Mar
01
2004

Trial by Anecdote

Newsweek's 'lawsuit explosion' blown away by facts

It's an all-too-familiar story: ordinary citizens paralyzed by the fear of frivolous lawsuits. A charity softball tournament canceled because a player sued after breaking his leg sliding. A minister who can't hug parishioners for fear of being slapped with sexual harassment claims. And doctors who perform unnecessary surgery just to avoid potential malpractice suits.

All these horror stories and more were included in a front-page story in Newsweek (12/15/03), announced on the cover with a photo of an anxious-looking minister, doctor and state trooper, and the words "Law-suit Hell: How Fear of Litigation Is Paralyzing Our Professions." According to the lead article by Newsweek contributing editor Stuart Taylor Jr. and assistant managing editor Evan Thomas, an "onslaught of litigation" is costing U.S. residents $200 billion a year, and paralyzing our society with "legal fear."

It's a common complaint, a staple of late-night monologues and kill-all-the-lawyers comic-strip punchlines—but in this case, almost none of it is true. In the wake of the Newsweek story (and an accompanying series of reports on NBC and MSNBC), consumer and legal advocates have revealed that its findings were based on faulty assumptions and outright misstatements—all to tout a legislative gimmick known as "tort reform" that is designed to protect corporations from liability for their own misdeeds.

Take, for example, the softball tournament. According to Newsweek, "Ryan Warner is a volunteer who runs an annual softball tournament in Page, Ariz., that usually raises about $5,000 to support local school sports programs. But not this year. A man who broke his leg at a recent tournament sliding into third base filed a $100,000 lawsuit against the city, and Warner fears he may be named as a defendant. 'It's very upsetting when you're doing something for the community, not making any money for yourself, to be sued over something over which you had no control,' he says. So Warner canceled the tournament."

But the consumer group Public Citizen pointed out that not only hadn't Warner been sued in the two years since the injury occurred, it's very unlikely that he could be sued: The Volunteer Protection Act, passed by Congress in 1997, specifically exempts volunteers for government or non-profit programs from liability for their actions—something that Taylor and Thomas never once mentioned in their 3,500-word story.

Or take the case where, in Newsweek's words, "a couple won a $70 million judgment against Stanford University Hospital and two other healthcare centers for failing to prevent their child from becoming disabled by a rare birth condition." How, you can hear readers asking, could a genetic birth defect be the fault of doctors? Again, Public Citizen turned up the full story: When Michael Cook was born with phenylketonuria, a metabolic disorder that interferes with the absorption of amino acids, doctors at Stanford performed the test too soon after birth, thus allowing a treatable condition to go undetected until Michael was six years old—and permanently disabled.

Antidotes to the anecdotal

The greatest irony, perhaps, is that contrary to Newsweek's claims, tort lawsuits are in fact not on the rise. In an extensive rebuttal to the Newsweek story, Joanne Doroshow, executive director of the Center for Justice & Democracy (a judicial consumer group initially funded by Michael Moore) reports that "far from 'exploding,' tort lawsuit filings have decreased 9 percent since 1992," while medical malpractice claims have remained steady, adjusting for medical inflation, since 1975.

Malpractice insurance premiums have indeed skyrocketed over that time, notes a study by Americans for Insurance Reform—but in response to reduced profits from insurers' investments, not a wave of lawsuits. When J. Robert Hunter of the Consumer Federation of America, a former Texas insurance commissioner and federal insurance administrator under presidents Ford and Carter, analyzed the growth in malpractice premiums, he found they correlated not with jury verdicts but with the economy: When the stock market is strong, insurance rates hold steady, but when stocks are weak, premiums rise (TomPaine.com, 2/11/03).

Moreover, in the 30 states that have capped malpractice awards, insurance premiums did not fall. "It stands to reason that tort reform, especially if the cap is real low, has got to reduce the amount that insurance companies will pay out, but that doesn't mean the industry will pass it through to the consumer," former Missouri insurance commissioner Jay Angoff told TomPaine.com (2/11/03). "Regardless of whether you believe caps limit the amounts that insurance companies pay out, it's demonstrable that it doesn't reduce insurance rates."

Such hard data are almost entirely absent from Newsweek's story, which relies heavily on the anecdotal, often expressing indignation over lawsuits that were merely filed, though of course in the American legal system there's nothing to prevent anyone from filing a lawsuit for whatever reason—and likewise nothing to prevent judges from tossing them out.

On the rare occasion when actual dollar figures appear in the article, they are generally wrong. "The bill [for the 'litigation explosion'] is enormous," wrote Taylor and Thomas, "an estimated $200 billion a year, more than half of it for legal fees and costs that could be used to hire more police or firefighters or teachers."

