The Senate HELP Committee this Thursday will hold a hearing on the Paycheck Fairness Act. While this bill’s title gives the casual observer the sense that it will prevent discrimination in pay, in reality it only promotes more litigation. In the process, the legislation creates tremendous uncertainty for employers who are struggling to create and retain jobs in these trying economic conditions.

This legislation will be a boon to the trial bar by allowing unlimited punitive damages and larger class action suits against employers under the Equal Pay Act. Because the Equal Pay Act is a strict-liability statute, plaintiffs’ attorneys don’t even need to demonstrate an employer’s intent to do harm to file a suit. If passed into law the Paycheck Fairness Act would force employers to second-guess every pay decision that they make.

In addition, the bill eliminates key employer affirmative defenses when presented with such claims. Just last year EEOC data shows that fewer than 5 percent of discrimination claims actually had legal grounds behind them. What does this mean? Even though a case may not have grounds, it forces employers to mount expensive defenses themselves against such claims. As The Washington Post when they rightfully pointed out that this legislation “risks tilting the scales too far against employers and would remove, rather than restore, a sense of balance.”

While illegal discrimination has no place in today’s workplaces, this legislation will not address those issues. Discrimination on the basis of gender is already illegal. The legislation does not make discrimination any more against the law, it simply opens up the judicial process to more civil lawsuits based on equal pay claims. Who benefits? Not the worker, the lawyers

In a post this morning, we noted the failure of the Center for Public Integrity to include trial lawyers in its list of interests lobbying on health care issues. If you’re going to be querulous about groups exercising their First Amendment rights to influence health care legislation, you have to wring your hands about the American Association of Justice (AAJ) and its allies, too.

Not just lobbying, but campaign contributions also provoked fretting today in the goo-goo-sphere. The National Journal picked up a news release from Citizens for Responsibility and Ethics (CREW) in Washington that tallied up the campaign contributions that went to the attendees of the President’s Blair House health care meeting. From “CREW’s study of health care contributions to summit participants“:

A review of campaign finance records shows the health care establishment has invested heavily in the campaigns of the members of Congress invited to the meeting. In total, these 21
lawmakers have taken nearly $28 million in campaign donations from health care interests since
2005. These donations include contributions from health professionals (including physicians,
pharmacists, nurses, and others providing health care services) and their trade associations, as
well as the employees and political action committees (PACs) of hospitals and nursing homes;
pharmaceutical and health product companies; health services firms; HMOs; health and accident
insurers; and miscellaneous health care interests (such as research groups).

“Invested heavily in” is the sneering way of saying, “contributed to.” Shocking in a representative democracy, we know.

Strangely, CREW omits from its list contributions made by trial lawyers and labor unions. (At least the Center for Public Integrity included the unions.) Are the trial lawyers NOT a health care interest?

Well, of course they are, and they prominently contribute to campaigns, too. The Manhattan Institute’s latest edition in its “Trial Lawyers, Inc.” series reports, “In the last decade, lawyers and law firms—excluding lobbyists—have injected $780 million into federal campaigns, on top of $725 million donated to state races.”
Legal Newline, a legal reform-oriented publication backed by the U.S. Chamber of Commerce, today reported on the litigation industry’s campaign contributions to Sen. Richard Durbin (D-IL), “Durbin gets big bucks from trial lawyers.” At today’s health care meeting, the Senator argued impassionedly for the necessity of lawsuits in achieving recompense for injured patients. Sen. Durbin’s argument is an important point of view, and it absolutely deserved to be heard at today’s health care event.

But to omit trial lawyers and their campaign contributions from any accounting of health care interests is ridiculous on its face. CREW’s political selectiveness belies its claim to the moral high ground on “responsibility and ethics” in Washington. Or anywhere else.

James R. Copland, director of the Manhattan Institute’s Center for Legal Policy, has started a week of posts at PointofLaw.com on the Institute’s new contribution to its series on the excesses of the litigation industry, “Trial Lawyers, Inc. — K Street .” This edition focuses on the political and lobbying clout of the litigation industry and how it achieves its policy goals.

