Details of Legislation Approved as Response to Insurance 'Crisis'

Less than five years have passed since the Supreme Court decided Alvis v. Ribar (1981) 85 Ill. 2d 1, 412 N.E.2d 886, giving Illinois a system of pure comparative negligence.

The bench and bar were just beginning to get a feel for the system and its intricacies when the legislature reestablished contributory negligence as a bar to recovery by the addition of a new paragraph to the Code of Civil Procedure, Paragraph 2-1116. This paragraph is part of a massive piece of legislation, the "Act in Relation to the Insurance Crisis," which goes into effect 60 days after being signed by Gov. Thompson.

It is in anticipation of the governor's signing this legislation that this article was prepared. Having had the opportunity to participate in the activities which surround its passage, including House Speaker Madigan's summits," I left Springfield with the full expectation that the bill would be signed and all subsequent indications suggest this will happen shortly.

The act deals with a number of subjects, but most extensively with the area of immunities for municipalities and others, along with the legislation dealing with the insurance industry itself. Woven into it, however, are a number of sections which meaningfully affect the Illinois tort system. These include a modification of the collateral source rule; limitations on punitive damages; and the adoption of extended sanctions for bad faith pleadings, modeled after Rule 11 of the Federal Rules of Civil Procedure. Future articles will explore the sections that affect injury litigation in Illinois. Here we deal with two of the most important areas of changerticle 3, which modifies comparative negligence and Article 5, which makes significant changes in the law of joint and several liability.

Section 2-1116 of the act, which will appear in the Code of Civil Procedure as Paragraph 2-1116, is short, and reads:

"Limitation of Recovery in Tort Actions. In all actions based on a count of bodily injury or death of physical damage to property, based on negligence or products liability based on strict tort liability, the plaintiff shall not be barred from recovering damages if the trier of fact finds that the contributory fault on the part of the plaintiff is not more than 50% of the proximate cause of the injury or damage for which recovery is sought, but any damages allowed shall be diminished in proportion to the amount of fault attributable to the plaintiff."

The force of the Alvis case was to get rid of contributory negligence as a bar to recovery. The pure form of comparative negligence disposes of that bar altogether, and allows compensation based on the degree of defendant's fault, no matter how small that may be. The new legislation restores the bar of contributory negligence. Although it is referred to as a comparative system, and this is not a complete misnomer, it is not strictly so, since the plaintiff's negligence is not compared with any party or combination thereof. Rather, the permissible amount of plaintiff fault is simply enlarged - from none, as it existed in pre-Alvis practice, to 50 percent. The differences in philosophy, application and practice between a truly comparative system and this kind of formulation may make a significant difference in some kinds of cases, and how the law develops in the future.

Future interpretations of this section are likely to be predicated, in part, on the decisions of other jurisdictions which have modified comparative fault systems. It would be a mistake however to think of Illinois as being one of the many "not greater than" jurisdictions, and to uncritically look at those states for guidance in interpretation or an indication as to how Illinois courts will come to treat the matter.

In appearance, Illinois' formulation is quite like the rule as it is found in Wisconsin and a number of other jurisdictions, but the appearance of similarity is illusionary. The essential but critical distinction is that such states compare the plaintiff's negligence with each defendant, and allow the plaintiff to recover only against those as to whom his negligence is not greater. Soczka v. Rechner (1976) 73 Wis. 2d 157, 242 N.W. 2d 910. Hence, under such a system, a plaintiff with as little as 20 percent negligence could be denied recovery in a case involving eight defendants, if each were found to be 10 percent at fault.

Further, in these states, the formula used allows the plaintiff to recover only if his contributory negligence is not greater than the defendant's, and so to that extent is truly comparative. Under the Illinois statute, the plaintiff's fault is compared with no one's - rather it is measured against an absolute standard: 50 percent.

In this Illinois appears to be unique so that reliance on the decisions of other states will be more problematic than might otherwise be supposed. The systems which Illinois' statute most closely resembles, are those having statutes which specify that the plaintiff's negligence be not greater than all of the defendants considered together. Such jurisdictions can be expected to supply the largest share of authority for interpretation of this act. While the new statute is less favorable to plaintiffs than was the pure comparative negligence of Alvis, it is more favorable than are the modified systems of the Wisconsin type. Because the injury is directed at the plaintiffs' fault measured against the absolute of total casualty, he cannot be deprived of recovery in multiple-defendant cases where his fault is greater than any given one of them. Of course, in a case with one plaintiff and one defendant, this doesn't matter; where there are many defendants the difference can be most significant.

Another feature of this statute which is unusual, though not entirely unknown elsewhere, is reference to "fault" rather than to "negligence." This terminology, which the drafters determined not themselves to define, is sure to prove significant, particularly if resort is had to the decisions of other jurisdictions where it is used and has been defined by statute. In those states, "fault" is understood to go beyond what is generally understood by negligence. The state of Washington, for example, a pure comparative jurisdiction, has a statute which diminishes the plaintiff's recovery by the degree of "fault chargeable to the claimant." The definition of fault goes well beyond the ideas of negligence to implied contract and warranty.

