Protecting Your Rights in the Civil Justice System

U.S. Chamber of Commerce to releases another misleading "study" attacking the Civil Justice System

The U.S. Chamber of Commerce recently released an updated "study" that supposedly ranks the best and worst state legal systems in America. But as with past editions, this "study" merely measures how Corporate America perceives the civil justice system, ignoring the views of consumers. The "study" is based on a survey of corporate lawyers from multi-million dollar corporations who spend their days trying to ensure that consumers or employees can't hold these corporations accountable for wrongdoing and gross negligence. A survey isn't necessary to tell us that the attorneys working for Merck are not happy with the legal system that holds their company accountable for the deaths and injuries caused by its controversial drug Vioxx. Similarly, any convicted criminal would say that the legal system doesn't work. Nevertheless, the Chamber touts this study as fairly measuring the states' legal systems. The facts tell a different story. Click here for more Recent Firm News.

The Chamber's "Study" Is Misleading

• The Chamber's "Study" Is Actually a Survey of Corporate Lawyers Working for Multi-Million Dollar Corporations. Instead of attempting to measure the effectiveness of the civil justice systems in each state, the Chamber instead commissioned a poll of corporate lawyers at companies with $100 million or more in annual revenues.(1) These are the very same lawyers who work every day protecting and defending large corporations when they take unfair advantage of consumers and employees.
• The Chamber's Own Pollster Admitted that There is No Way to Measure the Fairness of a State's Legal System. Humphrey Taylor of Harris Interactive, the polling firm that conducted the survey for the Chamber, admitted that there is no way to measure fairness of the legal system in each state. According to the Copley News Service, "Humphrey Taylor of Harris Interactive said the survey is based on the individual responses of the [corporate] lawyers because there is no hard data that can be used to measure the perceived fairness of a state's legal system."(2) Nevertheless, the Chamber has mischaracterized the "study" as "rank[ing] the best to worst legal systems in America."(3)
• After Ranking West Virginia as Having One of the "Worst" Liability Systems, the Chamber's CEO and Pollster Were Forced to Admit that Only of a Fraction of Those Surveyed Actually Knew Anything About the State's Court System. When questioned about the methodology of last year's "study" that ranked West Virginia as 49th in the list of state legal systems, the Chamber's CEO, Thomas Donohue, and the pollster that conducted the survey, Humphrey Taylor of Harris Interactive, were forced to admit that only a fraction of the corporate lawyers surveyed actually knew anything about West Virginia's courts. According to the Charleston Gazette, "Taylor and Donahue [sic] acknowledged not all of the 1,437 lawyers surveyed knew anything about West Virginia's courts. Taylor said ‘around 107' said they had direct knowledge of the state. ‘You could argue that's a small sample, but what they keep saying is ‘49th, 49th, 49th,' he said."(4)
• Florida Newspaper Criticized Chamber for Mischaracterizing the "Study" in a Television Ad. According to the Tallahassee Democrat(5), the Chamber's Institute for Legal Reform sponsored a television ad in Florida last year that mischaracterized the results of their "study" of state legal systems. The Chamber's ad included the line, "[a] recent Harris poll ranked the best to worst legal systems in America." However, the Democrat reported that this claim was "wrong," noting that the "ad did not mention the Harris poll was conducted among corporate lawyers who have to defend their clients against civil suits."

Lawsuits Are Not A Major Concern For Businesses

• A Recent Survey Published by the National Association of Manufacturers Found that American Manufacturing Companies Ranked the "Fear of Litigation" at the Bottom of Their Concerns.National Association of Manufacturers recently released(6) a survey of manufacturers in the United States showing that the "fear of litigation" ranked at the bottom of their list of concerns:
  "Please rate the following factors in terms of their negative impact on your company's operations (with 1 representing the greatest negative impact and 10 the least)."(7)
  2.9 Cost of non-wage compensation
  3.5 Cost of materials used in production
  4.0 Inability to raise prices
  4.1 Energy prices
  5.0 Foreign competition
  6.1 Taxes
  6.3 Cost of wages
  6.4 Shortage of qualified workers
  7.4 Regulations/corporate governance rules (Sarbanes-Oxley)
  7.8 Fear of litigation
• Survey by Business Week Magazine Found that the Threat of Lawsuits is Not a Major Concern of Small Business Owners. According to a recent survey published(8) in Business Week magazine, owners of small and medium-sized businesses are generally not concerned about the threat of lawsuits: "One of the survey's more surprising results revealed that tort reform -- particularly limiting class-action lawsuits -- is not a major priority." The survey found that the biggest threats to their businesses are: (1) Rising inflation, 44 percent; (2) The trade deficit and a weak dollar, 40 percent; (3) Energy shortages, 40 percent; (4) Excessive household and/or corporate debt, 29 percent; (5) The growing federal deficit, 28 percent; (6) Poorly prepared labor force/Shortage of skilled labor, 27 percent.

