Litigation and Trial - Max Kennerly : Philadelphia Trial Lawyer Max Kennerly : Business and Commercial Litigation : Civil Attorney : The Beasley Firm : Philadelphia Pennsylvania

One of the big issues that's been floating around the personal injury / wrongful death world over the past few years is the extent to which states can recoup the money they spent on an injured person's care if that person later sues the person who caused the injury and obtains a settlement.

The Supreme Court gave us a partial answer in Arkansas Dept. of Health and Human Servs. v. Ahlborn:

There is no question that the State can require an assignment of the right, or chose in action, to receive payments for medical care. So much is expressly provided for by §§ 1396a(a)(25) and 1396k(a). And we assume, as do the parties, that the State can also demand as a condition of Medicaid eligibility that the recipient "assign" in advance any payments that may constitute reimbursement for medical costs. To the extent that the forced assignment is expressly authorized by the terms of §§ 1396a(a)(25) and 1396k(a), it is an exception to the anti-lien provision. See Washington State Dept. of Social and Health Servs. v. Guardianship Estate of Keffeler, 537 U. S. 371, 383-385, and n. 7 (2003). But that does not mean that the State can force an assignment of, or place a lien on, any other portion of Ahlborn's property.

The issue became all the more pressing when the Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”), effective July 1, 2009, named tort defendants as “responsible reporting entities” that also have to assess the plaintiff's Medicare / Medicaid status and ensure that those government liens have been paid. Defendants have, understandably, been annoyed by that.

Plaintiffs, of course, have already been responsible for clearing these liens.

Let's pause and consider the background of these cases: a plaintiff is injured, has some care paid for by the government, and hires an attorney. The attorney then spends his or her own time, and own money, pursuing the case, until the plaintiff — who, despite their injury and resulting hardship, has tried to hold out for an appropriate settlement figure — and the defendant reach an agreement on how much the case is worth. The attorney then takes a cut of the settlement, covering their costs and paying themselves a fee for all that time and risk they put into the case.

Then the government wants a piece. It didn't do anything to get the money, but it thinks it deserves to be reimbursed in full.

The vast majority of these claims are resolved amicably between then plaintiff's attorney and the government, with the government waiving a chunk of the claim in order to get payment now, rather than later, and to not have to litigate the issue and risk having a judge rule against them.

But sometimes the plaintiff's attorney and the government can't reach an agreement, and so have to get the court to figure it out.

The big question has been: how does a court figure it out?

We just got one answer:

In a decision that is sure to grab the attention of the personal injury bar, a federal judge has ruled that a settling plaintiff cannot be automatically required to reimburse the Pennsylvania Department of Public Welfare for 100 percent of her Medicaid expenses because a settlement always reflects a compromise.

The ruling by U.S. District Judge Berle M. Schiller comes just a few months after lawyers at Kline & Specter secured a settlement worth nearly $12 million in a "state-created danger" suit against the Philadelphia Housing Authority over persistent mold in a home that allegedly triggered an acute asthma attack and left a teenage girl brain damaged.

The settlement in McKinney v. PHA sparked a new court battle when lawyers for DPW moved to vacate the settlement and to intervene in the suit to assert a $1.2 million lien.

...

Schiller decided instead that the proper approach was for the trial judge to "assess the factors that would have influenced the parties' settlement positions and to make an ultimate determination of what portion of the settlement represents compensation for past medical expenses."

As the judge who presided over the McKinney case through summary judgment and Daubert hearings, as well as settlement talks, Schiller concluded that the plaintiffs had settled for two-thirds of the value of the case.

That's not a perfect answer, but it's not a bad one. There's no basis for the government to claim full reimbursement for a settlement in which a claim is, by definition, compromised. There's also no easy way to figure out just how much of an overall settlement "should" be allocated to medical expenses, and it doesn't make sense to engage in full-blown litigation over that question when the case itself has been settled.

Hence the shoot-from-the-hip approach. It's not what I'd prefer — I think the plaintiff was right about the parties, who know the most about the case and the reasons for settlement, establishing the portion attributable to medical expenses — but I'll take it.

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[Update: I somehow missed Ron Coleman's earlier take on the article, but it's required reading if you're interested in the subject. Coleman and Walter Olson both seem on board with, as Olson words it, "steering rights owners into agency complaints or arbitration as an alternative, or at least precondition, to court action."] 

Via Kevin Drum, Wired's Threat Level has a profile of Steve Gibson, CEO of Righthaven, a company which has applied the much maligned — but often quite lucrative — "patent troll" model to copyright litigation on behalf of publishers:

Borrowing a page from patent trolls, the CEO of fledgling Las Vegas-based Righthaven has begun buying out the copyrights to newspaper content for the sole purpose of suing blogs and websites that re-post those articles without permission. And he says he’s making money. ...

Gibson’s vision is to monetize news content on the backend, by scouring the internet for infringing copies of his client’s articles, then suing and relying on the harsh penalties in the Copyright Act — up to $150,000 for a single infringement — to compel quick settlements. Since Righthaven’s formation in March, the company has filed at least 80 federal lawsuits against website operators and individual bloggers who’ve re-posted articles from the Las Vegas Review-Journal, his first client. ...

Gibson says he’s just getting started. Righthaven has other media clients that he won’t name until the lawsuits start rolling out, he says.

“Frankly, I think we’re having tremendous success at a number of levels,” Gibson says. “We file new complaints every day.”

They sure do; a search on Justia Dockets for "Righthaven" shows a handful of new suits every week, including a recent suit against those scourges of American society, the American Society of Safety Engineers. Here's the complaint, in which Righthaven requests the Court, e.g.,

3. Direct Network Solutions and any successor domain name registrar for the Domain to lock the Domain and transfer control of the Domain to Righthaven;

4. Award Righthaven statutory damages for the willful infringement of the Work, pursuant to 17 U.S.C. § 504(c);

5. Award Righthaven costs, disbursements, and attorneys’ fees incurred by Righthaven in bringing this action, pursuant to 17 U.S.C. § 505;

Apparently either the ASSE or one of its chapters (the complaint references the Central Florida Chapter of the ASSE) cut and pasted into their newsfeed a copy of an article from the Las Vegas Review-Journal titled, “Bill would help regulators better enforce safety rules."

Cutting-and-pasting someone else's article isn't kosher, but look at the harsh relief claimed by Righthaven.

I'm doubtful of the demand in #3 that Righthaven be given control of asse.org, considering that they raise solely a copyright claim, not a cyber-squatting claim, and "Copyright law does not protect domain names." I suppose the Court has the power to enjoin defendants from further infringing activity, but that's a far cry from locking someone's entire website and transferring it simply because there was, at some point, an infringing work on it.

#4 and #5 are standard in copyright litigation: the plaintiff can elect "statutory damages" of up to a whopping $150,000 per incident, just shy of three times the median annual household income, plus the costs (including attorneys' fees) of suit.

Putting aside those substantial damagins, just hiring an attorney to defend the case will cost a couple thousand dollars, even if they are on a flat fee with someone who specializes in copyright defense.

As Kevin Drum and Wired both note, the notion of litigation "trolling" — whether on behalf of patents or copyright — is not without its critics. That said, as well-intentioned as the ASSE may have been, truth is, it wasn't their content, and they shouldn't have posted it. So long as the claims are meritorious, the settlement demands are not extortionate, and the practice of trolling is limited to companies, rather than individuals — the primary target of the RIAA's hopelessly failed litigation campaign — then I'm not that worried about due process or "SLAPP" concerns.

But two aspects of the practice as applied to publishing copyrights bother me.

First, there is no doubt that copyright law and copyright norms affect culture. Consider this fascinating article at Ars Technica about how comedy routines changed dramatically once it became taboo to steal other comedian's jokes. When it comes to copyright trolls, I worry that legitimate fair use of portions of articles will be chilled by litigation concerns, as is already the case in the world of film.

Second, if we assume — as I do — that the bulk of these cases involve minor infractions that can and should be settled for less than $10,000, that raises a basic question of fairness. One of the least-discussed aspects of the civil justice system is how we have completely different systems for the most common types of claims, i.e. employment discrimination claims and minor injuries.

In many states, including Pennsylvania, if you want to sue an employer for employment discrimination, you can't. Instead, you need to file an agency complaint — which you must do within 180 days, much sooner than you must file any other type of lawsuit — and then you must work your way through the agency process before you can even begin your lawsuit in court.

Similarly, as the Court of Common Pleas of Allegheny County here in Pennsylvania pioneered, a number of jurisdictions enforce compulsory arbitration for claims of low value. If you have one of those low-value claims, the full powers of the civil justice system aren't available to you, at least not initially.You need to go through the compulsory arbitration system first, thereby delaying your relief and making it harder for you to prosecute it.

Are agency investigations and compulsory arbitration bad ideas? Not necessarily. Both of them do, in fact, save defendants a tremendous amount of time and money, and sometimes they facilitate a resolution of the case in a much cheaper and more expedient manner than the full-fledged trial courts.

But if our purpose in setting up those parallel legal systems is to lessen the burden on the defendant for comparatively small claims, why not set up as a similar system for comparatively small copyright infringement claims like those brought by Righthaven? Is there some reason that a claim arising from a single copying of a single newspaper article should be entitled to start immediately in the federal district courts while a claim arising from the wrongful termination of an employee for discriminatory reasons should have to go through a year or more of agency investigation?

It would seem to me that the terminated employee — who may have wrongfully suffered a grievous economic injury — should have a stronger entitlement to immediate relief than a well-funded company that exists solely to carry out litigation. 

[As I commented at Overlawyered following Walter's link here] I think these types of copyright claims are more appropriate for agency investigation or arbitration than employment discrimination or personal injury suits. The latter two are typically dependent upon oral testimony (and thus the credibility of the witnesses, which needs to be assessed through live testimony), while the former could reasonably be evaluated solely on the documents.

Just taking that ASSE case as an example, all the agency would really need, other than the complaint filed, is an answer from the defendant admitting or denying the material facts about the extent and nature of republication.

And that would be it; the investigator or arbitrator could then look at those documents, the core of which would be fewer than 20 pages, and start discussing with the parties a reasonable settlement. That would obviate the need to bring on attorneys for hundreds of dollars an hour, and would keep these small potatoes matters from clogging our federal courts.

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Today's The Legal Intelligencer includes an article titled, "Limited Liability Law May Apply in Duck Boat Accident" about the effect of the Limitation of Liability Act of 1851 on claims arising from last's weeks collision between a tugboat and a duck boat on the Delaware River.

The Limitation Act — which nominally limits the liability of a ship owner to the value of the ship itself — is a fascinating relic from a turbulent time in the United States, when whispers of war were beginning and the young agrarian nation was painfully converting to a steam-powered industrial society. The world's first commercial oil well would not be built, in Poland, and the world's first union railway station would not be built, in Indianapolis, for another two years.

With a lot of output, a big country, and not much transportation infrastructure, we needed investment in shipping, and lots of it.

Hence the Act.

Few would disagree that the Act has outlived its purpose, but it's still on the books.

It's just as well that the Legal article is subscription only, since it doesn't tell us much other than that defense lawyers think the tugboat and duck boat are free and clear while plaintiff's lawyers believe there are ways around it.

The press did a similar dance a few weeks ago, after Transocean invoked the same act to limit its liability following the catastrophic oil leak caused by the sinking of the Deepwater Horizon oil rig. Transocean's use of the Act so bothered Congress that they're trying to get the entire Act repealed; if that happens, this entire discussion will be rendered moot in the near future, as it should be: in our modern world of insurance, re-insurance, global finance, and limited liability companies, there's no need to give vessel owners special treatment. Ships will still be built and used, regardless of the Act.

But the Act is still on the books. I'm with the plaintiff's lawyers; there's plenty of ways to get around the Act and get these types of maritime accidents back in the state courts where they belong.

First, the Act doesn't apply if the liability of the vessel owner isn't actually at issue:

In construing the Limitation Act, this Court long ago determined that vessel owners may contest liability in the process of seeking limited liability, and we promulgated rules to that effect pursuant to our "power to regulate . . . proceedings." The "Benefactor," 103 U. S., at 244; Supplementary Rule of Practice in Admiralty 56, 13 Wall., at xiii; Supplemental Admiralty and Maritime Claims Rule F(2). Thus, we agree with respondent that a vessel owner need not confess liability in order to seek limitation under the Act. The Act and the rules of practice, however, do not create a freestanding right to exoneration from liability in circumstances where limitation of liability is not at issue. In this case, petitioner stipulated that his claim for damages would not exceed the value of the vessel and waived any claim of res judicata from the state court action concerning issues bearing on the limitation of liability. The District Court concluded that these stipulations would protect the vessel owner's right to seek limited liability in federal court. Then, out of an "abundance of caution," the court stayed the limitation proceedings so that it could act if the state court proceedings jeopardized the vessel owner's rights under the Limitation Act. 31 F. Supp. 2d, at 1170-1171. We believe nothing more was required to protect respondent's right to seek a limitation of liability.

Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438 (2001). Here, it's already been reported that K-Sea had an insurance policy* in excess of $100 million; if the plaintiffs stipulate their damages don't exceed that (which they reasonably could), then the Act's purpose has been met.

Second, even where the Act applies, there are plenty of exceptions:

The Limited Liability Act allows a vessel owner to limit its liability for any loss or injury caused by the vessel to the value of the vessel and its freight.[6] "Under the Act, a party is entitled to limitation only if it is `without privity or knowledge' of the cause of the loss."[7] If the shipowner is a corporation, "knowledge is judged by what the corporation's managing agents knew or should have known with respect to the conditions or actions likely to cause the loss."[8] Once the claimant establishes negligence or unseaworthiness, the burden shifts to the owner of the vessel to prove that negligence was not within the owner's privity or knowledge.[9]

In re Hellenic Inc., 252 F.3d 391 (5th Cir. 2001)(footnotes omitted, but they're worth reading if you're looking for more cases).

For anyone interested in the subject, the Admiralty and Maritime Law Guide has a couple cases on the Act. For anyone really interested, yesterday I went to a CLE on Boating Law and Liability — hosted, coincidentally, by Ride The Duck's maritime lawyer — that included a thick book of materials on maritime law that can be purchased, even after the CLE.

As noted by those materials, "the knowledge of a corporation necessarily is measured by the knowledge of the corporation's employees and agents." A clever plaintiff's lawyer would point out that the knowledge and negligence of the mate — the one who took the Fifth and refused to testify — is imputed back to the owners of the vessel.

All of which is to say: as nice as the Act sounds on its face to defense lawyers, that tugboat company and its insurer aren't going to just walk away from this tragedy.

 

* Some defense lawyers would argue that insurance isn't considered among the "value" of the vessel limited by the Act. I say insurance proceeds are an asset tied to the vessel and the owner and thus obviously have "value." 

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The Wall Street Journal (and their Law Blog) had an amusing piece recently about the jockeying underway for the position of lead counsel in the Toyota Motor Corporation Unintended Acceleration Marketing, Sales Practices, and Products Liability Multidistrict Litigation, which has been consolidated in the Central District of California:

Lawyer Daniel Becnel Jr. of Reserve, La., donated a kidney to his sick brother. Alexandria, La., attorney Richard Arsenault organized a symposium featuring a lawyer played by John Travolta in the movie "A Civil Action." New York lawyer Anita Jaskot's father is a doctor. She is also single and speaks Polish.

These are among the many personal morsels lawyers hope will help them win a lead spot in the litigation against Toyota Motor Corp., which has been consolidated in a Santa Ana, Calif., courtroom. ...

For the Japanese auto maker, which declined to comment for this story, billions of dollars in legal liability could be at stake as it fights suits tied to its recalls of vehicles because of sudden-acceleration issues. The lawyers' quest is a pot of as much as $500 million in fees. Only a few will share it.

For reference, here's David Becnel's, Richard Arsenault's, and Anita Jaskot's applications.

You can't blame them for pulling out all the stops. Judge James V. Selna specifically ordered:

[T]he Court presently intends to appoint plaintiffs’ lead counsel and liaison counsel. Applications for these positions must be filed with the clerk’s office on or before April 30, 2010. The Court will only consider attorneys who have filed an action in this litigation. The main criteria for these appointments are (1) knowledge and experience in prosecuting complex litigation, including class actions; (2) willingness and ability to commit to a time-consuming process; (3) ability to work cooperatively with others; and (4) access to sufficient resources to prosecute the litigation in a timely manner. Where appropriate, applications should also set forth attorney fee proposals, rates, and percentages that applicants expect to seek if the litigation succeeds in creating a common fund.

How intense and expensive can these cases get? 

Consider the class action filed back in 1996 on behalf of 300,000 Native Americans alleging the U.S. Department of the Interior mismanaged trust accounts and land under the Dawes Act of 1887. The suit tentatively settled for $3.4 billion a few months ago, but approval is being held up by the political process.

The case was driven by a team at Kilpatrick Stockton, which sunk more than $22 million in legal fees and expenses into the suit, through fourteen years of litigation, seven trials (totaling almost 28 weeks in trial), and 10 rounds of appeals against the most well-funded defendant in the world: the United States government.

But they weren't lead counsel.

That honor went to Dennis Gingold, a solo practitioner who used to represent big banks.

It wasn't easy:

Mr. GINGOLD: We gave [Blackfeet tribe leader and lead plaintiff Elouise Cobell] a commitment that no matter what it took, we would do what needs to be done to resolve this for the individual Indians, because it's the dark side of American history and we as lawyers have an obligation to correct it if we can.

