Thursday, February 10, 2011

Tort Reform Versus the 10th Amendment

By Mike Dorf

Yesterday brought news that 16 freshmen members of Congress had declined federal health insurance.  I find their principled stand admirable, even though I disagree with the principle that they are standing up for.  The issue was nicely encapsulated in an NPR interview of one of the 16, Congressman Rich Nugent of Florida.  Robert Siegel asked Nugent whether the high price he had to pay in the individual insurance market wasn't simply a product of the fact that individuals lack the bargaining power of large collectives, such as the federal government.  Nugent held his ground, arguing that most of the cost difference between the Congressional policy and the private policy he could buy on the open market was the result of a taxpayer subsidy for the Congressional policy.  The actual cost savings that result from large pools, Nugent said, was relatively small.

Nugent is surely right about a big chunk of this.  The main driver for health insurance inflation is health care cost inflation, and so bargaining power can only do so much to rein that in.  But when asked about health insurance inflation, Nugent repeated the old saw that it is driven by defensive medicine practiced, and unnecessary tests ordered, by doctors who fear medical malpractice liability.  Studies vary on that too, but most show it to be only a moderate contributor to health care cost inflation.

Nonetheless, we can expect the GOP alternative to "Obamacare" to focus heavily on med-mal reform, in substantial part because that is one area where there appear to be substantial differences between Democrats and Republicans, and the narrative, however exaggerated and distorted, favors Republicans: Dems can be portrayed as in the pockets of greedy ambulance-chasing lawyers.

The major affirmative effort on med-mal now pending in the House would impose a variety of limits: caps on compensation for non-economic injury and punitive damages; a federally-imposed statute of limitations (the shorter of 3 years from manifestation of the injury or 1 year from the discovery of the injury); caps on attorney contingent fees; etc.  Overall, the package is relatively modest and thus may have a chance of picking up some Democratic support but also is unlikely to make a serious dent in medical malpractice liability, much less in health care cost inflation.  In a fascinating study some years ago, Cathy Sharkey showed that state-law caps on non-economic damages did not much reduce total med-mal awards: Instead, plaintiffs' lawyers pursued, and juries awarded, more money for economic damages.  So even if the pending legislation prompts a big fight, it is ultimately small potatoes.

But there's also an interesting intra-conservative fight potentially brewing here.  Medical malpractice lawsuits, after all, seek damages in tort, an area of law over which states have traditionally exercised sovereignty.  Folks like me, who think that Congress has broad latitude to regulate under the Commerce Clause, have no difficulty seeing the package of federal limits as constitutional, even if we don't think it's desirable policy.  But what about all of those self-styled patriots in tri-corner hats who go on incessantly about how the federal government is a government of enumerated powers and worry about the modern Commerce Clause jurisprudence making the feds omnipotent?  Shouldn't they be worried about this federal government takeover of state tort law?  You betcha.

Yet here is the predicate for federal authority recited by H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011:
Congress finds that the health care and insurance industries are industries affecting interstate commerce and the health care liability litigation systems existing throughout the United States are activities that affect interstate commerce by contributing to the high costs of health care and premiums for health care liability insurance purchased by health care system providers.
That rationale for regulation works under existing post-New Deal Supreme Court precedent, but the tea partiers tend to follow Justice Thomas in decrying the modern definition of Commerce.  They prefer understanding congressional power as referring to something more like "exchange."  And thus, sure enough, two Texas Republican Congressmen have expressed federalism-based doubts about the Health Act. "If the people of a particular state don’t want liability caps, that’s their prerogative under the 10th Amendment," said Congressman Ted Poe. 

The Politico story from which I have taken that quote shows that House Judiciary Chair Lamar Smith doesn't get it.  He dismisses Poe's concern as misguided because the Act would not prevent states like Texas from enforcing stricter caps if they have them.  But as Poe's quotation clearly states, he is not simply worried about the ability of Texas to enforce its law; he doubts federal power to impose substantive tort rules on any state.

So, just as I admire Nugent and the other Congressmen turning down federal health insurance on principle, I admire Poe (and fellow Texan Louie Gohmert) for sticking with their federalism principles.  I suspect they'll lose this fight, though.  When push comes to shove, most elected officials are fair-weather federalists.  They tend to invoke states' rights when they dislike the substance of federal policy and to forget about states' rights when they like the substance of federal policy.  But at least in the short run, it will be interesting to watch the intra-conservative debate on these and other issues.


Howard Wasserman said...

Not the assumption in Smith's response: There is no way a state would ever *reject* damages caps.

Michael C. Dorf said...

Howard, did you mean "Note" rather than "Not"? Otherwise I don't understand your comment.

egarber said...

There's also the idea of selling insurance across state lines, which Republicans have placed at the center of their preferred approach.

Since the proposal statutorily weakens state sovereignty over minimum quality standards, the same conflict seems to apply here as well, at least on a general level.

Howard Wasserman said...

Yes, I did mean "note"

Crispian said...

Quite right about so many elected officials being fair-weather federalists. The unfortunate result is that political opponents will use this inconsistency to paint the principle as a mere pretense. I don't think you go this far and I appreciate that.

