Author: Richard H. Adler, Attorney at Law

The following is a brief look at “fiction vs. fact” concerning issues effecting our individual rights to hold wrongdoers accountable.   

I.   Number of Lawsuits Filed 

Fiction: The number of lawsuits filed is skyrocketing. 

Fact: The numbers are actually dropping and dramati­cally so. According to the Justice Department, the num­ber of federal tort (personal injury) cases resolved in U.S. District Courts fell by 79 percent between 1985 and 2003. In 1985, 3,600 tort trials were decided by a judge or jury in U.S. District Courts. Almost 20 years later, that number had dropped to less than 800 in 2003. 

Personal Injury trials in state courts have decreased overall. These statis­tics were compiled as part of the Justice Department's survey of state civil justice systems in the nation's larg­est 75 counties. Among these counties, the number of tort trials decreased 50 percent between 1992 and 2005. 

Justice Department statistics also looked specifically at King County, which reported a decrease in the num­ber of jury trials (down 10 percent between 1992 and 2005) and jury trial awards (decreased from $45,069 in 1992 to $29,000 in 2005).

II.   Lawsuits Relationship to Insurance Rates 

Fiction: Insurance rates skyrocket because of lawsuits. 

Fact: Your insurance premiums may be going up, but it is not tied to lawsuits. Look no further than the insurance industry's annual profit reporting. In 2007, insurance companies reported a near-record profit of $61.9 billion. In comparison, the insurance industry's 2004 profit was $38.7 billion, which broke all previous records. Their profits continue to rise, and unfortu­nately, your premiums are following suit. 

The insurance industry has also made the argument that personal injury damages should be capped or limited in order to reduce insurance premiums.  However, in states that have adopted caps on damages, the same industry has later admitted that caps do not lower premiums. For example, American Insurance Association spokes­man Dennis Kelly told the Chicago Tribune in 2005 that, "we have not promised price reductions with tort reform." 

In Washington State, voters' approval of the Insurance Fair Conduct Act (IFCA) in November 2007 is help­ing consumers avoid the hardball tactics employed by the insurance industry. Since IFCA went into effect in December 2007, the Office of the Insurance Commis­sioner has received approximately 900 'Notice of Com­plaint' letters about insurance companies. According to a survey of our attorneys practicing in the area of personal injury law, about 99 percent of those complaints were able to be resolved without filing a lawsuit because of IFCA. Insurance Commissioner Mike Kreidler has said publicly that the insurance industry’s assertion that IFCA would raise insurance rates and create more lawsuits is not accurate. 

III.   High Care Costs, Doctors, and Lawsuits 

Fiction: Health care costs are rising and doctors are un­able to practice due to litigation. 

Fact: Health care costs are rising; however, medical malpractice litigation has nothing to do with it.  According to the Congressional Budget Office, medical malpractice amounted to less than 2 percent of overall health care spending. The Government Accountability Office also found that malpractice cases have not widely af­fected access to health care. 

According to the American Medical Association, the overall number of physicians has increased by more than 40 per­cent since 1995, while over the same time, the U.S. population increased by only 18 percent. 

IV.   Lawsuits and Small Business 

Fiction: Legal reform is needed because lawsuits hurt small businesses. 

Fact: Multiple surveys have shown that lawsuits are not a concern for small business owners. A survey from that National Association of Manufacturers suggests that "lawsuit abuse" ranks at the bottom of con­cerns for manufacturers.  A 2008 survey from Na­tional Federation of Independent Business had similar results, with “cost and frequency of lawsuits / threat­ened suits" ranking 65th on a list of small business owners' worries. 

In reality, only big corporations and their “front groups” want to destroy the legal system so they can't be held accountable for negligence and misconduct. Drug, oil, and insurance companies have tried to hide behind small business owners to accomplish this; however, small business owners are not concerned about lawsuits. 

V.   Taxes and Lawsuits 

Fiction: Lawsuits cost taxpayers hundreds of dollars each year. 

Fact: Several so-called "independent" think tanks or organi­zations have devised the notion that American families pay a yearly "tort tax," or that the cost of litigation is passed onto taxpayers. These organizations, funded by oil, drug, tobacco, and insurance companies, pro­duce studies that are a prime example of junk science. 

There is no methodology or academic basis for their results. Trying to pass off these organizations and their studies as legitimate is yet another ‘scheme’ by corpora­tions to avoid accountability in the courtroom and stack the deck against every day Americans.

One such study was done by Towers-Perrin.  However, this study on "tort cost" has been widely rejected. Congressional Quarterly did a study of the "tort tax" figure and found:  

"Nearly all the assertions about the growing cost of the tort system are based on the figures from just one actuarial and management consulting firm, Towers-Perrin, that works for the in­surance industry, which has a stake in limiting lawsuits. ... The company's estimates of tort costs include the insurance industry's administrative expenses and pay­ments on claims that never involve courts or lawyers, such as auto collisions."

The bigger cost to American families is the damage done by aggressive lobbying to eliminate accountability and oversight of the bank­ing, mortgage and insurance industries that led to our current financial crisis. The U.S. Chamber of Commerce and its affiliate, the Institute for Legal Reform, sought to destroy any check on corporate accountability under the guise of "tort reform" for Enron, Exxon, AIG, and a host of other negligent corporations.   It tried to protect reckless financial institutions that committed subprime fraud, and received over $20 million from AIG to fight for de­regulation and strip post-Enron reforms.

The U.S. Chamber's lobbying has largely focused on Washington, D.C. but recently came to Washington State via a media campaign to convince citizens that lawsuits hurt our state. Washington State Association for Justice recommends that citizens be wary of organizations like the U.S. Chamber of Commerce and Institute for Legal Reform that are funded by corporations notorious for their negligence and misconduct, and that advocate eliminating ac­countability for their actions.

*Some content of this article was original published by the Washington State Association for Justice and permission granted to Adler Giersch PS for its use.