Torts and Insurance

Mark A. Geistfeld
According to conventional wisdom, the normative source of modern tort law is mysterious. The reasons trace back to the state of nature. In a world without centralized government, individuals protected themselves by exacting talionic revenge—“an eye for an eye”—on their injurers. These customary norms of behavior were the source of the early common law, but tort scholars have assumed that they were merely a barbaric punitive practice without any relevance to the modern tort system. This field of the common law had to be normatively recreated, making it “modern.” The resultant body of tort law depends, as Oliver Wendell Holmes famously concluded, on “more or less definitely understood matters of policy.” The policies in question, however, have never been clearly identified. Courts and scholars continue to disagree about the norms that generate the behavioral obligations of modern tort law.
 
The normative source of modern tort law has been hidden in plain sight because of this widely held but mistaken understanding of legal history. Contrary to conventional wisdom, the state of nature was governed by a reciprocity norm of equitable balance that has survived the evolving demands of the modern tort system. In cases of accidental harm, the reciprocity norm often took the form of a compensatory obligation requiring “the value of an eye for an eye.” This norm was initially adopted and then further developed by the early common law. Courts subsequently invoked the reciprocity norm in the late nineteenth and early twentieth centuries to justify rules of negligence and strict liability. Once one looks, the importance of reciprocity is obvious.
 
Reciprocity, in the basic sense of “treating others like they treat you,” is a metanorm that individuals use to identify and enforce more particularized behavioral obligations in a wide variety of social interactions. Reciprocity attains equitable balance in tort cases through a series of behavioral and compensatory obligations corresponding to the modern rules of negligence and strict liability. Given the ongoing, pervasive influence of reciprocity, it readily provides the type of normative judgment that jurors must exercise when determining the behavioral requirements of reasonable care in a negligence case. Reciprocity supplies a normative practice that is distinct to tort law, defining a behavioral paradigm that normatively demarcates torts as a substantive field of the common law.
 
But even though tort law is distinctively defined by the paradigm of compensatory reciprocity, this normative practice does not fully justify tort law. Reciprocity is a behavioral norm. Why should the legal system enforce the norm? Must it always do so? These questions must be resolved with a substantive rationale for tort law, not with a behavioral norm that is enforced by the law.
 
By enforcing the behavioral obligations of reciprocity, the tort system engages in a normative practice that can be justified by the liberal egalitarian principle that each person has an equal right to autonomy or self-determination, making each responsible for the costs of his or her autonomous choices. Liberal egalitarianism is the only principle of substantive equality that can justify the tort rules that give different treatment to different types of nonreciprocal behaviors. Far from being a barbaric relic of the past, the reciprocity norm is enforced by tort law in a manner that clearly reveals the substantive rationale for this field of the common law.
 
Omri Ben-Shahar & Ariel Porat

The most fundamental feature of negligence law is the “reasonable person” standard. This feature bases negligence law on a strictly objective foundation: It requires people to behave in the prudent way that, as Holmes explained, the ordinary, typical member of their community observes. In this Article we argue that with the increasing availability of information about actors’ characteristics, negligence law should give up much of its objectivity by allowing courts to “subjectify” the standard of care—that is, to tailor it to the specific injurer’s tendency to create risks and his or her ability to reduce them. We discuss the effects of this personalization of the standard of care on injurers’ and victims’ incentives to take care, injurers’ activity levels, and the injurers’ ex ante investments in improving their skills. We also discuss justice considerations as well as the feasibility of personalization with the aid of “Big Data.”

Mitchell Russell Stern

Thanks to a streamlined approval process under the 1984 Hatch-Waxman Act, generic drugs have largely helped make prescription medications in the United States more affordable by providing an essentially identical product at a lower price. While generics may appear to be a perfect substitute for brand-name pharmaceuticals, consumers injured by prescription drugs may encounter an unexpected difference: because federal regulations severely restrict the ability of generic manufacturers to unilaterally update their warning labels, the Supreme Court has held that many products liability claims against generic manufacturers are pre-empted. At the same time, the Court has held that identical claims against brand name manufacturers remain viable. In response, the Federal Food and Drug Administration (FDA) has recently proposed a rule that would purportedly “fix” this asymmetry by allowing generic manufacturers to make labeling changes without prior FDA approval, even if it results in a brand-name drug and its generic “equivalent” bearing different warning labels.

