Athwart torts

 In 2006-01

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Athwart torts

Why the case politicians and special-interest groups make that lawsuits are crippling the economy doesn’t stand up.
By Ed Martin

Children giggle and squeal as they churn the water in the wading pool at Medfield Area Recreation Club in Cary, but above the clamor a shriek jolts David Lakey. Standing nearby with other parents, he spots his 5-year-old daughter seemingly frozen to the bottom of the pool. He tries to scoop her up, gently tugging on the brown-haired girl, but she won’t budge. “My stomach hurts,” she whimpers.

Another parent notices she’s sitting on the pool drain and flips a switch that cuts off its powerful pump. As Lakey splashes from the pool with her in his arms, a red stain spreads behind them in the water. On the deck, he cradles her and whispers over and over, “Daddy loves you.”

Valerie Lakey will turn 18 this month, 12 1/2 years since a loose cover allowed the drain’s suction to disembowel her. After years of surgery and treatment, a routine — school, piano lessons, birthday parties — slowly developed in her life. But no parent wants to imagine parts of the routine — nights attached to feeding tubes, the constant risk of infections and organ failures. “She’s in a lot of pain,” her mother says. “She’s got permanent injuries that are going to affect her the rest of her life.”

Few North Carolinians would recognize her name, but most know that of her lawyer: John Edwards, the former U.S. senator and Democratic candidate for vice president in 2004. In 1997, in a product-liability lawsuit he filed, a jury decided the maker of the drain cover was at fault and awarded the Lakeys $25 million, the largest personal-injury award in state history. It included no punitive damages, only costs that experts estimated the child would incur in a lifetime of care. Unwittingly, though, her case helped fuel a struggle that pits business, industry and professions such as medicine against the legal profession. Some call it the demonization of lawyers.

“We’ve been hit by a very expensive, well-financed public-relations offensive by special interests bent on changing the subject from accountability and responsibility for their actions to creating a new bogeyman,” says Richard Taylor, chief executive of the North Carolina Academy of Trial Lawyers, which has more than 4,000 members. “We’re it.”

Most of his group’s members represent individuals who claim injury by faulty products, negligence, accidents or malpractice, but the taint is spreading even to members of firms that represent business and industry. “There’s no doubt the profession is under assault,” says Willis Whichard, a former state Supreme Court justice and ex-legislator who is dean of Campbell University’s law school. “The level of respect has declined to the point, you hear over and over, that lawyers rank just ahead of used-car salesmen in public esteem.”

Whichard says more is at stake than prestige. Lawsuits decided by juries are the last line of defense when enforcement of laws and rules breaks down. “What’s at stake? Our form of government,” says David Ball, a national jury consultant based in Durham and author of several books. “If you take juries out of the mix, the tri-part government we have can’t exist. I don’t blame the chambers of commerce, doctors or politicians. They’re just doing their damned jobs. But we’re at risk of creating a form of anarchy here.”

Detractors tell a different story. They say lawyers are reaping an ill wind they generate by preying on gullible clients and sympathetic juries, parlaying unscrupulous tactics and marginal ethics into riches for themselves. Particular targets are those like Edwards, who won an estimated $150 million for plaintiffs injured by defective products, medical malpractice and other causes.

Rolf Blizzard is chief lobbyist for the 2,000-member North Carolina Citizens for Business and Industry, the state chamber of commerce. “Unfortunately,” he says, “the misdeeds of a few bad apples spoil the whole barrel.” The organization is a chief proponent of a $250,000 cap on non-economic damages such as pain and suffering in cases like Lakey’s. The issue has failed repeatedly in the General Assembly but likely will resurface in 2006.

“There’s no doubt the profession is under assault. The level of respect has declined to the point, you hear over and over, that lawyers rank just ahead of used-car salesmen in public esteem.”

Despite those defeats, the phrase “tort reform” has become a bludgeon for politicians on state and national levels. “It’s all about jobs,” says N.C. Sen. Robert Pittenger, a Charlotte Republican and real-estate investor who claims that North Carolina’s reputation as a hotbed of litigation has cost it billions in investment and 50,000 jobs.

