Shielding business from coronavirus torts neglects deep-seated dysfunction in litigation, health insurance

Amid reopening and the controversy over reopening, American private business is seeking legislative protection against coronavirus-related tort litigation.

To oversimplify, businesses are worried about being sued if a worker or customer contracts the virus in the workplace or in a retail space.  Tuesday morning, U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley told National Public Radio that the Chamber is not asking for blanket immunity, but "a safe harbor ... against frivolous lawsuits."

"No one wants to protect bad actors here," Bradley said.  He suggested that liability could be predicated on gross negligence or "willfully forcing workers to work in unsafe conditions," which, legally speaking, is recklessness.

Protecting business from litigation is the Chamber's bread and butter, and that doesn't make it the Big Bad Wolf.  Businesses, especially small businesses, represent real people, owners and workers, who, in the absence of any extended public safety net, need to work to make ends meet.  Facing bankruptcy because of prolonged closure or because of the inevitability of a contagious disease surmounting all precaution is a heck of a catch-22 to put a business in.  From that perspective, the Chamber's position seems a fair ask.

At the same time, the Chamber's advocacy highlights two enormous socio-legal problems in America: transaction costs in tort litigation and employment-based health insurance.  A safe harbor would brush both these problems back under the rug.

It isn't tort litigation per se that business fears; it's the cost of that litigation.  Corporate defense—that's the kind of law I practiced a million years ago—wins in litigation with an enviable record.  The burden of proof rests with the plaintiff, which means that even meritorious causes may fail upon the vagaries of evidence.  What's more, the usually superior resources of the corporate defense bar warp the playing field of an adversarial contest predicated on the fallacy that the truth will out.  But the defense's advantages don't change the fact, for many reasons I won't here explore, that litigation costs a fortune.

As a result of runaway transaction costs, everyone loses.  Plaintiffs and would-be plaintiffs with meritorious complaints wind up not suing, winning nothing, or winning far less than will make them whole.  Plaintiffs without meritorious complaints may nevertheless win in settlement.  Meanwhile the cost of defense in every scenario, from insurance in anticipation of litigation to fees in its management, is visited on American business and passed on to the American consumer.  And the mere risk of those costs results in over-deterrence that burdens the American marketplace, distorting economic behavior.  This dysfunction renders the U.S. personal injury system a laughingstock elsewhere in the world.

So if the deck is so stacked against plaintiffs, why do they sue anyway, courting an invariably unfulfilling outcome and burdening even prevailing defendants?  That leads us to the second problem, our dysfunctional health insurance system.

An injured person might wish not to sue, yet become a plaintiff anyway; if the person is insured in any measure, the insurer will make the choice.  And notwithstanding the intervention of insurance, our healthcare system usually leaves an injured, would-be plaintiff holding a bag of devastating, bankruptcy-inducing invoices.   (I asked, rhetorically, earlier this week, what perversion of American values causes a working person diagnosed with terminal cancer to have to spend his precious last year of life carving out time from family and chemotherapy to do fundraising.)  In the American litigation and health insurance systems, a plaintiff sues against all odds because the plaintiff has no other choice.  And in a perverse feedback loop, plaintiff and plaintiff's insurer are permitted to pin their hopes on the likelihood that the threat of excessive transaction costs will shake loose a settlement upon even the weakest of claims.

The problem of healthcare costs is compounded by America's stubborn insistence on employer-based health insurance.  Focused on the bottom line, employers effectively make advance healthcare decisions for workers, which, naturally, increases incurred costs for the workers who become patients.  With precious little control over their healthcare choices, but afraid of wholly losing coverage, risking food and shelter for themselves and their families in a country that eschews social safety nets for people while bailing out corporations, workers make irrational market choices, such as working for less than a living wage, accepting a salary to obviate overtime, going to work in unsafe conditions, and going in sick.  We got into this mess entirely by accident, as Planet Money reported in 2009, and we seem helpless to get out of it.  Ironically, now, the Chamber seeks to protect business against a litigation problem that results in large part from employers' own choices, however economically rational, to leave workers unprotected from catastrophe and trapped in a job by an unlevel labor market.

In the theoretical American tort system, the way it works when I teach its rules and policies to law students in America and Europe, the businesses represented by the U.S. Chamber should not be worried about tort lawsuits.  The test for negligence-based liability in American tort law is simply unreasonableness.  A business that takes reasonable measures to protect workers and customers against infection would suffer no liability, even given the inevitability that contagion will still happen in the face of reasonable precautions.

The truth of the matter is quite different from the theory, and Bradley's statement to NPR demonstrates the divergence.  On the one hand, Bradley said that business must be protected against "frivolous lawsuits."  The problem with that rationale is that the legal system already provides for potentially hefty penalties and sanctions against any plaintiff or plaintiff's lawyer who would try to prosecute a truly frivolous lawsuit.

