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Trial Lawyers Inc.

   Trial Lawyers Inc.: Health Care
    The Lawsuit Industry's Effect on American Health, 2005


The Lawsuit Industry's Effect on American Health: Condition Critical?
Trial Lawyers Inc. Health Care
A Message from the Director

Focus: Lines of Business
Drugs and Medical Devices
Special Focus: Vaccines
Medical Malpractice
Special Focus: Hospitals
Health Maintenance Organizations

Government Relations/Public Relations
Outlook and Conclusion

Other Resources
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The Manhattan Insitute's Center for Legal Policy.
Walter Olson's OverLawyered.com.



Trial Lawyers, Inc. hurts consumer health with its full-fledged assault on the U.S. medical system.

Last November, hundreds of trial lawyers converged on Las Vegas to plot a strategy for their assault on Merck Pharmaceuticals and its besieged painkiller Vioxx.[14] They divvied up key tasks and traded marketing and legal ploys in a confab worthy of a Fortune 500 company launching a major new product.[15]

Meet the health-care division of Trial Lawyers, Inc., which regularly delivers outsize profits for the plaintiffs’ bar at the expense of doctors, hospitals, consumers, and the health-care system itself. Trial lawyers have honed their health-care playbook to a simple but devastating formula —gin up public outrage, recruit intimidating hordes of plaintiffs, and rewrite medical science to fit the claims of injury.

Drug Torts: A Massive Pain

Trial Lawyers, Inc.’s highly effective business model has undone corporations from Armstrong World Industries to W. R. Grace,[16] but arguably nowhere have the litigation industry’s tactics been more aggressive and sophisticated than in the mass product-liability suits that have dogged pharmaceutical manufacturers for two decades. The plaintiffs’ bar and its allies in consumer lobbies like Public Citizen have torpedoed dozens of drugs, driving many off the market.[17] Of 39 pending product-liability cases currently before the Judicial Panel on Multi-District Litigation, which determines jurisdictional issues for mass torts, 22 involve drugs or medical devices.[18] To be sure, some drugs have harmful side effects, but they are often exaggerated and avoidable. Others, such as Norplant, a long-term reversible contraceptive, have been hounded off the market despite evidence that its side effects are little more than a nuisance.[19]

Bolstered by its success, and spurred on by the pharmaceutical industry’s prolific development of useful and profitable new drugs, Trial Lawyers, Inc. has been stepping up its assault. The litigation industry is using increasingly sophisticated plaintiff-recruiting techniques, which include not only traditional advertising—fully 46 percent of all trial-lawyer advertising on television is directed at culling plaintiffs for drug lawsuits (see graph)[20]—but also new tactics that vary from hitting daytime talk shows that attract the poor and unemployed to running Internet ads that can reach more sophisticated audiences.[21]

While the trial bar gets rich, the average consumer loses—through higher costs, reduced access, fewer products, and less innovation.

It’s no surprise that the plaintiffs recruited by such techniques usually have feeble cases. Nor does it really matter. Trial Lawyers, Inc. needs only to get a couple of multimillion-dollar verdicts—usually in tort-friendly courts where judges are in the pocket of the plaintiffs’ bar—and it can begin to make the real money from cowed defendants who settle the thousands of weaker claims—often for billions of dollars.

Consider the Fen-Phen mass tort, for example: a Mayo Clinic study found that the widely used diet drug appeared to cause heart-valve damage in 24 individuals, which prompted the Food and Drug Administration to pull the drug from the market;[22] soon after, Trial Lawyers, Inc. set up echocardiogram mills in hotels across the country that churned out thousands of class-action claimants.[23] An audit of a sample of plaintiffs’ echocardiograms found 70 percent ineligible for compensation, many of them having been doctored to produce evidence of disease.[24] Nevertheless, once Fen-Phen’s maker, Wyeth, lost two verdicts totaling more than $120 million, it began to settle.[25] So far, Wyeth has forked over $14 billion and estimates its total liability at $21 billion.[26]

