The supporters of tort reform put forward that protecting the doctors, nurses and hospitals from being held financially responsible for their mistakes will actually help improve health care. The theory is that by reducing the financial consequences, the cost of malpractice insurance will decrease. Without the specter of lawsuits looming over their heads, doctors, nurses and hospitals will stop practicing “defensive medicine” and provide better service to their patients.

What tort reformers don’t tell you is that taking away consumers’ rights doesn’t improve the quality of health care or reduce the cost. Forty-eight states have already put caps on settlement awards and yet these legal restrictions have not reduced costs or improved health care services.

In 2003, Texas passed tort reform legislation that capped pain and suffering awards at two hundred and fifty thousand dollars. Yet the small town of McAllen, Texas has one of the most expensive health care markets in the country – almost double the national average. In contrast, another small town in Texas, El Paso, has roughly the same demographics but their health care costs are about half of McAllen’s. So McAllen must have some of the best health care in the country, right? But, by Medicare standards, five of McAllen’s hospitals, on average performed below El Paso’s hospitals when measured in twenty-five different metrics.

So what’s going on in McAllen? According to the tort reformers’ theories, McAllen should have affordable and some of the best health care in the country. If you read The Cost Conundrum by Atul Gawande published in The New Yorker, the high cost of health care seems to be a direct result of the doctors themselves.

“It’s a machine, my friend,” explains one surgeon.

Then there are physicians who see their practice primarily as a revenue stream. They figure out ways to increase their high-margin work and decrease their low-margin work. This is a business after all.

The tort reformers would like you to believe medical malpractice is the cause of high health care costs and poor quality health. But if you look beyond the tort reformer’s smoke and mirrors, you’ll find facts that they don’t want you to know…taking away consumers’ rights doesn’t improve the quality of health care or reduce the cost.

Health economists and legal experts assert that it’s not medical malpractice lawsuits that are driving up the cost of healthcare, but the medical errors that medical malpractice lawsuits try to prevent that take a toll on not only injured patients but the health care system itself.

According to Tom Baker, a professor at the University of Pennsylvania Law School and author of The Medial Malpractice Myth, “If you were to eliminate medical malpractice liability, even forgetting the negative consequences that would have for safety, accountability, and responsiveness, maybe we’d be talking about 1.5 percent of health cost. So we’re not talking about real money. It’s small relative to the out-of-control cost of health care.”

In 2003, Texas capped medical malpractice damages, yet Texas has seen a steep increase in health insurance premiums and medical costs. According to the Dartmouth Institute for Health Policy, Medicare spending actually rose 24 percent in Texas even though punitive damages were capped at $250,000.

McAllen, Texas has one of the highest health care costs in the country – almost twice the national average. Only Miami, Florida spends more on health care than McAllen, Texas on. And Miami has much higher cost of living expenses and a higher average income than McAllen, Texas, whose average income is twelve thousand dollars per year.

So why is health care in McAllen, Texas so out of line with the rest of the country?

In his commentary, The Cost Conundrum, Atul Gawande a surgeon turned writer for New Yorker magazine, visited the town of McAllen and talked to doctors and other residents about the high cost of health care in their town. His findings are amazing and eye-opening.

During his dinner with some local doctors, Gawande asked these doctors for their opinions on the high cost of medical care in their community. Medical Malpractice was the quickest, most obvious answer given.

“It’s malpractice,’ a family physician who had practiced here for thirty-three years said.
“McAllen is legal hell,” the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere.

Yet, Texas passed tough malpractice laws that capped pain and suffering awards to $250,000. When pressed, hadn’t lawsuits gone down due to tort reform, the cardiologist replied, “Practically to zero.”

Straight from the doctor’s mouth…practically zero medical malpractice lawsuits in one of the highest health care areas in the country.

Tort reform myth #1 – tort reform will lower health care costs doesn’t seem to be the truth in Texas.

Almost every day in the news you’ll hear about a “frivolous lawsuit” that some idiot has filed because they slipped and fell while trying to rob a dry cleaning business or a gentleman who crashed his motorhome when he got up to make himself a sandwich while driving on the interstate. So what do we really mean by a “frivolous lawsuit?”

A case may considered frivolous if the lawsuit is based on absurd legal theories with many motions filed as a means of harassment. Another definition of a frivolous lawsuit is a case that has solid legal ground but is deemed frivolous due to the percieved value of the damages such as malpractice suits filed against doctors or products liability claims filed against the manufacturers of faulty medical devices or unsafe drugs.