On the other hand, Bradley said that businesses should be liable only upon a heightened culpability standard, gross negligence or recklessness.  "No one wants to protect bad actors here," he said.  Someone who is grossly negligent or reckless is not necessarily bad; bad is a normative judgment and not a workable legal standard.  Colloquially, he is equating bad with culpability, and that's fair.  But if the equation holds, why is a negligent business not also bad?  Is every negligence lawsuit necessarily a frivolous lawsuit?

Bradley made a strategic semantic choice.  Mention of the "frivolous" is calculated to evoke a gut reaction of displeasure in Americans who have been conditioned by the heavy media messaging of tort reform advocacy.

But let's for the moment cut Bradley and the Chamber some slack.  From where they sit, frivolous cases and negligence claims are equally problematic.  That's because plaintiffs are compelled by the circumstances of our dysfunctional systems to sue in negligence even when the merits might not bear out the claim.  In other words, the brokenness of our litigation and healthcare systems over-incentivizes injured persons to litigate.  A plaintiff decides to sue because of desperate need for compensation, not because of the strength of the claim that the defendant is blameworthy.

Negligence isn't the thing that's broken.  For my money, negligence, meaning the reasonableness test, applied by a Seventh Amendment jury, remains one of the greatest innovations in law in the last two centuries and has proved a worthy American example for the world.

Our litigation system is broken.  And our health insurance system is broken.  Adoption of a safe harbor for defendants within those systems as they exist now will just mean that when a business is negligent, and a person gets sick as a result, the sick person will bear the cost of the illness and of the business's negligence.  That's not how American civil justice is supposed to work.  That's not how it was ever supposed to work.

So many pundits, so many of us, Americans and people around the world, have wondered aloud whether this crisis might at last precipitate real and meaningful change, change that might bring people's standard of living into correlation with our fantastic global wealth and technology.  We've wondered whether, and we've dared hope that, we stand at the threshold of the Great Realization, from which humankind will never turn back.

In that frame of reference, the safe harbor proposed by the Chamber, or moreover statutory immunity from tort liability, would be a profoundly disappointing portent of business as usual.

My thanks to Professor Rebecca Crootof at Richmond Law for an email that got me thinking about this.  Thanks also to any loyal reader who made it this far without pictures.  My "Report from a Social Distance Week 7" is delayed but not forgotten; look for it this weekend.

'Game changer,' $2.5m punitive affirmance elucidates 'gross negligence' in medmal

The Massachusetts Appeals Court in late February affirmed an award of $2.5m in punitive damages in a case of death from botched laparoscopic surgery for a hiatal hernia.  In affirming, the Court reiterated terms and circumstances that allow a jury to differentiate "gross negligence" from mere negligence in the medical context.

According to the court opinion, Laura Parsons died after laparoscopic surgery to repair her hiatal hernia resulted in surgical tacks penetrating her pericardium, the membrane surrounding the heart.  The jury laid blame squarely on defendants surgeon, nurse, and employer for tacks having been inserted in the diaphragm too close to heart tissue.  Parsons died of cardiac arrest two days after surgery, and an autopsy observed "puncture marks on the posterior aspect of the heart."

In addition to $2.6m in compensatory damages, the jury charged the surgeon with $2.5m in punitive damages for "gross negligence," the threshold for punitive damages in medical malpractice in Massachusetts.  The Appeals Court affirmed.  Mass. Lawyers Weekly called the decision a "game changer" in favor of punitive damages for medmal plaintiffs (Mar. 5, 2020, pay wall).

An issue on appeal was the jury instruction on "gross negligence."  More than negligence and less than recklessness, "gross negligence" is a familiar yet elusive norm in Anglo-American common law.  The Appeals Court in part faulted the surgeon's counsel for failing to state objection to the usual jury instruction on the standard, though the court seemed content with the instruction on its merits.  The court observed, "While drawing the line between ordinary negligence and gross negligence can be difficult, 'the distinction [between them] is well established and must be observed, lest all negligence be gradually absorbed into the classification of gross negligence [citations omitted]."

The court concluded, "The evidence as a whole permitted the jury to find that [Dr.] Ameri's use of the tacker in Parsons's surgery manifested many of the common indicia of gross negligence. See Rosario v. Vasconcellos ... ([Mass.] 1953), quoting Lynch ... [Mass. 1936] ("some of the more common indicia of gross negligence are set forth as 'deliberate inattention,' 'voluntary incurring of obvious risk,' 'impatience of reasonable restraint,' or 'persistence in a palpably negligent course of conduct over an appreciable period of time'").

The case is Parsons v. Ameri, No. 18-P-1373 (Mass. App. Ct. Feb. 26, 2020) (Justia).  Justice Massing wrote for a unanimous panel with Sacks and Hand, JJ.