TESTIMONY OF DONALD A. CAMINITI

PRESIDENT
THE ASSOCIATION OF TRIAL LAWYERS OF AMERICA -

NEW JERSEY CHAPTER

Before the Assembly Insurance Committee

February 23, 1995
On S-1493, S-1494 and S-1496

INTRODUCTION

This fall, New Jerseyans voted for less government, lower taxes and more personal responsibility. These values are embodied in our civil justice system, where ordinary citizens are empowered to hold wrongdoers accountable and demand positive change.

The civil justice system serves the very important function of enabling citizens and businesses to resolve grievances before an impartial judge and jury. The package of bills approved by the Senate which makes changes to our system of tort law is not as drastic or draconian as earlier proposals; however, it nonetheless tips the balance in favor of wrongdoers without offering any additional protection to New Jersey consumers. These bills not only make it more difficult for individuals and businesses to have their day in court, but also reduce the accountability of those who do harm.

The only real common ground in the lengthy debate over changes to our tort law has been that frivolous lawsuits should be eliminated. The New Jersey Supreme Court has agreed, at the request of Governor's Counsel, the review the scope of this issue to determine whether in fact such a problem exists and, if so, to make any necessary changes to current Court Rules.

I. ATLA-NJ OPPOSES S-1493, WHICH REQUIRES A CERTIFICATE OF MERIT IN LAWSUITS AGAINST ANY PERSON IN A LICENSED VOCATION.

It has been alleged that medical malpractice reform is necessary because the present system increases the cost of health care and imposes an unfair burden upon practicing physicians. The facts however do not bear out the allegation. According to a Harvard Medical Practice Study (Patients, Doctors and Lawyers: Medical Injury, Malpractice Litigation, and Patient Compensation in New York (1990)) extrapolated nationally, 80,000 Americans die in hospitals every year as a result of the negligence of their health care providers and astonishingly, more than 300,000 Americans are severely injured due to medical negligence. Medical negligence is the third leading cause of preventable death in the United States, behind only tobacco and alcohol related deaths. Notwithstanding those dramatic statistics, only about 2 percent of those injured by physicians' negligence ever seek compensation through the legal process.

A 15 year review of malpractice awards in New Jersey was published in the prestigious Annals of Internal Medicine. That study (The Influence of Standard of Care and Severity of Injury on the Resolution of Medical Malpractice Claims (1992)) was based upon data obtained from the New Jersey Medical Inter-Insurance Exchange, the largest physician owned medical malpractice insurance company in this state. Its results are instructive. The study concluded not only that unjustified payments were uncommon but, perhaps more interesting to this discussion concerning an affidavit of merit, the study found that most cases settled early in the process and that payment was made in only six percent of cases that were arguably defensible. Payment was made in 69 percent of the cases where the standard of physician care was deemed unclear, and in 93 percent of the cases which the carrier itself classified as "indefensible". These statistics do not demonstrate a problem of frivolous medical malpractice lawsuits which must be rooted from the system early on in the process.

In light of the above, one might reasonably conclude that hearings before the Senate Commerce Committee focused upon how preventable injury resulting from medical malpractice could be eliminated, and not upon whether or not a certificate of merit is necessary. Amazingly, however, that issue was not even discussed. Rather, the certificate of merit was expanded, without explanation, to include all 44 licensed vocations in this state including, for example, acupuncturists, collection agents, hair stylists, manicurists, pawn brokers, etc. Quite simply, there is no rational basis for requiring a certificate for any of these vocations, and to do so would accomplish nothing more than to increase the cost and complicate the procedure for injured persons who seek reasonable compensation for harm caused by others.

The bill is further flawed by imposing strict qualifications upon the author of the certificate of merit. Malpractice attorneys on both sides know that it is very difficult for an injured patient to find a physician who is willing to testify as an expert against another physician. These additional qualifications will unquestionably preclude some injured patients from pursuing a legitimate medical malpractice claim without advancing any reasonable public policy.

The qualifications' requirement is also most probably unconstitutional. More than 45 years ago our Supreme Court held that the State Constitution delegates all rule-making power over the practice, procedure and administration of the courts to the Supreme Court. Winberry v. Salisbury, 5 N.J. 240 (1950). Current New Jersey Court Rules, Rules of Evidence and long standing common law have established criteria for the acceptance of expert testimony. The criteria is fair and impartial. It protects the rights of all litigants.

