Thanks for joining this episode of the No. 86 lecture series, where we discuss basic principles and applications of Tort Law along with landmark cases. Today's episode features Gregory Dolin, who is a Professor of Law at the University of Baltimore, where he teaches Torts, Contracts, Property, Intellectual Property, Federal Courts, and Constitutional Law. As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker. Professor Dolin, could you start this episode by giving us your perspective on the tort system and some of its imperfections? The tort system, like every system, is imperfect. What we oftentimes don't see is that it's imperfect on both extremes. And yet only one extreme is being reported on. And I'll just preface it by saying that I came to law school after having gone to medical school where I was a member and an officer of the American Medical Association. And so I came with very strong views on the deficiency of the tort system and the pressing need for reform. And I haven't fully abandoned those views because I do see the distortions of the system. But, having sort of seen it a bit more from the inside and from a kind of historical perspective, I'm much less adamant about, the particular, at least reforms that are being proposed as well, and much more cognizant of the fact that, if we are gonna talk about distortions, we should really talk about distortions on both ends. Could you elaborate on some of these distortions in the tort system that you've observed? So what are those distortions? Let's talk about some that everybody knows. Sometimes you'll see, you know, a crazy verdict. Somebody gets, you know, $20 million for something that seems fairly mundane. Everybody knows the kind of the McDonald's coffee case with Ms. Liebeck. But let's talk about something that's isn’t McDonald's and we'll get back to McDonald's coffee case because it was so grossly misreported. But let's get to something that's perhaps much less sympathetic. Even less so than Ms. Liebeck. So there's a famous case called BMW versus Gore, not Al Gore, different Gore, and uh, case ultimately decided by the US Supreme Court. But it came up from, I believe, Alabama. And there Mr. Gore bought a BMW, which apparently was in a small, it was a new car, but apparently was in some small collision on its way to the dealership, and was, you know, that collision was sort of covered up, was repainted. It didn't really affect the value of the car all that much, affected it somewhat. Somehow or another, Mr. Gore found out about it and sued. Sued the, the dealer, sued BMW for selling him something that he didn't bargain for, that he said a car of a lower value and the court awarded him damages. It was kind of mostly a contracts case, but had some of tort element to it. Awarded him damages for the difference in value of the car as delivered versus what he bargained for kind of a brand new undamaged car. And then they awarded him and it was like a couple thousand dollars and then they awarded him, I think something like 10 million dollars in punitive damages for, I suppose, egregious behavior at BMW. Didn't tell him and kind of tried to pass off, you know, a second, you know, second rate car. And that is a bit of a distortion of the system. There's no good reason why this behavior calls for 10 million dollars or however many million dollars award. Ultimately, Supreme Court invalidated it on constitutional grounds in a five-four decision, which didn't split along predictable ideological lines. I think Justice Breyer wrote the majority together with the most conservative justices and Justice Scalia wrote a dissent together with most liberal justices. We see those types of distortions on the far end where somebody gets a lot of money or the, again, the McDonald's coffee case, which is true, Ms. Liebeck did get a lot of money; but what was not reported is that she also suffered a third degree burns meaning kind of, not something that happens when you pour a little bit of hot water accidentally on your hand, kind of to the point where, she needed skin grafting, et cetera. It was not reported that, when McDonald's was found liable, she was also found liable. Let's go back to our comparative negligence discussion. She was also found negligent and in fact she was found to be more negligent than McDonald's. And so her recovery was significantly reduced. It was also not reported that she was not planning to sue McDonald's. She actually, she just, because of the severe burns, she was faced with huge hospital bills. And she basically initially wrote McDonald's a letter saying just pay for my hospital bills. And McDonald's declined to do it. So nevertheless, we could say, look, awarding punitive damages, maybe compensatory damages one thing, but awarding lots of punitive damages to, to Ms. Liebeck is too much. And maybe that needs reform. But what's generally not reported is that there's distortions on the bottom end where lots and lots of people are injured who will never see compensation because no attorney will ever take their case. When we talked about the case of my grandfather who was, him, and of course our family was injured by the fact, that the doctor failed to diagnose his infection in time, no attorney would take this case. And so our family, and, you know, look, we're fine. And we expected that if not this year, the next year, my grandfather was not a, you know, not a young man, but nevertheless, our family is injured and we will never see compensation for it. Well, there's plenty of people like that who end up because of doctor's mistakes, spending more time in a hospital. A day or two, right? One might say, look what’s a day or two? But nevertheless, that's an injury. They'll never see that compensation. There are people who, for example, because of various rules we talked about, Lost Chance Doctrine. And for example, if you're in a state where you have to show that when you came to a doctor you have a higher than 50% chance of living, and now you have lower, and only then can you claim lost chance. If you live in that state, if you came to a doctor at 45% chance of living, but because he