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October 2004 Archives

Warning label madness

A cartoon from the London Spectator.

In the WSJ

I've got an op-ed in yesterday's Wall Street Journal discussing ballot measures that voters will decide in six states next Tuesday on litigation reform. Readers of this site got an advance look at a few of the highlights in this post of mine last Monday. For more links on the subject, see my Overlawyered update.

New book on the rule of law

NYU legal historian John Phillip Reid has recently published Rule of Law: The Jurisprudence of Liberty in the Seventeenth and Eighteenth Centuries (Northern Illinois U. Press, 2004). From the publisher's blurb:

While the rule of law's English roots can be found in the Middle Ages, its governing doctrine rose to power during the seventeenth and eighteenth centuries. John Phillip Reid traces the concept's progress through a series of landmark events in Great Britain and North America: the trial of Charles I, the creation of the Mayflower Compact, the demand for a codification of the laws in John Winthrop's Massachusetts Bay Colony, and an attempt to harness the Puritan Lord Protector Oliver Cromwell to the rule of law by crowning him king. The American Revolution, the culmination of two centuries of political foment, marked the greatest victory for rule of law.

(The book has been reviewed for the online "Law & Politics Book Review, here.)

Insurance broker Marsh & McLennan is at the center of the emerging commission and bid-rigging scandal, but it hasn't actually been convicted of anything yet, nor have its top execs. So eyebrows are being raised at New York Attorney General Spitzer's hardball (and successful) tactic of announcing that he wouldn't negotiate with the company unless it got itself a new CEO. Aren't private companies still supposed to be entitled to select their own leaders, at least until such point as said leaders are found guilty by due legal process of some misconduct? There's no denying that the tactic enjoyed immediate success: within days CEO Jeffrey Greenburg had announced his departure. Giving every appearance of running scared, the Marsh directors selected as his replacement former prosecutor Michael G. Cherkasky, a former head of the Kroll security and investigations consulting firm, who is said to be light on insurance experience but has a distinctive line on his curriculum vitae: he was once Eliot Spitzer's boss. The New York Times's coverage is here, here, here (Spitzer says he doesn't plan to indict Marsh, and hasn't to date brought charges against individual Marsh employees either) and here.

Insurance broker scandals

The private lawsuits are already under way, including one filed by famed Madison County class-action firm SimmonsCooper against Chicago insurance broker Arthur J. Gallagher & Co., the world's fourth largest (complaint) (courtesy Madison Record).

Wyoming med-mal study

The Milliman actuarial firm projects what will happen if Wyoming enacts a cap on non-economic damages. According to Martin Grace's summary, the study's simulation model "suggests that the cap [at a level of $250,000] will reduce losses and loss adjustment expenses by about 15%."

Ephedra retailer litigation, cont'd

Galen of Galen's Log has gotten more reader feedback about that case that led to a jury verdict of more than $4 million against a Los Angeles sports nutrition store (see Sept. 23).

The glass ceiling in the mirror

It is a dearly held assumption of many litigators on the plaintiff's side of employment discrimination law that large statistical gender imbalances among executive positions at places like Wal-Mart or Costco are strong evidence of wrongful discrimination. If that's so, one thing that's clear is that law firms, including plaintiff's firms, themselves are going to have a lot to answer for.

Overtime class actions: lawyers, too

Among the latest groups to get into the act in class actions over alleged employee misclassification: lawyers themselves, specifically those hired on a temp or contract basis, as is now a common practice at big firms. Notes the New York Law Journal: "Seattle firm Preston Gates & Ellis, whose name partner is the father of Microsoft Corp. founder Bill Gates, recently settled for $700,000 a class action suit seeking overtime pay and paid rest breaks for contract lawyers handling document review." (more, more).

Stay tuned: New featured discussion

Stay tuned to our newest featured discussion. Following last month's political debate on medical malpractice reform, this month we've decided to look at the empirical evidence more closely by discussing a new paper by Daniel Kessler of Stanford Business School, the Hoover Institute, and NBER, prepared for the Manhattan Institute (this site's host).

Professor Kessler, along with Mark McClellan (who now heads up Medicare), wrote the seminal study in 1996, "Do Doctors Practice Defensive Medicine." His new paper discusses how the U.S. malpractice system works, examines the empirical evidence both on the malpractice system as it exists and on various tort reform measures, and analyzes various policy approaches that have been suggested to deal with the problem.

We're expecting comments from other leaders including Philip K. Howard, the founder and chairman of Common Good and the author of The Death of Common Sense and Collapse of the Common Good; Dr. Richard Anderson, Chairman and CEO of the Doctors Company, the largest mutual (doctor-owned) medical malpractice insurer and author of an earlier Manhattan Institute study on medical malpractice; and "Syndey Smith," a/k/a MedPundit, a practicing physician who runs one of the most successful weblogs on health care issues.

We hope readers will check in over the next week for what promises to be a provocative discussion!

According to Lyle Roberts at 10-b5 Daily, a theory of "collective scienter" is "beginning to gain a foothold in securities litigation caselaw, even if courts are not expressly acknowledging the nature of their holdings." The idea is to attribute conscious wrongdoing to a business if the requisite knowledge or awareness was present among executives or employees aggregated together -- the alternative, of course, being to require proof that one particular corporate officer had a guilty state of mind. Which raises the inevitable question: "if an officer makes the statement and a janitor knows the statement is false, has the corporation acted with fraudulent intent?"

NJ plans rescue for med-mal insurer

MIIX Insurance used to be one of the largest medical malpractice providers in the country, but now it, like many of its competitors, has entered the supervised mode called "rehabilitation" for fear of not being able to meet its obligations. What happened to all those obscene profits that the trial lawyers assure us are to be made by selling liability insurance? (Mary P. Gallagher, "Judge Orders MIIX Insurance Into State Rehab", New Jersey Law Journal, Oct. 12).

