States have been debating the merits of enacting new state False Claims Acts (FCAs), or broadening existing ones, largely in response to a federal mandate included in the 2005 federal Deficit Reduction Act. The 2005 mandate dictates that to have a federally qualified FCA, the state must have a whistleblower provision targeted at Medicaid-related fraud that is at least as generous to whistleblowers as the federal civil FCA, which gives the whistleblowers up to 30% of recoveries. If a state enacts such a false claims act, the federal government will give states 10% more of the awards in cases brought under those laws.
A few states quickly passed laws to meet these standards, but most have taken a more careful and cautious look. These states want to know if the federal “deal” is worth it, both financially and in their ability to fight and deter fraud. To date, most states have not adopted these changes. This paper explains why this decision is sound from the perspectives of both economics and public policy.
Trial lawyers and aggregators increasingly spend large sums of money on television, digital, and print advertising to recruit new clients for class actions targeting a variety of industries. As the COVID-19 pandemic reached the United States, entrepreneurial personal injury lawyers saw yet another opportunity to profit off of a national crisis.
Early on, a coalition of national law firms specializing in mass tort litigation formed a “Coronavirus Litigation Task Force” to identify targets and theories for litigation. Law firm websitessprungup, inviting people to blame their illness or family member’s death on someone rather than on the virus. Some websites provide a roadmap for suing for contracting COVID-19 at work. Others attempt to prompt lawsuits against nursinghomes or others. One website, “Top Class Actions,” uses that familiar language often heard on billboards and late-night TV ads: “If you believe that your rights were violated by a company as a result of the coronavirus pandemic, you may be entitled to compensation.”
From March through December of 2020, 176,053 advertisements for legal services and/or soliciting legal claims mentioning COVID-19 or coronavirus aired in the United States at an estimated cost of $34.4 million. As of February 1, 2021, 8,200 lawsuits related to COVID-19 have been filed in the United States.
Thus far, COVID-19 exposure lawsuits have primarily targeted those that have experienced outbreaks, such as cruise ships (including those who did not become ill) and nursing homes. Lawsuits filed by employees of retailers, meat processing plants, supermarkets, and healthcare providers are also mounting. In addition, some plaintiffs’ lawyers have filed class actions alleging that the business’s operation – a fast-food restaurant, golf course, office building, or shipping facility – poses a risk of transmitting COVID-19 and is a public nuisance. As doors open and operations move back toward “normal,” more lawsuits are likely to target schools, daycare centers, offices, stores, factories, and others.
The following study by the American Tort Reform Association shows the trial bar’s intention to profit off of the pandemic. Plaintiffs’ lawyers have spent millions of dollars on COVID-19 related advertising across the country and will continue to do so. The data shows just how important it is for state legislatures to seek legislative solutions to support health care providers, businesses, and their employees who have been on the frontlines, responding to the pandemic. To date, 21 states and the District of Columbia have enacted some level of COVID-19 liability protections.
Recent polling shows broad bipartisan support for elected officials to respond to pandemic-related issues – rather than trial lawyers filing lawsuits to address such concerns. Key findings show 74% of respondents said the government should support small businesses affected by COVID-19 with grants or loans, versus 6% who said lawyers should help small businesses pursue legal claims instead.
Despite the lack of public support for COVID-19 litigation, law firms advertised regardless. An analysis by the Wall Street Journal found that dozens of top law firms received millions in Paycheck Protection Program (PPP) loans. Some firms spent those dollars to increase their advertising, including U.S. powerhouse personal injury law firm, Morgan & Morgan. This report shows Morgan & Morgan as the top sponsor for COVID-19 legal services TV ads from March through December, airing approximately 70,000 ads at a cost of $10.5 million.
Majorities across both parties maintain that elected officials should respond to the pandemic, rather than trial lawyers. 59% say those harmed by the pandemic should get assistance from policies passed by elected officials, versus just 7% who say they should get payouts from lawsuits: this is consistent from October when 63% favored assistance through policy versus 9% who favored payouts from lawsuits.
