Corp Reform - Not Tort Reform

Even MORE evidence that the U.S. Chamber is Full of It

I recently wrote about how Mississippi passed a bunch of "reforms" but still rank near the bottom of the Chamber's list.  Here's some additional evidence that the legal climate in a state isn't nearly as important to attracting new business as such old standbys like tax breaks and geographic location:  

JFP: Most of the people I know, back in 2004 were really intrigued with the idea of tort reform because we were led to believe that our insurance rates would go down, but nobody that I can think of are bragging that their rates went down. I know mine havenҒt. Were we supposed to actually benefit from that or was tort reform aimed to benefit somebody else?

Ross: Mississippi has benefited. I gave you Toyota as an example. After we fixed our legal system, it was no longer an obstruction to them coming here.

Former Gov. Ronnie Musgrove told the JFP that the issue of the states legal climate never came up in numerous conversations he had with Toyota executives in 2003.

ғToyota was comfortable with our business climate, Musgrove said. ԓWe had passed significant tort reform in 2002, and the Toyota proposal came in 2003. It just was not an issue for them.

Toyota Senior VP, Dennis Cuneo said in a company press article that Toyota passed over Mississippi for an $800 million Toyota plant in 2003 because of a number of factors unconnected to the stateԒs legal climate.

According to Cuneo, one of the crucialӔ factors in the decision to pick San Antonio was the big money Texas committed to build two separate rail accesses for the plant. The state also committed $116 million in training and tax breaks for the plant.

Arkansas officialswho had also been competing for the plantחadmitted to the Associated Press in 2003 that Toyota executives told them that the plant in Texas would be a doorway to a virtually untapped market of pick-up truck buyers in Mexico and Latin America. Texas, itself, was the biggest market of pick-up sales in the nation, and Toyota was looking to seduce Texans with a new home team.

Finally, the legal climate in Texas, according to the U.S. Chamber of Commerce, was not so rosy at the time either, with Texas ranking No. 46 out of 50 in judicial fairness in February of 2003the same month that Toyota decided on San Antonio. (Emphasis added.)

Source: Mississippi StateDesk

Not sure why the formatting is goofy.  But it's still not as goofy as the notion that the best way to attract new business is to gut your state's civil justice system.

Technorati tags: U.S. Chamber of Commerce, Mississippi, tort reform

Responding to Ted Frank's response to Professor Charles Silver

I do not presume to speak for Professor Silver, but I wanted to respond to the following  points raised by Ted Frank in response to Silver's article.

What we do know from Silver's dataset is that insurers do ignore insurance limits and settle for above policy limits a significant percentage of the time. Silver's hypothesis works only if one assumes the policy limits are firm; the alternative hypothesis works even if the policy limits are not firm—and Silver's dataset shows that, indeed, the policy limits are not absolute. Silver provides no explanation why insurers would settle some meritorious cases at policy limits and others above policy limits; it's not clear to me that any such explanation is possible. (Emphasis added.)

Source: PointofLaw.com | PointOfLaw Forum: Charles Silver on insurance limits

First, I don't mean to quibble, but Silver wrote, "Payments above the policy limits, which appear to the right of the spikes, were present in about 2% of the cases."  If Ted believes that 2% is a "significant percentage," that's his prerogative... but I bet that if a drug caused side effects for 2% of its users, Ted wouldn't consider that to be significant.

I've come up with a possible explanation as to why insurers would settle meritorious cases above policy limits.  Eric Turkewitz recently wrote about the high costs of bringing a medical malpractice case; buying medical records, retaining experts, taking depositions, etc.  Plaintiffs aren't the only parties that have to bear these costs.  If an insurance company believes the plaintiff has a a strong case and is likely to be awarded a sum that meets or exceeds the policy limit, the insurer will be willing to settle for an amount that is less than the policy limit plus the cost of defending the case. 

For example, if the doctor in question has a $250k policy and the insurer expects the litigation costs of going to trial will be $50k, the insurer will come out ahead if it settles the case for even $290k, which exceeds the policy limits.  The insurer will also have to take into consideration the potential cost of any appeal(s) when determining what amount to settle a case for.  Additionally, if a plaintiff is willing to accept a settlement that includes periodic payments, the insurer might be willing to settle for more than the policy limits in order to take advantage of the benefits of periodic payments.

Update: Ted is right, Professor Silver's dataset revealed that more than 2% of cases did settle for excess of policy limits.  We also shared a nice series of emails in which we discussed possible scenarios where it makes financial sense for insurers to settle cases above policy limits.  I'd share them with you, but Ted asked me not to repost his emails.  Suffice it to say, there actually are some situations where it is in the financial best interest of an insurer to settle a case above policy limits.

Cross-posted to TortDeform 

Technorati tags: Charles Silver, Ted Frank, Medical malpractice, insurance, tort reform, Tortdeform

Evidence that the U.S. Chamber's State Rankings are Crap

As you may know, the U.S. Chamber of Commerce puts out a bogus study every year that purportedly ranks the civil justice system in every state.  The rankings are determined by surveying various corporate attorneys and asking their opinions as to the fairness of every state's justice system.  To put that in perspective, it wouldn't be much different than asking career criminals to rate the fairness of every state's criminal justice system.  But I digress.

