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May 2006 Archives

Why, yes, now that you mention it, the legislation to accomplish that did happen to be drafted by trial lawyers who had a big financial stake in the result. You mean there's something wrong with that?

[Larry] Drivon and Jeff Anderson, a Minnesota attorney who handles abuse cases nationwide, helped draft a California bill that won unanimous approval abolishing the state's time limits on civil sex abuse lawsuits for one year. That measure prompted hundreds of new claims, while serving as a model for legislation in Ohio, Colorado, Maryland, Delaware and elsewhere.

More here, here, etc.

Letting jurors ask questions

These experiments got their start in Arizona but have now spread elsewhere, notes columnist Steve Chapman:

Recently, the federal courts in the 7th Circuit, encompassing Illinois, Indiana and Wisconsin, conducted an experiment in which members of the jury sitting in civil trials were allowed to submit questions for anyone testifying. From all the evidence, justice was well served.

More: New Jersey Law Journal, Peter Nordberg.

From A Sinking Ship

The Recorder's Justin Scheck chronicles the exodus from Milberg Weiss in the aftermath of last week's indictment of David Bershad and Steven Schulman. This desertion includes the heads of Milberg's healthcare and corporate practice groups, as well as less prominent members of the firm. And it raises the question of what, exactly, will happen to those members of the firm who decide to stay.

In Williams v. Philip Morris, an Oregon state jury awarded $21 thousand in economic damages, a capped $500,000 in non-economic damages, and $79.5 million in punitive damages. The Oregon Supreme Court, as we reported in February, upheld the 150-1 ratio. The Supreme Court has agreed to review the decision and clarify State Farm v. Campbell—but only four justices remain from that majority. Lyle Denniston's summary:

The Court said it would rule on two issues raised in Philip Morris USA v. Williams (05-1256). The first: if a court finds that a company's misconduct was outrageous, does that override the constitutional limit that holds punitive damages closely to the actual harm done -- the so-called "ratio" issue. The second is whether the Constitution forbids juries to provide damages to punish a company for the effects of its conduct on others, not directly before the court.

A third issue raised by the appeal, on the appeals court's deference to the factual claims made by the plaintiff, was not granted review.

I�ve done the hard work, so you don�t have to, on SOX, corporate governance experts, Enron and, of course, Gretchen Morgenson.

Today the snoozing New York Times rouses itself and actually reports a bit of fresh news possibly relevant to the Milberg scandal: "A lead plaintiff in a proposed tax shelter settlement that was brokered by the class-action securities law firm of Milberg Weiss Bershad & Schulman indicated that he was offered a financial incentive to serve as plaintiff, according to documents filed yesterday in federal court in Newark." The exact significance of the disclosure, however, is far from clear at the moment; the plaintiff in question, Claude Gerald Harris, "said that 'while these statements are largely true, they are taken out of context,'" and a Milberg spokesman claims the KPMG affair is wholly irrelevant to the charges in last week's federal indictment of the law firm.

In a marvelous self-parody, the City Bar Association of New York, together with the Historical Society for New York state courts, reenacted the argument over the famous Palsgraf case—and ruled in Palsgraf's favor. Peter Lattman has details.

The original 1928 Palsgraf case, of course, was an early version of the deep-pockets search: a passenger carrying dynamite was rushing for a train when a Long Island Railroad employee did a poor job of keeping him from falling, causing the package of fireworks to drop and explode, causing scales to fall on Ms. Palsgraf a ways away and injure her, for which she sought to blame the railroad, rather than the fellow who dropped his fireworks. (Not mentioned in the opinion, taught in every law school torts class: Palsgraf's chief complaint for damages was that the accident caused her to start "stuttering and stammering.")

Oz: CP shouldn't be in court

From the Australian: "Cerebral palsy should be removed as a reason for litigation against obstetricians to ensure the future of maternity services in Australia, a leading expert said today. Alastair MacLennan, a professor of obstetrics and gynaecology at the University of Adelaide, said each state should pass legislation to ensure medical professionals could not be hit with costly litigation over a condition that was rarely associated with errors during childbirth."

This coming Wednesday morning, in Washington, the AEI-Brookings Joint and Common Good will hold a forum that "will bring together leaders in the fields of playground and landscape design, childhood development and health, and law to consider the relationship between America�s growing aversion to risk and the development and health of our children." Details here.

Hevesi's Milberg connection

The political spotlight has been aimed mostly at Milberg campaign beneficiary Eliot Spitzer, who's opted to return the donations, but his less famous Albany colleague, State Comptroller Alan Hevesi, should be squirming at least as nervously, as this New York Sun editorial notes:

...Hevesi accepted $100,000 from the firm for his 2002 campaign, as well as $13,500 each from senior partners Melvyn Weiss and William Lerach....after winning re-election in 2002 in part with a cash infusion from Milberg Weiss, Mr. Hevesi just happened to hire the firm to represent the state's public-employee pension fund in - you guessed it - a shareholder suit against Bayer AG.

New York's Republican Governor George Pataki has taken Milberg money for his campaigns too. More on Hevesi's connections: OL May 14 and Dec. 10, 2004 and Apr. 14, 2005 and this site, Oct. 25, 2004.

Lay and Skilling convicted

Prof. Bainbridge is rounding up reactions. More: and here are post-mortems from Tom Kirkendall and Larry Ribstein.

James Quigley, Deloitte Touche USA CEO, tells us something like that about SOX in today's WSJ. I explain the errors in his reasoning.

Our lawyer licensing discussion

Milberg kickbacks defensible?

At Concurring Opinions, law professor Dave Hoffman (Temple) writes that he "[doesn't] particularly understand the economics of outrage" over the alleged kickbacks paid by Milberg Weiss and wonders about the strength of at least some of the arguments against the kickbacks. He generously invited me to respond; my response (which ran in the comments there too) follows after the break.

The left-leaning law lectern

John McGinnis:

As the Anglican church was once described as the Tory Party at prayer, the legal academy today is best seen as the Democratic Party at the lectern.

(via Bainbridge who got it from LawCrossing).

"The Lawyers Killing N.Y."

New York Assembly Speaker Sheldon Silver (D-Weitz & Luxenberg) is so avid to eliminate the statute of limitations for civil rape claims, the better to open the sluices for negligent-security and premises-liability suits against businesses, that even the National Organization for Women is upset with him. It's all kind of symbolic of the stranglehold the trial bar has got on Albany (via NYCivic.org)(more there).

That's what Dave Hoffman and Peter Lattman are asking. Spitzer has returned $124 thousand in donations from Milberg Weiss attorneys, who have given millions of dollars to Democratic candidates over the years.

As reported at Law.com, Louis Robles pleaded not guilty.

This whole thing is so lamentable. Robles is being defended by a public defender (i.e., by Florida taxpayers), because he says he has no more money. He had already paid his "former" attorney, Roy Black of Miami, $100,000, but that was apparently not enough to get him a lawyer at arraignment.

