Practicing Law With a Passion for the Rights of the Individual

Punitive Damage
Punitive Damage
05/16/2003
Arkansas Times
By: Doug Smith

Hugh E. Crisp of Little Rock sues more doctors than anyone else in Arkansas. It is tough, contentious work. Accustomed to deference, doctors hate being sued even more than most people, and they despise the lawyers that do it. In an Arkansas Times survey earlier this year, doctors described trial lawyers as "rat bastards" and "subhuman species."

Crisp is unfazed by such talk, having heard it many times. "Physicians are uninformed and misinformed," he said. "They'll always have the attitude that medical malpractice lawyers are out to get them. The insurance industry and its lawyers keep that stirred up. Tort reform will serve no legitimate purpose for physicians. It won't lower insurance premiums." Crisp fought "tort reform" at the recent legislative session, unsuccessfully, and he is not giving up now that tort reform is law.

"I think that every lawyer who files a medical malpractice lawsuit should allege in the complaint that Act 649 of 2003 is unconstitutional on its face," Crisp said. "When I testified before the Senate Judiciary Committee, I told them that in 1992, our Supreme Court said it was unconstitutional to put additional requirements on the filing of a lawsuit for medical malpractice. Act 649 adds an affidavit provision. The legislature said 'We are disregarding the ruling of the Supreme Court.' " Act 649 says that any medical malpractice lawsuit must be accompanied by an affidavit stating reasonable cause and signed by an expert engaged in the same type of medical care as the defendant.

The affidavit is not the only constitutionally questionable provision, Crisp said. "The venue provision says the lawsuit has to be filed in the county where the wrongful act took place. That's unfair, and contrary to the venue statute on all other personal-injury claims." Those other claims can be filed where the incident - a car wreck, say - occurred, where the plaintiff resided at the time of the incident, or where the defendant resided.

The reason for this new provision, Crisp said, is that "The doctors want the cases tried in their back yard. There are 7 or 8 regional medical centers in Arkansas - Jonesboro, Fayetteville, Fort Smith, El Dorado, Texarkana, Little Rock. People from all over the state come to those areas for treatment. There are a lot of people associated with the big hospitals in those areas. They know all the doctors. The plaintiff from out-of-town is not getting a jury of his peers. To get a case before a jury that's more sympathetic to doctors, the legislature has created a special law for a special class of people - medical providers."

Crisp also objects to the new law's requirement that the physicians he calls as expert witnesses must be from the same specialty as the physician being sued. "There are family physicians in outlying areas of Arkansas who do pretty technical surgical procedures without the appropriate surgical training. Before, I could get a surgeon to testify about the standard of care that's needed for surgery. Now, I'll have to get another family physician. The effect will be that these people won't have to adhere to the same standard of care in performing surgery as surgeons do. The law is lowering the standard of care for patients."

Then there is the new law's cap on punitive damage awards - $1 million. Taking away the jury's power to decide damages is also constitutionally questionable, Crisp said. He's not the only one. Two attorneys general - the incumbent, Mike Beebe, and his predecessor, Mark Pryor - have opined much the same thing in regard to other tort-reform legislation, and their opinions would apply equally to the cap in HB 1038, now Act 649. (It's revealing of the muscle behind HB 1038 - the Chamber of Commerce/Associated Industries of Arkansas, the Medical Society, the insurance companies, the Poultry Federation, the Farm Bureau - that even legislative opponents of the bill didn't ask for an attorney general's opinion on its constitutionality before voting. Nobody wanted to offend its backers. Beebe's opinion about caps on damages was in response to questions about a separate tort-reform bill written specifically to protect nursing homes. That bill died just short of passage.)

At the soonest, it'll probably be one and a half to two years before a challenge to Act 649 can reach the Supreme Court. And when the Court rules on the Act, it'll likely do so in piecemeal fashion, ruling on one provision in one case, another provision in another, rather than throwing the whole thing out - or upholding it entirely - at first opportunity. It's not inconceivable that the Supreme Court will disappoint the trial lawyers. Justices are elected too, and they know the kind of money and influence that supports tort reform. A Supreme Court ruling against tort reform might generate another recall bill in the legislature.

A small minority of doctors account for most of the malpractice suits, but the good doctors cover up for the bad ones, Crisp said. And, he said, most malpractice goes unchallenged to begin with. "Studies show that for every eight instances of malpractice, only one malpractice claim or lawsuit is filed," he said. "That's unrefuted. We need more consumer-oriented laws. The last thing we need is more laws protecting doctors and hospitals."

We don't mean to suggest with this week's cover that Peter Miller will never smile again. Just that the most familiar lawyer's face in Little Rock, one that beams out at us from TV commercials, billboards and the back of the Little Rock telephone directory, cheerfully promising to make insurance companies do right, has been temporarily darkened by the legislature's enactment of tort reform.

