This is for all tort reform advocates, like those smart folks at the Wall Street Journal, who spout the simplistic suggestion that a loser pay rule would improve the American civil justice system. The Times Online reports on Lord Justice Jackson’s lengthy report on the United Kingdom’s civil justice system. The upshot is that Lord Justice Jackson recommends ending the United Kingdom’s loser pays rule.

Leave it to The Times to get to the heart of the matter: “The civil justice system has priced itself out of the reach of ordinary people; they face financial ruin if they venture into court and lose.”

The issue is access to justice. In a loser pay system, only the wealthy can access the courts. That is so contrary to the American way. Let’s all mark this lesson as a response when the smart folks at the Wall Street Journal start pushing for limits that treat justice as a luxury item.

David Sugerman

What starts out as a blah-blah Wall Street Journal editorial supporting Illinois’ damages caps on medical error cases, turns ugly.

Look at what’s underneath, as the editors at the Journal are fairly frank about their goals:

“We’d prefer a ‘loser pays’ rule as in the British system. But without such a deterrent to frivolous suits, limiting damage awards is the only way to stop jackpot judgments that drive doctors away and hurt the quality of medical care.”

It’s a nasty bit of rhetoric for several reasons. First, there’s the urban myth of doctors driven away. There are no names, and there is no data. It’s just the bald “fact” that this happens. But the more unfortunate and intellectually dishonest piece is the “jackpot justice” rhetoric. The Journal editors know that they’re being disingenuous as a number of high-profile studies confirm that the system works fairly well, with one important flaw. Here’s a widely-publicized study from the New England Journal of Medicine on the topic of medical errors and litigation. Here’s another slightly-dated summary from AARP.

Here’s the bottom line from the New England Journal article: “Claims that lack evidence of error are not uncommon, but most are denied compensation. The vast majority of expenditures go toward litigation over errors and payment of them. The overhead costs of malpractice litigation are exorbitant.”

That overhead cost thing at the end is also important. What the Wall Street Journal wants to do is make litigation more expensive by importing from England the loser pays rule. What that means is that lawyers on both sides get paid by the loser.

Under the current system, most patients’ cases are handled on a contingent fee basis. That means that the lawyers get paid if and only if we make a recovery for the injured patient. That system does several things. First, it keeps open the courthouse to meritorious claims, regardless of the wealth of the patient. The patient that wins pays his or her lawyer based on a percentage of the recovery.

Under the contingent fee system, lawyers who represent patients simply can’t afford to take losing cases because when they lose, they don’t get paid.  As well, middle-income patients are able to locate and hire top-flight legal talent because they don’t have to pay by the hour for the lawyer’s work.

But the second thing is that I imagine that loser pays will drive up the costs to both sides. While I don’t have any data, the costs are apt to increase because both sides have an incentive to do more work and stick the loser with the bill.

Underneath, the Wall Street Journal wants us to believe that juries can’t be trusted, and our founders were wrong to set up a jury system. The Wall Street Journal apparently believes that legislatures that pass one-size-fits all rules are better suited than juries to determine case outcomes. [Snark alert:] I’m sure this has nothing to do with the fact that lobbyists roam through the various hearing rooms and halls of various legislatures but are barred from jury rooms.

In the end the editors of the Wall Street Journal sipmly ignore the reality of injured patients. I have to assume that they simply close their eyes because no one should be so jaundiced in the face of profound injury.

David Sugerman

No secret that I’ve been a big critic of large insurance companies. You don’t have to look too far into the archives to find a combination of snarkiness, outrage, and jaundice over some of their practices. So this one is in the spirit of calling it fairly. While away on vacation, I missed this report on the outcome of high-flying plaintiffs’ lawyer Dickie Scruggs’ fall from grace.

Back story is that Scruggs is one of the guys who took on the tobacco industry made millions, took on the insurers on Katrina claims, and was poised to make millions more. In between he’s done all manner of injury cases. I have no basis to know the specifics, but I would be willing to bet that he’s earned sums that might shame some small countries’ gross domestic profit numbers. So he falls from grace when the state and maybe a few insurance carriers go after him for attempting to bribe a judge.  They got him, and now he’s going to jail.

Let’s be clear. Allstate, State Farm, The Wall Street Journal and everyone else has a right to call this guy a crook and to be wary of conduct like this. I join them, by the way. I particularly appreciate what Mr. Scruggs has done for injured people with legitimate claims and their lawyers who play by the rules. (Editors note: He’s being snarky, again…he’s not grateful. Not one bit.)

It’s a black mark on those who represent injured people. It’s worse than the magic pants guy, as this was an attempt to completely undermine the fairness of the civil justice system. The problem is that criminals and clowns like this provide major fuel for the efforts of those who would limit consumers’ ability to access the courts.

It was reported that Mr. Scruggs swooned when the judge sentenced him to the maximum. Good. And I hope the jerk spends each hour of his five years reflecting on how his corruption undermined the civil justice system. I say big props and major thanks to the trial judge. By slamming him, the judge made it clear that the integrity of the civil justice system will not be undermined by criminals.

David Sugerman

For consumers who have taken Vytorin, here’s a good summary of the problem from the New York Times: http://www.nytimes.com/2008/01/15/business/15drug.html

Interestingly, the companies have apparently known since April 2006 that their higher-priced drugs were not more effective than generics. But they sat on that information until Congress pressured them to release their study this month. In the meantime, the manufacturers continued to sell the higher-priced less effective drugs.

I don’t routinely pay close attention to such things, but I have to wonder whether the companies ran some of those glossy TV ads for Vytorin. Sure would be interesting to see what they said. I suppose that will be part of the discussion as the various consumer class actions move forward.

One other thing. A google search also turned up a fairly hostile editorial in Wall Street Journal. According to the writer, these cases are inappropriate because no one has been injured. I guess the Journal is bound to side with its friends on Wall Street and not consumers. But you would think that even the Journal’s editorial writers could appreciate the obvious point.

Taking money from consumers by way of deceptive trade practices IS an injury. Sure, it’s not a big deal to the well-heeled at the Journal. But of course, if we’re talking about $30 per month per person, and you’re selling this thing everyday to consumers across the nation, that’s a lot of money. Maybe it looks too much like business as usual to the Journal?

David F. Sugerman