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Time	Speaker	Text
00:00:48	>>	PROTECTING MAIN ST. JOHN'S FROM LAWSUIT ABUSE. THIS IS A SUBJECT -- PROTECTING MAIN STREET JOBS FROM LAWSUIT ABUSE. THIS IS AN IMPORTANT SUBJECT THAT HAS A DIRECT IMPACT ON OUR ECONOMY AND ON OUR COUNTRY'S FUTURE. AS WE HAVE LEARNED, ONE OF MY CONSTITUENTS FROM TEXAS TALK ABOUT WHAT WE HAVE DONE IN TEXAS IN TERMS OF MEDICAL LIABILITY REFORM AND ITS IMPACT ON INCREASING ACCESS TO HEALTH CARE. RUNAWAY LITIGATION COSTS AMERICAN CITIZENS AND BUSINESSES THAT EMPLOY THOSE CITIZENS MILLIONS OF DOLLARS EVERY YEAR. WE ALL WILL CONCEDE ON THE FRONT END THAT IT IS IMPORTANT TO DO JUSTICE WHEN A WRONG IS COMMITTED. MERITLESS AND ANUZIS LOSSES HAVE SIGNIFICANT COST IN TERMS OF THE MONEY AND THE TIME IT TAKES IN LITIGATION. THIS BRINGS RESOURCES AND MAKES IT HARDER FOR AMERICANS WORKING TO PUT THE ECONOMY BACK ON THE RIGHT TRACK. AS THE PRESIDENT TALKED TODAY ABOUT HIS EFFORTS TO HELP SMALL BUSINESSES, IT IS IMPORTANT TO A KNOWLEDGE THE FACT THAT THE LITIGATION COSTS AND HAVE A DISPROPORTIONATELY HIGH IMPACT ON SMALL BUSINESSES AND THEIR ABILITY TO RETAIN AND HIRE NEW EMPLOYEES. OF LARGE CORPORATIONS USUALLY CARRY SIGNIFICANT INSURANCE AND HAVE ROBUST BUT JUST TO COVER LITIGATION COSTS. SMALLER BUSINESSES MAY FIND ONE LAWSUIT COULD RESULT IN LEGAL FEES APPROACHING A YEARS REVENUE. THAT IS EVEN IF YOU WIN THE LAWSUIT IN THE END. SMALL ENGINEERS ARE NETTING WHEN A THOUSAND DOLLARS A YEAR AFTER TAXES AND PAYROLL IS PROSPERING IN CREATING JOBS, BUT THAT $100,000 CAN EASILY BE DESTROYED BY LEGAL FEES FROM ONE LAWSUIT. MANY AMERICAN BUSINESSES, THE COST OF BEING SUED CAN BE TANTAMOUNT TO A DEATH SENTENCE FOR THEIR BUSINESS. THE LEADERSHIP OF THIS CONGRESS SEEMS TO BE OBLIVIOUS TO THESE FACTS AND DETERMINED TO REWARD POLITICAL ALLIES AND BENEFACTORS BY PASSING LEGISLATION DESIGNED NOT TO DECREASE BUT INCREASE THE NUMBER OF LOSSES IN AMERICA. WE'RE LESS THAN 10 MONTHS INTO A NEW ADMINISTRATION AND A NEW CONGRESS. -- WE ARE TWO MONTHS -- WE ARE LESS THAN TWO MONTHS INTO A NEW ADMINISTRATION AND A NEW CONGRESS. THERE WERE DECISIONS MADE DECADES AGO AFTER WITNESSES' MEMORIES OR WITNESSES THEMSELVES HAVE DIED. IT IS IMPOSSIBLE TO DEFEND THOSE SUITS. IT HAS BEEN AN OPEN ENDED PROPOSITION BY EXTENDING THE STATUTE OF LIMITATIONS IN SOME OF THOSE CASES. THE STIMULUS BILL CONTAINED A PROVISION THAT WOULD ALLOW TRIAL LAWYERS TO ENTER A CONTINGENCY, CHECK WITH STATE ATTORNEY GENERAL'S OUTSOURCING THAT WORK SO TO SPEAK AND TO SUE HEALTH CARE COMPANIES FOR HIM OF VIOLATIONS -- HIPPA VIOLATIONS. CONTINGENCY FEES LAWYERS CAN DO