S1493 is ill advised, unconstitutional and will result in more litigation, as parties challenge its constitutional infirmities and struggle over its definition of expert, as applied to the many vocations encompassed by this proposed legislation. Medical malpractice reform should focus on the elimination of preventable injury and death; not on the elimination of meritorious lawsuits.

II. ATLA-NJ OPPOSES S-1494, WHICH FURTHER MODIFIES JOINT AND SEVERAL LIABILITY.

Despite the rhetoric that a wrongdoer should not be required to fully compensate an injured person when that wrongdoer is only minimally at fault, the law in this state has not imposed pure joint and several liability since 1987. Under legislation passed in that year, a wrongdoer does not pay more than its share of non-economic loss unless it is first found to be more than 60 percent at fault for an injury. A wrongdoer must be at least 20 percent at fault before being liable for the entire economic loss of an injured consumer. N.J.S. 2A:155.2.

This law should not be modified because there has been absolutely no empirical data to demonstrate a need for further change. Without question, the prior change in the law made it more difficult for an injured consumer to recover his or her full measure of damages. Those who advocate further change should be required to demonstrate empirically that business has significantly benefited or that insurance costs to motorists and other individuals have been reduced to an extent that justifies a further erosion of the rights of the innocent injured. Several months ago, at the Governor's counsel's roundtable, corporate participants were asked to submit such data. Today, many months later, that data still has not been provided.

Some argue that it is unfair to have a wrongdoer pay more than his or its "fair share". And, in the hierarchy of those required to pay, we can all agree that wrongdoers should pay first according to their percentage of fault. However, if that payment proves inadequate, it is far more fair to have other wrongdoers pay compensation, even beyond their share, than it is to have that burden fall upon an injured person or upon the state.

Joint and several liability reflects the first purpose of tort law — compensation of persons injured as a result of the carelessness of others. Within the parameters of our state law, joint and several liability provides full non-economic loss compensation to an injured person if a wrongdoer is 60 percent or more at fault, and full economic loss compensation if a wrongdoer is 20 percent or more at fault. It then removes the injured party from the system and permits the wrongdoers who have been found to have caused the injury to properly apportion damages among themselves. The liable defendant may seek contribution or indemnity from the others who have contributed to the injury. Pure and simply, joint and several liability makes the value judgment that the burden and cost of apportioning damages should be placed on those who caused the harm and not on the individual who suffered the harm or upon the taxpayer.

Frankly, in some instances, inequity is unavoidable. Either the innocent injured shall be made to suffer twice (once by being injured and once by receiving less than adequate compensation for that injury) or one or more of the wrongdoers who have caused the injury will pay beyond what might have otherwise been their share. I submit that out of these two results, joint and several liability, even modified as it is in our state, makes the only fair choice.

Take as an example two motor vehicles involved in a crash which was caused because one driver made an illegal turn on red and the other was driving while drunk and speeding. The turning driver jumps over the curb and onto the sidewalk where he seriously and permanently injures a child. Assume the drunk driver is found to have been 60 percent at fault and the turning driver 40 percent at fault and that the turning driver is either uninsured or only minimally insured. In either event, that insurance is inadequate to compensate the child for her injuries. If you want to pass legislation to protect the drunk driver at the expense of the child — have him pay only "his fair share" — then vote favorably on S1494. If you agree however that sound public policy demands that innocent injured women, men and children should be fairly compensated, and that this law should not be further modified unless the proponents can demonstrate that insurers, businesses and ultimately consumers have significantly benefited from the 1987 changes to joint and several liability, then vote no on S1494.

S-1494 in many instances will not save costs but rather will shift the cost to unsuspecting taxpayers. Take again the above example. Assume the injured child is in need of lifelong care, is unable to work as a productive member of society or is uneducable. If the wrongdoer is protected from having to fully compensate those losses, that child will become dependent upon this state's social services, all of which are funded by the tax dollars of your constituents.

III. ATLA-NJ OPPOSES S-1496, WHICH ENHANCES THE STANDARD OF PROOF FOR THE AWARD OF PUNITIVE DAMAGES.

S-1496 is unnecessary because it seeks to reform the mistaken perception that the frequency and level of punitive damage awards are out of control. This myth derives from the media attention and publicity which punitive damage awards often generate. Yet the reality about punitive damage awards is that they have been exceedingly rare nationwide and even rarer in New Jersey. Furthermore, punitive damages are available in only the most egregious cases of misconduct and are always subject to judicial review.