SHAPIRO: How much of your time has this case taken up as a percentage of your total practice in the last 14 years?

Mr. GINGOLD: A hundred percent.

SHAPIRO: Really, this has been your sole case for the last 14 years?

Mr. GINGOLD: I haven't had a vacation since December of 1998. I've generally worked seven days a week on this case.

Twenty years ago Gingold organized the takeover of Baltimore Bancorp. That massive, hostile deal was like a vacation compared to the Indian Land Trust case, which swallowed up his whole professional and personal life for more than a dozen years.

But he did it, and did it well. You can't say he did the whole case by himself — Kilpatrick's $22 million contribution was essential — but you can say he managed the litigation by himself.

So what does it take to be lead counsel on a multidistrict class action? They need access to money, sure, but that can be effectively guaranteed by appointing multiple plaintiff's firms to the case.

What it really takes is dedication. As much as I'd like to see the Court adopt Philip Thomas' suggestion that the lawyers compete on an obstacle course — a process that would probably yield similar or better results to relying on the whimsical applications — my hope is that the most dedicated lawyer is chosen.

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As always when a major corporation is caught killing, maiming or poisoning innocent people, the apologists have come out in full force in defense of Toyota. This time, they're blaming senior citizens.

You see, old people become confused. They don't realize when they're accelerating and when they're braking. At least that's what I've been told by the usual suspects.

Don't buy it:

In the 50-second tape, crash victim Chris Lastrella begins by telling the dispatcher: “We're in a Lexus ... we're going north (state Route) 125 and our accelerator is stuck.”

The dispatcher asks where they are passing, and Lastrella is heard asking someone in the car where they are. He exclaims: “We're going 120 (mph)! Mission Gorge! We're in trouble – we can't – there's no brakes, Mission Gorge ... end freeway half mile.”

The dispatcher asks if they can turn the car off.

Lastrella doesn't answer and says repeatedly: “We are now approaching the intersection, we're approaching the intersection, we're approaching the intersection.”

The last sounds heard on the tape are someone saying “hold on” and “pray.” Lastrella says: “Oh shoot ... oh ... oh” Then a woman screams.

Killed in the crash were CHP officer Mark Saylor and his wife Cleofe who were both 45, their 13-year-old daughter Mahala, and Lastrella, 38, who was Cleofe Saylor's brother. All four lived in Chula Vista.

So much for blaming the victims for being too old to understand how to drive a car. A California Highway Patrol officer in his prime couldn't stop one of those death traps, so he, his wife, his daughter, and his brother-in-law paid with their lives because, at Toyota, Safety Is Job #2.

That case conveniently didn't make it into any of the articles blaming elderly drivers for the crashes.

Here's something else the corporate apologists won't tell you: lawsuits are the primary reason that cars are safer today than they were in the past.

In the 1970s and '80s, litigation was watched keenly by manufacturers and regulators as a kind of early warning system on safety defects, said Kelley, now semi-retired and consulting on auto product hazards from his home in Pebble Beach, Calif.

Steered by lawsuits and safety standards set by the National Highway Traffic Safety Administration after its creation in the late 1960s, automakers corrected design defects that had exposed drivers to impalement on gearshifts and lacerations from shattered auto glass.

Also in the 1960s, seat belts became widely adopted by automakers and crash tests were refined into a serious science.

The 1970s provided automakers with a wake-up call in the Grimshaw vs. Ford Motor Co. case, in which a California appeals court ordered the carmaker to pay $125 million in punitive damages to the victims of one of the Ford Pinto's fiery explosions. The huge punitive damages award followed evidence showing that Ford knew of the defect but failed to recall the vehicles for what was estimated to be an $11 repair. The award was reduced to $3.5 million in a post-verdict negotiation but nevertheless was one that signaled to the auto industry that it would be harshly sanctioned for ignoring known defects.

Improved seat belts and seat backs emerged in the 1980s, spurred by lawsuits brought on behalf of accident victims. Before three-point restraints were made mandatory a decade ago, back-seat occupants were prone to paralyzing injury when frontal crashes caused their upper bodies to fly toward the impact, smashing into seats, doors or other passengers.

Fact is: money talks. If it costs Toyota less to shuttle a few families to an untimely demise than to fix the problem, Toyota won't do it. 

Every time a car company today evaluates the safety of the car's gas tank and fuel system, an engineer, manager or lawyer at the company inevitably says,

Remember the Ford Pinto cases.

Then they check the gas tank and fuel system again. And again.

Next time a car company investigates reports of sudden acceleration, which would you prefer that engineer, manager or lawyer says,

Remember the Toyota cases.

or

Is it really worth issuing a recall?

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One of the true gems of the Internet is TED (Technology, Entertainment, Design), a nonprofit that invites luminaries from a wide variety of fields to give brief presentations about their signature ideas. A quick googling of "Best TED Talks" is well worth the hours of education and inspiration that will ensue.

I was thus disappointed to see that TED invited Philip K. Howard to talk about "Four ways to fix a broken legal system."

I have debunked Mr. Howard's work before (see my thoughts on his "Life Without Lawyers," his "health courts," and his claims about public support for tort reform). The bulk of his talk presents more of the same argument-by-anecdotes and generalized assertions that don't withstand a moment's scrutiny. Despite his claim around the 14:00 mark, I can safely assure my readers that we, as a society, do in fact still have seesaws, swingsets, and jungle gyms. Moreover, his overall argument that these problems are so insidious that you don't even notice them is, to me, unpersuasive.

About halfway through, Mr. Howard moves onto his four propositions, which are:

1. Judge law mainly by its effect on society, not individual situations
2. Trust in law is an essential condition of freedom. Distrust skews behavior towards failure
3. Law must set boundaries protecting an open field of freedom, not intercede in all disputes
4. To rebuild boundaries of freedom, two changes are essential: simplify the law and restore authority to judges and officials to apply law.

To call these propositions "vague" is an understatement.

That said, I generally agree with the first three. Indeed, it seems the irony of Mr. Howard's first proposition was lost on him; although his talk only mentions the former, for each funny story of a fishing lure with a warning label, there's a car manufacturer that bragged about avoiding a recall and ended up needlessly and carelessly endangering millions of people.

The fourth proposition, however, is where Mr. Howard and I diverge. It's not that I believe the law shouldn't be simple or that judges shouldn't apply the law; of course I do. I just don't believe it how he means it, which is to deny individuals the right to a jury trial.

But there's a bigger problem with his talk: the "authority to judges and officials to apply law" he claims should be "restored" never existed, and for good reason.

As part of his simplification argument, Mr. Howard gives, as an example, the United States Constitution. It's "only 16 pages" yet "worked well for over 200 years." Let's take a look at the Seventh Amendment thereto:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

(See the link for primary sources on the Amendment.)

I don't know what Mr. Howard thinks the words "common law" and "rules of the common law" mean there, but to the Framers of the Constitution, "common law" referred to hundreds of years of confusing — and sometimes contradictory — English court opinions.

So much for simplification.

But simplification isn't really what Mr. Howard wants; he wants to get rid of "the right of trial by jury."

That's not "rebuilding" freedom, nor is it "restoring" the way the Founders intended the civil justice system to work. It is a rescission of the freedoms guaranteed by the Seventh Amendment, which expressly preserved the same right to jury trial that was embodied in the Magna Carta and was recognized long before.

Indeed, the English "common law" of which the Framers were so enamored did not give judges any "authority" to usurp the fact-finding role of the jury. Mr. Howard claims that he wants to give judges the power "to apply law," but they have always had that power -- what Mr. Howard really wants is to give judges the power to determine facts, a power that the Framers of the Constitution expressly denied them.

Mr. Howard doesn't want to fix the legal system, he wants to break it.

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Sometimes, a police officer's hunch is right:

Columbia [Missouri] Police Officer Jessica McNabb pulled over then-19-year-old Daniel Sanders at Stadium Boulevard and Audubon Drive for running a red light and failing to use his headlights at night. Sanders didn't have a license. He asked for an attorney almost immediately.

After a search of the trunk, McNabb found the body of Sanders' mother beneath a tire — next to a new shovel with the price tag still on it.

Sometimes not:

Jordan Miles, who is black, thought his life was in jeopardy when three white men jumped out of a car on the night of January 11 as he walked not far from his home.

"My son tried to run thinking his life was in jeopardy," Terez Miles said. "He made three steps before he slipped and fell." After that, she said, the [Pittsburgh] police used a stun gun and beat him, pulling out a chunk of his hair.

The criminal complaint says the officers, considering Jordan Miles' appearance suspicious, got out of the car and identified themselves as police. He tried to flee, fell, and then struggled to escape.

The officers "delivered 2-3 closed fist strikes to Miles' head/face with still no effect," and then a "knee strike to Miles' head causing him to momentarily stop resisting," so that he could be handcuffed, the document says.

Miles' mother said the officers did not identify themselves as police to her son, a viola player and student at the city's Creative and Performing Arts High School.

The complaint says the police officers believed Miles was engaged in criminal activity and possibly armed with a "large heavy object." The object turned out to be a bottle of Mountain Dew.

There's a law for both:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Ironically, Daniel Sanders might have a better chance of avoiding a conviction for his mother's murder than Jordan Miles has of recovering compensation for his injuries.

Last year, the Supreme Court held in Arizona v. Gant that the Fourth Amendment prohibits "a vehicle search incident to a recent occupant’s arrest after the arrestee has been secured and cannot access the interior of the vehicle," with a limited exception for such searches "when it is reasonable to believe that evidence of the offense of arrest might be found in the vehicle."

Sanders was not pulled over or arrested for his mother's murder, so the exception doesn't apply. There's no doubt that he was "secured" — he didn't even put up a fight, he just asked for his lawyer.

His lawyer has moved to exclude from the trial all evidence found from the search of Sanders' car, including, of course, his mother's body:

In that motion, [Sanders' lawyer] Slusher said McNabb continued to question Sanders after he asked for an attorney and that the search of the car was conducted without a warrant or probable cause. Slusher characterized the search and the continued questioning as unconstitutional and thus inadmissible in trial.

He might win it. I'm sure the district attorney's office is burning the midnight oil to find some daylight in Arizona v. Gant.*

Returning to Miles, it's quite possible that the officers identified themselves as police and that Miles didn't hear them. Police confrontations are often fraught with confusion. Consider this instance:

Defendant Murphy approached the driver's side window and asked Plaintiff to produce his identification and credentials for inspection. (Frohner Dep. at 39.) Plaintiff, who kept his credentials in the door pocket of the driver's side door when driving, (Pl.'s Br. Ex. C at 4), began to reach down to retrieve his credentials. (Frohner Dep. at 39.) As Plaintiff was reaching down, Defendant Murphy shouted at Plaintiff, "keep your hands where I can see them." (Id. at 39-40.) Plaintiff, "[n]ot immediately understanding what was transpiring," continued to reach for his credentials in the door pocket, which prompted Defendant Murphy, who by this time had drawn his firearm, to again shout to Plaintiff to keep his hands in view. (Id. at 39-42.) Plaintiff complied with Defendant Murphy's second order and ceased reaching down to the door pocket. (Id. at 40.)

Frohner v. City of Wildwood, 07-1174 (D.N.J. 2008).

Plaintiff there — who was almost shot — was an on-duty undercover FBI agent. He was approached by a uniformed police officer who had pulled him over in a marked police car. Yet, even he didn't "immediately understand what was transpiring."

Consider what Miles would have "immediately understood" when three men in plainclothes jumped out of a car and started chasing him.

To win in a civil lawsuit, though, Miles has to show more than that the officers made a mistake.

First, he has to show his constitutional rights were violated. Then, he must overcome qualified immunity by showing "it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted." Curley v. Klem, 499 F.3d 199, 206-07 (3d Cir. 2007). Neither is easy to prove; most plaintiffs alleging violations of their constitutional rights lose their cases.

Miles has two constitutional rights that were potentially violated: the right to be free from false arrest and the right not to be subjected to excessive force during an arrest. I don't know what about his "appearance" was "suspicious," but the article reports "the police officers believed Miles was engaged in criminal activity and possibly armed with a large heavy object." From that, we can presume their nominal purpose was to perform a Terry v. Ohio stop and frisk to see if the Mountain Dew was an illegal weapon. If either the judge or the jury believes that, then the officers (really, the City of Pittsburgh, which will indemnify them) are free from liability for the false arrest claim.

When it comes to the excessive force claim:

In deciding whether challenged conduct constitutes excessive force, a court must determine the objective reasonableness of the challenged conduct, considering the severity of the crime at issue, whether the suspect poses an immediate threat to the safety of the officer or others, and whether he is actively resisting arrest or attempting to evade arrest by flight. Other factors include the duration of the officer's action, whether the action takes place in the context of effecting an arrest, the possibility that the suspect may be armed, and the number of persons with whom the police officers must contend at one time.

Couden v. Duffy, 446 F.3d 483, 496-97 (3d Cir. 2006). 

Hence the emphasis on the Mountain Dew: the officers want to justify their conduct by arguing "the possibility that the suspect may be armed." It also likely that, at some point, Miles was "actively resisting arrest or attempting to evade arrest by flight," given that he thought he was being assaulted. Such resistance, under excessive force precedent, makes the officers' punching and kicking less "objectively unreasonable."

After showing all of the above, Miles must also show the judge "it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted" to overcome qualified immunity. Miles can't just show what the officers did was wrong; he has to show it was so wrong that the officers had to know it was illegal.

Can Miles do that? Maybe so. Then again, a lot of constitutional rights / qualified immunity cases — like Curley v. Klem, in which a police officer was accidentally shot — end with a jury verdict for the defendant and a speech from the appellate court like so:

The mistake Klem made has undoubtedly been terrible in its long-term consequences for Officer Curley and his family, and we do not for a moment discount the pain, sorrow, expense, and frustration that it has visited on them in their innocence. But a mistake, though it may be terrible in its effects, is not always the equivalent of a constitutional violation. ... "[P]olice officers are often forced to make split-second judgments — in circumstances that are tense, uncertain, and rapidly evolving — about the amount of force that is necessary in a particular situation." Graham, 490 U.S. at 397, 109 S.Ct. 1865. Those were the circumstances facing both Trooper Klem and Officer Curley at the George Washington Bridge toll plaza. Viewed from that perspective, Saucier, 533 U.S. at 205, 121 S.Ct. 2151, the seizure effected by the mistaken shooting was not unreasonable under the Fourth Amendment. It therefore was not a constitutional violation.

Courts of law, not of justice.

Law nerds out there will recognize the retroactivity / "new law" issue, since Gant was decided after Sanders' arrest. In my humble opinion, though Scalia's concurrence would be "new law," the majority opinion by Stevens tried hard to fit within the existing framework, so I presume the rule has retroactive applicability.

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There's a myth — promoted by vested interests — that the United States is a free market economy.

Don't believe it. Even in the smallest of transactions, monopoly power still rules, dutifully skimming its unearned share.

"How Visa, Using Card Fees, Dominates a Market":

Competition, of course, usually forces prices lower. But for payment networks like Visa and MasterCard, competition in the card business is more about winning over banks that actually issue the cards than consumers who use them. Visa and MasterCard set the fees that merchants must pay the cardholder’s bank. And higher fees mean higher profits for banks, even if it means that merchants shift the cost to consumers.

Seizing on this odd twist, Visa enticed banks to embrace signature debit — the higher-priced method of handling debit cards — and turned over the fees to banks as an incentive to issue more Visa cards. At least initially, MasterCard and other rivals promoted PIN debit instead.

As debit cards became the preferred plastic in American wallets, Visa has turned its attention to PIN debit too and increased its market share even more. And it has succeeded — not by lowering the fees that merchants pay, but often by pushing them up, making its bank customers happier.

In an effort to catch up, MasterCard and other rivals eventually raised fees on debit cards too, sometimes higher than Visa, to try to woo bank customers back.

“What we witnessed was truly a perverse form of competition,” said Ronald Congemi, the former chief executive of Star Systems, one of the regional PIN-based networks that has struggled to compete with Visa. “They competed on the basis of raising prices. What other industry do you know that gets away with that?” 

As an old friend of mine wrote,

The present conditions of business cannot be accepted as satisfactory. There are too many who do not prosper enough, and of the few who prosper greatly there are certainly some whose prosperity does not mean well for the country. ... [W]e heartily approve the prosperity, no matter how great, of any man, if it comes as an incident to rendering service to the community; but we wish to shape conditions so that a greater number of the small men who are decent, industrious and energetic shall be able to succeed, and so that the big man who is dishonest shall not be allowed to succeed at all. ...

Wherever in any business the prosperity of the business man is obtained by lowering the wages of his workmen and charging an excessive price to the consumers we wish to interfere and stop such practices. We will not submit to that kind of prosperity any more than we will submit to prosperity obtained by swindling investors or getting unfair advantages over business rivals. ...

It is utterly hopeless to attempt to control the trusts merely by Antitrust Law, or by any law the same in principle, no matter what the modifications may be in detail. In the first place, these great corporations cannot possibly be controlled merely by a succession of lawsuits. The administrative branch of the Government must exercise such control.

Theodore Roosevelt said those words ninety-eight years ago. He was right then and is right today.

But these are different times; we can't rely on the administrative branch of the Government to exercise control, even when it claims it will. 

