Why I hate tort reform so much

Yesterday, a contractor came over to our house to look at a leak in our roof (thanks to the Home Owners Association).  Following his poking around our attic and looking at the tiles, we began speaking about the problems subcontractors and even general contractors are having obtaining liability coverage in Colorado, and that some simply cannot obtain liability insurance, despite pretty clean records.

Lets remember one thing.  Colorado passed a pretty tough law, known in this state as CDARA II (Construction Defect Action Reform Act), that requires all sorts of notices and provides all sorts of limitations on actions brought in construction defect litigation cases.  The new law caused a rush of new cases to be filed before the deadline.  There has been at least one attempt to overturn the law, pushed in part by Scott Sullen, Esq., by putting the matter on the state ballot.

And so here is why I hate tort reform.  Why is it that we have now instituted all of these protections to cover insurance companies, but the insurance companies have taken on no new obligations to provide greater or better access to insurance?

Let me frame for you a good example of insurance reform that is decent.  Under the Workers Compensation, businesses are provided with a protection against being sued.  In exchange, workers are provided insurance to cover them for medical and wage expenses from on-the-job injuries.  Granted, there are plenty of disputes revolving around Workers Comp claims, but overall, I think the law works pretty well to protect both employers and workers alike.  If the law didn't work well, somebody of significance would be calling for the system to be dismantled.

But most proposed tort reform otherwise does not provide similar give and take.  Insurance companies are provided protection from the general public, with virtually no benefit to the general public.

Insurance is a risky deal.  The proposition is as follows:  You, the insured, gives me your money (premium), and I, the insurance company, gamble that I can use your money and invest it and earn a profit on that money.  In exchange for you giving me your money, I provide you insurance for XXX item.  The gamble is that I need to make more money in my investments than I spend on claims in a given year.  If I am paid $1,000,000 in premiums, and I pay out $1,200,000 in claims, then that extra $200,000 has to come from somewhere - investments.

During the late 80's and 90's, this was a good deal for the insurance companies, based upon the hyper-inflated values generated by the stock market.  Since a company selling pet rocks probably could have seen its stock quadruple just by adding ".com" to their name, its easy to see where this extra money came from.

Then the bubble burst, and insurance companies lost one of their big sources of revenue.  So they had to make up the money somewhere.  The method chosen by the insurance companies, of course, was to villianize attorneys and push for tort reform.  They also chose to raise premiums as much as possible, while denying coverage and dropping coverage wherever possible.  Thanks for the money.  Now go fuck yourself.

Tort reform is a win-win for insurance companies.  They get to maintain high premiums, while absolutely minimizing exposure.  Yesterday you were paying X dollars for $1,000,000 in protection.  Now, you are paying that same X for protection, but the exposure for the insurance company is only $250,000.  Thanks for the money.  We'll call the extra that you paid us...well...profit.

Just like with auto insurance and No-Fault reform in Colorado.  For those of you not familiar with no-fault, it is a system whereby each insured is required to carry PIP (Personal Injury Protection).  When you get into an accident, your own PIP kicks in and provides the driver arnd occupants with immediate benefits for injury and lost wages, etc.  Insurance companies do not like PIP because it mandates payment, no ifs, ands or buts (if the other party is at fault, the insurance company is then on the hook to initiate a subrogation claim to recover what it paid out).

In Colorado, we did away with No-Fault/PIP.  The logic used by the insurance companies to sell this on the people is that "you don't need the excess protections of PIP" and instead, you should be free to choose your coverage.  By dropping PIP, you'd drop a huge chunk off your insurance bill since you would not have to carry PIP insurance protection.  And if you have a 12 pack of soda, you can save a lot of money by only buying 1 can of soda.  Of course, you have 11 less cans of soda.  But you pay less because you are GETTING less.  We were told by the insurance co.s that the benefit of no PIP is that we could just sue those who are actually liable (great...my doctor wants to get paid, and now I've got to spend 2 years in court to recover the money...sounds great so far!).

After the assembly and senate approved PIP reform (a terrible move, in my opinion), and shortly before the change went into effect, we got letters from State Farm saying that because of PIP's elimination, we would now be in a tort system.  Because of the tort system, our rates for liability and uninsured/underinsured motorist coverage would be going up.  WAY UP.  The net result is that, well, our insurance isn't any cheaper, but we have a lot less coverage, and will have to fight a lawsuit against the other driver to recover damages for injuries.

In the future, here is how I'd like all insurance reform to be commenced:  In exchange for ANY protection and insulation (except from truly frivolous claims), all tort reform must require that insurance companies provide insurance to high risk entities.  The biggest problem with insurance these days (among the many problems that exist) is that some simply cannot get insurance.

