Center for Justice & Democracy News Release
For Release CONTACT: Geoff Boehm, Joanne Doroshow
September 26, 2003 212/267-2801
Med Mal Insurer Dumping States with Severe “Tort Reforms”:
More Evidence that Caps Do Not Work
As further proof that lawsuit limits, such as caps, will not result in affordable insurance for
doctors, Farmers Insurance Group announced this week that it is pulling out of several states that
have had longstanding caps and tort reforms in place. In fact, Farmers, which is closing its
medical malpractice line, has most of its liability exposure in states that have had caps
and other severe “tort reforms” in place for years.
“If there was ever any doubt that tort reform will not solve doctors’ insurance problems, this
should remove all doubt. One-third of Farmer’s medical malpractice business is in California,
which has had a severe $250,000 cap on damages since the 1970s and is considered the ‘gold
standard’ by insurance companies and organized medicine. Farmers’ actions add to what has
become mounting evidence that capping damages will do nothing to keep insurers writing
affordable policies for doctors,” said Geoff Boehm, Legal Director of Center for Justice &
Democracy.
In addition to a $250,000 cap on non-economic damages that hasn’t been adjusted for inflation
since it was imposed 28 years ago, California also has limits on attorneys’ contingency fees,
reductions of awards for collateral sources, elimination of joint and several liability, and
periodic payments of future damages.
In fact, every one of the states where Farmers says it had more than 10% market share – Hawaii,
Idaho, Missouri and Oregon – have enacted numerous “tort reforms” and all four capped
damages in the 1980s. Oregon’s cap was found unconstitutional in 1994, after being on the
books for 7 years, but even Oregon has passed much of the tort reformers’ agenda by taking
away joint and several liability, reducing awards for collateral sources, and
limiting attorneys’ contingency fees in punitive damage cases.
Farmers’ pull-out of California comes shortly after the second largest med mal insurer in that
state, SCPIE, testified that caps and other extreme “tort reforms” do not work. In their
unsuccessful effort to get approval for a 15.6% rate hike, SCPIE testified: “While MICRA was
the legislature's attempt at remedying the medical malpractice crisis in California in 1975, it did
not substantially reduce the relative risk of medical malpractice insurance in California.”
“Lawmakers who want to improve the availability and affordability of insurance for
doctors will never succeed by taking away patients’ rights,” said Center for Justice & Democracy Executive
Director Joanne Doroshow. “The only way to help doctors is by more strongly regulating the
insurance industry.”
The following is the list of principal “tort reforms” enacted in states where Farmers has most
medical malpractice liability exposures: California: (1/3 of Farmers’ med mal premiums):
Cap on non-economic damages: 1975 Limits on contingency fees: 1975 Eliminated joint and several liability: 1986
Periodic payments of future damages: 1975 Repealed collateral source rule: 1975 Hawaii (Farmer’s largest market share--almost 24
percent):
Cap on pain & suffering damages: 1986
Limits on contingency fees: 1986
Restricted joint and several liability: 1986
Idaho (Over 10 percent of market):
Cap on non-economic damages, adjusted for
inflation: 1987; cap lowered in 2003.
Restricted joint and several liability: 1987
Periodic payments: 1987
Repealed collateral source rule: 1990
Missouri (Over 10 percent of market):
Cap on non-economic damages, adjusted for
inflation: 1986
Restricted joint and several liability: 1987
Repealed collateral source rule: 1987
Oregon (Over 10 percent of market):
Cap on non-economic damages: 1987, until ruled
unconstitutional in 1994
Limits on contingency fees in punitive damage
cases: 1995
Restricted joint and several liability: 1987;
further restricted in 1995
Repealed collateral source rule: 1987
Eliminated punitive damage awards against health
care providers: 1987