Health Law Perspectives
March 2008
In this issue:
Mass Tort Suits Against Healthcare Enterprises: Strategiesfor Dealing with a Tsunami
HLB CalendarMass Tort Suits Against Healthcare Enterprises: Strategies
for Dealing with a Tsunami
By David D. Johnson
The Risk of Mass Tort Litigation to Healthcare Organizations
Mass tort suits based on spills of pollutants into the environment or defective products have become increasingly common. As this article is being written, the pharmaceutical company Merck is in the process of attempting to gain approval of a $4.85 billion settlement of some 47,000 claims by persons who took the drug Vioxx and claimed that it caused heart attack or stroke.1 Healthcare providers and pharmaceutical and medical equipment manufacturers are susceptible to mass tort suits because they provide common procedures or common products to large numbers of people. If a mass procedure or product causes injuries to a single person, plaintiffs lawyers can be expected to claim that similar injuries were caused to every person to whom the product or service was provided. For example, in 2002, two patients at Tenet Healthcare Corporation's hospital in Redding, California – one of whom was a plaintiffs’ attorney – claimed that physicians at the hospital had performed unnecessary heart procedures on them. Over the next three years, over 1,000 other heart patients at the hospital raised similar claims. Tenet settled these claims in 2005 for $395 million.2
The Perverse Logic and Incentives of Mass Tort Case
A large part of the increase in mass tort cases in recent decades has been caused by the willingness of the federal and state court systems to combine or “aggregate” tort claims with common factual elements.3 Courts have been reluctant to grant class certification to mass personal injury cases.4 However, federal courts and many state courts have long permitted tort claims with common fact patterns to be transferred from the different originating courts where they were filed to a common judge, where they are coordinated or consolidated for at least pretrial proceedings.5 In addition, plaintiffs attorneys often file dozens or hundreds of individual plaintiff cases together as a single lawsuit – effecting instant “claims aggregation.” State and federal courts view claims aggregation as a critical tool to relieve the burdens on the courts that hundreds or thousands of individual cases could cause.6 The reality is that claims aggregation has greatly increased the number of tort claims as well as the damages awarded. Studies with mock juries have shown that as the number of plaintiffs in a case increases, juries become more likely to blame the defendant for the injuries of the plaintiffs.7 I term this phenomenon “instant epidemiology”. To the lay person, a large plaintiff group looks like reasonable sample of the population. If dozens or hundreds of plaintiffs claim similar injuries and were exposed to a common chemical or had a common procedure, this leads to the irresistible conclusion that the chemical or procedure caused their injuries.8 Of course, the truth is that a self-selected group of complainants is not a scientifically valid sample of the population, but one that is skewed toward higher incidence of disease – which is why they joined the mass tort suit in the first place.9 Mock jury studies have also shown that damage awards given to plaintiffs with weak cases increase when the weak cases are tried with strong ones. Jurors apparently believe that all plaintiffs will eventually share the fate of the plaintiffs who suffered the greatest injuries.10 The judgment entered in favor of a group of plaintiffs will likely exceed the sum of the judgments entered in favor of those same plaintiffs tried individually.11 Because weak claims have a greater chance of recovery if joined in a mass tort action, this has greatly increased the “claim filing rate” of tort cases filed as part of mass tort cases when compared to cases filed individually.12 Not only have plaintiffs lawyers learned that the chance and size of their recovery increases along with the size of the plaintiff class, but they have also found that litigating large number of claims simultaneously is also more profitable, because the costs of litigation can be spread among many plaintiffs.13 The ability to spread costs among many plaintiffs also permits plaintiffs’ attorneys to spend far more money on trial preparation than would be feasible for a single plaintiff case, thus increasing (although not guaranteeing) their chances of success.14 Given the attractiveness of mass tort suits for the personal injury plaintiffs’ bar, whenever information emerges about even the possibility of a link between disease and the use of a mass marketed product, the hint of an improper medical procedure or the presence of a chemical spill, mass tort attorneys begin aggressive marketing for plaintiffs. Marketing methods include internet websites, “community” meetings, door-to-door salesmanship and media events to get as many plaintiffs as possible to join in a single suit.
