Says who? Not the Wall Street Journal. (Facts Do Matter.)
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The Wall
Street Journal, 07/25/2017
COURTROOM
SURPRISE: FEWER TORT LAWSUITS
Restrictions
on filing, rising costs and a PR push discourage plaintiffs
BY JOE
PALAZZOLO
Americans,
reputed to be the most litigious people in the world, are filing far fewer
lawsuits.
Fewer than
two in 1,000 people—the alleged victims of inattentive motorists, medical
malpractice, faulty products and other civil wrongs—filed tort lawsuitsin2015,
an analysis of the latest available data collected by the National Center for
State Courts shows. That is down sharply from 1993, when about 10 in 1,000
Americans filed such suits.
A host of
factors are fueling the decline, including state restrictions on litigation,
the increasing cost of bringing suits, improved auto safety and a long campaign
by businesses to turn public opinion against plaintiffs and their lawyers.
The
nationwide ebb in lawsuits, which confounds the public perception of courts
choked with tort claims, has broad ramifications for businesses, doctors,
patients, lawyers and the courts themselves.
Companies
and insurers on the receiving end of such lawsuits welcome the decline of what
they regard as a lawsuit culture in which lawyer-driven litigation increases
costs to both business and consumers.
Trade groups
that represent these firms have long pushed for laws to raise the bar for
filing lawsuits and rein in damages, portraying a large chunk of tort litigation
as a drag on the economy that burns scarce judicial resources.
Lisa
Rickard, president of the U.S. Chamber Institute for Legal Reform, an arm of
the U.S. Chamber of Commerce, says that while state measures have "weeded
out some frivolous lawsuits," litigation abuse remains a problem.
"The American public wholeheartedly agrees there are too many lawsuits in
the country," she says.
At the same
time, the falling number of tort filings, coupled with the broader decline in
civil jury trials, has some judges concerned that Americans with garden-variety
cases no longer see courts as an affordable way to seek redress for their
injuries.
People are
just not filing cases like they used to. They are not seeking trials like they
used to," says Senior Judge Gregory Mize of the District of Columbia
Superior Court, a local trial court. "It’s so expensive and time-consuming."
The
Conference of Chief Justices, an association of state judicial leaders, has
been working on tweaks to the civil justice system that officials hope will
make many cases move more quickly and cost less. Judge Mize is assisting the
committee studying the issue.
Torts are
civil wrongs that cause someone to suffer loss or harm. Most tort lawsuits seek
damages for negligence rather than deliberate injury and fall into one of three
categories: auto cases, medical malpractice or product liability.
Contract cases rise
Tort
lawsuits now account for less than 5% of all civi! l filings in state courts.
Contract cases, including those fi! led by corporate plaintiffs such as debt
collectors and banks foreclosing on homeowners, have increased in number and
now represent about half of all civil cases.
Most civil
cases are filed in state courts—more than 15 million in 2015, compared with
281,608 cases brought in federal courts that year, according to federal
statistics and data collected by the National Center for State Courts, a
research center for state courts.
Federal
courts have seen an increase in some types of mass tort cases in recent years,
but the reality in state courts, where about 98% of all cases are filed,
contrasts sharply with public perception of civil dockets awash in tort
lawsuits. An election-night poll last November by Public Opinion Strategies
showed that 87% of voters agreed that there are "too many lawsuits filed
in America."
Tort filings
spiked in the 1980s, prompting the formation of groups like the American Tort
Reform Association in 1986 and triggering a wave of legislation meant to impose
new requirements for filing lawsuits or to reduce monetary awards to
plaintiffs.
Tort cases
declined from 16% of civil filings in state courts in 1993 to about 4% in 2015,
a difference of more than 1.7 million cases nationwide, according to an
analysis of annual reports from the National Center for State Courts. Those
estimates are based on case percentages recorded by more than 20 states that
track tort filings.
Contract
cases—a category that includes debt collection, foreclosure and landlord-tenant
disputes—grew from 18% of the civil docket to 51%, according to the center’s
data.
Anthony
Sebok, a torts professor at Benjamin N. Cardozo School of Law in New York,
contends the public perception of tort filings has never matched reality. Even
at peak growth in the mid-1980s, tort cases amounted to about 20% of civil
filings in state courts, on average.
"We as
a society seem to be OK with plaintiffs when they are debt collectors coming in
and using the court system more than they used to, but we somehow instinctively
think it’s a bad thing when victims of accidents come in and do the same
thing," he says.
Ms. Rickard
of the U.S. Chamber said an increase in single lawsuits bundled with multiple
plaintiffs could be a factor in the decline in tort filings. Most courts don’t
distinguish between lawsuits filed by individuals or by groups, counting both
as one filing in their statistics.
A study last
year by the National Center for State Courts found that nearly two-thirds of
tort cases involve automobiles. Motor-vehicle deaths and hospitalizations from
crash injuries have declined since the 1990s, likely contributing to fewer
lawsuits, legal experts say.
Researchers
at Northwestern University and the University of Illinois recorded a 57%
nationwide decline in malpractice claims paid by doctors or their insurers
between 1992 and 2012, and a similar drop in the number of malpractice
lawsuits. Claims of less than $50,000 fell the most, perhaps because increasing
litigation costs made many lower-value cases too expensive to pursue, the
researchers said.
In Texas,
the number of tort cases fell 27% between 1995 and 2014, according to another
study. The decline for nonauto- accident tort cases over that period was 60%,
the study said.
