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Accordion Trends Limiting and Expanding Tort Liability in the US X. AIDA Budapest Insurance Colloquium November 28, 2008 Marianne Oren Director Swiss Re.

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Presentation on theme: "Accordion Trends Limiting and Expanding Tort Liability in the US X. AIDA Budapest Insurance Colloquium November 28, 2008 Marianne Oren Director Swiss Re."— Presentation transcript:

1 Accordion Trends Limiting and Expanding Tort Liability in the US X. AIDA Budapest Insurance Colloquium November 28, 2008 Marianne Oren Director Swiss Re Germany

2 Slide 2 Like playing the accordion, it goes both ways... Agenda: Limits imposed by US Congress Limits imposed by various states Limits imposed by the US Supreme Court Marianne Oren Director Swiss Re Germany

3 Slide 3 Limits imposed by US Congress Marianne Oren Director Swiss Re Germany

4 Slide 4 Limits imposed by the US Legislative Branch (Congress) Class Action Fairness Act (CAFA)(2005) designed to correct abuses of class action system Heart of the law: expansion of federal diversity jurisdiction Marianne Oren Director Swiss Re Germany

5 Slide 5 Has CAFA limited liability? more class actions in federal courts than before CAFA “better justice” … Marianne Oren Director Swiss Re Germany

6 Slide 6 The perennial question Will there be broad Federal Tort Reform by the US Congress? No - US Congress has not (and will not in the near future!) pass universal tort reform … Marianne Oren Director Swiss Re Germany

7 Slide 7 Limits imposed by various states Marianne Oren Director Swiss Re Germany

8 Slide 8 Tort Law is State Law Tort Reform has (and will) come from individual (50!) states Marianne Oren Director Swiss Re Germany

9 Slide 9 Examples of Tort Reform in recent years 40 states: changed joint and several liability to make defendants proportionately liable 24 states: now allow evidence of collateral sources of payment (abolishing the “collateral source rule”) 32 states: reformed their punitive damages laws (mainly limiting the amounts) 23 states: limited the amounts that can be awarded for noneconomic damages 16 states: modified their laws on product liability including limiting suits against products known to be unsafe, changing standards of proof and enacting statutes of repose 13 states: enacted reform of the jury service provisions see www.atra.org for recent studies (done twice per year) Marianne Oren Director Swiss Re Germany

10 Slide 10 Some tort reform measures have been found unconstitutional by the courts! In Illinois and Kentucky: punitive damages reforms In Alabama, New Hampshire, Oregon,Virginia and Wisconsin: limits on noneconomic damages In Georgia and Kansas: the collateral source rule In Pennsylvania: joint and several liability Marianne Oren Director Swiss Re Germany

11 Slide 11 Recent Limits imposed by the Supreme Court Marianne Oren Director Swiss Re Germany

12 Slide 12 Limits on punitive damages  BMW v Gore (1996): three guideposts (reprehensibility; ratio to compensatory damages; penalties for similar conduct)  State Farm v Campbell (2003): “few awards exceeding a single digit ratio... will satisfy due process”  Philip Morris v Williams (2007): greater than 1:1 ratio will rarely be acceptable; wealth of defendant will not justify otherwise unconstitutional punitive amount Marianne Oren Director Swiss Re Germany

13 Slide 13 Preemption in Pharmaceutical Product Liability Limits on tort exposure for manufacturers of medical devices Riegel v Medtronic, Inc. (2008): Supreme Court decided that FDA approval of medical device preempted state common law products liability claims Facts: heart catheter inserted after heart attack; FDA approved label warned against over-inflation Law: Medical Device Amendments (MDA) expressly preempted differing state standards Marianne Oren Director Swiss Re Germany

14 Slide 14 Supreme Court held in Riegel: “Rigorous” pre-market approval process by FDA in approving medical devices FDA applies a cost-benefit analysis – “a jury, on the other hand, sees only the cost of a more dangerous design, and is not concerned with its benefits; the patients who reaped those benefits are not represented in court” Marianne Oren Director Swiss Re Germany

15 Slide 15 Big Issue of the day Will the Supreme Court severely limit tort exposure of pharmaceutical companies for prescription drugs? (in 2006 alone: 17.000 products liability lawsuits filed against drug manufacturers) Marianne Oren Director Swiss Re Germany

16 Slide 16 Wyeth v Levine is presently before the Supreme Court Legal issue: whether FDA approval of drug label preempts state tort “failure to warn” claims Facts: arm of professional guitarist had to be amputated after drug accidentally injected into artery Plaintiff argued warning on label should have been stronger Marianne Oren Director Swiss Re Germany

17 Slide 17 More on Wyeth v Levine Complicating factors: FDA formerly argued no preemption of state law (up until 2002) no express preemption provision (unlike medical devices) Oral Argument heard on November 3 – decision expected by June 2009 Marianne Oren Director Swiss Re Germany

18 Slide 18 A final look into the “Crystal Ball” Marianne Oren Director Swiss Re Germany

19 Slide 19 Barack Obama and a democratic Congress have Universal Health care as a priority. Will the introduction of universal health care mean less money paid to compensate accident victims through the tort system? Marianne Oren Director Swiss Re Germany

20 Slide 20 Let’s hope we can enjoy the music … Marianne Oren Director Swiss Re Germany


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