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Lawsuit Abuse Statistics

The term "lawsuit abuse" was first defined in the 1990s by Washington pollster Jan van Lohuizan. However, before then, the Michigan State Medical Society had already cleverly coined it "frivolous lawsuit disease." Since then, the U.S. Chamber of Commerce has spent over $100 million over the past three years on Tort Reform, lobbying and advertising to attempt to restrict citizens' right to sue. Many would argue this is a much needed reform. In 2002, civil lawsuits cost the U.S. economy a reeling $233 billion. With the rise of civil lawsuits over the last half a century, each American citizen is now estimated to pay a "lawsuit tax" of anywhere between $700 and $800 a year (27 September 2004 US Fed News). According to Secretary of Commerce Don Evans, if you take the total cost of tort claims and judgments in the United States and divide it by the number of citizens in the country, a tort tax of about $809 per capita results (15 December 2004 White House Press Releases And Documents).

What's more, lawsuit costs represented about 2 percent of the US Gross Domestic Product, over $250 billion. Of this, the manufacturing sector bears a disproportionate share of that, at 4.5 percent. (15 December 2004 White House Press Releases And Documents). And costs are rising, with a reported 5.4% increase in the cost of civil lawsuits from 2002 to 2003 (1 September 2005 Design Firm Management & Administration Report). This has taken a particularly hard toll on many companies. For instance, due to civil lawsuit abuse, asbestos companies have seen 67 bankruptcies with 60,000 corporate American jobs eliminated as a result in recent years (15 December 2004 White House Press Releases And Documents)

According to a poll undertaken by Citizens Against Lawsuit Abuse (CALA) in their "Sick of Lawsuits" campaign, 79% of respondents "believe advertising by personal-injury lawyers encourages people to sue, even if they have not been injured". As of 1995, Citizens Against Lawsuit Abuse now has 6,400 active supporters in the Houston area and 17,000 statewide. The compensatory damage payout in that year for the national median was $60,000. state and national medians peaked in 1989 and have been in decline since then (9 July 1995 Houston Chronicle).

In a Washington Times article in covering the same agency, Citizens Against Lawsuit Abuse found that the American Medical Association identified 20 states experiencing a "medical-liability crisis. "The group noted that about $70 billion to $126 billion could be saved in annual health care costs by eliminating so-called "unreasonable" jury awards. The article points to the recent Texas lawsuit against Merck & Co., who are already dealing with an additional 5,000 lawsuits (21 September 2005 The Washington Times). Many other such organizations, companies, lobby groups, and websites exist to combat or address the concerns of systemic lawuit abuse, such as Point of Law, the Manhattan Institute's blog on tort reform, The American Tort Reform Association, The AEI Liability Project, The Manhattan Institute Center for Legal Policy, Illinois Civil Justice League, and Texans for Lawsuit Reform.

In Texas, the Department of Insurance showed a 4 percent increase in lawsuit claims since 1996, according to an Austin America-Statesman report. Lawsuits in orthopedics practice rose from $20,000 to $97,000. One Fort Worth cardiologist experienced an insurance premium spike from $120,000 to $670,000 in only five years. St. Paul Companies, a medical malpractice insurance company, paid roughly $37 million in lawsuit claims in Texas and lost more than $100 million following the downfall of Enron. They eventually pulled out of the market. (24 March 2003 The Fort-Worth Star-Telegram)

However, certain figures suggest the issue of lawsuit abuse is not as dramatic as it once was. The National Center for State Courts reported that tort filings steadily decreased over the past ten years, dropping by 9 percent between 1992 and 2002, and in Texas in particular, where the rate of filings fell by 37 percent between 1990 and 2000, and in California, falling 45 percent. (1 September 2004 Mother Jones).

Plaintiffs also end up losing about half the time they go to trial, according to the Bureau of Justice Statistics. This is compared to doctors, whose medical malpractice cases succeed almost three-quarters of the time. In addition, when plaintiffs do win, the lawsuit reward is getting smaller all the time. New data released in April by the Bureau of Justice Statistics shows that in jury trials in state courts, the median award fell by almost half during the 1990s, from $65,000 to $37,000. Punitive damages were awarded in only 6 percent of all jury trials in 2001, with the average award being only $50,000. (1 September 2004 Mother Jones).

There have also been significant recorded drops in the number of lawsuits in many areas. According to the Office of Court Administration, the number of personal injury lawsuits not involving a motor vehicle has consistently fallen, including medical malpractice suits, which fell from 31,050 lawsuits in 1994-95 to 19,590 in 2000-2001. About 85 percent of medical malpractice claims filed in Texas result in no payment. Claims have declined since 1999, when they spiked at 5,715. Of the 4,445 claims closed that year, 617 resulted in payments, the average being $208,592. In 2001, 4,083 claims were filed, but only 1,088 were closed. Of the 23 closed with payments, the average amount was $267,253.(24 March 2003 The Fort-Worth Star-Telegram)

Also, a report on lawsuit claims in 75 countries undertaken by the Bureau of Justice Statistics reports that cases dropped from 1,356 in 1992 to 1,112 in 2001. Malpractice suits cost $24 billion in 2002, less than 2% of the nation's total health care costs, says the Congressional Budget Office (12 September 2004 Denver Post).

Yet despite the reported declines, it is distrurbing to note that personal injury lawyers had a whopping 70% error rate in lawsuits, with the large majority of malpractice claims dropped, dismissed, or withdrawn. Lawyers in Pennsylvania in 2003, who keep around 40% of the lawsuit award, have little motivation to provide a long-term solution to their clients' problems. This is partly why Pennsylvania received an "F" on a report card for lawyer accountability by a national consumer-protection organization.

>> next: "Are Frivolous Lawsuits Legal?"



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