Doctors Under Siege

Their deep pockets make drug companies sitting ducks for Trial Lawyers, Inc., but the litigation industry has also found less well-heeled
defendants, such as doctors, to be easy targets. The cost of these legal attacks is increasingly unaffordable liability insurance for doctors: according to the Congressional Budget Office, medical internists saw their malpractice premiums climb 50 percent between 1993 and 2002, and 33 percent from 2000 to 2002 alone.[27] Vulnerable medical specialties like obstetrics and neurology have buckled under the ceaseless pressure from the trial bar. Skyrocketing malpractice-insurance premiums— and, in some cases, the inability even to buy insurance—have driven neurologists to refuse to staff emergency rooms and OB-GYNs to stop delivering babies.[28]

Obstetricians continue to fall prey to suits alleging that the doctor's failure to perform a Cesarean section caused oxygen deprivation during delivery, which in turn caused cerebral palsy in the newborn. These suits, long a staple of the malpractice bar, have grossed millions in fees for trial lawyers like former senator and vice presidential candidate John Edwards.[29] Notwithstanding the fact that research has shown that cerebral palsy is only rarely attributable to birth asphyxiation[30]—and that the dramatic increase in C-section rates has led to no decrease in the percentage of infants born with cerebral palsy[31]—plaintiffs' attorneys continue to flog this theory to gullible juries. Last year, one of the highest jury awards ever in a medical malpractice case—$112 million (later settled for $6 million based on a pre-verdict agreement)—went to a New York couple who claimed that doctors failed to act on signs of fetal distress during the mother’s protracted labor.[32]

The cost of such litigation industry tactics is lower-quality health care. Trial Lawyers, Inc.'s cerebral palsy suits not only have helped spur an increase in unnecessary C-sections, at a cost to mothers' health,[33] but also have succeeded in shutting down maternity wards—Philadelphia has lost three in recent years[34]—thus forcing pregnant women in certain parts of the country to travel hours for treatment.

The Litigation Industry's New Health-Product Lines

Any well-run business must constantly explore new product lines, and the health-care division of Trial Lawyers, Inc. is no exception. In recent years, the plaintiffs' bar has been busily expanding its portfolio of health-care products. Having successfully persuaded some judges to accept novel theories of elder abuse, the trial bar has driven up the malpractice premiums of nursing homes.[35] Hospitals have long been accustomed to malpractice suits over surgical mishaps and birth defects, but now litigation-industry leaders like Dickie Scruggs, who led the states’ suits against the tobacco companies, have made class-action defendants out of nonprofit hospitals that serve the nation’s poorest citizens.[36]

Yet Scruggs's nonprofit hospital suits are small potatoes compared with his ventures alleging, on behalf of 145 million patients, that health maintenance organizations were guilty of fraud and racketeering.[37] Copying a page from the playbook he used against Big Tobacco, Scruggs cozied up to Wall Street analysts and investors, intimating what the fallout of an adverse verdict might be.[38] Although the biggest cases ultimately were dismissed, two insurers—after watching their stock prices tank—settled for half a billion dollars each.[39]

Ultimately, while Scruggs and his buddies in the plaintiffs' bar get rich, the average health-care consumer loses—through higher costs, reduced access, fewer products, and less innovation. Bloodletting was a core medical treatment from the time of Hippocrates to well into the last century, but if today's leeches in the litigation industry are not constrained, they may suck the lifeblood out of the American health-care system.

