The Reality Of Tort Reform
On Aug. 31, 1999, 73-year-old McComb obstetrician Edsel Stewart signed
a pack of Prudential Life Insurance papers that he believed gave him
a million dollars worth of life insurance for his family for $105,000
a year. Getting insurance at that age was no easy feat, and Stewart
counted himself lucky for nabbing a "Select Preferred Class H Rating" with
Prudential.
Prudential looked over Stewart's health history, his ability to pay an
egregious amount of money for the policy, and sent agent James Bateman
to Stewart's house with a contract.
Stewart's son, Larry, said his father forked over an initial premium
of $20,000 to Bateman and signed the slew of documents, which would appear
as evidence later in court. One of the final documents he signed
on Aug. 31, 1999, was a statement stating in bold letters: "I
believe this contract meets my insurance needs and financial objectives."
God's got a rancid sense of humor. Stewart had a stroke the very
next day--Sept.1. He spent the next month and a half in a coma,
and then he died.
Stewart's family said he had signed the documentation and turned over
his cash, fair and square. He was in perfect health the day of
his signing. Prudential had given Stewart a full health analysis
before even handing him the papers to sign, and Stewart had definitely
signed them. Nevertheless, the insurance company put up a fight.
Prudential argued the $20,000 payment was no premium, that Stewart handed
over the money merely to pay Bateman to put Stewart's estate in order--though
nothing in the paperwork alludes to this and Bateman had no license to
do such a thing. Prudential also argued that somehow the policy
wasn't finalized, and that the beneficiary, Stewart's son, had to sign
and approve a "Supplement to the Application" form, which the
company refused to offer upon hearing of Dr. Stewart's comatose state.
Then the company argued that the $105,000 policy Bateman brought Stewart
was not the actual policy, but a counter offer, based solely on the argument
that Bateman also had a $100,000 offer floating around in his briefcase
at the time of Stewart's Aug. 31 signature. It did not matter that
the figure $105,000 was written down almost 30 times in the stack of
papers upon which Stewart had planted his signature.
On Feb, 28, 2006, a Hinds County jury, after seeing all the evidence
from both sides, decided that Prudential was being a bad little insurance
company and hit them with the $36.4 million jury award--approximately
.5 percent of Prudential's net worth, for breach of contract.
No Jurv Needed
Prudential appealed the decision, and the Supreme Court judges, aside
from Justices James Graves Jr. and Oliver Diaz Jr., sucked down Prudential's
argument like a plate of warm peach cobbler.
The court disagreed with the jury, arguing that the "evidence does
not sufficiently support the establishment of the requisites of offer,
acceptance and consideration," that constitutes a solid policy.
On Oct, 2, the Mississippi Supreme Court overturned the case in a 6-2
decision, not only reversing a $36.4 million jury award against the company
in Hinds County Circuit Court, but ruling in favor of Prudential, forcing
the estate of Dr. Edsel Stewart to pay Prudential's court cost for daring
to sue them.
The court accepted Prudential's claim that the Bateman's paperwork
amounted to a counter offer, which Stewart had been unable to finalize "since
he was in a coma." The court also swallowed Prudential's
argument against the $20,000 being a premium payment. Bateman
testified that the check went to his company, JMB Financial Group, "for
two years of estate planning" for Stewart, even though Alston
said Prudential "didn't have one scrap of paper in cross examination
to show that he was doing this for estate planning."
Graves and Diaz dissented, arguing in their own opinion that " ...
The jury heard all of the evidence from both parties and decided that
a contract existed," that Prudential "makes no argument that
substantial evidence in support of its defense was not heard by the
jury," and that that "sufficient evidence" was presented
to support the jury's finding that a contract existed.
The Stewart family's options are tiny now. Alston is filing a
Motion for Re-hearing in Prudential Insurance Company of America and
Pruco Life Insurance Company v. Co-executors of the estate of Edsel
Stuart, but the motion has no choice but to head back to the same court
that reversed the jury's decision in the first place.
Alston said this was the most painful motion for re-hearing he had
ever written, but he said it was the most painful, because it is a
frantic appeal against a looming behemoth of judicial change that could
herald the death of the jury system in Mississippi.