Strategies to Cut a Mass Tort Case Down to Size
The good news is that courts have become increasingly open to procedures which permit defendants to minimize some of the prohibitive costs and logical fallacies created by mass tort suits. Among the most effective strategies is to “unbundle” the case – to take 10, instead of 1,000 cases to trial. In many mass tort cases, courts have sanctioned the selection of a small number of “test” or representative plaintiffs (often 8-16) on which to perform discovery and pre-trial motion practice, and potentially to take to trial. The cases of the remaining plaintiffs are stayed pending trial of the test plaintiffs.15 This procedure not only dispels some of the prejudice to defendants caused by claims aggregation, but it also vastly reduces litigation costs. For example, instead of taking depositions of 1,000 plaintiffs and their treating physicians, defense counsel only has take such depositions for 10 plaintiffs. To make the test plaintiff selection, plaintiffs provide “screening” level information by filling out questionnaires in which they detail their medical current claims and treatment, their past medical history, their work and educational history and their exposure claims. Once this information is provided, either the court or the attorneys from the parties select the test plaintiffs. Care must be taken with plaintiff selection to ensure that the test-case method produces results that provide meaningful settlement information.16 Properly-selected test cases often permit the parties to determine the likely litigation outcome of the remaining cases, thus permitting a global settlement or other resolution. Another effective strategy is to create a case plan that focuses the court on weeding out weaker cases via pre-trial discovery and summary judgment motion practice on causation issues.17 Many cases are resolved in their entirely based on grants of summary judgment by a trial court on medical causation grounds for the test plaintiffs. After such a loss, plaintiffs’ counsel will often dismiss the remaining cases, or settle them for a nominal sum.18 To effectuate these strategies, defense counsel should request that the court enter a case management order. This order should provide for successive stages for completion of plaintiff questionnaires, test plaintiff selection, exposure and test plaintiff discovery, expert discovery, and summary judgment motion practice on medical causation issues. A case management order should also provide for the organization of defense and plaintiffs counsel, a process for settling the pleadings and electronic service of documents. To further control costs and give their efforts a greater chance of success, defendants will often want to use joint experts and file joint summary judgment motions – although such decisions may not be appropriate for a case management order.20 The vast majority of mass tort cases, like other civil cases, are resolved either through summary judgment motion practice before trial or through settlement.21 While the logic of mass torts often works in the favor of plaintiffs, the filing of a mass tort case, rather than a series of individual cases, can make it easier for a defendant to achieve a global settlement of claims arising from an event. This can reassure shareholders or lenders that the company will survive intact.22 There are a number of methods to achieve at least a reasonable facsimile of a global settlement, such as seeking class certification for the case, creating group settlements which become effective only if accepted by virtually all plaintiffs, and establishment of a settlement fund with a claims bar date for unfiled claims.23 Should the case go to trial, defense counsel should again weigh the problems caused by aggregating weak cases with strong cases. Jury research suggests that if a strong case can be made for one plaintiff, this tends to bias the jury toward the cases of weaker plaintiffs, even if the fact patterns are very different – such as involving different diseases.24 If trial is to occur, the entire test group of plaintiffs may be brought to trial at one time.25 However, this is not the only option. To further minimize the prejudice caused by claims aggregation, defense counsel may consider seeking successive trials of individual plaintiffs.26 Defense counsel may also want consider seeking bifurcation of the trial for separate consideration of causation, negligence and damages. A number of jury studies have found that bifurcating issues such as liability v. damages, general causation v. liability and liability v. punitive damages can increase the defendant’s chance of prevailing.27 While there is debate as to the reason for this effect, one possibility is that jurors tends use bad facts from one phase of the case to color their conclusions about other phases in the case. I have often heard plaintiffs’ attorneys assert that in many environmental mass tort cases, the science for causation simply isn’t there. However, if the defendant can be shown to have been grossly negligent or to have attempted to cover up the spill, jurors will gloss over gaps in the causation evidence. Proper staging of the issues in the case for the jury can prevent such blurring of the lines.
Conclusion
Because they provide common products and services to large numbers of people, health care companies are at risk for mass tort suits. While defending against a tsunami of litigation by hundreds or even thousands of plaintiffs can seem intimidating, effective defense techniques exist to dramatically reduce litigation costs and to focus the court’s attention on the facts, and not the hype. With careful case planning and execution, mass tort cases can be cut down to size and often resolved either via dismissal or a settlement that preserves enterprise value.
For more information, please contact David Johnson at 310.551.8154.