Assistant U.S. Attorney Chuck Duross told Brown that he is concerned about withdrawals made by Robles in the past few weeks, including $141,000 he gave to his girlfriend and $500,000 he withdrew April 6. Robles also paid Greenberg Traurig, his civil attorneys, $120,000. Plus the 100K to Black. Plus "his daughter" is putting up $1 million in bond.

Robles, 58, could face life in prison if convicted of all counts, according to U.S. Attorney Alex Acosta. The indictment also contains a criminal forfeiture provision seeking a judgment for $13.5 million, to be used to compensate his former clients. But since Robles is "destitute", it looks like his former clients may not be fully compensated....

A casual admission, by Mississippi Attorney General Jim Hood, that private lawyers come to him to propose lawsuits that they'd like the state to have them file, not just vice versa:

They are hired on a first-come, first-served basis when they bring what Hood considers to be legitimate cases that they are qualified to pursue. They work on a contingency basis and are only paid if they win or settle.

(Charles Dunagin, "Hood defends hiring attorneys", McComb Enterprise-Journal, May 18).

While we're at it, here's Jane Genova with an anecdote about how it was the private lawyers in the Rhode Island lead paint case who approached the state with the idea of filing suit, and how the judge in the case ruled that it would be prejudicial to make the jury aware of that fact.

Prof. Childs has details.

Let's see. In December 2005 USA Today reports that collections of computerized phone records [NOT the contents of any phone calls] are being analyzed by Homeland Security. That mud doesn't stick to the wall -- nor should it, since no government was actually reviewing the content of any calls, but merely the phone records -- i.e. the numbers dialed, the frequency of calls, the length of calls, etc. Then USA tries to rehash the story in April, and all h--- breaks loose.

Well, it seems some plaintiffs' lawyers read the second story (but not the first): they have, surprise surprise, launched a $200 billion lawsuit against phone companies.

These suits will surely bite the dust: it's silly to expect phone companies to resist good faith national security demands from the NSA. As a fine posting on Tech Central Station today notes,in the end, we must all realize the compelling need to provide powerful, computerized tools to those charged with defending all Americans. Nearly five years since the devastating attacks on our country, we have had no further attacks -- thanks in no small part to vigorous efforts by the Administration to keep us safe. Let's hope trial lawyers' zeal gets directed elsewhere (maybe at politicians stocking their refrigerators with cash?).

Just my $0.02.

Paul Carpenter has a nice piece on the bogus "public interest groups" fighting various tort reform proposals in the states.

An example: " 'Pennsylvania Citizens for Fairness, which boasts of working to protect the rights of average citizens, is based at Suite 600, 121 S. Broad St., Philadelphia. That is also the address of a powerful lobbying outfit called the Pennsylvania Trial Lawyers Association, which has about as much devotion to fairness as a herd of professional wrestlers."

Third Milberg guilty plea

Attorney Richard Purtich has admitted to passing on under $879 thousand in referral fees to Milberg plaintiff Steven Cooperman as kickbacks. Intriguingly, the indictment names "Partner B" as involved in the transactions, with leaks naming B as former Milberg lawyer William Lerach, who hasn't been indicted. Prosecutors had alleged payments were $3.5 million, and agreed as part of the plea not to allege perjury before the grand jury (which could result in Purtich's disbarment), so Purtich is perhaps giving something back in return—which could include an agreement to giving damning testimony that spreads the scandal further. Per Walter's post below, the New York Times' coverage is straight out of Bloomberg News' perfunctory account, but Justin Scheck of The Recorder has more detail, including the tasty anecdote that Purtich used to be the attorney for Overlawyered favorite Rex DeGeorge of the Exploding-Yachts DeGeorges.

NYTimes: what Milberg story?

In recent years the New York Times, especially its Sunday business section, have positioned itself as the most tireless of diggers on the business corruption and white-collar-crime beat. In the early days of many scandals, from Enron on down, the paper has provided saturation coverage which signaled to the rest of the press that the stories were of long-lasting importance. At the same time, given the Times's fondness for stories lamenting the fate of victimized investors, it was perhaps inevitable that the law firm of Milberg Weiss featured regularly as a source in its news columns, lawyers from that firm being showcased favorably with some frequency.

So what has happened in the four days since Milberg was itself the subject of a dramatic 20-count federal indictment?

You might think that by now the Times would have published a whole raft of news stories on the scandal. There would be profiles of the firm itself and of indicted partners David Bershad and Steven Schulman; news analyses on the implications for Milberg, its competitors and the companies it sues and has sued; reaction roundups based on interviews with other lawyers, legal ethicists, and business people; explanatory graphics and sidebars on the mechanics of how class actions work; and feature profiles of interesting personalities in the case such as informant Howard Vogel and U.S. Attorney Debra Wong Yang. There would be a sternly moralistic editorial or two suggesting that however the case turned out, the industry of class-action-filing clearly needed its stables cleaned out. Columnists and op-ed writers would have chimed in.

In fact, none of this has happened. According to a search of NYTimes.com, the following is the sum total of what the Times has published since last Thursday on the Milberg case:

Class action refresher course

Michael Dorf at FindLaw usefully reviews the ethical and principal/agent problems with class legal representation. He explains why hidden payoffs to named plaintiffs would constitute, if proved, "very serious wrongdoing" -- and also why problems with the class action format would persist even if all lawyers were saints.

On Saturday, the Wall Street Journal's "Rule of Law" column (sub-only) featured Alex Tabarrok summarizing his new Manhattan Institute study on medical liability and insurance, already familiar to our readers.

"Inside Milberg's Credenza"

I've got a lengthy op-ed in today's Wall Street Journal (sub-only) discussing the indictment of Milberg Weiss. A few excerpts:

Since such payoffs are baldly illegal, prosecutors claim the firm took elaborate steps to keep them concealed from judges and others. They say Milberg funneled much of the money through law-firm cut-outs and other channels, including casinos, and drew on a stash of money kept in a safe located in a credenza in partner David Bershad's New York office, "to which access was strictly limited." Again and again, prosecutors add, the firm submitted sworn statements on behalf of its clients denying any receipt of the sorts of payments they were in fact receiving. ...

With other class members absent, named plaintiffs are one of the few watchdogs against self-dealing or misconduct by the lawyers -- specifically, the pursuit of settlements that result in high legal fees, whether or not they serve the interest of the class. ... if the Justice Department's allegations are correct, Milberg was taking no chances on the watchdogs staying pacified: It threw regular chunks of raw liver into their cages. ...

The two celebrity lawyers who made Milberg famous, Melvyn Weiss and the now-departed William Lerach, have thus far escaped indictment: Of course, if they were prosecuting such a case, they would miss no opportunity to insinuate that misconduct by part of a team of top executives must have been at least tolerated by the others, that the rot goes straight to the top, that senior partners turned a convenient blind eye to signs of misconduct because they profited handsomely from that misconduct, and so forth. Messrs. Weiss and Lerach must count themselves lucky that such reasoning did not lead to their inclusion as defendants.

