Trial Lawyer Blames Tort Reform for Bankruptcy

We can’t make these things up. Shame on those lawmakers for protecting doctors from outrageous malpractice claims.

Thanks to our friends at the North Carolina chamber for alerting us to this story.

A former Democratic candidate for governor and state lawmaker has filed for bankruptcy protection. The Chapter 11 bankruptcy filing will allow Bill Faison, a personal injury attorney, to restructure debt related to his Durham law firm, Faison and Gillespie.

In an interview, Faison said he expects to pay his debts in full, which are listed at more than $7.1 million. The Jan. 3 filing lists his assets at $9.4 million, including his family farm, a lake house, other real estate holdings, six cars, two motorcycles and two boats. “I can get it all paid,” he said.

Faison represented Orange and Caswell counties in the state House for four terms before making a bid for the Democratic Party nomination for governor in 2012. He came in a distant third in the party primary. The majority of the loans came from banks to underwrite his law firm and he is the guarantor. He said the lines of credit “smoothed out the peaks and valleys of cash flow” to his law firm. But the current atmosphere is making it difficult for the firm to pay back the loan on time.

The firm is facing major setbacks, he said, related to the economic downturn and a Republican-led effort to put caps on medical malpractice claims in 2011. The new lawsuit limitations “hurt business a great deal,” he said.


There’s Always News Coming Out of D.C.

A few Washington-related items that came across my radar screen in recent reading:

  • Presidential candidate Jon Huntsman says he never considered running for president while in his service as U.S. ambassador to China. I’ll give him the benefit of the doubt on that. But Huntsman notes that he never intended to stay in the previous role for more than two years — and admits that he failed to tell that to President Obama. Oops!
  • While many are criticizing the federal health care reform effort for what it tries to do, a former administration official is blasting it for its failure to address a related subject. Former OMB Director Peter Orszag says that as long as doctors follow evidence-based protocols, they should be exempted from medical malpractice suits. "His quote: "Unfortunately, in the health act, this was one of the largest missed opportunities." Anything to help curb the lawsuit mania that grips our country would be a good thing. Can we start over on that reform thing?
  • News flash! The U.S. Postal Service is a broken system — and Congress wants to fix it. Ending Saturday delivery and closing more branches are part of the plan, as well as renegotiating collective bargaining agreements. I don’t know the answer, but something must be done sooner rather than later to fix an uncompetitive, costly government-run program.

More Frivolous Lawsuits

Courts play a critical role in society. A justice system, however, that permits extremely frivolous (and extremely costly) lawsuits demonstrates there is a great deal of room for improvement. Everyone pays the prices for lawsuit abuses. The Heartland Institute looks at a few:

An 18-year-old high school student in shop class attached an electrical cord to one of his nipples with an alligator clamp, while a classmate used another alligator clamp to attach the cord to the student’s other nipple. A third student plugged the cord into an electrical wall socket.

The resulting three-second shock knocked the student to the ground and briefly stopped his heart. The boy survived but allegedly suffered short-term memory loss and brain damage.

Naturally, he’s suing the school and the teacher for failing to warn him it could be dangerous to play with electrical cords.

Laws Don’t Alleviate Doctor Fears

Fact: Doctors are worried about malpractice lawsuits.

Analysis: Such worries can increase actions that drive up health care costs. And a new study says that caps on economic damages are often not enough by themselves to take care of the problem. Health System Change reports:

Even in states with economic damage caps in malpractice suits, physicians remain highly concerned about being sued, suggesting that many popular tort reform proposals may do little to deter the practice of defensive medicine that contributes to unnecessary health spending, according to a study by researchers at the Center for Studying Health System Change (HSC) in the September Health Affairs.

“Our results suggest that many popular tort reforms are only modestly associated with the level of physicians’ malpractice concern and their practice of defensive medicine. The results raise the possibility that physicians’ level of concern reflects a common tendency to overestimate the likelihood of ‘dread risks’—rare but devastating outcomes—not an accurate assessment of actual risk,” according to the article.

“Whether justified or not, physicians’ liability fears are a policy problem because defensive medicine raises health care costs and potentially subjects patients to unnecessary care,” said Emily R. Carrier, M.D., senior HSC researcher and coauthor of the study with James D. Reschovsky, Ph.D., senior HSC researcher; Michelle M. Mello, Ph.D., J.D., a professor at the Harvard School of Public Health; Ralph C. Mayrell, a former HSC health research assistant; and David Katz, M.D., an associate professor at the University of Iowa.

