Author: Tom Scott

Recently, the the White House and the U.S. Department of Labor announced that they were getting into the legal referral business. I guess the government does not have enough on their hands so they needed to team up with the American Bar Association (ABA) to get them some more business.

Roughly 40,000 workers contact the U.S. Department of Labor every year with complaints about their bosses. Due to budget cuts, the Department cannot answer all the calls. So instead of throwing a little more money at the Department, they decided to form a new “alliance” with the ABA.

Instead of helping businesses create jobs, the Department of Labor seems more focused on creating more lawsuits. In 2009, Kiplinger reported that the 10 largest wage and hour settlements totaled nearly $364 million. That was 44% higher than the ten largest in 2008. One lawyer who was quoted in the article as saying that these cases are easy to win and involve big payouts, especially when you are looking at “two or three years of back pay and benefits.” If only the employees knew what they are getting into.

Another State of the
Union Address has come and gone and there is once again a
sense of excitement in the air. In this year’s address, the President stated,
"I am willing to look at other ideas to bring down costs, including one
that Republicans suggested last year – medical malpractice reform to rein in
frivolous lawsuits."

Is President Obama truly serious this time about
taking another look at medical malpractice reform? CALA has long stated that to
reform healthcare and not look at medical malpractice reform or defensive
medicine is just to completely miss the point. These areas have to be reformed
when tackling the issue of healthcare reform.

Lo and behold, here comes H.R. 5., the HEALTH Act of 2011. This
bill by Rep. John Gingrey (R-GA) will give the President the opportunity to
back up his words with action. It contains, among many things, a cap of
$250,000 on non-economic damages, which is similar to a reform we have in California
that the trial lawyers cannot stand. H.R. 5 even puts caps on contingency fees
and eliminates punitive damages for products that meet FDA standards.

No this is not a new song by Lady Gaga. This is a another honor, or should I say dishonor, bestowed upon the Golden State. The American Tort Reform Association releases an annual Judicial Hellholes report. This year California ranks second on its list of Judicial Hellholes. This year’s report focuses on six areas in the nation that are known for uneven justice.

This year, the top honor goes to Philadelphia, Pennslyvania. The City of Brotherly love is also in a love affair with trial lawyers I guess. Litigation tourism is being viewed by some as a form of economic stimulous. Punitive damages over $1 million in Philadelphia have reportedly tripled.

In second place is California, particularly Los Angeles and Humboldt counties. In Los Angeles, a $208.8 million verdict for a single asbestos claimant, the largest such award in California history, is a prime example. Humboldt county hosted a $677 million class action verdict against a nursing home provider for occasionally falling below staffing levels required by state regulators, even though no injury was claimed by the plaintiffs. These in addition to extortionate disability access claims against small businesses and expansive liability have placed California as a judicial hellole.

A new legislature has been sworn in and we are now in the process of shaping our state’s future, which is faced with serious unemployment and deficits and a very unclear future. Even the Chairman of the Federal Reserve, Ben Bernanke has said this economy might take 4-5 years to straighten out. So what better to do than to put California on a positive legal reform course, which would help economic recovery? If I had 12 wishes for legal reform in California it would probably go something like this:

1. A Governor and legislature who worked to make California a places businesses want to grow and can thrive.

2. For all California residents to serve when called for jury duty.

3. An end to class action lawsuits, at least as the system is designed now. They keep on coming and the consumers lose every time.

4. Leave the Medical Injury Compensation Reform Act of 1975 alone. It has worked.

Cross posted at www.cala.com

This week, CALA released a report on litigation costs to 12 of California’s school districts, finding that in just three fiscal years, these schools spent $98.7 million.

The
report examined verdicts, settlements and outside counsel costs to
Capistrano Unified, Elk Grove Unified, Fresno Unified, Kern High
School, Long Beach Unified, Los Angeles Unified, Merced Union High
School, Modesto City, Poway Unified, San Diego Unified, San Juan
Unified, and Santa Ana Unified.

You
would think at a time when a record number of our schools are in
financial trouble and further education cuts are likely ahead, we would
not allow these litigation costs to go unchecked. California continues
to rank among the most litigious states in every study yet we rank at
the bottom in many measures of student performance. The more dollars
our schools have to pay in litigation costs, the less we have to
improve our students’ performance.

A recent lawsuit against Skilled Healthcare California LLC has
had little or no coverage and it is amazing. Skilled Healthcare
California was hit with a penalty of $671 million dollars by a Humboldt
County jury. And that does not even include the punitive damages. The
core issue was whether the company violated a state law requiring
nursing homes to provide a minimum of 3.2 nursing hours per patient per
day (ppd). The key word here is minimum.

Senior
care in this state and country is a huge issue. Skilled Healthcare has
never received one complaint against it on the California Nursing Home
Directory. However, this did not stop the plaintiffs’ attorneys. The
judgement was leveled against Skilled Nursing on behalf of the 32,000
patients it has in California, awarding the maximum damages over a six
year period to the whole class.

This
is a company that provides 14,000 jobs to people in California. Its
stock price plummeted 75% on news of the judgement. It looks like it
cannot appeal the decision because to do so you have to post a bond of
150% to do so and its assets are approximately $2 million. It has also
exhausted its primary professional liability insurance.

Cross posted at www.cala.com

I am certainly
not a role model for eating habits.

Believe me I will jump at an
Entenmann’s donut any day of the week over a salad, but you will not
see me sue Entenmann’s. I guess I should have seen it coming. First the
County Board of Supervisors in Santa Clara banned McDonald’s from
putting toys in its Happy Meals. Now comes the Center for Science in
the Public Interest sending a letter of intent to sue McDonald’s if the toys are not removed from all Happy Meals.

Cross posted at www.cala.com

The CA Commission on Disability Access (CCDA) was established through legislation (SB 1608)
signed by Governor Arnold Schwarzenegger in the fall of 2008. It is a
17-member commission with a budget of $80,000 and six committees. One
of the committees is the Civil Enforcement Committee, which is designed
to look at the whole issue of litigation in California related to the
Americans with Disability Act.

Has this committee met since January 1st, 2009? No. Was it supposed
to meet? Yes. On May 27th it was supposed to have its first
meeting. However it was cancelled due to lack of quorum. It will likely
be rescheduled in July sometime. In the meantime ADA lawsuits are being
filed left and right throughout the state.

I think it is fair to say that most people in the business community
supported SB 1608, not because it was the model legislation that would
rid us of these predatory lawsuits, but because it is a compromise that
has the potential to end the the rampage of lawsuits being filed by a
bunch of trial lawyers in this state. Has it done that?  No. Not even
close. And the CCDA is doing nothing about it.

Cross posted at www.cala.com

Are you surprised?

I guess I should not be, but there is still a little
of me that thought some legislators would get it. Clearly, they do not.

As the trial lawyers swooped down on Sacramento for their annual right
of passage, I truly thought there might be a glimmer of hope for legal reform,
but not this year and, quite frankly, probably not for a while to
come.Interestingly, the Consumer Attorneys of California had scheduled
its Lobby Day on May 4, the same day that the Assembly Judiciary
Committee was meeting in Sacramento. This is an important policy
committee that deals with all legislation related to legal reform.