As I discussed in recent testimony on Capitol Hill, if one takes conservative estimates from these economic studies and adds it all up, the total cost to the economy from excessive litigation can be estimated to be between $600 billion and $900 billion a year, the vast majority of which is simply wealth destruction. That is between 4 and 6 percent of GNP, a tort tax of between $8,000 and $12,000 a year for an average family of four.
California has a double-digit unemployment rate, and it’s certainly not helped by regulatory red tape. The disabled now have equal access to Kirk’s Steakburgers in Cupertino, a supposedly otherwise-profitable business that closed rather than spend tens of thousands of dollars to come up to Americans with Disabilities Act compliance, not to mention lose three parking spaces in its tiny parking lot. (“Kirk’s Steakburgers closing its West San Jose location”, Cupertino Courier, Mar. 16 (h/t D.R.)).
Today I testified before the Senate Republican Conference about the effect on the economy of excessive litigation. A podcast is available on-line and, for the insomniacs among you, the hearing will be broadcast on C-SPAN tonight at 10:56 PM Eastern and again at 2:09 AM Eastern. Also testifying was Life Without Lawyers author Philip Howard; Crystal Chodes, who lost her job because of the expense of a meritless ADA filing mill suit; Texas doctor David Teuscher; and arbitration expert and University of Kansas law professor Christopher Drahozal.
If you just prefer reading what I have to say, my written testimony is on-line also:
The total loss to the economy from excessive tort litigation above and beyond a baseline of an employment at will regime and an average industrialized tort system can be estimated at between over $600 billion and over $900 billion a year, 4.3% to 6.5% of GNP, or a tort tax of between $8,000 and $12,000/year for an average family of four. And this is very much a conservative estimate, as other economists find much stronger effects than I have estimated here, as I have not tried to estimate a number of identifiable secondary and tertiary effects of excessive tort litigation on allocation of economic resources, and as I have not tried to estimate the likely effect of recent Congressional expansions of tort liability in the last twelve months.
I was pleased to hear from multiple Congressional staffers who are regular Overlawyered readers: one even surreptitiously added the website into my official biography. Carter Wood talks about the hearing and Senator Cornyn’s remarks over at Point of Law.
Update: video on-line at C-SPAN; my segment begins at 43:15 or so. And C-SPAN2 is rebroadcasting at 4:16 pm Eastern on Tuesday, March 17, which suggests that my appearance will be at about 5 pm Eastern.
Justinian Lane crows: Pfizer fined by an Australian trade group! Indeed it was; drug reps went off the reservation of what they were supposed to talk about without telling managers, and exaggerated the health effects of a competing drugs for personal profit. (Note that there was no need for a regulator or plaintiffs’ attorneys to get involved; this was entirely an Australian free-market self-policing arrangement through contractual agreements that fined Pfizer. Lane forgets to mention that part.)
Lane thinks this is a just result worth noting. So let us consider that trial lawyers do the same thing every day: lie about or exaggerate health effects of drugs for profit (just Google the name of any prescription drug to get a lawyer’s ad)–and without the intermediating effects of doctors to assess the claims and correctly inform patients, so it is clearly worse. But the lawyers do so with impunity, with no consequences for the adverse health effects on patients. (E.g., POL June 2007; POL Feb. 12.) There’s no private cause of action; and the trial bar and its professional organizations lionize such tactics, rather than punish them. All we can do is criticize plaintiffs’ lawyers for putting profits before people.
- “The accusatory legal document begins with several remarks defaming the skills, education, ability, integrity, and honesty of the physician being charged.” [Donald May, State Policy Blog] But hey, don’t take it personally, lawyers say [Mark Crane, Medical Economics] Good luck with that [Chiaramonte/Examiner, KevinMD, more]
- Law throwing open Florida doctors’ peer review to lawyers was bad enough, but now state high court has applied it retroactively to records created before law was enacted [KevinMD guest post; background at PoL here, here, and here]
- Even the New York Times hails as “sensible” laws encouraging medical apologies by making them inadmissible as evidence of wrongdoing [editorial]; but see counterexample to the usual reportage [Berlin/Am. Journal of Roentgenology via Buckeye Surgeon]
- A med-mal defense attorney says plaintiffs would win more often in proposed “health courts” than they do in the cases he handles [Medical Economics, more, and similarly]
- More evidence, this time from study of orthopedists, that docs rated as cold or callous attract far more than their proportionate share of suits [Orthopedics Today]
- EMTALA, the law forcing emergency rooms to take all comers, “has created the very conditions it sought to avoid” [Edwin Leap, M.D.O.D.] Watch for “free-standing” ERs that dodge mandate by refusing federal dollars [Scalpel or Sword?, Health Care BS] Semi-defense of law [Over My Med Body]
- Besieged state of dispersed emergency rooms and specialists is one reason for use of those risky helicopters that fly patients to the big city [Williams/Health Business Blog, M.D.O.D.]
