Debunking the “Tort Reform” Myth, One Cup of Coffee at a Time

Coffee in Coffee Cup --- Image by © Royalty-Free/Corbis

Tort reform is a hot topic these days.  It has been for the past twenty years.  We are told that America’s civil justice system is broken.  That so-called “frivolous lawsuits” are corrupting America.  That greedy lawyers are causing our insurance premiums to increase and the cost of healthcare to skyrocket.  If true, these allegations affect us all, so naturally we take them very seriously.  But are we being told the truth, the whole truth, and nothing but the truth?

For nearly 250 years we’ve let the jury decide that question.  And rightfully so; it’s indoctrinated in our Constitution.  Jury’s are privy to information that only a trial can reveal – details that must be experienced in order to be understood.  No journalist, for example, can capture the drama of what it’s like to sit in a courtroom and listen to a key witness deliver testimony about a gruesome murder.  Nor can a news anchor convey the emotion of a mother describing the unbearable loss of her only child due to a toy company whose product contained lethal amounts of lead-based paint.

These are just some examples that help illustrate why “the right of trial by jury” is revered as sacred in this country.   It embodies a concept that is greater than any single person, because juries speak on behalf of the community.  They act as our moral compass by distinguishing right from wrong, putting criminals in jail, and punishing bad behavior.  No one seems to dispute this in criminal cases.  Why then is there so much controversy surrounding our civil justice system?

Tort reform, as a movement, has only recently taken center stage.  You might say it all began back in 1994 with what is perhaps now the most famous “frivolous lawsuit” to enter the courtroom: Liebeck v. McDonald’s Restaurants, P.T.S., Inc. (a.k.a. The McDonald’s Coffee Case), a case in which you probably heard that a woman from Albuquerque, New Mexico was awarded $2.8 million in damages after spilling hot coffee on her lap. The thought alone is sickening.  How could this happen?  Where is the accountability?  Where is the common sense?

What you may not have heard about the McDonald’s coffee cup case is the plaintiff in that lawsuit, Stella Liebeck, was a 79 year old grandmother who suffered third degree burns to her thighs, buttocks, and genitalia after being served coffee that was near boiling temperature.  Her burns required extensive skin grafting, eight days of hospitalization, and over $13,000 in emergency medical expenses.  Stella attempted to settle her case out of court for $20,000 (the cost of her past and future medical expenses).  McDonald’s refused, however, and offered Stella $800 to settle her claim.

The rest as you know is history, although the judge reduced Stella’s award from $2.8 million to  $640,000 (a reduction of more than 75%).  Additionally, it was revealed during the course of Stella’s trial that, between the years of 1982 and 1992, McDonald’s received more than 700 reports from people who were burned by their coffee (to varying degrees), which was regularly served by McDonald’s staff at temperatures between 180 to 190 degrees fahrenheit.  At this temperature, water is capable of causing third degree burns in just 2 seconds.

The New York Times recently ran a front-page article about the Stella Liebeck case titled, “Scalded by Coffee, Then the News Media.”  The case is also featured prominently in the film “Hot Coffee,” a documentary directed by Susan Saladoff that examines how the media distorts the public’s view of lawsuits in general.  Below, are some additional facts you may not know about so-called “tort reform.”

Fact: The number of personal injury lawsuits is decreasing.

According to the Justice Department, the number of personal injury cases filed in U.S. District Courts (i.e. federal courts) has dropped by 79% from 1985 to 2003.  Additionally, according to the National Center for State Courts, the number of personal injury filings in state courts has declined by 25% from 1999 and 2008.  A 2010 study conducted by the risk management firm, Towers Watson, concluded that tort costs as a percentage of GDP dropped between 2001 and 2009.  Personal injury lawsuits are now at their lowest level since 1981.

Fact: Insurance company profits are increasing.

Between the years 2004 and 2007, insurance company profits rose from $38.7 billion to $61.9 billion.  That’s an increase of $23.2 billion dollars in just three years.  To put things into perspective, that’s enough money to feed a family of four for 1.5 million years; pay college tuition for 300,000 kids; or place $73.65 in the pocket of every man, woman, and child living in the United States.

With the number of personal injury lawsuits at their lowest numbers in 30 years, and insurance companies making record profits, you would expect the cost of insurance premiums to go down.  However, the exact opposite is true; insurance premiums are increasing.  When confronted with these facts, a spokesman for the American Insurance Association (an organization which represents roughly 300 insurance companies) stated during a 2005 interview with the Chicago Tribune that, “We have not promised price reductions with tort reform.”  What the insurance companies have promised, it seems, is to line their pockets at the expense of injured victims and the general public.