There’s political hay to be made with the issue. In a campaign speech to a women’s business group in Charlotte in 2004, George W. Bush referred to a flood of lawsuits stifling economic growth. Stumping for U.S. Senate candidate Richard Burr, the president vowed that the Winston-Salem Republican would help him rein in “junk lawsuits that are threatening the small-business owner.” Lawsuits might be a threat in North Carolina but not a growing one. The number of negligence lawsuits filed in Superior Court has declined since the late 1990s.

A statistician for the N.C. Administrative Office of the Courts says figures for the most volatile battleground — medical malpractice — show the number bobbing up and down since 1998, when 559 lawsuits contained at least one malpractice issue. It peaked at 680 in 2001 but dipped to 616 in 2004. Through November, it stood at 515, unlikely to hit even the 1998 level. General-negligence lawsuits involving such allegations as product defects followed a similar pattern. They totaled 2,941 in 1999, peaked at 3,051 in 2002, then dropped to 2,755 in the latest fiscal year, which ended in June. The state counts motor-vehicle cases, contract disputes and collection actions separately.

Bush didn’t mention something that lawyers are quick to point out: Burr’s campaign received about $1 million from health-care organizations lobbying for malpractice caps, according to campaign watchdog groups. And his claims that doctors are fleeing the state because of malpractice awards don’t hold up under scrutiny.

According to statistics from the Cecil G. Sheps Center for Health Services Research in Chapel Hill, the number of doctors in the state per 10,000 residents has risen more than 60% since the early 1980s and is among the nation’s highest. Malpractice awards have been relatively flat since 1998 despite sharply rising medical costs — and malpractice insurance premiums.

Many Tar Heel lawyers and their defenders concede that their detractors are winning. Some angrily attack their tactics — Ball calls assertions that doctors are fleeing “a flat-out lie” intended to scare the public — but they agree the profession’s image is being battered.

“Frank Luntz, the Republican campaign consultant, has said, ‘You can’t go too far in vilifying trial lawyers,’ and that has become a political mantra,” says Gary Jackson, 51, a Charlotte lawyer best known for representing more than 200 homeowners in a six-year suit against makers of synthetic stucco that caused their houses to rot. It was settled in 2002, with homeowners being awarded an estimated $20 million for damages. “Some plaintiffs’ contingency lawyers now are almost apologetic for what they do.”

Jackson has seen the issue from both sides. After graduating from Duke University law school in 1979, the Shreveport, La., native practiced corporate law. He became a partner in Winston-Salem-based Womble Carlyle Sandridge & Rice, one of the South’s largest law firms, representing such clients as R.J. Reynolds Tobacco and Wachovia. He left in 1995 to start his own firm.

Polls support Jackson’s view that lawyers are losing the image war. ProCare is the Raleigh-based, doctor-funded nonprofit that fought Blue Cross and Blue Shield of North Carolina’s effort to convert from nonprofit status. The second plank in its agenda is tort reform, a euphemism for caps on noneconomic damages, limits on attorney fees and measures to protect corporations, hospitals and others from liability.

In a ProCare poll of 400 Tar Heels conducted last spring by Alexandria, Va.-based McLaughlin & Associates, 78% said they believed personal-injury lawyers are the prime beneficiaries of medical-malpractice cases. Two-thirds believed, as the question was phrased, “there is a health-care crisis in North Carolina because lawsuits are driving up the cost of medical-malpractice insurance and doctors are leaving.” Critics claim that the wording was leading and that the polling group’s GOP roots made the results suspect: It concluded that 52% of those polled had a negative view of personal-injury lawyers, while only 12% viewed doctors unfavorably.

