The Tort Liability Index: Why You Should Feel Free to Ignore It

Cyrus Dugger

The Tort Liability Index: Why You Should Feel Free to Ignore It

The Pacific Research Institute recently published a report titled "Tort Liability Index: 2006." This report purports to show that "a poor civil-justice system lowers the standard of living for ordinary citizens" and that "meaningful legal reform on the other hand pays dividends in the form of stronger economic growth and higher personal income."

"A poor civil-justice system lowers the standard of living for ordinary citizens?"

Last time I checked, not so many middle and working class families are talking about how they are really scared of being sued in the civil justice system if an SUV they manufactured in their kitchen rolls over and kills a family of five.

"Meaningful legal reform on the other hand, pays dividends in the form of stronger economic growth and higher personal income?"

Although a dubious assertion without methodologically rigorous support, assume, for the sake of argument, that this statement is true.

The issue then becomes: even if a non-existent or severely weakened civil justice system would make economic growth soar, would you want to live in such a world?

Even if business boomed around you, would you want to live in a world in which you could do nothing if a corporation's negligence, disregard, or indifference damaged human life as part of their business plan?

In a world without the civil justice system, we are left with only highly understaffed administrative agencies to regulate corporations. Some people are left with no protection at all. Indeed, this culture of corporations unregulated is likely all too familiar to many living in the developing world. I wonder if the authors have recently passed through many developing nations and observed their standards of living?

The most "flashy" statement the report makes is that:

"The President's Council of Economic Advisers estimated that the nationwide excessive costs of the tort system were $136 billion in 2000 - the equivalent of more than three months of groceries, six months of utilities, or eight months of health-care costs for the average family."

Where would such a statistic so damning to our civil justice system come from? What is the President's Council of Economic Advisers? This Council is:

"[C]omposed of three members who shall be appointed by the President, by and with the advice and consent of the Senate and…each of whom shall be a person who, as a result of his training, experience, and attainments, is exceptionally qualified to analyze and interpret economic developments, to appraise programs and activities of the Government...and to formulate and recommend national economic policy to promote employment, production, and purchasing power under free competitive enterprise."

What more reputable body could one cite for information about our national economy?

Unfortunately, it appears...just about any. The Council relied heavily on a report done by Tillinghast-Towers Perrin. And who is Tillinghast-Towers Perrin you may ask? Their self-description states that:

"The Tillinghast business of Towers Perrin provides consulting and software solutions to insurance and financial services companies and advises other organizations on risk financing and self-insurance."

This is a company that focuses on helping insurance companies make money.

The enormous flaws of the Tillinghast study are described in detail in a report by the Economic Policy Institute. Most discrediting, as found by the Institute:

"Although TTP's estimate is widely cited by journalists, politicians, and business lobbyists, it is impossible to know what the company is actually measuring in its calculation of tort costs, and impossible to verify its figures, because TTP will not share its data or its methodology, which it claims are 'proprietary.'

Indeed, Tillingahst has even admitted that "the costs tabulated in this study are not a reflection of litigated
claims or of the legal system." (U.S. Tort Costs: 2004 Update, at 4).

It is hard to imagine a less reputable source of statistics than the one relied upon here: a report based on data that an organization holds as the equivalent of government classified information and refuses to release for peer review.

Then again, this appears to be the trend of our present administration, so perhaps Tillinghast is catching up with the times.

But can't you only strengthen support for the conclusion of your report if other people can independently examine your research and the data on which it is based?

At least some people agree. The U.S. Office of Budget and Management (that agency that has the unimportant job of overseeing the administration of the federal budget) seems to think that the "peer review" of research and data shunned by Tillinghast is a good thing.

In a 2003 release the office stated that:

"Peer review is an effective way to further engage the scientific community in the regulatory process. A more uniform peer review policy promises to make regulatory science more competent and credible, thereby advancing the Administration's 'smart-regulation' agenda. The goal is fewer lawsuits and a more consistent regulatory environment, which is good for consumers and businesses."

Last time I checked, the current administration and Tillinghast were both complaining about how there are too many lawsuits.

At least the U.S. Office of Budget and Management seems to think that the more peer review of other's research and data, the fewer lawsuits will be filed.

If the current administration and Tillinghast want fewer lawsuits - and other people want to do a peer review of Tillinghast's data - and peer review of research creates less lawsuits - what's the problem?

Maybe the U.S. Office of Budget and Management, the President's Council of Economic Advisers, and Tillinghast should have a sit down and work this whole "peer review" thing out.

To read my subsequent blog posting "The Tort Liability Index: Another Reason Why You Should Feel free to Ignore It", click here.

For additional resources that respond to the Tillinghast report please visit:

Websites
Common Dreams
Civil Justice Resource Group
Center for Justice and Democracy

Publications
The Conservative Nanny State, Chapter 6
The Frivolous Case for Tort Law Change

If you or your organization are interested in learning more about or working on these types of issues, please feel free to contact me at cdugger@drummajorinstitute.org.

Cyrus Dugger
Senior Fellow in Civil Justice
Drum Major Institute for Public Policy

Posted at 12:20 PM, Jun 23, 2006 in Civil Justice | Permalink | Comments (6) | TrackBack (0)

Comments

This is a good survey of some of the issues in tort Law reform. For those of us who aren't lawyers or who slept through torts, it assumes some familiarity with issues many of us (me at least) haven't thought about. More elaboration? The links are useful. thanks.

if there's no money in enforcing a shorter waiting period and a lot to earn in having a business model that refuses to even make a decision about claims, then how are we actually going to enforce these waiting periods? what can we appeal to except people's concern about average americans?

is there a way to make enforcing these timelines good for everyone, claimants and corporations included?

Hi Daniel Millstone.

Thanks for your comment. Is it the use of undefined terms which makes you feel the post is hard to follow? If you post your specific questions about things in my post, I will respond to them in the comments section asap. Sorry in advance for any legalese.... law school does that to you.

Cheers,
Cyrus

Hi Lori,

Thanks for your comment on my previous auto insurance post:

The Option of Indefinite Denial: NYS Legis. Considers Auto Insurance Nightmare
(http://www.dmiblog.net/archives/2006/06/the_option_of_indefinite_denia.html). I think that the most important thing is that people know about and oppose the Heastie Bill. As mentioned in my post, the current structure at least somewhat penalizes insurance companies by precluding their legal defenses once they get to trial.

Clearly the present system does not do enough, since insurance companies can just stall through litigation until the claimant gives up, and pay only a 22% penalty if they end up having to pay anything. I will be talking about the idea of a "good faith" requirement for denials (and maybe instances where there is no denail or payment after thirty days) in the near future. I think that a good faith requirement could be a great step in the right direction.

My book, THE Expert Witness Scam, proposes a liability system that would increase the fairness of liability awards, reduce lawsuits and provide an incentive for safer products. It can be read free at www.nanlee.net and hard copy can be purchased at http://www.lulu.com/content/296817

I think that if anything, the current tort system is broken in that people are absolutely helpless before the might of corporate interests, and if anything, the system needs to be completely redesigned so that there are meaningful sanctions against these life-stealing big money interests that (YES!) *make* them actually change their behavior. Yes, the system IS broken but exactly the opposite way than they say it is.

People who are injured NOW *cannot* get justice. Thanks to 20 years of corporate victories, they can't find legal help, unless they have literally been killed by the injury. (and even then it isn't easy!)

This is the way they (the corporate interests who own Washington) want it.

May they rot in Hell.