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June 2004 Archives

More on Chein v. Shumsky

We wondered aloud in our Monday post whether there were multiple Southern California doctors with the name of Edmund Y. Chein (whose conviction for perjury in expert witness testimony the Ninth Circuit just overturned). Reader Joe Zwers advises that "the Medical Board lists only one such person" and that his licensing and disciplinary record is here. Eric Rasmusen of Indiana University comments on the case here, though we think Rasmusen is barking up an entirely mistaken tree when he suggests that the split between majority and dissenting judges can somehow be ascribed to the kind of law they practiced before reaching the bench. So far as we can see, the backgrounds of the judges on each side of the case look very similar (a lot of big corporate firm practice, some prosecution) with only one or two exceptions.

Writes another reader, who asks for anonymity because he practices often before the court in question: "I was frankly a little surprised at the decision. Not so much that the Ninth Circuit granted habeas relief. But it seemed a little peculiar for them to write two inaugural paragraphs on the special entitlement of experts, as a class, to engage in truth-stretching under oath." The two inaugural paragraphs in question are reprinted as part of Peter Nordberg's post on the case. And in a more recent posting, Nordberg points to a case in which a "man who allegedly falsified his credentials to testify as an expert witness on electrical engineering matters in a Bronx civil suit has been charged with grand larceny and offering a false instrument for filing." Michael Newman, 67, of Woodcliff Lake, N.J., had allegedly misdescribed himself as a licensed professional engineer; he was hired by counsel representing the New York City Housing Authority as defendants in a now-settled lawsuit. (Cerisse Anderson, "Expert Witness? Not Really", New York Law Journal/New York Lawyer, Jun. 29). (Misspelling corrected 6/30).

Latest batch of incoming links

Round IV this time, and kind thanks for each one: Ernie the Attorney, The Right Coast, Wunderkinder.org, The Witness Box (economic damages), Edge of England's Sword, Atlantic Blog, and Against All Reason. Plus repeat links from MedPundit, Blog 702 and Michael Phillips. For earlier rounds, see here, here, and here.

Popcorn butter: suppliers win one

In the series of lawsuits filed by workers at a Carthage, Mo. food-processing plant over lung disablement caused by inhaling concentrations of popcorn butter flavoring, the score now stands at: one $20 million win for a plaintiff worker and his wife; one worker's case settled just before a jury was to return its verdict; and, now, one defense verdict. "After about five hours of deliberation, jurors ruled 9-3 Monday night that flavoring makers International Flavors and Fragrances Inc. and its subsidiary, Bush Boake Allen Inc., were not responsible for the injuries of Jasper Popcorn Co. plant worker Velma Ingalls, 34, of Iantha, and former employees Dustin Smith, 25, of Alba, Evelyn Standhardt, 60, of Carthage, and Marge Unruh, 51, of Jasper. All four contracted the lung disease bronchiolitis obliterans." Plaintiff's attorney Ken McClain said the trial "went as well as the other cases" but "just had a different jury". ("Jury rules against four popcorn employees", AP/Springfield News-Leader, Jun. 30). More: "How could juries hearing essentially the same evidence reach widely different conclusions? It happens all the time, said Daniel Whitworth, a Joplin lawyer who has argued a number of personal-injury cases." (Mike Pound, "Ruling shocks former worker", Joplin Globe, Jun. 30).

The company that actually owns the factory where the injuries occurred was not named in the suit. Which is to say that the whole idea was to bypass the workers' compensation system, with its definite but limited awards, in favor of turning the case into a product liability suit, where the amounts that can be sued for are not so limited (see Overlawyered.com letters, May 7). Thus the plaintiff's lawyers representing the Missouri workers have played down the direct employer's role in the calamity in favor of playing up the flavoring suppliers' failure to issue stronger warnings. In the case this week, however, defense attorneys Frank Woodside and Mike Patton successfully linked the workers' illnesses to poor practice at the factory. Quoting the AP account: "Patton noted that no one at the plant has become ill since the mixing area was enclosed and workers started wearing respirators. 'I expect the jury understood the deficiencies of the industrial hygiene at the popcorn plant,' Woodside said after the verdict was announced."

Herbert on Missouri med-mal

Like rabbits, the Times columnist's factoids (earlier coverage here, here, here and here) must be chased individually to their little holes: MedPundit (Jun. 29) has a letter from a Missouri physician concerning the supposed drop in medical malpractice payouts there as announced by the state's Department of Insurance. The Missouri State Medical Society website has a response to a tendentious press release issued by the state insurance department in Dec. 2003 concerning its annual report on malpractice insurance for the year 2002, but doesn't seem to have posted a reply to the April report yet.

Wal-Mart class action

Steve Malanga of the Manhattan Institute has an op-ed in today's Wall Street Journal on last week's certification of a sex discrimination class action against the world's largest retailer. "To read the individual stories of the original plaintiffs of this lawsuit is to get a lesson in how employment law has been degraded to the point where aggrieved employees who have been disappointed in their careers regularly claim discrimination and sue -- based on nothing more than the fact that they have not been promoted." ("Class Action? Third Aisle to the Left", Jun. 29 (subscriber-only); Radley Balko, Jun. 28; AP/Forbes, Jun. 23; AP/Law.com; "A rollback for Wal-Mart" (editorial), Christian Science Monitor, Jun. 25). For views more or less from the plaintiff's side, see David Streitfeld, "Lawyers Take On Wal-Mart", Los Angeles Times/KTLA, Jun. 28 (via Evan Schaeffer); Reed Abelson, "Welcome to Wal-Mart. Please Help Me", New York Times, Jun. 23.