OUTSOURCED WORK UNDER THE TRUTH IN LENDING ACT. THAT IS JUST THE BEGINNING. IN THE COMING MONTHS, WE BELIEVE THERE IS GOING TO BE MORE BILLS THAT WILL BE TO THE SAME END. THERE IS THIS BANKRUPTCY CRAMDOWN BILL WHICH WILL INCREASE BANKRUPTCY LITIGATION. THERE WILL BE EVER IS TO ALERT -- TO OUTLAW CONSUMER ARBITRATION WHICH IS CHEAPER THAN FULL-SCALE LITIGATION WHICH MAY BECAUSE PROHIBITIVE TO MANY PEOPLE. THAT KIND OF ARBITRATION IS LESS PROFITABLE FOR THE LAWYERS. THAT IS THE POINT OF. HOW DO WE CUT SOME OF THE COSTS AND SOME OF THE DELAY IN MODEL LITIGATION WHICH MAKES JUSTICE MORE ACCESSIBLE THAN LESS ACCESSIBLE. THERE WILL ALSO BE EFFORTS TO UNDO THE IMPORTANT REFORMS OF THE CLASS ACTION FAIRNESS ACT REVIVING THE CLASS ACTION STRIKE SUIT WHICH TRY MALES MAY MAKE MILLIONS WHAT THEIR CLIENTS RECEIVE NOTHING BUT COUPONS AS A RESULT OF THEIR EFFORTS. THERE IS AN ATTEMPT TO APPEAL THE SUPREME COURT'S LONG SEINING CASE LAW ON FEDERAL PREEMPTION. -- SUPREME COURT'S LONGSTANDING CASE LAW ON FEDERAL PREEMPTION. THAT COULD LEAD TO DETERMINATIONS IF PASSED BY A FEDERAL TRIBUNAL THAN AT THE BARGAINING TABLE BETWEEN AN EMPLOYER AND A PLANT EMPLOYEE -- AND AN EMPLOYEE. A BUDGET PROPOSAL IS UNLIKELY TO CONTAIN CERTAIN HEALTH-CARE REFORM THAT IS PROVEN TO REDUCE COSTS AND IMPROVE PATIENT ACCESS AND MEDICAL LIABILITY REFORM. THE HEALTH-CARE PLAN WILL BE MORE LIKELY TO INCREASE THEN DECREASE LITIGATION. THE COST OF ALL OF THIS LITIGATION WILL BE SIGNIFICANT FROM AN ECONOMIC STANDPOINT AND OTHER MORE GENERAL SOCIETAL COST. REPUBLICANS BELIEVE THAT WE CAN DO BETTER. ONE OF LITIGATION HAS OPPOSED TO MANY CALLS ON AMERICANS FOR TOO LONG FOR WHICH AMERICAN CONSUMERS PAY SINCE THESE ARE NOT COSTS OF SOARED BY THE BUSINESS. LIKE TEXAS, THEY ARE PASSED DOWN TO THE CONSUMER. I THINK IT IS FAIR TO SAY THAT AMERICA CANNOT SUE ITS WAY BACK INTO PROSPERITY. THE REPUBLICAN PARTY'S FIRST LEADER, ABRAHAM LINCOLN, ANGER SHARES FELL LATE -- ENCOURAGED HIS FELLOW LEADERS THIS WAY. COMPROMISE WHERE YOU CAN. THE LAWYER HAS A SUPERIOR OPPORTUNITY TO BE A GOOD MAN. THESE DAYS, I SHOULD SAY A GOOD WOMAN. HE CONCLUDED THAT THERE WILL STILL BE BUSINESS ENOUGH. REPUBLICANS HOLD THESE POLICE CLOSE WHEN RON CIRCUMVENTED -- WHEN RON CIRCUMVENTED, JUST -- WHEN WRONGS ARE COMMITTED, JUSTICE SHOULD BE SERVED. I LOOK FORWARD TO THIS AFTERNOON'S HEARINGS AND THE TESTIMONY OF OUR DISTINGUISHED PANEL OF WITNESSES. A LOOK FORWARD TO PURSUING A BETTER SOLUTION, A LEGISLATIVE AGENDA OF FAIRNESS AND FREEDOM FROM WASTEFUL LITIGATION. I YIELD THE FLOOR TO THE SENATOR FOR IN THE OPENING, AND -- FOR ANY OPENING COMMENTS HE MAY HAVE.
