In 2025, the Salt Lake Tribune reported that a Utah judge awarded a family close to $1 billion for a birth injury claim against a local hospital, the largest medical malpractice award in state history. The same year, a New Mexico jury awarded $16.75 million for chronic pain associated with a retained instrument, while death due to bowel perforation during surgery resulted in a $17 million verdict in Massachusetts.
These nuclear verdicts are just the tip of the iceberg. Settlement payments in medical malpractice cases against physicians that were reported to the National Practitioner Data Bank (NPDB)totaled $4.8 billion in 2023, according to one law firm’s analysis, while another firm reported a recent surge in verdicts over $10 million.
Large malpractice payouts come at a big cost, not just to healthcare providers but to everyone facing rising malpractice insurance premiums and to patients faced with higher bills as costs are passed on. State lawmakers have taken action to address these issues with the passage of tort reform laws. In response to rising costs and increased litigation, new laws have been enacted to modify liability, damages, and litigation procedures. However, the type and effectiveness of those laws vary considerably. In the ongoing debate, tort reform is a central issue, with proponents advocating for changes to address inefficiencies and high litigation costs, while critics raise concerns about fairness and access to justice.
So, what is tort reform in healthcare? This guide will explain the tort reform definition, the history of medical malpractice tort reform in the United States, tort reform laws by state, and the effectiveness of tort reform legislation.
Tort reform is a broad term that refers to efforts to reform the civil justice system. Tort reforms modify laws affecting all types of individual claims, but regulatory changes affecting medical malpractice cases are especially common. Tort lawsuits, including those for personal injury and medical malpractice, are often the focus of these reforms.
When a personal injury or wrongful death lawsuit is filed against an individual, there are practical limits on compensation created by liability insurance policy limits and by the fact that many defendants have limited personal assets.
When claims are brought against doctors and large healthcare facilities like hospitals, these de facto limits are much higher. Malpractice cases are also more complex, and juries may not always understand that bad outcomes are not always the result of medical error.
Unfortunately, this has resulted in medical negligence cases becoming a significant drain on resources, especially in light of social inflation driving up payouts. Tort reform is an effort to implement mechanisms in litigation against healthcare providers to both restrict frivolous claims and reduce excessive awards as part of efforts to reduce healthcare costs. Tort reformers advocate for these changes through the state legislature to address these issues.
So, what is tort reform in simple terms? Let’s take a closer look at the definition and types of reforms being put in place.
The tort reform meaning is simple. It is a set of laws designed to limit liability and damages, often by capping non-economic damages (such as pain and suffering), limiting punitive damages and regulating attorneys' fees, with the goal of reducing the frequency and cost of lawsuits.
These reforms are typically aimed at making it harder to bring unjustified claims and minimizing excessive damage awards that are not supported by the evidence of the case.
To further define tort reform, it’s helpful to look at some tort reforms that states have put in place:
Here are some of the most common modifications:
While the approaches differ, all tort reform in the US is implemented with the same goals in mind: to preserve access to justice while ensuring frivolous lawsuits and excessive verdicts don’t further contribute to rising healthcare prices or doctor shortages.
The history of tort reform in the United States stretches back to the 1970s, when concerns about rising insurance costs and the explosion of frivolous lawsuits began to gain national attention. The American Tort Reform Association (ATRA), established in 1986, became a leading advocate for legal reform, pushing for changes to the tort system that would reduce what they saw as excessive litigation and unwarranted costs.
Tort reform supporters argue that the proliferation of personal injury lawsuits, especially in areas like medical malpractice, has led to skyrocketing insurance premiums, higher healthcare costs, and a climate of uncertainty for businesses and professionals.
One of the central rationales behind tort reform is the belief that the current system encourages frivolous lawsuits and outsized jury awards, particularly for non-economic damages such as pain and suffering. For example, the Texas tort reform bill passed in 2003 was designed to address these concerns by capping non-economic damages in medical malpractice cases at $250,000, aiming to reduce the number of lawsuits and stabilize insurance markets. Proponents claim that such measures help ensure that the civil justice system delivers fair compensation without encouraging abuse or stifling innovation.