Perhaps the biggest problem with the U.S. Chamber's study is that a state's ranking doesn't seem to change very much even when a state passes the "reform" measures advocated by the Chamber.  For example:  

Notwithstanding the ballyhoo when tort reform was enacted by the 2004 Legislature that it cured what special interest groups called Mississippi's cesspool of jackpot justice, it seems those same groups now don't rate the state's reforms very highly...

The U.S. Chamber of Commerce, after pouring $1 million into Mississippi's 2000 Supreme Court races to elect its handpicked candidates. in 2003 rated Mississippi 50th in civil justice climate...

Mind you, in 2002 under Democratic Gov. Ronnie Musgrove, state lawmakers enacted a series of tort measures sought by the insurance industry. One limited non-economic damages to $500,000 until July 1, 2011, and scaled the limit up to $1 million by 2017; another reduced to two years the time in which suits could be brought against nursing homes; and another granted liability immunity to a number of health care providers.

But the reforms had not satisfied the U.S. Chamber and some other groups. Republican candidates in 2003 latched onto "tort reform" as a catch-phrase to get elected.

It didn't take long for newly-inaugurated Republican Gov. Haley Barbour, who campaigned for tort reform, to get the 2004 Legislature to do the Chamber's bidding.

Barbour won enactment of a fixed $500,000 cap on pain and suffering damages in medical malpractice cases and a $1 million cap on all others, and also gave retailers a shield against product liability lawsuits...

But the U.S. Chamber of Commerce itself has now let the air out of the Mississippi tort reformers' balloon. Recently the Chamber's Institute for Legal Reforms (which initially stirred the pot on reform by ranking Mississippi 50th in 2003) in its 2007 ranking put the state's legal climate at only 49th.

Source: U.S. Chamber lets the air out of Miss. tort reformers' balloon - The Clarion-Ledger

Mississippi passed damage caps, elected pro-business anti-consumer judges, granted various immunities, and reduced statutes of limitations and only increased from 50th to 49th?  States ranked far higher that Mississippi in the Chamber's study have far fewer "reforms" in place.  Since there doesn't appear to be any correlation between a state's ranking and it's "reform" measures, the study should not be used as evidence that a state needs to pass any of the "reform" measures pushed by the Chamber.

Cross-posted to TortDeform 

Technorati tags: Mississippi, tort reform, U.S. Chamber of Commerce, damage caps, medical malpractice, product liability

An attorney who clearly doesn't understand how a contingency fee works

I wasn't surprised that an attorney who writes for "The Conservative Voice" would praise Bush's recent Executive Order that bars Federal agencies from using contingency fee contracts.  I was surprised that such an attorney would have no idea how contingency fees work.

The media, relatively speaking, has all but ignored the EO, the excised text of which follows. How few people, otherwise reasonably informed, knew that the Federal Government sometimes retained attorneys to litigate upon a contingency-fee basis! Many States, of course, do likewise. The fees so earned by and large are minimal compared to the millions and multi-millions of dollars collected by the more high-flying “trial lawyers.” However, they are fees paid by taxpayers.

Source: “Hail to the Chief,” for Saving Taxpayers from Payment of Contingency Fees by Marion Edwyn Harrison

Under a contingency fee agreement, the attorneys are only compensated if they obtain a monetary recovery.  Their fee comes from that recovery, not the pocket of the taxpayers.  Because a contingency fee agreement is the epitome of "pay for performance," they tend to motivate attorneys to zealously and aggressively work to obtain a recovery for their client.  In fact, that's the reason this EO was signed - because government attorneys and their contracted attorneys are supposed to remain impartial, and not be zealous or aggressive. 

For better or worse, taxpayers will now be forced to pay high hourly rates to outside counsel, and pay them regardless of how effective the attorney is.  Now, rather than having an incentive to quickly recover a lot of money for the taxpayers, outside counsel will have an incentive to make cases unnecessarily complicated and to prolong them as much as possible to accrue as many billable hours as possible, all at the taxpayer's expense. 

Technorati tags: Mariod Edwyn Harrison, Conservative Voice, contingency fees, Bush, Executive order

A great comment at TortDeform

Professor Charles Silver has posted about his own experience with medical malpractice, and has been responding to comments.  One of his responses warrants a post here:

It continues to be remarkable to me how willing people are to stake out positions without knowing the facts. Judging from his (her?) most recent post, Chris seems exceptionally bright and well educated. Yet, Chris was too eager to reach a conclusion about the merits of my hypothetical malpractice case. I haven’t reached a conclusion myself, and I’ve lived with the injury for over two months. In these Internet discussions of tort reform, it seems to be a sin to utter the words “I don’t know.” In real life, of course, knowing that one does not know something is often important.

