For 15 years Michigan residents and families of loved ones who have been injured or killed by drugs like Rezulin, Accutane and Vioxx have tried to get their day in court. But they've largely been stymied by a state law that shields drug makers from legal liability.
Even the state itself, seeking to recover millions in Medicaid dollars spent on ailments caused by Vioxx, was prevented from doing so by its own appeals court.
Michigan passed the law in 1995, and it remains the only state in the nation with such sweeping legal immunity for drug makers.
But Wisconsin Republicans want to enact similar legislation that would shield drug makers from lawsuits over FDA-approved drugs. And the proposal here would go further, including immunity for makers of FDA-approved medical devices like automatic external defibrillators, heart valves and artificial hips. They also would be granted immunity from lawsuits if their products had inadequate warnings.
"If this becomes law, all of those people who are injured, or the families of people who die, will just be SOL," says Mike End, the president of the trial lawyers group Wisconsin Association for Justice.
And that's only one of the so-called "tort reform" measures being proposed by Gov. Scott Walker and Republican lawmakers in the latest special legislative session on job creation.
Another would lower the interest rate on awards, which in some cases could save corporations hundreds of thousands of dollars and reduce their incentive to pay up in a timely manner. And another would cap attorney fees, which some say is designed to make it difficult for plaintiffs to find attorneys who will take their case.
Trial lawyers, obviously, oppose the measures, saying they won't create a single job. The Republican lawmakers who proposed them, including state Sen. Rich Zipperer, R-Pewaukee, the chairman of the Senate Judiciary Committee, whose name is on all three proposals, didn't return calls seeking comment on exactly how they would create jobs, so I called the Washington, D.C.-based American Tort Reform Association, which is keeping close tabs on the situation in Wisconsin.
"This is basic economics," says Darren McKinney, a spokesman for the association. "Any dollar that I as a producer am not spending on a lawsuit or defending against a lawsuit is a dollar that can go into R and D, it can go into worker training, it can go into capital investment, it can go into worker benefits — and job creation."
Last January, I wrote an article about how state Republicans, in a sweeping piece of so-called tort reform legislation, sharply curbed citizens' ability to win awards for product liability, nursing home negligence and medical malpractice — all in the name of job creation.
"All those deprivations of rights for the people of Wisconsin resulted in zero job growth," says End. "What jobs have any of those things brought in? All they've done is take away the rights that the people of Wisconsin are entitled to. And this is more of the same."
According to a report by the Center for Justice and Democracy, a national consumer rights group, in the years since former Michigan Gov. John Engler signed the drug company immunity into law, mergers and acquisitions in the industry have resulted in the loss of thousands of big pharma jobs from that state. A PDF of the report is attached to this post.
But McKinney says those jobs left the state because of continued assault on the drug makers' immunity law, particularly in 2006 when Democrats nearly had enough support to kill it.
In 2007, Pfizer eliminated 2.400 jobs and closed several facilities in Michigan. McKinney says the reason was the push to overturn the immunity law although Pfizer denied that at the time.
"It's not for me to call them liars and say that they were obfuscating or whatever, because I have no way of knowing that for certain," he says. "But I will say it was at least a coincidence, and I would argue based on my life's experience that it's probably a little more than a coincidence."
End says the notion that drug and device makers will move to Wisconsin if they are protected from lawsuits from people in the state just doesn't make sense.
"Manufacturers aren't going to come to Wisconsin," due to an immunity bill, he says. "They're just going to continue manufacturing the dangerous products wherever they're currently manufacturing them, and the only benefit is they now know that when their defective products are sold in Wisconsin they don't have to worry about it."
Wisconsin's proposed legal immunity for drug companies and medical device manufacturers comes at a time when the FDA is speeding up its approval process for new drugs and devices and corporations are steadily increasing their influence over FDA decisions. Here's a Washington Post story on that.
End says the reduction on interest paid on a judgment is nearly as egregious as the corporate immunity from lawsuits.
The proposal would lower the amount of interest on a judgment against a business or a corporation from 12 percent to the prime rate — currently 3.25 percent — plus 1 percent.
