In a 1993 two-part article at a height of the liability crisis, particularly with medical "malpractice" lawsuits,(1) I wrote that rampant litigation had become a malevolent trend threatening to unravel the fabric of society and individuals. The trend has recently cranked up to high gear as attorney-litigators have found yet new venues for enacting disruptive litigation. Thus, it's time we revisit this subject.
At the end of this decade and marching across the bridge to the 21st Century, trial lawyers have entered into an unholy partnership with the federal leviathan to tax the tobacco industry and plunder it to submission. And the government has effectively joined in the looting, so it can extend its socialist tentacles with more "outreach" government programs to seduce ever more citizens into further complacency and more dependency.
Acquiescent Americans have become unwitting accomplices in this looting. Consider: If the government was totally and sincerely concerned about the health of smokers, why not ban tobacco use, just as it has banned other drugs, e.g., LSD and crack cocaine, which have no medical use? But no, government wants to share in the plunder of an industry in which it has previously had a vested financial interest (via campaign contributions to politicians) and which formerly it subsidized. (I am not for banning tobacco either but that is where the logic leads carried to its conclusion; prohibition left its mark yesterday, just as the pernicious war on drugs is leaving a dreadful mark today.)
Now the unholy partnership of trial lawyers and the government have set their mark on the gun industry, driving manufacturers into capitulation or bankruptcy. Today, it may be tobacco and guns. Tomorrow, it may be the airlines, HMOs, nutritional products, or fast food restaurants --- all of these items sued and taxed to the limit supposedly to protect us from ourselves. But no one is really safe from extortion and plunder. In the case of the most recent attack on the gun industry, the government is, effectively, using the greed of the attorney litigators to circumvent a constitutionally protected right it finds inconvenient and perhaps threatening. Because of this assault, eventually, it will become more difficult for law-abiding citizens to obtain affordable firearms to protect themselves, their families, their businesses, and their homes. Yet, criminals will continue to obtain guns and they will not be sued, because they aren't deep pocket defendants.
As with all public-private partnerships, the public partner, the government, usurps our liberties, while it arrogates itself more power and control over our lives; the private partner satiates its greed under the cover provided by monopolistic government protection - the public-private partnership inherent to economic fascism.
A Self-Perpetuating Lawsuit Explosion
To counteract this destructive affliction wrought by the litigation juggernaut, we should dust off and pull from our bookshelf a great antidotal medicine: The Litigation Explosion: What Happened When America Unleashed the Lawsuit by Manhattan Institute scholar, Walter K. Olson.(2) This momentous, witty and well-written book remains timeless, given the current legal resurgence against targeted industries. Olson's book traces the history of legal theory and ethics, and discusses the impact of these evolutionary (and revolutionary) changes on modern American society. Why is this relevant to us? Here's why.
As I predicted, the rate of litigation and its adversarial nature intensified during the presidency of Bill Clinton, who has had the trial lawyers as his greatest financial supporters.3 The litigation industry's proclivity to generate business for itself was given a boost with his presidency, or rather co-presidency with attorney Hillary Rodham Clinton, and medical litigation has been no exception. The rate of adversarial litigation continues full steam ahead, at an excess of 18 million lawsuits per year.
We should not deprecate honest attorneys who perform legal work necessary to adjudicate justice (e.g., criminal or civil law), or who do the legal work necessary for the everyday business affairs of society, executing the required transactions in business deals, negotiating contracts, drawing wills, carrying out corporate work, serving in advisory or managerial capacity as general counsels and performing other meaningful work. We should, instead, join Olson and denounce those "wheel-of-fortune" and "lottery litigators" who aggressively participate in filing and pursuing frivolous litigation as cogs in the wheel of "the sue-for-profit litigation industry" for their own vested financial interest. Rather than pursuing justice as they claim, these swashbuckling litigators are causing untold harm to the country and are unraveling the fabric of our nation.(2)
Guns, Tobacco, Doctors --- No One is Safe
In 1989, at least two dozen top attorney-litigators in the United States made estimated annual incomes in excess of $4 million each. In Houston, litigator Joe Jamail made "somewhere between $450-$600 million, mostly by talking a Texas jury into accepting the unprecedented proposition that unsigned contracts could be binding" in the famous Penzoil v. Texaco case, in which Texaco, "the third largest oil company, was forced into bankruptcy," reported National Review.(4) In the 1990s, millions have become peanuts. We are now dealing with billions as with Dow Corning, Intel, and more recently the tobacco industry litigation.(5) In fact, both the federal and state governments began planning and spending the billions of dollars, in the ancient, distributive fashion of panum et circenses, in anticipation of getting their hands on the spoils of the tobacco wars. And remember, this is an industry the government previously subsidized, despite what was already known about smoking and health, and the publishing of the Surgeon General report of 1964.
