"This is a disgrace to both professions."
Those are the words of Dr. Jerome Kassirer, former editor in chief of the New England Journal of Medicine, as quoted in this week's Wall Street Journal (subscription required) report about the close relationships between doctors who treat mesothelioma patients, and the plaintiffs' attorneys who litigate asbestos lawsuits.
This report details significant contributions to mesothelioma research made by some such attorneys, as well as some asbestos lawyers sending "elaborate gift baskets" to doctors, providing tickets to "professional sporting events," or offering "paid work as expert witnesses."
Some attorneys also use doctor testimonials as a marketing tool.
According to Dr. Raja Flores, chief of thoracic surgery at Mount Sinai Medical Center, taking such financial gifts "could influence" his treatment of patients.
Said Dr. Flores:
"When you add financial incentive it muddies the waters. We did not take the Hippocratic Oath for that."
Cross-posted from FacesofLawsuitAbuse.org
Question: How much does it cost a grocery store to install 69 cameras and six DVRs?
Answer: About $250,000.
Question: How much does it cost to maintain the store’s recording system?
Answer: About $100,000.
Rafael Cuellar, the owner of a grocery store in Passaic, NJ, estimates he has spent around $350,000 to install and maintain his store’s camera and recording devices. Doesn’t that seem like an awful lot of money to spend to repel or catch shop lifters?
Yes, it is. Which is why preventing shop lifting wasn’t the reason Mr. Cuellar invested in his security network in the first place. The cameras and recording devices are in place to monitor every inch of his store to protect Mr. Cuellar from frivolous lawsuits.
“Yesterday alone we had a consumer who came back in [the store] and claimed she fell,” Mr. Cuellar recounts in the video, Supermarket Swindle. “Once the loss-prevention director said, ‘Let’s pull it up on the camera,’ she goes, ‘No, I just twisted my ankle.’ And the story changed all of the sudden.”
Indeed, Mr. Cuellar said that one-third to half of all the lawsuits filed against his company every year are fictitious or overblown. Fictitious or not, however, all those lawsuits raise Mr. Cuellar’s insurance premiums, which are his second largest expense behind payroll.
In other words, spending nearly half a million dollars on cameras and DVRs is a drop in the bucket compared to what Mr. Cuellar would spend on a reward settlement, which could be in the millions.
Just one such reward settlement has the power to wipe out Mr. Cuellar’s small business.
But it’s not just store owners who suffer the expenses of frivolous lawsuits. Consumers pay as well. The Food Institute estimates that feeding a family of four will cost $4.16 per week more this year than last. That’s an extra $200 a family must spend this year.
Rising food prices are just one consequence of frivolous lawsuits. Mr. Cuellar notes that he could have invested a lot of the money he spent on cameras to hire more employees or cut prices. But the danger is too great.
“Being an entrepreneur, you always want to continue to grow,” Mr. Cuellar says. “But I do think twice about it, because of the things I can’t control.”
Unless we enact measures to combat lawsuit abuse, small business owners like Mr. Cuellar will continue to funnel their hard-earned money into protecting what they have, not building what they want.
You can learn more about Rafael's story here.
“This is not pretty,” writes Alison Frankel in ThomsonReuters.
She’s referring to a dispute between a plaintiffs’ law firm and a lender that provided it a loan in order to litigate an antitrust class action. Now that the class action case has settled, the lender has filed a suit seeking $28 million as repayment for the loan.
The breach-of-contract suit claims that under a 2004 lending agreement, [plaintiffs’ lawyer] Alioto owes [funder] LFG $28 million of the $49 million he has been awarded as co-lead counsel to a class of indirect purchasers of liquid crystal display screens. LFG asserts that it holds a lien on all of the Alioto firm's fees and receivables via an $18.3 million credit facility extended by the lender. Alioto, meanwhile, told me Monday that he has repaid $11 million to LFG, which includes "most if not all" of his $7 million to $9 million in principal, plus interest. According to Alioto, the lender is improperly attempting to cash in on his fees from the LCD case.
Third-party funding of litigation raises a host of ethical issues, including the introduction of an outsider with an entirely financial stake into the attorney-client relationship. This case shows what happens when the relationship between the lawyers and lenders goes bad. Not pretty at all.
The Louisiana State Senate Commerce Committee yesterday advanced a measure that would protect consumers from the growing lawsuit lending industry.
Melissa Landry, executive director of Louisiana Lawsuit Abuse Watch, writes in The Pelican Post:
Louisiana lawmakers are considering a proposal to appropriately regulate the lawsuit lending industry. Senate Bill 166 by Sen. Dan Claitor from Baton Rogue will bring these companies in line with other lenders and better protect Louisiana consumers and our courts from lawsuit loan sharks.
