In a recent article by Robert Regis Hyle at National Underwriter’s propertycasualty360.com, a baseball statistic is used as an example to illustrate the value of analytics over “gut feelings” to make decisions, and how such reliance on analytics has made its way into the insurance industry with respect to business decisions.  The article discusses the value of bunting with a runner on first base and no outs and includes the following quote from baseball writer Joe Posnanski of Sports Illustrated,

“They have been playing baseball for more than 100 years.  And for more than 100 years, more runs have scored with a man on first and nobody out than with a man on second and one out. This has been true every single season for more than 100 years.  Every single one.” 

Yet, despite the statistics, baseball managers still try to manufacture runs by bunting the runner over to second base and sacrificing the batter.

Some people may take the view that analytics should solely drive one’s business decisions, others may go strictly on instincts, while others may, and probably do, fall somewhere in between.  Where do your views fall?  Does it depend on the circumstances such as pricing vs. reserving?  Does it depend on whether it’s commercial lines vs. personal lines?  How about the audience to whom the information will be presented such as company management vs. regulators?  Or maybe there is something else?  Let us know what you think.

On March 22, 2010 the Georgia Supreme Court, in Atlanta Oculoplastic Surgery v. Nestlehutt, struck down as unconstitutional Georgia’s statutory limitation on non-economic damages in medical malpractice actions.     Georgia had adopted a cap of $350,000 on non-economic damages in any action (including wrongful death) for medical malpractice cases as part of its 2005 tort reform statute. (S.B. 3).   

The 2005 bill enacted a number of measures intended to reduce both the incidence of and decrease the cost of litigation.  In addition to the $350,000 cap on non-economic damages, the bill also included increased standards of proof for certain medical malpractice claims, and a loser-pays offer of judgment rule.

The Court upheld the ruling of the trial court, that the statute was unconstitutional in light of Georgia’s constitutional provision that “[t]he right to a trial by jury shall remain inviolate.” (Ga. Const. of 1983, Art. I., Sec. 1, Par XI(a)).   The Court’s opinion, which was unanimous, looked to prior Georgia cases intepreting Georgia’s unique “right to trial” provision, finding that they prohibited statutory limitations on the right to trial in cases where the common law had permitted a plaintiff to have a trial.  The Court found that a cause of action for medical malpractice was well-established prior to the adoption of Georgia’s Constitution and was, therefore, a right that could not be limited by statute.

Earlier in the month, the Georgia Supreme Court upheld two provisions of the state’s 2005 tort reform statute.  In Smith v. Baptiste the court upheld an offer of judgment rule (codified at O.C.G.A. 9-11-68) that allows a defendant in a tort case to ‘shift’ its attorneys fees to the plaintiff if the plaintiff refuses to accept an offer of settlement and ultimately fails to recover more than the amount offered.    And in Gliemmo v. Cousineau the court upheld the Georgia statute’s limitation of liability for emergency room doctors which limits liability only to claims resulting from “gross negligence only as shown by clear and convincing evidence.”

Merlinos & Associates can help you assess the effects of tort reform rulings in your business, including reserving and pricing issues.  See our Areas of Expertise for more details.