1 See Merck Agreement to Resolve U.S. Vioxx Product Liability Lawsuits. http://www.merck.com/newsroom/press_releases/corporate/2007_1109.html (visited February 7, 2008).
2 See Tenet Healthcare Corporation, Form 10-K, pp. 30-31.
3 See Federal Judicial Center, Manual for Complex Litigation (4th) ß22.1 (“Procedures to aggregate claims sometimes encourage the filing of questionable claims, accelerate the rate at which claims are presented or even create a mass tort out of what otherwise might have been a flurry of similar cases that would have quickly faded away.”).
4 See, e.g., Liggett Group Incorporated v. Engel, 853 So.2d 434 (Fla. App. 2003) (finding that certification of a state-wide class of 700,000 cigarette smokers was not warranted, given that each class member would be required to provide extensive proof regarding individualized issues of liability, affirmative defenses and damages); Federal Judicial Center, Manual for Complex Litigation (4th) ß22.7 (noting that federal courts have “ordinarily” disfavored – but not ruled out entirely – using class actions in dispersed mass tort cases).
5 For transfer in the federal system, see 28 U.S.C. ß 1407. For a recent survey of state coordination rules see Yvette Ostolaza, Michelle Hartmann, Overview of Multidistrict Litigation Rules at the State and Federal Level, 26 Review of Litigation 47 (2007).
6 S.Rep. 109-14, regarding P.L. 109-2, The Class Action Fairness Act of 2005, 2005 U.S.C.C.A.N.3, 2005 W 627977 at *7 (noting that courts began to expand the types of claims they were willing to certify as class actions “because they feared that the large number of individual mass tort cases could slow or stop the judicial system”).
7 Irwin A. Horowitz and Kenneth S. Bordens, Mass Tort Civil Litigation: The Impact of Procedural Changes on Jury Decisions, 73 Judicature 22, 24 (1989).
8 Peter A. Drucker, Class Certification and Mass Torts: Are “Immature” Tort Claims Appropriate for Class Action Treatment? 29 Seton Hall Law Review 213, 224 (1998).
9 See id. at n. 43.
10 Irwin A. Horowitz and Kenneth S. Bordens, Mass Tort Civil Litigation: The Impact of Procedural Changes on Jury Decisions, 73 Judicature 22, 24 (1989).
11 Peter A. Drucker, Class Certification and Mass Torts: Are “Immature” Tort Claims Appropriate for Class Action Treatment? 29 Seton Hall Law Review 213, 220 (1998).
12 See Thomas E. Willging, Mass Torts Problems and Proposals: A Report to the Mass Torts Working Group, 187 F.R.D. 328, 346 (1999).
13 See Deborah Hensler, The Role of Multi-Districting in Mass Tort Litigation: An Empirical Investigation, 31 Seton Hall Law Review 883, 889 (2001).
14 I worked on the defense of a recent mass tort case brought by students at Beverly Hills High School (Moss, et al. v. Venoco, et al., Los Angeles County Superior Court, Case No.____) who claimed that their leukemias and other cancers were caused by exposure to benzene from oil drilling operations near the campus. To model the effect of emissions from the drilling operations, the plaintiffs attorneys hired a wind tunnel expert to build a scale model of Century City and the high school campus and to film wind tunnel videos which showed billowing clouds of blowing over the campus from the emission sources. Such a vastly expensive project would not have been possible for a single plaintiff case.
15 See Manual for Complex Litigation at ß 22.314 (recommending that a judge “consider setting several individual cases on a schedule for pretrial motions, discovery and trial as test cases, while holding other cases or claims in abeyance.”).
16 A frequent method of selection is to have plaintiffs and defense counsel each pick an equal number of plaintiffs. One pitfall is that if the defense counsel picks weak cases, plaintiffs counsel may simply chose to dismiss these before trial, leaving only the stronger cases. The Manual for Complex Litigation recommends that the judge direct the parties to select cases randomly or limit the selection to cases that the parties agree are typical of the mix of cases. Manual at ß 22.315.