The Journal also has an editorial today on the subject.

Our earlier coverage: OL May 20 and links from there, May 21, as well as many posts at Point of Law. When The Economist profiled Melvyn Weiss three years ago, I told them, "A distinguishing characteristic of the Milberg Weiss approach is that the clients became tokens to be moved around a game board� (Jan. 17, 2002)(cross-posted from Overlawyered).

More reactions and commentary: Peter Henning explores the possibly relevant distinction between fraud and dishonesty, especially as regards the offense of "deprivation of honest services", and sketches out a possible defense for Milberg, namely to argue that "the victim really never lost anything and the defendants didn't get more than what a judge and opponent said they deserved". Betsy Newmark thinks the "story should be as big as Enron". Ed Morrissey at Captain's Quarters traces the political implications, Milberg being a heavy-hitting donor to elected officials. Larry Ribstein criticizes the decision to indict the firm as a whole. Independent Sources isn't impressed with the Milberg defense website. Right Thinking Girl links to a Bloomberg piece on the Arthur Andersen parallel. I've got a roundup at Overlawyered with reactions from Stephen Bainbridge, Evan Schaeffer and others, and also a post noting a peculiarly ill-timed announcement.

Featured Discussion

Starting on Monday, 5/22, PoL contributors Larry Ribstein and Jonathan Wilson will be debating the need for lawyer licensing. Their discussion began recently with Larry's post at Ideoblog, in which he wonders

whether it's worth preserving any piece of lawyers� monopoly on legal representation.

Jonathan responded at his own site, concluding that

[i]f the doors to the practice of law were completely unlocked by any licensing requirement, any charlatan with a website and a business card could hold himself out as qualified.

You can read the rest of the run-up to Monday's debate here, here, here, and here. And be sure to return after the weekend to see it continue.

Tom Kirkendall and yours truly have posts discussing the Milberg Weiss indictment.

"Front group", nyaah nyaah

Allentown, Pa. columnist Paul Carpenter has a bit of fun at the expense of Joanne Doroshow and Laurie Beacham of the misnamed Center for Justice and Democracy, who tend to fling around epithets like "front group" rather freely when criticizing groups that take a point of view different from theirs, such as the Pacific Research Institute.

Textbook of First Amendment law

It would just clutter up the text of such a volume to include the actual text of the First Amendment, even in an appendix (via Cernovich).

Milberg Weiss Indictment

According ($$$) to the WSJ, Milberg Weiss has been indicted as a firm, along with partners David Bershad and Steven Schulman. Looks like the deferred-prosecution deal fell apart. Read the text of the indictment here ($$$).

This morning, the Manhattan Institute Center for Legal Policy has released a new study in our Civil Justice Report series, Medical Malpractice Awards, Insurance, and Negligence: Which Are Related?. Written by our friend Alex Tabarrok and his assistant Amanda Agan, the study considers the underlying causes of variations in medical malpractice insurance premiums, over time and across the states.

Our regular readers are well aware that trial lawyers and their allied consumer groups, politicians, and journalists typically claim that increases in med-mal premiums are caused by the "insurance cycle" or insurer "price gouging". We've rebutted those claims often (see, e.g., here, here, here, here, here, and here; see also Ted Frank and Martin Grace's thorough debunking of the Center for Justice and Democracy's studies here), but the claims continue to find their way into the public debate.

Enter Alex and Amanda. Their new study makes four findings of interest (taken from the Executive Summary):

In response to the persistent problem of lawyers' stealing money owed to their clients, eleven states including New York and California have adopted "payee notification" laws embodying what Peter Morin calls a "rather simple and effective" rule: "When an insurance settlement check is transmitted from an insurer to a claimant's attorney, the claimant receives notification.

"Who could possibly object to that? Well, some lawyers." In Massachusetts, for example, a county bar association has come out against the idea, saying it implies not all lawyers can be trusted and permits that arch-no-no, direct contact between an adversary insurer and their own client without their intermediation.

Bulow on tobacco-deal inequities

Jeremy Bulow, the Stanford economics prof who's done more than almost anyone to expose the shoddy workings of the AGs' multistate tobacco deal, says it not only violates antitrust law but violates constitutional prohibitions on states' taxing each others' citizens:

Smokers buy as many cigarettes in Virginia as in New York, but New York makes six times as much as Virginia in the deal between states and cigarette makers....

New York made $510,597,469 more than it would have made through a straight tax and Virginia made $132,913,578 less, Bulow calculated in a report last year.

Summarized here, with the fat boiled away.

Although many suits on behalf of municipalities are continuing, former Maine Attorney General Jim Tierney, doyen of state AG activism, doesn't think any other state AGs are going to follow Rhode Island's in suing former paint and pigment makers. (Governing magazine; via Genova).

Bershad and Schulman

David Bershad and Steven Schulman, the two Milberg Weiss partners at the center of the Justice Department kickback probe, have taken a leave of absence from their firm. This comes as the firm tries to neogtiate a deal with the government that would spare it an indictment. According to ALM's Anthony Lin and Justin Scheck, Milberg Weiss will pay more than $100 million dollars, and agree to whatever restrictions the terms of the settlement impose, possibly including the supervision of their business activities by outside observers.

I have some thoughts about the state fiduciary, federal securities law and products liability law issues in the B & L lens cleaner scenario. The bottom line is that I wonder whether all this law ends up getting us less, rather than more, disclosure. In any event, the lawyers will be tripping over each other for years to come.

"Expert witness industry booming"

Some firms specializing in providing expert testimony in litigation have become so large that they have publicly traded stocks, notes the Fort Worth Star-Telegram in its survey of the field. "The expert-services industry was estimated by one insider to be reaping $6 billion to $8 billion a year." (via Childs who got it from Nordberg).

Yet another in the rapidly growing list of lawsuits invoking global warming:

The city of Seattle, a group of Alaska Natives and some of the nation's top climate scientists � including two from the University of Washington � thrust themselves into a high-profile legal battle Monday, hoping to resolve a stalemate over global warming.

The group is fronting an orchestrated, national campaign to convince the Supreme Court that the federal government's failure to regulate automobile emissions is already causing harm, from shrinking mountain snowpack to ecological changes in Arctic Alaska.

More here, here, here, etc.

Welcome Neal Boortz readers

The Atlanta-based commentator links to our recent column by Ralph Reiland on the liability verdict over the first WTC bombing.

New column: Jack Calfee on Vioxx

The AEI scholar reflects on the painkiller litigation in our newest column. If you're late to the subject, we've got a category on it.

