During the two days of committee discussion last week on the House’s medical liability reform bill,
H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011, Rep. Henry Waxman (D-CA) and several fellow committee members defended litigation and trial lawyers from the (well-founded) accusations that lawsuits increase health care costs and detract from medical treatment.

Litigation actually works to improve quality, supplementing the work of the Food and Drug Administration in the regulatory approval of drugs, they argued. Uh huh. The term is “regulation through litigation,” and it’s an inefficient, expensive and counterproductive system of dual regulation, in which trial lawyers and juries of laymen replace scientific experts and testing in determining which drugs are allowable.

At one point, an apparently frustrated Rep. Brian Bilbray (R-CA) reminded the committee members of the real-world consequences of this kind of litigation: Lawsuits force drugs off the market that help people. People really suffer because of the cash-seeking litigation by trial lawyers.

Bilbray spoke passionately about the loss of Benedictin, an anti-morning sickness medication, taken off the market after The National Enquirer published an alarmist article, “New Thalidomide Scandal-Experts Reveal,” and thousands of lawsuits followed. As a consequence, his wife was deprived of a safe and widely prescribed drug she had used in previous pregnancies. She wound up in intensive care.

Rep. Bilbray:

This is one issue you don’t talk about. You had a treatment, Benedictin, that was used all over the country. There was a National Enquirer story in ’79. It ended up being lawsuit after lawsuit after lawsuit, with no scientific data, according to the FDA, to take it off the market. But sheerly by the harassment of litigation this product is no longer available to women across this country.

And my wife was one of those that went into intensive care, while she was in the first trimester of pregnancy, because the litigation drove that product off the market and denied her access to that product. And you know what physicians do now? … They prescribe the chief components of Benedictin separately, because the private sector cannot provide it because it was driven off the market through litigation, not through science.

So this does have an effect. It has an effect on what’s available for consumers. And I say this…Who do I get to sue? Who do I get to take to trial for those who drove this product off the market. Who do I get to point the finger at? Which lawyers do I get to litigate with who drove it off the market, because my wife didn’t a product that she had in her previous pregnancies, she didn’t have the ability to get the medication that is essential to not only her, but to her unborn baby. Who do I get to have justice with because this product was driven off? (continue reading…)

We write often about the combine of trial lawyers, politicians, activists and PR flacks, aided by a sympathetic media, campaigning against companies in hopes of a cash payout and the expansion of the regulatory state. The attacks against Toyota provide a good example of this pernicious phenomenon.

Today, the Department of Transportation and the National Highway Transportation Safety Administration announced the results of an in-depth scientific study that found no basis for the claims that vehicles’ electronic systems produced unintended acceleration. (Toyota statement.) Transportation Secretary Ray LaHood said: “We enlisted the best and brightest engineers to study Toyota’s electronics systems, and the verdict is in. There is no electronic-based cause for unintended high-speed acceleration in Toyotas.”

Organizers of the corporate calumny against Toyota should be held accountable. The trial lawyers and their allies damaged the company’s reputation and sales, created unnecessary fears in the American public, and added to the “tort tax” that afflicts the U.S. economy.

Let’s start with the trial lawyers. The American Association for Justice, the main trial lawyer lobby, kept up a steady attack against Toyota, even dedicating the September 2010 cover of its monthly magazine, Trial, to the unfounded charges, “Toyota’s Deadly Secrets.” Just search the AAJ website for the term “Toyota” to see the unceasing promotion of litigation — class action suits, product liability suits, insurance complaints, even RICO claims.

The trial lawyer campaign was amplified last year by then-Chairman Henry Waxman (D-CA) of the House Energy and Commerce Committee. A subcommittee hearing in February 2010, “Response by Toyota and NHTSA to Incidents of Sudden Unintended Acceleration,” painted the company as an offender, failing to meet its corporate responsibilities. Another hearing in May repeated the allegations, complete with the release of subpoenaed documents that served the purposes of anti-Toyota litigation. The House Oversight Committee also promoted the charges, holding a hearing in February, “Toyota Gas Pedals: Is the Public at Risk?” The answer was no. (continue reading…)

Good commentary recently in several legal areas of interest to manufacturers…

Writing at Forbes.com, Rich Samp of the Washington Legal Foundation covers the CSX Transportation Inc. suit against a Pittsburgh law firm. As we reported yesterday, the Fourth Circuit just revived the case, CSX v. Gilkison. From “Asbestos Lawsuits as Racketeering Scheme?”

