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'Liability Suits--the Money Tree'

December 07, 1985

It is indeed unfortunate that Ernest Conine, in his article (Editorial Pages, Nov. 18), "Liability Suits--the Money Tree," fully embraces without critical analysis the overstated claims of the medical, business and insurance establishments.

What are Conine's solutions? Not to reduce the incidence of medical malpractice through encouraging better medical care; or to assure safer products through the implementation of better design and manufacturing processes; or to reduce the cost of insurance through the success of both the aforesaid efforts; but to take the easy way out--to reduce pay-out by limiting the opportunity of those injured to recover for their losses. In short, to increase the profitability of society's wrongdoers at the expense of the injured victim.

For more than a century, we found it necessary to protect our fledgling industries from civil liability for their errors and omissions; from the financial responsibility for the injuries caused by their failure to exercise acceptable care in the marketing and manufacture of commercial and consumer products. Within the past three decades, state courts across the country have removed many of the legal protections that some of these great citadels of power so long enjoyed.

The courts came to recognize that a mature and responsible society should not allow the economic burden occasioned by personal injury to fall upon the victim who is least able to afford it where the loss could be effectively spread among those financially sound parties who were, in fact, responsible for causing the injury.

Urging pervasive changes in our system of compensating injured victims by citing three unusual results, which admittedly would raise anyone's eyebrows, does nothing to advance serious debate. It is a fact that jury awards are becoming larger and even perhaps more frequent. This is inevitable, given the increases in the cost of living, especially the very substantial increases in the cost of health care.

The answer lies not in curtailing the rights of the victims nor in ridiculing attorneys by citing patently false statistics on how they are paid for their services. The answer lies in creating and maintaining those secure and stable means of spreading the cost of compensating the unfortunate victims of our increasingly complex society, something that the private insurance markets have found it difficult to do in recent years.

As a cursory reading of the pages of your own newspaper reveals--from the letters to the editors as well as the quotable words of those holding down some of the more exalted positions of economic power in our society, like the chairman of Lloyd's of London--insurance has become unaffordable and in some cases unavailable. This has much less to do with big judgments than it does with how the insurance business has been run over the past 10 years.

Rather than matching premium to risk, the insurance industry's money managers, seeking to generate quick profits, threw out the old rules governing risk underwriting, and devoted all of their energy to accumulating as many dollars in the high-yield money market as they could. They did this without regard to the risks they were undertaking.

When the money market fell, the insurance industry found itself the victim of its own unrealistic greed-motivated underwriting practices. The only instant solution was to increase insurance rates to the monstrous unaffordable levels we are now experiencing. Unwilling to accept responsibility for increased rates, they point an accusing finger at our system of justice and urge "reforms" that would deprive the innocent victim of compensation and restore their own long-term high profits.


Los Angeles

Steinberg is president of the California Trial Lawyers Assn.

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