From http://news1.iwon.com/odd/article/id/394379|oddlyenough|03-30-2004::10:46|reuters.html
Yes! Those VILE NASTY-WASTY ICKYPOO liability lawsuits have destroyed the US ladder industry.
Oops, never mind. Nothing to see here people. Iraq really-deally-diddly-iddly did pose an imminent and credible threat to the USA with millions of weapons of mass destruction.
I don’t get it what you’re upset about. He found out the information was wrong, so he didn’t state it and they took it out of the written copy when they posted it.
If this were really analogous to Iraq, then he would have gone ahead and made the comment anyway.
I thought Secretary Snowe thought outsourcing is a good idea. He should embrace lawsuits against U.S. industries as helping the process along, and building a brighter future for all Americans.
Well, as long as we’re being scrupulous here, why don’t you do some research on the number and cost of frivolous lawsuits that U.S. ladder manufacturers * have * had to deal with? According to this site (which admittedly has an agenda), 20% of the cost of a ladder is due to liability claims.
So, as near as I can tell, the fact that frivolous lawsuits cost us all lots of money is true. The fact that liability claims are driving US manufacturers out of business is true. The specific supporting claim was not true, and was correctly eliminated from the speech.
So, what was the point of the OP again?
Have you read the article you cited?
So isn’t the real issue the cost of liability insurance?
I think you’re splitting hairs, here. The company isn’t paying that much in liability claims but is paying a huge amount in liability insurance. That seems to speak pretty much of a tort system gone amok.
Maybe that the some in the administration pick their targets before they learn the facts about them?
Well, that isn’t really a debate. Maybe if we had an “Obvious Facts” forum, we could move it there.
Some guy screwed up, big deal. I don’t see how frivilous ladder lawsuits has anything to do with Iraq, but if you say so. Seriously, come on. There are enough things to criticize about the administration and situation in Iraq without this. This is to politics what frivilous lawsuits are to economics - they are stupid and take up way too much time.
The point is this: the Secretary wanted so badly to say that meritless law suits had destroyed the domestic ladder industry that he went ahead and put it on the official web site without checking the facts. In other word, he had an agenda, law suits = bad, that he was determined to pursue without regard to the facts until some calmer or more calculation head intervened.
Now the contention is that it isn’t the law suits, it’s the cost of insurance that is destroying the industry and if there weren’t any law suits then insurance would cost less (really, it would be free because you would not need insurance at all). Problem: claims without merit have minimal impact on the cost of liability insurance. What effects insurance costs is claims with merit and the course of the bond market – not so-called frivolous claims.
On a parallel subject, the last figures I saw were that 75% of premiums collected for medical malpractice insurance were paid out in settlements and defense costs. That leaves the insurer 25 cents of ever premium dollar and all the funds from investment to do with what it wants. Please note that claims costs includes money paid out without the institution of law suits and the expense of the company’s adjustment bureaucracy. Insurance companies need the buggy-boo of frivolous law suits to create a demand for their product.
There has been all sorts of screaming about frivolous law suits against fast food chains for making people fat. Some state legislatures want to grant special immunity to bar this sort of a claim. However, as far as I know, no such law suit has ever made it to court.
Lawyers are business people (just like physicians) and the bottom line is to make money. There is precious little money to be made from prosecuting cases that can’t be won. You avoid this sort of business blunder by declining to take cases that are unlikely to result in a substantial verdict. Likewise, insurance companies are in the insurance business to make money. The best way to make money is to jack up the premiums and pretend that it is necessary because of your terrible cost of doing business. The next best way is not to pay taxes.
And what is a frivolous law suit, anyway? I always thought that the law suit against me was frivolous but my law suit against you was seeped in merit. It does depend on whose ox is being gored.
I think your cite is a pretty poor choice if you wanted to make that case. As your article said and I have pointed out, the company wasn’t even sued all that often and when it was, it either paid out via a new ladder or went to trial, where it never lost a case.
I’m not a lawyer. Never been to law school, my wife hasn’t either, so I have no axe to grind here. And while we all know of egregious cases where it seems the legal system is being abused (like the McDonald’s coffee case) , it’s my opinion that the forces driving tort reform have so far gone largely unexamined. A cap on punitive damages at, say $750,000 (which Texas has enacted) essentially neuters the one weapon a smaller aggrieved party, such as a citizen, can bring against a large, rich corporation. In other words, such a cap distorts the legal system in favor of those parties who have money.
Tort reform does offer a nifty excuse for companies who need it. In James Fallows’ book Free Flight, he devotes a few pages to the Cessna Aviation company’s decision to move away from the single-engine small plane market. (Sorry, no cites online.) The Cessna CEO made much hay of the fact that liability insurance was becoming a larger and larger percentage of each plane’s cost. He even testified in Congress to that fact. (Aviation companies buy insurance for their planes on a model-by-model basis; this cost is spread among all of the units produced.) Yet he didn’t mention that the market for small planes was drying up, that the pool of pilots who might buy these planes was shrinking (so that the same insurance cost was spread among fewer customers), that his company hadn’t bothered to make any large changes to the basic Cessna models in about two decades, and that the margins for Cessna’s corporate jets (which was the direction he wanted to take the company) were higher, anyways. Tort reform became a nifty scapegoat for what was essentially a sound business decision.
Hey, I know that we can always come up with an example of a lawsuit that makes us want to throttle the plaintiff. And I’m all for certain measures that plaintiffs and lawyers abuse, such as “jury shopping” and sanctioning those who file frivolous or predatory lawsuits (like SLAPP suits–Strategic Lawsuits Against Public Participation, sometimes used by corporations who wish to silence consumer advocates who can’t afford to defend a lawsuit). But it’s useful to remember that there are vested interests who wish to limit the public’s right to address civil grievances in a court of law. So skepticism should always be called for when hearing some company affix blame to those “evil trial lawyers”.