Why is that important? Let's say you have a judgment worth $1 million. A 12 percent interest rate would amount to $120,000 a year, and some cases linger in the court system for a year or two as they work their way through the appeals process. But 4.25 percent? That's $42,500, which is chicken feed for the likes of Merck and Pfizer.
Says End: "Right now there's a big incentive for the wrongdoer to pay the judgment because they're facing a 12 percent interest for however long it takes to get paid. And if they appeal and the case goes to the Supreme Court, it will be two years and the interest will be huge. But if this bill passes they won't have the same incentive to promptly pay the injured party and they'll say, ‘What the heck, we'll appeal this thing for two years, we'll have the money invested over that period of time, we'll do OK on our investments, it won't cost us anything.' So I predict that if this bill were to pass you'll see a lot more appeals by businesses, corporations, insurance companies."
McKinney says the interest rate is ridiculously high, far more than interest rates imposed by the private sector. And some companies, both large and small, can't always promptly pay the "monstrous" verdicts imposed on them by juries.
"That's a fairly stiff rate of interest," he says. "What else do we pay 12 percent on? You can get a 30-year mortgage for less that 4 percent right now."
A third proposal would limit attorney fees to three times the award. Let's say an attorney works on a case that wins $10,000. That could earn that attorney $30,000. Maybe that's a lot of money to you and me. But it's not a lot of money if the case requires months or years of work. An attorney might even take a loss.
End says the Wisconsin statute that allows the winning side to recover attorney fees ensures that those with legitimate claims that seek relatively modest awards can get an attorney. But if the proposal becomes law, good luck.
"Consumers who have relatively modest claims in value won't be able to find lawyers to take their case anymore," End says.
But McKinney says, while not all trial lawyers are bad, there are always bad apples. And laws like the cap on attorney fees can lower the incentive to abuse the system.
Some civil cases have merit, he says, but "dockets are jam packed with a lot of garbage cases, so to the extent we can lower the incentives for junk cases clogging our courts, it seems to us that everybody other than the bottom-feeding trial lawyers win."
Bottom line, End says, Walker and the Republican-led Legislature are out to make it very difficult to sue and gain significant damages from businesses, even for the most egregious negligence. And that means errant corporations and businesses will have little incentive to change their ways.
"I don't understand in any way the justification for doing this other than, ‘Let's nail the little guy one more time,'" End says. "It's just one thing after another with this administration."
And how do they get away with it? A recent documentary asserts that savvy marketing plays a big part.
A week ago, the Association for Justice and the Center for Media and Democracy held a screening of Hot Coffee, an HBO documentary about how tort reform was sold to the American public. The title refers to the famous McDonald's coffee incident, in which 79-year-old Stella Liebeck spilled a cup of McDonald's coffee on her lap in 1992 and sued the company. A jury awarded her $2.86 million in punitive damages, later reduced by a judge. Eventually she settled for an undisclosed amount under $600,000.
For tort reformers, it was a gift from the gods. They managed to portray Liebeck as a poster child for frivolous lawsuits, and the media went along. Several "reformers" were interviewed in the film. They changed their minds about Liebeck's case when they were presented with the facts, including pictures of the horrific burns she suffered, which actually threatened her life.
The court case revealed that hundreds of others were burned in the same way, but McDonald's didn't do anything about it. Her victory in court resulted in McDonald's lowering its beverage temperature.
In addition to three other case studies, the movie also documents how tort reform was foisted on the American people by the U.S. Chamber of Commerce and politicians looking to score campaign donations from big business.
"I knew that people were being bamboozled and manipulated, and the information was being distorted so that (the public) would think the system was broken," the filmmaker, former trial attorney Susan Saladoff, told attorneys at an Association for Justice gathering last week. "Because if they think that the system is broken and there are too many frivolous lawsuits and it's jackpot justice and greedy trial lawyers, then they would be more open to reforming or changing it, not really understanding that that is essentially giving up their rights."
Since its debut on HBO, the movie has gotten a lot of attention, even prompting tort reformers to dash out their own film, InJustice, which ran on the ReelzChannel and has been strongly endorsed by the U.S. Chamber of Commerce.
Saladoff's movie is an eye-opener. It will be out on DVD in coming weeks.