Bastiat prize for journalism

Open to international entrants: "The prize was developed to encourage and reward writers whose published works promote the institutions of a free society: limited government, rule of law brokered by an independent judiciary, protection of private property, free markets, free speech, and sound science." International Policy Network is the sponsor and deadline for submissions is June 30.

Shifting asbestos theories

First, his lawyers said mesothelioma victim Harry Kananian was exposed to asbestos as a shipyard laborer. Then they shifted ground: he was really exposed during World War II as a GI aboard troop ships, they said. Settlements in hand, lawyers for his estate proceeded to sue tobacco maker Lorillard, saying he got the disease because of exposure to fibers in the Micronite filters of the Kent cigarettes he smoked for four years. Now, per Peter Geier in the NLJ, Lorillard has pointed out alleged inconsistencies between the various versions and intends to obtain discovery from lawyers involved in pressing the claims.

P.S. Homer nods dept.: Yes, if I'd been paying closer attention, I'd have noticed that Ted posted May 7 on this story.

Tried in the press

Forecasting mass litigation?

Business Week's Michael Orey reports (scroll down) that "social scientists at think tank Rand are teaming with RMS [Risk Management Solutions, a California-based firm] to see if data drawn from court files and insurance records can help predict 'L-Cats,' or liability catastrophes,", defined as liability-driven financial exposures above $100 million. The project will take up to three years, and Rand is interested in the policy implications, while RMS "hopes to sell its findings" to liability insurers (via PrismLegal blog).

AEI Judge & Jury event on video

A video and other information is now online for Friday's panel discussion in Washington which featured our own Ted Frank and Jim Copland, Alex Tabarrok, Theodore Eisenberg and Jonathan Klick discussing Tabarrok's book with Eric Helland, Judge and Jury.

SOX and foreign whistleblowers

One of the many problems with SOX is the extent to which it involves potential conflicts between US and foreign law. This particularly causes problems for foreign issuers that sell shares in the US. But it may also affect even US firms that do business in foreign countries, subject to different laws and mores.

I discuss a recent case on applying SOX's whistleblowing provisions abroad that should serve as a reminder that the problems with SOX are not all about small firms and 404.

Vioxx litigation update

  • Plaintiffs in New Jersey asked to postpone two cases scheduled for June 5; Judge Higbee agreed as to only one of them, citing unspecified discovery issues regarding pharmaceutical records. Whether this is code for the records not being consistent with the individual plaintiff's claims of long-term usage is unknown, but we've already seen multiple cases where usage was likely exaggerated. Twelve other cases in several other courts are scheduled in 2006 as of April 27.
  • Preliminary results from the year-long follow-up to APPROVe were released, indicating a statistically insignificant increased risk of heart attack after Vioxx use ceases. The lack of statistical significance didn't stop the press and the plaintiffs' bar from trumpeting this as bad news for Merck, and in the sense that judges allow statistically insignificant evidence into trial, Merck could potentially be on the hook for every heart attack that takes place for years to come if plaintiffs can find an expert willing to assert Vioxx's effects are permanent without supporting evidence.
  • Merck is finally getting its side of the story out there, with a new website about Vioxx litigation, learnaboutvioxx.com (via Lattman).
"Price-gouging" law passes House

Someone needs to explain to House Republicans that it does little good to pass pin-prick liability reform measures with one hand if with the other they pass wildly vague legislation expanding liability by potentially substantial amounts that could, if the FTC or local state attorneys general are overambitious, bring back the gas shortages of the 1970s. The Wall Street Journal points out that the bill can have no beneficial effects on gas prices.

"Junk lawsuits target ISPs"

Our own Jonathan Wilson, whose real-world job gives him reason to know whereof he speaks, catalogues the latest in, um, ambitious legal claims against AOL and other internet service providers.

"A haze of dust and deception"

The Houston Chronicle has a big two-parter on the silicosis litigation scandal (parts one, two; sidebar on genuine case of silicosis in man who worked as sandblaster for two decades).

As Walter noted earlier today, the blogosphere has picked up my debate with Larry Ribstein on the necessity of lawyer licensing.

I'm holding some more detailed thoughts in reserve (I'll need them badly if I'm to hold up my end of the debate with the good professor) but I couldn't resist posting a few follow-on thoughts here.

"At this point, it is too early in the investigation to say whether a particular product or solution may be responsible for the outbreak," says the Centers for Disease Control. But as Prof. Childs notes, it isn't too early for the lawyers to jump to conclusions unfavorable to Bausch & Lomb.

More on competing with lawyers

David Giacalone, who has a whole page on his site devoted to Unauthorized Practice of Law (UPL) issues, has an extensive post responding to Larry and Jonathan's controversy and to the Ohio case that touched off the discussion. Others commenting: Carolyn Elefant, Norm Pattis, Josh Wright.

Lawyer licensing: the poll

The WSJ Law Blog is running a poll on my question of whether lawyer licensing is necessary. As of about 4:00 cdt the vote was surprisingly close -- about 60% (yes)-40% (no). Jonathan Wilson and I have decided to debate this issue here in a couple of weeks. So more later. . .

The Manhattan Institute is recruiting a new press officer:

The Press Officer is responsible for coordinating media placements for Manhattan Institute scholars with local and national media, writing press releases, updating media lists and the website and marketing the institute's ideas, publications, website and scholars to the public. In addition, the Press Officer is responsible for media coverage on new reports, books and events. The Press Officer must be a self-starter and have a commitment to promoting ideas that foster greater economic choice and individual liberty. The position requires solid writing, research and organizational skills and a BA in political science/government. The Manhattan Institute is a New York City-based public policy institution (www.manhattan-institute.org).

The Communications Department consists of three press officers, two web/ print designers and is headed by the Executive Director of Communications. We are looking for someone with 1 to 3 years experience. This specific press officer will be working legal policy and other issues.

Interested candidates should contact Lindsay Young Craig, Executive Director Communications at lyoung [dot] craig - at - manhattan [hyphen] institute - [dot] - org or 212-599-7000, with a resume.

The job includes some chances to help call attention to Point of Law.

It begins

The pernicious effects of the 5-4 McConnell v. FEC decision show their face in Maine: a district court judge enforced a prior restraint on a television ad asking voters to lobby their Senator on an upcoming legislative debate because some voters might take it as an attack on Olympia Snowe, who is running for re-election, albeit currently unopposed in the primary. SCOTUSblog has extensive details and a link to the district court opinion. I'm not inclined to agree with Judge Bork that speech with sexual content should have substantially less First Amendment protection than political speech, but I'm quite confident that I agree with him that it shouldn't be the other way around.