This Note argues that the FDA’s response, while well intentioned, loses the forest for the trees by overvaluing compensation for injured consumers at the expense of low-cost generic drugs and accurate, consistent information for consumers. Instead, both the Agency and consumers injured by generic drugs should focus on discrepancies that already exist—that violate FDA regulations—between generic and brand name labels. Such cases not only present an information problem that should be corrected, but they may also provide a viable avenue for litigating products liability claims. While there is currently a circuit split on the issue, this Note explains why these failure-to-update claims should not be preempted. Moreover, given that such differences may occur in a majority of generic drug labels, these claims offer the possibility of recovery for a significant number of consumers.

Benjamin Zhu

Dataveillance, a method of surveillance that collects and analyzes massive amounts of data about individuals, poses a threat to information privacy because it allows companies to uncover intimate personal information that individuals never consented to disclose. No comprehensive legal framework currently exists to regulate dataveillance. A potential remedy lies in the common law torts designed to protect privacy. However, the most applicable of these privacy torts, the tort of intrusion upon seclusion, faces several doctrinal hurdles in regulating dataveillance because courts and commentators consider the initial collection of data to be the only potential privacy intrusion from dataveillance. This Note proposes that the tort of intrusion upon seclusion could be updated to effectively regulate dataveillance if courts recognize that dataveillance’s observation of new personal information constitutes its own privacy intrusion, distinct from the intrusion at the data collection stage. This doctrinal shift would overcome the doctrinal barriers to applying the intrusion upon seclusion tort to dataveillance.

David Shieh

As many as 98,000 people die each year as a result of medical error. According to law and economics scholars, the solution to this problem is straightforward: When calibrated correctly, medical malpractice liability will force healthcare providers to internalize the cost of their negligence, incentivizing improvements to patient safety that will reduce medical error. Debate has raged for decades over the coherence of deterrence theory, but little attention has been paid to the erosion of one of its bedrock assumptions: that the procedural mechanism through which claims are to be resolved is litigation. Arbitration has become pervasive in the healthcare context, but its effects on medical malpractice liability’s ability to deter medical error have been largely overlooked by public health and legal scholars. This Note argues that the adoption of arbitration will not, as law and economics scholars assume, improve the medical malpractice regime’s ability to deter error. In addition to drawing on existing law and economics and public health scholarship to advance this descriptive claim, this Note studies the experience of Kaiser Permanente, the nation’s largest integrated healthcare consortium, in using arbitration to resolve medical malpractice disputes with its seven million members in California.

 

Thomas H. Sosnowski

Federal preemption is one of the most powerful defenses that a product liability defendant can raise. If a court finds that federal law preempts a state law product liability claim, it must dismiss the claim. Dismissal of the state tort claim may eliminate the only source of private liability of defendants and the only source of compensation for plaintiffs. If the applicable federal statute does not contain an express preemption provision, most courts find federal preemption only if a “conflict” exists between the state and federal laws. However, in some areas, courts have held that all state product liability claims in a particular “field” are preempted because an aspect of the field is subject to federal regulation. This Note argues that this broad “field-based” preemption framework, referred to as implied field preemption, should not be invoked to preempt state law product liability claims, despite the Supreme Court’s recent decision in Kurns v. Railroad Friction Products Corp. The case against the field-based framework is strong when viewed from doctrinal, theoretical, and historical perspectives. The case studies presented in this Note illustrate the problems that result when an appellate court finds implied field preemption. Field preemption prevents lower courts from determining whether the state claims in question and federal law are actually incompatible. In some cases a field-based framework defeats the purposes behind both state tort law and federal preemption by eliminating product liability law’s deterrence and compensation functions without providing a corresponding benefit to the federal regulatory structure.

