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An Analysis And Critique*
ELIMINATION OF TORT-FAULT one who causes injury to another should
fairly and adequately compensate him for Under the American Insurance Associa
that injury. Once liability is determined, tion (hereafter referred to as AIA) pro
it is the fortfeasor's obligation to see that posal, the fault of a person causing an auto
the compensation is paid, either from his mobile accident would not be considered
own assets, liability insurance, or other to determine his benefits. This means that
sources. The fact that the vast majority the careless or inattentive driver, the speed
of motorists have purchased liability iner, the reckless or drunken driver would be
surance proves that the general public has treated as the equal of the innocent acci
assumed this obligation. dent victim who is injured as the result of
Those who claim that the widespread such conduct.
use of liability insurance destroys the conOne of the stated "basic principles" in
cept of individual responsibility fail to the development of the plan was:
recognize some significant facts. In many Fault is not a proper factor to determine
automobile personal injury actions, there reimbursement for motor vehicle acci
is always the possibility that the final verdent injuries."
dict will exceed the limits of insurance
coverage with the result that the insured The proposal does not set forth the reasons will be personally liable for the excess. which led to the adoption of that principle. Even with adequate liability insurance covIts validity is clearly open to serious de erage, it is foolish to say that the insured bate, especially since so much emphasis has
is not concerned about the possibility of a been placed on law, order and individual negligence action against him. Once inresponsibility in recent months.
volved in such a lawsuit, he will suffer perProponents of "no-fault" plans contend sonal inconvenience and possible financial that the fault concept has been destroyed loss due to his attendance at conferences because many tortfeasors escape responsi. with his counsel, attendance at depositions bility for the injury and damage they and trial. Liability insurance does not excause. The widespread use of liability in- tinguish personal responsibility; if it did, surance, they claim, has eroded the concept there would be no valid justification for of individual responsibility upon which the merit rating in computing auto insurance tort-fault system is based. They also claim premiums. that the fault system has little meaning It is true that the tort-fault system does since individuals may purchase first party
not concern itself with persons who are ininsurance which will return benefits de
jured through their own carelessness. spite the negligence of the insured and no
Whether persons so injured should receive matter how much that negligence may have
compensation is a social question, not a caused the damages and injuries he suf
legal one. fered. Persons who raise such arguments fail to
The great percentage of the population
is covered by first party accident and health understand that the true purpose of the tort-fault system is not to punish tort
insurance, hospital, and medical plans, and feasors. The entire fabric of the tort sys
wage continuation programs. Such indi.
viduals have recognized the need for protem is constructed around the premise that
tection from the contingencies of sickness •The facts concerning the American Insurance and injury which are not caused by anyone Association plan upon which this critique is based
except possibly themselves. were drawn from the report offered for study and comment by AIA as noted in footnote 1.
Proponents of no-fault plans have recog1 American Insurance Association, Report of Spe. nized that it would be too costly to have cial Committee to Study and Evaluate the Keeton. O'Connell Basic Protection Plan and Automobile
one plan which would retain all features Accident Reparations, at 3 (Oct 1968). The House of the present system for innocent traffic of Delegates of the American Bar Association voted victims, while offering added benefits to disapproval of the AIA plan at its mid-winter meeting held in Chicago January 27, 1969.
2See Exodus 21:5, 18 (RSV)
those who could not recover because of their own fault. Therefore, they declare fault meaningless and deny the innocent traffic victim his full, fair and adqeuate compensation so that all may recover limited benefits.
If fault is not a proper factor in automobile accident reparations, why should fault be acceptable in any other tort situation? If a motorist should not be held liable for his momentary inadvertence why should a surgeon be held liable if his scal. pel slips and injures a patient? Why should the distracted motorist who runs a stop light be exempt from tort liability when automobile manufacturers will be held liable if a workman's temporary distraction produces a faulty product that causes injury?
Simply stated, if the "basic principle" is true and motorists who injure others should not be held responsible for fair and adequate compensation, then the concept of fault should be discarded totally and each person should be required to protect himself not only from the consequences of his own conduct but from that of all others. It is clear that today's Americans are seek. ing a re-emphasis of individual responsibility, not its further erosion.
insurance in effect are correct, nearly three quarters of the public would be forced to buy unneeded coverage and, as part of the bargain, to give up the right to recover for losses not covered by either their present insurance or the AIA plan.