He is not concerned merely about his own practice, Miller said. "Tort reform is not business versus lawyers. It's business versus the public. Tort reform will hurt victims and help wrongdoers."

Act 649 of 2003, the new Arkansas tort-reform law, limits jury awards for punitive damages to $1 million, thus limiting the jury's power to punish those it finds guilty of wrongdoing in civil cases. The law also imposes new restrictions on the evidence that juries can hear.

"Tort reform won't change the essence of what we do," Miller said. "It will affect individual cases. We're not going to go out of business because of it." Nor, he said, when asked, will he stop advertising. Or smiling, though perhaps not as often.

Some of Miller's colleagues who fought tort reform the hardest do not think warmly of lawyers like Peter Miller - those who advertise heavily, handle a huge volume of cases, and settle almost all of them out of court. Many old-line lawyers still disapprove of large-scale advertising, believing it degrades the profession and fuels a contempt for lawyers that aids the tort-reformers. Not to mention that lawyers like Miller, though sometimes referred to dismissively as "car wreck lawyers," have taken over a big chunk of the personal-injury business, and done it without winning a lot of cases in the courtroom, which used to be the standard for measuring trial lawyers.

But if Peter Miller does not appear before many juries, he can deliver a hymn to the jury system as well as anyone.

"What makes our country unique is that we've had an unfettered jury system," he said. "It's bizarre that we allow a jury to punish a man by taking his life, but we won't let a jury punish a corporation that through its negligence may kill multiple persons." This bizarre turn of events was brought about, he said, by "some groups of the business community, particularly the U.S. Chamber of Commerce." Even the defense bar is opposed to tort reform, Miller said. (Some of them are; the legislative committee of the Arkansas Bar Association opposed the tort-reform bills before the legislature, and the committee includes a number of defense lawyers. On the other hand, it was defense lawyers who wrote the tort-reform bills.) "Several judges have told me privately this is the worst thing they've ever seen," Miller said.

"All of us in the legal profession are in the business of seeking the truth," Miller said. "The ideal trial is one in which all the evidence is presented to the jury. When both sides tell their story, the truth is in front of the jury. And the group intelligence of the jury is greater than the intelligence of any one individual. Laws that limit the power of the jury undermine the concept. They hurt victims and help wrongdoers. It's a slippery slope. You take away a little of the jury's power, to satisfy a business group. Then another business group says, 'Let's take a little more away.' Before long, a fine system has been poisoned."

Half-page ads have appeared recently in the Arkansas Democrat-Gazette saying "ATTENTION Cell Phone Users. Are you being charged improperly for roaming charges? You may have a claim for money damages. Call now for a free analysis" The ads are signed by the Little Rock office of Wilkes & McHugh, the big law firm that has previously specialized in suing nursing homes. It was two Wilkes & McHugh lawyers, and a local attorney at Mena, who won a $78 million judgment against a nursing home and its out-of-state owners, the biggest judgment in Arkansas history. That judgment added impetus to a tort-reform movement in Arkansas that was already well under way. The judgment recently was reduced by the Arkansas Supreme Court

Brian D. Reddick is the managing attorney of Wilkes & McHugh's Little Rock office, and one of the lawyers who won the Mena verdict. He said the cell-phone ad was not an indication that W&M is abandoning nursing-home litigation. To the contrary, he said, "I look forward to challenging the tort-reform law before the Arkansas Supreme Court. This law is a tremendous signal to big business that it's open season on Arkansas residents, as far as injuring, maiming and killing them is concerned. A million-dollar award [the new limit on punitive damages] will have no impact at all on large corporations. There'll be no deterrent effect, no change in business practices."

Independent of the tort-reform law, W&M has been investigating consumer fraud in Arkansas and other states, Reddick said. He's not authorized to say much about it yet, but it's possible that nursing-home litigation might become only a division of a larger W&M operation. Wilkes & McHugh began in Tampa, Fla. The firm litigates in many states, though it has offices in only a few, including Arkansas, where 12 lawyers work. (For the benefit of non-lawyers, consumer fraud would not be considered a tort, and thus not affected by Arkansas's new law. "This is more contractual in nature," Reddick said. Consumer fraud could be a basis for class-action litigation, however, and class-action lawsuits are another way to win huge judgments.)

Naturally enough, Reddick repeats arguments made by James Wilkes, a founder of W&M, that "Abuse and fraud are rampant throughout the for-profit nursing home industry," that the for-profit system hasn't worked and should be replaced with something else. But what?

"There are many alternatives. You could have a cafeteria plan, where you only pay for the services you need. Say somebody in your family needs skilled nursing-home care 3 or 4 days a week, but the other days you'd like to care for them at home. Now, Medicaid only pays for skilled care 24-7. But if you had financial assistance, to buy special equipment, for example, you could care for the person yourself at home. Or we might have smaller group settings, instead of these large nursing homes, where all kinds of patients are thrown in together."

