Fear and the Laws of Liability

 article-2207737-152e27e1000005dc-25_468x314American exceptionalism, that disease characterized by a smug assumption that all things American are superior, has kept the public blind to advances in other cultures.  Universal healthcare, available throughout the modern world except here, is the best example.  But we also know that internet speeds throughout Asia are typically faster than ours.  Our legal system does not always stand up to scrutiny either.  NPR yesterday carried a show “Comparing family life in New Zealand and the U.S.“, including a discussion between NPR’s Lulu Garcia Navarro and the writer Dan Kois.  Here’s the part I found most interesting:


GARCIA-NAVARRO: That sounds like a whole lot of fun. What could be the problem?

KOIS: Well, so, you know, here in our neighborhood, the kids just really run around in packs. It’s been quite astonishing to see, in a way that reminds me of my own childhood but doesn’t remind me of my kid’s childhood in Arlington, Va., where they’ve been growing up. You know, 9-year-olds walk together into town to buy ice cream together. And everyone uses the trampoline, this neighborhood tramp, as it’s known. You know, some family got a cheap trampoline from a relative. And they installed it in someone else’s front yard for the express purpose of having neighborhood kids jump on it whenever they want.

GARCIA-NAVARRO: What about liability laws? This is like – I’m just hyperventilating being in America thinking about this.

KOIS: Right? Well – so that’s what happens when we tell Americans this story. They all – they ask about liability. Right? That’s the immediate American response. Surely some kid would break his arm on the neighborhood tramp, and then his parents would sue the parents who have it in their yard. And that would be it. That’d be the end of it. But in New Zealand, personal injury lawsuits are essentially nonexistent thanks to this government-run accident compensation board, which pays for any injuries stemming from any kind of accident, no matter whose fault it is….”

So here’s what I find interesting.  The rise of draconian and fear inducing liability laws in the US is relatively recent –  it occurred largely during my lifetime.  When I was growing up in the 1950s, there were no helicopter parents.  Kids hung around together, spun on the go-rounds in the park, or hung from the jungle gyms.  We played baseball in the street, and waited for a good snow for the snow ball fights.  Or we sledded down a local hill – Starr Street – no parent in attendance, no Town “road closed” signs.  We had “kid” chemistry sets with real chemicals and what kid didn’t know how to make a tinfoil rocket out of match heads?

The kaybosch on all that fun (more than fun really – let’s call it the real world experience from which we learn how to climb a tree, or ride a horse, or fix a car)  was caused in significant part by the rise of the liability awards, liability insurance, and the influence of the insurers.  Unlike New Zealand, where accident victims are compensated from a government-run fund, in the US, an accident victim must find someone to sue for having caused the accident.

A little legal history.  Until the mid-20th Century, personal injury lawsuits were relatively rare and awards were typically small.  To win required proof of fault – you had to prove that the defendant intended to cause the injury, or should have known he might cause the injury.  Under that standard, many people injured in accidents could not recover – quite simply most accidents were not foreseen or caused with intent.  That standard suited the corporations most often involved in the serious industrial accidents.   Workplace accidents were ultimately addressed by workers compensation laws – not unlike the New Zealand system – to avoid the litigation and so that anyone injured was compensated.

However, outside of the workplace, accidents, as always, continued to happen just as the availability of, and cost of, medical care, was growing exponentially. Injured plaintiffs began to sue parties who were less clearly at fault.  They hired lawyers who earned a third of any award they might get and who were particularly  creative in finding liability, in pushing the liability envelope.  Over time, the courts and state legislatures, faced with injured and potentially destitute plaintiffs, decreased the “fault” standards, assisting the search for a party with “deep pockets” – or at least with liability insurance – who could be made to pay up.  This trend peaked with the flamboyant plaintiffs’ lawyers, the “kings of tort” who won some clients astronomical verdicts.  See this link to the Wikipedia note on the famed, and feared, tort lawyer Melvin Belli.

That system of relying on law suits to compensate the injured is what we have in the US today, haphazardly compensating some injured parties.  But it has notable flaws.   First, many  injured parties fall through the cracks – no one is found liable, or there isn’t any insurance.  And actual awards can vary to a staggering degree depending on the skill of the lawyers, the jurisdiction, the sympathy of the jury, and a thousand other factors.  Secondly, litigation in the court system is notoriously burdensome, both on the state and on the litigants.  As noted, a third of any award is taken off the top just to compensate the plaintiff’s lawyer, a major flaw if the concern is to assist the injured party.   Law suits are really best used only as a last resort.  Claims for auto accidents, for example, are now often handled under state “no fault” statutes.  And finally, the changes in the law that removed proof of meaningful fault has made all of us potential defendants.

Our current remedy is to purchase liability insurance.  We cross our fingers.  We avoid anything that seems dangerous.  We hope that nothing bad happens – that the mailman doesn’t slip on the walk and that the kid doesn’t injure someone playing baseball.  And we hope that our $300,000 policy will be enough even though our insurance agent told us we need a million dollar policy, or five million.  In short, we live in fear lest, god forbid, someone is hurt and we are sued.

Which is an overlong way of saying that New Zealand set the balance right in creating a compensation fund, and, more importantly in providing universal health care that can be relied on for any person injured.

So, are you tired of living in fear of lawsuits?  We could get smart, look to New Zealand, and rewrite the laws for accident compensation, health care, and liability.  My guess is that the insurers and the litigation lawyers would cry foul.



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