Tort Costs Were Record $233 Billion in 2002

NU Online News Service, Dec. 10, 2:04 p.m.EDT

The system cost $233 billion in 2002, a $27.4 billion increaseover 2001, the study noted. Those costs translate into $809 perU.S. citizen--$87 more than in 2001 and $797 more than in 1950,Tillinghast said.

Tort costs increased by a total of 30 percent in the last twoyears?the largest two-year increase since 1986/1987.

"It sounds trite, but the consumer ultimately pays for tortcosts," says Russ Sutter, Tillinghast survey sponsor. "America isan increasingly litigious society, and we are all feeling itseffects."

The largest single factor in the rise of tort costs in 2002 wasasbestos claims. At $11 billion, these costs were double the 2001level and more than one-third of the total cost increase.

Other contributing factors to the cost increases were theproliferation of class action lawsuits and large claim awards; anincrease in the number and size of shareholder lawsuits againstboards of directors; an increase in medical cost inflation leadingto higher costs of personal injury claims; and medical malpracticelawsuits.

When viewed as a method of compensating injured parties, theU.S. tort system has become increasingly inefficient, returningless than 50 cents on the dollar to people it is designed to helpand returning only 22 cents to compensate for actual economic loss,the study concluded.

Medical malpractice costs totaled nearly $25 billion in 2002, or$85 per person, compared with $5 per person in 1975. The increasein medical malpractice costs continues to outpace increases inoverall U.S. tort costs, rising an average of 11.9 percent peryear, versus an increase of 9.3 percent per year in all other tortcosts. "Physicians are relocating or changing practices as a resultof escalating liability insurance," Mr. Sutter noted.

"Manufacturers are looking at severe cost increases fromasbestos claims, which could translate into more layoffs and plantclosings," added Mr. Sutter. "Most pundits look at tort costs interms of their impact on revenue and profits, but it is just aspainful to patients who can't find a specialist or workers whocan't find a job."

Requests for copies of the study, "U.S. Tort Costs: 2003Update," can be made at www.tillinghast.com.