EPI Story Confirms Data Used to Support "Tort Reform" Unfounded

For Release:
May 17, 2005
Contact: Joanne Doroshow
            212/267-2801      
NEW ECONOMIC POLICY INSTITUTE STUDY CONFIRMS THAT DATA USED TO SUPPORT “TORT REFORM” FOR 20 YEARS ARE UNFOUNDED
New York, NY - The Center for Justice & Democracy applauded the Economic Policy Institute (“EPI”) for releasing today a definitive study debunking common myths about the costs of the legal system and its burden on consumers, which have been used to drive the so-called “tort reform” movement for over 20 years.
EPI’s briefing paper, “The Frivolous Case for Tort Law Change,” (http://www.epi.org/content.cfm/bp157) adds to mounting criticism of the now widely-discredited annual report by Tillinghast-Towers Perrin, an insurance industry-consulting firm,  whose figures have been used since at least 1985 by “tort reform” proponents as justification for weakening the civil justice system.
According to the EPI report:
“A careful examination of available data and economic trends reveals the following:

• Half of the “costs” that Tillinghast-Towers Perrin attributes to the tort system are not costs in any real economic sense. They are transfer payments from wrongdoers to victims…
• There is no tort liability crisis.
• The tort system is not the cause of insurance premium increases in recent years. The actual causes are the collapse of the stock market; record low long-term interest rates, which reduced investment income for insurance companies; the recession, which increased claims in some lines of insurance; and high and rising medical costs, which pushed up health insurance premiums.
• No evidence has been presented that the tort system has reduced real wages and caused job loss…
• There is no historical correlation between the inflated estimates of the costs of the tort system and corporate profits, product quality, productivity, or research and development (R&D) spending. Evidence suggests that the tort system, without the proposed restrictions, has actually been beneficial to the economy in all these areas.
• There is no basis for the claim that tort law changes now being considered will result in more jobs. Indeed, there is evidence that the significant changes in the tort system that have been proposed would slow job growth.”

For the past two years, the Center for Justice & Democracy and its project, Americans for Insurance Reform, have released critiques of the annual Tillinghast numbers.  J. Robert Hunter, Director of Insurance for the Consumer Federation of America and co-founder of Americans for Insurance Reform, said in January 2005, “Tillinghast’s numbers are wrong and are entirely inappropriate for demonstrating either total costs of the U.S. tort system, or cost trends over time. Policymakers and opinion leaders should consider these figures highly unreliable.”
For further information, see the EPI report at http://www.epi.org/content.cfm/bp157 or the Center for Justice & Democracy at http://centerjd.org.