For years, I’ve written about the prevailing myths about medical malpractice law, from the falsehoods about defensive medicine to the extraordinary economic damage caused by malpractice itself. Contrary to what the insurance companies and hospital lobbying groups keep saying, “defensive medicine” is simply a myth (if a given test didn’t make a patient substantially safer, doctors wouldn’t gain anything by doing it). The damage caused by malpractice — even when measured in purely economic terms, ignoring the non-economic harms and losses — dwarfs the cost of the malpractice legal system, including all the lawyers and all the settlements and verdicts.

 

Recently, the new statistics for medical malpractice filings and jury trials in 2012 were released, and those numbers revealed a couple of important points.

 

First, the odds at trial are heavily stacked against patients. In 2012, 133 malpractice cases went to a jury trial, and 79.7 percent of them resulted in defense verdicts. I suppose there could be valid reasons why 4 out of every 5 jury verdicts go in favor of the doctor or hospital — maybe the strongest cases are all being settled before trial, leaving only the weakest cases behind — but it’s hard to say that with a straight face when those figures mean that malpractice defendants have better odds winning in a courtroom than the odds a casino has winning its own games.

 

It’s hard to deny that plaintiffs are losing trials left and right thanks to years of relentless tort reform propaganda designed to mislead jurors about the nature of malpractice and its effects. It sure seems like some counties have particular problems; consider this paragraph from a recent Legal Intelligencer article: Continue Reading The Reality of Pennsylvania Medical Malpractice

 

Philly is still reeling from the horrific Center City building collapse last week. Every conversation I’ve had included both shock over the poor oversight of high-risk work like demolition and the conclusion that, surely, the City will be sued and will pay something towards the victims. Most everyone, including other lawyers who don’t do catastrophic injury work, are shocked to hear that it is unlikely that the City will be liable.

 

The primary cause of disaster is obvious: the work crew performed appallingly amateurish work. Taking down a building literally joined to other buildings isn’t rocket science, but it still requires structural engineering work. First, per OSHA, “an engineering survey shall be made, by a competent person, of the structure to determine the condition of the framing, floors, and walls, and possibility of unplanned collapse of any portion of the structure,” and then steps need to be taken to avoid such “unplanned collapses,” such as by braces, or shoring, or helical piers, or all three, and then, in all likelihood, the structure needs to be taken down manually.

 

What you don’t do is what property owner Richard C. Basciano apparently did: pay some bankrupt company $10,000 to rip the thing down with sledgehammers and an excavator, and then get it “expedited” by an architect who never bothers to review the demolition plan. The general rule is that “a landowner who engages an independent contractor is not responsible for the acts or omissions of such independent contractor or his employees,” Beil v. Telesis Const., Inc., 11 A.3d 456 (Pa. 2011), which would seem to absolve Basciano, but that rule is subject to a number of exceptions, like the “dangerous condition,” “retained control,” and “peculiar risk” exceptions. For a discussion of all three, see Farabaugh v. Pennsylvania Turnpike Com’n, 911 A.2d 1264 (Pa. 2006). It is in general hard to pin liability on a property owner, but this situation looks nothing like your typical by-the-book demolition. Continue Reading Can The City Of Philadelphia Be Sued Over The Center City Building Collapse?

Hardly a week goes by without an insurance company, a big corporation, or one of their lobbying groups complaining about “the cost of litigation,” usually prefacing the word “cost” with hyperbolic adjectives like “soaring” or “exploding,” with the implication that, somehow, injured plaintiffs or their lawyers are to blame. Yet, whenever we see an actual example of a party engaging in absurd tactics to make litigation more costly and difficult, it always turns out that the defendant or their insurance company is to blame.  Although trial is typically the most expensive part of any case, the vast majority of cases settle, and so discovery is typically the most expensive part of most cases. (Earlier this week I turned in the updates for the Third Edition of our Pennsylvania Civil Discovery book, so discovery is on my mind.)

 

The railroad company Norfolk Southern, for example, spent over $250,000 last year funding non-railroad anti-consumer lobbying groups like the U.S. Chamber of Commerce, Business Roundtable, and National Association of Manufacturers, all of which have spent ample time decrying the costs of litigation and blaming trial lawyers for it.

