Product Liability: Verdicts in Massachusetts for 1983-85

Published by the Government Accountability Office on 1990-10-26.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                          \I ni t.cd St.itt,cvi General Accounting
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                                        Iiqmr’t, t,o Congressional Requesters

                                        PRODUCT LIABILITY
                                        Verdicts in
                                        Massachusetts for
._..   _ ..^..__.__^..-I._-..._._....,._
                                  ..-.-.-.- -...--.----_-
    GAO   General Accounting Office
          Wmhington, D.C. 20648



          October 26,199O

          The Honorable Richard H. Bryan
          Chairman, Subcommittee on Consumer
          Committee on Commerce, Science,
            and Transportation
          united states senate

          The Honorable Doug Walgren
          Chairman, Subcommittee on Commerce,
            Consumer Protection, and Competitiveness
          Committee on Energy and Commerce
          House of Representatives

          In the mid-19SOs, businesses and other organizations reported problems
          obtaining adequate, affordable liability insurance. In response, nation-
          wide attention was focused on the role of litigation, especially trends in
          the frequency and size of damage awards in court cases, in contributing
          to problems concerning the cost and availability of liability insurance.
          At the same time, the Congress and state legislatures debated whether
          reforming the tort system (the legal rules and judicial procedures for
          compensating injured parties) would remedy the insurance problems.

          Last year, GAO issued Product Liability: Verdicts and Case Resolution in
          Five States (G~o/HRDs999, Sept. 1989) to assist the Congress in its delib-
          erations on uniform product liability law at the federal 1evel.l Currently,
          however, each state establishes its own legal standards for product lia-
          bility cases. Reform advocates, therefore, have focused much of their
          efforts on changing state laws. The resultant activity in the states has
          been widespread, but has varied considerably from state to state.

          In general, policymakers and researchers have noted a persistent lack of
          information, especially at the state level, on awards and the bases of
          liability. This lack of information makes both congressional and state
          deliberations about needed reforms difficult. To facilitate these delibera-
          tions, for four of the five states reviewed in our earlier report2 we are
          providing detailed state-level information on verdicts in product liability

          ‘Manufalzhmx3 involved in i&x&ate       commerwhaveamtendedthatasarcsultofvariationsinstate
          laws, they am hell   held to diffemnt   liabibyrules in different states, huther compkating estima-
          tionofriskforhurance        purposw. We fouml that federal reforms, if sufficiently clear, would make
          nzfonus wuuld depend, however, on the specifb of the legMath enacted.

          P8ge 1                                            GAO/BRD-9l+SRoductLbbWtyinlbbmachusetta
             B2407M                                                                                                    ,

             cases. We are addressing these reports to you because the Subcommit-
             tees you chair have recently held hearings and full Committees have
             reported favorably the proposed legislation to establish uniform product
             liability law~.~ In this report, we present information for Massachusetts.

             Generally, proposed reforms have been designed to remedy alleged -
Background   problems in the tort system, including increasingly large awards and
             high litigation costs. Defendants have also claimed that the basis of lia-
             bility has shifted from liability based on intent or negligence toward a de
             facto no-fault liability system financed entirely by manufacturers. Data
             limitations have fueled debate on (1) the magnitude of these problems
             and (2) whether reforms would alleviate them.

             In our earlier report on product liability, we analyzed data on (1) the
             frequency and size of awards and payments, (2) liability standards used
             to decide cases, (3) posttrial activities and adjustments to awards, (4)
             time and cost of litigation, and (5) potential effects of federal reform
             measures. We collected these data for cases in Arizona, Massachusetts,
             Missouri, North Dakota, and South Carolinaq4 Not surprisingly, we found
             significant differences from state to state.

             We concluded that, in general, (1) damage awards in the five states were
             strongly associated with severity of the injury and, presumably, the
             underlying economic loss and (2) liability was still based largely on neg-
             ligence. We found that appeals and posttrial settlement negotiations
             reduced the size of the majority of awards over $1 million. Appellate
             courts also eliminated many punitive damage awards (which are
             designed to punish flagrant or intentional wrongdoing and to deter
             others from similar conduct or both). These activities, however, added
             to the substantial cost and time required to resolve claims.

