Research

Research

During the early part of the last decade, many academics, insurance industry executives and policymakers were concerned with an apparent medical malpractice insurance crisis. The “crisis” appeared in the form of dramatic increases in physicians’ malpractice insurance premiums. News stories highlighted price hikes as high as 600 percent in one year.

In hindsight, it has become clear that despite the predominant storyline at the time, the crisis was not caused by an up swell of litigation. Claims severity – the average amount paid in medical malpractice claims – did increase during this time, as to be expected when such claims largely constitute medical costs that are subject to high levels of inflation. However, claims severity increased gradually, and not in a manner that would explain a sudden spike in claims costs. Moreover, claims frequency – the number of medical malpractice claims insurers were having to pay – actually decreased.

The Institute for Legal Reform (ILR), an arm of the U.S. Chamber of Commerce, has the sole mission of restricting the ability of individuals harmed by negligent corporations to access the civil justice system. According to the multinational corporations that finance ILR, American businesses are hindered by too many lawsuits. Yet these same corporations show no hesitation in liberally using the courthouse themselves.

Since 1980, the Medicare Secondary Payer (MSP) system has protected Medicare funds by ensuring that Medicare is reimbursed for costs that other entities have primary responsibility for paying. That system has become a poster child for inefficient bureaucracy. It is plagued with difficulties that range from posing inconveniences to causing genuine economic harm. Insurance companies, small businesses, municipalities and even other federal agencies have to spend millions of dollars to navigate MSP’s web of red tape. The system is so dysfunctional that even Medicare is harmed by its own bureaucracy, unable to recoup taxpayer dollars from people who are trying to give money back to the government.

Preventable medical errors kill and seriously injure hundreds of thousands of Americans every year. Any discussion of medical negligence that does not involve preventable medical errors ignores this fundamental problem. And while some would prefer to focus on doctors’ insurance premiums, health care costs, or alternative compensation systems – anything other than the negligence itself – reducing medical errors is the best way to address all the related problems. Preventing medical errors will lower health care costs, reduce doctors’ insurance premiums, and protect the health and well-being of patients.

Since 1974, the Consumer Product Safety Commission (CPSC) has issued more than 850 recalls for toy products, many for hazards like magnets, lead and other dangers hidden in our children’s toys. Between 2004 and 2008, toy-related injuries increased 12 percent. Also, The CPSC is woefully under-resourced to cope with the flood of new products entering the U.S. marketplace.

The result of such corporate negligence and regulatory powerlessness is that dangerous products can be sold on shelves for years before the public has any idea of their hazards. In the face of such risks, and with so few resources at hand, the nation has come to rely on parents, consumer groups and the civil justice system to serve both as an early warning system and an enforcement mechanism against negligent corporations and their dangerous toys.

For years, the U.S. Chamber of Commerce has led the charge to undermine and destroy America’s civil justice system. The Chamber has spent hundreds of millions of dollars financing efforts to close the courthouse doors to American consumers through massive lobbying campaigns, advertising and bankrolling anti-consumer political candidates. It has its own multimillion dollar affiliate, the Institute for Legal Reform (ILR), whose sole mission is to restrict the ability of individuals harmed by negligent corporations to file suit.

Yet ironically, the Chamber is also one of the most aggressive litigators in Washington, D.C., appearing in hundreds of lawsuits a year, entering lawsuits at a rate of twice weekly. The hypocrisy is striking. In almost every case, the Chamber’s litigation on behalf of corporations has come at the expense of Americans’ health or financial security.

There are many laws and regulations aimed at protecting seniors, yet government agencies, non-profit watchdogs and media organizations consistently report that serious problems exist in our nation’s nursing homes. The same is true of insurance companies that mislead and defraud vulnerable seniors. Insurance industry regulators protest that they can do nothing. Even when they do raise their hands, they more often than not strike deals to keep fines to a minimum and settlements secret.

With the regulatory and legislative bodies unable to cope with a groundswell of neglect and abuse, the civil justice system has stepped into the breach. Attorneys who represent our nation’s seniors, and their families, play a critical role in uncovering abuse and neglect, and are the most effective force to compel corporate nursing homes to fix their conduct.

Trial attorneys have long been on the front lines of the environmental movement, opposing corporate plans to wipe out forests, cut down mountain tops, and destroy entire ecosystems. When corporate acts have resulted in devastation for ecosystems and communities, the initial outcry of politicians and regulators has often died out as time has gone by. However, the attorneys seeking justice for such acts fight on, sometimes over decades and against the most powerful corporations on the planet.

When the environmental movement was born in the 1960s and 1970s, a slew of laws were passed to protect the outdoors. But lax enforcement left corporations little incentive to comply. Ultimately, trial attorneys sought justice for communities destroyed by corporate polluters. The BP oil spill will undoubtedly result in long-term devastation. Given the history of corporate behavior in the wake of such disasters, it is clear trial attorneys and the civil justice system will play a vital role in holding BP accountable and helping to return the Gulf to the state it once was.

Few have ever heard of it, but the American Legislative Exchange Council, or ALEC, is the ultimate smokefilled back room. On the surface, ALEC’s membership is mostly comprised of thousands of state legislators. Each pays a nominal membership fee in order to attend ALEC retreats and receive model legislation. ALEC’s corporate contributors, on the other hand, pay a king’s ransom to gain access to legislators and distribute their corporate-crafted legislation. So, while the membership appears to be public sector, the bankroll is almost entirely private sector. In fact, public sector membership dues account for only around one percent of ALEC’s annual revenues. ALEC claims to be nonpartisan, but in fact its free-market, pro-business mission is clear. The result has been a consistent pipeline of special interest legislation being funneled into state capitols. Thanks to ALEC, 826 bills were introduced in the states in 2009 and 115 were enacted into law. Behind the scenes at ALEC, the nuts and bolts of lobbying and crafting legislation is done by large corporate defense firm Shook, Hardy & Bacon. A law firm with strong ties to the tobacco and pharmaceutical industries, it has long used ALEC’s ability to get a wide swath of state laws enacted to further the interests of its corporate clients.

In the wake of Toyota’s sudden acceleration scandal, automobile safety is once again a hot-button issue. After internal documents showed Toyota knew about potential defects, hid them from regulators, and even bragged about saving money from limiting its recalls, Toyota received the largest fine ever levied against an auto manufacturer. After 50 deaths and 8.5 million recalled cars, this saga is yet another example of regulation as an incomplete safeguard and manufacturers that put profits over safety. Unfortunately, this scenario has been repeating itself for decades.

In the 1960s, court cases began highlighting the dangers of car design and the willful negligence of manufacturers in designing cars that they knew to be unsafe. Since then the civil justice system has worked hand-in-hand with regulation to protect Americans, while spurring generations of safety innovations. Litigation will ultimately play a key role in identifying what went wrong with Toyota. These findings will aid regulators and legislators in protecting the American public in the future. By holding manufacturers accountable, the civil justice system will continue to spur safety innovations, as it has done for half a century.

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