The process had only just started in Teddy Roosevelt's day:

The first federal regulatory agency, the Interstate Commerce Commission, was set up to regulate railroad freight rates in the 1880s. Soon thereafter, Richard Olney, a prominent railroad lawyer, came to Washington to serve as Grover Cleveland's attorney general. Olney's former boss asked him if he would help kill off the hated ICC. Olney's reply, handed down at the very dawn of Big Government, should be regarded as an urtext of the regulatory state:

"The Commission . . . is, or can be made, of great use to the railroads. It satisfies the popular clamor for a government supervision of the railroads, at the same time that that supervision is almost entirely nominal. Further, the older such a commission gets to be, the more inclined it will be found to take the business and railroad view of things. . . . The part of wisdom is not to destroy the Commission, but to utilize it."

Today, regulatory capture infects — literally infects — every aspect of our lives.

"Safety of Beef Processing Method Is Questioned":

 Officials at the United States Department of Agriculture endorsed the company’s ammonia treatment, and have said it destroys E. coli “to an undetectable level.” They decided it was so effective that in 2007, when the department began routine testing of meat used in hamburger sold to the general public, they exempted Beef Products.

With the U.S.D.A.’s stamp of approval, the company’s processed beef has become a mainstay in America’s hamburgers. McDonald’s, Burger King and other fast-food giants use it as a component in ground beef, as do grocery chains. The federal school lunch program used an estimated 5.5 million pounds of the processed beef last year alone.

But government and industry records obtained by The New York Times show that in testing for the school lunch program, E. coli and salmonella pathogens have been found dozens of times in Beef Products meat, challenging claims by the company and the U.S.D.A. about the effectiveness of the treatment. Since 2005, E. coli has been found 3 times and salmonella 48 times, including back-to-back incidents in August in which two 27,000-pound batches were found to be contaminated. The meat was caught before reaching lunch-rooms trays.

The last election has changed matters somewhat, including in terms of Antitrust. But make no mistake: the administrative branch of the Government is loathe to exercise control over the great corporations, and will just as often empower the great corporations against competitors and consumers as it will restrain them.

Thus, the primary method we have to control great corporations — whether to ensure a level playing field for competition or to protect ourselves from personal or financial injury — is "merely a succession of lawsuits."

Yet, a succession of lawsuits barely works to restrain corporate abuse and malfeasance. Consider Visa/Mastercard, which already paid $2 billion for manipulating merchants' processing fees, yet keep doing it. Jack-in-the-Box was nearly bankrupted by lawsuits following a multi-fatality outbreak of O157:H7 E. coli, yet it's still around, and E. coli still runs rampant in our food, particularly ground beef.

Today, however, we're forgotten what Teddy Roosevelt knew a century ago. Today, many of those same vested interests argue that the feeble option of the "mere succession of lawsuits" is too much. That even the involvement of the owners of corporations in corporate affairs is too much. That corporations are people, too, entitled to "speak" in elections just like you or me.

Don't believe it.

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That's one way to lose millions of dollars:

Disbarred lawyer Kenneth Heller's refusal to turn over files in a matter that ultimately was resolved with a $3.7 million settlement was "symptomatic" of a 24-year record of "utter contempt for the judicial system," Southern District Bankruptcy Judge Stuart M. Bernstein wrote, quoting from an opinion of the appeals court in Manhattan that disbarred Heller in 2004.

Bernstein's ruling in In re Ruby G. Emanuel, 97-44969, denied Heller any share in the $1.2 million the judge had awarded to the law firm of Jacoby & Meyers, which took over from Heller the wrongful death case of James Emanuel, a stevedore who was fatally injured in a 1992 accident at the Brooklyn Navy Yard.

...

Following Heller's disbarment [for misconduct in an unrelated case], Ms. Emanuel retained Jacoby & Meyers to handle the retrial in state court.

The law firm asked Heller to forward his files in the matter, but Heller refused, even though, Judge Bernstein noted, "terminated lawyers normally send their files promptly to new counsel to be sure that the interests of the client are protected."

In resisting the surrender of his files, Bernstein recounted, Heller provided different estimates of the value of his work for Ms. Emanuel.

During Jacoby & Meyers' 2 1/2 year quest to secure the files, Heller offered various explanations as to what had happened to them -- lost in a house upstate, damaged by a flood, discarded by workers -- as the case was passed among five judges in Manhattan and the Bronx.

Eventually, the court declared Heller in contempt and issued sanctions, causing Heller to flee, after which deputies raided his office looking for the files, to no avail.

$3.7 million doesn't come close to the actual damages. The decedent was paralyzed from the neck down after a 45-foot fall and spent 20 months in the hospital before he died. In the original trial (in which Heller represented the plaintiff), a jury unsurprisingly awarded $25 million.

But because Heller didn't turn over the file:

Jacoby & Meyers only had the record on appeal to work with in negotiating a settlement, Michael S. Feldman, the firm's lead attorney on the case, said in an interview.

Heller's files consisted of 43 boxes of material, while the record on appeal filled only two boxes, Feldman said. The defendant's records in the underlying death case had been destroyed in the Sept. 11 attack on the World Trade Center where its law firm, Hill Betts & Nash, had its offices, Feldman added.

"We had to proceed without videos and photographs of Mr. Emanuel" who was paralyzed from the neck down as a result of a 45-foot fall as he was repairing a barge, Feldman said.

Switching attorneys in the middle of contingent fee litigation can cause a dicey situation. It is never easy for the exiting attorney — after pouring years of blood, sweat, tears and money into the case — to set the file down and walk away without securing a fee, as they would before voluntarily referring a case to another attorney.

But walk away they must. An attorney can't dangle the client's case over the new counsel's head as a negotiation tool.

The flip side is that, if the lawyer does the right thing and ensures the timely transfer of representation, the law will protect them. At the resolution of a case, prior contingent fee attorneys are generally entitled to recoup their reasonable costs and the quantum meruit — the fair value — of the work they did.

Except, however, where the attorney has breached their fiduciary duties to the client, in which case most states will deny the award of fees. Indeed, the issue isn't just a concern for contingent fee attorneys: in some states, if a professional breaches their fiduciary duties, the court can order the disgorgement of any fees previously paid.

Some people need to learn lessons the hard way. For the rest of us, take note: there's millions of reasons not to play games with client's files.

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The ABA Journal reports about Mohawk Industries v. Carpenter:

Personal injury associate J. Craig Smith couldn’t turn down his father’s request to take on the case of his cousin Norman, who was fired from his job as a supervisor in a carpet manufacturer after alleging the company was hiring undocumented aliens.

"When my father called me from Georgia [in 2006] about Norman being fired, I didn't know if I could do anything for him," Smith told the Connecticut Law Tribune. "But my Dad said, 'Remember who you are, and where you're from--we stick by our own.' I knew I had to do right by Norman.”

Smith stuck with cousin Norman Carpenter, all the way to a U.S. Supreme Court victory on a privilege issue.

At the time of the call, Smith was a fourth-year associate at personal injury law firm Koskoff, Koskoff & Bieder in Connecticut. He worked on the case along with a two-person employment law firm in Atlanta—until cert was granted. Smith began getting calls from Supreme Court specialists, who warned he wouldn’t stand a chance unless they got involved, the story says. Smith turned them down and hired Yale law professor Judith Resnik; they sat together at the counsel table when the case went to the Supreme Court.

Lawyers like to believe we're really smart. We like to believe that we can predict which case will make a lot of money. We like to believe we can tell which cases are really important. We like to believe we can tell when a landmark unanimous Supreme Court opinion has walked in the door.

James E. Beasley, Sr., the late founder of our firm, believed that, if lawyers did the right thing, everything else would take care of itself. He took a lot of cases that offered little more upon presentation than years of bruising litigation, despite the risk and the cost, because he believed that taking up that person's cause was the right thing to do.

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"Removal" is the process by which a defendant in a state court case "removes" the case to federal court. 28 U.S.C. § 1441(b) makes it sound so simple:

Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

There are two ideas behind removal, each expressed in their own sentence above. (If you're in the mood for some light reading of 18th century constitutional debates, here's primary source material on federal court jurisdiction.)

The first idea (in the first sentence) is that defendants have the right to have claims made against them under federal law heard by a federal court. For example, if plaintiff brings a claim under the RICO Act, a claim for violation of federal constitutional rights, or a claim under the Lanham Act, then the defendant has the right to remove the case to federal court so that a federal court will preside over the federal claims.

The second idea (in the second sentence) dates to the beginning of our Republic: federal courts, where the judges were appointed by the President and confirmed by the Senate, were (and still are) perceived as being less likely to be biased in favor of local litigants than state courts, where the judges were either elected by the public or appointed by state officials. The "other such actions" described by 28 U.S.C. § 1441(b) refer to cases brought under "diversity" jurisdiction, which allows plaintiffs in one state to sue defendants in another state in federal court, regardless of the claims brought. Thus, out-of-state defendants concerned about bias in a plaintiff's home state can remove cases if the case could have been filed in federal court in the first place under "diversity" jurisdiction.

Diversity jurisdiction, however, is disfavored by the federal courts. Personally, I think the most simple reason for the federal courts' dislike for diversity jurisdiction is because, much like how we prefer federal courts preside over cases bringing federal claims (as reflected by the first part of 28 U.S.C. § 1441(b)), we prefer state courts preside over cases bringing state claims. Much like how a defendant has an interest in having federal law claims against them heard in federal court, a plaintiff has an interest in having their state law claims heard in state court.

The United States Constitution provides for a limited federal government, including a limited federal judiciary. Thus, the requirements for removal have been strictly construed, since loosely construing them would violate basic principles of federalism:

Because lack of jurisdiction would make any decree in the case void and the continuation of the litigation in federal court futile, the removal statute should be strictly construed and all doubts resolved in favor of remand." Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 29 (3d Cir. 1985) (citations omitted). If there is any doubt as to the propriety of removal, that case should not be removed to federal court. See Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498 U.S. 1085, 111 S. Ct. 959, 112 L. Ed. 2d 1046 (1991).

Brown v. Francis, 75 F.3d 860, 864–865 (3d Cir. 1996). 

The latest "fad" among defense lawyers — more on the source of the word "fad" in a moment — is to hire companies to monitor state court dockets for suits against big corporations, particularly class actions alleging product liability. The moment a plaintiff files a lawsuit that includes any out-of-state defendants, the big corporations collude to have the out-of-state defendant file for removal, on the grounds that the in-state defendants haven't been "properly joined and served" yet.

It doesn't matter if the case involves 99 in-state defendants and 1 out-of-state defendant. It doesn't matter, if, quite obviously, the case could not have been filed in the first instance as a diversity case, since it involves in-state defendants, too. The big corporations found themselves a dubious loophole and decided to run with it.

And run with it they have: the defense gurus at Drug & Device Law have tallied a few dozen of these cases across the country. The defense argument is always the same: under the "plain meaning" of the statute, we can remove any case we want if the in-state defendants haven't been served yet.

It's a silly argument: the plain meaning rule does not permit a court to find a "plain" meaning “demonstrably at odds with the intentions of the drafters.” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989). There is, of course, no indication that Congress intended to let defendants avoid the strict, centuries-old federal policies against diversity jurisdiction and against removal by setting up a computer program that downloads the state court dockets every 10 minutes.

The more compelling "plain meaning" of 28 U.S.C. § 1441(b) is that Congress wanted to ensure the in-state defendants were "proper" defendants, and thus prevent plaintiffs from adding bogus in-state defendants to a lawsuit.

The defendants' game worked for a while, but the tide is turning.

Via Gregory P. Joseph's Complex Litigation Blog, we see the Northern District of Ohio rejecting the "properly joined and served" silliness:

Comerica's interpretation of §1441(b) suggests that the language "properly joined and served" creates an exception to the forum defendant rule. This argument is not novel; in fact, it has been the topic of much jurisprudential debate with varying success across the country. I, however, have no need to survey such case law because the Northern District of Ohio recently rejected Comerica's argument in a case of first impression. In Ethington v. Gen. Elec. Co., 575 F. Supp. 2d 855, 861 (N.D. Ohio), my colleague, District Judge Dan Aaron Polster, engaged in a thorough review of available case law.

And what does Ethington say?

The Court further notes that the growing trend among district courts wrestling with this latest litigation fad is to grant a timely motion to remand. While a review of the Frick, Thomson, and Ripley cases indeed shows that the judges in those cases abided by the plain meaning interpretation of the forum defendant rule, the GE Defendants' assertion that the New Jersey federal district courts 'ha[ve] rejected Plaintiffs' argument' is disingenuous at best; it fails to acknowledge that Frick (issued February 23, 2006), Thomson (May 22, 2007), and Ripley (Aug. 16, 2007) were each issued well in advance of the more recent case law from the District of New Jersey -- starting with Judge Chesler's opinion in DeAngelo-Shuayto -- that in fact rejected the approach taken in those three earlier cases. See, e.g., DeAngelo-Shuayto, 2007 U.S. Dist. LEXIS 92557, at 5, 2007 WL 4365311, at *3 (finding that '§ 1441(b) must bar removal by a forum defendant, whether it has been served or not'); Fields, 2007 U.S. Dist. LEXIS 92555, at *12-13, 2007 WL 4365312, at *5 (rejecting the plain language approach because it would create an 'untenable result' that would 'eviscerate the purpose of the forum defendant rule,' and holding that 'the 'properly joined and served' language of § 1441(b) does not encompass the situation in which the removing party is a forum defendant, and that in such situations removal to federal court is improper.'). See also, Brown, 2008 U.S. Dist. LEXIS 55490, at *8, 2008 WL 2833294, at *5 (adopting magistrate judge's report and recommendation with additional analysis, explicitly embracing the reasoning provided in the R&R, DeAngelo-Shuayto, and Fields, and stating 'this Court agrees with [the conclusion] that § 1441(b) must be read to preclude removal by an in-state defendant whether it has been served or not.'); Brown v. Organon USA Inc. (hereafter 'Brown R&R'), 2008 U.S. Dist. LEXIS 50179, at *24-25, 2008 WL 2625355, at *8 (D.N.J. June 27, 2008) (M.J. Salas) (magistrate judge's R&R concluding that '[t]he Court agrees with DeAngelo-Shuayto' and finding 'that § 1441(b) bars a forum defendant from removing to federal court even if they have not been 'properly joined and served.''); Optec Displays, Inc. v. Am. Maint., Inc., 2008 U.S. Dist. LEXIS 47562, at *3, 2008 WL 2510633, at *2 (D.N.J. June 16, 2008) (J. Debevoise) (remanding removed case with forum defendant, and explaining that 'even if [defendant] was not properly joined and served, it is still precluded, as a forum defendant, from removing the action to federal court.') (citing DeAngelo-Shuayto, 2007 U.S. Dist. LEXIS 92557, at *15, 2007 WL 4365311, at *3)).).

Notably, these more recent New Jersey federal district court cases are not alone in adopting Judge Chesler's reasoning and analysis on the proper way to interpret § 1441(b). Other federal district courts as of late have likewise followed the reasoning articulated in DeAngelo-Shuayto. See, e.g., Allen, 2008 U.S. Dist. LEXIS 42491, at *13-15, 17-18, 2008 WL 2247067, at *4-6; Vivas v. Boeing Co., 486 F. Supp. 2d 726 (N.D.Ill. 2007) (J. Lefkow). (See also, ECF No. 30-2, Pls.' Rep. Mem., Ex. A to Aff. Dec. of Mitchell M. Breit, 1-6 (remand order in Evans v. GlaxoSmithKline PLC, Civ. A. No. 07-5046 (Jan. 10, 2008) (J. Brody); remand order in Hance v. GlaxoSmithKline PLC, Civ. A. No. 07-5047 (Jan. 10, 2008) (J. Brody); remand order in Malone v. GlaxoSmithKline PLC, Civ. A. No. 07-5048, 2007 U.S. Dist. LEXIS 97461 (Dec. 4, 2007) (J. Savage) (citing Oxendine v. Merck & Co., Inc., 236 F. Supp. 2d 517, 524-25 (D. Md. 2002)); remand order in Scott v. GlaxoSmithKline PLC, No. 07-CV-5049, Order of March 11, 2008, 2008 U.S. Dist. LEXIS 84490, n.1 (E.D. Pa. Mar. 11, 2008) (J. Joyner)).) But see Flores v. Merck & Co. (In re Fosamax Prods. Liab. Litig.), 2008 U.S. Dist. LEXIS 57473, at *37-38, 2008 WL 2940560, at *2 (S.D.N.Y. July 28, 2008) (a recent federal district court opinion invoking the plain language of § 1441(b) with little analysis to deny plaintiff's motion to remand).

After considering Sixth Circuit precedent on statutory interpretation and carefully reviewing case law on both sides of a federal district court split, the Court finds that applying the plain language of § 1441(b) would produce a result demonstrably at odds with Congressional intent underpinning the forum defendant rule, and specifically with the 'properly joined and served' language. Accordingly, the Court hereby joins the DeAngelo-Shuayto line of cases, and in so doing, the Court incorporates and adopts the well-reasoned, thorough analysis and holdings of Judge Chesler in DeAngelo-Shuayto as the basis for the instant ruling.

Ethington v. GE, 575 F. Supp. 2d 855, 864 (N.D. Ohio 2008). A "fad" that is "demonstrably at odds with Congressional intent." 

Told you so.

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The print edition of September's Emergency Physicians Monthly features a debate between yours truly and WhiteCoat, EPM's in-house blogger on the subject, "Does Medical Malpractice Liability Impact Access To Emergency Care?"

