Thwarting the Tort Reform Two-Step

Lawyer bashing has always been a national indoor sport. But recently, the game has made trial lawyers the scapegoats for all of society's ills: health care costs, competitiveness, unemployment. The President and Vice President are gone, and we take some pride in the role that trial lawyers played in their retirement. But we are left with their legacy. Common wisdom now accepts the myth they peddled, and the juries we face believe that their own self-interest requires them to just say no to our innocent, injured clients. Trial lawyers face a public that believes we are greedy sharks, engaged in a wholesale effort to ruin the nations economy, all the while wearing tasseled loafers. It is a heavy burden for us to bear. Like all human beings, we want to be proud of what we do, we want to make a difference, we want to make a contribution. Have we?

Today you virtually do not see a tractor anymore without a roll bar. Punch presses have guards. You cant buy a Dalkon Shield. Asbestos is not used for insulation. How did that happen? Government regulation? No. Corporations suddenly developing consciences? Not likely at all. These changes, every single one of these changes, were made by trial lawyers: civil trial lawyers before civil juries before the civil justice system of this nation. According to the National Safety Council, the fatal accident rate in this country has dropped by 10% in the last 10 years. The National Safety Council attributes this drop to Ralph Nader, with whom I am willing to share the credit, the consumer movement in general, and better medical care.

Civil lawsuits played an important role, but lam not the only one who thinks so. Sports Illustrated, which is not an organ of ATLA, reports that last year, for the first time in 60 years, no player died from football-related injuries. Sports Illustrated credits safer helmets with this change. Even Sports Illustrated recognizes that lawsuits against the manufacturers of unsafe helmets are the reason for safer helmets. The College of OBGYNs did a survey of their members that asked what, if anything, they had changed in their practice as a result of liability. One out of three doctors, 35%, said they had changed their practice as a result of liability. They started using written, informed consent, and telling their patients what it was they were doing and why. This hardly seems a reason for complaint to me.

Although these examples graphically illustrate the importance of the civil justice system, the system is not popular nor are we. Most people have no idea how important a role it plays in our society, unless or until they or somebody they love is injured by the wrong facts of others. Trial lawyers are the only segment of society that understands this role and can articulate it and we could do a better job. We must know the facts and tell the facts. With the tools of our profession, we must convince those who make our laws that the groups behind any effort to obstruct civil justice are wrong. They are wrong legally, they are wrong factually, and most important of all, they are wrong morally. Unfortunately, every time we debunk one of their myths, they generate a new one. The people behind this campaign are persistent and unquestionably creative. We have proven again and again and again that there is no liability explosion or any economic burden imposed by trial lawyers. It's all baloney! We've got the numbers; we've got the data!

A couple of months ago, I was invited to participate in a TV program called On the issues, sponsored by PriceWaterhouse, on product liability. There were four of us and eight of them. When the CEOs kept blaming liability and the litigation explosion for our lack of competitiveness in the world market, I said, You people are in danger of believing your own propaganda, and you are in more danger of creating a self-fulfilling prophecy. Some 14 objective, independent studies have been done on competitiveness which pinpoint why America is not currently a world market leader. Not one of these studies recommends changing liability or the litigation system to improve our ability to compete in the world market. Litigation is not an important consideration. Charles Epp and Mark Galanter, Professors of Law at the University of Wisconsin, work at the Institute for Civil Justice. Virtually all of the objective data existing today originated with the Institute. Epp and Galanter analyzed lawyer populations and economic growth nationwide from 1960-1988. Their research effort investigated whether or not lawyers had a negative impact on economic growth. They determined that there just wasn't any. They also found something else; the higher the ratio of lawyers to white-collar workers, the greater the rate of economic growth. Americas foreign direct investment increased from $83 billion in 1980 to $530 billion in 1990, proving product liability laws are not a burden on U.S. business.