The Supreme Court has a habit of overturning jury awards in Mississippi. Sometimes
bad evidence gets into the case, or the jury gets improper instructions,
and lawyers always get furious. This issue was different, though. This
time, there was no getting around it: The Supreme Court had supplanted
almost two weeks of deliberation from a Hinds County jury because seven
of the nine justices disagreed with it.
Alston says he is filing the motion for no less reason than "to
protect our public from the nullification of the jury system as we
know it."
"My sadness," Alston wrote, "stems from the opinion
here rendered by this court that is so basically wrong on both the
facts and the law and which completely abrogates findings of jurors
solemnly made on contested facts, which I have long believed and taught
to be sacrosanct."
Stewart's family has invested almost $100,000 in court costs so far,
and must now pay for Prudential's court costs as well, thanks to the
reversal of the decision. Prudential's home office did not return
calls.
For Alston, the momentous question is the precedent the decision sets.
"The jury made a unanimous decision to side against Prudential,
and they heard all the facts, and the Supreme Court just decided to
substitute what they had in their mind for the opinion of the jury. Otherwise,
why have juries, if all you have to do is overturn them? Why
doesn't each side write a brief, and send it up to Supreme Court, let
them just pull up a card and decide which one they want to side with? It
would save Mississippi millions of dollars."
Alston's frustration is not limited to just him. Other attorneys
are viewing this development as one of the most glaring examples of
the Mississippi Supreme Court's transformation into a de facto tool
for big industry.
Lawyers say the Mississippi Supreme Court has become one of the most
anti-plaintiff courts in the nation, particularly over the last two
decades, as the pro-business lobby manages to replace reasonably progressive
judges with their own. The business lobby dedicates huge expenditures
to judicial campaigns at every election.
Jackson Free Press columnist James L. Dickerson pointed out in his
Oct. 18 column "How Much Justice Can You Afford?" that Mississippi
secretary of state records reveal hundreds of thousands of dollars
in contributions to justices' campaigns from the big business that
often find themselves before them in court.
Justice William Waller Jr. took in about $300,000 in 2004 from insurance
companies, physicians and Prudential business partner American Bankers
Insurance. Dickerson reported that Chief Justice Jim Smith took
in around $300,000 from similar anti-regulation sources, as did Justices
George Carlson and Mike Randolph.
"Not only do I think it's undeniable that the Supreme Court has
swung away from plaintiffs, I think a majority of the present members
would be pleased by that perception," said Mississippi College
School of Law professor Matt Steffey. "I believe a majority
of the present judiciary feels that the court was too pro-plaintiff
in the past, and should rightfully swing in this different direction."
A Political War
It's not all about supporting your allies in the race for the death
of regulation. There's a fair amount of chewing up the other
team as well. During the past two years, the threat of legal
persecution has been a factor for any judge or attorney still adopting
a pro-regulation stance in the courtroom.
In 2003, U.S. Attorney Dunn Lampton charged Supreme Court Judge Oliver
Diaz, along with attorney Paul Minor, of bribery and mail fraud. Diaz
allegedly took loans from Minor in return for leverage in a libel case
against Minor's father, columnist Bill Minor, a loud progressive voice
and one of the first pro-desegregation voices in the state media. A
jury acquitted Diaz in 2005, but then Lampton went after Diaz for tax
evasion. A jury likewise found those charges Insufficient, and
cleared the judge a second time, though the trial removed his input
from some cases.
Diaz, a former Republican, is an outspoken supporter of the Mississippi
Democratic Party. Minor, another big Dem contributor, did not
get off as lucky. A U.S. District Court for the Southern District
of Mississippi jury convicted Minor of using contributions and loans
to influence judicial decisions. He is now serving an 11-year
sentence.
Two U.S. House Judiciary sub-committees started probing the convictions
last week, airing complaints that the Diaz and Minor prosecutions were
part of a greater witch-hunt launched against Democrats as part of
a united effort by the Bush administration and U.S. attorneys to undercut
Democrat funding in some states.
