Law: the Good, the Bad, the Ugly

PostBy: stockingfull On: Fri Nov 02, 2007 9:51 pm

Yanche wrote:I got a million dollar "umbrella" policy when I was on the board of directors of several charitable and community associations. A local group of pro land development advocates didn't like our support of restrictive growth policies. They threatened to sue the organization and each member individually. Fortunately there were several corporate lawyers on the BoD that knew a bit more about the law and put the threats in perspective. I've kept my "umbrella" policy. It's cheap and gives me a sense of security, perhaps falsely.

As the old saying goes, "No good deed goes unpunished."

Recently finished a long bankruptcy litigation in which many trustees got sued even though it was a not-for-profit hospital whose board they served on. And that was in spite of state statutes which purported to shield the volunteer directors. But because there was a $20M "D&O" liability policy, there "must have been some liability," right? :roll:

It was even wackier than most litigation because it was Bankruptcy Court (which can be like finding yourself down the rabbit hole), but the moral of the story is simple: nobody should ever agree to serve on ANY board of directors without both "Directors and Officers Liability" insurance and an indemnity agreement from the organization against all defense costs. Because the first thing the D&O carrier typically does is to deny coverage based on some claimed misrepresentation in the policy application. And the carrier will never pay for the cost of that "coverage" litigation.

It got so bad that, toward the end of the case, we all were wondering why one would even bother buying D&O cover, because (a) it's a magnet for litigation, and (b) the carrier always wants to deny coverage anyway. But one need only look above to see the worries that can result from not having enough insurance.

So, like with so many things in life, we're damned if we do and damned if we don't. :banghead:
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PostBy: Richard S. On: Sat Nov 03, 2007 1:28 am

Note I changed the title, original was poor choice.



In my case they left it open, I'm pretty sure there isn't such a rule here tp prevent asking during the trial but they never asked for a specific amount. We could have awarded the guy millions.

stockingfull wrote:Has anybody checked recently to see what medical care costs?

How much of that do you think is attributed to lawsuits? It's a Merry-go-round affect, as the judgements go up so do the insurance costs. ... 4/Tort.pdf

At nearly $27 billion in 2003, medical
malpractice costs translated to $91 per
person. This compares to $5 per person
in 1975 (not adjusted for inflation).

Even worse:

The U.S. tort system cost $246 billion
in 2003, which translates to $845 per
or $35 per person more than in
2002. This compares to a cost of $12
per person in 1950 (not adjusted for

That's $845 for every man, woman and child in the U.S. Quite a hefty bill to say the least.
Richard S.
Stoker Coal Boiler: Van Wert VA1200
Coal Size/Type: Buckwheat/Anthracite

PostBy: stockingfull On: Sat Nov 03, 2007 10:57 am

1. How do you define "frivolous?" The ones you don't like? :roll:

2. Insurance companies are interesting; what they do is keep score, and of course take a nice profit. So, if malpractice costs have gone up, that means that more professionals (whether doctors, lawyers, accountants or what-have-you) have gotten caught making mistakes. That's only bad if you're drinking the Kool-Aid that people somehow shouldn't be allowed to make those claims; it's pretty darn good if you've benefited from the either the learning curve or winnowing-out process which litigation feeds back into the system. Or, if you were a plaintiff who was compensated for your injury by the decision of the jury of your peers -- but most plaintiffs would happily trade the jury award for their status at the moment before they were injured.

3. Just think about it: anybody here want to have that $845 back and go back to 1950 (that's even assuming that number has been corrected for inflation)? Remember, that was when people were routinely impaled on stiff steering columns (let alone saved by airbags), lawn mowers chopped your toes off, people got electrocuted by faulty circuits and/or kitchen appliances, cigarettes were good for you, and, oh, remember thalidomide babies? If you want to save that paltry amount of money and live in that kind of society, I've got just the place for you -- a perfect time capsule of unregulated capitalism -- China.

Anybody seriously think that's better than here?
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PostBy: Richard S. On: Sat Nov 03, 2007 12:54 pm

stockingfull wrote:1. How do you define "frivolous?" The ones you don't like? :roll:

I define them as the ones brought that obviously should have never been filed in the first place. For example the one I was a part of was ridiculous, if someone had ran a bicycle into the car they would have caused more damage. I know this cause I've done it. :oops: I forgot to mention the woman was 80+ years old that hit him, my assumption was they thought she or the insurance company was going to cave and just pay.

Obviously something is broke and the public agrees, take for example the statistics from this article:
**Broken Link(s) Removed**
75% of medical liability claims are closed with no payment to the plaintiff, yet cost about $19,000 per physician in defense costs. Of the cases which go to trial, physicians are found to be not negligent 83% of the time, yet defense costs average $94,000 per physician. Only 1% of cases result in trial victories for plaintiffs.

Granted that site is going to have a slanted view but I can only assume its not far from the truth or close.


but most plaintiffs would happily trade the jury award for their status at the moment before they were injured.

