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Get Tort Reform Right

Monday, January 10, 2005; Page A16

PRESIDENT BUSH staged a series of events last week to highlight his hopes for legal reform. He is right that the staggering costs and irrationality of America's civil justice system are unacceptable. The tort system is something of a casino, offering windfall judgments to a small number of claimants and nothing to others -- with the merits of cases seeming almost irrelevant to their valuation. But it won't be easy to do reform properly. On one side, trial lawyers and their allies in the Democratic Party stand in the way; on the other, tort reform advocates often seem more interested in benefiting business than in making civil justice fairer and more predictable. The new Congress has three golden opportunities to improve the American litigation system. Seizing them will take a willingness to transcend old battle lines in the tort reform wars.

The first step is to finally pass a long-pending bill to rein in class-action lawsuits. Class actions can be important mechanisms for corporate accountability, but they are also ripe for abuse. Trial lawyers effectively invent their own clients and then bring claims in jurisdictions of their choice, extorting settlements that enrich them while giving coupons to "clients" who may not even have known they had lawyers. The bill would not solve the problem, but it would move more cases into federal court, where rules are tighter and consolidation of claims is easier. Opponents object that the bill would restrict the right to sue; this is nonsense. The only problem with this bill is that it takes so modest a step.

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A more difficult case is the president's push for damage caps in medical malpractice lawsuits. It's true that damage awards are partly responsible for soaring malpractice premiums that drive health costs up and doctors out of business. Unfortunately doctors' groups continue to resist efforts outside the tort system to address the serious problem of medical errors. They want relief from liability without greater disclosure or more aggressive disciplining of doctors. The goal should not be simply to impose a liability cap on all states but to encourage states to develop more constructive compensation mechanisms -- ones that would help victims predictably and quickly, limit physician liability, and encourage hospitals to reduce errors.

Finally, Congress is still struggling with the massive problem of asbestos litigation, which continues to bankrupt companies even as asbestos victims die miserable deaths in poverty. There is a consensus that asbestos compensation should be handled not in litigation but through a trust fund established by Congress and funded by the industries facing lawsuits. Though some business groups are having second thoughts, this remains the best approach. The trouble is that labor unions and industry cannot agree on the magnitude of the fund or on appropriate compensation levels for victims. Any fund must be sufficient to guarantee long-term solvency.

Senate Judiciary Committee Chairman Arlen Specter (R-Pa.) is holding a hearing on his latest efforts tomorrow. He would do the country an enormous service if he could finally guide the disparate interest groups to agreement and restore some rationality to the tragedy of asbestos.

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