Overlawyered: Chronicling The High Cost Of Our Legal System

Archive for January, 2004

Doctors on trial

In last week’s issue of the Journal of the American Medical Association ($ access), Baltimore physician David Merenstein writes about a malpractice case which resulted in a $1 million verdict against the residency program in which he was working (though he himself was let off the hook for liability) over his failure to insist on a PSA test in a middle-aged male later diagnosed with advanced prostate cancer. Central to the plaintiff’s attorney’s strategy was to put on trial the mode of medical practice known as “evidence-based medicine”. Medical blogger Ross Silverman at “The Bloviator” (Jan. 8), who is often critical of attempts to limit malpractice litigation, nonetheless finds the result in this case “horrible” and “ridiculous”. MedRants (Jan. 8 and Jan. 9) comments, as does Medpundit Sydney Smith (Jan. 9). More: The LitiGator, from Michigan, also comments (Jan. 18)

In the same Jan. 9 post, Medpundit links to an illuminating Cleveland Plain Dealer piece (Harlan Spector, “Fleeing the malpractice crisis”, Jan. 4) about a neurologist who lost his malpractice insurance and moved out of Ohio after he was hit with six claims. Six claims sounds like a lot, and we keep hearing that “problem doctors” account for a large share of the malpractice problem; but how weak were the six claims? Well, four of the six were dismissed before he had to meet with a lawyer; in a fifth, which is pending, the plaintiff has no lawyer of record. And the sixth? That resulted in a defense verdict, and was called “frivolous” by the presiding judge, who however also said: “They paid these experts who sign affidavits, and I can’t throw the case out.” “I feel like I’m being shot at all the time,” said the defendant, Dr. Bruce Morgenstern, who moved to less litigious Colorado.

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Mavericks eroding settlement tobacco share

More trouble (besides the trouble described yesterday) for states financially dependent on the spoils of the great 1998 tobacco robbery: the market share of companies that signed the agreement is eroding at a surprisingly rapid clip, despite the passage of harsh state laws aimed at protecting the loot by discouraging the rise of new, small or foreign cigarette companies. “In four years, the market share of the small cigarette companies has multiplied more than tenfold, from 0.5 percent of cigarettes sold in the United States in 1998 to 6.5 percent in 2002, according to the National Association of Attorneys General. The group said the numbers for 2003 will be more startling.” (“Small Cigarette Companies Whittle Away At Big Tobacco’s Sales”, AP/WRAL, Jan. 5) (via Vice Squad)(& see Jan. 23)

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How to drive away mortgage capital

Lawmakers in various states and cities are aiming legislation at so-called predatory lending, and in a handful of jurisdictions, including Oakland and Los Angeles, the laws have “targeted not just mortgage lenders and brokers who engage in dubious practices but also investors who buy securities backed by even a single mortgage later deemed predatory.” The laws make provision for something called “unlimited assignee liability,” which “puts investors in mortgage-backed bonds on the legal hook for misdeeds by lenders and mortgage brokers”. The idea is “to force investors and their agents to act as policemen against predatory lenders and to provide plaintiff lawyers with deep-pocketed targets for predatory-lending suits.” To make matters worse, “many advocates of the new laws use an expansive definition of predatory lending that classifies as evil a mortgage with high interest rates or fees, a prepayment penalty or even a provision requiring arbitration.” One likely result is to drive capital away from the housing markets of the cities involved: “Standard & Poor’s and Fitch, which rate mortgage-backed securities before they’re sold to investors, say they won’t rate mortgages covered under Oakland’s ordinance (and some under Los Angeles’) because the risk to investors is impossible to quantify.” How long do you think before investors fleeing the new legal risk will get accused of “redlining”? (Ira Carnahan, “Predatory Lawmaking”, Forbes, Jan. 12).

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“OK, so I won’t sue cable firm”

Updating Wisconsin’s tempest in a cable box (see Jan. 7): “A man who blamed a cable TV company for his television addiction and his wife’s 50-pound weight gain said Thursday he won’t follow through with a threat to sue the cable operator. In an unusual news conference held in the basement of his West Bend home,” Timothy Dumouchel insisted that cable TV provider Charter was to blame for his family’s addiction to its televised fare, because it had failed to cut off service as requested, but said most of his dealings with the company had been pleasant and that he would not pursue legal action. Dumouchel also “said he never claimed his three children — ages 30, 23 and 16 — were lazy. He also said he knows people are snickering about him, and that his wife was angry about his statements on her weight gain.” (Lauria Lynch-German, Milwaukee Journal Sentinel, Jan. 9; “Man won?t sue over TV addiction”, AP/Appleton Post-Crescent, Jan. 9).