“That’s highly unusual,” says Carter Wrenn, who directed Ronald Reagan’s 1976 campaign in North Carolina, was chief political operative for U.S. senators Jesse Helms, John East and Lauch Faircloth and is one of ProCare’s strategists. “Usually, ‘unfavorable’ on questions like that get about a 30% response. As a profession, personal-injury lawyers have got a bad reputation. There’s tarnish on their image.”

In Tar Heel courts, businesses file the most lawsuits, as well as the ones that win the biggest awards.

Lawyers say the stain isn’t there by accident. They blame what they call a campaign of disinformation, deception and deceit. Some outsiders agree, saying it has followed a pattern familiar to political scientists: Create a catchy phrase bristling with bad connotations, then hammer the public with it until it becomes toxic. “Trial lawyer” and “personal-injury lawyer,” UNC Chapel Hill political scientist Thad Beyle says, are such terms. “In many cases, lawsuits are justified, but people on the business side have gotten away with things like that.”

One irony is that most law firms are small businesses. That’s why at least one attack boomeranged three years ago when Tom Donohue, president of the U.S. Chamber of Commerce, addressed a meeting of the White House Economic Forum in Moore County. Soon after taking the job in 1997, he made tort reform the U.S. Chamber’s top issue. It spent about $24.5 million in 2004 lobbying for it.

Participants in the session say more than a dozen lawyers who head chambers in the state confronted him, wanting to know why their U.S. Chamber dues were being used to excoriate them. One says Donohue was “shocked” but persisted in lambasting lawyers in the panel discussion on job creation that followed.

In Tar Heel courts, businesses — not individuals — sue most often. In the latest fiscal year, ended in June, contract disputes and collection actions, which court officials say are largely filed by businesses, outnumbered general-negligence lawsuits more than 3-to-1.

North Carolina Lawyers Weekly reported that five of the 10 largest lawsuit settle-ments and jury verdicts in the state in 2004 involved businesses suing other businesses. They totaled more than $701 million. The largest — involving three Japanese companies that contended a Burlington reinsurance company had defrauded them — awarded them $400 million. Of those 10 largest suits, four were medical-malpractice, product-liability and negligence cases, with awards totaling $45 million.

Blizzard, the business lobbyist, insists statistics can be misconstrued. “They might show medical-malpractice lawsuits and payouts are remaining about the same, but the costs of health care are still going up in part because doctors are practicing defensive medicine to keep from getting sued.” Lawyers say such arguments prove that attacks against them are mostly empty rhetoric. Allegations that courts are flooded by junk lawsuits, they contend, clash with statistics, trial rules and common sense: State Bar rules prohibit frivolous suits, which can result in financial penalties.

Cliff Britt, a malpractice lawyer with Winston-Salem-based Comerford & Britt, which handles product-defect, motor-vehicle, air-crash and similar suits, says his firm takes only about one malpractice case in 50. Britt, who is president of the trial-lawyer academy, says that’s about the same ratio for most plaintiff-action firms. “The quickest way to go bankrupt would be to file frivolous lawsuits in medical-malpractice cases.” Lawyers get 20% to 40% of awards — zero if they lose. They also get stuck with upfront costs, which often exceed $100,000 in wrongful-death, product-liability or malpractice trials. ”You, the lawyer, bear the full cost unless you have a recovery. You’d be crazy to take a weak case.”

A spokeswoman for the U.S. Bureau of Justice Statistics in Washington says plaintiffs in North Carolina lawsuits alleging product defects or similar claims lose about half of their cases. Malpractice plaintiffs lose about three-quarters. The alternative to suing for plaintiffs? They often get little or nothing. The maker of the drain cover that a jury ruled was at fault in Valerie Lakey’s injuries initially offered the family $100,000 — less than her first hospital bills.

Pittenger repeatedly has referred to frivolous lawsuits, but when asked during an interview with Business North Carolina to cite an example, he was unable to do so. He volunteered that a staff member would provide examples later. Nobody did. Still, Britt and other lawyers concede, they’ve failed to sell their message while critics chip away at the legal profession.

