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An Imaginary Crisis

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Why read a book about tort “reform” four years after the Texas Legislature passed a sweeping rewrite of the state’s civil justice laws that seemed to give reformers most everything they wanted? To understand what’s next-the major corporate players are still at work-and view in sharp detail how skillfully voters in Texas, and across the country, have been duped into embracing their own legal disempowerment.

“Most Americans don’t know what tort reform is, and if they did, they’d be against it,” Mississippi trial lawyer “Dickie” Scruggs reportedly said, capturing in a nutshell how hard it’s been to persuade voters that their rights in the civil justice system are under attack by some of the system’s most notorious defendants.

One irony is that the spellbinding trial lawyers-supposedly adept at hoodooing juries into “out-of-control” awards-failed to motivate voters. Tort “reformers” found success with powerful shorthand phrases like “lawsuit abuse” and “victim culture.” They stoked outrage with urban myths about greedy coffee-spillers winning millions.

Perhaps the trial lawyers couldn’t believe voters would buy a political cause that takes away their rights. If so, they underestimated the determination and skill of their opponents, an ambitious national campaign presented step-by-step in Blocking the Courthouse Door.

Blocking the Courthouse Door cover

Stephanie Mencimer, a former Washington Post investigative reporter and now contributing editor of The Washington Monthly, has written a bracing narrative of who, how, and why “tort reform” became law in Texas and elsewhere. It’s a lively forward march filled with evidence from depositions, journals, interviews, news reports, university studies, and more, all footnoted.

If you think onions have layers, just wait for Mencimer to peel back those “Who pays for lawsuit abuse? YOU DO!” billboards and follow the money. Hint: really big money.

“Tort” is the legal word for “injury.” The closest many voters come to “injury law” or any part of the civil justice system may be getting out of jury duty. Though media outlets headline the rare, multimillion-dollar jury awards to injured plaintiffs, they ignore smaller, day-to-day cases, and those that plaintiffs lose. Likewise, mainstream coverage often fails to mention that the civil system already has a way to jettison “frivolous” cases: Judges dismiss them. (Dismissed lawsuits are most often brought not by lawyers behaving frivolously, but by people who chose to represent themselves, Mencimer notes.)

Most news outlets don’t have reporters deeply familiar with civil law and tort cases, so their readers and viewers-the voters-gain little understanding of torts. Maybe a hit TV show on civil cases would help: a “Law and Order” for torts. (The Observer covered Texas’ 2003 tort reform battles extensively, devoting much of our April 25 issue that year to the myths and mistruths behind the campaign.)

Mencimer observes that mainstream media largely fail to dig into fake research by paid-for “experts,” and into handy lawsuit urban myths. Tort reform’s primary engines-tobacco, insurance, and other corporate interests-spent millions running slogans through focus groups, setting up “think tanks” and advocacy groups, and planting stories like that of the scalded coffee-spiller who got millions from McDonald’s.

Mencimer presents the facts of that case. Stella Liebeck was a 79-year-old, conservative Republican who never had and didn’t want to sue anyone. Her burns from hot McDonald’s coffee required skin grafts; she spent over a week in the hospital and remained partially disabled for two years. McDonald’s policy was to serve coffee between 195 to 205 degrees Fahrenheit, a temperature sufficient to peel skin from bone in under seven seconds.

Liebeck first asked McDonald’s to turn down its coffee-serving temperature; the company refused. She asked McDonald’s to pay her medical costs, and the company refused. That stiff-arming led Liebeck to a lawyer and her day in court.

At trial, the Cincinnati Shriners Burn Institute testified that it had treated many McDonald’s coffee-burn patients. McDonald’s executives admitted they’d known for years their coffee was dangerously hot, but had done nothing to change their policy despite 700 complaints.

Understandably outraged, jurors nonetheless reduced their award for Liebeck’s medical bills and economic damages by 20 percent because she was partly at fault for spilling the coffee. Still, jurors awarded $2.7 million in punitive damages-equal to two days of McDonald’s coffee profits. Liebeck never received that sum-despite the headlines-because the judge reduced it. Judges often reduce jury awards, and defendants appeal them for years before they have to pay a cent. Ultimately, Liebeck received less than the headlined millions, but her case became exhibit one in the case against “runaway” juries.

Mencimer tracks the production of such lawsuit myths to groups like the American Tort Reform Association, founded in 1986 by the American Medical Association and financed mainly by the pharmaceutical, tobacco, and insurance industries. ATRA’s Web site touts “Loony Lawsuits” to this day, and ATRA’s spokesperson admitted to Mencimer that she doesn’t verify any of them.

Tort trials such as Liebeck’s benefit us all, Mencimer argues, by revealing corporate secrets that have harmed or continue to harm the public. The tobacco settlements and the Ford Pinto case provide other examples. The latter revealed “Pinto math,” the company’s calculation that it was cheaper to pay the occasional burned driver’s family than to shield the car’s vulnerable gas tanks.

And how about those Texas nursing homes? Mencimer reports a 2002 study by the U.S. House Committee on Government Reform finding that “40 percent of Texas nursing homes had violations of federal regulations that caused harm to nursing-home residents or placed them at risk of death or serious injury. More than 90 percent did not meet federal staffing standards.” Mencimer describes a 2003 Texas case in which an 85-year-old woman with Alzheimer’s disease was raped by an employee at her Austin nursing home, a worthy case crippled by 2003′s tort reform.

