Friday, October 16, 2009

Tort Reform Discussion

Person 1 (lawyer):

For obvious reasons, I'm vehemently against tort reform (the only real democratic leaning I have, besides being closer to pro-choice than I am pro-life). For those of you who are for tort reform, what you need is real stories of human tragedy to put a face on the issue. How's this for the worst thing you've ever heard:

17 year-old girl in rural Kansas. Father is abusive, mom an alcoholic. She goes to see a hack psychiatrist in rural Kansas for her emotional issues stemming from parents. Psychiatrist prescribes an anxiety drug that is extremely potent, and bears a warning on the box in big letters that strongly warns against exceeding max dosage, and says that if you see any sign of a rash to go to the doctor immediately. Problem is, he gives her the samples without the warnings, and while he's at it gives her double the max. dose. She takes it, ignores the rash that begins growing on her chest after a couple days, and finally is life-flighted to city hospital. after going into arrest. Turns out, she has Stevens-Johnson syndrome - the worst possible side effect from overdose of this drug. It literally burns your body from the inside-out. It burns up all your organs, then burns off all of your skin, burns your eyelids so you go blind, and burns off your scalp. Many organs are rendered essentially useless, and you spend your life in extreme pain as a complete vegetable, at constant risk of fatal organ failure. She is treated at KU Med. in the worst case of SJS they have ever seen, and racks up over $2 million in medical bills.

She is now at home, a complete vegetable, with little skin, no hair, is blind, and in immense pain every minute of the day. I have over 50 pictures that I can't show you, but believe me, you wouldn't want to eat after seeing them.

Who to sue? Well, the hack psychiatrist only has $200K in insurance, because that's all he's required to have under Kansas-law. He's judgment proof, as he's basically broke, because he's a sh*tty doctor. No case against the manufacturer, because the warnings were clearly there, had the doc. not given the samples only without a supplemental warning. Thus, the max she can collect is $200K. Medicaid paid all of her medical bills, and has a lien for the $2 million, so any of the $200K she collects goes straight to their pockets. Thus, what can she collect? 0.

I've seen dozens and dozens of cases of brain-dead infants, quadriplegics, people who died too young, crippling orthopedic injuries, strokes leaving people incapacitated with cognitive deficits, and nearly everything else you can imagine. I think this is the worst I've seen, which is why I felt compelled to share.

This isn't a direct product of tort reform, but is a product of the state allowing doctors to run around committing malpractice with too little insurance coverage, when they are otherwise judgment proof. What other recourse is there for this girl? None. Because some doctors who make well over $500K a year, which believe me, most do, whine that their coverage is too high. There are no easy answers, but believe me, if you saw cases like these everyday, you would not believe in tort reform.
Person 2 (lawyer):

Completely agree. Legal costs are expensive, yes, but that doesn't mean you punish victims to fix it. I think damage caps are unconstitutional and unconscionable because they take the power out of the courts' hands to make their own decisions on a case. Why would the legislature know how much a victim should be awarded more than the jury in the case?

So the newspapers pick up a story and run "Woman spills hot coffee and is awarded a billion dollars." People look at that and think, "god, I'd spill hot coffee on my crotch for that. Sh!t happens. We need to do something about tort judgments." But you never hear the full, gory details like what you just gave us.

Damage caps to me are like saying we need to fix the health care system so we're just going to allow doctors to perform $50,000 of treatment, no matter how much treatment is actually required to fix the person. We certainly would cut down on medical costs but I don't think people would actually be better off for it.
Person 3 (non-lawyer):

Interesting commentary. I know little of the subject and welcome the knowledge.

I guess I have the following questions:

- who ultimately finances the cost of justice-seeking?

- to what extent is there data available that categorizes the nature
(degree of frivolity - not that such a score is easily and unanimously
determined, but you know what I mean) of all cases. I require data.
Person 1:

Good questions. Here's the best I could answer:

(1) A doctor or R.N. typically pays (or has paid on his/her behalf) insurance premiums for "primary" coverage through a carrier of either his/hers or the hospital's choosing. Such primary policies are high in jurisdictions where there has been no tort reform (in Illinois, most docs. or nurses have at least $2 million in primary coverage) and abysmally low in jurisdictions where the insurance lobby has convinced the legislature to invoke caps on pain and suffering, wrongful death, etc. and/or doesn't require that doctors carry much by way of primary coverage (in Kansas, most docs. or nurses have $200,000 in primary coverage - which doesn't begin to cover damages in a catastrophic case).

Then, the doc. or nurse has excess coverage from a different carrier or state fund in the event that the primary coverage is satisfied by way of a jury verdict (verdict is 1.2 million, primary policy is only 200K, the excess policy comes into play), or settlement (primary carrier tenders their 200K, bringing the excess policy into play). Again, the extent of excess or "umbrella" coverage varies by state. Using IL and KS as examples, again, most excess policies are 4-6 million in IL, and 800K in Kansas.

