Frivolity Rears Its Ugly Head

Here we go again. This time it's Mitt. AP (11.20.07):

"'I believe we have to enact federal caps on non-economic and punitive damages related to malpractice,' Romney said. 'These lottery-sized awards and frivolous lawsuits may enrich the trial lawyers but they put a heavy burden on doctors, hospitals and, of course through defensive medicine, they put a burden on the entire health care system.'"

Romney: Cap Medical Malpractice Lawsuits

OK are you ready for it? Here it comes. "'We've got to rein in the incessant cost of medical liability,' he said."

Even though study after study have come to the same conclusion: "the medical malpractice 'crisis' is mostly an invention of insurance companies and their friends in Congress."

So you shouldn't be allowed to ask for punitive damages for frivolity like this? LATimes (11.22.07):

"The case of actor Dennis Quaid's newborn twins, who were reportedly given 1,000 times the intended dosage of a blood thinner at Cedars-Sinai Medical Center, underscores one of the biggest problems facing the healthcare industry: medication errors.

At least 1.5 million Americans a year are injured after receiving the wrong medication or the incorrect dose, according to the Institute of Medicine, part of the National Academies of Science. Such incidents have more than doubled in the last decade."

Hospital drug errors far from uncommon

Not like the mistakes were unavoidable. "The errors are made when pharmacists stock the drugs improperly, nurses don't double-check to make sure they are dispensing the proper medication or doctors' bad handwriting results in the wrong drug being administered, among other causes."

"The events over the last few days at Cedars-Sinai, and a case in Indiana last year in which three babies died after receiving an overdose of the same drug, offer a vivid illustration of the problems hospitals face. In both cases, nurses mistakenly administered a concentration of heparin 1,000 times higher than intended, giving the patients a dose with a concentration of 10,000 units per milliliter instead of the correct dosage of 10 units per milliliter."

You really want to rein in malpractice premiums? Let's start with crap like this.

Then there's always this novel concept: "these anesthesiologists focused on improving patient safety. Their theory: Less harm to patients would mean fewer lawsuits."

Fuckin' duh, eh folks?

Good Neighbor; Good Hands

And you're screwed. Bloomberg (08.03.07), via FirstDraft:

"[Julie] Tunnell joined thousands of people in the U.S. who already knew a secret about the insurance industry: When there's a disaster, the companies homeowners count on to protect them from financial ruin routinely pay less than what policies promise."

Home Insurers' Secret Tactics Cheat Fire Victims, Hike Profits

"Insurers often pay 30-60 percent of the cost of rebuilding a damaged home -- even when carriers assure homeowners they're fully covered, thousands of complaints with state insurance departments and civil court cases show."

"Paying out less to victims of catastrophes has helped produce record profits. In the past 12 years, insurance company net income has soared -- even in the wake of Hurricane Katrina, the worst natural disaster in U.S. history."

How did this come to be? "Although the tension between insurers and their customers has long existed, it was in the 1990s that the industry began systematically looking for ways to increase profits by streamlining claims handling." So they hired a consultant, McKinsey & Co., to make some recommendations.

The idea? First, after a claim is filed, you get the carrot or the stick. "When a policyholder files a claim, first make a low offer, McKinsey advised Allstate. If a client accepts the low amount, Allstate should treat the person with good hands, McKinsey said. If the customer protests or hires a lawyer, Allstate should fight back." This is the "Boxing Glove" strategy.

At the same time, drag it out. This is known as the "The Alligator". "One McKinsey slide displayed at the Kentucky hearing featured an alligator with the caption 'Sit and Wait.' The slide says Allstate can discourage claimants by delaying settlements and stalling court proceedings."

"By postponing payments, insurance companies can hold money longer and make more on their investments -- and often wear down clients to the point of dropping a challenge."

Is it working? Only too well. "Allstate spent 58 percent of its premium income in 2006 for claim payouts and the costs of the process compared with 79 percent in 1996, according to filings with the U.S. Securities and Exchange Commission." It's been "decreasing since Allstate hired McKinsey."

And State Farm? Hell, it's "profits have doubled since 1996 to $4.8 billion in 2006."

Ha, ha. Pretty funny. Guess the joke's on us, eh?

And the nerve of those big, bad plaintiff's lawyers (links via FirstDraft).

"The Alligator" may not be working as well as it once did. Bloomberg (01.11.07):

"State Farm yesterday was refused a delay of the trial based on alleged jury bias following media coverage of the Jan. 11 verdict.