Last month, I wrote a column in Investor's Business Daily examining the politics underlying state pension funds and their decisions to push shareholder class action lawsuits. As I noted, the 1995 Private Securities Litigation Reform Act has been largely ineffective, in no small part because the litigation process has been substantially captured by "the largest shareholders in our economy[,] . . . state employee pension funds, such as CalPERS (the California Public Employees� Retirement System) and the New York State Common Retirement Fund . . . [S]uch state funds are politically directed and thus subject to the unseemly political influence game that trial lawyers have long mastered."

It turns out that the much-publicized decision of Sinclair Broadcasting not to air "Stolen Honor" last Friday was forced upon it ($) by just such an unholy alliance. Sinclair was threatened by a class action lawsuit by none other than William Lerach, the securities plaintiffs' lawyer and Democratic funder who once famously quipped, "I have the greatest practice in the world. I have no clients." His partner-in-crime? New York State Comptroller Alan Hevesi, a Democrat, who oversees the Empire State's employee pension fund, a large Sinclair shareholder.

As I noted in my column, Hevesi has received substantial campaign contributions from securities plainitffs' lawyers and used his position to advance their agenda through his control of the New York pension funds. He led the New York funds to be the lead plaintiffs in the suit on behalf of Worldcom shareholders against Citigroup, one of New York's largest employers, in which the New York pension funds held $1 billion in stock. The plaintiffs' lawyers in that case stood to gain $144.5 million; directly and indirectly, those same lawyers had donated $121,800 to Hevesi's political campaigns. Hevesi also raised at least $137,000 in contributions from Milberg Weiss, Lerach's former firm, which controlled over fifty percent of all securities litigation until Lerach split off his west coast office earlier this year. In addition to working with Lerach on the Sinclair matter, Hevesi earlier selected Milberg as class counsel for the state fund�s suit against pharmaceutical giant Bayer.

For more discussion of the Sinclair situation, see Tom Smith at The Right Coast and Point Of Law contributor Stephen Bainbridge.

UPDATE: See also Larry Ribstein's thoughts here and here.

Nonprofit hospital suit tossed out

Last week a federal district judge in Birmingham dismissed a class action suit against Baptist Health Systems of Alabama claiming that uninsured patients had been "overcharged and subjected to unfair collection tactics."

The case against Baptist is one of 48 filed nationally on behalf of the uninsured, spearheaded by Richard Scruggs, the Mississippi lawyer who sued tobacco companies. The common thread is the claim that nonprofit hospitals are not living up to their charitable missions because they charge uninsured patients much more than insured patients and then go after the patients aggressively to collect the bills.
The Baptist case is the first one nationally to be dismissed at the defendant's request.

The judge ruled that "the three named plaintiffs could not sue in federal court because they already had lost in state court when Baptist sued them to collect unpaid medical bills." Further, the judge dismissed plaintiffs' claims that "Baptist violated the federal law that requires a hospital to provide emergency medical care regardless of ability to pay; they did receive treatment." The plaintiffs' attorney declared that he would re-file the case with a new set of nominal plaintiffs.

For more on this phenomenon, see the Not-for-Profit Hospital Class Action Litigation site.

(Anna Velasco, "Suit against Baptist hospitals dismissed," Birmingham News, Oct. 23)

New site: Legal Reform Now

LegalReformNow.com, a new website on legal reform, was launched today. The site is managed by the Institute for Legal Reform (ILR), an arm of the United States Chamber of Commerce committed to tort reform at the state and federal level. LegalReformNow.com is intended as a "clearinghouse for legal reform information on the Web sponsored by a diverse coalition of associations, chambers of commerce, think tanks and state-based legal reform groups." Among the supporting organizations is the Manhattan Institute, my employer and this site's sponsor.

Some of Legal Reform Now's features are complementary to ours here, e.g., an archive of legal news stories and recent research, organized by topic (though they use a different, if overlapping, categorization). But Legal Reform Now has a different focus than Point of Law -- instead of an ongoing weblog, and the discussions of and writings by legal academics that we have here, the ILR site includes comprehensive information such as a catalog of briefs on key court cases and bills in state legislatures around the nation. Anyone interested in the issues we discuss at Point of Law should bookmark Legal Reform Now today!

State initiatives head to the wire

Doctors and lawyers are battling over ballot initiatives in four states this year, with very mixed signals from the voters at the moment:

* Florida's doctor-sponsored Amendment 3 (May 19, Jul. 20), which would limit attorneys' fees in medical malpractice cases, has sunk to only 34 percent public support, down from 45 percent in an earlier poll. One possibly relevant factor is that trial lawyers have dumped $22 million into ads and other spending against the amendment, while proponents have managed to spend only $7 million. Meanwhile, lawyer-sponsored Amendments 7 and 8, "revenge initiatives" which would make life more difficult for doctors by exposing peer-review records to public scrutiny whether or not misconduct is found and would menace doctors with license revocation on the loss of three malpractice actions (see Aug. 4), are believed to be well ahead among voters.

* A new Las Vegas Review-Journal poll shows Nevada's doctor-sponsored Question Three, which would limit medical malpractice pain and suffering awards and attorney fees, has risen to 57 percent voter support, up 11 points from an earlier poll. Meanwhile, trial-lawyer-sponsored alternative Questions Four and Five, which would inscribe various trial lawyer agenda items into the state constitution under pretense of restricting insurance rates and frivolous lawsuits, have dropped sharply in public support and now stand at 39 and 45 percent respectively.

* In Oregon, an Oct. 1 poll found 50 percent of voters backing Measure 35, which would limit noneconomic damages in malpractice cases to $500,000, while 36 percent were opposed.

* No poll data is available on the Wyoming battle over Amendments C and D. Interestingly, trial lawyers are using the same ad (featuring "Becky's family") in Oregon as in Wyoming, notwithstanding many viewers' likely assumption that an ad opposing an initiative on their ballot will feature a family that actually lives in their state.

