From: http://wwww.ft.com Aiding America's victims Litigation awards a lot to a few but no-fault insurance may be fairer - and cheaper Published: February 21 2001 19:34GMT | Last Updated: February 21 2001 19:42GMT Suppose three refinery workers in Texas are maimed by burns that cover 70 per cent of their bodies, because their employer fails to inspect a pressure vessel. Surely they can exercise their fundamental human right to litigate? Not in the land of the lawsuit. Though litigiousness ranks with the Protestant work ethic as a core American value, US law does not allow these men to sue the employer that burned them. They cannot force the refinery to pay millions of dollars for pain and suffering. They cannot impose punitive damages, possibly in the billions, to deter others from such negligence. They cannot even fully recover lost earnings. Workers injured by sexual jokes, racial slurs or age bias can earn awards worth millions. But those maimed by workplace injuries cannot have their day in court, because the law makes most employers immune from such lawsuits. Instead, work injuries are dealt with by a no-fault insurance scheme. In the vast American sea of liability, there are islands of immunity not just in workplace safety but also in other areas of employment, securities and consumer law. Their very existence calls into question the moral geography of the system as a whole. Extravagant litigation is its most obvious feature. George W.Bush the candidate promised to redraw the map of civil justice in America. He vowed to cap excessive legal fees, punish frivolous litigation, deter bad-faith lawsuits and force losers to pay under certain circumstances. He even vowed to protect teachers against liability for discipline in the classroom. But George W. Bush the president seems to have lost interest in cartography. Grand reforms of the system have dropped off his agenda. Perhaps he is doing no more than recognise the lie of the land. In a divided Congress heavily lobbied by trial lawyers, only the most limited reforms will prosper. Any kind of swingeing tax on huge legal fees, for example - though still being toyed with by Bush reformers - seems unlikely to survive the greed-fed opposition of trial lawyers. And even the poor teachers may not get their island of immunity. Mr Bush's promised Teacher Protection Act is not expected to be part of the education legislation he sends to Capitol Hill. Indeed, the only important reforms with a chance of passing into law came from the old Congress. One measure could limit the number of class-action lawsuits by forcing them out of state courts and into the federal system, which has tougher standards. But another could turn the tide in the opposite direction: it would extend litigation to an area of previous immunity, by allowing patients to sue their health maintenance organisations about the extent of their insurance cover. But even if Mr Bush had been able to pursue the wilder visions of tort reform that danced in his head when he was a candidate, he still would not have asked the larger questions: • How can it be right that six people riding in a General Motors car can be awarded $4.9bn when their petrol tank explodes, whereas six GM employees test-driving the same car at work would probably get nothing but a portion of their medical costs and salary? • How can it be right that it is easier to sue a company and force a settlement of even baseless suits if the subject is sex discrimination than if it is securities fraud? Tighter rules brought in during the past decade discourage frivolous securities lawsuits and have increased the rate of dismissals. Could something similar not be done to tame employment litigation? • How can it be right that, increasingly, consumers are forced to sign away the right to litigate when they sign credit card, leasing, insurance, computer and e-commerce contracts? This is a legal sanctuary that over the past few years has grown by stealth to encompass a large number of consumer transactions and employment contracts. Banks, computer makers, insurance firms, car dealers and others have begun writing contracts that force consumers to submit disputes to arbitration. Most of the time, this stops consumers with small disputes from uniting to bring class actions. In effect, it limits both the damages they can claim and their ability to find a lawyer willing to represent them. How can such anomalies persist in a country that considers the right to sue fundamental to democracy, essential to level the playing field between employee or consumer and corporation and crucial to the perfection of capitalism? Proponents of the American civil justice system say it harnesses the entrepreneurial spirit of plaintiffs' lawyers (most of whom work for a share of the profits) to compensate victims (in the absence of a social safety net) and regulate corporate conduct (in the absence of big government). Surely it would make sense to extend that system into the workplace? But if the system works so well, should not American products be vastly safer than American workplaces? Manufacturers are fully liable for product defects and can be heavily punished, while their liability for workplace defects is strictly limited. And should not Americans outside the workplace be far safer than, say, Europeans? Neither of these propositions is true. Workers' compensation, as America's workplace insurance system is known, is a relatively inexpensive scheme that, if it makes no one rich, also does not impoverish them. Product liability litigation is a vastly expensive insurance scheme that makes some victims billionaires and leaves others paupers. The one system is comprehensive, predictable and cheap; the other is patchy, dependent on chance and costly. Is it really so clear that litigation is the better bargain? Contact Patti Waldmeir
