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[Congressional Record Volume 141, Number 70 (Monday, May 1, 1995)]
[Senate]
[Pages S5857-S5859]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                     MEDICAL MALPRACTICE AMENDMENT

  Mr. KYL. Mr. President, I would like to address for a few minutes the 
legislation which will be pending very shortly today, and specifically 
the amendment relating to medical malpractice that is before Members.
  I speak, of course, of the legislation to reform our product 
liability tort system and the amendment which would also reform the 
medical malpractice component of that civil tort litigation system.
  Some have said that we have, in effect, a tort tax in this country, a 
tax on all citizens by virtue of the increased costs of the products 
and the services, and in particular, I am speaking of medical services, 
that result from the fact that our tort system has become very 
expensive.
  The costs of operating that system have had to be folded into the 
costs of the products and the costs of the services in order to pay for 
the liability insurance, the lawyers' fees and the other expenses that 
fund this tort system of ours. That tort tax ends up being a tax on all 
Americans.
  [[Page S5858]] In the Los Angeles Times, Thursday, April 27, Majority 
Leader Bob Dole wrote an article, and it was published on this date, 
the title of which is ``Ignore the Lawyers, Help the People.''
  Mr. President, I ask unanimous consent that this article be printed 
at the conclusion of my remarks this morning.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. KYL. Mr. President, in this article, the majority leader, I 
think, makes a very powerful point; among them, points that are in 
support of the amendment that is currently pending before the Senate, 
which I offered on Thursday afternoon, an amendment which would put 
some reasonable caps on attorney's fees.
  As the majority leader notes in this article, the people who suffer 
the most from our current litigation system are, as he puts it, the 
little guy. He quotes a survey from the National Federation of 
Independent Business in a couple of States, Texas and Tennessee, which 
found that one-third to one-half of small businesses have been either 
sued or been threatened with suit to punitive damages.
  Because of this kind of lawsuit abuse, the majority leader notes that 
the Girl Scout Council, for example, in Washington, must sell 87,000 
boxes of cookies each year just to pay for liability insurance. The 
average Little League's liability insurance jumped 1,000 percent in a 
recent 5-year period.
  Just a couple of examples of the fact that we are all paying the 
costs of this litigation system, the tort taxes, if you will.
  If you are a woman and you need to go see your OB/GYN on January 2, 
be aware that on January 1, before that physician can even open the 
doors to see anyone, that physician is going to be paying medical 
malpractice premiums of probably a minimum of $30,000 and in many cases 
far more than that.
  Neurosurgeons are up in the $60-$70,000 range or higher. In other 
words, before most physicians can even begin to treat us, at the 
beginning of the year, they have had to shell out in medical 
malpractice premium costs more money than most Americans make in a 
year.
  The cost of those premiums is--just as the cost of the liability 
insurance premiums paid for by the Girl Scouts or the Boy Scouts or 
other organizations--the cost of those premiums is borne by everyone of 
us in the products that we buy, in the services that we receive.
  The majority leader goes on to point out in this article that there 
are three myths, all of which get to the basic point that the person 
who suffers is the little guy, as he noted. And the persons who make 
out in this litigation lottery are the lawyers. I must say at the 
outset, I practiced law for 20 years and I have a deep and abiding 
respect both for my fellow lawyers and for our legal system. But in the 
past, where there have been changes that have required action to 
compensate, where it has gotten out of balance, the legal profession 
has been pretty well able to restore balance to the system. That has 
not been possible with respect to this litigation lottery. You have a 
large group of lawyers who make their living by charging contingency 
fees to clients and then recovering very large--sometimes enormously 
large--sums of money as a result of the cases that they settle or that 