Stockbroker overtime, cont'd

The magazine Registered Rep devotes its new cover story to the barrage of overtime lawsuits directed at Wall Street firms, supposedly on behalf of exploited retail producers who in some cases are earning $400K. (See "Arise, ye prisoners of high-paid brokerage jobs", Mar. 9). The article profiles Reno, Nev. attorney Mark Thierman, who's organized a large number of such suits demanding $2 billion or more from retailers and financial institutions. One highlight: interviews with actual brokers at leading firms who violently reject ("ludicrous", etc.) the idea that they are non-professionals who should be entitled to sue their employers for overtime. The way FLSA, the federal wage/hour law, is set up, however, it's not clear that a payday for Thierman can be avoided no matter how lame his own supposed client pool considers his contentions to be.

Sidewalks of New York

Manhattan Judge Sherry Klein-Heitler did not find garden hoses laid across sidewalks or paths to be an inherent danger of bicycle riding in Manhattan, and has permitted Harry Eagle's lawsuit against Chelsea Piers, where, in 2001, he bicycled over a garden hose and crashed, to go forward. I wonder how many other hose-hating plaintiffs are going to come out of the woodwork before this is over.

As I discuss here, prosecutors seem to be drawing rather fine lines in the KPMG right to counsel hearing as to what the meaning of "pressure" is. I note how this seems to be rather at odds with criminally prosecuting business people based on similarly fine distinctions.

ABA bias and judicial evaluations

Early in the Bush's first term, the administration caused a small controversy when they announced they would no longer cooperate with the American Bar Association's judicial ratings, defending the decision on the grounds that the ABA was biased. The most famous example of that bias was the "Qualified/Not Qualified" ratings given Judges Posner and Easterbrook during the Reagan administration; the two went on to be the most prolific and cited judges of their generation.

We now have another prime example. Brett Kavanaugh, whose nomination to the D.C. Circuit has been held up for years, has received two "well-qualified" evaluations from the ABA. However, in recent weeks, the Democrats have singled Kavanaugh out as someone they want to make a stand on, even getting a second Judiciary Committee hearing on him. And the ABA has now followed suit, downgrading Kavanaugh from "well qualified" to "qualified"—apparently, the additional experience of being Staff Secretary for the Bush administration as he awaits a Senate vote makes him less qualified. The committee president, Stephen Tober, went on to leak to the New York Times various anonymous bad-mouthing of Kavanaugh in a smear inconsistent even with the "qualified" rating. (Neil Lewis, "Bar Panel Downgrades Bush Nominee for Judiciary", New York Times, May 9 (via Lattman); ConfirmThem blog).

Dell Discrimination

A new class action suit, filed in Miami by law firm Holtzman Equels, accuses Dell of discriminating against non-English speakers in its lending policies. According to Jessica Walker in the Daily Business Review, Juan Carlos Arteaga, a Miami businessman, was approved by Dell for a line of credit. But that approval was later withdrawn on the grounds (at least according to an internal Dell email that Mr. Arteaga could not "speak English and a non-English speaker can't personally guarantee an account for fear they may not understand the terms and conditions of the lease." This is a potenitally explosive suit, not merely because of Dell's deep pockets and high profile, but because it touches on the sensitive issues surrounding America's Hispanic population. Stay tuned.

The GAO has a Report to the Committee on Small Business and Entrepreneurship, U.S. Senate on the Sarbanes-Oxley Act. The GAO has followed the current conventional course of the SOX defenders: Things have gone too far to deny that SOX has problems, so let's try to sweep the problems into as small a corner as possible. Here's a more complete "buyer's guide" to the GAO report.

Med-mal cloture motion fails

A 48-42 majority was short of the 60-vote supermajority Senate rules require. Three Republicans—Lindsey Graham of South Carolina, Richard Shelby of Alabama, and Mike Crapo of Idaho—crossed party lines; Democrats held firm, 39-0. The compromise measure, S. 23, which applied to birth procedures, failed with a similar lineup. In statements, Senators Reid and Kennedy improbably claimed reform wouldn't lower insurance rates, with Reid reserving special scorn for doctors for "too much malpractice."

Bird flu and disposable masks

A WSJ editorial on April 27, summarized by Sam at this site and by yours truly at Overlawyered, drew the connection between the impending shortage of masks and the courtroom onslaught against mask makers by silicosis and asbestos lawyers. It turns out -- as is only fair to note for the record -- that Business Week's Lorraine Woellert had the story first, in an extensively reported piece earlier in April.

Judge fines R.I. AG for contempt

The judge in the lead paint case fined Rhode Island Attorney General Peter Lynch $5,000 and held him in civil contempt for maligning paint makers in the media, in violation of the state rules of professional conduct and an earlier instruction by the judge. Lynch denies the charge. Jane Genova has more here and here, as does Peter Lattman.

I'm still not convinced.

Because at 1:43 pm on the debate on S.22, he's quoting word for word from a Center for Justice & Democracy report that Martin Grace and I refuted.

Lyle Denniston has an excellent post summarizing Grace's petition for certiorari to the Supreme Court over a Ninth Circuit decision on the Libby mine that Grace says obliterates CERCLA's requirement of cost-effectiveness analysis. The government's response is due May 30. (h/t W.W.)

The petition itself is also interesting because it provides a perspective on the infamous Libby, Montana disaster that one hasn't seen in press coverage. If the facts listed are true, then the entire Libby incident was a media-created health scare.

More Tobacco Twists And Turns

According to NLJ's Marcia Coyle, a coalition of 30 state attorneys general has petitioned the US Supreme Court to intervene in a new tobacco lawsuit. This coalition is seeking to stop the so-called 'Little Three', a triad of smaller tobacco companies not included in the Master Settlement Agreement. The L3 have filed suits seeking to overturn the portion of the MSA that requires cigarette companies to join the MSA or to put funds for future damages in escrow accounts. But read the article-- it's a fascinating, as-yet-untaken look at the whole issue.

I have developed a (not so) modest response to Professor Ribstein's post here. I welcome any immodest replies.

It's been a busy week in the legal blogosphere. We're a committed group blog here at Point of Law, so we teamed up to cover the many topics summarized below. A big thanks to Larry Ribstein, Tom Kirkendall, Ted Frank, Sam Munson, and our editor Walter Olson for all their hard work.

I've sorted through everyone's contributions and tried to organize them as logically as I can, by topic. We start with the week's headline--Sex!--and proceed through Legal Academia, Legal Practice and Employment, Television and Cyberspace, Intellectual Property and First Amendment, Litigation, Corporate Governance, "Holidays and Anniversaries", and "Baseball, Death, and Taxes". If some of those are less than self-evident, keep reading. We hope you enjoy!

The lawyers for the estate of Harry Kananian have filed multiple asbestos complaints. Defendants noticed that the complaints contradicted each other, and "new evidence" always seemed to lead away from defendants that Kananian had already settled with. Cuyahoga County Judge Harry A. Hanna will permit discovery to be taken of two plaintiffs' law firms, Early Ludwick and Brayton Purcell, to get to the bottom of this, though one suspects such double-dipping is not uncommon. (Peter Geier, "Allegations of Conflicting Claims in Tobacco Case", National Law Journal, May 8).

