Today, the Texas Supreme Court reversed itself in the case of Excess Underwriter's v Frank's Casing.  The court originally issued an opinion in May 2005.  After much uproar from all sides, the court granted a motion for rehearing in January 2006, and held oral argument two years ago this month. 

I don't have time for details, but the case involves a situation when a liability insurance company disputes coverage but still chooses to settle the litigation. In the original opinion, the court held that the insurer, after settling the case, could go back and require the insured to go back and reimburse the insurer for any settlement amount if it is ultimately determined that no coverage exists.  This put insureds at peril, even after the underlying cases were settled.  Today the Supreme Court did an about face.

For a detailed look at the opinion and links to the prior opinions and others, please check out Todd Smith's Texas Appellate Law Blog.

As we have previously reported and updated, Texas Supreme Court Justice David Medina and his wife were indicted in connection with an alleged arson event at their home.  At the District Attorney's request, the indictments were dismissed.  But the story appears to be far from over.  Today, the grand jurors are stating that they will re-urge the investigation when a new grand jury convenes in February.   

But Justice Medina isn't the only Texas Supreme Court Justice feeling the heat.  Justice Paul Green is now the subject of a complaint with the Texas Ethics Commission for allegedly using campaign funds improperly.

It should make for interesting election year. 

The Houston Chronicle has a great story about Dr. Forney Fleming, a spokesman for Texans For Lawsuit Reform. Dr. Fleming was a key spokesperson for TLR and even prominently featured on its website. But, according to the Chronicle, TLR forgot to tell you that Dr. Fleming was reprimanded by the Texas Medical Board for substandard care and was accused by the Board of providing substandard care to at least six other patients (those claims were still pending when Dr. Fleming let his medical license lapse). The article reports that Dr. Fleming was also sued or threatened with malpractice suits three times.

Since the Chronicle started investigating its story, TLR has tried to distance itself from Dr. Fleming. But Texas Watch was able to document Dr. Fleming’s TLR bio, which is available here.

The sad thing is that this isn’t unusual. Author Stephanie Mencimer says that one of the things that prompted her to write her book Blocking the Courthouse Door: How the Republican Party and Its Corporate Allies Are Taking Away Your Right to Sue was the often unsavory background of the people that various tort reform groups chose to use as their "case studies" to prove why the system is broken.  For instance, Ms. Mencimer tells the story of Dr. Robert Zaleski.  In January 2003, doctors in Wheeling, West Virginia made national news by walking off the job to protest higher medical malpractice rates.  Dr. Zaleski was one of the key faces of the walkout, making the rounds of TV shows and news, including being featured on CNN and in the New York Times.   In fact, Dr. Zaleski was even personally invited by President Bush to attend a speech in Scranton, Pennsylvania, where Bush spoke about "out of control lawsuits." 

But again, the tort reform groups didn't do their homework.  Ms. Mencimer writes that Dr. Zaleski had been sued over fourteen times by his patients and admitted in a deposition in one of the lawsuits that he had been addicted to prescription painkillers for a substantial part of the time that he was operating on patients in the early 1980s.  And, she continues, not only was he an addict, but to maintain his habit, he allegedly wrote prescriptions to other local addicts, who filled them and then kicked pills back to the doctor.  As Ms. Mencimer puts it, "Given this history, the real scandal may not be how high Zaleski's insurance premiums are, but the fact that he can get insurance at all."

Unfortunately, these are the sorts of lies and half-truths that tort reform groups are using to not only push for reform, but to poison potential juries against personal injury cases.

Ken Shigley at the Atlanta Injury Law and Civil Litigation Blog has a great post (from our biased perspective) about trial lawyers. One of Shigley’s clients told him he was a sheep dog. What does that mean? Shigley found this explanation after a google search:

Like sheep dogs, trial lawyers help protect the sheep from the wolves. And that idea fits right in with our motto of Holding Wrongdoers Accountable.  Whether we represent a personal injury client in Austin or a business in Dallas, we're looking to protect our sheep and hold the wolves accountable.

Now, some may say that many trial lawyers are like the wolves.  And they'd be right.   Like all professions, we have some members that behave like wolves. But generally, when someone is hurt by the conduct of others and faced with the daunting task of fighting an insurance company or big business, trial lawyers are there to help. 

We routinely represent small businesses, not only from Austin, but from all over Texas, in disputes and litigation. And it seems more common that small business owners are victims of improper conduct by larger corporations, and they are ending up in our office, seeking our advice on how to enforce their contracts or how to get relief from the other party’s fraud. We have consistently been warning our (often-Republican) clients that they are being used as pawns and that their ability to do business is being threatened by their continued support of tort-reform. Sometimes they listen, but sometimes our warnings fall on deaf ears.