"The public must learn the full extent to which the Justice Department
has been transformed Into a political arm of the Bush administration," Rep.
Linda Sanchez, D-Calif, told the Associated Press.
Rep. Steve Cohen, D-Tenn., said the two cases are evidence of politically
motivated prosecutions, questioning why an FBI agent who investigated
Diaz and Minor was transferred to Guantanamo Bay, Cuba, after questioning
why Mississippi lawyer Dickie Scruggs had not been prosecuted for lending
Diaz money in the same manner as Minor.
Scruggs is the brother-in-law of GOP Sen. Trent Lott, and contributes
to both Republicans and Democrats. Diaz and Minor say Lampton
treated Scruggs differently.
"Scruggs was not prosecuted, although he did the same thing which
I was convicted of," Minor said in an Oct. 22 letter to House
Committee members.
"Scruggs, however, had contributed $250,000 to the Bush-Cheney
presidential campaign and GOP in 2002 .... In other words, when the
Republican led Justice Department looks at my contributions to Democrats,
they see fraud. When they look at Scruggs' donations to Republicans,
they see no crime at all."
Minor added that the indictments remained inconsistent regarding other,
"[F]ormer Chief Justice Ed Pittman, who was a sitting Mississippi
Supreme Court justice in 2000 was the beneficiary of a loan guarantee
from me. Justice Pittman, was not indicted, but Justice Diaz
was. Justice Pittman, however, was pro-tort reform. Justice
Diaz was perceived by the Bush Justice Department as anti-tort reform," Minor
wrote.
Steffey said he was never able to convey to his students Diaz' wrongdoing
during the trial.
"I thought the case against Diaz should have never been brought
and that they were ill-founded," Steffey said. "They
had no evidence of any cases he'd altered. I understand the prosecutors'
theory, but when asked to point to an act that was unlawful, I was
never able to do it. They say he was being bribed, but then when
you ask what their evidence was, they didn't have much of anything
to offer."
The transformation of the courts is only one part of a greater effort
by anti-regulation forces to alter the mindset of Mississippi's voting
population.
Beginning of the End
The stock market tanked in 2001. Insurance companies, which had
been able to offer unnaturally low rates to customers thanks to heavy
market investments, took a screaming whack on their backsides. St.
Paul, one the biggest medical insurance carriers in the nation, led
the pack in terms of market investment. But they dropped into
a hole at the end of the millennium. The company jettisoned its
malpractice coverage line in 2001 and reported a $980 million loss
that same year.
Medical malpractice companies, driven to follow St. Paul's lead during
to keep down their own prices, had been investing their surpluses into
bonds in the 1990s. But bonds are still stocks, and when interest
rates fell at the end of the decade, the companies had to take their
losses out on somebody, and it wasn't going to be them.
"What they did was they raised their rates rather dramatically," said
J. Robert Hunter, director of Insurance for the Consumer Federation
of America, in Washington, D.C.
Anti-regulation associations, such as the U.S. Chamber of Commerce,
saw a new weapon, in the form of falling numbers and spiking insurance
rates, drop abruptly into their arsenal.
It was time to go after those pesky trial lawyers who dared to sue
companies, and then donate money to Democrats.
The chamber announced a campaign against Mississippi's legal system
in 2002, spending $100,000 on ads in the state's newspapers to plead
its case for "common-sense" legal reforms. That year,
the chamber urged Mississippi to reform its "flawed legal system." It
also went on the attack, releasing verbose press statements warning
companies not to do business in Mississippi, citing "significant
risks its members and all companies face," because of a wild horse
legal system targeting out-of-state businesses "with frivolous
lawsuits and outrageous verdicts."
The Institute for Legal Reform, another division of the chamber, followed
up the chamber's effort with an intense get-out-the-vote program geared
toward promoting pro-tort reform candidates in Mississippi.
Pro-regulation groups like Public Citizen argued in vain that businesses
were the principal plaintiffs choking the courts. American companies
actually do a lively business in the national court system, both then
and now. Unlike American taxpayers, who usually have no spare
change to give to lawyers, companies have both the resources and the
wherewithal to push for alleged infringements.
