I read with great interest John F. Lawrence's column on the liability system. Lawrence's column betrays some misconceptions about personal injury lawsuits.
He writes that "the courts established the concept that producers of products and dispensers of services will bear the cost of accidents related to the use of these products and services." This is not the law in any of the 50 states. To recover a judgment against a product producer, the accident victim must prove that the product is defective. In lawsuits against service dispensers, the victim must prove negligence on the part of the dispenser.
Lawrence also writes that the cost of administering the liability lawsuit system (40% of premiums paid) exceeds the cost of administering group health insurance (10%). I agree that the administrative cost of the liability system is too high. However, comparing these two insurance systems is misleading.
Group health insurance is a no-fault insurance policy that pays the insured without regard to the cause of the claim. In a liability lawsuit, the accident victim must convince the insurer, or a court, that there is both a legal and factual basis to pay the claim. The necessity to determine fault accounts, in part, for the increased administrative cost of the liability system.