Monday, November 16, 2009
The tort system is frequently described by critics as a “litigation lottery.” For example, in their best-selling book Nudge, Richard Thaler and Cass Sunstein compare medical malpractice litigation to a lottery based on the assertion that many plaintiffs who suffer no harm or have not been treated negligently nonetheless receive compensation. They point to the variability in pain and suffering and punitive damages awards as further support for the comparison. According to this view, even if erroneous findings of liability and high awards are rare (as the weight of empirical evidence seems to suggest), they nevertheless make litigation into a game of chance. As leading tort reform advocate Ted Frank explains on PointofLaw.com, “[t]he nature of a litigation lottery is that the availability of potentially huge damages justify bringing a meritless claim, so long as there is some small chance that the combination of an outlier judge and an outlier jury will produce a jackpot that compensates for the risk that the judge/jury combination will get it right.”
Yet the possibility of erroneous outcomes and variable awards does not make tort litigation a lottery. Indeed, the very possibility of identifying some outcomes as erroneous fundamentally distinguishes litigation from a lottery. Winners in litigation are determined not by chance but by applying the law to the facts of a case. Of course, there is always the possibility of an erroneous outcome when a judge misapplies the law or the jury misconstrues the facts. But this is quite different from the process of random selection whereby lottery winners are selected. It makes no sense to argue that a randomly selected lottery winner should not have won. In contrast, it is certainly possible to criticize litigation outcomes as erroneous—to argue that the prevailing party should not have won—precisely because litigation, unlike a lottery, is governed by the rule of law. Suggesting that the error rate of a decision procedure makes it a lottery is a category mistake since the very possibility of identifying an erroneous outcome, by definition, makes the procedure non-random and therefore not a lottery. (One could criticize the outcome of a lottery on the basis that it was not random—for example, where the lottery is “fixed”—but that would render it no longer a lottery.) Of course, for practical purposes, the error rate of a decision procedure could be so high as to render outcomes practically random. But no one, not even the most ardent advocates of tort reform, has suggested that high damage awards based on erroneous findings of liability are anything but statistical outliers.
One might argue that there is a randomness as to whether an individual who files a false claim of medical malpractice will be lucky enough to draw the rare judge or jury who will produce an erroneous judgment in his favor. But this random distribution of errors does not make a flawed process into a random one. While bank depositors stand a random chance of an accounting error in their favor, this does not make depositing one’s money in a bank tantamount to playing a lottery.
One might argue, instead, that the tort system operates like a lottery not because of the chances that false claims will succeed but because only a small percentage of negligent actors are held liable. According to this view, the low probability that a doctor who commits medical malpractice will actually be successfully sued makes the system a lottery from the defendant’s point of view. Does a low probability of being held liable make the process a lottery? Does the fact that those who cheat on their taxes stand some random chance of avoiding detection make the tax system a lottery? In one respect, yes, one could argue that negligent actors are subject to a liability lottery and that dishonest taxpayers participate in an audit lottery. Many areas of law involve lotteries in this sense: the same could be said of the chances of getting a speeding ticket or being arrested for robbery or of being the victim of a breach of contract.
But I suspect that critics of the tort system mean something else when they describe the tort system as a litigation lottery. They mean to identify a feature of the tort system that distinguishes it from other areas of law such as criminal and contract law. They mean to suggest that tort litigation is arbitrary in way that these other areas of law are not, that tort litigation outcomes are not, on some level, governed by the rule of law to the same degree as are other parts of the legal system. Ultimately the problem with the lottery analogy is that it proves too much—if the tort system is like a lottery insofar as negligent defendants stand only a random chance of being held liable, the same can be said about the enforcement of rights in many other areas of the law. There is no basis for charging that the tort system is any more or less a lottery than these other areas of the law.
Comparing tort litigation to a lottery is, at best, unhelpful for understanding the sources, frequency, and magnitude of error in the tort system. At worst, it is a rhetorical strategy aimed at undermining public confidence in the civil justice system in order to strengthen popular support for tort reform. In the rush to reform the tort system, we would be well advised to ignore this kind of rhetoric and take a more careful look at what its real shortcomings are.
For a more extended analysis of Thaler & Sunstein’s critique of medical malpractice litigation and their proposals for reform, see Tom Baker and Timothy D. Lytton, Allowing Patients to Waive the Right to Sue for Medical Malpractice: A Response to Thaler and Sunstein, forthcoming in Northwestern Law Review and available now on SSRN.
Timothy D. Lytton
Albert and Angela Farone Distinguished Professor of Law