'Tort tax' harms business
PRI in the News
By: Lewis Fuller
5.3.2007
The Montgomery Advertiser, May 3, 2007
Wealthy personal injury lawyers are whipping around like a dying snake because of a study by the respected Pacific Research Institute that proves Americans are footing an annual "tort tax" in the hundreds of billions of dollars. That is billions. Leading researcher Dr. Lawrence J. McQuillan says the total economic drag on Americans for runaway litigation, jaw-dropping punitive damages and frivolous lawsuits is an astonishing $865 billion per year. That computes to $9,827 per year extra for goods and services for a family of four. Personal injury lawyers are scrambling to say what nice guys they are and what a fool is Dr. McQuillan. While they try to tarnish the study, they won't give their own estimate of the cost of the calamity we call our civil justice system. A few have the audacity to claim there is no such thing as a tort tax. Here is Montgomery businessman Hobson Cox: "I want to assure the personal injury trial lawyers that anyone who thinks there is no tort tax simply does not understand the capitalist system of doing business. "My own business is Affordable Eyewear. I take the name seriously and do all I can to provide a quality product at a reasonable price, and I make my living on the margin. "Last year, I was sued three times, none were legitimate and none were successful. But the cost of defense, the time I was forced to waste and the mental anguish I suffered were all extravagant. "Tell me, trial lawyers, do I swallow those costs, which I can ill afford to do, or do I pass them along to my customers? "Where do trial lawyers think these costs go? It's simple. These costs have to be added to the prices for goods and services. We all pay for these crazy lawsuits. I believe in fair lawsuits, but in Alabama a simple listing in the Yellow Pages puts a target on a business owner's back." Alabama Voters Against Lawsuit Abuse believes in legitimate lawsuits. AVALA believes anyone harmed through no fault of his/her own should be fairly compensated. But high dollar awards and frivolous lawsuits restrain industry and kill jobs. In fact, Alabama's economic growth began shortly after three essential tort reform laws were passed in 1999 to limit punitive damages, restrain class action suits and prohibit "venue" shopping for plaintiff-friendly courts. And AVALA is governed solely by a board of directors from small businesses from across the state. What is true for small business is also usually true for big business. Big businesses like Home Depot and Wal-Mart are sued thousands of times each year nationwide. Most of the lawsuits are frivolous, like a fake slip-and-fall. It is easy to find a personal injury lawyer to take these cases. Here's Bernie Marcus, co-founder of Home Depot: "A dollar amount to pay for liability and legal bills is built into the cost of every product the home improvement retailer sells." And the same is true for Wal-Mart. Part of the price for every item a consumer purchases goes to pay for the cost of lawsuits and lawsuit abuse. We all lose and we all pay. Here's Dr. McQuillan: "Alabama's civil justice system is widely recognized as one of the nation's worst. A previous Pacific Research Institute report, the U.S. Tort Liability Index, revealed that Alabama's tort system was one of the 10 most costly in the nation in direct monetary payouts. "And the American Tort Reform Association has in the past labeled parts of the state 'judicial hellholes.' The U.S. Chamber of Commerce, the American Justice Partnership and the Tort Index all rate Alabama among America's 10 worst for lawsuit abuse. "Georgia and Mississippi have had their share of problems with tort costs, but they've been more active than Alabama in court reform. They have recently passed reforms that preserve access to the courts while reducing costly excess. "This makes them a much more attractive place to do business and practice medicine. This is bad news for Alabama. Ultimately, it threatens good, affordable medical service and many businesses still ignore the Yellowhammer State, taking tens of thousands of jobs elsewhere." The study also proves that the United States is the most lawsuit-happy place in the world. The United States spends about 2.2 percent of its gross domestic product on direct lawsuit costs while other countries spend only 0.9 percent of GDP on direct tort costs. Worse, the study shows that less than 22 cents of every tort-cost dollar goes to injured claimants. Personal injury trial lawyers and attorney fees take 19 cents and 21 cents goes to "administrative" costs. Make no mistake about it: those billions in tort tax are real, and the tax is coming out of each consumer's pocket -- mine and yours. Trial lawyers throw zeroes around so frequently these days that it is easy to lose sight of just how huge a number is a billion. Consider this: a second is a tiny, fleeting thing. It is a wink, a blink, a snap of the fingers. Yet 865 billion seconds ago, Jesus had not been born and would not be for another 25,000 years. That is what trial lawyers can do to an innocent second. Lewis Fuller, owner of a Gadsden medical supply company, is chairman of Alabama Voters Against Lawsuit Abuse. Send e-mail to avala@mindspring.com. The AVALA web site is alabamalawsuitabuse.org.
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