« October 2003 |
Main
| December 2003 »
Perhaps you've seen the "Stella Awards" on the Internet; these supposedly real examples of lawsuit abuse are named after Stella Liebeck of McDonalds fame. The Stella Awards are fake. I've decided to create the "Greg Abbott Awards", after the hypocritical Texas Attorney General Greg Abbott.
In 1984, Greg Abbott was jogging in the wrong place at the wrong time, and a tree fell on him while he was jogging and partially paralyzed him - he's in a wheelchair today.
Greg Abbott hired Texas attorney Don Riddle to sue the homeowner of the tree, and a company who once trimmed the tree.
Don Riddle obtained a settlement for Mr. Abbott that may exceed $10 million in his lifetime. He receives yearly payments, and according to this article, Mr. Abbott received $300,000 in 2001 alone.
Surprisingly, Greg Abbott has become a major champion for tort reform. As a Supreme Court justice in Texas appointed by George W. Bush, Mr. Abbott helped push a tort reform agenda. Here's what Don Riddle, Mr. Abbott's attorney has to say: "People who sadly find themselves in Greg Abbott's position today will not have the same access to obtaining compensation that Mr. Abbott had. The difference is the tort reform laws that have come into place." Had the tort reform laws Mr. Abbott advocates been in place in 1984, Mr. Abbott would not receive $300,000 or more every year of his life. Why then, is it fair for Mr. Abbott to receive millions of dollars in pain and suffering - and mental anguish - but it's not fair for other Texans?
The Texas Observer has even more details about the hypocrisy of Greg Abbott. For example, here's what Greg Abbott had to say about Kirk Watson's competing campaign for attorney general: "My opponent, a former Mayor of Austin, is a liberal plaintiff personal injury trial lawyer who’s made millions suing doctors, hospitals, businessmen and women," Greg Abbott is just one of many conservative Republicans who head straight for "liberal plaintiff personal injury trial lawyers" like Mr. Watson when they're injured.
This article at the Austin Chronicle calls Greg Abbott "[T]he most reliably pro-corporate vote on the consistently pro-corporate court." While another article, also from the Austin Chronicle says that "Abbott's judicial achievement list might have been drawn directly from the corporate-friendly agenda of the Texans for Lawsuit Reform."
So, with a little background information about Greg Abbott, you can certainly understand why I've decided to honor tort reform hypocrites with an award in his name. Look for the first actual award sometime next week. There are so many tort reform hypocrites, I'll have a hard time figuring out who first to honor.
While doing some research about the conservative "think tank" The Manhattan Institute, I came across TomPaine.com and this article about how think tanks are rapidly turning into lobbyists. Basically, corporations pay a think tank to do a study that will end up with a certain result, and then use that study to sway politicians. After all, the study was done by scientists or scholars, right?
Yesterday, the site had its first public comment, which was from a gentleman who disapproved of my post about Trial Lawyers, Inc. For those who don't know, Trial Lawyers, Inc. is a "study" that basically attempts to lump all lawyers into one giant organization that is reputed to be destroying America, the justice system, etc. I'll tell you who made the "study" possible, and let you draw your own conclusions.
The "study" was authored by the Manhattan Institute, a conservative think-tank. Well, at least it's funded by conservatives. Let's take a look at who pays the bills for the Manhattan Institute.
Richard Mellon Scaife and his foundations: This article at CNN profiles Richard Scaife. Richard inherited his millions from the Mellon industrial foundation. He owns some interest in newspapers and other media outlets. Why? The CNN article has this to say, "Burton Hersh, author of "The Mellon Family," said, "Even as a child, he always saw the correlation between the media and the reputation of politicians. That's certainly been a sub-theme of his life." This makes sense, because the article also concludes with this statement: "[I]t is a fact this billionaire has spent millions in tax-free money attacking the current occupants of the White House." (Clinton)
According to this link at Media Transparency, Scaife and his foundations have given $565,000.00 to the Manhattan Institute since 2000 alone.
The Lynde and Harry Bradley Foundation: Another large contributor to the Manhattan Institute is the Bradley foundations. Media Transparency has some nice information about this group here. In 1968, Allen-Bradley (where the money came from) had over 7,000 employees, but only 32 black or Hispanic workers. The federal government forced them to integrate. It's currently run by a former executive of the John Olin foundation, another conservative group profiled in the same Media Transparency article, and summarized below.