             31nMay 1990, the Committee on Commerce, Science, and Transportation reported favorably to the
             Senate S. 1400, the Product Liability Reform Act of 1989. In June 1988, the Committee on Energy and
             Commerce reported favorably to the House H.R. 1116, the Uniform Product Safety Act of 1988. In
             December 1987, the Subcommittee on Commerce, Consumer Protection, and Competitiveness had
             approved that bill.
             4We based our selection of states on (1) whether product liability cases could be identified without
             manually searching thousands of case fifes, (2) the amount of information already published on
             product liability litigation in the jurisdictions, and (3) the relative costs associated with obtaining the
             information. The five states offer a mix in terms of region of the country, degree of urbanization,
             numbers of manufacturers and manufacturing employees, and tort laws (see Product Liability: Ver-
             dicts and Case Resolution in Five States, pp. 76-77).

             Page 2                                             GAO/HRBSM         Product Liability   in Massachusetts

Product Liability in     Tort reform advocates do not consider Massachusetts to be a problem
Massachusetts            state in terms of excessive damage awards and inappropriate bases of
                         liability; little effort, therefore, has been expended to reform product
                         liability law in that state. No comprehensive product liability reform bill
                         has been proposed.

                         There have been some efforts, however, to change tort law in Massachu-
                         setts, which would affect product liability cases. Since 1986, several
                         bills to reform tort law have been proposed, but none have been enacted.

                         GAO'S  findings in Massachusetts were distinct from those in the other
                         four states in several respects. First, in Massachusetts, the rate at which
                         defendants were found liable was lower than the rates in the other four
                         states. Defendants were found liable in 33 percent of Massachusetts’s
                         cases as opposed to 48 percent of cases in the other four states com-
                         bined. In Massachusetts, there were no awards of punitive damages,
                         which are given to punish flagrant or intentional wrongdoing or to deter
                         similar conduct. Punitive damages were awarded in each of the other
                         four states and, for two states, in 25 percent of cases in which defend-
                         ants had been found liable. This difference, at least to some extent,
                         occurred because Massachusetts’s law limits punitive damage awards to
                         cases of death. But laws in the other four states do not limit the type of
                         injury for which punitive damages can be awarded.

                         Finally, in Massachusetts, cases took longer to reach verdict than in the
                         other states. Massachusetts cases took over 3-l/2 years to reach verdict
                         as compared with a combined average of just over 2 years in the other
                         four states. Ironically, Massachusetts is one of the two states GAO
                         reviewed that requires prejudgment interest on awards, which is
                         designed, in part, to create the incentive for a quick resolution of cases.
                         Prejudgment interest accrues from the date the complaint is filed to the
                         date of the judgment. Because of the considerable time required to reach
                         verdict, on the average, one-third of the amount awarded at judgment in
                         Massachusetts’s cases was prejudgment interest.

                         In this report we provide information for 66 cases that were resolved
Scopeand                 through verdicts for 1983-85 in Massachusetts’s 14 state superior courts
Methodology              and in the US. District Court (federal court) in Massachusetts. Of the 66
                         cases we studied, 22 were heard in the state courts. We describe
                       . the accidents giving rise to product liability cases, the parties to the
                         cases, the allegations and demands contained in plaintiffs’ complaints,

  and the amount of time spent on the cases at each stage - from the
  accidents to final court actions (see app.1);
l the percentage of cases in which defendants were found liable, the bases
  of liability, the amount of compensatory and punitive damages awarded,
  and deductions for comparative negligence (see app. II); and
. the frequency of posttrial adjustments to awards and actual payments
  made to plaintiffs after verdicts (see app. III).

    For a discussion of the methodology used to identify cases and collect
    data, see appendix IV.

    GAO  is sending copies of this report to Members of Congress, state legis-
    lators and officials, and other interested parties. The report is also avail-
    able on request. If you have any questions, please call me on
    (202) 2756193. Other major contributors are listed in appendix V.

    Joseph F. Delfico
    Director, Income Security Issues

    Page 4
Page I5   GAO/HID918   Product Liability in Masaachwetta
Letter ~-                                                                                              1

Appendix I                                                                                             8
CasesThat Went to
Verdict: Accidents,
Parties, Demands, and
Appendix II                                                                                           13
Verdicts: Rate and Size
of Awards
Appendix III                                                                                          16
Payments: Effects of
Statutes and Posttrial
Appendix IV                                                                                           18
Appendix V                                                                                            20
Major Contributors to
This Report
Tables                    Table I. 1: Majority of Accidents Involved Machinery                         8
                          Table 1.2: Majority of Injured Parties Suffered Personal                     8
                          Table 1.3: Typical Injured Party an Adult Male, Married,                     9
                              and Working
                          Table 1.4: Majority of Plaintiffs Who Went to Verdict                       10
                              Were Those Harmed by Products
                          Table 1.6: Majority of Defendants Who Went to Verdict                       10
                              Were Manufacturers
                          Table 1.6: Most Plaintiffs Resided in Massachusetts and                     11
                              Most Defendants Were Headquartered in Other States

