This is a rush transcript from "On the Record," October 9, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Great news. Senator Orrin Hatch just found a pile of money. Should we all start splitting it up? Well, as you might guess, there is a catch. Senator Hatch went "On the Record."


VAN SUSTEREN: Senator, nice to see you, sir.

SEN. ORRIN HATCH, R - UTAH: Good to see you.

VAN SUSTEREN: Senator, you've written the Congressional Budget Office asking about tort reform and got an answer back. What did you ask them and what did you learn?

HATCH: I personally believe unnecessary defensive medicine, doctors ordering many more tests and medical devices for things that they should, than they need to, and they all admit they want to do that because they want to protect themselves from litigation.

That the director originally said, I think, that it would only cost us $5 million to $10 billion every 10 years. I knew that wasn't true. So I went over it with him and said here's the reasons why because I used to be a medical liability defense lawyer, and I said here's the reasons why it cost more.

He did honestly revamp his figures and he figures that at least $41 billion to $51 billion over 10 years is really lost because of unnecessary defensive medicine. That would be enough to take care of some very important people who don't have health insurance now.

I believe it's much higher than that. I said 25 years ago, so at least $300 billion a year. And I believe it's in that neighborhood.

That doesn't mean we shouldn't have the right to litigate over truly - - true negligence. But we've got to find some way of resolving that way so we get rid of frivolous cases.

When I was trying these cases, I estimated about 90 percent of them were frivolous. And why were they brought? Because they would get the defense costs of somewhere between $50,000 and $200,000. If you get the defense costs as an attorney, you can do all right as long as they're that high.

VAN SUSTEREN: The Congressional Budget Office with this number is written to you, sir. Have you distributed it to other members of the finance committee? Did they know about this $41 billion estimate?

HATCH: It's gotten around. They're fully aware of it.

And I've been saying this for a long time, so this just does reconfirm what I've been saying.

Look, I think -- I've seen them take the wrong kidney taken out. I've seen some very gross negligence, and I think there should be compensation for that. So I'm not one of those who is saying we ought to shut down the lawyers. No, I don't think that is necessary.

But I think we needs to get a system, some sort of semblance of reason into this -- into the tort reform area.

VAN SUSTEREN: Is there any tort reform in the current Senate finance bill, at least the one we've spent a lot of time talking about that talks about? Do they talk about tort reform in that bill?

HATCH: There's been a statement.

VAN SUSTEREN: There's nothing in it, no provision?

HATCH: No provision at all, and why is that? Because Democrats, one of their highest forms of financial support comes from the personal injury lawyers in this country.

Now, you know, I've done that type of work. I understand it. And I don't blame lawyers for wanting to represent people. But I've got to say, a lot of those cases are frivolous brought for defense costs. And those companies will pay those defense costs rather than take a chance of a runaway jury, especially in a case that it doesn't look very good.

But I was talking to one of the leading heart specialists, open heart surgeons just a couple of weeks ago, and he said you're right on this. He said we all prescribe a lot more than we have to just to protect ours so the history as a patient will contain everything possible that could possibly occur.

And he said we do it just to protect ourselves, because if we go to court, we want to be able to show that we did everything possible even beyond the standards of the community to be able to take care of these people.

VAN SUSTEREN: All right, can't you take you r $41 billion estimate...

HATCH: It could be $54 billion.

VAN SUSTEREN: Well, $54 billion to Senator Baucus and say Senator Baucus, you're the chairman, and I've got this number $41 billion to $54 billion. Can't you pull him aside and say do you want to take a look at this again in the Senate finance bill?

HATCH: I don't blame Senator Baucus for not doing anything. But I did go to him and I explained it to him and explained to Dr. Elmendorf who said who said I do need to revamp on that.

But I think it's way too low.

VAN SUSTEREN: What did Senator Baucus say to you when you said look, senator, this $41 billion to $54 billion we found to try to scrape together the cash to pay for this new system, what does he say to you? Tough luck, Senator Hatch? Or maybe he calls you by your first name, but did he say tough?

HATCH: He would never say that to me, but the fact is he knows he can't do anything about it. The Democrats just aren't going to do anything about it.

And look, because of that, sooner or later someday really good lawyers who are really bringing these cases for the right reasons, in other words, they're legitimate cases, they'll be shut off because one of these days the American people will rise up and say we've had enough of it.

We're paying for a lot of stuff we shouldn't have to pay for and the reason our insurance premiums are going up so high is partly because of this. And then it will be something that will be a real bad situation, a bad interpretation, a bad approach to it.

I think we can resolve the problem, but I don't see one democrat willing to stand up on it.

VAN SUSTEREN: He's the thing that's sort of distressing as a taxpayer, at least to me, is that when you tell me that the Democrats won't even look at it -- and I'm a trial lawyer, but the Democrats won't look at it because the trial lawyers are whether it's the insurance industry for another group or for another party or whether it's the docs or whatever, and the taxpayer program, I'm thinking is everybody really for sale up here?

HATCH: I don't think it's that.

VAN SUSTEREN: Then why don't they look at it?

HATCH: Because they don't want to offend that particular special constituency...

VAN SUSTEREN: But that's bad. If we're trying to pay the money to pay for this, and if the Democrats say, yes we should look at tort reform and you're saying it's $41 billion to $54 billion and you say it's more --

HATCH: It's a lot more.

VAN SUSTEREN: And taxpayers are looking -- Speaker Pelosi even mentioned the possibility that we night get a value-added tax, and if we can pick up money here to offset some money to pay later, it's hard for me to understand why Senator Baucus wouldn't say hey, good job, let's look at these numbers.

HATCH: He would say that to me but then he knows he doesn't have the votes and the ability to change it.

Look, I've been trying to change this for years. I know that I'm right on this. I do not believe that we should pass something that basically stops all lawsuits because there are some legitimate ones. But there are a lot that aren't legitimate and are just brought to get the defense costs, which runs up the insurance and cost of health care for everybody.

And I think anybody with brains if they look at it will say yes, that's right. And -- but we've never been able to make any headway on tort reform with regard to the Democrats.

So I might add there are a number of Republicans who are the same way. They'll vote for personal injury lawyers over what reality is.

I'm a personal injury lawyer, too. I don't want to hurt any of their businesses that are legitimate. But some of this is not legitimate. A lot of it is very costly to society, and we've got to quit playing those games and do what is in the best interest of bringing about a transformational change in health care that will save taxpayers some money.

VAN SUSTEREN: Senator, thank you, sir.

HATCH: Nice to be with you.


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