U.S. Tort System Is Wrongly Perceived, RAND Study Says

In an attempt to explain discrepancies in data touted by both opponents and proponents of tort reform legislation, the RAND Corp.’s Institute of Civil Justice said today that both sides wrongly perceive the nation’s tort liability system as one system when it has split into three.

“We need to know what part of the elephant we are patting,” wrote institute research director Deborah R. Hensler, comparing the debate to the fable of blind men misidentifying an elephant as various animals when each touched a separate part of the elephant.

“In many cases,” concluded Hensler and her associates in a special report released today, “statistic-bandiers on both sides of the crisis are right--they are just describing different parts of the system.”

The analysis was the nonprofit think tank’s first written report attempting to synthesize statistical studies that it has made of civil courts for 25 years.

The purported litigation explosion decried by reformers, researchers said, does not cover the entire gamut of tort liability. Some categories do show meteoric growth in numbers and awards, they said, but others, including simple automobile injury cases, have remained fairly stable for several years.

Data utilized by lobbyists for insurance companies and local governments advocating tort reform and by plaintiffs’ attorneys opposing change is collected principally by the Santa Monica-based institute, the Administrative Office of the U.S. Courts, and the National Center for State Courts.

Tort reform has been debated in Congress and almost every state legislature in the last two years.

In California, the continuing debate this year produced the Willie L. Brown Jr.-Bill Lockyer Civil Liabilities Act of 1987, which requires stronger proof of “despicable” conduct to collect punitive damage, limits product liability actions, and limits an insurer’s obligations to provide an independent attorney for clients when a conflict of interest exists. The act was a watered-down version of the proposed California Tort Reform Act, and more legislation is expected.

Proponents of changes in civil law have argued that liability lawsuits have multiplied phenomenally in the last few years, that “out of control” juries grant primarily million-dollar-plus verdicts, and that the cost for attorneys and courts outweighs the monetary benefits for injured people.

Opponents have countered that the number of cases have merely kept pace with population growth, that jury awards have changed little when inflation is considered, and that costs are reasonable considering that deterrence of wrongdoers is an objective of the court system along with compensation to victims.

Hensler and her colleagues said the three parts of the tort liability system that must be recognized in the debate in order to generate “a little more light and a little less heat” are:

- Simple personal injury suits like automobile accidents.

- High-stakes personal injury suits including product liability, medical malpractice, or business cases.

- Mass latent injury cases such as asbestos and toxic substance suits or cases involving interuterine devices.

The researchers said statistics for each system provide different answers to the questions of how much litigation exists, whether jury awards are stable or out of control, and how much litigation costs. Using data from one system to answer the questions for all tort liability cases, they said, is misleading.

Collectively, the researchers found, the number of all kinds of tort cases filed nationally is “growing relatively slowly”--about 3% between 1981 and 1984 adjusted for population growth.

But growth differs considerably from one category to another.

The number of automobile accident suits in relation to population, Hensler reported, has remained stable for several years, while other kinds of personal injury cases such as product liability and malpractice have soared, attracting the attention of reformists.

Growth of the third category, mass latent injuries, has been “truly explosive,” the researchers said, illustrated by estimates that 16,000 asbestos cases existed in 1981 but had grown to 30,000 by 1986. In 1981, 7,500 suits over the Dalkon Shield had been filed, and the number climbed to 325,000 by 1986 when the manufacturer, A.H. Robins, filed for bankruptcy protection.

Jury awards have been climbing in all three areas, the researchers said. But--when adjusted for inflation--the awards for automobile cases have remained modest or relatively stable while those for liability and malpractice have multiplied by 2 to 10 times.

“There is little question that average jury awards are increasing . . . and that awards have increased more in high-stakes cases than in routine litigation,” the report concluded from detailed statistical studies that the institute made of Chicago and San Francisco courts between 1960 and 1984.

To decide whether juries are “out of control,” Hensler wrote, analysts need to know more about jurors’ motivations and to consider the court system’s post-trial “corrections” such as reduced verdicts or reversals on appeal. Institute studies of 900 cases in Illinois and California courts from 1982-1984 showed that 20% of jury verdicts involving the highest amounts were reduced--by about 7% for those under $100,000 but by 40% for those over $1 million.

“This suggests that awards most likely to be viewed as ‘excessive’ by critics,” observed Hensler, “are most likely to be cut substantially.”

The researchers found that increases in the cost of litigation were higher for the high-stakes second category cases and highest of all for mass injury cases. Compared to the 3% increase in tort litigation in the early 1980s, they said, the increase in legal fees and expenses were 6% for auto cases and 15% for other cases.

In 1985, Hensler reported, the lawyer fees for all tort litigation was half the amount awarded. Separating the three categories, she wrote, legal fees totaled about 45% of the auto injury awards, but 54% of product liability and malpractice-type cases, and 63% of asbestos awards.