Narrowly passed by Texas voters in September 2003, Proposition 12 amended the state’s Constitution to limit the amount a jury could award someone for pain, suffering, disfigurement, and mental anguish. Awards were limited to $250,000 for each defendant (such as a doctor or hospital), and no more than $750,000 in cases with multiple defendants. The law applies to medical malpractice lawsuits now, but allows the Legislature to place similar limits on any other civil lawsuits. For example, should a future jury find a company responsible for a refinery explosion that killed several workers, the workers’ families might find their jury awards limited.

One result, tort reform opponents say, is that low-income Texans have been effectively shut out of the civil system since 2003 because lawyers cannot afford to take their cases. Plaintiffs’ lawyers bear all the costs of a lawsuit over the years it takes to bring one to a settlement or trial-doing legal research, hiring experts to review documents and write expert opinions, depositions, office costs, court filing fees, and so forth-and are paid only if clients get a settlement or jury award. Under tort reform “caps,” many deserving medical malpractice lawsuits can’t pay their own costs and bring a decent return to the plaintiff, lawyers say.

Maybe it’s cheaper to fund tort reform campaigns than bring nursing homes up to safety standards: The nursing home industry got behind Prop. 12 and brought Texans a new legal restriction. Should you ever have a loved one injured or killed in a nursing home, know that state reports on the home’s inadequate care and past penalties cannot be used as evidence in your court case. Good luck.

The author traces the start of current tort reform to 1986, when the tobacco industry saw its first serious threat from product-liability lawsuits in three states. Mencimer presents evidence that the tobacco giants set about to limit their liability by attacking the civil justice system. The industry brought marketing savvy and lots of money to tort reform, and was welcomed by physician groups and the insurance industry, which had much to gain from downsizing jury awards.

In Mencimer’s account, West Virginia doctors became the first appealing public face of corporate tort reform. The physicians expected to lower their insurance premiums and shield themselves from malpractice claims. The campaign might have appealed to them as easier than challenging insurers’ high rates, rooting out the malpractice-repeaters in their ranks, or tackling hospitals’ medical error problems.

The same year that Texas legislators crafted Prop. 12, West Virginia underwent a “doctor strike.” Primed by a Republican-led hearing entitled “Harming Patient Access to Care: The Impact of Excessive Litigation,” and urged on by the American Medical Association, many West Virginia doctors staged a “strike” in January 2003. The strike coincided with President Bush’s mention of malpractice caps during his State of the Union address. West Virginia Democratic legislator Joe DeLong said doctors had done a fine job of “turning their insurance problems into an anti-lawyer issue.”

Texas rates its own chapter. Here Mencimer connects many a dot: from Karl Rove’s consulting work for Philip Morris USA Inc. to his talking George W. Bush into adopting “the tobacco industry’s pet cause-tort reform-as one of his three primary campaign issues” for governor in 1994. Rove continued to work for Philip Morris while working for Gov. Bush, until 1996.

Mencimer describes how Philip Morris, via ATRA, tested ads in the 1992 Democratic primary between incumbent tort-reform advocate state Sen. Eddie Lucio of Weslaco and challenger Juan Hinojosa, with favorable results. Soon other businesses and businessmen joined, notably the OSHA-fined David Weekley Homes, Enron Corp. CEO Ken Lay (about the time the company’s Pasadena gas plant exploded), Perry Homes, James Leininger, and more.

It’s hard to evaluate doctors’ claims of “sky-high malpractice insurance” without knowing about the “insurance cycle” and a study led by University of Texas malpractice insurance expert Bernard Black, both helpfully summarized by Mencimer.

Black and colleagues took Texas Department of Insurance data on medical malpractice claims resolved from 1988 to 2002. They found the rate of malpractice lawsuits to be stable over those years, adjusted for population growth and inflation. In other words, there was no Texas malpractice “crisis.”

Black’s study also revealed the claims’ disconnect with prices charged by Texas malpractice insurers. While the state’s malpractice insurance rates rose 135 percent from 1999 to 2003, the number of claims paid didn’t mirror the increase. Instead, claims fell, both in “per doctor” numbers and in cost, Black’s data showed. The percentage of big-claim payouts, those over $1 million-awards that might lead to a premium hike-turned out to be a consistent 6 percent of all claims over the same years. Texas doctors’ insurance hikes apparently weren’t caused by lawsuits.

The “insurance cycle,” noted by Mencimer and others, is a pattern displayed over decades that coincides with outcries for tort reform. In the cycle, insurers make up for investment losses in stocks or the bond market by raising doctors’ premiums, while simultaneously calling for tort reform and malpractice caps.

In Mencimer’s analysis, the tort reform issue brought the Republican Party contributions and new supporters, peeling off doctors and small-business owners from the Democratic Party. As a bonus, it cut big donations to Democrats; as Grover Norquist put it, tort reform meant “defunding the trial lawyers.”

Mencimer has a passion for her subject. She organized her impressive research into a fast-moving narrative that casts a bright light on hidden alliances, funding, and the operations behind what often appeared to be a grassroots outcry. The reader comes to realize that the effort to hamstring jury verdicts continues, a valuable insight for the political year ahead.

Texans haven’t seen the end of tort reform. Prop. 12 opened a legal door through which the Legislature-without voter approval-may extend tort reform’s benefits to other corporate defendants in any industry. To understand why we still hear “victim culture” stories and “lawsuit abuse” slogans, and to spot the operation’s new goals in the political rhetoric ahead, voters would be wise to read Blocking the Courthouse Door.

Suzanne Batchelor is a freelance writer in Austin.