Rep. Darrell Issa (R-CA) in Politico, “Bipartisan health care reform must include tort reform“:

The unsustainable path of rising costs is a serious national problem. Currently, health care spending exceeds $2.5 trillion per year. By 2019, it is expected to top $4.7 trillion per year. Any hope for cost containment would involve comprehensive medical malpractice reform to end the practice of defensive medicine, close the loopholes that allow frivolous lawsuits to clog up the system, and set reasonable limits on jury awards.

Compare that tone to a news release from the American Association for Justice:

“Opponents of reform have repeatedly attacked injured patients and used the malpractice issue to hijack the health care debate,” said AAJ President Anthony Tarricone. “If health care reform makes medicine safer, then fewer patients will need legal recourse – a win for everyone. But it is unconscionable to tell injured patients that they should be left with no recourse if injured through no fault of their own.”

Advocates of tort reform have repeatedly attacked injured patients? That’s just ugly and shameless.

We’ve had a few posts on the medical liability issues involved in health care reform and the Blair House event at Point of Law.com:

• Medical liability reform mentioned, in passing, sort of
• More than a mention
• On medical liability reform, a base misrepresentation
  

We’ve often described high-profile litigation against U.S. businesses as being pushed by a combine of trial lawyers, activists, a complicit (or lazy) media and government officials. (See the anti-Chevron litigation in Ecuador.) It’s a strategy that litigation industry often uses but rarely acknowledges.

However, John Coale, the well-known plaintiffs’ attorney who made millions from suing tobacco companies, revealed the strategy in a 2000 panel discussion sponsored by the Federalist Society. From “Firearms Litigation, Tort Liability, and the Second Amendment - A Symposium,” Coale’s frank description:

MR. COALE: What I want to do is take you through our strategy. I am going to give you an honest assessment of what we (”we” being the lawyers who have attacked the tobacco industry, and who are now attacking the gun industry) are attempting to accomplish. My group represents five cities in coordination with the other 25 to 30 cities suing the gun industry and is working with several state Attorneys General.

Now, I would preface my remarks with the observation that the other side does the same thing, they just don’t admit it. We take these cases, such as tobacco-back in 1994, and then put together a threepronged attack, legal, media, and political. We attacked on these three fronts for five years until they folded and settled. Whether we would have won the cases in court, we will never know, but the bottom line is that we won the war.

We vilified the industry in the media, which wasn’t hard to do. We leaked damning documents. We worked with our political friends against the tobacco industry in Congress and elsewhere. And then we went into court and we used this three-prong attack against the tobacco industry very effectively. I am sure very few in the audience agree with this strategy, but tobacco was an issue we wanted to win, and we did.

To see examples of the three-pronged attack in action, just read the news releases from the American Association for Justice, the trial lawyer lobby.

The national trial lawyers’ association, the American Association for Justice, opens its winter convention in Maui today. It’s been a busy year for the AAJ and their members, lobbying (so far successfully) to keep any meaningful tort reform out of health care legislation being considered by Congress.

We don’t begrudge anyone their conventions, board meetings, cocktail parties and fundraisers. Still, the AAJ’s activities are rarely covered by the major media despite the group’s impact on the economy, business climate, legislation and the American legal system.

So for context, below is a list of some of the workshops and litigation group meetings scheduled at the convention. Litigation groups are AAJ-recognized groups of attorneys who specialize in litigation against a particular product or industry.

We’ve only included meetings that had .pdf agenda attached to the session. The entire convention program is much longer and includes other litigation groups and activities.

And for more on the convention in Maui, the politicians who are attending, and other AAJ machinations, see our posts at the Point of Law blog.

Advocacy Track Monday — Persuasion
Advocacy Track Tuesday — Persuasion
Byetta Litigation Group
Chantix Litigation Group
Civil and Employment Section
Fosamax Litigation Group
Heart Devices Litigation Group
Interstate Trucking Ltigation Group
Litigation at Sunrise [This one's especially informative in a brief, 10-minute kind of way.]
Pain Pump Litigation Group

The American Association for Justice — the trial lawyers lobby — held a press briefing Monday to outline the group’s legislative agenda for 2010. After the usual anti-business fulminations, the AAJ’s news release offers a list of special interest legislation for the plaintiffs’ bar, including the coded language for opposing medical liability reform in Congress: “Protecting patients injured by medical negligence.” That’s a laudable goal, of course, but limits on non-economic damages do not in any way diminish patient protections.