Messaging on small business receives an even stronger response: 74% say small businesses affected by COVID-19 should be supported by government grants or loans versus 6% who say lawyers should help small businesses pursue legal claims.
48% of voters agree law firms using PPP funds for lawsuit advertising is inappropriate compared to 26% who say this is appropriate. This trend holds from October when 62% called lawsuit advertising inappropriate and 24% considered this appropriate; the discrepancy in those who call advertising inappropriate was driven by a greater proportion of Unsure respondents.
The proportion of voters who say trial lawyer advertisements are annoying and take advantage of people is virtually unchanged from October: 65% said advertisements are annoying and take advantage of people in December, and 66% said the same in October.
Each day, thousands of people in the United States are contracting coronavirus. The virus is devastating families, stretching the ability of health care providers to help those who become sick, and crippling businesses and the economy. Manufacturers have ramped up production of medical supplies and protective equipment and are investigating treatment options and developing vaccines.
Some personal injury lawyers, however, view individuals exposed to COVID-19 as a large new pool of plaintiffs, and health care providers and businesses that aid in the response effort or provide essential services as defendants to cast blame. Personal injury law firms are already recruiting individuals to “sue now” even if they have not contracted the disease. The first lawsuits targeting health care providers, employers, retailers and other businesses for COVID-related injuries have been filed. Many more are to come.
States should proactively adopt legislation that distinguishes legitimate claims from no-injury lawsuits. States can place reasonable constraints on the types of lawsuits that pose an obstacle to the coronavirus response effort, place businesses in jeopardy, and further damage the economy.
ATRA applauds the nation’s governors who have stepped up to address liability concerns stemming from COVID-19. These executive orders generally rely on the governor’s authority under each state’s emergency powers statute to modify or suspend enforcement of state laws that pose an obstacle to the state’s ability to respond to a crisis. The risk is that this type of executive action has not been tested in court. Plaintiffs’ lawyers are certain to challenge the governors’ authority to provide this liability protection through use of emergency powers.
This paper explores tort liability concerns related to the COVID-19 pandemic and considers potential solutions.
One can only imagine the scene inside the plaintiffs’ lawyers’ R&D laboratory for expansive liability theories when they created today’s public nuisance litigation: “Let’s come up with a way to sue manufacturers without having to prove product liability,” said one personal injury lawyer. “Wouldn’t it be great if this new legal theory did not even require us to prove fault,” added another. “I know, let’s get rid of causation too! And, while we’re at it, let’s figure out how to bring these new lawsuits on behalf of a whole bunch of people without having to deal with those pesky class action rules.”
Mix a little bit of this and a little bit of that, and bam! A “Super Tort” is born.
That is today’s public nuisance litigation in a nutshell. It is completely unprincipled and a far departure from any long-standing liability law. Under tort law, including under public nuisance theory, a person or company is supposed to be subject to liability only for wrongfully causing harm. In today’s public nuisance lawsuits, though, plaintiffs’ lawyers are attempting to convince judges to discard this basic principle. These lawsuits are attempts to subject businesses to liability over societal problems—regardless of fault, how the harm developed or was caused, whether the elements of the tort are met, or even if the liability will actually address the issue. Their mantra is, “Let’s make ‘Big Business’ pay.”
This report explores several high-profile public nuisance lawsuits being waged in courtrooms around the country today. It explains what public nuisance theory is, how it has long been used, and how plaintiffs’ lawyers are trying to re-engineer it into their Super Tort. What we find is that plaintiffs’ lawyers typically look for a crisis that people want to solve. This can be a hot-button political issue like climate change, a widespread social harm like opioid addiction, or an environmental concern such as contamination in a local waterway. Then, they look to represent a local or state government so they can sue on behalf of an entire community without abiding by class action rules. The lawyers offer to do this for “free,” agreeing to be paid only from money the lawsuits generate.
