False alarm: how the media helps the insurance industry and the GOP promote the myth of America's "lawsuit crisis."

Washington Monthly, Oct, 2004 by Stephanie Mencimer

The industry knew what it was doing. In 1979, Elizabeth Loftus, the famous memory researcher and University of California psychologist, tested the effects of this kind of advertising on potential jurors and their decision making in the jury box. At the time, the industry yeas spending $10 million on a series of ads in a host of national magazines. In an article in The American Bar Association Journal, Loftus reported that potential jurors who were exposed to even one insurance ad awarded much less for pain and suffering than those who weren't.

In the mid-1980s, with instance companies hitting a slump, the insurance industry's "tort reform" movement, as it became known, broadened its emphasis. Instead of limiting itself to targeting individual jurors through mass media advertising, the industry began to heavily lobby legislators to restrict citizens' ability to sue The movement pursued strict caps on damage awards, tougher standards for proving liability and caps on plaintiffs' attorney fees. The industry's crusade was taken up by small government conservatives, who believed that tort reform paralleled their own efforts to fill the federal bench with pro-business jurists and roll back government regulations. They were also upset by changes in the 1960s and 1970s that broadened legal protections for women and minorities, such as the 1964 Civil Rights Act, and the expansion of product liability doctrines that made it easier for injured consumers to force companies to compensate them for faulty products. Politically, it was a lot easier to attack juries and trial lawyers than the popular consumer, civil fights, and environmental protection laws they enforced--or the injured victims they represented.

Advertising was a key component of those efforts. In 1986, Newsweek ran a series of ads sponsored by the insurance industry under the heading, "We all pay the price." The ads warned that lawsuits were driving ob/gyns out of business, shuttering local school sports programs, and scaring the clergy out of counseling their flocks--though few of these assertions turned out to be true. That same year, 1,600 tort reform measures were introduced in 44 state legislatures, 21 of which passed significant restrictions on lawsuits and jury awards before adjourning.

"Tort reformers still weren't satisfied but were hamstrung by the fact that most Americans didn't see lawsuits as a huge problem. After all, most people never have any contact with the legal system unless they're getting divorced. So, a group of corporate leaders, including AIG's Greenberg, set about to change that by pumping money into right-wing think tanks to prepare a body of "evidence" proving that not only was there a crisis in the courthouse but also that "we all pay the price" as a result.

One of the most influential of those groups is the Manhattan Institute, founded by the late CIA director William Casey. In 1986, the institute created its Project on Civil Justice Reform with funding from all the same insurance companies who'd been responsible for circulating bogus lawsuit horror stories. The project was targeted specifically at journalists. In a 1992 memo, institute president William Hammett explained the strategy, for molding reporters into a "pro-tort reform" position: "Journalists need copy, and it's an established fact that over time they'll 'bend' in the direction in which it flows. For that reason, it is imperative that a steady stream of understandable research, analysis, and commentary supporting the need for liability reform be produced. If sometime during the present decade, a consensus emerges in favor of serious judicial reform, it will be because millions of minds have been changed, and only one institution is powerful enough to bring that about: the combined force of the nation's print and broadcast media, the most potent instrument for public education--or miseducation--in existence."