The Myth of America's 'Lawsuit Crisis'

Last December, Newsweek featured a cover package by Stuart Taylor and Evan Thomas that blared: "Lawsuit Hell: Doctors. Teachers. Coaches. Ministers. They all share a common fear: being sued on the job." Paired with a weeklong tie-in on NBC News and online chats on MSNBC.com, the article claimed that because "Americans will sue each other at the slightest provocation," the country is suffering from an "onslaught of litigation" that costs Americans $200 billion a year. The story was full of tales claiming to illustrate Americans' overarching sense of legal entitlement and desire to "win a jackpot from a system that allows sympathetic juries to award plaintiffs not just real damages…but millions more for the impossible-to-measure 'pain and suffering' and highly arbitrary 'punitive damages.'"

Among others, the story featured a softball tournament organizer, a minister, and a doctor who all claimed to have modified their behavior because they were terrified of lawsuits. Ryan Warner, an insurance salesman in Page, Ariz., told Newsweek that he had recently cancelled an annual charity softball tournament because an injured player had sued the city of Page for $100,000. Warner said that he worried he might be added as a defendant.

The story as published, though, lacks a few critical details. Newsweek didn't mention, for instance, that the 1997 federal Volunteer Protection Act ensures that people like Warner are immunized from these types of lawsuits. The article also excluded the injured man, Richard Sawyer, a locomotive engineer who suffered a dislocated ankle and a spiral fracture to the fibula – and missed months of work as a result – after he slid into a base that was supposed to break away on impact but didn't because the city hadn't followed the manufacturer's instructions for maintaining these fixtures properly, according to Kevin Garrison, Sawyer's lawyer.

The event organizers had insurance – required by the city – to protect against exactly this kind of situation, but Warner cancelled the tournament anyway because he says the lawsuit was "a hassle." Canceling the tournament proved a smart PR move, as it brought out an immense amount of pressure on Sawyer to drop his suit, says Garrison. The case was settled this January for an undisclosed amount and Warner was never named. In fact, the tournament has been revived and scheduled for early September.

Not only were the particulars of the Newsweek story misleading. The essence of the story was wrong, too. Newsweek's "onslaught" of lawsuits simply hasn't happened. According to the National Center for State Courts, a research group funded by state courts, personal injury and other tort filings, when controlled for population growth, have declined nationally by 8 percent since the 1975, and have been falling steadily in real numbers since 1996. The numbers are even more dramatic in places with rapid population growth, like Texas, where the rate of tort filings fell 37 percent between 1990 and 2000. Even in liberal California, the rate of filings has plummeted 45 percent over the past decade. And those overly sympathetic juries Newsweek derides as so eager to dole out big bucks to injured victims?

In 2001, they voted against plaintiffs in 75 percent of all medical malpractice trials, according to the federal government's Bureau of Justice Statistics (BJS).

In an interview, Taylor dismisses these numbers as insignificant compared with the tort system's $200 billion drag on the economy. "The costs of the tort system to society have gone up astronomically," he says. That figure, though, comes from the insurance-industry consulting firm Tillinghast-Towers Perrin (TTP), which includes in its definition of the "tort system" insurance company administrative costs and overhead and the salaries of highly paid insurance company CEOs (Maurice "Hank" Greenberg, chairman of AIG, one of the world's largest insurance companies, makes $29 million a year). One thing TTP doesn't include: court budgets, which makes its study seem a lot more like an assessment of the insurance industry than of the legal system.