Illinois' Act, in naming the areas covered, does not include warranty theories. This writer participated in the colloquies of the drafters, who specifically intended to limit the plaintiffs' recoveries only in products actions based on strict liability in tort, and specifically did not want to infringe upon the handling of products cases based upon contract theories. Also not mention, and apparently meant to be excluded from the purview of the act, are intentional wrongs, and those torts which were reachable, at common law, by assumpsit; conversion and fraud.

There is, under the act, also a question of the status of wilful and wanton. Many authors, jurists and practitioners regard willful and wanton misconduct as gross negligence, and therefore a specie of negligence, and hence they see no problem with trying such a case subject to comparative principles.

States which have a 50 percent system have yet to resolve this issue. A few have allowed such comparisons. Oregon has determined, by case law, that the ordinary contributory negligence of the plaintiff may be compared to the wilful misconduct of a defendant. Minnesota has done so by statute, in its definition of fault, which specifically includes "acts or omissions which are in any measure negligent or reckless towards the person or property of the actor or others.

But the majority of the 50 percent states, which have a clear determination on the question, hold that a plaintiff's ordinary negligence is not to be compared with the willful misconduct of a defendant. These include Connecticut; Georgia; Montana; and New Jersey, which has held that there is a distinction between gross negligence and recklessness, and that there can be a comparison with gross negligence, but with recklessness there cannot. Illinois itself, after Alvis, has also given indication that the two should not be compared. The legislature has defined willful and wanton elsewhere in the same legislation, as part of the provisions dealing with municipalities, but that definition mirrors the one with which we're all familiar, that long used in instructing juries, I.P.I. 14.01. Interestingly, the question of willful and wanton is one of those which may be subject to resolution by the fact that the statute, as drawn, has created, not a modified system of comparative negligence, but a modified system of contributory negligence. It was always the law in Illinois, in pre-Alvis proceedings, that contributory negligence was no defense to wilful misconduct, and this tradition will doubtless be brought strongly to bear on future interpretations of these issues.

Another question raised by the act is the treatment of third-party cases. The act makes no specific reference to third-party plaintiffs and defendants, which is surprising in view of the fact that such proceedings are now commonplace in tort litigation. However, after having observed the legislative milieu and the current of tort reform posture, I can report to you that it is difficult, maybe impossible, to get a detailed inquiry or analysis of such legal niceties as third-party practice in an environment broadened by competing political interests such as lights in Wrigley Field, a stadium for the White Sox, Kelly and the Park District and special legislation for race tracks.

In any event, it would appear that the term plaintiff also includes counter-plaintiff and third-party plaintiff, in which case the general policy would apply, with the result that a third-party plaintiff guilty of more than 50 percent of the causative fault would not be allowed to recover anything back from the third-party defendant which had been brought in. While this seems the most likely result, it is not absolutely clear, and doubtless, in the course of time, creative counsel will have other interpretations to advance. Another question is of the status of classic defenses to contributory negligence.

Alvis, in abolishing contributory negligence as a defense, had also abolished the doctrine of last clear chance. The Legislature has now effectively abolished Alvis and revitalized, albeit in modified form, the bar of contributory negligence. In view of this, it is not unnatural to think, and many will doubtless wish to argue, that the reason for the abolition of last clear chance being gone, it should be restored to use. In fact, a number of sister jurisdictions which have a modified system of comparative negligence have preserved some of these defenses in modified form. While assumption of risk is almost universally abandoned by jurisdictions after the adoption of a comparative system because is simply transmuted into a form of plaintiff fault, the last clear chance doctrine has continued to survive as viable in a number of 50 percent jurisdictions, including Georgia, Montana, New Hampshire, Ohio, and Minnesota, which, like Illinois, has adopted a fault rather than negligence approach.

While the fate of the classic defenses may be one of speculation, the plaintiffs dodged a bullet with respect to the legislative rejection of "the blindfold rule." Basically, the blindfold rule requests that the jury not be informed of the effect of their apportionment vis-a-vis liability. Wisconsin, historically, has been a stronghold for this rule, but it also has a following on Arkansas and Massachusetts. Most other modified comparative jurisdictions permit the jury to be informed of the effect of its answers on liability.

Illinois will join Colorado and Connecticut in mandating such disclosure by statute. Section 2-1107.1 requires that the jury be informed of what effect its apportionment of fault has upon the issue of liability, that a finding of 51 percent plaintiff fault will result in no recovery.

This avoids the harsh results that have sometimes been obtained, particularly in jurisdictions having a 49 percent percent rule, where a finding of equal fault results in no recovery.

Article 5 of the legislation introduces another far-reaching element into Illinois tort law by its modification of joint and several liability. Two new sections have been added to the Code of Civil Procedure, Section 2-1117, which modifies the current joint and several rule, and Section 2-1118 which places certain limitations on that modification.

