The Jury is still Out

by Robert J. Bliwise
Is modern society too litigious? Or is compensation awarded judiciously? A legal expert and an economist reach different verdicts.
When a customer sued McDonald's over spilled coffee and received a jury award of $2.9 million, it was--as Duke economist Kip Viscusi rather dryly puts it--"the kind of thing that captures public attention." The woman had sued for damages after she accidentally poured hot coffee on her lap. On appeal, a judge reduced the award to $640,000. To Viscusi, the idea that judges are "going to second-guess everything juries do" reflects a legal system in disarray.

But that's not the verdict reached by every scholar of the jury system. Neil Vidmar, a Duke law professor, points out that McDonald's coffee historically had been sold much hotter than coffee served at most fast-food outlets, and that the corporation had received hundreds of claims of individuals being burned. Even the original damages award, he says, "is like one day's profit for McDonald's--probably less than that--for this behavior. When you put it into that context, and when you consider that the purpose of our tort law is to punish, it's not such an outrageous amount of money."

Trained as a social psychologist, Vidmar is the author of Medical Malpractice and the American Jury, published last year by the University of Michigan Press. Vidmar makes the case that the verdict statistics fueling the zeal for tort reform are not especially significant. Between 8 and 10 percent of the cases filed actually go to trial; the remainder are either settled, dropped by the plaintiff, or disposed of through judicial or administrative action. The headline-grabbing large awards aren't representative of actual damages awards, he argues. And plaintiffs are most often the losers in liability trials.

Medical malpractice, the focus of Vidmar's research, places specific demands on juries. Under the law, the jury is not allowed to second-guess the doctor's decision after the fact by applying its own judgment of "reasonableness," as it would in other kinds of negligence cases. And jurors learn about the standard of practice through the testimony of medical experts. At trial, plaintiff and defense experts typically differ in interpreting standards of care; their opinions may involve complex medical technicalities. They may also address any number of forms of negligence--failure to diagnose disease or misdiagnosis, failure to give timely treatment, improper medication, failure to obtain informed consent, failure to chart the risks of not undergoing treatment.

Jury critics assert that juries are led astray by "junk science" or "hired gun" experts, or at the least are confused by esoteric scientific and medical testimony. The criticism is exaggerated, Vidmar says. Often, cases boil down to "a judgment of credibility, and that's what we have always trusted the jury to decide." His interviews with North Carolina malpractice jurors, he says, "showed that most jurors had a clear understanding of the adversary process and evaluated witnesses accordingly." They also developed a good sense of the credibility of adversary witnesses--that is, after the testifying physicians were questioned about how many times they had testified in other cases, for whom, and for how much per hour.

There is "nothing so extraordinary in many of the cases that most or all of a group of twelve laypersons could not understand them," he says. "In some, the issue of negligence, or its absence, is pretty straightforward. In others, the primary issue revolves around the credibility of patients versus doctors about what occurred and when. In still others, good lawyers and experts appear capable of educating laypersons about complex matters."

When doctors acting as neutral evaluators look at liability cases, their verdicts typically conform to jury verdicts. That's one finding that leads Vidmar to contest the popularly accepted idea that jurors' sympathies lie with injured plaintiffs, or that jurors are eager to soak defendants with "deep pockets." He cites evidence that juries find for plaintiffs in just one-third or less of trial cases. And the path to victory is not through pity in the jury box: Vidmar says that no correlation exists between the severity of the injury and the probability of the plaintiff winning on the issue of liability.

The other possibility, he says, may be more likely--that juries are biased against plaintiffs. Many jurors believe that doctors may make honest mistakes for which they should not be held at fault, and that awards as reported in the media are much too high. During pretrial questioning for jury selection in malpractice trials, Vidmar recorded comments like "too many people sue their doctors" or "it is just going to raise the health insurance rates for the rest of us." Some potential jurors were quick to pick on greedy lawyers who encourage undeserving patients to sue.

Will defendants, and their insurance companies, settle those greedy and undeserved claims just for the sake of keeping out of the courtroom? It's true, Vidmar says, that liability insurers are highly sensitive to "transaction costs"--the expense involved in defending lawsuits. And early settlement may be less expensive than going to trial and running the risk of an excessive award. Still, Vidmar rejects the theory that insurers settle frivolous suits to avoid the expense of litigation. As "repeat players" in litigation, insurers must uphold "a reputation of toughness and principle," he says. Otherwise, they'd open themselves to being blackmailed by "unscrupulous plaintiffs with questionable negligence claims," compounding their economic losses.

But the litigation process is expensive for would-be plaintiffs; that expense and an uncertain outcome can be powerfully discouraging. Likewise the time-consuming "discovery," or information-seeking, process. For his book, Vidmar looked at 895 medical malpractice cases filed in North Carolina over three years, beginning in July 1984. The average time elapsed from the filing of the lawsuit to trial was twenty-six months; a few cases exceeded five years. Beyond the basic costs of legal talent, experts have to be found and hired--at rates of $300 to $500 per hour. And jury generosity is balanced by lawyerly limits: Under contingency fee arrangements, plaintiff lawyers receive 30 to 40 percent of the award.