If you are truly injured I could agree, but everything I have posted about is in reference to frivolous lawsuits and the lawyers that for all intents and purposes encouraging them. "Did you slip and stub your toe? We can get you MONEY!" is what I'm concerned with. Next thin is they have "Crazy Eddie" on there yelling "XXX's Law Offices Settlements are Insane!".

As for number 3 you make some good points, but I ask at what cost? That stupid handle on the lawnmower has to be the worse thing ever required as far as I'm concerned, how many injuries do you think it prevents? Your first instinct when falling is to grab onto something, otherwise anyone stupid enough to stick their foot under a lawnmower deserves to get there toes chopped off. We now have air bags that go off on low impact crashes that can cause more damage than the crash itself which of course is just another lawsuit and require a hefty fee to get replaced. We have doctors and hospitals that don't want to treat people with high risk medical problems. Drugs sitting on shelves that could help a majority of the people but may pose a risk to some...etc

BTW, the adjustment for inflation isn't much.

What cost $12 in 1950 would cost $90.11 in 2003.
Also, if you were to buy exactly the same products in 2003 and 1950,
they would cost you $12 and $1.60 respectively.

So it was $90 in 1950 and $845 in 2003. That's approximately a 1000% increase, probably a little less but I didn't get my calculator out.
Richard S.
Stoker Coal Boiler: Van Wert VA1200
Coal Size/Type: Buckwheat/Anthracite

PostBy: Richard S. On: Sat Nov 03, 2007 3:53 pm

I'll add a few more things to my "At what cost?" list specifically about kids, these were all things I enjoyed as a child:

Going to the playground, the current playground is much smaller has a lot less things to do and I might add pretty boring stuff. Adds up to nothing more than a maze. No jungle gym, no big slide, no merrry-go-round. I'm surprised they still have swings, much smaller than the ones when we were kids I might add.

My High School no longer has a high dive, the local public swimming pool has no dive at all. It had both a high dive and low dive when I was kid.

If you want to go down to the local field where we used to play football forget it, they'll chase you away. Other organized sports are paying exorbitant fees for the insurance and in some cases the programs are being cancelled.

They want to build skate parks but every time it comes up the roadblock seems to be the cost for liability insurance. It's a skatepark, chances are you will be hurt... If you can't accept that fact don't skate.

Kids can't play tag during recess? WTF is that about?

These are the costs I can just think of associated with kids, if I sat around I could probably provide a laundry list that affects everyone. Do I want my coffee hot when I purchase it? Damn right I do.
Richard S.
Stoker Coal Boiler: Van Wert VA1200
Coal Size/Type: Buckwheat/Anthracite

PostBy: stockingfull On: Sat Nov 03, 2007 7:35 pm

And remember all the broken arms from the jungle gym? And have you heard about all the broken necks off diving boards?

Like so many, when I went to law school, I thought that people in my profession (engineering) were getting a bad rap and just needed better advocates. Like so many things, it wasn't as simple as I thought.

In my second year of law school at Syracuse, I was hired to clerk at a local personal injury plaintiffs' firm because they wanted my background to help with their products liability cases. In one of the first cases I worked on, our client was a quadriplegic who'd been a guard on the Syracuse football team. He had a summer job at a local brewery blowing out the dregs from kegs coming back for refill. The end of one of the kegs had blown off explosively when he put the standard 23 psi tavern head on it. He had been shot across the room, where he'd landed, breaking his neck. (For those interested in doing the force arithmetic, the keg was about 20" in diameter.)

The keg had been manufactured of stainless steel and was almost new, so how could it have exploded? It was a welded design, which design we learned had just come off patent. The end had blown off it just like the top off a jar. :scratch:

I contacted a former colleague who was a metallurgist to ask him what he thought about it. He asked me if Syracuse had an engineering library and if they had old journals of ASTM (Am. Society for Testing and Mat'ls). When I said they did, he said I should go up there and look for articles from the 1930's about a phenomenon called "sensitization," where chromium precipitates out of some stainless steel alloys when heated to the "low-red" heat range (around 900°F.). When this happens, you have an area of the stainless steel which is, uh, no longer stainless.

Guess what? The cheapskate engineers for the copy-cat low-bidder keg manufacturer had saved some money by specifying an alloy for their welded kegs that caused bands of material certain distances away from all the welds to be subject to corrosion. And the result was that thousands of kegs were destined to fail when they corroded through near to the welds. And we had a 20-year-old client who couldn't even touch his thumbs to his fingers -- for the rest of his life.

Wanna talk about formative experiences? 46 pages of interrogatories later ("Are any of your design engineers members of ASTM? If so, can they read?"), defense counsel flew in from Chicago, suing for peace, as it were. Do you think they had ever admitted they were wrong? Do you think they even told us that they recalled tens of thousands of these kegs because they knew they screwed the pooch -- and our client -- trying to save the almighty dollar on material?