The current rule, that a defendant who is liable for any part of a plaintiff's tort damage is liable for all, has been well established since the last century and finds its most famous expression in the 1891 decision of St. Louis Bridge Co. V. Miller, 183 Ill. 465, 476, where the Supreme Court said:

"The rule is well settled that a person contributing to a tort, whether his fellow contributors are men, natural or other forces of things, is responsible for the whole, the same as though he had done all without help."

The inequities incident to such a system have been cured by the law of contribution, which allowed a tortfeasor who had paid more than a proportionate share to secure such amounts from his fellow tortfeasors. The law has now been made more complex by far. Generally stated, a tortfeasor whose fault is found to be less than 25 percent is not jointly, but only severally liable. This means that he will be liable only to the extent of his own degree of fault. A party found to be 25 percent or more at fault will be jointly and severally liable as before, the statute, by specific reference, brings into the picture, not only named defendants but such additional defendants as may be third-partied in. These parties would have the right to seek contribution from the other tortfeasors if called on to pay the whole judgment.

Further, the act specifically refers to third party defendants that the plaintiff could have sued. This addresses the concern, expressed by the plaintiffs' bar during the Springfield negotiation, that any abolition of the joint and several doctrine should not be allowed to serve as a vehicle for bringing in, to share in the appointment of cause, those whom the plaintiff could not sue, such as a worker's employer or a child's parent. This also serves to avoid the empty-chair defendants who are not really viable parties in the case, but are added by other defendants to reduce their own share of liability.

A number of other states which have a 50 percent system have adopted a statutory modification of the joint and several rule. These includes Texas, Oregon, and Nevada. But in all such cases the statute is formulated in such a way that all defendants are jointly and severally liable except as to a defendants whose negligence is less than the plaintiff's. Such a defendant will be liable for only the part of the judgment which represents his own percentage of negligence. Again, Illinois statute is unique in permitting a contributing tortfeasor to be severally liable even in cases where the plaintiff has no fault at all. The drafters specifically rejected requests of the plaintiffs' bar that all defendants be jointly and severally liable in cases where the plaintiff was not at all negligent.

Another feature of Paragraph 2-1117, which will go far to complicate trials, is that joint tortfeasors retain joint and several liability for medical damages and medically related damages. This special exception came about because the drafters were concerned that medical indigent victims would not be able to collect proceeds necessary to defer their medical or other health care costs. In order for this section to be effected, separate findings as to types of damages will have to be made in every damage case involving multiple defendants - just as they already are in medical malpractice cases.

While the Medical Malpractice Act gives guidance as to what constitutes medical damages, what is meant by "medically related" damages is nowhere suggested. The drafters struggled with creating a term that would broadly include the anticipated medical expenses of an injured party. Thus, the drafters specifically elected to use the term "medically related" instead of separately itemizing such things as vocations, physical rehabilitation, computer augmented communication systems, prosthetic devices, nursing care, and additional care, including equipment transportation, specially designed houses, and so on. As you can see from the list that I've just stated, it could go on and on and the drafters were specifically concerned about someone arguing that a certain expense would be excluded because it was not specifically stated. Thus, the term "medically related" was selected on the belief that it would supply the broadest application possible.

Because this bill was based on political reasons which were indifferent to thoughtful analysis of how it would work, many issues remain unresolved. For example, consider an injury victim found to be 40 percent at fault in an action against two defendants, found to be 50 percent liable, and B, with a 10 percent finding. The total, unreduced damages are found to be $500,000 of which the trier attributes $50,000 in past medical damages and $150,000 in future medicals.

The total verdict will be $300,000 after reduction for the plaintiff's fault. Although other scenarios are possible, it seems most likely that the $200,000 in medicals will reduced pro rata by 40 percent to yield $120,000. B can be called upon to pay this entire amount, because he is still jointly liable for medicals. In addition to this, B must answer for 10 percent of the remaining, non-medical damages, another $18,000. If B has in fact been required to pay the entire amount of medicals, he will be able to claim $108,000 from A under the existing law of contribution.

Paragraph 2-1118 expresses certain exceptions to the new law. For example, it does not apply to medical malpractice cases. This came about because the medical societies (as distinguished from the hospitals) thought enough about the joint and several doctrine that they wanted to preserve it so that the doctors could turn to the hospital and have them pay on any awards which they could not cover. This, of course, insures that the hospitals will be kept in the case until settlement time to pay what many think is more than their proportionate share of damages.

Thus, while many attorneys think that change in the joint and several doctrine will have an effect on settlement negotiations, any such alternative certainly would not enter into medical malpractice cases. Another exception is cases which involve injury from toxins of all kinds, whether dangerous products (asbestos is specifically named), by-products, or pollution. This exclusion applies only to generators of such substances. Those engaged in restoring them, or endeavoring to clean up such substances are outside the exclusion and are treated as other defendants under the rule.

Many lawyers believe that the character and direction of plaintiffs' injury practice is dramatically changing. I certainly share that view and only time will tell whether this legislation brings into blanace legitimately competing societal interests, or is only a panicky reaction to a crisis in which many fair minded people still do not believe.