Remember the book The Bell Curve? This group helped fund it, and after it was published, increased the author's grant to $136,000. For those who forget, The Bell Curve espoused that poverty was caused by genetic inferiorty. This article, also at Media Transparency, details the "racist agenda" of the organization and its efforts to eliminate affirmative action. It's a good read.
Since 2000, this foundation has given $585,000 to the Manhattan Institute.
The John M. Olin Foundation: This foundation is financed by chemical and munitions money. Last I checked, the chemical industry pushes heavily for tort reform. There is a nice piece about the foundation here at the People For The American Way, and it has this quote: "Explaining his efforts to convince corporations to halt grants to university programs deemed "liberal," Olin president William Simon argues that many businesses are "financing their own destruction." "Why should businessmen," Simon asks, "be financing left-wing intellectuals and institutions which espouse the exact opposite of what they believe in?"
While the previous quote is fairly telling, the best quote in the article could be this one: "The report finds a significant and long-standing movement to reshape the American legal system on the part of "a powerful coalition of business groups and ideologically compatible foundations [who are] engaged in a multi-faceted, comprehensive and integrated campaign to elevate corporate profits and private wealth over social justice and individual rights." Further, "[c]onservative foundations, particularly Olin, Sarah Scaife, Lynde and Harry Bradley, and Smith Richardson, are the effort's philosophical leaders."
UCLA turned down money from this foundation because they felt the Olin foundation was, "taking advantage of students' financial need to indoctrinate them with a particular ideology." It certainly doesn't look good when a university turns down grant money because of the beliefs of an organization.
The Manhattan Institute, however, has no problem with taking Olin money. Since 2000, they've received $1,001,000 in grants from the Olin Foundation. Have the authors of Trial Lawyers, Inc. been indoctrinated with the ideology of the Olin group?
So, the Manhattan Institute has received millions of dollars in funding from right-wing, racist, pro-business, anti-consumer "think tanks", and they use that money to produce a "study" which blames trial lawyers for the decline of America. Draw your own conclusions.
The following article, entitled "Crushed by My Own Reform" is the story of Frank Cornelius, an insurance lobbyist who got royally screwed by the tort reform he helped enact. The article appeared originally in the New York Times on October 7th, 1994.
Crushed By My Own Reform
By Frank Cornelius
In 1975, I helped persuade the Indiana Legislature to pass what was acclaimed as a pioneering reform of the medical malpractice laws: a $500,000 cap on damage awards, and elimination of all damages for pain and suffering. I argued successfully that such limits would reduce health care costs and encourage physicians to stay in Indiana – the same sort of arguments that not underpin the medical industry’s call for national malpractice reform.
Today, from my wheelchair, I rue that that accomplishment. Here is my story.
On February 22, 1989, I underwent routine arthroscopic surgery after injuring my left knee in a fall. The day I left the hospital, I experienced a great deal of pain and called the surgeon several times. He called back the next day and told my wife to get me a bedpan. He then left on a skiing trip. I sought out another surgeon, who immediately diagnosed my condition as a reflex sympathetic dystrophy – a degenerative nervous disorder brought on by trauma or infection, often during surgery.
A few months later, when a physical therapist improperly red the instructions on a medical device, I received a tremendous current of electricity through my left leg. This seriously complicated my condition.
In August 1990, another physician proposed a medical procedure, but used the wrong instrument; that left me with several holes in the vena cava, the main vein from the legs to the heart. I would have to bled to death in my room if my wife had not come to see me that evening and called for help. As another physician tried to save my life, he punctured my left lung.
The cost of this cascading series of medical debacles is painful to tally:
I am confined to a wheelchair and need a respirator to keep breathing. I have not been able to work.
I have a continuous physical pain in my legs and feet, prompting my doctor to hook me up to an apparatus that drips morphine. My pain used to rate a 10 on a scale of 1 to 10. Now it’s about a 4.
Twice, I have received last rites from my church.
My marriage is ending, and the emotional fallout on our five children has been difficult to witness, to say the least.
At the age of 49, I am told that I have less than two years to live.
My medical expenses and lost wages, projected to retirement if I should live that long, come to more than $5 million. Claims against the hospital and physical therapist have been settled for a total of $500,000 – the limit on damages for a single incident of malpractice. The Legislature has raised that cap to $750,000, and I may be able to college some extra damages if I can sue those responsible for the August 1990 incident the nearly killed me. But apparently because of bureaucratic inertia, the state medical panel that certifies such claims has yet to act on mine.
