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March 12, 2004, 8:20 A.M.

In 1999 forty-four people, thirty-seven of whom were black, were arrested in the Texas panhandle town of Tulia in a sweeping narcotics operation conducted by the Panhandle Regional Narcotics Trafficking Task Force. Many of those arrested were eventually convicted on the word of Tom Coleman, a white undercover police officer who has now been completely discredited and who is scheduled to stand trial for perjury in May.

Declaring that Coleman was “simply not a credible witness under oath,” an appeals court judge released the victims of what was a racially motivated drug bust in which victims were convicted with no evidence, and only on the word of Coleman. The Tulia defendants were released in 2003 after a judge found little or no evidence supporting their convictions.

Yesterday, the City of Tulia agreed to pay $5 million dollars to residents targeted in the bust and settlements are being negotiated between the victims and several other agencies involved in the task force. These settlements will not give the residents four years of their lives back, but it will begin to allow healing for families torn apart by this ugly injustice. The conviction and hopefully imprisonment of Coleman should close the book.

March 11, 2004, 10:20 P.M.

On March 10, 2004 the Manchester Union Leader published an editorial by former gubernatorial candidate Bruce Keough, which asks readers to call their legislators and ask them to support legislation aimed at changing the way medical malpractice litigation is handled in New Hampshire. The editorial is misleading and factually inaccurate.

No one has ever produced any statistic, list of cases or even accurate anecdotal support for the claim that there are or have been excessive or runaway jury awards in New Hampshire. No one, not ever.

The reason why no such evidence has been produced is because it doesn’t exist. Furthermore, the article links malpractice premiums with those nonexistent, excessive jury awards. Again, this is not the case. Insurance companies blame rising malpractice premiums on increasing jury verdicts in malpractice cases. Actually, insurance company profits have little to do with the payment of verdicts and settlements and a lot more to do with the investment of insurance premiums in bonds. When bond prices are low, insurance company profits are correspondingly low. When they are very low, as they are now, insurance companies raise premiums and blame lawyers.

Blaming lawyers is convenient. It’s easy because people have been conditioned to dislike lawyers, and to mistrust jury verdicts because of misinformation about those verdicts. Take the infamous McDonald’s coffee case, for example. What you hear is how a woman got a lot of money because she was burned by hot coffee. What you are not told about that case is that the woman who sued McDonald’s was horribly burned and permanently injured as a result of coffee which was so hot that it burned her to the bone in a very private and sensitive area of her body. What we are also not told is that the coffee was so hot because an enterprising young executive at McDonald’s had determined that if he disabled the safety equipment on the coffee machines, he could make the coffee stay hot longer and sell more to factory workers within a certain radius of his store. The woman got scalded, scarred and disfigured. The executive got promoted. You are also not told that the “outrageous” verdict (which was later reduced by a judge) represented two day’s profit of McDonald’s regional coffee sales.

There are dozens of other examples that are exaggerations, misstatements, or outright lies about cases that are aimed at undermining confidence in this country’s civil justice system. The insurance industry is manipulating facts in order to gain legislative advantages limiting the liability of wrongdoers. This so-called “tort reform” legislation is being proposed in many states and supported by pressure from industry (as in the case of the Eli Lilly legislation in the Homeland Security Bill) and professional groups (like striking doctors in West Virginia and New Jersey).

People tend to support the idea of tort reform because they believe the stories they hear about lawyers. The fact is that lawyers and the contingent fee system afford access to the courts to millions of people who could not otherwise afford to fight for compensation from individuals or companies that harm them through no fault of their own. The insurance industry in New Hampshire recently argued that lawyers should be excluded from representing injured workers in workman’s compensation cases because the average award for claimants in these cases is “substantially higher” when lawyers are involved. I’m sorry, but that sounds like a good thing to me.

The drumbeat of tort reform is growing louder. It is beating to the rhythm of decreased corporate profits and historically low bond rates. The insurance industry is hinting at more increases in the cost of health insurance. These attacks on trial lawyers are somewhat blunted by two Government Accounting Office reports released last summer that cast further doubt on insurance industry and medical profession claims linking jury verdicts with rising health care and malpractice costs, and the exodus of health practitioners in some high-risk specialties such as maternity care from certain areas of the country.

The GAO report issued in June of 2003, entitled, “Medical Malpractice Insurance: Multiple Factors Have Contributed to Increased Insurance Rates,” verifies what trail lawyers have been saying all along: that rising insurance premiums and decreasing availability of healthcare are as much as the result of bad insurance company investments in a soft economy, as of jury awards. Malpractice premiums vary widely from place to place, and cannot be neatly tied to losses. The President, the American Medical Association, and the insurance industry blame trial lawyers and vilify John Edwards to frighten people into supporting their arguments at the polls. To suggest that capping awards will stem the tide of doctors leaving high risk specialties by lowering premiums is just wrong.