However, critics argue that tort reform measures can go too far, unfairly limiting access to justice for individuals harmed by corporate negligence or misconduct. They contend that strict caps on damages and other restrictions may prevent victims from receiving just compensation and can reduce accountability for those responsible for serious harm. The debate over tort reform continues to shape state legislatures and courtrooms across the country, reflecting ongoing tensions between the goals of efficiency, fairness, and consumer protection in the tort system.
Just as medical malpractice case stories show the evolution of laws defining medical negligence, a review of state tort reform laws reveals the techniques lawmakers have implemented to limit abuses in the legal system. Trends in tort filings and the volume of tort suits have played a significant role in driving the push for reform.
While some tort reform efforts specifically target medical malpractice claims, others have a wider scope, addressing other cases as well, including product liability claims. These reforms often redefine tort liability and the standards for compensation in a variety of civil cases. These laws could affect plaintiffs’ rights more broadly, including in upcoming Ozempic lawsuits and other multi-district litigations or class actions.
Here are some of the most notable rules and regulations that have been put into place in tort reform states. Several states have recently enacted new law to address emerging issues in tort litigation:
Not all of these laws remain in effect today in their current form. New law and recently enacted statutes continue to shape the tort reform landscape. In fact, California updated MICRA in 2022, Florida’s damage caps were declared unconstitutional by the state Supreme Court in 2017, Georgia tort reform 2025 laws imposed new limits on attorneys' fees and split trials into phases, and Missouri’s malpractice caps were declared unconstitutional.
By contrast, Wisconsin’s caps were upheld, providing more stability for providers and insurers.
As mentioned above, a number of courts have struck down caps on damages or declared other tort reform laws unconstitutional. State lawmakers have also been making changes and modernizing legislation put in place decades ago.
Some notable recent changes include the following:
Many of the states that are increasing damage caps are doing so to respond to pressure from consumer advocates seeking to promote access to justice and fair compensation. It is argued that old caps are now too low because they were not indexed to inflation.
However, other states, concerned about too many lawsuits and too many excessive verdicts draining healthcare resources and driving up healthcare costs, continue to move to limit plaintiffs’ rights. In Missouri, Senate Bill 239 reinstated caps on non-economic damages in 2015. Plaintiffs' attorneys have responded by adapting their strategies and expediting filings to comply with new requirements.
Some reforms have also introduced new restrictions on the ability to file lawsuits, aiming to reduce frivolous or excessive litigation.
Punitive damages seek to punish defendants for particularly reckless or intentional misconduct and to deter similar behavior in the future. However, tort reform supporters often argue that punitive damages can be excessive, unpredictable, and a driving force behind frivolous lawsuits. They point to cases where punitive awards far exceed compensatory damages, claiming this can lead to unfair outcomes and encourage unnecessary litigation.
In response, several tort reform measures have sought to limit punitive damages. The Class Action Fairness Act of 2005, for instance, placed restrictions on punitive damages in class action lawsuits, aiming to curb what reformers saw as abuse of the system. Some states, such as California, have enacted their own laws to cap or otherwise limit punitive damages in tort cases. A notable example is the Supreme Court’s decision in Exxon Shipping Co. v. Baker (2008), which set a 1:1 ratio between punitive and compensatory damages in maritime cases, highlighting the judiciary’s role in shaping the boundaries of punitive awards.
Despite these reforms, critics argue that limiting punitive damages can undermine the ability of plaintiffs to hold corporations and other powerful entities accountable for egregious misconduct. They contend that punitive damages are a vital tool for ensuring corporate accountability and deterring dangerous behavior that might not be adequately addressed by compensatory damages alone. The ongoing debate over punitive damages reflects broader questions about the balance between deterring wrongful conduct and ensuring fairness in the civil justice system.
The Class Action Fairness Act (CAFA) of 2005 marked a significant tort reform measure aimed at addressing concerns over frivolous class action lawsuits and inconsistent outcomes in state courts. By granting federal courts jurisdiction over large, multi-state class actions, CAFA sought to create a more uniform and predictable legal environment for resolving complex tort litigation. The law also imposed stricter standards for certifying class actions, limited attorney’s fees in settlements, and required plaintiffs to present clear, provable claims before a class could be certified.
