From the pages of In Business magazine.
In a recent ibmadison.com blog post about Republicans’ efforts to derail Obamacare, I mentioned that our country has traditionally spent more on health care — by far — than any other industrialized country, while at the same time getting worse results. A commenter made an argument straight from GOP talking points: “Never once in the Obamacare debate did I hear anyone even suggest tort reform.”
Coincidentally, I had just watched a film that completely eviscerates the popular notion that so-called “jackpot justice” — which supposedly drives up malpractice insurance rates and, consequently, everyone’s health care bills — is the real fly in the ointment of our health care system.
Titled Hot Coffee, the movie revisits the famous McDonald’s coffee lawsuit, which became something of a national joke and a cause célèbre among would-be tort reformers across the country.
The film is a brilliant illustration of the maxim that it ain’t what you don’t know that gets you into trouble — it’s what you know for sure that just ain’t so.
While the consensus among most levelheaded Americans has been that the lawsuit’s outcome was a gross injustice that symbolizes everything that’s wrong with our judicial system — which all too often handsomely rewards people for their own carelessness and stupidity — Hot Coffee tells a radically different story.
In a series of clever man-on-the-street interviews, the filmmakers showed people’s reactions as they learned the little-publicized details about the “hot coffee” incident.
The full details are available at hotcoffeethemovie.com, but here’s a short summary:
The plaintiff, a 79-year-old woman, received third-degree burns over 16% of her body, which led to hospitalization, skin grafting, and disability for more than two years. That was startling enough. But it was the gruesome photos of the woman’s injuries that really caught people’s attention — and almost instantly changed their minds.
Of course, many people would say, “So what? No matter how badly she was injured, she still spilled the coffee on herself. She needed to take personal responsibility for her actions.”
Well, sure, but as the filmmakers pointed out, McDonald’s own operations manual required its franchisees to keep their coffee at 180 to 190 degrees, and coffee at that temperature is known to cause third-degree burns in three to seven seconds. What’s more, McDonald’s admitted that it had known about the risk of scalding from its coffee for more than 10 years, and 700 people had been burned by the restaurant’s coffee between 1982 and 1992. In addition, “McDonald’s admitted that it did not warn customers of the nature and extent of this risk and could offer no explanation as to why it did not.”
The film also recounts the story of Colin Gourley, a young man who was born with severe brain damage as a result of medical malpractice. His family sued and was awarded $5.65 million, but because of a Nebraska law that capped damages, their award was reduced to $1.25 million, which isn’t nearly enough to cover a lifetime of Gourley’s care.
So there’s real harm in placing hard caps on damages. As the McDonald’s case illustrates, the threat of civil action is often the only thing holding companies’ feet to the fire, and capped damage awards are likely to be written off as the price of doing business.
Meanwhile, the Gourley case shows that ordinary people who have been harmed suffer extreme hardship when they can’t pay for the care of loved ones.
(Continued)
So what about the benefits of reform? Those are considerably harder to find. One study, led by University of Texas at Austin professor Charles Silver, found that a Texas constitutional amendment that capped payouts in medical malpractice cases in 2003 did nothing to bend down the health care cost curve. In fact, the researchers said they found some evidence that physician spending actually increased slightly in comparison to control states.
So what about tort reform? I go back to this fact: The U.S. has traditionally spent more per capita on health care — by a long shot — than any other industrialized country, and unlike all those other countries, we’ve failed to insure all our citizens.
That’s a problem, but I seriously doubt that tort reform can address it. Seems to me that the fault lies more with our health care system than with our judicial system.
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