                          Page 6                           GAO/HRD91-8 Product Liabiltty in Mamachuaetts

         Table 1.7: Monetary Demands Increased With Injury                              11
         Table 1.8: Negligence the Predominant Basis of Liability                       12
             Claimed by Plaintiffs
         Table II. 1: Defendants Found Liable in One-third of Cases                     13
         Table 11.2:Liability Rates for Key Defendant Types the                         13
         Table 11.3:Extremely Large Awards Accounted for                                13
             Majority of Total Amount Awarded
         Table 11.4:Awards Varied by Type and Severity of Injury                        14
         Table 11.5:Negligence a Basis of Liability in Three of                         14
             Every Four Cases in Which Defendants Found Liable
         Table 11.6:Comparative Negligence Has Small Effect on                          15
             Total Amount Awarded
         Table III. 1: Defendants’ Payments to Plaintiffs May Differ                    16
             From the Initial Awards as a Result of Statutory
             Limits and Posttrial Activities
         Table 111.2:Total Amount Awarded Increased                                     16
             Substantially With the Addition of Prejudgment
         Table 111.3:Appeals More Frequent in Cases Plaintiffs                          17
             Won Than Those Won by Defendants
         Table 111.4:Net Effect of All Posttrial Actions Reduced                        17
             Payments by 23 Percent

Figure   Figure 1.1: On Average, Cases Took 3-l/2 Years to Reach                        12
              Verdict and Appeals Took Over 1 Year to Resolve

         Page 7                             GAO/HRD91-9 Product Liability in Maseachusetta

Appendix I

CasesThat Went to Verdict: Accidents,Parties, ’
Demands,and ProcessingTime

Table 1.1: Majority of Accidents Involved
Machinery                                   Product type                                                                     Number              Percent
                                            Machinery                                                                              38                 58
                                            Chemical substances                                                                     6                  9
                                            Vehicles                                                                                5                  8
                                            Drugs                                                                                    5                 8
                                            Othera                                                                                  11                17
                                            Not specified                                                                            1                 2
                                            Total                                                                                  66                102b
                                            aThis category includes a variety of products, such as medical devices, ladders, and appliances.
                                            bThe percentages   total more than 100 because of rounding.

Table 1.2: Majority of Injured Parties
Suffered Personal Injury                    lniurv tvpe                                                                      Number              Percent
                                            Personal injury:
                                              Permanent partial disability                                                         45                 68
                                              Permanent total disability                                                             5                 8
                                              Temporary partial disability                                                           4                 6
                                              Temporary total disability                                                             2                 3
                                              Not soecified                                                                          3                 5
                                              All personal iniurv                                                                  59                 908
                                            Death                                                                                    4                 6
                                            Property Damage                                                                          4                 6
                                            Total                                                                                  67b               101b
                                            ‘Percentages   for the five subcategories   of personal injury add to more than 69 because of rounding
                                            bBecause 1 case involved both personal injury and death, (1) the number of injuries is more than 66, the
                                            total number of cases, and (2) the percentages total more than 100.

                                            Page 0                                              GAO/HRD91-9 Product Liability in Massachuaettti
                                           Appendix I
                                           Cama That Went k, Verdict: Accidents,
                                           Parties, Demands, and Prowwing Time

Table 1.3:Typical Injured Party an Adult
Male, Married, and Working                 Characteristic                                                               Number          Percenr
                                           Male                                                                                47                 67
                                           Female                                                                              20                 29
                                           Not applicable (businesses)                                                          3                  4
                                           Total iniured oarties                                                              70              100

                                           Age categoryb
                                           Children (l-l 7 years old)                                                          10                 14
                                           Adults (18+ years old)                                                              56                 80
                                           Not applicable (businesses)                                                          3                  4
                                           Not specified                                                                        1                  1
                                           Total injured parties                                                              70                  99

                                           Marital status (adults only)
                                           Married                                                                            28                  50
                                           Sinale                                                                              7                  13
                                           Divorced, separated, or widowed                                                     3                   5
                                           Not specified                                                                      18                  32
                                           Total adult injured parties                                                        56              100

                                           E~DlOV~ent       status (adults onIvY
                                           Employed full-time                                                                 42                  75
                                           Employed part-time                                                                  4                   7
                                           Not working                                                                         2                   4
                                           Not sbecified                                                                       8                  14
                                           Total adult injured parties                                                        56              100
                                           aPercentages may not acid to 100 percent because of rounding.
                                           bOn the basis of data for 73 percent of the injured parties who were not businesses, the average age
                                           was 33 years old.
                                           % 47 percent of the cases, the injuries occurred on the job.