The kicker, of course, is that I fought to enact the very law that limits my compensation. All my suffering might have been worthwhile, on some cosmic scale, if the law had accomplished its stated purpose. But it hasn’t. (Emphasis added.)
Indiana’s health care costs increased 139.4 percent from 1980 to 1990 – just about the national average. The state ranked 32nd in per capita health spending in 1990 – the same as in 1980.
It is understandable that the damage cap has done nothing to curb health care spending; the two have almost nothing to do with each other. In 1992, the Congressional Budget Office reported that medical malpractice litigation accounted for less than 1 percent of total healthcare spending. I doubt that the percentage in Indiana is much different.
Make no mistake; damage caps are arbitrary, wholly disregarding the nature of the injury and the pain experience by the plaintiff. They make it harder to seek and recover compensation for medical injuries; extend unwarranted special protection to the medical industry; and remove the only effective deterrent to negligent medical care, since the medical profession has never done an effective job of disciplining negligent doctors.
Medical negligence cannot be reduced simply by restricting consumers’ legal rights. That will happen only when the medical industry begins to effectively police its own. I don’t expect to see that day. (Emphasis added.)
Sadly, Frank did not live to see that day and passed away. To me, the most telling part of this article is that tort reform legislation did nothing to to decrease healthcare costs in the state of Indiana.
I've seen this article in numerous places, but was reminded again of it while reading the Iowa Citizen Action Network's webpage, which has a lot of good information for everyone - not just Iowa citizens.
Here is a good article from their site on how to lobby your politicians. Check them out.
It turns out that the most popular way people find this site is searching for something about Stella Liebeck and her McDonald's coffee case. Here is the last article I wrote about Stella. Since then, I've written a little more about her case for a newsletter I'm putting together for Students Against Tort reform. What follows is the article from the newsletter:
The poster-child of tort reformers is the famed “McDonald’s Coffee Case” - the case where a woman obtained a multimillion-dollar jury verdict for spilling hot coffee on herself. Most people think that a careless woman spilled some hot coffee on herself while driving, received minor burns, and then filed a lawsuit. That’s not what happened. Here's what did happen:
Stella Liebeck, a 79-year-old grandmother, was the passenger in her grandson’s vehicle and ordered a cup of McDonald’s coffee. McDonald’s served the coffee at approximately 190 degrees. McDonald’s admitted coffee at that temperature is “unfit for human consumption”; 190 degree liquid causes third-degree burns within 2 to 7 seconds of contact with skin.
Stella spilled the coffee on the crotch of her cotton jogging pants, and the coffee immediately soaked through her pants and caused third-degree burns to her legs, thighs, and genitals. The burns were so severe she needed skin grafts to heal the damage. It took many months for her to recover from the severe burns.
Stella offered to settle the case with McDonald’s if they would just pay her medical bills, which were into the many thousands of dollars. McDonalds refused, and Stella filed a lawsuit. During the trial, it was discovered that in the ten years prior to Stella’s accident, over 700 men, women, and children had been burned by the unsafe McDonald’s coffee.
For years, McDonald’s sold coffee that was “unfit for human consumption”, and made $1.3 million dollars a day in profit doing so. Information such as this wasn’t really reported by the media. What was reported was the $2.6 million dollar jury verdict.
The jury arrived at that figure by calculating the profit of two-days worth of coffee sales, and “fining” McDonald’s that amount to get their attention and make them fix the problem.
It worked. The day after the verdict, McDonald’s lowered the coffee temperature to a safe-but-hot 158 degrees. This is still hot enough to cause third-degree burns, but it takes closer to sixty seconds worth of exposure to do so.
Many believe that $2.6 million dollars was too much money. The judge in the case did, and he reduced the verdict to less than $500,000. Stella actually settled with McDonald’s for even less money. It took a multimillion dollar jury verdict to get McDonald’s to fix a dangerous problem they knew about for ten years; doesn’t that prove the system works?
I added this link to the Journals and Newletters list on the right. The law firm of Ross, Dixon, & Bell has several newsletters they publish online that may be of interest to many of you. They include:
Environmental - "Summaries of important cases and other timely information about environmental and mass tort coverage litigation in federal and state courts throughout the nation. "
Directors & Officers Liability - "Noteworthy developments pertaining to all lines of directors & officers liability insurance, including commercial, non-profit, healthcare, fiduciary, and employment practices liability."
Transportation - "Recent decisions affecting the transportation industry and its insurers from throughout the country."
