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GAZETTE
JULY 1994
At the Annual Conference were, l-r: Ken Murphy, Chairman, Education Committee, Law
Society; Tom Shaw, Past-President,
Law Society and Patrick O 'Connor, Junior Vice-
President, Law Society.
proposals were based on the premise
that defendants' insurance companies
offered fast settlements, whereas, in
reality, insurance companies defended
cases - even ones that appeared to be
indefensible - to the hilt. The Board
also argued that the skill and stature of
the lawyer involved has some bearing
on a case, but under the Institute's
proposal, the more skillful lawyer, who
should be rewarded for being able to
resolve a matter quickly, would actually
receive a much smaller fee.
The American Association of Trial
Lawyers had also denounced the
proposal, adding that it was masquerad-
ing as a "pro consumer initiative". The
Association claimed the proposal did
not derive from complaints by injured
consumers about contingency fees but
rather, was the product of a few people
who called themselves "an institute" but
who neglected to mention that they
were funded by insurance, chemical,
pharmaceutical and tobacco companies.
Contingent fees had not led to a litiga-
tion explosion and independent studies
had confirmed that the only recent
growth in litigation in the US had been
in the area of contract and real property.
Analysing the debate, the former ABA
President said it was unlikely that there
would be any reform of the contingency
fees system for some time to come. In
his opinion it was important not to lose
sight of what the contingency fee
system stood for i.e. providing a
mechanism for someone without means
who was injured to file a suit for fair
compensation.
Medical Negligence Capping has not
worked in the US
Addressing the Conference Seminar, a
prominent US litigation specialist,
Robert Harley,
Harley & Browne, New
York said: "the argument in support of
caps in medical malpractice cases
parallels the argument for caps across
the board in all personal injury
litigation: the public will save money.
Mr. Harley told delegates that the
experience in America had been
otherwise:
"the truth is that the facts
are precisely to the contrary: the cost is
high and the savings to the public are
non-existent."
Robert Harley cited examples of States
in the US which had introduced caps on
awards in medical negligence cases. He
told delegates about the case of
Frank
Cornelius,
an employee in the insurance
industry in the State of Indiana, whose
job was to lobby the Indiana legislature
to impose caps on medical malpractice
cases. The Indiana legislature placed a
general cap of $500,000 on the
total
damages that could be awarded in a
medical negligence case. A few years
later, Frank Cornelius had a minor
operation performed on his knee. As a
result of what a court subsequently
found was medical negligence, he
suffered complications and diseases that
involved many hospitalisations and
operations. Although an economist
retained by his attornies evaluated his
economic loss at over $5m, his damages
under the law he had helped to enact
were limited to $500,000.
Meanwhile, between 1980 and 1990,
health care costs in Indiana had actually
increased
by 139.4%. Health care costs
in the United States in general in that
same period went up by 138.7%. There
had been no improvement in Indiana's
per capita health care costs. In return for
denying adequate recovery to the most
severely injured victims of medical
negligence, the citizens of Indiana had
gained nothing, stated Mr. Harley.
Mr. Harley's second example was the
State of Colorado which, in 1987,
passed a statute limiting total
compensation (including both economic
and non-economic loss) against the
State in a negligence case to $400,000
per
occurrence.
By 1992 this had
lowered the State of Colorado's casualty
insurance bill by a mere 9%. In 1987, in
the course of working on a State
highway, some State workers
accidentally set a boulder rolling which
fell on a bus; eight people were killed
and others injured. One survivor was
rendered blind and brain damaged and
by the date of the trial had expended
$328,000 in medical expenses. He had
to share with all of the other victims in
the $400,000 maximum compensation.
In 1975, the State of California passed a
$250,000 cap on pain and suffering
compensation awards in medical
malpractice cases in order to contain
health case costs. Since this statute was
passed, general inflation in the State of
California had gone up by 169% while
the cost of health care had increased by
286%. California's per capita health
care cost is 19% higher than the national
average.
Mr. Harley continued: "California's
lesson is the same as Indiana's and
Colorado's. Taking the right to just
compensation away from the very tiny
number of the most deserving accident
victims has had little or no effect on the
cost of the entire system."
Mr. Harley told the Conference that
constitutional challenges, alleging
violation of the State and Federal
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