Junk lawsuits

How journalism in Nevada and elsewhere invented the litigation ‘crisis’

Reno trial lawyer Peter Chase Neumann’s “junk” lawsuit against AMC Jeep removed the CJ-5, a dangerous vehicle with a propensity for rollovers, from the road.

Reno trial lawyer Peter Chase Neumann’s “junk” lawsuit against AMC Jeep removed the CJ-5, a dangerous vehicle with a propensity for rollovers, from the road.

Photo By David Robert

Sharon was a university instructor and a weekend Harold’s Club dealer when she started using the Dalkon Shield intrauterine device. One part of the shield was a fabric line that allowed infection to migrate into the uterus. Within a few years she was sterilized. She filed a “junk” lawsuit.

Sharon (not her name) didn’t make a bundle with her lawsuit, but she did receive a payment.

An inability to have more children—Sharon had one daughter—can certainly fall under the heading “pain and suffering.” What is it worth? If someone is in court, should the value of child bearing be determined by 12 residents of the community and a judge familiar with the evidence or by a sweeping legal edict enacted by the legislature or by a public vote like Question 5 on this election’s ballot? And which of the two processes will be more likely to distinguish between ordinary liability and the liabilty (as in Sharon’s case) of a company that kept selling a lethel product for years after its dangers were known?

Mike Fondi used to be a Nevada judge. In 1982, he presided over a “junk” lawsuit against AMC Jeep that helped get the deadly Jeep CJ-5 off the market and its manufacture halted.

“I think it probably saved hundreds of lives because it set the wheels in motion for the demise of that design,” says trial lawyer Peter Chase Neumann. “I believe they would have kept making that Jeep for another five years or so. They were selling about 500,000 of them a year.”

Trial lawyers have also filed and won “junk” lawsuits that resulted in children’s flammable pajamas being taken off the market, lethal tampons being discontinued, warnings of liver dangers being put on Tylenol labels, defective Ford transmissions being redesigned, asbestos products being taken off the market, Ely Lilly withdrawing its toxic arthritis drug and the public being warned about Airco’s deadly surgical ventilator.

So how did trial lawyers and their “junk” lawsuits get such a lousy reputation?

It has little to do with them. It has much to do with the tools of public relations that are increasingly turned not to selling but to demonizing. And it has still more to do with journalists not doing their jobs.

It might be argued that the cases mentioned here are not the frivolous or nuisance lawsuits meant when critics such as George W. Bush attack “junk lawsuits.” The problem is, when the cases they do cite, like the McDonald’s coffee case or the Jeep and Dalkon cases, are scrutinized, their description of those cases doesn’t hold up. Their real argument isn’t against frivolous lawsuits, but suing businesses in the first place. Nothing turns conservatives into socialists like the thought of trial lawyer fees.

Time after time, claims about liability cases have been made—and advanced by million-dollar campaigns—but never adequately scrutinized by journalism. And time after time, those claims have failed to stand up under unpublicized non-media scrutiny long after the damage was done.

Crisis? What medical crisis?
Nothing more clearly demonstrates this process than the medical malpractice “crisis” that erupted in Las Vegas in 2002, fueled by an expensive public-relations campaign funded by doctors.

At the time, Nevada already had a process for discouraging frivolous malpractice lawsuits. Litigants had to jump through some rigorous hoops to make it to court. A claimant first had to go to a panel of three doctors, three lawyers and sometimes hospital administrators who reviewed the claim and judged its merit.

If the panel found malpractice was likely, the claimant still didn’t go to court. First, she or he had a settlement conference overseen by a judge. Only if a settlement couldn’t be reached would the claimant be able to go to trial—and then the claimant had to win an award equal or greater than that offered in the settlement conference or pay the doctor’s legal costs. (The doctor would pay the patient’s costs if the settlement offer was less than the amount won at trial.)

And if the patient decided not to accept the panel’s judgment that no malpractice had taken place and went to court anyway, the panel’s findings could be used against the patient in court.