If the jury does decide for liability, it sets a damages award--an award subject to review by the judge--against the defendant. Juries will award "economic" damages for costs, including lost income as well as medical treatment resulting from an injury; "noneconomic" damages, often given the "pain and suffering" label; and "punitive" damages, meant to punish egregious or malicious behavior. Responding to the view that damages awards are inflated, Vidmar and a couple of associates put to the test two hypotheses: that experienced legal professionals would assign awards that are lower than those given by juries; and that the awards suggested by legal professionals would be less variable than jury awards.

The experiment in decision making used the case of a woman who underwent elective surgery to have a bunion removed from her foot. During the surgery, someone in the operating room accidentally placed an extremely hot, just-sterilized surgical instrument on the patient's knee. The woman was left with severe burns and a lasting scar.

For his juror sample, Vidmar recruited persons awaiting jury duty in Durham and Greensboro; the legal professionals came from a roster of lawyers who work with the Duke law school's Private Adjudication Center. The jurors and arbitrators received the identical case summary and got the task of rendering a noneconomic-damages award. For the lawyers acting as arbitrators, the average award was $50,433; for the lay jurors, the average was very close, $51,852. Jurors were more variable in their awards than the lawyers: Two-thirds of the lawyers' awards fell between $33,703 and $67,730, while two-thirds of jurors' awards fell between the wider range of $22,871 and $80,981.

"The picture is not so good even for the experienced lawyers," Vidmar observes. "The awarding of noneconomic damages is a pretty subjective process even for trained, experienced legal professionals."

Among the 895 North Carolina cases Vidmar examined, just eighty-four reached the stage of trial by jury; plaintiffs prevailed on the issue of liability in seventeen of the cases. There were three awards of at least $1 million, along with one for $750,000 and two for $300,000. The remainder of the trials, though, resulted in much more modest sums, down to $4,000. "The most striking impression from these verdict statistics is that plaintiffs did not do well with juries," writes Vidmar. "They won less than one case in five. When they did receive an award, the amount was usually low."

Using the North Carolina data, Vidmar also concludes that most claims grow from serious injuries. Minor or emotional injuries accounted for 5 percent of claims; most claims were based on temporary disability, permanent partial disability, permanent total disability, or that most disabling of medical outcomes, death. Out-of-court settlements occurred with greater frequency in cases involving the most serious injuries, including partial or total disabilities; so did jury trials. The apparent message: The big-deal undertaking of a court case can't be rationalized apart from a big-deal grievance.

There may be a special reason for the power of that message in instances of presumed medical malpractice: Plaintiffs face a problem in finding medical experts willing to testify against fellow physicians. In several claim files, Vidmar came across notations that other physicians "despised" a doctor charged with malpractice; in one instance, he found a notation that most believed the doctor-defendant "was probably guilty." With those cases, the plaintiff lawyers "never found local physicians who were willing to testify," he writes. "These pressures extend outside the local community, though perhaps to a lesser degree; and physicians and other groups appear quick to label plaintiff experts as 'hired guns.' "

When Vidmar considers the "jury lottery," he sees a system that's fundamentally rational, and certainly not one that induces windfall-seekers to come and play for profit. Most patients who are injured don't find the role of litigant particularly attractive, he says. "They've never been in court before, and they have to expose themselves to examinations by doctors and cross-examinations in the courtroom. You don't want to go through this if you don't have to."

Economist Kip Viscusi isn't persuaded by Vidmar's use of medical-malpractice statistics to demolish the "myth" of a litigation crisis. An expert on regulation, he is the author of Reforming Products Liability (Harvard University Press), along with other books and dozens of regulation-oriented articles. Viscusi agrees with Vidmar to a point: His own research shows that "juries are not crazy"; awards for damages do correlate with the dimensions of a plaintiff's financial loss and the character of the injury.

But he sees a crucial problem with insufficient guidelines in awarding damages, a problem that leads to arbitrary decision making. "Juries are not as reckless as people suggest. They make occasional mistakes, but that's because they don't know what they're doing." What they don't know, in particular, is whether they're obliged to deter bad behavior or somehow to make the person whole again--quite a problem in the case of the McDonald's coffee spill, and an even bigger problem if the victim is dead, Viscusi observes.

"Let's say Christopher Reeve was injured because of a defective saddle. So he has a legitimate lawsuit. What pain and suffering amount should we throw at him? Is it a million? Is it fifty thousand? How should we even begin thinking about this number? Or take a twelve-year-old who was burned by a kerosene lamp that exploded. She was basically burned to a crisp from head to toe, and she's had to undergo repeated plastic surgeries so she can function. How much money does she get? I'm not sure that a jury can think that way.

"Right now, juries have no guides whatsoever as to what they should be doing. How should they even think about it? That's the real problem. They have vague guides with respect to pain and suffering, even vaguer guides with respect to how to set punitive damage awards, and we're turning these juries loose. It's no wonder they come up with periodic awards that look outlandish."