I've posted the debate below, with footnotes added to show my sources. I believe WhiteCoat will update his with sources when he gets a chance; you can find his post here.

Opening Argument - Max Kennerly

 A 2006 American College of Surgeons report[1] concluded, "the single most important factor shaping the [emergency] surgical workforce today is declining reimbursement," a euphemism for cutthroat health insurer tactics. Last month, Bayonne Hospital sued Horizon Blue Cross Blue Shield for a parade of horribles, such as calling patients, lying about their coverage, and instructing them to leave the ED prior to screening or stabilization.[2]

Against this backdrop, malpractice premiums are at a per-physician thirty-year low. Unbiased analysis of their effect, however, is in short supply. A.M. Best, which rates insurers' creditworthiness for banks, says premiums represent 0.45% of national health care expenditures[3; see also *]; Towers Perrin, an insurance consulting firm, says 1.5%.[4] Least credible is the American Hospital Association, which relies on the Lewin Group[5], part of Ingenix, a UnitedHealth subsidiary that recently agreed to a $400 million settlement for manufacturing phony fees data to short-change physicians.[6]

After a decade of declining premiums and claims payments in the 1990s, the stock market collapsed, prompting insurers to raise premiums rapidly. In 2003, the peak of the increases, the General Accounting Office surveyed five states with "reported malpractice-related problems" (including Nevada and Mississippi) and four without for the impact of liability on access to care[7]. The GAO found no impact in the latter and "scattered" reductions in the former by providers of ER surgical coverage and obstetricians, most of whom also faulted other "long-standing factors" like reimbursement.  The GAO concluded most reports were "unsubstantiated" and that malpractice liability "did not widely affect access to health care."

The same report found little evidence of "defensive medicine," criticizing a widely-cited Health & Human Services report (the source of that "$300 billion" figure) for its transparently flawed generalization from two narrow examples of elderly heart disease treatment. In 2004, the Congressional Budget Office followed up on the H&HS report[8], even using the same methods, yet "found no evidence that restrictions on tort liability reduce medical spending," deeming the evidence for defensive medicine "weak or inconclusive" and noting "some so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefits to patients."

Such did little to stop a wave of "tort reform" in many states, like capping noneconomic damages and eliminating joint and several liability. Several years later, we have control and experimental groups in our laboratory of democracy.

The 2009 American College of Emergency Physicians' Report Card on the State of Emergency Medicine[9] is a revelation: of the ten states with an "A" or "B" grade for their "medical liability environment" (the most hostile to patients), six had an "F" for "access to emergency care," one had a "D-," two had a "C-," and one had a "B-," together averaging below a "D-."  Mississippi and Nevada, too, took WhiteCoat's "tort reform" advice: years later, they have, respectively, a "C" and "C+" for liability and a "C-" and an "F" for access to care. Conversely, the nine states with an "F" for liability earned the only "A," had only one "F," and averaged a "C" for access to care, better than the national average of "D-."

But, tort reformers say, there are other factors. That's my point: the impact of malpractice liability on access to care is so small it appears positive because it is dwarfed by other factors such as Aetna, Cigna and WellPoint, all of whom the AMA recently sued[10] for also using the bogus Ingenix database, and the increase in uninsured or underinsured patients. The big change in the past generation has not been an increase in malpractice premiums or claims (both are at historic lows in inflation-adjusted dollars [see 1]) but an extraordinary decrease in reimbursement.

A 2003 AMA report[11] found physicians lost $4.2 billion in annual revenue providing unreimbursed emergency care; compare that loss in a single field to the $4.7 billion paid in 2008 to resolve all malpractice claims nationwide[see 1]. The same study said emergency physicians incurred an annual average of $138,300 in uncollectable fees, double the average insurance premium for specialists and nine times the average premium for primary care physicians. It seems an ounce of reimbursement is worth a pound of tort reform.

Counter Argument - WhiteCoat

Doctors fear malpractice liability. And why shouldn’t they? Last month a woman was awarded $60 million dollars after a cosmetic surgeon allegedly botched her thigh lift. Medical malpractice law firms proudly display news releases about their multimillion dollar malpractice verdicts against physicians.

Does malpractice liability affect access to medical care, though? Access to medical care is limited by two factors: Available providers and willing providers. The best vascular surgery program in the world can’t help you if there’s no surgeon available or if you’re 150 miles away when your aortic aneurysm ruptures. Similarly, an abundance of nearby neurosurgeons helps no one with a brain hemorrhage if none of those neurosurgeons is willing to perform brain surgery.

What factors affect whether a provider is available or willing to provide services? Money undoubtedly affects access to care. Even though patients with Medicaid ostensibly have a means to pay for their care, they often have difficulty finding a physician to treat them because payments do not cover the costs of providing care. In this case, physicians may be available, but they are unwilling to provide care for the proposed payment. Conversely, patients with commercial insurance don’t seem to have such problems.

Liability also affects access to care. At first glance, it is easy to discount that effect. How could something that amounts to only 1.5% of total healthcare expenditures affect a physician’s willingness to provide care? The answer is that direct liability costs are only a small piece of the puzzle. Fear of liability creates a tremendous ripple effect. No physician wants to be at the receiving end of the next $60 million verdict. Residents in high-risk fields cite malpractice costs as by far the largest reason for leaving one state in favor of another. More than half of hospitals in medical liability crisis states have difficulty recruiting physicians, resulting in less physician coverage for their EDs. A survey of some Nevada Ob/Gyns showed that 60% planned to drop obstetrical coverage due to malpractice premium increases. Similarly, many Mississippi Ob/Gyns have dropped obstetrical care due to malpractice liability, leaving some counties with no obstetrical care at all. Trauma centers in several states have temporarily closed due to malpractice issues.

Texas tort reform shows that liability reduction can increase access to healthcare. Since tort reform was passed in Texas six years ago, the number of applications for physician licenses has increased dramatically. The number of emergency physicians has increased in 76 Texas counties – many of which were considered “underserved” for emergency care before tort reform. The number of malpractice insurers in Texas increased from 4 to more than 30 and insurance premiums dropped more than 40%. One Texas health system was able to spend $100 million extra dollars helping poor patients. That money had previously been held in reserves for legal defense fees and insurance premiums.

Some might try to draw conclusions by comparing metrics on ACEP’s Report Card. Doing so does not take into account multiple other factors affecting each metric. We cannot directly compare better access to higher liability any more than we can directly compare better access to colder climate. After all, states that scored worst in “access to care” were exclusively in the South and West United States – which generally have warmer climates.

Finally, defensive medicine costs our system up to $300 billion each year. Eliminating defensive medicine could provide each one of the 46 million uninsured patients in the US with $6500 in health care. Unfortunately, there is little tolerance for errors or misdiagnosis in medicine. While no lawyer will ever admit an expectation that medical care should be perfect, I still haven’t found a lawyer who will give me an example of a heart attack, a ruptured appendix, or a leaking cerebral aneurysm that it is OK to misdiagnose. Instead, doctors perform one low-yield test after another to “prove” that every haystack really doesn’t have a needle in it.

I respect Max and I respect his opinions. It just seems ironic that some of the strongest supporters of the notion that we can “sue our way to better health care” are those who stand to benefit the most from trying to do so.

 

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Ronald Miller has an excellent post about the timing of interrogatories in personal injury lawsuits.

One of the most effective weapons available to plaintiff's lawyers is the element of surprise. Although defendants typically begin lawsuits with far more information about the facts (and thus a better ability to marshal specific facts in their favor), they do not know what the plaintiff's lawyer knows or believes, and they do not know how the plaintiff's lawyer intends to prove his or her case.

Moreover, in some cases, the defendant's lawyer might not even take the time to learn all the relevant facts. Thus, as Miller notes,

[S]ome [defense] lawyers are going to learn the case when they get the file and get their client ready, regardless of the stage of the case. Others are going to not know the file at all and introduce themselves to the client and the case 10 minutes before the depositions. The theory behind waiting to serve interrogatories is that if you get the latter type of defense attorney, the defendant will take positions that don’t comport with the facts, logic or good strategy because they have not looked at the nuances of the case. Arguably, this logic would even hold up against a top notch lawyer because every lawyer, even well prepared lawyers, sees a case with a clearer lens on the courthouse steps than they do when preparing for a deposition.

No doubt. On the other hand,

The advantage in first obtaining answers to interrogatories is that the answers should help the attorney determine who should be deposed, what questions should be asked of those deponents and what documents should be obtained in the case.

Of course, another highly effective weapon is the truth. Much as how cynics say that you should tell the truth because it is easier to remember, a lawyer will always be able to handle surprise at trial if his or her theory of the case is consistent with the truth. Conversely, a lawyer who presents a theory that is inconsistent with the truth (even if presented in good faith, such as when the lawyer was simply unaware of a particular fact) is exposed to the risk that a "surprise" fact will contradict their theory and take the whole case down with it.

For me, then, when determining how much discovery I want to do prior to a deposition, I consider how much I know about the witness's story and about the truth, and how much more I need to know about the witness's story and the truth. Thus, while I rarely send out comprehensive interrogatories prior to a deposition, I will usually send out enough to know the witness's position with regard to the major issues in the case. Odds are, the defense lawyer will have figured out those issues (and prepared the witness) even if they only picked up the file a few days before the deposition, so it's pointless to blind myself to those facts.

Finally, in my personal experience trickery of any form, even ethical trickery that is entirely within the bounds of professionalism, is a waste of time, and you have more to lose by attempting it than by simply investigating the case thoroughly and proving it in the most clear, concise and compelling manner possible.

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[UPDATE: The Volokh Conspiracy, Concurring Opinions and TechDirt picked up on the case and this post as well. Volokh has substantial discussion in the comments, including links to law review articles on the issues of vacated and unpublished opinions, and a comment by the author of The Legal Intelligencer article, Shannon Duffy, noting that you can find the opinions themselves on the Eastern District of Pennsylvania's own website. I have also edited a line (the one quoted by Co-Op) for clarity.]

The Legal Intelligencer reports:

Ordinarily, the decision to settle a case while an appeal is pending means giving up the opportunity to set a legal precedent as well as forgoing the chance to win a reversal of any unfavorable published decisions handed down by the lower court.

But a team of defense lawyers fighting to overturn a $24 million verdict have figured out a way to have their settlement cake and eat their jurisprudence, too.

The confidential settlement in Klein v. Amtrak -- a case in which two trespassing teenagers climbed atop a parked train car and suffered serious burns when they got too close to a 12,000-volt catenary wire -- included an unusual provision that called for the trial judge to vacate all of his published opinions and have them removed from Lexis and Westlaw.

And it worked.

A few months after holding an hourlong oral argument, the 3rd U.S. Circuit Court of Appeals agreed in late July to remand the case to the trial judge, U.S. District Judge Lawrence F. Stengel, who, in turn, agreed to vacate eight of his published opinions and to "direct" Lexis and Westlaw to remove them from their databases.

...

Exactly how the lawyers went about persuading Stengel to take such an unusual step is impossible to say because all of the court papers are under seal and none of the lawyers will talk about it.

The verdict drew a lot of attention in the Philadelphia legal community, not least because of the size and the names of the defendants, most of whom often avoid premises liability on a variety of theories. It's no surprise the defendants want to re-write history to prevent future plaintiffs from finding or referring to the case.

As a citizen, I am a strong believer in open government and governmental accountability, including for the judiciary. As a lawyer, I do not believe a court can ever truly "unpublish" a decision, and I believe that law is made every time a court decides any issue.

As such, I am linking to the free and publicly-available RECAP copies of the "vacated" opinions:

(a) the District Court's March 31, 2008 Memorandum Order denying Defendants' post-trial motions [reported at 2008 WL 879968 and 2008 U.S. Dist. LEXIS 25990] (District Court Docket No. 208).

(b) the District Court's October 11, 2006 Memorandum Order denying Defendants' in limine motion regarding evidence of prior electrical contacts [reported at 2006 WL 2927280 and 2006 U.S. Dist. LEXIS 73940] (District Court Docket No. 130).

(c) the District Court's October 12, 2006. Memorandum Order denying Defendants' in limine motion regarding evidence of prior electrical contacts [reported at 2006 WL 3000955 and 2006 U.S. Dist. LEXIS 75942] (District Court Docket No. 145).

(d) the District Court's March 31, 2006 Memorandum Order denying Defendants' summary judgment motion [reported at 2006. WL 859442 and 2006 U.S. Dist. LEXIS 15331] (District Court Docket No. 58).

(e) the District Court's Memorandum Order, entered August 17, 2006, denying Amtrak's motion to certify pursuant to 28 USC 1292(b) [reported at 2006 WL 2385516 and 2006 U.s. Dist. LEXIS 57613] (District Court Docket No. 72).

(f) the District Court's October 2, 2006 Memorandum Order granting Plaintiffs' motion for reconsideration of the District Court's order of July 13,2006 with respect to Norfolk Southern's liability as a non-possessor of land [reported at 2006 U.S. Dist. LEXIS 80992; not reported in Westlaw] . (District Court Docket No. 111).

(g) the District Court's October 2,2006 Order denying Defendants' in limine motion regarding Amtrak's internal memorandum dated November 17, 1983 and Amtrak's June 20, 1984 letter [This Order is not reported in LexisNexis or Westlaw] (District Court Docket No. 119).

(h) the District Court's October 10, 2006 Memorandum Order denying Defendants' in limine motion regarding evidence of prior electrical contacts for the purpose of proving ·punitive damages [This Order is not reported in LexisNexis or Westlaw] (District Court Docket No. 129).

Law, once made, cannot be unmade.

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Professor Richard Epstein of the University of Chicago published an opinion piece in yesterday's Wall Street Journal on medical malpractice.

"Embarrassingly ignorant" would be a charitable description. Eric Turkewitz calls it "flat out false."

How bad was it? Turkewitz caught two outright falsehoods:

American courts commonly think it proper for juries to infer medical negligence from the mere occurrence of a serious injury.

and

American plaintiffs are sometimes spared the heavy burden of identifying particular acts of negligence, or of showing the precise causal connection between a negligent act and an actual injury.

Neither of these are true, as described in Turkewitz's article.

But it doesn't even end there. Here's another line:

American judges frequently let juries decide whether honest mistakes are negligent.

It is hard to put into words how embarrassing, shocking and insulting it is to see a law professor who has written textbooks on torts question how we (or who we let) "decide whether honest mistakes are negligent."

An "honest mistake" is negligent. It's what it means to have been negligent: you made a mistake. You neglected your duty. You failed to exercise the care that a reasonable, prudent person would exercise under the same circumstances. If a physician had intended the harm, it wouldn't be medical malpractice, it would be battery, an intentional tort.

And that is how it should be: a physician should be responsible for damages they caused the patient by neglecting their duty. If the patient neglected to drive safely, ran a red light, and injured the physician, the patient would be responsible for the damages they caused the physician. It's why we have insurance: to pay for the damages we mistakenly cause others.

Putting aside Professor Epstein's "honestly mistaken" description of medical malpractice law, let's consider his solution to the "disturbing" medical malpractice system (which he vaguely and ridiculously concludes causes a full 10% of US health costs by way of defensive medicine):

What is needed is the replacement of juries with specialized commissions like those in France, which help reduce litigation expenses and promote uniformity in case outcomes across regions.

Naturally, Epstein doesn't go into any detail about his proposal, so there's nothing even to critique.

On the subject, however I recently noted that Philip K. Howard's health courts proposal (in the New York Times) was "unlikely to make results any more 'reliable' than now, unless you presume that judges are systematically biased in favor of one side or the other" and that "Howard's process for choosing a 'neutral' expert and the materials they opine on will probably make medical malpractice litigation more contentious, expensive, and uncertain."

Epstein's ephemeral proposal would likely suffer the same problems if he actually spelled out the details. But he has no need to worry about that, he can just 'negligently' draft a new column filled with errors about some other field of law.

Finally, he concludes:

The best reform would be to allow physicians, hospitals and patients to contract out of the liability mess by letting the parties reject state-imposed malpractice rules. They could, for example, choose to arbitrate, to waive jury trials, or to limit damage recovery. Stiff competition and the need to maintain reputation should keep medical providers in line in such a system.

That is to say, Epstein wants to transplant to medicine the same fine extrajudicial system we use for credit cards, used car buying, and check-cashing.

Thanks, but no thanks.

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After four days of trial, and a few hours of deliberations, the AP reports:

A federal jury ruled Thursday that Jammie Thomas-Rasset willfully violated the copyrights on 24 songs, and awarded recording companies $1.92 million, or $80,000 per song.

Thomas-Rasset's second trial actually turned out worse for her. When a different federal jury heard her case in 2007, it hit Thomas-Rasset with a $222,000 judgment.

Under our absurd (and possibly unconstitutional) copyright laws, the award per violation can range from $750 to $150,000, and the jury here roughly split the difference at $80,000 per song, about the same amount as a Manhatten jury will give you for losing the end of your pinky. The jury must have felt these particular duplicate copies of the songs were very dear to the poor record companies.

Why would twelve ordinary citizens do that?

A vigorous defense from Kiwi Camara and Joe Sibley was not enough to sway the jury, which had only to find that a preponderance of the evidence pointed to Thomas-Rasset. The evidence clearly pointed to her machine, even correctly identifying the MAC address of both her cable modem and her computer's Ethernet port. When combined with the facts about her hard drive replacement (and her failure to disclose those facts to the investigators), her "tereastarr" username, and the new theories that she offered yesterday for the first time in more than three years, jurors clearly remained unconvinced by her protestations of innocence.

