The Tort Tax - $865 Billion Annually

All yesterday, lead-paint watchers had been flagging me about the opinion-editorial in THE WALL STREET JOURNAL titled "The Tort Tax."  It's penned by Lawrence J. McQuillan and Hovannes Abramyan whose credentials include the book "Jackpot Justice: The True Cost of America's Tort System."  But, I couldn't get to post on it until today because I was at my day job.

Given day jobs, mine isn't the worst.  As a self-employed consultant I don't have to report into an office daily and endure co-workers.  But for us narcissist writers/bloggers, any kind of employment outside our mission to tell it as it is can dampen the spirit and take way too much time.  In addition, yesterday's assignment entailed a schlep deep into New England and when you're driving you're not blogging.  Not a happy day.

But that was that and I don't have to leave my home office again until April 17th.

The tort piece is persuasive in that it estimates that America's tort system "imposes a total cost on the U.S. economy of $865 billion per year."  That boils down to an annual "tort tax," say McQuillan and Abramyan, of about $9,827 for a family of four.  And that's quite a bit more than even tort-reform ranters like myself have quoted or even imagined.

Of course, following this staggering number are the usual arguments about the harm excessive or needless litigation does to the economy - e.g. slows down innovation. And, as any business owner like myself knows, it also causes plenty of sleepless nights wondering if that client or customer will file a lawsuit.

My question:  Are the plaintiff lawyers such as Motley Rice preparing a rebuttal type op-ed to be published soon?  I'd love to deconstruct that.

Comments

[Bill]

I read this report last night. The thing that they conveniently seem to leave out is a mention of the harms that the tort-feasors are costing society. Perhaps I missed, amidst their charts and sob stories of Crown Cork and Seal, but it shows only half the story.

For example, in the section about asbestos, the authors make a big issue over the number of people that were put out of work as a result of the bankruptcies caused by asbestos litigation. The total number was approximately 50 to 60 throusand. From the way it is written, they take the posiution that most, if not all, of the asbestos workers would never be able to find employment again. However, there is no offset given in their calculations to the approximately 10 thousand people a year who die of asbestos related illnesses. Just like the people who have lost their jobs in the bankruptcies, not all of them died in the 80s or after they had permanently retired. There are still people who are dying from illnesses caused by asbestos that could still be working and therefore generating additions to the GDP.

The thing I took the most issue with is the the idea that tort reform increases the number of lives saved. The article that this idea is based on simply looks at one thing: when tort reforms went into effect and how many people died before and after that. It does not take into account advances which were brought about because of torts nor of after-effect of litigation (such as increased auto safety standards for one).

Essentially, this study is one sided. It does not take into account the legitimate injuries suffered by people as a result of civil wrongs. It also takes the position that civil lawsuits are the only reason that liability insurance is so high. If it was, then why in states where there has been the adoption of tort reforms there been no significant reduction in the premiums?

Another failure of the study is that it takes the positon that the proper cost to a society is that it should be about .9% of the GDP. Howeverr, this number is reached by averaging a number of industrialized nations. Of those nations, only portions of one (the UK) has a common law based system. The rest are civil code societies, which means the administration of justice is fundamentally different. So unless the authors are proposing switching over to a civil law system (meaning an amendment to the U.S. Constitution), the number that they arrive at is flawed to begin with. From that number, flows at least part of their argument that half of all expenditures are a waste.

Do we live in a society that expects perfection? Yes. This is not always conducive to new ideas and new methos because of the risks involved. However, we compensate for this by having a system that penalizes those who cause harms to others. It als punishes them if a jury of their peers agrees that they deserve to be punished. The alternative, at least suggested, is that punishment has no place in a civil justice system and that the only proper remedy is restitution to loss.

[Eyecare]

This article is one sided but not incorrect. I think controlling tort costs are integral to controlling health care costs. Rather than just trying to limit spending on the medical side(s) of the house if Congress passed legislation that would limit reimbursements, not to the injured, but to the plantif's lawyers then we'd go a long ways towards controlling health care costs in the US.