But in the last ten days, two major business publications have included articles that may help in our warnings. On July 1, Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business, wrote IN DEFENSE OF LAWYERS (No Joke), in Business2.0 Magazine. In the article, Professor Pfeffer argues that  attorneys and the tort system are necessary to help keep the economy humming. In the article, he writes:

The next time you want to complain about "frivolous" lawsuits, picture doing business in a world where promises can't be relied on and you can only deal with people and organizations you already know well. There are undoubtedly abuses and problems in our current system, but the cost of punishing malfeasance is a necessary and small price to pay for running a modern economy.

On July 9, Business Week ran AFTER THE $54M DRY CLEANER LAWSUIT, which interviewed owners of small businesses and members of national small business organizations and asked about their concern of being sued. The article found that, for the most part, small business owners weren’t concerned about being sued. And, in fact, for many, the opposite was true. In discussing "tort reformers" use of small businesses to push tort reform, the article echoed our warnings to clients:

That may not reassure small-business owners who are being asked to get behind tort reform, particularly because they can find themselves at the plaintiff's table. "Very often it's small companies being harmed by larger corporations and needing to seek redress through the civil justice system," says Jeff Milchen, cofounder of the American Independent Business Alliance.

While the US Chamber of Commerce continuously argues that one lawsuit could put many small businesses out of business, the opposite is also true. Many small businesses couldn’t survive being the victim of one large improper act (whether it’s the breach of a big contract or misrepresentations about a deal) without the aid of the tort system.  Unfortunately, many small business owners listen to the propoaganda and let themselves be used to try and change the system in ways that often come back to harm themselves.

As the legislature reconvenes in Austin, Texas Watch released a new study called THE FALSE CHOICE: DOCTORS OR ACCOUNTABILITY.  The main premise of the study is that Texans were provided a false choice between access to health care and protecting patient rights when presented with tort reform's Prop 12 in 2003.  The study makes three main findings:

1. Prop 12 hasn't increased access to health care.  Prior to the passage of Prop 12, the rate of new doctors in the state was increasing.  Since 2003, the rate of growth (for actual practicing physicians) is slower than the increase in the pre-Prop 12 years.  In addition, every underserved region of Texas shows slower growth than the pre-Prop 12 years.
2. Prop 12 hasn't provided any meaningful relief in malpractice insurance rates.  Market-wide, premiums have fallen about 13.5%.  But when compared with the pre-Prop 12 run-up in rates of up to 147%, the decrease is not substantial.  This is particularly true when considering many of the largest insurers requested rate increases greater than the 13.5% decrease in the months immediately following the passage of Prop 12.
3. Prop 12 hasn't helped Texas consumers.  The cost of health care continues to skyrocket, and numerous Texans injured by egregious conduct of negligent medical providers are left without a way to recover for their injuries.

It is unlikely that Texas consumers will find any relief in this legislative session, but perhaps the Texas Watch findings can be a lesson to other states (and the federal government) considering additional tort reform litigation.

In the wake of the President's State of the Union address, the Illinois Justice Project had a short rundown of the 2008 presidential candidates' views on tort reform.  The post should be interesting to anyone interested in civil justice issues. 

Thanks to the TortsProf blog for the link.

Perhaps no case says more about the civil justice system and the frivolous defenses than the case of Bob and Jane Cull. A recent article in the Dallas Morning News chronicles the Culls’ case.

Ten years ago, Bob and Jane purchased their dream home from Perry Homes. Shortly after the purchase, they started experiencing problems with the house, and their saga began. In 2000, the Culls filed suit against Perry Homes. Hoping to avoid a long, legal battle, the Culls opted to submit their claims to arbitration as required by the arbitration clause in their contract. After their builder opposed the arbitration, the case went to the court of appeals and the Texas Supreme Court, who all agreed with the Culls that the case should be sent to arbitration.

In the arbitration, the Culls were awarded more than $800,000.00. Instead of paying the award, Perry Homes once again appealed. After losing at the court of appeals, Perry Home has once again appealed the case to the Texas Supreme Court.

But what makes this case so important is that Perry Homes is owned by Bob Perry, who, according to the article, is the largest individual political donor in the country. The article says that among those donations are hundreds of thousands of dollars donated to the Texas supreme court justices that are now slated to hear this case. Even more ironic is that Mr. Perry’s political donations have been important in taking away consumer’s right to jury trials, instead forcing claims to arbitration (the avenue he now seeks to avoid) or other alternatives to a jury.

This case also demonstrates one of the downfalls of arbitration:  regardless of the result, the losing party often attempts to overturn the verdict.  One article last year from Texas Lawyer discusses a losing defendant's attempt to overturn a multi-million dollar worker's compensation verdict because the arbitrator allegedly had a migraine the night before the hearing.  The article also touches on the Cull/Perry Homes litigation.

The Texas Observer had also written on the Cull/Perry Homes matter last year.