Wednesday, January 03, 2007

the tide turns against the parasites running class action law suites (the plaintiff's bar)

BusinessWeek's Jan 8, 2007 cover article discusses how busines lobbying groups have managed to turn the tide in the battle against predatory class action law suites.

I've been following tort reform since the 1980s, when fear of product litigation (remember the McDonald's hot coffee law suite) and astronimical medical malpractice suites seemed likely to destroy US business and health care.

In fact, medical malpractice has been exceedingly damaging in the medical field, forcing out many near retirement practitioners as well as helping destroy the single physician practice. In some fields, such as obstetrics, predatory malpractice suites may be gutting the specialty.

In some states, like Illinois, which has only recently embraced limits on pain and suffering, malpractice premiums are still very high - running from $30k - $100k per year per physician. Oddly the more invasive the physicians procedures (and the more important they are for very serious situations), the higher the malpractice insurance. This means the person most likely to save your life when all is lost has to pay the biggest percentage of his/her income for insurance coverage - that's alot of thanks for saving your life.

Some physicians in NY are retiring early as recent lawsuits have pursued their personal assets (such as savings, homes and other funds) beyond their insurance coverage. Who would want to work a lifetime to see their entire 35 years effort disappear in one frivolous lawsuit?

I work in the financial industry and spend alot of time with commercial insurance people. They tell me they are very afraid of frivolous or opportunistic law suits. The biggest upcoming targets seem to be lead contamination (think lead paint) and elder care / nursing homes. My more recent readings seem to indicate that 401k mismanagement by employers will be another hot topic - see the recent 10 employer law suit that alledged abuses of 401k participants.

On the surface these are very legitimate issues and matters that need change, however, the class action mechanism, although wrapped in patriotic shrouds, always seems more about personal enrichment than doing the right thing. What would happen if plaintiff attorney's fees were limited - would we still need limits on the awards?

Doubtful - look who your congressmen are - mostly lawyers.


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