The Moore-Gephardt reform would also provide substantial savings in health care costs, through the elimination of the collateral source rule and by reducing inflated claims of medical damages. Moreover, the Moore-Gephardt reform would reduce the occurrence and size of "pain and suffering" damage awards.

Jim Saxton
Vice-Chairman
Joint Economic Committee

Improving the American Legal System:
The Economic Benefits of Tort Reform

I. Introduction
      The legal system in the United States has been widely criticized for being too costly, inefficient and ineffective in administering fair awards. In particular, the contemporary tort[1] system in the U.S. has deteriorated because of perverse incentives that lead to skyrocketing costs. Because of our current third party insurance system, and its pain and suffering damage recoveries that sustain contingency fee litigation, perverse incentives and standards have developed that drive up the cost of the tort system. In the auto insurance field, these incentives have produced a system riddled with fraud and abuse, and along with the tort system as a whole, they have generated costly, unnecessary and fraudulent medical claims. All of these problems add up to a huge economic burden for individuals, businesses, and government. According to a recent study by the actuarial firm Tillinghast-Towers Perrin, 1994 tort costs are up 125 percent from the 1984 level.