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Trial Lawyers Find Operating Room

How hospitals became jackpots for America's trial lawyers.

By 8.29.06

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A small town of less than 2,000 households, Hurricane, West Virginia, is betting its future on its location amidst "Advantage Alley," a five-county partnership promoting economic development along the state's Interstate 64 corridor.

Yet, ironically, the town suffers from a major disadvantage. Hurricane, it turns out, is caught the eye of a storm now threatening America's health industry: over-zealous trial lawyers who, in this instance, have descended upon the community's sole hospital and buried it underneath an avalanche of lawsuits, thus compelling the citizens of Hurricane and tens of thousands of others West Virginians to look elsewhere for reliable medical care.

At issue is the future of Putnam General Hospital in Putnam County, West Virginia. More than 100 lawsuits have been filed against Putnam General's parent company, Hospital Corporation of America, seeking billions in damages for alleged medical malpractice. Specifically, the suits claim wrongdoing on the part of Dr. John Anderson King, an orthopedic surgeon who was on staff at Putnam General for eight months between 2002 and 2003, before the hospital suspended his privileges.

HCA's response to this litigious piling-on? It planned to shut down the hospital, which would have occurred at August's end had not a nearby medical center intervened. However, with the new management running the hospital on only an interim basis, Putnam General's future remains very much in doubt. If the past is any indication, the rural community is in deep trouble. Twenty-five years ago, it took county officials more than five years to convince the West Virginia Health Care Authority to approve construction of a new hospital.

This one county's plight raises at least two important questions about the future of America's health industry, the first being the reliability of both doctors and medical information in this Information Age. The fact is Dr. King was licensed to practice in West Virginia and nine other states. HCA contends that its background check found nothing troublesome regarding the doctor. However, as the Wall Street Journal has reported, medical data bases contained faulty or incomplete information. So while trial lawyers look for a big payday (trial lawyers typically walk away with at least one-third of an award), what goes overlooked is the veracity of government watchdogs, who theoretically should be safeguarding our hospitals just as they keep a watchful eye on our airports and airwaves.

Which leads to the second question: what's motivating the trial lawyers? It is really easing others' suffering, or is it just another case of fattening one's own wallet?

That so-called "jackpot justice" is a cash cow on today's society is hardly a moot point. One study has found that America's trial lawyers generate about $46 billion annually, with revenue growing more than 11% a year -- nearly triple the rate of growth in the nation's domestic product. A recent report by the Manhattan Institute finds that medical malpractice liability now accounts for one-tenth of America's "tort tax," which each year costs a family of four more than $3,300.

And if you doubt that dollar signs weigh as heavily as justice's scales, consider this amusing sideshow that's spawned from Putnam County's woes. As anyone who watches late-night television knows, trial attorneys advertise to generate business. And, in the case of Putnam General, they do their best to try their cases in the court of public opinion.

But, apparently, not all trial lawyers get along.

A Charleston attorney has filed suit against 25 of his former clients in the Putnam General case, claiming they owe him $76,000 for "litigation-related costs and expenses" while he represented them. A fellow local trial attorney has called the case "nuts" and "unprecedented." It turns out that the two attorneys have gone after each other in court before, over allegation of fraud, extortion, and how to divide an $833,000 "jackpot" from a drug manufacturer.

Granted, trial lawyers aren't the only profession to be profit-motivated. But the question is: profit to what end?

The West Virginia Record, a legal journal, summed it up neatly in a recent editorial. "Justice needs to be served," it opined. "The problem is that lawyers want much more than that."

It went on:

A sympathetic lot, as spectators we casually figure big numbers like $50 million or $100 million in damage are fair compensation for whatever turmoil they're meant to cure. Still we never stop to think exactly where this money comes from -- how the expense of putting a family on easy street is exacted not just from the defendant and their insurance company, but the rest of us.

Higher prices, lost jobs, fewer life-saving drugs, and in this case, a disappearing hospital -- these aren't hidden costs. They're as real as the impact they have on our lives -- and on our pocketbooks. Killing Putnam General won't make the world more just or medical care more consistent. But it will make life in Putnam County less safe and a handful of people -- of lawyers -- fabulously wealthy.


America's trial lawyers recognize this, which may be why they've been busy polishing their image. Recently, for example, the American Trial Lawyers Association voted to change its name to the American Association for Justice (the Washington Post sarcastically noted that the runner-up choice was "Association for Apple Pie, Motherhood, and the American Way").

The Shakespeare question notwithstanding, what's in a name does matter. Across America, trial lawyers have wreaked havoc on state and local economies. Take California, for example. Trial lawyers there have launched securities class-action lawsuits against Silicon Valley, have discouraged job-growth by threatening employment lawsuits, and have suppressed the state's housing sector with frivolous construction-defect lawsuits. Perhaps California, with its world-class economy, can afford the hassle. Try telling that to West Virginia, which was just ranked 49th by Forbes.com among "best states for business."

America's legal system, used properly, can produce marvelous results. But when used improperly by those more interested in cash equities than social inequities, it becomes an impediment to real progress. Look no further than Putnam County, who may one day be looking at a life without local doctors or local emergency care.

Such is the future of America if, left unchecked, "jackpot"-driven trial lawyers are free to treat hospitals as their latest slot machine.

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About the Author

Bill Whalen is a research fellow at the Hoover Institution, where he follows California and national politics.