Lawsuits in the USA - Case Study Example

Frivolous Lawsuits Thousands of lawsuits are filed in the U.S. each day that have no legal merit, aka frivolous lawsuits. Defendants in these suits must spend large sums of money for an attorney and risk losing the case or settle out of court. It is an expensive, no-win situation for the target of a baseless claim. Businesses, hospitals, physicians, homeowners, etc., all find themselves under an umbrella of fear wondering when and if they will be taken to court even though they have not been negligent or complicit in causing harm to anyone. Small businesses are the most vulnerable. They are the most susceptible to frivolous lawsuits because they deal with the public but do not have the capital to fight court battles or settle large sums out of court. Many have been forced to file bankruptcy. The most recent high-profile example is the dry cleaners being sued for millions of dollars for damaging a pair of pants. The owners of the cleaners were put through two years of stress and expense then had to sell one of their three businesses to pay attorney fees. The disturbing upward trend of frivolous lawsuits is making a travesty of the U.S. justice system, damaging the economy, driving up health care costs and causing financial ruin for individuals and businesses. The current system of justice in the U.S. allows for practically anyone to file a frivolous lawsuit anytime against anyone because there are no legal consequences for this irresponsible, costly action. ‘Rule 11’ of the Federal Rules of Civil Procedure, which directed that those who filed frivolous lawsuits in a federal court faced mandatory penalties, was diluted in 1993. Despite strong, widespread judicial support for keeping Rule 11 intact, following the change, judges were allowed great discretion to decide whether or not to impose penalties against those who file frivolous law suits (Anderson, 1997). As a result, baseless, senseless lawsuits devoid of merit or facts are filed by the thousands throughout the U.S. and why not, there is nothing to lose and everything to gain. A person could file suits until they won one, that’s all it takes to make a fortune. Of course some innocent individual or business could be financially ruined but evidently, there are plenty of people who are very willing to profit from another’s misery if not their negligence. “This is legalized extortion. It is a lawsuit lottery” (Smith, 2004). Frivolous lawsuits are ridiculous and have led to ridiculous and unnecessary warning labels that companies have been forced to place on their products such as “Remove child before folding” on a baby stroller, “Beware: sled may develop a high speed under certain snow conditions” on a snow sled, “Do not allow children to play in the dishwasher” and “Never iron clothes while they are being worn” (Smith, 2004). A serious consequence of frivolous lawsuits affects the health of everyone. Doctors frequently will not perform procedures considered ‘high-risk’ because of the threat of a lawsuit including delivering babies and setting broken limbs. Frivolous lawsuits cost Americans more than $300 billion a year, as estimated by the President’s Council on Competitiveness, a staggering number. As a comparison, U.S. courts process about 70, 000 more liability lawsuits than Britain and 30 times the lawsuits of Japan. As a result, liability insurance rates for American businesses are up to 50 times those paid in other countries and these numbers climb every year (Anderson, 1997). “It’s no surprise that jury awards are on the rise, after all, Americans these days are perhaps the most sue-happy people on the planet” (Skutnik, 2007). The Wall Street Journal reported that frivolous lawsuits cost each American family more then three thousand dollars per year. This figure includes the sum of the suits, attorney’s expenses and fees and the administrative costs for insurance companies to defend and investigate claims (“How Much”, 2007). The overall effects of unfounded claims, such as the dry cleaning lawsuit or the infamous coffee in the lap incident at a McDonald’s drive-through window are, in regards to the medical industry, causing physicians to quit their profession for fear of financial ruin and insurance companies to continually raise premiums or face bankruptcy. This ‘jackpot justice’ problem is growing steadily every year. According to Jury Verdict Research, “the average medical malpractice jury award has risen almost 75 percent from 1995 to 2000 to an average of $3.5 million per case, with some awards going as high as $40 million” (“How Much”, 2007). Only from lawsuits and the lottery could a person win this amount of money and their odds are far better in court. Frivolous lawsuits are simply a shameless effort to ‘shake down’ or extort physicians. Those that file such claims use any excuse without regard to its merit. If the procedure did not go exactly as planned, the first thought for many is to sue. “Everybody is suing doctors because they are not getting absolute positive results every time” (Skutnik, 2007). Some go as far as to bait doctors into performing services knowing that they are going to