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asbestos

May 14 roundup

by Walter Olson on May 14, 2009

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A high-profile federal environmental prosecution has struck out following charges of prosecutorial misconduct as well as disputes over the quality of the evidence [Montana's News Station, Van Voris/Bloomberg] Carter Wood and others have been blogging the case at Point of Law, and a joint blog effort of the University of Montana’s law and journalism schools has given the case extensive coverage. See also Kirk Hartley.

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New at Point of Law

by Walter Olson on April 29, 2009

If you’re not reading my other legal site, Point of Law, here’s some of what you’re missing:

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In 2007, the Texas Supreme Court unanimously decided Borg-Warner v. Flores, holding that a defendant in an asbestos case was not liable unless its product was a “substantial factor” in causing injury.

But there are now bills in the Texas House and Senate, SB 1123 (recently reported out of Senate committee) and HB 1811, that seek to undo this by defining “substantial factor” to merely mean that a product “contributed to the [plaintiff’s] cumulative exposure”—whether or not other defendants’ products were far more responsible for a plaintiff’s injury. The effect of this rollback would be to return Texas to the role of asbestos magnet, since it could conceivably create indiscriminate liability for hundreds of innocent businesses in any given case. The effect will be very similar to the infamous Lipke rule in Madison County, Illinois that extracted billions of dollars from the innocent this decade.

Texans for Lawsuit Reform has a fact-sheet, as does the Texas Civil Justice League.

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March 24 roundup

by Walter Olson on March 24, 2009

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Microblog 2008-12-13

by Walter Olson on December 13, 2008

  • Holman Jenkins on auto bailout [WSJ] Bush’s willingness to use TARP helped the unions scuttle a reasonable deal with Corker; and why exactly did CEO Wagoner commit GM to the (dubious and self-injuring) position that buyers’d abandon the company in the event of a Chapter 11? [Hodak Value h/t Ted] So that’s what dragging Detroit down — domestic partner benefits [Brayton] And Ted wonders if it might be cheaper in the long run for the government just to buy a Senate seat from Gov. Blagojevich for every auto worker;
  • Where’d Gov. Blagojevich pick up idea it was OK to sell official acts for $$$? Can’t imagine [Ribstein] Who is Advisor B? [Byron York] Sing, Rod, sing! [Coleman] “Blago’s decision to let SEIU and not AFSCME organize Ill. child-care workers” Hmmm [Freedom-at-Work, NRTW] “How do they think Chi pols talk in private when muscling some guy for cash? Like Helen Mirren playing the queen?” [John Kass, Tribune] A look at AG Lisa Madigan [PoL] Illinois pols have shaken down hospitals before, state’s “certificate of need” (permission-to-build) law is one culprit [StateHouseCall]
  • J.K. Galbraith’s best bon mot: “bezzle” = inventory of unexposed embezzlement, revealed as tide of boom recedes [Cox, Breaking Views] Fascinating memoir of why Madoff had been giving off fishy smell for years [Tokyo Cassandra] So sleazy! “Many” investors put $ with Madoff because they suspected he was crooked — but cheating someone else [Blodget] “Madoff didn’t run one of these much-maligned, unregistered hedge funds. He was registered with the SEC. Here’s his latest 13-F, which looks perfectly normal.” [Weisenthal]
  • Daily downer for media folk [@themediaisdying h/t @amyfeldman] “Remember, America, you can’t wrap a fish in satellite radio” — P.J. O’Rourke wants bailout for print [The Australian]
  • Jurors’ political leanings predict whether they’re pro-plaintiff or defendant? Not as simple as that [Wisconsin Lawyer h/t @juryvox]
  • Asbestos rise in Madison County, Illinois could signal return to “old school” tactics [MC Record h/t @icjl]
  • Sue me harder, don’t stop now: competing Fla. fetish clubs feud in court, which’ll get whipped? [ABA Journal]
  • Russian patent office grants trademark for ;-) emoticon, businessman asking royalties [BBC h/t @bodhi1 @mediadonis]
  • Arnold Kling: loan modification way oversold as remedy for housing ills [EconLog h/t @tedfrank]
  • Best line: “the goose was not our employee or our agent” [CKA Mediation h/t @vpynchon, earlier]

September 3 roundup

by Walter Olson on September 3, 2008

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Add the August 28 LA Times to the list of newspapers looking askance at Joe Biden and his family’s cozy relationship to judicial-hellhole asbestos attorneys, in this case Madison County’s SimmonsCooper. (Chuck Neubauer and Tom Hamburger, “Business dealings of Biden family could be problematic for him”, Aug. 28). Unfortunately, the article somehow manages to miss the rationale for creating the trust fund, which was the degree to which so much asbestos litigation in the country is abusive.

