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Tort Reform

Position:  NCCBI applauds the North Carolina General Assembly for the actions taken in 1995 to enact common sense tort reforms such as limiting punitive damages, and revising our products liability statute. NCCBI believes that these were important first steps toward bringing common sense and balance back to our civil justice system. NCCBI would support further changes to eliminate punitive damages, limit non-economic damages, end the collateral source rule, and provide a right of subrogation to health insurers and others that may have paid a portion of the damages suffered by an injured plaintiff.

Explanation: 

Punitive Damages. In 1995, the General Assembly enacted legislation limiting punitive damages. That legislation went a long way toward correcting the problems caused by punitive damages in our civil justice system, particularly encouraging litigation and enriching plaintiffs and their attorneys well beyond any amount lost by the plaintiff. However, by definition, any punitive damage award is in addition to what is necessary to compensate a plaintiff for the injuries sustained and, as such, is a windfall to the plaintiff and his or her attorney. The general public pays for these windfalls through increased product costs, insurance costs, and either increased taxes or decreased public services, or both. These costs to the public rarely produce a public benefit. The usual justification put forth for punitive damages is to deter and punish intentional or malicious conduct. Yet, deterrence punishment for such conduct is properly the province of our criminal courts, where fines and probationary terms can be put to public benefit. The civil courts are not the proper forum for deciding punishments.

Non-Economic Damage. Under our current system of civil justice, a plaintiff may attempt to recover compensatory damages that include past and future medical expenses, past and future lost wages, and "non-economic" damages, which are those amounts awarded to the plaintiff and that the defendant must pay to compensate plaintiff for pain and suffering the plaintiff claims to have endured as a result of the defendant's conduct. These damages by their very nature are purely speculative. There is no way for a jury to objectively measure pain and suffering and, as a result, the award of such damages is merely a guessing game determined largely by the amount of sympathy the jurors may feel for the plaintiff. These damages are the primary cause of many lawsuits that could otherwise be easily settled without litigation. "Pain and suffering" damage claims also cause inflated settlements. Other states have recognized this and passed legislation limiting or restricting non-economic damages. NCCBI urges the General Assembly to enact legislation to provide objective guidance to juries in deciding the amount of non-economic damages to award, such as caps or limits set as a multiple of medical expenses. Such a system would preserve the plaintiffs right to fair and reasonable compensation for damages actually incurred, including some compensation for pain and suffering, while insuring that jurors act from reason and evidence, and not sympathy.

Collateral Source Rule. When determining a compensatory damage award, the collateral source rule prohibits both the judge and jury from considering the fact that the plaintiff has already been compensated for much of his or her financial loss, such as payment of medical costs through health insurance or payment of income replacement benefits through a disability insurance plan or workers' compensation plan. The goal of the civil justice system is to reasonably and fairly compensate the plaintiff for actual losses. When a plaintiff receives an award for medical bills that have already been paid by another source, the plaintiff and the plaintiffs attorney receive a windfall. These multiple recoveries contribute to the rising costs of medical care and health and liability insurance. Elimination of these multiple recoveries by abolishing the collateral source rule would be an important step in controlling health and liability insurance costs.

Subrogation. As an alternative to eliminating the collateral source rule, the General Assembly should consider enacting a statute to specifically allow health insurers, disability insurers, and others that may pay a portion of an injured party's expenses pursuant to a contract to recover that money paid to the plaintiff out of any recovery the plaintiff receives from a negligent third party. This would accomplish the same goal as eliminating the collateral source rule; that being, to control health insurance costs by preventing double recoveries that serve only to enrich a plaintiff or his or her attorney.

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