Torts - Cases, Principles, and Institutions Fifth Edition, 2016a

Witt & Tani, TCPI 10. Damages
Baker found in his interviews that most plaintiffs’ lawyers denied being willing to pursue
blood money, except in exceptional cases. “We don’t do it often,” one plaintiffs’ lawyer told him.
“And if you talk to every responsible plaintiffs’ lawyer in the state, I’ll bet it’s rare.” Id. at 281.
Baker’s interlocutors described their reasons as ethical: “It’s hard to take somebody’s house away.
I mean, you know, people with kids and mothers and fathers, and they worked their whole lives,
probably, to acquire that home. I mean, it’s not easy.” Id. And so plaintiffs’ lawyers asserted
that they followed “an unwritten union rule that you take the coverage and you go home.” Id.
What about the lawyer’s obligation to pursue his client’s interests? Baker’s interview subjects
insisted that they would not represent clients who demanded damages over the policy limits.
An exception to the rule arose when “the defendant failed to purchase adequate
insurance.” Id. at 196. In such instances, plaintiffs’ lawyers cited the defendant’s wrongful
failure to insure adequately as grounds for the collection of blood money. In addition, certain
intentional torts, including rape and drunk driving, warranted the collection of blood money as
well.
Empirical studies have confirmed Baker’s qualitative analysis that “blood money” payments are
relatively rare and may serve largely to punish defendants for being underinsured. A group of researchers
studied settlement data from Texas medical malpractice suits and found that about 15% of cases settled
exactly the upper limit of the insurance policy. This was more common with cases involving infants,
which tend to have even higher damages awards. Less than 2 percent of cases involved payments above
the upper limit of the insurance policy—and even in many of those cases, insurance companies paid the
difference (presumably to avoid failure to settle claims). However, the rate of cases that involved
payments beyond the insurance policy were several times higher for defendants that had purchased
insurance policies with relatively low (under $250,000) limits. See Charles Silver et al., Malpractice
Payouts and Malpractice Insurance: Evidence from Texas Closed Claims, 1990-2003, 33 THE GENEVA
PAPERS ON RISK AND INSURANCE: ISSUES AND PRACTICE 177 (2008).
What best explains the reluctance to seek blood money? Is it a moral economy of the plaintiffs’
bar? Or is it the acute difficulty and great expense of seizing personal assets? Note that one possibility is
that seeking blood money is a specialist’s game, and that while most cases do not require the pursuit of
blood money, those that do go to the specialists.
3. Subrogation; or, The Role of Plaintiffs’ Insurance
How does the plaintiff’s insurer (for example, a health insurer or workers’ compensation provider)
enter into the picture? Many insurance companies include subrogation clauses in their insurance
contracts. A subrogation clause allows the insurer to pursue claims against a tortfeasor on the
policyholder’s behalf and entitles the insurer to recover any damages paid that were covered by the
insurer.
Some states, by statute or common law, have limited the reach of subrogation clauses. Arizona
has held that subrogation of personal injury claims amounts to an “assignment” of personal injury claims,
which cannot be assigned. State Farm Fire & Casualty Co. v. Knapp, 484 P.2d 180, 180 (Ariz. 1971).
Virginia’s legislature prohibiting contracts subrogating personal injury claims. VA. CODE § 38.1-342.2
(1980). Note that the prohibition on subrogation claims surely raises the price of insurance for all
646