How does that square with them claiming our liability laws discourage competitiveness? What does the insurance industry say about this when they think were not listening? Ralph Tate, the Vice President of Common Stocks at Aetna, said There is no real concern about the wave of lawsuits, and Connecticut Business quoted him. Do they think we cant read? The National Insurance Consumer Organization, using data from A. M. Best, determined that product liability premiums amounted to a total of $2.6 billion. This sounds like a lot of money--$2.6 billion. It is 14% 4Vc of the total costs of goods and services sold at retail in this country. But retail is only 1% of the total costs of goods and services. The average payment for a closed claim was a mere $5795. For every 100 claimants who got anything, 128 got nothing. The study also showed that administrative costs, the money insurance companies keep for transferring money around, amount to $1.09 for every $1.00 that they paid out to claimants. The contingency fee is looking pretty modest.

The cost of product liability adds less than 1% to the cost of a product; corporate (EQs know this and have even acknowledged it, aloud, in public. A 1988 study conducted by the New York Conference Board, a group of CEOs in major corporations, reveals one-third of their managers surveyed said the real impact of product liability law on company operations was better products. Incidentally, this board quickly rescinded this study after it came out. The fellow who supervised it resigned. The board put out another study more consistent with what they wanted it to show, hut we still have the original study. Financial World reports that in 1990, 500 American CEOs received $1 billion in total direct compensation. Thats about $2.4 million, each. I low about caps on executives salaries? W hen the product liability unfairness bill was pending in the United States Senate, we were prepared with a series of amendments to the bill. My personal favorite was an amendment that would cap executive salaries, at 10 times the wage of the lowest-paid person in the company.

Whenever legislators ask insurance executives to tell them what effect their proposals will ha ye on insurance rates, they are met with evasion: "We cant tell--too many factors. Its the tort reform two-step. Georgia, one of your neighbors, passed a bill that contains most of what the insurance industry keeps saving it wants. They were about to add caps on insurance rates in an amendment when the insurance industry killed it. In 1986, Florida passed significant changes in their civil justice system. One requirement was for insurance companies to report, one by one, to the Insurance Commissioner what those changes in the civil justice system would do to insurance rates. A provision of the law thats been cancelled. However, several companies did report. The really significant and dramatic changes affected less than 1% X of the insurance rates. Other states bought the same propaganda and have had the same experience.

Doctors are a special case. They just want an out--no liability. Nobody wants to be sued, hut these people have the power of life and death over us and our families. We face a serious struggle trying to protect the civil justice system and patient rights. But there are several recent studies supporting our contention that the cause of medical negligence lawsuits is medical negligence. Harvard released a study to define medical negligence. It analyzed hospital discharges in the State of New York during 1984. They found 30,000 injuries and 7,000 deaths related to medical negligence in one year, in one state. It is an epidemic. Apply those numbers nationwide, and you have 80,000 deaths a year from medical negligence alone. Despite the high incidence of medical negligence, only one out of eight people who survive it ever bring suit. Doctors claiming patients sue them at the drop of a hat are simply wrong. They do not get sued nearly often enough. The system doesn't work. Let me put this in context for you, seven out of eight people with negligence claims don't bring them A startling statistic.

