It's the injuries, stupid.

For the past few years, the insurance consulting firm Tillinghast has released an annual study purporting to tabulate the cost of the tort system to the American economy. The latest one came last week. I hate this study, and various people have taken whacks at it for its methodology, for different reasons. I won't rehash all that here (follow the links if you want more). What bugs me about this stupid study, besides that it's meaningless, is that it's never accompanied by any acknowledgment that there would be no tort costs if there weren't any accidents.

Even if you acknowledge, as I do, that the transaction costs of the tort system can be quite high (meaning that you have to spend a bundle to get any compensation you're owed), the real hit to the economy is not from the lawsuits but from the initial injuries. For instance, medical errors, most of which go entirely uncompensated, are supposed to cost the country $38 billion a year. Some 42,000 people a year are killed and nearly 3 million seriously injured in car accidents, at a cost of around $230 billion a year (a number suspiciously close to the Tillinghast tort costs!). That is a big drain on the economy.

The tort system is simply one way that many of these injured people are supposed to be made whole, either by claiming insurance coverage they're rightfully owed or by making the wrongdoers pick up the tab. Rather than always harping on the "tort costs," it seems to me that insurance companies, health care providers, and business groups ought to focus on the source of the problem, and figure out cost effective ways to reduce accidental injuries. Maybe this is too simplistic, but it seems to me that everyone would be better off this way.

Comments

[Cyrus Dugger]

Some more discussion on Tort Deform.

http://www.tortdeform.com/archives/2006/12/thoughts_on_the_idea_of_a_tort.html

[Tom Foss]

Well, to track this information the way you suggest would be way too sensible and logical. It makes for better headlines and soundbites to attack the tort system.

Of course, Tillinghast does not look at the cost of real injuries, although some of that is captured in its methodology. But what it does do is capture a lot of insurance contract litigation costs, like doctors suing insurers over reimbursement practices, (some of the biggest class actions in recent history), the costs of litigation to enforce insurance contracts when insurers scr-- consumers, companies hiring lawyers to figure out how to scr-- employees as well as consumers, costs of insurance industry administration and record shattering profits, CEO salaries and bonuses, inflated insurance defense costs to engage in scorched earth defense tactics, etc, etc.

An interesting side note on this discussion is looking at med malpractice and its costs to the health care system. When looking specifically at medical negligence and injuries, the problem is even worse- the costs of the whole med mal system, which includes all the insurance costs and overhead, plus profit, is about one-sixth the cost of the preventible medical injuries. And that doesn't even count the fact that most med mal costs are actually for future medical care caused by the injury. The transactional costs you talk about are way too high, Stefanie, but in large part they are brought about by the strategies and tactics of the insurers in making it so. And, the single biggest element of those costs in med mal are the hugely inflated fees paid to expert doctors who charge 4-5 times their clinical rates for their testimony, which of course an injured patient has to have to prove their case.

I have participated in efforts through court rules and even legislation (slippery slope there, on separation of powers) to reduce these transactional costs, and its not the consumer groups or civil justice lawyers who object-its insurers who fight it tooth and nail.

-Tom Foss

[Degsme]

Another interesting thing to consider in the case of punitive torts is that in theory, human persons are of greater import and significance than corporate 'persons'. Yet if the ideals of tort reform were to come to pass, this would be essentially reversed. Why? Because in both currently and historically, those who lack access to the court system for redress are essentially non-person's in our legal system. That is in part why Dredd Scott was so important - it denied that access. Anyone without meaningful access to the tort system is a non-person.

And those 'reforms' would essentially make access to the courts out of reach to all but the wealthy and the corporations.

As it is, access is very difficult and many many many torts go uncontested. What is interesting to see is that many of those advocating "tort reform" are also advocates of draconian punishment systems against Human persons on criminal justice.

So if the Death Penalty and LWOP are good enough for human persons, why are they such a bad idea for corporations? Given that corporations do not have the life-span limitations that human persons have, they already have an edge over human persons in any tort battle. After all, the Exxon trials have been going on now for something like 15 years. Exxon has essentially already earned in interest on the surety bond, the MAXIMUM amount it would have been required to pay in damages. Meanwhile the fishermen and natives who were harmed, have lived 1/5 of their lives and 1/4 of their adult lives fighting this battle.

To then remove from corporations the threat of the Death Penalty or severe restrictions on future income opportunities (LWOP) makes them more "citizen" than human citizens.

[Dominius]

"Some 42,000 people a year are killed and nearly 3 million seriously injured in car accidents, at a cost of around $230 billion a year (a number suspiciously close to the Tillinghast tort costs!)."

Are you claiming that the cost ($230 per year) is because of negligence?