TortDeform com's blog

With "Protectors" Like This...

Fri, 25 Jan 2008 12:21:11 -0800

"It is a universal truth that the loss of liberty at home is to be charged to the provisions against danger, real or pretended, from abroad."--James Madison

The significance of this quote, shared by Senator Dodd during hearing statements last fall--can be observed now amidst the newest round of debates over whether telecommunications companies that illegally spied on the American public (by doing things like tracking what blogs we read, reading our emails, listening in on our phone calls, and keeping track of our activity on password protected sites) should be granted retroactive immunity for violating our constitutional right to privacy.

I've ranted about this issue before. But the Administration's apparently increasing gall and contempt for the law notwithstanding, and its undying commitment to shielding corporate friends from the effect of the law aside, let's focus instead on the lie of so-called "liability protection" and what it really means for the public and our civil justice system.

Yesterday, the Senate Judiciary Committee's proposed amendment to the FISA bill, which would have eliminated the option of so-called "liability protection" for telecom law-breakers, was tossed out by a 60-34 vote. Next up was the SSCI bill, which would grant retroactive immunity to telecoms. As Senate considered that bill its supporters--a largely Republican group with a hefty sprinkling of Dems in the mix--made every effort to block any amendments that would have addressed its glaring civil liberties concerns. And on this Monday at 4:30 p.m., the Senate will vote on whether to stop considering amendments to the SSCI bill and just move forward with passing it.

Liability protection. It sounds kind of harmless, like dry political jargon used to describe a reasonable, sensible policy. It protects. It deals with liability. It's liability protection. But who does it protect? And what's liable to happen to the rest of us and our rights as citizens as a result?

Bush, Cheney, and executive administration officials insist that if we don't scurry and pass this bill, and in the form and fashion that Bush wants it, it'll be at our peril. This do-or-die framing of the issue creates a sense of urgency and drama and depicts opponents to retroactive immunity as the bad guys who don't want to protect America.

But this so-called "protection" they say we'll get sure works like quite the opposite for the American public. We're told that spying on us--not just authorized, I-got-a-warrant spying, but plain old blatantly-not-okay-unwarranted spying--is for our protection. Also necessary for our protection is eliminating our right to hold accountable those who illegally spy on us.

They have yet to explain how retroactive immunity as a policy itself will really help protect Americans, while the President threatens to veto any version of FISA that doesn't provide it. The proponents of legalized-illegal spying make red-alert calls to pass FISA now and in the way and shape that they see fit, but hypocritically drag their feet on making any progress in passing the bill by the February 1st expiration date. (Sen. Harry Reid said in the Times:''It appears the president and Republicans want failure. They don't want a bill.")

Conclusion: supporters of retroactive immunity are NOT trying to protect America. They're trying to protect America's favorite corporate big dogs, and the executive branch's unfettered power to wave the wand and say magic words like "executive privilege" and "classified information," etc., in order to get out of any mess they make, regardless of the repercussions for real people. That's what I call off the hook protection.

This is nothing new.

This is yet another twist to the same old corporate cronyism that has infected our civil justice system over the past couple of decades via tort "reform" measures to shut the courthouse door to regular Americans. Eliminating our ability to enforce our constitutional right to privacy in a court of law is tantamount to eliminating that right altogether. Because our civil justice system is where we go to enforce our rights, a move to "protect" corporations from liability for violating our rights, is a move to endanger Americans' access to substantive justice.

Like I said, it's nothing new. We saw it with the Class Action Fairness Act, which made it difficult for wronged individuals with important but small claims against corporations to come together and hold those corporations accountable. We see it with persistent reliance on the Federal Arbitration Act to enforce mandatory binding arbitration, which allows corporations to funnel people out of the public courts and into a private, heavily corporate-biased proceeding for disputes between regular people and big companies. Retroactive immunity, liability protection, is just another bullet point in the tort "reform" agenda to defang our civil justice system. And it sets a scary precedent wherein all sorts of companies facing all sorts of claims will know that the American legal climate is particularly warm to the idea of preserving corporate privilege even to the detriment of the public's constitutional rights.

This is why we need to keep our eyes open on Monday. We need to watch whether our so-called "representatives" take to task and represent our interests (apparently Rockefeller (D-W.Va.) may vote for our interests on Monday, which is, to say the least, surprising). We should take note of whether the Presidential candidates in the Senate hop off the trail for this important vote. And we should listen to what Bush says in his State of the Union speech about our 4th amendment right to privacy.

The attack on the civil justice system takes many forms, and "liability protection" for the telecoms is just one. And with protection like this, who needs endangerment?

Preempting Preemption: Will Congress Have the Will to State Its Will

Thu, 21 Jun 2007 10:15:44 -0700

Cross-posted from TortDeform.com

By Henry Greenspan

In my last blog for Tort Deform , I argued that the Food and Drug Administration Revitalization Act (FDARA) passed the Senate overwhelmingly (93-1, the nay being Bernie Sanders) mainly because it wouldn't change anything. The final bill was so watered down by compromises that it didn't even make good sausage. But for the pharmaceutical industry it promised a continuing supply of filet mignon.

I also predicted that FDARA's illusory strengthening of the FDA, if the bill became law, would provide a pretext for the next troop surge for "FDA preemption." It would be argued that, now that the FDA's has been "fixed," there was no reason to withhold it full preemptive authority. Imagine Dan Troy, Tiger Joyce, and friends on the Abraham Lincoln. Mission Accomplished.

Unfortunately for the ATRAnauts, I was not alone in anticipating the strategy. A number of sources have now reported that several drafts for the House version of the FDA reform bill included the following sentence:

"Nothing in this act or the amendments made by this act may be construed as having any legal effect on any cause of action for damages under the law of any state (including statutes, regulations, and common law."

Any reasonable reading of the statement would see it as pretty mild stuff - nothing more than an assertion of the status quo. FDA regulation and civil liability would both continue to exist (except in my own state of Michigan). Whatever improvements in the agency's drug safety system – modest at the very best – will not change that.

Small stuff indeed. But you would never have known that from the response of the boating crowd. John Engler, now head of the National Association of Manufacturers and formerly Governor of Michigan (and responsible for our own drug shield law) submitted an op ed to the Detroit News that was little short of raving. Directly referring to the statement quoted above, Engler exclaimed: "This one sentence in legislation would result in the most fundamental change in prescription drug and medical device law in the past thirty years." According to Engler, jobs would be destroyed, innovation would cease, plagues and locusts would stalk the land. The sentence was "cleverly hidden," wrote Engler, in order to create a "bureaucratic nightmare only benefiting thousands of trial lawyers in the hunt for the big payoff."

The trial lawyers who represent drug companies were no less apocalyptic. The Drug and Device Law blog, manned by Jim Beck and Mark Hermann, described the same one sentence as a "stealth amendment" and a "poison pill." It reveals trial lawyers (the other ones) "pretense" to care about anyone but themselves. "Obviously the trial lawyers and their fellow travelers don't really care about increasing safety," the blog concluded. They care only about lawyer lucre.

My goodness. Most of us haven't heard this much about "fellow travelers" since Joe McCarthy. And all because of a sentence which, in actuality, only affirms reality as it is, rather than as the FDA preemption folks would like it to be.

Still, we should not be coy. This is a tough political fight between those who defend the industry and hate lawsuits against it (for every motive from principle to greed) versus those who defend civil liability (also for every motive from principle to greed). I'm not a lawyer of any kind - I'm not even a "fellow traveler" - so I get to say things like that.

Still, the sides are anything but equivalent in terms of whose goals would represent the most radical change in policy. If FDA preemption became the law of the land, it would mark the most profound shift in federalist balance – an assumption of power by the center – of anything that we have seen in many, many years. In my personal view, not only would the result be a nightmare for state and individual rights, but ultimately for the pharmaceutical industry as well. Imagine a Vioxx-scale disaster occurring in a context in which there is no organ of oversight and accountability but some version of the FDA. Imagine how many years and deaths would go by, how many clues and more would be missed or ignored or denied, before the truth finally emerged. We're not talking Mission Accomplished here. From the point of view of public trust – which is always the real bottom line – we're talking irremediable Meltdown.

That is why that one sentence is, indeed, so important. At core, all preemption arguments rely on an interpretation of the intent of Congress, explicit or implied. So the question is: Will Congress have, or not have, the will to state its will?

How Much Malpractice Coverage Does Your Doctor Have?

Wed, 23 May 2007 11:04:40 -0700

Cross-posted from Tort Deform

by Professor Charles Silver

I recently suffered a grave injury during a hearing and balance test. The internal carotid artery on my right side dissected, a result of applying torque to my neck so a computer could get better readings from electrodes attached to my skin. A massive blood clot formed, blocking the artery 80-90 percent. I suffered blinding headaches, nerve damage, and other problems, and was hospitalized for over a week. Still, I count myself lucky. I’m alive and, apparently, I didn’t suffer a stroke. My doctors remain hopeful that, with time, I’ll recover.

Suppose I had died. My estate might have had a sizeable malpractice claim against the doctor who treated me. I’m a 49 year old male employed at a good salary. My lost future income would have run into the millions. My claim would also have had strong jury appeal. Ear exams should never kill people. The extraordinary result would strongly have suggested a medical mistake.

Assume with me that my “hard” damages, meaning my health care costs, lost wages, and other expenses, would have been $3 million. One might then infer that $3 million would be a realistic amount for my estate to recover. That would probably be wrong. Although the law allows recovery of economic damages in full, most doctors carry much less than $3 million in malpractice insurance and insurance is the only source from which my estate would have been able to collect.