00:07:59	>>	THANK-YOU TO THE WITNESSES WHO ACCEPTED OUR INVITATION TO COME TODAY. ON THE AMERICAN AGENDA THIS YEAR ARE THE ISSUES OF JOBS AND HELP. THE TRIAL LAWYERS AGENDA GOES DIRECTLY TO THE QUESTION OF WHETHER WE WILL HAVE MORE JOBS FOR AMERICANS AND WHETHER AMERICANS WILL HAVE BETTER HEALTH CARE. I WANT TO THANK THE SENATOR WHO IS A FORMER SUPREME COURT JUDGE IN TEXAS. THE OTHER SENATOR IS A FORMER UNITED STATES ATTORNEY IN ALABAMA. A LOT TO THANK THEM FOR THEIR LEADERSHIP IN THIS AREA. SENATOR CORNYN HAS MENTIONED ABOUT HOW EARLY IN THIS AGENDA WE HAVE SEEN WHEN IT COMES TO JOBS THAT THE DEMOCRATIC CONGRESS IS MORE INTERESTED IN NEW JOBS FOR TRIAL LAWYERS THAN IT IS FOR AMERICANS WHO ARE NOT TRIAL LAWYERS. FOR EXAMPLE, THE STIMULUS PROVISION WHICH SEEMED TO STIMULATE SOME PEOPLE BUT NOT OTHERS FOUND TRIAL LAWYERS AT THE HEAD OF THE LINE. THEY HAVE NEW JOBS. RIGHT BEHIND IT CAME IN OTHER JOBS FOR TRIAL LAWYERS PROVISION. THAT IS THE KIND -- THAT IS GOING TO MEAN FEWER JOBS IN SMALL BUSINESSES AS THEY HAVE TO GIVEAWAY PROFITS IN A BAD ECONOMY TO GUARD AGAINST LOSSES THAT MAY COME. THESE LOSSES ARE USUALLY SETTLED. SOMETIMES THEY ARE NOT EVEN MERITORIOUS. WE NEED TO CREATE JOBS. EVERY AMERICAN KNOWS THAT. I APPRECIATE SENATOR CORNYN FOR HAVING THIS SESSION BECAUSE REPUBLICANS AND SOME DEMOCRATS STRONGLY BELIEVE THAT ANY HEALTH-CARE REFORM OUGHT TO INCLUDE MEDICAL MALPRACTICE REFORM. 45 OF TENNESSEE'S 95 COUNTIES, A PREGNANT MOTHERS HAVE TO DRIVE FOR MILES TO GET PRENATAL HEALTH CARE OR TO DELIVER THEIR BABIES. IN 15 OF THOSE CAMERAS, A PREGNANT MOTHERS HAVE NO ACCESS TO ANY PRENATAL CANRE IN THEIR COUNTIES. DOCTORS ARE LEAVING THE OB/GYN PROFESSION AND MOVING AWAY FROM TENNESSEE TO OTHER STATES WHERE AS IN TENNESSEE, ONE OF 100 MEDICAL STUDENTS CHOSE TO BE AN OB/GYN. ONE OF THE FACTORS IS THE HIGH CASTE -- IS THE HIGH COST OF MEDICAL MALPRACTICE INSURANCE. REPUBLICANS WANT TO BELIEVE THAT ANYONE HURT OUGHT TO BE COMPENSATED BUT THAT EXCESSIVE PUNITIVE DAMAGES UNFAIRLY LIMIT LOW-INCOME AND MIDDLE-INCOME AMERICANS' ABILITY TO GET HEALTHCARE. IN OUR STATE, IT WORKS AGAINST PREGNANT WOMEN, PEOPLE WHO NEED PRENATAL HEALTH CARE AND HELP DELIVERING THEIR BABIES. TODAY WE WANT TO HEAR ABOUT HOW THE APPROPRIATE RELATIONSHIP BETWEEN LAWSUITS AND JOBS CAN BE FASHIONED SAID THAT WE CAN BE GOOD ABACUS FOR THAT. ACTING SENATOR CORNYN FOR IS LEADERSHIP.