After the creation of screening panels, physicians went back to the Nevada Legislature in 1995 and later years seeking more changes, including a $250,000 cap on pain-and-suffering awards. That figure originated in California, which in 1975 enacted a Medical Injury Compensation Act that became influential when other states crafted their own versions. It included the cap and also limited attorney fees. (The Wall Street Journal notes that after 30 years California has never given malpractice victims a “raise,” and that 1975 cap is now worth $71,000 when adjusted for inflation.)

There were numerous claims made by the medical community during the Las Vegas “crisis,” and journalists repeated those claims as fact instead of subjecting them to investigation. Indeed, just by using the term “malpractice crisis” reporters were buying into the doctors’ characterization of the situation without first establishing its existence.

For instance, the Las Vegas Review-Journal on May 7, 2002, ran a story under the headlines “MEDICAL MALPRACTICE CRISIS: Pregnant women turned away, OB/GYNs say they cannot afford to take on new cases.” It said, “Las Vegas obstetricians are turning away newly pregnant women, including existing patients who become pregnant, because they say they cannot afford to deliver more babies. … About 100 Las Vegas doctors already have left Nevada to practice elsewhere, have announced they will close or have retired early, said Larry Matheis, executive director of the Nevada State Medical Association.”

Shortly thereafter, a special session of the Nevada Legislature abolished screening panels and capped non-economic damages at $350,000.

Not until months later did an enterprising reporter, Beth Fisher of KVBC in Las Vegas, decide to test the claim about OB/GYNs not taking new patients. She started calling doctors and found that an immediate appointment with a Las Vegas OB/GYN was easy to get.

Moreover, trial lawyers, who were taking a beating in the medical community’s public-relations offensive and wanted to get their own case out, were mostly ignored. The heavy coverage given to the doctors wasn’t extended to the lawyers, who received only occasional mention. Story after story ran without their stance being included. Trial lawyers’ lobbyist Bill Bradley says that in the “crisis” firestorm, getting coverage for an alternative view—much less the overly respectful hearing given to physicians—was impossible.

Even in the language used, reporters took sides. They described one side as reformers ("tort reform,” “malpractice reform"), which by implication cast the other side as opponents of reform.

Just as exasperating as the apparent inability of journalists to fairly present the issues of tort “reform” and malpractice is the shoddy coverage of liability cases themselves. Large judgments are regularly treated as inexplicable and inexcusable, when actual reporting—digging out the facts and examining them—normally shows otherwise.

It’s at this point that the McDonald’s coffee case—another “junk” lawsuit—often gets mentioned, and it’s a good time to look at it here, too, because of its colossal impact on public policy.

You deserve a burn today
On Feb. 27, 1992, 79-year-old Stella Liebeck of Albuquerque was with her son and grandson going through a McDonald’s drive-up. After they left the window, her son pulled over and parked to allow her to pull the lid off her cup of coffee. She held it between her knees, and the cup spilled when the lid came off. She suffered third-degree burns and had to be hospitalized for a week. She convalesced at her daughter’s house for three weeks, then underwent painful skin grafts. Her weight dropped from 103 to 83, and her daughter doubted she would live.

Liebeck thought McDonald’s should pay for her medical bills and sought $15,000 to $20,000 to cover the uninsured costs. McDonald’s offered $800.

Liebeck, who had no wish to go to court, reluctantly turned the matter over to lawyers, who arranged to test McDonald’s coffee throughout Albuquerque and found it was hotter by 20 degrees than any other restaurant’s (temperature policies were imposed on local stores by the McDonald’s corporation). They also learned that McDonald’s had ignored warnings from burn centers for years and had been sued for coffee injuries and settled 700 times for amounts up to a half-million dollars. (A retired judge who tried to mediate the Liebeck case recommended that the company settle for $225,000, but McDonald’s refused.)