From news accounts, it appears that one element of the plaintiffs' case will be to assert that female Wal-Mart employees are statistically "underrepresented" in higher-paying sections of the store, such as the paint and hardware department. For bias-law buffs, that issue instantly recalls one of the titanic struggles in the history of sex-discrimination law, the EEOC's prolonged courtroom crusade against Sears, Roebuck & Co. A useful introduction to that suit appears on John Rosenberg's Discriminations blog (Oct. 25, 2002, scroll down; see Overlawyered, Oct. 28-29, 2002). Rosenberg, who worked as a consultant on the defense side in the case, points out that: "The percentage of women in various positions at Sears (selling hardware, clothes, appliances, air conditioners, etc.) closely tracked the percentage of women among sole proprietorships in those areas." For extensive discussion of the legal war on Wal-Mart, see Overlawyered, Apr. 13 and links from there.

Now that the Supreme Court has ruled that habeas corpus extends to foreign nationals detained at Guantanamo Bay, Eugene Volokh thinks it possible that concerted litigation campaigns by captured detainees could become a method by which enemies carry on hostilities against the U.S. government. Read the whole thing (Jun. 28). Why might al-Qaeda or other forces at war with the United States find litigation tactically attractive? One motive would be to impede the actions of government (by, for example, making it necessary for U.S. combat personnel in the field to make themselves available for depositions). A further possible motive involves a risk which Volokh brushes on in passing, namely the disclosure of secret material. We know that al-Qaeda sent agents to major terrorism trials to take careful notes of the testimony there, and that the resulting trove of information did much to allow the organization to construct a model of how Western counterterrorism services do their work. To be sure, U.S. courts employ various safeguards (such as in camera examination of documents by judges) which help to prevent dissemination of sensitive material. Still, once the barrage of interrogatories and document demands is underway against the Pentagon and its contractors (characterized, of course, as pursued only for the purpose of determining whether detainees' rights have been violated), and the results shared by lawyers with each other and (where not prohibited) the press, it would be surprising if a quantity of militarily useful information did not make it onto the public record. A range of other views on yesterday's decisions: Jack Balkin, Steve Bainbridge, Dan Drezner, Larry Solum, Stuart Benjamin.

Via Mike DeBow (Jun. 28), who just finished guestblogging on Overlawyered: Massachusetts AG Thomas Reilly has been letting private law firms enforce the state's "item pricing" law, which requires stores to stamp prices on individual items and provides for penalties if the computer scan price comes through higher than the sticker price. Many of the private attorneys who've been making large fees on item-pricing suits donate to Reilly's campaign coffers, which is not exactly a shocker. More interesting, the attorneys have been arranging settlements in which -- given that there is no way of identifying most of the consumers victimized by the practice -- the targeted stores (including Walgreen's, Home Depot and Wal-Mart) agree to fork over large sums to consumer organizations which in many cases act as key political allies of trial lawyer interests, including Public Citizen ($50,000), ATLA's Roscoe Pound Institute, and the New England Patients' Rights Group ($100,000 each). Most of the grants "will be used to spur greater awareness of consumer rights." (Bruce Mohl, "Reilly turns to private enforcement of item pricing", Boston Globe, Jun. 27). The practice of allocating "cy pres" moneys to pro-litigation groups has occasionally stirred controversy in other states, such as California, where Consumers Union was one notable beneficiary.

Another State rejects Daubert

On Friday, the North Carolina Supreme Court rejected the federal Daubert standard for the admissibility of expert testimony. The court decided to retain North Carolina's unique admissibility standard. Like Daubert, this standard purports to require that expert testimony be reliable. However, lest they get confused, the court advised lower courts in North Carolina that "application of the North Carolina approach is decidedly less mechanistic and rigorous than the 'exacting standards of reliability' demanded by the federal approach. The court condemned Daubert's "gatekeeping" approach as putting "trial courts in the onerous and impractical position of passing judgment on the substantive merits of the scientific or technical theories undergirding an expert's opinion." The court also expressed specific concern that Daubert leads to too many civil actions being dismissed on summary judgment (though it's not clear why the court thinks that cases based on unreliable expert evidence should survive summary judgment).

I've been arguing for years that civil justice reform advocates have been too complacent about the state of the rules for the admissibility of expert testimony. As a forthcoming article of mine explains,

MedPundit on Herbert

On Friday New York Times columnist Bob Herbert published yet another lame diatribe against medical liability reform ("Cooking Up a Crisis", Jun. 25) pasting together little factoids from here and there in the Litigation Lobby's defense. MedPundit Sydney Smith has a rapid response (citing our coverage along the way). She points out that Herbert manages to cite a snippet of a General Accounting Office report to his purpose while leaving out a critical statement from the report:

Multiple factors, including falling investment income and rising reinsurance costs, have contributed to recent increases in premium rates in our sample states. However, GAO found that losses on medical malpractice claims -- which make up the largest part of insurers' costs -- appear to be the primary driver of rate increases in the long run. (emphasis Smith's).

For our tag-team coverage of an earlier Herbert column, see last week's posts: Frank, Copland, Olson. The blogosphere's most prominent defender of Herbert's latest column is Atrios, with his usual taste and nuance (no kids, please).

Yet more incoming links

Another round of links and welcoming comments: from Lawrence Solum's widely read Legal Theory Blog; Peter Nordberg at Blog 702, who says particularly kind things about us; and David Giacalone, Curmudgeonly Clerk, Tim Sandefur, Poliblog, Southern Appeal (& permalink), Michael Phillips, Red, White and Blog, Michael Capanzzi's Masculiste, and Technicalities. For the first two rounds, check here and here.

