If you wonder why insurance fraud and insurance expense are so high in New York state it’s because of opinions like AA Acupuncture Service v. State Farm Mutual Insurance Company. (The fact that the plaintiff is a quack-upuncturist immediately suggests problems, no?) Civil Court Judge Arlene P. Bluth agreed that there was “uncontradicted, overwhelming circumstantial evidence” that an accident had been faked. But State Farm was still not entitled to summary judgment on the litigation of bad-faith claims by three medical providers who insisted that State Farm was liable as the insurer of the woman who claimed to have been injured in the accident. (Plaintiffs deny fraud, though apparently wasn’t able to rebut the evidence of fraud at the motion stage.)
Posts Tagged ‘legal extortion’
Public Citizen and Arbitration: the case of Alex Karakhanov
Public Citizen’s attack on arbitration highlights the case of Alex Karakhanov. Public Citizen’s take on the anecdote demonstrates why Public Citizen has no business calling itself a consumer advocacy group.
Breaking: Merck wins two more Vioxx cases on appeal
AP reports a Texas court has thrown out the infamous Ernst $26 million judgment; a New Jersey court has tossed $9 million of the judgment in McDarby. More details on Point of Law as available.
Ernst was the first Vioxx suit to go to trial. A jury awarded $253 million. Mark Lanier waited months before asking for a final judgment; at the time, I suggested that this was because he knew the case would be reversed on appeal, and did not want the bad publicity. Indeed, the appellate decision perhaps comes too late for Merck: the number of lawsuits increased from 6000 to 60000 in the months following publicity over the jury verdict, costing Merck billions of dollars in the later extortionate settlement.
With these two decisions, only three plaintiffs’ verdicts in favor of Merck remain.
Update: I still haven’t seen the McDarby decision, but an updated AP story indicates that it upheld the compensatory damages of $4.5 million, overturned the $9 million punitive damages verdict, and overturned the consumer-fraud judgment (which also saves Merck millions of dollars in plaintiffs’ attorneys’ fees).
Tonight’s 20/20: Stossel on extortionate attorneys
John Stossel has a WSJ op-ed and tv special tonight on the problem of extortionate attorneys. Overlawyered previously discussed the Selbin case and I’ve written about Bill Lerach’s extortion of banks in the Enron case.
February 23 roundup
- Easterbrook: “One who misuses litigation to obtain money to which he is not entitled is hardly in a position to insist that the court now proceed to address his legitimate claims, if any there are…. Plaintiffs have behaved like a pack of weasels and can’t expect any part of their tale be believed.” [Ridge Chrysler v. Daimler Chrysler via Decision of the Day]
- Retail stores and their lawyers find sending scare letters with implausible threats of litigation against accused shoplifters mildly profitable. [WSJ]
- Kentucky exploring ways to reform mass-tort litigation in wake of fen-phen scandal. [Mass Tort Prof; Torts Prof; AP/Herald-Dispatch; earlier: Frank @ American]
- After Posner opinion, expert should be looking for other lines of work. [Kirkendall; Emerald Investments v. Allmerica Financial Life Insurance & Annuity]
- Judge reduces jury verdict in Premarin & Prempro case to “only” $58 million. And I still haven’t seen anyone explain why it makes sense for a judge to decide damages awards were “the result of passion and prejudice,” but uphold a liability finding from the same impassioned and prejudiced jury. Wyeth will appeal. [W$J via Burch; AP/Business Week]
- Judge lets lawyers get to private MySpace and Facebook postings. [OnPoint; also Feb. 19]
- Nanny staters’ implausible case for regulating salt. [Sara Wexler @ American; earlier: Nov. 2002]
- Doctor: usually it’s cheaper to pay than to go to court. [GNIF BrainBlogger]
- Trial lawyers in Colorado move to eviscerate non-economic damages cap in malpractice cases [Rocky Mountain News]
- Bonin: don’t regulate free speech on the Internet in the name of “campaign finance” [Philadelphia Inquirer]
- “Executives face greater risks—but investors are no safer.” [City Journal]
- Professors discuss adverse ripple effects from law school affirmative action without mentioning affirmative action. Paging Richard Sander. Note also the absence of “disparate impact” from the discussion. [PrawfsBlawg; Blackprof]
- ATL commenters debate my American piece on Edwards. [Above the Law]
The Patent Reform Act of 2007
My latest Liability Outlook is on the Patent Reform Act of 2007:
Despite some in the media calling patent reform dead, on January 24, 2008, the Senate placed S. 1145, the Patent Reform Act of 2007, on the general calendar. The next few weeks will be critical to the legislation, which the House passed in September. Although much of the discussion has focused on the different perspectives and concerns that the high tech and the biotech/pharma industries have about the legislation, the fact remains that the patent litigation system is broken. Congress should make every effort to fix it by writing into this legislation reasonable formulas for damage awards and venue rules that discourage forum-shopping. …
Affiliates of Erich Spangenberg’s Plutus IP have sued 476 different defendants in 42 lawsuits. The vast majority of those lawsuits allege infringements of patents that Plutus IP purchased for $1,000. The use of invalid patents in litigation is more than theoretical. Philip Jackson sued his attorneys, Chicago plaintiffs firm Niro, Scavone, Haller & Niro, for malpractice after his $12.1 million jury verdict against Glenayre Electronics Inc. was reduced to under $3 million; Niro challenged the malpractice suit by claiming that th e patent Jackson had successfully enforced was invalid. In 2006, approximately 6,000 defendants were sued in 2,800 patent cases; in 2007, the six thousand mark was reached in early October, implying a 30 percent increase in patent litigation in a single year. Such litigation stifles substantial technological innovation. Patent trolls claim to block entire fields, and one cannot hope to innovate in these areas without the financial capital to handle the threat of patent litigation. IBM has 370 corporate patent attorneys, not just to avoid the pitfalls of infringement, but to create a patent portfolio that can provide counterclaims (or cross-licensing opportunities) if a commercial entity were to sue them for infringement. Since the late 1990s, patent litigation costs have outstripped patent profits.
