Litigation Industry Looks to Recapture the Great Lakes State
Twenty-five years ago, Michigan’s lawmakers looked at a state in legal crisis. Plaintiffs’ attorneys—whom the Manhattan Institute calls Trial Lawyers, Inc.—had made the state one of its favorite jurisdictions in the nation. To restore some sanity to the civil justice system, Michigan passed a round of legal-reform legislation in 1986, a second round in 1993 (which strengthened medical-malpractice law), and a third, more comprehensive, round in 1995. As we shall see, these steps have been highly successful at curbing lawsuit abuse. Little wonder, then, that Trial Lawyers, Inc. is now committing its powerful lobbying and public-relations resources to rolling back laws that have put a dent in the litigation industry’s bottom line.
A State in Legal Crisis
By the mid-1980s, trial lawyers had begun to exert such control over Michigan’s legal system that their industry was having a deleterious effect on the finances of the state government. The state faced 1,400 lawsuits claiming $2.4 billion, an amount equivalent to half of the general budget. In 1984, payouts by the state transportation department, to give just one example, equaled 30 percent of its outlays on road building and improvement. Municipalities were also being hammered: a village with just over 1,500 residents was stuck with $480,000 of a $500,000 jury verdict in a case in which a driver struck a pedestrian. The jury found that the village was 10 percent at fault for failing to mark the side of the road adequately, but because the driver had only $20,000 in insurance, the village had to pay most of the damages. A 1985 report issued by the state senate declared: “Liability has reached epidemic proportions and presents an emergency situation to the Legislature.”
Michigan legislators’ concerns went beyond the threat to the public fisc. They were also worried about medical-malpractice liability, which was curtailing access to care. Medical-malpractice claims in the state had spiraled upward from ten per 100 doctors in 1979 to 25 per 100 by 1985—an increase of 150 percent in just six years. From 1970 to 1984, the large Detroit metro-area counties of Wayne, Oakland, and Macomb had seen their malpractice filings jump an astounding 1,100 percent. Unsurprisingly, medical-malpractice insurance costs had also doubled in the period 1980–84 and grown even faster in the riskiest specialties. Michigan doctors took notice: 42 percent of Michigan family physicians reported that they had ceased delivering babies or reduced the number they delivered, and an even higher percentage of such doctors reported that they had cut back on surgery and treating patients likely to require intensive care.