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Updates at www.iii.org/issues_updates Insurance Topics
The Liability System and Medical Auto Malpractice
Insurance
right to trial by jury. In Illinois, the Supreme Court overturned the state’s 2005
medical malpractice statute, which capped noneconomic (pain and suffering)
medical malpractice awards at $500,000 in lawsuits against physicians and $1
million for hospitals. The court ruled that the law violated the state’s constitutional
principle of separation of powers in that lawmakers had made decisions
that should be made by judges and juries.
Some states, such as Maryland, are deciding to retain their caps when challenged.
Arbitration: To keep small disputes out of the courts, insurers are increasingly
turning to arbitration. The nation’s largest arbitration provider, nonprofit Arbitration
Forums, resolved more than 520,000 inter-insurance disputes in 2009
valued at $2.5 billion, for a savings in litigation costs of $700 million. Disputes
leading to arbitration typically arise when insurance or self-insured companies
believe their policyholders or employees are not at fault or due to disagreement
over the percentage of liability or the amount of damages. More than 85 percent
of these disputes involve auto collisions.
Tort Liability Environment: In December 2009 the American Tort Reform
Association (ATRA) released its annual list of states and counties characterized
as “Judicial Hellholes,” places with courts that have a disproportionately harmful
impact on civil litigation. ATRA explains that personal injury lawyers seek
out these places as targets for their efforts to expand liability and develop new
opportunities for litigation. ATRA’s newest list includes six Judicial Hellholes,
including holdovers South Florida; West Virginia; Cook County, Illinois; and
Atlantic County, New Jersey, and New Mexico appellate courts and New York
City, which are new on the list. ATRA highlights several reforms that can help
restore balance to these jurisdictions. They include stopping venue shopping
(looking for jurisdictions where juries are favorable to plaintiffs), imposing
sanctions for bringing frivolous lawsuits, stemming abuse of consumer laws,
ensuring that noneconomic damage awards serve a compensatory purpose, and
strengthening rules to promote sound science in the courtroom.
I.I.I. Insurance Handbook www.iii.org/insurancehandbook 53