March 4, 2011

Does Michigan have more truck accidents because it doesn't allow punitive damages?

Opponents of limits on punitive damages typically argue that unlimited punitive damages are necessary to deter bad corporate behavior and protect public safety.  See this recent blog post, for example.  If that reasoning is correct, states with caps on punitive damages should be experiencing a rise in corporate misconduct and a decline in public safety.  And the situation should be even worse in states that have banned punitive damages altogether.  But is there any evidence this is true?  Yes, according to these Michigan plaintiffs' lawyers.

They argue, in this video and on this page of their website, that Michigan is suffering from a high rate of trucking accidents because that state does not allow punitive damages.  They say that trucking companies, free from the threat of punitive damages, "knowingly hire unqualified, unfit truck drivers who commit safety violations that cause accidents."  They cite evidence that Michigan experiences more than 100 fatal truck accidents per year, and another 5,000 truck accidents causing serious personal injuries per year.

One thing seems to be missing: evidence that the rate of truck accidents in Michigan is higher than in states where punitive damages are allowed.  Without such evidence, it seems awfully difficult to argue that truck accidents in Michigan are caused by that state's prohibition on punitive damages.

I decided to take a look at the data available on the internet to see if I could test the hypothesis that Michigan's lack of punitive damages has resulted in more truck accidents.  According to this University of Michigan study, Texas had the most fatal truck accidents between 2003 and 2007, a total of 2,545.  Michigan had a total of 606 during the same time period.  According to the 2010 census figures, Texas has a population of  25.1 million and Michigan has a population of 9.9 million.  That means that Texas actually has a higher rate of truck accidents per capita, .0001 per person for Texas compared to .00006 per person for Michigan.  Texas, by the way, allows punitive damages (subject to a cap).   

Florida also had a very high number of fatal truck accidents during the same time period, a total of 1,894.  With a population of 18.8 million, Florida's rate of fatal truck accidents per person is .0001, the same as Texas, and higher than Michigan.  Florida, of course, has no caps on punitive damages and is home to many of the largest punitive damages awards in the country in recent years.  Hmmm, the hypothesis isn't looking so good.  In fact, the only correlation so far is that states that allow punitive damages have a higher rate of fatal truck accidents, but I'm certainly not confusing correlation with causation.

Let's look at a Ohio, a state that is more economically and geographically similar to Michigan.  Ohio had 828 fatal truck accidents in 2003-2007, with a population of 11.5 million, for a rate of .00007 per person.  Again, higher than Michigan.  And Ohio law permits punitive damages (subject to a cap).

Based on this limited examination of the data, there appears to be no support whatsoever for the theory that Michigan has a higher rate of truck accidents as a result of its prohibition on punitive damages. To truly isolate the impact of punitive damages law on trucking accidents, a researcher would have to dig a lot deeper, and isolate a lot of other variables - economic, geographic, demographic.  That may be possible, but I haven't seen any such study. If any of our readers have seen one, let us know.