The Number Of State And Federal Tort Trials is Declining

• Bush Administration Statistics Show that the Number of Federal Tort Trials is Down Nearly 80 Percent Since 1985. Last year, the Bush Justice Department reported that the number of tort (personal injury) cases resolved in U.S. District Courts fell by 79 percent between 1985 and 2003. In 1985, 3,600 tort trials were decided by a judge or jury in U.S. District Courts. By 2003, that number had dropped to less than 800.(9)
• The Number of State Tort Trials is Decreasing. According to the most recent statistics from the Bush administration's Bureau of Justice Statistics, the number of tort trials at the state level has decreased. These statistics were compiled as part of the Bureau's survey of state civil justice systems in the nation's largest 75 counties. Among these counties, the number of tort trials decreased 31.8% between 1992 and 2001.(10)
• "Overwhelming Majority" of Federal Judges Don't See "Frivolous Lawsuits" as Major Problem. According to survey by the Federal Judicial Center – the research and education agency of the federal court system – most Federal judges do not view "frivolous lawsuits" as a problem: "Frivolous litigation is not a major problem in the federal court system, according to an overwhelming majority of federal judges who participated in a recent survey. The survey, conducted by the Federal Judicial Center, was based on the responses of 278 federal district court judges. Seventy percent of the respondents called groundless litigation either a 'small problem' or a 'very small problem,' and 15% said it was no problem at all. Only 1% called it a ‘very large problem,' 2% called it a ‘large problem' and the rest rated it as a ‘moderate problem' in their courts. In addition, 91% of the judges surveyed opposed provisions in the Lawsuit Abuse Reduction Act, which won House approval in the last Congress."(11)

(1) "2005 U.S. Chamber of Commerce State Liability Systems Ranking Study," U.S. Chamber of Commerce, 3/8/05, http://www.instituteforlegalreform.com
(2) "Survey says frivolous lawsuits hurt state's reputation," Copley News Service, 3/8/04
(3) "AdWatch," The Tallahassee Democrat, 3/12/05
(4) "Corporate lawyers rank state's legal climate poor," The Charleston Gazette, 3/9/05
(5) "AdWatch," The Tallahassee Democrat, 3/12/05 (6)"NAM Survey Shows Most Manufacturers Concerned About Energy, Production Costs and a Skills Shortage," National Association of Manufacturers press release, 3/21/05, http://www.nam.org
(7) "National Manufacturing Week 2006 Annual Survey Results," National Association of Manufacturers, http://www.nam.org
(8) "The Big Concerns of Small Business; A new survey points to the future of Social Security as a major concern. Tort reform, on the other hand, elicits only yawns," Business Week, 5/12/05, http://www.businessweek.com
(9) "Federal Tort Trials and Verdicts, 2002-03", Bureau of Justice Statistics, 8/17/05
(10) "Civil Trial Cases and Verdicts in Large Counties, 2001", Bureau of Justice Statistics, 4/04
(11) "Federal judges don't see problem with frivolous suits," Business Insurance, 4/11/05, http://www.businessinsurance.com

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What To Do After an Automobile Accident

Life can get very complicated in the aftermath of a car accident. Knowing the following steps will simplify what can be a nerve-wracking experience.

• Seek immediate medical attention if you've been injured.
• Call the police and do nothing else until they arrive on the scene.
• Tell the truth about the facts of the accident.
• Copy down all insurance and drivers license information with the other drivers and get names and phone numbers of any witnesses. Write down the names, addresses and telephone numbers of all potential witnesses.
• Obtain the investigating officers contact information.
• Notify your insurance carrier and file a claim as soon as possible. Also, notify the other driver's insurance carrier of the accident.
• Take pictures of any and all property damage before having your car repaired.
• Contact an attorney early in the process if you think you need legal representation or have any questions. Your attorney can assess the situation and make sure that all the facts and information that are important to your case are collected and documented appropriately.

