Neo No-Fault Early Offers: A Workable Compromise between First and Third-Party Insurance

Jeffrey O’Connell & John Linehan, Neo No-Fault Early Offers: A Workable Compromise between First and Third-Party Insurance, 41 Gonz. L. Rev. 103 (2005).

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Recent national and state political activity, centering mostly on today’s crisis in medical malpractice, has again brought to the forefront the long-simmering issue of “tort reform.” Although concerns over personal injury compensation have persisted for decades and the recent deficiencies have clear historical precedents, to date there has been little success in achieving optimal reform. This is largely due to the fact that the debate is monopolized by two dueling sides – deeply embedded in their respective special interests, and stubbornly resisting attempts to compromise. With the persistence of this bi-polar configuration, the likelihood of sensible reform remains bleak. The accident recovery system is a complex, multi-faceted amalgam of tort law and private as well as social insurance that involves a wide array of policy objectives; any one-sided, simplistic modification of the status quo will necessarily prove to be either ineffective, imprudent, or both.

Developed nations, as a matter of course, have some organized means of personal injury compensation that measures the costs arising from accidents and attempts to distribute benefits appropriately. Under the American system, there are two different means by which compensation for loss may be pursued. Direct or first-party compensation may apply to an injury victim through an available insurance plan (such as health care or disability insurance) without much need for litigation. When injury accrues from fault, the victim may also seek recourse through third-party means by bringing suit in tort against the alleged wrongdoer. Upon a finding of fault, a court orders a defendant to pay damages to fully compensate the victim. Such damages are almost always covered by liability insurance with payments from the defendant’s insurer rather than directly from the culpable defendant…. Read More

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