Deborah Hensler, of the Rand Institute for Civil Justice, has evaluated the operation of our liability system. She found this same statistic repeated again and again in other areas of liability such as automobile and product liability. Whatever the area of liability, the statistic was constant: only one out of eight to one out of ten people who have a negligence claim actually bring it. Our system works as well as any system. No one has a better system, but some people think they do. Unfortunately, some have offices in the White House, or very close by in the Executive Office building. The proposals on the table having an adverse impact on the cost of health care include: caps on damages, caps on contingency tees, sliding scale contingency lees. Liability is gone. As best I can determine, enterprise liability was put forward by the administration in an effort to cheer rip the doctors who say, God, they sue me and it destroys my lifestyle; my golf game goes down. Members of the administration thought they could insulate doctors from direct liability and then they would be happy. Well it didn't make them happy; it made them unhappy. The concept of enterprise liability is gone. MICRA, the California tort reform for almost two decades, has worked so well that California now has the second-highest medical costs per capita in the country. They follow right after Massachusetts, which has a similar type of system for medical malpractice. It absolutely amazes me that they can say how wonderful their system is with a straight face. If what you want to do is impede people with valid claims from bringing them, then their system does work. It works in California. If your aim is to lower the cost of medical malpractice insurance for doctors, that works too. Yet health care costs will not go down. In fact, Indiana, like California, bought the whole myth in 1974. Indiana has an absolute cap, not just a cap on non-economic damages, an absolute cap of $750,000--lost wages, medical costs, and intangible damages. Lay people think $750,000 is just about as much money as you could ever have and ever need. They don't realize that when you are dealing with someone who is totally disabled, $200,000 a year for medical costs is not out of line. They don't understand that you've got a 25-year-old police officer who made $25,000 a year before he was totally disabled. If you take $25,000 a year for his work-life expectancy of 40 years, rising constant dollars you have a million dollars in lost wages alone. When you are explaining this to people, make sure they understand--$750,000 simply isn't compensatory for many injuries.

Whats happened in Indiana? What has been the economic consequence of this draconian cap? Illinois, right next door to Indiana, has left the tort system virtually unchanged. Recently, a study comparing costs of hospitalization between the two neighboring states, found that they are the same. They are virtually identical, except in one area: childbirth. Costs in Indiana are higher, not lower. In Financial World, an article How Doctors Have Ruined Health Care, are some startling allegations: 35% of all surgical deaths and 50% of post-operative complications, such as infections, are probably preventable. As many as 25% of patients who die in hospitals are misdiagnosed by their physicians. Trial lawyers did not write this article. It came from a bi-partisan study, which is still not really public as best I can determine. The people who head the study are former Presidents Ford and Carter. The bottom line is money, and for doctors it was insurance premiums. Until recently, we were told insurance premiums were driving health care costs up and doctors out of business. Now we know, without question, the cost of insurance premiums for doctors is .74% , or less than 1% of the cost of health care. On December 16, 1992 at a panel discussion on the issue of health care and tort reform in the District of Columbia, Marty OConnor, the head of ATRA, the American Tort Reform Association, wrote this down: The cost of medical malpractice insurance is not why health care costs are out of control. But why is he telling us this now? Because insurance rates are going down, and health care costs are not going down.

In Arizona, the Mutual Insurance Company has filed annual rate decreases totaling 4ft since 1989. Yet health care costs just keep on going up. Too much data says that the premium thing is a lie. Do they say, Oops, were sorry. Oops. No, now its defensive medicine, a linguistic makeover. Defensive medicine, like defensive driving, was a good thing. It was cautious. We liked it! We don't like it any more. Defensive medicine has been transformed into a very bad thing. It means unnecessary tests and procedures are performed solely to avoid liability. This is unethical. Doctors, to avoid liability, increase their liability by unnecessary tests, particularly if there were risks incident to doing the test. Its very hard to get a grip on what they mean by defensive medicine. The numbers are ephemeral. They change on a daily basis. But lets assume everything that any doctor ever said was defensive medicine is, in fact, defensive medicine. We get another 1% of the total cost of health care. Thats all we get. The use of diagnostic tests and procedures has gone up. There are now a whole slew of studies about why; but it has nothing to do with the tort system. If the doctors own the testing equipment, then everybody who comes to that doctor needs that test unless uninsured. This has been studied too. Drug companies also give doctors perkstrips, not little calendars and paperweights. When a drug company gives a doctor significant perks, the doctor is seven times as likely to prescribe that particular drug. This is from the New England Journal of Medicine. How are they going to blame us?

