Well..... yes and no TCE.
Cases can be appealed to Federal Court for whatever reason, injury from a drug sold across State lines, for instance.
So I would say that both the States and the Fed could enact a kind of tort reform, not to describe limits on damages, but rather to set gudelines for how damages are calculated, so as not to create the situation where someone goes through $5,000 in damage, and $50,000 in suffering, but receives $1,000,000 in awards.
The caveat being that the Federal reform guidelines only apply to Federal courts, and not to State courts, and then State reform guidelines apply to State courts.
But yes, I think we could affect tort reform without violating the free market. So long as we take the route of establishing guidelines for how to calculate awarded damages instead of just 'capping' damages as XYZ for ABC, then it may not only be possible, but necessary.
That, and keeping an eye on jurisdiction is crucial. If the Fed could dictate guidelines to State courts, that would be dead dead dead wrong.