00:11:16	>>	THANK YOU SO MUCH. I DO BELIEVE IN THE JUSTICE SYSTEM. I BELIEVE PEOPLE HAVE THE RIGHT TO SEEK REDRESS IN COURT. WE SHOULD NOT DENY THAT. MITIGATION DOES HAVE A COST. WE KNOW THAT LITIGATION OFTEN HAS BEEN AN EXTORTION TECHNIQUE WHERE UNACCEPTABLE CASES ARE FILED TO EXTRACT SETTLEMENTS FROM COMPANIES. WE KNOW WITH REGARD TO THE ISSUE OF DELIVERING A BABY AS SENATOR ALEXANDER, I AM UNDERSTAND IT IS ABOUT $1,000 PER CHILD IS INSURANCE THAT IS CARRIED TO PAY FOR THAT. IN SOME AREAS IT MAY BE MORE OR LESS. THAT SHOWS THE EXTENT TO WHICH THIS COST RIPPLES THROUGH THE ECONOMY. THE SAME IS TRUE WITH REGARD IN NURSING HOMES. THEIR INSURANCE COSTS ARE EXTRAORDINARY AND OFTEN THEY AND OTHER MEDICAL PROFESSIONALS CARRY OUT ACTIONS THAT THEY WOULD NOT CARRY OUT OTHERWISE EXCEPT FOR FEAR OF SOME LAWSUIT. I WOULD JUST SAY THAT WORKING OUR WAY THROUGH THIS IN A RATIONAL WAY IS WHAT WE SHOULD DO. I BELIEVE THAT IS WHAT THIS PANEL IS ABOUT TODAY. PRESIDENT OBAMA SAID TODAY THAT ECONOMIC RECOVERY DEPENDS ON THE SUCCESS OF SMALL BUSINESSES. I HEARTILY AGREE. IF YOU TALK TO ANY SMALL BUSINESS, THE ONES I KNOW ARE IN FEAR OF UNPREDICTABLE LAWSUITS. AND THEY CANNOT PAY INSURANCE PREMIUMS ARE ABOVE WHAT IS NECESSARY WHICH IMPACT THEIR ABILITY TO GROW AND PROSPER IN HIGHER AMERICAN PEOPLE AS EMPLOYEES. THANK YOU. I LOOK FORWARD TO THIS.
00:13:10	>>	OUR FIRST WITNESS IS THIS MAN WHO HAS BEEN A TRUMPET -- CHAMPION OF LEGAL REFORM IN AMERICA. HE FORMED AN ORGANIZATION. HE HAS TRIED TO COMBAT LAWSUIT ABUSE. .
00:14:14	>>	WHEN HE'S NOT WRITING BOOKS OR CONTRIBUTING OPINION ARTICLE, MR. HOWARD HOLDS DOWN A DAY JOB IN THE NEW YORK OFFICE OF COVINGTON IN BURRLING. WELCOME, MR. HOWARD. LOVE TO HEAR YOUR OPENING STATEMENT.
00:14:39	>>	I THINK YOUR -- THAT BUTTON IT'S NOW ON.