More on FRE 702:

Blog 702, generally an excellent resource for Rule 702-related matters, rather harshly condemns my theory that Rule 702 is stricter than the the Daubert trilogy. Here's what Joiner says about methodologies and conclusions:

But conclusions and methodology are not entirely distinct from one another. Trained experts commonly extrapolate from existing data. But nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence which is connected to existing data only by the ipse dixit of the expert. A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered.
Note the permissive language, backed up by an abuse of discretion standard.

Now, compare Rule 702, as amended, stating "a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise... if ... "the testimony is the product of reliable principles and methods, and the witness has applied the principles and methods reliably to the facts of the case." Note the lack of permissive language; courts must exclude evidence if an expert has not applied the principles and methods reliably to the facts of the case.

Similarly, Kumho Tire seems to give district courts almost infinitely wide discretion in how to determine the admissibility of experience-based testimony, including giving an example of a perfume-sniffer who is to be qualified based solely on experience and "whether his preparation is of a kind that others in the field would recognize as acceptable." Contrast this, again, with Rule 702's absolute requirement that all expert testimony be "the product of reliable principles and methods," that courts must ensure that "the witness has applied the principles and methods reliably to the facts of the case." Arguably, merely asking a perfume sniffer if "his preparation is of a kind that others in the field would recognize as acceptable" doesn't meet this standard.

Finally, Daubert itself was very ambiguous, and there was a great debate over whether it was a "loose scrutiny" or "strict scrutiny" opinion. Joiner and made it clear that Daubert was to be interpreted rather strictly with regard to scientific evidence, Kumho Tire made it clear that a reliability test applies to all expert evidence, and Rule 702 made things even stricter. For courts to go back and assume that any stray dicta is Daubert is sound simply ignores what has happened since then. Unfortunately, what many courts have been doing, in my view, is deciding based on their own predilections whether they want to admit challenged evidence, and then they go back and find precedents that support their perspective, instead of starting with an analysis of Rule 702's requirements, and then deciding whether the evidence meets that standard.

[cross-posted at the Volokh Conspiracy]

For the last few weeks I've been trailing NYT Sunday columnist Gretchen Morgenson as she pushes her questionable corporate governance agenda. She's trying to inspire an army of ordinary investors, led by self-appointed shareholder activists (often representing labor unions), to push incessant corporate wars that provide fodder for Morgenson's columns. Here's my latest installment, and here's posts from past weeks.

An article in today's NYT about what happened to a non-lawyer father who tried to represent his autistic son leads me to ask this question. Some lawyers may not like my answer.

The Vermont legislature passed a law making seed manufacturers strictly liable on a nuisance theory if farmers allow genetically modified seeds to enter others' property. Aside from the incentive for collusion to fake dispersal, the bill would have essentially made it uneconomical to sell such products in Vermont. (AP/Boston Globe, May 5 (via Steenson)). Having lost in the legislature, don't be surprised if lawyers attempt to achieve the same result in the courts—and cases like the Rhode Island lead paint nuisance verdict make that not entirely implausible.

Federal Rule of Evidence 702 was amended in 2000 to provide that expert testimony is admissible only if:(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case. This rule is both a codification, and to some extent an elaboration, on the so-called "Daubert trilogy" of Supreme Court cases. It's an elaboration because, for example, the Joiner decision stated that courts MAY exclude testimony if an expert witness has taken a potentially reliable principle or methodology, but not applied it reliably to the facts at hand; Rule 702 states that the court MUST do so.

Nevertheless, many federal district courts are simply ignoring or merely paying lip service to Rule 702, and relying on pre-2000 circuit court precedent. A particularly egregious example is Riley v. Target Corp., 2006 WL 1028773, slip op. (E.D. Ark. Apr. 13, 2006). No need to bore readers with the facts of the case. Target challenged the plaintiffs' physician's "differential diagnosis" (which was actually a differential etiology) under Rule 702.

The court found that the methodology of differential diagnosis is a generally reliable one, and then added that any weaknesses in the expert's opinions go to the weight of his testimony, not its admissibility. The court then cited a 1995 (!) circuit court case for the proposition that "[f]aults in an expert�s use of differential etiology as a methodology or lack of textual authority for his opinion go to the weight, not the admissibility, of his testimony".

Note that the court not only relied on a pre-2000 precedent that directly contradicts the text of Rule 702, but relied on a pre-Joiner (1997) case! [UPDATE: Even worse, I just noticed, the court quoted a 1995 case for the proposition thhat "[o]nly if an expert's opinion is 'so fundamentally unsupported that it can offer no assistance to the jury' must such testimony be excluded." This was clearly wrong as of 1995, much less now, and thus not surprisingly that case itself, as the court noted, was quoting a 1988, pre-Daubert case! This judge has apparently slept through the last thirteen years of expert evidence jurisprudence.] This case is one of many examples of a court relying on stray dicta from cases that are no longer good law, and paying mere lip service, at best, to the text of Rule 702.

So note to federal district court judges, and their clerks: you shouldn't be relying on any precedent on expert evidence from before 2000, because those precedents relied on a different version of Rule 702, not to mention that many of them were decided before Kumho Tire (1999) and Joiner (which are themselves less strict than amended Rule 702). If you feel the need to do so anyway, the holding needs to be checked against the text of amended Rule 702. If the precedent conflicts with the rule, the rule quite obviously trumps the precedent.

UPDATE: There's nothing inherently wrong with citing pre-2000 precedents, so long as they are consistent with amended Rule 702. But many courts seem unable and unwilling to distinguish precedents that are consistent with Rule 702 and ones that are not. Moreover, the starting point for analysis should be the text of Rule 702, not a circuit court's interpretation of old 702 from 1998. I should add that courts should be cautious about relying even on post-2000 precedents, because many of these themselves ignore the text of 702 and instead cite pre-2000 precedents.

[Cross-posted at the Volokh Conspiracy]

Robert Hunter gives an "I'm rubber and you're glue" response that ignores the vast majority of the criticisms Martin Grace and I made, and falsely claims we had no data in our report. Martin and I will decide over the weekend whether it merits a longer response than that.

Unfortunately for Hunter, this comes in the same week that HCLA catches Hunter admitting that tort reform lowers insurance rates and that a new Daniel P. Kessler study finds that "increases in tort awards, settlement payments, and defense costs explain why premiums have risen" and that the evidence Hunter adduces in claiming an "insurance cycle" is solely responsible for premium increases is "inconclusive."

More scary paternalism in the name of public health from the Bloomberg crew: the New York City government has begun "legally requiring laboratories that do medical testing to report to the Health Department the results of blood-sugar tests for city residents with diabetes -- along with the names, ages, and contact information on those patients. City officials are not only analyzing these data to assess patterns and changes in diabetes prevalence in the city, but are planning 'interventions.' ... If you wish to keep your medical data confidential, you cannot." Coercive public-health techniques originally seen as needed to combat communicable and infectious disease will now be deployed in hopes of correcting less-than-healthy individual behavior. Where's HIPAA, the manically overbroad federal patient-privacy law, now that it might actually do some good? (Elizabeth Whelan, "Big Brother Will See You Now", National Review Online, Apr. 25).(cross-posted from Overlawyered).