The jury, which was initially disgruntled to be put on such a trivial case, ended up outraged at the testimony by McDonald’s officials. One of them, McDonald’s quality manager, Christopher Appleton, said he knew perfectly well that the coffee was injuring people, that McDonald’s didn’t bother consulting burn experts, that the company decided not to warn people about the searing coffee, and that he had every intention of continuing to sell it.

It became apparent to jurors that McDonald’s considered the frequent injuries and out-of-court settlements part of the cost of doing business—a small price to pay for being known for the hottest coffee in town.

Judge Mike Fondi filed his finding in the AMC Jeep case even though AMC scrambled to settle the case before he could. His findings were mooted by the settlement but still helped turn the tide against the dangerous CJ-5 Jeep.

Photo By Dennis Myers

It was exactly the kind of conduct for which punitive damages were intended—deliberate injuries inflicted by a rogue corporation that stated its intention to continue its behavior. It was clear to the jurors that one more injury lawsuit against McDonald’s, coming on top of hundreds of others, wouldn’t cause the corporation to change its ways. Only punitive damages would do that.

The jurors decided that Liebeck’s damages came to $200,000 and that she would get $160,000 because they judged that 20 percent of the accident was her fault. And they slammed McDonald’s with a $2.7 million judgment.

What happened next was classic. The source of nearly all information on the case came from one sloppy Associated Press article sent out on Aug. 18, 1994. The lead sentence read, “A woman who was scalded when her McDonald’s coffee spilled won a jury award of nearly $2.9 million—or about two days coffee sales for the fast food chain.” The rest of the story gave a bare-bones account of the case but did not explain why the punitive portion of the award was granted nor give any account of Liebeck’s ordeal or the jurors’ initial scorn for the case.

Soon the McDonald’s coffee case was changing public policy. It appeared at a time when the Republican Party was running a national campaign on the “Contract with America,” one item of which was tort “reform.” Journalism’s careless coverage of the case was like putting oily rags near a furnace.

Soon the actual facts of the case became well-known in newsrooms around the country, but as so often happens, journalism was unwilling to correct the record, with one exception. On Sept. 1, the Wall Street Journal, which had carried the AP story on page B3, ran a long front page story fully describing McDonald’s recklessness, Liebeck’s reluctance to sue, and the jurors’ reluctance to award.

The McDonald’s case typifies coverage of large jury awards. News stories seldom detail either the reasons for those awards or their rarity. They are usually employed for good reason, to punish willful, malicious, wanton or reckless conduct—and since many corporations and individuals have a slow learning curve or a high greed quotient, large awards are often the only things that provide a remedy.

A.H. Robins went for years refusing to order a recall of the Dalkon Shield, allowing women to die. AMC Jeep went right on selling the unsafe CJ-5s until three days after a crucial Nevada Supreme Court ruling upholding a liability award.

Is there a doctor in the state?
Assumptions of conventional wisdom plague news coverage of these issues. There is, for instance, the highly publicized claim that doctors are fleeing Nevada because of high malpractice rates. It was reported as fact at the height of the 2002 hysteria in Las Vegas, but during the 2003 legislative session, a survey by the Nevada Board of Medical Examiners showed the departure of doctors from the state is in line with normal population turnover in the state.

Assemblyman Garn Mabey, a physician from Las Vegas, challenged the Medical Examiners’ survey and produced his own study with opposite findings. Then, on Sept. 9, the General Accounting Office—the investigating arm of the U.S. Congress—released a study forcefully arguing that the Nevada exodus of doctors had been grossly exaggerated, and that there is no malpractice crisis in the state.

These dueling studies make clear that, at the very least, the credibility of the claims about an exodus of doctors and the existence of a crisis are subject to debate, which raises the question of why journalists state both as fact.

It doesn’t stop there. Matters of debate are regularly described as matters of fact. Among the claims journalists have fostered without serious scrutiny:

• Caps on malpractice awards and on lawyers’ fees drive down health care costs. (California has had both for 30 years and has among the highest health-care costs in the nation.)