As Ted reported on Overlawyered on Friday, Operating Engineers Local 318 has sued to stop Illinois Lawsuit Abuse Watch from broadcasting an ad which criticizes trial lawyers' donations in the Illinois Supreme Court race but does not mention candidates' names. After the November Group announced plans to run ads criticizing Sen. John Edwards and promoting tort reform as an issue in next month's election, it got hit with a legal complaint before the Federal Election Commission from a group headed by a former aide to congressional Democrats. And in Georgia, after tort reform proponents aired an "infomercial" deploring the effects of excessive litigation on medicine, they got hit with a lawsuit claiming invasion of privacy by the son of a patient visible in emergency room footage in the infomercial. It so happens that one of the attorneys representing complainant Bob Blissitt in the suit is state lawmaker Nicholas C. Moraitakis, who has been a key opponent of tort reform in the state legislature, has represented the city of Atlanta in its suit against gunmakers, and formally represents the state trial lawyers' association on a state bar board. Update Dec. 22: more on case.

Bernstein in paperback

George Mason University law professor and Point of Law contributor David Bernstein's new book, You Can't Say That!: The Growing Threat to Civil Liberties from Antidiscrimination Laws, is now out in paperback (hat tip: Glenn Reynolds). Our editor reviewed the book, positively, in last December's New York Post.

This time it's drugmaker SmithKline Beecham, which has agreed to pay $5.2 million to nearly 1,300 workers who were classified as temps or leased employees when (plaintiffs argued) they really should have classed as regular employees. Their three lawyers will bag as much as $1.8 million. The judge found that the workers did in fact believe they were temps when they came on board and had no expectation of being entitled to receive pension benefits or other perks due regular employees. Reason to throw out the case, since the workers seem to have gotten very much the bargain they were expecting? Not at all: reason to suspend the statute of limitations, in the judge's view, since claimants who didn't imagine they had any right to extra money could hardly have been expected to pursue their right to sue.

State supreme courts roadshow

The Federalist Society sponsored a luncheon meeting in Jackson, Mississippi, earlier today on the state of the Mississippi supreme court. Similar programs are slated to discuss the state high court in Ohio (Columbus, Oct. 26), Illinois (Chicago, Oct. 27), and Alabama (Birmingham, Oct. 28). For more information, check the Society's webpage -- where you can also download the principal papers for all four meetings.

New antitrust blog

AntitrustProf Blog was launched this week, targeted at "professors teaching antitrust, students learning antitrust, and practitioners seeking information on recent developments in the law." The proprietor, Shubha Ghosh, is an IP/antitrust specialist at the Buffalo Law School. (Via InstaPundit.)

The burden on small businesses

Every four years or so the National Federation of Independent Business conducts a nationwide survey of thousands of small business owners asking them to rank the seriousness of public policy problems for their businesses. This year the cost and availability of liability insurance vaulted into second place in the survey, behind health costs, with 30 percent of respondents assessing it as "critical". (NFIB release/KSSmallBiz.com/survey in PDF format/more from NFIB)

This summer the U.S. Chamber of Commerce released a survey estimating the total liability cost to small businesses (those with <$10 million in annual revenue) at more than $88 billion a year. ((San Jose Business Journal/survey in PDF format). Per one account of the study, "U.S. small businesses pay up to 68 percent of all tort liability costs borne by business, even though they bring in only 25 percent of the nation�s total business revenue" (Business Council of New York State). ATLA rants and rails against the Chamber survey here.

Pennsylvania docs

Another website about their crisis.

Hollywood tort epics

DaimlerChrysler's Steven Hantler doesn't find them very entertaining: "It is telling that in the remake of the Cold War movie 'The Manchurian Candidate,' the new villain is Corporate America. In the original, you'll recall, the bad guys were part of an international Soviet/Chinese Communist conspiracy bent on taking over the United States. ...Just as the sheriff was always the good guy, so these legal thrillers are invariably told from the side of the plaintiffs' bar."

We'd like to thank Michael DeBow, who has been guest blogging with us for the past week or so at PointOfLaw. Professor DeBow has graciously agreed to continue on as a permanent blogger. He's a leading researcher on the states' lawsuits against the tobacco companies, judicial selection mechanisms, and the politics of legal reform, so we're very fortunate to have him aboard. You can also check out his postings, on various other topics, at Southern Appeal.

Disclaimer-shredding on the slopes

Continuing a trend toward expanding liability for recreation providers, the Connecticut Supreme Court this summer made it harder for ski operators to disclaim responsibility for customers' collisions. It didn't seem to matter that a state statute sets forth a principle that skiers assume the risk of collisions. The Connecticut Law Tribune has details. For more on Connecticut recreational liability, see Overlawyered, Sept. 27, 1999.

Sarbanes-Oxley meets its match

Law prof Larry Ribstein of the University of Illinois, whose Ideoblog is highly recommended as a resource on corporate law, has been collecting studies and reports critical of the Sarbanes-Oxley Act on this page. The latest is a working paper from Yale's Roberta Romano entitled "The Sarbanes-Oxley Act and the Making of Quack Corporate Governance".

More: the American Enterprise Institute has been doing a lot on Sarbox: its output includes a panel discussion from May (video/information/newsletter coverage), an article by Peter J. Wallison, and an earlier paper by Roberta Romano.

Yesterday the U.S. Supreme Court denied cert in Ayers v. Thompson, 358 F.3d 356 (5th Cir. 2004), thus ending the long-runnning desegregation suit (originally filed in 1975) involving the state of Mississippi's college and university system. The Court rebuffed a challenge to the settlement of the suit that had been mounted by a splinter group of the plaintiff class. The settlement, negotiated in 2000-01, calls for the state government to spend an additional $503 million on the three historically black campuses in the state higher ed system, over and above their annual state appropriation -- over a multi-year period. The plaintiffs' attorneys' fees called for in the settlement are capped at $2.5 million. Further details of the settlement are available in the Fifth Circuit opinion cited above, and in Riva Brown, "'75 Ayers suit officially ends; high court won't hear appeal," Jackson Clarion-Ledger, Oct. 19.