So far, so good for the litigation lobby. The Senate’s health care bill contains provisions to create state demonstration projects on medical liability that actually prevent effective, cost-saving reforms. As the AAJ’s president, Anthony Tarricone, boasted in an e-mail to members in late December:

I am pleased to report that this bill is clear of any provisions that would limit an injured patient’s rights concerning medical negligence claims. This is a stunning victory for your clients considering great pressure from the insurance industry and other interests to include medical malpractice tort “reform” in this bill. While there is a provision for demonstration projects, it provides an absolute opt-out clause for plaintiffs at any time. While some states may embark on demonstration programs we find objectionable, the opt-out provision for plaintiffs minimizes this concern.

Still, as the intraparty negotiations continue over the health care legislation, it’s the House version that may contain the most dangerous provision, an invitation for more lawsuits that Victor Schwartz of Schook, Hardy and Bacon identifies as a “trial lawyer earmark.”

In a news release from the American Tort Reform Association, Victor points to Section 257 in the House-passed legislation.

“Buried in the House health care bill is a multibillion-dollar bonanza for the trial lawyers,” explained ATRA general counsel Victor Schwartz, referring to Section 257 of the legislation. “The section was inserted without one moment of hearings on its merits.”

He said Section 257 “would empower state attorneys general to hire their trial lawyer friends and bring cash-heavy private lawsuits against practically anyone – small and large employers, health care providers, insurers, and others – for any violation of any one of thousands of regulations that will flow from the bill. The section is not in the Senate bill, but trial lawyer lobbyists with total access to the House and Senate leadership are prepared to do everything possible to keep it in the final legislation.”

It’s a stealth campaign, says Victor (who has represented the NAM in legal cases). And stealthiness explains why the AAJ did not mention Section 257 in its list of priorities.

The House health care bill is H.R. 3962, the Affordable Health Care for America Act. Here’s the language:

SEC. 257. ACTIONS BY STATE ATTORNEYS GENERAL:
Any State attorney general may bring a civil action in the name of such State as parens patriae on behalf of natural persons residing in such State, in any district court of the United States or State court having jurisdiction of the defendant to secure monetary or equitable relief for violation of any provisions of this title or regulations issued thereunder. Nothing in this section shall be construed as affecting the application of section 514 of the Employee Retirement Income Security Act of 1974.

From page 17 of the American Association for Justice’s third quarter lobbying disclosure form, the “torts” section listing legislation, amendments and issues the trial lawyers’ group lobbied on:

ADDENDUM for General Lobbying Issue Area: TOR - Torts

(Healthy Americans Act) specific interest in provisions in Title VI and VII relating to payments to States for implementing measures related to liability for medical malpractice.

Lobbying with regard to medical malpractice liability as it relates to any health care reform proposal generally.

Affordable Health Choices Act (HELP Committee health care reform bill; unnumbered as of 9/30/2009); specific interest in amendments relating to liability for medical negligence:

Hatch amendment #6, not agreed to; to shield doctors and hospitals from liability for medical malpractice while limiting the legal rights of patients who reside in rural and medically underserved communities.

Americas Healthy Future Act (Finance Committee health care reform bill; unnumbered as of 9/30/2009); specific interest in amendments relating to liability for medical negligence:

Kyl amendment #C25, not agreed to; to cap non-economic damages in all civil medical liability actions against health care providers and health care institutions, to apply new restrictions on expert affidavits that must accompany any health care claim, to eliminate joint and several liability, and to pre-empt state law in civil medical liability actions.

the great successes of the U.S. medical device industry in life-saving innovation have made the device manufacturers a target in Congress’ legislation to expand government control over health care. The revenue raisers have the industry in their sights.

From The Washington Post, “Medical-Device Firms Criticize Tax Proposal“:

Under the bill approved on Tuesday, the medical-device industry would pay a total of $40 billion over 10 years. Players big and small in the industry, which makes items from tongue depressors to artificial hearts, warned that the tax would harm their ability to innovate.

“This is a really devastating proposal for a large number of our membership,” said Stephen J. Ubl, president and chief executive of the Advanced Medical Technology Association, the organization hosting this week’s AdvaMed 2009 conference at the Walter E. Washington Convention Center. “It’s bad for patients, bad for jobs and bad for research and development.”

An amendment to remove the $40 billion tax was defeated last week in the Senate Finance Committee by a partyline vote, 13-10.

At a time when unemployment is still rising even with the nascent recovery, the device tax also represents a tax on job creation. As USA Today reports:

Twenty House members from California, home to heart-valve maker Edwards Lifesciences, signed a letter asking the Senate Finance Committee to reconsider the tax. Senators from Minnesota and Indiana — three Democrats and one Republican, in all — sent a similar letter.

“Minnesota, like many states, has lots of people employed in the medical device industry,” Sen. Amy Klobuchar, D-Minn., whose state is home to Medtronic, one of the nation’s largest device manufacturers, said in an interview. “I want to keep jobs in my state.”

