The Senate Buys No-Fault

For victims of automobile accidents, recovering from injuries is often easier than recovering from the insurance company. Because blame for an accident must be determined before claims are settled in most states, motorists frequently face costly court battles and years of delay before receiving compensation for their pains. One-fourth of all accident victims never collect a dime. Last week Congress took a first step to ward remedying that situation. After heated debate, the Senate passed (53-42) and sent to the House a national no-fault auto insurance bill.

Since Massachusetts pioneered compulsory no-fault insurance at the state level in 1971, the idea has won the support of consumer groups, labor unions and a growing number of insurance companies. Under no-fault, an injured driver is reimbursed for medical expenses and lost wages by his own insurance company, regardless of who caused the accident. In return, the motorist gives up his right to sue the negligent driver for further compensation or immeasurable factors like "pain and suffering" -- unless his injuries are much greater than usual. The backlog of auto cases clogging courts is cut and, backers hope, so are insurance premiums.

Some 20 states have already instituted some form of no-fault plan. But most have been timid versions that leave plenty of access to the courtroom. That is an ineffective solution; insurers generally agree that the right to file suit must be sharply limited if a no-fault plan is to work. Further, though insurers have tried hard to work out a system for peaceful coexistence of fault and no-fault systems in nearby states, some legal complexities remain. For example, if drivers from the fault states of Texas and Mississippi run into each other in New York, they can collect under that state's no-fault law. If they crash in New Jersey, they are not covered by that state's no-fault plan but must take each other to court.

Last week's Senate bill, co-sponsored by Democrats Frank Moss of Utah and Warren Magnuson of Washington, requires states to meet specific no-fault standards within four years or else adopt an even more stringent federal plan. To meet the minimum requirements, insurance companies must pay all medical and rehabilitation expenses of their injured customers, compensate victims for lost wages up to a maximum that ranges from $17,000 to $35,000 a year (depending on the state's income levels), and pay funeral expenses for a driver killed in a crash. The companies must also foot the bill for "replacement services," such as payments to a cook or baby sitter who must be hired while an injured housewife recuperates. More important, payments must be made within 30 days, and tardy companies face heavy penalties.

Stiff Opposition. According to supporters of the Moss-Magnuson bill, national no-fault insurance will do much to distribute insurance payments more equitably. Under the existing system, insurers tend to fight large claims vigorously, giving the most seriously injured and the families of those who are killed only a fifty-fifty chance of collecting. Smaller claimants, by threatening expensive court action, can often win out-of-court settlements worth many times the actual cost of their injuries.

After one year of no-fault insurance in Massachusetts, bodily-injury suits declined dramatically, and insurance premiums were reduced by a whopping 411/2%. In New York, which launched its own no-fault plan earlier this year, state officials estimate that motorists will win an average reduction of 16%. Though savings under no-fault would vary from state to state, a U.S. Department of Transportation survey estimates that insurance premiums could be cut by $1 billion annually under a national no-fault plan.

Despite these obvious benefits, no-fault insurance has met stiff opposition. One big reason is that it threatens what has become a $1.5 billion-a-year business for trial lawyers in arguing auto cases. This year the American Trial Lawyers Association staged a massive telegram campaign urging Senators to vote no on national no-fault, and won strong support among the chamber's 68 lawyer-Senators. The A.T.L.A. argues that no-fault is unconstitutional because it denies a motorist the right to sue and thus deprives him of due process of law --a point that troubles even strong backers of the plan.

Even now, the Moss-Magnuson bill faces a tough battle in the House before becoming law. Conservative Congressmen oppose federal meddling in the regulation of insurance, long the domain of the individual states. President Nixon has made public his own opposition to national insurance standards as well, preferring to let each state act on its own. And House members themselves are likely to be wary of antagonizing powerful associations of lawyers and professional colleagues in an election year.

This file is automatically generated by a robot program, so viewer discretion is required.