From the Oct. 14 Melbourne Age: "In a landmark decision, a West Australian court has ruled that a former Wittenoom asbestos mill worker who has a chronic fear of dying from an asbestos-related death be compensated for psychiatric injury." Arthur Della Maddalena's workplace had been ravaged by asbestos-related illness and although he was found not to be suffering from mesothelioma, judges "accepted evidence from Mr Della Maddalena's psychiatrists that he was terrified he would die a horrible asbestos-related death and lived in a state of chronic fear and depression".

The let's-sue-each-other club

Physicians finally hatch a plan to strike back: "I offered to be the one to be sued first by the remaining three. ...The cardiologist and gastroenterologist would be sued next." Just a satire, we think. Right? Please, someone, reassure us. (Ketan Desai, "The John Edwards Fan Club", ChronWatch.com, Sept. 7).

Outcomes affect expert testimony

It's been long understood that medical malpractice is more likely to be found where the injury suffered by a plaintiff is severe; in other words, juries are judging the end result, rather than whether the defendant met the quality of care. Amazingly, one study finds that expert witnesses often suffer from the same bias.

In 1991, the Closed Claims Project database was used to explore the possibility that the opinions of experts may be influenced by the severity of patient injury. The specific goal was to determine whether severe injuries were more likely than minor injuries to predispose medical experts toward harsh judgments about the appropriateness of anesthesia care.

To study this question in a rigorous manner, 112 practicing anesthesiologists were recruited to judge the appropriateness of anesthesia care using 21 case summaries selected from the Closed Claims Project database. About one-half of the cases had temporary injuries and one-half had permanent injuries or death. For each case, a matching but "fictitious" version was created that was identical in every detail to the original case except that a plausible outcome of opposite severity was substituted. The original and fictitious cases were divided randomly into two sets and assigned to the volunteer reviewers, who were unaware of the intent of the study. The reviewers were asked to independently rate the appropriateness of anesthesia care in each case, based upon the conventional yardstick of reasonable and prudent practice applicable to the year the event occurred.

How did the ratings of appropriateness of care differ between the original and fictitious cases, which differed only in the severity of injury? The proportion of ratings for appropriate care decreased by 31 percentage points (from 67 percent to 36 percent) when the case outcome was changed from a temporary injury to a permanent injury. Conversely, the proportion of ratings for less-than-appropriate care increased by 28 percentage points (from 28 percent to 56 percent) when the case outcome was changed from temporary to permanent injury. These findings indicate that the severity of injury can have a substantial impact on a reviewer's assessment of the appropriateness of care.

(Caplan RA, Posner KL: The expert witness: Insights from the Closed Claims Project. ASA Newsletter 61(6):9-10, 1997; Caplan RA, Posner K, Cheney FW: Effect of outcome on physician judgments of appropriateness of care. JAMA 265:1957-1960, 1991).

That's the question Peter Nordberg asks on Blog 702. In most states, experts are "immune from suit over legal claims arising from their testimony."

Before plaintiffs' lawyers answer yea, or defense lawyers answer nay, they should consider the possible effects of potential malpractice liability on the cost and quality of expert testimony. For example, if experts responded by protecting themselves through liability insurance, the cost of expert opinion would surely rise, and the insurers might well exert some pressure on experts to base their opinions on thorough and rigorous analyses. That might improve the general quality of expert evidence. Or it might just make experts likelier to practice "defensive testimony," or to retreat from the fray altogether.
Perhaps the tongue is in cheek, but the reasoning seems to me equally applicable to malpractice claims in general. It never fails to impress me how quickly attorneys recognize the costs of the tort system when it can negatively affect their own profession.

George Will

When is "pro bono" really pro bono?

Obesity lawsuits

Michigan becomes the thirteenth state to ban them by way of specific legislation. The Michigan Trial Lawyers Association opposed the measure.

State AGs and the flu vaccine shortage

A shortage of something will cause the market price for that thing to rise. Not surprisingly, the shortage of flu vaccine seems to have had this effect. Comes now the attorney general of Florida to police just how high the price can go:

State Attorney General Charlie Crist announced Wednesday that his office filed a lawsuit against a Florida flu vaccine company for alleged price gouging. Crist charged the company with violations of Florida's Deceptive and Unfair Trade Practices Act regarding pricing of flu vaccines.

Fort Lauderdale-based ASAP Meds, Inc., doing business as Meds-Stat, is named in the suit.

. . .

Following the announcement of a severe shortage, Meds-Stat sold vials of flu vaccines to a Kansas City pharmacy at a rate of $900 per vial (10 doses per vial). The vaccine is usually priced at $63 to $85 per vial, amounting to a markup exceeding 900 percent.

"This behavior is totally unacceptable, raw exploitation," said Crist. "While millions of Americans will be forced to do without vaccines this year, some businesses are attempting to take advantage of children, the elderly and the frail by unfair and unconscionable business acts. Preying on the fears of the consuming public is not a description of good corporate citizens."

The complaint is available online. The AG of Kansas announced a similar suit against the same company, apparently for the same sale, the day before.

Recess appointment upheld

Yesterday the U.S. Court of Appeals for the Eleventh Circuit rejected a challenge to President Bush's recess appointment of William H. Pryor, Jr. to that court earlier this year. Eight judges signed on to the order in Evans v. Stephens, which concludes that "both the words of the Constitution and the history of the nation support the President's authority." One judge dissented on the merits (Judge Barkett), and one dissented on the grounds that the court should have declined to rule on the motion in order to certify it to the U.S. Supreme Court (Judge Wilson).