Camara suspects that the jury thought Thomas-Rasset was a liar and were "angry about it," thus leading to the $80,000 per-song damages.

And there you go. Camara has it right; pity he couldn't get his client to stop lying at trial.

For comparison, not too long ago a jury awarded just $1 million in pain and suffering to this man:

After 63 days in the hospital (57 of them in a coma), 11 surgeries and 65 more days in a rehabilitation hospital, Robert Doviak was left totally and permanently blind, with a sense of touch that was seriously compromised, partial loss of hearing and no sense of smell or taste. Additionally, he had substantial orthopedic injuries including fractures of his left femur, several cervical vertebrae, both zygomatic arches and other bones in and about his face and eyes, his left hand and his right wrist.

The difference?

[D]uring summation, Doviak's attorney asked the jury to award Doviak $60,000,000 for pain and suffering, an amount Doviak's new attorneys say is preposterous and evidence of awful advocacy and which defense counsel says revealed the greed that served as the foundation of plaintiff's case[.]

Credibility matters. Who you are, what you do, and what you say matters. Don't treat the jury like they're stupid; don't try to get anything by them, and don't ask them to do or to believe something ridiculous. It will never work. If your case has a problem, concede it, deal with it, and move on.

And above all, never lie to the jury.

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Via Overlawyered, the NYTimes says:

In closed-door talks, Mr. Obama has been making the case that reducing malpractice lawsuits — a goal of many doctors and Republicans — can help drive down health care costs, and should be considered as part of any health care overhaul, according to lawmakers of both parties, as well as A.M.A. officials.

It is a position that could hurt Mr. Obama with the left wing of his party and with trial lawyers who are major donors to Democratic campaigns. But one Democrat close to the president said Mr. Obama, who wants health legislation to have broad support, views addressing medical liability issues as a “credibility builder” — in effect, a bargaining chip that might keep doctors and, more important, Republicans, at the negotiating table.

The story (and apparently Obama) is exceedingly light on details, but suggests:

Mr. Obama has not endorsed capping malpractice jury awards, as did his predecessor, President George W. Bush. But as a senator, he advanced legislation aimed at reducing malpractice suits. And Dr. J. James Rohack, the incoming president of the medical association, said Mr. Obama told him at a meeting last month that he was open to offering some liability protection to doctors who follow standard guidelines for medical practice.

...

And any effort to restrict patients’ legal rights to sue will face tough opposition from the American Association for Justice, which represents trial lawyers and has met with Nancy-Ann DeParle, Mr. Obama’s point person for health reform, to express its concerns. Linda Lipsen, the association’s chief lobbyist, said practice guidelines were established by unregulated medical societies and “should not be conclusive” in a court of law.

What's that mean? I don't really know -- I suppose they want to make guidelines from the American College of Obstetricians and Gynecologists and the American College of Emergency Physicians have the force of law, or they want to incorporate them as a presumption of meeting the standard of care.

Without more detail, it's hard to comment on the effects of it. Yet, incorporating these guidelines could make the medical malpractice process even more litigious, since lawyers will argue over whether the guidelines applied and whether the doctor followed them.

With regard to the idea of incorporating them, as I wrote before discussing Comparative Effectiveness Research ("CER"), also pushed by Obama:

Put simply, CER will cut both ways. A doctor who does not utilize a CER-approved treatment will have a lot of explaining to do down the road if that treatment would have helped. Conversely, a plaintiff alleging a doctor should have used a CER-disapproved treatment will have a hard time convincing a jury that the doctor should have overridden the billion-dollar research.

From a liability / malpractice standpoint, doctors who abide by the standard of care should welcome the CER with open arms, as it will give them a powerful tool to wield when a plaintiff's lawyer later asks "why didn't you do _____?" They can quite honestly answer "because the CER says it's not effective."

That may apply the same to "College" guidelines. One problem, as mentioned above, is that the guidelines aren't necessarily set based on empirical data, and they're not reviewed by outside sources prior to publication. 

We'll have to wait and see for more information.

[UPDATE: Obama's speech to the American Medical Association included:

I recognize that it will be hard to make some of these changes if doctors feel like they are constantly looking over their shoulder for fear of lawsuits. Some doctors may feel the need to order more tests and treatments to avoid being legally vulnerable. That's a real issue. And while I'm not advocating caps on malpractice awards -- which I believe can be unfair to people who've been wrongfully harmed -- I do think we need to explore a range of ideas about how to put patient safety first, let doctors focus on practicing medicine, and encourage broader use of evidence-based guidelines. That's how we can scale back the excessive defensive medicine reinforcing our current system of more treatment rather than better care.

So he might be talking about CER after all. If so, I think that's a good thing for everyone. One problem for both physicians and plaintiffs is that, in many areas, the "standard of care" is frustratingly unclear. If CER can be used to create those standards, all the better.]

 

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The WSJ Law Blog points us to a Gawker reference to an AP article that says:

Richelle Olson sued [Sacha Baron Cohen] and NBC Universal on May 22, claiming an incident at a charity bingo tournament that was filmed for the upcoming "Bruno" left her disabled.

Olson claims she was severely injured after struggling with Cohen and his film crew at the event, held in Palmdale, Calif., two years ago. The lawsuit states she now needs a wheelchair or cane to move around.

The lawsuit seeks unspecified damages of more than $25,000.

Gawker wonders aloud:

We would hope that if this lady genuinely suffered brain bleeding that left her in a wheelchair that she's a asking for much more than $25,000 in damages, but why she waited two years to file the suit is anyone's guess—-Some would say probably because it's all a bunch of BS.

Don't blame Gawker, they don't claim to be legal experts.

The suit was filed in Lancaster, California, which is in Los Angeles County.

As you can see from this fee schedule (PDF), the Superior Court of California, County of Los Angeles, has a "limited civil case" program for those cases valued at less than $25,000. It likely has different rules and different judges, much like Philadelphia's mandatory arbitration for cases below $50,000 and Pennsylvania's municipal court for cases below $8,500 (or $10,000 in Philadelphia).

Most states have in place a "small claims court" of some sort for claims below a certain value, to conserve judicial resources while still giving parties access to substantial justice.

Thus, a suit that "seeks unspecified damages of more than $25,000" could be worth millions or billions of dollars. That allegation is nothing more than a legal term inserted in the complaint by the plaintiff's lawyer to let the clerk know that the case should be assigned to the full-fledged civil trial court and not the small claims court.

As for the two years, I doubt that has anything to do with the plaintiff herself. It takes time to prepare a case, and it's not surprising to see a case filed right as the statute of limitations is about to expire. Perhaps the lawyers have been discussing settlement. Perhaps the plaintiff was hoping to avoid suing and was seeing if they would get better, but, due to the statute of limitations, has to sue now or never.

[UPDATE: Daniel A. Reisman, a Los Angeles business lawyer, fills in the details, noting how (like in Pennsylvania), plaintiffs in personal injury suits are prohibited from stating specific damages in their complaint.]

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Among the many creative “legal” ideas floating around on the internet is:

If you set up an LLC for yourself and conduct all your business through it, the LLC will be liable in a lawsuit but you won't.

Last week, I was asked if this "asset protection strategy" worked.

No, it doesn't.

Conducting your personal business through an LLC provides no protection against a tort verdict, the type of liability that most people are worried about. The use of corporate forms -- like LLCs, S-Corporations, or Incorporation -- has many important purposes, but avoiding personal tort liability for your own conduct is not one of them.

To see why, let's start with some background.

What's a "tort?"

"Tort" is the Norman word for "wrong." There are three main types of legal wrongs: criminal wrongs, contractual wrongs, and tort wrongs.

A "criminal" wrong is an offense against the state: we as a society made it illegal to smoke pot, you did it anyway, here's your punishment. A "contractual" wrong is a failure to do something you agreed to do: I gave you $20 to mow my lawn, you didn't do it, I want my money back.

Everything else is a "tort" wrong. The most common tort is "negligence," which includes most lawsuits, like car accidents, medical malpractice, or slip and fall. In negligence, you had a general duty to do something in a reasonable way (like drive your car safely) and you messed up, so you have to pay for the harm you caused. Another type of "tort" is an intentional tort, like defamation or tortious interference with business relations: you purposefully hurt me, so you should pay for the damage.

When most people say they're worried about "getting sued," they're usually talking about being responsible a large tort verdict arising from a catastrophic injury or wrongful death.

What's an LLC?

A limited liability company is a type of business association recognized by state and federal governments as a legal entity independent of its owners and employees. On behalf of the owners, the company can, for example, own property and enter into contracts.

For our purposes here, we do not need to go into the differences between a limited liability company, an S-corporation, full incorporation, or a limited partnership. (I exclude general partnership and sole proprietorship because neither claims to limit liability at all.) All of them serve the same basic purpose, which is to protect investors from incurring any liability greater than the amount they invested into the company. The Economist described the purpose of limited liability a couple years ago:

Before limited liability, shareholders risked going bust, even into a debtors’ prison maybe, if their company did. Few would buy shares in a firm unless they knew its managers well and could monitor their activities, especially their borrowing, closely. Now, quite passive investors could afford to risk capital—but only what they chose—with entrepreneurs. This unlocked vast sums previously put in safe investments; it also freed new companies from the burden of fixed-interest debt. The way was open to finance the mounting capital needs of the new railways and factories that were to transform the world.

How does tort liability work in the context of an LLC?

Most everyone knows, although not by name, "vicarious liability" and "the doctrine of respondeat superior." If, in the course and scope of your employment, you cause someone else harm, then your employer is liable for your conduct. 

Here's what you probably don't know:

An agent is subject to liability to a third party harmed by the agent's tortious conduct. Unless an applicable statute provides otherwise, an actor remains subject to liability although the actor acts as an agent or an employee, with actual or apparent authority, or within the scope of employment.

Restatement of the Law, Third, Agency § 7.01 (emphasis added).

(An aside about The Restatement: The Restatement is an intense effort of lawyers, professors and judges organized by the American Law Institute to reduce to writing the legal community's consensus regarding general principles of law applied across the country. "Agency" is the subject of this particular Restatement, and "Third" means it's the third version, which was published in 2006. For reference of how intense these efforts are, the Second version was published in 1958. In case you're wondering, the Second version also said “[a]n agent who does an act otherwise a tort is not relieved from liability by the fact that he acted at the command of the principal or on account of the principal …")

An "agent" is a broader definition of "employee:" it's anyone acting on behalf of the company.

Let me reiterate what that all means: the general legal rule across the country is that individuals acting on behalf of a company are personally liable for their tortious conduct, even if they did so on behalf of the company.

Don't believe this "Restatement?" Want some case law? Here's a case from the Virgin Islands less than a month ago, noting in passing the cases it found with minimal research:

Terr. of the U.S.V.I. v. Goldman, Sachs & Co., 937 A.2d 760, 794 n.153 (Del. Ch. 2007) ('Officers and directors may be held individually liable for personal participation in tortious acts even though performed solely for the benefit of the corporation[.]') (quotation omitted); Armed Forces Ins. Exch. v. Harrison, 2003 UT 14, 70 P.3d 35, 41 (Utah 2003); Miller v. Keyser, 90 S.W.3d 712, 717 (Tex. 2002); Saltiel v. GSI Consultants, Inc., 170 N.J. 297, 788 A.2d 268, 273 (N.J. 2002); Haupt v. Miller, 514 N.W.2d 905, 909 (Iowa 1994); Camacho v. 1440 Rhode Island Ave. Corp., 620 A.2d 242, 246-47 (D.C. 1993); Weir v. McGill, 203 Ga. App. 431, 417 S.E.2d 57, 59 (Ga. 1992); Hecker v. Ravenna Bank, 237 Neb. 810, 468 N.W.2d 88, 95 (Neb. 1991); Ingram v. Machel & Jr. Auto Repair, Inc., 148 A.D.2d 324, 325, 538 N.Y.S.2d 539 (N.Y. App. Div. 1989); Mississippi Printing Co. v. Maris, West & Baker, Inc., 492 So. 2d 977, 978 (Miss. 1986); Wyatt v. Union Mortg. Co., 24 Cal. 3d 773, 157 Cal. Rptr. 392, 598 P.2d 45, 52 (Cal. 1979); Jabczenski v. Southern Pac. Memorial Hosp., 119 Ariz. 15, 579 P.2d 53, 57 (Ariz. Ct. App. 1978); Taylor v. Alston, 79 N.M. 643, 447 P.2d 523, 525 (N.M. Ct. App. 1968); New Eng. Box Co. v. Gilbert, 100 N.H. 257, 123 A.2d 833, 835 (N.H. 1956)."

Addie v. Kjaer, 2009 U.S. Dist. LEXIS 36110, at *21–12 (D.V.I. Apr. 28, 2009)(noting, "The Court has come across no jurisdiction that applies a contrary rule.").

Insurance and employee indemnification are so common today that this distinction is not often appreciated, but it's still the law. If Warren Buffet defrauded Mom and Pop’s Ice Cream Stand wholly for the benefit of Berkshire Hathaway, he would personally be on the hook for the damage just the same as Berkshire.

Let's go back to your personal LLC. Assume you hit a pedestrian with a car, defame someone in a blog post, or cause a building fire. It doesn't matter if you were "employed" by your LLC when you did it -- you will still be personally liable, as will the LLC that "employed" you.

Thus, in order to "protect your assets," you need to put enough money into the LLC that it can completely pay any tort judgment against you, or else the injured person can go for your assets long after it has bankrupted the LLC. That just defeats the nominal purpose of the LLC (to avoid liability), since you'll have to pay the same amount anyway, just through the LLC.

Again, there are plenty of reasons for setting up an LLC, such as protecting investors, limiting contractual liability, limiting liability arising from employee's conduct, and a host of business and tax uses, but avoiding personal liability for your own conduct isn't one of them.

There's an easier and more effective way. Buy good personal liability insurance and buy an umbrella liability insurance policy. If you're running a business, buy a good business insurance policy (including liability) and an umbrella policy for it, too. If your business is unusual, or you're worried about a particular risk, look for risk-specific insurance, like media policies which cover defamation. Don't skimp -- get at least $1 million in coverage, or more depending on your own risks.

Then you'll be covered for most tort verdicts (keep in mind some states prohibit insuring intentional conduct, and insurance policies can carve out whatever exceptions / exemptions they want).

No trickery needed, just some money and foresight.

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A recent post at a prominent club / venue in San Francisco, DNA Lounge:

Several years ago, there was some kind of scuffle and one of our customers who was dancing on the stage fell off and hurt her ankle. She sued us. I'm not sure what exactly her reasoning was, but she did, because this is America, and you can sue anybody for anything. She claimed she had spent $4,000 on medical bills (chiropractors!) and asked for $500,000 in pain and suffering.

We learned in the discovery phase that this woman had also been in three automobile accidents in the previous two years, for which she had been going to chiropractors already. How about that.

We submitted this claim to our insurance company, like you do, and their lawyers handled it. They ended up settling the case by paying her around $11,000. And here's where it gets fun:

Our deductible was $10,000. So the lawyer, who was working for the insurance company, did right by the insurance company. It only cost them $1,000! But he didn't try to negotiate anything lower, because that would have been a waste of his time, since he wasn't working for us, and that was the part we would have to pay. Oh, but it gets better.

It turns out that the fine print on our insurance said, in longwinded, 4-point, incomprehensible legalese, that the rates we had been paying for years were merely "estimates". So after our claim, the insurance company "audited" us, and retroactively raised our rates for the last four years by $20,000 per year. So the fact that we filed a claim at all caused the insurance company to demand an additional $80,000 from us.

At that point, we hired our own lawyer who negotiated that $80,000 down to $40,000, paid out over a year instead of being due immediately. Plus several thousand more for the new lawyer, obviously.

Though the author heaps blame on the plaintiff for what happened here, the outcome would have been exactly the same if the claim had been legitimate: $10,000 out of pocket plus a retroactive bill raising the rates.

There were two causes of this expensive affair: an absurdly high deductible and an unethical, unregulated insurance company.

Every bricks and mortar business which invites customers onto its premises -- whether it's a nightclub, a coffee shop, a computer store, a hair salon, a gym, a jewelry store, a DVD shop, a law firm, whatever -- should expect paying its deductible from time to time to defend or to settle claims.

I know, you are perfectly safe, and flawless in your execution of all mundane asks like ensuring walkway cracks are repaired in a timely fashion.

Are your employees? Your customers? The building? The location? In the case above, a fight broke out; not necessarily the club's fault, but if they had inadequate security and did not react appropriately then indeed their responsibility, at least in part, which in many jurisdictions exposes them to potentially paying the whole judgment.

It's not like driving a car where you can take a handful of defensive driving steps and dramatically reduce your odds of being at fault. (Even there, you can still expect to cause an accident at some point.) Someone will get hurt, or at least claim they were hurt, at your premises. A nightclub that serves alcohol is continually exposed to liability from multiple sources, like slip and fall, premises security, and dram shop.

A $10,000 deductible sounds cheap when you pay the premium, and it is exactly that: cheap. You'll pay the deductible more than once. You might pay it every single year.

Moving on to the unethical insurance company, if the insurance company-appointed lawyer "didn't try to negotiate anything lower, because that would have been a waste of his time," call me. The policyholder's interests come first. Anything less is bad faith.

