Articles Posted in Tort Reform

According to the Wall Street Journal Law Blog,  the Chamber of Commerce is going to start running short films before feature films in movie theaters in the Washington, D.C,area.  The films "tell a story of supposed “Lawsuit Abuse” — cases in which people were allegedly dragged into the legal system with the filing of a frivolous lawsuit."

From the blog:  “’Lawsuit abuse and the harm it brings to everyday Americans and small businesses is one of the great American tragedies,’” says Lisa Rickard, the president of the Chamber’s Institute for Legal Reform, formerly of Akin, Gump. "’That’s why the silver screen is the perfect venue for these Faces of Lawsuit Abuse short films.’”

After a one month run in DC, the Chamber is going to take the films to select theaters elsewhere in the country.

Liability insurance companies make money in two major ways.  First, they make money on the insurance product – doing good underwriting, setting appropriate rates, and properly managing claims.  Second, insurance companies make money holding today’s premiums to pay tomorrow’s claims (and claim expenses).  That money is invested, and the investment income and capital gains on the investments are a big part of the net income of insurance companies.

Now, the stock market is in the toilet and the bond market is more complicated than ever.  Short-term cash yields virtually no interest, and Treasuries have a very reduced yield.  It is reasonable to assume that investment income is down, way down.

So, will rates be increasing?  Yes.  Will lawyers and juries be blamed?  Of course.

There is a lot of talk about capping fees in medical malpractice cases.  Fees are already capped, of course, at one-third of the recovery, but the health care industry wants further limitation on fees charged to plaintiffs in successful cases.

Why?  Because they’re not stupid.  They understand that a lower  fee cap means that fewer cases will be filed and those that are filed will be filed by less qualified lawyers.  Why?  Because lawyers generally will not file cases when they cannot earn a fair return for their efforts on the case.  And more qualified lawyers will file still fewer cases because they can earn a better return on other types of work.  Reduced filings mean reduced indemnity payments and defense costs, which means more profits for insurers, which presumably will lead to reduced insurance rates.  Filings by less qualified lawyers means more defense wins, which means more profits for insurers, which once again will presumably lead to reduced insurance rates.

What about statutory limitations on fees paid to defense counsel?  Wouldn’t that save defendant’s money?  Of course it would, but that would affect the quality of the lawyer who is willing to defend malpractice cases.  A very good or great lawyer will not be willing to work for below-market rates.

Here is the text an December 20, 2008 article on the CBS News website about the efforts of the U.S. Chamber of Commerce to take advantage of the opportunity created by the world’s financial problem to seek legal protection for wrongdoers.  Thanks to Suzanne Keith at TAJ who forwarded it to me.

Made in America: Corporate Gall

Dec. 20, 2008

Insurance companies know that they have little credibility in the fight over access to the courthouse.  This is particularly true in the medical malpractice area, where the evidence   in Tennessee demonstrates that (a) doctors and hospitals win over 96% of jury trials; (b) professional liability rates, adjusted for the medical  inflation rate, have been more or less flat for over 20 years; (c) the average settlement is $256,100 (for calendar  year 2007); and (d) $1,000,000 verdicts are extremely rare.

But that doesn’t sell insurance.  And it certainly doesn’t cause doctors to jump on the tort reform bus. 

What does?  Fear.  And it was an effort to create fear that gave rise to this statement by State Volunteer Mutual Insurance Corporation in a publication to their insureds:

That’s right.  The Chamber of Commerce believes in  the right to file suit if you have been aggrieved by the conduct of another.

As long as you are a car manufacturer and want to complain about new laws limiting greenhouse gas emission standards.

Read about the Chamber’s latest hypocrisy  here.

The Manhattan Institute for Policy Research has issued a report extolling the virtues of a "loser pays" rule.

Here is an excerpt from  the "Executive Summary:"

This study explores the likely effects of adopting a "loser pays" rule for attorneys’ fees in the United States. Loser pays, sometimes called the "English rule" but actually, in essence, the rule in place in the rest of the world, refers to the policy of reimbursement by the parties who lose in litigation of the winners’ legal expenses, including attorneys’ fees. This study argues that loser pays could be an important part of a larger effort to reduce litigation costs, better compensate prevailing litigants, and better align tort law with its goal of deterring socially harmful conduct. A loser-pays rule would discourage meritless lawsuits, but because any such rule should also ensure plaintiffs of modest means but strong legal cases access to justice, our proposal calls for:

The Tennessee Department of Commerce and Insurance has released the 2008 Medical Malpractice Claims Report.  The report reveals data from medical malpractice cases settled and tried in Tennessee in calendar year 2007.

The numbers:

Total judgments for plaintiffs  

One repeated argument for restricting the right to trial by jury is that we need to have a state where businesses will want to settle, thereby creating more jobs and strengthening our economy.

Well, to the extent that is a relevant factor in the tort deform effort it is should be off the table in Tennessee.  Why?  The Tennessean  reports that "Site Selection, an Atlanta-based magazine that annually ranks states’ attractiveness to investors, placed Tennessee behind only North Carolina. Tennessee moved up four notches from last year’s rankings."

Read the article here.

There is alot of public outcry about the profits of Exxon Mobil for the 3rd quarter of fiscal year 2008.  The company reported profits of $14.83 Billion for the three months ended September 30, a 58% increase.

Exxon Mobil had revenue of $137.74 Billion during the 3rd quarter of 2008.  So, the company had a profit of 10.76% of total revenue.

So why is Exxon Mobil talking about getting into a new line of business?