At long last, there's good news in the fight against "jackpot justice" tort claims and the nefarious law firms that file them. In courts and legislatures across the country, fraudulent lawsuits are being exposed, and the abusive tort lawyers that file them are finally getting a taste of their own medicine.
Most notable is the recent indictment of Milberg Weiss Bershad & Schulman, the nation's most notorious class-action law firm. For four decades, Milberg Weiss has filed hundreds of dubious class-action lawsuits and wrung billions of dollars from terrified companies.
Now, a federal grand jury in Los Angeles has indicted Milberg Weiss and individual partners on multiple counts of conspiracy, racketeering, obstruction of justice, mail fraud, money laundering and filing false tax returns. For over twenty years, according to the U.S. Attorney, the firm brazenly paid kickbacks to repeat plaintiffs in order to serve as lead counsel in class-action lawsuits. Worse, according to prosecutors, the firm continued to do so while aware that it was under investigation.
Long-known for overzealously employing "professional plaintiffs" to extort settlements and jury awards from companies (for example, individual defendant Seymour Lazar served as plaintiff in no fewer than seventy lawsuits), Milberg Weiss stands accused of the very type of misconduct that it wantonly alleged against companies and even entire industries. An even greater irony is that Milberg Weiss faces the same "death sentence" suffered by companies like Arthur Andersen, one of its frequent past targets.
Those of us who have witnessed Milberg Weiss's abusive tactics through the years can be forgiven for taking delight in seeing the chickens finally coming home to roost. As former Milberg Weiss mastermind Bill Lerach once said, "the whole industry was a fraud," and, "so much fraud, so little time." In the case of abusive class-action law firms like Milberg Weiss, we couldn't agree more.
In similar fashion, rail company and frequent asbestos-lawsuit target CSX has turned the tables against the law firm of Peirce, Raimond & Coulter, which had filed literally thousands of asbestos claims against CSX and other companies. CSX discovered that plaintiffs in one of Peirce's lawsuits fraudulently substituted each other's x-rays in order to duplicate advantageous diagnoses. Accordingly, CSX sued the employees, who confessed and testified that they asked Peirce attorneys to dismiss the lawsuit, but that Peirce nevertheless proceeded with the case.
On that basis, CSX sued the Peirce firm for fraud, misrepresentation, and negligence, the very types of claims that Peirce had alleged in thousands of lawsuits. CSX further claims that Peirce maintained the x-rays and knew about the false diagnoses, and that it repeatedly retained a physician whom a federal court accused of manufacturing false silicosis diagnoses.
Additional good news comes from federal court in Pennsylvania, where an asbestos lawsuit claiming hundreds of thousands of plaintiffs is disintegrating. Some of the plaintiffs' diagnosing physicians disavowed their diagnoses under scrutiny, while others refused to testify about their diagnoses. As a result, forty-six defendants filed a joint motion to dismiss these hundreds of thousands of claims until plaintiffs' attorneys can produce even a single credible physician to justify them.
And in Texas, a grand jury has commenced a criminal investigation based upon the findings of federal Judge Janis Graham Jack, who one year ago issued a blistering opinion against fraudulently-manufactured silicosis suits by lawyers, physicians and x-ray services.
At the Supreme Court, there is additional positive news to report in the battle against tort lawsuit abuse. The United States Supreme Court will again review Philip Morris v. Williams, in which Oregon courts upheld a $79.5 million punitive damage award that was 97 times greater than the $821,000 underlying compensatory damage award. Such an outrageous punitive damage award contravenes the Supreme Court's 2003 State Farm ruling, in which the Court suggested that any punitive damage award exceeding a single-digit multiple of actual damages may violate due-process rights.
The Supreme Court had already vacated the Oregon courts' ruling and remanded for reconsideration in light of State Farm, but the Oregon Supreme Court flagrantly disregarded the U.S. Supreme Court's instruction and affirmed the award. Let's hope that they get the message loud and clear this time.
Congress is also getting in the mix, as Kentucky Congressman Ed Whitfield held his third House Oversight and Investigations Subcommittee hearing on silicosis fraud last week. During the hearings, some testifying x-ray screeners asserted their Fifth Amendment rights, some physicians admitted to performing screenings without a license and others evaded federal marshals' attempts to serve subpoenas. Meanwhile, state health officials from Texas and Mississippi testified about widespread x-ray diagnosis fraud.
Together, these events provide reason for optimism, and demonstrate that legislators, courts, prosecutors and companies are finally getting serious about fighting frivolous tort lawsuits and the unscrupulous law firms that file them.
Unfortunately, the bad news is that these efforts are only the tip of the iceberg. There are still many battles to be fought in courts and legislatures across the country.June 16, 2006
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