Update: also, Am Law Daily.

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Biden and the trial lawyers

by Ted Frank on August 27, 2008

A USA Today story delves deeply into how Biden’s done the bidding of the litigation lobby special interest group, particularly with respect to the bipartisan asbestos litigation reform bill.

Lester Brickman has a new must-read paper on an under-reported problem:

Lawyers obtain the “mass” for some mass tort litigations by conducting screenings to sign-up potential litigants en masse. These “litigation screenings” have no intended medical benefit. Screenings are mostly held in motels, shopping center parking lots, local union offices and lawyers’ offices. There, an occupational history is taken by persons with no medical training, a doctor may do a cursory physical exam, and medical technicians administer tests, including X-rays, pulmonary function tests, echocardiograms and blood tests. The sole purpose of screenings is to generate “medical” evidence of the existence of an injury to be attributed to exposure to or ingestion of defendants’ products. Usually a handful of doctors (”litigation doctors”) provide the vast majority of the thousands and tens of thousands of medical reports prepared for that litigation.

By my count, approximately 1,500,000 potential litigants have been screened in the asbestos, silica, fen-phen (diet drugs), silicone breast implant, and welding fume litigations. Litigation doctors found that approximately 1,000,000 of those screened had the requisite condition that could qualify for compensation, such as asbestosis, silicosis, moderate mitral or mild aortic value regurgitation or a neurological disorder. I further estimate that lawyers have spent at least $500 million and as much as $1 billion to conduct these litigation screenings, paying litigation doctors and screening companies well in excess of $250 million, and obtaining contingency fees well in excess of $13 billion.

On the basis of the evidence I review in this article, I conclude that approximately 900,000 of the 1,000,000 claims generated were based on “diagnoses” of the type that U.S. District Court Judge Janis Jack, in the silica MDL, found were “manufactured for money.”

Despite the considerable evidence I review that most of the “medical” evidence produced by litigation screenings is at least specious, I find that there is no effective mechanism in the civil justice system for reliably detecting or deterring this claim generation process. Indeed, I demonstrate how the civil justice system erects significant impediments to even exposing the specious claim generation methods used in litigation screenings. Furthermore, I present evidence that bankruptcy courts adjudicating asbestos related bankruptcies have effectively legitimized the use of these litigation screenings. I also present evidence that the criminal justice system has conferred immunity on the litigation doctors and the lawyers that hire them, granting them a special dispensation to advance specious claims.

Finally, I discuss various strategies that need to be adopted to counter this assault on the integrity of the civil justice system.

Once plaintiffs’ lawyers attracted potential asbestos plaintiffs, they had to convert them into actual plaintiffs. This “production” process is at the heart of the overall asbestos litigation scam. As noted, the screenings typically occurred in vans or trailers in parking lots. The procedures inside were laughable:

Inside the trailers, screeners took “occupational exposure histories” (which were necessary to link plaintiffs to asbestos defendants), conducted breathing tests, and took X-rays that were later analyzed by medical specialists known as “B readers.” People with little or no medical training ran the screening clinics: high school students or clerical workers took patient histories, a crucial procedure in diagnosing lung disease. Glorified clerks composed the diagnoses and “signed” them with rubber stamps.

The evidence is overwhelming that these screenings were largely shams designed to identify as many individuals as possible as “impaired” with asbestos-related injury. The plaintiffs’ lawyers only employed 4 to 6 percent of the nation’s certified B-readers. Some were employed in staggering mass-production fashion: one doctor diagnosed some 88,000 patients, conducting 150 asbestos X-ray readings per day. Unsurprisingly, many of the doctors who were most employed by the asbestos litigation machine later disavowed their diagnoses under oath or pleaded their Fifth Amendment-right against self-incrimination.