In the case of gun litigation, venerable factions of the much smaller but yet seriously embattled firearm industry is folding, even before the lawsuits have really gotten started because they know they will not survive the litigation onslaught. These legitimate businesses, American traditions, like Colt firearms, do not believe they can survive financially even to mount a serious defense.* This is taking place even as serious judges have been correctly dismissing lawsuits against the gun industry from various municipalities in Ohio (Cincinnati), Connecticut (Bridgeport), and Florida (Miami). In the process, a constitutionally protected right, nevertheless, is being eroded and threatened to extinction by extra-constitutional means. Big money awards are obtained as booty, or as extortion, in the usurpation process.
Olson points out in his great book that big money awards are "protected behind the banner of a moral crusade with media coverage of splashing philanthropic ventures, played to the hilt which help deflect public criticism [of whopping awards and luxurious lifestyles] in advance."(2)
The trial lawyers have found allies in the media who see an opportunity to correct perceived evils of society which they attribute, among other things, to economic maldistribution and legal inequities of the past. They see litigation against "deep pocket" defendants as a means to redistribute wealth and of correcting social injustice (either real or imagined). Olson correctly points out the litigators themselves see these nebulous abstractions as gold mines to be exploited while they last. They propagate the myth that those who press their legal rights to their stretchable limits are performing a public service by leading a moral crusade to reestablish justice and extirpate the evils of society, including the greed of rich physicians and unscrupulous businessmen, and the avarice of rapacious insurance companies and sinister corporations.
Olson hits the nail on the head: "The ideology of litigation in its contradictory and multiplicitous way, has something spurious to offer every political viewpoint." But for radicals, the heart and soul of the litigation business, "it offers an unending pantomime antagonism between workers and bosses, consumers and producers, husbands and wives, in a perfect orgy of consciousness-raising and grievance... [But] it fails on every front...A litigation explosion is a civil war in very, very slow motion...."(2)
A Medical Liability Crisis
In medical care, practicing physicians have inured the endemic medical liability crisis since the 1970s without relief. Yet, the threat of litigation affects the everyday decision-making process of practicing physician. The direct cost of the medical litigation in the form of defensive medicine has been estimated to be in the order of $50 billion per year.6 Medical malpractice insurance premiums for neurosurgeons range from a high of $100,000 to a low of $7,673 depending on coverage limits.(7) This, mind you, in the era of managed care and cost-containment health care rationing.
Despite the decades long battle to institute tort reform in the medical marketplace, no meaningful reform has been implemented at the federal level. Still something needs to be done. What can be done?
In the short term, physicians must push with renewed vigor and new leadership for tort reform at both the state and national levels. Above all, physicians and patients need to militate for a $250,000 cap on intangible losses, such as pain and suffering and other non-economic damages as instituted in California's MICRA (Medical Injury Compen-sation Reform Act of 1975). And efforts should not relent until that fundamental tort reform proposal has been instituted in these United States.
Weapons and Tactics
Significant medical liability (tort) reform at the state level, if not at the federal level, should include the following:
--- Disclosure of the collateral source rule which would save Americans millions of dollars by prohibiting double and triple reimbursement to plaintiffs for the same alleged loss from multiple sources.
--- Redefinition of the statutory standard of care which is often open-ended, and allows medical experts reviewing the care after the fact, to find legal fault with the treating physician simply because the physician did not choose the treatment alternative the expert would have selected. Instead, we should propose the adoption of the "reasonable medical judgment" standard that has the potential of reducing the use and cost of defensive medicine.
--- Implementation of a sliding fee scale or a graduated contingency fee for lawyers which increases the net amount of the award going to the injured plaintiff.
--- Restriction of the dismissal rule, a rule that is extremely unfair and an affront to justice. Under this rule, plaintiffs may choose, for example, to dismiss their case at any time up until the middle of trial. They then have up to six months to refile the claim. This privilege gives plaintiffs the singular opportunity to dismiss their case if they don't like the way it is going, and to refile against the same defendant without prejudice. The defendant has no such privilege.
--- The establishment of a realistic and effective statute of limitations --- the timely expedition with which medical liability cases are handled. Two years should be the limit for unusually complex medical malpractice claims, with one year being the standard for resolution of all other claims.
--- And, the requirement for periodic payments in case of lump sum awards exceeding $100,000. This requirement best protects the injured patient's right to receive continuing medical care. This is important because numerous studies have documented that damages awarded in "windfall sweepstakes" are often spent within a short time, leaving the recipient unprotected from future health care costs or disability.