Expert witness beats perjury rap

What does it take to convict an expert witness of perjury? Well, according to the Ninth Circuit (over dissents from O'Scannlain and four others), ruling last week, it's not enough to catch the expert passing himself off in testimony as a specialist in orthopedic surgery when his actual residency was in physical medicine and rehabilitation. Very curiously, the Ninth Circuit judges decided that the misrepresentation was not material to the jury's reception of Dr. Edmund Y. Chien's testimony -- even though he was testifying on a plaintiff's future need for orthopedic surgery -- and thus, on a habeas corpus petition, overturned his California state court perjury conviction. The case is Chein v. Shumsky, No. 01-56320, D.C. No. CV-99-05296-ABC, (Jun. 25 (PDF)); via Peter Nordberg, who comments.

The slip was not exactly an isolated one. To quote the majority opinion in the case, Chien on more than one occasion described his educational background as "'American University School of Medicine, Florida, 1979-1980,' when he in fact was enrolled in the American University of the Caribbean School of Medicine, which is located in the West Indies but has an office in Florida." (Chien, it should be noted, was not charged with making this particular misrepresentation in the course of rendering expert testimony, though he did make it in an interrogatory in an unrelated legal case.)

So what happens to an expert witness after this kind of embarrassment blows up? At the time of the original incident Dr. Chien was apparently pursuing a practice from several offices around the Los Angeles area. We Googled "Edmund Y. Chien" and found directory listings describing him as a doctor in Palm Springs who "is known internationally for his valued contributions to hormone research and his pioneering work in anti-aging hormone therapy." Googled without the middle initial "Y.", "Edmund Chein" returns more than 1,000 hits, most of them promotional in tone ("One of the most prominent figures in anti-aging research today") and lauding his work in the use of human growth hormone (HGH). There's also this Oct. 5, 2000 clip clip from the Desert Sun on his successful lawsuit to keep the California Medical Board from yanking his license, and this clip on how he's treated the multiple-sclerosis-stricken talk show host Montel Williams. He even gets mentioned in spam (more). Is it the same Edmund Y. Chien, M.D., or are there two Southern California doctors by that name? Someone ring the assignment desk... [see update: Jun. 30].

For those of you anxiously awaiting our first featured discussion between editor Walter Olson and GMU Law's Michael Krauss on the propriety of federal legislation to stop gun lawsuits, a new tidbit this week from West Virginia, where Kanawha County Circuit Judge Irene Berger certified a $1 million settlement between a pawn shop that sold a gun to a woman with no criminal record and two police officers shot in a gun battle with a criminal who ultimately used the weapon.

The original purchaser of the gun, Tammi Lea Songer, and James Gray, the convicted felon to whom she delivered the gun (Gray in turn sold the weapon to others, including the felon who was actually involved in the shooting), both served time for their crimes. How were they caught? Well, it seems that the managers of the pawn shop "became suspicious because of the number of weapons Songer bought [12] and contacted the federal Bureau of Alcohol, Tobacco and Firearms. The agency and the store set up a sting operation in which ATF officers dressed as store clerks, and Songer was arrested when she returned to buy guns again . . . ." So, the moral of this story is that a store that actually goes to the ATF to report a suspicious sale, as this store did the very next day, makes itself a target for lawsuits.

Of course, the lawyers' quest for cash does not end here. Outstanding suits remain against Sturm, Ruger, the gun manufacturer, and Acusport, an Ohio distributor who presumably initially acquired the gun from Ruger and resold it. For my take on such suits, see my National Review Online column from last November. See also our prior discussions here, here, and here.

Will the gun manufacturer and distributor lawsuits go anywhere? Who knows, but just remember: Kanawha County, West Virginia, is one of the American Tort Reform Association's "judicial hellholes" . . .

More visitors

Two days after our launch, visitor traffic continues at a brisk clip, thanks in part to very generous links from Ramesh Ponnuru at National Review Online "The Corner" and David Bernstein at Volokh Conspiracy. George Lenard at George's Employment Blawg also gives us a nice write-up, while Fool in the Forest and Carolina Law have added us to their permalinks. For the first wave of links, see yesterday's post.

P.S. And here come some more nice ones: MedRants, Pejman Yousefzadeh, Heritage Policy Weblog.

This is your AG on drugs

Via Michael DeBow, guest-posting at Overlawyered: Vermont Attorney General William Sorrell, incoming president of the National Association of Attorneys General (NAAG), says he plans to lead the organization in a campaign against high pharmaceutical prices, and NAAG has scheduled a meeting for Chicago in January on the subject. Are we being unfair in suspecting that for many AGs the identification of a popular voter issue came first, and the search for possible legal hooks justifying their own involvement followed afterward? Whatever its origin, anti-drugmaker AG activism is cropping up all over the place: Wisconsin (AG Peg Lautenschlager earlier this month sued 20 cos. demanding price rollback); Minnesota (AG Mike Hatch released screed bashing drug manufacturers as "the other drug cartel"; Illinois (AG Lisa Madigan (more) on campaign trail denounced "obscene" profits and promised investigation). To no one's surprise, the private plaintiff's bar got there first: see Overlawyered, Oct. 19, 2000 (suits "could eventually dwarf current tobacco litigation"); Nov. 24, 2003 (tobacco/mass tort firm Hagens & Berman using California's ultra-elastic s. 17200 to challenge various marketing practices that Congress and the FDA have not seen fit to ban). More: Derek Lowe discusses New York AG Eliot Spitzer's suit against Glaxo SmithKline (Jun. 8). See also R. Glenn Hubbard, "Attacking Drug-Makers Is No Cure", Financial Times, Jun. 16, reprinted at AEI site.

