Myth vs. Fact 
Factsheets

 

Myth vs. Fact

Myth #1: The legal system is clogged with so-called “frivolous lawsuits.”

FACT: According to the National Center for State Courts, the number of lawsuits in Arkansas from 1993 – 2002 was steady or declined.  Read more about the actual decline in litigation from a recent report from the National Center for State Courts.

Myth #2: The cost of medical malpractice insurance is skyrocketing because of lawsuits.

FACT: Insurance companies take the premiums paid by physicians for medical malpractice insurance and invest them. They are able to pay claims based on the money they made on those investments. When the economy, specifically the stock market, is down, insurance premiums go up. Premiums are escalating because insurance companies have been losing money in the stock market not because doctors are losing in court.

According to the International Risk Management Institute (IRMI), one of the leading analysts of commercial insurance issues, "What is happening to the market for medical malpractice insurance in 2001 is a direct result of trends and events present since the mid to late 1990s. Throughout the 1990s, and reaching a peak around 1997 and 1998, insurers were on a quest for market share, that is, they were driven more by the amount of premium they could book rather than the adequacy of premiums to pay losses. In large part this emphasis on market share was driven by a desire to accumulate large amounts of capital with which to turn into investment income." IRMI also noted: "Clearly a business cannot continue operating in that fashion indefinitely."

Myth #3: Tort Reform will decrease the number of lawsuits filed.

FACT: New laws actually increase litigation. Under recently passed Arkansas law, in order for those who have been harmed by medical malpractice to recover 100 percent of damages due them, their attorneys must now not only name doctors, hospitals and nursing homes in medical malpractice suits, they must also name every person whose name is on the medical chart. This includes nurses, respiratory therapists and other support staff who would not otherwise have been involved.

Myth #4: The contingency fee system for plaintiff attorneys encourages meritless claims.

FACT: In a contingency fee system, attorneys are only paid if their client gets a settlement or verdict. Therefore, attorneys are not inclined to take a case without merit because they will not be compensated.

Additionally, the alternative of requiring clients to pay an attorney by the hour would, in effect, limit who has access to the courthouse. Only the wealthiest corporations are able to pay an hourly rate for attorney services. The average person or small business owner would have no form of recourse in a dispute with a giant corporation because the company could bury them in paperwork, making the cost of their case prohibitive.

Contingency fees allow every person or small business with a legitimate case a chance at justice.

Myth #5: The jury system has become a runaway train that regularly awards millions of dollars to plaintiffs for silly claims, like the woman who sued McDonald’s over a coffee burn.

FACT: The amount that is being paid in jury awards has remained stable, according to the Rand Institute for Civil Justice.

There is also much more to the story of the McDonald’s coffee than is often told:

  • The plaintiff, Stella Liebeck, suffered third degree burns to her lap, groin and inner thighs when she placed a coffee cup between her legs to open it and the contents sloshed out.
  • She spent eight days in the hospital for her injuries.
  • She initially offered to settle the case for the amount of her medical bills, but was refused.
  • McDonald's admitted that it had knowledge of more than 700 prior instances of its coffee burning and scalding its customers.
  • The jury awarded Stella $160,000.00 for her injuries and awarded punitive damages which equaled 2 days of McDonald's coffee sales -- $2.7 million.
  • The verdict was reduced on appeal and the case later settled for an undisclosed amount.
  • As a result of this case, McDonald's reduced the temperature of its coffee to a non-scalding, consumable temperature.

Heard a rumor you'd like to confirm or deny?  Receive an email claiming outlandish information?  Is a colleague spouting tales of an urban myth that you'd like to debunk with fact?    

Visit    www.snopes.com to find reference sources and information on today's hottest topics.

 

Fact Sheets
HR554 Fact sheet (cheeseburgerbill)
Center for Justice & Democracy Med Mal Report
-         CJ&D - Med Mal Report – Backgrounder
-         CJ&D - Med Mal Report - Appendix

Medmal-Just the Facts
Caps vs. Non-Caps - number of insurers
AR166 Report Factsheet, Click here for the full report
Tort Reform PowerPoint by Chip Welch
Insurance Industry CEO Salaries

Insurance Information Institute’s, Tort Excess Fact Sheet, Click Here for the full report
Bankruptcy & Tort Factsheet
Court Stats - No Litigation Explosion
Liability Costs for Small Businesses
Bestplaces to Practice
California Rates Are Higher ThanIn States Without Caps
Are Insurer Investments in Good Shape?
Medical Malpractice Insurance Premiums, October 2004, Medical Liability Monitor
Legislative Fact Sheet: Negative impact of S. 2062 on enforcement of state wage and hour laws AFL-CIO
McDonalds Scalding Case: The Facts


Letter to the Editor
Chris Heil, 2009 President in AR Democrat-Gazette July, 2009

 

 

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