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 media mogul Steve Brill first wrote about litigation myths back in 1986, when, as a journalist he traced several examples of the allegedly "frivolous lawsuits" for The American Lawyer magazine and found that many of them were simply urban legends. He says, "I had gone back through the archives of Time magazine, and every ten years, Time declared a 'litigation crisis.' But there was no crisis." Reporters' perpetuation of the litigation myths has become one of Brill's pet peeves, even though, as a business owner himself, he supports legal changes that would protect businesses. "Reporters are basically lazy," says Brill. "You can always find a ridiculous lawsuit to make the system look crazy."

The $30,000 jackpot

The plain fact is, most lawsuits are neither ridiculous nor lucrative. Despite the eye-popping headlines about billion-dollar fen-phen verdicts or David v. Goliath movies about little guys taking on corporate wrongdoers in court, the civil justice system looks a lot more like this: On Aug. 2,1997, Bonnie Daniels rear-ended Diane Pitnikoff in Cumberland County, Maine, and was arrested for drunk driving. Pitnikoff suffered a number of lingering injuries and ran up $42,000 in medical bills. Pitnikoff sued Daniels for $100,000. On March 20, 2003, a jury voted in favor of Pitnikoff, awarding her a grand total of $21,000.

It's not a very sexy story--hardly the kind of firing that captures the imagination and lands on the cover of Newsweek. Yet most tort lawsuits in this country--nearly 60 percent--involve simple fender-benders, and the awards are generally quite small and getting smaller. New data released in April by the Justice Department's BJS show that in state courts, the median "jackpot" jury verdict in all tort suits was a mere $37,000 in 2001--down from $65,000 in 1992.

And what of the undeserved billions in punitive damages that Newsweek says Americans win from sympathetic juries? Punitive damage awards are intended to punish wrongdoers for reprehensible conduct, and as a result, must be high enough to get the defendant's attention. That's why an Alaska jury hit Exxon with a $45 billion penalty in the wake of the Valdez spill. But such awards are so rare that, according to BJS, the median punitive damage award in 2001 was only $50,000. Only 7 percent of all plaintiffs were awarded $1 million or more.

Because the Justice Department data conflict so sharply with conventional wisdom, you'd think it would have been big news. The media coverage that resulted from the new government study? Forty words in the USA Today. As of mid-August, no major media outlet bad covered the study, including Newsweek. National editor Tom Watson says that his magazine has a strict policy of not commenting on its own news coverage. "No one is willing to report that tort awards are down, and that they're 30,000 bucks, not 5 million," says Theodore Eisenberg, a Cornell University law school professor who does empirical research on the legal system.

Indeed, the tort reformers' message has proven remarkably resistant to correction. Part of the reason is that those who have another side of the story to present have vastly fewer resources with which to make their case. BJS has a publicity budget of zero dollars, making it tough for the bureau to publicize its remarkable findings. Trial lawyers, who do have some money, have been reluctant to fight back in the media because they recognize that they are universally mistrusted. They've picked their fight in the courthouse, where they challenge tort reform proposals as unconstitutional.