The Courts: Traffic Jam

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Dead: 422. Injured: more than 20,000. Cause: driving on those happy, blood-soaked holidays, Christmas and New Year's. As the last twisted wreck was towed away, the last bits of glass and gore rinsed off the asphalt, lawyers and insurance companies began the dreary job of figuring up the price tag on destruction. Determining who pays how much for auto accidents is far and away the biggest legal business in the U.S. today.

The automobile accounts for half to three-quarters of personal-injury suits, fully 25% of all civil cases brought to state law courts. In Chicago, more than 50,000 auto cases are awaiting trial. In Los Angeles, auto liability cases have nearly tripled in the past decade. In New York City, more than 90,000 new cases come up each year. Across the country, Americans pay out $6.5 billion a year in automobile insurance premiums—yet in the past decade the insurance companies have suffered a net loss of more than $850,000 on this business.

Padded Bricks & Padded Bills. For many a victim, an auto accident is a ticket to a lottery in which the value of his injuries depends on a lawyer's skill and a jury's unpredictable sympathies. About half the time, in fact, juries in personal-injury cases decide for the defendant rather than the person claiming to be hurt. Yet some juries are markedly munificent. A Philadelphia jury gave $500,000 to a man injured in a taxi crash who claimed he suffered "excessive pain" in his back when anything touched it, even his clothing. A San Diego woman, arms and legs paralyzed, blinded in one eye, her speech and hearing impaired by a collision with a police car, won $650,000.

Such large awards are rare, though insurance companies claim that the highly publicized examples raise the average size of all awards and settlements. What bothers the underwriters more than the occasional big payoff is the widespread evidence of fraud. In one macabre conspiracy, a Los Angeles man arranged to have a friend push his car off a cliff, smash both his legs with a padded brick, and place him and his drugged wife beside the wreck. "No one would ever believe that I was crazy enough," boasted the man; the plot was uncovered—and the conspirators jailed—only because his friend got frightened and called the sheriff.

In Washington County, Pa., where auto insurance rates and the size of awards have both climbed to the highest levels in the state, the insurance companies and the county bar association have been battling what they say was an unspoken working agreement among certain courts, lawyers, witnesses and claimants. Judges in the county have been repeatedly rebuked by higher state courts for their handling of damage suits. One man who did not even miss work after his auto accident got $9,000 for a sprained thumb. In another case, two defense lawyers charged that the judge entered the jury room during deliberations to urge a "liberal" award.

Delay before the Jury. What the average auto accident claimant wants to recover, according to a recent New York study, is the actual cost of his medical and car-repair bills plus "a little gravy" to pay him for his trouble and pain. What he gets, according to the same study, is an average $850. After paying his lawyer, he has about $500 left.