So then you propose a “race to the bottom?”
The state with the fewest protections for consumers wins a shiny new factory!
I don’t propose a “race to the bottom” any more than I propose gravity. The laws of economics affect us whether we like them or not.
December, where do you get off with this high-liability/ low-liability area nonsense? The law governing a product liability suit is not determined by what factory the item is manufactured in. Injuries to workers are covered by workers comp law, not tort law. Are you referring to environmental torts, like if both factories leak toxic fumes, the one in NY will have to pay out more than the one in Boise? This is a debatable proposition at best, and even if true may be due to greater population density and land value than the local tort laws.
I get it from my own knowledge, since I’m a retired insurance executive, who has run a casualty insurance underwriting operation with a national reputation as a n actuary.
I’d like a lawyer to comment on this. I think the injured plaintiff may have a choice of jurisdiction in some cases – either where he was injured or where the product was manufactured. That’s for suits within different states. However, when looking internationally, a product manufactured in the US causing injury abroad may lead to a suit in the US. A product manufactured and used abroad could not lead to a suit under US law.
Correct. I didn’t mention workers’ compensation, but that’s a cost factor too, particularly in industries with substantial amounts of worker injuries.
Yes, environmental torts is one type. There are many others, as well, such as Products liability, Slips and falls (premises liability), employment practices liability, automobile liabilty, and professional liability of various sorts.
There’s a huge difference in the cost of liability claims as a percentage of sales between the US and almost every other country.
“Tort reform” is one of those terms like “pro-life.” It is a term ment to stir up emotions and quiet dissent. A truer “pro-life” position we be a vegan who is anti-death penalty, anti-war with iraq, and anti-abortion. The opposite of “pro-life” would be a psychopath who is “anti-life” and wants nuclear war.
Although proponents of liability caps would have you believe “reform” is synonymous with “capping damages,” reasonable minds may differ.
So do you think that group of doctors went on strike out of a purely philanthropic desire to see the court system change? No, they went on strike because their insurance premiums are too damn high, and they believe that liability caps would help their premiums. Joanne Doroshow would disagree with that conclusion.
Interesting if true. Cite? Also, I’d like to know if this is only true since they lost their shirts in the market, or if they were more heavily invested a couple of years ago.
Well, if the allegations of the Center for Justice & Democracy are true, the reason the companies need to raise rates have nothing to do with insurance. It appears that we would be better off if the government lowered the barrier to entry and gave incentives to new market participants rather than bail out the existing ones.
Again, Joanne Doroshow would disagree. Have any cites?
I disagree with the first half of this statement. Tort reform could include other legal changes in addition to capping non-economic damages. E.g., a popular recommendation is “loser pays,” also called the English rule, for obvious reasons.
No doubt. She is either a liar or an ignoramus.
It’s reasonable for you to ask for cites, but I am not going to bother. The data is in insurance publications, which I no longer receive, since I retired a few months ago.
Stocks and bonds are the bulk of the investment portfolio for property-liability companies. By and large, insurance companies invest more in bonds than in stocks. This is especially true for companies specializing in risky business. They don’t want the risk of stocks combined with the risk of uncertain liability awards.
Well, the allegations of CJ&D aren’t true.
Insurance premiums don’t bail out old losses; they are calculated as adequate for future losses on the policies to which the rates will apply. Regardless of the current stock market slump, investment income is a significant positive item. Even in down periods, insurance companies can avoid realizing a loss by simply holding the stocks.
Frankly, CJ&D is so far from reality that it’s not worth debating. If you’re really interested, you would need to read a textbook or two, follow the insurance trade press, and review industry statistics.
Oh, well, when you put it that way. Everyone who disagrees with you is either a liar or an ignoramus and we should all trust you because, well, just because.
[quote]
The jury verdict statistics that most insurers trumpet were discredited by the Wall Street Journal in a June 24, 2002, front-page cover story. The paper found that, “The statistics come
from Jury Verdict Research, a Horsham, Pa., information service.… But Jury Verdict Research says
its 2,951-case malpractice database has large gaps. It collects award information unsystematically,
and it can’t say how many cases it misses. It says it can’t calculate the percentage change in the
median for childbirth-negligence cases. More important, the database excludes trial victories by
doctors and hospitals — verdicts that are worth zero dollars. That’s a lot to ignore. Doctors and
hospitals win about 62% of the time, Jury Verdict Research says. A separate database on
settlements is less comprehensive. A spokesman for Jury Verdict Research, Gary Bagin, confirms
these and other holes in its statistics.”