17 Establishing causation in a personal injury case generally requires the plaintiff to provide medical expert testimony. Ordinary rules of civil procedure often provide for disclosure of experts shortly before trial – frequently too late to bring a summary judgment motion. For example, in California, expert disclosures ordinarily do not have to be provided until 70 days before trial. Summary judgment motions must be filed at least 105 days before trial. See California Code of Civil Procedure Sections 437c(a), 2034.220. A court may order earlier simultaneous disclosure. Zellerino v. Brown 235 Cal.App.3d 1097 (Cal.App. 1991). This means that defense counsel should ask the court to create a case plan that permits disclosure and discovery of experts in sufficient time to bring a summary judgment motion causation.
18 For example, after a grant of summary judgment against the stalking horse plaintiff in Stadish v. Southern California Gas Co., 2002 WL 1360667 (Cal.App. 2002), plaintiffs’ counsel abandoned their plans to pursue several other related cases for for additional plaintiffs. For further details on case management orders see Manual for Complex Litigation 22.6; Deskbook on the Management of Complex Civil Litigation, ß 3.52.
20 It is important to coordinate motion practice so that multiple motions are brought by different defendants on the same issue. In many cases, I have seen an initial and poorly-written motion by one defendant sabotage subsequent, better conceived motions by other defendants. A judge is also more likely to devote the time necessary to fully consider complex issues if brought in a single, joint motion, rather than in numerous motions by many parties.
21 See Brian J. Ostrom, David B. Rottman, and John A. Goerdt,A Step Above Anecdote: A Profile of the Civil Jury Trial in the 1990s, 79 Judicature 233, 234 (1996) (reporting that jury verdicts accounted for only 2.7 of all tort case dispositions in state courts in the 1990s).
22 Hensler, The Role of Multi-Districting in Mass Tort Litigation: An Empirical Investigation, 31 Seton Hall Law Review 883, 890 (2001).
23 The last two methods are currently being employed in the proposed Vioxx settlement. See Merck Agreement to Resolve U.S. Vioxx Product Liability Lawsuits. http://www.merck.com/newsroom/press_releases/corporate/2007_1109.html (visited February 7, 2008).
24 Kenneth S. Bordons and Irwin A. Horowitz, The Limits of Sampling and Consolidation in Mass Tort Trial: Justice Improved or Justice Altered? 22 Law & Psychology Review 43, 60-622 (1998)
25 For federal cases transferred to a court by an MDL panel, the transferee court may lack authority to conduct trials without the parties’ consent. See Lexecon, Inc. v. Milberg, Weiss, Bershad, Hynes & Lerach, 523 U.S. 26 (1998)
26 For other options, see Manual for Complex Litigation, § 22.93; Deskbook on the Management of Complex Civil Litigation, § 3.57.
27 Hans Zeisel & Thomas Callahan, Split Trials and Time Saving: A Statistical Analysis, 76 Harvard Law Review 1606 (1963); Irwin A. Horowitz and Kenneth S. Bordens, Mass Tort Civil Litigation: The Impact of Procedural Changes on Jury Decisions, 73 Judicature 22, 26 (1989); Stephan Landsman, Shari Diamond, Linda Dimitropoulos, Michael J. Saks, Be Careful What You Wish For: The Paradoxical Effects of Bifurcating Claims for Punitive Damages, 1998 Wisconsin Law Review 297 (1998).
HLB Calendar
March 7 |
Medical Education Services – Pofessional Developement Network, Dublin, CA. Linda Kollar co-presents a full-day seminar on Legal Issues in Behavioral Health in California with Allan Rawland, ACSW director of Behavioral Health for San Bernardino County. |
March 13 |
Los Angeles County Bar Association Healthcare Law Section Managed Care Program. Daron Tooch presents Hot Topics in Managed Care. |
April 9-11 |
AHLA Institute on Medicare and Medicaid Payment Issues, Baltimore. Lloyd Bookman presents Provider Reimbursement Review Board Appeals, John Hellow presents Medicare Litigation Update, and Byron Gross presents Medicaid Litigation Update. |
April 11 |
California Society for Healthcare Attorneys Annual Meeting, Napa. David Henninger is a panelist at the Stark Law Intensive. |
April 16-17 |
Technology at the Crossroads : Maximizing Clinical Integration |
April 18 |
Healthcare Association of Southern California Annual Conference, Dana Point. Daron Tooch speaks on Recent Developments in Managed Care Payor/Provider Disputes. |
June 12 |
ABA 7th Annual National Institute on the Civil False Claims Act and Qui Tam Enforcement, Washington, D.C. Patric Hooper is a panelist for Recent Developments on Damages and Penalties. |
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