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The five big lies about Colorado tort reform

For years we have heard a steady drumbeat for tort "reform" from the insurance industry and others blaming the legal system for all of society's ills (everything from economic decline to skyrocketing insurance premiums). They've distorted the facts and mounted a nationwide campaign of misinformation to convince legislatures and Congress to severely restrict the legal rights of average citizens and small businesses. There's no longer a level playing field in the courtroom. Your rights to access the courts and jury trials have been limited, while those with money and power continue to enjoy full access. Ask yourself why.

As early as 1986, statutes were enacted in Colorado to seriously limit your right to have juries decide who should be held accountable when you are harmed. For example, in place of jury decision-making, Colorado has placed arbitrary limits on the amount of medical bills and lost wages you are entitled to when you've been injured, regardless of the severity of your injury. In Colorado, time after time the privileged few have been partially or totally immunized from responsibility for harming others (e.g., ski resorts, llama trekkers, liquor stores and bars, sellers of unsafe baby cribs, public utilities, and negligent homebuilders, to name just a few).

To sell the public, politicians, and the media on the need for tort "reform," crisis after crisis has been fabricated. Big corporations have manipulated statistics, slanted facts, and, yes, outright lied. At Bachus & Schanker, LLC we want to share some of their tactics, because nothing is more infuriating than to have big corporations misuse power and trust to gain an unfair advantage. We have put together a list of what we like to call "The Five Big Lies." These lies, although only part of the entire picture, clearly paint the landscape of how we have all been misled and manipulated.

Lie Number 1: America's courts are overwhelmed by lawsuits.

The truth: Suits filed in federal and state courts are decreasing. According to data from the Administrative Office of the U.S. Courts, federal tort filings decreased five percent in the last decade. Tort trials in 2004 dropped to just 883 — 20 years before, there were 4,506. The U.S. Bureau of Justice Statistics (BJS) revealed that civil trials dropped by 47 percent between 1992 and 2001. In Colorado, civil trials have declined 54 percent in the last 15 years. During 2003, there were almost 249,000 cars in crashes in Colorado — but only 3,338 car-crash injury lawsuits were filed. The typical injured person does not even consider the notion of seeking compensation from some other person or entity. Only 10 percent ever file claims, which includes informal demands and insurance claims. Only two percent file lawsuits. These statistics are at odds with any notion that we live in an overly litigious society. (Rand Institute)

Lie Number 2: Our economy is being destroyed by outrageous awards given by runaway juries.

The truth: According to the BJS, the median inflation-adjusted award in all tort cases dropped 56 percent between 1992 and 2001. In 2001, the median jury award was $28,000, certainly not outrageous. In Colorado, the number of personal injury suits filed per 1,000 people has dropped dramatically.

Lie Number 3: There are too many frivolous lawsuits.

The facts speak for themselves. The number of suits and the size of verdicts are significantly down. When was the last time you read of an outrageous verdict in Colorado? When did you last hear of a frivolous lawsuit in this state? Why are big business, the insurance industry, and special interest groups continuing to beat the tort reform drum?

You may have heard the stories about these frivolous suits.

• The robber who fell through the skylight and then sued the building owner.
• The man who tried to trim his hedge with a lawn mower and cut off his hand.
• The strongman contestant who developed a hernia while towing a refrigerator up a hill and sued the contest sponsors.
• Best of all, the Winnebago operator who was injured when his motor home ran into a ditch after he left the driver's seat of the moving vehicle to fetch a cup of coffee from the galley. He supposedly sued the manufacturer.

Although whoever dreamed up these fictitious lawsuits had a vivid imagination, a search of court records throughout the nation revealed no such suits have ever been filed. These fabrications (all debunked at www.snopes.com) might be comical if it were not for the fact that the stories were invented to help persuade you and everyone else that our civil justice system is broken and tort reform is necessary.

Lie Number 4: It costs Americans $300 billion per year to pay for lawsuits.

The truth: This oft-quoted fable first appeared in the late 1980s, invented by Tillinghast-Towers Perrin. Its inflated numbers scared Americans into believing that our system of civil justice harmed the U.S. economy.

Tillinghast's estimates were roundly criticized by experts. Finally, in late 2004, this insurance related firm publicly admitted that its annual study was actually a myth. The figure measured costs, they wrote, "not directly related to…tort claims." Tillinghast included…

• insurance-industry overhead (executive salaries, advertising, and inefficiencies)
• payments for property damages (fender benders) and nontort PIP benefits without any lawyers, courts, or lawsuits involved.

