The Supreme Court’s first big case this big term will be an attempt to mandate "tort reform," limiting punitive liability awards.
We don’t need the Supreme Court for this. All we need is a very simple business rule.
New Rule: Punitive awards are not insurable.
Whether you’re a corporation, or a professional, you have liability insurance. This insurance covers you against mistakes. It also covers you against punitive damage awards.
It shouldn’t.
Once it doesn’t simply tell juries it doesn’t. Allow the defense, in its arguments, to describe the real assets and liabilities of the person being sued.
Then enforce the rule. It can be done through insurance exclusions. If you’re a doctor, or a lawyer, and a jury wants to punish you by taking away your house, your car, even your dog, they should be able to do it. The same should be true of corporations.
Exclude punitive liability from coverage, and punitive damage awards are
guaranteed to go down. Juries will not be able to do more than break
defendants. Appellate courts will then have a real basis on which to
decide how much punishment is enough.
The reason jury awards is so high today is that everyone knows insurance pays. Stop that, and the issue goes away.