Chaput on abuse suits

Roman Catholic Archbishop Charles Chaput of Denver, interviewed in Our Sunday Visitor, is outspokenly critical of the trend toward retroactively reopening statutes of limitations so as to facilitate sex-abuse litigation against churches and church schools. He also makes a couple of other interesting points about the litigation, in particular its tendency not to be directed at the government-school sector:

In almost every state, public officials use a combination of governmental immunity, very brief reporting timeframes and very low financial damage caps to make it difficult for anyone to sue public institutions � including public schools. Religious and private institutions enjoy no such lop-sided protections....

In Colorado, under current (February 2006) law, a parent whose child is sexually abused in a public school is barred from suing the school because of governmental immunity. Even if a public school waived its immunity, which is unlikely, the child would have only 180 days to provide formal notice of a claim against the school. And even then, the maximum damages the child could recover are only $150,000.

For the identical sexual abuse in a Catholic parish, there is no immunity, no notice requirement, no $150,000 damage cap, and a much longer statute of limitations. This is why the litigation industry � and that's exactly what it has become; a very lucrative revenue-producing industry � targets private institutions and ignores the public sector. There's no money in suing public schools.

More on the abuse litigation here, here, here, here, here and here.

Pennsylvania med-mal crunch

Marcia Coyle's May 3 piece extensively quotes me and the Liability Outlook I wrote with Martin Grace of RiskProf, the good parts of which can be attributed to him.

Sen. Ensign's S. 22 itself is finally available on THOMAS.

(cross-posted at Overlawyered)

Lone Star med mal law fix

Zocor has been on the market for fifteen years, but an intermediate court in the case of Zito v. Zabarsky allowed expert evidence that the doctor should be liable because of the novel possibility that the statin could cause polymyositis, notwithstanding the lack of evidence of this in the medical literature, and the fact that use of a statin at the recommended dose is the standard medical practice for treating high cholesterol.

Even if the theory (based on a single speculative case report in The Lancet—the expert admitted no other scientific literature supported him) was scientifically valid, in the words of one commenter at Medrants, "To be held liable for a 1 in a million event while trying to prevent a 1/100 event is about as reasonable as a suing your dentist for dental cleaning, although 1/million develop sometimes fatal endocarditis."

For more detail, read the excellent AMA/WLF briefing (h/t S.B.) moving to reconsider the decision.

Blawg Review

Monday, May 8th, Point of Law will be hosting Blawg Review #56. Previous hosts have included Benjamin Cowgill, Brandy Karl, and James Edward Maule-- to say nothing of our own Walter Olson, Ted Frank, and Jonathan Wilson. Blawg Review is a roundup of the best and most interesting in legal and law-related blogs. So-- if there's something you want (or need) to see covered, follow these submissions guidelines, and submit it here. Thanks!

Gov. Janet Napolitano, a Democrat, vetoed GOP-backed legislation that would have raised to "clear and convincing evidence" (from "preponderance of the evidence") the showing needed before emergency room personnel could be found liable for negligence. (Phoenix Business Journal; Arizona Star).

They're retreating from hurricane zones; the attempts by some lawyers and politicos to knock out their contractual exclusions of flood damage can't exactly be what you'd call a helpful factor in encouraging them to stay.

The Canadian Medical Association Journal released the first study suggesting that short-term use of Vioxx elevates risk of heart attack. The adjusted relative risk rate of 1.67, however, means that 60% of heart attacks by short-term Vioxx users would have occurred anyway. To the extent courts enforce the idea that a proposed cause must be more likely than not a cause, this study should not help plaintiffs, but it's unclear to what extent courts will accept that combination of legal and scientific standards, though some have. Merck's strategy of focusing on an eighteen-month cutoff for causation, rather than on demonstrating that it acted appropriately in the face of uncertain information, could be hurt to the extent courts are willing to allow speculation beyond the 2.0 rule.

The press coverage has an interesting focus on the negative impact for Merck, while ignoring other findings of the study. The same study did not find a statistically significant increased risk rate of heart attack for users with more than one Vioxx prescription or more than three weeks of use. (And the sample-size for prevalent use was much larger than the sample-size for first-time use headlined in the news coverage.) The relative risk for all Vioxx usage was merely 1.24, suggesting that over 80% of heart attacks by Vioxx users would have happened anyway. No one seems to have asked Andy Birchfield about those results. Merck's only comment on the study to date is to note that observational studies like that in the CMAJ are inferior to clinical trials. (Elena Cherney and Heather Won Tesoriero, "Study Raises Questions On Short-Term Vioxx Use", Wall Street Journal, May 3) (via Lattman).

�The Passion of Eliot Spitzer�

Kimberley Strassel wonders why Spitzer's "penchant to threaten people" is getting so little scrutiny. (via Lattman)

Olivo v. Exxon Mobil

According to Michael Booth in the New Jersey Law Journa, the New Jersey Supreme Court ruled last week that companies have a duty to spouses "based on the foreseeable risk of exposure from asbestos borne home on contaminated clothing," in the words of Justice Jaynee LaVecchia. This means that New Jerseyan Anthony Olivo can file a wrongful death suit against his former employer, Exxon, for the death, at age 82, of his wife Elizabeth from mesothelioma. And, presumably, that a whole new class of plaintiffs can be created.

Wrong-site surgery

Surgery performed on the wrong body location or even on the wrong person makes a frequently bandied-about class of horror story about the medical system, but a new study finds it a "fairly rare" phenomenon, occurring at a rate of one in 113,000 operations ("Cases of 'Wrong-Site Surgery' Are Rare", HealthDayNews/ Forbes.com). Most instances resulted in minor or insignificant temporary harm to patients. Although wrong-site surgeries make great anecdotes for lawyers fighting malpractice reform -- as witness the classic Willie King case -- they can distract attention from more widespread and serious problems in the system:

"You can do 20 redundant checks [for the wrong site] before you have surgery, but is that really worth the amount of effort when this is probably the least common adverse effect that could happen to you?" Kwaan said [lead researcher Dr. Mary Kwaan, of Boston's Brigham and Women's Hospital and the Harvard School of Public Health].

"It would be better to spend time and energy on more common problems that are dangerous to patients," Kwaan said. These include infections, bleeding and leaving materials like sponges inside the patient, which occurs about one in 10,000 operations, she said.

(via KevinMD).

Earlier this year, federal district judge John Gleeson handed down a decision holding that New York's much-criticized method of selecting judges via party-dominated convention violates the U.S. Constitution. In our newest column, Henry Stern, former NYC Parks Commissioner and a longtime observer/participant in the Gotham political scene, views the ruling as a rare opportunity for reform.