they bring to trial.
  One of the myths that the majority leader notes is that the trial 
lawyers protect the consumers. But the fact of the matter is that over 
half of the money recovered by the plaintiffs in these cases goes to 
the lawyers. As a matter of fact, let me cite--this is not just one or 
two studies. There are several different studies that make this point. 
For example, one of the studies was done by the Department of Commerce 
just last year, a 1994 study, which stated that 40 cents of each dollar 
expended in litigation is paid in attorney's fees.
  On a recent edition of ABC's ``20/20,'' John Stossel reported that 
some trial lawyers are earning contingency fees that pay them the 
equivalent of $300,000 an hour. Think of that, Mr. President, $300,000 
an hour. So this is not a matter of lawyers being properly compensated 
for taking cases. This is literally a matter of hitting the jackpot. It 
is not plaintiff who hits the jackpot, it is plaintiff's lawyer.
  A 1994 study by the Hudson Institute found that 50 cents out of each 
litigation dollar went to attorney's fees. That, by the way, was 
reported on in the June 1994 article in the Wall Street Journal.
  A study of the Rand Corporation also found that 50 cents out of each 
liability dollar goes to lawyers and transaction costs, rather than to 
injured victims. There are others.
  The point I am making here is that study after study after study has 
made the point that about half of all of the recoveries go to the 
lawyers. That is not fair to the victims. That is not fair to the 
plaintiffs. And what the amendment which I have offered and is 
currently pending before us will do is to ensure that the victim, the 
claimant, plaintiff recovers his or her fair share of whatever recovery 
is obtained. Effectively, that means something in the order of 75 
percent of it. I think most Americans would find it astonishing that we 
would even be having a debate about whether or not the person who is 
injured, who actually suffers, should be receiving on the order of 75 
percent of what the jury has awarded to that individual. Yet that is 
what this is all about. Our amendment simply limits the attorney's fees 
to approximately 25 percent of the recovery.
  I also note, when we talk about this first myth that the majority 
leader noted that the trial lawyers are just protecting consumers, one 
other example of the costs that get passed on. The American Tort Reform 
Association notes that half of the cost of a $200 football helmet goes 
to lawsuit-driven liability insurance. This is just one example of 
products in our society which have been the subject of these suits and 
which, therefore, are either not on the market or are on the market at 
a greatly increased cost, simply because of the litigation lottery.
  Myth No. 2, trial lawyers protect workers and the poor. But as the 
majority leader notes in his article, the current system victimizes no 
group more than the working poor and disadvantaged. Lawsuits add a 
$1,200 litigation tax on every consumer in America. That is the cost we 
are all paying as a result of this litigation lottery. The trial 
lawyers, through contingency fees, as I said, can effectively earn 
$300,000 an hour in some cases. So I do not think it is true to say 
that trial lawyers protect workers, just workers and the poor.
  Myth No. 3 that the majority leader points out is that the trial 
lawyers are the champions of safety; if they did not bring these 
lawsuits that, somehow, very dangerous products would still be on the 
market. There is some truth to the fact that high profile cases have 
helped to remove unsafe products from the market. But that exception to 
the rule should not be the basis for this lottery, this jackpot which 
results when people find they can recover astronomical sums for some 
perceived damage. It often, in fact, makes our lives less safe rather 
than more safe. One only has to look at the drugs that do not reach the 
market because the pharmaceutical companies are afraid if they produce 
some new drug without 30 years of testing on people that somebody might 
have an adverse reaction to it, sue the drug manufacturer, and make 
millions in punitive damages.
  It is not just drugs. It is also designs of all kinds of new products 
which manufacturers have said over and over again they are reluctant to 
change because, if they do, there will then be the inevitable lawsuit 
that that change resulted in some harm to someone as a result of which 