One may wonder why AIA affirms an auto compensation plan which is, in effect, compulsory accident and disability insurance. One insurance executive has alleged that marketing factors are a prime reason.. He stated:
The AIA automobile insurance plan, being in itself simply a form of compulsory accident and disability insurance, lends itself from a marketing and procedural standpoint to a group approach. It seems fair to suggest that one motive strongly influencing members of the AIA Executive Committee, which are the giants in their own organization, is the marketing potential for tying their present group writings directly into the new automo bile insurance system they propose.
The AIA plan does not provide for a collateral source setoff, as in the KeetonO'Connell plan, and the stated reason for not doing so is the belief that "the cost of motor vehicle accidents should be borne by motorists." However, companies that will write the new auto plan and also continue to write other non-auto, first party accident and disability coverages will, in effect, be getting two premiums for the same coverage.
It should be noted that problems can arise in the enforcement of a compulsory insurance law. Since the purchase of its insurance would be a prerequisite to operating a motor vehicle in a state enacting the plan, some machinery would have to be set up to recover the drivers' licenses, certificates of registration and vehicle licenses of those motorists who allow their insurance to lapse.
COMPULSORY ACCIDENT AND
The AIA plan is compulsory accident and disability insurance for motorists, nothing more. Benefits payable under the plan (medical and hospital expenses, work loss and disability payments – per schedule) are available under present forms of non-auto, first party insurance coverages. If the plan were enacted, it would produce a unique situation. Motorists would be the only class in the United States who would be forced to purchase insurance to protect themselves from accidental injury.
Since most Americans have forms of nonauto insurance which provides for exactly the same losses that AIA's plan would cov. er, these persons would be forced to buy insurance they don't need. If statistics on the amount of this non-auto, first party
Statistics show that 85% of the American public have non-auto medical and hospital benefits avail. able and that over 70% of the work force have wage continuation benefits available. Andre Maisonpierre, A.M.I.A. vice-president, speech to In. dependent Mutual Insurance Agents of New York (Sept 1968)
LIMITATIONS ON RECOVERY
WORK Loss Under the present system, the innocent victim of an auto accident may recover full
Kemper Insurance Reports, Automobile Insurance: The Politics Of Surrender, at 10 (Nov 1968) : see also, Insurance Today, The Journal of Commerce (Nov 7, 1968) 5lbid Note 1 supra
damages, including any wage loss he may dent which would force him to miss one suffer, present and future. The AIA plan month's work. He would receive his places à ceiling on the recovery for this wage loss (less 15% and up to $750) and type of loss. A 15 percent "tax deduction" his hospital and medical expenses. Alis subtracted from any amount payable for though he could return to his prior job, this benefit and the maximum recovery his disability might disqualify him for betallowed is $750 a month ($9000 a year). ter jobs at higher pay. Under the present The 15 percent deduction means that the system, his potential for assuming better most an injured person will be able to re- positions prior to the accident would be a cover is 85 percent of his lost wages.
proper consideration in determining his The $750 a month restriction clearly dis- damages. Under the AIA plan, his wage criminates against those who have earnings loss benefits would end once he returns to over $9000 a year which includes over 300 his former job and he would receive no of the population. If inflationary pres- payment although his disability made it sures continue and the average wage and impossible for him to better himself, exsalary continue to grow, more and more cept for a benefit computed at or up to people would not be fully compensated for 50% of his medical and hospital bills. wage loss due to the arbitrary limitation. The failure of the AIA plan to consider It is easy to see why a limitation was set any compensation for loss of earning caOne has to be fixed in any plan if initial pacity is another example of the fact that cost figures are to be projected as lower it is not a complete form of personal prothan present rates.
tection as its title claims.
