This year, the Legislature is poised to take major steps to prevent TV’s personal injury lawyers from
gaming the state’s tort and workers’ compensation system. Legislative leadership believe that there is an opportunity to cap punitive damages and non-economic damages, curb frivolous lawsuits and complete the reformation of the workers’ compensation system.
To be fair, trial lawyers and TV personal injury lawyers are different. Trial lawyers play an important role in the judicial system by representing individuals who otherwise wouldn’t have a voice. Business leaders say TV personal injury lawyers are a small fraction of trial lawyers who game the system for their own financial benefit. They drain the state’s economy and burden its ability to generate jobs and grow the economy.
Towers Perrin, a leading source of U.S. tort cost analyses, estimates that because of personal injury lawyers, every man, woman, and child in the U.S. paid over $800 to cover tort costs in 2008. Expenses are passed down through insurance premiums and costs of services and goods. A family of four can expect to pay an extra $3,200 per year.
To give this context, 60 years ago, only $12 in tort costs were passed off to each U.S. citizen. In terms of today’s money, considering inflation, that cost should only be $87 per person, not the current $800. With an average of eight to 10 percent increase per year, the total cost in tort claims surpassed $250 billion in 2008 in the U.S. That is nearly a $2 billion increase from the previous year, according to Towers Perrin. In fact, in the same report, tort costs accounted for two percent of this country’s GDP— double that of other industrialized nations.
Businesses, also, carry a heavy burden because of this country’s toleration for lawsuit abuse. Tort costs mostly affect small businesses, carrying a price tag well over $100 billion to those small businesses each year. A study conducted by the U.S. Chamber found that small businesses pay, collectively, $35 billion of these costs out-of-pocket each year rather than through insurance. Keep in mind that small businesses create nearly two-thirds of all new jobs.
Lisa Rickard, an official with the U.S. Chamber said, “As America struggles out of this current economic downturn, our lawsuit system continues to be a drag on job-creating small businesses.”
The S.C. Legislature will have opportunities come January to reduce lawsuit abuse even more by placing reasonable caps on noneconomic and punitive damages, as well as curb frivolous lawsuits.
Frivolous lawsuits cost small business owners time and money to defend. On the health care front, they raise the costs in defensive medicine, which is the dynamic by which health care professionals practice diagnostic or therapeutic measures as a safeguard against malpractice liability. These practices are not typically practiced to ensure the well-being of patients. In other words, health care professionals say they run extra tests on patients to make sure they are not liable to personal injury lawyers.
Health care professionals say the primary reason for defensive medicine is to protect themselves and their health care institutions against malpractice liability. Further research concludes that defensive medicine is particularly practiced in emergency medicine and obstetrics, as well as other high risk medicine. Towers Perrin says in its most recent report that medical malpractice costs in 2008 totaled $29.8 billion.
According to a Kessler-McClellan study, defensive medicine costs in 2005 totaled anywhere between $100 billion and $178 billion— costs that are passed on to patients.
In addition to tort issues, business leaders say the state’s workers’ comp system needs reform. They assert that personal injury lawyers feed off of the state’s distorted workers’ compensation system—a problem the state Legislature could tackle this year.
In South Carolina, many workers’ compensation plaintiff attorneysare accused of gaming a system that is designed to be a no-fault system—that is, the way the South Carolina workers’ compensation system is designed, attorneys are not intended to be a part of the process. Unfortunately, South Carolina has allowed this parasitic system to thrive, driving awards up at the cost of business.
Simply look at a local phone book. For instance, on the front cover of the Greater Greenville phone book is a workers’ comp attorney advertisement with these words in bold: “INJURED?” The two inside pages of the phone book cover has full page ads with the words, “INJURED?” Count the number of phone book pages that list workers’ comp attorneys. There are 56 pages dedicated to attorneys that deal with workers’ comp cases in the Greenville phone book alone. It is a thriving industry for attorneys in what is supposed to be a system that needs no attorneys.
Until recently, workers’ comp rates have doubled for S.C. businesses year after year. It wasn’t until the S.C. Legislature passed a solid workers’ comp reform law two years ago that rates began to stabilize to a point. The business community believes there is more that the state can do. The legislature agrees. Look for the legislature to work on a bill that implements objective standards on awards for plaintiffs.
The state legislature convenes January 2011.