                                           Page 9                                           GAO/HRD-91-9 Product Liability in Massachusetts
                                             Appendix I
                                             Case8 That Went to Verdictz Accldente,
                                             Parties, Demands, and Processing Time

Table 1.4: Majority of Plalntlffr Who Went
to Verdict Were Those Harmed by              Plaintiff type                                                                    Number            Percent
Products                                     Injured parties (includes estates)                                                       64                 67
                                             Spouses                                                                                  24               - 25
                                             Parents                                                                                   5                  5
                                             Children                                                                                  2                     2
                                             Total                                                                                    95.               99b
                                             aA total of 145 plaintiffs were named in the complaints in the 66 cases. In just under 90 percent of the
                                             cases, all plaintiffs named in the complaints went to verdict. One case, which had 43 plaintiffs at filing
                                             and 2 at verdict, accounted for the majority of the reduction in the number of plaintiffs from filing to
                                             verdict. In this case, plaintiffs had filed the case as a class action, but were denied that status and tried

                                             bPercentages do not add to 100 because of rounding.

Table 1.5: Majority of Defendant8 Who
Went to Verdict Were Manufacturers           Defendant type                                                                    Number            Percent
                                             Manufacturersa                                                                           75                73
                                                                                                                                      17                16
                                             OtherC                                                                                   10                10
                                             Not specified                                                                             1                 1
                                             Total                                                                                  1036               100
                                             aln this category, 67 manufactured   the finished product and 8, a component part.
                                             bin 18 of the cases (27 percent), product sellers were named in the complaints. When the cases went to
                                             verdict, 17 sellers remained, a drop-out rate of 6 percent, which is lower than the 32-percent drop-out
                                             rate for other types of defendants (see footnote d).

                                             CThis category includes a variety of types of defendants,   including government agencies and
                                             dA total of 145 defendants were named in the complaints in the 66 cases; 32 percent of defendants did
                                             not go to verdict. In about 85 percent of the cases, all defendants named in the complaints went to
                                             verdict. For 1 case, 29 defendants were named in the complaint and 6 went to verdict; in another, 11
                                             defendants were named in the complaints and 1 went to verdict. These 2 cases accounted for the
                                             majority of the reduction in the number of defendants from filing to verdict.

                                             Page 10                                            GAO/HID-91-9 Product Liabiltty in Massachusetts
                                        Appendix I
                                        Cures That Went to Verd& Accidents,
                                        Parties, Demands, and Proceming Time

Table 1.6: Moat Plaintiff8 Reaided in
Ma88achuaette and Mo8t Defendant@       state                                                                            Number           Percent
Were Headquartered in Other State8      Plaintiff reridence
                                        Massachusetts                                                                             91            96
                                        Other states                                                                               3             3
                                        Not sbecified                                                                              1             1
                                        TOtsi                                                                                     95           100

                                        Defendant headquarters
                                        Massachusetts                                                                             17            16
                                        Other states                                                                              81            79
                                        Not specified                                                                              5             5
                                        Total                                                                                 103              100

Table 1.7:Monetary Demand8 inCrea8ed
With InJury Severity                    Dollars in thousands
                                                                                                       Demand                 $1 million or more
                                        TVDCBof   iniurv                           Number’        Averaao    Median                   Iin oercenb
                                        Wrongful death                                       3       $1,322         $1,500                      67
                                        Personal injury:
                                          Permanent                                        47         1,537             750                     47
                                           Temborarv                                        7           471            350                      14
                                           All personal injury                             55b        1,376            800                      42
                                        Property damage                                     4           704            400                      25
                                        All cases                                          62c        1.330            800                      42
                                        Note: In all cases, plaintiffs requested compensatory damages; in 7 cases, compensatory and punitive
                                        damages. Compensatory damages are paid to plaintiffs to replace the losses caused by injury. They
                                        consist of economic damages, which cover the actual out-of-pocket expenses incurred by plaintiffs, and
                                        noneconomic damages, which cover intangible injuries such as pain and suffering. Punitive damages
                                        are given to punish intentional or flagrant wrongdoing and deter others from similar conduct.
                                        Qata were unavailable for 4 cases; 3 cases involved personal injury and 1 case, personal injury and
                                        wrongful death.