00:14:44	>>	YOU HEARD IT IN THE PUBLIC EVEN BETTER. I WOULD -- I WILL NOT REPEAT WHAT I STATED IN MY STATEMENT WHICH INCLUDES A NUMBER OF VERY SPECIFIC REFORMS INCLUDING CONTINUE INNOCENCE SENATOR CORNYN THAT YOU MEXED. WHEN TIMES ARE HARD IT IS RARELY TO ENCOURAGE MORE LITIGATION. YOU WANT TO MOVE FORWARD AND TRY TO REMARY THE DAMAGE DONE TO AN ECONOMY TO HAVE POSITIVE ENERGY NOT THE NEGATIVE OF FINGER POINTING. IF THERE'S A NEED TO LOOK AT WHAT WENT WRONG, I WOULD ENCOURAGE CONGRESS TO LOOK AT SPECIAL ADMINISTRATIVE MEETINGS OR OTHER PROCEEDINGS THAT ARE FAST-TRACK ASSOCIATED WITH THE CURRENT LITIGATION PROCESS IN AMERICA. I'D ALSO LIKE TO ENCOURAGE CONLT -- CONGRESS TO MAKE SURE THAT SMALL BUSINESS IN AMERICA IN GENERAL ARE PROTECTED AGAINST LAWSUIT ABUSE BUT TO LOOK AT THE LEGAL INFRASTRUCTURE OF AMERICA WHICH HASN'T GOTTEN THE KIND OF REVIEW THAT IT DESERVES AFTER 40 YEARS OF INCREASING -- OF INCREASING LITIGATION. THE COST IS FAR GREATER THAN THE SUM TOTAL OF TALL LAWSUITS. THE COST IS TO THE CULTURE OF AMERICA IF YOU VISIT ANY PUBLIC INSTITUTION OF AMERICA, ANY SCHOOL, ANY HOSPITAL, ANY WORKPLACE, ANY GOVERNMENT OFFICE, THE MAIN SENSE IS NOT "YES, WE CAN" BUT NO, YOU CAN'T. AND THE REASON FOR THAT IS BUZZ PEOPLE ARE FEARFUL OF BEING SUED OR FEARFUL OF VIOLATING RULES THEY MAY NOT EVEN KNOW ABOUT. NO TEACHER IN AMERICA WILL PUT AN ARM AROUND A CRYING CHILD TODAY. WHY? BECAUSE THEY'RE SCARED OF LAWSUITS. IF YOU I HAVE ANY PLAYGROUND IN AMERICA, THERE'S NOTHING ATHLETIC IN IT. NO SEESAWS, NO JUNGLE GYMS NO HIGH SLIDES, NO MERRY GO ROUNDS. I REMEMBER THE AGE OF 4 OR 5 CLIMBING UP THE SLIDE HEART BEATING IT WAS 6 FEET HIGH. WHAT THE DOCTORS AND THE CHILD EXPERTS TELL YOU IS TAKING THOSE RISKS AND LEARNING HOW TO TAKE RESPONSIBILITY FOR YOURSELF IS HOW CHILDREN LEARN TO BE RESOURCEFUL. BUT BECAUSE OF FEAR OF LAWSUITS ALL OF THAT HAS BEEN RIPPED OUT. BROWARD COUNTY, FLORIDA BANNED RUNNING AT RECESS FOR SCHOOLS. MANY HAVE DONE THAT AS WELL. THERE WE HAVE THE PROBLEM OF OH BESSITY. SO WE HAVE SCHOOLS THAT HAVE BEEN TRANSFORMED BECAUSE OF FEAR OF LAWSUITS. IT IS TO CREATE THE