Newsweek, as is typical for a newsweekly, published only a terse editorial response (see previous post) to the litigation lobby’s concerted attack on its reporting. However, Stuart Taylor, Jr., the distinguished veteran journalist who (with Evan Thomas) was principal author of the feature, has kindly consented to let us reprint his more detailed point-by-point rebuttal to ATLA’s official gripe catalogue, published under the title “Spin or Facts? A Look Behind Newsweek’s Series ‘Lawsuit Hell’“. Because of the length of Taylor’s response, we’ve split it into two posts, the first responding to the first six points of ATLA’s critique and the second responding to the rest. Check out in particular, under heading #6, ATLA’s false (and remarkably brazen) assertion that the Tillinghast study’s $233 billion estimate of the cost of the liability insurance sector includes “the cost of the entire property/casualty insurance industry” and in particular the cost of hurricanes and similar damage. (It doesn’t.)

Stuart Taylor?s point-by-point response follows (points 1 through 6):

1. Kentucky oral sex lawsuit: ATLA’s characterization of the December 18, 2002 Lexington Herald-Leader article is false. That article merely reported — as did Newsweek — the lawsuit’s claim that the school board had ruled that the act was forced and the girl was sexually assaulted.

In addition, school officials have specifically denied — both in court papers and in interviews with Newsweek — the lawsuit?s allegations that the girl was forced; that the Board of Education had so ruled; and that the girl?s two-day suspension was “for not promptly reporting the assault.” School officials say the incident was consensual. The lawsuit admits that the girl did not yell or scream. Adult chaperones on the bus heard nothing unusual. And ATLA?s implication that the lawsuit demands only a “training program” is deliberately misleading. The lawsuit demands money for the “pain and suffering” of both the girl and her mother and other alleged damages. (See also Newsweek?s “editor’s note.”)

2. $70 million California malpractice judgment: See Newsweek “Editor’s Note” as to the amount. In addition, ATLA?s implication that this was a clear case of medical negligence is wrong. For example, Stanford University Hospital, one of three defendants, presented unrefuted expert testimony that it had followed standard procedure in California for such cases.

3. Ryan Warner, Dr. Sandra Scott, and the Rev. Ron Singleton: The cover package made it clear that (as ATLA purports to reveal) none of them has ever been sued. But Ryan Warner (who has already had to hire a lawyer and give a sworn deposition) fears that he will be added as a defendant in a pending $100,000 lawsuit by a man who broke his ankle sliding into third base in a softball tournament that Warner had organized. Dr. Scott has often been threatened with lawsuits by emergency room patients she has treated.

ATLA?s assertion that the federal Volunteer Protection Act of 1997 gives Warner and others like him immunity from suit is false. That law?s protection is narrow and full of holes. To name just one, plaintiffs can get around the law simply by claiming “gross negligence.” The law provides no protection at all for the many coaches, referees, and other part-time helpers with kids’ sports who are paid more than $500 a year.

The fact that South Carolina and other states have so far rejected claims for clergy malpractice has not prevented plaintiffs from suing clergy and imposing years of legal costs and other burdens in efforts to create such a cause of action. In any event, Singleton spoke mainly of his fear of being sued for improper contact, not for “malpractice.”

As the web site Overlawyered.com points out, courts frequently allow lawsuits against clergy for “breach of fiduciary trust,” which is virtually the same as clergy malpractice. And at least one ATLA-member law firm has advertised that it has “recover[ed] large verdicts and substantial settlements” in clergy malpractice cases.

The main point of this package was not to provide a list of unwarranted lawsuits, although it cites plenty and could have cited thousands more. The main point was to show how the readiness of many plaintiffs and lawyers to bring unwarranted lawsuits has cast a chill of legal fear over the daily lives of many professionals and other ordinary Americans, including many who have never been sued.

4. ATLA asserts: “The McDonald’s obesity cases were dismissed? The sex offender could not find a lawyer willing to take his case and never filed suit? The Cheerleader’s parents never filed suit? The lightning strike case was lost at every level due to governmental immunity.”

But Newsweek:

–did not suggest that any McDonald?s obesity lawsuits have been successful–yet. (ATLA?s leaders have studiously avoided expressing disapproval of them.)

–fully disclosed that the sex offender could not find a lawyer and never sued.

–cited the case of one disappointed would-be cheerleader whose parents sued and another whose parents complained up the administrative ladder without going to court.

–did not suggest that this particular lightning-strike lawsuit was successful.

5. ATLA?s assertion that “litigation is down and awards are steady” is a gross misrepresentation of the statistical trends, which do not undermine anything in the Newsweek cover package. Newsweek was correct in saying that “the ‘litigation explosion’ of the past 30 years may be leveling off (though one study shows a sharp recent uptick).” And the sharp recent uptick is quite dramatic. Details:

The same (somewhat dated) National Center for State Courts report that says tort filings declined by 9 percent from 1992 to 2001 also says that almost all of that decline came in routine car-crash lawsuits, which were unmentioned in the Newsweek package. The report shows that medical malpractice claims, a major focus of the Newsweek package, increased by 24 percent from 1992-2001 (in line with population growth); that the median malpractice award was $280,000, 16 times the median car-crash award; and that total tort filings soared by 40 percent from 1975 and 2001, despite the dip during the 1990’s.

ATLA’s claim that “Federal civil filings are not only down, but the percentage of civil filings that are personal injury cases has also declined” was contrary to the latest data available at the time of Newsweek’s cover package. Chief Justice Rehnquist released new data on January 1 showing an 8 percent drop in civil filings in fiscal 2003, “primarily as a result of decreases in personal injury/product liability cases involving asbestos (such filings had soared 98 percent the previous year).” Still more recent data show that asbestos filings have begun to soar again.

More important than such fluctuations in the number of lawsuits is the cost of the tort system to society, both direct and indirect. After leveling off during the 1990?s, the system?s direct costs soared by a stunning 14.4 percent in 2001 and another 13.3 percent in 2002, to a 2002 total of $233 billion, the equivalent of a 5 percent tax on wages, according to a report released on December 10 by Tillinghast-Towers Perrin, which publishes the most definitive trend statistics on tort system costs. (The Newsweek package, which came out before this new report, cited the $205 billion figure for 2001.)

Inflation-adjusted direct U.S. tort costs per person have shot from $89 in 1950 to $809 in 2002, the Tillinghast report says. The direct costs of medical malpractice claims jumped by an average of 11.9 percent a year from 1975 to 2002. Of the $233 billion total, 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.

6. Every sentence (save one irrelevancy) of ATLA?s characterization of the Tillinghast firm is false, even aside from ATLA?s continued use of the now-outdated 2001 figure of $205 billion in direct tort system costs. Although the actuarial and consulting firm does provide services to insurance companies and self-insured businesses?as well as insurance regulators?its reports on tort system costs are funded internally. Its $233 billion total is not “the cost of the entire property/casualty insurance industry”; the only insurance costs included 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. Nor does the $233 billion include any investment costs or ?non-tort claims, like property damage caused by a storm.” Insurance overhead amounts to 21 percent?not 40 percent–of the $233 billion. If it were omitted, the current rate of increase in total tort system costs would be larger, since insurance overhead has declined as a percentage of the total. The annual Tillinghast reports stress that their purpose is “to provide a straightforward, objective analysis of cost and trends, and not to support any particular point of view.”

Filed under: AAJ, asbestos, hospitals, Kentucky, South Carolina, Stuart Taylor Jr., Tillinghast