                                        blncludes 1 case in which the severity of injury was unspecified.

                                        CDemands ranged from $15,000 to $11 million.

                                        Page 11                                            GAO/IilUMU4I       Product Liability   in Massachusetts
                                          Appendix I
                                          Ceselr That Went to Verdicts Accidenta,
                                          Parties, Demands, and Promssing Time

Table 1.8: Negligence the Predomlnant
Bad8 of Liability Clalmed by Plaintiffs   Basis of liability                                                               Number             Percent
                                          Negligence, breach of warranty, and strict liability                                    31                 47
                                          Negligence and breach of warranty                                                       24                 36
                                          Negligence only                                                                          6                  9
                                          Negligence and strict liability                                                          2                  3
                                          Breach of warranty and strict liability                                                  2                  3
                                          Breach of warranty only                                                                  1                 2
                                          Total                                                                                   66               100
                                          Note: In Massachusetts, plaintiffs can allege that defendants are liable for different reasons. Most preva-
                                          lent among these are negligence and breach of warranty. Under negligence, defendants are liable if
                                          they did not exercise due care and this lack of care caused the injury. Under breach of warranty,
                                          defendants are liable if a product failed to work as expressly or implicitly warranted or promised. Massa-
                                          chusetts has not adopted the standard of strict liability per se, under which many states allow plaintiffs
                                          to plead their cases. Under strict liability, defendants are liable if a product was defective and this
                                          defect made the product unreasonably dangerous and caused an injury. The plaintiff in a strict liability
                                          action need not prove that the manufacturer or seller failed to exercise due care, as is required in a
                                          negligence action. Massachusetts’s courts have indicated that in the state, breach of warranty covers
                                          the same circumstances in which defendants can be held strictly liable in other states. Our data indi-
                                          cate that plaintiffs in 35 cases alleged strict liability, although such allegations are not recognized under
                                          Massachusetts law.

Figure 1.1:On Average, Cases Took 3-l/2
Year8 to Reach Verdict and Appeals
Took Over 1 Year to Resolve                  In Months

                                                           21.4                            42.8                     4.5           13.4

                                            Incident                   Filing                                                              Appeal
                                                                                          Trial Starts .5

                                          ‘Time between verdict and filing of appeal primarily reflects the time required to resolve
                                          parties’ motions (requests) to the trial judge (for example, a motion for a new trial or a motion
                                          for a reduction in the award). During this time, parties submit briefs (arguments)   in support of
                                          their positions on the motion(s) and the judge considers and rules on them.

                                          Page 12                                            GAO/HRD9143 Product Liability in Maseachusetta
Appendix II

Verdicts: Rate and Sizeof Awards

Table 11.1:Defendants Found Liable in
One-third of Cases                                                                                                     Cases
                                                                                                        Reaching                     Defendants
                                         Type of injury                                                   verdict                    found liable
                                         Wrongful     death                                                        4                                3
                                         Property    damage                                                        4                                2
                                         Personal     iniurv                                                      58                            17
                                         Total                                                                    66                            22

Table 11.2:Liability Rates for Key
Defendant Types the Same                                                                                           Defendants
                                                                                                     Reaching            Found liable
                                         -Type of defendant                                            verdict      Number            Percent
                                         Manufacturers                                                      75             22                   29
                                         Sellers/distributors                                                17             5                   29
                                         Othera                                                              11             5                   50
                                         All cases                                                         103             32                   31

                                         ‘Includes 1 defendant for whom type was unavailable

Table 11.3:Extremely Large Awards
Accounted for Majority of Total Amount   Dollars    in thousands
Awarded                                                                                                    Awards                 Percent of total
                                         Size of award                                   Cases        Average     Median                awarded
                                         Gs       than $100.000                                12          $50           $50                        5
                                         $100,000     to $999,999                               4          187           124                        7
                                         $1    million and over                                 6        1,616         1,346 .-                 87
                                         All cases                                             22a         505            88                    99b

                                         Note: Awards exclude prejudgment interest (see table 111.2).
                                         aAwards ranged from $15,000 to $3.1 million and totaled $11 ,l million. All awards were for compensatory
                                         damages. Because Massachusetts only allows punitive damages in wrongful death cases, only the 3
                                         wrongful death cases in which defendants were found liable would have qualified for awards of punitive
                                         bPercentages do not add to 100 because of rounding.