This is the lesson of 14 years of medical malpractice litigation in Texas. Using a database of over 9,000 claims against doctors that closed with payments from 1990 to 2003, my colleagues and I discovered the following:
• Patients injured by medical malpractice rarely recover more than their physicians’ insurance policy limits.
• Malpractice payments stack up at the policy limits, suggesting that insurance policies cap recoveries even when patients deserve much more.
• Many doctors have small insurance policies. Almost 1/3 of Texas physicians with paid malpractice claims had $200,000 in coverage or less.
• Doctors almost never use personal assets to resolve malpractice claims. The claim that ‘every physician is one lawsuit away from financial ruin’ is a myth.

These findings (and many others) are fully set out in two articles that are forthcoming in peer-reviewed publications.

It takes some patience and thought to understand these results, so bear with me as I explain them. To keep the presentation simple and short, I’ll tie everything into one set of graphs.

My colleagues and I began by comparing the payments patients received to the amount of professional liability coverage doctors’ carried. Suppose a patient received $500,000 and a doctor had $1 million in insurance. The Payment-To-Limit Ratio (or PTL ratio for short) would be 0.5. If the patient received $1 million, the PTL ratio would be 1. If the patient received $1.5 million, the PTL ratio would be 1.5.

The figures below plot the actual PTL ratios. The figure on the left is for all types of malpractice claims. The one on the right is for claims involving newborn infants. These are the so-called “bad baby” cases that are thought to be exceptionally expensive and to expose doctors to enormous personal risks. The height of each bar shows the percentage of the claims with particular ratios. In the “All Claims” figure, about 16% of the claims had PTL ratios between .95 and 1. In the “Perinatal Claims” figure, the PTL ratio fell in this range about 32% of the time. Although the graphs don’t show this, in both types of cases, the vast majority of the claims in the spikes were PTL=1, meaning that the patient recovered the policy limits in full.

FIGURE 1: Distributions of Payment-to-Limit Ratios
All Claims (n = 9,389) Perinatal Claims (n = 1,037)

Notice that, in both figures, although there are sizeable spikes at PTL=1, there are very few cases with payments above the policy limits. Payments above the policy limits, which appear to the right of the spikes, were present in about 2% of the cases.

In combination, the spike at PTL=1 and the dearth of cases with larger ratios show that, as a practical matter, payments are capped at the limits of doctors’ insurance polices. Patients with strong claims, severe injuries, and sizeable damages have a good chance of recovering their doctors’ policy limits, but they have little or no chance of receiving more. This truth is especially prominent in “bad baby” cases, where the policy limits were paid 32% of time but payments above the limits occurred in only 2.4% of the cases. An infant injured by malpractice may need a lifetime of care, but an OB/GYN’s contribution to the cost of that care will equal at most the amount of insurance he or she carries. The parents or society at large will have to bear the remaining cost or the infant will have to do without.

Why can’t injured babies and other deserving patients get full compensation? The most likely reason, I believe, is that no more money is to be had. Not all doctors are rich, and those who are rich—who live in mansions, drive fancy cars, and send their kids to expensive private schools—are protected by state laws, trusts, limited partnerships, and other devices that insulate their assets. One can’t squeeze blood from a stone—or a turnip, as we Texans often say. The rarity of out-of-pocket payments by physicians bears this out. Doctors used personal assets to help resolve malpractice claims in only about one-half of one percent of the cases. We talked with plaintiffs’ attorneys who said they don’t even investigate doctors’ personal assets because they know they can’t reach them.

Because insurance is the sole source of payments for most injured patients, it is important to know how much liability coverage doctors carry. The conventional wisdom is that most physicians have $1 million in coverage. Medicare takes this mantra so seriously that it bases payments to physicians partly on premiums tied to policies of this size. In fact, most Texas physicians carried much less insurance. In our dataset, the median nominal policy limit was $500,000. 32% of the closed claim reports indicated that the doctor carried $200,000 (nominal) or less in coverage. Surprisingly, doctors who treated newborns carried less insurance than others, even though “bad baby” cases are thought to present the most serious financial risks.

We also found that, over time, the real amount of insurance available to cover patients’ losses shrank by about 30% in inflation-adjusted dollars. When stumping for tort reform, doctors told the world they faced rising malpractice exposure because jury verdicts were skyrocketing. Yet, they didn’t buy larger liability policies. Evidently, they didn’t think they needed them. And they were right. Doctors’ personal assets remained well protected even though they carried less real insurance coverage.

In reality, then, damages caps have existed for decades. They may always have been in place. The caps stem from asset protection laws, the limits on doctors’ insurance policies, and the economics of contingent fee litigation, which make it impracticable for plaintiffs’ attorneys to go after doctors’ personal wealth. These caps are hard. They apply to all elements of plaintiffs’ recoveries, including their economic losses, and they are rarely exceeded.
If people in our society focused on things that mattered, the debate over damages caps would end immediately. We already have them. Replacing it would be a debate over the amount of liability insurance doctors ought to carry and the possibility of creating other means of defraying injured patients’ losses. Many states, including Texas, have neither financial responsibility laws nor patient protection funds. In these states, doctors can carry as little insurance as they want. As seen, they often buy policies that are small. Although doctors complain mightily about malpractice insurance premiums, patients, their families, their first-party health insurers, and society at large absorb much or most of the burden of malpractice. An important question, rarely discussed, is whether health care providers and their liability insurers shoulder as large a fraction of the costs of medical malpractice as they should.

Medical Malpractice Reforms Don’t Increase Healthcare Safety

Mon, 21 May 2007 16:18:13 -0700

Cross-posted from Tort Deform

by Michael Townes Watson

The sacrifices being made by injured patients who are victimized by the tort reform movement are not being offset by improvements in the safety of healthcare. On the Alternet website, Dr. Atul Gawande, who has written extensively about medical mistakes, states that “One of the easiest ways to prevent the spread of hospital infections is also one of the most neglected.” He has toured hospitals with infectious disease specialists and microbiologists whose sole jobs are to stop the spread of infections in the hospital. He laments, however, that despite the fact that every year two million Americans acquire an infection while they are in the hospital, and the fact that ninety thousand die of that infection, the hardest part of the infection-control team's job is not coping with the variety of contagions they encounter or the panic that sometimes occurs among patients and staff.

Instead, their greatest difficulty is getting clinicians to do the one thing that consistently halts the spread of infections: wash our hands.

We can’t, however, take comfort in the knowledge that the justice system will be available for people who are hurt by the failings of the hospital systems. This week, alone, I have seen news of a number of different incidents of clear malpractice where the victims have either been deprived of their day in court or have had to move heaven and earth to get even a small measure of justice. Here are some examples:

(1) In a Chicago suburb, a jury deliberated nearly nine hours before awarding $3 million to a brain-damaged victim in a medical malpractice suit. The suit was filed against an orthopedic surgeon and anesthesiologist whose medical actions left him with brain damage.
About three hours into the surgery, the anesthesiologist informed the orthopedic surgeon that some of the patient's monitoring equipment had malfunctioned, but the surgery was continued.

An hour later, the patient went into cardiac arrest and a coma, and was diagnosed with permanent brain damage due to lack of oxygen during the surgery. A medical review panel of three doctors ruled that the doctors had breached the standard of care during surgery and caused the injuries. Nonetheless, the doctors chose to ignore the findings of the medical review panel and proceed to trial, standing on the flimsy defenses they maintained. They still vow to appeal the verdict, still depriving the brain-damaged victim of compensation.

(2) In Florida, a 59- year old patient was killed over four years ago, and her family still awaits the outcome of her case. After having a relatively uncomplicated knee replacement, she became nauseated and vomited. The next day, after some tests and procedures to determine the cause, she violently vomited and aspirated, causing an infection, that later caused her organs to shut down, ending in her death.

(3) A Baltimore obstetrician was found liable for medical malpractice and ordered by a city jury to pay $8.1 million to the parents of a baby boy he delivered in 2003. The jury found that the doctor was responsible for the brain damage suffered by an infant Caleb Spence during a difficult delivery. But the damages would be limited to just over $2.1 million under Maryland law putting a cap on awards for pain and suffering. We still see evidence that the reforms enacted to curb malpractice litigation are not benefiting anyone other than the insurance companies. A story from Wyoming says that the screening panels, put in place there to limit frivolous malpractice cases, are not having any impact on medical malpractice liability costs for physicians and other health care providers.

So, when malpractice occurs, the victims end up without timely or adequate compensation, while the insurance companies are still able to focus the public’s attention on what they claim are “out of control jury verdicts” and “frivolous lawsuits.” Yet, there is no doubt that we have too many hospital errors, not only with infections, but also with prescribing and dispensing medication. The Institute for Healthcare Improvement has engaged in its campaign to save five million lives over the next ten years. Their website states that it’s hard to imagine medical practice today without the use of painkillers, sedatives, and blood thinners. But some of the most powerful drugs prescribed to patients can also cause harm, earning them the dubious distinction of “high-alert medications.” The classification is helping those concerned with patient safety to draw attention to the risks associated with certain drugs, even when used as intended, and the steps that can be taken to prevent injury. Reducing harm from high-alert medications is one of the interventions in IHI’s 5 Million Lives Campaign, a follow-on to the successful 100,000 Lives Campaign, and launched in December 2006 to help hospitals reduce medical harm by targeting now 12 areas for dramatic improvement. “Most hospitals have been working to improve the safety of high-alert medications for a long time,” says Frank Federico, RPh, an IHI Director. “But when you ask if they still need help with it, there is a resounding ‘yes.’”
Former secretary of the U.S. Department of Health and Human Services, Tommy Thompson, a Republican candidate for the 2008 presidential nomination, told about 250 students and administrators his plans for improving America's health. He also talked about health care during a 45-minute discussion with Des Moines Register reporters and editors. Thompson's remarks ranged from common-sense cures, such as "eat only 50 percent of what's on your plate" to specific statistics on how many doctors - 92 percent - open their patients up to medical errors by using handwritten prescriptions instead of "e-prescriptions."