As for the "estimated" premium, perhaps this was during the Quackenbush era. That wouldn't fly in most jurisdictions these days and would form the basis of a fraud, deceptive trade practices, and consumer protection act class action lawsuit and an insurance commissioner investigation.

The post ends:

What's the lesson here, kids?

I think it's, "people are scum" and/or "never start a business."

No. A properly-insured business will find a slip and fall soft tissue case to be a minor annoyance for which they will be liable, if at all, a nominal sum.

The lesson is "don't skimp on your deductible" and/or "regulation of the insurance industry is important."

Did you choose a reasonable deductible? Have you called up your local, state and federal representatives lately to ask what they're doing to keep insurance companies honest?

And do you know who is trying to protect you right now? Trial lawyers. They're fighting every day to keep insurance companies from abusing policyholders the way DNA Lounge was abused.

You don't have to be a lawsuit horror story.

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Fresh off of my juror twittering post yesterday, KevinMD points us to a Newsweek story:

What might you overhear if you got 100,000 doctors together in one virtual room? You could find out if you had access to the social network Sermo. It's just one of a growing cadre of sites designed for the nation's practicing physicians. Here, doctors from across the country can consult each other about the ordinary and the weird (or "zebras" in the lingo). There are queries about treatments for everything from plantar warts to photographs of mystifying rashes and even questions about an unfortunate fellow with postorgasmic nausea.

...

But there are other questions as yet unanswered: ... What if comments are pertinent to a malpractice case? Both Sermo and WebMD say they zealously protect physician anonymity from all third parties.

What if a treating physician called another physician in the room for an informal discussion session about a treatment, and was later sued for medical malpractice?

That conversation would be discoverable, since it's relevant to proving the physician's conduct relative to the standard of care and it's not privileged (unlike, say, a post hoc Peer Review Committee).

Nothing about the message board changes that analysis. Would it make the responding physician liable? Probably not, as they're not responsible for the patient's care -- but again, there's no real need for a whole new method of analysis here. Just think of what the answer would be in the bricks & mortar world.

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New to the site? Haven't been here in a while? Here are some of the most popular posts over the past few weeks.

Litigations and Trials:

• Managing Expectations in Defamation Cases: A Legendary Trial Lawyer Faces His First Malpractice Suit
• $120 Million In Hourly Billing For A Single Trial: What Happened In Robertson v. Princeton?
• How Not To Spend $120 Million In Hourly Fees On A Single Trial: A Few Questions for Robertson v. Princeton
• The Watchmen Movie Ruling: How Typical Lawyer Obstructionism Can Destroy Your Case
• "Quinn Emanuel Hit With Malpractice Suit" -- More Business Contingent-Fee Madness

Law Practice:

• Creating "The Black Triangle," A Critical Step Before Any Trial, Deposition or Brief
• "The End of Leverage"? What Are BigLaw Associates Really Worth?
• "Remember That Profits Equal Revenues Minus Costs" - The Real Reason for the Billable Hour's Impending Demise

Current Events:

• Can the Octuplets Sue for Medical Malpractice? (Part 1 of 2)
• Differential Diagnosis, Defensive Medicine and Medical Malpractice: Coumadin Edition
• 25 Things About Facebook's Terms of Use and Your Rights
• Facebook and the Law of Stealth Changes in Consumer Contracts

Recent Court Opinions:

• Pennsylvania Commonwealth Court Limits the Special Value to the Plaintiff Damages Doctrine
• Reminder: Contract Disputes Act Requires You Exhaust Administrative Remedies Before Suing the United States Government
• An Ounce of Prevention: Dismissal Upheld In Derivative Suit Because of Independent Inquiry
• The Third Circuit's 1:1 Punitive Damages Ruling: The Lingering Complications of State Farm v. Campbell

 

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Via the Law & Magic Blog (via @walterolson via @nomadtoes), I learned ahead of time of an article by Shannon P. Duffy in today's Legal Intelligencer:

In a motion in limine in Blash v. ABA Construction Group, the plaintiff's lawyers begged the judge to forbid their opponent, Steven G. Leventhal of Reger Rizzo & Darnall, from performing magic tricks or even mentioning that he is a professional magician.

Leventhal's response (the cause of most of the laughter) asked the judge to use his or her own sleight of hand to make the plaintiff's motion disappear -- with prejudice.

Now that the case has settled for $1.2 million, the motion will never be ruled on by a judge.

Just as well; it's very hard to prevail upon a judge that opposing counsel's closing argument was prejudicial, unless the closing either inappropriately referenced previously excluded or stricken testimony, or if counsel tried to inflame the jury through bias or emotion.

For kicks, I threw some search terms into Lexis and, whaddayaknow, found something similar, from the Supreme Court of Kansas:

During closing argument, an attorney is given wide latitude in the language and manner of presenting argument and may indulge in impassioned bursts of oratory and may use picturesque speech as long as he or she does not refer to facts not disclosed by the evidence. State v. Duke, 256 Kan. 703, 719-20, 887 P.2d 110 (1994). In prior cases, analogies similar to the prosecutor's "puff of smoke" argument in this case have been found to be within the permissible bounds of rhetoric and not gross or flagrant.

In Duke, 256 Kan. 703, 887 P.2d 110, defense counsel attempted in closing argument to cast doubt on the veracity of the State's witnesses and the quality of the police investigation. In response, the prosecutor told the jury there had been "'a lot of smoke in this case. . . a lot of smoke that was given to you in the argument of the defendant when he closed his case'" and, after objection to this argument was overruled, the prosecutor continued, "'It's smoke and mirrors. And when you have that, you get illuminations and things . . . trying to confuse you.'" 256 Kan. at 718. When the defendant argued on appeal that the comments implied to the jury that defense counsel was trying to intentionally mislead the jury, we found that the comments were within the permissible bounds of rhetoric. 256 Kan. at 719-20.

In State v. Baker, 249 Kan. 431, 447, 819 P.2d 1173 (1991), we concluded that the prosecutor's closing argument which included comments that the "nice boy image" that the defense was trying to give the jury was "nonexistent," and "it's a smoke screen" was neither gross nor flagrant and had not deprived the defendant of a fair trial.

Although "smoke screen" types of argument have been noted in some cases where the prosecutor's overall arguments were found improper, the comments were not found improper merely because of the smoke screen references.

State v. Rodriguez, 269 Kan. 633, 643-644 (2000). The law isn't much different anywhere else, including Pennsylvania. But that's not actually a trick, just language describing a trick. So perhaps there's room for prejudice in the actual presentation.

The article also reveals an impressive amount of candor from plaintiff's counsel, who filed the motion:

Dooley, in an interview, said that he and Coppol decided to file the motion to "bust his [Leventhal's] stones," and to throw Leventhal off his game.

But Dooley also said he believed the law was on his side and that a judge would likely agree that performing magic tricks during a trial is improper.

Maybe so. Defense counsel defends his closing as follows:

"That the undersigned counsel opted to travel the globe to learn a special set of performance skills rather than wasting his brain cells drinking his summers away at the Jersey Shore should not be held against him," Leventhal wrote.

Touché.

Frankly, I'd worry about performing a magic trick at closing, as it would not only distract the jury from what you're saying (see "Monkeys in Business Suits") but would run the risk of deeply offending jurors who had not been won over to your arguments, who would consider it all the evidence they needed that you were, as they suspected, a professional con man paid to mislead and to deceive them.

My question is not whether the judge would have granted the motion (probably not), but whether the magic trick closing is ever really worth doing. Just the facts, ma'am.

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News has spread far and wide of the octuplets born to Nadya Suleman at the Kaiser Permanente Medical Center in California.

In one sense, their birth and continued life is a “miracle,” as they made it to 30 weeks gestation, about 8 weeks past the threshold of viability and about 4 weeks past the point at which serious mortality or morbidity are more likely than not. Importantly, the octuplets have made it through their first week of life (sometimes referred to as the “honeymoon” period in neonatal intensive care units) without having any serious complications, like higher-grade intraventricular hemorrhages ("IVH"), a.k.a. “brain bleeds.”

Yet, it was a completely avoidable “miracle,” the same as if Captain Sully on U.S. Airways Flight 1549 had intentionally landed on the Hudson River. Multiple pregnancies are inherently high risk, with the risks increasing exponentially with each new fetus in higher order multiples. Twins are more than twice as dangerous as singletons; triplets are more than one-and-a-half times as dangerous as twins, and on and on.

These risks are well known and accepted within the international medical community, which is why some countries, like as Belgium, prohibit in vitro fertilization of more than one embryo at a time, while others, like Sweden, impose financial disincentives against the practice. Sweden’s national healthcare system covers an unlimited number of single-embryo IVF treatments but only four multiple embryos IVF treatments. Here in the United States, embryo transfers are not regulated by the government, but there are professional guidelines.

The Practice Committee of the Society for Assisted Reproductive Technology ("SART") and the Practice Committee of the American Society for Reproductive Medicine ("ASRM") produced a joint Guidelines on number of embryos transferred, which, for the 33-year-old Nadia Suleman, holds:

For patients under the age of 35 who have a more favorable prognosis, consideration should be given to transferring only a single embryo. All others in this age group should have no more than 2 embryos (cleavage-stage or blastocyst) transferred in the absence of extraordinary circumstances.

Ms. Suleman certainly had a “more favorable prognosis” considering that she had six prior children, all of them through IVF.

Which brings us to the medical malpractice: what on earth was their doctor doing?

Some have speculated that the octuplets simple couldn't have come from IVF, since it's so far outside the guidelines, but everything we know from Kaiser Permanente tells us that's exactly what happened. Perhaps most troubling:

According to [Suleman's mother's] account, when her daughter discovered that she was expecting multiple babies, doctors gave her the option of selectively reducing the number of embryos, but she declined.

"Discovered?" She didn't expect multiples from eight embryos?

It’s hard to overstate how foolish, reckless and irresponsible it is for any physician to transfer eight embryos in IVF, particularly to a young and healthy mother with a history of successful pregnancies. The Suleman octuplets have become celebrities precisely because of the rarity of their situation – which is not over by any means – since, in the past, every octuplet pregnancy in the United States has resulted either in miscarriages (frequently miscarriage of all the embryos) or the death of at least one of the neonates, possibly more.

The procedure itself was reckless; to have done it without the patient's informed consent was unconscionable.

Tomorrow we'll talk about the law.

To raise a couple points now, every jurisdiction I know of, following the seminal New York case Becker v. Schwartz, prohibits the claim for "wrongful life," based in part upon the idea that the law is simply incompetent to calculate the "damages" that arise as a result of being born or born with a disability as compared to never existing in the first place. Parker v. Chessin, mod. sub nom. Becker v. Schwartz, 46 N.Y.2d 401, 413 N.Y.S.2d 895, 386 N.E.2d 807 (1978).

But that's not really the issue here. In contrast to a "wrongful life" claim, where the person born claims they should not have been, the octuplets born here can claim that while they should have been born, one or more of the other octuplets should not have been, and that each was put in danger by the others. That may become important soon -- while the first week is over without any apparent birth injury, the first month and first two years, both important milestones, are not. If it turns out that any of the octuplets has, say, bronchopulmonary dysplasia or cerebral palsy, it can hardly be said that the damages of having BPD or CP due to placental insufficiency and being born premature are philosophically impossible to calculate.

And then we'll get to the mother's claims; can she, for example, recover the cost of raising seven additional children?

[Continued at Part 2, see also Can a Patient Consent to Medical Malpractice? (A Followup on the Octuplets)]

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After my post yesterday, "Differential Diagnosis, Defensive Medicine and Medical Malpractice: Coumadin Edition," the original physician responded on WhiteCoat's Call Room at length:

Max Kennerly is another lawyer that posted a response on his blog “Litigation & Trial.” He accused me of being afraid to use the “basic principle of clinical medicine known as differential diagnosis” - which he defines as “a process of elimination by which physicians reach a diagnosis by eliminating the most serious and unlikely diagnoses first before continuing their basic evaluation.”

What Mr. Kennerly is apparently suggesting is that, rather than use medical education and heuristics, physicians “shoot the moon” and order “million dollar workups” on every patient complaint. Forget that a runny nose and cough in a child are highly likely to be a viral upper respiratory infection. According to Mr. Kennerly, physicians have to “eliminat[e] the most serious and unlikely diagnoses first … before continuing their basic evaluation.” Because runny nose and cough could also be signs of serious and unlikely diagnoses like bronchopulmonary dysplasia, pandemic bird flu, and inhaled foreign bodies, Mr. Kennerly is apparently asserting that every child with a runny nose and a cough requires a NICU admission, full isolation precautions, viral cultures for H5N1 influenza virus, a call to the CDC (just to be sure), and bronchoscopy before physicians can breathe a sigh of relief and recommend nasal suction and honey (cold syrup is much too dangerous - just ask all the pediatricians). Did I miss anything in my “differential,” sir?

Mr. Kennerly then takes issue that I would consider discharging a woman with a mild head injury who developed a headache 5 days later and who was also taking coumadin. Bleeding in the brain must be ruled out “even after minor accidents,” according to an article he cited from the NIH. But Mr. Kennerly does not stick to his own script. Many “serious and unlikely diagnoses” can cause a headache. Using Mr. Kennerly’s logic, it is likely that “differential diagnosis” algorithm he proposes would require me to get an MRI and MRA to rule out vascular causes of headache and to perform a lumbar puncture to rule out pseudotumor cerebrii. While he may have some success getting a jury to believe that “his” is the way medicine should be practiced, it just isn’t so.

...

I removed the second half; I'll have to answer that later.

I responded in his comments section:

Thanks for the link! It’s great to get a dialogue going.

Just to be clear, I didn’t use the phrases “shoot the moon” or “million dollar workups,” but I did suggest that physicians should rule out severe and life-threatening conditions first.

I’m surprised you’d disagree. Truth is, you don’t. Think back to all of the examples you provided in your prior post — why did you order all those x-rays and CT scans? To avoid a lawsuit?

Nope — no physician has ever been held liable for not performing an x-ray or a CT scan. There’s no harm from simply not performing a test.

Physicians are liable for not ordering tests when they should have and when harm was caused by that failure. You ordered all those tests because, in your judgment, there was a reasonable chance that the ‘unlikely’ scenario was the actual diagnosis.

Let’s take the 60yo woman on coumadin with the head injury. You tried to dodge those initial facts by recasting it as “a headache” and then listing all the potential but unlikely causes.

Well, she didn’t have “a headache.” She was on coumadin, had a fall, and then had a headache serious enough to bring her to the hostpial, which is why you ordered a CT scan looking for brain bleeding, and not a lumbar puncture looking for pseudotumor cerebrii.

You applied your judgment, saw an unlikely by possible serious complication, and ruled it out. That wasn’t “defensive,” it was “appropriate” — if you didn’t think there was a reasonable chance of her having a brain bleed, then you’d have absolutely no reason to fear a lawsuit.

Moving on to your child with the runny nose and the cough, it’s hard to take your example seriously when you first propose the “child” go to a unit reserved for neonates. If a neonate has an obvious infection, that is a very serious issue that will be treated accordingly, likely with multiple antibiotics and multiple x-rays to repeatedly check pulmonary function.

If by “child” you mean the typical toddler going to a pediatrician, then, yes, I submit to you that if the pediatrician has reason to suspect something more serious than a typical cold then they should rule out that serious possibility. You gave no other facts than “every child with a runny nose and a cough.” I have kids. They’ve had runny noses and coughs. My pediatrician ordered no tests. That’s fine; it was a typical kid with a cold.

But let’s mix it up, the way it happens in real life: my child has had a severe cough for over a week now, has shown trace blood in her mouth, can’t sleep, and won’t eat.

Now what? Go home?

Or should you look for something more?

“Defensive medicine” doesn’t exist — the concept requires a doctor somehow see enough of a risk to fear litigation but not enough of a risk to warrant testing. What sense does that make? Either the doctor fears the serious outcome or they don’t.

But the ball is in your court — what would you have us do different? Set up a, say, 5% rule? As in, if something has a less than 5% likelihood, physicians as a matter of law need not look for it?

You tell me. I hold doctors to the standard of keeping people safe by making sure patients don’t have any serious or life-threatening complications that are reasonably foreseeable. You want something less than that.

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The magazine Emergency Physicians Monthly hosts a blog called WhiteCoat’s Call Room, which recently posted a complaint about “defensive medicine:”

Why was I ordering all of these things when my clinical judgment led me to believe that they would “probably” not lead to any changes in the patient’s management?

The answer is because in our culture, “probably” doesn’t cut the mustard any more. Clinical medical judgment has been supplanted by the demand that physicians disprove the improbable. Society has made it so that physicians are more concerned with proving that unlikely diagnoses with the possibility of a “bad outcome” don’t exist and with maintaining good Press Ganey scores. Many physicians are afraid to practice rational medicine based upon clinical judgment and physical examination skills. No one wants to face the liability.

The author is complaining about a basic principle of clinical medicine known as “differential diagnosis,” a process of elimination by which physicians reach a diagnosis by eliminating the most serious and unlikely diagnoses first before continuing their basic evaluation.

Using a “differential diagnosis” compels physicians to evaluate patients in a systematic, rational and logical fashion, free of any distractions or other biases that might cloud their judgment. One example is the well-known psychological effect of “confirmation bias,” through which people who hold a particular belief tend to review the available evidence in a way that confirms that belief.

The failure to diagnose -- the failure to use the differential diagnosis -- may be the most common form of medical malpractice.