                                         Page 13                                          GAO/HRD-918 Product Liability in Massachusetts
                                              Appendix II
                                              Verdict-a Rate and Size of Awards

Table 11.4:Awards Varied by Type and
Severity of Injury                            Dollars    in thousands
                                              Wry type                                             Cases       Average         Median        Expected.
                                              Wrongful      death                                         3b      $1,756        $1,800             $1,317
                                              Personal     injuryC                                       17          337             82                   99
                                              Property     damaged                                        2b           50            50                   25
                                              All cases                                                 22           505             88                 168

                                              aExpected award is the average award across all cases, including those won by defendants. Of the
                                              three ways of describing the typical award, the expected award is the best indicator of what plaintiffs
                                              received across all cases that went to verdict.

                                              bThe average, median, and expected award can be extremely unreliable when only a few cases are

                                              CAmong personal injury cases, larger awards were given for permanent disability than for temporary
                                              disability. In the 15 cases involving permanent disability in which defendants were found liable, the
                                              average award was $376,000 and the median award, $92,000. Awards in the 2 cases involving tempo-
                                              rary disability were $47,000 and $50,000.
                                              dThe 3 awards in wrongful death cases were for $402,000, $1.8 million, and $3.1 million, The 2 awards in
                                              property damage cases were for $15,000 and $85,000.

Table 11.5:Negligence a Barrla of Liability
In Three of Every Four Cases In Which         Basis of liability                                                              Number            Percent
Defendants Found Liable                       Negligence       onlya                                                                   9                  41
                                              Negligence       and breach      of warrantyb                                            8                  36
                                              Breach      of warranty   only                                                             2                 9
                                              Not specified                                                                            3                  14
                                              Total                                                                                  22                 100
                                              BUnder negligence, defendants are liable if they did not exercise due care and this lack of care caused
                                              the injury.

                                              bUnder breach of warranty, defendants are liable if the product failed to work as expressly or implicitly
                                              warranted or promised.

                                              Page 14                                            GAO/HRLI-918 Product Liability in Massachusetts
Table 11.6:Comparative Negligence Ha8
Small Effect on Total Amount Awarded    Dollars     in millions
                                                                                     Comparative nealhence       Reduction in total
                                        Effect on award                 Cases       Award before    Award after award (in percent)
                                        Cof;fn;:tive       negligence

                                           Award       unchangedb             5                 $1.6                  $1.6                           0
                                           Award       reducedC               7                   1.7                  1.4                          18
                                        All cases                           66                  11.4                  11.1                           3

                                        Note: In Massachusetts, if the defendant’s liability is based solely on negligence, the award is reduced
                                        by the degree to which the plaintiff’s negligence was responsible for the injury (that is, comparative
                                        negligence). If the plaintiff’s negligence exceeds that for all defendants combined, the plaintiff is not
                                        entitled to recover any damages.
                                        ‘Awards were unchanged because, in addition to negligence, defendants’ liability was also based on
                                        breach of warranty, to which the principles of comparative negligence did not apply.
                                        bFor the 7 cases, the average percentage reduction was 48 percent. In 2 cases, because plaintiffs’
                                        negligence was more than 50 percent responsible for the injury, they could not recover damages.

                                        Page 16                                           GAO/JSRDBl-fl Product Liability in Massachusetts
Payments:Effects of Statutesand
Posttrial Activities

Table 111.1:Defendanta’ Payments to Plalntiffs May Differ From the Initial Awards as a Result of Statutory Limits and Posttrlal
Mechanism          - .._-___.- Deflnltlonldescrlotlon                           Possible effect on award
Statute                        Statutes (1) limiting the amount that can be recovered        May decrease award if statute sets limit (for example,
                               from defendants (for example, requiring that awards           under the law, prejudgment settlements with
                               be reduced by the amount of prejudgment settlements           defendants who did not go to verdict would be
                               with other defendants) or (2) specifying that interest        deducted from the award) or increase award if statute
                               be added to the award                                         requires payment of interest (for example,
                                                                                             prejudgment interest is paid from the date the case
                                                                                             was filed)
Subrogation                    The right of a person who is secondarily liable to            Does not change total amount plaintiff receives;
                               succeed to the right of the person he or she paid; for        subrogation decreases the amount the defendant
                               example, if an insurer pays the injured under an              pays to the plaintiff; the defendant pays the
                               insurance policy, the company can then recover the            subrogated amount to the person secondarily liable
                   .” _-.---   amount paid from any subsequent award to the injured
Motion (req&st)   to trial     Request to the trial judge to either change the verdict  Trial judge may (1) decrease award (remittitur);
judge                          or grant a new trial                                     (2) increase award (additur); (3) partially or completely
                                                                                        overturn the verdict, thereby eliminating some or all
                                                                                        awards; or (4) grant a new trial
Appeal                         Request that an appellate court determine whether        Appellate court may (1) decrease award; (2) increase
                               (1) sufficient evidence exists to support the verdict or award; (3) partially or completely overturn the verdict,
                               (2) the trial judge made any major errors in ruling on   thereby eliminating some or all awards; or (4) set aside
                               specific matters                                         the verdict in whole or in part and remand the case to
                                                                                        the trial court for further proceedings
Settlement                     Negotiated agreement between parties specifying          May increase the payment so that it is more than the
                               how the case will be resolved                            award, decrease the payment so that it is less than the
                                                                                        award, or specify a payment schedule for the original

