Sanctioned Race And Gender Bias In Tort Compensation?

For its next witness, the defense calls the distinguished  forensic economist...

“For its next witness, the defense calls the distinguished forensic economist…”

I was going to make this an ethics quiz, but there really is only one answer. The practice is ethically indefensible, and noxious too. The only question is how and why it is still occurring.

One reason may be that not enough people know about it. I certainly didn’t. Kudos to the Washington Post for shining light on a terrible, and terribly unethical, practice.

The American tort system frequently uses race and gender statistics to calculate the damages victims or their families should receive in compensation after someone is catastrophically injured or killed by another individual’s negligence or misconduct. Experts are allowed to testify regarding what a particular victim might have achieved and earned during their lives, were they not dead, or brain-damaged, or paralyzed. Race and gender are among the factors allowed into that calculation.

Writes the Post:

As a result, white and male victims often receive larger awards than people of color and women in similar cases, according to more than two dozen lawyers and forensic economists, the experts who make the calculations. These differences largely derive from projections of  how much more money individuals would have earned over their lifetimes had they not been injured – projections that take into account average earnings and employment levels by race and gender.

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Ethics Hero, If A Bit Late To The Party: Maryland Attorney General Brian Frosh

Horrified by this story in the Washington Post and others like it,  Maryland Attorney General Brian Frosh has filed suit against Access Funding and other viatical settlement companies, asserting that they take advantage of vulnerable victims of lead poisoning by purchasing their structured settlements at less than fair-market value.

Gee, ya think?

I have written about this many times and in other forums, and even been threatened by a few the despicable companies (“It’s your money!”…”I have a structured settlement and I need cash now!”) in this cruel and predatory industry. 

Few in the general public know about it or understand what’s going on. Structured settlement are annuities bought by insurance companies to ensure a regular flow of compensatory damages to personal injury and medical malpractice plaintiffs to cover their medical costs and living expenses. The settlements aren’t given out in lump sums because many such plaintiffs are poor and have no experience handling money. A large payment of millions of dollars guarantees that needy family members and friends will beg, plead for and demand loans and hand-outs, while the recipients themselves are tempted to buy luxuries they have long dreamed about with funds intended to cover lifetime cancer treatments.

As I wrote in a post almost seven years ago…

Once they are on their own, however, the compensated victims are targeted by viatical settlement companies, both those with cute opera-singing commercials and those without. They undermine the sound advice of the attorneys with slogans like “It’s your money!” and try to persuade the former plaintiffs to unstructure the structured settlement by selling the annuity’s income stream to the viatical settlement company at a deep discount. Result: the annuity company gets the regular income at bargain rates, and the victims get a new, smaller lump sum to dissipate in exchange. The statistics say that the customer of the viatical settlement company will run out of cash long before he or she runs out of the need for it. But for the company, it’s a sweet deal.

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Ethics Musings I : The Dark Side Of Personal Injury Lawyers

better-call-saul

I’ve been reflecting, since yesterday, on the bizarrely angry and intellectually dishonest protests registered here and on his own blog by trial lawyer Eric Turkewitz regarding the aunt who sued her 12-year-old nephew. His arguments, if you can call them that, consisted of constantly shifting the issue from ethics (what the aunt should have done) to law (what the aunt had a legal right to do), denying the core problem (Why would anyone assume that a child is harmed by dragging him into court, subjecting him to examination in front of strangers, and focusing on him as a wrongdoer and responsible for his aunt’s alleges misery, all mandated by the aunt who supposedly loves him?), and appealing to a dizzying list of rationalization and fallacies. He then made his exit by accusing me, a lawyer, of “knowing nothing about the law” (I made no assertions about the law at all—this is not a legal issue) making everyone stupid, and being a narcissist, a full-bore ad hominem attack ending in an ominous “May God have mercy on your soul!” Why would he act like that?

The reason, I realize, is that my posts challenge the basic belief system of the plaintiff’s bar, which I know very, very well having worked in an executive position and run such diverse programs as the research data base, conventions, sections, litigation groups and more over seven years with the Association of Trial Lawyers of America. Now ATLA is called “The American Association for Justice,” a name chosen purposefully to disguise the fact that it is a plaintiff’s lawyer’s lobby by keeping “trial lawyers” out of the name because it had a negative response in marketing studies. (I kid you not.)

