Corp Reform - Not Tort Reform

Senator Hollings on Medical Malpractice

Fritz Hollings, the Senator from South Carolina, always has some pointed things to say about tort reform and medical malpractice. His July 8th, 2003 floor speech to the Senate made some good points:

58,000 people died in the ten years we were in Vietnam. 100,000 people die every year due to medical malpractice.

In West Virginia, just forty doctors cause 25% of the state's malpractice claims.

Florida, Michigan, Texas, and West Virginia - all states with damage caps - have the highest malpractice insurance premium rates.

2/3rds of Medical Malpractice cases are dropped or dismissed with the plaintiff taking nothing.

Just .9 percent of malpractice plaintiffs are awarded money by a jury.

For the past ten years, the number of malpractice suits has remained steady.

Since 2000, the average malpractice jury award has gone down by 50%.

I don't know too much about Senator Hollings' positions on other issues, but I strongly agree with his position regarding the medical malpractice "crisis".

The Truth About the McDonalds Coffee Case

Perhaps the most well-known "frivolous lawsuit" is the story of Stella Liebeck - the woman who was burned by hot coffee from McDonalds. Here are the facts about the McDonald's lawsuit; decide for yourself if the suit was frivolous:

1: Stella Liebeck was a 79-year-old grandmother who was the passenger in her grandson's car.

2: McDonalds served the coffee at roughly 190 degrees. 190 Degree liquid will cause third-degree burns within 2-7 seconds of contact with the skin.

3: Stella was wearing cotton jogging pants, and the 190 degree liquid soaked into the pants. She received third-degree burns to her thighs and genitals. This is what a third-degree burn looks like:

4: McDonalds admitted that the coffee was not fit for human consumption at the temperature they served it.

5: Over 700 men, women, and children had been burned prior to Stella's lawsuit.

6: Stella offered to settle with McDonalds just for her medical bills. They refused.

Here is a PDF file that explains the suit in better detail. It's authored by the attorney who won the case. I tried to get permission from him to post this, but he never responded to my e-mails. This didn't surprise me: No one I've ever contacted about tort reform has bothered to respond to my e-mails.

Hopefully, this clears up some of the misconceptions that Stella was a careless woman who spilled some hot coffee on herself and just needed some aloe vera.

The question I have is why didn't the media report about how badly burned and disabled she was? I wonder if it has anything to do with the tens of millions of dollars McDonalds spends on advertising?

Meditations

I've been reading Meditations - the private journal of the Roman emperor Marcus Aurelius. What amazes me most about the book is how little men have changed in thousands of years. Marcus, as a Roman emperor, struggled with the same fights and fears that I do today. Marcus himself recognized that the nature of man is unchanging:

"[A]ll the cycles of creation since the beginning of time exhibit the same recurring pattern, so that it can make no difference whether you watch the identical spectacle for a hundred years, or for two hundred, or forever." Book II, 14

The more I delve into history, the more I see that the nature of man has not changed a whit. Men lie, men cheat, and men steal - all to obtain power and money. I watched the History channel's special on the Brooklyn Bridge last night, and had to burst out laughing at the part where it was discovered that a wire contractor was switching good wire for bad to increase their profits. Some things never change, do they? Corruption seems inexorably tied to man.

Perhaps the passage of Meditations that speaks the loudest to me is Book II, 4:

"Think of your many years of procrastination; how the gods have repeatedly granted you further periods of grace, of which you have taken no advantage. It is time now to realize the nature of the universe to which you belong, and of that controlling Power whose offspring you are; and to understand that your time has a limit set to it. Use it, then, to advance your enlightenment; or it will be gone, and never in your power again."

Much can be learned of wise men from the past; without the complications of today's modern life, men like Marcus were more able to focus their brilliance on the true nature and problems of man. Their work, therefore, has a simplicity and a purity to it that can't be found in self-help books that give advice about how to juggle your schedule around your favorite TV shows.

Medical Malpactice Costs - They're Lower Than You Think

There's a supposed healthcare crisis with regard to medical malpractice costs. However, the facts don't seem to support the idea of a crisis. For example, total healthcare expenditures in 2001 were $1.42 Trillion dollars. Medical Malpractice expenditures were $7.3 billion - less than one half of one percent of medical expenditures. (From 2001 US Census) That one half of one percent figure doesn't sound like a crisis to me. But, let's assume that it is. How would we fix it?