oops. I accidently hit “tab” and then “space” which is apparently enough to hit submit. Here is a good page from the CJ&D’s website: http://www.centerjd.org/medmalindex.htm
Anyway, december’s original thesis (“the large and growing number of costly tort liability claims in America is doing damage to the overall economy”) is just wrong. Although he refuses to accept statements from CJ&D, they state (with cites) that “average payouts have been virtually flat for the last decade.” Furthermore, “as a percentage of national health care expenditures, are at an all time low, 0.55 percent.” Also “According to the National Center for State Courts, there has been no change in the volume of medical malpractice cases in the last five years.”
In the absense of any other data, I declare this debate over.
I don’t know who you’re quoting here. Do you have a cite?
I’ve had contact with JVR in the past. At one time, I tried using their reports for statistical analyis, and found them difficult to use. I agree with the WSJ criticisms of JVR.
However, I disagree that JVR is the key source of statistics. It’s somewhat useful for public debate, because it’s based on actual claims and because it’s collected outside of the insurance industry. But, even if the JVR data had no gaps, it would exclude all the cases that are settled, i.e., where there’s no jury verdict. So, ratemaking, financial reporting, management decision-making etc. are based on the insurance companies’ own claims data, which includes settlements, verdicts and estimates on open claims. Trends are hard to analyze just from JVR data, because the percentage of claims going to the jury many change over time. For many of the liability lines, statistics are gathered by Insurance Services Office.
BTW, as a rule, insurance companies tend to under-estimate their liability losses, although many in the public don’t want to believe that. So, their results over time are often more unprofitable than the companies report.
And, I would assume that most of the people are on the other side are backed by the big insurance companies, big industries, etc. Why is it that you and the Wall Street Journal editors only seem to recognize money, influence, and propaganda when it comes from trial lawyers, environmentalists, or labor unions?
Just wanted to point out how silly (IMHO) december’s example of the Bronx is.
The venue rules in New York allow suits to be brought by Bronx residents for wrongs in other counties, such as Westchester and Manhattan. So if there really were a serious connection between jury awards and economic conditions, you’d expect that the Bronx would bring down the surrounding area.
Newsflash: The Bronx is part of one of the wealthiest urban areas on the planet.
And even if for some reason industry moved out of the Bronx, it would be easy enough for Bronx residents to find economic opportunities in neighboring areas. Manhattan is a 30 minute subway ride away, ya know.
Anyway, let’s face reality: The reason the Bronx is so favorable to plaintiffs is BECAUSE it’s so poor. The jury pool is full of middle and lower class blacks and hispanics who, for obvious reasons, tend to identify with the little guy.
I think this is an interesting thread, and I don’t think that this time december is doing anything more than trying to take the issue for a walk.
Sure, you should be skeptical about the opinions of such clear vested interests. And of course, merely capping payouts would be what they want without any clear consumer interest.
But reform has occurred in some places, sometimes with the support of quite different groups. Where I live, for example, workers’ compensation and motor vehicle personal injury have both been taken out of the private sphere. Common law rights have (mostly) been abolished and replaced with compulsory no-fault government schemes by left-wing governments with (mostly) the support of the union movement. The insurance industry hated it.
It seems to me that the case for supposing tortious liability has bad economic effects has a pretty obvious basis: if a person deserving of our sympathy can get money at no appreciable cost to me if the faceless entity with deep pockets is found liable, I’d sure err on the side of person. A standard prisoners dilemma/ tragedy of the commons problem. I see * lucwarm* has already said this. December’s point is that, whilst this is understandable, it is bad for the residents of the Bronx.
What I disagree with in december’s OP is the idea that it will affect US employment - the effect will be in lower wages and rates of return. But the sort of problems december talks of could well drive premiums so far above actuarily fair premiums that profitable businesses relocate to other regions, taking jobs with them.
I don’t know what the solution is - nationalised and regulatory approaches have their problems too, but I’m amazed that some people here who I seem to recall wanting universal health coverage in the US (which, IMPO, is the same issue) failing to recognise there’s a problem.