Just how stacked were the screenings in favor of finding a positive diagnosis of injury? A study employing independent readers conducted by Johns Hopkins researchers looked at 492 X-rays processed by the screening clinics and found lung impairment in 4.5 percent of cases; the lawyers’ B-readers had identified asbestos-related injury in 95.9 percent of the exact same films.

While the fraud involved in asbestos screenings was fairly well known among those in the know, and had been documented extensively by Professor Lester Brickman (see, e.g., here), the real public break in exposing the fraud came in federal court in 2005, when Texas judge Janis Graham Jack documented on the record massive fraud in the silicosis cases before her court. Regular readers of Overlawyered and Point of Law are familiar with Judge Jack’s basic findings (see here), so I’ll only go over the high points. (Interested readers can refer to the pertinent section of the Trial Lawyers, Inc.: Asbestos report for more detail.)

In essence, Judge Jack discovered (through the diligent work of the defendant’s law firm) that most of the silicosis claims before here were filed on behalf of individuals who had already been paid for asbestosis. While medically possible, mutual occurrence of both diseases is highly unlikely; and the medical diagnosis of X-ray readings makes distinguishing between the 2 injuries rather easy, as “scars that asbestos causes look like threads, while the scars that silica causes look like BBs.” Dr. George Martindale, a doctor who had processed thousands of claims before Judge Jack, admitted that the language in his “reports” that formed the basis for the litigation came from the lawyers and screening companies, and he denied that they were actual diagnoses. Judge Jack held full hearings under the rules established by Daubert v. Merrell Dow Pharmaceuticals and its progeny, and issued a comprehensive — and withering — 249-page decision:

These diagnoses were about litigation rather than health care. And yet that statement, while true, overestimates the motives of the people who engineered them…. [T]ruth and justice had very little to do with these diagnoses. Instead, these diagnoses were driven by neither health nor justice; they were manufactured for money. The record is not clear who originally devised this scheme, but it is clear that the lawyers, doctors and screening companies were all willing participants.

Since Judge Jack’s ruling, other scandals involving mass asbestos screenings have emerged, which I’ll document in due course. The key take-away from a broad litigation context is just how much difficulty U.S. courts have in dealing with complex medical evidence. Federal courts have improved significantly since Peter Huber wrote Galileo’s Revenge, in no small part due to Daubert and the cases that followed, but many state courts lack the procedural protections — or competence — that their federal brethren possess in handling these issues. Indeed, had Judge Jack not been a former nurse, she herself may not have been able to interpret the fraud before her. In mass tort cases, of course, handling the scientific evidence becomes all but impossible, as I’ll discuss next.

Asbestos: Part Deux

by James Copland on June 25, 2008

With Walter occupied on a deadline and Ted on the road, I’m happy to be back to wrap up my discussion of developments in asbestos litigation, as summarized in the Manhattan Institute’s recently released Trial Lawyers, Inc.: Asbestos report. As I noted last month, asbestos has an ancient history, and in the early part of the last century, it was deemed a “magic mineral”; its flame-retardant properties protected American naval vessels and schoolhouses from fire. (See here.) Unfortunately, asbestos exposure ultimately proved deadly, the plaintiffs’ lawyers pounced, and the American asbestos industry largely went bankrupt by the early 1980s. (See here.) The trusts created to pay out claimants from these bankrupt entities became a big business unto themselves, swamped with claimants and unable fairly or efficiently to process the claims. (See here.)

 What happened next, in the 1990s and early part of this decade, amounts in large part to the systemization of fraud, through a business model the trial lawyers developed to extract as much money as possible out of the asbestos well. As we point out in our Trial Lawyers, Inc. report, this business model “starts with marketing (recruiting plaintiffs), followed by production (eagerly screening prospective plaintiffs for purported lung impairment and usually finding it), packaging (bundling cases into a “mass” of tort claims), and sales (overwhelming courts and defendants to extract settlements).” At each stage of the process, the business exemplifies major problems with American jurisprudence. I’ll start with marketing.