Trial lawyers have done a lot of good and important things and continue to, but the profession is corrupting. There is a lot of money to be made, and ATLA–excuse me, AAJ, is devoted to eliminating any limits on their members’ ability to sue anyone for any amount, no matter what harm it does to the economy, the nation, the cost of health care, the bonds of trust in society, personal liberty, or public respect for the civil justice system. Individually, members of AAJ are among the top donors to the Democratic Party, in part to make sure that they can block all Republican efforts to limit jury awards, spurious lawsuits, and damages that have to be paid by negligent corporations when they destroy lives through shoddy products, conspiracies, and other conduct. The other reason is that Democrats support the redistribution of wealth, and trial lawyers profit by it.

In the matter of keeping corporations accountable, the AAJ is, as they will constantly remind us, on the side of the angels. But like other interest groups (the NRA, the ACLU, NOW, and may more) that stake out  extreme, self-serving and unethical positions in defense of legitimate rights, trial lawyers often feel that they must take the position that every injury and misfortune deserves compensation by someone else. Eventually, they believe it. Justice is taken out of the equation for all but the plaintiffs bar’s clients. Justice means that someone else is always at fault. Continue reading

The Next Time You See One Of Those Opera Commercials About Selling Structured Settlements, Think About “Rose”

Rose

Because I worked as the general counsel for the late Richard Halpern, a kind and brilliant man, I know a lot about structured settlement, and also about the slimy businesses that conspire to destroy them. Richard’s company, The Halpern Group, worked with trial lawyers to develop structured settlements for successful plaintiffs who had won long-term damages for catastrophic injuries due to medical negligence, product liability or other torts. Most of these clients were poor, and if their millions in damages, designed to help them survive the rest of their lives, were awarded in lump sums, the result would almost always be catastrophic. These were poor people, for the most part, with poor families and poor friends and neighbors, none of whom had any experience or success managing money.  Drop millions on someone who has never had luxuries of any kind, and a spending spree as well and handouts to needy or greedy friends and acquaintances were sure to follow. For their own protection (or the protection of minors needing lifetime medical care), these plaintiffs of Rich’s lawyer clients were advised to forgo a big lump sum in favor of an annuity which would pay out regular amounts over time.

The plaintiffs own the income stream, but not the annuity itself. With assured income developed according to projected needs, the plaintiffs and their families could be assured of security and relative comfort and well-being—relative, because damages can seldom make up for broken bodies, minds and lives. Let me take over for myself here, from a post I wrote on this topic almost exactly six years ago.

Once they are on their own, however, the compensated victims are targeted by viatical settlement companies, both those with cute opera-singing commercials and those without. They undermine the sound advice of the attorneys with slogans like “It’s your money!” and try to persuade the former plaintiffs to unstructure the structured settlement by selling the annuity’s income stream to the viatical settlement company at a deep discount. Result: the annuity company gets the regular income at bargain rates, and the victims get a new, smaller lump sum to dissipate in exchange. The statistics say that the customer of the viatical settlement company will run out of cash long before he or she runs out of the need for it. But for the company, it’s a sweet deal.

It’s also despicable. The viatical settlement industry like to use lottery winnings, which are usually paid out in annuities like structured settlements, to justify their business. Lottery winning are windfall funds; while the same dissipation  hold for those lump sums (most multi-million dollar lottery winners have no money left after five years), the winners are usually no worse of after the money has been blown than they were before their number came up. When the money is a settlement for an injury, however, losing it is calamity. I would consider a viatical settlement company that only bought the income stream from lottery annuities ethical. There is no such company, however. The victims with structured settlements are a much larger and more lucrative market.

I have written about these legal but unethical businesses more than once. The first time, on The Ethics Scoreboard, I described a viatical settlement company only by using quotes from its own website, and explained what it meant, accurately. The company’s lawyers demanded that I take down the post, claiming that I had disparaged them (by using their own words and making it clear how they made their money.) I was in no position, with a family, a struggling business and aging parents, to engage in a legal battle of principle (though I suspected the company was bluffing, and I didn’t know Ken White and Marc Randazza then, both courageous blogging lawyers who assist bloggers who are threatened, like I was being threatened, to silence them. I took down the post. Continue reading

Superhero Ethics: The Duty To Rescue

Which is the cold, calculating, utilitarian face?

