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Thursday, July 14, 2005

Class Action Fraud

My essay on class action fraud was posted on The American Thinker today.

Here is the essay:

Class action fraud is widespread

A Wall Street Journal editorial (subscription required) entitled “The Silicosis Sheriff” covers the painstaking efforts by Texas federal Judge Janis Graham Jack, a Clinton appointee, to uncover the massive fraud in nationwide silicosis litigation. Lawyers, doctors, plaintiffs and screening companies participated in this fraud. Most judges, lazy and/or plaintiff-oriented, allowed the many claims to pass their bench without question. Judge Jack, a former nurse, wondered why a disease on the decline, that nationally had dwindled to 200 cases a year, had generated over 20,000 claims from Mississippi and a few other states. Ten thousand cases were in front of her court.

Jack embarked on a grand jury investigation that found payola and friendly persuasion throughout the plaintiff diagnostic process. Reports the WSJ, in 9,000 of the cases before her “99% had been diagnosed with silicosis by the same nine doctors”. Some doctors merely signed blank forms for screening companies and let secretaries fill out the forms. Sixty-five percent of the plaintiffs had previous claims in court for asbestos. The WSJ notes that it is “clinically impossible to have both”. A large screening company had no one with medical training in its employ.

Judge Jack has sanctioned one law firm for its under-handed actions, forcing the firm to pay defendants $850,000 for their expenses. Does this pay back any of the anxiety of being a trial defendant? Look behind the scene and you will find destroyed health (physical and emotional) due to the strains of being sued. Jack’s tenacity has led to federal prosecutors beginning criminal investigations into Milberg Weiss, one of the country’s biggest class-action firms.

I have almost 2 decades of first-hand involvement in nationwide litigation of all types from the insurance end. I have managed litigation and negotiated many settlements. The decision to actually try cases is rare. Juries have an affinity for the injured plaintiff, often despite questionable injuries or a lack of connection (the legal term is “causation”) to anything the defendant did. Add in the fact that many judges nationwide were former plaintiff attorneys who skew court rulings on the evidence allowed or in jury instructions.

The decision to go to trial is quite daunting. Guess wrong as a litigation examiner for an insurance company and you will be up-dating your resume at home shortly thereafter.
Now, we see in the open what insiders have always suspected: out and out fraud by the practitioners. However, seeing a judge stand up, publicize and hold liable the corrupters of our legal system, I am heartened by her courage and tenacity. At the same time I remain chagrined that more judges will likely not follow suit.

Many of my friends are defense attorneys. Ironically, they are against tort reform or verdict caps. Why? This will reduce their business as well. While defending people is very difficult and frustrating in a less than level playing field (as illustrated by the silicosis litigation), defense attorneys paid by the hour can make a good living with this legal arrangement. Any cut into the aggregate number of cases, while immeasurably beneficial to the country and our economy, does not improve a defense attorney’s income potential. By the way, these reforms harm the employment prospects of in-house attorneys like me.

But, as Judge Smails said in Caddyshack: “The world needs ditch-diggers, too.”

Neal Phenes 7 14 05

3 Comments:

At 12:37 PM, Blogger Da Man said...

A great piece in the WSJ--I read it on the train this morning--and nice commentary on your part. Looking forward to more.

 
At 8:20 PM, Anonymous Anonymous said...

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At 6:04 PM, Anonymous Anonymous said...

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