How the House Freedom Caucus Killed ‘Med-Mal’ Reform

Great news for the cause of federalism.

Republican tort reformers ran into a constitutional roadblock in Congress last month, set up by Republican federalists. That’s a big deal, and great news for the cause of constitutionally limited government.

On March 17th, GOP leaders found their decades-old effort to enact national tort reform legislation stymied in the House Judiciary Committee when members of their own party, aligned with the conservative Freedom Caucus, blocked a medical malpractice reform bill that has long been a top priority of the physicians lobby.

The bill would tightly cap economic damages and attorney fees, to discourage malpractice lawsuits from being filed, and alter the rules of evidence in civil trials, to make it harder for plaintiffs to prevail. Those kinds of reforms have been enacted in a number of states, where they’ve reduced the size and number of damage awards. Supporters claim they’ve also increased physician supply and reduced health care costs in those states. (The academic evidence for these claims is weak.)

The bill had been identified as a priority by House Speaker Paul Ryan, R-Wisc. He asked committee chairman Bob Goodlatte, R-Va., to move it as part of the leadership’s effort to woo Freedom Caucus members to support the Ryan budget, which has stalled amid (legitimate) concerns that it spends too much. According to the Congressional Budget Office, the med-mal bill would reduce federal outlays by $40 billion over ten years, or about one-tenth of one percent of projected federal spending over the period.

Goodlatte duly moved the bill, only to be caught off guard when several committee conservatives objected to it on constitutional grounds. Facing an embarrassing defeat, he abruptly adjourned the panel without taking a vote.

Freedom Caucus Wins Again

It must have been frustrating, because an identical bill passed the committee in 2011 and 2012. What changed? The Freedom Caucus. Formed at the beginning of 2015, the libertarian-leaning group of about 40 House members has brought to Congress a renewed commitment to the idea of constitutionally limited government. Several caucus members serve on Judiciary, including Ted Poe, R-Texas, Ken Buck, R-Colo., Raul Labrador, R-Idaho, Ron DeSantis, R-Fla., and caucus chairman Jim Jordan, R-Ohio. Non-member Louie Gohmert, R-Texas, usually votes with it.

Poe and Gohmert are former judges. Both spoke up against the bill in committee. The federal government, they argued, has no authority to overwrite state civil liability laws. That power is reserved to the states under the Tenth Amendment, which declares: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Numerous leading conservatives agree, including Senator Mike Lee, R-Utah, and libertarian law professor Randy Barnett of Georgetown University.

Doubtless Ryan and company are working behind closed doors to resurrect the bill. But given Republicans’ slim majorities in both chambers, and the uncompromisable nature of the constitutionalists’ objection, one may safely declare med-mal reform dead for the remainder of this Congress (i.e., through 2016).

Even if Ryan manages to resurrect it, the bill will almost certainly die in the Senate, as it did in 2012, or be vetoed by President Obama.

Republicans should let the whole issue drop.

For one thing, the various physician lobbies pushing for the bill are no friends of the GOP. Just this week, the American Medical Association and dozens of national medical specialty societies publicly demanded federal funding for research on what they claim is an “epidemic” of gun violence—as if gun deaths are a contagious disease. Such calls are part of the Left’s larger strategy to undermine the Second Amendment and smear conservatives as anti-science and pro-death. Why would Republicans reward them?

Doctors Are Imports?

More importantly, Republicans are wrong on the constitutional question. The Freedom Caucus is right. Ours is a system of limited, enumerated powers. Local lawsuits are outside the federal purview.

Bill supporters, of course, have a counter-argument. They claim Congress has authority for federal intervention under the Commerce Clause, which declares that “Congress shall have power to regulate commerce among the several states.”

But that famously overused clause could only be a persuasive source of authority for federal tort reform if at least one of the following premises is true: 1) The term “commerce” encompasses virtually all human activity. 2) Physicians are akin to goods shipped across state lines. Neither premise is plausible.