From Copland’s post today, he answers the question, why should we care? Quoting from the report:

The annual direct cost of American tort litigation–excluding much securities litigation, punitive damages, and the multibillion-dollar settlement reached between the tobacco companies and the states in 1998–exceeds $250 billion, almost 2 percent of gross domestic product. The indirect costs of excessive litigiousness (for example, the unnecessary tests and procedures characterizing the practice of “defensive” medicine, or the loss of the fruits of research never undertaken on account of the risk of abusive lawsuits) are probably much greater than the direct costs themselves.

Of course, tort litigation does do some good, and it does deter some bad behavior. The problem is that it deters a lot of good behavior, too. Indeed, the legal system does such a poor job of distinguishing between good and bad behavior that the high cost of litigation is effectively a “tort tax” paid by every American. The share of America’s economy devoted to lawsuits is far higher than that of other developed nations such as Germany and Japan. Yet America is hardly safer as a result.

See also Copland’s Wall Street Journal op-ed, “How the plaintiffs bar bought the Senate.”

The Hill previews the upcoming Blair House health care confabulorama in the context of medical liability reform, i.e., the possiblity of the President reaching out to Republicans by again making a gesture on tort reform. The trial lawyers say no way, man, he better not. From “Trial lawyers to Obama: Don’t deal on tort reform in healthcare negotiations.”

“I would hope this would be an area we just don’t go,” said Linda Lipsen, vice president for public affairs at the American Association for Justice, the trade group for trial attorneys.

Lipsen said. “The last thing Congress should be doing is eliminating people’s rights when the real issue is safety in hospitals.”

This is the sum of the American Association for Justice’s argument against tort reform: Costs of health care are not the issue, medical errors are the issue. It’s a false dilemma, an either/or choice that makes no logical sense.  In the real world you can actually address the frivolous lawsuits, exorbitant damage awards and the costs of defensive medicine AND hospital safety.

Also in The Hill, “White House snubs budget panel leaders in health summit invites“:

The White House did not invite House or Senate Budget Committee leaders to its healthcare reform summit later this month, including a Republican who recently offered to work with President Barack Obama to strike a bipartisan deal.

The White House letter of invitation to the Blair House meeting is here, and the list of invitees is here.

The Manhattan Institute’s Center for Legal Policy has released another in its series of reports on the litigation industry, “Trial Lawyers Inc., K Street.” From the Message for the Director, James R. Copland:

With business groups now fighting back against Trial Lawyers, Inc.’s longtime grip on state judiciaries, the litigation lobby has turned its attention to state legislatures, where it is not only blocking tort reforms but working to expand its portfolio of litigation opportunities. Among other things, state legislators are authorizing new kinds of lawsuits, raising damage caps, and giving private lawyers authority to sue on behalf of the state.

Of course, the growth in federal regulation and law has made it necessary for Trial Lawyers, Inc. to lobby Congress as well. Thanks to large contributions, both to the Democratic Party and to individual legislators, lawyers have not only blocked most federal efforts at tort reform but are also working to coax goodies from Congress that pad their bottom line. Such efforts include:

• Lengthening statutes of limitations in employment law to make it easier to file discrimination suits;
• Spurring securities litigation by allowing suits to be filed against the vendors of corporations accused of fraud;
• Cutting contingent-fee lawyers a tax break worth over a billion dollars;
• Gutting arbitration contracts designed to encourage resolution of disputes that are too expensive to take to trial; and
• Allowing state juries to override federal regulations.

The full report is available here as a .pdf file (3MB). The Center’s “Trial Lawyers, Inc.” series is especially valuable as a thorough introduction to the political power and economic clout wielded by the trial bar — and the harm it does. The authors provide history, big picture, footnotes and economic analysis.

In a Feb. 8 op ed in The Wall Street Journal, “How the Plaintiffs Bar Bought the Senate,” Copland also put the U.S. Supreme Court’s decision in Citizens United v. FEC in the context, explaining why the trial lawyers were so incensed by the decision upholding First Amendment rights.

[For] those, like me, who view factions as inherent in democracy, the decision was welcome. Labyrinthine campaign-finance laws serve mainly to entrench incumbents and empower those special interests either exempted from regulation (i.e., the institutional media) or best able to navigate the maze of rules. Among the latter group, no lobby has been more empowered than the legal profession—specifically the trial lawyers.

More: John O’Brien, Legal NewsLine, Blog of Legal Times.

