Archives: 06/2012

New Hampshire Medical Malpractice Reform: ‘Early Offers,’ With a Side Of Loser-Pays

Overriding a veto from Gov. John Lynch, the New Hampshire legislature on June 27 enacted SB 406, establishing the nation’s first “early offer” system for medical malpractice claims. The law establishes incentives for defendants to make offers early in the litigation process that cover plaintiff’s economic losses such as medical bills and lost wages. The early-offer process is at claimants’ option only; claimants are free not to request such an offer. [Kevin Pho; supportive website; trial lawyers’ opposition website]

Importantly, the new procedure also contains pioneering elements of loser-pays in both directions. If a claimant chooses to accept a defendant’s early offer of economic-loss expenses, the defendant will pay an additional sum to reflect a scheduled assessment of pain and suffering, plus the reasonable costs of attorney representation. However, if the claimant invokes the early-offer process but then turns down the offer as inadequate, there is a real risk of a fee shift in the opposite direction:

XII. A claimant who rejects an early offer and who does not prevail in an action for medical injury against the medical care provider by being awarded at least 125 percent of the early offer amount, shall be responsible for paying the medical care provider’s reasonable attorney’s fees and costs incurred in the proceedings under this chapter. The claimant shall certify to the court that bond or other suitable security for payment of the medical care provider’s reasonable attorney’s fees and costs has been posted before the court shall consider the case.

At TortsProf, Christopher Robinette explains in some detail (contrary to an error-filled screed in a Litigation Lobby outlet) why this adds up to a generally good deal for claimants (who, of course, are free not to trigger the process if they disagree) as well as making the system fairer. “Early-offer” proposals have been championed over the years by Jeffrey O’Connell, the distinguished University of Virginia torts scholar, and by Philip K. Howard of Common Good, among others. More on loser-pays here.

[cross-posted from Overlawyered]

[Research assistance: Cato Institute intern Byron Crowe]


Big Government Cripples Incentives to Save, Promotes Risky Culture of Immediate Gratification

America’s political elite is nauseating for many reasons, but perhaps most of all when they blame others for problems that are caused by misguided government policies. A stark example is the way they attacked the Facebook billionaire who moved to Singapore because of punitive taxation and class-warfare policy.

Today, let’s look at an example that affects almost everybody rather than just a handful of rich people. Many people in Washington sanctimoniously say that American households and businesses are too focused on the short term and that we don’t save enough.

But as I explain in this CBNC interview, tax and spending policies from Washington have undermined the incentive to save.

Allow me to elaborate on three of my examples.

1. Look at this post comparing the red ink from America’s bankrupt Social Security system with the huge levels of private savings generated by Australia’s system of personal retirement accounts.

Good politicians would respond by copying Australia and reforming Social Security. But good politicians are like unicorns.

2. Or look at this chart showing the extensive double taxation in our tax code, as well as these international comparisons of how America over-taxes dividends and capital gains.

Good politicians would respond by junking the tax code and adopting a flat tax, which has no double taxation of income that is saved and invested. But good politicians are like the Loch Ness Monster.

3. And consider the fact that the Obama Administration has just imposed a regulation that will discourage foreigners from depositing money in American banks, thus driving capital from the U.S. economy.

Good politicians would minimize the damage of anti-savings policies by keeping America a haven for foreign capital. But good politicians are like Bigfoot.

The moral of the story, just in case you haven’t picked up on the theme, is that bad things happen because politicians can’t resist expanding the burden of government when they should be doing the opposite. Which is why this poster is funny, but in a painful way.

P.S. I should have mentioned that some politicians think that we can boost savings by imposing a value-added tax! This is not only a perverse example of Mitchell’s law, but it’s also completely illogical.

A VAT does not change the incentive to save since current consumption and future consumption are equally taxed. But it does reduce the amount of money people have, thus reducing both private consumption and private savings.

Statists would argue that a new tax will reduce the budget deficit and thus reduce the amount of private savings that is being used to finance government debt. That’s only true, though, if you’re naive enough to think politicians won’t spend the new revenue. Good luck with that.

John Roberts, Judicial Pacifist

That’s the title of my latest op-ed on the ObamaCare ruling.  Here’s an excerpt:

The Supreme Court’s health-care ruling displayed an unfortunate convergence of two unholy strains of constitutional jurisprudence: liberal activism and conservative pacifism.

Liberal activism, typified by the four Democratic-appointed justices, finds in the Constitution no judicially administrable limits on federal power. Conservative pacifism, a knee-jerk reaction to the liberal activism of the 1960s and ’70s, argues that we must defer to Congress as much as possible, presuming its legislation to be constitutional.

Neither approach considers that the Constitution’s structural provisions — federalism, separation and enumeration of powers, checks and balances — aren’t just a dry exercise in political theory, but a means to protect individual liberty against the concentrated power of popular majorities.

Read the whole thing.

Education Silver Lining in ObamaCare Decision?

After having my brain twisted into a pretzel reading yesterday’s ObamaCare decision, I was as disturbed as anyone. I mean, I had spent most of my life thinking I knew the difference between a “penalty” and a “tax,” and it turns out I was just fooling myself. Not to get too existentialist about this, but it has really made me question whether anything I think is real truly is.