The insurance companies and their rhetoric have made us believe that the debate over healthcare error is something new that has been cooked up by a bunch of trial lawyers looking for a way to make a buck. Yet, Dr. Gawande writes that medical errors are nothing new. In 1847, a Viennese obstetrician famously deduced that, by not washing their hands consistently or well enough, doctors were themselves to blame for childbed fever. Childbed fever, also known as puerperal fever, was the leading cause of maternal death in childbirth in the era before antibiotics (and before the recognition that germs are the agents of infectious disease). He states that, in his own hospital, despite the availability of antibacterial gel, the compliance rates for proper hand hygiene improved substantially: from around 40 percent to 70 percent, but hospital infection rates did not drop one iota. If 30 percent of the time people didn't wash their hands, that still left plenty of opportunity to keep transmitting infections. Indeed, the rates of resistant infections continued to rise.

Instead of the focus on making changes in the tort laws to help insurance companies, let’s focus on the things that can matter most to the safety measures practiced by the healthcare professionals. If we can move away from the debate about how to save insurance companies money, and on to the debate about saving lives and preventing injuries, we would be much better off in terms of dollars spent on healthcare and healthy humans available for work and play.

We Are All the Mitten State - FDA Preemption and the Lipstick Problem

Wed, 16 May 2007 11:53:05 -0700

Cross-posted from Tort Deform

by Professor Henry Greenspan

Last week, the U.S. Senate passed the "FDA Revitalization Act" (hereinafter, FDARA) by an overwhelming majority (only Bernie Sanders of Vermont voted 'nay'). That ought to tell us something. Clearly, the pharmaceutical industry and both major parties found something they could all agree upon: the usefulness of lipstick.

In order to understand this victory for cosmetology, a bit of context is needed. For the past six years, the industry and its allies have done everything possible toward making FDA preemption the law of the land. That is, the goal has been to turn Michigan's drug industry immunity law – which fully shields drug companies from civil liability if their product is "in compliance" with FDA regulations – the national standard. There has never been any secret about this; Michigan has been designated "the model" by every preemptor from Daniel Troy, who is to FDA preemption what James Brown was to soul, to every law firm that defends pharma from product liability claims.

One of the most common arguments against FDA preemption has been the sorry state of the FDA itself. Thus, people who are rightfully terrified at the prospect of the FDA being the only institution in the country that could hold drug companies accountable have pointed to the mountain of studies that agree about the inadequacy of the FDA's drug safety system. I have argued that, serious as the FDA's problems are, they are also beside the point as far as preemption is concerned. Even a utopian FDA has no jurisdiction over many of the delinquencies that become relevant in civil liability.

But here we begin to understand why the industry and its allies were so gung ho on FDARA. Inevitably, they will insist that now the FDA's problems have been solved. The argument about its failings has now been met. Ding, dong, the witch is dead.

Here is why the Munchkins' enthusiasm is misplaced. The reasons why fall into two major categories.

First, there are the limits of FDARA itself. In order to get it passed, so many compromises were included that it changes the actual situation at FDA hardly at all. As a single example, a proposed ban on direct-to-consumer advertising during the first two years a drug is on the market (initially supported even by Bill Frist) was simply tossed out. It is that initial marketing blitz which creates "blockbusters" - an all-out PR offensive during what is called the "evidence-free zone"; i.e., before whatever problems may be out there begin to hit the fan. Instead, FDARA would impose fines of $150,000 if, in the FDA's judgment, a company uses advertising that is "false and misleading." Let's be clear what $150,000 means in the context of the pharmaceutical industry. Vioxx made $2.5 billion per year, even after all the now famous label changes were in place (which, by the way, affected its sales not at all). So, under the new regime, a company could use ads that lied all their way down the Yellow Brick Road, and the entire fine – were it to be levied at all – would be what a drug like Vioxx made in less than a day (roughly, what the drug made every eighteen hours).

Second, and more central to the issue of FDA preemption, there remains a wide range of potential delinquencies relevant in civil litigation but over which the FDA – even in its most "revitalized" incarnation – has no authority whatsoever. Staying with Vioxx, for example, we learned that there was an orchestrated campaign to threaten and intimidate academic researchers who did not see things the company's way. Tactics like those may profoundly influence what does and does not become known about a drug's safety, but they have nothing to do with whether a company is "in compliance" with FDA regulations. They are not within the FDA's jurisdiction at all.

We have also learned that data may be skewed, even excised, in ways that impact what is published in major medical journals. These are the sources of information upon which physicians rely. Again, however, the FDA has no authority whatsoever over the editorial policies of those journals. Indeed, in a now well known article about Celebrex published in the Journal of the American Medical Association – in which, it turned out, half the data was simply left out – the most seasoned medical reviewer at the FDA, Dr. Robert Temple, noted "when the JAMA article comes out and confirms the hype, that probably has more impact than our labeling does." Unfortunately, even if we had the most "revitalized" FDA imaginable, there would remain very large arenas for potential intimidation, misinformation, and hype.

That is why there is no FDA reform conceivable – and even less what was just passed by the Senate – that would substitute for the accountability that civil liability makes possible. The two systems complement each other; they do not cover the same ground. And that is why, when the FDA preemption gang starts to invoke that bill to suggest that FDA's problems are now solved, we should not be distracted. We should not confuse the pig, when there is one, with the lipstick.

More Evidence of State Farm Insurance Company's Lies and Deceit

Tue, 15 May 2007 15:44:36 -0700

Cross-posted from Tort Deform

by Richard Pyorre

State Farm Insurance Companies have come under fire in Mississippi, Oklahoma and elsewhere recently because of denial of claims and or failure to pay what they owed. There has been documentation showing State Farm, or the engineering firm representing them, changed engineering reports in order to support State Farm's denial of claims in Mississippi. This same pattern with State Farm and the same engineering company also took place in Oklahoma and resulted in one jury award in May 2006 of $13 Million dollars with $10 million of that being punitive damages. The jury in that case found State Farm had "recklessly disregarded its duty to deal fairly with policyholders".

If you listen to the State Farm spin doctors they try to claim no knowledge of any changed documents and want to put blame on engineering companies. But I have information that puts the light on the real problem with what is happening at State Farm. I am a former agent of State Farm who has proof that State Farm has breached the contracts of its own agents. The information shows that a California Appellate Court has ruled that State Farm breached the contract and the California Supreme Court refused to hear State Farm's appeal making the Appellate Court decision final (Case#C050591 California Third Appellate District). What does this mean to the average policyholder? Well a policyholder who has a policy (contract) with State Farm expects State Farm to honor that policy (contract) if the policyholder has a loss. Now the question is if State Farm will not even honor their own contract with their own agents what chance does the average policyholder have? In addition to this State Farm has not even notified the agents of this decision by the California Courts.

I also have documentation proving State Farm has committed perjury to the IRS. State Farm has told the IRS that its agents are independent contractors and attend meetings at their option and there are no penalties for not attending meetings. But yet my contract as an agent, as well as 3 others, was terminated specifically for not attending a "mandatory meeting". After being terminated I filed an SS-8 (determination of employee or independent contractor) with the IRS and State Farm again told the IRS, under penalty of perjury, "attend meetings at their option" and "no penalties for not attending meetings". Now this may not seem very important to the average citizen until one realizes what State Farm is avoiding by this perjury. Because the IRS declares the State Farm Agent to be an independent contractor (based on what State Farm has told them) State Farm avoids state and federal payroll taxes on approximately $3 billion of annual payroll. This has been occurring since 1998 so the amount avoided thus far is approximately $30 billion! In addition to this State Farm has also avoided workmen's compensation and all of the other costs such as a retirement plan, vacation pay, sick leave and any other benefits employees would have. Now the contract of the agent states that he, or she, is an independent contractor but State Farm only recognizes them as independent contractors when it suits State Farm. State Farm uses the threat of termination at will for the agent who does not do as State Farm requires. As for State Farm telling the IRS (August of 2000) that agent's attend meetings at their option they (State Farm) are still requiring agents to attend mandatory meetings as of today. If you know a State Farm agent ask them if they have mandatory meetings they must attend and you will find State Farm has perjured itself and that is but one example.

When I was terminated on Feb 28, 1999 I had been representing State Farm for 27 years and had been recognized by State Farm for the quality of my agency for virtually every year as an agent. State Farm terminated me for not attending a "mandatory meeting" which was at least a two and a half hour drive (one way) from my home. What State Farm knew, but didn't care, was that I was going to physical therapy three times a week after being in a car accident and after having cancer surgery nine days before the accident. In addition to this the mandatory meeting was a self-study course which I told State Farm I would do but they insisted on the mandatory meeting and said it was not self-study. I happened to have the book for the class and it is exactly that, a self-study course.

Nineteen days after State Farm terminated my contract they sent me a letter telling me they would not be paying me my termination payments . Termination payments are also a part of the contract (are you starting to see a pattern?) which would have amounted to approximately $250,000. I then began selling other insurance policies to my former policyholders and offered them better prices for the same or better coverage. Approximately one year after my termination State Farm sued me for "theft of trade secrets" and "unfair competition" claiming I had breached my contract. State Farm filed the lawsuit in Federal Court in the ninth district (Case# C99-4668MJJ) and claimed they were a national company and the federal court was the correct venue. However I had documents showing State Farm General Insurance Company had become a "California only Company" and that State Farm was not giving the judge the correct information (see more of a pattern emerging). Eventually the judge had to dismiss the case "for lack of subject matter jurisdiction" as my information proved correct.