This number, notes Doroshow, was compiled by the insurance-consulting firm Tillinghast-Towers Perrin, which simply totaled all liability insurance premiums, not just those caused by "frivolous" lawsuits—auto insurance alone, according to an Americans for Insurance Reform study, accounts for $82 billion of the Tillinghast figure. Moreover, Newsweek's $200 billion "bill" ignores the credit side of the ledger: the consumer savings brought by, for example, suits that prompt improvements in product safety, or the reduced need to have the government cover care for patients injured by medical misdeeds.

Likewise, the charge that malpractice liability leads to unnecessary "defensive medicine"—between $50 billion and $100 billion a year worth, according to Newsweek ("that kind of money could buy health insurance for the 40 million Americans who have none")—is based on a single 1996 study co-authored by Mark McClellan, now commissioner of the Food and Drug Administration. A 2003 study by the General Accounting Office noted that "(1) some defensive medicine is good medicine, (2) managed care discourages bad defensive medicine, and (3) doctors do defensive medicine because they make money from defensive medicine." Another study the same year conducted by the Congressional Budget Office found "no statistically significant difference in per capita healthcare spending between states with and without malpractice tort limits."

Our lawyer, the philosopher

Those tort limits are the heart of Newsweek's prescription for legal reform. Their prime proponent: Philip Howard, introduced as a "corporate lawyer and civic activist with a philosophical bent" who hopes to "save Americans from a legal system gone mad," and who is quoted no less than six times in the piece. (Opponents of tort reform are limited to a single appearance by Ralph Nader, whose comments were only added to the article at the last minute after Doroshow alerted the consumer advocate to the pending story.) Only later do Taylor and Thomas parenthetically reveal that Howard is a partner in the corporate law firm of Covington & Burling, which represents tobacco and drug companies—and Newsweek itself.

Given free use of his client's magazine to espouse his views, Howard pulls no punches. The medical liability system, he says, is a "cancer in its latest stage," while schools are a "viper's nest" of legal fear. The only solution, in Howard's eye: not just caps on jury awards, as most "tort reform" so far has done, but removing the healthcare and education systems from the courts entirely, substituting parent-teacher dispute resolution committees and a "special court of medical experts."

Howard promises more effective schools and cheaper medical insurance as a result—but critics say the evidence all points to no improvements in service, along with crippling obstacles for the genuinely wronged seeking restitution. The "medical tribunal" for malpractice claims is particularly worrisome to Doroshow, who notes that several states are considering such legislation. "We know from the way these cases go that there's a 'white wall' of silence in the medical profession. So it would probably result in almost no compensation to victims." In Virginia, she notes, all cases involving brain damage to infants were rerouted into the workers'-comp system in the 1980s, "and it's been a terrible disaster for everybody—patients don't get compensated, and there's a concern that the state has become a safe haven for negligent doctors."

As for education, Newsweek presents a nightmare vision of "chaotic and undisciplined" schools where "thanks to judicial rulings and laws over the past four decades, parents can sue if their kids are suspended for even a single day—for any reason—without adequate 'due process.'" Shunting cases from the legal system to parent-teacher groups, write Taylor and Thomas, would mean teachers "wouldn't have to worry about getting sued or having to jump through procedural hoops to send a student home for a day, to fire an ineffective teacher or to change the curriculum."

Yet a case from their own story illustrates the problems with this plan. A mother who "sued her daughter's school after the girl had performed oral sex on a boy during a school bus ride returning from a marching-band contest"—cited as an example of out-of-control litigation against schools—turns out to have exhausted all other channels before taking the school to court. As Public Citizen discovered when it researched the story further, the mother told the principal that her daughter had been forced into the sex act; when the principal disagreed, she appealed to the board of education, asking that it set up a training course on sexual assault for school employees, including trip chaperons. Only when the board refused did she file suit to seek the policy change.

This is the main point missed by "tort reform" advocates like Howard, say critics: While lawsuits do have a cost in time and money, they can also reap tremendous benefits, both in deterring misbehavior and in gaining reforms in how business is conducted. (Though Taylor and Thomas did make note of the potential benefits of lawsuits in their article, they put a bizarre spin on some achievements, such as insisting that new kid-safe playground equipment, installed for fear of lawsuits, is actually more dangerous because, according to "some experts," "risk-loving kids will test themselves by, for instance, climbing across the top of a swing set.")

Newsweek's scare tactics, says Doroshow (TomPaine.com, 2/11/03), obscure another, far more likely horror story that would result from the passage of tort reform.

Once you set that kind of precedent with a federal law, there is a huge slippery-slope problem. Ultimately, it will set the stage for the pharmaceutical industry, for the chemical industry, for oil and gas, the auto makers-they'll all move in and try to get Congress to limit their liability through federal legislation. So it's a very, very dangerous precedent and it will be used by all of corporate America over the next two years as a way of moving to basically take over the local judicial system in every single state.

Neil deMause, a frequent contributor to Extra!, is the editor of Here magazine. He has a website at www.demause.net.