Another GAO report issued in August of 2003 is entitled, “Medical Malpractice: Implication of Rising Premiums on Access to Health Care,” and is the subject of an article in that appeared last week in the Washington Post. Sandra Boodman’s article entitled, “What Crisis?” examines this GAO report and features J. Robert Hunter, a former federal insurance administrator, who has studied the malpractice crisis issue for the Consumer Federation of America, an advocacy group, and whose study corroborates the conclusions of the GAO report:

“Hunter, an actuary, said that he oversaw the production of a study last year for a coalition of 100 consumer groups that tracked 30 years of malpractice payments and insurance premiums. The report concluded that there has been no malpractice "explosion" during the past three decades and that payments have been "extremely stable" since the mid-1980s.

Premiums paid by doctors, Hunter's study found, "do not correspond to increases or decreases in payouts," but "rise and fall in concert with the state of the economy. . . . Insurance companies raise rates when they are seeking ways to make up for declining interest rates and market-based investment losses."

That conclusion is similar to one reached by the GAO in a report released last June. Among the causes of the latest round of malpractice premium increases, the congressional investigators found, were insurers' losses in their investment portfolios, inadequate reserves to pay claims and artificially low rates set during the 1990s when many companies vied to attract policyholders.” Mr. Hunter went on to explain:

“Every 10 years we hear the same thing: that all the doctors are leaving, that patients can’t get care; it’s sort of a ritualized dance. . .And the reason is always the same. The AMA and insurance companies blame the tort system.” Despite the misinformation and an active campaign of disinformation, insurance company claims that jury awards cause high malpractice premiums and restrict access to health providers are simply not supported by fact. In spite of the conclusions of these two recent government reports, there are tort reform bills in legislatures all across the country. In Texas, a constitutional amendment has just been passed that caps pain and suffering damages at $750,000.

Despite volumes of data calling into question the connection between jury verdicts and malpractice premiums, the drums continue to beat out a steady rhythm of misinformation. At the same time, millions of Americans will have their right to fair and adequate compensation for wrongs done to them by others curtailed.

The insurance company executives who make millions of dollars regardless of the health of their companies will continue to rake in their exorbitant salaries. The CEO of one of the largest medical malpractice insurers, St. Paul Companies, received almost $10 million in compensation in 2001. Setting a cap on the damages that victims of medical malpractice can collect will help keep these insurance executives in the style to which they have become accustomed, but will have no real effect on your access to health care or on the premiums paid by doctors who treat you.

Last year New Jersey doctors staged a strike that they claimed was to protest rising malpractice insurance costs. The methods, strategy and tactics were revealed when a group called the Foundation for Taxpayer and Consumer Rights published a series of e-mail messages between New Jersey doctors who staged a strike to protest rising malpractice costs and the protest organizers. The e-mail messages advised doctors to wear white lab coats at public appearances, punish uncooperative colleagues by threatening a loss of referral business and to make sure that patients experience colossal inconvenience. Equally telling, the messages referred to Democratic legislators, trial lawyers and greedy patients as “prostitutes” and “blood suckers.” Their colleagues who refused to participate in the strike were called “scabs” and “parasites.”

Clearly the main goal of the strike was to manipulate public opinion and, according to Andrew Jacob who reported on the e-mails in the New York Times, this was the message of Hudson County Medical Society Vice President, Steven P. Shikiar, who warned his colleagues that they are “either with us or against us.”

Apparently, some the messages were pretty ugly and some of the more outrageous suggestions, such as denying healthcare to lawyers and legislators and their families were rejected out of hand.

The New Jersey physicians said that they suffered a sharp increase in their medical malpractice premiums and they blamed this increase on so-called “jackpot” awards. But, according to statistics reported in Mr. Jacob’s article, there were 205 cases which went to juries in New Jersey in 2002; doctors won 151 of those cases. Only 18 of the remaining cases resulted in verdicts over $1 million. Furthermore, the proposed cap would only reduce premiums by 6% because of the existence of other factors, such as investment losses and general industry problems. Remember, this was New Jersey, the most densely populated state in the country, not New Hampshire.

Access to affordable healthcare, and to affordable health insurance, are two major domestic issues that need to be addressed nationally. Until the insurance industry is made to stop distorting the facts and inflaming the passions of healthcare providers and consumers alike, we are doomed to remain mired in legislation and litigation.

