30 August 2019

Would You Like a Large Serve of Lies With That?

A Reflection on Misinformation and Tort Reform Mark O’Connor
Mark O'Connor Compensation Lawyer

It began with a recent approach by a grade 11 high school student whose essay inquiry has reawakened memories of draconian measures invoked for so-called tort reform in 2002 and 2003 in Queensland.

The student was working on an assignment in Legal Studies and her topic referred to a comment I’d made to the press some 16 years ago regarding what I then saw as “ill-conceived and draconian” measures to restrict the rights of plaintiffs in Queensland as a result of the reforms underway.

Despite drastic changes made the demands are still there as insurers push even harder today to chip away further at Queenslanders’ compensation law rights.

The student’s inquiry reawakened the bleak days of 2002/03 and the concerted attack by the public liability insurers, medical insurers and the medical profession back at that time, and how so much misinformation from the insurance industry was used to eventually cause buckling of the will by the government. It led to a significant reduction of entitlements to injured Queenslanders and, for that matter, all Australians.

Back then, the insurance industry fear mongered, arguing there was a growing Americanisation of the personal injury compensation legal system in this country and reference was often made to an infamous American case where a woman allegedly received millions of dollars of damages after spilling coffee she purchased from a McDonald’s restaurant on her lap.  It was argued that this sort of craziness could not be let loose in Australia.

The case was Liebeck v McDonald’s Restaurants and, at the risk of letting the truth get in the way of a good story, I believe it’s worthwhile to reflect on that case as a warning to the public, that it should not allow the misleading scuttlebutt of insurance companies to be used to erode the hard-won rights of Australians.

Mrs Liebeck was a 79-year-old grandmother.  She was a passenger in a car.  She purchased a cup of coffee at a McDonald’s drive-thru in Albuquerque, USA.  While the car was stationary, she took the lid off the coffee cup to add sugar and cream.  She spilt coffee on her lap and suffered burns.

It was the policy of McDonald’s to superheat its coffee to 85°C. If spilt, it would cause third-degree burns in 3 to 7 seconds.

Mrs Liebeck’s case was not isolated. McDonald’s had received more than 700 previous reports of injury from its coffee, including third-degree burns, and had paid settlements in some cases.

At the time of the spill, Mrs Liebeck was wearing track pants, which absorbed the coffee and kept it against her skin. She suffered third-degree burns and required skin grafts on inner thighs and elsewhere.

Mrs Liebeck offered to settle her case for $20,000 to cover her medical expenses and lost income.  McDonald’s never offered more than $800.  The case went to trial.

The most damaging testimony at the trial against McDonald’s came from its own quality assurance manager, who testified that McDonald’s required the restaurants to keep their coffee pot temperature at 85°C.  He admitted that a burn risk existed for any drink served at over 60°C and that the coffee poured into the cups was not fit for human consumption since it was above that temperature.  Burns to the mouth and throat would occur if the consumer would drink the coffee at that temperature.  He also admitted that McDonald’s had no plans to reduce the temperature of its coffee.

A twelve-person jury reached its verdict on 18 August 1994.  The jury found that McDonald’s was 80% responsible for the injury and Mrs Liebeck was 20% at fault.  The jury awarded Mrs Liebeck $200,000 in compensatory damages, which was reduced to $160,000 because of her share of the responsibility for the accident.  It awarded a further $2.7 million in punitive damages to punish McDonald’s for its “reckless, callous and willful” disregard for the safety of its customers.

On appeal, the punitive damages award was reduced to $480,000.

After the trial, McDonald’s Albuquerque reduced the temperature of its coffee to a temperature which was less likely to cause injury when spilt.

The case was not frivolous and attacked McDonald’s corporate indifference to the safety of its customers.

Most recently there has been a parliamentary enquiry into Queensland’s compulsory third-party insurance scheme, with RACQ Insurance and Suncorp calling for a reshaping of the Queensland scheme to a ‘no-fault’ scheme, such as that which has recently been introduced into New South Wales.  This scheme has led to a significant destruction of rights for injured motorists.

A change to a ‘no-fault’ system such as that sought by RACQ Insurance would provide a windfall in profit for the insurers – this is in circumstances where RACQ’s profits jumped from $26.7 million in 2017 to $64.4 million in 2018.

Despite this incredible profit, RACQ Insurance wants more and the fear-mongering continues.

Queenslanders should be vigilant to protect their rights, remembering the lies that were propagated in 2002 and 2003 by the insurance industry – with the insurers, they never let the truth get in the way of a good story.

 


Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).

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