The Facts about Personal Injury Settlements

Due to the ever increasing number of frivolous lawsuits, the last 20 years have seen a spike in discussions about the need for tort reform in the United States. Tort reform refers to the suggested changes in our civil justice system, so that supposed victims do not find it too easy to bring tort litigation against their targets. Tort reform also includes reducing the amount of damages that victims can receive.

Many who insist on tort reform point to the ludicrous amounts of money that litigants can receive in settlements or in court verdicts. These proponents maintain that these rewards represent a danger not just to the US economy, but also to the legal system itself.

When you listen to these tort reform advocates, it may seem as if a large settlement or damage is an everyday occurrence. That perception is bolstered by lurid news reports that emphasize the seemingly disproportionate size of settlements and verdicts. The impression these news reports give is that in the current state of the US civil justice system, apparently anyone can sue people or companies with deep pockets and earn millions in the end. The accusations these supposed victims put forth don’t even have to be reasonable. Lawsuits can be filed for even the most frivolous of reasons.

Of course, the actual facts about personal injury settlements are far less melodramatic than the news reports and media coverage suggest. Thousands of such lawsuits are currently being litigated in the courts right at this very moment, but you won’t hear about most of them.

Myths about Personal Injury Cases

That’s because for the vast majority of these civil lawsuits, the settlements and verdicts result in far more reasonable amounts. Lets take car accident cases for example. The lawyers can go for hundreds of thousands of dollars, and often they settle for just tens of thousands of dollars. The money that the victims receive is often used to cover medical costs that insurance companies don’t cover. The settlements and verdicts aren’t about enabling the filers of lawsuits to hit the jackpot and become rich.

These amounts don’t generate as much excitement and outrage, so they’re not extensively covered. It is true that in rare cases the verdicts can reach staggering amounts. You may encounter news reports about large companies that are ordered by the courts to pay hundreds of millions or even billions of dollars in damages.

Such reports can be featured in numerous newspapers and media websites in the US. The headlines are guaranteed to attract attention and website clicks. These judgments are sensationalized for the simple reason that they’re rare. What doesn’t really get reported in the headlines is that often these huge sums can be vastly reduced on appeal. The money may also be divided among thousands of litigants who have joined together in a class action suit, so that each one may only receive a few thousand dollars as their share of the settlements.

News reports also don’t often emphasize the fact that if you file a personal injury lawsuit, you most likely won’t get anything at all if the reason is frivolous or without merit. In fact, you may even have trouble finding a lawyer to represent you. In many of these cases the law firm gets a percentage of the damages or settlement. No lawyer will waste their time (or sully their reputation) by represent ridiculous claims.

What you have to understand is that the civil justice system isn’t designed to enable the advancement of patently ridiculous accusations. You want to file a personal injury lawsuit? Then you need proof. You have to show proof that you were actually injured, and that another person was liable for those injuries. All these require collecting real hard evidence, in the form of official accident reports, medical bills, properly taken witness statements, and acceptable photographic evidence.

Without the hard evidence to back up your claim, you won’t see a dime. Insurance companies won’t settle with you, and no jury would take your side.

What about the McDonald’s Personal Injury Case?

The notorious McDonald’s coffee civil suit remains the flagship example among proponents of tort reform how the civil justice system can and has run amuck. To this day, decades after the events that happened in 1992, this case is still held as the prime example of why changes to the civil justice system must be undertaken.

In the eyes of most people who heard about the case, the lawsuit was obviously ridiculous and was apparently an attempt to take money from a rich corporation. It was scandalous when it resulted in a verdict for damages up to $3 million.

The essence of the case in the public’s mind is that someone ordered hot coffee from McDonald’s and was actually foolish enough to put the cup of coffee between her legs while she was driving. Of course the woman would be burned when she spilled the coffee on herself. Coffee is supposed to be hot! And why would she be drinking hot coffee while she was driving anyway? It’s obviously her fault, and this lawsuit was a transparent attempt to use the courts to get rich of large corporations. That the courts couldn’t figure out this obvious conclusion was a travesty, and why tort reform is so necessary.

Of course, the real facts about the case weren’t exactly accurately understood by most members of the public.

  • The litigant’s name was Stella Liebeck, and that’s why many in legal circles refer to this suit as the Liebeck case. She was 79 years old at the time of the incident, and she did place the cup of coffee between her knees because the car she was in didn’t have any cup holders. The coffee spilled on her and soaked into the sweatpants she was wearing, which caused full thickness burns (3rd and 4th degree burns) in what the surgeons estimated as 6% of here total body surface area. She suffered these burns in her genital area, along with her thighs, groins, and buttocks.

In other words, these weren’t minor injuries at all.