The author lists a number of situations where they thought they were practicing “defensive medicine” instead of being “rational” (the bulk of which were x-rays that confirmed the absence of bone fractures), including this situation:

A patient in her 60s fell and hit her head 5 days ago. She was having a headache. I couldn’t find a mark on her and was inclined to send her home with pain medications. But she was on Coumadin which put her at risk of bleeding. So I did a CT scan of her head to “make sure” that she didn’t have a bleed. She didn’t.

I’ve lost count of the number of people I’ve seen killed because their physician or hospital ignored the dangers of Coumadin. Here's what the NIH says about Coumadin (PDF):

Because Coumadin reduces the ability of the body to form blood clots, a patient on Coumadin will bleed longer after an injury than a patient not on Coumadin. ...

Bleeding inside the brain, even after minor accidents, can also be deadly.

If a patient in her 60s on Coumadin falls and then has a headache of sufficient severity to bring her to the hospital, then warning bells should be going off.

The fact that this physician would not have ordered the appropriate test -- a CT scan -- but for fears of medical malpractice liability suggests to me we need more liability, not less, since the physician obviously didn't recognize the standard of care dictated that a brain bleed be ruled out before sending her home.

[UPDATE: WhiteCoat replied to me, so I replied to him.]

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From the Associated Press:

Pardo's downward slide ended Christmas Eve, when the 45-year-old electrical engineer donned a Santa suit and massacred nine people at his former in-laws' house in Covina, where a family Christmas party was under way. He then used a homemade device disguised as a present to spray racing fuel that quickly sent the home up in flames.

Pardo had planned to flee to Canada following the killing spree but suffered third-degree burns in the fire — which melted part of the Santa suit to him — and decided to kill himself instead, investigators said. His body, with a bullet wound to the head, was found at his brother's home about 40 miles away.

...

Pardo had a 9-year-old son, Matthew, by another former girlfriend, Elena Lucano. He had not seen the child for years, but apparently was claiming him as a dependent for tax purposes. Lucano told the Los Angeles Times that she didn't know Pardo was claiming their son as a dependent.

The boy was left severely brain damaged as a toddler when he fell into a backyard swimming pool on Jan. 6, 2001 while Pardo was alone with him at his former home in Woodland Hills, according to attorney Jeffrey Alvirez, who represented Lucano in the resulting court case.

Medical costs reached $340,000. Lucano sued Pardo to obtain money from his $100,000 homeowner's insurance policy and about $36,000 was put into a trust fund for the boy, who requires constant care. Pardo never contributed any more money to the boy's care.

"He never spent a dime on his son," Alvirez said.

A high school girlfriend described Pardo as, back then, having been "a very easygoing person, a very friendly guy." Now he's the Santa Gunman, after years of ignoring his own disabled child.

I often hear that personal injury plaintiffs want to "get lucky" with their accident, that the most important consideration is to ensure no one gets a "windfall." No doubt, there are plenty of people who want to find a reason to sue or to profit from a trivial infraction. I reject cases like that every day.

But let's be clear: no one who needs a trial lawyer is "lucky." Most of my catastrophic injury or wrongful death cases look like Matthew's. A child, a loved one, or an "easygoing, friendly" person was going about their ordinary life, doing something everyone else has done, when something went terribly wrong.

It wasn't too long ago that Matthew's case would be considered a hunt for a "windfall;" after all, they were suing over something his own father did. Law students will recall Arizona's Broadbent v. Broadbent case, 184 Ariz. 74, 907 P.2d 43 (1995), a favorite of textbooks, which involved similar circumstances and the doctrine of "parental immunity."

There are obviously far more causes of the tragedy here -- from mental illness, to a messy divorce, to losing his job -- than his son's accident. But I can't help but wonder what Bruce Pardo's life would have been like if his son had never been injured. I'm sure he wondered, too.

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Yesterday’s Wall Street Journal included an editorial by Dan Slater (who runs the WSJ Law Blog) called "The Debate Over Who Pays Fees When Litigants Mount Attacks," suggesting reconsideration of the “English Rule,” in which unsuccessful litigants are required to reimburse their opponent's legal fees and costs (a/k/a the “loser pays” system), as contrasted to the “American Rule,” in which each party bears their own legal expenses: 

Legal experts think a loser-pays system cuts down on frivolous suits. Those clearly hurt the U.S. The nation's tort system cost $245.7 billion in 2003, amounting to about 2.2% of total gross domestic product, according to a report from professional services firm Towers Perrin. The percentage of GDP spent on litigation was at least twice those in the U.K. and Germany.

At the same time, say experts, the insurance helps mitigate the pitfalls of a loser-pays system. "Insurance does move in to fill the gap for those suits that might not otherwise be brought in a loser-pays system," says Paul Lomas, a London-based litigator at Freshfields Bruckhaus Deringer.

Initially, a few factual corrections are in order.

First, the Towers Perrin study claiming that litigation costs amount to 2.2% of total gross domestic product has been roundly criticized as being baseless and inflated. For example, the study unfairly lumps together actual litigation costs, like attorneys fees, with the routine functioning of our torts and insurance system. As the Wall Street Journal itself noted over two years ago,

But here's the problem: critics of past years' studies -- and there are many -- say the number and the projections that come with it are deeply flawed. For instance, they include payments that don't involve the legal system at all. Say somebody smashes his car into the back of your new SUV and his insurance company sends you a $5,000 check to fix the damage. That gets counted as a tort cost in Tillinghast's number. Critics say it's just a transfer payment from somebody who wasn't driving carefully to somebody who has been legitimately wronged. How is that evidence of a system run amok?

"It's just so inflated," J. Robert Hunter, the director of insurance for the Consumer Federation of America and a former Texas insurance commissioner, says of the Tillinghast figure. Critics also argue that other insurance-industry costs that aren't the fault of a burdensome tort system -- such as the salaries of insurance-industry CEOs -- show up in its calculations.

"Math Divides Critics As Startling Toll of Torts Is Added Up," By LIAM PLEVEN, March 13, 2006; Page A2.

Second, plaintiff’s lawyers are in no sense “accustomed to being the exclusive financier of litigation.” The primary "financier" of litigation in America is the insurance industry, turning its good hands into boxing gloves when injured parties seek more than nominal compensation. Even in the context Slater is thinking about – the plaintiff's side of personal injury tort suits – there are hundreds of companies willing to loan money to plaintiff’s firms and/or plaintiffs for a piece of the eventual recovery. Ordinary business banks also loan to firms after performing the same due diligence they would with an company.

All of these companies, however, have the same restriction that would have to be imposed in a loser pays insurance system: the financier has absolutely no say as to whether the case will be settled or not. Such limitation is appropriate to ensure uncompromised decision-making and is analogous to similar barriers on the defense side, in which the defendant, with limited exceptions, retains control over whether to settle and where the defense lawyer nominally represents only the defendant and not the insurance carrier as well, so as not to divide the lawyer's loyalties and prejudice the defendant.

Third, most states already recognize a form of “loser pays” in the claim for wrongful use of civil proceedings, which permits the victims of frivolous lawsuits to recover damages caused by such frivolous lawsuits. It has bite here in Pennsylvania -- the "Dragonetti Act" has resulted in multi-million-dollar outcomes.

There's also, of course, the "loser pays" already at the heart of contingent fee cases: if I lose a case, I get nothing. No reimbursement for my time. No reimbursement for my expenses. Nothing. A total loss.

Which brings me to my primary objection to the loser pays system. I would not object to receiving a guaranteed income like my brethren of the defense bar instead of bearing the risk that years of effort and tens of thousands – potentially hundreds of thousands – of dollars will be spent in vain, but I would object, on grounds of fairness, to penalizing a party that brought a valid claim merely because they did not meet their burden of proof.

Consider a typical medical malpractice case. Most of the facts are uncontested. The dispute centers on whether the physician-defendant breached the standard of care, whether such breach caused any harm, and what damages resulted.

In all states of which I am aware, the first two elements require expert medical testimony. To even start a lawsuit here in Pennsylvania, I need a certificate of merit from a qualified physician establishing those two elements. To prevail at trial, obviously, I need in-court credible testimony from a qualified physician establishing those elements to a reasonable degree of medical certainty.

No expert testimony, no claim. Period. That is to say, by law the first two elements are matters entirely outside the understanding of any plaintiff except for physicians who happen to be victims of malpractice in the specialty they currently practice or teach.

If, in good faith, my client and I believed our qualified expert's opinion on matters the law says are beyond our understanding, why should we be punished if a jury accepts the defendant’s version instead of our's?

Deterrence? Of what? Claims a qualified expert physician thought were valid? Should I be deterred merely because the defense found someone to say otherwise? In medical malpractice, there's always some doctor somewhere willing to say that my client coincidentally suffered a heart attack or stroke or spontaneous decapitation regardless of the record or the probabilities.

Why would we want to deter valid claims? Isn't the point of a civil justice system to offer people the opportunity to present their claims in fair and open court?

I'm wary, too, of considering the lower litigation costs in Europe as a positive sign of judicial health (if, indeed, they are lower, given the inflated numbers of the US study). Many European countries routinely apply legal doctrines we consider abhorrent in the United States, such as the onerous standards applied to publishers in libel cases in the United Kingdom, standards incompatible with First Amendment principles of free speech.

When all is said and done, the effective result of loser pays, whether insured or not, is to change the civil system from one in which a plaintiff must convince a jury of the rightness of their cause with the preponderance of the evidence to one in which a potential client must convince a lawyer and/or insurance company of the rightness of their cause beyond a reasonable doubt. The client must convince the lawyer/insurer not only that their case is worth their damages, but that their case is worth well beyond their damages, to mitigate the direct loss the lawyer or insurer will incur if they lose.

The practical effect, then, would be to intimidate plaintiffs' lawyers like me into rejecting the vast majority of legitimate cases because, even though I may feel they have a strong likelihood of prevailing, I simply can't afford to test my luck with anything other than the handful of cases I'm sure will win.

UPDATE: Dan Slater got plenty of email, as he relates on the WSJ Law Blog.

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Ronald V. Miller, Jr., at the Maryland Injury Lawyer Blog, on the ball as always:

David Davis, a Massachusetts based jury consultant, offers five thoughts in The Jury Expert on the psychology of how jurors process requests for damage awards that I think is of interest to accident and malpractice lawyers.

I found of particular interest his theory that consumers – and by implication jurors – have a propensity to judge precise amounts of money to be lower in magnitude than similar round prices. The reason is that we tend to use precise numbers for small amounts and round numbers for larger amounts. The example Dr. Davis provides is that a precise number like $325,425 is seen as lower that $325,000 even though obviously the former number is a higher amount.

The implication for personal injury lawyers is obvious: make a request for damages that is a specific amount and back up that amount with some logical foundation. ...

This advice corresponds with the general principle of negotiation that you should start with the highest number that you can reasonably and fairly demand. Of course, when you define "reasonable" and "fair" in such situations, you do so in a way most beneficial to you and your client — the core point is to have a rational basis for your numbers, a basis others will at least consider and not reject out of hand.

There are very few situations in which $500,000 is the "rational" number, even in the context of pain and suffering, which obviously does not have a specific dollar amount. Even if the jury, at the end of the day, will likely compromise on some round number, their decision will be much easier to make if they can build a number from rational, reasonable and fair components.

Those components include, as Ronald Miller writes, per diem amounts. I am fond of including interest and attorneys fees and the like.

Of course, the Maryland injury lawyer is in a completely different situation from me, a Pennsylvania injury lawyer, as Pennsylvania does not allow lawyers to suggest exact numbers to the jury. They can, however, present evidence that includes exact numbers, such as expert analyses of lost wages and fringe benefits, and medical bills. Further, you can of course use whatever numbers you want into settlement demands; there's no reason to keep your persuasive tools on lockdown until trial.

Keep that in mind the next time you write $X,000,000 or $X00,000 as your demand.

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Over at PhilaLawyer, an anonymous (and largely humor-focused) part of the Rudius blog network, there are four ideas for "Shyster-Proofing the Courts:"

1. Immediate Mandatory Mediation
2. Allow Expert Witnesses to be Deposed
3. Give Frivolous Litigation Claims Teeth and Allow Expert Witnesses to Be Sued in Such Claims
4. Eliminate Referral Fees

First, let's keep something important in mind: the bulk of civil cases involve automobile accidents. So in some sense we're really missing the boat unless we're talking about that specifically. That said, I doubt any of these would make a difference.

1. Immediate Mandatory Mediation

Because I work on a contingent fee, I would like nothing better than to settle cases as quickly as possible.. Settlement puts money in my pocket, does not require my own money put out on the street for costs and fees, and puts my client back on their feet, a particular concern in personal injury and medical malpractice cases. So don't think I am ever the one driving the litigation.

Problem is, even a hypothetically perfect insurance company that promptly and fairly evaluates every claim, sets an appropriate reserve, and begins negotiation has multiple incentives not to settle early. The insurance company makes a return on every single penny in their reserves, a return that evaporates the moment they tender a check to me. The insurance company also typically starts blind on damages; they know a lot about their insured's liability, but very little about my client's medical expenses, lost wages, and the impact the injury has had on their life, and for obvious reasons the insurance company is not going to take my word for any of them. Finally, the insurance does not know how highly I really value the case. The only way they believe they can estimate my bottomline is by pushing back against me and seeing how I respond. Even at a firm with a strong reputation for taking cases to trial and for rejecting weaker (even though meritorious) cases, there is still a belief among insurers and defense counsel that some of the cases are "nuisance value" cases taken to maintain cash flow, with little expectation of a substantial settlement or verdict.

In the real world, the above analysis does not even happen at the insurance company until the case is ready for trial. The insurance adjuster, who, as a cog in a bureacracy, has the primary goal of demonstrating their usefulness to the bureaucracy by creating an extensive paper trail, frequently does not even bother to set a reserve for the case until trial schedules have been finalized. Similarly, the defense attorney, who gets paid by the 10th of the hour they spend defending the case, has little incentive to encourage a swift resolution of the case, thereby extinguishing a source of income and appearing feckless in the face of controversy.

Thus, by and large early mandatory mediation conferences will function as a subsidy for defense lawyers — by giving them something else to bill for — and a tax on plaintiff's lawyers — by taking them away from their other contingent fee cases. At the conference, the defense attorney will have authority only for a nuisance value while the plaintiff's attorney (who will be a junior associate, if the firm has them) will have authority only for the highest number the plaintiff's attorney can reasonably demand. If there is some external force which could drive early settlement, that force will do so regardless of court intervention.

2. Allow Expert Witnesses to be Deposed

That's already the case in the federal system. While it probably does reduce the need for trial because it puts almost everything on the table, it won't do anything to cut back on litigation. The point about having experts who write bogus opinions expecting a case will never go to trial is well taken, but that's already factored into our current system — if one of the sides thinks the expert will pull out the event at trial, they'll just push the case straight to trial, extracting a favorable settlement while teaching the other side a lesson. Adding a deposition, which would naturally have to occur after discovery (as it does in the federal system), won't really change that dynamic, it just slightly advances the time when the expert pulls out. There might be some savings to that, since it obviates the need for full trial preparation, but those savings would be minimal.

I don't think expert witness depositions are a bad idea, I just don't think they will result in any significant savings. Moreover, in cases worth less than, say, $100,000, expert witness depositions could have the perverse effect of making settlement less likely, because they hike up the costs of bringing the case to trial, thereby requiring the plaintiff and their attorney to raise the demand accordingly to protect the amount they get in the end, which in turn makes it less likely the insurer will meet the demand.

3. Give Frivolous Litigation Claims Teeth and Allow Expert Witnesses to Be Sued in Such Claims

Frivolous lawsuits are already actionable in most states, and are frequently acted upon right here in Philadelphia County. In Pennsylvania, there is specific statutory authorization for them under the so-called Dragonetti Act, named after the first attorney to get really walloped under it. The elements of such a wrongful use of civil proceedings suit seem reasonable to me:

§ 8351.  Wrongful use of civil proceedings

(a) ELEMENTS OF ACTION.-- A person who takes part in the procurement, initiation or continuation of civil proceedings against another is subject to liability to the other for wrongful use of civil proceedings:
 
   (1) He acts in a grossly negligent manner or without probable cause and
   primarily for a purpose other than that of securing the proper
   discovery, joinder of parties or adjudication of the claim in which the
   proceedings are based; and
 
   (2) The proceedings have terminated in favor of the person against whom
   they are brought.

...

§ 8352.  Existence of probable cause

A person who takes part in the procurement, initiation or continuation of civil proceedings against another has probable cause for doing so if he reasonably believes in the existence of the facts upon which the claim is based, and either:
 
   (1) Reasonably believes that under those facts the claim may be valid
   under the existing or developing law;
 
   (2) Believes to this effect in reliance upon the advice of counsel,
   sought in good faith and given after full disclosure of all relevant
   facts within his knowledge and information; or
 
   (3) Believes as an attorney of record, in good faith that his
   procurement, initiation or continuation of a civil cause is not
   intended to merely harass or maliciously injure the opposite party.

42 Pa.C.S. § 8351 et seq.
 

If there is a way to improve these elements, I would love to hear it. I personally can't think of any way of strengthening it without making it, at best, confusing and, at worst, a violation of the rights of due process and access to the courts.