Now comes the interesting part, as I had been a policyholder of State Farm I filed a claim with State Farm when I was originally sued in federal Court. Apparently arrogance got the better of State Farm when they filed the federal lawsuit and they forgot their policy (contract) required them to provide a defense for the claims they made against me. After the federal judge dismissed the federal case State Farm re-filed the lawsuit in Mendocino County (Case#CV82819) and tried to plead around the coverage (altered the wording in an attempt to negate the defense coverage required by my policies). However State Farm was not able to get away with their attempt and was forced to pay defense costs of approximately $2,000,000 in addition to State Farm's own costs of approximately $4,000,000. These were cost up to near the end of the Mendocino County jury trial which lasted 6 weeks and ended on August 12, 2002. The jury awarded me and my fellow agent John Wier $12,600,000 in compensatory damages and punitive damages and nothing for State Farm. After the trial many of the jurors questioned why State Farm had even brought this case to trial as the jurors thought State Farm had no case. The judge thanked the jurors for their time and hard work and released the jury on August 12, 2002.

Approximately 5 months later the Mendocino County Judge, Richard Henderson, ruled the "jurors may have been confused" and ordered a new trial. Judge Henderson was a newly elected judge and this case was one of his very first which he took over from a retiring judge. It was also very coincidental that during the discovery process of this case, prior to trial, that the lead counsel for State Farm, Steven Brick, was appointed to the bench in Alameda County. Since both Judge Henderson and Judge Brick were newly elected/appointed they were required to attend a two week judge school prior to taking the bench (there is only one judge school each year).

The judge's decision was appealed to the appellate court Case#A101791 where the appellate court ruled the trade secrets belonged to State Farm and quoted a portion of the State Farm contract. The problem with the quote by the Appellate Court was that they left twenty words right out of the middle of their quote and as you might imagine those twenty words were critical to the trade secret ruling.

The case was then appealed to the California Supreme Court who agreed to hear it (Case#S131445) but put it on hold until a lead case was heard. Once the lead case, which was considerably different than this one, was heard the Supreme Court took it off the docket and sent it back to the Appellate Court. The Appellate Court then sent it back to the trial court in Mendocino where it now awaits a new trial date that State Farm has requested.

During all of the appeals to the Appellate Court and Supreme Court State Farm refused to pay the defense costs for me as provided by my policy (contract) and even filed another lawsuit against me, this time in Sonoma County (Case#SCV234700) requesting the money State Farm had paid for the Mendocino County defense be reimbursed to them. State Farm filed this lawsuit while the Mendocino lawsuit was continuing and while they were refusing to abide by their own policy (contract).

State Farm filed a summary judgment motion in the Sonoma Case and provided the court a "true and correct copy" of my policy claiming they had no duty to defend. The problem with State Farm's "true and correct copy" was that it was neither true nor correct! State Farm left off coverage's that did in fact show coverage (more of a pattern like the Oklahoma and Mississippi cases?). State Farm calls themselves the "Good Neighbor" but if you had a neighbor like that you probably wouldn't refer to them as good or really wouldn't want them as a neighbor. The Sonoma County Judge ruled against State Farm' summary judgment and astonishingly State Farm filed another summary judgment which was also denied.

As of this date State Farm has still refused to reimburse the defense costs I have incurred after State Farm quit paying but yet they continue to go forward with both lawsuits in Mendocino and Sonoma County. In the meanwhile I keep asking why is the IRS ignoring the perjury committed by State Farm executives? Why is State Farm allowed to get away with this perjury when it is costing all US citizens billions in uncollected taxes? When is someone in government going to step forward and make State Farm Executives suffer the consequences of their actions? Why hasn't the press brought this to the attention of the public and/or government officials? My concern is not with the State Farm agent, who would like to be the independent contractor he or she is supposed to be, but with the executives of State Farm who have lied and continue to lie to get what they want while at the same time breaching the agent's contract.

I wanted to make sure all of State Farm's Board of Directors were made aware of this perjury by State Farm Executives so I sent registered, receipt requested, letters to all Board members as well as most of the top Executives. In my letter I sent documentation and told the officials I had more if they needed it. The Board hired an attorney who contacted me and asked if I was represented by legal counsel and requested more information. I forwarded the requested information to the Attorney and waited patiently for a response and when I received none I sent another registered letter advising the board they would be deemed culpable if they did nothing.

Coincidently I suddenly received a phone call from an IRS agent in New York who had been assigned to review my SS-8 filing. This agent told me she would review the file but she did not have it available. I told her the Austin Texas office should have the file but she told me they did not do that anymore and had probably destroyed it. I told her I could e-mail the information to her right away but she told me she could not accept e-mail and could only get it via fax or regular mail. This phone call was on June 30 and the IRS agent was in New York and I am in California, a three hour time difference. I printed out and faxed approximately 90 pages on the afternoon of June 30 to the IRS agent and on the cover page advised that I would fax and mail additional pages as soon as I could. On July 6 I faxed another approximately 45 pages to the IRS agent and advised if this documentation was not enough to let me know and I could send more.
You can imagine my surprise when I received a letter from this IRS agent dated July 2 telling me she had done a "thorough review" of the documentation and found no facts or legal arguments to change the determination of independent contractor! The IRS agent placed the word "final" in bold type and highlighted it with a yellow marker.

Coincidently, again, I received a letter, dated August 5, from W.H. Knight Jr., Chair of State Farm's Legal Affairs Committee, telling me the State Farm Board of Directors finds "no basis to recommend or direct that State Farm take any further action". The letter head used by Mr. Knight was that of "W. H. Gates Hall" in Seattle Washington which didn't mean much to me until I recently found Mr. Knight has been charged with "ethics violations" at Washington for using the schools computer for State Farm business. Apparently my letter is now some proof of Mr. Knight's use of the school computer while working at his position as a member of State Farm's Board of Directors.

I have the documentation for all of the statements I have made above and am willing to testify to those facts. I would ask those of you reading this to ask your Congressman and Senators to look into this matter of why the IRS has allowed perjury by State Farm to go unpunished? If it didn't matter if State Farm had mandatory meetings for their agents why would State Farm lie about it? Do you think it is fair that State Farm, who happens to sell workmen's compensation, should be able to lie and avoid paying their fair share? Isn't it time someone looked into the management of State Farm and ask why the Rust family should be able to operate the company like a family business, handing it down from father to son to grandson, when they have no ownership in the company? Isn't it time large corporations be made to tell the truth or pay the consequences?

Giuliani's 9/11 Safety is Too Expensive Business Model

Mon, 14 May 2007 09:30:41 -0700

Cross-posted from Tort Deform

The following article gives great coverage of the issue of Ground Zero Workers’ illnesses that has been covered many times before here on Tort Deform. This piece touches upon many of the issues that have been touched on before including: the safety is too expensive business model.

I hope to go back and dissect smaller portions of the article, but for right now I just want to make syre it available to our readers. For anybody considering supporting Giuliani for President because of his bravery and resolve in the wake of 9/11, this article should give you……………..a great deal of pause.

From the NY Times:

Ground Zero Illnesses Clouding Giuliani’s Legacy
By ANTHONY DePALMA
Anyone who watched Rudolph W. Giuliani preside over ground zero in the days after 9/11 glimpsed elements of his strength: decisiveness, determination, self-confidence.
Those qualities were also on display over the months he directed the cleanup of the collapsed World Trade Center. But today, with evidence that thousands of people who worked at ground zero have become sick, many regard Mr. Giuliani’s triumph of leadership as having come with a human cost. (keep reading)

Exciting Developments in Access to Justice for Low-Income People

Mon, 14 May 2007 07:22:31 -0700

Cross-posted from Tort Deform

by Laura Klein Abel, Deputy Director, Poverty Program, Brennan Center for Justice &
David Pedulla, Research Associate, Brennan Center for Justice

It is common knowledge that our courts don’t well serve people of modest means. Whether the concern is lost wages, unfair evictions, bureaucratic denials of health coverage, divorce or domestic violence, most individuals have a difficult time trying to enforce their civil legal rights. But, against this grim backdrop, some areas are getting increased attention.

Advocacy organizations recently joined together to urge the Federal Communications Commission to reduce the amount that lawyers and others who receive collect calls from prisoners and immigration detainees have to pay to receive those calls. For prisoners who are unable to contact their lawyers and social service providers, and for families who are unable to talk to their loved ones behind bars, this is a vitally important issue. The advocates explained that the high cost of collect calls from prison interferes with attorney-client communication. Some public defenders and civil legal aid attorneys are simply unable to accept client calls. The advocates also explained that by making it hard and sometimes impossible for prisoners to maintain contact with family members and social service providers, the high cost of calls from prison interferes with the ability of prisoners to successfully re-enter society after they have served their sentence. Among the groups filing comments with the FCC were the Coalition for the Right to Communicate (a coalition, represented by the Brennan Center, of prisoners’ families, attorneys, and social services agencies), the Sentencing Project, the American Bar Association, and many other interested entities. (To read all comments, click here and search for proceeding #96-128).

In the halls of Congress, Senator and former legal aid attorney Tom Harkin (D-IA) introduced a loan repayment bill to help civil legal aid attorneys pay off their exorbitant student loans. Known as the Civil Legal Assistance Attorney Loan Repayment Act (S. 1167), the bill aims to provide an incentive for qualified attorneys to serve as lawyers at civil legal aid organizations. Many lawyers graduate from law school with overwhelming debt, which makes it difficult for them to take jobs at civil legal aid organizations that offer salaries beneath those available in private firms and other job settings. But, qualified legal aid attorneys are necessary to ensuring that low-income people are able to enforce their rights. The bill authorizes a Congressional appropriation of $10 million in FY 2008 to provide up to $6,000 in loan repayment assistance each year to lawyers who are employed full-time at civil legal services organizations. Legal aid attorneys would apply to participate in the program, and recipients of the financial assistance would be selected on a first-come, first-served basis.