- Docs should stand up to family members demanding futile or inappropriate end-of-life care [Musings of a Dinosaur] Relatedly, daughter on dying father: “if you give him any more morphine, I will sue you.” [Fat Doctor]
(Most links via the highly recommended one-stop shop for medical blogging, KevinMD, e.g. this post and this one on EMTALA.)
- As I type this post, I’m listening to Andrew Frey argue Conrad Black’s appeal before Judge Posner and the Seventh Circuit. Posner seems to be confused over whether incorrect jury instructions can be prejudicial in a general verdict. [Bashman roundup; earlier]
- “For years families bogged down in Harris County [Texas] probate courts have accused judges of bleeding estates of tens of thousands of dollars to pay high-priced lawyers for unnecessary work.” [Houston Chronicle; Alpert v. Riley (Tex. App. Jun. 5, 2008) (via)]
- Company sets policy. Employee violates policy. Is corporation criminally responsible for employee’s act? [POL; FCPA blog; Podgor]
- Merrill Lynch banker asks for investigation of Enron Task Force withholding of exculpatory evidence [Bloomberg]
- When calculating the costs of medical malpractice suits, let’s not forget the noneconomic costs. “In the [John] Ritter case, the jury agreed with the defendant physicians and exonerated them of any liability. They were lucky. How lucky? They were able to spend four years with attorneys worrying about their future, including the potential that they would be ordered to pay tens of millions of dollars and be left penniless. So, they didn’t really win. They just lost less.” [EM News via Kevin MD via Dr. RW]
- Nor should we forget the defensive medicine costs. [Kevin MD]
- Legal reform = job creation. [American Courthouse]
- According to Justinian Lane, if you’re reading this post, you’re a “spineless sycophant.” [Bizarro-Overlawyered]
“– and not simply like liability risks.” Still smarting from the trauma of an obstetrics malpractice trial, a young doctor gets a surprising and heartening patient referral. (Steven Erickson, M.D., “The true final verdict of my malpractice trial”, Medical Economics, May 16) (so far as I know, not the same S.E. who’s guestblogged for us).
First you get hauled in by compulsory process, then you start having to look at the emergency room photos: “North Carolina is considering allowing jurors access to counseling services to cope with post-traumatic stress that can occur after exposure to graphic images and disturbing testimony during a trial.” (Molly McDonough, “Jurors ‘Haunted’ By Time in Courtroom,” ABA Journal, May 16).
Advice to ponder (Mar. 6):
George Harrison once sang: “You serve me and I’ll serve you/Swing your partners, all get screwed/Bring your lawyer and I’ll bring mine/Get together, and we could have a bad time.”
If you sue me, I’m going to do my best to figure out how I can sue you. You want to think about that dynamic before you sue somebody. …
The decision to file a lawsuit is a momentous one. Think hard and think many steps ahead before you bring the courts into your life. Don’t sue angry.
- Remember that ludicrous case where the Florida driver fell asleep, crashed his Ford Explorer, his passenger was killed, and a jury blamed Ford to the tune of $61 million? (See also Sep. 10.) A Florida court got around to reversing it, though only to grant a new trial under a variety of erroneous evidentiary rulings that prejudiced Ford, rather than because the suit was too silly to ever conceivably win in a just society. The remand goes back to the same judge that let the suit go forward and committed multiple reversible errors in favor of the plaintiff. [Ford Motor v. Hall-Edwards (Fla. App. Nov. 7, 2007); Krauss @ Point of Law; Daily Business Review; Bloomberg/Boston Globe]
- Not really a man-bites-dog story, but Geoffrey Fieger (Aug. 25 and rather often otherwise) speaks. [ABA Journal]
- Uh-oh: Former litigator hired to invest $100m in court cases for UK hedge fund. [Times Online]
- The real NatWest Three deal. [Kirkendall; July 2006 in Overlawyered]
- Homeowners fined $347,000 for trimming trees without a permit—after the Glendale Fire Department sent them a notice telling them to trim their trees for being a fire hazard. (h/t Slim) [Consumerist]
- Disclaimers at children’s birthday parties (h/t BC) [Publishers Weekly]
- British Christmas parades handcuffed by litigation fears. (h/t F.R.) [Telegraph]
- Underlawyered in Saudi Arabia: A “19-year-old Saudi gang-rape victim was recently sentenced to 200 lashes and six months in jail for being in a car with an unrelated male when the attack occurred. Last week, her lawyer was disbarred for objecting too vociferously.” [Weekly Standard]
- Don’t forget to vote for us at the ABA Journal Blawg 100.