If these arguments about "cafeteria plans," and "flexibility" and whatnot sound familiar, and faintly preposterous, they should. They're the same arguments that conservative entrepreneurs make for privatizing Social Security and Medicare and the public schools. Wilkes' ideas are echoed by the Religious-Right Republican group, Focus on the Family, headquartered in Colorado Springs but with a heavy presence in Washington, where it's extremely influential with the Bush administration, Wilkes is written up glowingly in FF publications. If the existing Medicaid-nursing home link were broken, then groups like Focus on the Family might be able to get Medicaid money for some of their programs.

The truth is that most people want the 24-7 care for aged and infirm relatives that nursing homes provide. They feel guilty, but they want it. Few could afford to keep elderly relatives at home, even part-time, even if they got a little money for special equipment. A representative of Arkansas Focus on the Family was prominent among opponents of the Arkansas nursing homes' tort reform bill at the legislature.

Bud Whetstone of Little Rock has sued doctors, but he thinks that neither he nor anyone else will be filing many medical malpractice suits under Act 649, which he calls "medical immunity." Oh, the egregious case of neglect or incompetence will still be filed - against the surgeon who cuts off the wrong leg, say - but other meritorious suits won't be, with the law so tilted against plaintiffs, Whetstone said. "Lawyers won't take your case," he said. "I wonder what people will think when they find out they can't collect damages from an incompetent doctor." And he's not highly optimistic about overturning Act 649 through appeals to the Supreme Court. Appeals cost money, with no guarantee of success, he said. Even before Act 649, state law was weighted in favor of malpractice defendants, to the extent that they won 8 of every 10 cases that went to trial, Whetstone said.

Unlike Whetstone, Winslow Drummond of Little Rock, who testified against tort reform at the legislative committee hearings, doesn't think there'll be a sharp reduction in the number of lawsuits, although he said the new affidavit requirement "may slow things down" as far as medical malpractice suits are concerned. Nor does he think that doctors will be more willing to go to trial now that punitive damages have been capped. Although punitive damages are seldom awarded in medical malpractice cases - the last such award in Arkansas was in 1971 - proponents of tort reform say that the threat of a huge punitive-damages award causes doctors to settle lawsuits rather than fighting them in court, and that these settlements help drive up the cost of malpractice insurance. Plaintiffs' lawyers like Drummond and Crisp say that's malarkey.

"The threat of punitive damages doesn't cause settlements," Drummond said. "They settle when there's a clear case of medical neglect." When they know they'll lose if they go to court, in other words. Crisp adds that the typical settlement in a malpractice case includes a confidentiality provision, so that the amount the doctor forks over is not made public, as it would be at a jury trial.

One thing all the plaintiffs' lawyers agree on, and most other people who look at the record, is that tort reform will do nothing to lower the cost of insurance. Early in the legislative debate on HB 1038, lowering the cost of malpractice insurance was given as a major reason for tort reform. But after the opponents presented unrefuted evidence that tort reform has not lowered insurance costs in states that have adopted it, that doctors are not fleeing Arkansas, and that jury awards in Arkansas are not unusually large, except for nursing homes, even proponents of HB 1038 began saying that the best they were hoping for was that tort reform might slow the rate of increase in insurance costs. That was the statement of Dr. Joe Stallings of Jonesboro, among a small group of witnesses called by the proponents, and one of the few who inspired trust. Stallings said that unless something were done about the soaring cost of malpractice insurance, doctors would stop delivering babies in Arkansas, except for a handful working at the biggest hospitals in the biggest cities. But Stallings offered no guarantees that tort reform would help with insurance. Nor did any other witness.

Opponents of tort reform argued that the insurance business is cyclical: When insurance companies lose money on their investments, as they've been doing for several years in a distressed economy, they raise their premiums. When they're making money in the stock market, they lower their premiums, so they can get more money to invest. Even some insurance executives have said publicly that tort reform doesn't lower or stabilize insurance rates. None of those executives said that to the legislative committees considering tort-reform legislation in Arkansas, however. For all the talk about what causes insurance rates to rise and what is needed to bring them down, not a single insurance-company official testified at the hearings. The omission was even more conspicuous because the chief counsel and strategist for the tort reformers, Nick Thompson, is a member of the Mitchell law firm, which is famous for representing insurance companies and counts three former state insurance commissioners among its partners. The proponents surely knew that no insurance executive would promise a decrease in premiums if tort reform were enacted.

