“Houston lawyer Warren Todd Hoeffner is accused of paying $3 million in cash, BMWs, trips, even spa treatments and ‘gentleman’s entertainment’” in a scheme to obtain $34 million in settlements in silicosis litigation. Things began to unravel when Hartford Insurance, which had cut settlements on behalf of a number of defendants, noticed the arrival of a check for $6,000 from Hoeffner to one of its former claims personnel. Hoeffner’s lawyers are arguing that the insurance company employees extorted money and goods from their client by threatening not to approve fair settlements otherwise. [Houston Chronicle, Southeast Texas Record]
Posts tagged as:
silicosis
In Mississippi Litigation Review blog, Philip Thomas argues that Kim Strassel’s article (which we discussed Sunday) overemphasizes the role played by U.S. Silica’s CEO. I think that’s more the doing of the WSJ headline writers (which do pitch the story of one guy standing alone against the plaintiffs’ bar) than Strassel; as Thomas himself acknowledges, Ulizio doesn’t try to take undue credit, and Strassel merely (and correctly) notes that lawyers alone couldn’t defeat the silica lawsuits without the support of the business community willing to stand up against the tort bar.
Thomas also objects to Ulizio’s characterization of the victory as “luck,” but luck definitely played a huge role. The scandal came to light solely because Judge Janis Jack held mass Daubert hearings at an abnormally early stage in the litigation. In fact (and I seem to be the only person who has ever made this point), Jack’s ruling was especially abnormal, because she made the Daubert ruling before she made a jurisdictional ruling—and her jurisdictional ruling found that 99% of the cases in front of her lacked complete diversity and needed to be remanded. In other words, Judge Jack’s famous condemnation of plaintiffs’ experts was largely an ultra vires advisory opinion (which is why her sanctions order was for only a couple of thousand dollars).
The luck of the MDL draw had everything to do with that result. Another judge might not have held Daubert hearings at such an early stage; another judge might not have actually applied Daubert even if she had held the hearings; another judge might have preferred to empty her docket immediately, rather than stalling on the eventual remand.
And these aren’t purely hypothetical musings: in the welding fumes MDL in Ohio, there has been plenty of evidence of mass tort fraud, yet the judge has refused to throw out cases, so they slowly continue to proceed to trial.
In that sense, Ulizio is absolutely right: “When you have an entire system that condones these lawsuits, that does nothing to police its own, where there are no consequences, right or wrong has nothing to do with it. It’s a coin flip.” The lawyers who brought these fraudulent cases are still practicing law; thousands of fraudulent mass tort lawsuits continue to be brought since Judge Jack’s ruling without consequence to the unethical lawyers who bring them.
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“The first time we ever lost a case in trial, it was 2001. We tried it in Beaumont, Texas, and lost $7.5 million. . . . The judge sat there through the trial reading a newspaper. At one point an objection was made, the bailiff taps him on the shoulder and says ‘judge, objection is being made.’ He looks at our lawyer and says ‘overruled.’ The plaintiffs’ lawyer raises his hand and says ‘no, judge, it was me.’ He says ’sustained’ and goes back to reading the paper.” …
[U.S. Silica CEO John A.] Ulizio shares a memo that plaintiffs’ lawyer Joe Gibson sent to silica defendants in 2004 with a blunt offer: Settle our 9,000 cases for $900 million, or pay $1.5 billion in pretrial discovery alone, plus an even bigger verdict. “That’s the genius of the economics of litigation from the plaintiffs’ perspective. Sue a lot of people, sue on behalf of a lot of plaintiffs, get into an adverse jurisdiction, and then don’t make too big of a demand, so you can settle it for a relatively small percentage of the cost of defending the case,” Mr. Ulizio says.
Kim Strassel has a must-read account of how U.S. Silica beat a mass-tort fraud attempting to steal its solvency—and did so almost entirely by the luck of the MDL draw, as a different judge might have refused to conduct the hearings that exposed the wrongdoing. (See also Michael Krauss at Point of Law.)
Note that that $900 million proposal for 9000 bogus cases works out to $100,000/case—which is exactly what the Vioxx litigation settled for.
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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.