• Malpractice awards and lawyers'-fees caps drive down malpractice premiums. (The evidence from independent studies—as opposed to those commissioned by doctors, lawyers or insurance companies—is less than compelling. It’s worth noting that after the special session of the Nevada Legislature capped malpractice awards at $350,000 in 2002, insurers responded by raising rates.)

• Caps on malpractice awards and on lawyers’ fees have not kept working people or other victims from getting lawyers to take their cases. (More than one study has shown a rise in lawyers having to turn away clients because of state caps. Last week, the Wall Street Journal went to its front page with a report, “As Malpractice Caps Spread, Lawyers Turn Away Some Cases,” that was striking for telling a story other media entities have ignored.)

• Punitive judgments are out of control. (An August 2000 study by the U.S. Department of Justice indicates that punitive awards are rare, awarded in only 3.3 percent of cases.)

• Juries are too easily swayed by trial lawyers or by emotion. (Statistically, a victim is better off with a judge than a jury.)

• Damage awards are growing. (Damage awards are declining. The same Justice Department study found that from 1992 to 1996 jury awards declined by 47 percent, from $57,000 to $30,000 on average.)

The issue here is not really whether these claims are or aren’t true, but why they have been accepted without proof by gullible journalists—and why journalists have participated so eagerly in helping one interest group demonize another. How are journalists, supposedly rough, tough, skeptical folks with printers ink in their veins, manipulated so easily?

It’s not really that difficult to understand. Most newsrooms have become very thinly staffed and their reporters appallingly overworked and underpaid. The idea of taking time out to do research is laughable. There may have been a time when reporters spent time in courthouses or archives going through records, but except at the larger media entities, those days are past. And reporters are up against powerful lobbyists and public-relations people highly skilled at manipulation.

In addition, the norms of journalism play into the mythmaking. It is a truism in journalism that the odd drives out the routine. News outlets don’t report the banks that haven’t been robbed. So when the rare frivolous lawsuits come along, they get attention out of proportion to their number. But precisely because of that heavy coverage, the odd seems usual. Journalists convert the exception into the rule.

The devil you know
UNR sociologist Jim Richardson specializes in studying the demonizing of groups such as religious cults. He says trial lawyers have become victims of a growing industry—not selling a product or person or point of view, but unselling them.

“Well, we have a term for it in sociological theory—we call it ‘labeling theory,’ “ he says. “And that’s a reference to the fact that people or groups with some influence or power in a society decide to label someone in a derogatory manner. It may be that the people they’ve so labeled have been doing whatever they’re doing for years, and nobody called any attention to it, but all of a sudden a new boundary is designated, and these folks are across that boundary. So they get defined in negative terms.”

The process is not new, of course, as can be seen by the demonizing of Catholics, Jews, immigrants, gays, student protesters, welfare recipients, crack mothers and pit bulls. What is relatively new is its practice as an occupation and an industry. Richardson says journalism is essential to this process.

“If they have access to the media and can get the term repeated enough and the accusation repeated enough, then it begins to stick. It’s a sad commentary that there’s actually social/psychological research that demonstrates that if you hear something often enough it begins to sound truthful to you whether it is truthful or not.”

We’re currently seeing efforts to demonize trial lawyers, Richardson states.

“In part [that’s] because of the presidential campaign and the fact that a former trial lawyer is on one of the tickets,” he explains.

Richardson also says demonizing campaigns can create a conventional wisdom that intimidates reporters who would like to jump off the bandwagon.

“This happens, and no one says that the king has no clothes. Untruths can become conventional wisdom. … The media have a major responsibility to do the job they are supposed to do, but it is all too easy to not question and just take people’s word for it if they have some authority or speak confidently.”

It is certainly not fair to say lawyers are heroes, and doctors are villains. It’s easy to imagine a scenario in which lawyers willingly demonize doctors, or both demonize insurers. And there’s no question that there are occasional friviolous suits or that a few lawyers are ambulance chasers. The claims of trial lawyers may be as dubious as some of those advanced by doctors.

But we’ll never know if reporters don’t fairly scrutinize both sides.