Some political scientists estimate that about 100 groups, many funded by corporations such as cigarette maker Philip Morris, are lobbying for tort reform. Even within the legal field, lawyers point to a chasm. “I’m concerned that corporate lawyers, defense lawyers and the lawyers that represent insurance companies and corporations have not been as vocal as they should have in defending the profession,” Taylor says. “An attack on any lawyer is an attack on the justice system.” Others say a 1977 court decision that permitted lawyers to advertise has led to abuses, particularly by personal-injury lawyers seeking auto-accident cases. Many of those ads, a Charlotte lawyer says, end up depicting his peers as “sleazy, money-grubbing and greedy.”

Even Edwards comes in for criticism by some trial lawyers who believe he downplays his past because of its political baggage. Bush and Vice President Dick Chaney ridiculed him during the 2004 campaign, and one network commentator called him the “Jacuzzi lawyer from North Carolina” — a reference to the Lakey verdict.

“We’ve watched time and again shameless attempts like that to distort his record,” aide Kim Ruby says. “We’ve also caught people trying to hide or distort facts about his cases.” Example: Some reports about the Lakey verdict, widely cited as a case of an overly sympathetic jury, fail to mention that 12 other children had been injured by the drains, including a Henderson boy who died in 1981, but the drain’s maker failed to change its design or warn users.

Nobody denies that blood runs hot on both sides. Burr may have unwittingly underscored how hot in a Raleigh meeting last February, organized by the North Carolina Medical Society. The new senator once again told how doctors were being driven from the state by frivolous malpractice suits filed by unscrupulous lawyers. But members of a patient-advocacy group — backed in part by trial lawyers — didn’t get to hear him. They had been rousted from the meeting by an armed guard.

Many lawyers paint it in a word: scary. They scoff at opponents’ claims that competition in the marketplace and government regulators protect the public. Asheboro pediatrician Mary Johnson offers an example.

“The quickest way to go bankrupt would be to file frivolous lawsuits in medical-malpractice cases.”

The setting is Randolph Hospital in 1998. She answers a page from a nurse, but by the time she reaches the newborn unit, a baby is blue from the chest down and in shock — dying. “I’ve been cleaning up messes like this right and left,” she thinks. As she struggles to clear bile and other wastes from the child’s lungs, she decides to file a complaint, alleging incompentence and lack of training of the attending physician, with the hospital’s peer-review committee. Such panels, which operate out of the public eye, are supposed to be the first line of defense against bad doctors.

The baby, rushed to a larger hospital in Winston-Salem, survives. Johnson, who says she had been told by administrators not to complain about other doctors, finds herself the center of controversy. “Two weeks later, I’m out of a job — fired.”

Complaints to the N.C. Medical Board, the state agency that licenses and disciplines doctors, fell on deaf ears, she says. No fan of lawyers — she also filed complaints with the State Bar alleging misconduct of hospital lawyers during the dispute — she nevertheless says peer review is, in her words, a joke. “There’s little or no protection for doctors who blow the whistle.” A hospital spokeswoman, citing confidentiality rules, declined to comment.

Other doctors cite the example of a neurosurgeon who practiced at Gaston Memorial Hospital and had been sued for malpractice 24 times, with his insurers making nine or more payments to plaintiffs, including at least four for more than $300,000 each. Only after press reports revealed he was blind in one eye and colorblind in the other did the state order him to quit operating. At a hearing, he blamed the lawsuits on greedy lawyers.

Lawyers say they have to do a better job at highlighting such cases if they expect to withstand attacks on their profession. “In politics,” Taylor says, “it’s easier to give people a bogeyman and reason to attack than it is to give them a reason to stand up for something. We’re pretty good at lobbying and playing ball in the legislative sense, but we’ve got to do more in the court of public opinion.”

On a gray late-November day at her home in Raleigh, Sandy Lakey considers that. Twelve summers have passed since her daughter’s life was forever altered by a product that a jury decided the manufacturer had sold knowing that it had maimed other children. “How lucky a lot of people will be,” she says, “to never find out whether they really need a lawyer.”

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