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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- Remember those class actions against tech manufacturers for allegedly misstating the capacity of hard drives? Another one just settled, with buyers in for coupons and discounts, lawyers for $1.78 million [The Register, Cho v. Seagate Technologies settlement website]
- Watch what you say about lawyers, cont’d: Erie, Pa. paper thus far has fended off libel suit by Pittsburgh attorney over coverage of his run-ins with authorities over client treatment [Post-Gazette via Ambrogi]
- New at Point of Law: suicide risk of anticonvulsants?; Ohio AG Dann rebuked on foreclosure activism; simultaneous asbestosis and silicosis happens all the time at some law firms; Bush nominates an ATLA/AAJ member to a federal judgeship; and much more.
- Has a prominent investor with close ties to President Bush set up shop as an East Texas patent troll? [Troll Tracker, The Recorder]
- Embattled Tom Lakin and Lakin Law Firm, once high on the Madison County heap, fight to overturn $3.7 million legal-malpractice judgment [MC Record]
- Brent Coon suing former colleagues at Beaumont’s Provost Umphrey over division of billions in tobacco-fee booty [Texas Lawyer]
- UK judge criticizes “barking mad” human rights rules after prisoner refuses to leave his “comfy” jail cell to attend hearing [Times Online, Telegraph]
- “Six years after Enron, executives face greater risks—but investors are no safer.” [Gelinas/City Journal]
- United Farm Workers union threatens to sue over unflattering coverage [two years ago on Overlawyered]
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All-medical edition:
- Shocker for New York docs: possible assessment of $50K apiece to make up losses at nonprofit med-mal insurer [White Plains Journal-News Chamber reprint]
- Dr. Ray Harron, a central figure in furor over mass asbestos and silicosis screenings, seems rather hard to locate at the moment, though he does have a lawyer speaking on his behalf [NY Times, WV Record]
- Another push to raise the threshold of liability for emergency room care in Arizona [AZ Business Gazette]
- End run around Roe? Some state legislatures attaching sweeping new tort liabilities to the provision of abortions [Childs]
- Three nominees for worst-founded medical lawsuit, lamentably unsourced [Medical Justice]
- Spokane psychiatrist shouldn’t have engaged in romantic (though not sexually consummated) dalliance with forty-ish patient; that much is clear. But should she now get cash? [AP/Seattle Times]
- “Baby falls to floor during home delivery, mom sues hospital for too-early discharge” [SE Texas Record]
- A sensitive subject: malpractice and doctors’ suicides [KevinMD, a while back]
- “If the ‘loser pays’ system is so bad, why do most other countries keep it around instead of switching over to an ‘Americanized’ system of tort law?” [WhiteCoat Rants]
- Hospital, ambulance service among those sued after fatal crash of NFL’s Derrick Thomas [seven years ago on Overlawyered]
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Adam Liptak’s latest Sidebar column reviews the case of an asbestos plaintiffs’ lawyers’ doctor who should know better, as he testified in the Judge Jack silicosis proceedings. I have uploaded the motion to exclude Dr. Segarra’s testimony.
Among things you’ve missed if you haven’t been keeping up with our sister site: law firm tells silicosis clients that “unfortunately” they’ve checked out healthy and don’t have the disease after all; American Express pays $3 million, and class action objectors go away; Harvard’s Larry Tribe apologizes to the widow of the late Prof. Bernard Siegan; French consumerist vows not to replicate U.S. folly on class actions; Madison County, Ill. courts due for upgrade to heckhole status?; Hillary bashes Obama for supporting class action reform; Deborah La Fetra concludes her week of guestblogging on premises liability, negligent security and other matters; and much, much more.
In today’s Journal, an article by the people behind Medical Justice:
In 2002, we launched Medical Justice, a membership-based organization designed to complement tort reform and to head off frivolous lawsuits. Medical Justice pays the bills and provides the services to file countersuits against all proponents of meritless lawsuits….
Our service has two principal components. First, we look at the quality of so-called expert-witness testimony. Behind every frivolous lawsuit there is an “expert” — usually a physician skilled in testifying before juries and often compensated to the tune of $10,000 dollars a day. Put bluntly, many of these “experts” are frauds, as this newspaper has repeatedly shown in cases regarding asbestosis and silicosis claims….