Fear of Spitzer

AEI's Federalism Project has reprinted Ramesh Ponnuru's recent critique of the New York attorney general's activities, which took the form of a cover story for National Review ("Meet Eliot Spitzer -- The most destructive politician in America," Jun. 14). Discussed in the piece are Spitzer's activities on tobacco, "predatory lending", brokerages, mutual funds, interstate pollution, and guns (I'm quoted). Ponnuru is not uniformly critical on every issue, but he's appropriately harsh on Spitzer's enthusiasm for regulation by litigation in areas where the side he backs could not win in the political process, and on the incoherence of Spitzer's pronouncements on federalism.

More: on Spitzer's suit against Glaxo SmithKline, see updated Jun. 25 entry. On controversy over his fund-raising, see Charles Gasparino, "Friends of Eliot (Sort of)", Newsweek, Jun. 21.

Welcome visitors

Point of Law was officially opened to the public yesterday and has been drawing rave reviews and plenty of incoming links. So here's a welcome to visitors from Howard Bashman ("Be sure to drop by and take a look around"); Steve Bainbridge ("Looks like a blog to me ... and a darn good one"; MedPundit Sydney Smith and KevinMD, both linking to our Bob Herbert dissection; Martin Grace; Key Monk; Stop the Bleating; Kyndal, and (no surprise) Overlawyered; along with permalinks from Declarations and Exclusions, Legal Reader, and SynTym.

Bob Herbert's "Malpractice Myths"

"This is all about greed," Bob Herbert explains, talking about medical malpractice. ("Malpractice Myths", NY Times, Jun. 21). Very few would disagree with this sentence standing by itself. But Herbert, without any obvious irony, is ascribing this sin to insurance companies, rather than to the trial lawyers who have caused losses paid per doctor to increase 1300% since 1975--more than twice the rate of medical-care inflation. This is not a question of a handful of incompetent doctors; more than half of all doctors have been sued for malpractice.

Herbert's piece is unencumbered by such trivial things as data. He baldly asserts that "there is no evidence that soaring malpractice premiums are the result of sharp increases in the amounts of money paid out for malpractice claims." This is utterly false, as our Overlawyered.com site documented Jul. 29 and Mar. 24.

The GAO found (as did HHS and the House Joint Economic Committee) that increases in malpractice rates were due largely to the high payoffs in legal claims. A study in Contingencies, the journal of the American Academy of Actuaries, who doesn't have a dog in this fight, also found that malpractice premiums are directly related to malpractice losses.

No, insurance companies have not promised to lower rates in response to reform, but that's because the reforms being proposed are minor; again, both the government and the actuarial studies showed that states that endorsed such reforms experienced a slowing in their premium increases. According to HHS, "Malpractice reforms in the 1980s led to a 34% decline in malpractice premiums in those states that enacted reforms compared with states that did not enact reforms."

Herbert claims that medical malpractice insurance and claims is only 1% of health-care costs; but that figure ignores the billions spent on inefficient defensive medicine, on hospital in-house lawyers, on time doctors spend with lawyers instead of with patients, and on self-insurance. It also ignores the effects of runaway claims on specialists such as obstetricians that face six-digit premiums--even the trial-lawyer front group Center for Justice and Democracy, who Herbert relies upon, admits that the average OB/GYN pays about a quarter of her net income in premiums, and that figure is much higher in "crisis" states. If it really is the case that only 2% of malpractice injuries result in suits (and, again, the Center for Justice and Democracy has claimed elsewhere the number is much higher when it suits their purposes), it goes to show how broken and inefficient the malpractice litigation system is; whatever it is trial lawyers are protecting, it's not the rights of injured patients.

Herbert's column becomes especially incoherent when talking about the case of Deborah Rayburn, who sued over a tubal ligation gone wrong. The lawyers agreed to a settlement, but Rayburn "would have preferred to go to trial, she said, not because she was looking for a big payday, but because all the details of her case would then have come out publicly." The tragically-injured plaintiff who claims not to care about a payday is rapidly becoming a cliched op-ed archetype, and I've never understood why. Why is a lengthy trial--taking up the time of lawyers, doctors, experts, and jurors--to pointlessly resolve a settled dispute a desireable result? Why does Herbert think medical malpractice reform has anything to do with Deborah Rayburn's preference for a trial to a payday (a preference that apparently wasn't strong enough to insist her lawyers refuse to settle)? If Herbert wants to see greed, he should see the reaction of trial lawyers if he proposes that they replace their settlement paydays with pro bono public inquests to make people like Deborah Rayburn feel better about their misfortune.

