Democracy:

Tort Reform

For the last 16 years, the tobacco, pharmaceutical, auto, oil, chemical, and health care industries, and their insurers, have fought to limit peoples' rights to sue and to further limit their own liability for the damages they cause innocent victims. Aimed in the direction of Congress and the state legislatures, this coalition of insurance companies and corporate defendants' lobbies has relied on misinformation and anecdotal evidence to attack and destroy decades of slow but careful progress made by state court after state court respecting the physical integrity of human beings against harm. This wrongdoers coalition is out to convince lawmakers to view this progressive evolution not as a source of national pride, or as a source of public recognition that the weak and the defenseless sometimes get justice, but rather as a source of shame, as a source of economic destructiveness, as something that should be stopped.

The civil justice system provides our society with its moral and ethical fiber. When the rights of injured consumers are vindicated in court, our society benefits in countless ways: by compensating injured victims and shattered families for unspeakable losses (and saving taxpayers from having to assist them); by preventing future injuries by removing dangerous products and practices from the marketplace and spurring safety innovation; by educating the public to unnecessary and unacceptable risks associated with some products and services through disclosure of facts discovered during trial; and by providing authoritative judicial forums for the ethical growth of law where the responsibility of perpetrators of trauma and disease can be established. This authoritative expansion of respect for human life serves to distinguish our country from most other nations.

The tort deform legislation that has been proposed in Congress and in state legislatures around the country over the last 15 years undermines each of these functions. Under tort deform, the most severely injured or disease-afflicted Americans — seniors in nursing homes, quadriplegic workers or brain-damaged children who suffer most and suffer for a lifetime — are prohibited from obtaining fair compensation for their injuries and are unable to hold the perpetrators of their harm accountable. Indeed, "tort deform" laws take away the rights of 99 percent of the people who live in this country, while letting a handful of corporations escape accountability for reckless misconduct that causes injury and death. They are also unfair to the well-behaved companies. Business wrongdoers should be held responsible fully for their damage to innocent people. When courts make these defendants accountable for their damage, the companies have a greater incentive to produce safer products or conditions. This is the lesson of legal history.

Tort deforms are also a direct interference with the independence of the civil justice system, often the only place where an individual can effectively challenge raw corporate and financial power. Judges and jurors are free from the influence of corporate lobbyists, who wine and dine regulators and use their influence to weaken regulations, and the lure of the corporate revolving door. Tort deforms tie the hands of our courts -- both judges and juries -- by legislators who never see, hear or evaluate the evidence in each specific case, thus undermining our uniquely individualized system of justice.

If judicial determinations are to be replaced by a codified system which can be later altered with the corruptive monies of political action committee and the special interest influence-peddling that often reached the ears and pockets of legislators, the answer must be premised on data. But the tort deform coalition relies on alarmist, prejudicial and often erroneous or unrepresentative anecdotes which either belie credulity or are so manipulated as to more closely resemble fiction than fact.

Here is what the data show: around the country machines break and chemicals burn their victims and the cost of the casualty count in the workplace and marketplace runs into the billions of dollars annually. We also know that at least 80,000 Americans die each year as a result of medical malpractice in hospitals alone. More die in a given year as a result of medical malpractice than from motor vehicle accidents (43,458), breast cancer (42,297) or AIDS (16,516).

Yet eight times as many patients are injured by medical malpractice as ever file a claim; 16 times as many suffer injuries as receive any compensation. Indeed, very few injured Americans file lawsuits. Overall, only 10 percent of injured Americans ever file a claim for compensation, which includes informal demands and insurance claims. Only two percent file lawsuits. Compensation for Accidental Injuries in the United States, Rand Institute for Civil Justice (1991). Moreover, the number of tort lawsuits filed in state courts is steadily dropping, down 16 percent since 1996, according to the National Center for State Courts.

Major corporations and their allies have also been feeding the public misinformation about the alleged need for tort deform legislation, including arguments that they are economically necessary. There is no basis for this view. The annual survey of business insurance conducted by Ernst & Young and the Risk & Insurance Management Society calculates annual insurance and claims costs for U.S. businesses, including property damage, workers compensation, and all other liability costs. These liability costs are minimal and generally declining -- only $5.71 for every $1000 in revenue in 1998, down from $7.10 in 1992. This important fact (not to mention record corporate profits year after year) makes it impossible for corporations or politicians to even argue there is any economic need to ration justice or to limit compensation for people injured by their products or services.

