Blood money, new money, and the moral economy of tort law in action

Law & Society Review, 2001 by Baker, Tom

This article reports the results of a qualitative study of personal injury lawyers in Connecticut. Building on the results of an earlier study of lawyers in Florida, "Transforming Punishment Into Compensation: In the Shadow of Punitive Damages" (Baker 1998), the Connecticut study describes and explores the implications of professional norms and practices that govern tort settlement behavior. In particular, it examines the moral and practical barriers to collecting "blood money" (money from individual defendants, as opposed to liability insurance companies), as well as explanations for victims' apparent ability to partially trump the claims of subrogating workers' compensation and health insurance carriers. The results pose a challenge to the conventional understanding that tort law in action is a simpler, more streamlined version of tort law on the books. In addition, the results suggest that compensation and retribution figure far more prominently in tort law in action than does the deterrence emphasized in much of the theoretical and doctrinal literature.

That personal injury litigation revolves around liability insurance has become almost a truism among tort teachers, scholars, and practitioners alike. As both scholars and practitioners report, personal injury lawyers rarely bring a case unless there is an insured defendant (or a solvent self-insured organization) on the other side (Shapo 2000:165; Stapleton 1995:824; Baker 1998). Indeed, tort law analysts are so confident that liability insurance captures the bulk of the personal injury universe that they regularly use liability insurance claims files and liability insurance statistics to document, describe, and otherwise measure the dynamics, cost, and prevalence of personal injury litigation (Abraham & Liebman 1993; Saks 1992; Hughes & Snyder 1995; Kessler 1999).

At the same time, however, we continue to teach that tort law's claim to corrective justice rests on the moral principle that individuals should provide compensation for harm they wrongly cause others (Coleman 1992:329, 361; Perry 1992b; Weinrib 1983). And, even though we know that tort law in action is in some sense "really" about liability insurance, we also know that many defendants do not have enough liability insurance to compensate the people they injure (Conard et al. 1964; Sugarman 1993:666). Thus, unless all but the well-to-do are judgment proof (a situation that is belied by the ready availability of credit cards, mortgages, and other forms of consumer credit), we might expect that a significant part of the personal injury universe would be financed by "real money" from "real people"; that is, out-of-- pocket payments by uninsured or underinsured individual defendants.'

This study uses qualitative data from a series of in-depth interviews with personal injury lawyers to examine the place of real money from real people in personal injury litigation. In the process, it begins to map a fascinating, previously unexplored aspect of personal injury practice: the moral code that is implicit in the various kinds of money that are generated and disbursed in personal injury litigation. These kinds of money include the "blood money" and "new money" featured in the title, as well as insurance money, lawyers' fees, collateral sources, doctors' and chiropractors' bills, and a host of different subrogation or lien currencies.

"Blood money" is a term many of my respondents used for what I have been calling real money from real people-money paid directly to plaintiffs by defendants out of their own pockets. As their term reflects, blood money hurts defendants in a way that money paid on behalf of a defendant by a liability insurance company cannot. For that reason, blood money is an entirely different currency than what lawyers refer to as "insurance money."

The blood money story teaches us that the source of money makes a difference in tort litigation. Depending on the context, blood money can be worth much more than insurance money, or much less. Claims to insurance money are closely tied to tort doctrine and statutory entitlements; claims to blood money bear a much looser connection to formal law. Bargaining for insurance money takes place very much in the shadow of law (footer et al. 1982:225); bargaining for blood money turns more on commonsense morality and practicality. For readers who respond to tactile images, insurance money can be imagined as cold, hard, and flat; blood money as hot, soft, and highly textured.

"New money" is new insurance money, paid on top of old. New money comes into play when a plaintiff has already received health insurance or workers' compensation benefits that must be repaid, or when there are underinsured motorists (UM) benefits available on top of a defendant's inadequate liability insurance. The new money story teaches us that the recipient as well as the source of money makes a difference in tort litigation. When new money is at issue there often are competing claims on a defendant's assets. Not only the plaintiff but also a workers' compensation or health insurance company or a health care provider may expect to be paid. Settlements compromise those claims in predictable ways that do not necessarily track tort doctrine or statutory entitlement. Although claims to new money are more closely tied to doctrine and entitlement than are claims to blood money, plaintiffs' claim on new money often exceeds that which would be granted by formal tort law.