Walking down the stairs of a state courthouse, a woman trips and falls. Despite suffering only minor injuries, she sues the state—claiming that dilapidated steps caused her fall. In Maryland, the most she could win is $50,000 in damages, in Virginia, $100,000. But between these two states exists an ambulance chaser’s dream, a jurisdiction with no limit on liability recovery. In D.C., a jury could award the woman millions of dollars for her sprained ankle.
The District can no longer afford such generosity, insists Mayor Sharon Pratt Kelly. As part of her budget reduction package, Kelly wants to cap liability claims against the District government at $250,000 plus actual medical expenses not covered by insurance, or—in the case of multiple defendants—$1 million per incident. Kelly estimates savings of $1 million annually if her bill is passed by the D.C. Council.
Nearly every state puts a ceiling on liability recoveries. The caps vary in scope, and can apply only to claims against governments, or to those brought against private individuals and businesses, too. Kelly’s not the first mayor to attempt liability tort reform in D.C. Urged by physicians and Councilmember Charlene Drew Jarvis, Marion Barry tried to pass a general liability cap in 1989. But the bill was killed by the same advocacy group that will probably terminate Kelly’s—lawyers on the council.
“Often attorneys do not favor a liability cap, and there are a large number of attorneys on the council. So that may affect its chances,” says Pauline Schneider, president of the D.C. Bar Association.
Seven lawyers currently sit on the council: Chairman Dave Clarke, and Councilmembers Bill Lightfoot, John Ray, Jack Evans, Jim Nathanson, Harold Brazil, and Kevin Chavous. Personal injury lawyers like Chavous and Lightfoot would likely recuse themselves from a formal vote. But that hardly matters. The councilmembers’ philosophical objections to the bill are predicted to kill it long before it reaches the council floor.
An average of six citizens sue the D.C. government each day, blaming the District for everything from their trouble walking down stairs to police brutality and medical malpractice. The Corporation Counsel—the equivalent of a state’s attorney general’s office—settles about 90 percent of these cases; the other 10 percent wend their way to a jury trial. Any moneys paid come out of the Settlement and Judgment Fund allocated each year by the council.
The Corporation Counsel settles most cases because jury awards are a form of Russian roulette: The potential for deadly damages is in every court chamber.
Erecting a governmental liability ceiling would encourage plaintiffs to settle and reduce the size of judgments. “The District’s public treasury is continuously at risk to an outsize damage award, greatly exceeding the amount allocated by the council and the Congress for the Settlement and Judgment Fund,” Corporation Counsel Vanessa Ruiz told the judiciary committee at a public hearing Sept. 23.
To illustrate the risk to the treasury, Ruiz cited a case where a student, attending a summer program co-sponsored by American University and the public-school system, was badly burned during a chemistry experiment. Damages against the two institutions were enormous; the District was ordered to pay $11.5 million. On appeal, that figure was knocked down to $4.9 million. Still, the final award represented one-third of the District’s Settlement and Judgment Fund for 1993.
But that award would be even more devastating now, for last year the council reduced the fund to $10 million. This reduction may actually cost the District more in the long run, for the money didn’t last through fiscal year 1994, says Deputy Corporation Counsel Martin Grossman, who is in charge of civil suits. As a result, plaintiffs who might have settled out of court proceeded to trial, because the District must pay court-ordered judgments immediately, even if that requires a diversion from the general fund.
Governments appear to be soft touches, because only they have access to a virtually unlimited supply of cash, Grossman adds. Other defendants may be sued for millions, but their liability is, as a practical matter, “capped” by the extent of their insurance or assets.
If one case gobbles most of the Settlement and Judgment Fund, the Corporation Counsel is forced to fight deserving plaintiffs instead of settling with them, says Grossman. And if the fund is depleted, the taxpayers are at risk that their money will be used to pay a judgment, rather than for “wheelchairs and beds in D.C. General, or foster care,” he adds.
“The decision has been made to limit the [Settlement and Judgment Fund] pie, and that’s fine,” Grossman says. “But there’s a second decision to be made, and that’s how to fairly allocate the pie, how to divide it.”
Once, kings were considered God’s representatives on Earth. If a king were God, and God could do no wrong, then the king could not be sued. This canon was called sovereign immunity, and it persisted even after the development of democratic governments.
“Then came the Enlightenment, and gradually the law changed,” says Council Judiciary Committee Chairman Nathanson. “Do we really want to limit the results of the Enlightenment?”
Many states still have sovereign immunity, but D.C.’s councilmembers are uncomfortable with reducing our government’s liability. “I don’t know how I can write a law that says that an enterprise that I’m a part of would be held to a different standard than every other business,” Clarke said at the public hearing.
Nathanson worries that a cap would lead the Corporation Counsel to try cases that should be settled, and would also have a negative impact on the government’s risk management.
“From their perspective, it’s easier to rewrite the law” than to enact risk management programs the council has vainly requested for eight years, he says. “If they know government can only be sued for a certain amount, there’s even less incentive to be careful. In the need to save money, are we willing to put citizens more at risk? To hell with that.”
A lame-duck mayor should make cuts to existing programs, not institute policy, says Nathanson. “She’s stubborn and she wants her way. That’s why she isn’t going to be mayor anymore,” he contends. “I think doing this solely because of a fiscal emergency is not sufficient. The executive alleges that this would save $1 million—that’s a little disingenuous,” he says, and notes that the Corporation Counsel itself said only a few cases a year glean jury awards of more than $250,000.
Both sides agree that big settlements usually go to deserving plaintiffs. “What price do you put on a life, or a limb? They talk about that little boy that got burned—well, he got very badly burned as I recall,” Nathanson says. “They’ve got to take reasonable care, not absolute care, but reasonable care. Is the teacher in the room, or not?”
“We’re not saying that child didn’t suffer serious injuries,” counters Grossman. “But do you use your entire year’s budget for one case? We’re leaving ourselves exposed to unbelievable damages.” Excessively generous, or “runaway” juries may not be common, but they do happen. So far, Grossman adds, D.C. has been lucky.
“This legislation is based on the same reasoning as the mayor’s overall package,” Ruiz said at the hearing. “That is, the District is unable to continue paying the most liberal benefits in the region from the most limited tax base. We’re talking about public funds. The government has to make a policy decision that gives the maximum benefit to the maximum number of people.”
For now, however, the council seems content with the status quo. “If we’re going to do this, we should do it after a lengthy, public discussion of the pros and cons,” says Nathanson. “We might decide that it is necessary, but this isn’t going anywhere this time around.”