CONDITIONS FOR RELIABLE JUSTICE. AND THE MOST IMPORTANT AND THAT INCLUDES STANDARDS FROM LEGISLATURES BUT PROBABLY THE MOST IMPORTANT INNOVATION -- I JUST HAD LUNCH WITH THE CHIEF JUDGE OF THE SECOND CIRCUIT. WE HAPPEN TO BE ON THE TRAIN TOGETHER, WHICH HE AND I HAD BEEN WORKING ON THIS TOGETHER TFPLGT MOST IMPORTANT INNOVATION IS TO GIVE JUDGES TO DRAW THE BOUNDARIES OF REASONABLY THAT WILL NOT AFFECT PEOPLE IN THE COURTROOM. IF SOMEONE BRING AS LAWSUIT TO SOMEONE WHO FALLS FROM A SEESAW, SOMEONE HAS TO DRAW A BOUNDARY OF WHAT'S REASONABLE. OTHERWISE IT WOULD MEAN ALL THOSE SEESAWS WILL BE RIPPED OUT BECAUSE NO ONE WILL TAKE THE RISK. IF JUDGES DON'T GET THAT AUTHORITY BACK, IT'S A FORM OF ACTION BUT IT'S DEFENSIVE ACTION. WHAT YOU'VE DONE IS GIVEN THE UNILATERAL POWER OF THE STATE TO WHOEVER BRINGS THE CLAIM. BECAUSE BRINGING A LAWSUIT IS INDICTING SOMEBODY. YOU'RE JUST INDICTING THEM FOR SOMEBODY. IF NO ONE IN THE COURTROOM SEES IT PROTECTING THE COMMON GOOD THEN WHOEVER SEES THE CLAIM IN THEIR OWN SELF-INTEREST WILL HAVE EFFECTIVELY SET THE LOWEST COMMON DENOMINATOR STANDARD INNER THE REST OF SOCIETY IN 2006, THE HOUSE OF PARLIAMENT PASSED A LAW EXPLICIT ITALY TELLING THE JUDGES IN -- EXPLICIT TELLING THE JUDGES THEY -- THAT THEY HAVE TO LET CLAIMS GO. NOTHING WOULD BEGIN TO RESTRICT JUSTICE THAN THAT PARTICULAR REFORM. ARE MY FIVE MINUTES UP?
00:19:41	>>	THEY ARE WE'RE GOING TO COME BACK AND HAVE A CHANCE TO FOLLOW UP WITH SOME QUESTIONS. MY NEXT WITNESS IS CRYSTAL CHOTUS. THE COST OF BUSINESS COULD BE BRINGING SMALL BUSINESS OUT OF BUSINESS. SHE HAD A BUSINESS BY THE NAME OF BASKETBALL TOWN. THEY HOSTED BIRTHDAY PARTIES. DESPITE STRIVING TO GO ALONG WITH THE LAW, SHE HAS -- WAS FORCED TO CLOSE HER BUSINESS. SHE BRINGS A COMMITMENT TO SERVING HER COMMITMENT, HER SAME COMMITMENT TO HER ADVOCACY TO PROTECTING SMALL BUSINESSES LIKE BASKETBALL TOWN FOR MERITLESS LITIGATION. SHE LIVES IN RANCHO CAR DOVEA, CALIFORNIA. WE'LL BE GLAD TO HEAR YOUR OPENING STATEMENT.
00:21:03	>>	I THINK WE'LL ROLL THE VIDEO ABOUT BASKETBALL TOWN.
00:21:07	>>	WILL YOU PULL THE MICROPHONE CLOSER.
