The Tort Liability Index: Why You Should Feel Free to Ignore It

The Pacific Research Institute recently published a report titled "Tort Liability Index: 2006." This report purports to show that "a poor civil-justice system lowers the standard of living for ordinary citizens" and that "meaningful legal reform on the other hand pays dividends in the form of stronger economic growth and higher personal income."

"A poor civil-justice system lowers the standard of living for ordinary citizens?"

Last time I checked, not so many middle and working class families are talking about how they are really scared of being sued in the civil justice system if an SUV they manufactured in their kitchen rolls over and kills a family of five.

"Meaningful legal reform on the other hand, pays dividends in the form of stronger economic growth and higher personal income?"

Although a dubious assertion without methodologically rigorous support, assume, for the sake of argument, that this statement is true.

The issue then becomes: even if a non-existent or severely weakened civil justice system would make economic growth soar, would you want to live in such a world?

Even if business boomed around you, would you want to live in a world in which you could do nothing if a corporation's negligence, disregard, or indifference damaged human life as part of their business plan?

In a world without the civil justice system, we are left with only highly understaffed administrative agencies to regulate corporations. Some people are left with no protection at all. Indeed, this culture of corporations unregulated is likely all too familiar to many living in the developing world. I wonder if the authors have recently passed through many developing nations and observed their standards of living?

The most "flashy" statement the report makes is that:

"The President's Council of Economic Advisers estimated that the nationwide excessive costs of the tort system were $136 billion in 2000 - the equivalent of more than three months of groceries, six months of utilities, or eight months of health-care costs for the average family."

Where would such a statistic so damning to our civil justice system come from? What is the President's Council of Economic Advisers? This Council is:

"[C]omposed of three members who shall be appointed by the President, by and with the advice and consent of the Senate and...each of whom shall be a person who, as a result of his training, experience, and attainments, is exceptionally qualified to analyze and interpret economic developments, to appraise programs and activities of the Government...and to formulate and recommend national economic policy to promote employment, production, and purchasing power under free competitive enterprise."

What more reputable body could one cite for information about our national economy?

Unfortunately, it appears...just about any. The Council relied heavily on a report done by Tillinghast-Towers Perrin. And who is Tillinghast-Towers Perrin you may ask? Their self-description states that:

"The Tillinghast business of Towers Perrin provides consulting and software solutions to insurance and financial services companies and advises other organizations on risk financing and self-insurance."

This is a company that focuses on helping insurance companies make money.

The enormous flaws of the Tillinghast study are described in detail in a report by the Economic Policy Institute.  Most discrediting, as found by the Institute:

"Although TTP's estimate is widely cited by journalists, politicians, and business lobbyists, it is impossible to know what the company is actually measuring in its calculation of tort costs, and impossible to verify its figures, because TTP will not share its data or its methodology, which it claims are 'proprietary.'

Indeed, Tillingahst has even  admitted that "the costs tabulated in this study are not a reflection of litigated
claims or of the legal system." (U.S. Tort Costs: 2004 Update, at 4).

It is hard to imagine a less reputable source of statistics than the one relied upon here: a report based on data that an organization holds as the equivalent of government classified information and refuses to release for peer review.

Then again, this appears to be the trend of our present administration, so perhaps Tillinghast is catching up with the times.

But can't you only strengthen support for the conclusion of your report if other people can independently examine your research and the data on which it is based?

At least some people agree. The U.S. Office of Budget and Management (that agency that has the unimportant job of overseeing the administration of the federal budget) seems to think that the "peer review" of research and data shunned by Tillinghast is a good thing.

In a 2003 release the office stated that:

"Peer review is an effective way to further engage the scientific community in the regulatory process. A more uniform peer review policy promises to make regulatory science more competent and credible, thereby advancing the Administration's 'smart-regulation' agenda. The goal is fewer lawsuits and a more consistent regulatory environment, which is good for consumers and businesses."

Last time I checked, the current administration and Tillinghast were both complaining about how there are too many lawsuits.

At least the U.S. Office of Budget and Management seems to think that the more peer review of other's research and data, the fewer lawsuits will be filed.

If the current administration and Tillinghast want fewer lawsuits -  and other people want to do a peer review of Tillinghast's data -  and peer review of research creates less lawsuits - what's the problem?