The decision to settle or try a case to verdict is solely in the hands of the carrier. A doc. may pressure the carrier to settle on his/her behalf if it's a bad case, because he doesn't want the bad PR, but it is ultimately up to the carrier and the doc. has little to say about it. A carrier can be liable for bad faith if they refuse to settle in a case that is clearly very bad, because by refusing to settle within policy limits they are exposing their insured to a personal excess verdict. If they are found to be in bad faith, they will have to cover the excess. (This factors in in the case with the 17 year-old girl - there is no coverage at stake and a verdict in excess is of no value, because the psychiatrist has no assets).

Thus, insurance comes heavily, heavily into play here, and the state legislatures dictate how much coverage a health care professional must have, and whether damages are capped.

(2) Whether on the defense or the plaintiff's side, I have always been against tort reform, but in favor of getting rid of frivolous suits. The thing people don't realize, and why the issue gets muddled, is that the frivolous suits weed themselves out. It costs so much money for a plaintiff's attorney (who only gets paid on a contingency, if his client gets a settlement or verdict) to try a medical malpractice case these days (at least $100 - $150,000 for a big case) that he can't afford to go on a witch hunt and try cases of no merit. It simply doesn't happen. If it does, the insurance company refuses to settle, and the case goes to trial. Then, in 99% of frivolous cases, the jury will return the right verdict. The "McDonald's case" is representative of .0000000000001% of the cases that are filed. It simply doesn't happen. It's a freak occurrence, and is not representative in any way of the types of cases we see now. I can tell you personally that I never saw a "frivolous" suit, ever, as a defense attorney - only, at worst, ones that we would probably win, but that could reasonably be brought by a plaintiff. Now, on the plaintiff's side, we look for reasons to reject cases, not the other way around. It's fiscally irresponsible, and gives you a bad reputation. Thus, while I can't give you a percentage, I can tell you that anyone who supports tort reform because of "these frivolous lawsuits" has no idea what they're talking about.
Person 2:

Generally, the cost of justice seeking is financed by two parties: the injured person's attorney and the injurer's insurance company, which really gets passed along to everybody who pays for that type of insurance (med mal, etc.), which then gets passed along to the customers of that industry (patients in the med mal case). That's why the tort reform movement is so appealing to some people. It seeks to cut down on costs for everyone.

As for frivolity, you could try looking at jury verdicts but those almost always tend to be 50/50 for the plaintiffs and defendants. Going to trial is literally a coin flip's chance of getting a favorable result. Therefore, statistics are hard to measure because an overwhelming majority of cases are settled out of court. Nobody wants to spend the money to fully litigate something that is so uncertain. Even a lot of frivolous cases settle because it sometimes costs less to pay out a relatively small settlement than to litigate it fully. The settlement agreement is usually not public record either. I have a feeling that companies generally do a pretty good job of knowing which cases are frivolous and which are not, and they tend to act in their best financial interests when it comes to litigating or settling.

Legal costs are a problem, in my opinion, because of the lengthy discovery process. Much of this is set up to provide victims--especially poor ones--with as much access to the courts and to information in the control of the other party. As a country, we decided long ago (whether you agree or not) that it was good public policy to not deny injured people access to the court system because they couldn't afford it or because they couldn't get to the information. That is why we have contingency fee arrangements where a lawyer can provide services where he gets money only if he gets a favorable result*: people with no money can still hire a lawyer. For the same reason, we don't make the loser pay the other's costs. I don't necessarily agree with that policy, but that's the way it is. We have decided that nobody should ever be injured and not be able to be made whole again because he was too broke to sue. I think it comes down to America regarding the plight of one person as being more important than the health of our overall society. Same with criminal justice. We would rather see 99 guilty men walk free than incarcerate one innocent man.

Legal costs are ridiculously out of control, I think we could cut down on this by making the loser pay and encouraging mediation as much as possible.

*So lawyers are also gate keepers when it comes to frivolous lawsuits. Good lawyers don't take bad cases.
Person 3:

I would be interested to see numbers on the percentage of cases (or claimed failures) per "treatment" (or doctor-patient interaction)... The number of failures should have a positive correlation with the increase in the number of the patients and care-givers. The greater the number of treatments, the greater the number of failures. In theory, any deviation from this fixed % should be able to be explained... unless of course there was a boon in frivolity, which, as you say, is not the case.

Naturally, as treatments increase with technology and population, it reasons that the cost to fix malpractice will increase accordingly, along with all the other healthcare costs.

The answer to who pays for this is everybody.

And, quite simply, the only way to curb health care costs is to decrease treatments, which can only be achieved by improving the health of the population.

Tort-reform - upon cursory thought - therefore appears to be missing the point...

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