California voters approved a far-reaching law last week limiting damage awards for pain, suffering and other losses that cannot be measured in exact dollar amounts. The success of Proposition 51 has stimulated debate on proposals to ease the liability insurance crisis–the target of hundreds of bills in state legislatures.
The Reagan administration, which is promoting similar reforms in Congress, hailed the vote as ”a major step forward.” The National League of Cities called it ”a step towards limiting excessive damage claims” against local governments.
But consumer and lawyer groups complained that the new law would restrict a victim`s ability to recover damages for injuries. Don Wiener, director of Chicago`s Coalition for Consumer Rights, explained how it might affect parents whose child dies as a result of negligence by several parties:
”Say, for instance, one party is 10 percent liable while the other two parties are each 45 percent liable but have no insurance. In California the three are no longer jointly liable for all the pain and suffering caused by the loss of their child. The parents could recover only 10 percent of the jury`s total award.”
Generally in suits where more than one party is responsible for an injury, the victim can collect damages from any or all of them. But if some of the responsible parties cannot pay their share, then those only partly at fault may be forced to pay the entire amount of the court-awarded damages.
Damages compensate people for two types of losses: ”economic” for lost wages and medical costs; and ”non-economic” for pain, suffering and injury to reputation. The California measure affects only the rules governing who must pay for ”non-economic” damages.
The chief beneficiaries of this reform are city governments, hard hit by lawsuits and the rash of insurance policy cancellations and premium increases as high as 1,000 percent. California`s attorney general had argued that approval of Proposition 51 would result in substantial savings to state and local governments.
”Regardless of whether it is a city, county or private enterprise that is hit with huge `deep-pocket` court awards or out-of-court settlements,”
supporters declared, ”the taxpayer and consumer ultimately pay the costs through high taxes, increased costs of goods and services, and reduced governmental services.” This statement was signed by the presidents of the California Taxpayers` Association, the California State Parent-Teachers Association and the California Police Chiefs Association.
Opponents, however, condemned the measure as ”a fraud promoted by the insurance industry, chemical manufacturers and local government officials.”
The California Consumers Union pointed out that two states with similar laws
–Ohio and Kansas–are experiencing insurance crises.
Wiener of Chicago`s Coalition for Consumer Rights warns that changing the rules on joint liability could affect the cleanup of hazardous and toxic waste sites. ”Sometimes hundreds of companies have used a particular site and there is no way to determine who dumped what, when and how,” he says. ”It would take forever to figure this out.”
And if you can`t force big companies and the principal dumpers to pay, Wiener adds, the burden shifts to the taxpayer–or there`s no cleanup at all. The coalition supports Minnesota`s approach to joint liability: parties under 30 percent at fault could be required to pay no more than double this amount.
In Los Angeles, Robert Steinberg, the immediate past president of the California Trial Lawyers Association, insists that passage of Proposition 51 by a 62-38 percent vote was hardly a mandate for major reforms in liability law.
”It was really a Republican primary as there were no blood issues for Democrats,” Steinberg says. ”Sen. Alan Cranston (D., Calif.) had no opposition so there was nothing on top of the ticket to bring Democrats out. A lot of healthy conservative voters went to the polls. I`m not sure the 62-38 margin was reflective of the population as a whole.”