Joanna C. Schwartz

Every year, medical error kills and injures hundreds of thousands of people and costs billions of dollars in lost income, lost household production, disability, and healthcare expenses. In recent years, hospitals have implemented multiple systems to gather information about medical errors, understand the causes of these errors, and change policies and practices to improve patient safety. The effect of malpractice lawsuits on these patient safety efforts is hotly contested. Some believe that the fear of malpractice liability inhibits the kind of openness and transparency needed to identify and address the root causes of medical error. Others believe that malpractice litigation brings crucial information about medical error to the surface and creates financial, political, and institutional pressures to improve. Yet neither side in this debate offers much evidence to support its claims.

Drawing on a national survey of healthcare professionals and thirty-five in-depth interviews of those responsible for managing risk and improving patient safety in hospitals across the country, I find reason to believe that malpractice litigation is not significantly compromising the patient safety movement’s call for transparency. In fact, the opposite appears to be occurring: The openness and transparency promoted by patient safety advocates appear to be influencing hospitals’ responses to litigation risk. Hospitals, once afraid of disclosing and discussing error for fear of liability, increasingly encourage transparency with patients and medical staff. Moreover, lawsuits play a productive role in hospital patient safety efforts by revealing valuable information about weaknesses in hospital policies, practices, providers, and administration. These findings should inform open and pressing questions about medical malpractice reform and the best ways to continue improving patient safety.

Zachary B. Savage

The civil litigation system aims to resolve disputes in an efficient, centralized, and final manner. In the context of mass tort litigation, one technique courts often use to achieve these goals is what I call “scaling up”: holding individual trials, and then applying results from these trials to similarly situated individuals. Scaling up, however, presents two difficulties. First, the technique risks compromising defendants’ Due Process rights by creating impermissible settlement pressure. Second, scaling up requires the initial court to structure the litigation so that it may serve as a template for follow-on proceedings; where this is not done, attempting to graft the results of one proceeding onto the remaining group of similarly situated individuals may simply lead to more protracted litigation.

Yet these difficulties are not inherent to the technique; in fact, courts can scale up in a way that avoids these problems. In order to mitigate the Due Process problem, courts should not apply the results of individual trials to subsequent trials involving similar claims until a substantial number of trials have been completed, and until it has become clear that any verdicts unfavorable to defendants are not flukes or outliers. And to ensure that scaling up does not simply lead to more protracted litigation, the initial trials should be structured so as to maximize the likelihood that individuals in follow-on litigation can invoke the findings under the issue preclusion doctrine of Parklane Hosiery v. Shore. The American Law Institute has made a proposal with these considerations in mind with respect to issue classes. This Note argues that a similar approach should be taken in the Multidistrict Litigation (MDL) process, where most mass tort litigation occurs today. This approach would be particularly useful if applied to one device that is being used with increasing frequency in the MDL process: the bellwether trial.

Catherine M. Sharkey

Previous empirical studies have examined various aspects of medical malpractice damages caps, focusing primarily upon their overall effect in reducing insurance premium rates and plaintiffs' recoveries, and(to a lesser degree) upon other effects such as physicians' geographic choice of where to practice and the "anchoring" effect of caps that might inadvertently increase award amounts. This Article is the first to explore an unintended crossover effect that may be dampening the intended effects of caps. It posits that, where noneconomic damages are limited by caps, plaintiffs' attorneys will more vigorously pursue, and juries will award, larger economic damages, which are often unbounded. Implicit in such a crossover effect is the malleability of various components of medical malpractice damages, which often are considered categorically distinct, particularly in the tort reform context. This Article challenges this conventional wisdom.

My original empirical analysis, using a comprehensive dataset of jury verdicts from 1992, 1996, and 2001, in counties located in twenty-two states, collected by the National Center for State Courts, concludes that the imposition of caps on noneconomic damages has no statistically significant effect on overall compensatory damages in medical malpractice jury verdicts or trial court judgments. This result is consistent with the crossover theory. Given the promulgation of noneconomic damages caps, the crossover effect may also partially explain the recently documented trend of rising economic (as opposed to noneconomic) damages in medical malpractice cases.

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