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It is not surprising that a study reporting a sharp rise in the cost of the tort system would be embraced by the American Tort Reform Association � and just as quickly attacked by trial lawyers. But a close look at the study, which claims to be “unbiased,” demonstrates how difficult it is both to research this complex and sprawling subject and to pass muster with academics who have long mined the same terrain. Although researchers question the study’s methodology, many also praise the effort to take on this politically charged domain with statistics rather than, as one professor puts it, “argument through anecdote.” The study, conducted annually since 1985 by the actuarial firm Tillinghast-Towers Perrin, found that the U.S. tort system cost $233 billion last year, an increase of 13.3 percent. This represented 2.23 percent of the country’s gross domestic product (GDP), the highest rate since 1990. Because it is apparently the only study that attempts to quantify tort costs nationwide, the Tillinghast report is widely cited in the media and in Congress. “We cite them all the time,” says Sherman Joyce, president of the American Tort Reform Association. He deems Tillinghast “the most reliable arbiters of our legal system.” Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform, says she considers Tillinghast’s data the best available. “It enables the American consumer to understand . . . that you’re paying $809 per person [and] that it’s the equivalent of a 5 percent tax on wages,” she says. “It’s the same old song,” counters Carlton Carl, spokesman for the Association of Trial Lawyers of America, “bought and paid for by the insurance industry.” The study used to be sponsored by various groups, including the insurance industry, acknowledges Russ Sutter, a Tillinghast actuary and the study’s principal author. Though the company’s primary business remains consulting for the insurance industry, it no longer accepts outside funding for the study. Tillinghast’s ties to the insurance industry should not disqualify its research, say several prominent academics, but they have other criticisms. Wellesley College political science professor Thomas Burke objects to the report’s failure to reveal many of its sources. That, he says, “is why I never cite their data.” Deborah Hensler, a Stanford Law School professor, says she has been “impressed” by the company’s efforts to get the data right. But she complains about the study’s methodology and notes “red flags” in its language. Using the word “tax,” for instance, seems designed for lobbyists. “We’re just trying to put it into context for the reader,” Sutter responds, “and we feel that translating it into a cost per person does that.” As for methodology and sources, he says the study discusses much of it. About 70 percent of the data can be obtained from A. M. Best Company, Inc. The rest is proprietary. Herbert Kritzer, a University of Wisconsin political science professor, says many of the largest payments are for plaintiffs’ medical care. “The cost of the tort system is going to increase substantially more than inflation if it’s being driven by health costs,” he says. J. Robert Hunter, a consulting actuary and longtime consumer advocate, attributes cost hikes to the cyclical nature of the insurance business. “It has very little to do with the legal system,” he says. Hunter points to the industry’s reserve funds as evidence. For years, Best said asbestos reserves were too low. In 2002, as the study reports, the industry suddenly added $11 billion to them, citing asbestos claims. That $11 billion is 40 percent of the systemwide rise the study reports.

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