Unchecked fraudulent litigation drives up costs for all Americans and undermines trust in justice, new research shows.
WASHINGTON — A new report released by the American Tort Reform Association reveals an alarming prevalence of fraud plaguing the nation’s civil courts and outlines solutions to address abuse.
“Frivolous lawsuits and fraud in the courts minimizes faith in the civil justice system and harms litigants, small businesses, and everyday Americans,” said Tiger Joyce, ATRA’s president. “Lawsuit abuse leads to higher costs for everyone, while individuals with legitimate cases may see justice delayed or compensation depleted when settlement money is siphoned by unsupported mass tort claims.”
Excess litigation in the U.S. costs $367.8 billion annually and results in a “tort tax” of $1,666 per person, or $5,215 per family.
The report categorizes questionable lawsuit filings into two main buckets:
- Personal injury claims from auto accidents or falls; and,
- Mass tort litigation.
Mass Tort Litigation
The number of mass tort cases in federal courts has nearly doubled in the last 10 to 15 years, with multidistrict litigation accounting for 65-71% of all federal civil cases. The increase is sparked in part by made-for-litigation studies and in some cases, outright fabrication of evidence is alleged in MDLs. This flood of filings is further fueled by aggressive legal advertising campaigns urging individuals to “call right now” despite limited or no screening to ensure the legitimacy of claims.
Similarly, after junk science reports and legal advertisements linked prenatal Tylenol use to developmental disorders, a massive MDL formed, with the case pending in the 2nd Circuit.
A Federal Advisory Committee on Civil Rules estimated that 20-50% of claims in MDLs are ultimately “unsupportable,” meaning there is no documentation confirming the plaintiff used a certain product or developed a medical condition or other injury that is the subject of the litigation.
Regardless of whether claims have merit, defendants spend millions attempting to review cases, amid pressure to settle vast inventories of filings en masse. Sometimes, it is only during the process of distributing settlement funds that it is revealed that many of the plaintiffs do not have valid claims.
Personal Injury Claims
In addition to mass torts, personal injury lawsuits alleging vague “soft tissue” injuries — like sprains, strains, or muscle spasms — are particularly susceptible to exaggeration and outright fabrication.
ATRA’s report highlights several instances of elaborate, organized fraud schemes in states like New York, California, Florida, Pennsylvania, Louisiana, and New Jersey. Schemes involve various types of staged accidents and often include expensive and unnecessary medical treatments with inflated bills to run up insurance claims, settlement demands, and damage awards. In some instances, vulnerable individuals are recruited to participate in schemes by staging accidents and undergoing painful procedures, lured by the promise of a large payout.
Enforcement, Accountability, and Reforms
The report outlines several solutions and recommends a multi-pronged approach. In recent years, some businesses have fought fraud using civil actions under the Racketeer Influenced and Corrupt Organizations Act.
ATRA notes, however, that RICO actions, false claims actions, and other civil claims brought by businesses are a last resort and indicate a complete system failure — one in which the rules of civil procedure, attorney disciplinary system, and even law enforcement have failed.
Instead, a combination of enforcement by U.S. attorneys, disciplinary actions from judges, and strengthened civil rules could reduce the increase in fraudulent filings.
The full report, entitled “Sanctionable,” is available at ATRA.org.
About the American Tort Reform Association
Founded in 1986, ATRA is a nonpartisan, nonprofit organization and is the nation’s first organization dedicated exclusively to reforming the civil justice system through education and legislative enactment. ATRA acts as a nationwide network of state-based liability reform coalitions backed by 154,000 grassroots supporters. ATRA works to bring greater fairness, predictability and efficiency to America’s civil justice system. Those efforts have resulted in the enactment of state and federal laws that make the system fairer for everyone.
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