Monday, October 11, 2004

Things I "Learned" In Law School

Over on mythago's blog, there is a brief discussion of the insurance industry-sponsored venture known as "tort reform", and the extent to which the insurance industry distorts facts - or just plain fabrications - in their effort to advance industry-friendly litigation. A couple of example fabrications, described in the Washington Monthly, brought back fond memories of law school....
In 1977, the venerable insurance company Crum & Forester sponsored one of the first print ads that included what would become a staple of anti-lawsuit rhetoric: the fictional lawsuit horror story. The ad told the story of a guy who collected a $500,000 jury verdict after he was injured using a lawnmower as a hedge clipper. The agency later conceded that it had no factual basis for the story, but that didn't keep it from circulating widely in the media and in conservative political speeches.
More than ten years later, my torts professor related this story as being about a man who had cut off his thumbs while using a lawn mower as a hedge trimmer. (Think about that for a minute - even if you were to try to cut a hedge with a lawn mower, how could you hold it such that it would be your thumbs which were injured?) A quick Nexis search confirmed the story to have been a fabrication. Another example came from a different professor, I believe in Civil Procedure:
Back in 1986, [60 Minutes] profiled the owner of a ladder manufacturing company who claimed his company had been hit with a $300,000 jury verdict in a suit by a man who fell off a ladder because he set it in a pile of manure. The business owner claimed the lawsuit alleged the company should have warned buyers of the dangers of setting ladders in dung. The real lawsuit had nothing to do with manure; the ladder had broken with less than 450 pounds on it, even though it had a safety rating that said it could support up to 1,000. Tedesco says the show never ran a correction.
That story, also, was recounted as fact.

Another portion reminded me of a recent effort to discuss issues of malpractice with doctors. One kept bringing up the claim that the medical industry wastes $100 billion per year on "defensive medicine" - never mind that not one doctor in the discussion would admit to having ever engaged in defensive medicine, and not one could explain why an HMO or other managed care organization would pay for medical care it did not deem necessary. One claimed that an example of "defensive medicine" was the provision of pregnancy tests to infertile women before certain radiological procedures - although, given that infertile women cannot conceivably suffer fetal injury, it is not at all apparent how this could be classified as "defensive" as opposed to "stupid" or "profit-maximizing". Obviously, if we include profiteering and stupidity in the definition of "defensive medicine", it will be possible to derive an exhorbitant price tag. But generally, it is easier to just fabricate the price, and get it embedded in the public consciousness:
Take the idea of a "tort tax," the financial hit allegedly taken by every citizen because of the legal system, which Taylor raised in his December Newsweek article. It dates back to 1988, when Manhattan Institute fellow Peter Huber coined the term in his book, Liability, and claimed that the tort system cost Americans $300 billion a year. Three years later, the figure made its way into a speech given by Vice President Dan Quayle, who blamed lawyers for wrecking the economy. After the speech, several researchers examined the methods Huber had used to arrive at that figure. Huber, they found, had simply made it up. As The Economist observed in 1992, "the $300 billion figure has no discernible connection to reality."
What was also interesting was seeing that the doctors had no conception of the actual cost of medical malpractice, which the insurance industry estimates at 2 - 3% of the health care dollar, subject to being reduced by approximately 0.4 - 0.5% if all current "tort reform" measures are implemented. And the current "reforms" would have no effect on "defensive medicine", because they are uniformly aimed at limiting the recovery of the most injured victims of malpractice in the most meritorious cases.

Meanwhile, the same doctors who obsessively whinge about trial lawyers, malpractice liability, and the "need" for the tort reform measures which will "save" at most a half-percent of health care costs... yawn at the notion of eliminating bureaucratic inefficiency that results in the outright waste of 10 - 20% of every health care dollar.

My own experience supports the article's observation that most tort recoveries are small, and many tort victims are undercompensated. I also have experience receiving inquiries from people who have come to see the tort system as a slot machine, where an inconsequential or effectively self-inflicted injury can return millions. This, as the Washington Monthly points out, is an impression created largely by the insurance industry's own, decades-long disinformation campaign.
Some academic researchers suspect that all the hype about the litigation crisis might actually be making Americans more litigious by giving them the erroneous impression that compensation is available through the courts for most injuries. As McCann says, "Tort reformers may have produced more frivolous claims while making legitimate claims harder to bring."

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