The lawsuit in many of these types of cases is based on the fact that the manufacturer knew of the potential danger to the consumer, but chose to continue to distribute this particular product. It isn’t until these corporations suffer an economic penalty that they will take responsibility and either change their product to make it safer or pull it off the market. At times these economic penalties come in the form of judgements from “frivolous lawsuits.”

Perhaps one of the most famous (or infamous) cases is Stella Liebeck and her 1992 hot coffee lawsuit against McDonalds.

The media had a field day with this case. Stella, who was 72 years old at the time, ordered a cup of coffee at the drive-thru window at a McDonalds in Albuquerque, New Mexico. Contrary to media reports, she was not driving the car with a cup of hot coffee in her lap. Her grandson, who was driving the car, parked the car so Stella could add sugar and cream to her coffee. She placed the cup between her knees and when she pulled the top off, the entire cup of coffee spilled on her lap. Stella suffered third-degree burns on her thighs, buttocks and groin.

A fact of this case that you did not read in the media is that McDonalds knew their coffee was hot enough to cause third degree burns. Between 1982 and 1992, McDonalds received more than 700 reports of customers who suffered burns from their coffee.

Another fact: Stella originally asked McDonalds for twenty thousand dollars to cover her medical bills. McDonalds’ original offer was $800.

We’d all like to say we’d know better than to place a cup of hot coffee on our lap. The case is not about the fact that the coffee was spilled – accidents happen. The case is based on the fact that McDonalds knew their coffee was hot enough to cause third degree burns. What if Stella had put that cup of coffee on a table instead and accidentally knocked it over and was burned by the scalding coffee? What if a child running through the restaurant had bumped into that same cup of coffee and was burned by the scalding coffee? Would these cases be considered frivolous?

The bottom line is this “frivolous lawsuit” accomplished a very important goal. McDonalds has lowered the temperature of their coffee so that it can no longer cause serious burns. I know the last time I had a cup of coffee at McDonalds; it was more than hot enough.

Imagine then, the horror when this life-saving device malfunctions and instead of helping save your life, sends multiple dangerous, life-threatening shocks to your heart and throughout your body. Now your health has been seriously compromised and you face more medical bills due to hospital stays and medications to monitor and repair the damage caused by this malfunctioning medical device.

Imagine that this medical device that was approved by the Food and Drug Administration (FDA) was known by the manufacturer to have problems. In fact there was a recall issued on this supposedly life saving medical device just weeks before this horrific incident.

This is the really story of Bridget Robb and many others like her. Ms. Robb, a single mother, recently testified before the US House Energy and Commerce’s Subcommittee on Health in support on the Medial Device Safety Act (MDSA).

Last year, the Supreme Court ruled in Riegal vs. Medtronic that medical devices approved through the Food and Drug Administration are immune from lawsuits filed at the state level. Typically, states laws are stricter in their degree of accountability for the manufacture of medical devices and prescription drugs. What the Supreme Court ruling means for patients’ is, that if you are injured or a loved one suffers a fatality from a defective medical device, the manufacturer can not be held liable for the malfunction of their device.

In the case of Bridget Robb, Medtronic knew of the malfunction problems with the leads in their defibrillators. According to Heart Rhythm, the Official Journal of the Hearth Rhythm Society, Medtronic recalled the lead in their defibrillator in 2007, only after there were 665 failures and five reported deaths.

In addition, the Journal reports that in a study of 3,037 cardioverter-defibrillator leads, 72 (8.5 percent) of 848 Sprint Fidelis leads failed, while only 94 of all 3,037 defibrillator leads studied failed. According to the Journal article, “the cumulative hazard of Sprint Fidelis failure was significantly greater compared to 2,189 other defibrillator leads.”

In a 2008 landmark case, the Supreme Court ruled in Wyeth vs. Levine that drug companies will be held accountable for content on the labels of their prescription drugs. The Medical Device Safety Act (MDSA) would restore this same protection to patients who need medical devices.

We’d all agree, Ms. Robb included, that medical devices save lives. The Medical Device Safety Act would protect patients’ rights by forcing the manufacturers of these medical devices to put consumer protection over profit by holding these manufactures accountable for their defective products.

Some time ago, I blogged about a defunct Colorado effort to limit the amount of money a plaintiff’s attorney could charge. I suggested that this was the future of “Tort Reformers,” reducing access to attorneys by attempting to lower the amount of money they earned, rather then the past effort to convince people that injuries and lives could only be worth set amounts.

