Excessive Damage

The cost of the tort system


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 championed 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 Committee, released a report estimating that three insurance-reform proposals pending in Congress could save consumers as much as $55 billion a year.