Well, not by enacting tort reform; just ask the VP of State Farm:

"[W]e believe the effect of tort reform on our book of business would be small. ... [T]he loss savings resulting from the non-economic cap will not exceed 1% of our total indemnity losses." - Robert J. Nagel, Assistant VP State Farm

State Farm isn't alone, either. In Florida, a $450,000.00 cap on noneconomic damages was put into effect. Aetna then analyzed their previous malpractice payouts to determine whether the new cap would be able to lower their costs. Here's what Aetna had to say: "[T]he review of actual data submitted on these cases indicated no reduction of cost."

OK, so State Farm and Aetna don't think that tort reform lowers costs or premiums. Let's keep looking to see if any insurance company does.

In the eighties, Washington state enacted some of the most draconian tort reform ever in an attempt to lower malpractice premium rates. Did it work? Not according to General Accident Insurance Company (GAI), one of the largest malpractice carriers in Washington state. GAI said this immediately after the legislation they lobbied for took effect:"Given that liability losses constitute such a low proportion of business owners' losses, GA feels it is prudent to continue with its original proposal of a 10 percent increase in base rates."

Just in case you missed it. GAI raised insurance rates right after tort reform took effect because liability lossed constituted such a "low proportion" of their costs. Allstate was even worse: "[O]ur proposed rate would not be measurably affected by the tort reform legislation." Allstate then wanted to raise rates by a whopping 22%! Thankfully, the Washington Supreme Court ruled the tort reform laws to be unconstitutional in 1987.

Will tort reform lower malpractice caps? No. Ask the insurance carriers - they'll tell you! And so will their trade groups:

"We wouldn't tell you or anyone that the reason to pass tort reform would be to reduce insurance rates." - Sherman Joyce, President of the American Tort Reform Association.

The only sure way to lower malpractice premiums is to regulate the insurance industry to cap premiums.

What Is Tort Reform - And Why Is It Bad For The Public?

There’s an interesting dichotomy regarding the public’s perception of lawsuits in America. On one hand, we love the little guys, Erin Brockovich, and the myriad crusaders for justice in John Grisham’s novels. We hate “big tobacco”, and cheer multibillion dollar settlements in the tobacco litigation. Americans, as a general rule, are distrustful of big corporations. The accounting scandals on Wall Street have left the public with the perception that the bigger the company, the deeper the corruption – remember Enron, Tyco, and Worldcom?

We’re enraged when we hear about companies that put the bottom line ahead of the safety of their customers. Yet, despite our predilection to root for the underdog, many Americans support tort reform.

What is a tort, and what is a tort reform? The classic legal textbook about Torts is called Prosser and Keeton on Torts. In that book, one definition offered of a tort is a “civil crime”; an act that is illegal, but is not criminal. Perhaps the most common type of a tort is an auto accident. Medical malpractice suits are also torts. Tort reform is the effort to “reform” lawsuits so as to prevent “runaway verdicts” that range into the millions of dollars.

Often, tort reform, or “tort deform” as its detractors call it, revolves around setting limits of awards for “noneconomic damages”. Noneconomic damages include things like pain & suffering, mental anguish, and in general, anything you don’t have a fixed bill for. To better illustrate, let’s say you’re in a car wreck and your car receives $5,000.00 in damage, and you need $5,000.00 in medical treatment. You would have $10,000.00 in economic damages. If you were to receive another $7,000.00 for pain & suffering that $7,000.00 would be noneconomic damages.

When you hear about multimillion dollar jury verdicts, they usually involve a form of noneconomic damages that are called either punitive or exemplary damages. Let’s take a look at what punitive/exemplary (P&E) damages are, and are not.

First, punitive damages are not intended to compensate or reward the individual who was wronged. The Merriam-Webster definition of punitive is “inflicting or aiming at punishment”, and the definition of exemplary, in this context anyway, is “to serve as a warning. That means that P&E damages are to punish a party who did something that the jury wants to make sure never happens again, such as knowingly selling a dangerous product, or hiring a bus driver that failed his drug test. Over time, it has been found that the most effective way to deter a company from engaging in unethical or illegal behavior is to punish them financially for their misdeeds. Juries do this by awarding punitive damages, and those awards could be considered a fine. Of course, rather than the state collecting a fine, the punitive damages go to the plaintiff of the lawsuit. From time to time, juries are outraged by a defendant’s behavior and award punitive damages that are far in excess of any suffering the plaintiff endured. These verdicts are what are reported to the public, and these verdicts create the perception of greedy plaintiffs and money-grubbing trial lawyers. However, what is rarely reported are the circumstances that caused a jury to award the large verdict.