Just a few days ago, I was asked for my response to a brand new Levin study on the cost of defensive medicine at $5 billion a year. Would you pay $5 billion a year if we just deprived innocent injured people of their right to redress in parts of this country? When you hear $5 billion, it sounds like a lot of money until you realize we spend $817 billion a year on health care. This is not a way for us to get a grip on health care costs. Trial lawyers are the last bastions. In Iowa and most other states, doctor discipline is a joke. Doctor discipline has resulted in 2,000 disciplines in the last year across the country. Ten percent of the doctors today are thought to be impaired by drugs or alcohol. Trial lawyers are the only thing that stands between negligent doctors and their ability to practice medicine unfettered. They don't want us looking over their shoulders, but I am concerned that we will be unable to hold the line in this instance. This is a snowball rolling down a hill. We are the scapegoats, and were easy to give away.

Mark Galanter and Charles Epp maintain that available evidence suggests health care costs have grown the slowest in those states with the most lawyers per capita. This is not a surprise to me. If were doing our jobs, we are preventing bad doctors from doing bad things to good people. If were not there, more bad doctors will do more bad things to more people. Health care costs will go up inevitably. If we abandon the field and let those who would destroy the civil justice system do it, what would they do? First, of course, is a cap on non-economic damages: pain and suffering. Why? They say its not compensatory, not necessary. In the Phoenix New Times, Michael Lacey wrote:

On September 11, 1981, an Arizona public service utility line was leaking natural gas. When Susan Smith lit a cigarette in her Phoenix residence, the apartment exploded in a huge fireball and burned the woman horribly over her entire body, except for the top of her head. Today, four and one-half years after the accident, doctors have finished the cosmetic and the prophylactic surgery. Though she will spend the rest of her life in medical treatment, and despite the doctors bills that currently top $850,000, there is little more that can be done about her appearance. Susan looks like a monster. If Americas insurance companies get their way in Arizona, people like Susan will collect roughly $l90 a week for pain and suffering. Is $190 fair?

Once she was stabilized, the doctors cut dead skin off of Susans charred husk and replaced it with good skin from her scalp. Dozens of operations followed. Unable to breathe for much of this period, Susan was hooked up to a respirator that supplied the kiss of life, but also left her unable to talk. Massive doses of antibiotics fought off life-threatening infections, but the antibiotics also rendered her stone deaf. She suffered pain that we can never imagine, and she suffered it without hearing the sounds of comfort and without being able to scream words of anguish. The talk in State House quarters is that pain and suffering awards should be capped at $300,000, and rather than giving a lump sum, payment should be spread out over a lifetime like the lottery pay-off. If Susan Smith lives another 30 years, that money would average out to $10,000 a year, something less than$190a week. This is how she will spend those three decades. Because of her deformity, even the simplest household chore will require assistance. Although a workaholic when she toiled as a television producer at Channel 3, Susan will never again have a career. She cannot hope to ever walk normally. When she hobbles into a room, people will stop what they are doing and stare. The insurance industry thinks that $l90 a week should comfort Susan Smith, and the rest of us are supposed to believe that if we play cheap with the Susan Smiths, somehow our insurance premiums are going to go down. As if stealing crumbs off of Susan Smiths life were justifiable as long as we could pocket some spare change.

Voters in Arizona defeated that initiative, but the initiatives keep coming back, and so will we. In California, Arizona, Florida, and every state where these issues have been on the ballot, we have prevailed. When people come to understand what is at stake here, they say No to the insurance industry and to the organized tort-feasors.

Punitive damages. Another favorite target, Dan Quayle, had quite a bit to say about punitive damages in Atlanta during August 1991. All of it wrong. He said, Even a casual observer knows that in the last several decades punitive damages have grown dramatically in both frequency and size. What began as a sanction only for the most reprehensible conduct has now become almost routine. Several recent studies flatly contradict him. The Roscoe Pound Foundation released its study of punitive damage/products liability cases and found, from 1965 to 1990,355 total damage awards in products liability cases. What a surprise to those who profess to blame punitive damages for everything bad thats ever happened. 355 total awards in 25 years. One of the most striking findings was that of those companies that had punitive damages awarded against them, three-quarters took some safety-related action: better instructions, warnings on the product. A major reason that manufacturers back proposals that would eliminate punitive damages, or make them a set percentage of compensatory damages, is to predict the amount. The greatest value of punitive damages is the fact that the bean counters cannot factor them into the bottom line because they are so unpredictable. I was on a television program called Its Your Business put on by the United States Chamber, and made a comment about this business tendency on the program. The people on the other side said, Oh, no, we would never do such a thing. They would, they have, and they continue to do so.