A Public Citizen survey of case filings in both Arkansas and Mississippi
during the height of tort reform in the 1990s showed that businesses
filed "four times as many lawsuits as do individuals represented
by trial attorneys."
The wave of corporate enabling crushed most debate, however. Anti-regulation
lawmakers, like Sen. Charlie Ross, R-Brandon, waved the chamber press
releases like blood-drenched letters from God. Under the direction
of Ross and his corporate backers, the state passed a significant bill
in 2002, which then-Gov. Ronnie Musgrove signed.
Mississippi House Bill 2 provided liability immunity to government
employees, UMC doctors and members of the Veterans' Affairs Board,
as well as immunity for health care providers working at schools and
for physicians who volunteer medical services. It also reduced the
statute of limitations for actions against nursing homes to two years
and required 60 days' notice of any lawsuit against nursing homes,
making suits for Grandma's bruises and bedsores harder to come by.
Its biggest change, by far, was limiting non-economic damages to $500,000
until 2011 and $1 million after July 1, 2017.
The Washington Lobbyist
Then came newly elected Gov. Haley Barbour. Barbour was born of the anti-regulation response to the flurry of environment and consumer protection laws passed by Congress during the height of its progressive movement in the late 1960s and 1970s. Laws like the Clean Air Act of 1970, the Endangered Species Act of 1973, the Occupational Safety and Health Act of 1970, as well as the creation of the Consumer Product Safety Commission and other government agencies, terrified the pro-industry lobby. The damn hippies and Ralph Nader, obviously, were imposing their rancid liberal beliefs upon the government.Barbour's lobbying company Barbour, Griffith & Rogers catered to the anti-regulation lobby, forging convenient ties between it and the emerging Republican presence in Washington. Barbour carried his philosophy with him onto the Mississippi campaign trail, riding into the governor's office on a platform of ending lawsuit abuse in the last gubernatorial election.
In 2004, under his governorship, the state Legislature passed House Bill 13, the Tort Reform Act of 2004. That bill fossilized the $500,000 cap on pain-and-suffering damages in medical malpractice cases and placed a $1 million cap on such damages in all other cases. HB 13 also eradicated some liability to sellers and retailers.
Anti-regulation bulldogs, like The Wall Street Journal, labeled the new laws nothing less than a triumph. Insurance companies, which had made very timely statements threatening to withhold some versions of insurance in Mississippi during the height of the tort reform battle, suddenly turned sweet and rosy and returned coverage to various policies in the state.
Insurance rates have dropped in some regard, though doctors have not seemingly transferred those savings onto consumers just yet. Mississippi Assurance Company of Mississippi, which writes about 70 percent of the state's medical malpractice insurance, reported some falling rates.
"In September, our board decided to reduce our annual rates by 10 percent across the board for 2007,' Hope said. "The year before that we reduced it 5 percent for 2006. In 2005, we held rates level for the first time in a long time."
Hunter told the Jackson Free Press that he attributes the company's
generosity more to the market than tort reform. "Right now
we're in a soft market. Rates have dropped double digits over
the last few years, and it had nothing to do with tort reform," Hunter
said.
Even a congressional report requested by tort-reform bulldogs deflated
some of the most rabid U.S. Chamber of Commerce accusations regarding
runaway justice and the medical field.
A 2003 Government Accountability Office report, "Medical Malpractice:
Implications of Rising Premiums on Access to Health Care,@ took a candid
look at three "crisis" states, Mississippi, Nevada, Pennsylvania,
West Virginia and Florida. After checking up on reports of doctors
fleeing these problem states, the GAO information not only dashed claims
of doctors swarming out of the problem states, but also eviscerated
the Chamber of Commerce's reasons for the alleged emigration.
"Although some reports have received extensive media coverage,
in each of the five states we found that actual numbers of physician
departures were sometimes inaccurate or involved relatively few physicians,@
the GAO reported.
The GAO catalogued higher insurance premiums among some doctors' concerns,
but attributed the reasons behind the rising premiums to "interest
rates (falling) on the bonds that generally make up around 80 percent
of these insurers' investment portfolios."