Table 111.2:Total Amount Awarded
Increased Substantially With the                  Dollars in thousands
Addition of Prejudgment Interest                                                                                Awards
                                                  Staae                                        Cases       Average     Median              Total awarded
                                                  At verdict                                         22         $505            $88                 $11,100
                                                  At judgments                                                   736            178
                                                  % each of 5 cases, the trial court judge adjusted the initial award. The net effect of these adjustments
                                                  was to reduce the number of cases in which awards were made to 21 and the total amounts awarded
                                                  by less than 2 percent. In 3 of the cases, the judge granted motions made by one of the parties: in 1
                                                  case, the judge increased the award amount; in 2 cases, the judge reduced the award amount. In the
                                                  other 2 cases, because of a statutory requirement, the trial judge reduced the initial award by the
                                                  amount agreed to in settlements with defendants who had not gone to verdict.

                                                  Massachusetts’s statute requires that the trial court judge add prejudgment interest to the final award
                                                  amount. Such interest accrues from the date the complaint is filed to the date of the judgment and is
                                                  designed to (1) create the incentive for a quick resolution of the claim and (2) compensate the plaintiff
                                                  for having to sustain the loss while the case is being litigated. The applicable rates of interest for the
                                                  cases we studied were 12-percent simple interest for personal injury and property damage and 6-per-
                                                  cent simple interest for wrongful death. In the 20 cases for which we have data on prejudgment interest,
                                                  plaintiffs were awarded a total of $4.6 million in interest and such interest averaged 33 percent of the
                                                  amount awarded per case. For 1 case with an award of $1 million, data on prejudgment interest were

                                                  Page 16                                           GAO/I-IRDOl+? Product Liability in Mamachwetta
  .                                       Appendix Ill
                                          Payments: Effects of Statutes and
                                          Poettrial Activities

Table 111.3:Appeals More Frequent in
Cases Plaintlff s Won Than Those Won by                                                                                          Appealed
Defendants                                Winning party                                                       Cases         Number        Percent
                                          Plaintiff*                                                             22              14                 64
                                          Defendant                                                              44              13                 30
                                          All cases                                                              66              27b                41
                                          ‘The rate of appeals for cases in which the awards were greater than $100,000 was not greater than the
                                          appeals rate for cases in which the awards were less than $100,000. This was unlike the findings in the
                                          other four states we studied.

                                          bFor 26 cases, we obtained data on the resolution of appeals. In 7 cases, at the request of both parties,
                                          the appeal was dismissed prior to an appellate court ruling. In the 19 cases in which appellate courts
                                          rendered decisions, the courts affirmed the verdicts in 6 of 10 cases won by defendants and 4 of 9
                                          cases won by plaintiffs. Among reversed cases, appellate courts remanded 2 cases won by defendants
                                          and 2 cases won by plaintiffs to the trial court level for further action.

Table 111.4:Net Effect of All Posttrial
Action8 Reduced Payments by 23            Dollars      in thousands
Percent                                                                                                                                        Ratio of
                                                                                     Cases                        Average                   Pw;;a;r
                                          Posttrial action                       Number    Percent              Award Pavment                         a
                                          Plaintiff verdicts            ________
                                          Reduced                                        6b             13      $1,390         !1,045               .75c
                                          Unchanaed                                      6              13            113          113                1
                                          Defendant verdicts
                                          Unchanged                                    31               69              0               0
                                          Increased                                     2                4              0             13                  d
                                          All cases                                    4tP              99’       $200           $155               .77
                                          Note: For purposes of this study, payments were defined as all moneys paid to plaintiffs by defendants
                                          who went to verdict, excluding payments for postjudgment interest, legal fees, liens, and pretrial
                                          ‘Consistent with previous research, this is the ratio of payments to awards for a group and not the
                                          average of ratios for individual cases.