The Pinto document, September19, 1973, is the actual cost-benefit analysis that Ford Motor Company did on the lives of you and your family. In Table 3: benefits, savings under benefits, 180 burn deaths. 180 serious burns, injuries. 2,100 burned vehicles. It lists how much it will cost to pay off the families of people who die, and indicates that it will cost less to pay off the families of the dead people$49.5 million, than it would to move the gas tank. It would have taken only $11 per car to make that gas tank safe. But the choice was made on the basis of the bottom line and their bottom line was money not lives.

Cutter is a pharmaceutical company that makes factor concentrate, a blood product. On December 23, 1982, a doctor told the company they needed to warn people that their factor concentrate could cause the dread disease AIDS. He said, We need to include it in the package insert; we need to educate the sales force, and since most doctors will not be reading the package insert, we need to send it to the hematology specialists, kind of a Dear Doctor: letter. Until this document surfaced in spring 1984, Cutter and other manufacturers said that the duty to warn did not exist. Even more shocking, the American Red Cross in a document dated March 20, 1984, engaged in a cost-benefit analysis in determining not to test the blood supply for AIDS. They decided it would cost more to test each donation than to treat the AIDS patients that their failure to test would inevitably produce. While I believe our report reacts appropriately to the data at the end, I also believe that the best we can do in this situation is buy time. There is little doubt in my mind that additional transfusion-related cases and additional cases in patients with hemophilia will surface. They were right. The American Red Cross did not warn the general public about the risk of AIDS until April 1985, more than a year after this document. The pharmaceutical companies did not warn until 1984, when it was already too late for some 12,000 hemophiliacs who are now dead or dying of the disease AIDS.

Another interesting case. Pauline Staffords signature appears on an insurance claim form. At the time Pauline signed the form, the diagnosis was on it. Do you see the diagnosis? It says brain tumor. This is a bill for a CAT scan and that is not the proper diagnosis. The proper diagnosis is RULE OUT BRAIN TUMOR. Pauline believed, as a result of signing that form, that she had a brain tumor and two days after she signed it, she committed suicide. She didn't have a brain tumor. The reason it says Brain Tumor--and this case went to trial the reason it says Brain Tumor is because the doctor wanted to get his $129 without any hassle, and he got it. In a document from Chrysler, dated July 18, 1986, it says, Questions on 35 miles per hour and on rear seat belts have raised the need for a safety policy. It is. . . stay with the pack. Think about this when you see Lee Iacocca on TV. He was more responsible than any other human being for the fact that it took so long to get three point seat belts in cars, but now hes on TV saying, Stay with the pack A document that made me an asbestos lawyer is from E. A. Martin at Bendix to a Mr. Noah Hendiy on September12, 1966. It said:

My answer to the problem is, if you have enjoyed a good life while working with asbestos products, why not die from it? There has got to be some cause.

Now I think maybe thats where Ronald Reagan got his ideas about pollution. But at the time I thought, My God, these people need to be sued. Thats how I do it. Thats all. I have a whole notebook of these smoking gun documents gathered from lawyers all over the country, and your Executive Director and President have that notebook.

What justification is offered for the efforts to limit victims rights? Former Vice President Quayle said we just couldn't afford it. Just too darn expensive. The total cost of our civil justice system is between $29 and $36 billion a year, less than one percent of the GNP for the greatest civil justice system in the world. What are we exporting to the countries that used to be the Soviet Union? Our justice system. Our civil justice system. In my opinion, the preservation of this system across America is the civil rights issue of the decade. It is a cause with tremendous social importance. The state trial lawyer associations and ATLA are the organizations through which we will succeed.