Loss OF EARNING CAPACITY Under the present system, loss of earning capacity is a proper element of a personal injury claim. However, under the AIA plan, it appears that claims for loss of earning capacity will not be allowed since, "work loss" is defined as:
loss of income from work (for example wages) and expenses reasonably incurred for services in lieu of those the injured person would have performed
without income.8 If the plan intends to eliminate this ele
inate this ele ment of recovery, a significant portion of the recoverable losses of some of the most seriously injured persons will be destroyed. For example, a college student could suffer a severe brain injury in an auto accident and have no wage loss because he is then unemployed. His brain injury could cripple him for life, making it impossible for him to accept employment but he would receive no payment for this calamity, except for a permanent disability payment computed as 50% of his medical and hospital bills. Under the present system, his potential for future earnings would be considered when determining damages.
As another example, a factory worker could be injured in an automobile acci.
7 Statistical Abstract of the United States at 326 (1968 ed) *Note 1 supra at 5
ELIMINATION OF PAIN AND SUFFERING
RECOVERY The AIA plan would provide no recovery for the pain, suffering and inconvenience experienced by a person injured in an automobile accident. The reason is another of the "basic principles” used in de veloping the plan:
Pain and suffering are not susceptible of objective measurement and should not be included in a reparations system.'
It is not denied that injured persons endure pain, suffering and inconvenience but the injured would have to bear their bur. den because these elements of damage can't be computerized to provide a hard, fast formula applicable in all cases and regardformula applicable in less of individual human differences. The plan finds it easier to compute a payment based upon 50 percent of medical and hospital specials than to treat each claimant as an individual with pain and injuries distinct from other individuals – pain and distinct from other individuals suffering just don't compute so they are eliminated.
Recoveries for pain and suffering are presently allowed. In fact, a substantial portion of many personal injury awards is made up of compensation for that element of damages. Recognition is now made of the fact that persons may be forced to en
old at 3
dure pain, suffering and inconvenience insurance have been doing with claimants through no fault of their own and that, for many years and are still doing today. but for the carelessness of another indi
That settlements and verdicts which invidual, they would not have had to under
clude sums for pain and suffering do not go that ordeal. The basic principle applies
have a precise mathematical formula is to that a person who causes injury to another
the credit of the present system. A jury should be responsible for seeing to it that
considers all the evidence presented to de. the injured person is fairly and adequately
termine the plaintiff's injury and the pain, compensated. Anguish and inconvenience
suffering and inconvenience he was forced are now considered as much a part of that
to undergo. The greatness of the system is injury as the lacerated skin, torn muscles
that it allows individuals to be treated as and broken bones. The vast sums our pop individuals and allows human beings to ulation spends on drugs, medical research,
assess the injury suffered by human beings. hospitals and doctors illustrates our dread
The fact that the pain and suffering of pain and shows that we will go to great
caused one individual by another does not expense to prevent or relieve it.
work into a computer program should not Also recognized is the concept that pain be allowed to determine whether an inand suffering include much more than the jured person will be denied his right to actual physical hurt produced by the in- recover for that damage - unless a comjury. A person with a broken limb is puter can also prevent one from ever sufforced to endure discomfort and incon sering pain again. Forms of first party venience as long as, and sometimes after, coverages are no substitute for compensathe bones mend and the actual physical tion for pain and suffering. hurt ceases. A person whose face is so scarred that plastic surgery can never fully
REDUCED DISABILITY BENEFITS succeed will suffer anguish and humiliation for the rest of his life. A young wo
The AIA plan does recognize that, in man whose injury prevents her from ever
some cases, a person may be partially or bearing a child may suffer emotional an
totally disabled by an auto accident and guish long after her wounds have ceased
does attempt to provide a small benefit as causing her physical pain.
“compensation" for that disability. The present system does not pretend to
Under the present system, the trier of set an exact value on a quantum of pain fact considers all the evidence presented so it can be multiplied by the claimant's
on the issue of the plaintiff's disability and total time exposed to that experience. No
determines a reasonable award for that two human beings are alike, and it is logi.
damage. Under the AIA plan the only in. vel to say that no two human beings ex
dividual consideration given to a disabled pertence pain to the same degree. Pain
claimant will be the total of his medical in suffering are not commodities avail.
and hospital expenses. This amount will wie in the marketplace. They have no go
be multiplied by a fixed figure up to fifty 2 leuri rate as do the wages of work
percent. The extent and nature of the dis
ability will not be considered. In fact, the 13. She trier of fact is given the individual himself will not be considered. mbi toward the plaintiff a sum All that will matter are figures and deci.
etable for the total experience mal points on the hospital and doctor bills. mi suttering he has undergone.