Bad Faith - "News and information about some of the most difficult and high stakes matters that insurer clients face -- "bad faith" litigation."
Antitrust - "Antitrust case analyses involving corporations and consumer classes in a wide variety of different industries."
These web newsletters are a great way to stay informed about recent developments in court cases across the country. The Antitrust newsletter has lots of good information about tobacco lawsuits. For some reason, it doesn't have any antitrust actions against insurance companies. I wonder why... Oh, that's right! The insurance industry has a federal exemption (The McCarran Ferguson Act) from antitrust law! That's why they can collude together to fix rates! That's why Progressive can tell you the rates of their competitors! That's why health insurance isn't affordable! And that's why there's no real competition among insurers!
I'm sure Ross, Dixon & Bell aren't the kind of lawyers who'll approve of this site, but I applaud them for taking the effort to maintain their newsletters, and for the Pro Bono work they did for NYC Firefighters.
Information is power, and even an occasional read of their newsletters would be a good way to stay informed.
Turns out the bad guys at Philip Morris knowingly marketed "light" cigarettes as less dangerous than regular cigarettes, when they knew they were just as bad. So, the judge - not a jury - awarded $7 billion in economic damages and $3 billion in punitive damages. In fact, because big business has been so successful in convincing people that "runaway juries" are destroying the system, Philip Morris REQUESTED A JURY TRIAL, which was denied by the judge.
Let me state again: In a multibillion-dollar class action lawsuit, Philip Morris asked for a jury trial. You know, the same runaway juries that they always bitch about. Why? Because the bogus hype about runaway juries has worked. This shouldn't come as any surprise. After all, the Department of Justice issued a report years ago that shows judges award more money than jurors.
The court decision over at www.tobacco.org contains some great quotes from the judge. For example:
The Court recognizes that punitive damages are not favored in the law and this Court is careful not to award such damages improperly or unwisely. However, the course of conduct by Philip Morris related to its fraud in this case is outrageous, both because Philip Morris' motive was evil and the acts showed a reckless disregard for the consumers' rights. As a consequence, punitive damages are appropriate in this case.
Of course, Philip Morris is appealing the decision. The important thing about this case, for me anyway, is that it clearly shows that runaway juries aren't a problem. If the most hated industry in America would rather have their case tried by a jury than a judge, doesn't that show that their misinformation and propaganda has been working?
I'm starting up a new group, Students Against Tort Reform, and am looking for people, preferably students or faculty, to help me get some chapters started. Drop me a line at justinian @ corpreform dotcom if you're interested.
I came across the website for the Center for Economic Justice, a Texas-based organization that is trying to help minorities, the poor, and to regulate the insurance industry. They have a report that talks about what really happened as a result of Governor Bush's tort reform. Here's a blurb from their website:
Our reports have established that insurers earned over $2.8 billion in windfall profits in 1996-1998, and that consumers are not reaping the promised benefits of substantially lower insurance premiums. This windfall to insurers has been realized at the expense of consumers, and we continue to expose insurers’ unjust enrichment at consumer expense.
Check the site out and join the group - it's free.
The good guys at the Consumer Watchdog have started a new little site, ArnoldWatch, that is going to keep tabs on the new governor of California.
I think the man will need to be watched. For example, this article contains the following passage:
"Schwarzenegger said legislation passed this year doesn't do enough to lower the cost of workers' compensation. The governor-elect said he will take steps to close loopholes and eliminate incentives that encourage fraudulent claims."
So, it appears that the California Workers' Compensation System will be under attack by Arnold. This doesn't bode well for injured workers. I live in Texas right now, which is another state that had its workers' compensation system overhauled to prevent "fraudulent claims" and to "lower costs."
Here's an example of how the workers' compensation system "works" in Texas:
Are you injured on the job? Good luck finding an attorney to handle your case; very few lawyers in Texas will represent injured workers in a workers' compensation claim, because it's nearly impossible to get paid. Let me tell you about a client I will call "Mr. K" who was represented by an attorney I know.
Mr. K was working in a medical facility when a wall-mount broke and a television fell on his head. This was witnessed by a couple of other employees and never disputed by the employer. He was seriously injured, and filed a workers' compensation claim, which was denied entirely by the insurance carrier.