Which is the cold, calculating, utilitarian face?

In the new Superman film, Supie fails to rescue an important character in distress after the character requests that he allow him to perish.

Lawyer and superhero obsessive James Daily, co-author of “The Law and Superheroes” and the Law and the Multiverse blog, has taken to his keyboard to examine whether the transplanted Kryptonian had a legal duty to rescue the victim anyway.

His conclusion, and the law’s, is no. Daily writes,

“People are sometimes surprised to learn that, by default, there is no obligation under American law to help or rescue other people…Even “Good Samaritan” laws do not create an obligation to act as a Good Samaritan, but instead only encourage such acts of kindness by shielding some would-be rescuers from legal liability if they accidentally end up hurting rather than helping the victim. This “American rule” (not to be confused with the American rule for attorneys’ fees) applies even when a life could be saved with the most minimal of effort. As a result it has been called “morally repugnant” and “revolting to any moral sense,” but it is nonetheless the law in most states….” Continue reading

Ethics Quiz: Is It Wrong For A Rescuer To Sue The Victim He Rescued?

"OK, Princess, you'll get my bill for this rescue in five to seven business days."

On March 11, 2009, Mark Kinkaid and David Kelley were riding in Kinkaid’s truck when they saw a detached bumper, headlights and all, lying in the middle of Rt. 23.  Smoke was rising up from the highway embankment,  and the two men concluded that someone was in trouble. The truck stopped, and they got out, hopped a barbed-wire fence, made their way down the steep highway embankment, where they saw a flaming Hummer. Theresa Tanner was trapped inside, screaming for help. They forced their way into the vehicle, pried a door open and pulled Tanner out. She was injured and burned, but after weeks in intensive care, survived.

Now Kinkaid and David Kelley are suing Tanner, claiming that the crash was her fault and that she is liable for the injuries they sustained in rescuing her. They have filed a lawsuit asking for damages of at least $25,000 each. “All I know is that I am not the same man I used to be,” says Kelley, a 39-year-old truck driver and father of five, who says the heavy smoke and fire that day damaged his lungs so that he can’t carry a laundry basket up the three flights of stairs in his home.

The law provides a rationale for such a lawsuit. “The precedent is clear: danger invites rescue … and if you’ve acted recklessly or negligently and someone gets hurt rescuing you, you could be in trouble,” says Stan Darling, a tort law specialist. A well-established principle known as “the Rescue Doctrine” holds that if someone is in peril because of their own negligence or recklessness, an injured rescuer can recover damages if he acted reasonably and can prove that his injuries were caused by the rescue attempt.

That’s the law, however. This is ethics, and your Ethics Quiz today is:

Is it ethical for a rescuer to sue the person he rescued? Continue reading

When Law Professsors Attack!

On his excellent blog “The Ethical Lawyer,” Franco Tarulli sounds a perceptive, and unusual, ethics alarm.

On January 11, 2011, there was another botched police raid at the wrong house, this time in the San Francisco suburb of Castro. Police had apparently given a mistaken description of the house that was supposed to be raided when they sought the warrant. As a result, innocent law professor Clark Freshman was put in handcuffs and scared out of his wits, as police ignored his objections that they had the wrong house. Continue reading

Obama’s Unethical Gift to the Trial Lawyers

After January 1, 2011, when you begin to process all the new taxes coming your way and all the deductions you can no longer take, think about this:

The nation’s largest trial lawyer trade group, the American Association for Justice, has announced it was informed by Obama Administration officials that the U.S. Department of Treasury will give its members (and all tort lawyers) a tax break on contingency fee lawsuits. The new provision is expected to mirror proposed legislation by Sen. Arlen Specter, himself a lawyer, that was previously rejected by Congress last year. That bill would have allowed attorneys to deduct up-front costs in contingency fee lawsuits. Continue reading