At the international level, the United Nations Development Programme is sponsoring the Commission for the Legal Empowerment of the Poor, which will examine the relationship between poverty, exclusion, and the law. The Commission, chaired by former U.S. Secretary of State Madeleine Albright and Hernando de Soto, a leading Peruvian economist, will focus on the ways in which poverty pushes people to live outside of the rule of law and the role that governments and foundations can play in promoting legal reforms to reduce poverty. One of the Commission’s working groups will specifically focus on Access to Justice and the Rule of Law. This working group will look at expanding access for poor people to legal services, putting an end to people feeling excluded from the legal system in their country, and promoting knowledge of the legal system.

As the Sky over Michigan Falls, Chamber and Republicans Focus on More Tort Deform

Thu, 10 May 2007 07:13:56 -0700

Cross-posted from Tort Deform

by Cameron Getto

Michigan has for months now been in the midst of its worst budget crisis ever. The Governor and the Legislature are talking about taking school money away in the last quarter of the fiscal year, laying off state employees, and potentially shutting down our government. And now the governor is threatening the reduction of Medicare payments to medical providers who serve poor people and elderly people.

The problem is due in no small part the last year's Republican-controlled Legislature's elimination of a business tax that is now wearing a $2 Billion hole in Michigan's pockets.

What has the Michigan Chamber of Commerce spent the last several months working on during these trying times? Tort deform. Despite proven facts to the contrary, the Chamber has chosen to spend its time and money on the same thing as the Michigan Republican Party -- more tort deform.

Michigan is the only state in the union that provides complete immunity for drug companies that manufacture and sell dangerous drugs. In a March ad in the Lansing State Journal, the Chamber disingenuously stated:

[Repealing drug immunity laws] is the first step in their plan to turn Michigan into a playground for personal injury lawyers. They want to undo laws that hinder them from recruiting phony victims who aren't even hurt so they can flood our courts with more frivolous lawsuits.

In a press release from the House Republican Communications Services, the response to the repeal attempt was to once again blame trial lawyers, rather than to help victims of dangerous drugs. The Republicans disingenuously stated:

The people who stand to gain the most are the personal injury lawyers looking for their next pig payday.

Is it any wonder that we are still waiting for the Michigan Republican's budget proposal to leave the Senate floor? They seem to be spending all their time taking shots at attorneys and victims, and very little of their time actually doing the job they were elected to do: balance Michigan's budget.

Why 400 Years of Knowledge is Better Than 20

Wed, 09 May 2007 14:29:09 -0700

Cross-posted from Tort Deform

by Michael Townes Watson

Being, as I am proud to admit, an addict of the history of our American history, I have visited Jamestown, Virginia on multiple occasions. Consequently, I am on the mailing list for promotional information from their public relations department. I have recently received news of the planned events for the weekends of May 4-6 and May 11-13, when Colonial Williamsburg will host “Her Majesty Queen Elizabeth II and His Royal Highness Prince Philip” to commemorate the 400th anniversary of Jamestown’s founding. The reason for the timing of these spectacles is that this year marks the 400th anniversary of the founding of Jamestown.

If you have ever spent any time in Jamestown, Williamsburg and Yorktown, Virginia, you have undoubtedly stood on that ground and pondered where we would be if it were not for the perseverance, strength of purpose and desire for liberty displayed by those settlers, by the colonists who first met at the House of Burgesses to declare our independence, and by the citizen delegates who later demanded the ten Constitutional Amendments that we know as the Bill of Rights. How can one ponder those events and not wonder at the same time whether we have the will, perseverance and dedication to resist the influence of the forces that are now attempting to whittle away at the very rights for which the settlers, colonists and delegates died and fought.

At the same time as I am celebrating the news of the 400th anniversary of our nation, I am lamenting the hype of the debate being held among the ten Republican Presidential hopefuls at the Ronald Reagan library in California. Although the media commentators are regaling Reagan as the libertarian whom all the candidates should emulate, it was Reagan who, twenty years ago, began the intentional and contrived decimation of one of the precious liberties for which our colonists fought—the right to a jury of one’s peers in a court of law. Reagan began the assault which has endured for 20 years when he proclaimed that the “excesses of the courts have taken their toll.”

An earlier post on this site details Reagan’s efforts to misstate the facts, much like the efforts of those who have successfully perpetuated the tort reform impetus for the past twenty years. Over the course of those twenty years, there have been 34 states that have enacted legislation limiting punitive damages, thus limiting the deterrent and retributive effect of awards against the most evil wrongdoers. There have been 25 states that have done away with the collateral source rule, thus enabling negligent parties to deduct from their liability amounts paid to the injured by the injured parties own insurance (for which the injured party has already paid). There have been 28 states that have limited non-economic damages, thus depriving the most vulnerable in society, children, elderly and low-income injured, from recovering when they are severely affected by negligent wrongdoing. Finally, there have been 38 states that have altered the rules of joint and several liability, thus preventing full recovery by a victim of multiple negligent wrongdoers if any of those wrongdoers is insolvent. Yet, on the 400th anniversary of our nation’s first settlement, we still hear more cries for “tort reform.” It seems that the past twenty years have trumped our first 400 years. Most people who bemoan lawsuits have no idea of the amount of decimation our jury system has already suffered, yet they want more because they have been conditioned to believe that lawsuits are bad things.

The media, as I write this post, inflames the public, much like an insidious infection spreading in an unsanitary hospital room. They rampantly report this week of the “judge in D.C. who sues for $67 million over a pair of lost pants.” Who knows whether they have their facts accurate, but they obviously love the impact of the story, even introducing it with “Move over lady who recovered millions from McDonald’s when she spilled coffee in her lap.” It is clear that they want, and indeed succeed in their efforts, to perpetuate the image of the greedy trial lawyer with the non-deserving client recovering outrageous amounts from an unfair system fostered by unaccountable judges and stupid juries.

It was 180 years after Jamestown that other Virginians among our nation’s founders, Thomas Jefferson and James Madison, wanted to assure, as written in the Seventh Amendment to the Constitution, that “trial by jury shall be preserved, and no fact tried by a jury, shall be reexamined in any Court of the United States, than according to the rules of the common law.” Our Supreme Court has never ruled that the Seventh Amendment was binding on the states under the Due Process Clause of the Fourteenth Amendment, but the wisdom of the notion of trial by jury still persists. Yet, legislative bodies in every state of this nation have seen fit to violate that notion, because of some contrived and rampantly propagated belief that juries are evil and undermine the aims of legitimate society.

Why have we become adverse to Jefferson’s belief that the right to a jury trial was the cornerstone of a true democracy? The citizen-soldiers who fight in a politically-motivated war in Iraq come home injured, only to find that if they are then further injured by an error-prone medical system, they do not even have the rights they supposedly were fighting for in a foreign nation, where we are trying to “establish a democracy.” The stay-at-home mom is the cornerstone of the very family structure so often credited with the preservation of the “family values” extolled by opportunistic politicians. Yet, when that mom is killed by a hospital system that wrongfully kills nearly 200,000 Americans every year, she is survived by children and a husband who must hear that the life of their loved one has been arbitrarily limited by those same politicians. When that same medical system finds a way to save or enhance human life with advances in stem-cell research, our President refuses to fund that research because he proclaims that it will destroy single-cell beings, whose lives are, to use his words, “of limitless value.” Yet, when a child is maimed for life by the errors of a negligent hospital delivery, that President wants to limit the value of the injured child’s life so that, to use his own words again, the ob-gyn doctor can go on “practicing his love with his patients.” So much for the “limitless value” of human life.

Whenever we hear the cries of people for “tort reform,” we must be sure to counter those cries by disseminating information about the true effects of these reforms. We must let people know that the very reforms they advocate not only disrupt the system envisioned by our founding fathers, those reforms also leave them helpless when they become victims themselves. In The Federalist Paper #78, Alexander Hamilton was trying to let his fellow citizens of his newly-formed country know the purposes and benefits of the proposed Constitution, in a way much more eloquent than I. He stated, in reference to the moderating effect of an independent judiciary:

“Considerate men of every description ought to prize whatever will fortify or beget that temper in the courts; as no man can be sure that he may not be tomorrow the victim of a spirit of injustice, by which he may be a gainer today.”

The rules that we choose for our society should be rules that we would choose to apply to all, regardless of which side of the debate we are on. Former Senator Rick Santorum, a highly vocal advocate of limiting damages, sought a gigantic damage recovery for his own claimed damages when his wife was wrongfully injured. A doctor may some day be a patient; an insurance agent may some day have a child injured; a hospital administrator’s wife may be brain-damaged by a neurosurgeon. Democracy should give everyone a glimpse of justice. It should give that glimpse not just to those who make the rules, but for those who watch the rules being made and those who are impacted by those rules. How many times is your eye caught by a tabloid story at the grocery store checkout line, such as the ones Reagan told, the McDonald’s coffee case, or other such rendition without the full facts? You then fume all the way home from the store thinking that you are victimized by the justice system, when the truth is that you have actually been victimized by those who tear that system apart.

We all are vested in the justice system. Every person now breathing in this country is just as likely as anyone else to have fate’s hand turned against them in some form or other at some point in time. When you support an idea, a thought, a proposal, a law, a reform, please be sure that you know what it is, what it will do, what it will not do, and who will be affected by it before you decide your position. Inform yourself, listen to all sides of the debate, and imagine what it would be like if it were to some day apply to you. If you can’t bring yourself to think that way, just think of the settlers at Jamestown 400 years ago, their fellow Virginians 180 years later, and ask how they would have thought. Let’s not be fooled by twenty years of false rhetoric. Instead, let’s learn from 400 years of our country’s history, and the 800 years of history that have passed since the Magna Carta articulated the right of trial by jury.

