Ecessive Damage

The cost of the tort system

Rick Henderson from the June 1996 issue

Throughout his peripatetic presidency, Bill Clinton has shown unwavering fidelity to one group of constituents: trial lawyers. In December, Clinton vetoed a securities litigation reform measure that was sponsored by the Democratic Party's general chairman, Connecticut Sen. Christopher Dodd. (Congress overrode that veto.) At press time Clinton had also threatened to veto a bipartisan product-liability reform bill cham pioned by Democratic Sens. Jay Rockefeller (W. Va.) and Joseph Lieberman (Conn.). Excessive damage awards in liability suits lead to higher insurance premiums, increased consumer prices, and a reluctance by manufacturers who fear frivolous lawsuits to offer new products. A 1995 study by the actuary firm of Tillinghast-Towers Perrin estimates that the tort system cost individuals, businesses, and governments $152 billion in 1994. In March, Rep. Jim Saxton (R-N.J.), the vice chairman of the Joint Economic Com mittee, released a report estimating that three insurance-reform proposals pending in Congress could save consumers as much as $55 billion a year.