ATLA has added a whole bunch of services that did not exist before. If you need to know when rubber tips were first put on ladders, you can call ATLA and someone will tell you. I'm just about to file a really good brief in the case involving the death of a 20-year old woman [that happened] across the street from a police department. She was in the process of divorcing her husband, and under court order to exchange custody of the child twice a day, every day. In order to feel safe, this man had beaten her; she wanted to do it in the police department but they wouldn't let her. She met him across the street in a grocery parking lot instead, and he cut her throat in front of her child. I'm suing everybody that I can get my hands on. Its a developing area of law; therefore I have called in the experts. I got them through ATLA. This is just a sample of the things ATLA can do for your practice. Call the 1-800 number and we will try to do anything that you need to have done, from arranging videotape depositions in Cody, Wyoming, to research. We try to beat the bad guys and help the good guys. Sometimes we cant tell whose who, however. If you think that the organization doesn't matter to you, please think again. If you are not a member, please join, because we need you.

One of my great heroes is the late Teddy Koskoff from Connecticut. All of his life he worked on behalf of the little person as a civil trial lawyer. He was also President of ATLA. He defines lawyers with power and with poetry and I want to leave you with his words. I have added a little and I have subtracted a little, but most of what I am about to read to you belongs to Teddy Koskoff. He said that if you area lawyer, you stand between the abusive corporate power and the individual. If you are a lawyer, you stand between the abusive governmental power and the individual, and if you are a lawyer, you are helping to mold the rights of individuals for generations to come. If you think about those who have been a part of our professional heritage, your thoughts would,! think, turn to some of these. A Philadelphian in New York, the first Philadelphia lawyer, who understood the defense of John Peter Zinger to protect his right to publish what he chose free from censorship or interference. His name was Andrew Hamilton. He was a lawyer. You would see him at the trial of Captain Preston, another political trial, a trial that arose out of the Boston Massacre. His name was John Adams, and he was a lawyer.

You would see him at that miracle in Philadelphia, the Constitutional Convention of 1787, fighting for the Bill of Rights, which became the basis of American freedom. His name was Thomas Jefferson, and he was lawyer. You might seem him exhorting the Battle Cry of the Republic, Give Me Liberty or Give Me Death! His name was Patrick Henry; he was a lawyer. I know you would see him at Gettysburg, with tears in his eyes, gaunt and morose, re-dedicating our country to the principles of equal justice for all: "As I would not be a slave, so I would not be a master. His name was Abraham Lincoln, and he was a lawyer. You would see him speaking tons from his wheelchair, making us strong, lifting our spirits with his inner inspirational philosophy, The only thing we have to fear is fear itself. His name was Franklin Delano Roosevelt; he was a lawyer. You could see her standing before the podium in the United States Supreme Court Chambers and insisting that her client, Gerald Gault, a 15-year-old child, had the right to due process of law; a dangerous and unpopular idea at the time. Her name is Amelia Lewis, and she is a lawyer. You may also see her in the United States House of Representatives in July 1974 during the most serious Constitutional crisis of this century, as she gave voice to our fear, our anguish, and our hope. Her name is Barbara Jordan, and she is a lawyer. Certainly we see him, passionate and stubborn, brilliant and volatile, a product of segregated education whose extraordinary skills ended it. He said, Separate but equal is a legal fiction. There never was and never will be any separate equality. Our Constitution cannot be used to sustain ideologies and practices which we, as a people, abhor. He was the ultimate long-distance runner, his name is Thurgood Marshall, and he was a lawyer.

We may also see him in Birmingham, Atlanta, and Portland. Modest, unassuming, soft-spoken, but with the courage to face down the enemies of liberty and to march on despite the threats to himself and his family, using the civil justice system to bring the Klan, the Skinheads, and the other hate-mongers to their knees: Remember me by my clients. His name is Morris Dees, and he is a lawyer. And finally, you might remember the marvelous admonition of Holmes, when more than a hundred years ago he said, "It is required that we share the action and passion of our times at the peril of being judged not to have lived. We are truly blessed. This is a peril we will never face. All of our lives are action and passion because we are lawyers.