The authors point to recently funded demonstration projects to test new approaches to liability reform, including alternatives to litigation that emphasize early disclosure and settlement of claims through less adversarial processes, as a way to address physicians’ liability concerns more effectively.

The Health Affairs article, titled “Physicians’ Fears of Malpractice Lawsuits Are Not Assuaged By Tort Reform,” is based on findings from HSC’s 2008 Health Tracking Physician Survey, which is sponsored by the Robert Wood Johnson Foundation, which also funded the study. The survey includes responses from 4,720 physicians who provide at least 20 hours per week of direct patient care and had a 62 percent response rate.

The survey asked physicians to indicate how strongly they agreed with the following statements based on a five-point scale, ranging from “strongly disagree” to “strongly agree:” (1) I am concerned that I will be involved in a malpractice case sometime in the next ten years. (2) I feel pressured in my day-to-day practice by the threat of malpractice litigation. (3) I order some tests or consultations simply to avoid the appearance of malpractice. (4) Sometimes I ask for consultant opinions primarily to reduce my risk of getting sued. (5) Relying on clinical judgment rather than on technology to make a diagnosis is becoming risky because of the threat of malpractice suits.

Between 60 percent and 78 percent of all physicians agreed or strongly agreed with each of the five statements related to malpractice concerns. Physicians agreed most strongly with the statement that it is becoming increasingly risky to rely on clinical judgment rather than diagnostic testing, with 78 percent either agreeing or strongly agreeing.

Overhauling Medical Malpractice Laws the Right Thing to Do

Malpractice changes have been ignored, for the most part, in the health care reform discussion – now there are numbers to back why this needs to be a part of the solution.

The Congressional Budget Office (CBO) recently released data estimating government spending on programs such as Medicare, Medicaid and the Children’s Health Insurance Program would decrease by $41 billion over a 10-year period with proper reforms. The reason:  Physicians would no longer overuse tests as a way to protect themselves from lawsuits.

Changes in the malpractice system would also cut national health care spending by 0.5% a year ($11 billion in 2009). No, that doesn’t solve all the problems, but trying to fix the lawsuit-happy world we are living in is a step in the right direction.

CongressDaily reports the CBO’s analysis is based on a few reform factors such as capping noneconomic damages at $250,000 and punitive damages at $500,000. It also calculated the numbers based on a one-year statute of limitation for adults and three years for children from the time the injury is discovered.

A few senators rightly shared their support for reform (and dismay for dawdling Democrats), CongressDaily shares:

"This is an important step in the right direction, and these numbers show that this problem deserves more than lip service from policymakers," said Sen. Orrin Hatch, R-Utah. "Unfortunately, up to now, that has been all the president and his Democratic allies in Congress have been willing to provide on these issues." Hatch had requested the updated analysis from CBO.

Senate Finance ranking member Charles Grassley and National Republican Senatorial Committee Chairman John Cornyn of Texas also expressed disappointment that Democrats have not cracked down on medical liability issues. Cornyn urged senators to "take account of the CBO’s objective numbers and the experience of Texas and other states where healthcare access and affordability have been improved by setting reasonable limits on lawsuits against doctors."

Democrats are reluctant to cap payouts from medical liability lawsuits. But President Obama recently directed HHS Secretary Sebelius to look at ways to make changes to the system that will bring down spending.

CBO’s analysis makes a clear argument that malpractice reform should be part of health care reform discussions. Still, supporters have their work cut out for them based on this outlandish comment:

The findings "reiterate what we’ve always known: that medical malpractice claims have almost no effect on overall healthcare spending," said American Association of Justice President Anthony Tarricone. "The vast majority of empirical evidence suggests that there are only minuscule savings to be found in reforming our nation’s civil justice system."

WARNING: Do Not Hold Wrong End of Chainsaw — May Cause Discomfort

The latest edition of the Heartland Institute’s "Lawsuit Abuse Fortnightly" newsletter has some gems. For example:

The top prize winner in the “Wacky Warning Label” contest sponsored by Citizens Against Lawsuit Abuse and the Parent Bloggers Network? The label on a chainsaw that warned: “Do not hold the wrong end of a chainsaw.”

One runner-up was the label on a rocking chair: “Do not eat The Rocker or anything included with The Rocker, including, but not limited to, nuts, bolts, tags, cardboard, packaging, plastic bags, plastic pieces, styrofoam, unpopped popcorn kernels, etc. Attempting to eat these things may result in injury, death, or at the very least, discomfort while passing these items through your digestive system from entry to exit.”

