A Premium Smokescreen

Hoey Farina Team
  • Hoey & Farina, P.C.
  • FELA Lawyers / Railroad Injury Attorneys
  • 1-888-425-1212
  • info@hoeyfarina.com


"Tort reform" is back in the headlines with new campaigns stressing the medical malpractice "crisis." There have been recent efforts to restrict consumers' rights by making it nearly impossible for many seriously injured consumers to hold their offenders financially responsible in court.

In Florida, Governor Jeb Bush and state lawmakers pushed through a sweeping medical malpractice reform bill in the past legislative session.

There is no doubt that doctors are paying high premiums to be insured in their profession. However, insurance companies, and now many doctors, wrongly conclude that our civil justice system is responsible for unaffordable liability insurance.

In fact, the "solution" offered by insurance companies, "Tort Reform," will do nothing to lower doctors' skyrocketing insurance rates. According to a major report released by the national consumer group Center for Justice & Democracy (CJD), laws that restrict injured consumers' rights to go to court have failed to cut insurance rates around the country. According to the CJD report, which analyzed for the first time whether enactment of these laws reduce insurance rates, tort reform laws do not lower insurance rates for doctors. This central theme also was discussed in a recent U.S. News & World Report article ("Premiums Up, Payouts Flat", U.S. News & World Report, June 30, 2003, p. 24)


Passionately speaking, tort reform is an attack on our civil justice system. The FELA - Federal Employers' Liability Act, the law that protects injured railroaders, can be voted out at any time by an act of Congress. The anti-jury advocates and their corporate allies, if spurred on by successful tort reform efforts, could look at the FELA as their next target. What would be the result: injured railroaders would lose their powerful rights and protection under federal law.

The recent medical malpractice crisis is part of a wider movement to change our civil justice system. From the mid-1980s, the nation's largest businesses have been advancing a legislative agenda to limit their liability for causing injuries. One of the principal arguments on which they rely is that laws that make it more difficult for injured people to go to court and recover lower jury verdicts (i.e., "tort reform") will reduce insurance rates. The CJD report -- "Premium Deceit – the Failure of ‘Tort Reform' to Cut Insurance Prices"-- analyzes these claims, and concludes these arguments are invalid.

J. Robert Hunter, Director of Insurance for the Consumer Federation of America (CFA), former Commissioner of Insurance for the State of Texas, and former Federal Insurance Administrator under Presidents Carter and Ford, is a co-author of the study. He wrote, "States with little or no tort law restrictions have experienced approximately the same changes in insurance rates as those states that have enacted severe restrictions on victims' rights."

According to co-author Joanne Doroshow, Executive Director of Center for Justice & Democracy (CJ&D), an attorney who has represented consumer interests on civil justice issues since 1986, "For years, insurance companies and their corporate allies have argued that our civil justice system is responsible for unaffordable liability insurance. They have convinced lawmakers around the country to enact legislation that makes it nearly impossible for many seriously injured consumers to hold their offenders financially responsible in court by promising such laws would bring down insurance rates. "This study has, for the first time, definitively exposed the campaign to restrict consumers' rights for what it is -- an insidious public relations scam that has had terrible consequences for many innocent people, while doing nothing to improve the affordability or availability of liability insurance for businesses or professions," Doroshow added.


The "liability insurance crisis" of the mid-1980s was ultimately found to be caused not by legal system excesses but by the economic cycle of the insurance industry. Given large rate increases and cut backs in coverage, the insurance cycle soon turned again and prices began to fall. The nation has enjoyed a relatively "soft" insurance market for over a decade now -- with rates of liability insurance not only stable but down.

Simply stated, insurance companies, in order to make money, take the customers' premium contributions and look for investment vehicles such as shopping malls, office buildings, government securities and start up companies.

Today, the insurance companies' coffers are low because their financial investments "popped" when the stock market collapsed two and half years ago and eroded much of their return on investments. The recent large rate increases on doctor premiums reflects both the depressed rates of insurance for the past 10 years and the need of insurance companies to cover their poor investment decisions. The rate increases are not the product of a tort law cost explosion, as many insurance companies and others claim.


Malpractice caps do not reduce premiums. Instead, caps discriminate against the most seriously injured victims of malpractice, while enriching the insurance companies that caused premiums to rise because of their poor business and investment decisions.

Juries should decide what medical malpractice victims receive in compensation, and not a one-size-fits-all cap determined by politicians. Reform should focus on the insurance industry, a group which is exempted by Congress from anti-trust regulations.

As the findings of the CJD report confirm, legal system restrictions are based upon a false predicate. "Tort reforms" do not produce lower insurance costs or rates. Write, email or phone your senators and representatives and let them know that you do not support any efforts to curb America's civil justice system.

Hoey & Farina, your FELA Designated Legal Counsel, can answer any questions you may have about your rights under the law. Do not hesitate to contact us if you have any questions about your rights under the FELA or any other legal issue.

If you or a loved one have suffered a work injury or wrongful death on the railroad, call an experienced FELA lawyer / railroad injury attorney at Hoey & Farina, P.C. at 1-888-425-1212, or complete this form, for your FREE CONSULTATION. Hoey & Farina represents clients throughout the United States.


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Chicago, Illinois 60605
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Toll Free: (888) 425-1212
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Email: info@hoeyfarina.com
Representing clients throughout the United States.


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