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The Economics of the Tort Liability Crisis
| Article
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15663 |
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Section : |
MODERN THOUGHT
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| Issue
Date : |
2 / 1989 |
6,201 Words |
| Author
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Thomas S. Ulen
Thomas S. Ulen is an associate professor in the Department of
Economics and the Institute of Government and Public Affairs
at the University of Illinois, Champaign-Urbana. |
Many people believe that there is a crisis afflicting the tort liability system, that part of the legal system that determines who will bear the cost of losses arising from accidents. As evidence, these critics point to some dramatic anomalies that have arisen in recent tort litigation. For example, the largest and most profitable asbestos manufacturing company in the United States, the Johns-Manville Corporation, was forced to seek the protection of bankruptcy law when the company's anticipated liability for harm attributable to asbestos exposure over the last fifty years exceeded $2 billion, which was then the value of all the company's assets. In another case, a teenager, who was sneaking across a school's roof late at night in order to burglarize the school, fell through a skylight and was paralyzed. He threatened to sue the school district. The district's insurance company, fearing an adverse judgment if the suit ever got to trial, settled with the teenager for $260,000 plus $1,500 per month for the reminder of the boy's life. The G.D. Searle Company, alarmed by the bankruptcy of the A.H. Robins Company (a bankruptcy attributable to adverse judgments against that company for harm caused by Robins' Dalkon Shield, an intrauterine birth control device), decided to halt production of its own intrauterine device, even though Planned Parenthood and other experts believed the Searle product to be the safest IUD on the market.
Vaccines for such devastating childhood diseases as polio and whooping cough are in short supply because manufacturers, fearful of adverse tort judgements, have quit producing them. Some doctors have become so fearful of medical malpractice suits that they have changed their specialties, moving from highrisk areas such as obstetrics and gynecology to lower-risk areas such as internal medicine. In
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