Article by Ellen Smith Pryor
In both the political and academic spheres, tort law has recently come under heavy attack. Calls for reform of the traditional fault system have met with some success in many state legislatures. Meanwhile, academics endorse yet more radical changes than the usual slate of reform measures that state legislatures have adopted thus far. These proposals range from Professor O'Connell's suggestions for settlement offers foreclosing full compensation to Professor Stapleton's recent discussion of the need for a nontort scheme based on disability rather than cause. In addition to these developments, a vast nontort compensation landscape already exists. For example, state workers' compensation programs, the federal social security and civil service disability schemes, and veterans' disability programs handle enormous numbers of compensation claims and pay out benefits that constitute a large percentage of the total payments made under all compensation programs, including tort.
Yet, despite the importance of current systems and the outpouring of material critical of tort, much less of the literature has focused in detail on the desirable features of nontort systems. This Article moves in that direction by proposing a model—a consequential model of loss—which compensation programs should employ in evaluating and measuring the losses resulting from compensable injury or disease. In other words, as to any loss that a compensation program might claim to compensate—such as lost wage-earning capacity or disfigurement—the consequential model should be the basis for identifying and measuring the existence and degree of that loss. The Article argues that this model should form part of any future compensation program and that it also should be used in operating and interpreting existing compensation programs.
Why is such a model for loss necessary? First, any compensation program should rest on a complete and coherent understanding of the loss process—the spectrum of consequences that may befall a victim of disease or accident. This is necessary because any compensation program must choose (explicitly or implicitly) the losses that will be compensated and the standards for measuring those losses. An inadequate understanding of the loss process itself will produce flawed choices, whatever the theoretical aim of the compensation program. For example, from a perspective of reducing total accident costs—the goal that dominates current compensation writing and that is associated with the seminal work of Dean Calabresi—failures in measuring loss are harmful because any system of accident or compensation law must evaluate as accurately as possible the costs of accidents or disease. Dean Calabresi has termed this issue as “what-is-the-cost.”' As he has explained, failures in evaluating what-is-the-cost will impede the system's ability to assign true accident costs to the appropriate cost-avoider and thus will hinder the goal of total accident cost reduction.
Respecting the other major theoretical aim of compensation law—corrective justice or fairness—failures in identifying or measuring loss will prevent many of the injured and diseased from receiving the benefits, often desperately needed, to which they are in some sense entitled. Hence, whatever the theoretical aim of a compensation program, the system should rest on a complete understanding of the loss process.
Second, compensation law currently suffers from an incomplete and flawed view of the loss process. Compensation law in this context refers not only to tort law but to the massive body of law concerning existing nontort compensation programs. As this Article will demonstrate, neither tort nor nontort law rests on a full view of the loss process.
Third, because compensation law currently lacks an adequate foundation for loss evaluation issues, legislatures and courts habitually and inevitably err in implementing existing compensation programs. Future programs will be doomed to repeat these errors unless they select a superior method for evaluating loss. The model that this Article develops represents a complete and coherent view of the loss process and thus can help avoid the types of systematic evaluation errors that currently plague compensation law.
Part II of this Article introduces and develops the consequential model of loss. The model, which draws heavily on the insights of the medical and rehabilitative communities, is a way of understanding and describing the spectrum of loss and the available methods of measuring those losses. Part III demonstrates how the absence of a complete consequential view of loss causes current compensation law to fall short in identifying and measuring compensable loss. In particular, Part III contends that many areas of current compensation law reflect a common failure: a particular compensation program purports to select a certain loss or losses to be compensable, but then establishes a standard for measuring the loss that is inconsistent with the loss and thus undermines the very decision to compensate the loss. Part III illustrates this problem—the undermining of compensation choices with inconsistent measurement standards—by examining several major areas of workers' compensation doctrine.
First, Part III shows how many jurisdictions that use compensation “‘schedules”’—a fixed specification of benefits payable for certain bodily part losses—apply the schedules in a way that undermines the supposed administrative efficiency that justifies the use of schedules. Second, Part III demonstrates how Florida's recently reformed and much praised workers' compensation program, although purporting to award benefits on the basis of lost earning capacity, includes a measurement standard that is inconsistent with the loss of earning capacity. Hence, programs modeled on the Florida system inevitably will disallow benefits to claimants who, under the system's own premises, deserve them. Third, Part III examines a complex but frequent loss-evaluation issue: how to measure losses that originate in one part of the body and affect others. This Article shows how many jurisdictions resolve this issue with standards that are incoherent and that undermine the goals of the system. Finally, Part III demonstrates how many jurisdictions that seek to compensate loss of earning capacity undercut that goal by incorrectly defining the relevant sphere of the worker's activity. Part III's exploration into four major areas of current compensation law demonstrates the failures that result from the absence of a consequential view and also illustrates how a consequential model helps to resolve some of the more difficult loss evaluation issues that currently arise.
Part IV uses the consequential model to examine an issue that has great significance for both existing and future compensation programs. As noted, many nontort compensation programs heavily use schedules—a specification of benefits payable for defined bodily losses. Undoubtedly, many proposals for alternative compensation programs will include at least partial reliance on the concept of schedules. Part IV uses the consequential model to examine the plausibility and desirability of the schedule approach, concluding that the primary traditional argument for the approach—its greater administrative ease—is highly questionable in many contexts. Hence, Part IV challenges the use of schedules in certain contexts and outlines the circumstances in which their use will have greater justification.
About the Author
Ellen Smith Pryor. Assistant Professor of Law, Southern Methodist University.
Citation
64 Tul. L. Rev. 783 (1990)