After his claim is denied, Mr. K searches for an attorney, and finds the attorney friend of mine. The attorney appeals the denial of the claim, and the game begins. One of the requirements for a Texas workers' compensation claim (and almost everywhere, I believe) is that of the Independent Medical Exam, or IME. An IME is a medical exam performed by a supposedly independent doctor, although the doctor is actually paid by the insurance carrier. During the IME, the doctor examines the patient to check for the existence of and extent of the disputed injuries.
Mr. K has to undergo several IME's. A couple of the doctors claim they don't think a TV even fell on him - remember, the employer never tried to dispute this, only the insurance carrier. One of the other doctors agrees a TV probably fell on him but repeatedly points out how Mr. K is a former alcoholic and claims that he reaked of alcohol during the exam.
After dozens of hours of work, the attorney won the first hearing with the Texas Workers Compensation Commission (TWCC). This entitled Mr. K to workers comp. medical benefits and lost wages, and entitled the attorney to 25% of those benefits.
However, the carrier appealed the decision to the next administrative level. This appeal held off the benefits and the pay for the attorney. The insurance carrier again tried some defenses that lacked merit, and again, Mr. K wins and is entitled to his benefits... Until the carrier appeals again.
By this time, Mr. K has been unable to work for months, and has lost his car because he couldn't make the payments. The attorney wins the third appeal, and the carrier doesn't choose to appeal from the TWCC to an actual court of law. This means Mr. K and his attorney can finally get paid.
The attorney got his first check for all his hard work last week, for $36.00. Why? Well, in many states, injured workers (and their attorneys) receive a "lump sum" payment for their injuries, but not in Texas. So, Mr. K will get $144 a week for the next 20 months, and the attorney will get 25% of that, which is $36 per week.
Few Texas attorneys handle workers' compensation claims anymore because not only will it take 6+ months to get paid a dime, but instead of getting a "lump sum" payment, the attorneys will get 25% of the worker's weekly benefits.
All of these "reforms" were put in place to lower the insurance premiums for workers' compensation insurance. So, are low premiums worth a system that is stacked against the injured? Texans can't answer that question, as we still have some of the highest premiums in the nation.
I have a sneaking suspicion that Arnold will look towards the Texas model for some guides on how to "reform" the California system.
I've had a horrible flu this past week, but one upside of that was that I was able to lie around and watch part of the marathon fillibuster on C-SPAN2. I found quite a few senators that I agreed with, even more I disagreed with, and made some observations. I was rather shocked with a comment that Orrin Hatch made about fillibustering.
Orrin was prattling on about how Republicans didn't fillibuster Clinton's judicial nominees, even though one of them was a labor lawyer. I laughed out loud at how obviously pro-corporate interests that Hatch and his fellow Republicans are. I mean, to state that it would have been reasonable to fillibuster a judicial nominee simply because that nominee represented the people instead of corporate interests?
I guess I shouldn't be surprised. After all, Ol' Orrin thinks that it's ok if big companies destroy your personal property to protect their copyrights.
I'll never understand how Republicans manage to court the little guys and get their votes. I mean, why would any individual want to vote for people or parties who believe that big business has the right to remotely destroy your property if you infringe on some copyrights?
How can the people get behind a party that refuses to raise minimum wage, and believes that they would be justified in fillibustering a judicial nominee simply for being a labor lawyer?
The Republican party will never enact meaningful laws to reform corporate misbehavior. Instead, they'll enact laws that will eviscerate the rights of the public at large. I just wish I knew why the public is in love with the Republicans.
Madison and Lincoln both saw the future. Scary, isn't it?
“I see in the future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of war, corporations have been enthroned and an era of corruption in high places will follow. The money power will endeavor to prolong its reign by working on the prejudices of the people until all the wealth is aggregated into a few hands and the republic is destroyed.” - Abraham Lincoln
“We are free today, substantially, but the day will come when our republic will come to impossibility because its wealth will be concentrated in the hands of a few. When that day comes, then we must rely upon the wisdom of the best elements in the country to readjust the laws of the nation to the changed conditions.” - James Madison
One of the complaints tort reformers have about our justice system is that it discourages "personal responsibility"; that if individuals took responsibility for their own actions, fewer lawsuits would be filed. They even cite tobacco lawsuits, arguing that individuals have known for years that smoking causes cancer, so they should take personal responsibility for their illnesses, and not sue.
By their logic, any manufacturer should be able to sell any product it wishes, merely by placing a warning label on the product. We could abolish the FDA and stop regulating the pharmaceuticals, because as long as they warn people that the drug has health risks, the doctrine of personal responsibility should preclude lawsuits. Phen-fen could come back on the market, for example. The golden oldie thalidomyde could also make a comeback.