 

Pannunzio v. Norfolk Southern, reported on by The Legal Intelligencer earlier this week, involves a train hitting a delivery van that was on the tracks. The driver sued the train company, alleging the train was going too fast, that the train didn’t sound a horn as it approached the crossing, and that the tracks were improperly designed, making it hard to see oncoming trains. The plaintiff’s claim as a whole is by no means simple –— they’re going to have to spend tens of thousands of dollars, maybe more, on experts testifying about how a railroad crossing should be designed — but the basic facts of the lawsuit are obviously quite simple, such as how fast the train was going and whether it sounded a horn or not.

 

Wouldn’t it be nice if there was, say, a camera on the train recording all that?  Continue Reading Toot! Toot! All Aboard the Baloney Train!

Via Overlawyered and TortsProf, I saw that a new law review article came out last week in the Vanderbilt Law Review, “Products Liability and Economic Activity: An Empirical Analysis of Tort Reform’s Impact on Businesses, Employment, and Production” by Joanna Shepherd. As a products-liability lawyer (and an armchair economist), I was excited, so I printed out a copy, sat down with my highlighter, and, unfortunately, didn’t even make it past the third page without gnashing my teeth in frustration:

 

Specifically, we know surprisingly little about whether products liability law suppresses economic activity, and which, if any, reforms might improve economic conditions.4

This Article provides empirical evidence that addresses this argument. This issue is particularly salient because economic conditions are worse than they have been in decades, yet the cost of the products liability system continues to grow. Consequently, probusiness groups have intensified their demands for tort reform, maintaining that reforms are essential to improving the economy. Hence, it is imperative for lawmakers to know which reforms can help mend current economic conditions. Moreover, the tort system costs American businesses over $150 billion annually.5

4. AM. TORT REFORM ASS’N, supra note 2.

5. TOWERS WATSON, 2010 UPDATE ON U.S. TORT COST TRENDS 7 (2010)

 

There are two big empirical problems right out of the gate.

 

First, the Towers Watson report — Shepherd’s sole citation for the assertion that “the tort system costs American businesses over $150 billion annually” — has been repeatedly discredited for inflating its numbers and for relying on secret proprietary data, instead of the industry standard A.M. Best data. Similarly, as I’ve explained before, even if we corrected the numbers, the Towers Watson study still wouldn’t make any sense: the study absurdly refers to every benefit paid to an injured person as a “cost” to society. This would be an accurate analysis if injured persons took their settlement checks and promptly set them on fire.

 

In reality, as the Coase Theorem makes clear, money paid out in tort liability is not a “cost” to society, it’s just a transfer from one party to another, because the money goes right back into the economy through payments to medical providers and insurers (who subrogated part of the injured person’s claim). The money left after those medical and insurance costs goes towards remedying the insured person’s lost wages, and thus goes to the same healthy economic expenditures as before, like paying for their children’s education, or buying a new house, or putting food on the table. (Before someone claims, “but the lawyer’s fees are a transaction cost,” remember that, in personal injury litigation, the lawyer’s fees are not added to the defendant’s liability, but rather subtracted from the plaintiff’s recovery, and so they do not add to the overall recovery.)

 

Second, and even more worrisome in a study that purports to make “empirical” arguments, is the lack of any citation at all for Shepherd’s assertion that “the cost of the products liability system continues to grow.” Have the “costs” of our product liability system actually grown relative to the size of the economy? My hunch would be no; as Shepherd admits, since the 1980s, “state after state enacted legislation designed to curb the [fictitious liability insurance] crisis by limiting the scope of liability and damages,” and the federal government has enacted special liability protections for “general aviation aircraft,” “biomaterials suppliers of raw materials and medical-implant component parts,” and “manufacturers, distributors, dealers, and importers of firearms or ammunition.” I’d add to that list of political victories by product liability defendants the increasing adoption of the Third Restatement of Torts (which essentially eliminates strict liability) and the wholesale elimination of claims against generic drug manufacturers.

