The Birmingham News (AL), May 14, 2007

Reports say Alabama among worst in lawsuit abuse

The $664 billion in excess costs for civil justice amounts to a tort tax of $7,848 on a four-person household, according to a study released in March by the Pacific Research Institute.

Generous Alabama juries and relatively few caps on the cash they award helps make Alabama the 10th worst tort system in the country, said Lawrence McQuillan, the principal author of the PRI study, "Jackpot Justice." Dollar figures weren't available from the rating, which used a ratio of jury awards to the size of the state's economy.

An annual assessment released last month by an arm of the U.S. Chamber of Commerce ranked Alabama the 47th worst state tort system.

"Alabama is near the bottom of the barrel," McQuillan said. "Basically, it's dragging down not only its own economy but also it's imposed burdens on the rest of the country, too."

Critics say the PRI study and Chamber rankings are part of a longtime campaign by corporations to protect their economic bottom lines from the people their products harm.

PRI's funding sources, for example, include oil, banking, pharmaceutical communications and other businesses or related foundations, according to the group SourceWatch.

"It's a fundamental right that is being threatened here," said Niko Corley, spokesman for the Alabama Trial Lawyers Association. "CEOs want immunity and reduced damages. The less they have to pay to victims of their wrongdoing, the more they can put in their wallets."

But proponents of limits on lawsuits and jury awards say the studies help people understand the extent of waste in the civil justice system and Alabama's contribution to the problem.

"Every major survey mentions Alabama as one of the worst states in the nation," said Skip Tucker, executive director of the advocacy group Alabama Voters Against Lawsuit Abuse. "Anybody that says we don't have a problem with lawsuit abuse in Alabama either has an agenda or has not studied the situation."

Ripple effect:

Pacific Research Institute says its study is the first comprehensive look at the cost of civil litigation and its ripple effect on the economy.

"We're the only study that has tried to carve out what is legitimate from what is meritless," said PRI's McQuillan.

The study concluded that $201 billion per year is spent on legitimate civil cases.

But the cost of the $664 billion per year in excess is lost lives and jobs, higher prices and a lower standard of living, the study said.

"Defensive medicine," unnecessary tests ordered by doctors to avoid lawsuits, costs $124 billion, the study said. Rising health care prices leave 3.4 million people without insurance, it said.

Fear of lawsuits makes some businesses reluctant to develop new products, costing the economy another $367 billion, the study said.

Not included in PRI's waste calculation is the estimated $684 billion per year that lawsuits cost stockholders, the study said. Workers lose up to $3.9 billion per year in wages and pensions when lawsuits bankrupt their employers, it said.

But a 2006 study by the Washington-based Economic Policy Institute found no relationship between the costs of being sued and jobs, productivity, profits and product development, said Ross Eisenbrey, EPI's vice president and policy director.

Critics also attack the methods used to calculate the amount of waste in the system.

"It's lousy science," Eisenbrey said. "The notion of that much waste in the tort system is overblown. All this is a smokescreen for the insurance industry and a lot of large businesses that don't want to be sued."

McQuillan defended PRI's decision to define punitive damages, jury awards designed to punish, as excessive.

"The civil justice system was never intended to punish, just to compensate for actual losses," he said. "There is a place for punishment: the criminal courts."

But punitive damages help ensure that corporations don't put profit ahead of consumer safety, said Corley of the Alabama trial lawyer group.

Battleground:

For decades, Alabama has been a tort reform battleground, where the campaign cash and rhetoric flow freely.

But people on both sides say Alabama's reputation has improved since the mid-1990s, when Forbes magazines dubbed Alabama the nation's "tort hell."

Alabama has not made the annual list of "judicial hellholes" the American Tort Reform Association has done since 2002, although some state jurisdictions have been singled out for a "dishonorable mention."

Tucker, the tort-reform proponent, says Republican-dominated courts are key to protecting tort limits passed in 1995.

E-mail: evelasco@bhamnews.com