Q Who Spreads The Myth Of Frivolous Lawsuits And Why
January 27, 2016
LOOK TO THE LAW
Clients and friends have asked me many of the same questions over the course of my career. This is one in an ongoing series of “lawyer questions and answers”. Hopefully, this will be useful to you, or at least interesting.
A: Myths are awfully hard to kill, and they often live on indefinitely despite all evidence to the contrary. The myth of an avalanche of frivolous lawsuits is one of them. But why? Who perpetuates this myth? Why would anyone want to perpetuate the myth? Who has a vested interest in seeing to it that you, and most Americans continue to believe lawsuits to be frivolous?
The answer is: Insurance companies and large corporations. It’s well known that most jury awards are paid by insurance companies and large corporations. If you injure someone in an auto accident, your car insurance company pays the damages. The same is true of your homeowners company if someone is injured at your home. If your doctor injures you, his malpractice insurer pays the damages. If you are injured by a defective product, the corporation which made the product must pay any award entered for your injuries.
Insurance companies and manufacturing corporations have unlimited resources and spend billions of dollars on media efforts, public relations campaigns, and lobbying, all intended to keep the myth alive that they are inundated by frivolous lawsuits. The insurance companies in the past 16 years spent $2,234,393,387 on lobbying, and manufacturers spent $1,142,304,755 (Center for Responsive Politics, 2015). The insurance industry alone has 848 full-time registered lobbyists arguing that frivolous lawsuits are rampant and must be stopped.
It is no wonder that the myth of frivolous lawsuits goes on and on despite its illogic, and despite statistical proof that it does not exist. Two infinitely wealthy industries… insurance and manufacturing… have for decades poured endless money into perpetuating the myth. Why? Two reasons.
Firstly, because if the public is given the illusion that most lawsuits are frivolous, and that people who file them are unjustifiably pursuing free money, then when they themselves are injured, they will be less likely to file a lawsuit and run the risk of being perceived that way. If you were badly injured, and were thinking of a lawsuit, wouldn’t one of your considerations be that you might be perceived unfavorably by your friends? Of course. And if, let’s say 20% of injured people decide not to file suit for that reason, then the insurance companies and manufacturers have just saved 20% on their overall payments, and increased their profits by 20%. That represents hundreds of millions of dollars. Motivation to perpetuate the myth? Yes.
Secondly, when the public believes that lawsuits are frivolous, the dollar value of payments which insurers and manufacturers have to make go down. It saves them money. Jurors are just members of the public. You, me, everyone. When most members of the jury pool (i.e. you and everyone else) have been convinced that lawsuits are frivolous, jurors will award less, or little, or nothing even when the case is legitimate and has merit. Insurers and manufacturers know that very well. More millions. More motivation to continue the myth.
So those are the main reasons why insurers and manufacturers spend billions of dollars to perpetuate the frivolous litigation myth. They are on one side of the equation throwing mountains of money to make sure the public continues to believe the myth. On their side of the equation are huge amounts of money and power.
Who is on the other side of the equation? On the other side of this issue is… no one. There is no organization representing injured people. People maimed in horrible car accidents, or killed or grievously injured by doctors’ mistakes do not suddenly assemble together and form an Organization of Injured People. Injured people have no organization to countervail the massive insurance/manufacturing lobby. No money at all is spent on lobbying or public relations to balance out the billions spent on the other side. And so the insurance company and manufacturer claims about the prevalence of frivolous lawsuits go unanswered. The myth goes on, and on, and on…
Do you think it is far-fetched that public opinion could be so profoundly changed by the lobbying efforts of a wealthy industry group? Well, for decades the tobacco lobby had Americans believing that smoking cigarettes promoted health and was encouraged by doctors. Check out the link below. So Americans believed that myth for nearly 50 years because the tobacco lobby threw millions of dollars to continue it. The big lie told by their media campaigns protected their profits.
So it is with the myth of frivolous lawsuits, insurance companies, and manufacturers.
Jack Hoyt, Esq.