Tort Reform
McDonald's
Tort Reform is a euphemistic term to describe a concerted effort on the part of insurance companies and large corporations to block consumers' access to the courts. People who are in favor of tort reform believe there is a crisis in the courts and there are thousands of frivolous lawsuits filed by greedy lawyers. This crisis is a fiction created by selective and inaccurate reporting of a few outlandish verdicts or ridiculous lawsuits. Let's talk about some examples.
Whenever the topic of frivolous lawsuits comes up, many people think of the lawsuit filed against McDonald's by a lady who got burned by hot coffee she got at a McDonald's. I often refer to it as the poster child for tort reform. What do you know about this case?
If you read only The Wall Street Journal account of this lawsuit or, more likely, heard about it from Jay Leno or on an episode of Seinfeld, all you would have heard about was some lady who spilled coffee on herself and got a $2.9 million verdict against McDonald's. You would have been told that the lady was complaining that she did not know the coffee was hot. You would have thought that the lady spilled the coffee as she was driving down the road, juggling the coffee in her lap.
The truth is that Stella Liebeck, a 79 year old grandmother, was a passenger in a car driven by her grandson. After the coffee was purchased at a McDonald's drive-through, the grandson pulled over and stopped the car. While Mrs. Liebeck was trying to add sugar and cream to the coffee, she spilled it and received second and third-degree burns on her thighs, buttocks and private parts.
Mrs. Liebeck required skin grafting for these burns. Her medical treatment cost over $20,000. Certainly, if you spill coffee on yourself you would expect to receive a scalding injury. But would you really expect third degree burns? You would in the coffee was 40 degrees hotter than the industry standard! And McDonald's had received 700 prior claims for burn injuries from its coffee before this incident. The McDonald's representatives testified that they had done nothing in response to these prior claims to try to prevent injuries.
Mrs. Liebeck tried to settle the claim herself and asked McDonald's to pay her medical bills. McDonald's offered her $800 to settle. She hired a lawyer to represent her and the case went to trial. The jury, which heard all the evidence and had the opportunity to evaluate the credibility of the witnesses, awarded Mrs. Liebeck $160,000 for her injuries and then awarded $2.7 million in punitive damages (two days worth of coffee sales at McDonald's) because of McDonald's callous disregard for the welfare of its customers. The judge reduced the punitive damages to $480,000 (three times the compensatory damages), so the total judgment was for $640,000, more than $2.2 million less than the newspapers reported.
The rest, as they say, is history. What lives in the minds of most potential jurors is the headline, not the story. Most people I have talked to have a completely different perception once the facts are revealed. But the sad truth is that many, many injured victims of the negligence of others have gotten far less compensation than they deserve due to the bald lies and distortions which are presented by publications looking for attention-grabbing headlines and comedians looking for a punch-line. The truth sounds boring compared to the distortions published in the press.
Proposition 1
The most recent example of tort reform in Texas was Proposition 12 which was on the March, 2002 ballot and passed by a narrow margin. Basically, Prop. 12 is an amendment to the Texas Constitution which allows the legislature to impose a cap of $250,000 for non-economic damages on medical malpractice and other cases.
Here's the truth - very few juries ever award more than $250,000 in non-economic damages. When they do, there is usually a very sound basis for it. Non-economic damages encompass things like pain and suffering, impairment and mental anguish. Let's say a 37 year-old senior executive of a large company suffers a stroke as a result of clear negligence on the part of a surgeon. And let's say that the patient, who holds an MBA from a major university, suffers lost wages of several million dollars and medical bills in excess of a million dollars. The patient has profound permanent injuries. He can no longer read, spell or do complex math. He walks with a pronounced limp and has no feeling in his right arm. He was fed by a tube for a year after the incident and had a tracheotomy. His vocal chords were damages and he could barely speak for nearly a year. His short term memory is very impaired - if he starts a long sentence, he sometimes forgets halfway through what he was talking about. He can no longer have sexual relations with his wife and is dependent on her for everything. (These are facts from a client I represent.)
Obviously the case has significant economic value. The medical bills and lost wages are in the millions of dollars. But what of all the rest? Is the life-long impairment this young father and husband must endure worth a maximum of $250,000? And what if the injury occurred to someone who was not working and whose bills were paid by Medicaid? Are the damages worth only $250,000? My point is, a jury should decide. These types of catastrophic cases should be decided by a jury which hears all of the evidence - not by a legislature that receives vast sums of money from insurance, corporate and physician-funded groups. In my practice which now spans over 23 years, I have rarely seen a jury get it wrong. When they hear and see all of the evidence, they are in a unique position to reach valid, valuable conclusions.
Tort reform is, at its core, an all-out assault on your right to access to the judicial system. Any time a politician tells you that tort reform is good for you, follow the money. Who paid for his or her campaign?
Of course, the same criticism is leveled at trial lawyers. And it is true - we do contribute to political campaigns. But if I give $1,000 to a judge running for re-election, it often shows up in some newspaper article or on 60 Minutes. When an insurance company PAC gives $10,000 to the opponent - not a word. When a trial lawyer makes a campaign contribution, it is not just for the lawyer, but for all the clients the lawyer has or will represent - clients who often lack the means to make the donations themselves.
The next time you hear about some outlandish verdict, look behind the headlines. The truth is usually in the details.