Herbert on med-mal, cont'd

Martin Grace of Georgia State provides more details (series of posts begins Jun. 21) to back up one of the points Jim makes below, namely "that the medmal insurance market is owned to a major extent by the doctors though medical malpractice mutuals," so that Herbert's tirade makes little sense except on the premise that "[d]octors really enjoy charging themselves high premiums just for the heck of it." In two posts today, Grace delves further into insurance industry statistics by way of refuting Herbert. In the first post, he discusses various insurance formats outside the stock-company format (mutual, reciprocal, risk-retention) and notes that "some 43 percent of all medmal premiums are written by member owned insurers. One reason this number is so high is that the traditional insurers have left the market leaving the physicians and hospitals with the incentive to insure using more creative organizational forms." Contrary to Herbert's "myth of extraordinary insurer profits, we see that in the 20 AMA 'crisis states' the percentage of medical malpractice writings that are written by member (physician and hospital) owned companies is about the same as the 'near crisis' and 'not in crisis states', so the stock insurance companies are not necessarily able to extract extraordinary profits from the physician." In the second post he observes that legal defense costs run far higher in med-mal than in conventional insurance -- circa 25.5 percent as compared with 5.5 percent -- and that one reason for this is that a remarkably high share of med-mal cases fail at trial.

Elsewhere in the blogosphere, Herbert's column met with approval from Bump in the Beltway, but not from Medrants (+ comments). The author of Culture Shift, a Kerry supporter, nonetheless thinks we would be better off emulating the Swiss and seeking "a society which can more easily handle frictions and disputes that arise without the constant fear of litigation hanging over your head". Leading the cheering section for Herbert, not surprisingly, is Kevin Drum of the Washington Monthly (Jun. 21, with a big comments section), who writes of "the tort reform scam". The Monthly is a magazine that used to be sharply critical of the Litigation Lobby on many matters but has apparently had a change of heart.

In yesterday's New York Times, columnist Bob Herbert attacked tort reform as "all about greed." According to Herbert, "[w]hat tort reform will lead to, not surprisingly, is an unwarranted burst of additional profits for the insurance industry, which is why the industry is sinking so much money into its unrelenting campaign for 'reform.'" Herbert repeated the familiar trial lawyer canard that "there is no evidence that soaring malpractice premiums are the result of sharp increases in the amounts of money paid out for malpractice claims."

And the source of information for Herbert's contention? None other than the "Center for Justice and Democracy." Innocently called a "consumer advocacy group" by Herbert, the CJD is a Naderite group (its president, Joanne Doroshow, began working with Nader in 1986), heavily funded by the trial bar, and started with seed money by Michael Moore (yes, that Michael Moore), who remains on the group's board.

Problem is, the CJD's own data refute its claims that the "premium-gouging underwriting practices of the insurance industry have been widely exposed." The very "study" the CJD issued through its subsidiary group, "Americans for Insurance Reform," showed that since 1975, actual liability losses paid by doctors have escalated 1300%, versus a general 500% medical cost inflation, and only a 300% rise in actual premiums written per doctor. The result, of course, is that the paid-loss ratio -- the percentage of insurance premiums going to cover tort losses -- escalated from about 25% in 1975 to about 80% today. (CJD either doesn't understand its own data, or it deliberately misrepresents them. For more thoughts on the weakness of the CJD's claim that medical malpractice insurance rate increases are not linked to rising tort costs, see Ted Frank's earlier commentaries here and here.)

The medical malpractice insurance industry, therefore, has been a decidedly unprofitable business. In 2001, the country's biggest malpractice insurer, the St. Paul Companies, exited the business entirely after incurring nearly $1 billion in losses. In Pennsylvania, one of 20 states with out-of-control rates, only two malpractice insurers remain, down from ten only five years ago. In Mississippi, at least 15 insurers have exited the market since 1997.

In this environment, the majority of doctors today are insured through mutual insurance companies -- i.e., those owned by the doctors themselves. In other words, if the doctors' malpractice insurance rate hikes were "all about greed," it would be a peculiar greed indeed, since the doctors themselves control most the companies through which they are insured.

Herbert's column would be amusing were its implications not so deadly serious. Faced with potential bogus "botched delivery" suits, many obstetricians are limiting their practices to gynecology, forcing women in some areas to travel hours for prenatal care and delivery. High-risk specialists such as neurosurgeons are exiting some parts of the country entirely, meaning that stroke patients and head- and spinal-trauma victims have to be helicoptered to neighboring states.

Americans potentially have access to the best health care in the history of the world, but that health care is being threatened by a system that is reducing their access to care through a random and haphazard system of law. Of course, in medicine, mistakes happen, and some of those are due to doctor negligence. A system of deterring those mistakes, and compensating the victims of negligent mistakes, is extremely important. But that's not what our system is doing; our system is broken and it needs to be fixed. Instead of pointing a finger at the insurance industry, we should be thinking about solutions to the problem.

Following up on my post yesterday: the New York Post today ran an editorial lambasting Second Circuit judge Guido Calabresi for his inflammatory remarks comparing Bush's ascension to power to those of Mussolini and Hitler. The Post goes so far as to call on Judge Calabresi to resign. (via Howard Bashman)

Bashman also posts the following remarkable account from WNBC-4 New York (from Associated Press reports) last month (emphasis added):

As he traveled around New Haven, the president appeared to be suffering no ill effects from a fall from a mountain bike Saturday other than visible minor abrasions and scratches on his chin, upper lip, nose and right hand. He also had minor abrasions and scratches to both knees, the White House said.

The president left Tweed-New Haven Airport in New Haven aboard Air Force One shortly before 7 p.m. First lady Laura Bush was expected to stay at Yale through Tuesday.

About 50 protesters gathered at Levin's home Sunday afternoon. They denounced the president and the war in Iraq, while holding signs saying "Uproot Bush" and "Resist This Endless War."

The crowd was a mix of students and older Yale graduates.

Anne Tyler Calabresi, 69, of Woodbridge, said she was protesting on behalf of herself and her husband, 2nd Circuit Judge Guido Calabresi, a Yale graduate and former dean of the Yale School of Law.

