Florida
State University Law Review Article
Refutes Tort 'Reform' Claims
Dismisses
The 'Tort Tax' Myth
Addressing
what they call the "distorted discourse on the civil justice system,"
the authors of a new article in the Winter 2000 issue of the Florida
State University Law Review look at the media and "scholarly"
efforts of corporate and other interests bent on tilting the legal
playing field in their favor, and reach the conclusion contrary
to tort "reformer" claims that there is no empirical evidence
demonstrating the existence of a "litigation explosion" or that
juries act irrationally in awarding damages.
The article,
"Tort Reform 1999: A Building Without A Foundation," by Robert
S. Peck, Richard Marshall and Kenneth D. Kranz, expresses concern
over how suspect "scholarship" issued by politically motivated
conservative think tanks such as the Manhattan Institute, the
Hudson Institute and writers such as Peter Huber and Walter Olson
is not only being accepted as reality by uncritical members of
the press, but now is being seized upon by politicians and political
groups looking for "proof" to justify their legislative and policy
agendas.
The most glaring
and recent of these efforts is Florida Governor Jeb Bush's signing
of House Bill 775 into law on May 26, 1999 the culmination of
a years-long effort by that state's business community to restrict
citizens' and consumers' rights. Unfortunately, and as detailed
in the "Tort Reform 1999: A Building Without A Foundation" article,
there was no factual basis to claim that such legal relief from
liability was necessary, just rhetoric supported by specious research.
Moreover, there is a serious question as to the constitutional
validity of such rights-restricting legislation.
Below are
some points taken from the "Tort Reform 1999: A Building Without
A Foundation" article that refute the oft-cited myth that Americans
pay some sort of "tort tax" when consumers exercise their rights
and seek redress for their injuries in court.
For the complete
article, please visit the Florida
State University Law Review Web site. Author Robert S. Peck
is Senior Director for Legal Affairs and Policy Research at AAJ.
Richard Marshall is Research Analyst for AAJ, and Kenneth D.
Kranz is a sole practitioner in Tallahassee, Florida.
The Tort
Tax Myth
Peter
Huber's $300 Billion Figure
-
The
"scholarship" of Peter Huber, a leading tort tax proponent who
claimed the tort system cost America $300 billion per year,
has been thoroughly discredited by reputable scholars, who have
derided it as misleading, shaky, and riddled with errors.
-
Judge
Roger Miner of the U.S. Court of Appeals for the Second Circuit,
a conservative Reagan appointee, said that the "$300 billion
figure has been demonstrated to be a product of casual speculation
and not derived in any sense from investigative or statistical
analysis." Similarly, The Economist has scored the figure as
having "no discernable connection to reality" and for being
"impossible to justify."
-
These
"tort tax"studies, suffer from poor methodology, exaggerated
addition, a studied indifference to the system's benefits, and
most importantly, a fundamental misunderstanding of the insurance
costs that they equate with tort costs.
Beacon
Hill Institute Study
-
This
study, the source for the figure of a Florida tort tax of $655
per person, has never appeared in a peer-reviewed journal. To
achieve the shocking $655 figure, the Beacon Hill toters throw
every and all insurance premiums paid into their calculation
-- homeowners, crop and farm insurance, and other multi-perils.
In other words, Beacon Hill charges the tort system with responsibility
for hurricane, fire, flood and other damages that are often
regarded as an act of God and unlikely to be the objects of
tort liability.
-
A
survey cited by the Beacon Hill study, purportedly to show that
taxes are a significant factor in a company's decision to relocate,
also happens to show that liability concerns that liability
or tort system concerns were never mentioned as one of these
factors.
National
Bureau for Economic Research (NBER) Report
-
The
NBER report, which purports to show that tort "reforms" have
a positive impact on a state's economy, has never appeared in
a peer-reviewed journal. Even so, the report found that "tort
reform" produced no increases in productivity or employment
in either manufacturing or health care, the two areas that "tort
reformers" claim are the most hurt by the liability system.
-
The
NBER researchers could not rule other possible alternative reasons
for the increased output they claim to have found in states
that enacted "tort reform," such as tax cuts or demographic
shifts. In fact, the authors themselves recognize this flaw.
Without accounting for these other effects, the authors cannot
authoritatively claim that liability "reform" leads to increased
economic output.
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