Clive Davis, the Victor Schwartz of the music biz. Photo by Christopherpeterson at English Wikipedia, CC BY 3.0
“Social inflation is the insurance industry’s relatively new term to justify price-gouging of policyholders. Using this catchy phrase allows insurers to deflect attention from their own greedy need for more money. They tell policyholders, “Oh, don’t look at us. It’s not our fault that we’re price-gouging you. It's social inflation. You know, lawyers and juries!” This time, they settled on a vague, undefined term that allows them to complain about (and blame) everything they don’t currently like about the civil justice system. #MeToo and child sexual abuse cases. Lawyer advertising. Verdicts in worsening truck crashes. Keeping track of and debunking these wildly-disconnected things is like playing “tort reform whack-a-mole.”
Usually blaming lawyers and juries works for them, even though this tricky industry hikes premiums for completely different reasons. But during past periods of similar price-gouging, lawmakers have responded by enacting legal obstacles for injured people to bring cases, or laws taking power away from juries. (For a 50-year history of how insurers have bamboozled public officials, see the Appendix in this study.)
However, one thing they didn’t anticipate in 2019: COVID. No sooner did they whip out their “social inflation” messaging, than COVID shut down the courts. Complaining about too many lawsuits and “out of control” juries while making a windfall from the pandemic made the insurance industry look ridiculous at best, venal at worst. They’ve struggled to be taken seriously. So, apparently needing help, they just dusted-off an old-timey “big gun” to speak for them, OG Victor Schwartz. The Clive Davis of the “tort reform” movement. And they got Victor to sign onto a data-starved naïve fantasy piece in the conservative Washington Examiner called “How to curb 'social inflation' in lawsuit damages.”
It’s safe to say that Victor Schwartz is someone we never agree with on civil justice issues (except those times when he slips up and truth slithers out). His association with the American Tort Reform Association, a much-diminished organization whose role, from what we can tell, “has been reduced to releasing tired, discredited messaging about judges and juries who rule against [its] corporate members when they kill and injure people,” or the American Legislative Exchange Council, famous for its link to the gun lobby, is pretty gross.
But we’ve never brushed him off as a careless amateur. He co-writes the law school casebook on torts. When he used to testify in Congress, he would generally recite his arguments without notes. (Evil genius comes to mind!) I say “used to” because it has been many years since this golden-ager has occupied a prominent public role in the “tort reform” movement. A decade ago, he admitted on camera to trying to push his inexperienced younger associates into the spotlight, as he was still the guy with the “name recognition.”
Despite the toll age may have taken, we genuinely wonder how he could have put his name on something so slipshod as this article? Who actually wrote this? It’s an online advocacy piece with no links to anything. I take that back - there are four links, all of which appear in the first three paragraphs and link to other Washington Examiner articles nearly unrelated to points being made. (Guessing some Washington Examiner intern said, “I know nothing about this topic but let me throw in some links.")
For example, one paragraph begins, “According to a recent study,” but no study is cited, and there is no link to anything. They say this “study” proves that large verdicts went way up between 2010 and 2019.
Um, actually, they didn’t. As we reported in our fully-cited study, as of the time of publication in 2019:
ALM’s Verdict Search data … show nearly three times the number of $1 million plus verdicts in 2010 (1542) as compared to 2019 (550), with a continuous drop each year. As for verdicts over $10 million, there were about half the number in 2019 (131) as there were in 2010 (256), also with a steady decline each year. Whether looking at $5 million verdicts or $20 million verdicts, the same trends appear.
And that was before the pandemic!
Then Victor throws in a socio-political opinion about “a younger generation of jurors,” who, he says, is arbitrarily throwing money at people to “redistribute wealth.” Not a single fact, study, link, or even one single example is used to support this. In 2020, the insurance industry called the problem “millennials” recently coming on juries. Then we pointed out that millennials have been on juries since 1999. So they just changed their words, i.e., the vocabulary changed but the inane rhetoric did not.
Then comes the customary attack on the lawyers who represent sick and injured victims. These attacks change over time, but today it’s about a few firms that “advertise” about harm caused by dangerous drugs and products, and a few other firms that reach out to financing companies to help fund often extremely-expensive cases. Litigation finance firms typically allow someone suffering an injury the means to bring a case and not be forced into accepting low-ball offers from insurance companies simply because they can’t pay rent. Welp, here’s the good news. Empirical research shows that litigation finance firms actually screen out meritless cases. Even business attorneys have written that “linking litigation funding to social inflation exposes the specious nature of the social inflation theory itself.” So there’s that.
Then Victor starts complaining about “caps on damages.” Don’t get me wrong, he (or whoever wrote this) loves his caps, especially the ones the insurance industry manipulated many states around the nation into passing, claiming caps would bring down insurance rates. (They didn’t.) But they hate when state constitutions disallow caps. Caps have been struck down nine times (and not repassed) over the course of 50 years. But most recently, New Mexico’s high court upheld an extremely brutal state cap. These laws are not exactly falling by the wayside. The next case up? An Ohio case challenging a state cap, which has been used against a child repeatedly raped by her pastor. There’s a right and wrong side of that issue. I think most people know what that is.
The rest of the article consists of further attacks on judges and juries, making jurors sound like blubbering idiots who don’t listen to evidence from both sides but are rather enchanted by bewitching plaintiffs lawyers, while calling judges “irresponsible” for allowing victims’ lawyers (never corporate or insurance lawyers) to “flood” jurors’ minds with “misleading information.” Not one example is given. What a dumb thing to argue.
When the pandemic hit, courthouses shut down. Jury trials stopped. People stopped driving for months. People drastically cut down on non-essential medical care, while at the same time most states passed laws immunizing hospitals and nursing homes from liability. (See more here.) No one believed that backlogged juries, non-existent victims and lawyers who couldn’t get their cases heard, were driving insurance rate hikes. Yet the industry never stopped talking about lawyers, juries and "social inflation." Pile onto that the fact that insurers, who had already put virus exclusions in many commercial policies, refused to pay virus-related business interruption claims and fought businesses in court. Insurers are winning those cases. As a result of all this, the property casualty insurance industry’s surplus is now more than an astonishing, record-breaking $1 trillion.
I don’t think even a legacy artist like Victor Schwartz can overcome a reality like that.