Imagine that.  When I was 32 years old and 320 pounds, with a cholesterol of 212 and 1 day before a heart attack, I could get health insurance virtually everywhere.  It wasn't cheap, but it could be had.  Now I am 33 years old, 195 pounds, I just ran a 10K (6.2 miles for the metricly dis-inclined) in 55 minutes flat (actually, 54:58 is when I crossed the finish line, but I was robbed of 2 seconds somehow in the "official" time - that's sub 9 minute miles - not elite, but probably better than a majority of Americans), have an overall cholesterol of about 100, a pulse of 48 (like many runners), and a blood pressure of 95 over 57.  I didn't require surgery to lose the weight, and while I do take medication, I am actually quite healthy, and about to begin training to run the Dallas Marathon in December.  But the only way I could get health insurance is through an employer or spouse (which fortunately, I do have through my wife).

Contractors who accidentally let their coverage lapse find that they simply cannot get new coverage, despite having decent or good records.

If insurance companies want protection under the public domain, they need to provide a benefit to the public domain, and that means insuring high risk individuals as well.

THAT is the only way I'll even consider supporting any tort reform.

Comments

[Jerry]

BEWARE of misleading captions on special interest initiatives. Rarely do they ever award the public more but nearly every time they steal away a previous right. "Tort Reform" is a perfect example as is "Social Security Reform". In the case of torts (a term actually unkown to the general public) such changes take away rights or make life difficult for the victim and award the insurance companies a multi-million dollar windfall. In the case of Social Security, the entire purpose is to present to stockbrokers millions in commissions in exchange for their huge political contributions.
It is a good rule to vote NO on every ballot initiative because such are almost always put on the ballot by someone who will make a huge profit if such a person or group (such as insurance companies)can mislead the voters into voting "Yes." I would challenge any person to show me where initiatives are ever for the working person.
Jerry Billings (retired lawyer)

[Manda]

It takes a laywer to oppose tort reform. The reason insurance companies want to drop PIP is because it is riddled with fraud. The only people making money in PIP are the doctors and attorneys! PIP is supposed to do 2 things in Florida - provide 10K worth of coverage for injuries resulting from car accidents and 2. provide the purchaser with 10K defense or exemption from an injured party. In some districts, the lawyers have found a way to elimnate the 10K protection. I am paying for it but don't get it.

Yes without PIP it means you will have to pay your own medical bills while treating and then settle with the other party to riemburse yourself or pay the Doctors. IT DOES NOT MEAN FIGHTING FOR YEARS IN A COURTROOM. Most claims are settled without anyone suing anyone. Perhaps if the patient has to take responsibility for the bills initially, we wont have personal injury doctors and chiropractors charges $500-$800 PER VISIT. Perhaps Doctors wont order so many tests that are not needed or not even a part of the generally accepted medical practices.

Of course insurance companies are going to charge more the LIABILITY coverage. There are two reasons. 1. They will have to pay more under the liability coverage and 2. They will have to use additional resources ($$) to investigate and settle those claims. BUT THE CONSUMER WILL NO LONGER HAVE TO PAY FOR PIP - rates may actually go down.

You talk about taking away from consumers and not making insurance companies give a little. Just look at the courts and see that in our current pro-plaintiff attitude, insurance companies have given way more that they have recieved. As I mentioned, in some areas policyholder no longer have the 10K set off. Which means that even thought it is the LAW to purchase PIP coverage, if you dont - no big deal, they will just make the insurance company pay it anyway -even thought the PIP statute called for the set off.

When PIP carriers are responsible for bills when an insured hurts his back taking a watermelon out of the trunk or tripping while walking away from or to the car - you know the system is out of control. When plaintiff attorneys are asking insurance companies to pay PIP for drive by shootings and suicides, you know something is wrong.

People and buisnesses have difficulty getting insurance because of the costs of defending proper and frivoulus law suits. When a company has to pay over 500,000 to defend because someone is claiming lower back herniation from a $30 rear impact - something is wrong! We have lost the use of common sense, instead we live in a society where insurance is a "lottery" not just in case.

In countries where they do not have Tort laws - people do not treat for minor sprains and strains to neck and back - they RESOLVE on their own. It is amazing how cars protect us better then ever before, yet people are making more injury claims per vehicle. How is that possible?

Before you talk about how bad the big insurance companies are, keep in mind that NO BUSINESS - NOT INSURANCE OR RETAILERS OR SERVICE PROVIDERS are in business to lose money. IF THEY DON'T MAKE MONEY - THEY WONT STAY IN BUSINESS -THEY WONT EMPLOY PEOPLE AND THOSE PEOPLE WON'T SPEND THEIR MONEY AND YOU WILL LOSE YOUR JOB.

[Debra Riley]

247220: Hey, does anyone know where I can find a list of gas stations with low prices in my area?