Let’s take a burn case for an example. What if a company was making $1.3 million dollars a day selling a product that they admittedly knew routinely caused second and third degree burns to their customers? What if during the ten years they offered this product, over 700 people had been badly burned – some permanently disfigured – by this product? What if this product was sold as something harmless, even common, but this product would cause third-degree burns to the skin within two seconds of contact if it were accidentally dropped? Finally, what if that company called those 700+ burn victims “statistically trivial” and refused to fix the product, even though doing so would cost next to nothing?

What would a fair award be for the callous indifference of a multibillion dollar corporation that made $1,300,000.00 per day - $474,500,000.00 per year - by selling a product that burned over 700 men, women, and even infants?

This isn’t a fictitious case. This is the famed “McDonalds coffee case”, and in that case, six men and six women found that an appropriate punishment for McDonalds was to “fine” them the profit from just two days of nationwide coffee sales.

McDonalds sold their coffee at 180-190 degrees, a temperature that they admitted no human could drink, as it would cause third-degree burns within 2-7 seconds of contact with skin. Over 700 people had been burned within the ten years prior to the McDonald’s coffee case, yet McDonalds wouldn’t lower the temperature of their coffee.

Stella Liebeck was the woman who was burned. She was a 79 year old grandmother who received third-degree burns to her legs, thighs, and genitals when the cup accidentally spilled in her lap. The 190-degree coffee immediately soaked into her jogging pants, and she was unable to do anything to prevent her burns. She had to go through painful debridements (scrubbing with wire brushes), skin grafts, and her treatment lasted two years. Of course, at the end of the treatment, she was left with permanent scars. She offered to settle with McDonalds for the amount of her medical bills, and they refused. After that, she hired an attorney, and the rest became a media circus.

One fact that wasn’t reported very heavily was that the judge reduced the $2,700,000 award to $480,000.00 and Stella settled for an undisclosed figure less than that amount instead of going through a lengthy appeals process. This demonstrates the safety valve inherent in the systems of many states: A judge can often reduce a verdict he or she finds excessive.

Perhaps the most important fact of the case is that the day after the verdict, McDonalds lowered the temperature of their coffee to 158 degrees, a temperature that takes about a minute to cause severe burns; the justice system worked, and it worked because of a large jury verdict.

But America now ridicules a grandmother who received third-degree burns to her genitals: Ever receive a piece of e-mail called “The Stella Awards”? The “Stella Awards” are supposed jury verdicts that purportedly showcase how “broken” the justice system is. None of those verdicts are real; some are laughable. But every laugh at the “Stella Awards” is a laugh at a permanently disfigured grandmother. More importantly, every recipient of the “Stella Awards” is someone receiving misinformation that may influence them to support tort reform.

The real point of tort reform isn’t to prevent multimillion-dollar jury verdicts; most of those awards are reversed or overturned, and even if they weren’t, a $1 million dollar verdict isn’t much deterrent to a company that makes ten billion dollars a year. So what is the point of tort reform? It’s to keep the misdeeds of corporate America out of the public eye. After all, if a plaintiff’s “best day in court” is arbitrarily set at $250,000.00, there’s no incentive to go through a lengthy and expensive trial if the plaintiff is offered $250,000.00 by a company that sells a defective product. Such a settlement would almost certainly be confidential, and the company could continue selling their defective product and killing or maiming consumers without anyone knowing of the dangers of the product. Confidential settlements kept the problems with Firestone tires a secret for years before the recent lawsuits. To put a finer point on it, confidential settlements killed Firestone consumers; it wasn’t until public litigation began that Firestone recalled tires that they had for years known were defective.

The real effect of tort reform will be to ensure that corporations can keep their dirty laundry private, and to place the financial well-being of a corporation above the physical well-being of their consumers. It’s a sad commentary on our society’s values that corporations will pay more money for defrauding investors out of money than for knowingly selling products that kill their consumers.

Why Treat The Symptoms?

Medical Malpractice insurance rates are the hot button in tort reform today. Doctors complain loudly and vehemently that they are being forced out of practice by high premiums. We're told that unless we do something to curb the wave of "frivolous lawsuits" against doctors, we won't have anymore doctors to go to. Doctors lobby very strongly to limit their ability to be sued.

It seems to me that attempting to lower malpractice insurance rates by capping damages of the catastrophically injured is treating the symptoms, and not the illness. The illness is high insurance rates; why not place a cap on malpractice premium rates?

Doctors who have no history of malpractice claims could have a cap in place of 1% or 2% of their gross income, with a maximum dollar cap of $10,000.00 per month. Doctors who have had malpractice claims could pay a higher percentage.