Lawyers’ ability to “market” for clients is founded in the U.S. Supreme Court’s decision in Bates v. State Bar of Arizona, which determined that attorney advertising is a form of speech protected by the First Amendment. That ruling may well have been right as a matter of constitutional law, but it effectively gutted prohibitions on attorney solitication of clients and led to attorney-driven litigation. In the asbestos context, solicitation of clients became truly laughable, as ne’er-do-wells attracted potential plaintiffs to screening vans parked outside union halls or strip malls:

Heath Mason, a junior-college dropout with no legal or medical training who made $25.5 million from asbestos litigation. Mason’s role was attracting potential plaintiffs to “screening clinics” that interviewed and “tested” them, usually in trailers hauled to restaurant, shopping-center, or motel parking lots. Mason would lure passersby with attractive women he called his “lawyer girls,” such as the two young lawyers he met at an unidentified convention in Fort Lauderdale, Florida, and later persuaded to stand on a Fort Worth street corner with signs directing potential plaintiffs to an X-ray screening van in a Staples parking lot.

Today, marketing tactics are also of the sophisticated variety. As Overlawyered readers are aware, the most expensive Google ad-search terms involve “asbestos” and “mesothelioma.”

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  • Screening firm hired by Beaumont, Tex.’s Provost Umphrey to do mass silicosis x-rays at Pennsylvania hotels is fined $80,500 for breaking various state rules, like the one requiring that a medical professional be on hand [Childs]
  • Milberg Weiss’s special way of obtaining perfectly pliant clients — that is to say by bribing them under the table — harmed other class members by increasing fees but not settlement sums, suggests a new study by St. John’s lawprof Michael Perino for Ted’s project at AEI [Carter Wood @ PoL]
  • Time for Texas to join many other states in requiring lawyers to inform clients when practicing without professional liability insurance [SE Texas Record; earlier here, here and here]
  • Lawyers, in concert with their public pension fund allies, jockey for control of securities case against Bear Stearns [Gerstein/NY Sun]
  • Another court, this time in California, rules that a screw maker can’t sue a law firm on the claim that its solicitation of potential claimants wrongly portrayed the company’s products as defective; amicus brief from state trial lawyers group and Sen. Sheila Kuehl says relevant provisions of state’s “SLAPP” law were “meant to protect plaintiffs groups, not companies” [The Recorder via ABA Journal; earlier case from Tennessee]
  • Most lucrative Google AdSense words still dominated by asbestos and other personal injury practice, the top terms being “mesothelioma treatment options” ($69.10 per click, and the point of obtaining the click is not to provide treatment options), “mesothelioma risk” ($66.46), and “personal injury lawyer michigan” ($65.85) [CyberWyre via NAM "Shop Floor"; more here, here, etc.]

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Tort reform, of course, resulting in substantially lower medical malpractice premiums and expenses, and an influx of 7000 doctors, including into many underserved regions. One indirect benefit: with less money spent on medical malpractice lawyers, self-insuring hospitals can spend more on doctors and on medical practice:

Take Christus Health, a nonprofit Catholic health system across the state. Thanks to tort reform, over the past four years Christus saved $100 million that it otherwise would have spent fending off bogus lawsuits or paying higher insurance premiums. Every dollar saved was reinvested in helping poor patients.

Also of relevance: the amusing results when Texas added evidentiary standards of medical harm to their asbestos and silicosis docket. Suddenly, over 99% of the cases went away because so few suing plaintiffs had a doctor willing to certify harm. (Joseph Nixon, WSJ, May 17). Related: POL Nov. 6, 2006 and POL Nov. 7, 2006, where I debate Texas law professor Charles Silver on these issues. Suffice it to say that the last year and a half has provided more support for my position than his.

Update: more data at Texas Medical Association website.

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Site housekeeping

by Walter Olson on May 13, 2008

* Comments on the main site are still broken, sorry. Update: Comments now working since WordPress changeover.

* Yesterday was one of our biggest Instalanches ever, with about 7,000 Glenn Reynolds readers coming over to visit this post.

* You can see our rapidly evolving WordPress “sandbox” here. One vexing problem we’ll need to fix: most of the posts from guestbloggers are being attributed to the wrong contributors. That problem is evident in this recent post, which was really authored by Jim Copland; the case names don’t render properly either. The posts in the sandbox may accept comments (which may or may not survive in a reconstructed site) but any permalinks are not really permanent and are apt to break soon. Comments about the reconstruction itself are best added to this post. Update: Sandbox removed since WordPress version has gone live.