Why stop with prescription drugs? Cars wouldn't need any safety equipment anymore, because a great big warning sticker on the door could inform people that misuse of an automobile could result in injury or death. Who needs seatbelts? The manufacturers could sell them as an add-on, and when people die, they should take "personal responsibility" for not ordering seat belts.
I have a different take on personal responsibility. I think that if corporate executives took personal responsibility, there would be far fewer lawsuits. For example, when someone slips and falls in a store, if the store manager took personal responsibility and offered to pay for their medical bills, the person probably wouldn't sue.
Or if tobacco executives took personal responsibility for their products, they might pull them off the market because, well, they kill their consumers.
Maybe an engineer at Firestone could have taken personal responsibility when he realized some of their tires were unsafe. He could have gone up the corporate ladder, and when (not if) that failed, he could have gone to the media. Of course, he'd be sued for divulging trade secrets, but he might have saved lives.
The truth is that for tort reformers "personal responsibility" means not suing big companies when their products cause injuries, even if those companies knew their products were defective.
Maybe more products should come with a warning label that says something like, "Warning: This product was manufactured by a corporation whose only concern is their profit margin. If you are killed or injured by this product, the manufacturer will say its your own fault, and will hide or destroy internal documents that prove the manufacturer was aware of the defect that injured you."
You know, I thought that two organizations in particular might have a common interest in defeating Tort Reform: Mothers Against Drunk Driving, and Students Against Drunk Driving. I found some strange facts:
1: MADD states that they will neither oppose nor support tort reform legislation. Tort reform would prevent the victims of drunk drivers from recovering meaningful jury awards if they are severely injured, or killed. However, I guess that MADD needs corporate money to survive, so they don't want to piss off the companies who donate, like Allstate, who donated $1 million to the California division of MADD. Funny - shortly after that donation, the California arm of MADD supported legislation that would have prevented punitive damages against drunk drivers.
2: I don't think SADD would really support the cause, either. After all, it seems that they have former liquor company executives on their board of directors. One of them, Donald B. Shea, is a former member of the directors for the American Tort Reform Association.
It's a sad state of affairs when drunk driving organizations are funded by those opposed to laws that hold drunk drivers accountable.
Senator Ted Kennedy sent a letter to President Bush in July of 2002, and it has some interesting points about why capping noneconomic damages is unfair to women, minorities, and children:
Caps discriminate against younger victims. A young person with a severe injury such as paralysis must endure it for many more years than an older person with the same injury. Yet, that young person is prohibited from receiving greater compensation for the many more years he will be disabled. Is that fair?
Caps on noneconomic damages discriminate against women, children, minorities, and low income workers. These groups do not receive large economic damages attributable to lost earning capacity. Thus, noneconomic damages are particularly important to these vulnerable populations.
Women who are homemakers and caregivers for their families sustain no lost wages when they are injured, so they only receive minimal economic damages. Ignoring the value of the work they do within the home violates the most basic family values.
Read the complete letter here.
Quick Facts About Medical Malpractice Payouts:
Over the last decade, the average medical malpractice payout has been $28,524.
The average claim is $107,587.
Insurers pay nothing in 77% of those claims.
Only one in eight malpractice victims file claims.
This information comes from this article on the Insurance Reform website.
The actuary who performed this study forAmericans for Insurance Reform, J. Robert Hunter, has some pretty impressive credentials: He's a former Texas Insurance Commissioner, and worked for a couple of US Presidents as a Federal Insurance Administrator.
I read a very interesting and informative article in defense of contingency fees. The article is a law review article, so it's not a light read, but it is very informative.
The author, Elihu Inselbuch, shoots down many of the myths and propaganda that are used to support the elimination of contingent-fee agreements. Contingent-fee agreements are "the key to the courthouse door," and without them, many people would be unable to file suits to protect their rights.
In 2003, the Texas Legislature passed House Bill 4, a bill that protects medical providers, including some manufacturers of medical devices, by capping the amount of noneconomic damages in personal injury lawsuits at $250,000.00. This cap was ostensibly put into place to protect medical providers from “runaway juries” that award tens of millions of dollars to catastrophically injured patients. However, as it turns out, this bill doesn’t protect medical providers from one group of plaintiffs that receive jury verdicts into the hundreds of millions of dollars: their competitors.