CAFA And The Effort to Defang Consumer Law

Tue, 08 May 2007 09:04:11 -0700

Cross-posted from Tort Deform

by Brian Wolfman, Director of Public Citizen Litigation Group

Today, I’m writing about the relationship between the so-called Class Action Fairness Act (CAFA) and the attack on the consumer class action and consumer law more generally. CAFA was enacted in February 2005 for the fundamental purpose of bringing virtually all substantial class actions based on state law into federal court. State-law class actions can now be filed in, or removed to, federal court based on minimal diversity of the parties, not the ordinary complete diversity rule. Under CAFA, there are a few situations in which the minimal diversity may not apply – for more or less “local controversies” – but they can only be invoked, at a minimum, if the main defendant is a citizen of the forum state, which is rarely the case with large corporations, whose corporate “citizenship” often has nothing to do with where it does business.

Indeed, relying on corporate citizenship is sort of silly in this day and age, where McDonald’s is no more a “citizen” of Illinois, where it is incorporated, than, say, California, where it does an enormous amount of business. Why shouldn’t a class composed entirely of Californians suing under California law be able to sue McDonald’s in California state court? (I’ll save my beef with the current conception of corporate “citizenship” for another column.)

In any event, judges, because of the cases presented to them, and the bloggers, academics, and columnists, because it is the only CAFA game in town so far, have become intensely interested in how the so-called “exceptions” to CAFA jurisdiction should be interpreted. But that’s not the real story. The real story is that CAFA has had its intended jurisdictional effect: In the vast majority of cases that matter to the big companies and their lobbyists that wrote CAFA, defendants now have their choice of forum. So, corporate defendants can go federal court when that’s where they want to be. And, indeed, preliminary studies conducted by Tom Willging of the Federal Judicial Center show that, in general, corporate defendants want a federal forum, as there has been a large migration of consumer class actions from state to federal court.

The exceptions are on the margin – they involve fringe cases – and, so, the academic and judicial hubbub about them has obscured the reality. The important questions are not how one defines “primary defendant” (which is an important issue for invoking one of the local controversy provisions) or who has the burden of proving CAFA’s $5 million amount in controversy. The real question is whether forum choice matters: Are the results in class actions – class certification, settlement, attorney’s fees, rulings on the merits – different when the defendant has forum choice than when it does not? This is very difficult research because there is no real control group: After all, post-CAFA, plaintiffs have forum choice in very few consumer class actions. But it is the important question. And the answer is the only way to know whether CAFA should be substantially revised or repealed.

This brings me to my second point. CAFA’s proponents often said that all they wanted was abstract “fairness” – the right to be in federal court when the matter was between parties from different states or the case concerned issues of national concern. But that can’t be right. Litigants are interested in results, and CAFA’s proponents thought the results would often be better in federal court. So, corporate defendants who lobbied for CAFA knew that they’d be able to argue that because the case involved plaintiffs from all over the country, the case should be in federal court. But that wasn’t the end point. Once in federal court, they felt that, in general, they would have a more sympathetic judicial ear for the claim that multi-state class actions brought under state law – that is, the laws of multiple states – would fail to meet the “predominance” requirement of Federal Rule of Civil Procedure 23 and, thus, couldn’t be certified as class actions. After all, decisions in number of federal circuit courts had suggested that these multi-sate consumer class actions were not certifiable. So, just to reiterate, this was the game plan: You ask Congress to enact a law on the ground that national state-law class actions ought to be litigated in national (that is, federal) courts, but then you get the cases ditched on the ground that, well, they are national state-law-based class actions, involving the laws of multiple states, and for that reason can’t be certified.

So, here’s my solution: Most state-law-based consumer class actions are filed under state consumer protection laws. These laws are known as “UDAPs” because they outlaw unfair and deceptive acts and practices. UDAPs are modeled after a famous federal law, section 5 of the Federal Trade Commission Act, enacted in 1938. But the Federal Trade Commission Act does not have a private right of action, and it’s not very vibrant these days because only the Federal Trade Commission can enforce it. If we are concerned – and in some cases we should be – that the differences among the states’ various consumer protection laws make class actions unwieldy, let’s amend the FTC Act to add a private right of action. Then, we’d have one uniform federal law, enforceable by federal courts, so that consumers can truly be protected from unfair and deceptive business practices.

And, this brings me to my final point on consumer class actions. As I said, CAFA’s corporate proponents didn’t seek its enactment because of some abstract interest in the purity of federal diversity jurisdiction. They wanted CAFA because they wanted to be able to choose the forum. But they have a broader agenda. Just in case they actually have to defend consumer protection cases on their merits, they want to gut the UDAP laws on which those cases are based. Through the American Legislative Exchange Council, or ALEC, they have proposed a “model” UDAP law, which would take us back decades, and be the ruination of the modern consumer protection class action. Most importantly, the model law would require that plaintiffs prove “reliance” on an unfair and deceptive practice, which is prohibitively expensive and next-to-impossible to prove, particularly when a defendant has ripped off consumers in relatively small amounts. Indeed, a key purpose of the Federal Trade Commission Act and the state UDAP statutes was to legislatively overrule the elements of the tort of common-law fraud, most prominently the need to show individual reliance. These laws overruled that common-law requirement precisely because it was generally an insurmountable obstacle to attacking fraudulent and misleading business practices.

So, under ALEC’s proposal, it would not be enough that the plaintiff or a plaintiff class lost money after the seller of a product debited the plaintiffs’ accounts by $20 when the company’s advertisements said the product cost $10; the plaintiffs would have to prove, plaintiff-by-plaintiff, that they relied on the advertisements in purchasing the product.

So, let’s make no mistake about it, the goal of the corporate community is to defang – to essentially eliminate – modern consumer protection law. It’s up to the rest of us to defeat that effort.

Think Tanks or in the Tank?

Mon, 07 May 2007 09:02:37 -0700

Cross-posted from Tort Deform

By Rick Cohen

In well publicized run-ins with the Securities and Exchange Commission and the former Attorney General of New York, Maurice “Hank” Greenberg became an avatar of the corporate movement to overturn Sarbanes-Oxley and to promote so-called tort reform. The SEC’s investigation of AIG had prompted the corporation to ease Greenberg out of the top slot.

Spitzer's charges addressed Greenberg’s administration of the estate of C.V. Starr, the founder of American International Group, the insurance behemoth that Greenberg also ran. According to the AG, Greenberg and partners as executors of the state has sold Starr assets to a firm he controlled at allegedly less than the market rate. Since the estate was meant to benefit the Starr Foundation, which Greenberg chaired, the AG charged that Starr has shortchanged his own foundation several billion dollars.

Starr didn’t take the accusations kindly, launching an all-out crusade against Sarbanes-Oxley-type oversight of corporate accountability and against the sullying of his reputation. Part of it seems to have been a massive amount of Starr Foundation grants to the National Chamber Foundation, an “educational” arm of the U.S. Chamber of Commerce addressing issues of government oversight and tort reform (Greenberg notoriously has referred to tort lawyers as “terrorists”). No surprise, but the Chamber and its CEO, Tom Donohue, have been supportive of AIG and Greenberg personally.

The Starr Foundation also ante’d up the lion’s share of funding for the report of the Committee on Capital Markets Regulation, co-chaired by the former head of the Bush Administration’s Council of Economic Advisors, R. Glenn Hubbard, (the remainder from a “vulture” investor named Wilbur Ross, the other from a hedge fund manager named Kenneth Griffin, both of whom served on the committee). The report was yet another new corporate stratagem to roll back Sarbanes-Oxley, though most people joined Senator Christopher Dodd in referring to the organization as the “Hank Greenberg commission”.

The Starr Foundation’s support of the National Chamber Foundation is described in the Cohen Report published by Nonprofit Quarterly magazine.
But an exceptionally odd part of the Greenberg story has been playing out in litigation in Massachusetts District Court.

Along with the Foundation’s capital infusions into the National Chamber Foundation, Greenberg launched a PR campaign to resurrect his and his institutions' image after many decades of corporate and philanthropic service— a strategy that included hiring journalists and academics to pen encomiums to the octogenarian billionaire .

In one instance, Greenberg’s investment company, C.V. Starr & Co., hired an entity called eSapience, based in Cambridge MA, to do some personal image-burnishing. A number of conservative scholars dedicated to free-market business theories run—or ran—eSapience, including the dean of the MIT Sloan School of Management. Probably no one would have noticed eSapience’s contractual relationship with Greenberg and C.V Starr & Co. had the firm not filed suit in U.S. District Court alleging that it had been stiffed for over $2 million in expenses (since the litigation, the website of www.esapience.org has been largely down).

In its court papers, eSapience said it was hired to “develop a campaign that would, among other things, help establish Greenberg as a visible and highly credible public intellectual”, “to change the public conversation about Greenberg,” and “to raise questions about the effectiveness of the current legal and regulatory environment.” Among the elements of the strategy was the creation of two virtual and apparently artificial think tanks, the “eSapience Center for Law and Business” and “the Barbon Institute”, each headed by principals of eSapience.

Whatever the facts of the billing dispute, both eCLB and Barbon were essentially think tanks designed to do little more than simply promoteing Hank Greenberg. The addresses of the websites of eSapience and the two think tanks ended in “.org”, the tell-tale domain extension of the non-commercial entities such as nonprofits, charities, religious organizations, and educational and cultural institutions, but most experts in the field quickly saw through them as Greenberg instruments. While armed with “.org” tags, none of the entities appear to be registered nonprofits.

The work of eSapience for Greenberg included recruiting journalists to write Greenberg-friendly articles, running think-tank conferences with big name speakers replete with applause for Greenberg and his free-market ideas. Run by MIT academicians and recruiting names for speaking gigs like Gore (and Greenberg) attorney David Boies and White House Iraq communications aide Dan Senor, eSapience’s functions for Greenberg added a veneer of manufactured intellectual credibility for Greenberg and his anti-regulatory agenda. The Greenberg think tank is no more convincing than the Greenberg commission as a high level examination of Sarbanes-Oxley-related issues.