--- Implementation of a 60 to 90-day notice of intent to sue which allows for settlement of some claims before a suit is actually filed. It also helps eliminate frivolous litigation.
--- Formation of an alternative dispute resolution panel in the form of voluntary, binding arbitration. This reform decreases the load of litigation on the judicial system.
All of these short-term battle-ax proposals should be supported by physicians and patients as consumers of medical care, as well as their allies in the business community and pursued aggressively for legislative remedy. What is good for medicine should be good for other industries under assault including guns, fast foods, and other products. Implementation of reform has resulted in the reduction of malpractice insurance premiums, as in California, where they have been reduced to one-half of what they are in other states. Moreover, health care costs in California have been reduced as a percentage change in the Consumer Price Index (CPI), representing millions of dollars of savings.(8, 9)
Battle Ax Strategy
In the long term, what should we propose to thwart the litigation juggernaut? First, structured contingency fees should be implemented with a sliding fee-cap, whereby fees diminish as awards increase; or even better, contingency fees should be eliminated. Most authorities agree that the unrestricted contingency fee is one of the greatest sources of grist for the sue-for-profit litigation mill.
For those who would drum up litigation, the "lawyers' contingency fee is like the battery in the Energizer bunny."2 It did not become legal in most of the United States until the 1960s. The practice is considered unethical and remains illegal in most other industrialized Western countries, because it is widely recognized that it encourages lawsuits and leads the plaintiff's attorney to overplay their client's hand in court.
Second, and most significantly, we should strive nationally for adoption of the English Rule, which Olson calls "full two-way fee-shifting."(2) By this rule, the losing side in litigation pays the court costs and all attorney fees. This principle is not new. It is rooted firmly in Roman as well as Anglo-Saxon law. It has been and remains the rule in Great Britain, Canada, France, Germany, Switzerland, and other countries whose legal systems derive from the Anglo-Saxon common law and the Roman civil law models.
This full two-way fee-shifting is, according to Olson, "the single most important and constructive legal reform that ordinary citizens can fight for over the long term. It is memorably simple and fair, and not easily subverted once put into effect. It may also be the only reform that could render tolerable today's procedural system of push-button litigation on demand, if that system is the one we want to keep...It's the heavily contingent, unlikely-to-succeed wildcat litigators who would be discouraged by fee-shifting. And they are precisely the ones who should have been driven from the courthouse...By the horror with which they react to full fee-shifting, we will get a good idea of their sincerity."(2)
Something Happened on the Way to the Forum
In the spring of 1995 (March 9), the House of Representatives passed a bipartisan medical liability bill by a significant margin (247 to 171), despite a strong opposition by the trial lawyers. This legislation was a sweeping tort reform bill that would have gone a long way towards reforming medical liability and alleviating the adversarial and litigious climate in which physicians have been practicing medicine for the last three decades. It included a $250,000 cap on non-economic damages, limits on "joint and several" liability, and even a provision for "loser pays" rule that would have penalized plaintiffs for filing frivolous lawsuits. AMA president Robert E. McAfee, M.D. called it "a giant leap forward"; not surprisingly, the AMA flexed its heretofore flabby abdominal musculature claiming victory for "its decade long advocacy on behalf" of physicians.(10) But unfortunately, it was a premature muscle flexing exercise.
Something happened thereafter in the high stakes playing field of political hardball. Less than 2 months later, the U.S. Senate, led by then Majority Leader Bob Dole (R-KS) and outflanked by his own Sen. Fred Thompson (R-TN), passed a different version of the proposal which focused solely on product liability reform and which had no medical liability relief. The two disparate bills then went to a conference committee where legislators were to iron out the significant differences. In the process, the entire health care liability reform proposal, despite the AMA's assurance that it would continue "to press the issue," was completely extirpated out of the conference committee legislation. The issue then became moot when the White House threatened to respond to the possible compromise with a presidential veto. And so, medical liability reform never saw the light of day, although some product liability did pass.
AMNews reported that "one particular last ditch effort to pass tort reform" could have been made had the AMA played hardball and consented to attach medical liability reform to the Kassebaum-Kennedy bill, which it was also supporting. Unfortunately, James S. Todd, M.D., AMA executive vice-president emeritus, explained the AMA had pledged "not to play that card" and would not risk endangering what later became the Trojan Horse of deleterious incremental health care reform in the form of the disastrous Kassebaum-Kennedy law.(11)
You can say this maneuver was a clear case of throwing the baby out and saving the dirty bath water. The Kassebaum-Kennedy law that was passed by the U.S. Senate (unanimously) in 1996 with the support of the AMA has been a terrible piece of legislation that has not improved but actually worsened the climate of the American health care system. It has enforced draconian fraud and abuse provisions harmful to both patients and physicians, implemented administrative simplification requirements that threaten patient medical record confidentiality (i.e., with Unique Patient Identifiers, establishment of databases, and other privacy violation provisions); engendered spiraling out of control health insurance premiums because of its guaranteed coverage and renewability requirements; and caused an actual increase in the lot of the uninsured for the same misguided reason.