On September 27, Surrogate Judge Renee Roth issued a decision asking three law firms to justify their "contingency fees" for representing clients who collected from the September 11 fund. Cardozo Law Professor and Point Of Law contributor Lester Brickman writes:

Surrogate Court Judge Renee Roth�s decision to inquire into the reasonableness of contingency fees charged by three law firms for representing families before the September 11 Victim Compensation Fund is both perfectly appropriate and exceedingly rare. Surrogate court judges virtually never subject lawyers� contingency fees to a determination of reasonableness. Instead they virtually always rubber stamp the fees irrespective of whether the risks borne by the lawyer justify the percentage of the recovery that the lawyer is charging. In most tort cases, lawyers charge a standard fee � one third of the recovery -- irrespective of whether the representation involves any meaningful risk. But the ethical justification for a contingency fee is that the lawyers is taking a risk that there will be little or no recovery or that he or she will have to devote considerably more time to the representation than anticipated. Accordingly, charging a standard contingency fee in a matter where the lawyer knows at the outset that there will be a substantial settlement -- given the seriousness of the injury, the amount of insurance coverage and the absence of any doubt as to liability -- is unethical if not fraudulent. Nonetheless, it is a common practice for lawyers to do so and for courts and disciplinary authorities to ignore the clear ethical violations. Thus, it was a moment of rare candor when Judge Roth announced that since the September 11th Victim Compensation Fund was certain to make large awards, "for the lawyers involved in such a process, there was no contingency upon which to support a contingency�type fee."

In determining the reasonableness of the fees in question, Judge Roth will be looking at whether there was any meaningful risk borne by the lawyers, the amount of the work that they did and whether the results achieved exceeded what most lawyers would have attained in these cases. A reasonable way for Judge Roth to proceed would be to determine a reasonable hourly rate fee for the actual work done by the lawyers. If Judge Roth then determines that the lawyer obtained a recovery that exceeded what would reasonably have been expected at the outset of the litigation, that is, added value to the claim by their efforts, then it would be appropriate to add to the hourly rate fee, a percentage in the 5-10% range of the value added by the lawyer. However, endorsing a percentage fee applied to the entire recovery would likely overcompensate the lawyers because that would include a premium for assuming risk though the process of securing a substantial portion of the award from the Fund involved no risk.

The operative principle that appears to apply to the applicability of rules of ethics to contingency fees is that the greater the fee, the less the applicability. Judge Roth�s decisions to apply ethical standards to determine the reasonableness of contingency fees is an act of judicial courage that stands in sharp contrast to the actions of most judges.

Readers who are interested in a more detailed exposition of Professor Brickman's views on contingency fee abuses should consult his and Professor Richard Painter's August featured discussion on the topic, and/or one of his many articles on the topic available for download on this site.

For additional commentary on the 9/11 Fund, see our editor's posting on Overlawyered last month. I note as an aside that the Manhattan Institute is in the planning stages of a conference on the 9/11 Fund and its lessons for January of next year.

This Saturday, October 16, the Pope Center for Higher Education Policy will be conducting its annual conference in Raleigh, NC. The conference theme is "Freedom and the American Campus." The venue is the McKimmon Center at N.C. State. "Registration will begin at 8 a.m. on the day of the conference and a continental breakfast will be provided. The cost of the conference is $20 per person."

I have two purposes in mind in mentioning this.

The first is to invite any and all Point of Law readers in the vicinity to attend. Speakers will include high-profile individuals such as David Horowitz, Alan Kors, and Candace de Russy, as well as lower-profile individuals such as . . . yours truly. Which brings me to my second purpose --

I'll be speaking on a panel devoted to the question, "Do American students learn enough about freedom?" I have already written up some brief remarks, but I thought I'd take advantage of my guest spot here to ask the assistance of the vast Point of Law readership in thinking about this topic. So, here goes -- If you have any thoughts on this question you'd care to share with me, please email me at medebow--at--samford--dot--edu


The corporate tax legislation that cleared the U.S. Senate yesterday and is on its way to the President for his signature contains a significant change in U.S. tobacco policy:

The tobacco provisions dramatically alter rules governing crop production. Since 1938 farmers had worked under a system of quotas that limited where and how much tobacco could be grown.

Those production quotas � which could be rented, bought, sold or inherited � were thrown out in return for a $10 billion buyout.

Several senators tried to attach the buyout to proposed Food and Drug Administration rules that would regulate tobacco manufacturing and marketing, but House leadership blocked the FDA provision.

"Our FDA provision would have made a real difference ... it would have saved lives," said Sen. Mike DeWine, Ohio Republican and a proponent of the new rules. Mr. DeWine called the buyout without the FDA package a "disgrace."

FDA jurisdiction over tobacco products has been a long-sought-after goal of anti-smoking groups which, since the Supreme Court's 2000 decision in FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, has necessarily involved a legislative strategy.

Much info on the farmers' buyout is available on the websites of the departments of agricultural economics at N.C. State, the University of Kentucky, and the University of Tennessee.

(Jeffrey Sparshott, "'Attack on tax shelters' passes," Washington Times, Oct. 12.)

Houston Chronicle on asbestos

A lengthy article in the Houston Chronicle last week described asbestos litigation as "the biggest legal mess in American history." Seventy-three companies have been forced into bankruptcy as a result, with others "sure to join them." A legislative resolution of the crisis remains elusive:

The U.S. Supreme Court, referring to the "elephantine mass" of asbestos lawsuits, has repeatedly called on Congress to come up with a way of compensating victims outside the court system. Legislation has been proposed and debated for years without resolution, but both Congress and the Texas Legislature are grappling with it anew as asbestos grows into a major political issue.

Washington is focused on a proposed national trust fund. Recent progress in Senate negotiations has encouraged its supporters. In Austin, the Legislature is expected to tackle competing bills that would restrict the filing of asbestos lawsuits to people already suffering from related illnesses. One of the proposals in Texas also would allow asbestos victims who are not sick now to sue once symptoms appear.