“The growing number of frivolous lawsuits has prompted manufacturers to cover all their bases where it comes to warning labels on products,” according to the Parent Bloggers Network. “These labels may be funny, but lawsuit abuse costs all of us money. Let’s bring common sense back.”

You should really read the entire rundown here. I especially like the Yale University student who is suing an airline for $1 million for allegedly stealing his souped-up Xbox (worth an estimated $1,000), citing "noneconomic distress." Noneconomic distress? Look, if I can’t sue somebody for that reason each time my morning alarm clock radio kicks on with a Jason Mraz song, then this guy can’t use it either.

Loony Lawsuits Unfortunately Keep Coming Back

A recent fact I read: there are more than 169,000 law offices in the United States. And, just like any profession, most of the lawyers operating out of those offices are doing the right thing. Put all the jokes aside — for now. Lawyers play a critical role in many aspects of everyday business and life.

But there are, just like any profession, some wishing to take shortcuts to get the job done or utilize their knowledge for their own personal gain. And when the legal system allows that abuse to occur, watch out.

That’s why there has to be an Institute for Legal Reform and an occasional publication from the Heartland Institute titled Lawsuit Abuse Fortnightly. You hear about one of these "cases too bad to be true" and you might not give it a second thought. Check out these resources and you get a litany of those "bad" examples, enough to make you a little queasy.

The latest Heartland offering has its usual array of bizarre court cases — each carrying a price tag in time and resources no matter the outcome. This issue includes a contribution from the Citizens Against Lawsuit Abuse and their "top five looniest lawsuits" of 2008.

Check it out, shake your head and feel free to let your representatives in Washington know that change is long overdue.

Definitely Wapner: Could a “Loser Pays” Civil Justice System Be What America Needs?

A new report from the Manhattan Institute asks a very intriguing question: If the losers in civil court cases had to pay the winners’ legal fees, would it cut down on the abundance of frivolous lawsuits in the United States? Naturally, they believe the answer is "yes":

In addition to being overly expensive, American litigation is all too often inefficient and unfair. The fees and expenses incurred by lawyers on both sides of a lawsuit are almost as costly as transfer payments to plaintiffs claiming injury. Mass tort litigation, for example, over asbestos, has been exposed as rife with fraud. Small businesses are regularly besieged with nuisance suits that they must settle if they hope to avoid crippling legal costs. Last year’s $54 million lawsuit against a small Washington-area dry cleaner alleging that it had lost a pair of pants was remarkable not only for the astronomical damages claimed but also the almost $100,000 in legal fees incurred in successfully defending against it. In American law, even when a defendant wins a lawsuit, he loses.

This study explores the likely effects of adopting a "loser pays" rule for attorneys’ fees in the United States. Loser pays, sometimes called the "English rule" but actually, in essence, the rule in place in the rest of the world, refers to the policy of reimbursement by the parties who lose in litigation of the winners’ legal expenses, including attorneys’ fees. This study argues that loser pays could be an important part of a larger effort to reduce litigation costs, better compensate prevailing litigants, and better align tort law with its goal of deterring socially harmful conduct. A loser-pays rule would discourage meritless lawsuits, but because any such rule should also ensure plaintiffs of modest means but strong legal cases access to justice, our proposal calls for:

  1. A robust litigation insurance industry similar to those that now exist in other loser-pays countries; and

  2. A cap on recoverable fees to eliminate the incentive that large litigants might have to attempt to "buy a verdict" under loser pays.

So what do you think? Is this true justice, or could it be unfairly manipulated somehow?

Cases of Law, Without the Order

I’ll admit to being a huge fan of Law & Order. When the original series (Fred Thompson did better work there in recent years than on the 2008 presidential trail), or one of the spinoffs (SVU, Criminal Intent) promotes a plot as "ripped from the headlines," it’s usually quite twisted and entertaining.

The only problem is that the stories truly are taken from real life cases. In that setting, it’s more costly than funny, more ridiculous than riveting. Let’s not even consider the financial factors — which impact all taxpayers — here. Simply look at some of the issues contributing to the overcrowding of the legal system. The Heartland Institute has a periodic publication (here’s the latest) that summarizes the worst of the worst. Hint: there’s part two of the lawyer suing his dry cleaners over a lost pair of pants and seeking punitive damages.

It’s often written that tort refom is needed. Tort sounds like something that should be popping out of your toaster in the morning. The simple, straightforward name is lawsuit abuse. And it’s being practiced by a set of lawyers who are playing a game, not practicing their craft in the way it was intended.