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.