The GAO also pointed out poor media coverage in tort-reform battleground
states, including Mississippi, that left voters ignorant about the
facts around the issue.
Getting Away with Murder
Gulf Coast attorney David Pitre said the damage caps come with one hell of a dark side. If your surgeon mistakes his lunch bag for a donor lung during your operation, you'd best be crapping bologna sandwiches before trying to sequester a jury. Getting compensation for any screw-up, no matter how obvious, is no easy fight in Mississippi these days."All this anti-attorney rhetoric everywhere has tainted the jury pool against plaintiffs. Trying a case has certainly gotten harder. Also, the cost to prosecute these cases is so expensive. An attorney can easily spend $50,000 to $100,000 on these cases. When you put an arbitrary limitation on the damages, there's a great economic disincentive involved,@ Pitre said. "If you don't have catastrophic injury or death, then its difficult to find an attorney who is willing to spend the large amount of money it takes to try a medical malpractice case."
Even with Pitre's "economic incentive" intact, with a virtual human artichoke lying on a stretcher, the plaintiff could still ultimately have to turn to government funding to sustain herself in her final years. Malpractice suits can encompass some of the most costly tolls to quality of life, from blindness, to brain damage. Some of the resulting injuries can require a lifetime of intensive care, running thousands of dollars a year. A $500,000 maximum jury award, after attorney fees and court costs, is a mockery to a person sucking sustenance from an $50,000 machine for the rest of their life.
Sen. Ross argued that the benefits of reform were obvious during his failed campaign for lieutenant governor.
"Lawsuits against doctors are down 90 percent, and the reports I'm receiving say doctors no longer feel they need to practice defensive medicine because of a fear of liability," Ross said.
Man, is he ever right. In fact, anti-regulation proponents can now seek solace in the fact that Mississippi now ranks at the bottom in terms of disciplining doctors.
Public Citizen released a June report revealing that out of every
1,000 physicians in the state, only 1.41 percent received any serious
disciplinary action, such as license revocation, probation, suspension
or surrender.
Dr. Sidney M. Wolfe, director of Public Citizen's Health Research Group,
said his organization had never witnessed such an appalling drop.
"Mississippi is the only board in the country, in the 25 years
we've been doing this, that has gone from first in the nation--in 1995,
1996, and 1997 in our rankings--to worst. This is unprecedented. In
2006, there were seven disciplinary actions .... The rate for your
state is now 1.41 disciplinary actions. In 1997 it was 11.56,
essentially eight times higher. ... We have never seen that before."
In September, the Mississippi Board of Medical Licensure reprimanded
two state doctors, Kevin Cooper and Glynn Hilbun, for putting their
signatures on 700 silicosis claims when they had not actually made
any diagnosis. The board did not demand their license for enabling
a mass product liability lawsuit--not even a suspension--and both doctors
are free to work in the state even now. The issue would not have
even gone public were it not for the well-publicized Texas trial, since
the board hides such actions from public view.
Wolfe said he doubted the state board's drop in disciplinary action
had much to do with Mississippi doctors' glowing talent.
"It is highly unlikely that this has anything to do with the quality
of doctors in the state. It has to do with the dysfunction of
the medical board. Something radical happened since 1997. It
was first in '95, '96, and '97. It was third in '98, eight in
'99, 13th in 2000 and its been downhill ever since," Wolfe said,
attributing the malfunction to either medical board funding, a change
in directors or interference by the state medical associations.
The Brave New World
Now that the initial tort-reform dust has settled, anti-regulation proponents like Barbour argue that the improvements to the state's health industry have been dramatic.Doctors, they claim, were now returning to the state after spending the latter part of the last century abandoning it to runaway lawsuit abuse and "jackpot justice.@
But information from the Mississippi State Board of Medical Licensure and the American Medical Association indicates that the number of physicians licensed through the board were on a slow climb up, both now and then--even during the worst of purported court-room abuse.
The Mississippi State Board of Medical Licensure shows new physicians got licensed by an average of 150 new permits every year between the years of 1996 and 2006.
