Vested Interest - Tort Briefs - October 1999 Issue

Illinois Supreme Court Allows Malpractice Suits Against HMOs

Inga Petrovich sought medical treatment for pain in her mouth in 1990. Her doctors recommended a MRI scan, but her HMO, Share Health Plan of Illinois, delayed authorization of the treatment for a year. When the tests were finally completed, doctors discovered that Petrovich had cancer which had spread through her tongue and surrounding tissue. She died in 1998. Her family filed a malpractice action, which was dismissed by the Cook County Circuit Court, on the grounds that the doctor was an independent contractor of the HMO. But the Illinois Supreme Court ruled on appeal that the suit should go forward. Justice Michael Bilandic’s ruling in Petrovich noted that HMOs regulate access to treatment, even if the doctor is technically an independent contractor, and concluded that a jury should decide if the HMOs actions resulted in the injury. Justice Louis Rathje, recently appointed to the Court, recused himself from the ruling. (Chicago Sun-Times, October 1, 1999)

Chicago-Area Minister Settles Van Fire Suit for $100 Million

The Rev. Duane and Janet Willis were driving their family of six children when a piece of metal fell off a truck and became stuck in the fuel tank of the Willis’ van. The leaking fuel, ignited by sparks, caused an explosion that killed all six children. Five companies, including Chrysler Corp., Hanjin Shipping, M&S Transport, and Transamerica Leasing, and two individuals have agreed to a $100 million settlement. The case drew wide attention when it was revealed that truck driver Ricardo Guzman, who did not speak English and so missed warnings from other truck drivers about the loose metal, obtained his license illegally in exchange for bribes which were funneled into then-Secretary of State George Ryan’s campaign fund. (Chicago Sun-Times, August 27, 1999)

U.S. Justice Department Sues Tobacco Companies

Keeping a promise from President Clinton’s State of the Union Address earlier this year, the U.S. Justice Department has filed suit against tobacco manufacturers, alleging that their campaign to hide the dangers of cigarette smoking contributed to thousands of needless addictions and caused health problems that cost Medicare and Medicaid hundreds of millions. The suit spells out 116 racketeering counts, and could amass total damages worth more than the industry. The federal suit comes as juries in California and Oregon have issued multi-million verdicts to the estates of individual smokers, and a federal judge in Pennsylvania dismissed a suit alleging that tobacco company advertisements encouraged blacks to smoke more than whites. (AP, September 22-24, 1999)

Tire Company Pays $17.7 Million to Settle Suit

Al and Ginny Jensen had taken their son Matthew to Disney World for Christmas. As they were driving home, a tire on their van failed, the tread separated, and Al lost control of the van. They flipped over, and then were struck by another car. Al & Ginny were killed, Matthew suffered severe injuries. Pirelli Armstrong Tire Company has agreed to pay $17.7 million to settle claims that their defective tire caused the deaths and injuries. (AP, September 23, 1999)

Fen-Phen Maker Offers $3 Billion to Settle Claims

Thousands of Americans used Fen-Phen, a diet drug linked to serious heart and lung ailments. Now, American Home Products Corp., which made the drug and knew of the problems before launching a multi-million-dollar marketing campaign for it, has put a settlement offer on the table. The offer would pay victims $2 billion now, and would also set aside $1 billion to pay for future medical exams to see if problems are developing. Victims who suffer from the worst adverse effect of the drug, primary pulmonary hypertension, would be excluded from the settlement. Their tort claims could cost an additional $1 billion, analysts predict. A Texas jury issued a verdict for $3.3 million in compensatories and $20 million in punitives for one woman who suffered heart valve damage; the punitive component was drastically reduced by Texas’ tort deform law, and the woman eventually settled for about $2.3 million. Over 8,000 victims have filed claims. (Bloomberg, September 17, 1999; AP, September 17, 1999)

Mayor of New York, or Civil Case Juror?

Mayor Rudy Giuliani was not only called for jury duty, he was empaneled, and chosen foreman. The case involved allegations that a landlord had failed to maintain the plumbing, resulting in scalding during a shower. The other five members of the jury, which found for defendant after 45 minutes of deliberations, insist that the mayor did not exert an undue influence over them. Giuliani said serving on a jury restored his faith in the jury system. (Liability Week, September 13, 1999)

Third U.S. Circuit Court Allows Med Mal Suit Against HMO Despite ERISA

Michelle Bauman delivered a daughter, Michelina, at Kennedy Hospital in Washington Twp, New Jersey in 1995. Mother and daughter were discharged within 24 hours, according to the policies of U.S. Healthcare, Bauman’s HMO. Michelina died the next day, and Bauman claims the early discharge contributed to the death. The HMO denied liability, claiming that ERISA pre-empted malpractice actions against federally-regulated insurance plans in state court. The Third U.S. Circuit Court, however, ruled that ERISA does not pre-empt malpractice actions, only insurance claims. The case, Bauman v U.S. Healthcare, now returns to the district court for trial. (Bloomberg, September 21, 1999)