Some defendants have successfully targeted absestos trial lawyers for their shady behavior (a WLF Web Seminar last April highlighted one example), and victims of asbestos litigation abuse had great hopes for a federal racketeering suit railroad firm CSX filed in 2007.  Those hopes flagged, however, when in March 2008, a federal trial judge dismissed CSX’s Racketeer Influenced and Corrupt Organizations (RICO) Act and state fraud claims as barred by the limitations periods of those two laws.

This week, the U.S. Court of Appeals for the Fourth Circuit, at the urging of CSX and a score of amici, including WLF (our brief here), vacated the district court’s opinion on the limitations issue and remanded the claims for further proceedings.

Walter Olson writing at Cato@Liberty welcomes the change in the leadership of the House Energy and Commerce Committee, “The Fall of the House of Waxman“:

Some lawmakers can talk a decent game about lean ‘n’ smart regulation, but no one ever accused Waxman of having a light touch. (The 900-page Waxman-Markey environmental bill, mercifully killed by the Senate, included provisions letting Washington rewrite local building codes.) He’s known for aggressive micromanagement even of agencies run by putative allies: his staff has repeatedly twisted the ears of Obamanaut appointees to complain that their approach to regulation is too moderate and gradual. More than any other lawmaker on the Hill, he’s stood in the way of any meaningful reform of the 2008 CPSIA law, which piles impractical burdens on small makers of children’s products, thrift stores, bicycles and others.

Chicago Tribune editorial, Dec. 23, “Lawsuit Loan Sharks“:

The offense of “champerty” has a long history in the law, and don’t let the Medieval-sounding name fool you: It’s alive and well in 21st-century Illinois.

Champerty involves financing someone else’s lawsuit in exchange for a cut of the payoff. The practice has expanded for more than a decade, thanks to weak laws, aggressive lobbying and erosion in ethical standards. Nowadays, litigation money-lenders woo potential plaintiffs with TV ads inviting anyone who has been in a car accident to give a call. They make upfront loans at enormous interest rates, getting paid back only if the case succeeds.

To protect the public against predatory practices, those loans should be covered by the same laws that govern any other type of consumer lending. Instead, litigation lenders have been pushing a bill in Springfield that would give them carte blanche to pocket a huge share of judgments won by individual plaintiffs with only a pretense of regulation. The Illinois Senate has approved a version of it, and a House committee has reviewed it with an eye toward a vote in January.

The bill is SB3322, and it’s being heard today in the Senate House Judiciary Committee. Travis Akin, executive director of Illinois Lawsuit Abuse Watch, has more on the bill here. If it becomes law in Illinois, look for other state legislatures to consider similar bills.

Sounds like the “trial lawyer tax break,” doesn’t it?

From Ira Stoll’s The Future of Capitalism blog, “Weiner, Waxman Set Gold Hearing”:

Just as the government is trying to prevent people from investing in anything other than T-Bills by raising taxes on taxable interest and dividends to confiscatory levels, it’s also trying to prevent you from parking your wealth in assets, like gold, that compete with the paper dollars issued by the Federal Reserve and the Treasury. A press release from Rep. Anthony Weiner, Democrat of New York, not yet (as of this instant) posted on Mr. Weiner’s Web site, announces that a September 23 hearing of the Subcommittee on Commerce, Trade, and Consumer Protection (a subcommittee of Rep. Henry Waxman’s Commerce Committee) will focus on “legislation that would regulate gold-selling companies, an industry who’s [sic] relentless advertising is now staple of cable television.”

If all it takes to inspire an inquisitorial committee hearing is heavy TV advertising, to become “staple of cable television,” then when’s the hearing on personal injury lawyers and class-action attorneys?

Since the blog post, the subcommittee has provided more detail on the hearing, which is now scheduled for 10 a.m. Thursday, Sept. 23. A bill has been introduced and will be discussed, H.R. 6149, to require disclosures to consumers by coin and precious metal bullion dealers.

Responding to a post at Instapundit, Stoll comments further, “Answering Glenn Reynolds on Gold.”

House Democratic conferees on H.R. 4213, the financial regulation bill, had pushed for language to unleash the Federal Trade Commission so it could go out and regulate as much federal commerce as it could get its hands on. The National Association of Manufacturers was one of 48 trade associations to join in a June 10 letter strongly objecting to the regulatory expansionism.