What the so-called “tort reform” legislation does is limit what people who are truly injured can recover. The whole argument about the cost of malpractice insurance ignores the 800 pound gorilla in the closet: people actually do get seriously and permanently injured as a result of screwups by doctors. Take for example the story of Jesica Santillan, the young Mexican girl who was given incompatible organs in her first transplant should give “tort reformers” across the country pause. This is a case where a young girl was promised life and had it mercilessly snatched away from her by an act of total negligence -- no different than if she were murdered.

Jesica’s death ended the promise of a young life and the opportunity that it presented. Her death was not an accident. It was a screw-up. Recently proposed medical malpractice caps would limit the family’s ability to recover damages for their loss so that insurance companies can protect their assets and pay their executives their enormous salaries.

Assume for a moment that Jesica was a 45 year old father of three. Assume that he was the sole provider for his family and that his doctors had promised him a second chance at life through the miracle of modern medicine. Then they killed him. His family would be without their dad. More than that, however, the family would be deprived of the opportunities that his lifetime of work would have produced. The commutative effect of his life’s work would never be realized. That is lost opportunity.

Not only will his family be deprived of his support, but of the care and comfort of his presence. What is the value of his daughter’s fatherless walk down the aisle? What is the value in his being deprived of the sight of his grandchildren, his children’s ballgames, his wife’s kiss? All gone, tragically.

The civil justice system cannot give Jesica her life back, nor can it return hundreds of thousands of loved ones to their families. It cannot give those hurt by negiligence their lives back. What it can do is compensate their families for their loss. Some doctors and insurance companies want you to see this as base. You see, doctors give you life – or death – while lawyers are just after money.

Think long and hard about who is harmed when our civil justice system is tampered with. For now it’s just those people who they say weren’t really hurt. Will you, the one who might really be hurt, be next? Remember, everyone hates lawyers until they need one. So-called tort reform is just another way to erode your civil rights.

The current legislation that Mr. Keough supports would limit, or cap, pain and suffering damages, and would limit contingent fees. The problem is that the bill places not limits on the amount that insurance companies can spend on their lawyers. It is the injured person whose claims are compromised because they can’t afford to pay their lawyer unless and until they recover for the wrongs done to them. Contingent fees are not base, they are necessary and they let people bring claims that they could not otherwise afford.

So let’s be honest in this debate. It’s about money and profit any way you look at it. Insurance companies are using lies, distortions and misinformation to push their agenda. They are raising premiums because their profits are down and they have been enormously successful at obfuscating that fact and by inflaming the passions of medical providers. It’s a lie and they know it, yet they persist in rolling right past the truth in an alternative reality.

Finally, Mr. Keough has made this a partisan issue. He urges us to act while the Republican majority is strong. I suggest that we urge our legislators to act based on facts, not on lies, to decide this issue based on its impact on real people, not on huge corporations only interested in preserving huge profits and executive salaries. Write to your legislators, yes, but urge them to get informed and to know the truth before they vote because if they do, they will realize that tort reform will not decrease premiums, it will only increase profits.

March 10, 2004, 9:35 P.M.

Josh Marshall has had some great posts recently on TPM on the issue of flip flops. (here and here)

This campaign is going to turn ugly fast, and it’s important to note that the Bush administration has very few weapons that can’t be turned against it, not the least of which is the flip flop thing.

March 10, 2004, 9:30 P.M.

Hookah Economics: Paul Krugman’s, ”Promises, Promises” column in yesterday’s Times is also a great little number. Column begins with a graph showing actual employment statistics from 1999 to 2004. There is a growth in jobs through 2001, followed by a rapid decline. Despite these numbers, the administration forecasted unrealistic job growth, which has never panned out. While the administration has continuously revised its projections downward, it’s predictions are absurd.

Krugman points out that these ridiculous “predictions” all occurred post-9/11. It’s as if the strategy is to simply say it’s so, and then wait for it to happen or blame others when it doesn’t. It’s kind of like saying that Iraq has weapons of mass destruction and just expecting everyone to believe it in the face of mountains of contrary evidence. No economic analysis can support the administration’s jobs claims and no science, other than political science, can support them.

Tax cuts for the rich were supposed to be the catalyst for jobs growth and that strategy clearly has not worked, either. Yet we still don’t hear anyone the administration talking about rethinking these policies. It’s as if they have gone down the rabbit hole again. We have had trickle-down economics, voodoo economics and now we have hookah economics. Lewis Carroll would be so proud. The Bush administration’s research strategy seems to be “Go ask Alice. I think she’ll know.”