"I'm profoundly worried about the way this country is going," she said. "And I'm furious about the lies George Bush has told to us again and again. He has led us into a war that is destroying our reputation around the world and creating implacable enemies around the world that we didn't have one year ago."

UPDATE June 23: The Wall Street Journal didn't go as far as the Post, but did call for sanctions against Calabresi. Also, check out Josh Gerstein's follow-up article on the scandal in today's New York Sun. (via Bashman)

UPDATE June 25: Judge Calabresi has now apologized for his remarks, according to articles in today's New York Sun, New York Times, and newswires. Calabresi's statement to Chief Judge John Walker reads, in part: "Although what I was trying to do was make a rather complicated academic argument about the nature of reelections after highly contested original elections, that is not the way my words, understandably, have been taken. . . . I can also see why this occurred, despite my statements at the time that what I was saying should not be construed in a partisan way. . . . I am truly sorry and apologize profusely for the episode and most particularly for any embarrassment my remarks may have caused you, my colleagues, and the court."

Not quite yet lawmakers to the world: to sighs of relief from the business community, the Supreme Court last week ruled 8-0 that federal antitrust law cannot be used to demand triple damages from foreign businesses over sins committed abroad against foreign consumers absent some more substantial domestic involvement in the case. It overturned the D.C Circuit's ruling to the contrary. "Stephen A. Bokat, senior vice president and general counsel of the United States Chamber of Commerce, said the decision was a 'very positive development' in its campaign against what it calls 'global forum shopping.'" (Linda Greenhouse, "The Reach of U.S. Antitrust Law Overseas Is Limited", New York Times, Jun. 15).

Is Mel Weiss worried?

At the bottom of Josh Gerstein's article focused (rightly) on Judge Guido Calabresi's explosive comments comparing Bush's ascension to power with those of Mussolini and Hitler, he includes the following tidbit:

During a session on corporate crime, a prominent class-action lawyer, Melvyn Weiss of Manhattan, warned that tort reform and similar measures could wipe out the plaintiffs’ bar.

Brandishing a copy of a Manhattan Institute report on trial lawyers, Mr. Weiss said, “This is what we’re up against, ladies and gentlemen, and if we don’t fight it, we’re dead meat.”

Another panelist said stockholders who said little about corporate governance in the 1990s share some of the blame for the recent corporate scandals.

“We were all making money. We weren’t out there saying, ‘Get ‘em Mel. Go get ‘em, Mel,” said a former attorney general of Massachusetts and a former president of Common Cause, Scott Harshbarger. He praised New York’s attorney general for his investigations.

“Elliott Spitzer has not drilled a dry hole yet,” Mr. Harshbarger said.

At another discussion, liberal lawyers said it was hypocritical for Republicans to push federal caps on damages in state tort cases while maintaining that they favor limited federal government.

We in the think tank world often wonder whether our ideas have any impact. While I'm far from convinced that the trial lawyers are in danger of being "dead meat" anytime soon, seeing Mel Weiss brandish a copy of Trial Lawyers, Inc. and the American Constitution Society devote an entire panel to tort reform at its national convention does at least offer some encouragement that we're getting noticed. (Of course, a look at the convention's schedule shows that sponsors for the convention included heavyweight plaintiffs' firms like Baron & Budd and Lieff Cabraser Heimann & Bernstein. And Baron & Budd's Fred Baron, a former head of the American Trial Lawyers Association and current co-chair of Kerry Victory '04, is on the organization's board of directors. So perhaps we shouldn't be too surprised...)

The blogosphere has erupted today over the silly comments made last weekend by Judge Guido Calabresi of the U.S. Court of Appeals for the Second Circuit, as reported by Josh Gerstein in today's New York Sun. Speaking before the American Constitution Society, in essence a left-wing version of the libertarian/conservative Federalist Society, Judge Calabresi questioned Bush's assumption of power through the Supreme Court's decision in Bush v. Gore as "illegitimate," compared that assumption of power to those of Mussolini and Hitler, and suggested that the American people ought to expel Bush from office not for political reasons but for "the structural reassertion of democracy."

Judge Calabresi, affectionately called Guido by his students, was my torts professor; he is charmingly generous, and I consider him a personal friend. His book The Cost of Accidents was the seminal work applying law and economics to the law of torts (which in application, unfortunately, had some quite negative unintended consequences -- many of which we have documented and will continue to document on this site).

But these comments make one really wonder what Guido's been smoking.

In a unanimous decision today, the Supreme Court limited customer suits against health maintenance organizations to federal courts. The court ruled that ERISA, the Employee Retirement Income Security Act, preempted state law for such "negligent misconduct" suits.

UPDATED 06/22: Linda Greenhouse at the New York Times has this report on the decision (registration required).

Can Rule 11 be rescued?

On overlawyered.com, our editor has posted a discussion of the new bill introduced by Rep. Lamar Smith (R-TX), the chairman of the House Judiciary Committee's subdivision on courts. The bill is intended to revivify Rule 11, which allows for sanctions against attorneys who filed frivolous claims; Rule 11 was significantly weakened in 1993.

In Massachusetts and Rhode Island, to name two states, interest accumulates on medical malpractice judgments at an astonishing 12 percent per annum, which may have made sense in the days of high inflation but in an era of 6 percent mortgages is pretty much a straight subvention to plaintiffs and their lawyers. A change to more realistic interest rates is, of course, bitterly resisted by the trial lawyers' lobby. ("Mass. May Cut Interest Paid on Med-Mal Awards", Insurance Journal, Jun. 16; more at ATRA (PDF) (via Martin Grace); "Doctors Pushing For Medical Liability Reform", TurnTo10.com (R.I.), Jun. 8.