No one has a firm grasp on the ultimate price tag for all the asbestos compensation and legal expenses. Experts now peg the total U.S. asbestos liability at $200 billion to $265 billion.

Professor Lester Brickman, a frequent contributor to Point of Law, is quoted in the article.

(Mike Tolson, "Asbestos lawsuits create U.S. legal crisis," Houston Chronicle, Oct. 3)

Online legal theory for law students

Attention first-year law student readers of Point of Law! Has this ever happened to you: You're sitting in class and your professor or one of your classmates uses a technical term from economics, say, or philosophy, that you're a bit shaky on. You'd like some further elaboration on the Coase Theorem, or utilitarianism, but you don't want to raise your hand and risk looking like you're not up on all the lingo.

Well, now, there's help for you, courtesy of University of San Diego law professor Lawrence Solum. His Legal Theory Lexicon provides relatively short, but very high quality, explanations of many of the most common terms encountered in the first year of law school -- from "ex ante/ex post" to "metaethics." The lexicon currently boasts 41 entries, and Solum posts a new entry each week. Check it out!

At this point I should introduce myself. My name is Mike DeBow and I'll be your guest blogger this week. I teach property and corporate law at the Cumberland Law School of Samford University, in Birmingham, Alabama. In addition I am interested in state law reform and state judicial selection. I've been a guest blogger on Southern Appeal for over a year, and have an extensive links page that I invite you to visit.

My thanks to Jim and Walter for the invitation to join them this week.

Md.: Doctors self-insure

Think medical malpractice liability isn't a problem? Doctors in Maryland are starting to go without insurance, reports the Washington Times:

Doctors at Montgomery General Hospital are asking administrators to let them work without malpractice insurance because they cannot afford a statewide 33 percent increase in premiums.

The doctors say the rates are so high now that they also are considering whether to discontinue high-risk procedures or to close or move practices out of state.

(via Martin Grace)

Nader: Edwards a "sniveling coward"

However skeptically one views John Edwards's commitment to medical malpractice reform -- and I'm inclined to agree with our contributor Ted Frank, there's much reason to be skeptical -- there's no doubting Ralph Nader's opposition. Speaking yesterday in Albany, the "consumer activist" turned politico called Edwards a "sniveling coward" for not being more forceful in denouncing Vice President Cheney's support for medical malpractice reform during Tuesday's debate.

Is there dissension within the ranks of Trial Lawyers, Inc.?

The irony is that Nader's staunch support of the status quo litigation lobby makes Edwards -- the former trial attorney whose political career has been almost wholly funded by plaintiffs' attorneys -- come off as moderate in comparison. Of course, blame for that perception also owes much to the GOP's inability to articulate a clear message on this issue: as our editor pointed out on Overlawyered, the vice president did very little to challenge Edwards on the tort reform issue when given the chance...

"A Public Policy Failure"

What was the fundamental reason for the disastrous failure of Texas's school finance equalization program? "Lawyers, not economists, designed the system." (Virginia Postrel, New York Times, Oct. 7; Caroline M. Hoxby & Ilyana Kuziemko, "Robin Hood and His Not-So-Merry Plan", July 2004).

Guest blogger (& posting lull)

Watch for a new guest blogger here next week. Don't watch for posts from me, however; I'm headed out for my Southern California speaking tour and expect to be absent from this site for the next week or perhaps a bit more. See you soon.

Madison County Circuit Judge Daniel J. Stack has replaced Nicholas Byron (Overlawyered Apr. 22, May 4) as the "chief asbestos judge" in the county, and his first decision involved a lawsuit brought by Paul Palmer Sr., a Louisiana resident, against eighty defendants whom he sought to blame for his mesothelioma. Judge Stack noted that Palmer lived fifteen miles from the Baton Rouge courthouse, 700 miles from the Madison County courthouse, and never worked or lived in Illinois. He thus granted defendants' motion for forum non conveniens opposing the forum shopping, a motion routinely denied by Judge Byron (Sep. 19). (Paul Hampel, "Asbestos judge tosses out 3 lawsuits", St. Louis Post-Dispatch, Oct. 6).

Fred Baron: I'm outta asbestos

Fred Baron of Baron & Budd, the trial lawyer and political kingmaker much criticized (by me, among many others) for the ethical questions raised by his asbestos practice, tells the Oct. 2 Houston Chronicle)(via Evan Schaeffer) that he's out of the asbestos game now, even if people don't recognize it:

[Baron] says he sold his partnership share at the end of 2002 so as to not present a conflict of interest with his present job: raising money for the Democratic presidential ticket.

"I'm done with asbestos litigation. I'm finished," Baron, 57, said in a recent interview. "Nobody prints that because I'm a poster boy, an asbestos lawyer working in his own self-interest."

However, it turns out there is just a little more to the story than that:
He allows a bit later, however, that he is still an employee of the firm. His wife, Lisa Blue, remains a partner.

The fateful 5 percent

From earlier this summer: "[John Edwards] cites the usual trial lawyer canard that only 5% of doctors are responsible for over half of all malpractice claims paid. Given that the typical ob/gyn will be sued once for every 3 years in practice, our specialty alone could account for much of that 5%, simply by virtue of our limited numbers and very high rate of unavoidable complications." (Charles J. Lockwood, "John Edwards: The wrong prescription for ob/ gyns!!!" (editorial), Contemporary Ob/Gyn, Aug. 1).

The Manhattan Institute's Center for Legal Policy, which I direct, is seeking applicants for a research fellowship in empirical economics and the law. We have already spoken with a few outstanding candidates but would like to broaden the nets -- so interested readers, please take note.