Maybe the U.S. Office of Budget and Management, the President's Council of Economic Advisers, and Tillinghast should have a sit down and work this whole "peer review" thing out.

For additional resources that respond to the Tillinghast report please visit:

<u>Websites</u&gt
Common Dreams
Civil Justice Resource Group
Center for Justice and Democracy

<u>Publications </u&gt
The Conservative Nanny State, Chapter 6
The Frivolous Case for Tort Law Change

If you or your organization are interested in learning more about or working on these types of issues, please feel free to contact me at cdugger@drummajorinstitute.org.

Cyrus Dugger
Senior Fellow in Civil Justice
Drum Major Institute for Public Policy

Tags: civil justice, courts, injustice, Justice, pacific research institute, peer review, remedy, Tillinghast, tort de-form, tort liability index, tort reform, tort tax (all tags)

Comments

5 Comments

Trial lawyers are not the problem

The tort system is by no means the most efficient way of regulating the risks of business danger inflicted on the general public, but the Bush administration sure as hell isn't going to do it.  The courts do begin to introduce the true costs and risks to the business enterprise that it should be taking into account when researching and producing a consumer product, or deciding how much "external" costs are acceptable.  What all the Rethugs who rail against "trial lawyers" are covering up is that those costs and risks are passed on to the general public unbuffered if businesses are not pushed back into making the product safer and cleaner in the first place.

As for Towers Perrin, my experience with them is anecdotal, but they were asked by a utility to come up with a study to justify closing some of its branch offices largely serving poor and disadvantaged people, and TP did it, with completely arbitrary numbers and targets divorced from any baseline reality, obviously designed to get the client where it wanted to go (and therefore dishonest, since TP purported to be a consultant with a degree of expertise and knowledge in the field).  Fortunately, the PUC in that case saw through the fancy gussied up b.s. "study" and denied the utility the ability to close the offices as TP "recommended."

by budlawman 2006-06-28 05:24AM | 0 recs
Re: Trial lawyers are not the problem

I agree that the civil justice system is not perfect, but then what system is? What Americans could benefit from are some minor tweaks to the system, but not the full scale "reform" envisioned by the "tort reform movement" aka tort de-form. In the world envisioned by the tort reform movement, compensating people for the harm that is visited upon them by no fault of their own is bad because it costs business money. Ever heard the saying, "whenever you point your finger at somebody else there's always three pointing back at you?" For me that is the fundamental weakness of the tort reform movement's argument. We wouldn't need a tort reform movement if people weren't getting hurt. The day will be great when we DON'T even need a civil justice system, just as it will be great when we DON'T need a criminal justice system. However, until corporations and individuals no longer harm each other, and until crime no longer exists - these systems are simply necessary - the alternative is simply unacceptable.

by Cyrus Dugger 2006-06-28 06:43AM | 0 recs
Re: The Tort Liability Index:

What a great post! If only the White House departments could communicate amongst themselves.

by terremotia 2006-06-28 06:28AM | 0 recs
Point of Clarification

FYI

The Pacific Research Institute defines a "poor" or bad civil justice system as a robust civil justice system.

This is why they state:

"a poor civil-justice system lowers the standard of living for ordinary citizens"

The translation is "[an effetcive] civil-justice system lowers the standard of living for ordinary citizens." I just wanted to clarify that quote so that nobody confused my stance or the quotes meaning.

In addition, I hope that nobody takes my statement that:

"[N]ot so many middle and working class families are talking about how they are really scared of being sued in the civil justice system if an SUV they manufactured in their kitchen rolls over and kills a family of five"

to mean that this group doesn't or shouldn't care about the civil justice system. They do and should care about it. What they don't mind, is that corporations are justifiably hit with lawsuits when they manufacture defective products, even if it means that it will lower their profits.

by Cyrus Dugger 2006-06-28 07:01AM | 0 recs
Re: The Tort Liability Index: Why You Should Feel

So they are going to "fix" this like the "fixed" the Iraq intelligence, New Orleans, Elections, etc., etc., etc.

Including the Space Shuttle?

by blues 2006-06-28 10:31AM | 0 recs

Diaries

Advertise Blogads