 

In short, product liability law has been increasingly favoring defendants for more than a generation, so why should we assume that the cost of the product liability system is growing relative to the economy?  Continue Reading The Real Economic Impact of Product Liability Tort Reform

Today the Supreme Court holds oral arguments in Standard Fire v. Knowles, a Class Action Fairness Act (CAFA) case. According to the defendant, an insurance company, the case involves plaintiffs’ attorneys “manipulating their complaints to evade federal diversity jurisdiction” by stipulating to the class recovering less than $5,000,000, the CAFA threshold that allows defendants to remove class actions from state court to federal court. According to the plaintiff, an Arkansas homeowner who alleges the insurance company routinely failed to pay for general contractors’ bills in home repairs, the issue here is just another example of the 70-year-old rule that a plaintiff can stay out of federal court by stipulating to recovering only damages below the jurisdictional amount.

 

I don’t want to discuss the case in detail (many others have; e.g., Alison Frankel has covered it a couple times, and Kevin Walsh discussed an amicus brief filed by a manufacturers’ association, and the lawyers who filed the brief responded), but to address the broader issue raised by the case. Like many plaintiff’s lawyers, I’ve longed been dismayed at the efforts of insurance companies and large corporations to force more and more civil lawsuits into federal court. Nearly three years ago, I summarized some of the supposed reasons why defendants prefer to be in federal court (while discussing the Hertz v. Friend case on diversity jurisdiction):

 

  • federal juries, by virtue of their larger geographic range, include fewer urban jurors and more rural jurors, and thus (according to lawyers’ lore) will award lower verdicts;
  • the Federal Rules of Civil Procedure place express limits on the amount of discovery available;
  • federal courts are (and were even before Ashcroft v. Iqbal) more prone to grant motions to dismiss (and motions for summary judgment) than state courts.

 

Is any of that true? Does it make a difference to the bottom line when all is said and done? Who knows, but it’s lawyer’s lore that federal courts are better for defendants while state courts are better for plaintiffs. A lawyer wouldn’t disregard the lore about federal court, much like how a sailor wouldn’t leave port on Friday or a driver wouldn’t race in a green car. For what it’s worth, though, state courts are typically the home of large personal injury verdicts — because the vast majority of wrongful death cases are there — federal juries do indeed award large damages in many cases. In 2012, for example, the second largest non-patent verdict nationwide was $167 million from a federal jury in an employment / sexual harassment case.

 

But lately the rush to put purely state law cases (like Standard Fire v. Knowles and Hertz v. Friend) in federal court seems to come from a different motivation: to get lawsuits out of fast-moving state courts and into federal courts hobbled by judicial vacancies. Continue Reading Why Civil Defendants Want To Be In Federal Court: Judicial Vacancies

My workload has been heavy lately, as has life in general, so I figured it was time for a diversion. It’s the end of the year, and thus unfortunately almost time for more deceptive “most frivolous lawsuits” lists, so here’s a retrospective of the worst lawsuit defenses I recall from 2012, a retrospective on the evils of water-soluble chalk, the violent propensities of classic Kung Fu movie fans, and the layman’s understanding of how a penile implant should work.

 

(5) Artist Drawing On Sidewalk With Chalk Deserved To Be Handcuffed, Arrested And Prosecuted For “Blocking Pedestrian Traffic”

 

One Saturday night down at 4th and South Street here in Philadelphia, artist Emily Hamilton Epstein was coloring the sidewalk with water-soluble chalk, the same harmless stuff my kids use that washes away with the rain. The complaint she eventually filed said:

[She] continued to draw for several hours, during which time she never blocked or obstructed public passage on the sidewalk. During that same period of time, many members of the public, including Philadelphia police officers, passed by and looked at her artwork — some commenting on the artistic quality of and the message communicated by her work — and no one ever advised the plaintiff that she was violating any law.

Isn’t it nice to see police officers walking around and encouraging civic participation like public art? For whatever reason, though, the chalk really, really bothered a particular Philadelphia Police Officer with a history of lawsuits against him. The officer allegedly demanded Epstein stop drawing, “grabbed and pushed” her, and then “applied handcuffs in an excessively tight manner,” after which he charged her with — drumroll, please — “obstructing the highway.”

The Philadelphia DA’s office took the case all the way to a non-jury trial, where the municipal judge brought sanity to the situation and found her not guilty. Epstein later sued — wouldn’t you? — and some poor fellow at the Philadelphia City Solicitor’s office had to come up with a defense. He settled on demanding “strict proof” that the chalk, which had long since washed away, was really water soluble:

[The] allegation regarding the type of chalk she was using is DENIED, because Answering Defendants do not have such knowledge.

