Property and casualty insurance companies' profits set all-time records of $43 billion in 2005, the same year of catastrophic losses caused by Hurricane Katrina. This comes during a time when many states are contemplating enacting laws to cap liability, which would further boost insurance companies' profits. Instead, states should examine the conditions that permit insurance rates to rise dramatically and suddenly.
Tort "reformers" (those who favor liability caps) would have us believe that our courts are overloaded with tort cases and that plaintiffs are cashing in on a never-ending source of undeserved riches.
Reality does not bear out these misconceptions. Data from numerous national sources shows that lawsuit filings are down, as are personal injury trials, damages awards and other signs of an alleged "litigation crisis."
Are greedy plaintiffs abusing our court system as a kind of lottery? If so, playing a regular lottery would make better sense. In state tort trials, the median damages award has dropped 56% since 1992, from $64,000 to $28,000. What about punitive damages awards? Only 6% of successful tort plaintiffs receive punitive damages, with a median award of $25,000.
Are tort cases clogging our court system? Hardly. Despite increases in our population, state tort litigation has dropped 10% over the past decade. Generally, civil trials take about 3.7 days to conclude, with most medical malpractice cases completed in 1 to 2 weeks, and auto accident cases in 2.9 days. The long, drawn-out court battles covered by the media are the exception, not the rule.
What has increased? Business-against-business lawsuits. According to the Washington, D.C.-based consumer rights group, Public Citizen, an analysis of public court records in 2004 revealed that businesses file four times as many lawsuits as people represented by trial lawyers do. While many businesses sue each other, they also sue individuals on an increasing basis. Nevertheless, in its 2004 report, Public Citizen concluded:
The overwhelming majority of Americans, both businesses and consumers, use the legal system responsibly. Public Citizen does not begrudge anyone, including corporations, the right to seek legal redress in court. We simply wish to counter the inaccurate stereotypes perpetuated by corporate lobbyists in their campaign to restrict consumers' legal rights.
Are there frivolous lawsuits filed? Unfortunately, yes, and we have the tools in place to dispose of such cases. A runaway litigation crisis is not, however, supported by facts.
If you have any questions about personal injury/accident law please contact Rowley Chapman Barney & Buntrock and ask for Kevin J. Chapman at (480) 833-1113.