  • Liebeck wasn’t driving when the accident occurred. She was a passenger, and the driver stopped the car so she could add cream and sugar to her coffee. The car wasn’t moving at all when she propped the coffee cup between her knees so that she could remove the lid. It was this action that started the accident.
  • She then filed a suit against McDonalds. She wasn’t out to get rich, since apparently she was willing to settle for $20,000. It was the McDonald’s company that decided to fight it out in the courts.
  • The court case then resulted in the discovery of other facts. These included the fact that McDonald’s had already encountered more than 700 claims from 1982 to 1992 from people who claimed to suffer burns from their coffee. These claims revealed that McDonald’s was already aware of the hazard posed by their extremely hot coffee.
  • McDonald’s representatives admitted that their coffee temperature was maintained at 180 to 190 degrees, upon the advice of a consultant that this range of temperature was optimal to achieve the best taste for the coffee. It was also discovered that in other fast food joints, the temperate of the coffee was kept at a much lower temperature. Even at home, people served coffee in the 135 to 140 degree range.
  • At first McDonald’s argued that their customers didn’t really plan to drink their coffee right away. They would drink the coffee when they got home or to the office, so the coffee would have cooled down considerably. Yet it also came out that the company’s own research revealed how their customers mostly drank their coffee while they were still in transit in the car.
  • A McDonald’s quality assurance manager actually brought the most damning testimony against the firm, when he revealed that the company required all their restaurants to keep their coffee at 185 degrees. This manager agreed that any food or drink served at over 140 degrees represented a burn hazard for the consumer, and thus their coffee upon pouring was not fit for human consumption. He admitted that the most likely result of drinking the coffee right away were burns to the mouth and throat.
  • Yet despite all these dangers that McDonald’s knew about and the hundreds of burn claims filed, the company still didn’t have plans to lower the coffee temperature.

Thus, it seemed more understandable that the jury would side with the plaintiff. The jury decided on $200,000 for compensatory damages. But this would be reduced to $160,000 since the jury determined that 20% of the blame can be placed on her. McDonald’s was also required to pay $2.7 million as punitive damages. That may seem overboard to some, but then the fast food giant isn’t a small business. That amount is equal to just 2 days of coffee sales for McDonald’s.

The amount of the punitive damage still garnered a lot of media attention, and many experts decried the “unfairness” of it all. The trial court even reduced the jury’s punitive damage amount to just $480,000. This reduction occurred even though the judge himself called the conduct of the fast food firm “reckless, callous, and willful”.

Eventually the case was settled for less than $600,000 after an appeal. Today, it’s still all about the “frivolous” lawsuit, and not about the McDonald’s company’s rather disturbing conduct.

How Common Are Large Punitive Damages?

They’re not very common at all. Usually, these are awarded when the behavior of the defendant company had been so blatantly wrong that the jury feels that a punishment is warranted. Often such awards aren’t called for when the defendant is judged to be guilty of simple negligence. Punitive awards are typically given out when the defendant was intentionally reckless and seemed to act with malice.

What about Class Action Lawsuits?

This type of civil suit became more prominent due to movies such as the Julia Robert’s film Erin Brockovich. This type of suit brings together a huge number of plaintiffs with similar complaints, usually against a huge corporation. Many news media sensationalize these cases because of the huge settlement numbers involved. Often these damages can be in the billions of dollars.

Take the recent case of recalled vehicles filed against General Motors. The attorneys who filed the suit are asking for damages amounting to $10 billion. But that’s because as many as 27 million vehicles were involved in the recall. Even if the lawyers in this case were working pro bono, that would still have resulted in just a measly $370 per plaintiff. That’s not exactly lottery-jackpot money.

What Are the Limits to These Payouts?

Tort law (which covers personal injury suits) is meant to compensate you for your injuries and losses should those be caused by someone else’s negligence, reckless behavior, or malicious act. They’re designed to restore to you what you were before the injuries, and not to enable you to profit from your misfortune.

That’s why often the damages cover the medical costs of the injuries, the lost salaries due to your incapacity, and even the emotional trauma that comes with your injuries.

What about Other Limits?

Insurance companies often bear the responsibility of covering the medical expenses of a patient, if their client was liable for that patient’s injuries. But the amount of the insurance coverage will be limited by the amount taken up by their client. For most people, these liability insurance plans can cover only tens of thousands of dollars, and not millions. For most people who file personal injury claims, these are the only damages they may receive.

Some states may also have laws capping the amounts that people may recover. So even if a plaintiff may deserve more in compensatory damages, they may not get more because of the state law.

So How Much is Your Case Worth?

Before you can file a personal injury suit, a lawyer will meticulously check your case to see if it’s worth their time and efforts and whether you have a case or not. They’ll check how much money you’ve spent on medical expenses and how much work you’ve lost. They may also assess the emotional trauma involved.

However, the strength of the case will also depend on what you can prove. You may also share some of the blame for the accident, and this will reduce the damages as well.

Finally, they will also evaluate how much the defendant can shell out. Usually the two parties can come to a settlement agreement, so that patients can get their money to cover their bills while the defendants minimize the bad PR. Both sides also cut down on court costs. But if a settlement can’t be reached, the lawsuit can progress up to a jury decision and even beyond after appeal.