The case settled three months later.  Continue Reading The Worst Lawsuit Defenses of 2012

The human body is both a marvel of engineering capable of jamming decades of memories and the programming to run a 100 trillion cell body into a brain the size of a football, and a slipshod jury rig. Ever since Hippocrates (“the father of spine surgery”) prescribed the first treatments for back problems — various combinations of baths, massages, and hanging upside down, all in all not too different from today — humanity has been dealing with chronic back pain. Even apart from classic deformities like kyphosis and scoliosis or a traumatic injury, the human back is just plain prone to problems, from sciatica to compressed discs.

 

When you add up all the doctors, physical therapists, spine surgeries, and epidural steroid injections, back pain in America is a $30 billion industry, and, as a part of that, over 9 million epidural steroid injections are given every year to treat back pain. It’s an old and simple treatment, dating back to 1952, although the scientific research on it (full text PDF here) remains sparse. There are some non-randomized studies showing that it works to relieve sciatica and low back pain in more than half of patients temporarily, and then there’s a fair amount of anecdotal evidence suggesting it helps in the long term. Part of this problem is likely due to the age of the product: it’s not under patent, so no one will fund the randomized trials to prove or disprove its efficacy.

 

Patients often opt for the injections because the alternative would be regular use of opioids (or more opioids), either taken orally or through the shockingly dangerous fentanyl patches. What’s the harm?, they ask, and their doctors reply that, of the over 9 million shots a year, only a handful of problems are reported. (They usually don’t mention that those problems can be devastating — including paraplegia, quadriplegia, and cerebral infarction — patients are, after all, receiving an injection directly into their spine.)

 

Over the past month, the potential harm of epidural steroid shots for back pain became shockingly disproportionate to the benefit, as more than one-hundred people across 23 states developed fungal meningitis from a contaminated steroid solution prepared by New England Compounding Center, a compounding pharmacy in Framingham, Mass. Seven have died. It’s not a disaster on the scale of Thalidomide, which left tens of thousands with birth defects, but it’s comparable to the “Elixir Sulfanilamide” incident from the 1930s, in which an improperly mixed antibacterial solution killed more 100 people.

 

There’s a lot that can be said about the outbreak’s causes and repercussions, and about reform for the future. USA Today questions whether the steroid shots are too dangerous for treatment of back pain even apart from the meningitis outbreak, and so should be restricted. John Day in Tennessee discusses how “tort reform” has limited the rights available to victims and has exacerbated the disparity in compensation awards for high income versus low income plaintiffs. Brett Emison in Kansas City, Missouri rounds up a number of articles questioning whether the FDA should be given more oversight over compounding pharmacies. There’s also some really interesting product liability questions in there relating to the liability of parties beyond the compounding pharmacy (and the role of strict liability without fault), but we need some more facts to flesh them out. There’s also the lingering question of collectability: it seems that New England Compounding Center has shut down entirely, and who knows what insurance coverage they had available. Medical supply companies aren’t required to carry business liability insurance.

 

But I want to talk about the contaminated injections in another context: the power of incentives.

Continue Reading Fungal Meningitis In Steroid Shots And The Power of Incentives

Just in time for Mesothelioma Awareness Day (which is tomorrow), yesterday the Wall Street Journal recycled the same canned attack on the Philadelphia Complex Litigation Center that the Chamber of Commerce and other special interests have been pushing for some time. (See here and here for more about the attacks on Philadelphia’s courts.)

 

Ashby Jones at the Wall Street Journal retreads over Judge Pamela Dembe’s remarks about out-of-state plaintiffs from early 2009, taking the Chamber of Commerce’s bait hook, line and sinker:

When the Philadelphia court system faced budget cuts in early 2009, an influential judge there invited plaintiffs to bring the court their cases — and their filing fees.

The plan backfired.

After Philadelphia Court of Common Pleas Judge Pamela Pryor Dembe told defense lawyers she wanted to “take business away from other courts” by making Philadelphia’s more attractive to lawyers, “mass-tort” filings—made up mostly of asbestos and pharmaceutical claims—skyrocketed from 550 in 2008 to nearly 2,700 last year. The surge left an already busy court system buried in lawsuits and scrambling to repair the damage.