California Legislature Approves HMO Liability Bill

By a 22-9 vote, the California state Senate approved a measure to allow patients to file medical malpractice actions against Health Maintenance Organizations, sending the measure to Gov. Gray Davis. The bill would allow suits where a patient suffered “loss of life, loss or significant impairment of limb or bodily function, significant disfigurement, or severe and chronic physical pain” as a result of a HMO decision to deny or restrict treatment. Patients must exhaust an internal appeal process before they can file a lawsuit. Gov. Davis, a Democrat, is expected to sign the bill. (AP, September 9, 1999)

U.S. Justice Department Survey Reveals Who Pays, How Much, and to Whom

Despite tort deformers’ attacks on punitive damages in personal injury cases, corporations pay more in punitives, and more often, to other corporations in commercial disputes than to injury victims. That’s one of the findings of a study by the U.S. Justice Department of trial verdicts in 75 large counties around the country. The study, “Civil Trial Cases and Verdicts in Large Counties, 1996,” looked at 15,638 verdicts in jury and bench trials of lawsuits relating to tort, contract disputes, and real property cases. Researchers found that the median verdict in tort cases was $31,000 in 1996, compared to $37,000 in contract cases, and $86,000 in real property cases. Punitive damages are issued more often in contract disputes (6.3% of all verdicts) than in tort cases (3.3%), and punitives in contract cases cost corporate America more in total than do punitives in tort cases. Because the survey looked only at verdicts, it cannot be used to draw conclusions about suits filed, or settlements. (Copies of the study are available from the U.S. Department of Justice, Bureau of Justice Statistics, at their website: http://www.ojp.usdoj.gov/bjs

Justice Ruth Bader Ginsburg Recovering, May Miss Part of Term

Supreme Court Justice Ruth Bader Ginsburg had surgery for colon cancer over the summer. Her surgeon, Dr. Lee Smith, reports that the surgery went well and that she is recovering on schedule. He could not predict, however, if she would be ready to return to work in time for the court’s fall calendar, which starts October 4. Other justices have missed time without disrupting the court’s schedule, including Justice Sandra Day O’Connor, who was treated for breast cancer in 1988, and Justice John Paul Stevens, who was treated for prostate cancer in 1992. (September 20, 1999)

U.S. Supreme Court to Hear Air Bag Case

Alexis Geier was 17 and driving her 1987 Honda when she lost control of the car and struck a tree. She was wearing the three-point lap-and-shoulder belts at the time, but still sustained severe injuries. She sued Honda, alleging that the failure to include an air bag in the design of the car rendered it defective. Honda replied that air bags were only optional, not mandatory, under federal law in 1987, and claimed that her suit was pre-empted by the 1966 National Traffic and Motor Vehicle Safety Act, which set federal safety standards for automobiles. Geier’s suit was dismissed at trial, and the dismissal was upheld by the U.S. Circuit Court for the District of Columbia. Geier insists that the 1966 statute specifically allows auto companies to be held liable if their cars are defective, even if they are in compliance with federal safety regulations. The case, Geier v American Honda Motor Company (98-1811) will be heard in the upcoming term. (AP, September 10, 1999)

Boston Transit Agency to Pay $5.5 Million for Racial Discrimination

Hiram Clifton worked as a foreman in a Massachusetts Bay Transportation Authority yard, despite racially motivated attacks from his peers and superiors. He claims his supervisors wrote racial slurs on his locker, called him by profane and racially charged nicknames, fired bottle rockets at him, and abused his personal property. He also claims that supervisors ignored his complaints about the behavior. A Suffolk Superior Court jury found the MBTA liable for $500,000 in compensatories and $5 million in punitives. The MBTA will appeal. (AP, September 18, 1999)

Therapist Liable for Implanted Memories

Joan Hess sought treatment from psychiatrist Juan Fernandez for depression. In the course of treatment, Fernandez hypnotized Hess and asked her about her distant past. Hess later alleged, and a jury agreed, that this effort to extract so-called “repressed memories” actually implanted false memories of events that never happened, such as ritual sexual abuse by her parents, involving forced feedings, infanticide, and sex with animals. Fernandez concluded that Hess has as many as 75 personalities. As a result of these false memories, Hess considered suicide, and is still in treatment for her additional problems. A jury in Wausau, Wisconsin, returned for plaintiff, with a verdict valued at $850,000. (AP, September 3, 1999)

City of Chicago Settles Depression Discrimination Suit for $65,000

Helen Powers alleged that her work assembling the Chicago City Council’s Journal of Proceedings contributed to her depression, and that when the City failed to offer reasonable accommodations to work around her illness, it violated her rights under the Americans with Disability Act. Powers lost her job in April, 1996, though she was re-hired in February, 1999. The settlement covers her back pay; the City will also restore her lost seniority. (Chicago Sun-Times, September 25, 1999)