Also conspicuously absent from the hearings was the state Insurance Department. One might think that the state agency charged with regulating the insurance industry would be a good source of information. Before the legislature convened, state Insurance Commissioner Mike Pickens, an appointee of Gov. Mike Huckabee, all but publicly endorsed tort reform, angering plaintiffs' lawyers. Angering them again, we should say. Pickens is a former insurance company lawyer (and presumably will be again when he leaves the state payroll), a staunch, right-wing Republican who believes the market is the best regulator, and a volatile sort often engaged in unfriendly discourse with the plaintiffs' bar. There are hardly any lawyers left in the legislature for Pickens to offend, but there are a lot of Democrats. Supporters of HB 1038 may have feared Pickens would lose votes for the bill.

(Not that Democrats in the Arkansas legislature always vote like Democrats. Because it's sought by corporations, insurance companies and doctors, all big contributors to the Republican Party, tort reform is considered a Republican issue. Trial lawyers generally give to the Democrats, though there are exceptions. Joey McCutchen of Fort Smith, active in resisting tort reform, pointedly told legislators he was a Republican. Another lawyer in the fight, Hugh Crisp, says he purposely avoids political involvement. The few votes against tort reform in the Arkansas legislature came from Democrats, all right, but most Democrats joined all the Republicans in voting for it. Being a small minority, the Republicans demand party loyalty more than the Democrats.)

At any rate, Pickens didn't show, not even after a former high-ranking official of the Insurance Department, Ronald L. Sheffield, blistered Pickens in his own testimony. Sheffield said that Pickens protected insurance companies, not consumers, and Sheffield and other opponents of tort reform said that what Arkansas needed was insurance reform, not tort reform. They called for a return to the old system of regulation, which entailed public hearings on proposed insurance rate increases, and approval by the commissioner before any increase could be implemented. This is essentially the same procedure still followed by the state Public Service Commission, which regulates utility rates. Several years ago, as part of the "deregulation" movement sweeping the country, Arkansas and a number of other states abandoned the "prior approval" method of insurance regulation, to let the market set rates. More recently, California reinstalled "prior approval," by a vote of the people, and after that, medical malpractice premiums began to stabilize. California's tort reform, adopted earlier, had failed to control rising insurance costs.

The opponents of tort reform - trial lawyers and consumer groups, including the AARP - presented a huge amount of evidence at the legislative hearings, the proponents hardly any at all. A lasting impression from the hearings is that of Rep. Marvin Parks, R-Greenbrier, a co-sponsor of HB 1038, wearily waving off opportunities to call more witnesses for his side, while the opposition presented one strong witness after the other. "If this were in court," one observer said, "the opponents would get a directed verdict."

It was not in court. Legislators were almost obsequious to the backers of 1038, the state's biggest companies on one hand and the doctors on the other. It's hard for a legislator to vote against the doctor he relies on for medical care, especially knowing that the doctor can afford to finance an opponent for him in the next election.

Aside from frail hope that tort reform might bring down malpractice insurance costs, the only other reason offered publicly to vote for HB 1038 was that it would save jobs. Indeed, the coalition of groups supporting tort reform called itself the "Committee to save Arkansas jobs." This is the same name used by a business group a few years back that persuaded the legislature to "reform" the workers compensation laws so that injured workers would be considerably less compensated. The committee included representatives of, to name a few, Murphy Oil, ALLTEL, Baptist Medical System, Entergy, Stephens Inc./Stephens Media, Tyson Foods, Arkansas Best Corporation. There were no doctors on the committee, though the proponents of tort reform put doctors at the front in the public hearings.

Some companies who were members of the coalition told their employees that Arkansas plants would close unless tort reform was approved. Such threats kept the AFL-CIO from opposing the tort-reform legislation. The companies didn't repeat these threats publicly at committee hearings - it would not be good public relations - but they may have done so when lobbying legislators privately.

In the legislature's rush to embrace the corporations' and doctors' idea of tort reform, proposals for real reform were thrown out. Such as, leaving punitive damages uncapped, but using the money for the public good. Since the purposes of punitive damages are to punish and deter, not compensate for suffering, why should the money go to enrich a private family, as happened in the Mena case?

For a number of years, conservative, anti-democratic interests have controlled the public debate, partly because they control the media. Constant repetition of the proposition that all politics and all politicians are evil made the common people receptive to term limits, which have taken power away from the common people. Much the same has happened through constant derision of lawyers and the legal system. There are crooked lawyers, and rogue juries and the system really is not about finding the truth as much it is about settling disputes in a peaceful and reasonably fair way. But it has worked better than the systems that other countries use, and it has given the little man a little bit of a chance against wealthy special interests.

I used to know a man who grew up in rural western Arkansas quite a number of years ago. As a boy (man too, for that matter) he didn't care for snakes. He recalled that there was always one hanging around the corncrib at the home place. He asked his father to kill it, and the older man replied that if it weren't for the snake, the rats would eat up everything. Act 649 is a snake-killer.

 

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