Associated Press, “Bruno trial sheds light on labor influence in NY“:

ALBANY, N.Y. (AP) — The corruption trial of former New York Senate leader Joseph Bruno revealed how box seats at a swanky race track, golf outings and other perks were the currency as labor unions and politicians kept public works dollars flowing, required union wages on taxpayer-funded projects, and sweetened pension benefits for unionized government workers….[snip]

Attorney James Featherstonhaugh, a longtime lobbyist ….described a political landscape where unions generally do a better job than business interests.

“The Medical Society for example is pervasive. The trial lawyers, I’m happy to say, are pervasive,” Featherstonhaugh testified. “But the unions are equal to or exceed them all.”

From The Maryland Gazette newspapers, Gazette.com, a reporter’s notebook column from November:

With all this talk about health care reform, don’t expect tort reform to move front and center, at least according to Senate Finance Committee Chairman Mac Middleton.

Middleton, who was on a health care panel at the Maryland Chamber of Commerce Business Policy Conference in Cambridge last Friday, said political realities might prevent it.

Middleton, a Democrat, said that having a Democratic president and Congress means no one is talking about limiting damages in medical malpractice cases.

“One of the things [is], Republican or Democrat, you take care of your base,” Middleton said. “You recognize the people that get you there. It’s labor and trial lawyers that get Democrats in office. And you don’t bite off the hand that feeds you. That’s the stark reality of it.”

It’s not quite Howard Dean’s much-cited quote about Congressmen’s fear of taking on trial lawyers, but still…

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.

In an editorial last Sunday, “Dont’ squeeze the telecoms, ” The Washington Times beat us to the topic of S. 1725, the Retroactive Immunity Repeal Act, introduced by Sen. Chris Dodd (D-CT) and three other Democratic Senators on September 29.

[They] are reopening a fight to make telecommunications companies liable for trillions of dollars for complying with a presidential directive to assist in a “warrantless surveillance” program against suspected terrorists. This has negative consequences for public safety, for the already staggering economy and for the cause of basic fairness and justice.

Even though the Senate just last year - after many months of debate - gave immunity to the telecoms for participating in the program, some senators want to take immunity away.

The Times regards the legislation as typical Senatorial solicitousness toward trial lawyer campaign contributors, since vitiating immunity  would revive the 46 lawsuits against the companies dismissed in June. (For more history, see our Friday post, “FISA Update: Civil Immunity? No, We Changed Our Minds.”) We tend to think the proposed policies derives more from civil libertarian absolutism and a distrust of any government surveillance; since these policies are generally unpopular and cannot be enacted in Congress, some turn to the courts to achieve the same ends.

Whatever the case, as the Times contends, removing immunity is wrong in terms of “basic fairness and justice.” It’s akin to reopening a case despite the statute of limitations having expired, or an ex post facto prosecution. The Times concludes:

The Senate last year granted immunity only after instituting a careful series of safeguards for civil liberties. There’s no need to reopen that careful compromise just for the sake of a few dozen wealthy lawyers trying to get still wealthier - especially when it would come at the expense of the nation’s economic health and safety.

UPDATE (Sunday 11:15 a.m.): Sen. Russell Feingold (D-WI), one of the bill’s cosponsors, submitted and then withdraw an amendment last week during the Judiciary Committee’s markup of the Patriot Act extension. His amendment would have re-opened the FISA debate by banning bulk collection of data; he quickly withdrew it, leaving the impression he was just making a point.

A broad cross-section of industry, farm and retail trade associations yesterday sent a letter to the leaders of the Senate Health, Education, Labor, and Pensions Committee asking for confirmation hearings on the nomination of David Michaels to head the Occupational Safety and Health Administration.

Michaels has advocated for more government regulation, even when the available science
and data to support such regulations is inadequate or unsettled. He has also attacked the landmark, unanimous Supreme Court decision in Daubert v. Merrell Dow Pharmaceuticals, which stands for the proposition that scientific evidence in litigation must meet certain standards to be admitted. Michaels has also been the beneficiary of product liability actions which have been shown to be without merit. Finally, nominees for the OSHA Assistant Secretary have traditionally been subject to a hearing before their confirmations moved forward. We see no reason why Professor Michaels should be an exception. Accordingly, as detailed below, we believe his views warrant a hearing and thorough examination before his nomination can proceed.

The National Association of Manufacturers, which joined the coalition letter, also sent its own letter to the Hill requesting the hearing.

For more on the Michaels’ nomination, see this August 18 Shopfloor.org post.

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.