Source: How Much Malpractice Coverage Does Your Doctor Have? | TortDeform

I wish Professor Silver the best and hope his condition improves.

Technorati tags: Tortdeform, Charles Silver, medical malpractice, tort reform

What the deuce? Med Mal insurer lowers rates without tort reform?

More evidence that med mal insurance rates depend on a lot more than just the tort system.

Good news for all concerned.  SVMIC, the doctor-owned professional liability insurer, has announced a rate reduction.  You probably won't read about falling medical liability insurance rates in the newspaper, but you can tell your friends and neighbors that rates are dropping even though the Legislature has not placed caps on damages in medical malpractice cases.

Source: Day on Torts: SVMIC Lowers Rates

The post is also interested because it mentions actual rates charged to doctors by SVMIC. 

Technorati tags: Day on torts, medical malpractice, insurance, SVMIC, tort reform

Good post from Nina Mason at her new Blog

TortDeform readers might remember the name Nina Mason as the creator of the innovative Georgia Civil Justice Foundation campaign to educate the public. 

It distresses me greatly that newspapers as well-respected as The Wall Street Journal would publish hogwash like “The Tort Tax” without bothering to check the facts. These articles are nothing more than misleading propaganda designed to sell books, capitalize on the politics of fear, and help push the democracy-dismantling agenda known as “tort reform.”

The article begins with this bald-faced lie: Economists have long understood that America’s tort system is a serious drag on the nation’s economy. Economists understand no such thing. The truth is that America’s civil justice system, unlike those in other countries, is designed so that the lion’s share of the financial burden rests where it should: on the wrongdoer, not the taxpayer. Consequently, the public tax burden for our liability system is a mere fraction of what citizens pay for civil legal services in England, France, Germany, and Canada, among others. Notice how “tort reform” advocates never mention that “fact”? But they constantly mention the bogus Tillinghaust-Towers study. Highly regarded, as McQuillan and Abramyan claim? Certainly not. Widely-cited by tort-reform pundits bent on misleading the public? You betcha.

Source: Lex Communicator » Blog Archive » There's no such thing as a "tort tax"

I wish her the best of luck with her business, and will definitely keep an eye on her blog.  You should too!

Technorati tags: Nina Mason, Lex Communicator, tort tax, tort reform

Finally, the AAJ starts playing offense!

If anyone has a copy of this ad, I'd love to see it.  It doesn't appear to be in my local edition of the USA Today. 

The American Association of Justice placed advertisements in USA Today, including the Philadelphia edition, urging doctors to ask their insurer a simple question: “Why do my rates keep going up while your claims payments keep going down?”

Source: Report Shows Malpractice Insurers Price-Gouging Doctors and Driving Up Cost of Care | Tortdeform

The article references a study conducted by the former Missouri Insurance Commissioner.  The study was funded by the AAJ, which no doubt means "reformers" are going to dismiss it as being biased.  If only they'd also dismiss the many studies funded by the insurance industry...

Technorati tags: AAJ, tort reform, insurance, insurance cartel

Uninspected utility poles

The following post from Greedy Trial Lawyer reminded me of a case I once worked on: 

Utility poles do not inspect, maintain or repair themselves. Utility companies do that (or, are supposed to do that) on some periodic or regular basis. But, sometimes a pole is totally neglected for 46 years. Then, a lineman is sent up the pole.

Source: Qwest's $39.5 Million Inspection Program - Greedy Trial Lawyer

I was working as a paralegal on a case in which a couple of teenagers on their school lunch break ran into a telephone pole after skidding off a rainy road.  The pole cracked and fell on the roof of their car, seriously injuring one of them and moderately injuring the other.  During the course of the investigation, we found out the pole was put in during the 1930's and the utility company had no inspection records for it at all.  To their credit, the company was in the process of replacing the poles in the area, but they hadn't quite gotten to that one.  The plaintiffs in GTL's post got $39.5 million.  Our firm referred our pole case to another firm, and I resigned shortly thereafter, so I have no idea how much money, if any, our clients received.

Technorati tags: Qwest, utility poles, Greedy Trial Lawyer

I Think I Found a New Job!

What's this?  An exciting job opportunity in D.C.?  Working side by side with Ted Frank?   

This position provides research support on issues related to American federalism and tort reform through case and brief retrieval, citation checking, case summarization, and legal analysis. It will also involve cultivating relationships with academics and practitioners in the field and overseeing the production of several monographs per year, as well as such administrative tasks as conference planning, editing, mass mailings, and data entry.

The ideal candidate will have excellent organizational, writing, and editing skills, as well as an interest in public policy and/or tort reform. Legal research experience and a background in economics preferred.

Source: Overlawyered: Work in Washington, DC at AEI!

Let's see... Organizational, writing, and editing skills?  Check.  Interest in public policy and/or tort reform?  Check.  Legal research experience?  Check.  Background in economics?  Definitely not.  Damn! Damn! Damn!  And it would have been so much fun helping the movement to shift liability costs from corporations to consumers.

Technorati tags: AEI, Ted Frank, tort reform