It puzzles me why doctors, an educated group of people, think that the cure for their high premiums is to try and cap damages on lawsuits. After all, premium rates aren't based solely on lawsuits. Malpractice premiums, like auto insurance premiums, take into consideration the locale of the doctor. Now, is a doctor in Duluth less likely to commit malpractice than a doctor in Miami? While the Miami doctor may see more patients than the Duluth doctor, he or she may not. After all, in some small towns, doctors are kept far busier than their big city counterparts because there aren't as many doctors per capita. Yet, in general, a big city practitioner will pay more in premiums than a small town practitioner. Why?

Because insurance companies charge what the market will bear. But instead of attacking the predatory pricing scheme of the insurance cartel, doctors get whipped into an anti-lawyer, anti-patient frenzy and become convinced that every patient is itching to file a malpractice lawsuit. So the doctors focus their efforts on getting laws passed that make it harder and less attractive to file malpractice lawsuits.

Wouldn't doctors be better served by lobbying for strict regulation of their premiums? Capping damages may or may not lower premiums - most insurance companies admit it will not lower premiums - but a regulatory board that prevents doctors from being gouged certainly would lower premiums.

Some may argue that it would be unconstitutional to tell a business what they may or may not charge for their product. If this is so, then wouldn't it also be unconstitutional to tell a judge or jury how much they may award a plaintiff in a lawsuit?

The truth is that until insurance reform is put into place, doctors will always be subject to the capricious whims of malpractice insurance carriers.

Tort Reform Doesn't Protect Business From the Really Big Verdicts

In 2003, the Texas Legislature passed House Bill 4, a bill that protects medical providers, including manufacturers of medical devices, by capping the amount of noneconomic damages in personal injury lawsuits at $250,000.00. This cap was ostensibly put into place to protect medical providers from “runaway juries” that award tens of millions of dollars to catastrophically injured patients. However, as it turns out, this bill doesn’t protect medical providers from one group of plaintiffs that receive jury verdicts into the hundreds of millions of dollars: their competitors.

In 2002, Igen International, Inc. was awarded $505 million dollars from Roche Diagnostics for patent violations, with $404 million dollars in punitive damages . While this case took place in Maryland, it could have taken place in Texas, and if it did, neither House Bill 4 nor its progeny, Proposition 12, would prevent Igen from collecting nearly half a billion dollars in punitive damages.

The irony becomes apparent with this hypothetical scenario: Assume arguendo that Roche used Igen’s patents to create a medical device that causes a patient to die on the operating table. Under numerous proposed tort reform bills across the country, Roche would be liable for a maximum of $250,000.00 to the family of the deceased. Yet, Roche was liable for nearly half-a-billion dollars to Igen for patent infringements – an award over 1,600 times as large as the $250,000.00 cap on noneconomic damages existing in Texas for personal injury lawsuits. Surprisingly, the large amount of punitive damages in the Igen case isn’t a rarity: In 1997, the Rand Group found that punitive damages are awarded four times as often in financial injury cases than in personal injury cases.

It’s not hard to imagine the same executives at Igen, who praised the $404 million dollar award, criticizing “runaway juries” if they were ordered to pay even $4 million dollars to someone paralyzed by their products.

One of the founding principles of our justice system is the belief that human life is infinitely more valuable than human property; it’s why you can’t simply shoot someone that’s trying to steal your car. This principle is subverted by any tort reform bill that holds companies accountable for hundreds of millions of dollars for theft of intellectual property, but only holds those same companies accountable for hundreds of thousands of dollars if their products disable or kill a consumer.

So why, then, don’t big businesses want tort reform that insulates them from enormous jury verdicts in financial injury cases? We’ll use another hypothetical scenario with Igen and Roche. $101 million of the Igen verdict was for economic damages – the actual monetary loss of Igen. Such an award creates a reasonable assumption that Roche must have made close to $100 million dollars from Igen’s patents. So, what would the deterrent be of a maximum award of $250,000.00 to a company that made $100 million dollars? Insignificant.

The question then becomes this: If businesses need multimillion dollar jury verdicts to deter their competitors from stealing their intellectual property, why don’t consumers need multimillion dollar jury verdicts to deter businesses from knowingly selling harmful, or even fatal products?

The Insurance Cartel Lies To The Florida Legislature

SANTA MONICA, Calif., June 20 /U.S. Newswire/ -- Florida's largest medical malpractice insurer, FPIC, announced yesterday that it will not fulfill its promise to lower doctors' premiums if the Florida legislature enacts a liability cap. The retraction is more proof that liability limits will never lower premiums, and only insurance reform including a mandated rate rollback will reduce physicians' rates, said the California-based Foundation for Taxpayer and Consumer Rights (FTCR).

"Insurers didn't lower malpractice premiums when a damage cap was passed in California, and they aren't going to lower rates in Florida either," said FTCR consumer advocate Carmen Balber. "The insurance industry's bluff was called and exposed: Damage caps have nothing to do with how much doctors pay for insurance."