00:21:14	>>	MY NAME IS CRYSTAL CHODES. I WAS WITH BASKETBALL TOWN FOR OVER TWO YEARS. BASKETBALL TOWN WAS A SPECIAL EVENTS FACILITY FOR BASKETBALL, VOLLEY BALL, VARIOUS SPORTING EVENTS WHERE KIDS AND FAMILY COULD COME AND SPEND TIME AFTER SCHOOL AND ON THE WEEKENDS AND IN A POSITIVE ATHLETIC ENVIRONMENT. AT BASKETBALL TOWN, WE OFFER BIRTHDAY PARTIES FOR KIDS. AND WE HAD ONE SCHEDULED FOR A LITTLE BOY. AND HE INVITED ONE OF HIS FRIENDS. AND THAT FRIEND BROUGHT HIS UNCLE WHO IS IN A WHEELCHAIR. THEY HAVE A CHOICE OF SCHEDULING THE BIRTHDAY PARTIES UP STAIRS IN THE UPPER DECK LOUNGE OR IN THE DOWNSTAIRS IN THE LOWER GAME AREA. AND THERE WAS NO PREFERENCE GIVEN. ONCE WE FOUND OUT THROUGH THE FAMILY THAT ONE OF THE GUESTS EXPECTED WAS IN A WHEELCHAIR, WE ACTUALLY OFFERED TO MOVE THE PARTY DOWNSTAIRS, AND THEY DECLINED. AND AS A RESULT, MONTHS LATER, WE WERE SERVED WITH A LAWSUIT. SOME PEOPLE IN THE COMMUNITY SAID, WHY DRCHT YOU PUT A LIFT IN -- DIDN'T YOU PUT IN A LIFT. IT'S NOT THAT EASY WHEN YOU ARE SERVED WITH PAPERWORK. IT TAKES A LOT OUT OF YOU JUST READING THE LETTERS OVER. RESPONDING TO THE LETTERS. THERE ARE TIMES WHEN I REMEMBER LOOKING THROUGH COURT ORDERS AND THINKING THAT'S INACCURATE. THAT'S NOT EXACTLY WHAT HAPPENED. AND THEN TAKING THE TIME TO PUT A STATEMENT TOGETHER SO THAT YOU CAN EXPLAIN CONFERENCE CALLS WHERE YOU'RE ON THE PHONE FOR A COUPLE OF HOURS AND YOU'RE SPEAKING EVERY MINUTE THAT YOU'RE ON THE PHONE. THIS IS COSTING MORE MONEY THAT COULD BE GOING TOWARDS THE FACILITY. IT'S SO FRUSTRATING. FINALLY AS A RESULT OF ALL THE LEGAL FEES ASSOCIATED WITH THE LAWSUIT, WE HAD NO CHOICE BUT TO CLOSE THE FACILITY. THERE WAS A FAMILY PIZZARIA HERE. THEY HAD INVESTED ALL THEIR FAMILY. THEY HAD TWO KIDS THAT THEY'VE GOT TO PUT THROUGH COLLEGE. JUST A SMALL BUSINESS OF GREAT FAMILY AND THEY HAVE LOST EVERYTHING. THEY'RE STARTING OVER. WHEN THE FACILITY WAS ORIGINALLY BUILT, IT WAS APPROVED AS IT. WE WERE IN COMPLIANCE WITH A.D.A. REGULATIONS BUT IT DIDN'T STOP THEM FROM SUING US. FINALLY AS A RESULT OF ALL THE LEGAL FEES ASSOCIATED WITH THE LAWSUIT, WE HAD TO CHOICE BUT TO CLOSE TO THE FACILITIES. IF CAN -- IT CAN CLOSE AN ENTIRE FACILITY THAT BENEFITS FAMILIES, THEN IT CAN HURT ANYONE, AND THAT HAS TO STOP.