Mark Leahy, President and CEO of the Medical Device Manufacturers Association, in a statement: “There can be little doubt — the proposed tax will have a cascading effect upon innovation, access to technology and employment in the industry.”

Meanwhile, the only interest group to have escaped the taxers and “reformers” in the health care legislation, the trial lawyers, also has the medical device industry targeted. The Medical Device Safety Act is one of the American Association for Justice’s top lobbying priorities, the goal being to replace a consistent federal regulatory regime with a patchwork of state regulations determined by the courts — that’s a much more lucrative environment in which to sue manufacturers.

In March, when the bill was reintroduced, NAM President John Engler issued a statement, making the central point: “At a time when our country is mired in a severe recession, suffering from rising job losses and a financial system in tatters, Congress is proposing legislation guaranteed to discourage innovation and drive up medical costs even further.” See also the Forbes column by Richard Epstein, “A Sickly Medical Device Safety Act.”

So here’s a test by which one can hold elected officials accountable: If in a speech, a member of Congress claims the future of the U.S. economy involves high-tech jobs, innovation, and the growth of medical sciences, just ask if this member supports the $40 billion tax on medical devices. If the answer is yes, judge the previous statements accordingly.

The Congressional Budget Office’s letter to Senator Hatch affirming the cost savings of legal reform in health care legislation gained all the headlines, but there have been other reports on tort reform that warrant attention.

Lawrence J. McQuillan and Hovannes Abramyan of the Pacific Research Institute released a white paper last week, “The Facts about Medical Malpractice Liability Costs,” a quick read on the various factors that contribute to the tort costs in health care: “There is a lot of talk in Washington about cutting wasteful health care spending and, more specifically, cutting costs associated with medical malpractice liability. The dollar figures used by various groups and lawmakers often diverge widely. This paper presents what we know, and don’t know, about medical malpractice liability costs.”

In their own analysis, the two authors arrive at a total for medical malpractice tort loss figure in 2008 of $5.9 billion.

Meanwhile, the Manhattan Institute’s Center for Legal Policy has released an update to its “Trial Lawyers Inc.” series, “HEALTH HAZARD: Litigation Increases Medical Costs, but Lawyers Block Reform,” responding directly to the usual talking points from the more-litigation-the-merrier crowd:

Trial lawyer lobby groups—the American Association for Justice and its assorted allies like Public Citizen and the Center for Justice and Democracy—regularly argue that litigation is an insignificant contributor to health care cost escalation because it only accounts for a tiny fraction of health costs. In making this argument, such organizations play the “denominator game”: the tiny fraction they point to takes the total $2.2 trillion in U.S. health expenditures as its denominator and an absurdly narrow definition of health-care litigation as its numerator.

To begin with, such groups typically use as a numerator medical-malpractice losses as reported by insurance companies—numbers that ignore legal defense costs as well as the fact that most major health systems in the U.S. cover at least a portion of their medical malpractice losses without insurance. More comprehensive estimates by the insurance consulting firm Tillinghast Towers-Perrin place the total direct cost of medical-malpractice litigation at $30.4 billion annually—an expense that has grown almost twice as fast as overall tort litigation and over four times as fast as health-care inflation since 1975.

For a prime example of this “denominator game” being played, see last Friday’s release from the trial lawyers lobby, which refers to savings as “paltry.”

They should just sue their membership. From The Washington Times, “Trial lawyers lobby sinks $6.2M in debt“:

The trial lawyers lobby has been awash in debt and bleeding members - just as it embarks on a national campaign to block any clampdown on medical malpractice lawsuits as part of President Obama’s health care overhaul.

The American Association for Justice, the most prominent group representing plaintiffs’ attorneys, has seen a shake-up in its executive suite and has struggled to deal with what appears to be a mounting budget shortfall. To help it fight congressional efforts to make it harder for patients to sue doctors and lawyers, it recently sent out an extra solicitation to its members, asking them to fork over money for a lobbying campaign.

The most striking evidence of its financial woes is a swift decline in income, which resulted in a more than $6.2 million deficit in its operating budget for the fiscal year ending July 31, 2008, the most recent year for which data are available.

Congrats to the Wash Times for reporting the story, including the news about the group’s failed lawsuit against Wachovia over loans to finance the association’s building. When Jon Haber, AAJ’s CEO, resigned in April, no one covered the leadership issues at AAJ beyond the most perfunctory of reports. (See our commentary at Point of Law.) Considering the group’s major political influence — and now, we see, its financial problems — reporters missed a good story.

We also wrote about the trial lawyers’ latest anti-tort reform campaign on September 15. You can see the AAJ’s message here.

