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Tort reform does not work because companies simply cannot be trusted to act responsibly!

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James E. Ballidis
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Tort reform does not work.  Read this analysis and see if you  agree.

The national debate continues: do we limit the right to bring a lawsuit when companies and insurers do the wrong thing?  I recently wrote of several “tort reform” failures that exist in our midst.  Here is a fresh look at one of the most powerful tort reform failures we currently endure.

In a well-presented article in the Los Angeles Times by Lisa Girion, mother Hilda Sarkisyan had to bury her daughter Nataline because CIGNA refused to authorize a kidney transplant.  At 17, Nataline died when Cigna, without even discussing or investigating the recommendations of Nataline’s UCLA doctors, denied coverage as experimental. “Experimental” in the experience of this California personal injury attorney is usually just another word for “we don’t want to pay for it.”  
In a lawsuit filed by the family for wrongful death, a judge properly ruled that the CIGNA process of denial cannot be reviewed or challenged after the death of Nataline.  ERISA, the Employee is Retirement Income Security Act, prohibits lawsuits for economic damages, even if the denial of service was purposefully negligent or wrongful, egregious or arbitrary.  The only lawsuit that can be brought is for a review of the denial and reinstitution of medical treatment, if the patient is still alive.  Of course, most of the time, it is too late for the patient.  Nataline died nine days after the request.  There is no provision for lawyer fees, and judicial review takes a long time, so cases are rarely brought.

My experience as a personal injury lawyer of 25 years, dealing with many seriously injured client insurers, is that in serious injury and medically complicated cases, almost all insurance companies routinely deny first requests for expensive procedures, without any consultation or discussion with the treating doctors.   Time and again we see a denial without even an explanation, other than “experimental,” “inadequately documented,” or “not medically necessary.”  Remember, the treating doctor is the best and most suited to make medical decisions, and his or her opinion should be paramount.  Instead, the insurer employs some hatchet man to review these requests, and keep the purse strings closed.  Almost always, our office is dealing with a decision maker that has no training in medicine or on a few occasions an employed nurse. 

ERISA is tort reform!  In order to give incentives to insurance companies to offer insurance nationally, the industry demanded concessions, and one concession was to limit lawsuits for improper denial of benefits.  In exchange, insurance companies “promised” to set up review procedures, and to treat patients fairly.  They agreed to administrative procedures built into the law to avoid litigation and the all-terrible lawyer.

These are the same promises we receive from all those who claim tort reform is the answer to the expense of insurance today.  Relying on companies to do the right thing simply doesn't work. Even insiders agree that without consequences, insurers are not going to act responsibly.  Wendell Potter, a CIGNA spokesperson, left CIGNA’s employ after addressing the publicity surrounding this case.  He is quoted by Ms. Girion: “HMO’s and insurers are largely free to deny access to care without fear of reprisal and financial consequences.”

Tort reform promises a fair administrative process to protect the public from big business. Unfortunately, the public needs lawyers and the weapon of financial consequences to make sure insurance companies act in the best interests of those they serve.

California first party auto insurance (dealing with your insurance company in an auto accident) is an example of a system that has worked properly.  In the early 80’s, first party insurance companies did little to treat their insured fairly when handling cases. Lawsuits were brought, and a number of large verdicts were entered for egregious and unfair conduct.  Eventually, insurance companies cleaned up their act.  As an auto accident attorney, we rarely see misconduct in the investigation and negotiation of first party insurance benefits now, because the companies were held accountable and profit is their motivation.  We still have the tool of California first party insurance bad faith, but claims and filings are almost non-existent compared to the 80’s. 

Nataline’s death is an unacceptable byproduct of tort reform. Until we recognize the immutable truth that businesses will act in their financial interest over that of the public no matter how much we want to believe otherwise, your fate and mine will be inexorably tied to that of Nataline, a roll of the dice, and the luck that it is someone else and not me or my family who is at the Dr. office.

Just say no to tort reform.  Let capitalism thrive by making sure that those who did not act responsibly suffer the financial consequence of a lawsuit against them.

As a final note, why was this article in the Times so interesting?  Even though CIGNA killed this woman’s child, they insulted her when she complained at their home office by heckling and finger flipping.  Correctly, this is not a matter for ERISA.  We expect everyone in society to act responsibly, and this type of conduct allows her to bring a lawsuit.  Isn’t it strange that we protect Nataline’s mom from humiliation and emotional distress, but do not allow Nataline her life?  We can live without tort reform.

Category: Car Accidents

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