“Buried in lawsuits and scrambling to repair the damage” of 2,700 filings sounds just terrible. As the WSJ ominously notes, “Since 2008, the backlog of asbestos and pharmaceutical cases has shot up from about 2,600 to more than 6,100 through last month.”

 

As Churchill said, “truth is so precious that she should always be attended by a bodyguard of lies.” Let’s unpack this supposed “surge” in filings, and figure out what’s causing the Philadelphia Complex Litigation Center to be “buried in” a “blacklog” of 6,100 lawsuits.

 

First, let’s look at what those 6,100 lawsuits are. You can see the numbers yourself by going to the “case list” under each type of mass tort on the CLC’s website. 2,294 of the pending cases, or more than one-third of the total, are Reglan cases. 1,843 of the pending cases, nearly one-third of the total, are Yaz / Yasmin / Ocella cases.

 

Judge Dembe’s remarks about making the Philadelphia mass torts center so efficient that parties preferred it over other courts (a laudable goal; notice how Judge Dembe’s remarks were made to defense lawyers) were in March 2009. Check those case lists again and you can see when the lawsuits started piling up. The Yaz / Yasmin lawsuits against Bayer in Philadelphia state court began in July 2009, but fewer than twenty had been filed until October 2009. That uptick had nothing to do with Judge Dembe: it had to do with the August 14, 2009 issue of the British Medical Journal, which published two studies (here and here) showing Yaz and Yasmin had twice the blood clotting risk of comparable hormonal contraceptives. Similarly, only two Reglan cases were filed against Wyeth and Teva before October 2009, when they started coming in quickly — because in February 2009, the FDA had mandated a “black box” warning on Reglan for the possibility of tardive dyskinesia.

 

Following so far? Reglan and Yaz — cases primarily against Bayer USA and Wyeth, both Pennsylvania companies (Wyeth is literally in Philadelphia) — together account for just over two-thirds of the overall Philadelphia mass torts cases. Both of these mass torts were prompted not by anything Judge Dembe said, but by the public revelation that the drugs were far more dangerous that the pharmaceutical companies had said.  Continue Reading WSJ Clueless About Philadelphia Mass Torts Lawsuits

“Let your greatest cunning lie in covering up what looks like cunning,” said Baltasar Gracián, the 17th Century Jesuit priest who wrote about how to survive in a post-Machiavelli world. These days, when tort reformers aren’t busy trying to stack the decks against consumers and injured people, they’re busy concern trolling, claiming to be looking out for the little guy while really waging war against the lawyers who take the risks and put in the time to make things right for the folks injured and cheated by corporate greed.

 

Via Overlawyered, Daniel Fisher at Forbes — who as far as I can tell has never once argued in favor of increasing consumers’ legal rights — is deeply concerned about the lawyers who invested approximately 20,000 hours and $500,000 of their own money, and then fought hard over the past four years, to win a $25 million settlement in an antitrust case (the case involved egg purchasers suing egg producers for conspiring to inflate the price of eggs.) He thinks their request for $7.5 million in fees — less than one-third of the settlement, and less than the $11 million the lawyers would have earned if they had billed the same way the defense lawyers did — should be delayed indefinitely, because, if we spend years picking apart the exact hours worked by every plaintiffs’ lawyer in a class action, “we consumers would have a much better way to judge whether our lawyers are overcharging us for this valuable work.” He wants this process to apply to every class action, so that plaintiffs’ lawyers will go wholly unpaid for years for their “valuable work” while corporate-funded intervenors dream up new objections.

 

Fisher complains, using the passive voice (“it would be unseemly … interestingly, however”) to imply but not actually state that the plaintiffs’ lawyers have done something improper:

It would be unseemly for law firms to collude on their billable rates in an antitrust case. Interestingly, however, the billable rates cluster around certain levels: $750-$950 for senior partners, $375-$450 for experienced associates, and $200-$300 for junior [associates]. While the legal industry might be as competitive and efficient as, say, the egg business, it’s difficult to see how this many firms, linked together with a web of referral agreements, can actually compete on price so their clients get the best deal possible.