These two factors alone are half the Tillinghast total. The study never looked at or included costs saved by the tort system in terms of injuries and deaths prevented due to safer products and practices, wages not lost, or healthcare expenses not incurred.

Insurance industry profits are booming. The property-casualty insurance industry enjoyed a record-breaking $38.7 billion in profits in 2004, the highest ever (Insurance Services Office). U.S. health-insurance firms recorded the highest profits in a decade (Weiss Ratings). Average pay for the five top executives at the largest health insurers almost doubled over the last four years to $3 million a year (Investors Business Daily). Health insurers raised premiums 59 percent during the same four-year period (Kaiser Family Foundation).

Lie Number 5: If we pass so-called tort "reform," insurance costs will drop.

Colorado is a laboratory rat for the tort "reformers." The American Tort Reform Association says our state passed ten out of their ten major tort reforms (the only state to do so). Our judges punish those filing frivolous cases; lawyers must file certificates that their cases "do not lack substantial justification." Our laws require judges to arbitrarily cut down awards for:

• noneconomic damages
• punitive damages
• economic losses (if the special interest has a high-powered lobbyist).

Think about that last one. We let certain special interests escape paying for the actual medical bills and lost wages of those they hurt — even if they've broken the law when they cause the harm!

The National Association of Insurance Commissioners reports that on a per-resident basis, back in 1984, Colorado residents paid insurance premiums of $512; the national average was $513. By 2003, Colorado premiums per capita had grown to $1,711 — but U.S. premiums were up to only $1,452. Would you be surprised to learn that insurance profits are higher in Colorado than in the United States as a whole?

Why are these people lying? Think about those amazing insurance company profits. Consider the size of executive salaries. Understand why insurance companies that are in the business of assessing and insuring risk salivate over the ability to charge huge premiums for little or no risk, because tort reform has eliminated risk from the business.

Someone once said, "Fool me once, shame on you, fool me twice, shame on me." Let's not allow ourselves to be fooled again. Get the facts. Educate yourself. Make sure the legal rights of average citizens are the same as those enjoyed by the privileged few. Educate your legislators, the media, your family, friends, and neighbors. Tell anyone who will listen, and even those who won't, that the lying needs to stop — our constitutionally guaranteed rights need to be protected.

For Consumer Advocacy Organization Links, please click here.

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Mythbuster!

2005 Was the Most Profitable Year Ever for the Insurance Industry

Despite hand-wringing from the insurance industry that payouts to injured consumers are costing insurers too much money, the data from 2005 actually shows that insurance industry profits hit record highs in 2005, despite the catastrophic hurricane season.

Fact: The property-casualty insurance industry's after-tax net income for 2005 was the highest ever, a record-breaking $44.8 billion!(Peter G. Gosselin, "Insurers Saw Record Gains in Year of Catastrophic Loss; They say the profits are a fluke, but the industry has worked to shift risk to clients and the public," Los Angeles Times, April 5, 2006.)

Fact: 2005 profits are up 18.7 percent over last year's profit of 38.7 billion; 2004 had been the record until 2005. (Insurance Services Office, Inc. [ISO] & Property Casualty Insurers Assoc. of America [PCI], First Underwriting Profit Since 1978 and Investment Gains Propelled P/C industry's Net Income and Surplus to Record Highs (April 12, 2005).

Fact: The property/casualty industry's surplus also is at the highest level ever, rising by more than 7 percent to nearly $427 billion.(Insurance Services Office, Inc. [ISO] & Property Casualty Insurers Assoc. of America [PCI], First Underwriting Profit Since 1978 and Investment Gains Propelled P/C industry's Net Income and Surplus to Record Highs (April 12, 2005).

Additionally, the insurance industry appears to be celebrating these results, at the same time they are publically statint that payouts to injured consumers are costing too much money.

“ ‘We've been through some of the worst natural disasters and man-made catastrophes in our history, and had some of the best earnings in the last 20 or 30 years,’ said Frank W. Nutter, president of the Reinsurance Assn. of America, a Washington trade group.”(Peter G. Gosselin, "Insurers Saw Record Gains in Year of Catastrophic Loss; They say the profits are a fluke, but the industry has worked to shift risk to clients and the public," Los Angeles Times, April 5, 2006.)

For more information, please visit The Center for Justice and Democracy website at http://www.centerjd.org/

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