"Asbestos Free Texas" woos GOP

Texas trial lawyers are trying to intervene in their state's Republican politics again, to judge from this account of an effort to sway the party on asbestos legislation (Janelle Shepard, "Texas Conservatives Receive Misleading Mail About Asbestos Litigation", Texans for Texas, May 28). For background, see Overlawyered, Mar. 12, 2002.

From Howard Bashman: The Illinois Supreme Court yesterday clarified that trial court judges in that state can set appeal bonds lower than the actual judgment amount plus interest. Illinois's rule hit the national headlines last year when Philip Morris USA faced potential bankruptcy were it to post the required $12 billion appeal bond from a $10.1 billion verdict for allegedly insinuating that its "light" cigarettes were "safer." The notion that such a verdict -- handed down in the notorious magnet court of Madison County -- would be essentially unappealable for even so giant a corporation as Philip Morris shows just how crucial this procedural reform was.

Pennsylvania State Police v. Suders

The Supreme Court, with near-unanimity (Thomas dissenting), has decided a case involving claims in which sexual harassment law intersects with the law of "constructive discharge" -- that is to say, where complainants weren't fired but say they had to quit because the environment at work was so hostile. George Lenard analyzes the case and discusses press reaction (Jun. 14 and Jun. 15) and Michael Fox also comments (opinions courtesy Findlaw).

Last week, the Oregon Court of Appeals sustained a $79.5 million punitive damages award levied against Philip Morris for the 1997 lung cancer death of an individual who had smoked 3-packs-a-day for over 40 years. The punitive damages awarded were 96 times the $821,485 in compensatory damages ($800,000 noneconomic) awarded in the case.

Having already affirmed the award in a previous ruling, the Court of Appeals had received the case on remand (i.e., for reconsideration) from the U.S. Supreme Court in light of its decision last spring in State Farm v. Campbell, 538 U.S. 408 (2003). In Campbell, the Supremes determined that an award of $145 million in punitive damages against State Farm was unconstitutional when compensatory damages were only $1 million: "[F]ew awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process." Id. at 425.

The Oregon court noted that the Supreme Court did not adopt a bright line rule rejecting punitive damage awards of 145-to-1 compensatory damages -- or, say, 96-to-1. The Court attempted to distinguish the tobacco case from Campbell, in essence, because (1) the tobacco companies' behavior was bad, bad, bad and involved "physical" harms, not "economic" harms as in Campbell; and (2) "at least 100" other Oregon smokers had been "defrauded" by Philip Morris's misleading statements about its product.

But the Oregon judges' reasoning is so tortured that it is impossible to interpret as anything but completely missing the Supreme Court's point in State Farm, or deliberately (if not overtly) flaunting the High Court's authority.

The doctors and the trial lawyers in New Jersey have been having a big fight, and the docs got thrashed. That's the message of a purported medical-malpractice reform bill recently signed by Gov. Jim McGreevey and praised by the state trial lawyers' association, which has been numbered among McGreevey's chief backers. The bill adopts a favorite Litigation Lobby nostrum in dealing with escalating malpractice insurance rates, namely to throw subsidies at the problem: in particular, $78 million will be raised over three years to subsidize the highest-risk providers (such as surgeons, emergency room doctors, and ob/gyns). It will come at the expense of New Jersey employers (who will pay $3 per employee as a new surcharge) as well as doctors, chiropractors, dentists, optometrists and lawyers (who will pay $75 each). So for a while, at least, business as usual will be able to continue.

The bill also (according to the New York Times) adds more stringent requirements for reporting physician misconduct. Moreover, "it prevents insurers from raising the premiums of doctors whose medical malpractice lawsuits have been dismissed" -- apparently on the premise that the provision of legal defense in such cases is a free good that insurers can be ordered to provide gratis. More realistically, they will be expected to spread its cost among other, lower-risk insureds. Among the bill's many other provisions are several that may actually reduce the rate of litigation: giving judges more authority to reduce high awards, making it easier for peripheral doctors named in "shotgun" pleadings to get dropped from suits, tightening expert witness requirements, strengthening doctors' "Good Samaritan Law" protection for emergency care above and beyond their normal duties, and reducing from age 21 to age 13 the statute of limitations for suing over birth-related injuries. Which probably justifies doctors' much-publicized plunge into political activism: had they not kept the issue aflame on the front pages, the lawmakers might have ignored the litigation side of the problem entirely. (Jessica Bruder, "New Jersey Starts Fund for Malpractice Costs", New York Times, Jun. 8; Tanya Albert, "3 states pass tort reform; others still waiting", American Medical News (AMA), Jun. 14; Martin Grace, Jun. 14). For more on malpractice battles in the Garden State, see Overlawyered, Nov. 22 and links from there, Sept. 12, and Aug. 22, 2003.

Utah court tosses "split-award" law

Utah: "A judge on Friday struck down a law enabling the state to fatten its general fund by taking half of all punitive damage awards above $20,000 in civil lawsuits." "Split-award" laws on punitive damages, which came to national note recently when Gov. Arnold Schwarzenegger proposed one in California (see Overlawyered, Jun. 2), are in effect in eight states. They have come under challenge from trial lawyers in several of those states (supposedly as a "taking" of plaintiffs' property -- Richard Epstein, call your office), but only the Colorado courts have struck them down. The latest ruling is by no means the last word in Utah, not only because of the chance of appeal, but also because it "applies to the law as it read before lawmakers amended it earlier this year. The amendment eliminated dire tax consequences for plaintiffs, but also made the law less vulnerable to attack by patterning it after a Georgia statute that has withstood legal challenges." (Elizabeth Neff, "Damage-awards law tossed", Salt Lake Tribune, Jun. 12).