P.S. The group’s Florida affiliate, the Florida Justice Association, has suffered damaging public relations this month after trial lawyers financed a race-baiting mailing in a special state Senate race. The head of the FJA, Scott Carruthers, has apologized, saying, “We had a moral duty to stop it and we didn’t.” As TampaBay.com headlined the latest news, “Things can’t get much worse for trial lawyers in Florida.”

Not a good time to be launching the group’s first ever gala inaugural fundraiser, the FJA Justice Ball.

Commentary and developments worth noting on the issue of health care legislation and medical liability reform…

The Washington Times editorialized today in “Obama’s malpractice lip service,” reacting to President Obama’s health care speech last week.

Reformers in both parties want to curb abusive lawsuits that drive medical costs through the roof. Yet Mr. Obama could not even bring himself to say that any suits are abusive, but merely that doctors are for some reason practicing “defensive medicine [that] may be contributing to unnecessary costs.” To help pacify them, the best he could offer was to “direct” Secretary of Health and Human Services Kathleen Sibelius to “authorize demonstration projects in individual states to test these issues.”

That is to say, the President was demanding reforms be included in health care legislation, EXCEPT when it came to medical liability reform, which was going to be left to pilot projects overseen by Sibelius — former executive director of the Kansas Trial Lawyers Association. So if a bill actually becomes law, the non-statutory initiatives can fade away.

Even that faint acknowledgement has prompted push back from the trial lawyers. As the Times reports, “Malpractice plan low on support“:

Trial lawyers bristled that a Democratic president had ceded any ground on the issue.

“It has no place in the debate,” said Anthony Tarricone, president of the American Association for Justice (AJJ) [sic], which lobbies for trial lawyers. “Limited accountability will never improve the quality of health care.”

He said malpractice law was a distraction from the real issues of improving quality of care, reducing medical errors and expanding coverage to the millions of uninsured Americans.

The AAJ initially laid low on the issue, figuring that its allies in Congress could keep any prospects for tort reform out of the bill. But business groups, tort reformers and free-market advocates kept up the pressure, and Howard Dean’s frank admission of the trial lawyers’ political power brought much more attention to the issue.

The AAJ has now decided to make a virtue out of necessity, aggressively raising money from its membership to oppose medical liability reform. Yesterday the group sent out a mass email asking for contributions for its Protecting Patients Rights Campaign, a lobbying campaign to oppose medical malpractice provisions in the health care bill. From the website version:

A contribution to the Protecting Patients Rights Campaign is an investment in your practice and in your clients’ future. All the money raised for this campaign will go directly towards educating lawmakers about the dangers of medical malpractice reform, and towards debunking the myths spewed by the other side. We can win, but we need your help today to make a difference in this fight. We need your help today to make a difference in this fight. Please make a contribution via the attached form.

It’s not unusual for trade associations to raise money by pointing to legislative threat, but the AAJ has been politically ascendant since 2008 elections and hence on the offensive. It’s a change to see them return to the defensive posture they were so accustomed to earlier in the decade.

Clearly the AAJ must think the medical malpractice issue has legs. That, or the lawyers’ elected allies on Capitol Hill are asking for some help. (Contributions are non-tax deductible, so they can be used for both partisan and lobbying purposes.) Or warning against catastrophe is a good way to raise money.

Here’s what they’re fighting to preserve (again from the editorial):

A 2006 study by the Harvard School of Public Health found that 40 percent of medical malpractice lawsuits involve either no actual injuries or no medical error — yet of those meritless cases, more than 27 percent resulted in compensation. Meanwhile, the researchers concluded, “The overhead costs of malpractice litigation are exorbitant.”

Similar observations previously made at this Point of Law post.

The Wall Street Journal’s Kim Strassel is very, very tough on President Obama’s speech on health care Wednesday, finding within the tort reform rhetoric more status quo trial lawyer. From “The President’s Tort Two-Step“:

On Wednesday the president told Congress “I will not stand by while the special interests use the same old tactics to keep things exactly the way they are.” In fact, the administration is standing by to allow its most special, special interest to drive this debate. What the tort bar wants, the tort bar gets. Health insurers should be so lucky.

The legal question has become the starkest symbol of a broken health discussion, and offers insight into this presidency. For Republicans, legal reform has become a litmus test, proof that Democrats have no interest in a deal, and therefore a reason to step back. For many Americans, legal reform has become proof that President Obama is more interested in an ideological triumph than his stated goal of lowering health costs.

Another reason for skepticism? From The Heritage Foundation, “Obama Taps Ex-Trial Lawyer Lobbyist To Lead Tort Reform.” That would be Kathleen Sebelius, secretary of Health and Human Services, who used to be head of the Kansas Trial Lawyers Association.