Tuesday, August 18, 2009

Don't pull Grandma's plug (until you get a lawyer) - A case for tort reform

Last week a 92 year old man was awarded $1.9 million dollars from the Phillip Morris company for the death of his 73 year old wife. Shirley Barbanell died in 1996 of lung cancer after smoking 2 packs of cigarettes a day since she was 16. Leon, her husband, was originally awarded $5.3 million, but the jury determined that the tobacco giant was only 35% responsible for Shirley's illness, with Shirley herself being 65% responsible (according to a practice in tort law called comparative negligence).

Now I'll give you some articles in a minute, and you can argue the facts amongst yourselves.

But I wanted to add a few facts to the mix.

Tort settlements account for nearly 2% of United States GDP, or approximately 285 billion dollars. However, liability insurance holdings, the insurance folks get to protect themselves from lawsuits may be consuming as much as 8-10% of the global GDP, with the US one of the biggest consumers. We can extrapolate that the US% is similar to global trends. That means as much as 12% GDP is used in preventing lawsuits. With healthcare consuming 16% of our GDP, and with malpractice insurance and lawsuits increasing the costs of healthcare (as the costs of those suits and insurance gets passed on to the consumer, us) we can't really know how much of our GDP is being spent suing people and preventing getting sued. 10% - 15% - more?

Lawyers take, on average of 50% of a tort settlement. If there were 285 billion dollars in settlements in 2008, that means being a tort lawyer is a 145 billion dollar industry. That's more than the majority of our industries make. That's big oil kinda money.

As for Shirley's case, it's worth noting the average American life span is 74 years old. Shirley Barbanell lived a reasonably long life. She chose to smoke and one might argue she got 50 years of product enjoyment from her Marlboros. And now, as sort of a parting gift, for being a loyal customer, her hubby gets $1.9 million (well, closer to $700,000, after the lawyers get their cut, and taxes, etc.)

Speaking of taxes, the states collected over 19 billion dollars in tobacco tax (with the feds taking another 6-8 billion, and more to come with a recent drastic hike), and many state economies depend on tobacco taxes to survive. If tobacco companies are going to sustain this kind of cash drain, somebody better keep smoking. Smoke em if you got em, please!

Enough facts, here's what it all comes down to...

1. Tort law is costing us trillions of dollars (and our souls). While some liability claims are legitimate, it is hard for me to see how Leon Barbarnell, 92 deserves to be a millionaire for his last few years because his wife enjoyed and CHOSE a life of smoking. Tort law teaches us to avoid responsibility. "I'm taking up a few more bad habits so my hubby has more chances to collect. Who needs life insurance, when I can SUE!" This rampant culture of lawsuits not only costs trillions of dollars, but it is turning us into a people who can't (won't) take responsibility for our own actions. We're a nation of greedy tattle tales, and nobody likes a tattler.

2. Tort law is mostly making lawyers rich. Tort lawsuits make lawyers millionaires in only one case, and many class action lawsuits net millions for attorneys while plaintiffs get only a few dollars compensation. Lawyers are looking for cash cows and big tobacco, medical malpractice and personal injury are always ready for milking, the consequences be damned.

3. The hidden cost of tort law is insurance. Everything must be insured to protect it from being sued. The sidewalks in front of your house need insurance. The porta potty you used at the fair. Even your kid's teacher may be required to carry insurance to protect from lawsuit. And especially your doctor, who could be paying up to half of his/her salary in malpractice insurance costs. Everything, everything, EVERYTHING costs MORE the more we sue, and as such, more places must then insure against lawsuits. The cycle of higher prices continues.

4. Tort reform will not be easy. People like Leon Barbarnell want to point the finger of blame and get rich. Lawyers want to help him do that. Lawyers give a lot of money to Washington. HECK, LAWYERS RUN Washington. They don't like giving up money or power in Washington, DC.

5. Tort reform is necessary. To reduce medical costs. To reduce government costs. To stop giving money to greedy folks that want a free lunch, and insure legitimate negligence cases are handled based on the case merits and not merely potential payouts. To save us all trillions of dollars. And maybe give us back our sense of personal responsibility.

I'm finishing off my smoke, now. But don't worry, folks, I'm not the suing type.

Here's the articles.


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