Fortunately, the Senate conferees showed little interest in turning a financial regulation bill into an “all things commercial regulation” bill. To summarize the back and forth at last night/this morning’s negotiations:

Chairman Henry Waxman (D-CA) of the House Energy and Commerce bill pressed hard for inclusion of the House language. After Senate conferees rejected his initial language, he offered a modified version that stripped out “aiding and abetting” and other enforcement provisions and asked for expanded rulemaking authority for the FTC with some extra tweaks for small firms. Again, the Senate rejected Chairman Waxman’s language. After 3 a.m., Chairman Frank said the House reluctantly accepted the reality of the Senate’s rejection and the conferees closed title 10, the consumer protection section.

Good, and thank you to the Senators.

And now, we’re sure Chairman Waxman will accept this setback and move on to other issues. The possiblity of unrestrained regulatory expansion by the FTC has receded into the background, never to worry us again.

More…
Dow Jones, “BANK BILL: FTC Misses Out On New Powers“

Reading about Jim McClelland of Goodwill Industries of Central Indiana (see this post), we’re reminded that Goodwill and other thrift store operators were among the many victims of the Consumer Product Safety Improvement Act (CPSIA). Thrift stores sold used toys, books and children’s clothing, which could conceivably have minute traces of hints of small amounts of lead, maybe. A warm winter coat for $10? Sorry, not this year, honey. Its zipper is illegal under the CPSIA.

The House Energy and Commerce Committee has been working on a bill that would accomplish some limited improvements to the CPSIA, the Consumer Product Safety Enhancement Act. At a subcommittee hearing on April 29, Jim Gibbons, head of Goodwill Industries Industries, testified in general support of the new legislation. Rosario Palmieri, vice president at the National Association of Manufacturers, did as well.

The committee’s consideration of the Consumer Product Safety Enhance the Improvements Act was set aside, however, as it shifted to more topical, attention-grabbing legislation, the Motor Vehicle Safety Act.

Question: If the motor vehicle safety legislation passes, will Congress be back a few years later to fix it, just like the CPSIA?

The bills share many similarities: Both responded to legitimate safety concerns that were elevated to consumer crises by the media, politicians, lawyers and activists, that is, the Chinese toy scare in the first case, and sudden acceleration problems in the second. The committee in Congress considering the bills are the same: House Energy and Commerce and the Senate Commerce Committee. Both pieces of legislation have been shaped by “consumer activists” and trial lawyers in order to increase litigation, cash flow and political clout. (See Shopfloor, “What’s the Goal? Improving Vehicle Safety or More Litigation?” and Point of Law, “Federal preemption, falling away in the motor vehicle safety bill.” In the case of the consumer product legislation, the national media did not bother to report potential negative consequences to consumers or manufacturers; the reporting of the possible harm from the motor vehicle bill is still thin, but it has improved.

A major difference between the two bills: The consumer product safety bill was embraced by Republicans and Democrats alike, passing the House by 424-1 and the Senate by 89-3. It was signed into law by President George W. Bush, whose administration oversaw a vast expansion of regulation.

This time around, Republicans are showing more skepticism, sharply questioning the impact of the motor vehicle regulation and litigation bill. The Energy and Commerce Committee passed the bill out by a vote of 31-21, and during the mark-up session several Republicans made strongly worded arguments about the bill’s costs, burdens on consumers, and encouragement of lawsuits. The public is certainly being better served by this informed debate than they were by the near-unanimous congressional approbation of the Consumer Product Safety Improvement Act.

So, if the motor vehicle bill passes, will its manifest errors and excesses lead to corrective legislation down the road, just like the CPSIA? We’re doubtful. The CPSIA’s egregious overreach affected not only manufacturers and major industries like off-road vehicles, it also hammered many small, home-based businesses — handmade toys, knitted products, etc., — and sympathetic groups like thrift stores and libraries. Their grassroots outrage helped generate the pressure needed for fixing the CPSIA.

The motor vehicle bill, on the other hand, will overwhelmingly affect just the motor vehicle industry (and its customers). Consumers will suffer the impact of increased litigation, new taxes, and higher vehicle costs, but the grassroots energy will be missing.

Still, who knows? Maybe Congress will learn from its mistakes, take the time to examine where it went wrong with the CPSIA and apply those lessons to the Motor Vehicle Safety Act. That would be a much smarter approach than being forced in the future to produce a Motor Vehicle Safety Enhance the Improvements Act after the damage to consumers and manufacturers had been done.

In the oddest twist of fate, manufacturers, telecoms and consumers are all breathing a sigh of relief upon hearing that both the House and Senate Commerce Committees are contemplating a rewrite of telecommunications law to acknowledge the existence of the Internet. Ah, sweet, sweet regulation!