As for moving against experts, there is always perjury. Beyond that, it's hard to imagine a worse idea than intimidating witnesses not to say what they really think. The point about this honest experts is, again, well taken, and I have tangled with my fair share of them, but such annoyances must be balanced against minor concerns like truth, justice and fairness. The best you can do now to retaliate against a lying expert is to report them to whatever professional organization of which they are a member, which hopefully have a deterrent effect against future offenders. I am loath to really encourage that idea, though, because by and large professional associations have a serious pro-defense bias, the natural result of a (perhaps understandable) desire to protect and shield their members from liability.

4. Eliminate Referral Fees

I have no idea how that would help anything. Plaintiffs lawyers bill on a contingent fee; if the case is meritless, they're a waste of time and money to pursue. Indeed, referral fees in my opinion actually reduce the number of cases filed, because they cut into the fee earned by the attorney actually pursuing the matter, thus requiring the case be stronger and have larger damages than if the case been brought in directly. Moreover, if there really is a problem of "recidivist professional plaintiffs," what good would it do to eliminate referral fees? They'll simply go to the same attorneys over and over or they'll find attorneys on their own — they're among the few people who really can find the right attorney for them on their own.

More importantly, referral fees serve a critical purpose in the civil justice system, introducing economic efficiency to an ordinarily inefficient process: the selection of a personal injury attorney by a nonlawyer. Corporate lawyers and clients don't need anything like a referral system because, as part of their paying jobs, they interact with all kinds of attorneys and generally have connections that can set them up with the right person for the job.

Your typical Wal-Mart or Wawa cashier hasn't the faintest clue about what to do when they get paralyzed by a drunk truck driver or when their spouse's brain gets blown out by an overdose of Heparin. Most lawyers don't even know to whom they'd turn in the event of a catastrophic injury. The referral system creates an incentive for the initial attorneys not just to half-assedly send a case away, but to diligently choose an appropriate attorney who can get the best result for the client.

Finally, and to me this is the most important function of the referral system, referral fees — specifically large referral fees — encourage attorneys who are not really qualified to handle large matters to refer those matters out to attorneys who are qualified. I cannot tell you the number of times I have been referred a case either because "it's just too big for me" or because "after I filed suit, the defense attorneys went nuclear on me." That is a good thing; attorneys should have no hesitation to radio SOS when the waters get rough. Eliminating referral fees gives them an incentive to hold on to these cases and "do their best," which is frequently not in the client's best interest.

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The "Truck Injury Lawyer Blog" points us to a new development in the world of trucking accidents:

In his recent article, Premiums Fall 10% to 50% As New Firms Enter Market, Frederick Kiel describes the effect that the drop in premiums has on the trucking companies, as these new insurance companies are offering across the board rates to trucking companies in an effort to compete for their business. ...

These new insurance companies are offering low premiums in an effort to gain new business, a trend that has been seen intermittently since the 1980s. Perhaps now is the time to look at the minimum insurance required to be carried by tractor trailer companies. Congress set the minimum rates back in 1984 at $750,000 for some companies with most being required to carry $1,000,000. Inflation and time have eroded the value of the coverage. Medical bills and the costs associated with catastrophic injuries have risen dramatically. Today, in a catastrophic case, the minimum limits are paid and quickly spent. The injured are then left for the taxpayer to pay for through medicaid or some other assistance program.

$1 million frequently will not cover the damages in a catastrophic personal injury case, particularly not where there will be extensive continuing medical treatment. $1 million also frequently does not cover wrongful death damages, and it usually will not cover an accident where multiple people have catastrophic injuries.

although the article does not address it, an important point to keep in mind here is how much safer trucking these days should be given the depth and breadth real-time monitoring available to trucking companies. Traffic, weather, and driver alertness -- down to excruciatingly minor details -- are all readily apparent in real-time to fleet managers, thereby eliminating the bulk of the systematic risks faced by truckers that cause major motor vehicle accidents.

If trucking companies used this technology appropriately -- rather than using it solely to run their drivers right up to (and frequently beyond) the Federal Motor Carrier Safety Regulation limits -- and purchased adequate insurance, including insurance with coverage for each plaintiff, rather than the accident as a whole, the costs and financial risk of trucking would be dramatically reduced.

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If you haven't been following, Victoria Pynchon at the Settle It Now Negotiation Blog and I have been having a running discussion about The Settlement Unicorn, which I originally defined as follows:

I've heard of a mythical beast, which I'll call The Unicorn Settlement, where two hostile parties on the verge of a lawsuit get lawyers, almost file suit, and then, through deft representation, settle their differences peacefully and move on.

Let me exclude from The Unicorn a particular class of dispute, where two businesses with an ongoing relationship have a big dispute. I exclude that because, while I've seen many such disputes resolved pre-litigation, it has always been in the context of an ongoing relationship the value of which exceeds the value of the dispute. So I don't call that a "settlement of a case," I call it a "continuation of a business relationship."

Victoria most recently gave an example in a medical malpractice case, which caused me to move the goal posts:

Thus, when the parties agreed to mediate, there was likely $40-60,000 "on the table," which could either be used to help settle the case or could be thrown away on experts. As noted above, that sum alone -- putting aside attorneys' fees and all the other costs and issues -- likely represented between one quarter and one half of the eventual settlement value, and the lawyers, whom I am guessing were experienced in medical malpractice, both deserve credit for recognizing this economic waste.

But that's why I just can't verify this as an actual sighting of the mighty unicorn. To me, it's analytically similar to my initial example of two businesses who resolve their dispute not because they really reach an agreement, but because the cost of the dispute is less than the value of their continuing relationship. The equation above doesn't work in a wrongful death or birth injury case. It frequently doesn't apply in cases worth more than $250,000 and virtually never applies to cases worth more than $500,000.

So Victoria commented:

On to the main point, isn't there ALWAYS some "external" factor that brings litigating parties to the table?

Which external factors do you want to rule out for our poor unicorn?

I deftly didn't answer for several days [sorry, Vickie]. Let me clarify: my biggest issue with her example was my suspicion that the final settlement didn't substantially exceed the cost of continued litigation. As such, it doesn't really look like a genuine desire to settle, it looks like a cost-avoidance measure with a little bit of personal understanding (the scar) involved.

That's all well and good, and covers a lot of cases, but it's not what I'm looking for and what I think needs more consideration. What I'm looking for is a settlement reached, for substantial money, because the lawyers sat down, considered the case, and came to an agreement on its value.

The frustratingly inefficient process that nags at me is this: after my investigation of a case, I have a good idea of three different numbers:

1. the highest reasonable verdict value of the case;
2. the likely settlement / verdict value;
3. the lowest reasonable successful resolution.

Unspoken there is #4, a defense verdict / abandoning the case, which I guess you could say is a consideration, except that, given how I'm largely in the business of contingent fee cases, I'm not in the business of taking cases I think can't win. It's always a concern, but not for settlement: if I settle a case, I settle it at a "win" amount. Otherwise I go for #1 and don't look back.

Here's the frustrating part. Every insurer is different, as is every defense attorney, and certainly every defendant, and there are disincentives for all of them (respectively bureaucratic, financial, and emotional disincentives) not to settle early. And even though I've done defense work, I know I just don't get how this adjuster works, how this case is evaluated, how my client is lying, blah, blah blah.

But at some point the adjuster, lawyer and/or client will start throwing numbers around in their head. At least along the lawyers, the #2 numbers usually aren't that far apart, and will be within half (plus or minus) of what a judge / mediator would put on it for settlement purposes.

Time after time, I litigate a case for months / years, for which I've known #2, and after all that time and money, no one knows any more than when they started. Some defense lawyers will, after the close of discovery, start talking settlement. Others refuse to discuss until jury selection.

Now, in some circumstances, such litigation is inevitable. Take a birth injury (hypoxia) / medical malpractice case. The potential damages are enormous, and heavily dependent upon developmental / life care / economic assumptions. There's always a thrombophilia defense, there's always some Chair-of-Whatever who can describe how a fetal strip says the opposite of what it actually does. So we'll need to litigate, depose the doctors, find the experts, wave to the insurance surveillance, and get the whole thing ready for trial before appropriate numbers are offered.

On others, it's just plain silly. Here's a hypothetical: industrial product failed, 54yo male client spent 16 days in the hospital, lost $80,000 in wages while recovering in physical therapy for months, now earns $15,000 less per year at a crummier job, has a recurring severe pain in legs, and can't engage in normal physical recreation anymore. He'll need continuing care plus a couple surgeries.

There are thousands of cases like that every year, more than enough to get a contemporary sense of "what they're worth."

Months of discovery will create dozens of copies of his medical records, find out he had three workplace safety violations in the past 15 years (none related to the machine), and reveal the company has had two other incidents with this same product, but no smoking guns.

Just before trial, we're exactly where we started, except the insurance company is poorer $50,000-$150,000 in legal fees and experts, I've put out $20,000-50,000 in costs and experts, and my client has gone more than a year since filing suit living off loans from family to pay off the massive credit card debt and home equity loans they took on immediately after the accident.

Why did we mess around all that time? The defense lawyers would have known proving liability wouldn't be that hard for me, and that neither me nor my firm ever shows up to trial unprepared. All of their discovery was, at best, a half-hearted fishing expedition. The bulk of what they did was force me to "prove" things that should have been beyond any genuine dispute. Why couldn't we get this done sooner?

Victoria, do you have any examples of two parties sitting down, before largely completing litigation, and wrapping up a case for substantially more than nuisance / cost of suit? If so, what brought them to the table?

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Cal Biz Lit details a great example of bungling the evidence at trial on an entirely undisputed point, to the tune of $57,394.24:

Under Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 and Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298, when a plaintiff has medical insurance, damages are limited to the amount actually paid or incurred, not the greater amount billed by the medical provider.  It is an article of faith among defense lawyers that if a plaintiff wins a personal injury case at trial, his or her medical specials will be the amount paid by the insurer, not the amount billed by the provider.

...

After the trial [of Olsen v. Reid, which established medical billing of $62,475], the defendant filed a motion to reduce the jury's verdict so that it would reflect amounts actually paid for medical treatment, rather than amounts billed.  Here is how the Court of Appeal described the evidence in support of the motion:

In support of the motion, Reid submitted a 22-page bill from Anaheim Memorial Medical Center (AMMC). Page 20 of that bill includes the following line item: “ADJ – MHIPA CAP ADJ” and in the amountcolumn, “46,270.05-.” The next line item reads: “ADJ – MHIPA CAP W/O” and “8,024.15-.” The “Total payments & adjustments” is listed as “55,094.20-.” The page also includes handwritten notes from an unclear source.

Based on this, the trial court reduced the judgment by $57,394.24, and the plaintiff appealed.  The Court of Appeal reversed, based on the insufficiency of defendant's evidence to support the reduction.  "The cryptic notations the court relied upon may reflect payments, or write-downs or write-offs; we cannot know, and if any evidence revealed the actual facts, they are not present in the record."  Furthermore, according to the Court's footnote:  "We entirely discount the handwritten notes on the bill. Their provenance is unknown. The notes, therefore, are without foundation and simply have no evidentiary value."

And thus the full bill was charged to the defendant, despite undisputed law to the contrary. I wonder who had the pleasure of explaining that to the insurance carrier.

There are plenty of ways to avoid this problem. Stipulations, requests for admission and, of course, actually putting the evidence on at trial.

Sometimes things get just a little too comfortable at trial, particularly with regard to issues you've handled over and over again. Do whatever it takes to look at every case with fresh eyes, even if it means duplicating the same work over and over again. Don't cite the Brontosaurus!

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The Nevada Accident & Injury Law Blog describes how a Nevada Jury Awards Las Vegas Man $60 Million:

A federal jury in Nevada last week awarded $60 million to a Las Vegas man who alleged Paul Revere Life Insurance Co. and the Unum Group denied in bad faith his claim for disability benefits.

This is one of those “be careful what you wish for” cases. In a previous trial, a jury awarded Plaintiff $11.6 million but it was overturned on appeal. So the case was tried again and the second jury awards five times what the first jury awarded.

I see that a lot, particularly in tort cases with verdicts over $1 million, and I don't think it's a coincidence.

At a tort (negligence, malpractice, breach of fiduciary duty, wrongful death, etc.) trial, the defendant usually holds most of the cards. They generally know which stones you overturned on discovery and which ones you did not, and they know which evidence that you have his most embarrassing and which evidence you do not have is most absolving.

More importantly, they were there. They really know what they did and did not do, and what they were thinking when they did it, and they certainly know what they intend to say.

It does not matter how many depositions you took -- you could have had people testifying for days -- and how much written discovery you collected, trial will still be full of surprises. Even if no new facts are revealed, you will see facts presented in a new light, often at odds with the light they were presented in pleadings and during discovery. (And you will have to quickly react to this new version of the truth: don't even try to argue to the jury that a fact was "presented in a different light during discovery.")

Trial makes the defendant show their cards, clearing away their natural advantage in a tort suit. You will see the strongest defense arguments and the most favorable defense evidence. More importantly, while you can always run a mock jury and see how neutral non-lawyers react to your evidence, you will never get a chance, pre-trial, to practice cross examining a defendant to see what evidence makes them squirm, babble, or obviously lie. A deposition will give you hints, but it will never show you what will really make a defendant fold or what they'll do when the chips are down.

My view is that these big cases aren't 50-50 or longshots, they're slam dunks if you have all the evidence, know where the defendant wants to go, and know where the defendant doesn't want to go. That's how a "big" verdict becomes a "blockbuster" verdict the second time around.

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From the Exxon v. Baker decision, which, under federal maritime law (foreshadowing future rulings on state civil law), cut a $2.5 billion punitive damages award down to $500 million, for a 1:1 ratio with compensatory damages:

The common sense of justice would surely bar penalties that reasonable people would think excessive for the harm caused in the circumstances.

Obviously. That's why we have juries, trial judges, appeal judges, and state supreme court judges to determine and review punitive damage awards. A jury, of course, is in far better position than an appeal judge years later to assess the real circumstances, being how they actually sit in the presence of the witnesses and, after swearing an oath, fairly consider all the evidence.

But the above quote is just a throwaway line, unconnected to any reasoning or holding. The Supreme Court actually held:

The real problem, it seems, is the stark unpredictability of punitive awards. Courts of law are concerned with fairness as consistency, and evidence that the median ratio of punitive to compensatory awards falls within a reasonable zone, or that punitive awards are infrequent, fails to tell us whether the spread between high and low individual awards is acceptable. The available data suggest it is not. A recent comprehensive study of punitive damages awarded by juries in state civil trials found a median ratio of punitive to compensatory awards of just 0.62:1, but a mean ratio of 2.90:1 and a standard deviation of 13.81.

Even to those of us unsophisticated in statistics, the thrust of these figures is clear: the spread is great, and the outlier cases subject defendants to punitive damages that dwarf the corresponding compensatories.

I have a proposal: would all persons who, in the future, are going to engage in intentional, wanton, willful, or reckless conduct, agree now to do so in a predictable fashion?

Seems to me the "real problem" is that life is complicated and -- shockingly -- unpredictable. It's no surprise that different defendants, in different cases with different facts, will be punished differently. It's also no surprise that a jury will find a given number sufficient to deter wrongdoing in one circumstance is insufficient to deter wrongdoing in another circumstance.

Confining and directing the method by which punitive damages are determined is appropriate; no one should be railroaded to punishment, or punished for conduct or harm unproven in court.

Arbitrarily asserting that punishment is not permitted to be as variable as the underlying conduct that was punished, however, is unconscionable.

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If you're looking for contact information, please go to my Contact page.

The Beasley Firm's main website also profiles our Areas of Expertise.

The Beasley Firm typically represents plaintiffs in civil litigation and trials in Pennsylvania, New Jersey, Delaware and, on occasion, Washington, DC, and New York City. We take difficult plaintiffs' cases and see them all the way through investigation, filing, pleadings, discovery and trial, and through appeal and re-trial, too.

The Beasley Firm is a full-service civil litigation and trial law firm with a forty-year history of excellence. Our reputation as trial lawyers is unparalleled, with multiple record-setting verdicts, and the record (held by the founder) for million-dollar verdicts by a single attorney. Slade McLaughlin and I set a new verdict record -- for punitive damages in a Pennsylvania medical malpractice case -- in May of 2008.

The Beasley Firm is unique in that it has many attorneys who specialize in particular areas like automobile accidents or medical malpractice, multiple appellate attorneys, and many general practitioners who focus on cases that don't fit the normal pattern, all under one roof that retains the nimble energy of a boutique firm where everyone knows each other and bounces ideas off one another. We adapt as the case demands; if a case needs a dozen attorneys and assistants, it gets them.

Most firms put up lists of the types of cases they work on; it's hard to do that for us. In the past year we've worked on automobile accidents, aviation accidents, breach of contract breach of fiduciary duty, business torts, civil rights, commercial litigation, copyright infringement, defamation, dram shop, employment discrimination, fraud, insurance coverage / bad faith denials, medical malpractice, private equity / shareholder disputes, personal injury, product liability, wrongful death, and wrongful use of civil proceedings / abuse of process cases.

We use alternative dispute resolution methods like mediation frequently and have experience in commercial arbitration, including large, complex commercial disputes.

My practice is largely unlimited -- at any given time, I generally have multiple cases representing people who have been physically injured in accidents or through medical malpractice, and multiple cases representing people and businesses who have been financially injured through breaches of contract, breaches of fiduciary duty, or downright fraud.

If you think you have a case, please contact our offices for a case review. We don't charge to review cases and we generally represent plaintiffs on a contingent fee, where our fee depends upon our success. Please see the Contact page for contact info.

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