misdiagnosed you, now you only have 15% chance of living, right? You got, you had a close to 50/50 shot, and now you're basically much more likely that you will not survive at all. You've lost something, right? But you will never get compensated. So there's reasons that you will not get compensated because your case is too small. Too small potatoes and an attorney will not take it. The case that you will not get compensated because of the various doctrines we have, and if we are gonna talk about tort reform, I think we should talk about “Tort” reform, kind of a capitalized. Looking at all of those things. I think looking at just the small sliver of cases up top, is not necessarily counterproductive, but at least incomplete. Although that having been said, I understand the need for, I understand that it's a problem when, you know, when I was in medical school, there was a situation when the entire state of West Virginia did not have a single neurosurgeon because the malpractice premiums were so high that basically all of them packed up and left. They said, we simply cannot afford to practice in this state. So that's certainly a problem, not just for some neurosurgeons. That’s a problem for the citizens of West Virginia. And if that, if those are the incentives, then we need to rethink what incentives we're creating, we need to rebalance them. But I think it just needs to be a deeper and broader conversation that we usually have in mass media. When we talk about tort reform, who would potentially benefit from these changes? Are there specific proposals you think are worth discussing? It's not clear whom tort form would benefit. I think it very much would depend on what the tort reform would involve, right? So there are different proposals for tort reform. For example, one proposal that has long been championed by the AMA is a cap on non-economic damages. So if you think about damages that a person suffers as a result of a tort, you can group 'em into two, you know, big buckets. One is economic damages, meaning your loss of employment, right? Because you were in a hospital, you couldn't work because you now have some sort of say permanent injury. You can only work, say six hours a day as opposed to eight hours a day. You've had hospital bills, right? You had to buy, I don't know, a walking stick, whatever it is, right? So all these extra costs that are easily sort of quantifiable as, like pure economic losses, right? So things that you were doing before–earning money and you're not earning, and expenses that you're now incurring that you were not incurring previously. And the second bucket is non-economic loss. And essentially that's pain and suffering, right? That's not economic in a sense that, you know, it's not as if you were somehow paid for not suffering beforehand. So, and they're of course much harder to quantify. I mean, how much is your suffering actually worth? How much is your pain actually worth? And so for example, AMA has long been championing putting a cap on non-economic damages, saying, look, economic damages are easily quantifiable, and if we, if a person has to pay out of pocket, it's true that a doctor who committed the error should pay, should carry these extra costs. But pain and suffering should be capped. And the proposal that the AMA has run with is about $500,000. Why $500,000? Because back in the 1970s, California passed this statute limited to $500,000 and the act called MICRA, which is Medical Insurance Compensation Reform Act, something like that. And they kept at 500,000 and it has been somewhat successful in keeping malpractice premiums down, although there's some debate, whether it was MICRA or subsequent reforms in the insurance industry. Of course part of the problem is that California enacted this law back in the seventies, 500,000 thousand dollars in the seventies, and 500,000 thousand dollars, 2020, are very different, $500,000. And yet theAMA has never sort of indexed its proposal for inflation. But in any event, whether you index it or not, so that's one type of proposal. So cap the damages, who would that benefit and who would that hurt? That perversely would hurt the most injured people. Why? So imagine you are injured and you have, remember, economic damage is not capped. And so whatever amount of economic damage you have, that's what you have. But imagine that your injury, you are not, your pain and suffering is actually not that much, let's say random number, let's say your pain and suffering. Everybody agrees you agree. The insurance company agrees, doctor agrees, it's worth a hundred thousand dollars. The cap doesn't affect you. It doesn't matter, right? You agree a hundred thousand dollars is way, way under the cap. Whether the cap is 500,000 as AMA proposes, or like I think some somewhere north of a million dollars as it is, for example, in Maryland. So it doesn't hurt you at all. But now imagine that your injury is so severe, again, leaving aside economic damages that your pain and suffering, that at least you claim is worth a million dollars. But the law says you cannot get more than $500,000. You are now getting undercompensated, everybody whose pain and suffering is $500,000 and below. They're exactly where they were before. They're not affected by the cap at all, but people who are really severely injured, people who are in really great pain, people whose pain is not expected to go away - At least to the extent that you believe that anybody's pain can be worth more than $500,000 - they're the ones who are getting the short end of the bargain right now. Again, is it worth it? Is it kind of essentially under-compensating some people in exchange for having neurosurgeons in the state of West Virginia. Maybe. Yeah. I don't really have a strong view on that, but I think it's something that we ought to at least talk honestly about saying who is actually getting hurt by such reforms and it's the people who are the most injured. Maybe it's worth it because there is no perfect system, but it should be acknowledged. This relates to a key question in tort law, namely the difference between compensatory damages and punitive