Trial Lawyers, Inc., Is an Economic Disease
Observe the ill effects of "litigitis."


Deroy Murdock

“Take two depositions and call me in the morning.”

If doctors could prescribe litigation to improve human health, every American would resemble an Olympian and reach age 110. Of course, the opposite is true. As the free-market Manhattan Institute discovered, the barrage of lawsuits battering the medical and pharmaceutical industries is incredibly expensive. Even worse, it shackles doctors, spooks researchers, and leaves patients sick or dead.

Since 2003, the Manhattan Institute has examined what it calls “Trial Lawyers, Inc.” Twice the size of Coca-Cola, the $40 billion litigation industry is a hulking Goliath, not the plucky David it fancies itself.

To gauge its impact, consider the 406 percent increase in per-doctor malpractice insurance premiums between 1975 and 2003. Simultaneously, medical-care inflation grew 525 percent, while Trial Lawyers, Inc., turbocharged medical-malpractice expenses 2,108 percent, to $26.5 billion. That figure nearly equals 2003’s pharmaceutical sales at Johnson & Johnson and Merck.

According to “Trial Lawyers, Inc: Health Care: The Lawsuit Industry’s Effect on American Health 2005,” insurers shield themselves from massive payouts by charging doctors more for malpractice coverage. Average policies rose 18 percent in 2003 alone. That year, Chicago-area obstetricians watched their premiums zoom 67 percent to $230,428.

Doctors, in turn, practice “defensive medicine” — using extra tests and referrals to prevent negligence claims. Thus, 74 percent of doctors unnecessarily send patients to specialists. Conversely, a Harris poll found that 43 percent of doctors do not prescribe drugs embroiled in litigation for fear of getting sucked into lawsuits themselves.

“The problem with defensive medicine is that it’s not good for our health, it’s not good for our pocketbooks, and it’s not good for the healthcare institutions on which we depend,” U.S. Chamber of Commerce chairman Tom Donahue told a February 21 Manhattan Institute luncheon.

While genuinely injured parties deserve compensation, Donahue calls many cases “Jackpot justice.” Often involving asymptomatic plaintiffs, mass tort actions routinely employ flimsy science to demand enormous awards. Fighting such suits costs money, as do out-of-court settlements and jury decisions.

Litigants seem blithely unaware of underlying economic reality. Covetous plaintiffs in one vaccine lawsuit sought $30 billion in damages while the entire vaccine industry’s annual revenues totaled $6 billion.

All of this has helped hike health insurance annually by 10.9 to 13.9 percent between 2001 and 2005. Family coverage has risen 59 percent since 2000.

Unfortunately, the damage has metastasized from our wallets to our well-being. Litigation’s clinical side effects are widespread and worsening.

Sick of lawsuits, hammered by malpractice premiums, or both, doctors are avoiding some specialties and leaving sue-happy locales. Seven New York counties have no OB/GYNs. As Alastair MacLennan concluded in the Journal of the American Medical Association last October 5, “It has never been safer to have a baby and never more dangerous to be an obstetrician.”

Trial Lawyers, Inc., kicks the poor and minorities in the teeth. Thanks to liability-insurance costs, Methodist Hospital in low-income South Philadelphia stopped delivering babies in 2002. Facing a $2 million malpractice premium, Manhattan’s Elizabeth Seton Childbearing Center closed in 2003 — bad news for the 30 percent of its patients on Medicaid.

Among thirteen hospitals in Palm Beach County, Florida, five have no emergency-room neurologists. Some seizure patients and accident victims have had to travel more than 100 miles to Gainesville and Tampa for treatment. Barbara Masterson, 53, suffered a stroke in 2004. Lawsuit-weary local neurologists refused to see her. While hospital personnel scrambled for a neurosurgeon, Masterson died.

As the U.S. Chamber’s Donahue explained, “The trial lawyers look at the pharmaceutical guys the way Willie Sutton looked at banks: That’s where the money is.”

Less than a year after GlaxoSmithKline introduced LYMErix in 1999, lawyers attacked, claiming this adult Lyme-disease vaccine caused arthritis. By 2002, Glaxo withdrew LYMErix. Previously-stable Lyme-disease infections suddenly soared 40 percent.

A quarter of pregnant women once used Bendectin for morning sickness. A lawyer-fueled frenzy over alleged birth defects prompted some Bendectin users to abort their fetuses. Facing 2,000 suits, $18 million in claims, and $20 million in sales, Merrell Dow Pharmaceuticals yanked Bendectin from U.S. pharmacies in 1983. No evidence ever has linked defects to Bendectin, which still sells abroad. Meanwhile, U.S. birth defects are flat, while morning-sickness hospitalizations have doubled.

These are drugs we have seen. As the Manhattan Institute reports, “Countless other potentially useful drugs sit in Petri dishes because companies hesitate to spend hundreds of millions of dollars on products that could land them in court, costing hundreds of millions more.”

Indeed, since lawyers ran the reversible contraceptive Norplant off the market in 2002, with no proof it ever harmed anyone, no new contraceptives have been launched in America. Drug companies, the report says, “spend 20 times more on cosmetics research than on developing new contraceptives.”

So, is there any cure for “litigitis”?

Since Texas capped non-economic damages at $250,000 in 2003, malpractice suits have been halved, and five insurers have cut total annual premiums by $50 million. In the first two years, Texas Medical Liability Trust cut its premiums 12 percent and 5 percent, respectively.

Common Good — a Gotham-based non-profit launched by Philip K. Howard, author of The Death of Common Senseadvocates medical courts in which specialized judges, often in non-jury trials, could consult their own objective expert witnesses and also weigh the validity of scientific evidence, which sometimes baffles jurors.

An Angleton, Texas, jury, for instance, blamed Vioxx for one user’s fatal heart attack, then invoiced Merck $253 million. Merck’s scientific defense seemed to flummox jurors.

“Whenever Merck was up there, it was like wah, wah, wah,” said juror John Ostrom in the Wall Street Journal last August 22, impersonating the voice of Charlie Brown’s teacher. “We didn’t know what the heck they were talking about.”

Medical courts also would counteract the anti-defendant bias of some jurors. Left-wing litigator Ron Kuby alluded to this when he said, “The Bronx civil jury is the greatest tool of wealth redistribution since the Red Army.”

Such reforms are needed — Stat! Without them, Trial Lawyers, Inc., will aggravate the splitting headache that is American medicine — far beyond the reach of aspirin.

– New York commentator Deroy Murdock is a columnist with the Scripps Howard News Service and a senior fellow with the Atlas Economic Research Foundation in Arlington, Virginia. He currently is advising the Manhattan Institute on a book project.