Philadelphia Reflections

Malpractice: State or Federal Problem?

McCarran Ferguson Act

The 1945 McCarran Ferguson Act prohibited federal agencies from regulating the business of insurance whenever individual states had passed laws on the topic. However, Congress can always modify its own laws, so McCarran Ferguson is not a serious obstacle to a federal tort reform law. Legislative interference in the judicial branch is admittedly somewhat more sensitive, particularly if the U.S. Supreme Court resists. However, the Supreme Court would have to be feeling especially prickly to block Congressional action whose effect is to increase the authority of the federal over the state courts, particularly in circumstances where the state courts appear to be failing.

Proponents of tort reform, the American Medical Association in particular, very much prefer one federal law to fifty state reform laws. Not only does it simplify the scrambling around, but the federal Congress is likely to be more sympathetic to this particular issue. Sixty years of state politics have saturated the various state legislatures with trial lawyers, building up a formidable example of conflict of interest. After all, since 1937 the legislatures have had comparatively little to occupy their attention except insurance. At one point, the Pennsylvania legislature found itself with the speaker, vice speaker, majority leader, and chairmen of both judicial committees all trial lawyers.

Bill Frist

And then there are personal circumstances of leadership. The U.S. Senate Majority Leader in 2005 was William Frist, M.D., a distinguished cardiac surgeon. Cardiac surgery is one of the specialties with the highest risk of a lawsuit, and the highest malpractice insurance premiums. His predecessor, Robert Dole, had been openly critical of the trial lawyers as a factor in Senate politics, an attitude that seems to come with the job. For balance, the 2004 President of the AMA, Donald Palmisano, M.D. was a lawyer.

Back of this line-up is the history that a cap on pain and suffering had been passed by the U.S. House of Representatives seven times in the last ten years (only to fail in the Senate), and most of the supporters are still in office. Proponents of tort reform, and opponents too, regard the matter as a foregone conclusion in the House. It's the Senate where it will be decided, requiring 60 votes to overcome a filibuster. Meanwhile, President George Bush, a notably vigorous political partisan, has announced early support. From the Republican point of view, trouncing the trial lawyers would be a delicious thing, but both sides must be wary of public annoyance at partisan behavior.

So, what about Constitutional issues? There really can be no argument about the jurisdiction for tort cases; they are tried in state courts, and no one proposes shifting to federal court. The Ninth and Tenth Amendments, plus two centuries of tradition place tort cases within state courts. The states have seemingly made a mess of the matter, but nevertheless, we are surely going to hear a lot about states rights when this matter comes up in the Senate. Justices Rehnquist and O'Connor have historically been strong advocates of states rights.

The strongest argument for a federal solution, in Congress or in the Supreme Court, lies in the discordance between states repeatedly imposed by individual state constitutions. In this area, the trial lawyer lobby might have over-reached. It can be terribly difficult to amend a state constitution, sometimes requiring super-majorities of both legislative houses in two successive years. When one faction achieves a brief but overwhelming dominance it can sometimes pass constitutional amendments that are very difficult to overturn even when the political climate significantly changes. The consequence: it is comparatively easy to pass tort reform laws in some states, next to impossible to do so in others. Add to that the matter of interpretation of these constitutions by state supreme courts that are often strongly partisan, and you can have a highly inequitable inter-state situation that is nearly impossible to change. One of the main functions of the U.S. Supreme Court is to settle conflicts between jurisdictions. When some states have firm limitations on non-economic awards, while other states effectively prohibit legislation on the subject, it is time to look at a national solution if we are to remain a single nation.

Originally published: Wednesday, June 21, 2006; most-recently modified: Sunday, July 21, 2019