Well, guess I’m right.

Now comes Oregon Republicans with a horrible ballot initiative, that they have tried to claim will “Protect Citizens from Excessive Attorney’s Fees.” Never mind the fact that the limit proposed is far, far, far below the industry wide norm. Never mind that nothing in the initiative would prevent defense attorneys defending corporations, or otherwise representing the people that can afford to pay high hourly rates upfront, from charging any amount they want an hour.

Everything that I said about the failed Colorado initiative still applies, this is an attempt to drive plaintiff’s attorneys out of business, so injured people can’t find lawyers willing to help them.

But here’s a new twist, the person who has donated the most money to the people putting these initiatives on the ballot, half the money raised, in fact, is a former manufacturer of medical devices. I’m sure that his donations are because he really cares about the issue, rather then the fact that he’d like to ensure that medical device manufacturers never get brought to justice when they make defective and dangerous products.

The contingency fee arrangement that most attorneys representing injured people use is designed to allow people who couldn’t otherwise afford a lawyer access to highly skilled attorneys. This type of meddling is designed, as I’ve said before, to reduce the number of attorneys willing and able to represent those harmed by another’s negligence.

Nathan T. Swanson
Summer Intern 2008
J.D. Candidate 2009
University of Denver

In 1994, a jury awarded punitive damages of $5 billion, which was then reduced to $2.5 billion. Now, the Supreme Court has further reduced the punitive award to $500 million, stating that in these situations (which are admittedly limited), the ratio of compensatory damages to punitive damages must be 1 to 1.

The Court based their decision on a perceived need for consistency, stating that punitive damages are sometimes high and sometimes low, and similar facts do not necessitate a similar award. I have a hard time arguing with that; one of the underlying theories of the Common Law is that it should be consistent and built on precedent. But I feel that the Court missed the forest for the trees, so to speak.

Punitive damages are levied with a specific goal, to punish and deter. The Court explicitly recognizes this, but at no time do they consider whether that 1:1 ratio is sufficient to accomplish that goal. Perhaps in some cases, 1:1 is enough. In this case, however, I’ll let the Pop Tort do a little explaining.

Okay, so in 1994, when a jury in Alaska awarded the victims $5 billion, the punitive damages award really might have punished the company for causing this disaster. In 1994, $5 billion represented a year’s profits for the oil company. In 2006, the award was cut down to $2.5 billion and only represented “about three weeks of Exxon’s current [2006] net profits.” So, the current $500 million damage award is what? Well, according to the New York Times, Exxon Mobile earned more than $1,287 of profit for every second of 2007.

At that rate, it only took them four and a half days to pay off this court’s punitive damages judgment.

Four days worth of profit hardly seem like a punishment, and it hardly seems like it would deter.

So why blog on a decision that has a very limited applicability, only to punitive damages awarded in maritime courts? A few reasons. First, the Court arrived at this decision based on a survey of state actions. Second, a large number of people will use this rationale when trying to argue for statutory damages caps.

Third, and most importantly, I believe that that logical leap is indemic within the argument for caps. The Court assumed that a 1:1 ratio would deter, without considering whether or not that is true. Likewise, tort reform (as I’ve blogged previously) is predicated on the belief that under no circumstances can an injury or pain and suffering require damages over a pre-set amount. Either way, you assume that a given amount or rule will be sufficient to accomplish the goal you’re pursuing. It is like saying that all bridges, no matter the length, may not use more then 10 tons of concrete. This seems to me to run contrary to the general preference this country has for individualized solutions over decisions by fiat. It also seems like a recipe for bad bridges and uncompensated people.

It would do all of us, including the Supreme Court, well to remember that although inconsistent judgments may be unjust, so are consistently low judgments. And consistently high judgments, although the Supreme Court itself noted in the decision that there is little evidence that there have been runaway awards, a growth in the number of cases where punitive damages are awarded. If most juries don’t award punitive damages, and the majority of those that do limit the damages, then the suggestion is that juries that award mass punitive damages do so because the high damage amount punishes or deters. Reduction of the awards serves to confound the award’s purpose.

Nathan T. Swanson
Summer Intern
JD Candidate, 2009
University of Denver

Comes now a Colorado ballot initiative, aimed at severely limiting attorney’s fees. The initiative would have set a schedule for contingency fees, reducing from the standard 30%, down to 20% and then to 10% as the amount of the jury award rises. It also would have set a severe limit on overall contingencies, essentially allowing the percentage to plummet with no bottom in certain circumstances.

