Limiting Litigiousness

AN overhaul of the way Americans sue each other had been speeding toward passage in the 104th Congress. Then it hit a boulder: House-Senate disagreement.

But part or all of the so-called tort reform package may soon make its way around the obstacle. Speaker Newt Gingrich could soon appoint conferees to work out a compromise on the main piece of legislation, according to close observers of the legislation. The House version would cap punitive damages in all kinds of lawsuits in an effort to dampen litigiousness across the board. The Senate opted for a narrower cap, on product liability awards alone.

Other tort-reform items: limits on investor lawsuits against financial advisers, which is moving ahead as a separate bill, and restraints on medical malpractice suits, now wrapped into Medicare legislation.

The tendency to take problems to court, often encouraged by aggressive personal-injury lawyers, has grown in recent years. Multimillion-dollar punitive damage awards - like those in the famed McDonald's hot-coffee case or the BMW paint-job case (now before the Supreme Court) - have fed public scorn for the system.

But such jackpot litigation is only part of the picture. A recent Justice Department study found that punitive damages are awarded in a relatively small number of suits. Researchers at the American Bar Foundation in Chicago, in an earlier study of civil suits between 1988 and 1991, found that only 4.5 percent of verdicts carried a punitive damages award.

So, are legislative critics exaggerating the problem, spurred on by business interests that want to be shielded from suits? Or are outrageous awards, even if infrequent, distorting the whole system - forcing even out-of-court settlements to soar?

A balance has to be struck. Citizens have a right to go to court to seek redress and settle disputes. Some elements in current legislation, such as provisions in the investor lawsuit bill that make the loser pay all legal fees, go too far toward limiting that right.

On the other hand, large settlements and awards are generating a litigation industry that has a negative impact on everyone - driving up prices of goods and services as businesses pass along liability costs.

Caps on punitive damages are one way to help curb excesses. They should be tried.