Our new research fellow will be expected to help create and pursue a research agenda studying the economic effects of the American civil justice system. Applicants should be interested in how legal incentives function with markets, have clear thoughts about problems in contemporary tort law, and have some ideas about how to develop an empirical program in this area. Applicants should ideally have a PhD in economics or a comparable indicator of statistical aptitude, in addition to a strong interest in and familiarity with the law, if not a JD degree.

Manhattan Institute fellows need not live or work in New York; our fellows are typically off-site (though you get plenty of opportunities to interact with folks like our editor Walter Olson and senior fellow Peter Huber). Pay for this position will be very competitive with comparable non-profit opportunities. Applications for part-time fellowships will be considered. If interested, please contact me at jcopland -at- manhattan-institute.org, (212) 599-7000.

Doesn't shock her

Ann Althouse on the VP debate: "Cheney tries to shock us with the fact that a doctor in Wyoming must pay $100,000 a year for malpractice insurance. Somehow, I don't find that number shocking."

Yes, now that you mention it, Ms. Althouse is a law professor. How did you guess?

Certificate of merit, done right

As we've indicated before, "certificate of merit" malpractice reforms (a centerpiece of Messrs. Kerry and Edwards' plan) come in a number of varieties, ranging from the reasonably strong to the vanishingly weak. The editor of one magazine for doctors calls for the strong kind (Charles Lockwood, Contemporary Ob/Gyn, May 1):

Certify good faith. There are now 125,000 malpractice cases in the nation's court systems, 70% of which will be closed without payment. This is prima facie evidence of widespread abuse of "negligence" claims by plaintiffs' attorneys and their "experts." Plaintiffs' attorneys should be required to furnish the defense and court with a formal analysis of a case documenting area(s) of negligence. [emphasis added] The analysis should be drafted by a board-certified physician currently practicing in the defendant's field and in good standing with his or her professional body. Such a "good faith" certification would reduce the number of frivolous suits now clogging the system.

The overrated Sherlock Holmes

Especially when it comes to forensics, says Judge Posner.

Malpractice reform: Maryland

Because most of the fifteen medical malpractice insurers doing business in Maryland in 1996 have become insolvent or stopped taking new clients, Medical Mutual of Maryland insures 75% of the state's doctors. But, while the number of claims have remained the same, the number of million-dollar payouts has been increasing geometrically; the average settlement for a medical-malpractice case has risen from $216,727 in 2000 to $410,546 this year; the total payout has gone from $47 million in 2000 to $93 million in 2003. Under three percent of Medical Mutual's payouts from 1998-2002 were made on behalf of physicians who incurred more than two losses in that timeframe, putting the lie to the ATLA claim that the majority of malpractice is committed by a tiny minority of incompetent doctors. Medical Mutual has thus had to increase its rates 28% for 2004 and 33% for 2005; ob-gyn Amy Ampey told legislators that her insurance premium has gone from $45,000 three years ago to $112,000 next year. Doctors are threatening strikes.

Maryland is currently considering having taxpayers pay the increase, but there's a movement considering the radical reform of taking some malpractice cases out of the litigation system and into a workers' compensation type program. (Robert Redding Jr., "Malpractice-case amounts soar", Washington Times, Oct. 5; John Wagner and Susan Levine, "Md. Considers Special Session On Insurance", Washington Post, Oct. 4; M. William Salganik and Andrew A. Green, "Doctor policy reform pressed", Baltimore Sun, Oct. 5; Medical Mutual Notes, Oct. 23). Medical Mutual last year commissioned a report from Tillinghast-Towers Perrin refuting Public Citizen's claim that there was no malpractice problem in Maryland.

Beldar on firing contingency lawyers

The Texas trial lawyer takes a look at the case (see Sept. 29) of the client who got hit in the Second Circuit with a substantial quantum meruit award of legal fees after firing its contingency-fee lawyer without good cause, even though the case was later settled without cash payment. He concludes that the lawyer was probably within its rights to insist on the payment, and that it is important for clients to be warned going in of the possibly harsh consequences of dropping their lawyers without good cause.

Anonymous experts: a reader writes

Reader Len Ferrucci, M.D., of New Canaan, Ct. writes, in response to yesterday's post:

Connecticut has a requirement for a certificate of merit before a malpractice lawsuit can be filed. The law has no teeth because a doctor does not have to sign an affidavit. A plaintiff's attorney merely as to sign a certificate of good faith stating he obtained a certificate of merit. Not only does the lawyer not have to reveal the name of the expert, the certificate of merit does no have to be revealed.

Under a new law passed by the legislature, but later vetoed by former Gov. Rowland, a judge could review the certificate of merit if the defendant objected to the certificate. If the judge ruled the certificate was inadequate, the plaintiff would have another chance to submit a new one. The only problem was the defendant wouldn't have, under any circumstance, access to the certificate he objected to.

Wrapping up our summary of the St. Louis Post-Dispatch's special series on asbestos litigation (see posts here, here and here investigates the distinctive way Madison County's judges manage the court's asbestos docket. More mesothelioma cases were set for trial last year in Madison County than in New York or Chicago. Plaintiff's attorneys praise the speed of the process, but "defense attorneys say the court's pace -- with trials often set only six months after a suit is filed, often setting dozens of trials for a particular week -- makes it impossible for defense attorneys to prepare for any of them, and weakens the defense position in settling them. 'We have to prepare for dozens of cases from around the country and we don't know which case (the plaintiff lawyer) is going to call,' said a defense attorney who asked to remain anonymous. 'But Randy Bono can focus on one case like a laser.'"

One factor in the county's judicial climate "is a watershed event almost 25 years ago known then and now as 'the vendetta.' In 1980, a small group of prominent plaintiff attorneys proved they could oust judges they did not like. They did that to circuit Judges Victor Mosele and John DeLaurenti, both now deceased," in hardball electoral campaigns. There's also a separate article on donations to judicial campaigns, along with sidebars: "Who Gives What?", "Graphic of key players in Madison County mesothelioma litigation", and "Graphic of Madison County at a glance."