there will be a new lawsuit.
  All three myths, I think, need to be exploded. The bottom line of all 
three, as I said in the beginning, is that the lawyers are using this 
process not so much to create safety or protect the little guy--the 
little guy is the person who is actually hurt--but rather to earn a 
living which is far beyond what is necessary to protect the public. And 
that then gets to the amendment I have introduced and that is before us 
right now.
  Very briefly, my amendment will be actually criticized as being too 
generous to the trial lawyers because we start with the premise that 
the underlying legislation, the McConnell-Kassebaum-Lieberman 
amendment, already 
[[Page S5859]] provides for lawyer's fees for the economic damages 
suffered. So a lawyer can recover either 33 percent of the first 
$150,000 and 25 percent of everything thereafter with no limit for the 
economic damages. So you can have a very large attorney fee just for 
the economic damage component of a lawsuit.
  Then you have the noneconomic damage component. This is the pain and 
suffering that is supposed to go to the person who suffered the pain 
and suffering. All we say in my amendment is that the lawyer would be 
entitled to no more than 25 percent of the first $250,000 of that pain 
and suffering. So that is an additional up to $60,000-plus in 
attorney's fees for the pain and suffering component of the suit.
  Then, if it is a suit in which punitive damages are sought and the 
lawyer believes that he should be entitled to a percentage of that as 
well, he may petition the court to have a percentage of the punitive 
damage award. The court would have to make that award based on what is 
reasonable and ethical. It should be based upon the amount of time the 
attorney put in; 25 percent would be presumed to be a reasonable fee 
but all of this is up to the court.
  So you see, this is a limitation but it is a limitation which will 
enable attorneys to receive multithousands and tens of thousands and 
even hundreds of thousands of dollars in fees for the kind of case that 
would warrant it. So there is no question there would be an incentive 
for anybody who has a claim--be it a little claim or a larger claim--to 
have that case brought to trial because a lawyer would have an 
incentive to do so. But what it provides is a cap so the lawyer does 
not have a lottery here, so the lawyer does not have an incentive to 
bring these cases just to see if that lawyer can hit the jackpot and 
earn literally hundreds and hundreds of thousands of dollars or 
millions of dollars in attorney's fees when we think that money should 
go to the plaintiff or the claimant, the victim in the case. That is 
what it is all about. We are going to be voting on that shortly after 
11 o'clock tomorrow morning.
  I just urge all of my colleagues to view this issue in the light of 
what is best for the claimant, for the plaintiff, the injured party, 
and to view it in the light of what is best for the American people, 
who are paying a very large sum of money so that a lot of lawyers can 
get very rich. As I say, some people criticize this as not being tough 
enough on the lawyers. That is not what we are here for. We are not 
here to bash lawyers, but to put a cap on the big bonanza kind of 
recovery that we have all been reading about.
  Finally, I want to take a minute to say that at shortly after noon, I 
will be offering a second amendment. This is an amendment which will 
put a cap on the noneconomic damages--so-called pain and suffering--in 
these medical malpractice cases. It will put a cap of $500,000 on these 
medical malpractice cases.
  A lot of our colleagues have said the cap discussed earlier--a 
quarter of a million dollars--is just not quite big enough for that 
really exceptional case. In response to that, I think a lot of people 
have said, ``OK. We will provide for up to half a million dollars.'' 
Bear in mind that this is after the economic damages--after all of the 
bills have been paid, after all of the economic losses have been 
accounted for--there is the pain and suffering part of it. It does not 
relate to the punitive damages. There will be a different kind of 
treatment for that. This is just to say with respect to that 
noneconomic damage component, there will be a cap of half a million 
dollars.
  So I will be proposing that amendment and asking support from my 
colleagues for that amendment, as well.
  Mr. President, I yield the floor.
                               Exhibit 1