file a lawsuit regardless of the outcome. If mechanics were being sued at the same rate as doctors, a simple oil change, for example, would cost much more than it presently does. Merit-less suits cause a ripple effect throughout the medical industry which ultimately costs everyone vast amounts of money. According to an article in the New York Times, doctors are paying increasingly high premiums for malpractice insurance. “Rates of 20 to 40 percent over the next year are looming on the horizon for doctors, with specialists such as obstetricians and neurosurgeons paying over $100,000 annually in premiums” (Skutnik, 2007). Doctors have two choices, pay the insurance or quit and many have chosen the latter. Those that continue practicing have a tendency to ‘over diagnose’ illnesses, for example, anyone who’s been to the doctor knows that they order a seemingly endless number of tests. They do this for two reasons, to help shield themselves from potential lawsuits and pad the price of their services. Insurance companies are paying more for expensive tests which drives insurance costs up. “Slowly but surely, ‘jackpot justice’ lawsuits are leaving the poorest members of society unable to even afford coverage, much less the expensive yet frivolous tests required for doctors to shield themselves from liability” (Skutnik, 2007). The situation has become so problematic that many doctors decline to perform procedures that they consider susceptible to lawsuits which puts the lives of patients in danger. Attorneys that specialize in personal injury suits, as seen on television all over the country, coldly view filing lawsuits, whether frivolous or not, against doctors, hospitals and pharmaceutical companies as a profitable area of growth. Due in large part to the dilution of Rule 11, lawyers have made a good living suing health care providers which in turn has caused health care costs to skyrocket over the past 14 years and the quality of health services to diminish. “The cost of defending against malpractice and liability lawsuits is inevitably passed on to the consumer” (“Why”, 2003). The U.S. Department of Health and Human Services reports that the costs of health care across the country could be reduced by five to 10 percent if limits were placed on amounts won in lawsuits that far exceed the actual damages. The total savings would reach more than 100 billion dollars per year. In addition, reducing costs by this amount would help three to four million more Americans afford health insurance (“Why”, 2003). “Clearly if one of the main problems with health care in America is the number of uninsured, further eroding protections from frivolous lawsuits aren’t the answer” (Skutnik, 2007). The state legislature in California enacted a $250,000 limit for ‘pain and suffering’ awards 30 years ago which has helped to significantly control healthcare costs in that state. It has been widely argued that awards for all lawsuits be decided by judges who have a better knowledge of legal precedents and procedures than by juries who usually decide amounts by emotion. Tort reform should be extended to require the losing party to pay all attorney and court costs. This would dissuade people from filing frivolous lawsuits because it could cost them dearly if they lost. Perhaps the best way to reduce ‘lottery’ lawsuits is for insurance companies to not settle ‘out of court.’ This common practice of paying out for nonsensical cases is costing many millions every year. “For fear of the stratospheric jury decisions alone do many insurance companies choose to settle claims rather than have them out in court, caps on award settlements may help quell the skittishness these companies show for handling claims in court” (Skutnik, 2007). Frivolous lawsuits are tantamount to extortion. “Plaintiffs of frivolous claims threaten to sue unless they are placated” (Skutnik, 2007). The American health system, doctors, businesses and individuals will all reap the benefits of legislation that discourages frivolous lawsuits. Passing the Lawsuit Abuse Reduction Act, first introduced in 2004, would re-strengthen Rule 11 and set stricter guidelines for civil lawsuits in an effort to discourage frivolous lawsuits. By curbing the likelihood of merit-less claims, public confidence in the justice system would be restored, the perception of a sue-happy culture diminishes, more people could afford health insurance and the costs of doing business lessens. Works Cited Anderson, Debra Rae. “The Cost of Frivolous Lawsuits is no Joke.” Minneapolis / St. Paul Business Journal. (1997). September 28, 2007 from “How Much Are Frivolous Lawsuits Really Costing You?” Canada Free Press. (2007). September 28, 2007 Skutnik, Stephen. “Frivolous Lawsuits Hurting Health Care.” Iowa State Daily. (2007). September 28, 2007 from Smith, Lamar. “Stopping Frivolous Litigation and Protecting Small Businesses.” Washington Legal Foundation Advocate for Freedom and Justice. Vol. 14, No. 19, (2004). September 28, 2007 “Why Are Medical Costs So High? Courtrooms Are a Culprit.” The National Center for Public Policy Research. I. 30, (August 15, 2003). Washington, D.C. September 28, 2007 Read More