Now, admittedly, this is slightly older news, the backers of the initiative agreed to withdraw it as long as the Colorado Trial Lawyers Association withdrew their competing ballot initiatives. But I think three things are worth considering, because I truly believe this is the future of tort reform.

First, as I said, limiting awards only seems like a good idea until the public realizes what it truly means, a flat edict about how much every single life and injury is worth. So now tort reformers are going to try to limit attorney’s fee; but note, only plaintiff’s attorney’s fees. The goal is, I’m sure, to demonize plaintiff’s attorneys further, painting them as rich fat cats leeching money from injured people. Pay no attention to the fact that a large award and contingency indicates that the lawyer is good at his job and that the plaintiff experienced some colossal damages.

Second, note that the initiative says nothing about defense attorneys. Plaintiff’s attorneys work on contingency, because their clients often can’t afford to pay a hourly rate. But defense attorneys can, under this regime, charge as much as they like: $500 an hour, $600 an hour, $1000 an hour.

Which leads us to the third point, the true import of this kind of regulation. It isn’t to restrict unconscionable fees, it is to drive lawyers away from representing injured people. Even laying aside the fundamental unfairness of saying “Defense attorneys can charge what ever they want to defeat a claim, plaintiff’s attorneys can only charge a set amount,” consider this: if you suggested “Automakers are making too much money, they should be limited to charging a set percentage above the cost of production” the howls of outrage would be deafening. You would hear screams about how that was ridiculous, un-American, and that your true goal must be to drive the automakers out of business. And that is what is happening here. By and large, plaintiff”s attorneys are not operating on huge profit margins, and this type of regulation is squarely aimed at convincing current and future plaintiff’s attorneys to decide that it would easier, and certainly more lucrative, to just walk away and do something else. Maybe become a defense attorney, since defense attorneys apparently deserve to charge as much as they like.

Because nothing would make tort reformers happier then for an injured person to limp into an attorney’s office, tell their story of negligence, bad faith, and down right evil behavior, and have the attorney say “I’m sorry, I’d go bankrupt just trying to get you your medical fees.” And for the injured person to drag their broken body to the next lawyer, and hear the same thing. And then again and again until the injured person hobbles home, with empty pockets and a broken body.

Nathan T. Swanson
Summer Intern
JD Candidate, 2009
University of Denver

She wasn’t driving the car; her grandson was behind the wheel and had pulled over to allow Liebeck to add cream and sugar to her coffee.

The temperature of the coffee served at McDonalds was between 180 degrees fahrenheit and 190 degrees fahrenheit. Coffee served at home is usually about 135 degrees fahrenheit to 140 degrees fahrenheit. The quality assurance manager for McDonalds testified that a burn hazard exists for any food substance served over 140 degrees fahrenheit.

McDonalds had knowledge of this hazard and had in fact produced evidence that it had 700 claims by people burned by its coffee between 1982 and 1992. Some claims involved third-degree burns substantially similar to Liebeck’s. Despite this knowledge, they refused to lower the temperature of their coffee.

Liebeck suffered third-degree burns over 6 percent of her body, including her inner thighs, perineum, buttocks, and genital and groin areas. She was hospitalized for eight days where her treatment included skin grafting and debridement.

Liebeck’s initial settlement request was $20,000 which McDonalds refused.

Liebeck was awarded $200,000 in compensatory damages. This amount was reduced to $160,000 because the jury found Liebeck 20 percent at fault in the spill. The jury also awarded Liebeck $2.7 million in punitive damages, which equals about two days of McDonalds’ coffee sales.

The trial court subsequently reduced the punitive award to $480,000 — or three times compensatory damages — even though the judge called McDonalds’ conduct reckless, callous and willful.

The parties eventually entered into a confidential settlement which remains closed to the public, despite the fact that this was a public case, litigated in public and subjected to extensive media reporting.

Post trial, coffee at the local Albuquerque McDonalds has dropped to 158 degrees fahrenheit.

Makes you wonder…what else don’t we know about cases we hear about in the media?

Recently the Republican National Committee decided to come out of the swamp of Washington, DC and play some of their games on our Eastern Plains of Colorado. They spent hundreds of thousands of dollars on a mailing attacking Angie Paccione, a Democrat running for Congress against Republican Marilyn Musgrave. The mailers are full of the usual RNC lies and false misrepresentations about the civil justice system. (false misrepresentations — sounds like what the insurance companies do, right??).