In committee, Republican leaders based their case on the latter premise. Trent Franks of Arizona, chairman of the Constitution subcommittee and the bill’s lead sponsor, argued:

State tort law has dramatically and negatively affected interstate movement of individuals with valuable skills. Studies show that medical liability laws have a significant effect on the movement of medical professionals from state to state. Not surprisingly, studies also show that Mississippi and Texas, two states that enacted medical tort reforms recently, have experienced a significant rise in the number of doctors practicing there.

Congress has the clear authority under the Commerce Clause to enact federal tort reform that facilitates the free movement of medical professionals throughout all fifty states unimpeded by the deterrent effects of excessive tort liability.

In other words, tort laws are like tariffs, and doctors are like crates of fruit. Hmm. This argument is doubly disappointing, because Franks too is a Freedom Caucus member.

The Original Meaning

During the ratification debates of 1787 and 1788, the “tort laws are tariffs” theory would have been dismissed as absurd, not only by the supporters, but also by the opponents of the proposed Constitution. Federalists and Antifederalists alike understood “commerce” much more narrowly than does the modern Supreme Court.

Professor Robert G. Natelson explains the difference in an important 2011 article, “The Roots of American Judicial Federalism .” In the founding era, he writes:

To “regulate commerce” was to supervise imports and exports, control money and other weights and measures, oversee transportation, and administer the “law merchant”—that is, the law governing mercantile trade, markets and fairs, cargo insurance, and commercial finance. Governance of other activities, even economic activities closely connected with commerce, was not part of “to regulate commerce,” as the Constitution employed that phrase.

Supporters of ratification assured the public that under the new system the states would retain their traditional jurisdiction over civil justice. Congress would have no power in that area. This assurance was specific and unqualified. Without it, the Constitution might not have been ratified. This fact, in my view, renders modern Commerce Clause arguments irrelevant.

In Federalist No. 17, which appeared in New York on December 5, 1787, Alexander Hamilton implies that under the draft Constitution the states will retain their authority over the “administration of private justice between the citizens of the same State” (emphasis added). A month later, the influential Tench Coxe, writing in the Pennsylvania Gazette on January 23, 1788, makes the claim explicit:

Trials for lands lying in any state between persons residing in such state, for bonds, notes, book debts, contracts, trespasses, assumptions, and all other matters between two or more citizens of any state, will be held in the state courts by juries, as now. In these cases the foederal courts cannot interfere. (Emphasis added.)

And we find other Federalists making the same assurance in other states, including Massachusetts, Maryland, and Virginia, in published essays and private letters that circulated throughout the Union.

Professor Natelson summarizes:

Under the Articles of Confederation, nearly all judicial matters were concerns of the states rather than of Congress. During the Constitutional Convention, the Framers considered provisions that would grant to Congress and the federal courts jurisdiction over all activities with interstate effects. Ultimately, however, they rejected that approach, opting instead to enumerate the powers of Congress and of the federal courts. …

During the ratification debates, supporters of the Constitution repeatedly represented to the public the limited scope of federal power. They emphasized that the establishment and procedures of state courts would remain immune from federal interference, as would most of the substantive law those courts administered Tort law, for example, was to remain almost exclusively a state affair. Those representations are authoritative evidence of the ratifiers’ understanding; without them it is doubtful the instrument would have been adopted. The Bill of Rights [including the federalism-protecting Ninth and Tenth Amendments] was designed in part to fulfill those representations. [Emphasis added.]

He concludes:

Integrity of state court systems is a fundamental aspect of the Founders’ design. Except as authorized by subsequent constitutional amendment, congressional interference with state courts’ procedures and substantive jurisdiction is profoundly hostile to the federalism the Founders bequeathed to us. [Emphasis added.]

Amen. Federalism is a precious inheritance. And happily, it’s finding new defenders in Congress.

Dean Clancy, a former senior White House and congressional aide, writes on U.S. health care, budget, and constitutional issues. Follow him at deanclancy.com or on twitter @deanclancy.

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