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Asbestos litigation continued to grow during the 1980s: by 1992, fully 100,000 claims had been resolved, but another 100,000, yet unresolved, had been filed.

A novel means of processing asbestos claims was initiated in 1988, when the Johns-Manville corporation emerged from bankruptcy and established the Manville Personal Injury Settlement Trust, the first “bankruptcy trust” set up to pay out money to asbestos claimants. Unfortunately, plaintiffs’ attorneys controlled the trust’s claimants committee and set up procedures for the trust that were advantageous to themselves, rather than potential claimants. The trust rules minimized requirements of proof of actual injury or causation (exposure to Johns-Manville products). The trust thus paid out a lot of money quickly to the attorneys, all the while exhausting its funds for potential future claimants.

In just its first nine months of operation, the trust paid out some $500 million to 12,600 claimants — and by the end of 1989, 89,000 more claimants were outstanding. Eventually, the trust had to sharply curtail payments to claimants — to 10 percent in 1995, and 5 percent in 2001. Injured claimants were literally getting a nickel on the dollar. “As of June 30, 2006, the trust had received more than 773,000 claims and paid out about $3.4 billion–just $4,400 per claimant.”

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Asbestos litigation has been around a long time. Early on, nothing like modern product liability law existed (see Richard Epstein’s discussion here); lawsuits resided in workplace injury law when filed in the 1920s and 30s, and were soon subsumed in workers compensation reforms.

Modern asbestos litigation began after the Selikoff study was published in 1964. In December 1965, Texas attorney Ward Stephenson filed a case on behalf of Claude Tomplait, who had worked as an asbestos insulator. Four years later, Stephenson extracted a settlement for $75,000 from seven defendants.

Notwithstanding this meager beginning, Stephenson persisted in asbestos litigation and won a major victory in Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076 (1973), in which the Fifth Circuit Court of Appeals found asbestos manufacturers strictly liable for their workers’ injuries. The Borel court rejected statute of limitations, contributory negligence, and assumption of risk defenses; and modern asbestos product liability litigation was born.

The litigation got another shot in the arm when New Jersey attorney Karl Asch uncovered the “Sumner-Simpson papers,” which “described in great detail the efforts of Raybestos, Johns-Manville, and other manufacturers to find out about the hazards of asbestos, develop strategies to deal with them, and–most important–to keep that knowledge from the public and workers.” These documents were put to great effect by South Carolina lawyer Ron Motley, who actually used the papers to convince a South Carolina circuit judge to grant a new trial after a jury had ruled in favor of asbestos defendants. Motley of course went on to become an asbestos super-lawyer and an architect of the multibillion-dollar multistate tobacco settlement; his antics are well-known to long-time readers of this site.

Two more foundational cases are worthy of mention. In 1981, the D.C. Circuit ruled that insurers who had written asbestos policies were liable for the maximum insured between exposure and diagnosis, rather than only in the year of diagnosis. See Keene Corp. v Insurance Co. of North America, 667 F.2d 1034 (D.C. Cir. 1981). Given the long latency between asbestos exposure and ultimate illness, the level of insurance exposure was suddenly massive. Circuit Judge Patricia Wald warned that the court’s decision “requires a leap of logic from existing precedent, for it concerns diseases about which there is no medical certainty as to precisely how or when they occur.”

In 1982, the New Jersey Supreme Court threw out the “state of the art” defense for asbestos manufacturers, in essence holding that it mattered not whether business practice was the best available to the industry at the time the injury occurred. See Beshada v. Johns-Manville Products Corp., 442 A.2d 539 (N.J. 1982). The court opined, “The burden of illness from dangerous products such as asbestos should be placed upon those who profit from its production and, more generally, upon society at large which reaps the benefits of the various products our economy manufactures. ”

Thus, in less than a decade, the law was radically shifted, and asbestos litigation was born: “The decade after Borel saw 25,000 asbestos cases filed. By 1981, more than 200 companies and insurers had been sued; by 1982, defendants’ costs had topped $1 billion.” But these early years were just the beginning…

Yesterday, I had the privilege to do a brief interview with Lester Brickman, a professor of law at Cardozo School of Law in New York. Professor Brickman is one of the nation’s leading legal ethicists and the national adacemic expert on asbestos litigation. The discussion is available as a podcast, downloadable here.