For elected officials, signing up for this litigation is enticing. They get to tell their constituents that they are trying to solve a local, national, or even international problem and it isn’t going to cost them anything. Who doesn’t want free money? Then, the government-deputized contingency-fee lawyers target businesses—often large, faceless, out-of-state companies—that they can vilify in the media and blame for the problem because their products are associated with the crisis. It doesn’t matter whether the companies actually caused the crisis or are legally responsible for it. In fact, they often sue entire industries to cast blame in broad strokes in an effort to get away from having to prove specific allegations against specific companies.
Those who bring today’s novel brand of public nuisance lawsuits gamble that (1) local judges, who often are elected, will want to be seen as trying to solve a problem for the community and will facilitate the recoveries despite traditional tort law, or (2) the targeted businesses will buckle under the pressure of the media and litigation onslaught and settle the claims just to end the nightmare, regardless of the truth or justice.
The truth is that public nuisance theory is not and should not become a “Super Tort” for making businesses pay for any and all crises. As the next section shows, it is a centuries-old tort with a highly specific purpose, namely to deal with local disturbances like vagrancy. It also does not permit either this Cuisinart-style of liability, where everyone in an industry is blended together, or strict liability for manufacturers merely because their products are associated with a downstream harm.
These crises do need to be solved, but they should be solved the right way. That is why today’s expansive public nuisance litigation should concern us all.
In the third quarter of 2019, from July through September, nearly 3.7 million advertisements for legal services and/or soliciting legal claims aired on local broadcast networks in the 210 local media markets across the United States. It is estimated that more than one quarter of one billion dollars was spent on airing these ads. An analysis and discussion of the legal services advertising volume and spending in West Virginia follows.
In two West Virginia media markets in the 3rd quarter of 2019 – from July through September – television advertisers for legal services sponsored a daily average of nearly 60 ads in Clarksburg and nearly 360 ads in Charleston at a total estimated cost of nearly $1.5 million.
In the third quarter of 2019, from July through September, nearly 3.7 million advertisements for legal services and/or soliciting legal claims aired on local broadcast networks in the 210 local media markets across the United States. It is estimated that more than one quarter of one billion dollars was spent on airing these ads. An analysis and discussion of the legal services advertising volume and spending in Florida follows.
Florida is the third most populous state in the nation and Tampa-St. Petersburg and Miami-Ft. Lauderdale are the largest media markets in the state. They are also among the Top 20 markets by size in the country ranking as No. 12 and No. 16 with 1.8 million and 1.6 million television households each.
In the third quarter of 2019, from July through September, nearly 3.7 million advertisements for legal services and/or soliciting legal claims aired on local broadcast networks in the 210 local media markets across the United States. It is estimated that more than one quarter of one billion dollars was spent on airing these ads. An analysis and discussion of the legal services advertising volume and spending in Georgia follows.
Atlanta and Savannah, the two largest media markets in Georgia and the 10th and 89th largest in the country, also saw heavy local legal services TV advertising in the third quarter of 2019.
In the first half of 2019, from January through June, approximately 6.9 million advertisements for legal services and/or soliciting legal claims aired on local broadcast networks in the 210 local media markets across the United States at an estimated cost of $422 million. An analysis and discussion of the legal services advertising volume and spending in Philadelphia follows.
With nearly 13 million residents, Pennsylvania is the fifth most populous state in the nation and its largest city, Philadelphia, encompasses the fourth-largest media market in the country with 2.8 million homes with televisions.
With 4.7 million residents, Louisiana is the 25th most populous state in the nation, and its three largest media markets include New Orleans, Shreveport, and Baton Rouge. Louisiana’s largest market, New Orleans, ranks 50th in the nation with an estimated 624,000 television-viewing households. Shreveport, ranked 90th, includes slightly fewer than 323,000 television-viewing households while the Baton Rouge media market ranks 97th in the nation with more than 287,000 television-viewing households.
In the second half of 2018, a legal services ad aired every minute on average in local broadcast networks across these three Louisiana media markets. From July to December, viewers in New Orleans, Shreveport and Baton Rouge were exposed to 251,116 of these advertisements purchased at an estimated cost of $15.6 million.
