to raise premiums to cover increased awards. The so-
called insurance cycle began at the end of the
1960’s, when the insurance industry’s profitability
was declining and when the doctrine of strict liability
was expanded to include personal liability cases.
(The doctrine originally applied solely to businesses
conducting abnormally dangerous activities.) With
that expansion, a plaintiff no longer had to prove
negligence but merely had to prove that the plaintiff
was injured while using the product in the manner
intended.
In the mid-1970’s, the slump in insurance indus-
try activity brought insurance premium increases. In
1976, President Gerald R. Ford convened a White
House conference on product liability, and in 1979,
during President Jimmy Carter’s administration, a
special task force produced a model uniform prod-
uct liability act for the states. The early 1980’s saw the
insurance industry booming again because of good
investment income and high interest rates. Policies
were underpriced to generate premiums for invest-
ments. By 1984, interest rates fell, as did insurance
investment income and profits. Pressure to increase
premiums came about because of higher tort dam-
age awards. The jury awards were so high that com-
panies as well as individuals who could not pay their
premiums went bankrupt. Others “went bare”; that
is, they operated without insurance, knowing that a
large verdict against them could annihilate them.
The Tort Policy Working Group, formed during
the administration of President Ronald Reagan, re-
leased a report advocating tort reforms, including
the elimination of joint and several liability, limits
on contingent fees, and a $100,000 cap on noneco-
nomic damages.
Some Reforms Numerous states passed legislation
that aimed at reducing huge jury awards, limiting
the areas for which suits may be brought, and im-
posing caps on punitive damage awards (damages
granted beyond compensatory damage awards as-
sessed as punishment for aggravated, wanton, reck-
less, or oppressive conduct and as a deterrence to
others to prevent them from engaging in like con-
duct) either through a specific numerical cap or
through limiting the circumstances under which pu-
nitive damage claims can be awarded. It had not
been uncommon for juries to award actual damages
of a few thousand dollars yet award millions of
dollars in punitive damages. Additionally, amounts
assessed by juries to compensate for lost wages, med-
ical payments, and the like (called “special dam-
ages”) made up a small part of many liability awards.
Juries were likely to add on larger amounts for
noneconomic damages, such as pain and suffering
and loss of the ability to enjoy life (called “general
damages”).
In an effort to quell this trend, new legislation was
sought. Tort reform involved putting limits on dam-
age awards in malpractice, negligence, and personal
injury cases. The legislation passed by the states was
not uniform; not every reform was enacted in each
state.
In addition to imposing caps on punitive damage
awards, limits were imposed for pain and suffering
awards, and strict standards were adopted for prov-
ing liability for an accident or injury. In order to ac-
complish this, the joint and several liability principle
was revised or abolished. Under the joint and several
liability doctrine, two or more defendants are jointly
(together) held financially responsible for a plain-
tiff’s injury, and each defendant severally (indi-
vidually) may be held financially responsible for the
full value of the harm. The most common form of
joint and several liability reform was to limit its ap-
plication when awarding general or noneconomic
damages. Under this reform, defendants could be
severally liable for economic damages but not for
noneconomic damages.
The intent of the reform was to provide assurance
that injured plaintiffs are paid for their out-of-pocket
expenses even if some defendants are insolvent. At
the same time, this reform limited the “deep pocket”
approach to awarding damages for noneconomic
losses. Another pattern limited joint and several lia-
bility when the defendants are together less than 50
percent at fault or less at fault than the plaintiff. This
reform aimed at “fairness”: limiting the number of
situations in which a defendant who is only slightly at
fault will have to pay for the entire amount or a large
portion of damages. Generally, tort reform in this
area was focused on financial responsibility in pro-
portion to fault rather than on one’s ability to pay.
Few, if any, of the reforms completely abolished joint
and several liability. Of the thirty-three states that
passed joint and several liability reform, only four
completely eliminated the use of that doctrine.
Some states enacted restrictions limiting frivo-
lous lawsuits (in which there is no foundation for a
liability claim); others instituted fines against attor-The Eighties in America Tort reform movement 975