Earlier this week, FoxBusiness.com featured ILR’s position on the burgeoning lawsuit lending industry. You can read that story here.
As Harold Kim blogged about last month, Congress is currently considering a vital piece of legislation — the Furthering Asbestos Claim Transparency (FACT) Act (H.R. 942) — that would address problems with federally-created asbestos bankruptcy trusts.
These entities, with assets estimated in excess of $36 billion, were established by companies forced into bankruptcy by asbestos litigation. Their goal is to compensate asbestos victims fairly and promptly.
As Harold posted about last month, however, the trusts’ “opaque operations” open the door to abuse:
A recent article in the Wall Street Journal revealed that an employee of a California law firm filed a claim with a trust in the name of someone who didn’t even exist. Five weeks later, he received a $26,000 check from the trust. The same firm also filed trust claims on behalf of clients who were nurses. They allegedly were exposed to asbestos while chipping paint from boilers – not exactly a typical duty for nurses.
Thankfully, others are picking up on the need to enact this important legislation.
This morning, the Houston Examiner features a piece on the FACT Act:
Businesses and employees have already suffered through decades of harsh court battles, bankruptcies, companies closing their doors and people losing their jobs. Many of these have been right here in Houston and Southeast Texas. Congress has an opportunity to fix the problems with this system.
For more information on the FACT Act, we urge you to check out these additional links:
- As Asbestos Claims Rise, So Do Worries About Fraud (Wall Street Journal)
- It's a FACT: The Bill That Will Help Restore Integrity to the Justice System (FreeEnterprise.com)
- Facts on the FACT Act (InstituteforLegalReform.com)
A new report in City Journal discusses the fiscal challenges facing the "City That Works" — Chicago.
From the city's history of high-profile corruption cases to its current economic challenges to a series of poor rankings on economic indicator studies, author Aaron M. Renn delves into a number of reasons why he feels the "Second City" has become a "Second-Rate City."
Of interest to our readers is the fact that Renn also highlights the Chicago area's reputation as a haven for lawsuit abuse:
Companies also fear Cook County’s litigation environment, which the U.S. Chamber of Commerce has called the most unfair and unreasonable in the country.
He is, of course, referring to ILR's Lawsuit Climate report, in which Cook County's lawsuit climate ranks as the worst in the country. This is a big reason why the entire state of Illinois is also ranked among the country's worst, with the fifth-worst lawsuit climate in America.
This report comes at the same time that Texas Governor Rick Perry has launched an ad campaign in Illinois, seeking to lure Land of Lincoln businesses to the Lone Star State. Perry is leveraging his state's 2003 tort reforms as one of the reasons his state is more business-friendly than Illinois.
We hope this continued spotlight on Illinois' abusive legal climate is a wake-up call to Illinois' elected officials and spurs them to take efforts in coming years to enact common sense reforms to the state's civil justice system.
Over the weekend, ILR's Justin Hakes was quoted in a FoxBusiness.com expose about the growing lawsuit lending industry.
Hakes sums up well the need to protect American consumers from this burgeoning practice:
"The lawsuit lenders charge sky-high interest rates on these loans, often more than 100% annually ... Even when the consumer 'wins' or settles the case, he or she often recovers no money, because the entire amount of the award or settlement goes to pay the plaintiff's attorneys or to repay the lawsuit lender."
For a great background on lawsuit lending, please click here to watch a brief video with former Georgia Attorney General Thurburt Baker discussing “Why Lawsuit Lending is a Problem.”
You can find an archive of additional articles and backgrounders on the issue of Lawsuit Lending by clicking here.
“Australia has clearly made its choice and you are racing down the path, leading globally (after the US) in class action litigation and funding,” says ILR president Lisa Rickard in an interview with The Australian. Rickard warns that the recent commercialization of law in Australia could lead to the kinds of litigation abuse seen in the United States, and recommends leaders “take a step back and examine” the effect the changes on the legal system.
A Wall Street Journal editorial highlights super plaintiffs’ lawyer and Baltimore Orioles owner Peter Angelos’ use of his team doctor to screen asbestos clients and his latest attempt to consolidate 13,000 asbestos claims. The editorial also highlights the FACT Act as a remedy to help shine a light on the opaque asbestos trusts to prevent “double dipping” of both trust claims and lawsuits against solvent defendants. An analysis of the Angelos cases found 1,500 claimants have already filed with a bankruptcy trust and 70% of the remainders were diagnosed by a group of five doctors, raising concerns of “bogus suits manufactured with the help of friendly doctors.”
Melissa Francis and trial lawyer Mark Lanier discuss the dangers of lawsuit funding in this video from Fox Business. Litigation funding, which is a relatively new concept in the United States, is more established overseas, but it’s still unclear what happens when things go wrong and disputes break out, according to Bloomberg.