Dispute-screening and arbitration are alternatives to million-dollar awards, which penalize all. : Stop the Litigation Lottery

Increasing litigation against public servants portends a blow to the delivery of public services. Across the nation, million-dollar award settlements are rendered against urban police departments. And police departments are not the only victims: Litigation costs both in civil rights and personal injury have forced many municipalities to forgo youth sports programs due to lack of adequate insurance coverage. Susan MacManus of the University of South Florida says some researchers in this field consider the cost of insurance, lawyers and trials a “hidden litigation tax.”

As with any tax, consumers must dig deep to either maintain the same level of services or accept reduction in services. Despite the growing need for improved services in public safety, education and public-health services in the urban core, the concern within many public-service delivery systems is shifting to avoiding financial liability. This culture of fear strips many public-sector employees of the ability to develop innovative programs and elevates, within many organizations, risk avoidance and mediocrity as primary objectives. We all have been accomplices in this self-destructive mentality, which seeks punitive damages even if it destroys rights for the community. The wisdom of Solomon is no match for justice corrupted by greed.

The legal system needs to provide meaningful boundaries to all individuals in society. But allowing the tort system to replace the market system in allocating resources should not be tolerated, either in the public or private sector. The new “litigation tax” provides a windfall of benefits to a few at the expense of all consumers. Each multimillion-dollar award that is paid out by a school district, police department or county health facility is paid by all of us, without regard to whether we can afford it. The regressive nature of this tax can only be seen as we drive through our cities and see locked schoolyards, no patrol officers and the decaying public infrastructure.

A recent study commissioned by Los Angeles Mayor Richard Riordan suggested that shifting costs to city departments rather than using city reserves for payouts may help reduce the annual $140.5 million the city pays to settle lawsuits and workers’ compensation claims. Theoretically, this would force department heads to scrutinize their employees’ activities. But what happens if there is a human error that results in a multimillion-dollar mistake? Do we immediately lay off city employees and stop providing services to pay the damages? Or is it time to stop the emphasis on managing potential lawsuits and claims and focus on limiting our right to sue public entities?

Japan and Great Britain have recognized this problem and have curtailed these costs by placing barriers to litigation and making it harder to win a suit. The problem is made worse in the United States by a payment system in which the lawyer gets a percentage of the award. Trial lawyers argue that such a payment system provides greater access to the courts for indigent clients. Yet look at all the television advertisements that do not speak of justice but of windfall wealth. Have we reached the point where the poor must play the litigation lottery to move ahead?

A viable mechanism to reduce litigation against public entities may be to resurrect the doctrine of sovereign immunity for school districts and local and county government. This doctrine prevents a litigant from bringing suit against public entities without their consent. It also provides the government with immunity from tort liability resulting from their provision of government services.

Although we may not want to provide such blanket immunity to government entities, we could adapt the doctrine to allow for an impartial screening of disputes that merit exceptions. We could also invest in more effective and less costly alternatives to dispute resolution such as mediation or arbitration.

Without meaningful tort reform in the public sector, we cannot honestly expect government to provide cost-effective services. Reforms in health care, schools and the police will become empty promises unless we include alternatives to costly litigation.

If we destroy our public-services delivery system, there will be no one in the private sector to provide these services. The litigation lottery must stop so that our efforts and resources may be focused on improving the delivery of public services to all.