Tort reform supporters argue that CAFA has helped reduce the number of meritless class actions and curbed abuses that can arise when cases are filed in plaintiff-friendly state courts. By shifting many cases to federal courts, the act was intended to ensure that class actions are handled more consistently and fairly, benefiting both defendants and legitimate claimants.
However, critics argue that CAFA has made it more difficult for individuals to seek justice through class action lawsuits, particularly when facing large corporations. They point out that moving cases to federal courts can impose additional hurdles for plaintiffs, including stricter procedural rules and higher costs. Critics also contend that the law has limited access to justice for those harmed by widespread corporate wrongdoing, as it can be harder to bring and win class actions under the new standards. Despite these concerns, the Class Action Fairness Act remains a cornerstone of the tort reform landscape, continuing to influence how class action lawsuits are litigated and resolved in the United States.
Third-party litigation funding (TPLF) has emerged as a significant factor in the ongoing tort reform debate. TPLF involves outside parties—often specialized litigation financiers—providing funding to plaintiffs in exchange for a share of any eventual settlement or judgment. Tort reform supporters, including the American Tort Reform Association, argue that party litigation funding can help level the playing field by giving individuals the resources needed to pursue legitimate claims, especially against well-funded defendants. They contend that TPLF can increase access to justice and reduce the financial barriers that might otherwise prevent injured parties from filing lawsuits.
However, critics argue that third-party litigation funding can introduce conflicts of interest and incentivize frivolous lawsuits, as litigation financiers may encourage plaintiffs to pursue cases with little merit in hopes of a large payout. Concerns have also been raised about transparency and the potential for outside funders to exert undue influence over litigation strategy and settlement decisions, potentially undermining the integrity of the legal system.
In response to these concerns, some states have enacted laws to regulate or even ban TPLF. For example, Wisconsin has implemented disclosure requirements for third-party litigation funding arrangements, while New York has taken steps to restrict the practice. The debate over third-party litigation funding underscores the need for careful oversight to ensure that the benefits of increased access to justice are not outweighed by the risks of abuse and exploitation within the tort system.
Pain and suffering damages are a central component of tort law, designed to compensate plaintiffs for non-economic losses such as emotional distress, loss of enjoyment of life, and other intangible harms. Tort reform supporters argue that awards for pain and suffering can be highly subjective and prone to excess, fueling frivolous lawsuits and driving up the costs of litigation and insurance. As we’ve discussed in this blog, to address these concerns, many states have enacted caps on non-economic damages, with California’s Medical Injury Compensation Reform Act (MICRA) being one of the most well-known examples.
Proponents of these caps claim they help ensure reasonable settlements, prevent runaway jury awards, and keep insurance premiums in check for healthcare providers and other defendants. However, critics argue that limiting pain and suffering damages can unfairly restrict the ability of plaintiffs to receive just compensation, particularly in cases involving severe or life-altering injuries. They contend that such caps may undermine the deterrent effect of tort law and reduce corporate accountability for negligent or reckless conduct.
The controversy over pain and suffering damages remains a focal point in the tort reform debate, with ongoing discussions about how best to balance the need for fair compensation with the goal of preventing abuse of the legal system. As state legislatures and courts continue to revisit these issues, the future of non-economic damages in tort litigation remains uncertain and highly contested.
While many state tort reform laws have passed, the question is: Are they effective?
Do they impact medical malpractice settlements and verdicts, or reduce the costs of healthcare services? Tort costs, including legal fees and insurance company expenses, are central to the debate over reform effectiveness, as they significantly contribute to overall litigation expenses and influence the economic impact of the tort system.
While there is evidence to suggest some reforms have moved towards resolving some of the most serious issues they were designed to tackle, that evidence is mixed.
Tort reforms, and particularly caps on non-economic damages, have consistently been shown to reduce average malpractice payments and claim severity. These reforms often also affect the calculation and admissibility of medical expenses and damages, influencing how evidence is presented and how compensation is determined.
One 2014 study, for example, demonstrated that non-economic damage caps reduced payouts by 15%, or around $42,980, with more restrictive caps producing larger reductions. However, the study also revealed that the results varied by medical specialty.
A more recent 2019 systematic review of 37 studies also found that non-economic damages caps were the most effective type of tort reform as measured by reducing payments. Caps tended to lower payments by 20% to 30% on average, largely because of limits on pain and suffering damages.