Yet, other industries did lobby and obtain legal protection from the litigation juggernaut. Writing in The Wall Street Journal, John Stossel reported: "The single engine air-plane business came back from the dead after the General Aviation Revitalization Act made it harder to sue. Vaccine makers were helped by the Vaccine Injury Compensation Program. Silicon Valley will be helped by the Private Securities Litigation Reform Act, passed in December  by Congress over President Clinton's veto" He then questions why is it fair to pass piecemeal reforms for powerful industries? "And anyway, the lawyers just move on to the next hot area of litigation."(12) And yes, he was prescient. Lawyers have moved on to expand litigation as far as the eye can see: to tobacco, the gun industry, sexual harassment and domestic violence,(5,13) and other areas of the health care field such as managed care and HMOs.(14)
In the October 21, 1996 issue of AMNews, the headlines blared, "Doctors win big in Washington --- AMA persistence delivers powerful results." But those items listed in the AMA scorecard are dubious claims for victory at best.(15) The major defeat of medical liability reform, of course, was not listed. The battle issue the AMA swore it would not abandon and would continue to press died a quiet but painful death.
The time is ripe for tort reform resurrection. It is time for a group of young, bright attorneys and judges in concert with a group of like-minded activist-physicians, businessmen, and other professionals to roll up their sleeves and get to work for an uncompromising and vigorous push to change the litigation rules that are wreaking social and economical devastation on plaintiffs and defendants and return them to the standards of ethics and justice where they originated.(1) Under the current rules, two groups, the trial lawyers, are enriching themselves at the expense of the rest of society, while the other group, demagogic politicians, are arrogating to themselves political power.
Olson's book, if you can find a copy, should be read by all Americans concerned with the litigation explosion --- and that should be all of us, for we all are at risk. We must do this not only to protect our pocketbooks, but also to preserve what remains of our legacy of freedom that we must pass to our children.
1. Faria MA, Jr. The litigation juggernaut. Part I: The dimensions of the devastation and Part II: Strategies and tactics for victory. J Med Assoc Ga 1993;82(8):393-398 and J Med Assoc Ga 1993;82(9):447-451. Although this two-part article touches on all aspects of the lawsuit crisis, it emphasizes medical liability and tort reform.
2. Olson WK. The Litigation Explosion: What Happened When America Unleashed the Lawsuit. Truman-Talley Books, Dutton, NY, 1991. The book is out-of-print now but we hope it will be reprinted.
3. Faria MA, Jr. On the liability crisis and the glut of litigators. J Med Assoc Ga 1993;82(4):155-157.
4. Malefactors of great wealth. Natl Rev, Sept. 14, 1992, p.19.
5. Moore S. The trial lawyers: a clear and present danger. Human Events, December 17, 1999.
6. Kreier R. Study, defensive medicine costs billions. AMNews, April 15, 1996, p.7.
7. AANS Bulletin, Fall 1999/Winter 2000, p. 3.
8. Schwachman B. The story of MICRA: medical injury compensation reform act of California. Am Soc of Anesthes Newsletter 1992;56:16.
9. Abrams G. How MICRA works for California. Calif Phys, July 1995, pp. 34-38.
10. AMA delivers in liability reform. AMNews, April 10, 1995.
11. McCormick B. Tort reform dropped from product liability bill: future damp. AMNews, March 25, 1996.
12. Stossel J. Protect us from legal vultures. Wall Street Journal, 1/02/96.
13. Schlafly P. Feminist-inspired law violates the Constitution. Human Events, December 17, 1999, p.15.
14. Hoff J. Patients' rights: a double standard. National Center for Policy Analysis, Brief Analysis, No. 307, December 3, 1999.
15. Doctors win big in Washington - AMA persistence delivers powerful results. AMNews, Oct. 21, 1996, p.1.
Dr. Faria is also a consultant neurosurgeon and author of Vandals at the Gates of Medicine (1995) and Medical Warrior: Fighting Corporate Socialized Medicine (Macon, Georgia, Hacienda Publishing, Inc., 1997).
Originally published in the Medical Sentinel 2000;5(3):88-91. Copyright ©2000 Association of American Physicians and Surgeons.