For example, a young secretary who lost - Caustics show that about 98 a leg in an auto accident will be told:
ELAN claims are settled and "We paid your medical and hospital ex--- S ere ever determined penses and your lost wages while you were * ETTİR. Since so many cases away from work. Your wheel chair will fit
aums for pain and behind a typewriter. But, since you are - Its strange to sug. permanently disabled, we'll also give you
e lement for pain an extra 50% of your medical and hospital -- vahed. This is bills. This will make up for the fact that
est write auto you can't swim or dance, or engage in any 20 kwariation of
of the other activities young girls of your age enjoy."
Such a plan will also "care for" the for scores of responsible motorists who use young father who loses his arms in an auto every means to avoid damaging the propaccident. Under its rehabilitation program erty of others and to assure that their own he may even be fitted with artificial arms vehicles are in good condition. so that he can again perform the tasks ex- AIA indicates that, under their plan, all pected by his employer. But, will an addi. insurers would be required to offer a form tional 50% of the value of medical and of “physical damage coverage" (presumhospital bills compensate him for his in- ably similar to present forms of collision ability to teach his son to throw a football? and comprehensive coverages). It should Will it provide just compensation for the be noted that this coverage would be opimpairment of his ability to fully enjoy tional and that an additional premium life?
would be charged to those who wished it. The protection of the AIA plan is not as complete as the title suggests. It does Misunderstanding As To Need For not consider the fact that a person suffer
Coverage ing from a severe, permanent disability may have relatively small hospital bills and
If the plan were enacted, it is question
able whether motorists would be sufficientmedical expenses and that this would re
ly informed about its features to recognize duce the amount of the award. It is based on an easily calculated formula which
the need to acquire the additional physical treats each claimant as a computer entry
damage coverage. Most motorists do not rather than an individual.
consider their auto insurance as a group of separate coverages for which separate pre
miums are paid. They tend to view all PROPERTY DAMAGE LIMITATION
coverages as an indivisible whole for which The AIA plan presents a unique ap- a single premium is charged. It is reasonproach to liability for property damage.
able that many would view the claimed 45 Today's motorist is liable for damage he
percent premium savings under its new may cause to the property of others be
plan as a saving that would be realized cause of negligence. Insurance coverage for against the price now paid for a complete such property damage is a standard part auto insurance package – including colliof automobile policies. In addition, first sion and comprehensive coverages. This party insurance coverages are provided to
view is strengthened by newspaper overcover loss to one's own auto which would emphasis on the claim of 45 percent cost otherwise go uncompensated.
savings. Few have mentioned that only 19 Under the plan, owners of property
percent savings are claimed if physical other than motor vehicles would be treated
damage coverage is also added. Expecting a as additional insureds under a motorist's
45 percent saving, motorists might mistakpolicy. If, for example, a driver left the
enly purchase only the bare bones AIA road and struck and damaged a person's
coverage and not the additional physical home, the driver's insurer would pay the
damage option. Thus they would be exhomeowner for that damage. However, if
posed to severe financial loss in case of the driver would strike a car parked in
subsequent damage to their autos. front of the owner's home, the plan gives the driver and his insurer immunity from
Inequity In A Deductible any liability. All vehicle owners in a state One must also consider the fact that the enacting the plan would assume the risk of plan's physical damage coverage would cerdamage to their own vehicles. Thus, even tainly have some form of a deductible. The if the owner could conclusively prove that most common deductibles with present colhis car was properly parked and that the lision coverages are $50 or $100. However, damage was caused by another's negli under the present system, a vehicle owner gence, he would have no right to be re- may recover the $50 or $100 he paid for imbursed.
the cost of repair, if the damage was caused Such a change in the rules of liability by another's negligence. might be welcomed by parking lot op T his would not be so under the AIA erators and the owners of vehicles that are plan. Those causing property damage to one step away from the junk yard. How- the vehicles of others would be immune ever, it would be unjust and 'inequitable from liability. Up to the limit of the de