Medical Justice’s second tool is a patient-physician contract. That contract states that in a legitimate dispute, both sides will utilize only those experts who belong to such societies and who strictly follow their code of ethics. This limits the list to reputable and accountable physician experts, thus precluding the use of hired guns or medical “witnesses having other rational explanations” — better known by their acronym.
Does it work? Yes. After five years of collecting data, we know that Medical Justice plan members are sued at a rate of under just 2% a year. The average doctor is sued at a rate of 8%-12% per year. And the company is top heavy with physicians in “high-risk” specialties.
Further, when meritless cases are filed against plan members, generally they’re dropped quickly….
Finally, the system works because we back our words with deeds by taking action against proponents of frivolous suits. In a sense, Medical Justice has created a contract-based “loser-pays” paradigm. We have helped over a thousand physicians who are tired of being victimized by a system that doesn’t prevent collateral damage.
Private law saves the day? Perhaps — but how long before the plaintiffs’ bar fights back with legislation?
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- How to handle illegal alien’s slip-fall suit against supermarket? With some delicacy: jury told only that plaintiff “couldn’t legally work in this country” [Oroville, Calif., Mercury-Register]
- Sorry, docs: “I hate doctors” beats out “I hate lawyers” as a Google search result [Bioethics Discussion Blog via KevinMD]
- Virginia adopts harrowingly punitive schedule of traffic fines. Its sponsor: lawmaker whose day job is defending motorists [Washington Post; NRO "The Corner"; Ribstein; our earlier report]
- A businessman in London is suing Google for “publishing” (by indexing) allegedly defamatory material, and, boy, will the Internet ever be a different place if he wins [Independent (U.K.), Volokh]
- Federal indictment charges Houston injury lawyer secretly paid $3 million to two Hartford Insurance claims adjusters in connection with $34 million in silicosis settlements [PoL]
- Mississippi high court rules invalid former AG Mike Moore’s slush-fund diversion of $20 million/year in tobacco settlement money to evade legislative oversight [Sun-Herald, Bader; also this PoL roundup]
- More RIAA-suit horrors, this time from Washington state [Seattle P-I] Prospects for a counterattack? [Pasquale, Concurring Opinions]
- California Assembly votes to require pet owners to sterilize mixed-breed dogs and cats, while UK animal rights authority mulls rights for invertebrates [Mangu-Ward and Bailey, Reason]
- Here come the tainted-Chinese-export suits, with many American defendants on the hook [Parloff, Fortune] Plus: car with the “E COLI” license plate may be driving lawyer to work [WSJ Law Blog]
- Gimme those antiquities: Peru vs. Yale on Machu Picchu relics [Zincavage]
- Dick Schaap med-mal case evokes shifting theories from celebrated lawyer Tom Moore [two years ago at Overlawyered]
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- Ford wins an Explorer rollover lawsuit brought by family of unseatbelted accident victim, but press coverage is skimpy. [Detroit News]
- Milberg Weiss’s claims for $12 million in fees viewed skeptically, cut in half. [Lattman; WSJ]
- Dog food prank plaintiff Tennie Pierce is “the O.J. of the Fire Department.” Contrary to what one may think, this is apparently meant as a compliment, suggesting a racial divide that can’t be entirely attributable to whites. [LA Times]
- SDNY Clinton appointee Judge Scheindlin thinks she’s smarter than Judge Easterbrook, throws pension law into mess again. See POL Nov. 12 and Aug. 8 for background. [Business Insurance; Cooper v. IBM]
- Nifong gets around to releasing DNA results that appear to exonerate indicted Duke lacrosse players. Earlier: Oct. 12, etc. [AP/ABC News]
- Judge won’t censor Borat DVD, but frat-boy lawsuit goes forward. [Reuters]
- Criminal speeds away from DC police, hits innocent motorist, DC taxpayers liable for $1M. [WaPo]
- Similarly: negligent driver veers across three lanes of highway traffic into oncoming vehicle, killing 18-year old; taxpayers liable for $2M because SUV was able to smash through the median. [AP/King County Journal]
- Today’s Ninth Circuit Follies edition: lawless reopening of final sentences. [Kerr @ Volokh; Bashman; Carrington v. US; Lat]
- Robert Ramsey files two more lawsuits claiming simultaneous asbestosis and silicosis in Madison County against several dozen defendants. [Madison County Record]
- UK: 100-pound fine for misfiling trash. [Market Center Blog via Overcriminalized]
