"False Alarm" by Stephanie Mencimer [Washington Monthly, Oct. 2004] --
A Response by Stuart Taylor, Jr. [Newsweek, National Journal]

* * *
 

December 16, 2004
To the Editors
Washington Monthly

Dear Sirs:

Stephanie Mencimer’s “False Alarm,” in your October issue, is a shockingly inaccurate and misleading regurgitation of personal-injury-lawsuit lobby propaganda. Mencimer’s sins against honest journalism are so numerous that I respond here only to her opening section, which attacks a December 2003 Newsweek cover package by Evan Thomas and me (with reporting from nine other Newsweek writers).

Every one of Mencimer’s criticisms of the Newsweek package is false, misleading, or a difference of opinion masquerading as a correction of fact. Her article casts no doubt on the accuracy or fairness of anything in Newsweek’s cover package.

I append a copy of Mencimer’s discussion of the Newsweek cover package with my point-by-point responses interlineated (in blue). Please publish this letter in your magazine and post it and the point-by-point response on your web site.

Sincerely, Stuart Taylor, Jr.
 (I am a National Journal columnist and Newsweek contributing editor.)

* * *

False Alarm: How the Media helps the insurance industry and the GOP promote the myth of America’s “lawsuit crisis.”

By Stephanie Mencimer
Washington Monthly
October 2004

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.

False. The details that were necessarily omitted from Newsweek’s one-paragraph summary of this case (in a 41-paragraph cover package) were far from “critical.”

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.

Newsweek omitted this law because it is so full of holes that it hardly immunizes anyone. Plaintiffs can get around it simply by inserting the words “gross negligence” in their complaints. Even when the plaintiff does not claim gross negligence, an unpaid volunteer who is named as a defendant must go to the expense and trauma of a lawsuit unless and until he or she can prove that the law applies to the facts of the case. The law does not protect the organization that the volunteer was helping. Nor does it protect the many part-time coaches, refs, and other helpers with kids’ sports who are paid more than $500 a year.

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 first part of this sentence is a long-winded version of what Newsweek said: “A man who broke his leg at a recent tournament sliding into third base filed a $100,000 lawsuit against the city.” The second part would have been contradicted by defense testimony that third base had been properly maintained and that the plaintiff’s broken leg had nothing to do with the condition of the base.

Garrison refused to tell me whether his client had been reimbursed by his own insurer or employer for his medical expenses and any lost wages caused by his unfortunate accident. If he was reimbursed, as I suspect, then the lawsuit was an effort to make a profit by suing defendants who had apparently done nothing wrong. The tort law of Arizona and many other states allows such double recoveries, while keeping juries in the dark about them.

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."

Warner was forced to travel a long distance to give a deposition, under oath; to waste time coping with the plaintiff’s lawyer; to hire his own lawyer; and to face the uncertainties of litigation. All for having run a softball tournament as an unpaid volunteer.

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.

Nonsense. Sawyer did not drop his suit. He extracted a settlement from the City of Page, which would otherwise have been put to considerable legal expense to get rid of a dumb lawsuit that would have been rejected by any sensible court or jury.

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.

But this unwarranted lawsuit denied hundreds of people the pleasure of playing in the 2003 tournament.

Not only were the particulars of the Newsweek story misleading. [False, as explained above.] 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 1975, and have been falling steadily in real numbers since 1996. [Wrong and wrong again. The most recent NCSC report states that its (incomplete) data “indicate a 40 percent increase in tort filings” from 1975 to 2002. Census figures indicate that the population increase from 1975 to 2002 was about 33 percent. So tort filings per capita have not declined by 8 percent since 1975; they have increased somewhat. The 1993-2002 “fall” was 5 percent. This is consistent with the Newsweek cover package, which noted that “the ‘litigation explosion’ of the past 30 years may be leveling off” (at an unduly high level).] 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. [Wrong again. The NCSC data show that the rate of filings per capita in California dropped by 18 percent, not 45 percent, from 1993 to 2002.]

Aside from Mencimer’s factual errors--all made in support of her misleading suggestion that tort litigation nationwide has declined substantially in recent years--she neglects to note that the drops in numbers of tort suits per capita in some states during the 1990’s were driven by decreases in claims of the least costly, least controversial (and, for lawyers, least lucrative) types. Those are car-crash lawsuits, which account for 60 percent of all tort suits. They declined by 14 percent from 1992 to 2001, according to NCSC; it said that “one possible explanation for the decrease . . . is that automobiles are safer now than ever before. . . .” In a subsequent report, NCSC said the number of auto tort filings had declined by only 5 percent from 1993 to 2002, without explaining the apparent discrepancy.

