The Right Wing's Drive for 'Tort Reform'
Not only are socially significant lawsuits like malpractice and product liability a small fraction of the legal picture but numerous studies show that capping damages doesn't affect insurance premiums. One survey examined insurance rates between 1985 and 1998, then ranked the states according to the severity of their restrictions on lawsuits. Increased severity did not produce lower rates. In Texas, where malpractice filings dropped 20 percent in the nine years before Proposition 12, the liability picture has been little improved by its passage. About a third of doctors will see a decrease of 12 percent--after cumulative increases of 147 percent. The rest will either get no relief or double-digit increases.
According to J. Robert Hunter, Federal Insurance Administrator under Presidents Ford and Carter, caps don't work, because liability rates reflect not litigation costs but the insurance industry's own practices. During good times, insurers write policies even for the worst risks to generate cash for investment. When the stock market tanks, rates climb steeply to cover losses. The current liability crisis, Hunter notes, coincided with the market downturn that began in the summer of 2001. And since the insurance cycle is international, the "hard market" also drove up premiums in Canada, Australia and France. "And those countries have totally different legal systems," Hunter says.
The irony is that just as virtually the entire country finishes retooling its civil justice system, the hard market is easing and insurance costs are edging downward, a trend that became evident in late 2003 and for which tort reform is unjustly receiving credit, according to Hunter.
The numbers show that lawsuits are an insignificant cost both to businesses and to health providers, for whom they represent less than 2 percent of spending. In short, the lawsuit-abuse crisis is a hoax. Yet the Republican right has launched one of the great propaganda blitzes of recent American history to yank the teeth from the civil jury.
The reach of the civil justice system expanded dramatically during the 1970s, but by the early 1980s a retrenchment was under way. The seed money for tort reform came from the same group of extremist multimillionaires whose family foundations nurtured the rest of the ultra-right's agenda, especially David and Charles Koch, Richard Mellon Scaife and Lynde and Harry Bradley. Of the dozens of think tanks they created, four--the Heritage Foundation, the Washington Legal Foundation, the American Legislative Exchange Council and especially the Manhattan Institute and its Center for Legal Policy--took particular aim at plaintiff's lawyers.
They were an obvious target, especially the "mass tort" lawyers who were filing waves of suits over products like the Dalkon Shield and asbestos. Only in America can civil juries, which are virtually unheard of in the rest of the world, both compensate victims and award punitive damages against a defendant whose behavior outrages the community. Although less than 4 percent of tort actions are decided by a jury verdict, that tiny handful represents the only time a corporation's fate rests in the hands of ordinary citizens. A punitive damage award, or any large judgment, is a serious embarrassment and often collapses stock prices. The fate of asbestos maker Johns-Manville, which sought bankruptcy protection in 1982 under a deluge of 20,000 lawsuits, has often been cited as a portent of things to come, although it is rarely mentioned that Johns-Manville was a fully solvent company with assets of more than $2 billion when it sought shelter. Or that it emerged six years later with its profit-generating core intact.
By the mid-1980s the asbestos wars had made a number of plaintiff's lawyers wealthy political players in the liberal wing of the Democratic Party, while on the other side, the American Tort Reform Association was founded to lobby and begin reprogramming the jury pool through a long-term propaganda campaign. The ultra-right was perfectly positioned to speak to opinion leaders through its web of self-referential think tanks, magazines, books and conferences. The Manhattan Institute promoted Peter Huber, whose influential books injected terms like "junk science" and "tort tax" into the national conversation.