Here are some of the realities that people in Colorado need to know about our civil justice system:

1. Skyrocketing Insurance Premiums Are Actually the Result of Medical Malpractice Price-Gouging Doctors. A 2005 study conducted by former Missouri Insurance Commissioner Jay Angoff found that insurance companies have been price-gouging doctors by drastically raising their insurance premiums, even though claims payments have been flat, or in some cases decreasing. According to the annual statements of the 15 largest insurance companies, the amount malpractice insurers collected in premiums increased by 120.2 % between 2000 and 2004, while their claims payouts rose by only 5.7 %. Thus, they increased their premiums by 21 times the increase in their claims payments. ["Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry," Jay Angoff, 7/05; http://www.centerjd.org/ANGOFFReport.pdf]

2. The Number of Doctors in Colorado is NOT Decreasing. The most recent statistics from the American Medical Association indicates that the number of doctors in Colorado is increasing — not decreasing. According to the AMA, there were 13,051 doctors in the state in 2003, which increased to 13,455 in 2004. ["Physician Characteristics and Distribution in the U.S.,?? American Medical Association]. Furthermore, the number of emergency room doctors has nearly doubled from 14,243 in 1990 to 27,864 in 2004 ["Physician Characteristics and Distribution in the U.S.," American Medical Association, 2006 edition, p.312]; the number of neurosurgeons has increased by more than 20 percent – from 4,358 in 1990 to 5,288 in 2004 ["Physician Characteristics and Distribution in the U.S.," American Medical Association, 2006 edition, p.312]; and the number of OB-GYNs has increased by nearly 25 percent – from 33,697 in 1990 to 42,059 in 2004. ["Physician Characteristics and Distribution in the U.S.," American Medical Association, 2006 edition, p.312]

3. A Survey by Business Week Magazine Found that the Threat of Lawsuits is Not a Major Concern of Small Business Owners. According to a survey published in Business Week magazine, owners of small and medium-sized businesses are generally not concerned about the threat of lawsuits. The survey found that the biggest threats to their businesses are: (1) Rising inflation, 44 percent; (2) The trade deficit and a weak dollar, 40 percent; (3) Energy shortages, 40 percent; (4) Excessive household and/or corporate debt, 29 percent; (5) The growing federal deficit, 28 percent; (6) Poorly prepared labor force/Shortage of skilled labor, 27 percent. ["The Big Concerns of Small Business; A new survey points to the future of Social Security as a major concern. Tort reform, on the other hand, elicits only yawns," Business Week, 5/12/05]

The final reality is that Republicans, desperately trying to cling to power despite their abysmal record, are spreading misinformation and outright lies in an effort to eliminate the ability of Americans to hold big drug, oil, insurance and health care companies accountable. Trial lawyers represent injured consumers against large energy companies (Enron), the insurance industry (State Farm) and other polluters and profit mongers. Trial lawyers help workers fight for safe workplaces and workplaces free from discrimination on the basis of age, sex, race and religion. Plain and simple, trial lawyers fight for justice and access to justice, including the access that those same corporations seek when they feel they have been wronged. Access to the civil justice system is for everyone – not just the powerful and wealthy corporate interests.

This election season, Colorado voters have a choice – change vs. more of the same; accountability and responsibility vs. greed and cronyism. You decide.

It is important that we, as trial lawyers, continue to educate consumers and individuals about the REAL business climate in America. It is up to us to help individuals hold large corporations accountable for their actions. One example of how we can do this is through fighting for more disclosure by the corporations of how they are spending their money and why they are raising their rates and prices. In Colorado, the General Assembly recently passed, and the Governor recently signed, a law that requires insurance companies to disclose the factors that go into setting insurance rates. This information has to be filed yearly with the Colorado Division of Insurance. The bill also requires insurers to only set rates based on loss experience that happened within Colorado. In other words, a medical malpractice insurance company in Colorado cannot base their insurance rates on the number of malpractice claims made in California; and likewise, an auto insurance carrier cannot base their insurance rates on the number of claims paid out in Florida.

By providing this information to the public, we will be able to show the public that the work trial lawyers do on behalf of consumers, individuals and families, goes to make products more safe, professionals more careful, and businesses more accountable to their customers.

[1] Andrew Wheat, Stop Lawsuit Abuse — Or I’ll Sue, TEXAS OBSERVER, Oct. 25, 2002.