Vioxx settlement: February 8 update
(Updating and bumping Feb. 4 post about to roll off bottom of page because of new comment activity)
- Judge Fallon denied the motion of Florida plaintiffs to expedite a hearing on their inclusion into a settlement when they did not even bring suit (Jan. 30). Merck and the PSC are required to respond Feb. 15, and the hearing will be Feb. 21, where one can expect the motion to be denied.
- At Point of Law, I comment on the recent grand jury investigation into Merck marketing of Vioxx.
Update, Feb. 8: separately, Merck yesterday settles for $650 million different Medicaid fraud allegations over the marketing of Vioxx and other drugs. The qui tam relator will get a jackpot award of $68 million. [WaPo; DOJ; Merck] The pricing theories at the center of these lawsuits—which hold Merck liable for purportedly charging too little—definitely deserve longer discussion another time.
Exclusive: Grand Theft Auto deposition
Back in 2005, when the first lawsuits were filed over the Grand Theft Auto hot coffee mod, I wrote:
Me, I’m just amused by the thought of class action attorneys trolling for a named plaintiff parent who will testify that, while she was okay for her little Johnny to buy a game involving drug dealing, gambling, carjacking, cop-shooting, prostitution, throat-slashing, baseball-bat beatings, drive-by shootings, street-racing, gang wars, profanity-laced rap music, violent homosexual lovers’ quarrels, blood and gore, and “Strong Sexual Content,” she is shocked, shocked to learn that the game also includes an animation at about the level of a Ken doll rubbing up against an unclothed Barbie doll with X-rated sound effects…
Alas, Take Two games has given in to the blackmail and settled the case, but a sense of how frivolous it was can be seen from the following deposition excerpt of lead plaintiff Brenda Stanhouse, a schoolteacher in Belleville, Illinois, who will receive $5000 for her role in the litigation. Recall that Mrs. Stanhouse is alleging she was defrauded because she would not have bought a game that could be modified to include “pornography,” but take a look at pp. 67 ff. of the deposition, where she makes clear she didn’t have the faintest idea what was in the game that she did buy. Readers: type your favorite Stanhouse deposition excerpts in the comments.
Enron cert denial
My op-ed on the Supreme Court’s denial of cert in the Enron class action is in today’s New York Sun.
Did Mark Lanier comment about Vioxx on a medical blog?
Libertarian medical school blogger “Frommedskool” has been critical of the Vioxx litigation (regularly citing to our coverage at Point of Law). An April 2006 post about the Cona/McDarby case, however, appears to have generated a December 2007 comment from someone calling himself Mark Lanier, the plaintiffs’ attorney in the case:
Third, there was a huge amount of info Merck had that it never gave the FDA, there were smoking gun memos and emails, and there was huge harassment of the medical community done by Merck. For example, Merck did a full meta-analysis of placebo trial that showed a statistically significant increase in heart attacks, but Merck excised that from the report given the FDA. Even Merck’s head admtted they should have given the analysis to the FDA.
(Point of Law discussed the so-called withholding of the meta-analysis back in 2006. It wasn’t all that.) Fascinatingly, this comment immediately provokes comments from another lurker (just two hours later?!) claiming to be a plaintiff, reasonably asking why, if the evidence was so good, Lanier was agreeing to settle 47,000 plaintiffs’ cases for under $5 billion, essentially a nuisance settlement given that victorious plaintiffs were being awarded in the millions and tens of millions.