By contrast, the number of medical malpractice lawsuits, which are far less numerous but much more costly to society on a per-case basis, rose by 18 percent from 1993 to 2002, according to the most recent NCSC report, which adds that “the latest two years of data show filings rising substantially (10 percent.)” Other sources suggest that the numbers of huge class action and multi-defendant lawsuits--especially in product-liability cases--have increased even more dramatically. This may explain any evidence that lawyers are spending less of their time filing large numbers of small claims.

Far more important than fluctuations in the number of lawsuits are the soaring costs of the tort system to society, both direct and indirect. "Inflation-adjusted direct U.S. tort costs per person have shot from $89 in 1950 to $809 in 2002,” according to a February 2004 report by Tillinghast-Towers Perrin, which publishes the most definitive trend statistics on tort system costs. And although the tort system’s inflation-adjusted direct costs per capita did decline modestly during the 1990’s, they soared by a stunning 14.4 percent in 2001 and another 13.3 percent in 2002, to an estimated 2002 total of $233 billion. The tort system consumes 2.2 percent of GDP in the U.S.--almost four times the percentage in 1950; more than triple the 0.6 percent in the United Kingdom; and more than double the 0.8 percent in Japan, France, and Canada. This money ultimately comes from all of us, in the form of higher prices and insurance premiums, reduced wages, loss of international competitiveness, and fewer jobs (as well as lower corporate profits).

The direct costs of medical malpractice litigation jumped by an average of 11.9 percent a year from 1975 to 2002, according to Tillinghast. And median jury awards in such cases more than doubled between 1996 and 2001, from $457,000 to $1 million, according to Jury Verdict Research; average awards also doubled, to $3.9 million.

Of the $233 billion in tort costs in 2002, only 22 cents on the dollar went to compensate alleged victims’ economic losses; almost as much (19 cents) went to their lawyers; 24 cents went to payments for noneconomic losses, mainly pain and suffering; 14 cents went to defense costs; and 21 cents went to insurance overhead costs, according to the Tillinghast report. The tort system’s indirect costs--including many thousands of lost jobs at the more than 60 companies bankrupted by asbestos lawsuits and tens of billions of dollars in medically unnecessary tests to insulate doctors from liability--are impossible to measure precisely. (So are the system’s indirect benefits, including safer products.) The indirect costs probably exceed the direct costs.

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).

Newsweek noted that “doctors win most malpractice cases that go to trial.” It also made some other points about such lawsuits that Mencimer neither acknowledges nor refutes: Studies suggest malpractice lawsuits “are unfounded in as many as 80 percent of the cases”; malpractice insurers nonetheless “lose often enough to want to settle many claims”; many doctors go to work every day “wondering of they are going to get sued,” especially in high-risk specialties like obstetrics and surgery; “according to one estimate, doctors waste $50 billion to $100 billion on ‘defensive medicine’”; malpractice claims “don’t even do what they are supposed to do--compensate victims and deter future mistakes,” in part because “the vast majority of medical errors go undetected by patients and . . . nine out of ten are never compensated”; “[c]ountless avoidable deaths are actually caused by the system,” because “[f]ear of lawsuits contributes to a culture of secrecy”; and the most dangerously incompetent doctors “often remain in place for many years, in part because employers fear wrongful-dismissal suits by fired doctors even more than malpractice suits by their victims.”

 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 ). [Misleading, as explained below.] (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.

Here Mencimer mimics the lawsuit lobby’s disingenuous technique of dismissing the best available numbers on the soaring burden that the tort system imposes on the economy by seeking to discredit the messenger. But Mencimer cites no evidence casting the slightest doubt on the Tillinghast numbers. She resorts instead to guilt by association. While Tillinghast does provide services to insurance companies and self-insured businesses--that’s why it has the relevant statistics--the actuarial and consulting firm’s customers also include insurance regulators. And while Tillinghast has accepted partial funding from tort reform groups in the past, since 2003 its reports on tort system costs have been funded internally. Mencimer cites no evidence undermining Tillinghast’s assertion that its annual reports’ purpose is “to provide a straightforward, objective analysis of cost and trends, and not to support any particular point of view.”