Two weeks ago, in an effort to boost Governor Bush's proposal to cap non-economic damage awards at $250,000, the Florida insurance industry vowed it would reduce malpractice premiums by 20 percent if a cap was passed by the legislature. However, as soon as the Florida Senate indicated a willingness to pass a cap on Wednesday, FPIC withdrew the offer.

"A malpractice cap will never reign in the real crisis: reckless business practices, the volatility of the insurance cycle, and insurer greed. Only insurance reform -- including rate regulation and a mandated rate rollback -- will lower doctors' premiums and stabilize the malpractice market in Florida," said Balber.

California passed the Medical Injury Compensation Reform Act (MICRA) in 1975, which capped non-economic damages at $250,000. In the thirteen years after MICRA's passage, physicians' malpractice premiums increased 450 percent. Only after California voters passed Proposition 103, a ballot initiative which instituted rate regulation and required a 20 percent rollback in rates, did doctors see their insurance premiums drop.

California Insurer Says Caps Didn't Lower Risk

In documents released last week by FTCR, California's second largest medical malpractice insurer acknowledged that damage caps and other insurer-touted restrictions on patient rights in California failed to reduce malpractice premiums.

FTCR challenged a 15.6 percent rate increase request by SCPIE Indemnity under the rules of California's insurance reform law, Proposition 103. As part of the Department of Insurance rate hearing, SCPIE Assistant Vice President and Associate Actuary James Robertson testified that: "While MICRA was the legislature's attempt at remedying the medical malpractice crisis in California in 1975, it did not substantially reduce the relative risk of medical malpractice insurance in California."

The Myth of the Frivolous Lawsuit

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INTRODUCTION:

One of the catch phrases of tort reformers is “frivolous lawsuits” – a lawsuit that has no legal basis, or is so petty that the suit isn’t justified. Often, tort reformers cite high profile cases, such as the McDonalds coffee case to try and show that the court system is “broken” and “runaway juries” routinely award ridiculous verdicts in frivolous cases.

Tort reformers promise that the legislation they propose will put an end to frivolous lawsuits by putting up various barriers that will prevent frivolous lawsuits from being filed in the first place.

What tort reformers don’t tell you is that the legal system already has three safety mechanisms in place to prevent, dismiss, and correct frivolous lawsuits. The first mechanism, the contingent-fee agreement prevents frivolous lawsuits from being filed in the first place.

THE CONTINGENT-FEE AGREEMENT:

Have you ever seen or heard an ad for an attorney who promises something like, “No cost to you unless we collect!”? Nearly every attorney that brings a lawsuit for a personal injury case does so under a contingent-fee agreement. While most people understand how the contingent-fee arrangement works, I’ll explain it in detail for those who do not.

Let’s say you’ve had an auto accident and decide to hire an attorney. If you shop around, you’ll find that contingent-fee agreements vary from attorney to attorney. Generally, they will range from anywhere from 25% to 50% of the total settlement or judgment you receive. For simplicity, we’ll say you hire an attorney on a 40% contingent-fee agreement. If you were to receive $10,000.00, the attorney would get $4,000.00 in that case as his fee, in addition to being reimbursed for any expenses he or she incurred in building your case. These expenses include obvious things like court filing fees and office expenses, but there some expenses in many cases that the general public doesn’t know about: expert witness fees.

What is an expert witness fee? Well, in most complicated cases – and virtually all medical malpractice cases – the plaintiff needs to hire expert witnesses to help prove his or her case.

In some states, you’re not even allowed to file a medical malpractice case without first having a report from an expert witness that says, in essence, the doctor in question committed malpractice.

All cases are gambles, no matter how strong the facts may be. When you hire an attorney on a contingent-fee basis, he’s gambling with his time and money. While attorneys are willing to gamble as to when, if, and how much they’ll get paid, expert witnesses generally are not.
Expert witnesses won’t wait until your case is over to get paid – they want to be paid up front, and it’s the attorney who has to pay them out of his or her pocket. As you might surmise, expert witnesses aren’t cheap: they’re highly qualified professionals who generally have high hourly fees.

What kind of expert witnesses might be needed in a given case? Let’s take some real-life examples of experts and what they charge:

Professional Engineers: If you’re suing a manufacturer because you got hurt by a product that you think was poorly designed, you’ll need a professional engineer. One engineer in Garland, Texas charges $225.00 per hour, with a 50% premium for deposition and court time. So, if that engineer spent ten hours reviewing a design, and five hours in court, that would cost your attorney almost $4,000.00. In a complicated design case, it’s not uncommon for several engineers to spend fifty or more hours evaluating the product.

