A new study, Jackpot Justice: The True Cost of America's Tort System, researched by the Pacific Research Institute and published earlier this week by the American Justice Partnership calculates the nation's tort system imposes a yearly "tort tax" of $9,827 for a family of four and raises health care spending in the U.S. by $124 billion.
Every patient, every business, every family, every nurse and doctor devotes scarce health-care dollars to a personal injury system that funnels 85 percent of jury awards to attorneys. According to the report, only 15 percent of the jury award goes to injured parties. And health consumers foot the bill in increased costs and defensive medicine, a practice aimed at avoiding liability by ordering expensive tests that are often unnecessary.
The authors of Jackpot Justice tell the story of a Washington State patient who suffered a broken jaw while working at a construction site. Despite a clear diagnosis, emergency room doctors fearing possible litigation ordered a battery of tests, including CT-scans and MRIs. The additional costs of these "lawsuit-prevention" tests - about $20,000.
The increase in health expenditures due to liability concerns adds 3.4 million Americans to the rolls of the uninsured.
Higher health care costs aren't only pushing more people into the ranks of the uninsured, the increased costs are forcing doctors to leave medical practice and increasing mortality rates.
Consider, for example, data the study cited from the Institutes of Medicine. It suggests that 114,000 people died due to excessive tort liability during the past two decades.
While health care remains a critical concern, the extent of litigation costs hits nearly every sector of the economic engine. Included deep within the business model of a car dealership, as a line item on the cost of goods sold, is the cost of litigation.
Last week, a Charlotte area automotive dealership owner defended himself in a civil case involving a car stolen from inside his locked service bay. At issue was whether the dealership acted properly as the custodian of its customer's car prior to the theft from inside the locked and secured service department. A $7,500 judgment on the line, the jury found in favor of the dealership.
So, the automotive dealership won its case. Jubilant victor right? Not quite. The winner spent over $10,000 on his defense. Guess who really pays for that victory. We do; it rolls into that annual "tort tax" of $9,827 that the average family of four pays.
This study clearly illustrates that legal reform is a consumer issue, not just a business problem. We cannot afford to let America continue to be a nation of the lawyers, by the lawyers and for the lawyers.
For more information, including video and audio interviews and to download the study, visit the American Justice Partnership. And see what others have written on the same subject: NAM says end jackpot justice now; Bill Hobbs; YouTube
The American Justice Partnership (AJP) released a new study published by the Pacific Research Institute illustrating the direct and indirect costs of the American tort system. At an annual cost of $865 billion, the figure dwarfs the $65 billion the federal government spends on schools and education and the $260 billion that Americans gave to charities in 2005. In fact, the figure dwarfs the $500 billion Pentagon budget for managing conflicts in Iraq and Afghanistan in 2006. A family of four pays an average $9,827 in a "tort tax." By comparison, the average family of four paid $6,884 in state and local taxes in 2004. The study takes into account the economic disruption caused by the inefficiencies in our legal system. Defensive medicine, a practice necessitated by excessive medical malpractice litigation, for example, costs $124 billion per year and has added 3.4 million people to the ranks of the uninsured.
This is a powerful new study that will add hard figures to the debate over the need for legal reform. Read the NAM’s news release and visit the AJP release for the full report and additional background, including a video interview with study co-author Dr. Lawrence McQuillan.
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Tart Tort - There are two types of torts. There is the tort spelled with a silent e that is an elaborate sweet cake. This is not a show for confections. Here, we are discussing the other tort, which is a French word meaning wrong. Our civil justice system defines a tort as wrongful conduct by one actor that results in injury against another. A tort has been committed when someone has suffered injury caused by the failure of another person or company to exercise a required duty of care.
Torts are not altogether bad, but there are ample facts that suggest our civil justice system is out of control. Consider, for instance, that of the 193 nations in the world,
And to further illustrate how broken our civil justice system really is, listen to the cast for this Leadership Roundtable segment in which Todd Young interviews The Home Depot co-founder Bernie Marcus about the importance of CEO involvement in state level legal reform efforts.
It’s clear that as consumers, shareholders and employees – we all have been affected in some manner by the cost of litigation. And I would like to hear from listeners who have been victims of our civil justice system.
Are you a doctor who moved or changed your practice due to the cost of litigation or insurance? Are you with a manufacturer that abandoned a product due to the risk of legal exposure? Send your feedback by phone at 704.248.6171 ext. 4 or via e-mail at feedback@tortscrisesandsoupsandwiches.com
For example, third party endorsement remains the key ingredient in positive public relations. But Michael Richards, Seinfeld’s Kramer inspiration, found third party opportunistic endorsement in airing his apology with the Reverands Jesse Jackson and Al Sharpton. And since conflict is one of the 13 news hooks, Rosie and The Donald are finding themselves in a never-ending news cycle.