In 2002, Igen International, Inc. was awarded $505 million dollars from Roche Diagnostics for patent violations, with $404 million dollars in punitive damages . While this case took place in Maryland, it could have taken place in Texas, and if it did, neither House Bill 4 nor its progeny, Proposition 12, would prevent Igen from collecting nearly half a billion dollars in punitive damages.
The irony becomes apparent with this hypothetical scenario: Assume arguendo that Roche used Igen’s patents to create a medical device that causes a patient to die on the operating table. Under numerous proposed tort reform bills across the country, Roche would be liable for a maximum of $250,000.00 to the family of the deceased. Yet, Roche was liable for nearly half-a-billion dollars to Igen for patent infringements – an award over 1,600 times as large as the $250,000.00 cap on noneconomic damages existing in Texas for personal injury lawsuits. Surprisingly, the large amount of punitive damages in the Igen case isn’t a rarity: In 1997, the Rand Group found that punitive damages are awarded four times as often in financial injury cases than in personal injury cases.
It’s not hard to imagine the same executives at Igen, who praised the $404 million dollar award, criticizing “runaway juries” if they were ordered to pay even $4 million dollars to someone paralyzed by their products.
One of the founding principles of our justice system is the belief that human life is infinitely more valuable than human property; it’s why you can’t simply shoot someone that’s trying to steal your car. This principle is subverted by any tort reform bill that holds companies accountable for hundreds of millions of dollars for theft of intellectual property, but only holds those same companies accountable for hundreds of thousands of dollars if their products disable or kill a consumer.
So why, then, don’t big businesses want tort reform that insulates them from enormous jury verdicts in financial injury cases? We’ll use another hypothetical scenario with Igen and Roche. $101 million of the Igen verdict was for economic damages – the actual monetary loss of Igen. Such an award creates a reasonable assumption that Roche must have made close to $100 million dollars from Igen’s patents. So, what would the deterrent be of a maximum award of $250,000.00 to a company that made $100 million dollars? Insignificant.
The question then becomes this: If businesses need multimillion dollar jury verdicts to deter their competitors from stealing their intellectual property, why don’t consumers need multimillion dollar jury verdicts to deter businesses from knowingly selling harmful, or even fatal products?
I wrote to Senator Brownback a while ago to let him know I strongly support his position on the RIAA's ridiculous lawsuits. Here's the letter I received:
Dear Justinian:
Thank you for contacting me regarding the use of information subpoenas by the Recording Industry Association of America (RIAA) to identify internet users suspected of piracy. It is always encouraging to hear from Kansans on issues that concern them most.
Our nation is experiencing a remarkable transformation in our communications and information industries. Today, communications networks are converging, increasingly offering the same services – voice, video, and data – and offering Americans unprecedented levels of connectivity to the Internet through new broadband high-speed Internet access services. The information we commonly use, including movies, music, and written publications, is moving into the digital realm as well, and is increasingly accessible through the Internet.
Digital content, unlike older analog content, can be replicated perfectly and the challenge of protecting it from piracy is no small task, especially when combined with the potential for broadband distribution. Our nation's copyright owners are justifiably concerned that their seeming inability to prevent digital piracy and distribution could result in the widespread availability of pirated digital content that will severely harm their property right in their copyrighted works.
It was recently determined by a federal court, in RIAA v.Verizon, that a provision of the Digital Millennium Copyright Act permits copyright owners to use an information subpoena to obtain an ISP subscriber's identifying information without any judicial supervision, or any due process for the subscriber.
The real danger here is that nothing in this quasi-subpoena process prevents someone other than a copyright owner – a stalker, a pedophile, a telemarketer or even a spammer- from using this quasi- subpoena process to gain the identity of Internet subscribers, including our children. In fact, we cannot even limit this subpoena process to mainstream copyright owners. (Emphasis added)
Understanding your concern and the concern of many other Kansans in this matter, I recently introduced The Consumers, Schools, and Libraries Digital Rights Management Awareness Act of 2003. The bill, in part, requires the owners of digital media products to file an actual case in a court of law in order to obtain the identifying information of an ISP subscriber. This will provide immediate privacy protections to Internet subscribers by forcing their accusers to appear publicly in a court of law, where those with illicit intentions will not tread, and provides the accused with due process required to properly defend themselves.
Again, thank you for contacting me regarding this important issue. Please do not hesitate to contact me again.
Sincerely,
Sam Brownback
United States Senator
Why not visit Senator Brownback's Website and let him know you also support his efforts?
