If you’re worried about how frivolous lawsuits and huge jury verdicts are affecting your insurance premiums, there’s something important you don’t know.
Insurance companies lie.
In this first installment of our multi-part series on tort reform, we’ll look at the insurance industry’s long-term, expensive campaign to mislead the public about injury-related lawsuits.
Do Frivolous Lawsuits Happen?
No one will seriously try to tell you that there are no frivolous lawsuits. For example, most of us in the legal profession remember when a member of the bar sued his dry cleaner for $67 million over a lost pair of pants. That case is an excellent example of why you needn’t worry too much about frivolous litigation. The attorney was suspended from the practice of law because he failed to make the required objective assessment of the validity of his claim.
South Carolina has both a statute and a court rule providing for sanctions. An attorney bringing a claim that is deemed frivolous can be fined or ordered to pay the opposing party’s legal expenses. The statute also requires the court to report those sanctions to the South Carolina Commission on Lawyer Conduct, meaning the lawyer could also face disciplinary action.
The idea of “greedy” lawyers lining up to file frivolous claims for profit falls apart when you know that an attorney who makes a practice of filing frivolous cases can expect to pay fines and/or legal expenses, and may face disciplinary action that interrupts their ability to earn a living. Injury lawyers also typically work on a contingency basis, meaning they only get paid when they settle a case or win a verdict for the client. If they don’t have a valid claim, they know they’re unlikely to get paid.
So, Where Does the Drama about Frivolous Litigation Come From?
In short, the insurance lobby. For decades, the insurance industry has thrown a lot of time and money into the effort to convince everyone from the average person on the street to doctors to legislators that a crisis of frivolous litigation and massive jury verdicts was costing American families, businesses and professionals thousands of dollars each year in insurance premiums.
One way they chose to spread this myth was by cherry-picking stories that would capture the public attention, then misrepresenting them. The highest-profile example of this is Stella Leibach, the elderly woman injured in the infamous “McDonald’s coffee case.”
If you’re old enough to remember the news coverage of the case, you probably just rolled your eyes. That’s because the popular presentation went something like this:
Old lady didn’t know coffee is hot, spilled it on herself, sued McDonald’s and got millions of dollars from an out-of-control jury.
The woman became a national laughingstock, and the poster child for tort reform. Back here in the real world, here’s what actually happened:
McDonald’s own experts had told them that coffee served at 180-190 degrees wasn’t safe for consumption, and they’d received hundreds of other complaints about burns from the coffee. They continued to serve it at the high temperature.
The woman spilled coffee into her lap and the liquid was so hot that she sustained 3rd degree burns over 16% of her body–including her genitals, which required skin grafts. She was prepared to settle for $20,000 in medical reimbursement, but McDonald’s said no. She received $640,000.
If you’ve never wondered why you keep hearing the same handful of examples year after year, take some time to think about it now. Maybe do some research. Here are a few important things you’ll learn:
- The vast majority of injured people never file a claim, let alone a lawsuit
- The cases clogging the courts are consumer debt collection cases–about half of all civil cases–compared with about 7% for injury-related cases
- Several different studies have shown the average personal injury settlement to fall below $50,000
So, Are Crazy Jury Awards the Problem?
No. We don’t even have to dig into specific jury verdicts to know the answer to this question, because fewer than 5% of personal injury cases make it to trial. In other words, in the vast majority of injury cases, there is no jury.
In the small fraction of injury cases that reach a jury:
- The insurance carrier’s liability is still limited by the insurance policy limits
- Damages caps already apply in certain types of cases
- South Carolina judges already have the authority to reduce a jury verdict if they find it is not supported by the evidence
So, why do you hear so much about frivolous lawsuits and runaway juries? Because insurance companies like money. And they have a powerful lobby. And they have big marketing and PR teams.
And they lie.
Tort reform is on the agenda in the South Carolina legislature. The proposed changes won’t help injured people, or South Carolina businesses. They won’t lower your insurance premiums. Stay informed and let your legislators know you don’t want to make insurance companies richer at the expense of your neighbors.