March 10, 2004, 9:25 P.M.

Benson still doesn't get it. What D’Alessandro and Pepin did is a breach of the public trust. They were partners in a consulting business before being brought into Benson’s administration. They were sent out to negotiate huge insurance contracts for the state and at least Pepin gained a lot of money to which she was not entitled. Had Pepin been a state employee, she would have received nothing more than her wages (hopefully nowhere near $187,000 based on her job category). Any way you look at it, the money came from the taxpayers, and that’s not right.

March 8, 2004, 7:20 P.M.

Three Blind Mice: Last month the Republican-controlled state senate voted to remove the criminal penalties portion of a bill calling for a statewide code of ethics. After the latest demonstration of the lack of ethics in the executive branch, many lawmakers are suggesting that those provisions be put back.

It bothers me that such a law should even be necessary, but judging by the recent ethics flap, something needs to be done. Linda Pepin, long-time Benson insider and Cabletron right hand, has departed her volunteer position about $187,000 richer, thanks to brokers fees she collected for her part in securing a new provider for state employee health insurance.

Pepin was encouraged to come to work in the Benson administration by her former Cabletron boss. Also brought over was former Cabletron executive Joe D’Alessandro who, until his resignation this past Friday, was Benson’s personnel director. D’Alessandro resigned just moments before the Attorney General, Peter Heed, announced that his office recommended D’Alessandro’s removal from office for hiring the insurance broker who funneled the $187,000 in broker fees to Pepin. Pepin was in fact not actually an insurance broker at all, and she therefore was not eligible to receive these commissions. The catch is, because she was not a broker, she cannot be prosecuted criminally and she cannot be ordered to give up the money.

The most the state can get is a $42,500 fine from Pepin and about $2,500 from Dennis French, the insurance broker, who admitted to breaking an insurance law and agreed to pay the fine.

Attorney General Heed announced that “the behavior exhibited here. . .was inappropriate, unacceptable and, in the end unethical,” however, he announced that his office “did not find evidence sufficient to bring a criminal charge.” Benson seems to have become stuck on the fact that the Attorney General found no evidence of illegal activity. He said, “the Attorney General found no evidence of illegal activity. However, I agree with his conclusion that it is unacceptable for state employees, volunteers or elected officials to give the appearance of impropriety.”

This is not the right response. Benson has not said, “This was wrong. It was an abuse of the public trust and I support finding a way to ensure that these types of abuses don’t occur in government.” All Benson could muster in the face of clearly unethical behavior by one of his friends, was that it gave an appearance of impropriety. It’s more than an appearance, it’s unethical at least. Had Pepin actually been an insurance broker, it would have been illegal and it should be criminal.

Because Pepin was a volunteer, she was not subject to the same level of scrutiny as she would have had she actually been an administration official, like D’Alessandro, or an real state employee. Without ethical or legal constraints on her behavior, Pepin was put in a position were she was not accountable for her actions and where she could make substantial income from the “public coffers.” Lest we forget, it was the Governor who set the whole thing up.

This entire event is just another in a series of unfortunate examples of the Governor’s failure to grasp the difference between the public and the private sectors. The system of rewards and the methods of operation that Benson obviously found acceptable at Cabletron are clearly way out of bounds in government. Volunteers are not supposed to be handsomely paid in questionable financial deals simply because they are in the position to do so. According to Benson’s statements, because these actions were not illegal, they only “appear improper.” There is a missing link in the governor’s thinking because there is behavior that is short of illegal, but clearly and unequivocally improper. The Pepin/D’Alessandro insurance deal is a prime example.

Meanwhile, the blame game continues. Just as corporate executives caught pushing the bounds of ethics routinely blame others for their shortcomings, Pepin is blaming Administrative Services Commissioner Donald Hill. Pepin claims Hill is responsible for failing to supervise D’Alessandro, who set up the illegal fee arrangement for Pepin through French. That’s twisted logic at its best. Pepin got caught with her hand in the cookie jar, and she ought to just own it.

But it gets better. Benson, who has yet to endorse the ethics bill winding its way along a tortured path in the legislature, has now re-imposed an executive order created by Governor Shaheen requiring state officials to file financial disclosure statements. Of course, Pepin was not a state official, she was a volunteer.

I don’t think that the Governor gets the problem here, so I don’t expect that much will change in this administration. This is the second major ethical scandal in two years and all the Governor can see is “an appearance of impropriety.” The blame game around this scandal looks a lot like three blind mice to me.


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