An analysis and discussion of the legal services advertising volumes and spending in these markets follows.
Texas is the second-most populous state in the nation and its four largest media markets include Dallas-Ft. Worth, Houston, San Antonio, and Austin. Dallas-Ft. Worth and Houston are the fifth and the seventh largest media markets in the U.S., with 2.6 million and 2.4 million respective television households. San Antonio, the third largest media market in Texas, is the 31st largest media market in the country, with 900,000 television households. The 4th largest Texas market, Austin, ranks 40th in the nation with just under 752,000 television households. An analysis and discussion of the legal services advertising volumes and spending in these markets follows.
In the second and third quarters of 2018, from April through September, nearly 6 million advertisements for legal services and/or soliciting legal claims aired on local broadcast networks in the 210 local media markets across the United States. It is estimated that $412 million were spent purchasing these ads. Eight percent of the locally broadcasted legal services ads during this six month period aired in seven media markets in three states across the United States. These markets – Dallas, Houston, and San Antonio, Texas; New Orleans and Shreveport, Louisiana; and Lexington and Louisville, Kentucky – also accounted for nine percent of all local legal services television advertising spending during this time period. An analysis and discussion of the legal services advertising volumes in the Kentucky markets follows.
In the second and third quarters of 2018, from April through September, nearly 6 million advertisements for legal services and/or soliciting legal claims aired on local broadcast networks in the 210 local media markets across the United States. It is estimated that $412 million were spent purchasing these ads. Eight percent of the locally broadcasted legal services ads during this six month period aired in seven media markets in three states across the United States. An analysis and discussion of the legal services advertising volumes in the Texas markets follows.
In the first, second, and third quarters of 2018 – from January through September – nearly 90,000 advertisements for legal services or advertisements soliciting legal claims aired on local broadcast networks in two of the largest media markets in West Virginia at an estimated cost of $3.9 million. An analysis and discussion of the legal services advertising in these markets – Charleston and Clarksburg, West Virginia – follows.
This study looks at seven media markets and dissects trial lawyers’ spending on legal services ads in Los Angeles, San Francisco, Tampa-St. Petersburg, Miami-Ft. Lauderdale, St. Louis, Kansas City and New York City. It offers comparisons between Quarter 2 spending and Quarter 3 spending in 2018. Nearly 14 percent of all local legal services television ad spending occurred in these seven markets in the third quarter of 2018.
This report looks at seven media markets and dissects trial lawyers’ spending on local legal services ads in Los Angeles, San Francisco, Tampa-St. Petersburg, Miami-Ft. Lauderdale, St. Louis, Kansas City and New York City. Nearly 15 percent of local legal services television ad spending occurred in these seven markets in the second quarter of 2018.
Consumer protection laws were intended to provide a remedy for people who are duped by false advertising or misleading practices in their day-to-day purchases, but, lately, the primary beneficiaries are plaintiffs’ lawyers. By taking advantage of the laws’ vague prohibition of “unfair or deceptive practices,” plaintiffs’ attorneys and some advocacy groups are transforming them from serving a legitimate function for consumers into a virtual lawsuit production factory. As a result of these suits, consumers get less choice in products and services, higher prices, and unnecessary disclaimers. Those who take the time to fill out the paperwork resulting from a settlement may get a few dollars or a coupon off their next purchase, while the attorneys who ginned up the lawsuit take home millions.
This paper explores the introduction, original mission of, and corruption of State CPAs. It proceeds in three additional parts. Part II outlines a brief history of American consumer protection laws, beginning with the accompanying immodest expansions of State CPAs. Part III reviews and discusses the predictable litigation consequences of these expansions, including harm to consumers themselves, litigants, and the judicial system, and briefly surveys elementary economic theory as well as salient empirical data confirming that these unjustified CPA expansions harm consumers. Part IV concludes, recommending several salutary policy prescriptions for lawmakers considering amending a State CPA.