I continue to not understand the zeal for the extension of federal power that you express - even if technically possible under precedent. The extension of federal power into state tort law should be easily recognized as not within the scope of the Constitution. As I wrote yesterday, must the 10th Amendment be entirely neutered? And what principle would limit federal power?

Michael C. Dorf said...


I think you may slightly misread me. I oppose this legislation both on the ground that I think it's bad tort policy (although not terribly so) and because I think there's no need for a uniform national tort standard, i.e., on federalism grounds. But I think it pretty clearly satisfies the Lopez test, and I'm okay with that test. I don't favor a stricter test for the courts to apply because I think it would inevitably devolve into mostly pointless formalism. But I also don't favor a weaker test because I think there is some value in saying that the courts will invalidate extreme overreaching by Congress. Mostly, though, I'm with the late Herb Wechsler in thinking that political safeguards do most of the work of protecting state interests.

Publius the Clown said...

You can count me among those who more or less sides with Justice Thomas on the Commerce Clause, with some stare decisis caveats. And I agree that the proposed federal tort legislation runs afoul of a federalist (which, I would say, is the most reasonable) interpretation of the Commerce Clause.

But we should keep political realities in mind. First of all, many legislators are not lawyers, and even those who are may not have engaged in any serious study of doctrinal constitutional law since their first years of law school. So they may not be able to recognize clearly when various principles apply. (Granted, given the prominence of the Commerce Clause in the news nowadays, some of them may have learned a thing or two.)

Second, and more importantly, the reality is that, if Republicans are going to repeal Obamacare, the electorate is going to want to see them put another comprehensive health care scheme in its place. And in order to do that, it's somewhat unlikely that they would be able to hew to a much narrower interpretation of the Commerce Clause in the process. A much narrower interpretation would likely leave many of the things that affect the national health insurance market outside the scope of congressional regulation.

In other words, the Republicans don't face a choice between enacting health legislation that likely exceeds the scope of Congress's commerce power, versus leaving most of the things that affect the health insurance market properly outside of Congress's regulation. Instead, their choice is between enacting good (in their view) legislation that probably exceeds Congress's power to replace bad (in their view) legislation that probably exceeds Congress power, versus leaving the bad legislation in place. It's obvious what a pragmatic legislator would choose--and most legislators are pragmatic.

Unknown said...

For essentially the same reasons, will someone explain how the federal ban on "partial birth abortion" is within the power of Congress?

gs said...

1. But what about all of those self-styled patriots in tri-corner hats who go on incessantly about how the federal government is a government of enumerated powers and worry about the modern Commerce Clause jurisprudence making the feds omnipotent?

With respect, if you're referring to the Tea Parties, you are too harsh. It is not yet clear if, and to what extent, they will ignore their limited-government principles once they have power.

2. On the other hand, if anything you are too lenient on the so-called Religious Right. Their federalization of the Terry Schiavo matter comes to mind.

3. (OT) It is also not yet clear whether the Religious Right will succeed in turning the Tea Parties into sock puppets.

Crispian said...

Professor Dorf,

Thank you for the reply. I did catch that you don't support a national tort standard, though I did miss the federalist rationale the first time. I don't dispute that the Lopez test can be read to include the mandate, tort reform, etc. My issue is not with the basic test, but the insistence that it must be applied so liberally.

I understand your argument, more thoroughly explained in the chapter on tort reform in your book "No Litmus Test." And as you wrote there, "[constitutionality] depends on how one describes the regulated activity."

My concern is that you and so many others are eager to describe an activity in a way so that it may be found constitutional. You would find federal authority to regulate state-provided legal remedies based on the fact that the underlying cause of action involves an ostensibly economic activity (medical malpractice).

You adopt the judicial hunch that political safeguards are sufficient and you dismiss constitutional limits on the Commerce Clause, except for specific prohibitions found elsewhere in the Constitution.

Lopez offered a word of caution (though intended to be a mere observation): "so long as Congress' authority is limited to those powers enumerated in the Constitution, and so long as those enumerated powers are interpreted as having judicially enforceable outer limits, congressional legislation under the Commerce Clause always will engender 'legal uncertainty.'"

There is very little sense of that legal uncertainty in academic/legal circles when it comes to the Commerce Clause. I obviously respect your view and I find it internally coherent. But I don't think coherency is the same as constitutionality. I think the dicta in Lopez points to the fundamental truth that the constitutional grants of power are inherently limited. That this idea isn't easily reduced to a formula does not make it less valid. My solution is not to find a weaker test, but merely to not read the test so expansively.

And why? Because I believe the Constitution created a government of inherently limited powers - a view supported by words of the Constitution itself. Because there is a difference between regulating the insurance industry and telling people to buy insurance. Because there is a difference between regulating medical malpractice and regulating state-provided legal remedies.

These are not mere symantic differences. They are substantive differences and history provides a great many reasons why they should be treated differently by the Constitution. It is against this background that I do not understand the eagerness to blur clear distinctions and put all hope in political, rather than constitutional, safeguards.

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