Your youthful writing style aside, what the heck does Iraq have to do with your post?
I’m not even sure of the purpose of your post. It’s not even a debate to say that frivolous liability law suites affect industry in this country. If Frangles number is true (20% of the cost) then an American product is penalized by that cost. Without even discussing cheaper labor you are putting an entire industry at a disadvantage. If an American made ladder cost $300 then someone could pay the same wages in another country and sell that ladder for $240 and make the same profit. Which ladder are you going to buy? Now cut the cost of labor to almost nothing and that ladder goes to $75. That’s great if a new industry pops up to replace the ladder manufacturer. But that only works if the cheap labor comes from cottage industries in developing countries. If a developing country can advance a new industry at the same rate as your country (while maintaining cheap labor) then they effectively destroy the replacement industries needed for the former ladder makers. China has the technical infrastructure to make any product sold in the US. ANY product.
I have an American ladder (when I can wrestle it away from my friends). I have American made tennis shoes. I have American made tools. I drive an American made car. How much longer do you think I’ll be able to buy these items? I’ve already seen a cheaper version of my ladder that was not made in the US. I’ve completely given up hope of ever buying an electronic item made in the US. And unless an American car manufacturer makes a hybrid in the next couple of years I’ll be driving a Toyota.
Sounds more like an insurance industry gone amok, to me. We need federal limits on insurance premiums.
I don’t agree about the federal limits, but tort reform has become a convenient scapegoat for rising insurance costs in several industries. Whereas an equally strong case could be made that poor business decisions and the generalized bear market have been equally to blame for insurance premium rises over the last few years. I am married to a doctor, and also a shareholder in insurance companies. It is fascinating to see what the company tells the investing community, the general news media, and its customers. Three totally separate stories. Only one of those stories that they tell is required to be correct - the one they tell shareholders. If you read 10-K’s and annual reports, you see that their investment income provided a large portion of their earnings in the bull market, and (obviously) crashed with the broader market. They raised premiums steeply to maintain cash flow. Not that there was a dramatic surge in claims against the insurance coverage they provided.
I have seen very little acknowledgment of this fact in any of the debates about tort reform.
Fear Itself , I must disagree vehemently with your idea of putting caps on insurance premiums. The insurance industry spends millions and millions of dollars deciding what risks they are willing to take on, and for what price. If you capped insurance premiums such that a company’s risk analysis showed it to be unprofitable, the company would pull out of the market. The cost of regulating the insurance industry greatly outweigh the perceived benefit.
Ok Airblairxxx I am still not convinced you are not my brother in law, whos name is Blair and he is a Pilot for a major US carrier, but I doubt you are because you seem much more intellegent than him…
Anyway, clearly the McDoald’s case was justified, but I think you do a disservice by sarcastically refereing to it. While I appreciate the fact that you linked to the article that explaines how the law suit was completely justified, I doubt many members will read it. Therefore they will fail to realize you were being sarcastic.
Someone enlighten me: what, precisely, is a frivolous lawsuit?
I mean, do I not have the right to bring suit against someone I feel has damaged me? And is it not the role of the judiciary to determine whether or not my suit has merit?
The idea of removing my right to sue, or capping my potential damages, strikes me as a form of corporate welfare. Isn’t all this the role of the judges?
Capping insurance rates, likewise. When it ceases to be profitable, insurance providers will cease to provide. You can certainly count on them to do that. Hell, insurance providers I’ve dealt with don’t even like to cough up when they are legally required to do so.
Sure, you’re going to have suits filed against McDonalds by people who are psychologically driven to go in there and order buckets of fries floating in lard, sure. You’re going to have suits against the prison system filed by death row inmates who have absolutely nothing better to do.
…but to simply say that we no longer have the right to sue these people? Isn’t that abridgement of a basic right? Isn’t this creating a situation where legitimate suits could well be suppressed? Who benefits from this, aside from large corporations, anyway?
The answer does NOT lie in shipping manufacturing overseas. We won WWII because we could outproduce half the planet, singlehanded. If we keep this up, China is going to win WWIII, and we’ll have no one but ourselves to blame about it…
MWK since you asked
Here is alink
FAIR, the liberal media watchdog group, has been documenting the various ways in which major media have been lying or distorting the facts in the service of the “tort reform” movement. Here is a link discussing how a U.S. News and World Report editorial mentioned some lawsuits that turned out to be urban legends and then refused to print a retraction:
In the latest issue of their magazine “Extra!”, FAIR dissects an article called “Lawsuit Hell” in Newsweek which contained many similar “problems”. (Unfortunately, the Extra! article isn’t available online.)
Some of us on the liberal side of the fence are receptive to the idea that there may be some commonsense reforms that need to be made to our legal system. But, as long as the “tort reform” lobby seems to be dominated by a bunch of big-business-backed liars, it seems unlikely there can be much middle ground for compromise on this issue, which itself is unfortunate.
Indeed…Here is a piece discussing this:
Here is another link, admittedly from a group with their own biases on the issue, on the medical malpractice insurance issue.
jshore,
I think it’s more likely that US News did not accept the claim of the Trial Lawyers person that these stories were in fact urban legends. This based on their publication in respectable publications. You’ve simply decided to accept the version you prefer as a “correction” but that does not make it so.
Your second post is overly simplistic. Of course it is true that a market downturn will have a negative impact on insurance rates. But this does not mean that torts are not also a factor. There’s nothing you - or the insurance companies - can do about market downturns. But there may be something that can be done about torts.
(To call insurance companies raising rates due to a market downturn “price gouging” suggests ignorance of the insurance business or anti-business bias, or - most likely - both.)