Anyway, I eventually discovered what might be a small silver lining in the ruling, at least for education: the Medicaid section might have begun to place some, very nebulous, boundary on the ability of the federal government to bribe states into adopting federal rules. That has been the primary mode by which Washington has taken over elementary and secondary education—think No Child Left Behind, Race to the Top, No Child Left Behind waivers—and this ruling says there is a constitutional limit to what the federal government can do to coerce state action though spending.

Essentially, whether or not Spending Clause coercion is unconstitutional depends on whether it constitutes “undue influence” on states. For Chief Justice Roberts, that line was crossed when the Feds changed the rules for Medicaid and threatened states with the loss of all their funding if they didn’t follow the new strictures.

Obviously this doesn’t give us anything approaching a bright line on the limits to Spending Clause use. Such a limit surely can be found—no spending is allowed not connected to one of the specific, enumerated powers given to Washington by the Constitution—but Roberts writes that “Congress can use [Spending Clause] power to implement federal policy it could not impose directly under the enumerated powers.”

So why bother with enumerated powers? Got me…

Addressing education directly, the conservative justices noted that compared to Medicaid, federal education funding is a relatively small share of total spending, casting doubt on how applicable the ruling might be. In contrast, it was very gratifying to see those justices make a point I’ve made repeatedly, especially when discussing the absurd assertion that adopting national curriculum standards has been voluntary. Even if adoption were technically voluntary for states, taxpayers in those states have had no choice about paying the taxes that fund multi-billion-dollar carrots such as Race to the Top. Indeed, the conservatives write, were a state to fail to meet conditions attached to Spending Clause bucks, not only would it lose access to federal funds, it would likely have to raise its own taxes to make up for the shortfall, taxes that “would come on top of federal taxes already paid by the State’s citizens” for the spurned federal program.

The teensy bit of good news out of this ruling is that there is some limit to how coercive Washington can be under the Spending Clause, the clause that has been the linchpin of federal education policy. Unfortunately, the new problem is that were the Spending Clause avenue eventually cut off, Congress could probably just threaten the residents of recalcitrant states with some sort of financial penalty…er…tax. I mean, penalty…

Oh, my existentialist crisis!

What DC Schools Can Teach Us about Obamacare

Thanks to today’s Supreme Court ruling, the federal government has gained broad new powers to control the nation’s health care system. This, we are told by the President and his fellow travelers, will save money, expand access, and improve quality. One way to gauge the chances of that is to see what benefits federal oversight has brought to education in the one district in the nation over which Congress has ultimate authority: the District of Columbia public schools.

As I wrote earlier this week, the Census Bureau has now confirmed my finding that DC public schools spend about $30,000 / pupil annually. That is more than double the national average of public schools. Access to schooling may be universal in the District, but access to a quality education is not. As Economist Mark Perry writes, despite its stratospheric spending, DC’s graduation rate of 58.6% is far lower than the national average of 75.5%. The academic performance of its students is also significantly below the national average, and also below the average for other big city districts–in both reading and mathematics. Its achievement gaps by race and socio-economic status are also larger than in other public school districts.

That is how the only public school district in the nation under the control of Congress performs. Nor have nationwide federal education programs shown promise, as the chart below illustrates.

If our experience with education is any guide, a bigger federal role in health care does not bode well.

What Was Roberts Thinking?

As you digest Chief Justice Roberts’ opinion, it is worth re-reading the opening part of my DePaul colleague David Franklin’s Slate piece from a while back.  In it, he notes the current Chief Justice’s admiration for Chief Justice John Marshall, and then speculates that Roberts’ “Obamacare” opinion may try to ape Marshall’s strategy in Marbury v. Madison.  David writes:

Everyone knows Marbury v. Madison as the case in which the court first asserted the power to declare acts of Congress and the president unconstitutional. What’s less well known is that the defendants in Marbury (Secretary of State James Madison and, by extension, President Thomas Jefferson) got off on a technicality… . Marbury promised sizzle and ended with fizzle.

But all of this was by design. John Marshall, the brilliant but unassuming chief justice, always intended to use Marbury to hand his cousin and arch-foe Jefferson a narrow legal victory while dealing him a long-lasting political blow. By lecturing Jefferson about his legal duties, Marshall put the president in his place. (Ours is ‘a government of laws, and not of men.’) And by laying the foundation for judicial review, Marshall carved out a prominent new place for the court. Most important, Marshall did all of this without ordering Madison or Jefferson to actually do anything. No wonder historian Robert McCloskey called Marbury ‘a masterwork of indirection.’”

Was Roberts trying to ape his hero Marshall’s “masterwork of indirection” when he crafted his opinion?  The idea isn’t totally implausible, especially if you credit libertarian lawprof Jon Adler’s and Slate pundit Tom Scocca’s takes on the decision.  Both note that while the decision hands President Obama a legal victory, the opinion may contain a considerable silver lining for advocates of limited government over the longer term.  Whether or not you think this is true, it at least opens a plausible window on the mind of Chief Justice Roberts.

Update: David Franklin has posted a sequel to the article quoted above in a new Slate piece that expands on the connection between Roberts’ “Obamacare” opinion and Roberts’ Marshall-philia. David may be too sanguine about the long term potential for Roberts’ opinion to help libertarians. David has also altered me to a piece by Daniel Epps at the Atlantic, which also explores the link between Roberts’ thinking and Marbury. Epps takes the long-term potential of Roberts’ decision to help advocates of limited government more seriously than David does. For those looking for insights into Roberts’ motivations, both are well worth reading.