The only insurance costs included in the $233 billion Tillinghast total are liability payments to allegedly injured parties and their lawyers, payments for legal defense and other costs of insured parties, and administrative costs (overhead) directly attributed to tort liability coverage. While I have no quarrel with Mencimer’s implication that insurance CEO’s such as Greenberg are overpaid, her suggestion that his entire salary is included in Tillinghast’s estimate of total tort costs is inaccurate, according to Tillinghast consultant Russ Sutter. He told me that only a relatively small percentage of executives’ salaries are allocated to tort liability, with the rest allocated to other lines of business.

By the way, if these insurance overhead costs were omitted from Tillinghast’s calculation of total tort costs, the current rate of increase in total tort system costs--perhaps the most significant number of all--would be even larger, because insurance overhead has declined as a percentage of the total.

As for Tillinghast’s decision not to count court budgets, the firm explains that no reliable estimates of those budgets going back to 1950 exist and that court budgets total less than 1 percent of the tort system’s other costs.

It's not as though Newsweek wasn't aware of these facts. On Friday, Dec. 5, a day before the story went to press, Taylor contacted the Association of Trial Lawyers of America (ATLA) for a quote. ATLA relayed the request to the nonprofit Center for Justice and Democracy (CJD), whose director, Joanne Doroshow, emailed Taylor information that contradicted some of the assertions in the story, including the state court data and a critique of the TTP study. (Doroshow provided the entire email exchange to The Washington Monthly.)

Doroshow cited no evidence contradicting a single statement in the Newsweek package, as Mencimer must know if she read the entire email exchange.

Taylor dismissed it all, telling Doroshow, "Based on your many emails to me over the past 24 hours, you have very little thoughtful analysis to contribute to that debate."

A fair-minded review of this email exchange would confirm what I said in the same email to Doroshow that Mencimer selectively quotes: Doroshow sent me “shallow and unpersuasive arguments, irrelevant ramblings, sophistries, and . . . insults and character assassination designed to impugn the motives of [those] with whom you disagree.”

Mencimer’s implication that Newsweek and I neglected the case for broad liability rules is a gross distortion. Newsweek gave Senator John Edwards, who made his millions as a plaintiffs’ tort lawyer, a full page, as part of the cover package, in which to defend the current tort rules. The main cover article devoted a long paragraph to Ralph Nader’s defense of the civil-jury system as “a gem” and of personal-injury lawyers as “all that is left to hold [corporate] wrongdoers accountable.” The article also qualified its criticisms of unwarranted lawsuits by stressing that “lawsuits can be a force for good” and that: “Starting in the 1960’s, crusading judges and well-meaning social reformers began opening the way for the powerless and dispossessed to assert their rights by going to court. Large corporations and authority figures were held responsible for their carelessness or callousness. Manufacturers were forced to pay more attention to the safety of their workers and consumers, and public officials were held more accountable to the people they served.” Finally, the article mentioned “dramatic examples where the jury system worked (such as the case of Steven Sharp, a high-school student whose arms were mangled by farm machinery notes that suddenly started up. After a long legal fight, he recovered $9 million.).”

Taylor did, however, take lots of his information from Philip K. Howard, the founder of Common Good, a group funded by corporations and physicians seeking to limit their legal liability for wrongdoing. Common Good's agenda includes advocating for legislation that would end the civil jury's role in many lawsuits. To advance the cause, Common Good helps reporters generate anti-lawsuit articles by distributing colorful litigation horror stories from around the country--the story from the Arizona Sun about Warner's softball tournament, for instance, was linked on Common Good's Web site a few months before the Newsweek story appeared.

Mencimer’s implication that I took information from Philip Howard or Common Good without carefully checking its accuracy and completeness is a dishonest effort to camouflage Mencimer’s inability to cite a single inaccurate or misleading statement in Newsweek’s entire cover package.

Incidentally, Howard also works for the law firm of Covington & Burling, which represents Newsweek's parent company. Post-Newsweek Inc. has been sued a number of times for employment discrimination and was hit with an $8.3 million verdict in 1999, a fact that Newsweek didn't mention in the story.

Newsweek disclosed its relationship with Covington & Burling. The notion that Newsweek had any reason to disclose the fact that it has sometimes been sued is fatuous. Every large company in the country has been sued countless times, for alleged employment discrimination and many other things. Does Mencimer think that every article about the litigation system ever published should list the lawsuits that have been brought against the publisher?

* * *

More: on Feb. 15 Mencimer and Glastris replied here.

Back to Jan. 19, 2005 Overlawyered.com entry / to Overlawyered.com main page