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What is a Compensation Culture?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 05 November 2016
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Compensation culture is a slang term most commonly used in the United Kingdom to refer to a highly litigious society where people routinely file claims for compensation in any situation where they believe they have experienced damages. The presence of compensation culture is used as an argument for tort reform by politicians who suggest that it is necessary to change the laws pertaining to civil suits to make it more difficult to file frivolous suits. Critics of the concept argue that sensational stories in the media exaggerate the number and nature of claims for compensation.

Many nations allow people to file suit in civil court when they experience harm because someone else failed to exercise due care. For example, if a driver is not paying attention on the road and hits someone else, the victim of the accident can sue for assistance with medical expenses or repairs to the car. In a compensation culture, the number of such suits increases significantly, and their merit is sometimes dubious as people may sue in situations where it is not clear they have experienced harm.

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The court system is obliged to take on all reasonable cases, although judges are allowed to throw out cases clearly lacking merit, including cases without sufficient supporting material. The rise of compensation culture can result in a clog in the civil courts, making it more difficult to process legal matters. Costs for liability insurance tend to go up because insurance companies are paying out more on their policies. Attorneys can contribute to the growth of such suits by encouraging clients to pursue damages in court.

Arguments against compensation culture usually surround cases where people have been sued in situations where no damage occurred, or when they were attempting to help someone and were sued for their trouble. The classic example used by advocates for tort reform is the good Samaritan, a person who stops to help in an accident and becomes the target of a lawsuit. Nuisance suits, such as people attempting to resolve customer service matters like poorly prepared food through the courts are also an example of compensation culture.

Some advocates argue for good Samaritan laws, allowing people to offer assistance and basic medical attention like cardiopulmonary resuscitation at the scene of an accident without fear of reprisal. Tort reformers also push for making emergency services like police officers and ambulance crew immune to suits unless negligence is clearly present; a paramedic could not be sued for cracking ribs while administering CPR, for example, but could be sued for failing to identify a neck injury. People concerned about compensation culture may also recommend fining or otherwise penalizing people who bring nuisance suits to court.

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