As you’ll remember, the FCC received a judicial noogie* from the DC Circuit when it ruled the FCC didn’t have the authority to chastise Comcast for steering Internet bandwidth away from poor, defenseless children who were stealing movies and music on BitTorrent, and instead diverting it to evil doers implicated in healthcare, education, global commerce and other nefarious, high-bandwidth practices. Nevertheless, FCC Julius Genachowski decided that he’d give himself the authority to regulate the Internet by rejiggering Title II of the Telecom Act by reclassifying it as a telecommunications service, as opposed to a data service.

Well, following hot on the heels of letters from 74 House Democrats and 37 Senate Republicans, House Energy and Commerce Chairman Henry Waxman and Senate Commerce Chair John Rockefeller announced that they’ll develop proposals to update the Communications Act, starting in June.

Gentlemen, you get the humble thanks of a grateful manufacturing sector. The FCC’s proposed boot-strapping of regulatory authority would’ve only served to chill broadband deployment and investment in the telecom sector, with manufacturers and consumers getting the short end of the stick. Of course, there’ll be concern over whether or not net neutrality provisions will be foisted upon network managers, but at least through a legitimate legislative process, everyone will have the opportunity to be heard. And Mr. Chairmen, you have our deepest appreciation.

* It’s a legal term of art. Really, it’s in Black’s Law Dictionary.

CANCELLED. More work to be done before a markup session.

The Subcommittee on Commerce, Trade, and Consumer Protection of the House Committee on Energy and Commerce will meet in open markup session on Wednesday, April 21, 2010, at 2:00 p.m. in room 2123 Rayburn House Office Building, to consider H.R. _____, Consumer Product Safety Enhancement Act of 2010.

Here’s the briefing memo for the meeting.

The text of the draft bill, the Consumer Product Safety Enhancement Act.

The markup session will be webcast here.

Hope they get it right. After “improvement” and “enhancement,” we worry the next Act could be the Consumer Product Safety Perfection Act, and that would be really scary.

From David Freddoso, Washington Examiner, “Waxman cancels Obamacare CEO hearing“:

A House Energy and Commerce Committee spokeswoman tells me that Chairman Henry Waxman, D-Calif., has indeed cancelled the April 21 subcommittee hearing in which CEOs were to testify about Obamacare. So far, the only indication of this change appears on the committee’s website is on the Republican minority ranking member’s site. In fact, the hearing still appears on Waxman’s committee calendar for that day…

The CEOs, required by law to be honest about earnings projections, re-stated their bottom lines in reaction to Obamacare’s passage, earning the ire of Waxman and other Democrats.

Hearings on this matter would likely have proved an embarrassment to the Democrats and helped drag out discussion of Obamacare’s unexpected ill effects.

Other things to keep the committee busy, though. Bloomberg, “Waxman Calls For Major League Baseball Ban on Chewing Tobacco.”

From the American Benefits Council, which represents large U.S. corporations, a news release, “Exorbitant accounting hit to businesses will continue unless health law’s retiree drug subsidy provision is reversed“:

“For months, the American Benefits Council, along with several employers and labor unions, warned that the retiree drug subsidy tax in the health care legislation would impose an enormous hit on company financial statements as soon as the bill was signed into law,” Council President James A. Klein said today. “The recent announcements by major U.S. companies have captured Wall Street’s attention, while the Obama Administration fails to acknowledge their significance. Since the president has made clear that job creation is his top priority, we urge the Administration and Congress to remove this obstacle to economic recovery.

And …

“Over the next several days, many companies will be compelled to either take a hit on their earnings or decide to move retirees into the Medicare Part D program.” Klein said. “As our recent research report clearly shows, as more retirees are moved from employer plans to Medicare Part D, government outlays will increase, and the shift from employer retiree drug subsidy programs to Medicare Part D is likely to be significant. In the end, this so-called revenue raising provision may actually cost the government money.” A separate study, conducted by the Towers Watson consulting firm, reported that unless companies change their benefit plans, the aggregate accounting charge would be nearly $14 billion.

Safe prediction, Mr. Klein. Today’s news is: “Boeing Expects $150 Million Charge In 1Q For Health-Revamp Impact.” More …

• Wall Street Journal, “The ObamaCare Writedowns—II“
• John Fund, Wall Street Journal Political Diary, “Waxman Convenes the First Death Panel“
• Chicago Tribune, “Companies reveal big hits to earnings over health care“
• Newark Star Ledger, “Reform has firms rethinking benefits“