Despite "improvements' claimed by the U.S. Chamber of Commerce and its clone organization, the Institute for Legal Reform, the same groups still complain that Mississippi still hits almost rock bottom in terms of its lawsuit climate.
Delaware has retained the top spot for the entire six-year run of the ILR/Harris survey cataloging lawsuit climates. Minnesota, Iowa, Maine and Nebraska are other top spots. West Virginia ranked in last place for the second year in a row, but Mississippi, after many painful rounds of lawsuit reform, sits only one spot above West Virginia, and shares the low rung with other bottom-feeders like Louisiana, Alabama and Illinois,
Some changes have definitely come around since the courts altered their policing role for consumer-protection policies, however. The state's health industry Is sinking down the tubes, according to some sources.
Last month, information from the American Medical Association ranked Mississippi as last on the U.S. Health System's Performance National Scorecard.
Mississippi and Oklahoma were the only two states that were ranked
in the bottom quartile in all five dimensions measured: access, quality,
avoidable hospital use and costs, equity, and healthy lives.
AMA information also ranks the state 50th in mortality amendable to
health care, and 49th in infant mortality.
The lack of medical oversight is also showing up in outpatient care,
where 35 percent of Mississippians are getting inappropriate timing
of antibiotics to prevent Infections, incubating a breeding ground
for antibiotic tolerant super bugs. The same Public Citizen report
shows more than half of heart failure patients, 55 percent, were not
given written instructions at the time of their discharge.
Pitre noted the irony of one of the people getting stiffed in the Prudential
lawsuit. Beneficiary Larry Stewart, a doctor, was a member of
a group that marched on the State Capitol in droves in 2004,
flooding the halls with white lab coats and demanding tort reform.
"Tort reform is an equal opportunity arrow through the heart of
anyone who suffers a loss,' Pitre said.
"They say that during Katrina there was a disproportionate amount
of tort reform advocates who suffered. Many people in houses
on the Coast and who live near the water had a higher standard of living,
and for them to find out that tort reform applies to them must have
been shocking .
The issue of anti-regulation versus pro-regulation is not a dead topic
in Mississippi. This year's elections are rife with campaign
materials labeling a candidate as a hero of tort reform or a champion
for consumer's rights.
The race for lieutenant governor is one such contest. Republican
Phil Bryant has gone out of his way to tie himself to the hyper-pro-reform
Barbour.
Bryant commends Barbour at every possible press event, and
sought to alienate "those trial lawyers during at least one campaign
forum, where Bryant accused them of ruining the court system, "until
we got tort reform.
His Democratic opponent Jamie Franks, however, is campaigning hard
on the argument that the state should follow up tort reform with some
form of insurance reform to guarantee that consumers see a drop in
insurance rates.
Franks had attempted to marry the Legislature's 2004 tort-reform bill
language limiting insurance rates, though the Barbour-dominated Senate
removed the language.
"We've got tort reform. We've done that, but now we need
to see that reform reflected in more affordable insurance,@ Franks
told the JFP. "We gave them what they wanted, Now it's our
turn.
Other states are still tweaking recent tort reform endeavors.
In 2006, the Oklahoma Supreme Court threw out a tort-reform law born
during the Oklahoma reform upheaval. The court tossed a state
law requiring anyone filing a malpractice lawsuit to obtain an affidavit
from a medical expert asserting that the case has merit, on the basis
that the affidavit was required for medical malpractice cases only.
The court ruled the Legislature had created a "special law@ that
arbitrarily singled out a class for special treatment. The court
also ruled that the law created a barrier to the courts for the poor,
who cannot afford to obtain the affidavits as a requirement for filing. Such
affidavits may cost $500 to $5,000 to obtain, the court found.
Mississippi, which has no Supreme Court willing to scrutinize impacts on plaintiffs,
"The (Mississippi) Supreme Court is a damn mess," said one Jackson attorney, who chose to remain anonymous because of his interaction with the court. "The place is bought, and I don't see it going consumer friendly anytime again soon."
Source: Jackson Free Press
