ThePopTort

Social Inflation Nonsense, or, What Happened to Victor Schwartz?

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.

Repost from 2012: The Unbearable Lightness of Being ... Unaccountable

You know how much I love quoting Ronald Reagan.  (Kidding.) (No offense, Tea Party friends.)  Here’s a good one: “We must reject the idea that every time a law's broken, society is guilty rather than the lawbreaker. It is time to restore the American precept that each individual is accountable for his actions.”

I’m guessing he believed that cigarette smokers, as one example, fell into that “individual accountability” category.  But what if the law breakers are the people who are supposed to be enforcing the law?  Should they be accountable?  Which brings us to last night’s 60 Minutes, and a couple other hot topics. 

The show last night was about the exoneration of Michael Morton, wrongly convicted of murdering his wife in 1987.  He was freed after 25 years in prison based on DNA evidence, thanks to the hard work of the Innocence Project. 

But, reports 60 Minutes, Morton’s attorneys, “recently discovered something astonishing: sitting in his prosecutor's file all those years was evidence that could have established Morton's innocence during his trial.”  That evidence was a police report, relating how Morton’s then 3-year-old son, who witnessed the murder, described in detail the guy who really killed his mother, and it wasn’t Michael Morton.  The DA who apparently failed to turn the report over to Morton at the time, Ken Anderson, later “was named prosecutor of the year in Texas and since 2002 he's been a district judge in the same court where Michael Morton was convicted. All those years, Morton languished in prison.” 

Here’s some of the conversation between 60 Minutes correspondent Lara Logan and Barry Scheck of the Innocence Project, and Logan and Anderson’s lawyer, Eric Nichols:

Lara Logan: So just to be clear, from both of you, you believe that Ken Anderson, the prosecutor in Michael's case, willfully, deliberately withheld evidence.

Barry Scheck: We believe that there's probable cause to believe that he violated a court order, withheld exculpatory evidence, and violated other laws of the State of Texas.

In February, a Texas judge agreed with Michael Morton's legal team that there was probable cause to believe Ken Anderson violated the law, and Anderson is now the subject of a special criminal inquiry. That's extremely rare. Studies have shown prosecutors are hardly ever criminally charged or disciplined for serious error or misconduct. And one thing Ken Anderson doesn't have to worry about is being sued for damages by Michael Morton because the Supreme Court has ruled that prosecutors have "absolute immunity" from civil lawsuits for their legal work.

Lara Logan: Doctors, lawyers, policemen, there are all kinds of people who do their job with limited immunity or no immunity. It just seems hard to understand why prosecutors have to have a different standard to everybody else.

Eric Nichols: Seeing that justice is done, in many instances, requires very difficult judgments. And to come back behind those prosecutors and second guess them, or sue them would throw a wrench into that system of prosecutors seeking justice.

Lara Logan: I have to say, there's a certain irony in hearing you say it's the job of a prosecutor to seek justice, right? Because in this particular case, that's exactly what Michael Morton did not get. …

Michael Morton: I don't have a lotta things really driving me. But one of the things is, I don't want this to happen to anybody else. Revenge isn't the issue here. Revenge, I know, doesn't work. But accountability works. It's what balances out. It's the equilibrium. It's the social glue in a way. Because if you're not count-- accountable, then you can do anything.

Pay attention, corporate and medical lobbies pushing for laws to limit their liability for wrongdoing, so-called "tort reform."  He's talking about you.  As Logan notes, accountability doesn’t just mean criminal accountability but also, civil liability - something we touched on last week in our post about how the civil justice system can sometimes step in where the criminal justice fails.  That is, except if the destructive, corporate-backed, right-wing American Legislative Exchange Council (ALEC) (which we’ve covered many times, like here, here, here) has anything to do with it. 

Paul Krugman's column in today’s New York Times, called "Lobbyists Guns and Money," hits it out of the park with a great piece about how ALEC is responsible for the spread of Stand Your Ground laws (among many other horrendous laws), which many believe not only contributed to the killing of Trayvon Martin but also, the failure by police to arrest his killer.  Writes Krugman:

Florida’s now-infamous Stand Your Ground law, which lets you shoot someone you consider threatening without facing arrest, let alone prosecution, sounds crazy — and it is. And it’s tempting to dismiss this law as the work of ignorant yahoos. But similar laws have been pushed across the nation, not by ignorant yahoos but by big corporations.

Specifically, language virtually identical to Florida’s law is featured in a template supplied to legislators in other states by the American Legislative Exchange Council, a corporate-backed organization that has managed to keep a low profile even as it exerts vast influence (only recently, thanks to yeoman work by the Center for Media and Democracy, has a clear picture of ALEC’s activities emerged). And if there is any silver lining to Trayvon Martin’s killing, it is that it might finally place a spotlight on what ALEC is doing to our society — and our democracy. …

But where does the encouragement of vigilante (in)justice fit into this picture? In part it’s the same old story — the long-standing exploitation of public fears, especially those associated with racial tension, to promote a pro-corporate, pro-wealthy agenda. It’s neither an accident nor a surprise that the National Rifle Association and ALEC have been close allies all along.

There’s a lot more in Krugman’s piece about the corrupting influence of corporate money behind ALEC’s work.  So where does civil liability fit into this picture?  Well, forget prosecutor immunity laws.  These Stand Your Ground laws turn everyday people into prosecutor, judge, jury, and executioner, and then immunize them not just from criminal prosecution but also civil liability.  Just like dirty prosecutors in Texas are protected.  Just like the corporate members of ALEC are protected from civil liability when they commit wrongdoing, thanks to laws written and pushed by ALEC's civil justice task force, chaired by our friend Victor Schwartz, the General Counsel of the American Tort Reform Association.  Here’s Victor, below.  As they say, everything’s connected.