According from information obtained from New Jersey Verdict & Review, less that 10 such awards have been awarded in New Jersey product liability or toxic tort cases since 1980. That is fewer than one per year. And, several of those awards have been reversed, reduced or settled on appeal.

In determining whether to award punitive damages, our Supreme Court has established fair and reasonable standards. It has ruled that the trier of fact must consider the seriousness of the hazard to the public; the degree of the wrongdoer's awareness of the hazard; the duration of the improper marketing behavior and its cover-up; the wrongdoer's attitude and conduct after discovery of the misconduct; and the wrongdoer's reason for failing to act. All punitive damages cases are bifurcated, and the wrongdoer is permitted to introduce evidence of prior punitive damage awards in order to convince a jury that it has been sufficiently punished. Moreover, our courts permit evidence of the wrongdoer's financial status to show the likely effect of such an award. Fischer v. Johns-Manville Corp., 103 N.J. 643 (1986).

S-1496 is simply not necessary to stem some "explosion" of punitive damage awards. Nationally, a study which the United States Supreme Court termed "the most exhaustive study" of all federal and state court product liability awards displays the rarity of punitive damage awards. Honda Motor Co., Ltd v. Oberg, 114 S.Ct. 2331, 2341, n. 11 (1994). That study, entitled In Defense of Punitive Damages in Products Liability: Testing Tort Anecdotes with Empirical Data, 78 IOWA L. REV. 1 (1992), by Professor Rustad of the Suffolk University Law School, uncovered just 355 punitive awards in products liability cases between 1965 and 1990. Excluding the 91 asbestos cases (26%) there were an average of only 11 such awards each year in the entire country. Furthermore, over half of the punitive damages awards in this study were either compromised in settlement negotiations or were reduced or reversed by an appellate court. A wrongdoer who has not behaved outrageously has nothing to fear from punitive damages.

Given this infrequency, one might expect that punitive damages have not been an effective deterrent to improving product safety. Yet the occasional punitive damage awards and the more important threat of them have made New Jersey consumers safer. The Rustad study revealed that more than 75 percent of the non-asbestos defendants subject to punitive damage awards between 1965 and 1990 took some sort of post-litigation step toward making their products safe, usually in the form of fortified warnings, product withdrawals or added safety features. Similarly, a manufacturer of children's pajamas, the fabric of which was 100 percent untreated cotton flannelette, stopped making the highly flammable garment in 1980 only after a Minnesota jury ordered the company to pay $1 million in punitive damages to a 4-year girl who had been badly burned when her pajama top caught fire.

Punitive damages have also ensured healthier lives for women. The A.H. Robins Company did not voluntarily offer to compensate the thousands of women injured by the Dalkon Shield. Such compensation came only after a punitive damage award. Playtex only removed from the market tampons linked to toxic shock syndrome (TSS), strengthened its warnings on other products about the association between tampons and TSS, and started an awareness program to alert the public about the dangers of TSS after a federal court awarded $10 million in punitive damages to the family of a woman who died from TSS.

Punitive damage awards serve a vital role in deterring such wrongful conduct, even though they are exceedingly rare. There is no reason to enhance the standard of proof or to cap damages in such cases. To do either would vastly undercut the ability of the civil justice system to deter abhorrent conduct by the worst of wrongdoers.

Finally, it has been suggested recently by some that, in punitive damages cases, the entire punitive award should go to the state. That logic is misguided. Make no mistake about it, if that standard were adopted, virtually all punitive damage awards would be eliminated. No reasonable injured person would risk loosing an offer of compensatory damages and incur the cost and stress of two trials if the entire punitive damage award will be paid to someone else. No sensible attorney would advise a client to proceed in the face of such a risk. An injured consumer must have a reasonable economic incentive to pursue a punitive damage claim. Without that reasonable incentive, the supporters of this legislation will have achieved their unspoken goal — the elimination of punitive damage awards.

I urge you to vote no on S-1496. Do not give corporate wrongdoers unwarranted privilege from the horrendous consequences of their wilful and wanton conduct at the expense of New Jersey Consumers.

CONCLUSION

The legislation before you (S1493, S1494 and S1496) represents a bold attempt by wrongdoers to obtain unwarranted privilege from the consequence of the harm they cause. It is not in the best interests of the consumers of this State. Accordingly, I strongly urge the members of this committee to reject these bills.