There’s nothing to prevent a conservative philanthropist like Greenberg from putting his tax exempt capital behind nonprofits that believe what he belives. And there’s nothing to prevent conservative business economists at places like MIT from weighing in with attacks on Sarbanes-Oxley and tort reform. But when the agenda is intensely personal, about the specific business and personal interests of the philanthropists’ outside business interests, then the philanthropy raises questions. And in the case of recruiting PR firms to conjure an array of high falutin’ think tanks to do personal and political image burnishing to undermine corporate accountability standards, the real experts and academics on both sides of the issue ought to reject the veneer and expose the paid ventriloquists.

Coda: As of April, eSapience probably thought it had won its case. Greenberg and CV Starr hadn’t responded to the complaint and eSapience called for a default judgment. Apparently, Greenberg and associates contended that they hadn’t been served properly. The lawyers talked, maybe it looked like things were going to be settled, but as of May 2nd, the eSapience litigation was on again with an amended complaint and a remarkable explanation of the firm’s strategy for rebuilding Greenberg’s image.

Time to Reduce Medical Errors with Full Disclosure

Fri, 27 Apr 2007 08:10:06 -0700

Cross-posted from Tort Deform

by New York State Senator Eric Schneiderman

Each year in the United States, there are between 44,000 and 98,000 hospital deaths and another 300,000 injuries attributed to preventable medical errors. New York's hospitals are no exception. In fact, a 2006 study of medical errors by the private research group HealthGrades rated New York State's hospitals the second worst in the country.
Medical errors are not a new problem in New York State. In 2005 the New York Public Interest Research Group issued a report entitled "Empty Promises: The Failure of the New York State Health Department to Monitor Medical Errors." That report was a follow up to findings from five years earlier that thousands of patients in New York State were dying from medical errors. When those findings were released, the New York State Department of Health committed to reducing medical errors by half. Five years later DOH had not only failed to meet its goal, but had no plan in place to even try.

But the fault does not only lie with inaction on the part of the DOH. Despite the fact that a small number of doctors who are repeat offenders cause a large number of the injuries resulting from medical errors, hospitals and medical boards are slow to discipline them. An analysis by Public Citizen of data in the National Practitioner Data Bank Public Use File for the years 1990 to 2005 found that two thirds of doctors who had made ten or more malpractice payments were never disciplined by their hospitals or medical boards. In part because of this failure of institutions to act against the worst offenders, the situation continues to get worse.

To help mitigate this problem, I am the sponsor of legislation in the New York State Senate, S.2685, which would require doctors to inform patients (or their representatives where appropriate) when significant medical errors take place.

From an ethical standpoint this is a no-brainer. The AMA's ethical guidelines state: "Situations occasionally occur in which a patient suffers significant medical complications that may have resulted from the physician's mistake or judgment. In these situations, the physician is ethically required to inform the patient of all the facts necessary to ensure understanding of what has occurred…Concern regarding legal liability which might result following truthful disclosure should not affect the physician's honesty with a patient." (link)

In theory, doctors agree with these guidelines. Research has found that at least 70% of doctors feel that medical errors should be disclosed to patients or their families, but in practice, doctors only informed patients or their families that a medical error had occurred in approximately 24-28% of cases.

And New York State law does little to encourage physicians to uphold the AMA guidelines. Legally, New York State only requires that physicians notify the state Department of Health-not the patient-when an error takes place.

But patients who have been the victim of a medical error need to know all the facts about their condition in order to make a judgment about whether to continue treatment with the same physician in light of the incident, and if they choose not to, to discuss all aspects of their condition with their new doctor.

In cases when a medical error amounts to malpractice, it is only fair for the victims to be informed and to receive appropriate compensation. Any other view endorses leaving innocent persons with a potentially disabling injury without any remedy or financial support.

Of course not all medical errors amount to malpractice, and certainly not all bad outcomes are the result of malpractice, or even of errors. Medical treatment is an inherently uncertain thing. There are many situations in which reasonable medical professionals can, in good faith, disagree about the best course to take. Even in circumstances for which there is strong expert consensus about the proper course of treatment, the outcome is not guaranteed. Malpractice differs from these situations. The definition given in jury instruction is as follows:

Malpractice is professional negligence and medical malpractice is the negligence of a doctor. Negligence is the failure to use reasonable care under the circumstances, doing something that a reasonably prudent doctor would not do under the circumstances, or failing to do something that a reasonably prudent doctor would do under the circumstances. It is a deviation or departure from accepted practice. (link)

When a failure to use reasonable care, or a departure from generally accepted practice does occur and it results in serious complications or even the death of a patient, full disclosure of the error is critical.

Almost no one argues that, ethically, full disclosure is the right thing to do, but there are two major arguments made against such a policy on more practical grounds: that there will be more malpractice claims and payouts, and that doctors will be charged higher malpractice premiums as a result.

The argument that disclosure would drive up malpractice premiums is not only ethically suspect, but it ignores substantial evidence of what really drives increases in insurance premiums-for malpractice and other types of insurance.

Ethically to argue against disclosure of real errors in order to keep premiums low is essentially to say that victims should be denied justice so that bad actors can get a free ride. If frequency of errors and malpractice were driving insurance premiums up to burdensome levels, then the solution would be to reduce such errors and malpractice-not to deny justice to people who have been wronged.

But the reality is that numbers of malpractice claims and the amounts of awards paid out are at most a minor factor in determining insurance premiums. Similarly, medical malpractice "losses" (defined as medical malpractice verdicts, settlements, legal fees, etc.) account for less than 1% of total U.S. health care costs, and the cost of all medical malpractice premiums likewise amounts to less than 1% of total U.S. health care costs in the nation.

Furthermore, studies have shown that insurance premiums have often gone up at times when payouts were flat, or even declining. Rather than responding to the volume of insurance claims, Americans for Insurance Reform has documented how insurance premiums are driven by investment cycles. Insurance companies make most of their profits not from premiums per se, but from the returns they reap on investing those premiums. When markets are performing well, insurance companies lower premiums to increase their pool of capital with which to invest. When markets perform poorly they raise premiums to help cover their losses and prop up their corporate earnings reports, usually citing a "litigation crisis" and calling for "tort reform" at the same time. Insurance reform advocates have dubbed this process the insurance cycle.

So while it would be unethical to deny victims of medical malpractice information about their health in order to shield the doctors who injured them from liability, its even worse to keep victims of medical errors in the dark in pursuit of an elaborate ruse on the part of insurance companies to cover their investment losses and blame the cost on malpractice victims-or more likely, "frivolous lawsuits". Ultimately, if medical malpractice insurance companies don't cover the costs of the medical errors of the doctors they insure, you and I as taxpayers are left with the bill by way of an increased drain on the public assistance these victims (especially the most severely injured) must often turn to for support.

On ethical grounds, for the health and independence of patients, and possibly even to reduce litigation costs for doctors and hospitals, it is time to address the high level of medical errors in New York State with a policy of full and prompt disclosure. The arguments against doing so simply don't hold water.

The Real Frivolous Lawsuit Crisis

Fri, 20 Apr 2007 09:50:25 -0700

Cross-posted from Tort Deform

by Marc Dittenhoefer

This year in New York, what with a new Governor and all sorts of Budget drama, it seems an appropriate time for those of us concerned with consumers' rights to stop a bit and take our bearings. Albany is replete with this year's calls for sweeping changes in the civil justice system - wholly apart from the ridiculously overdue and eminently deserved judicial pay raise. New Bills are being floated all the time, even during placid seasons. Now, with an entirely new political equation in the capital, every conceivable new “combination” is being considered to open the doors to the Legislature, the Governor’s favor, or both.

We can expect much to be asked for by big business interests, what with the squeeze that has been put on the doctors, the contractors and the property-owners in the form of raised insurance premiums - all blamed on the greedy lawyers with seedy clients who hoodwink idiotic juries into awarding titanic sums to the undeserving. This "explanation" has made its way into the American mainstream as so much received knowledge and common wisdom that hardly anyone questions these assertions anymore. More's the pity – they ARE wrong!

But what is more pitiable still than the coming attempts to narrow the Courthouse door to those individuals with “pedestrian” complaints is what these offered changes to our administration of justice – immunity provisos, damages caps, statutes of repose, diminished fees, preemption of entire causes of action out of existence - say about us as a society, as a people, as a culture. How fitting it is that this entire sour business is now to be crystallized by artificial sweeteners!

A Federal District Court is now entertaining a suit on behalf of MERISANT, the manufacturer of “Equal” in the little blue packets, against McNEIL NUTRITIONALS, the maker of “Splenda” in the similarly little yellow ones. The supposed issue is couched in consumerist terms: whether or not “Splenda’s” advertising campaign is misleading to the public by circulating the idea that it is made from sugar, and is thereby a “natural” product. The “Splenda” slogan – “made from sugar, so it tastes like sugar” – is cited by “Equal” as an “urban myth” not worthy of commercial respect or legal protection. “Equal” is anxious to point out that “Splenda” does not contain any sugar at all in it, and thereby is hoodwinking customers into thinking they’re getting “sugar without the calories, or skim sugar, or magic sugar...” which, almost needless to say, it is not.

By the way, “Equal” likewise is wholly without sugar. It ‘s ad campaigns concede that point more readily, but describe a “sweet, clean taste, like sugar.” And, weighing in on the side of “baby blue” is the Sugar Association, a trade and lobbying collective that acts on behalf of America’s sugar industry. Both sides have lined up witness lists filled with chemists, neurobiologists, businesspersons and experts of wide description. And yet, much of the case is expected to be fought over issues of grammar, definition, syntax and nuance, according to an opinion written by the Judge in the case.