Fisher wrote “$200-$300 for junior partners.” I think that was just a mistake, so I corrected it above. Starting with the basics, there’s nothing “interesting” about that clustering of fees: that’s how hourly fees are in the legal marketplace. Walk into a tall building in a downtown metropolis and ask for a top-shelf senior litigator, plus some associates, and you’ll hear those exact rates.

 

But more to the point, “collude on their billable rates?” “Overcharging?” What on earth is Fisher talking about?

 

The cases were all done on a contingent fee. Multiple clients signed up directly, each agreeing to pay one-third or more as a contingent fee, and it was those clients’ claims that was used to create the class action. No client was charged a dime in fees or expenses — all of the work and risk was born by the plaintiffs’ lawyers, who are walking away from those claims with less money in their pocket than the defendants’ lawyers. Continue Reading Concern Trolling Over Class Action Fees (Egg Purchaser Antitrust Edition)

Yesterday, the U.S. Chamber Institute for Legal Reform released its “2012 State Liability Systems Ranking Study,” which asked lawyers and senior executives at companies with over $100 million in annual revenues what they thought about being sued. That’s like asking Yankees fans what they think about the Red Sox.

 

Seriously, here’s the “Methodology” for the Chamber of Commerce’s “study:”

The final results are based on interviews with a nationally representative sample of 1,125 in-house general counsel, senior litigators or attorneys, and other senior executives who are knowledgeable about litigation matters at public and private companies with annual revenues of at least $100 million.

Does anyone doubt what a bunch of lawyers for big corporations are going to say?

 

Unsurprisingly, the Chamber of Commerce used these meaningless results from a hopelessly biased survey to spam the Internet with press releases purporting to be tailored to individual states, like this release for California, this release for Pennsylvania, this release for Illinois, this release for West Virginia, and this release for Florida. The highlight of each release was the pro forma quote from Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform, who has apparently served her entire legal career in Washington D.C. as a lobbyist. Here’s her deep and sophisticated understanding of the civil litigation environment in each of those five states:

 

  • “Plaintiffs’ lawyers bring cases in California because the state’s courts rubber-stamp class actions and juries award outsized paydays,” said Rickard.
  • “Pennsylvania stands geographically between the nation’s worst legal climate in West Virginia and its best in Delaware. Unfortunately, the state is heading more in West Virginia’s direction by allowing plaintiffs’ lawyers to ‘forum shop’ for favorable venues like Philadelphia to cash in,” said Rickard.
  • “Illinois continues to suffer from the negative reputations of courts in certain counties, like Cook, Madison, McLean, and St. Clair, which still invite lawsuit abuse and produce jackpot jury awards,” Rickard said.
  • “West Virginia continues to suffer from outrageous verdicts, lack of meaningful appellate review, an overzealous attorney general’s office, antiquated laws, and frivolous lawsuits,” said Rickard.
  • “Florida’s litigation climate can be attributed in large part to its notorious reputation for exorbitant jury awards,” said Rickard.

 

“Human sacrifice, dogs and cats living together, mass hysteria!” said Dr. Peter Venkman.

 

But here’s the incredible part: the hopelessly biased study of corporate lawyers showed that lawyers for big corporations are overwhelmingly satisfied with state courts. More than half said their state court was “excellent” or “pretty good.” A whopping 90% of respondents listed their local jurisdiction as “excellent,” “pretty good” or “fair.” It’s as if you polled a bunch of Yankees fans and 90% said the Red Sox were an excellent, pretty good, or fair team.

 

When asked to come up with the “most important issues for state policymakers,” the respondents struggled to come up with issues to complain about. In the end, the most common complaint — at a mere 5% of respondents — was to impose more limits on discovery. For all the hoopla about “frivolous lawsuits,” only 4% of respondents could even think to mention that. That finding lines up with the finding of another study The Pop Tort pointed out, in which a survey of businesses found that “Cost and Frequency of Lawsuits/Threatened Lawsuits” was the sixty-fifth highest priority for businesses, just below “Solid and Hazardous Waste Disposal.” [Update: A commentator notes, correctly, that this study was more focused on small businesses and that “cost of liability insurance” ranked higher. More discussion on that in the comments.]
Continue Reading Chamber Of Commerce Study: Big Business Says Tort Reform Not Needed