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14. See David Hechler, First Vioxx Fight: Where to Litigate, Nat’l L.J., Nov. 15, 2005, at 1 (discussing “conference sponsored [in Las Vegas] by Mass Torts Made Perfect, for plaintiffs’ lawyers only, [which] featured five hours of Vioxx presentations on Nov. 11 and 12”).
15. Mass Torts Made Perfect “provides ambitious, goal-oriented attorneys with the knowledge and methods that attract mass tort clients, take the case into the courtroom and win over even the most formidable competition.” See http://www.masstortsmadeperfect.com/html/aboutus.html.
16. See trIaL Lawyers, InC., supra note 1, at 10 (citing American Association of Actuaries).
17. Public Citizen boasts that Vioxx was “the ninth drug removed from the market in the previous seven years that we warned consumers not to use,” see http://www.worstpills.org/moreaboutpc.cfm.
18. See http://www.jpml.uscourts.gov/Pending_MDLs/Products_Liability/products_liability.html.
19. Levonorgestrel, or Norplant, is no longer available in the United States; see http://www.rxlist.com/cgi/generic2/norplant.htm. For a discussion of the litigation industry’s attack on Norplant, see Marc Arkin, Products Liability and the Threat to Contraception, 36 CIv. Just. Memo (Manhattan Inst. Center for Legal Policy, Feb. 1999), available at http://www.manhattan-institute.org/html/cjm_36.htm.
20. Data from TNS Media Intelligence (on file with Manhattan Institute).
21. For an example of a Trial Lawyers, Inc. website trolling for class-action “customers,” see http://www.myclassactionlawsuit.com/. For a discussion of how plaintiffs’ lawyer Mark Lanier exploited one juror’s affinity for the Oprah Winfrey show in his closing argument in Ernst v. Merck, see Heather Tesoriero et al., Merck Loss Jolts Drug Giant, Industry, Wall St. J., Aug. 22, 2005, at A1.
22. See Heidi M. Connolly et al., Valvular Heart Disease Associated with Fenfluramine-Phentermine, 337 new eng. J. Med. 581, 581-88 (1997); Frankel, supra note 6.
23. See id.
24. See id.
25. See id.
26. See id.
27. See Congressional Budget Office, Limiting Tort Liability for Medical Malpractice, Jan. 8, 2004, available at http://www.cbo.gov/showdoc.cfm?index=4968&sequence=0.
28. See Trial Lawyers, Inc., supra note 1, at 13.
29. See Marc Morano, Did “Junk Science” Make John Edwards Rich?, Cnsnews.CoM, Jan. 20, 2004, at http://www.cnsnews.com//ViewPolitics.asp?Page=\Politics\archive\200401\POL20040120a.html.
30. A January 2003 report issued by the American College of Obstetricians and Gynecologists and American Academy of Pediatrics found that “that use of nonreassuring fetal heart rate patterns to predict subsequent cerebral palsy had a 99% false-positive rate.” Neonatal Encephalopathy and Cerebral Palsy: Defining the Pathogenesis and Pathophysiology (American College of Obstetricians and Gynecologists and American Academy of Pediatrics Jan. 31, 2003), available at http://www.acog.org/from_home/Misc/neonatalEncephalopathy.cfm (executive summary).
31. See Steven L. Clark, Temporal and Demographic Trends in Cerebral Palsy—Fact and Fiction, 188 Am. J. Obstetrics & Gynecology 628, 628-33 (Mar. 2003) (“The rate of cerebral palsy has not decreased in developed countries over the past 30 years, despite the widespread use of electronic fetal heart rate monitoring and a 5-fold increase in the cesarean delivery rate over the same period of time.”).
32. See Nora L. Tooher, High-Low Agreement Deflates $111.7 Million Award in Med-Mal Case, Lawyers Weekly USA Top Ten Jury Verdicts of 2004, available at http://www.lawyersweeklyusa.com/usa/8topten2004.cfm (discussing Reden v. Wagner Jan. 26, 2004).
33. See D. B. Petitti, Maternal Mortality and Morbidity in Cesarean Section, 28 ClinicaL Obstetrics & Gynecology 763, 763-69 (Dec. 1985).
34. See Pennsylvania Medical Society Alliance, Closing Hospitals, available at http://www.fightingdocs.com/closingHospitals.htm; Joseph B. Treater, Rise in Insurance Forces Hospitals to Shutter Wards, n.y. tIMes, Aug. 25, 2002; Steven Malanga, Tort Turns Toxic, CIty J., Autumn 2002, available at http://www.city-journal.org.
35. See Theresa w. Bourdon & Sharon C. Dubin, Long Term Care: General Liability and Professional Liability, 2004 aCtuarIaL anaLysIs (Aon Consulting, July 2004).
36. See, e.g., Kolari v. N.Y. Presbyterian Hosp. et al., No. 04 Civ. 5506 (LAP), 2005 WL 710452, at *1(SDNY March 29, 2005).
37. See Susan Beck, HMO Postmortem, aM. Law., Oct. 10, 2003, available at http://www.law.com.
38. See id.
39. See id.





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