It's not just the horrible, unnecessary injuries that grossly defective products cause, it's the disfigured forceps babies, the people who've gotten the wrong limbs amputated, and on and on, right on down the line. Some of these guys, like the cheapskate designers who crippled my old client, should have been put in jail. Or at least exposed to the claims for punitive damages which always get the "tort reformers" screaming. Because NOTHING, no amount of money, could give our client his life back, or could give so many profoundly injured people theirs back either. Sure, as we said above, there are always examples of cases where insurance companies settled when they should have defended or where juries have made mistakes (often because they didn't follow the instructions they were given by the court), but all one need do is know somebody who's been hurt like this, or see one of these cases in detail, to understand why the tort system is so fundamental a part of the highly advanced society in which we are privileged to live.

Business only understands the bottom line and it's sad but true that the deterrent effect of exposure to large verdicts is the only thing that keeps business honest. It's the way our system works -- and has worked for a very long time. And the efforts of the insurance industry and all the "Chamber of Commerce" boyz to stack the deck to "cap" tort claims is just a cynical attempt to stack the deck and put the fox in charge of the henhouse.

At what cost, you ask? Let's use your numbers and look at it like the insurance we buy. For a premium of $845-90, that's $755, you get all the safety advances in medicine, drugs, products, environmental safety (ck the water and air quality in other countries) that we enjoy because all the goddam lawyers have pursued them for somebody other than you who got to test the product.

Or there's always China, if you want your 1950 life today. But there, you'll have to get the lead out yourself.
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PostBy: gaw On: Sat Nov 03, 2007 8:14 pm

I am exposed to the same TV advertising as our leader the coalman. The ambulance chasers that are regularly advertising on NEPA TV stations come across to be as genuine at saving me from the evil corporations and the military industrial complex as Jim and Tammy were about saving my soul from the Devil himself.

I refuse to let any facts change my opinion :?

I met stockingfull at the first get together and my impression is he is a good man. I tend to agree more with the administrator on this subject. Now if we all get together for the spring meet how about a moratorium on the subject when we are all in person? This subject has strong opinions on all sides.

OK now my blood pressure is up after reading all this, I'm off to see my lawyer, someone has to pay :evil:
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PostBy: Richard S. On: Sat Nov 03, 2007 9:03 pm

Another example that I thought of that was in the paper a few years back. there was a local catering business that used to take all their leftovers to the local food kitchen. Those people would be getting, roast beef, chicken, good bread etc. They had to stop out of fear of lawsuits that their insurance carrier wasn't going to cover because this wasn't done as part of the business. If the food didn't get eaten or taken home by the part it was catered for it went in the garbage.

stockingfull wrote:And remember all the broken arms from the jungle gym? And have you heard about all the broken necks off diving boards?

The possibilities of these things happening are part of life, I don't want my kid to be a "bubble boy". I want him to climb on Jungle Gyms, I want him jumping off the high dive. If he climbs to he top of the high dive and the thing topples over because the designer made a poor design then I have reason to sue, he falls off it because he has no coordination or balance and doesn't belong on it in the first place that's my responsibility or his. Simply because it exists shouldn't make the school or local pool liable for its use.

For a premium of $845-90, that's $755

That's for every man woman and child in the U.S. Assuming that everyone was paying, which they are not, a family of four is $3380 per year or $3020 more that in 1950.
Richard S.
Stoker Coal Boiler: Van Wert VA1200
Coal Size/Type: Buckwheat/Anthracite

PostBy: stockingfull On: Sun Nov 04, 2007 2:31 am

The catering business could have fixed their problem with a simple release from the recipients of the food. Any journalist who would buy that "insurance" answer probably would drink the rest of the tort reform Kool-Aid.

If you want your kids on a jungle gym or a diving board, that's your choice, and your supervisory responsibility, on your property. Not everybody wants to consign their kids to that risk of injury -- and that's their choice. And, lest our nostalgia for the risks we remember delude us into thinking that life has somehow, to borrow your term, been "bubbled," think about it: were there climbing walls, 300 HP WRX Sti's and EVO VIII's when we were young? And look at the absolutely phenomenal motorcycles some of us ride. No, the incredible paradox is that life is not only safer but actually more exciting than ever. Don't like the safety belt on that climbing wall? Take your kids rock climbing.

Formula 1 is another perfect example: when I first followed it in the early '70's, it was Russian Roulette for drivers; I saw 3 guys die in barely more than a season. Today, the cars are faster than ever but, knock on wood, both cars and tracks have improved so much that no driver has died since 1994. Same with LeMans; even NASCAR has finally gotten on board with the Hansa device, thanks to Dale "Darwin" Earnhardt.

As to the last point, :-({|= None of us likes paying our local, state, or federal taxes, either, but that's the price of the society we live in. You accept the benefit, you pay the bill. And society judges the acceptable level of risk.
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