Tort Costs Were Record $233 Billion in 2002

Tort Costs Were Record $233 Billion in 2002

The system cost $233 billion in 2002, a $27.4 billion increase over 2001, the study noted. Those costs translate into $809 per U.S. citizen--$87 more than in 2001 and $797 more than in 1950, Tillinghast said.

Tort costs increased by a total of 30 percent in the last two years?the largest two-year increase since 1986/1987.

"It sounds trite, but the consumer ultimately pays for tort costs," says Russ Sutter, Tillinghast survey sponsor. "America is an increasingly litigious society, and we are all feeling its effects."

The largest single factor in the rise of tort costs in 2002 was asbestos claims. At $11 billion, these costs were double the 2001 level and more than one-third of the total cost increase.

Other contributing factors to the cost increases were the proliferation of class action lawsuits and large claim awards; an increase in the number and size of shareholder lawsuits against boards of directors; an increase in medical cost inflation leading to higher costs of personal injury claims; and medical malpractice lawsuits.

When viewed as a method of compensating injured parties, the U.S. tort system has become increasingly inefficient, returning less than 50 cents on the dollar to people it is designed to help and returning only 22 cents to compensate for actual economic loss, the study concluded.

Medical malpractice costs totaled nearly $25 billion in 2002, or $85 per person, compared with $5 per person in 1975. The increase in medical malpractice costs continues to outpace increases in overall U.S. tort costs, rising an average of 11.9 percent per year, versus an increase of 9.3 percent per year in all other tort costs. "Physicians are relocating or changing practices as a result of escalating liability insurance," Mr. Sutter noted.

"Manufacturers are looking at severe cost increases from asbestos claims, which could translate into more layoffs and plant closings," added Mr. Sutter. "Most pundits look at tort costs in terms of their impact on revenue and profits, but it is just as painful to patients who can't find a specialist or workers who can't find a job."

Requests for copies of the study, "U.S. Tort Costs: 2003 Update," can be made at www.tillinghast.com.