                                          bin 1 case, the payment was reduced as a result of a posttrial settlement. In 2 cases, appellate courts
                                          reduced the award amounts. In 3 cases, the reasons for the reductions were unspecified.

                                          CA reduced payment in 1 case accounted for much of the reduction across all cases. The case had an
                                          initial award of over $1 million and a payment of $116,000, a reduction of more than 90 percent.
                                          Excluding this case, the payment-to-award ratio for the remaining 5 cases with reduced awards was .92
                                          as compared with .75, including the outlier. Considering both cases won by plaintiffs and those won by
                                          defendants, the ratio of amount paid to awarded was .93, excluding the outlier.

                                          dThe ratio is undefined because the base, average awards, is 0.

                                          ‘?n the survey of attorneys used to collect this information, we obtained responses for 45 of the 66 cases
                                          (see app. IV).
                                          ‘The percentages      do not add to 100 because of rounding

                                          Page 17                                             GAO/HID-91-9 Product Liability in Massachusetts
Appendix IV                                                                                                      <

Methodology                                                                                           I

                     We gathered data on product liability cases resolved in 1983-86 by a
Selection of Cases   judge or jury verdict. To ensure a sufficient number of cases for our
                      analyses, we examined those that went to verdict during a %-year
                     period; that is, we treat the 3 years as one period, not three consecutive
                     periods. Since appeals can take years to resolve, we estimated that cases
                     closed in 1986 were the most recent for which we could reasonably
                     expect all appeals to have been resolved.

                     We examined cases that were resolved in Massachusetts’s 14 state supe-
                     rior courts and the U.S. District Court (that is, federal court) for Massa-
                     chusetts.1 From the Office of the Chief Administrative Justice, we
                     obtained a listing of product liability cases that had been tried in state
                     superior courts.2 We supplemented this information from the Adminis-
                     trative Office of the Massachusetts Court of Appeals on cases appealed
                     since 1983. In total, we found 22 cases that went to verdict in state
                     court. We obtained a listing of cases that were resolved in federal court
                     from the Administrative Office of the U.S. Courts.3 The listing indicated
                     that 44 cases went to verdict in 1983-86.

                     From the case files maintained by the courts, we obtained background
Data Collection      information including descriptions of accidents and parties to the law-
                     suits; the disposition of the cases against each defendant; the amount of
                     compensatory and punitive damages demanded and awarded; and dates
                     of various stages of case processing, from the date of the accident to
                     final disposition. We also recorded information on posttrial activities,
                     including appeals and settlement negotiations, as well as, when avail-
                     able, their outcomes. To supplement information on appeals, we
                     searched appellate court records, when available, and a computer
                     database that included information on appealed cases nationwide

                     To gather information not consistently available from court files, we
                     sent copies of a questionnaire to plaintiff and defendant attorneys who
                     represented the parties in the cases. Attorneys were asked to report the

                     ‘Cases involving state law can be heard in federal court if (1) all defendants are citizens of states
                     different from all plaintiffs and (2) in 1983-86, at least $10,000 was claimed in damages. Since April
                     1989, to be heard in federal court, the amount in controversy must be at least $60,000.
                     2Superior courts do not have jurisdication over cases involving claims under $7,600, which can be
                     tried in state district court, municipal court, or housing court.
                     3The Administrative Office’s data are generally considered to be the best source for information on
                     product liability cases.

                     Page 18                                          GAO/HUD-918 Product Liability in Massachusetts
    Appendix N

    status of the cases, payments made to date, and how the amounts were
    determined. For questions concerning payments, the questionnaire was
    designed so that a response from only one side in the dispute provided
    complete case data. We obtained complete payment data for 45 cases,
    68 percent of the 66 cases.

    Page 19                          GAO/I-JRD-91-8 Product Liability   in Massachusetts
Appendix V

Major Contrtributorsto This Report                                              /

                  Cynthia A. Bascetta, Assistant Director, (202) 2750020
Human Resources   Susan E. Arnold, Assignment Manager
Division,         Laurel H. Rabin, Reports Analyst
Washington, DC.

(106666)          Page 20                           GAO/HlUh91-8 Product Liability   in Bbssachueetts
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