A review of outcomes in individual tort reform states also highlights the impact of damages caps on payments, including an assessment of the impact of the 2003 Texas reforms. Researchers found 47% of verdicts were impacted in cases that were resolved in the plaintiffs’ favor, and caps reduced mean total payout by as much as 73% in some circumstances.
Defensive medicine refers to ordering tests and providing treatment for purposes of reducing the chances of litigation or a plaintiff’s verdict, rather than solely based on the patient's best interests. It is costly and damaging to patients and to the healthcare system as a whole.
While some studies suggest that tort reforms reduced defensive medicine, and thus insurer spending, others found there was little change resulting from limits on malpractice claims.
One 2019 systematic review identified as much as a 3% to 4% reduction in defensive medicine and healthcare spending with no clear impact on care quality. However, a 2017 review of tort reform laws put in place in the early 2000s showed there was no significant drop in Medicare Part A spending and that Medicare Part B spending for physicians' services rose 4%.
Research from 2022 also revealed that reduced deterrence may come at a price, as non-economic damage caps were linked to significantly higher instances of adverse outcomes.
Do tort reforms increase the supply of physicians in an area by encouraging more doctors to practice there? This is an especially pertinent question in healthcare shortage areas.
One study, called Impact of State Malpractice Reforms on Physician Supply, identified a 3.3% increase in supply of physicians in an area three years after reforms were adopted.
Another revealed 2.2% more physicians per capita in states with economic damage caps compared to states without them, with the biggest impact felt in rural areas.
These are positive results that point in favor of reform initiatives in underserved areas struggling to attract qualified healthcare professionals.
One of the primary stated goals of tort reform is to help control costs. Health insurance costs and coverage are also influenced by tort reform measures, particularly in relation to medical malpractice claims. Reforms are supposed to reduce overall healthcare expenses by reducing defensive medicine and are supposed to lower malpractice insurance premiums by limiting risk.
The Congressional Budget Office analyzed this issue in 2009, estimating that malpractice tort reform, which included damage caps and other meaningful restrictions, could reduce mandatory spending for Medicare, Medicaid, SCHIP and the FEHBP by roughly $41 billion over a decade and could yield an increase in federal tax revenue by as much as $13 billion. This would provide a total estimated savings of $54 billion over 10 years.
As healthcare costs have increased substantially since 2009, the impact today could be even greater.
While some evidence highlights the benefits of tort reform, limitations on access to justice remain controversial.
There have been many proposed alternatives to traditional tort reforms that aim to find a balance between preserving a plaintiff’s right to fair compensation while minimizing the risk that frivolous claims and unfair outcomes present to providers and to the healthcare system. Some of these alternatives focus on providing liability protection for providers while ensuring the judicial system remains fair and effective.
Here are 4 of the most prominent alternatives to traditional state tort reform laws.
Communication and Resolution Programs (CRPs) encourage provider transparency and early resolution of medical negligence by offering opportunities for care providers to disclose mistakes, apologize, and work with patients to find non-litigious solutions.
Apology laws, which protect physicians from having their apologies for unfavorable outcomes used against them in malpractice claims, are also aimed at fostering discussion between providers and patients and encouraging open communication and transparency.
A total of 39 states have apology laws in place, according to the National Conference of State Legislatures.
One study showed that early apology and disclosure programs had as much as a 50% to 67% success rate in avoiding litigation and resulted in a substantial reduction in the amount of compensation paid per claim.
Alternative dispute resolution (ADR) keeps cases out of court by allowing plaintiffs and defendants to resolve claims through mediation, arbitration, and mandatory pre-trial panels.
The National Conference of State Legislatures also reports that 27 states have laws in place related to ADR for medical negligence claims, and 17 states – including Alaska, Delaware, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Massachusetts, Montana, Nebraska, New Hampshire, New Mexico, Utah, Virginia, the Virgin Islands and Wyoming – require cases to be heard by a screening panel before moving to trial.
Research suggests that ADR programs have a positive impact on outcomes, with mediation boasting a 75% to 90% success rate in avoiding litigation, a 90% satisfaction rate among both plaintiffs and defendants, and cost savings of approximately $50,000 per claim.