damages. Can you quickly explain the difference between those? So compensatory damages are ones that are meant to compensate for the injury, right? So we ask, okay. You started out the day with a fine working car, and because somebody ran into your car, you now have a broken car. What's the difference between the value that you started out the day with and the value you ended the day with? And that's what we're gonna compensate you for. That's compensatory damages. We're focusing on the injury done to the plaintiff. Kind of, where was he before? Where is he now? What's the delta? Right? And let's give him that delta in compensation. Punitive damages focuses more on our outrage towards the behavior of the defendant, right? We're not necessarily saying that this is anything to do with the plaintiff and the injury that he suffered. We're just saying the behavior that the defendant has engaged in is so reprehensible. And also perhaps the punitive, is the compensatory damages are so insignificant to the defendant, right? Because maybe the defendant is a giant corporation or, you know, a particularly wealthy individual. And so he's said like, pay $10,000. He's like, yeah, whatever. That's fine. That’s pocket change. In order to really incentivize him not to do it again, you need to carry a bigger stick. So it's a both an expression of an outrage at the behavior, as well as a tool to say like, you really need to feel the sting of your behavior. So hopefully next time you won't do the same thing. Punitive damages oftentimes make headlines because punitive damages are the, those are the ones that may be fairly large. But punitive damages are rarely, rarely awarded. So they make the headlines. They're the, they're the ones that are oftentimes are impetus for the call for tort reform, but they're not the ones that really drive the tort system. Punitive damages are actually extraordinarily rare, in part because outrageous behavior is extraordinarily rare. Usually our tort system is, again, you pressed the wrong pedal. You, you know, you were changing a radio station on your phone. Your kid was screaming in the backseat of your car and you were trying to quiet him down and that's why you didn't pay full attention to the road and that's why you caused an accident. It's unfortunate. You shouldn't do that, but it's not outrageous and so we will say, look, compensatory damages are due, not punitive. On the other hand, if this is like the fifth time you're caught driving drunk and and you know, and you've been in accidents before and now you've severely injured someone. So it's now questionable whether or not they'll ever walk again. Maybe then punitive damages are appropriate, right? Because there's sort of some level of outrage. And clearly prior accidents have taught you nothing. What about alternative approaches to managing risk in these situations? Are there contractual solutions that might address some of these issues? One way people can solve their problems is by agreeing as to who should bear the risk of a bad outcome. We do this all the time, we do it in business transactions, for example, you enter into some sort of business deal and the company says like, look, and if during that, it turns out that you violate somebody's patent, you agree to indemnify us, right? You agree to pay for all of those things. So, there'll be no liability transfer. It's essentially patent violation is a tort, right? Parties can agree as to who will bear that risk. It can happen in most other walks of life. So, and most of us in one point or another have signed liability waivers. If we've gone horseback riding, if we've gone skydiving, if we've gone motor boating, if we've gone rock climbing. I mean any activity even mildly dangerous. We had probably signed some sort of liability waiver. Question is, should they be enforceable? And the general answer is yes, right? If you kind of go into an activity with your eyes wide open, you know the dangers you choose to voluntarily encounter those dangers, there's no reason why you shouldn't be able to say, I agree to encounter those dangers. I understand the risks involved, and I'm happy to bear the cost of those risks if they happen to befall me. Okay? You can also imagine circumstances, those agreements are not entered into entirely voluntarily. Imagine you come to a hospital in an emergency and a hospital says, we're happy to treat you. Just sign here that if we commit any medical malpractice, you promise not to sue us. You'll probably sign anything. Say if you're in active labor, you'll sign anything because you need medical attention now, right? If you're bleeding and like you, you know, to the point, say from a from a stab wound, right? Doesn't even have to be as a result of a crime, because you were fixing your house or something and you know, something happened, you will sign anything because if you don't, you will die from exsanguination, right? exsanguination. So those types of agreements are probably will not be enforced against public policy. So in that sense, these waivers of liability, which are, they're contractual and we approach them as we approach most contract agreements. We will not enforce some where, perhaps the bargaining power is disproportionate and the agreement violates some sort of public policy notion, where we would expect parties to enter into agreements freely. Have there been other attempts to reform the medical malpractice system beyond the measures we've discussed so far? So there have been attempts to reform not just kind of the compensation portion of the medical malpractice, but reform the entire system. For better or worse, they have not been successful in the United States. So, for example, in Maryland for a while there was an attempt to shunt all of the medical malpractice cases from regular, you know, traditional courts and juries to these professional boards that basically would convene a panel of doctors and they'll say whether or not there was malpractice. There were some constitutional issues with that under Maryland state Constitution. But even that aside, turns out, it's not obvious that doctors do better in