The company said it wanted to appeal issues common to both cases and claimed in court papers that Senter made mistakes in the first case."

State Farm Must Pay Couple $2.7 Million for Katrina

Like A Good Neighbor

State Farm gets the message. LATimes (07.07.07):

"Two Mississippi attorneys who won a punitive damages verdict against State Farm Fire & Casualty Co. over destruction from Hurricane Katrina said Friday that they had settled other pending cases.

Biloxi attorney Jack Denton said he and attorney William C. Walker Jr. settled 20 State Farm cases Friday."

Mississippi lawyers settle 20 State Farm cases

Why is State Farm all of a sudden settling these left and right? Bloomberg (01.11.07):

"State Farm Mutual Automobile Insurance Co. must pay a Mississippi couple $2.7 million for the loss of their property, a judge and jury ruled in a test case over how much Hurricane Katrina damage is covered by insurance.

The judge, deciding actual damages without the jury, awarded $223,292 for the home and belongings of Norman and Genevieve Broussard of Biloxi, Mississippi."

State Farm Must Pay Couple $2.7 Million for Katrina

"The jury awarded punitive damages of $2.5 million for State Farm's improper conduct in processing the claim, half of the couple's $5 million request."

The judge in Broussard entered a directed verdict against State Farm, as in the judge determined that no reasonable jury could reach any other decision.

Sounds like the Broussard decision got State Farm's attention. Big-time.

Not In Good Hands

To say Oxford's behavior was egregious and unconscionable is an understatement. LATimes (06.26.07):

"U-Haul International Inc. has had its share of courtroom dramas, but none quite like one involving its corporate sister, Oxford Life Insurance Co.

When Oxford balked at paying a modest claim from a badly injured policyholder, it was hammered with a $39-million verdict. The judge denounced Oxford's conduct as the worst he'd ever seen."

Corporate sibling called 'mean-spirited'

"The policyholder, West Virginia farmer Charles Kocher, had long wanted a Ford pickup. In 1999, at the urging of his wife, who was dying of cancer, he tapped their savings for a down payment on a used truck. Kocher paid Oxford more than $700 for a credit insurance policy that would pay off the $11,563 loan if he suffered dismemberment or death."

"Soon afterward, Kocher's right foot was crushed in a tractor accident. He had several surgeries that amounted to a progressive amputation of his foot and lower leg."

"Oxford (like U-Haul a subsidiary of Amerco) made a few loan payments on the pickup, then stopped for several months. Kocher later testified that a 'very nasty' Oxford representative told him: 'We're not paying the loan off because it's not a full amputation.'"

"The agent also accused him of deliberately maiming himself to collect on the policy, Kocher said."

The West Virginia Supreme Court of Appeals elaborates (06.17.04):

"According to detailed findings of fact later made by the circuit court, Oxford engaged in substantial litigation misconduct during the pre-trial period - including failure to comply with discovery requests; giving false information about other claims filed against Oxford in West Virginia; and improper deposition conduct.

The trial court found that Oxford's litigation misconduct was a continuing pattern of misconduct, and not 'isolated occurrences.' Our review indicates that the court's findings were well-grounded in the record."

Kocher v. Oxford Life Insurance, No. 31539

"In addition, the circuit court found that Oxford had engaged in a particular instance of extreme litigation misconduct. On or about February 6, 2002, Oxford's Senior Vice President, Larry Goodyear, the company's second-in-command, traveled from the company's office in Arizona to West Virginia, via Pittsburgh, for Mr. Goodyear's deposition. (The trial of the case was set for March of 2002.) In connection with that trip, Mr. Goodyear's secretary in Arizona called Mr. Kocher's home and pretended to be a Federal Express employee who was seeking directions to deliver a package to Mr. Kocher. Using this ruse, the secretary obtained driving directions to Mr. Kocher's house, and relayed those directions to Mr. Goodyear, who paid a visit to Mr. Kocher at Mr. Kocher's home near St. Mary's, West Virginia - and then drove to Huntington, West Virginia, to Mr. Goodyear's attorney's office."

To say the appellate Court was royally pissed would also an understatement: "We observe that the compelling facts of the instant case and applicable law fully support the trial court's ruling imposing sanctions. It should be emphasized that this is not a case of one private litigant innocently seeking to talk directly with another litigant without either party's counsel being present. Rather, this is a case where a sophisticated corporation deliberately lied to a litigant for the purpose of contacting the litigant without his counsel's knowledge, and improperly sought to influence the litigant to settle the case."

Not too long after this decision, Oxford settled for $12.8 million.