Tort Reform and Regulation of the Insurance Industry: Medical Malpractice Liability Proposals in 1986

Tort reform was a key issue for state legislatures in 1986.It pitted powerful interests against other powerful interests;it raised basic questions about common law; and it threatenedto alter the federal system by having the federal governmentclaim greater control over tort law and insurance regulation.In this article we set the background that led to this flurryof attention, review the major proposals for reform, and outlinethe actions of both the federal government and state governments.The federal government did little in 1986; it still faces thequestion of whether to preempt traditional state authority inthese areas. At the same time, virtually every state acted in1986. Early in the year, the insurance industry (and physicians)set the debate—its topic, tone, and terms. By the timeother interested parties got organized, many states had actedgenerally following the recommendations of the insurance industry.Later in the year, the debate became more heated, and the insuranceindustry had much more difficulty securing desired state action.As a result, many issues were carried forward to 1987.