This link is to some comments that are, shall we say, less than truthful regarding the legal system. Excuse me while I pick apart some of the more egregious misrepresentations:
As we shall see, the lawsuit industry today is truly a behemoth, but—unlike the major corporations in our regular market economy—it remains financially opaque. Whereas public corporations must disclose their financials in 10-Ks according to SEC regulations, trial lawyers practice in private partnerships that, under the guise of attorney-client privilege, have shielded their financials from public scrutiny.
Gosh, last I checked all privately held companies aren't required to place their financials up for "public scrutiny".
Total tort costs today exceed $200 billion annually, or more than 2% of America’s gross domestic product—a significantly higher percentage than in any other developed nation.
"Total tort costs" is pretty broad. Let's look at some of 2002's highest verdicts:
IGEN International Inc. v. Roche Diagnostics GmbH S.D. (Breach of licensing agreement, unfair competition) - $505 million
Burns v. Prudential (Breach of Fiduciary Duty) - $261 million
Marvin Lumber and Cedar Company v. PPG Industries, Inc. (Breach of Warranty) - $135 million
Atlantic Recording v. Media Group Inc. (Copyright infringement) - $136 million
Just a few big jury verdicts for corporate entities can sure tip the scales.
"While many Americans may understand that the lawsuit industry in America has run amok—most people could quote anecdotal examples of silly cases generated by our “lawsuit culture”—the public tends not to appreciate that the litigation industry is nothing but Big Business."
I agree wholeheartedly. Big business uses lawsuits as a strategic weapon all the time. They sue their competitors. They sue their suppliers. Hell, they even sue their customers from time to time. Of course, their lawsuits are "Strategic" and ours are "frivolous."
"Given that 19% of all tort costs go to plaintiffs’ attorneys, we can imagine a corporation called Trial Lawyers, Inc. which rakes in almost $40 billion per year in revenues—50% more than Microsoft or Intel and twice those of Coca-Cola."
The corrolary is that 81% of tort costs go to defendants, isn't it? Of course, let's look at that $40 billion figure in terms of perspective:
According to the huge ad company Universal McCann, big business spent around $466 billion last year. Dataquest reported corporate software sales in the neighborhood of $80 billion. Enron, that pantheon of corporate responsibility, had about a $50 billion bankruptcy filing. That poor pharmaceutical industry that's always being sued sold around $155 billion in prescription drugs in 2002. The trucking industry took in roughly $587 billion last year. Gosh, $40 billion isn't that big, is it? Especially considering that the other 81% of tort costs is about $160 billion.
Although not centrally organized, the plaintiffs’ bar tends to be dominated by tort kingpins who carve up their markets—a practice that in a non-litigation context would be called collusion, a violation of antitrust law. Just as corporations are organized around different “lines of business,” plaintiffs’ lawyers target different industrial sectors. These include:
Traditional profit centers like asbestos, tobacco, pharmaceuticals, and insurance;
I find it extremely ironic that trial lawyers would be villified for purported antitrust violations, and just one sentence later, insurance is mentioned. Why is this ironic? Because of the McCarran-Ferguson Act, the bill that exempts the insurance industry from antitrust law.
"Although the trial bar likes to accuse corporations of having undue influence, the government relations and public relations arms of Trial Lawyers, Inc. are more powerful and focused than those of any other industry."
It's funny about lawyer contributions. According to ecrets.org, 19 out of the top 20 law firms who contributed money to political campaigns are defense firms, like, Skadden Arps, et. al. , a firm that brags about representing 60% of the top 25 companies in the U.S., and 40% of the top 25 global corporations.
One thing I'm left to wonder; If plaintiff's lawyers are so bad, then why do big companies turn to them when they need a competitor sued? Like when Joe Jamail - THE plaintiff's lawyer - got a $10 billion verdict for Pennzoil against Texaco?
I've added some more links to sites that support the cause. The Commnweal (yes, commonweal) Institute looks like its got the right idea. Public Citizen, founded by Ralph Nader, seems to be the 800lb gorilla in the field. Check those sites out.
I'd also like to mention the Center for Justice and Democracy. They have written many reports and fact sheets about tort reform and corporate accountability. However, you and I can't get to them. At least, not without ponying up the bucks.
I understand that money doesn't flow freely to anti-corporate sites, but, um... Considering that the average person can't even bother to V O T E, I sincerly doubt that the average person is going to pay money to read a political report.
Note to Centerjd.org: Why not make your reports free, so you could inform the public?
| |
Recent Comments