Lawsuit reform edu-tainment

A group sponsoring the election efforts of a Republican running for the Illinois House offers a Flash arcade game tangentially related to medical malpractice reform. It won't replace Grand Theft Auto among the nation's youth, but has succeeded in distracting a number of people into spending enough time to push pro- and anti-Bush and Kerry messages onto the high scores list (via Kotaku).

Anonymous medical experts, cont'd

More on the issue of anonymous case-certifying experts, last discussed here Jul. 26: "Illinois is one of 14 states that require a physician to sign a certificate of merit before a malpractice lawsuit can be filed. It is 1 of 5 states that does not require the disclosure of the name of the doctor signing the affidavit." ("Court ruling allows physicians to know accusers, but...", Contemporary Ob/Gyn, Sept. 1). Can anyone tell us what the other four states are with such a provision? Well, that was fast: our own Ted Frank writes to advise me that the correct answer is "Colorado, Delaware, Illinois, Missouri, New York. The Colorado provision seems to be ambiguous whether the court is permitted to disclose to the other side; I haven't looked at the other states closely. Illinois' provision clearly isn't ironclad anonymity, either."

Chasing pots of Vioxx gold

No surprise here, especially since hundreds and even thousands of suits were already in progress alleging injury from Merck's just-withdrawn arthritis drug: "plaintiff attorneys are gearing up for a repeat of the Baycol, Rezulin and fen-phen torts. After Thursday's recall, firms around the country rushed to send mass e-mails and issue press releases to recruit Vioxx litigants." (Law.com).

Strong Rule 11: judges liked it

The National Law Journal, in its coverage of the effort to restore a strong Rule 11 (Marcia Coyle, "House Votes to Bring Bite Back to Rule 11", National Law Journal, Sept. 27; see Sept. 15) has a couple of points worth noting:

* Nowadays the official Federal Judicial Conference, in common with most of the legal establishment, bad-mouths the old (1983-1993) Rule 11, primarily on the grounds that it encouraged overuse of sanctions motions with resulting wasteful satellite litigation. However, at the time Congress pulled the teeth from the old rule in 1993 (following a concerted campaign which included, though it was not limited to, organized plaintiff's counsel) the rule was strongly supported by the federal judges who enforced it:

[Rep. James] Sensenbrenner, both on the day his committee approved the bill and on the day the House finally endorsed it, pointed to a 1991 study by the judiciary's research arm, the Federal Judicial Center, as evidence that the 1983 version was preferable.

At that time, 751 federal judges found that an overwhelming majority of them, 95 percent, believed Rule 11 did not impede development of the law; 72 percent believed that the benefits of the rule outweighed any additional requirement of judicial time; 81 percent believed that the 1983 version of Rule 11 had a positive effect on litigation in the Federal courts; and 80 percent believed that the rule should be retained in its then-current form," Sensenbrenner told his House colleagues.

"That is what the judges who were on the bench at the time this rule was in effect said."

Meanwhile, one of the most prominent critics of the older rule, Prof. Georgene Vairo of Loyola-Los Angeles Law School, suggests that the spirit of the older rule lives on in some significant measure and that this may be not such a bad thing:
"most people agree and most judges agree the '83 version increased everybody's consciousness about the need to impose sanctions in appropriate cases," said Georgene Vairo of Loyola Law School, Los Angeles. ... "The rule is virtually as potent today as it used to be, not to mention that you have other tools out there, all sorts of things to sanction lawyers who are bad, and judges are now much more attuned to using those tools," she added.

Featured discussion complete

Our featured discussion between Ron Chusid (Doctors for Kerry)(more) and Ted Frank (Point Of Law, Overlawyered) has now wrapped up. With all modesty, we think the exchange provides a treasure trove of arguments, information and links about the medical malpractice crisis and its role in the Presidential race. For a list of some of the sites that have cited or linked to the discussion, see last week's post.

Calendar: AEI on Tuesday

This coming Tuesday afternoon, Oct. 5 in Washington (2-4 p.m.), the American Enterprise Institute's Federalism Project will host a panel discussion on state-level tort reform. Speakers will include Ron Aldridge, Mississippi director of the National Federation of Independent Business; Hugh Rice Kelly, general counsel of Texans for Lawsuit Reform; Linda Woggon of the Ohio Chamber of Commerce; and Michelle White of the University of California�San Diego and the National Bureau of Economic Research. Update Oct. 4: Andrew Stephens from the U.S. Chamber Institute for Legal Reform will replace Ron Aldridge on the panel.

Asbestos: Illinois's "Lipke rule"

Continuing our summary of highlights from the St. Louis Post-Dispatch's excellent recent coverage of asbestos litigation (see our earlier posts here and here): one of the articles in the series (Paul Hampel, "'Lipke rule' is unfair to defendants, many argue", Sept. 19) discusses Illinois's unusual "Lipke rule", named for the plaintiff in a 1987 case, which is powerfully effective in extracting money from defendants. (It is applied in many lower courts, but has never been ruled on by the Illinois Supreme Court.)

Because of Lipke, if only one of 100 defendants in an asbestos case forced a trial, while the other 99 settled, a judge could bar the last defendant from suggesting at trial that one of the other 99 caused the plaintiff's illness...."One reason the Lipke rule is so destructive is that most of the corporations that were most responsible for harming workers in America because of asbestos products are bankrupt - like Johns Manville," said an attorney whose client is frequently named as a defendant in mesothelioma suits.

"Say if the plaintiff worked at the Navy docks and was exposed to Johns Manville products for 30 years. He is - quite frankly - coached by trial lawyers to testify that he once did a home improvement job in his basement using a joint compound purchased at a hardware store.

"So this guy worked a few days in his basement with the joint compound. He worked for 30 years on the docks. But the jury only gets to hear about the joint compound."

The series also includes a "Glossary of terms involving asbestos suits".



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.