"Health Week" pushed back to May 8

Senate votes on medical malpractice reform and other health policy issues have been pushed back to next week on the Senate calendar. The Kaiser Network has links (h/t P.W.) to back-and-forth claims about the effect of the bill on nursing home care. (See also Overlawyered, Aug. 18).

Separately, the crowdedness of the calendar speaks poorly about the likelihood of asbestos reform being considered in this Congress.

As if SOX weren't causing enough problems, especially for small companies, there may be far worse problems on the horizon. The GAO has issued a report on company formations to the Senate Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs. The report addresses the concern that "�shell� companies, which have no operations, can be used for illicit purposes such as laundering money." As discussed here, the report could be the precursor of an enormous expansion of federal power over the smallest firms.

That would be us (according to the medical student who posts at MedSkool -- thanks).

Various American jurisdictions impose liability on party-givers who it's argued should have done more to prevent guests from drinking and driving. Now the Supreme Court of Canada has agreed to consider a case in which Zoe Childs of Oxford Station is suing Dwight Courrier and Julie Zimmerman, who threw a New Year's party attended by Desmond Desormeaux, an alcoholic who drove off and into Childs' car, severely injuring her. More: OL, May 7 (court unanimously rejects liability).

More on Consumer Disadvocacy

The consumer disadvocates are taking it on the chin.  Last week Ted Frank and I finished an AEI Liability Outlook critiquing studies put out by various consumer advocates.  Also late last week Rob Hoyt and Lars Powell took on the Foundation for Taxpayer & Consumer Rights (FTCR).  This is a group that advocates getting rid of zip code restrictions on insurance pricing in California.  This would be a good thing for low risk drivers in California and is often fought by other consumer disadvocates. However, the FTCR has a split personality.

The FTCR issued a report last winter which claimed med mal insurers were intentionally over reserving to create a crisis so that they could raise med mal rates.  In addition to the previous canards often repeated, yet easily discredited, such as the claim that the insurance industry lost money due to poor investments choices, the FTCR looked at a given set of years’ reserves and then extrapolated forward claiming that the med mal industry will have over charged doctors some $15 billion. 

Hoyt and Powell look at more recent data which suggests something completely different.  First, they tackle the issue of the "poor" investment choices of med mal insurers to show that, the investments are mostly in bonds, and the portfolios are more conservative, on average, than the insurance industry as a whole.  Second, they show insurers have not over reserved as evidenced by relatively small downward reserve revisions.  Further, Hoyt and Powell point to evidence consistent with an industry without profits: Insurer exit and state assistance plans for physicians seeking coverage.  This is not the sign of a healthy market and truly inconsistent with the high profits alleged by the FTCR. 

The consumer advocates really need to understand this market and insurance markets in particular.  They do not comprehend insurance pricing, competition, market structure or the incentive structure of the industry.  According to the PIAA, an industry association of physician owned insurance companies, some 60 percent of the US market is covered by these member-owned medical malpractice insurers.  What possible incentive do these insurers have to over-charge their customers just so that they can turn around and give those same customers a dividend?

From this afternoon's speech at the Washington Hilton:

Our fifth policy to confront high cost health care and to make sure private medicine is central in the United States is to confront the glut of frivolous lawsuits that are driving good doctors out of practice and driving up the cost of health care. (Applause.)

To avoid junk lawsuits, professionals in the health care field are forced to practice defensive medicine. They order tests and write prescriptions that are not necessary, so they can protect themselves from trial lawyer lawsuits. One hospital CEO in New York said, "Fear of liability does nothing but threaten patient safety by discouraging open discussion of medical errors and ways to prevent them."

The total cost of defensive medicine to our society is estimated at $60 billion to $100 billion a year, and that includes $28 billion billed directly to the American taxpayers through increased costs of Medicare, Medicaid, Veterans Affairs, and other federal health programs. The costs of frivolous litigation are more than financial; they hurt patients all across America.

Most Americans are shocked when I cite the fact there are nearly 1,500 counties in the United States without an OB/GYN. We want our doctors focused on providing compassionate care, not fighting junk lawsuits. We want our hospitals pursuing innovative and promising ways to heal, not battling lawyers who second-guess them in the courts. This is a national issue that requires a national response. The House of Representatives have passed a good bill. The Senate has done nothing on medical liability reform. For the sake of affordable and accessible health care, we need medical liability reform this year. (Applause.)

The bill pending in the Senate is S.22, a variation of H.R. 5, which passed the House last year. It doesn't appear to be up on THOMAS yet.

Sebastian Mallaby on Vioxx

Open societies flourish because they are driven by intelligence and information; the U.S. tort system creates an enclave of idiotic whimsy in the heart of the most open society in the world. But the Vioxx litigation does not merely celebrate dumb prejudice. It's extraordinarily expensive. For this year alone, Merck has set aside a legal war chest of $685 million. The Vioxx lawsuits could eventually cost it between $10 billion and $50 billion.

Did those numbers sink in properly? The midpoint of those estimates -- $30 billion -- is six times more than the federal government spends annually on cancer research. Or, to put it another way, $30 billion is about five times Merck's annual earnings, meaning that one of the world's top pharmaceutical research establishments is fighting for survival. At a time when Americans fret over relative decline in science and business, it's insane to sink a flagship scientific company in order to line the pockets of unscrupulous lawyers.

The first politician who says this will be called an enemy of injured victims, but he or she will also deserve to be called bold and right.

Read the whole thing. (Sebastian Mallaby, "No Defense For This Insanity", Washington Post, May 1 (h/t P.W.)).

Gretchen Morgenson's busy day

In yesterday's NYT column, Gretchen Morgenson again attacks Pfizer, this time using the attack as a springboard to unleash Eliot Spitzer, federalize corporate governance and bring back Glass-Steagall, among other things. I've got a report here.

To what extent are the problems of what I've called "criminalizing agency costs" just the general problems of the criminal justice system? I have posted a little primer highlighting what I think are the special problems here. Hopefully this will be helpful in understanding the Enron trial, as well as the forthcoming hearing in the KPMG case.

"Alabama Values Coalition"

Such a pleasant, wholesome-sounding name for an organization. And then it turns out to have been just a conduit by which the powerful law firm of Jere Beasley could fund radio ads attacking politicians it disliked.

W.V. med-mal reform

It's reduced the incidence of meritless cases, says Don Sensabaugh, counsel to the West Virginia Medical Association:

In particular, he said, the changes have decreased "shotgunning," in which a lawyer would sue any doctor who had seen his or her client.

"And then, as the case went on, they'd figure out who was responsible," Sensabaugh said. "It was not infrequent that at the end of discovery or before trial, two or three doctors would be dismissed [from the suit]. That was an unnecessary expense to the system."

(via KevinMD).



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.