Doctors: If you have a medical malpractice case, or any case where the extent of your injuries is called into question, you’ll need to hire a doctor as an expert witness. Doctors, as you might guess, are expensive. Plan on having your attorney spend around $250.00 per hour, possibly twice that much for a well-regarded specialist. In a complicated medical case, you may need three or more doctors, each of whom may have to spend ten to twenty hours – an out-of-pocket cost to your lawyer of $10,000.00 or more.

Nurses: You’ll probably need a nurse in any case where you need a doctor. While they’re not as expensive as doctors, they’ll still be around $75.00 an hour. Just like doctors, they’ll also probably have to spend ten to twenty hours on a case - $750.00 or more from your lawyer’s checking account.

Surprisingly, finding expert witnesses isn’t easy. Often, a lawyer will have to “shop around” for experts. That means your lawyer will spend time finding experts with the right qualifications for your case. Then, he or she would gather all the pertinent materials and send them to an expert for review. Sometimes, the expert will review the records and say that they’re not interested in the case. Or perhaps they’ll review the records and not find anything helpful to your case. Either way, the expert will still have to be paid, and it’s your lawyer who will have to pay them. It’s not uncommon to go through two or three experts, and several thousand dollars, before the “right” expert is found. Of course, it’s also not uncommon for a lawyer to think his or her client has a great case, only to be told by several experts that the case has little or no merit. In such an instance, that lawyer will be out-of-pocket thousands of dollars, and the client will owe nothing to the attorney – thanks to the contingent-fee agreement.

Now, if you were a lawyer with a contingent-fee agreement, would you be willing to spend thousands of your own dollars and hundreds of hours on a case you’re not confident you can win? If your answer is “no” to that question, then you’ve just seen how contingent-fee agreements prevent frivolous lawsuits from being filed.

While contingent-fee agreements prevent frivolous lawsuits, they also do something even more important: They provide access to the courts to everyone. In general, a lawyer’s hourly fee will be anywhere from $100 to $300 an hour. Not many people can afford to pay that kind of money to an attorney for more than a few hours. If you were to have to pay an hourly fee to an attorney to bring a complicated injury case to trial, you might have to spend $50,000 on the attorney. If contingent-fee agreements were abolished, two things would happen: Only the rich would be able to file lawsuits, and attorneys would be far more willing to file a lawsuit that doesn’t have merit; when you’re paid by the hour, it doesn’t matter if you win or lose.

No case is “easy”, and in general, the more complicated the case, the harder it is to win. Contingent-fee agreements are what attract lawyers to the complicated cases. Contingent-fee agreements are what drive lawyers to take those cases to trial, instead of settling for a fraction of what the case is really worth. Contingent-fee agreements are what allow the poorest of the poor to hold corporate juggernauts accountable for their actions in court of law.

Is it any surprise then that some special interest groups are attacking the contingent-fee agreement? They argue that it’s not fair for attorneys to take such a “large percentage” of any recovery of their clients. Their arguments have worked: Some states have put limits on the percentage an attorney can take.

Damage caps and attorney-fee caps work together to make the complicated cases less enticing for lawyers, and the consequence is that those who traditionally receive large jury verdicts – the catastrophically injured, or the families of those who are killed – won’t be able to find attorneys to bring their case to court. The corporate entities that support tort reform won’t be held accountable when they act irresponsibly or unethically, and will instead enter into confidential settlement agreements with those who are harmed by their products.

The irony is that as those corporate entities take away the individual’s right to a jury trial, they’re doing it under the guise of protecting the public from “greedy lawyers.”

So, what happens if an inept lawyer decides to file a frivolous lawsuit? The second safety mechanism, the Summary Judgment, would be used to dismiss the suit.

THE SUMMARY JUDGMENT:

Tort reformers say that the courts are overwhelmed with “frivolous lawsuits” – lawsuits that have no legal basis, or are so petty as to not be worth the time of the court system. They say that to protect the justice system, we need to make it harder for individuals to file lawsuits.

But what if instead of putting barriers up that could prevent legitimate lawsuits from being filed, there was a tool that could quickly and easily dismiss frivolous lawsuits? What if this tool not only dismissed frivolous lawsuits, but could also be used to force the plaintiffs in frivolous lawsuits to pay the attorney fees of the defendant? This tool not only exists, but has been in use in America since 1937 ; it’s called the Summary Judgment.

The purpose of the summary judgment is to determine whether there is a genuine need for trial. When a party files a motion for summary judgment, they’re telling the court that there is no need for trial because the facts and law applicable to the case would prevent the other side from winning.