Viscusi says the government's regulatory apparatus--including such agencies as the Environmental Protection Agency, the Occupational Safety and Health Administration, and the Consumer Product Safety Commission --hasn't had the expected effect of quashing litigation. In theory, government regulation should put a damper on lawsuits: "Once we meet the requirements of regulations, given the fact that these regulations are set more stringent than makes sense economically, you should certainly not be subject to additional liability for not taking a specific degree of care. As it turns out, there is no regulatory compliance exemption in the court. The result is that meeting the regulatory standards doesn't help you. But if you fail to meet the regulatory standards, that's a strike against you."

"Let's say you had a lawnmower that met the Consumer Product Safety Commission lawnmower standards. That's nice, but that doesn't prevent a suit from someone who was hit in the eye by a rock that was ejected by a lawnmower," Viscusi says. In that case, involving an unfortunate visitor to Hawaii, the plaintiff won. "The fact that Toro had met the safety commission's safety standards did not get them off the hook. The typical argument is, 'Well, the regulations are a floor, they're not a ceiling on your responsibility'--that would be the plaintiff's argument."

Even with such incentives generated by court awards, companies aren't necessarily moved to remove product problems. In Reforming Products Liability, Viscusi points out that the Ford Motor Company chose to market the Ford Pinto with a gas tank that posed a high risk of explosion when hit from the rear. "Ford calculated the prospective liability burden, compared this cost with that of altering the design to reduce the risk of injury, and concluded that the design change would be more expensive than the court awards."

Federal products-liability lawsuits involving personal injury increased sixfold from 1975 to 1989, according to Viscusi's statistics. Today, the litigation crisis is over only "in the sense that we've stabilized, but we've stabilized at a high level of litigation and a high level of insurance costs," he says. The biggest action in the civil-litigation arena is now with class-action lawsuits that cut across an entire product line--lawsuits targeting substances like Agent Orange and asbestos with medical effects that are difficult to document. The breast implant litigation is "the classic case" of our litigious time, Viscusi says. An industry consortium including Dow Chemical, Bristol-Meyers, and Squib has set up a $4-billion fund to pay off claims; even that sum may not be enough. According to Viscusi, some recent medical studies suggest no link between the implants and disease. "Still you have a large population with a certain medical device implanted in them, and simply through random events bad things are going to happen to people--cancer and other adverse health outcomes." Unless experts can show a differential disease incidence between the breast-implant group and the general population, there's no rational basis for liability awards; still, juries may find themselves emotionally drawn to side with the victim.

While the number of liability cases in federal court has dipped, that's because companies--particularly companies facing class-action activity--are settling out of court, says Viscusi. "So if you look at the trends for a particular industry, like the pharmaceutical industry, which is a big industry for lawsuits, their federal court case load has dropped dramatically. But the reason is that they're paying off now."

Consumers, especially, are paying for liability activity, he writes in his book. "Rising liability costs have influenced product innovation and product introduction decisions, particularly in markets in which the liability exposure is substantial. And the products-liability price tag, which is passed on to the consumer, sometimes reaches staggering levels."

Riders on the Philadelphia mass transit system pay seventeen cents of every fare dollar to cover the insurance costs for injuries to passengers; from 15 to 25 percent of the purchase of ladders reflect legal and liability costs. American firms produced more than 17,000 private planes in 1979; production decreased to 1,085 by 1987, a consequence of a liability cost on every plane produced of about $100,000. As described by Viscusi, the plane-production story is especially ironic: Aircraft manufacturers are sued in 90 percent of crashes, even though pilot error is the cause 85 percent of the time. Because manufacturers are being deterred from production, modern planes are not coming onto the market, which means that an older, and presumably more dangerous, fleet is left in the air. Only in very recent years has the industry revived a bit, Viscusi says, because it has "hired some tough-as-nails lawyers to fight these lawsuits."

To the law school's Neil Vidmar, the movement to reform the liability system feeds into a political agenda. "The people who have seized upon this tort-reform movement have used anecdotes as propaganda; they have picked on the jury system because it's vulnerable. It can't talk back. My argument has been that jurors should form together in a class action and sue for slander and libel because they have been treated unfairly. They're accused of these egregious behaviors all the time, and the data don't support it."

But economist Kip Viscusi sees lawsuit enthusiasm as more pernicious and more persistent. Viscusi is involved as a consultant with a case involving "an ibuprophen product," as he puts it. A pregnant woman took the product, her baby had problems, and now she's suing. If individuals can pursue damages against the manufacturers of "over-the counter basic drugs," he says, then there's "essentially no limit" to the litigious spirit.

Embracing technology as we do, we may be uncomfortable with the idea of random forces at work. Viscusi notes that we have a hard time absorbing the fact that "not all babies come out looking great." We will always look to blame; we will always look to pin that blame on something beyond ourselves, and beyond chance. And if redress seems satisfying and lucrative, maybe we'll sue.

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