Supposedly the Nineteenth Century courts put us on the road to plutocracy when they acknowledged that Constitutional rights can apply to enterprises as well as individuals, or so at least runs an old chestnut of anti-business rhetoric (see, for example, here, here, here, and here). Eugene Volokh (Jun. 10) concisely outlines some reasons to think the courts got it right and the business-bashers get it wrong. Prof. Bainbridge adds a coda (Jun. 10).

The 205-year-old Providence Washington Insurance Companies, the oldest insurance company in New England and third oldest in the United States, has announced that it will cease operations after "running off" its current obligations (paying claims on them as they mature). Though the company withstood the Civil War, 1929 stock market crash and any number of hurricanes, fires and earthquakes, it could not quite withstand the unpredictable nature of the present-day litigation system: "A.M. Best attributed the insurer's decline partly to losses from asbestos claims on businesses insured in the 1960s through 1980s." ("After 205 Years, R.I.-Based Providence Washington to Close Its Doors", Insurance Journal, Jun. 1)(via Martin Grace, who suggests that reckonings of the industrial damage done by the asbestos litigation -- as with the oft-seen lists of manufacturer bankruptcies -- ought to include the damage done to the insurance sector of the economy as well).

Ted Frank has posted on overlawyered the sordid tale of yet another "valedictorian suit." The case seems silly, and it will likely be dismissed. But that dismissal is far from harmless. Sadly, the lawsuit has the school district "considering whether to follow the lead of other [school] districts and drop the valedictorian ritual in favor of a system that recognizes a wider array of talent."

Via MedPundit: physicians in much of the U.S. may find their legal environment discouraging, but they can still be thankful they don't practice in Libya (doctors accused of spreading HIV through needle reuse subjected to torture and face execution by firing squad) (Jun. 8) or Somalia (family sends gunmen to hospital following hysterectomy, although dispute later amicably resolved in Sharia court)(also Jun. 8)

Expert testimony and abortion bans

Peter Nordberg of Daubert on the Web (Jun. 6) has a thought-provoking post pointing out the surprising extent to which judicial rulings on scientific evidence helped shape the result in last week's case of Planned Parenthood v. Ashcroft, in which Judge Phyllis Hamilton struck down the Partial Birth Abortion Act of 2003.

A report by the National Academies of Sciences two weeks ago debunks the myth of "toxic mold," a myth that has spurred such headlining lawsuits as the 2001 $32 million verdict for homeowner Melinda Ballard, who claimed that mold in her home injured her family, and the 2003 $7 million settlement for TV personality Ed McMahon, who claimed the fungus killed his dog. A pair of reports released last summer by the Manhattan Institute and U.S. Chamber Institute for Legal Reform outline both the history of the mold panic and its legal implications (in an article written by attorneys) and the (lack of) science supporting "toxic mold" claims (in an article written by scientists).

Corporate law: what to read

For those seeking the basics of a library on corporate law and corporate governance (a field intimately bound up with securities class action litigation), Prof. Bainbridge published a set of book recommendations last fall ("The Corporate Canon", Sept. 12).

Japan introduces trial by jury

...for serious criminal cases, at least. (Bennett Richardson, "In reform bid, Japan opts for trial by jury", Christian Science Monitor, Jun. 4). Russia, with much encouragement from the U.S. Embassy in Moscow, did the same in 1993 ("Jury trials in Russia", Moscow Center for Prison Reform, undated). Britain, as is well known, years ago was careful to preserve the use of the jury in serious criminal cases while abolishing it in most civil cases (defamation being the best-known exception to the latter rule). Why is it so widely felt that the virtues of the institution are crucial in the application of criminal but not civil law? A good question.

The CSM article also reports on Japan's concerted effort to make its legal system more closely resemble those of other industrialized democracies. Key passage: "Japan's chronic shortage of lawyers is another cause - despite having a population around two-fifths the size of the US, Japan has less than one-fiftieth the number of lawyers. Until last year there was only one institution in Japan at which judges, prosecutors, and lawyers could become qualified to practice law, and the bar exam's annual pass rate was kept at a ludicrously low 3 percent. To address this shortage, the government allowed universities across the country to establish law schools in 2003 and aims to lift the pass rate for the bar exam so that the number of judges, prosecutors, and lawyers in Japan will double by 2018."

Tuesday's Wall Street Journal ran a lead editorial (subscription required) chronicling the abusive practices that have so corrupted modern asbestos litigation.

The article led with the recent ruling by the Third Circuit Court of Appeals, In re: Kensington, that disqualified Senior District Judge Alfred M. Wolin from presiding over 3 of 5 consolidated asbestos bankruptcy proceedings, for Owens Corning, W.R. Grace, and USG Corp.

It's on... no, it's off

The saga of tort reform bills in the U.S. Senate continued Monday and Tuesday, as Majority Leader Bill Frist took a U-turn, first intending to bring the Class Action Fairness Act to the floor for a vote, then backing off as Democrat supporters of the bill balked at Frist's intention to move the bill forward. The Act is intended to address the phenomenon of large national class action cases being shopped to the most permissive jurisdiction in the country -- inevitably a "magnet court" favorable to plaintiffs -- by allowing for such cases' removal to federal court.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.