Similarly, according to a report by the Consumer Federation of America (CFA) based on data collected by the National Association of Insurance Commissioners, products liability insurance costs only 16 cents per $100 of a retail product -- a tiny fraction equaling less than 2/10 of 1 percent. Adjusted for inflation, products liability insurance costs have fallen about 75 percent over the last decade. Moreover, according to the CFA, total products liability verdicts and settlements nationwide for insured and uninsured manufacturers cost $4.1 billion in 1993. By comparison, Americans spend about twice that much — about $8 billion — on dog and cat food each year. This figure is an incredible bargain for reckless perpetrators since 90 percent of those injured by medical malpractice, product defects and toxic harm each year do not even file a claim for compensation. Therefore, wrongdoers are paying only a fraction of the harm they are costing the family pocketbook, workers and the health care industry. And when someone is hurt and the wrongdoer doesn't pay, it's the taxpayer who often must pick up the tab in the form of taxpayer-funded health and disability programs. Either the wrongdoer pays or the taxpayers pay.

In addition, there is no "crisis" or "explosion" in punitive damages awards to suggest any need for legislators to curb the power and authority of judges and juries. Punitive damages are rarely awarded. A new report by the Bureau of Justice Statistics and the National Center for State Courts, which looks at 1996 state court data in the nation's 75 largest counties, shows that punitive damages are awarded in only 3.3% of cases won by plaintiffs, and that the median punitive award is less than $40,000 (excluding the unusual, recent punitive damages award in Florida's tobacco litigation that is under appeal). The median punitive damages awarded by a judge is $75,000, $48,000 higher than the median punitive jury award of $27,000.

Lawmakers considering whether to enact tort deform rarely ask the opinion of judges, who have more intimate knowledge of the system than anyone. A recent survey of federal and Texas judges appearing in the May 7, 2000, Dallas Morning News shows that judges are extraordinarily supportive of the civil jury system. According to the article, "The judges' responses reflect a high level of day-to-day confidence in the jury system…. Only 1 percent of the judges who responded gave the jury system low marks.…Ninety-one percent believe the system is in good condition needing, at best, only minor work.… Overwhelmingly…judges said they have great faith in juries to solve complicated issues.…Ninety-six percent said they agree with jury verdicts most or all of the time. And nine of 10 judges responding said jurors show considerable understanding of legal issues involved in the cases they hear."

Tort limits do not reduce insurance rates. The only study ever conducted of the impact of tort restrictions on insurance rates in every state in the country finds absolutely no correlation between enactment of tort deform and insurance prices. Some states without tort deform have experienced low rate increases while other states with major tort deform laws have seen very high rate increases relative to national trends. Premium Deceit -- the Failure of "Tort Reform" to Cut Insurance Prices, Citizens for Corporate Accountability & Individual Rights (1999). In 1995, under the lobbying of Governor George W. Bush, Texans were forced to trade away their legal rights through the enactment of a series of repressive tort deform measures in exchange for the promise of $864 million a year in insurance savings. But a recent study by J. Robert Hunter, Director of Insurance for the Consumer Federation of America (former Texas Insurance Commissioner and Federal Insurance Administrator under Ford and Carter), found that overall insurance premium savings, including any that might be attributed to these tort deforms, have been a "small fraction of the amount predicted by the legislature and claimed by the proponents." In fact, as the study found, "on an overall basis, premiums in Texas in the lines containing liability components have risen by 6.9% from 1995 to 1997, whereas the same lines saw a premium increase of 5.9% nationally. On an annualized basis, Texas premiums rose by 3.4% vs. 2.9% nationally. So, despite the ‘savings' claimed for tort reform, premiums in Texas are going up for liability lines at a faster rate than the national average."

Among the positive steps Congress should take are:

Tort deforms make it difficult or impossible for American consumers who suffer death, brain injury, amputation, paralysis, quadriplegia, cancer and other devastating injuries at the hands of corporate wrongdoers, to be fully compensated for their harm. They increase the many obstacles faced by consumers who are hurt by defective products, toxic chemicals and dangerous drugs, already face in bringing offenders to justice. Tort deform is nothing more than a bailout from liability and responsibility for corporations, including the largest and richest corporations in the world at the expense of all Americans. The tragic costs, human and economic, are born by the wrongfully injured and their families, not by the wrongdoers themselves.