Trial by Anecdote
Extra!
April 2004

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According to the lead article by Newsweek contributing editor Stuart Taylor Jr. and assistant managing editor Evan Thomas, an "onslaught of litigation" is costing U.S. residents $200 billion a year, and paralyzing our society with "legal fear."

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Malpractice insurance premiums have indeed skyrocketed over that time, notes a study by Americans for Insurance Reform—but in response to reduced profits from insurers' investments, not a wave of lawsuits. When J. Robert Hunter of the Consumer Federation of America, a former Texas insurance commissioner and federal insurance administrator under presidents Ford and Carter, analyzed the growth in malpractice premiums, he found they correlated not with jury verdicts but with the economy: When the stock market is strong, insurance rates hold steady, but when stocks are weak, premiums rise.

Moreover, in the 30 states that have capped malpractice awards, insurance premiums did not fall. "It stands to reason that tort reform, especially if the cap is real low, has got to reduce the amount that insurance companies will pay out, but that doesn't mean the industry will pass it through to the consumer," former Missouri insurance commissioner Jay Angoff told Tom- Paine.com (2/11/03).

Such hard data are almost entirely absent from Newsweek's story, which relies heavily on the anecdotal, often expressing indignation over lawsuits that were merely filed, though of course in the American legal system there's nothing to prevent anyone from filing a lawsuit for whatever reason—and likewise nothing to prevent judges from tossing them out.

For a copy of the complete article, contact AIR.