Do Louisianans Really Need "Tort Reform?"

January 13, 2012 (Press-News.org) A recent "survey" was conducted by an organization identified as Coalition for Common Sense (CCS) and the results indicate the majority of citizens in Louisiana feel there is a need for tort reform. Their survey found:
- 65 percent said there are too many lawsuits in Louisiana
- 69 percent agreed that lawsuit abuse costs jobs
- 71 percent agreed that lawsuit abuse is hurting the state's economy
- 85 percent agreed that personal injury lawyer ads encourage people to sue

Surveys of this type, however, always raise more questions than they answer. For instance, who is the CSS? Turns out they are comprised of organizations like the American Insurance Association, American Tort Reform Association, Louisiana Association of Business and Industry, Louisiana Chemical Industry Alliance, Property and Casualty Insurance Association of America, and U.S. Chamber Institute for Legal Reform, and many other business and insurance concerns.

Why Have Auto Insurance Rates Increased

While insurance companies often claim lawsuits are the reason their rates increase, there are many more factors at work. In 2011 for instance, there were natural disasters causing $11 billion or more in damages, which means insurance companies had to pay out over $11 billion to policyholders.

The nature of insurance is such that those policyholders hadn't paid premiums sufficient to cover those claims, so the insurance companies have to find the money somewhere; like the pockets of policyholders in Louisiana. So, as health care costs continue to escalate costs of automobile insurance also continue to rise; not just because of the lawsuits that stem from automobile accidents.

A Successful Campaign

For decades, pro-business interests have argued lawsuits provide a significant drain on the ability of business to grow and prosper. Actually, not merely lawsuits, but frivolous lawsuits, these are the purported as bane of American business.

These frivolous and abusive lawsuits are the problem, permitted by liberal judges, and the legislature needs to act, they claim. Notice how the survey results are worded, 65 percent feel there are "too many lawsuits."

The question is how one determines if there are "too many lawsuits?" The language is so vague and subjective that any meaningful measurement is virtually impossible. This is not by accident; the survey is designed with vague questions to extract the "right" answers.

Simply because courts are busy does not necessarily imply there are too many lawsuits; it may be due budget cuts that have left courts with insufficient resources. Whether there are too many lawsuits tends to be seen through the eyes of the beholder.

From a business's perspective, any time they are being sued probably qualifies as "too many." However, when they need to sue some entity, chances are they see their lawsuit as being justified and appropriate.

As this survey demonstrates, many people have a vague suspicion that there are a great deal of illegitimate lawsuits, but probably lack any knowledge of a specific example. These "tort reform" discussions typically use the terms like "frivolous" or "abusive" while implying there large numbers of lawsuits, but typically fail to provide much in the way of concrete evidence of the implied numbers.

The Reality

There are far fewer "frivolous" personal injury lawsuits than many suspect, because most attorneys work under a contingent fee agreement. This means they only receive payment if they win the case. They simply cannot afford to file frivolous lawsuits, as they would soon go broke.

Summary Judgment

Another limiting mechanism is known as "summary judgment" which allows a judge to dismiss a case when one side fails to present enough evidence to demonstrate there is a "real" issue at stake. Judges and courts are busy, and they tend to be ruthless in removing cases that are wasting their time.

A Famous "Frivolous" Lawsuit

The infamous McDonalds coffee case is frequently pointed to as a prime example of an abusive lawsuit. A woman in Albuquerque spilled hot coffee in her lap and sued McDonald's and was awarded $2.3 million. What could be more blatantly abusive than that? After all, it was just hot coffee.

The scalding 180-degree coffee, caused third-degree burns to the 79-year-old woman's thighs, requiring skin grafts. She had originally asked for $20,000 to cover her medical expenses, but McDonald's refused.

During the lawsuit the jury found out that McDonald's had been sued over 700 times for hot coffee spills resulting in third-degree burns and still refused to reduce the serving temperature of the coffee to a less dangerous level.

The jury awarded her $160,000 for her injuries and $ 2.7 million for punitive damages because of the behavior of McDonald's and amounted to approximately two days of coffee sales for McDonald's. It was later reduced to a mere $480,000.

Tort Reform?

The problem with tort reform is it often results in the further narrowing of remedies of innocent persons injured by the negligence of others, including large corporations. Companies have made arbitration part of their boilerplate "contract" agreements for years; have a problem with your credit card or airline?

In many cases, if not most, you cannot sue them, because your ticket purchase or credit card agreement restricts your disputes to an arbitration forum, where private arbitrators (functioning like judges) control your case.

Tort reform, if it really could lower automobile insurance costs, could be valuable to drivers in Louisiana. The problem is, the reforms purposed tend to specifically limit remedies (damage caps, requiring those who lose a lawsuit to pay the other side's legal fees), while being merely aspirational for insurance companies and other businesses to lower their prices.

Even The Economist, hardly known for its support of anti-business causes, noted in an article on tort reform in Texas, "Frivolous lawsuits are, along with criminal aliens and fraudulent voters, a bit of a bogeyman. They do exist, but are hardly as ubiquitous as the thundering rhetoric would suggest."

Article provided by Bohrer Law Firm, LLC
Visit us at www.bohrerlaw.com