We’ll use a fictitious car wreck as an example of how a summary judgment would dispose of a frivolous lawsuit:

Mr. Smith runs a red light and slams into Mr. Jones. Mr. Smith claims the light was green, but two witnesses say the light was red. Mr. Smith is given a citation from a police officer for running a red light. Mr. Smith decides to sue Mr. Jones for mental anguish.

Mr. Jones hires a lawyer. Mr. Jones’ lawyer spends a few hours drafting a motion for summary judgment. At the end of the motion, Mr. Jones’ lawyer requests he be awarded attorney’s fees from Mr. Smith because the lawsuit is frivolous.

The lawyer for Mr. Jones files his motion for summary judgment, and includes with it pictures of the accident scene, affidavits from the witnesses, an affidavit from the police officer, an affidavit from Mr. Jones, and a copy of the police report. All of the affidavits and the police report say that Mr. Smith ran a red light.

In such a case, the judge would most likely grant the summary judgment, and Mr. Smith’s lawsuit would be dismissed. The judge could also decide to order Mr. Smith to pay for Mr. Jones’ attorney’s fees. In the end, Mr. Jones wouldn’t be out any money, and Mr. Smith would have had his day in court.

The requirements for summary judgment vary from state to state, but in general, you need to show the court two things:

1: That the facts clearly support your side. In Texas, for example, you have to show that “reasonable and fair minded people” cannot possibly come to different conclusions about what the evidence shows. If reasonable and fair minded people could come to different conclusions about the facts of the case, then summary judgment shouldn’t be granted.

2: That the law is clearly on your side. A common use of the summary judgment is to dispose of lawsuits where the statute of limitations has passed. Many states have a four-year statute of limitations for breach of contract. So, if you bought a car in 1995 and tried to sue the dealer for breach of contract in 2000, you wouldn’t legally be able to win – the statute of limitations would bar you from recovery – and the judge would grant the car dealer’s motion for summary judgment. In medical malpractice lawsuits, there is a two-year statute of limitations.

Summary judgments have disposed of frivolous lawsuits for decades. They allow a defendant in a frivolous lawsuit to get out of the case quickly and without the expense of a full-fledged trial. Often, the defendants are even awarded their attorney’s fees for preparation of the motion for summary judgment.

The bottom line is that because of the summary judgment, very few “frivolous lawsuits” ever make it to trial. It could even be argued that any case that makes it past summary judgment can’t be a frivolous lawsuit because a judge – not a “runaway jury” – decided that the case had enough merit to present to a jury.

Tort reformers want to make it hard for you to file a lawsuit, harder for you to win a lawsuit, and impossible for you to collect a meaningful amount of money in a case involving serious or permanent injury. To accomplish these goals, they claim that frivolous lawsuits and runaway juries are destroying the justice system. However, tort reformers don’t talk about how summary judgments have been effectively used for over 100 years to dispose of untold thousands of lawsuits.

The next time someone tries to persuade you that we need more barriers to filing lawsuits, ask them why they don’t think the summary judgment is getting the job done.

Let’s assume that a frivolous lawsuit makes it past summary judgment and a “runaway jury” awards more money then they should. Several judicial remedies exist to correct these verdicts.

DIRECTED VERDICTS:

Most people think that a jury can make whatever decision they want. This isn’t the case at all. A judge can issue a directed verdict, which tells the jury that they must make a certain decision. Usually, a directed verdict is used when something comes out at trial that prevents the other side from winning as a matter of law. For example, it could come out that a key event happened so long ago that the statute of limitations prevents the plaintiff from winning. In such a case, there would most likely be a directed verdict for the defendant.

Less often, the evidence in a case is so strong that the judge feels that there can be only one verdict, and he or she would order the jury to return that verdict. One example would be a case where someone caught the auto accident in question on videotape, and the tape clearly shows that one of the parties to the lawsuit ran a red light, and is therefore at fault. In such a case, the judge may direct the jury to find in favor of the person who did not run the red light.
Directed verdicts are more common in criminal cases than in civil cases, because the summary judgment would typically be used to dispose of a civil case before a jury trial. However, directed verdicts can and do dispose of civil lawsuits without merit.

JUDGMENT NOT WITHSTANDING THE VERDICT (JNOV):

Everyone is familiar with the concept of appealing a decision; if you lose your case, you can generally appeal it to a higher court. However, not everyone is familiar with a Judgment Not Withstanding the Verdict (JNOV). JNOV is an acronym for Judgment non obstante veredicto, which is Latin for “notwithstanding the verdict”.