I take issue with the lawyers, who claim that product safety has improved because of liability lawsuits. In my view, most products are INHERENTLY UNSAFE…this is because we live in a physical world, subject to the laws of physics. Take automobiles, for example. These are 1.5-3 ton objects, which are capable of being driven at speeds up to 120 MPH. Put such an object in the hands of an impaired person, and you have an accident waiting to happen. We had an example lately (the Ford Explorer SUVs equipped with Firestone tires). Nothing that came out of the attendent lawsuits will do anything to change the inherent unsafe nature of these vehicles. In fact, not only were the tires not likely responsible for the accidents, in most cases, the cause of the accidents were from a group of factors (poor maintainence, excessive speed, high ambient temperatures, poor driving skills). So, a few people hit the jackpot-receiving massive damage awards. What that will do toimprove the safety of SUVs isn’t clear, because vehicles constructed as they are (high center of gravity, truck chassis,inadequate crush zones) cannot be made safer.
I gather you would have no problem driving a vintage Ford Pinto?
What about working in an area with asbestos flaking off the pipes? Taking a cruise on a ship with insufficient lifeboats?
Now, I’m not saying that the threat of liability lawsuits is the sole reason that the above-mentioned problems were ameliorated, but certainly the threat of such suits has an impact.
For Ford this is true, they have a 40 year history of selling us unreasonably safe vehicles. But, you should note that the 2002 Explorer has a lower center of gravity and a wider track than the '90-'01 Explorers. It took them more than a decade to make changes that were suggested in the late '80’s. If they had made the changes that Ford engineers wanted, we’d never have heard of the Wilderness AT tire. If Ford had made the changes that their engineers wanted for the Pinto, we’d already have forgotten about '70’s Pintos.
ralph124c, if you don’t think that lawsuits have led to safer products, then you really should investigate the history of products liability law. Cars now have collapsable steering columns and roofs that support the weight of the vehicle in a roolover - the automobile industry has argued in lawsuits that they had no obligation to provide these safety features. Lawsuits helped show them that they did have such an obligation.
Ahh…the PINTO red herring! Yes, the Ford PINTO was involved inmany horrendous accidents. The car would burn when the gas tank was ruptured in a rear-end crash. What the lawyers won’t tell you: in almost all of these accidents (which resulted in a fire), the car was hit from behind by a much heavier vehicle.
Statistics show that the Pinto was not significantly worse than many other small cars of the 1970’s. In any case, did the lawsuits lead to safer vehicles? Yes and no…I’d wager that a small car rear-ended by a 2-ton SUV would be just as “unsafe” as a Pinto.
What I’m curious about: now that the extortionists have been paid off, how come we never hear about how much safer Firestone tires are? It is because:
-if you drive on underinflated, old, bald tires, at high speed, and in extremely hot weather, you will get tread seperation. This will happen whether you have tires from any vendor.
ralph124c, if you have a car, go out and take a look at it. Do you think it has a collapsable steering column? Do you think that if it rolled over the roof would crush? Do you think that it was built to crumple so that your body doesn’t? If your answers contain many no votes, you likely have an old car. The car industry used to argue that they did not need to build cars that helped the occupants survive crashes. Lawsuits helped persuade them otherwise.
Again, I urge you to studt products liability law and its history. The problem with Firestone tires is that their design was changed to try to compensate for the flaws of the Explorer. Also, both Firestone and Ford expected them to be driven underinflated. Firestone didn’t need to alter the design of their other tire lines - they just needed to stop making the defective tires.
And extortionists? You must not know much about Ford’s litigation policies.
Robb…what’s an “unreasonably safe vehicle”? Is that a legal term, or didyou invent it?
ralph124c:
Automobile fatalities per passenger mile have been dropping rapidly since about the time that Ralph Nader started his crusade to make automobiles safer. While there may be other factors (safer highways, …), automobiles themselves have clearly gotten safer, many while even getting a lot lighter and more fuel efficient. It seems likely that product liability law have played an important role in this.
Well, I personally am not against any reform. I think there is definitely room for common sense reforms of some sort. However, I think this issue has become very polarized and a lot of the problem is that those pushing for reform are just not credible. If you read the WSJ editorial page, for example, who goes after this issue at least once a week, you just lose all faith in the people on the reform side both to have their facts correct and to acknowledge the sort of double-edged nature of the sword…i.e., the issue of keeping companies, etc. from selling unsafe products. Basically, the reformers seem to just be pimping for the corporations and insurance companies.
If there are reasonable people in between who really want some reform but are not just pimping for those folks or mislead by them (and I am sure there must be), these folks need to make themselves heard.