- Inhofe’s take on global warming. [Senate]
- Trial lawyer puts money where his mouth is. Check back in ten years to see whether it’s lawyers or insurers who are really at fault for medmal insurance crisis. [Point of Law]
- I blame the fact I joined Friendster for this. [PrawfsBlawg]
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Until now, we’ve ignored a small left-wing think-tank’s admitted attempt to create a Bizarro-world version of Overlawyered. The writers are a recent college graduate and a recent law-school graduate who don’t appear to have actually read anything reformers write in support of reform. (For example, one post links to Overlawyered when defending the infamous McDonald’s coffee lawsuit, but fails to address any of Overlawyered’s arguments for why the McDonald’s coffee case is meritless, and simply repeats ATLA propaganda that Overlawyered refuted.) The blog has consisted mostly of thoughtless regurgitation of trial-lawyer talking points; when original analysis is attempted, it rises to the level of self-parody, such as an analysis of Leonard v. Nationwide (see POL Sep. 7 and links therein) that ignores the language of the insurance policy, the relevant Mississippi precedent, the existing discussion in the blogosphere, and any semblance of public policy rationalization in lieu of a Wikipedia definition to argue that the decision (and the defendant) are racist because some African-American plaintiffs might lose as a result.
Another such post is Justinian Lane’s “The Myth of the Frivolous Lawsuit.” The standard trial-lawyer talking point on such issues is to redefine “frivolous lawsuit” to consist of an exceedingly narrow subset of what it is laypeople are talking about when using the term “frivolous lawsuits,” note that the legal system has some mechanisms to address this narrow subset of cases, and then conclude that there’s no problem and thus no need for reform. (Or, as per John Edwards, announce Potemkin legislation to tackle this artificially constrained set of “frivolous lawsuits” that does nothing to actually address the problems of the tort system.) But Lane, perhaps because of his unfamiliarity with the legal system, bites off more than he can chew and inadvertently proves the reformers’ point.
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Kevin Hassett asks why the Milberg Weiss indictments and silicosis scandal aren’t resulting in sensible liability reforms when the publicity over the Enron scandal created the rush to pass Sarbanes-Oxley.
Today’s W$J has an editorial about the ill consequences of the trend in recent years for lawyers prosecuting asbestos and silicosis cases to add makers of commonly used industrial masks and respirators as defendants in their suits:
The Coalition for Breathing Safety, an industry group, reports that between 2000 and 2004 plaintiffs attorneys filed more than 326,000 claims against its five members. Some of these are asbestos-related, although the recent deluge has been all silicosis. One manufacturer (which prefers not to be named lest it become a bigger target) says that prior to 2002 it faced about 200 silicosis claims a year. In 2003-4, it got hit with 29,000….The industry coalition estimates its members have spent the equivalent of 90% of their 2004 net income fighting suits in recent years.
The suits have fared poorly — none of the respirator makers have lost a case in court — but the making of industrial respirators and masks is a low-margin line of business, and companies that invest heavily in the business may simply be buying themselves legal risk. And now comes the scare over avian flu:
Respirator manufacturers are still going strong overseas, but the U.S. could find itself unable to purchase these products in a crisis. Worried about a possible flu pandemic, many governments are snapping up masks; France is acquiring 685 million. In previous disease scares (say, China and SARS), countries have blocked mask exports. Local U.S. governments and hospitals are already having a hard time finding supplies.
It might be added that the plight of respirator makers is attributable in large part to the economics of what has been called the shotgun approach to defendant-naming. It is very unlikely that lawyers would have filed 300,000 claims against mask makers, or anything approaching that number, if each suit had to be filed as a freestanding matter. However, it costs very little to add 3M or another respirator defendant when a case is already been judged to be worth filing against other, more vulnerable defendants. For more on the mask litigation, see Sept. 15, 2004 and Jan. 22, 2005. More: Point of Law, May 9.