It would be heartwarming to know that two of our major corporations are willing to take time out from their workaday worries to make sure that America’s consumers were not misled on issues so important to health as just what we put into our bodies, were it not for the fact that this is NOT an informational lawsuit. At stake is an apparently significant chunk of this nation’s $1.5 billion-per-year faux sweetener market!

What should give us all pause, though, is that no one dares to suggest that we close the Courthouse doors to these corporate giants in their struggle to continue to be able to sell us swill so long as we'll swallow it. If the justice system deformers have their way, it is the “frivolous lawsuits” – the sick, sore, lame and disabled; the malpracticed upon brain-damaged child; the traumatic amputee from a defective product; the falsely arrested and brutalized innocent man; the auto accident victim - who would be pushed from the Courthouse to make way for these titans to settle their ridiculous score.

If this were even a slightly better world it would be obvious that it is these types of corporate battles - one incomprehensibly rich and powerful megalomerate suing another to add to their already gigantic holdings - that are the REAL frivolous lawsuits. As in the lawsuit by CBS vs. ABC for impermissibly aping “Survivor” with its own show. Or “Ragu” vs. “Prego” and “Hot Wax” vs. “Turtle Wax”: all three examples of corporate irresponsibility writ large across the legal landscape. Apart from the sheer “Godzilla vs. Rodan” spectacle of it all, there was little of enduring merit to anyone in these legal smackdowns. Only profit on a scale most of us could never imagine seeing in one lifetime.

Perhaps this “Sweet Suit” will be different, but here’s my bet. After wasting much of the Court's time and the system's effort, they will do what 95 per cent of all litigants do anyway - they'll settle upon terms that both sides can live with, and grow wealthier still.

Which is all just fine with me. I believe in the glory of the lawsuit, in the right of anyone to call anyone else into Court to explain a wrong done, or pain caused, or damage inflicted - even if it is only to a balance sheet!

But what about those of us who are not corporate? Those of us with bones that break, organs that stop functioning, pain that can be felt and suffering that won't go away with a hefty profit-posting next quarter.
Those people can have more than a business deal go bad if they are seriously and permanently injured. Their lives might never be the same again. And while they and their families sink slowly onto the welfare rolls, the makers of whichever product loses this Federal Court case will move on to spawn yet another "high watermark" for advertising by finding yet another way to hawk phony sugar.

The point? Do we really want a justice system that treats corporate rights to profit and property better than it does the rights of people - even the injured ones?

How the Tiarht Amendment is Undermining Civil and Criminal Justice Efforts Against Illegal Guns

Thu, 19 Apr 2007 10:39:58 -0700

Cross-posted from Tort Deform

by New York State Senator Eric Schneiderman

In the wake of this week’s tragic shooting rampage at Virginia Tech, we are witnessing a lot of hand-wringing by politicians who acknowledge that the flooding of America with easily available handguns is a problem, but contend that the overwhelming power of the gun lobby prevents us from doing anything about it. In fact, there’s a great deal we can do. For one thing, we can unshackle our law enforcement officers and lawyers by allowing them to use data on "crime guns” to stop the small minority of gun dealers that supply America’s criminals with their weapons.

Since the 1990s victims of gun violence, realizing that they were inadequately protected by federal enforcement of gun trafficking laws, have gone to court to seek compensation for their suffering, and relief for themselves and their communities from future negligent behavior by the gun industry. Because of the chronic intentional understaffing of the federal Bureau of Alcohol, Tobacco and Firearms, civil litigation against gun dealers is critical. At their current rate of conducting compliance inspections it will take the ATF twenty-two years to inspect each of the 104,000 federally licensed firearms dealers only once.

One of the keys to making successful civil claims against gun dealers has been to demonstrate that there exists a special class of gun dealers that stand out from the vast majority because of their disproportionate contribution to the flow of guns from the legal market into the hands of criminals who, predictably, use them to commit crimes. The way to make these connections is by analyzing aggregate data, collected by the Bureau of Alcohol, Tobacco and Firearms (ATF), tracing guns that have been recovered from crimes to their original source. In the past such analysis has shown that approximately 1 percent of guns dealers sell approximately 57 percent of the guns that are used in crimes (ATF Commerce in Firearms Report, February 2000). For an individual shop that is supplying the illegal market that means having hundreds of “crime guns” traced back to them per year, as compared to a law abiding gun dealer who may have one or two of their guns per year recovered from crimes. In fact, 86 percent of gun dealers had no “crime guns” traced to them at all. (2000 ATF Report)

The City of New York, under the leadership of Mayor Michael Bloomberg, has used ATF data from before 2003 to identify a handful of gun dealers who sold hundreds of guns that were used in crimes in New York City. The NYPD targeted those shops with undercover sting operations and confirmed what trace data strongly suggested — that many of these dealers ignore federal laws and standard industry practices with regard to identifying and deterring straw purchasers. Those are buyers who purchase guns for someone else or fill out federal background check forms for someone else who would not be legally allowed to do so for themselves because of their criminal record, age or other factors. Undercover officers acted out textbook cases of straw purchases over and over with no objection, and the city used video recordings of these transactions to sue 27 gun dealers for their reckless behavior.

These lawsuits have two objectives: to force gun dealers to obey the law, thereby reducing illegal gun trafficking into the city in the future; and to hold negligent gun dealers accountable for the entirely predictable harm caused by their past disregard for laws that are intended to prevent illegal gun trafficking. In some cases the city has been successful. Twelve gun dealers have settled, agreeing to strict monitoring of their sales practices by a court appointed special master, adherence to record keeping standards, provision of appropriate employee training, and ongoing random integrity testing.

But, as with any attempt to impose sanity on our gun policies in this country, no good deed goes unpunished. The gun lobby quickly pushed a bill through Congress to immunize the gun industry from liability—the Protection of Lawful Commerce In Arms Act (previously discussed by Professor Alan Morrison on TortDeform). While that disgraceful law preempted many civil claims and even legislated that some pending claims be thrown out, New York City’s suits against dealers can proceed because they allege that the dealers actions constituted negligence per se because they violated state and federal laws intended to prevent harm that did in fact occur because of their actions. The gun industry immunity bill specifically allows these causes of action.

As if granting the gun industry immunity from most civil liability weren’t bad enough, Congress took another even more insidious step. At the behest of the gun lobby, Congress attached riders to the last three appropriation bills for the ATF—the Tiarht Amendments —barring the ATF from sharing crime gun trace data with municipalities or local law enforcement, except for data relating to a specific crime. Yes, our “tough on crime” Republican Congress decided it would be a good idea to make it impossible for local police departments and city governments to analyze where the criminals in their communities are getting illegal guns. This provision makes it impossible for cities that bear the brunt of the illegal gun problem to either target their law enforcement resources effectively against illegal guns within their jurisdiction, or to identify the gun dealers outside their jurisdiction who are supplying illegal guns to their communities and seek to have their reckless behavior enjoined by the courts. The city had sufficient information from pre-2003 data for its current crop of lawsuits, but if the traffickers who are buying guns through straw purchasers shift their business to other willing dealers, New York and other municipalities will be unable to identify these new sources of illegal guns as long as ATF is barred from sharing trace data.

The effort to stop negligent gun dealers from supplying guns to criminals is multi-faceted. Mayor Bloomberg’s litigation efforts have reached into other states because 85 percent of “crime guns” in New York City come from out of state. But in upstate cities like Buffalo, the majority of “crime guns” come from within New York State. That’s why I sponsored a bill, S.2404A, to codify gun trafficking prevention measures into state law. (click here for bill search page)

Since negligent gun dealers in New York State are about as likely to be visited by an Ivory Billed Woodpecker as an ATF agent, my bill would bring state resources to bare to enforce anti-trafficking regulations—including mandatory training of store employees to spot straw purchases, record keeping requirements to facilitate identification of suspicious purchasing patterns or suspicious numbers of “lost” guns that might have been sold illegally, and safe storage requirements. It would also create a state cause of action that would not be preempted by the Protection of Lawful Commerce in Arms Act if dealers violated any of these regulations and the violation resulted in someone being injured or killed with one of their guns. Finally, my bill would require gun dealers to carry a minimum of $1 million in liability insurance. This will ensure that if a gun dealer is profiting from illegal gun sales, they will be the one to pay when someone is injured or killed as result. And, whatever New York State spends on additional enforcement will be more than recouped if we can reduce our share of the $100 billion per year that gun violence costs the United States annually (primarily from healthcare and lost productivity costs).

The State Assembly has passed such measures before, and I will continue to work with New Yorkers Against Gun Violence and other advocates to force action by the Senate’s republican leaders, but legislation is not enough. The civil justice system has a critical role to play in stopping illegal gun trafficking. Successful suits can lead to court appointed monitors, and civil damages can change the economics of supplying the illegal market. The truly appalling aspect of gun industry’s role in supplying the illegal market is not just that they are negligent, but the reason they are fighting so hard against effective measures to stop their behavior: they profit enormously from the carnage in cities like New York. It’s that simple. Approximately 15 percent of the guns sold every year find their way into the illegal market—in the majority of cases because of negligent sales practices. Successful litigation could eliminate the profit motive for supplying the illegal market by preventing the industry from externalizing the costs of their negligence on to our communities.

But to realize the promise of the civil justice system when it comes to reining in illegal guns, we must lobby Congress to strip the Tiahrt amendment from this year’s ATF appropriation. Future litigation against deadly negligence will not be possible if Congress continues to require the ATF to cover up critical evidence. Mayors Against Illegal Guns, lead by Mayor Bloomberg and Cincinnati Mayor Mark Mallory, has launched a website, www.ProtectPolice.org, to organize opposition against the Tiarht Amendment. I urge anyone interested to visit the website. Learn more about how this provision hampers both civil suits and criminal investigations, ultimately endangering all of us, but particularly our law enforcement officers who have to face armed criminals every day. And then sign up, and tell Congress to protect police instead of criminals.