Back to Richards, who as you know let fly with a few racist slurs after being heckled on stage in December. To apologize and move on, he sought the help of Jackson and Sharpton.
Third party endorsement – getting someone else to speak on your behalf – is a powerful tool. And is why a positive article in a respected newspaper, authored by an objective journalist, is considered to be of greater value than a self-serving advertisement.
As part of our human psyche, we need to hear from those we trust that a person, company or product mirrors what the person, company or product claims to be.
Mr. Richards chose to seek his endorsement from two lightening rods who are opportunists in their own right. Reverends Jackson and Sharpton stand ready to seize on any racial inferno for their own self-promotion. And they did – so much so that the two aggrieved hecklers’ attorney demanded a similar apology and a settlement for her clients.
There is a point in all of this for leaders who find themselves embroiled in a crisis scenario. Third party endorsement frequently is a proper remedy for various tribulations, but be careful where you seek that endorsement.
In Mr. Richards’ case, the longer he parades about apologizing and seeking supporters, the worse it will be for him. The best advice is to focus principally on action and get out of the news cycle by lying low.
While the Trump vs. O’Donnel kafuffle certainly has been entertaining and is arguably good for their TV ratings, there is another point for leaders who find themselves falling to the temptation and belaboring their disgust for another person or someone’s ideas.
Leaving the obvious name-calling aside, this is actually great advice. Keep to the high-road. In fact, you can zealously represent your position on an issue without falling into a tailspin of name-calling.
Avoiding conflict and sticking to the root issue also contributes to a shorter news cycle.
23:10 - Here’s your chance to win up to $500.
In episode 3, I discussed the lawsuit that I found at Walter Olsen's blog overlawyered.com. Last year, Mike McPhee with the Denver Post reported that an elderly couple sued neighbor Shannon Peterson for taking 5 a.m. baths, complaining that she bathes too early in the morning, disrupting their sleep and the quiet enjoyment of their condominium.
That Looney Lawsuit and the California Attorney General’s suit against six automobile manufacturers for contributing to that state’s greenhouse gas emissions inspired the 2007 Looney Lawsuit Award.
So, Torts Crises and Soup Sandwiches is awarding cash prizes to the top three "Looniest Lawsuits in 2007." If you have read about a Loony Lawsuit that deserves special recognition, please send either a copy of the actual filing or the newspaper page where the suit was reported, along with your name and address to: TC&SS Loony Lawsuit Contest,
At the end of the year, the grand prize winner will receive $500 and a copy of the book, "Myths Lies and Downright Stupidity!" by John Stossel. The second place winner will receive $250, and the third place winner gets $100.
Please submit Loony Lawsuits to Torts Crises and Soup Sandwiches. Your entry will be mentioned on the Podcast and winners will be selected in January 2008.
And if you’re a victim of our civil justice system, I would like to hear from you.
Are you a doctor who moved or changed your practice due to the cost of litigation or insurance? Are you with a manufacturer that abandoned a product due to the risk of legal exposure? Is your son or daughter missing out on some of the things that you enjoyed as a child?
Send your feedback by phone at 704.248.6171 ext. 4 or via e-mail at feedback@tortscrisesandsoupsandwiches.com
Regular updates will follow on the first and third Mondays beginning in January 2007. Every show will feature guest commentary and listener feedback. In fact, the fastest way for listeners to provide opinions and comment is to call 1-704.248.6171 and leave a message. Listener feedback will be played at the end of the following show.
In this segment, I am fortunate to have the American Justice Partnership's permission to air an interview between ABC's John Stossel and the AJP chairman Steve Hantler. In this interview, Stossel and Hantler discuss the real cost of litigation on business' balance sheet.
3:51 Sour Tort
5:05 Stossel / Hantler interview
17:54 Other news in Tort Reform
21:34 Crisis Crunch
The American Tort Reform Association recently released its 2006 Judicial Hellholes list, which includes
Finally, here is a special report from the American Justice Partnership on the Georgia Supreme Court's Nov. 20 asbestos ruling.
Earlier this week, CNBC’s Maria Bartiromo wrote in NYSE Magazine that chief executive officers can get a fair shake in the media. But they have to show up to get that fair shake. In the article, Bartiromo recommends that CEOs spend time with the reporter before the story to educate the reporter about the business. She adds that CEOs also should recognize that the reporters will interview others for the same story.
I have a perfect example to share from May 2005. An investigative reporter with KUSA 9 News in
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