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“Lotto loser’s lawyer defends his actions”

Lawyer of the week? Once-obscure Ohio attorney Sheldon Starke seemed to revel in the sudden worldwide publicity as he represented Elecia Battle in her claim to be the true winner of a $162 million lottery jackpot — until her story fell apart and she turned out to have a rap sheet. “A Cuyahoga County judge has threatened to find Starke in contempt of court after seeing Starke’s animated defense of Battle this week on television — after Starke had said he couldn’t come to court because of an injured back. And Starke can’t seem to avoid questions about how he handled Battle’s incredible claim on the Mega Millions lottery — about how he maintained his belief in Battle’s story when just about nobody else did. ‘I felt like a fool,’ said Starke, who insists he handled the case properly. ‘If there was one person that was damaged this week, it was me.'” (Scott Hiaasen and Jesse Tinsley, Cleveland Plain Dealer, Jan. 10)

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2nd Circuit: tobacco deal may have violated Sherman Act

We’ve been saying it for years (here and here, for instance), and now we can cite authority from one of the nation’s most distinguished jurists, Judge Ralph Winter of the Second Circuit: the 1998 tobacco settlement was skillfully designed to create the sort of cartel among cigarette manufacturers that would have gotten tobacco executives packed off to jail had not state attorneys general been on hand to bestow their blessing. In a case called Freedom Holdings, Inc. v. Spitzer (yes, the New York AG, a vocal defender of the 1998 travesty, continues to be on the wrong side), a three-judge panel headed by Winter reinstated a lawsuit by a cigarette importer challenging the deal’s anticompetitive provisions.

Read On…

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“Lodi’s legal hell”

Scathing Sacramento Bee editorial on the growing embarrassment, fiscal and otherwise, facing the city of Lodi in California’s San Joaquin County over a too-cute-by-half plan to recoup groundwater cleanup expenses by passing the bill to insurers for local businesses. Lodi officials “came up with a novel strategy: Assume authority from the state and federal governments for the clean-up, and then pass a local law that forces the polluters (or their insurance companies) to pay whatever legal costs the city might run up during the process of prosecuting the case,” even though the city’s own actions contributed to the toxic mess. Armed with the law requiring opponents to pay its fees, the city invested “$6.3 million of its own money in lawsuits against several downtown businesses and their insurers. The balance of $16 million spent on legal outlays was borrowed at credit-card interest rates from the investment banking firm Lehman Brothers of New York”.

The scheme hit the rocks last month when U.S. District Judge Frank C. Damrell Jr. ruled that the city’s cleanup ordinance conflicts with federal law and is unconstitutional. Judge Damrell said Lodi’s attorneys “have often produced unnecessarily voluminous or redundant filings and imaginative ploys that have sent this litigation needlessly down paths”. The result: “important remediation efforts have been brought to a grinding halt.” The city’s “cost recovery scheme generates the opportunity for a financial windfall for some few fortunate professionals, as well as Lehman Brothers, Inc., an investment bank, which has no interest in cleaning up the contaminated site,” Damrell said. The editorialists conclude: “Lodi is left with a problem far greater than its underground pollution and it has only itself to blame.” (Jan. 3; Cameron Jahn, “Court ruling may put Lodi on the spot for millions”, Sacramento Bee, Dec. 24). Updates: Jan. 17 (city fires attorneys responsible for litigation strategy); May 8 (messy aftermath).

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Regulating workplace noise — in orchestras

In a fit of sense, our own Occupational Safety and Health Administration has generally refrained from trying to protect symphony orchestra members from the noise of the bass trombones, trumpets and tympanies in their midst. Not so in the European Union, where a newly promulgated rule “reduces the allowable sound exposure in the European orchestral workplace from the present 90 decibels to 85. The problem is, a symphony orchestra playing full-out can easily reach 96 to 98 decibels, and certain brass and percussion instruments have registered 130 to 140 at close range.” (James R. Oestreich, “The Shushing of the Symphony”, New York Times, Jan. 11)(via Arthur Silber). See Mar. 8-10, 2002 (bagpipes); Dec. 22-25, 2000 (military bands). More: “Mindles H. Dreck” at Asymmetrical Information has further commentary and a BBC link.

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Update: Calgary youth soccer claim

Parent/attorney Michael Kraik has dropped his suit against the Springbank Minor Hockey Association (Dec. 19), but “Bow Valley Hockey Society president Todd Atkinson said the fact the suit was dropped will do little to give officials the necessary peace of mind to continue volunteering. ‘The damage is done … (dropping the suit) is not going to change the fact that an already depleted volunteer base will be affected by this,’ said Atkinson. ‘This is probably the worst thing that could’ve happened to minor hockey in Calgary.'” (Pablo Fernandez, “Lawsuit chills officials”, Calgary Sun, Jan. 11).

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Fee catfight in Microsoft case

Class-actioneers Michael Hausfeld and Stanley Chesley, already in line to collect $10.5 million in fees under Microsoft’s settlement of one of its antitrust cases filed in federal court, “say they are entitled to share in $50 million for helping lay the groundwork for the state claims [filed by other law firms].” Hausfeld and Chesley say many lawyers who filed state claims were happy to rely on the work they did in advancing the federal case, but “‘Memories are short and gratitude fleeting when attorneys’ fees are at issue.’ … In a reply brief, the law firms of Milberg, Weiss and Lieff, Cabraser, and Kirby, McInerney & Squire argue that assistance provided by Hausfeld and Chesley ‘was spotty and sometimes non-existent.’ ‘To put it most charitably, rather than being a resource to various state court counsel throughout these proceedings, Hausfeld-Chesley looked out for their own clients (and fees) in their own cases, which of course is completely proper,’ the lawyers in the state cases replied. ‘Such behavior, however, does not give rise to an entitlement for fees for other plaintiffs in other cases.'” (James Rowley, “Legal-fee fight erupts over Microsoft case”, Bloomberg/Seattle Times, Jan. 7)

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