A losing party in a lawsuit can often file a motion with the court requesting a JNOV. A JNOV is one of the ways that a judge can reduce the dollar amount of a verdict. Some states require that an attorney file a motion for a JNOV, while other states allow a judge to issue a JNOV sua sponte, which is Latin for “of its own accord.”

A JNOV can set aside an entire verdict, or just parts of a verdict. Here’s a good example of how a JNOV could correct an improper jury verdict:

In many states, if a jury finds that the conduct of a defendant in a lawsuit was “knowing” and/or “intentional”, the court must double or triple the amount of a jury verdict. Let’s assume that in a medical malpractice case, a doctor made an honest mistake. Maybe he transposed the numbers in a prescription, and the plaintiff ended up taking too much medication. But, for whatever reason, the jury found that this honest mistake was intentional, and awarded $100,000 dollars. Because the doctor’s conduct was found by the jury to be intentional, the judge would have to award the plaintiff $300,000 dollars. However, if the evidence was very convincing that this was an honest mistake, a JNOV could eliminate the finding of the jury that the doctor’s conduct was intentional, and the plaintiff would be awarded only the $100,000 dollar jury verdict.

Directed verdicts and JNOV’s are two mechanisms that judges have available to prevent juries from awarding damages when they should not, and to reduce jury verdicts that are clearly excessive. Of course, tort reformers don’t tell the public about these tools; they want to be able to prevent these large jury verdicts from ever occurring, and to prevent the bad press that accompanies the verdicts.

SETTLING AFTER A DECISION:

In many cases, such as the famed McDonald’s coffee case, the plaintiffs in a lawsuit will settle the case for less than they were awarded. In the McDonalds case, Stella Liebeck was awarded $2.7 million dollars, and the judge reduced the award to $480,000. Stella settled with McDonalds for a confidential amount less than $480,000.

Plaintiffs and plaintiff’s attorneys are often motivated to settle because a settlement means they won’t have to go through a lengthy and potentially risky appeals process. This is where big companies have the advantage over individual plaintiffs: A major corporation can afford to spend time and money to drag a case out for years. Settlements are extremely common, and are yet another way that very large jury verdicts are reduced.

APPEALING THE DECISION:

The majority of cases where a jury awards millions of dollars are appealed, and many times, those verdicts are reduced or overturned on appeal. For example, in the Igen case that was discussed earlier, the appellate court reduced the $505 million dollar verdict down to $19 million dollars– a $486 million dollar reduction.

While some verdicts are reduced, others are overturned entirely by appellate courts. It’s important to realize that the judges in appellate courts aren’t overly emotional jurors, but are seasoned judges who place far more weight upon the legal issues in a case then on the emotional issues. As such, incredibly large jury verdicts are rarely upheld by the many appellate courts in our country.

Despite what tort reformers claim, large jury verdicts are the exception, and not the rule. When juries do return large verdicts, the plaintiffs usually settle for less than verdict or see the verdict reduced or overturned by an appellate court.

Our justice system is a system of checks and balances. Before someone can even bring a case, they have to convince an attorney that their case is worth gambling time and money on. The contingent-fee agreement weeds out countless cases that have no merit. Once an attorney accepts the case, a judge will most likely scrutinize the facts and law applicable to the case through a summary judgment. If the judge decides that the case has merit, then the case will be presented to an impartial jury of twelve men and women. If those twelve men and women are convinced that the plaintiff has proven his or her case, the jury will then rule in favor of the plaintiff, and award compensation for the plaintiff’s injuries. The judge has an opportunity to modify, reduce, or set aside the jury’s verdict. Then, the defendant has an opportunity to appeal his case to higher courts, and even more experienced judges can then modify, reduce, or set aside a jury’s verdict.

The burden of proof in any case is always on the plaintiff; the deck is stacked in favor of the defendants in both civil and criminal cases. Multimillion-dollar jury verdicts rarely survive the appeals process. Yet tort reformers continue to argue that we need more barriers to file lawsuits, and statutory limitations on how much money can be awarded in the lawsuits we’re able to file. The reason is that the big corporations who push for tort reform don’t want the bad press and public scrutiny that accompanies trials where people are severely injured or killed. Instead, they prefer to enter into confidential settlements that the public never knows about.

Tort reform isn’t about fixing a “broken” justice system; it’s about protecting the public image and bottom lines of the biggest and most powerful companies in the world. Tort reform isn’t about protecting doctors from high insurance rates; it’s about protecting their insurers from having to pay large judgments. Tort reform isn’t about keeping “greedy lawyers” from filing frivolous lawsuits; it’s about keeping those who are severely injured out of the court system and away from the public eye.