               [From the Los Angeles Times, Apr. 27, 1995

                  Ignore the Lawyers, Help the People

                             (By Bob Dole)

       During the current Senate debate over legal reform, you 
     will hear from the trial lawyers and their allies that legal 
     reform is nothing more than a boost to big business.
       But the facts suggest otherwise. Who is hurt by lawsuit 
     abuse? It's the little guy, according to recent surveys by 
     the National Federation of Independent Businesses in Texas 
     and Tennessee, which found that one-third to one-half of 
     small businesses have been sued or been threatened with suit 
     for punitive damages. Because of this kind of lawsuit abuse, 
     the Washington-area Girl Scout council must sell 87,000 boxes 
     of cookies each year just to pay for liability insurance, and 
     the average local Little League's liability insurance jumped 
     1,000% in a recent five-year period. These are just a few 
     examples of a problem that is big and getting bigger.
       Who profits from lawsuit abuse? The trial lawyers.
       As the Senate considers legislation to reform lawsuit 
     abuses, the buzzing sound you hear is the trial lawyers 
     swarming to the defense of their hive of honey: The lawsuit 
     lottery.
       This picture, needless to say, is not the one trial lawyers 
     would paint. According to them, they are the best (perhaps 
     only) friends of the poor, consumers and women. They have one 
     of the most effective public-relations efforts going. It is a 
     costly exercise, characterized by millions in contributions 
     to politicians and judges. Now they are mounting a $20-
     million campaign to stop lawsuit reform in the U.S. Senate.
       Why? Lost in the fog of propaganda is a fact well-
     understood by most Americans: Our legal system costs too much 
     for everybody (except the trial lawyers) and has turned into 
     a lottery where even the threat of outrageous damages with 
     little or no connection to fault extorts money and time from 
     charitable organizations, small businesses, blood banks and 
     volunteer groups. But, like any effective gambling operation, 
     the house always wins. And the house in this case is the 
     trial lawyers and the system they so ardently defend.
       We need a system that ensures that those harmed by someone 
     else's wrongful conduct are compensated fully. And we need to 
     ensure that the system is not twisted in ways that deter 
     folks from engaging in activities that we ought to encourage. 
     That's why I have offered an amendment that would extend the 
     protections against outrageous punitive damages now being 
     considered for manufacturers to include volunteer and 
     charitable organizations, small businesses and local 
     governments.
       These reforms are an attempt to restore fairness and 
     integrity to a system that has gone awry. But, given the 
     distortions from the trial-lawyer lobby, it is clearly time 
     to confront a few of their most cherished myths.
       Myth No. 1: Trial lawyers protect consumers. The California 
     Trial Layers Assn. recently changed its name to the Consumer 
     Attorneys of California. Some consumer Attorneys of 
     California. Some consumer champions. Across the nation, 
     abusive lawsuits drive up the costs of all kinds of goods. As 
     noted by the American Tort Reform Assn., half of the cost of 
     a $200 football helmet goes to lawsuit-driven liability 
     insurance.
       Myth No. 2: Trial lawyers protect workers and the poor. The 
     current system victimizes no group more than the working poor 
     and the disadvantaged. Lawsuit add a $1,200 litigation tax on 
     every consumer in America.
       Meanwhile, some trial lawyers through contingency fees 
     effectively earn $300,000 per hour.
       The poor also pay in jobs. A RAND Corp. study estimates 
     that wrongful termination suits have reduced the hiring 
     levels in just one state by as many as 650,000 jobs.
       Myth No. 3: Trial lawyers are champions of safety. Personal 
     injury lawyers put out literature informing us that Americans 
     live in the safest society in the world because of our civil 
     justice system. The reality is that our legal system long ago 
     crossed a critical threshold: It often makes our daily lives 
     less safe. Lawsuits not only stop pharmaceutical research and 
     new drugs. They cause industrial engineers to avoid safety 
     improvements for fear that current designs, by comparison, 
     will be interpreted as defective. They make all organizations 
     fearful of the new--because in the hands of personal injury 
     lawyers, ``new and improved'' has come to mean ``new and open 
     season for lawsuits.''
       Part of our heritage as a free people is a legal system 
     where justice, not the search for a windfall, is the goal. 
     Over the past 40 years, we have strayed from that path. The 
     powerful trial-lawyer lobby must not be allowed to kill 
     reform with a campaign of disinformation, distortion and 
     delay. I am determined that this is the year that civil-
     justice reform will pass the Senate.

  Mr. GRAMS addressed the Chair.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Minnesota [Mr. Grams] is recognized to speak for up to 15 minutes.
  The Senator from Minnesota is recognized.
  Mr. GRAMS. Thank you very much, Mr. President.
  

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