Health Care Bill's 'Fine Print' May be Boon to Trial Lawyers

A small but important clause in the health care bill, which passed in the U.S. House of Representatives earlier this month, is a big boon to tort lawyers, said Insurance Information Institute President Robert Hartwig, who sounded the warning bell at an Ernst & Young conference.

Tort lawyers specialize in suing companies for mishaps such as slip and falls and workplace accidents, not to mention CEOs who tout their stock a bit too much. These companies then turn to their insurers for payback, which is why insurers don’t like tort lawyers.

Vice presidential nominee and attorney John Edwards and Los Angeles lawyer William Lerach, now in jail for paying kickbacks in securities fraud lawsuits, helped give tort lawyers a bad rep, resulting in Congress and the courts cracking down on this type of litigation, particularly during George W. Bush’s presidency.

But with the current crop of Democrats holding the majority in Congress that may change, since Democrats and tort lawyers tend to be closely allied, with lawyers among their biggest contributors.

So Hartwig has reason to suspect an ulterior motive in a provision of the health bill that creates incentive payments for states who adopt “alternatives” to medical liability litigation. The provision says that a state is not eligible for these incentive payments if it puts a law on the books limiting attorneys’ fees or imposing caps on damages.

A Wall Street Journal editorial claims that not limiting attorneys’ fees will stimulate “frivolous lawsuits.” Hartwig says that a “tort crisis,” similar to the one in the early 1990’s, could be on the horizon by 2012 to 2014 and affect not just health insurers, but property and casualty carriers as well.

While you don’t have to agree with Hartwig and the Wall Street Journal about the rapacity of lawyers, it’s obvious the health care bill doesn’t need this gratuitous addition to pass. And judging from the point of view of everyone but trial lawyers, it might be better to be omitted by the Senate and left for another day.