Stephen
Daniels, a research professor at the American Bar Foundation who co-wrote the
Texas study, says advocates of lawsuit restrictions have succeeded in making
many tort cases economically impossible for trial lawyers to bring.
Plaintiffs’
lawyers typically front the cost of litigation and take their fees on the back
end, usually one-third of whatever their clients recover.
In tort
lawsuits, damages come in three varieties. Economic damages are meant to make
the plaintiff whole. They cover lost wages, medical costs or other economic
harms caused by others. Noneconomic damages ameliorate intangible harms such as
pain and suffering, while punitive damages are meant to punish and deter.
More than 30
states have capped damages in medical malpractice or other cases since the
1970s, according to the Center for Justice & Democracy, a group that
opposes such laws. In 2003, Texas capped damages in medical malpractice cases
at $250,000.
Meanwhile,
costs have increased for medical records and the expert witnesses often needed
to testify about medical treatment, lawyers and legal experts say. Many states
require medical-malpractice plaintiffs to file an expert report with or soon
after their lawsuit. Total costs often reach thousands of dollars, trial
lawyers say.
Economic
damages are tied to lost wages and income. Plaintiffs’ lawyers told Mr. Daniels
and co-researcher Joanne Martin they no longer could afford to represent
retirees and stay-at-home parents as clients in medical-malpractice cases, or
even unemployed people as clients in some auto accident cases, "because
they wouldn’t get sufficient damages, and cases are expensive," Mr.
Daniels says.
In Kansas,
which moved to curb tort litigation, tort filings fell by 45% between 2000 and
2015, according to the National Center for State Courts.
Noneconomic
damages have been capped by the state for decades, most recently at $300,000
under a 2014 law, and Kansas plaintiffs have to request permission from a judge
to file for punitive damages. Other changes in litigation rules also have
lowered damages in Kansas and elsewhere, lawyers and legal experts say.
Craig
Kennedy, a Wichita lawyer who represents insurers, says his practice has
shifted from litigation to mediation as more cases settle before a lawsuit.
Legal costs have increased for insurers, too, he says, and both sides have a
greater incentive to handle matters without litigation.
Mike
Fleming, a plaintiffs’ lawyer at Kapke & Willerth LLC in the Kansas City
area, says that as legal expenses have increased, insurers have gained an
advantage in c! ases involving minor injuries that would normally lead to about
$10,000 to $15,000 in damages.
"They
play hardball with a lot of these smaller, soft-tissue claims," Mr.
Fleming says, because insurers know trial lawyers will often balk at spending
$5,000 or more to recover a relatively small sum. "They are going to offer
$7,500, take it or leave it."
It’s unclear
how often alleged torts are resolved outside courts, but data from the
insurance industry show that the percentage of bodily-injury claims that lead
to lawsuits has been declining since the 1990s.
Arbitration
may be siphoning some tort cases from the courts. Judges have steered
personal-injury claims out of court based on mandatory-arbitration clauses
contained in contracts entered into by patients, employees, home buyers and
others, according to Elizabeth Thornbu! rg, a law professor at Southern
Methodist University in Dallas.!
Insurance
company practices can also affect decisions about whether to sue.
Josh Johnson
and Patricia Perryman wanted to sue the YMCA after their daughter nearly died,
they say, from injuries sustained at a summer camp in Minnesota in 2014. A
storm blew in the first night and toppled a tree onto the tent in which she was
sleeping because the cabins were full, Ms. Perryman says. Their daughter
suffered four broken ribs, a collapsed lung and nerve damage.
Mr. Johnson
and Ms. Perryman wanted to recover their out-of-pocket expenses, including
their insurance deductible, and future medical costs associated with their
daughter’s injuries. Mr. Johnson says their insurer, Blue Cross Blue Shield,
told them that any money they recovered from a lawsuit would first go to
reimbursing the insurer for about $138,000 i! n medical costs it paid for their
daughter’s treatment.
They would
have to sue the YMCA, an organization that "does a lot of good," Mr.
Johnson says, for hundreds of thousands of dollars to get enough to pay their
attorney and make themselves whole. The Johnsons decided against it.
The YMCA
declined to comment, and Blue Cross Blue Shield didn’t respond to requests for
comment.
PR campaign
The slump in
tort filings coincides with dwindling membership in some state triallawyer
associations. It follows a decadeslong public-relations campaign highlighting
wrongdoing by trial lawyers, including a 2008 guilty plea by Mississippi
plaintiffs’ lawyer Richard Scruggs on a charge of conspiring to bribe a judge.
In 1994, a
jury awarded nearly $3 million to a 79-yearold woman who sued McDonald’s! after
spilling coffee in her lap and burning herself badly. The verdict was reduced,
and the parties eventually settled. The American Tort Reform Association
portrayed the case as the embodiment of lawsuit abuse.
"Let’s
do word association," says Sean Harris, a Columbus based plaintiffs’
lawyer and president-elect of the Ohio Association for Justice, a trial lawyer
group. "What word comes to mind when I say ‘frivolous’?"
"Lawsuit" is the word most people think, he says. "If we go to
trial, we know that we are going to face a hostile jury."
A committee
appointed by the Conference of Chief Justices recently concluded that state
judicial systems are getting fewer cases because many disputes cost more to
litigate than they are worth. A study conducted for the group found that 0.2%
of civil cases resulted in judgments of more than $500,000, while most tort
cases ended in judgments of $12,000 or less.
