THE TORT TAX

"Celebrity rules. Harvard's School of Public Health announced it would bestow its highest honor, the Julius Richmond Award, upon Erin Brockovich. Ms. Brockovich, you'll recall, was the "distinguished heroine" of a film by the same name. As a paralegal in Los Angeles, Brockovich, according to Hollywood, saved the day by suing a corporation, claiming it had polluted local water in Hinkley, California, which was thus responsible for cancer cases in the area.

Colleague Michael Fumento, a senior fellow at the Hudson Institute, begs to differ. Fumento notes that according to the California Cancer Registry, Hinkley has cancer rates no higher than found in any other counties in that area. Indeed, according to an EPA toxicology report, "No data were located in the available literature that suggested that chromium-6 is carcinogenic by the oral route of exposure." Further, according to the Journal of Toxicology and Environmental Health, "Exposure to chromium-6 in tap water via all plausible routes of exposure [poses no] acute or chronic health hazard to humans."

Mr. Fumento concludes, "That mere film-goers would be confused about Brockovich is understandable, but you might think the Harvard School of Public Health would do a bit more research before giving awards than merely watching a movie."

The real beneficiaries of personal-injury and class-action lawsuits are not those who have been harmed.

Of course, the real beneficiaries of these personal-injury and class-action lawsuits are not those who, ostensibly, have been harmed, but the lawyers bringing suits.

For her part, Brockovich collected a $2-million bonus from the Hinkley case and got a movie deal to boot. Having figured out how to win the legal lotto, she and her firm are now suing several oil companies and the City of Beverly Hills, claiming some public high-school students in attendance there between 1975 and 1997 have cancer from oil-well vapors. "[Their cancer rates] are 20 times higher than the national average," claims Brockovich. "[There is] an oil-production facility underneath the school. It doesn't take a rocket scientist to figure out that the two fit together."

As in the Hinkley case, however, there is little evidence to support Brockovich's claim in Beverly Hills. Under court order, her firm admits having no evidence of increased cancer rates among former students, and epidemiologists at the University of Southern California confirmed the same. But in such celebrated cases, where the media generates hypochondriac hysterics, who pays attention to the facts?

Most of the big class-action awards have all been driven by hysteria.

Sadly, the cases that depend more on hysteria than facts yield big awards, and this scenario is repeated daily. Most of the big class-action awards, like those on asbestos and breast implants, have all been driven by hysteria. So have personal injury cases against manufacturers and drug companies. This is not to diminish the fact that, in some cases, corporations should be held liable for gross negligence that results in real pain and suffering, or even death. But these cases are the exception.

For their part, personal-injury trial lawyers claim to be doing a great humanitarian service for the nation, insisting their actions prevent the "powerful from abusing the people." (See Edwards, John; Hoodwinking Juries by Channeling the Thoughts of the Unborn.) That is a pernicious lie—one that causes a lot of wealth to change hands.

It is clear who benefits from the "tort tax," but who pays it? You do, of course, even when compensatory and punitive damages comport with the degree of negligence.

Direct costs from such awards amount to more than $200 billion a year now and are growing at a much faster annual pace than the economy. These awards, combined with the enormous costs of insuring against such suits and awards, are paid by consumers through increased product and service costs. Put another way, the 2005 Current Population Survey lists median household income at just under $50,000; direct and indirect tort tax are estimated to cost each household more than $4,000 annually.

Clearly, lawyers are the big winners, and consumers are the big losers.

The tort tax goes well beyond the increased costs of goods and services.

There's more. The tort tax you're paying goes well beyond the increased costs of goods and services. A growing share of your state and federal taxes is also usurped to compensate lawyers. For example, when the ACLU sues local, state and federal entities and prevails, those entities pay all the ACLU's fees. In other words, the ACLU is largely a taxpayer-funded organization.

Worse, consider this case, paid for in its entirety by taxpayers.

Daniel LaPlante was convicted of a triple murder. He broke into a home in Townsend, Massachusetts, raped and executed a pregnant mother, then drowned her seven-year-old daughter and five-year-old son in bathrooms adjoining their bedrooms.

According to Superior Court judge Robert Barton, who presided over LaPlante's case: "Of the 150 murder cases I heard, his is one of only five that I would personally have no problem pulling the switch on the electric chair myself. He was incorrigible, he would never be rehabbed, and we'd be wasting our money feeding and clothing him."

A few years after his conviction, LaPlante was concerned for his safety in the prison yard (even in the pen, they don't tolerate sociopaths like him) and was placed under lockdown (at enormous expense). Soon thereafter, he complained that the pornography he received by mail was being withheld. LaPlante's case was argued pro bono by the elite Boston law firm Palmer & Dodge. (Law firms, it should be noted, are expected to complete a certain amount of pro bono work to remain in good standing with the bar—though this hardly excuses the sickeningly poor judgment of this particular firm.) Palmer & Dodge thus argued before U.S. District Court judge Nancy Gertner that LaPlante's civil rights were being violated.

Attorney General Thomas Reilly, who originally prosecuted LaPlante, said, "To be worried about his civil rights? The victims had no civil rights. He executed them." But Gertner agreed and ordered that LaPlante should receive his pornography.

Palmer & Dodge then decided that they had too much time in the case to do it for free, so they submitted a bill for $125,000. Judge Gertner approved $99,981. In summary, according to the Boston Globe's Brian McGrory, "LaPlante gets top-shelf legal representation [and his pornography]. Palmer & Dodge gets another hundred grand. And as too often happens, taxpayers get nothing more than the bill."

So what about tort reform?

Conservative presidents have campaigned on promises of "tort reform" for generations but have had little success delivering on those promises. Why? Well, because Congress is controlled by lawyers. That fact alone goes a long way toward explaining our national government's bloated bureaucracy and legalistic paralysis. It also explains why President Bush's tort-reform measures have fallen flat.

From: The Fed.Pat.