Health court proposals would create specialized courts for medical malpractice cases that are presided over by judges with expertise in the field. The courts could include panels of neutral experts who evaluate cases.
The purpose of these courts would be to make rulings more consistent, reduce biases in jury trials, and ensure medical standards, not legal strategies, determine outcomes. However, the jury trial remains a fundamental protection of individual rights in civil cases, ensuring that damages and awards are decided by a jury of peers.
Finally, enterprise liability proposals would shift more responsibility to institutions and organizations that employ physicians, rather than to individual doctors.
This could result in better safety protocols and could distribute risk to larger institutions, reducing the individual financial burden that malpractice premiums present to individual providers. Such companies are often the focus of enterprise liability proposals, as they are better equipped to manage risk and implement safety measures.
Medical malpractice case studies demonstrate the serious damage that malpractice can do. Patients harmed by medical negligence, of course, suffer dire consequences, while frivolous claims and the threat of expensive litigation can weigh on a provider’s mental health and impact the way they practice medicine.
A few key ways that tort reforms can affect provider policies include:
Misconceptions about lawsuit reform often stem from misunderstandings about the goals and effects of these legislative efforts. In particular, it is important to know the facts around some common tort reform myths.
Specifically, while some advocates believe tort reform always reduces defensive medicine or always improves health outcomes, the study results referenced above show that the impact of these reforms is mixed and can vary by specialty.
Further, while some believe that all states have medical malpractice caps, the reality is that many jurisdictions either did not put these caps in place or the damage limits have been struck down by the courts.
State laws are also evolving, and many states with caps have increased the amounts in recent years. As a result, providers must make sure to monitor changes in the law to confirm they have the right medical malpractice insurance in place.
Still need to know more about tort reform? Here are the answers to some frequently asked questions about state tort reform rules.
Amendments to the Federal Rules of Civil Procedure can significantly affect tort reform cases. These federal rules influence discovery processes, class actions, and requirements for disclosing third-party litigation funding in federal courts. Changes to the rules can impact how evidence is gathered, how cases are managed, and the transparency of litigation funding arrangements.
The Consumer Protection Act plays a key role in tort reform by regulating litigation funding practices. It aims to enhance transparency, set standards for legal financing, and protect consumers and litigants from predatory tactics in civil and personal injury cases.
A litigation financier is an entity or individual that provides funding to plaintiffs involved in lawsuits, often in exchange for a portion of any settlement or judgment. Regulation of litigation financiers, often under consumer protection laws, is important to ensure transparency, cap fees, and restrict certain behaviors to safeguard consumers involved in legal claims.
In 2025, the current California MICRA cap is $430,000 for non-fatal claims and $600,000 for wrongful death claims. California’s AB 35 resulted in the cap increasing to current levels after reforms in the 1970s limited non-economic damages to $250,000.
The cap will continue increasing by $40,000 for non-death claims and $50,000 for wrongful death claims until 2033, when the cap reaches $750,000 and $1,000,000, respectively, after which time caps will be indexed to inflation.
The National Conference of State Legislatures reports that 28 states have imposed requirements for filing an affidavit or certificate of merit before medical malpractice claims can progress.
In some states, such as Arkansas, laws were passed requiring an affidavit, but were struck down by the courts. You can review your individual state’s statutes to determine if your state has an active requirement for an affidavit or pre-suit panel.
Apology law statutes exist in 39 states, according to the National Conference of State Legislatures. Apology laws prevent your words of apology from being used against you if you express regret for the outcome of a medical treatment you provide. You can review your individual state’s statutes to determine if these laws are in effect where you live.
Collateral source reforms allow you to introduce evidence in a medical malpractice claim demonstrating that a plaintiff has already received compensation from other sources for losses, such as from government benefits or insurance. These reforms can reduce the amount of compensation a plaintiff is likely to receive, as the plaintiff’s economic losses are not as great.
Tort reform has had a positive impact on the practice of medicine, but courts continue to award large medical malpractice verdicts, and the impact of tort reforms on defensive medicine is not 100% clear.
Ultimately, providers must ensure they are doing all they can to protect themselves against claims of negligence and should put the right medical malpractice insurance coverage in place to protect their finances.
Indigo’s medical malpractice insurance can help you get the right coverage in place for the state where you practice, given the laws affecting your risk.
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