that system. The doctors actually may be much harder on other doctors than, you know, lay jurors are on doctors. So, to the extent that doctors think like, look, if only I could talk to my fellow physicians and explain to them what happened, they would understand. Turns out that's actually not exactly true. It might be more streamlined, right? Because you may not necessarily need to spend time explaining things to jurors and getting expert witnesses, et cetera. So it might be more streamlined, might be more, cheaper to litigate. But in terms of outcomes, at least, at least as plaintiff friendly, if not more. There are also the costs that will never go away, again, and it's we can debate whether it's a good thing or a bad thing, et cetera. But medical malpractice for physicians is viewed, perhaps incorrectly, is viewed as an attack on who they are, right? So if I drive a car and accidentally hit a wrong pedal or accidentally, you know, doze off or do whatever and get into an accident, and I get sued for it, I don't view it as an attack on me being a good person. But if some, but medical malpractice, essentially it's a claim that you don't know how to be a doctor. You don't know how to do the job that you spent half your life training for. And that feels very personal and I think that it will feel very personal whether or not you're judged by some sort of professional tribunal or in a kind of, in a more expedited fashion, or whether you're judged by a jury. And it's not clear how you deal with that. Right? But those costs, right? And so why do doctors wanna fight them? Why are these cases so complicated? Because nobody wants to admit that they don't know how to be a good doctor, right? It's okay to say, look, I made a mistake driving. It's much harder to say, I made a mistake in something I've dedicated my entire life to, especially when it's a close call. There are other approaches. For example, New Zealand has eliminated the torts system almost entirely. New Zealand has this kind of basically compensation fund, and it's a no fault system. And if you get injured, whether it's medical malpractice or anything else, you file a claim saying, look, I missed these many days of work and I like had to buy these medications and I had to do this surgery and whatever else. And you file a claim with the government and they will pay you. And it's funded by, you know, taxes and other sorts of fees. That’s another way of doing it. It may raise some constitutional problems, because we are often guaranteed in, in federal and some state constitutions, the right to a jury trial. So there are ways of doing it differently. There are also ways, for example, one potential reform proposed is basically adopting an English model where it's still a traditional trial, but it's loser pays. So if your claim was actually not meritorious, then you pay not just for your attorney, but for the attorney of, you know, the winning party. But that has its own problems. And again, I'm not saying that those problems are, should mean that we should not, we ought not adopt the reform, but they ought to be considered. So it has, its potentially its own problems where, people who say sue a doctor, people generally who are plaintiffs and personal injury losses, they generally do not pay their attorneys unless they win. Right? Attorneys front all the cost, they work on a contingency. And oftentimes people who are plaintiffs, not always, but oftentimes people who are plaintiffs, that is the only way they can afford an attorney because they cannot afford to pay five, six, $700 an hour for legal representation. But if attorneys are potentially gonna not only front the cost of litigation, but potentially also be on the hook to the other attorney, either they will stop doing contingency work altogether and people have to pay upfront, right? Or they will take even more surefire cases, meaning that once again people at the lower end of either economic scale or the lower end of, certainty of winning, will not get representation at all, will be undercompensated. So again, no perfect system, but there are solutions to some problems. As long as we understand that solving some problems might exacerbate others, and we have to just do it, we have to decide whether a tradeoff is worth it. I'm interested in your personal perspective on this issue. You mentioned your mother is a physician – how have your conversations with her shaped your thinking on medical malpractice? One last thing about medical malpractice, and it goes to the point where kind of doctors might feel personally attacked. You know, my mother is a physician and every so often we have this, you know, and my explanation is enough to last for a couple of months, and then we return to this conversation. And she says like, well, why can't people understand that doctors are humans, they make mistakes and we shouldn't be, you know, we shouldn't be raked over the coals for it. And I always tell her like, but you are not. You are human. You make mistakes, you know, when you drive your car. We're not saying you're a bad person, we're simply saying you made a mistake and between you who made a mistake and an innocent party whose car you smashed, one of you has to pay. That's the only question: who pays. And it's simply more fair that the person who made a mistake - innocently made a mistake - that they pay. And so too, when you're a physician, right? We're not saying you purposefully chose not to treat this person because you don't like him, or you purposefully chose to give him wrong medication. We're saying you made a mistake. Between you and the victim, who ought to pay? And she's like, oh, well when you put it this way, it makes sense that I pay. And that's enough for a couple months until the conversation restarts precisely because doctors internalize it as an attack on not just kind of, look, you may be overworked, you may, you are human. People internalize it, saying like, people are saying I'm a bad doctor and I can't take that. Thank you for listening to this episode of the No. 86 Lecture series on Tort Law. 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