00:24:19	>>	THAT'S HARD TO WATCH THAT. I THANK YOU ONCE AGAIN FOR INVITING ME TO TESTIFY TODAY. AGAIN MY NAME IS CRYSTAL CHODES THE ISSUE OF LAWSUIT ABUSE HITS CLOSE TO HOME. I WAS THE MARKETING DIRECTOR LOCATED IN RANCHO CARDOVA. WE OFFERED A SAFE PLACE FOR FAMILY TO PLAY BASKETBALL AND VOLLEY. WE HOSTED BIRTHDAY PARTIES ONE ON THE GROUND FLOOR AND THE OTHER ONE ON THE UPPER LEVEL. WE HOSTED A BIRTHDAY PARTY FOR A BOY. THIS WAS A ROUTINE EVENT FOR OUR FACILITY AS WE HOSTED HUNDREDS OF BIRTHDAY PEARS AND EVENTS EACH YEAR. THE FAMILY HAD NOT INDICATED WHETHER THEY WANTED TO HOST THE PARTY UPSTAIRS OR DOWNSTAIRS. AND WE HOSTED THE PARTY ON AT THE MEZZANINE LEVEL. WE LEARNED HIS FRIEND WAS BRINGING AN UNCLE WHO WAS USING A WHEELCHAIR. AND WE IMMEDIATELY OFFERED TO MOVE THE PARTY DOWNSTAIRS BUT THEY DECLINED. THEN A FEW MONTHS LATER, WE WERE SERVED WITH A LAWSUIT. THE BASKETBALL TOWN WAS NOT IN COMPLIANCE WITH THE DISABILITY ACT IN FACT, WE WERE FULLY COME COMPLIANT. WE HAD WORKED WITH THE BUILDING'S OWNERS WHEN WE MOVED INTO THE FACILITY TO ENSURE THAT THE BUILDING WAS FULLY COMPLIANT WITH THE LAWS. DURING THE LAWSUIT THE PLAINTIFF'S ATTORNEY HIRED AN INDEPENDENT EX-EXPERT TO COME TO THE FACILITY. AND THE PLAINTIFF'S OWN EXPERT FOUND NO VIOLATIONS OF THE SECOND FLOOR. WE DIDN'T VIOLATE THE LAW BUT WE WERE SUED ANYWAY. AND THE COST OF DEFENDING THE LAWSUIT ULTIMATELY BIM MORE THAN WE COULD BEAR. AFTER A YEAR OF THE LAWSUIT, WE WERE FORCED TO SETTLE AND CLOSE OUR DOORS FOREVER. THE PLAINTIFF'S LAWYER DIDN'T JUST SUE THE BASKETBALL TOWN AND THEY DIDN'T SUE THE FACILITY. INSIDE WE HAD LEASED BASE TO A SMALL PIZZARIA. THE FAMILY HAD INVESTED ALL OF THEIR LIFE'S BUSINESS. WHEN BASKETBALL TOWN WAS FORCED TO CLOSE, SO WAS THEIR PIZZERIA. THEY WERE TRYING TO PUT THEIR KIDS THROUGH COLLEGE. NOW THEY HAVE TO STARTED OVER AFTER LOSING THEIR LIFE SAVINGS. NOT ONLY DID THEY LOSE EVEN BUT THEY ARE STILL RECEIVING LEGAL BILLS. AND THEY'LL HAVE TO PAY THOSE OFF TOO. BASKETBALL TOWN WAS BUILT TO SERVE FAMILIES AND KIDS WHO NEEDED A SAFE PLACE TO HANG OUT. AND I'M PROUD TO SAY THAT AT THE HEIGHT OF OUR BUSINESS WE SERVED ABOUT 100,000 FAMILIES IN OUR COMMUNITY EACH YEAR. WHEN WE CLOSED THERE WAS NO REAL ALTERNATIVE IN SACRAMENTO FOR MANY OF THESE KIDS TO GO AFTER SCHOOL AND ON THE WEEKEND. MANY CHILDREN WERE DEVASTATED. AND I SEE PEOPLE NEARLY TWO YEARS AFTER OUR CLOSURE WHO REMAIN DEVASTATED BY OUR UNFAIR AND UNJUST OR DEAL. BASKETBALL TOWN HAD ABOUT A DOZEN EMPLOYEES AND THOSE JOBS ARE GONE. AND TODAY WE NEED TO FIND WAYS TO INCREASE JOBS NOT DECREASE THEM. I'VE LOOKED FOR WAYS TO SPEAK OUT OF THE DEVASTATING ABUSE OF LAWSUITS ON FAMILIES, KIDS, AND SMALL BUSINESSES. THE BACK BURNER OF EVERY COMMUNITY IN OUR COUNTRY. IN DOING SO I HAVE MET OTHER SMALL BUSINESSES WHO HAVE BEEN HURT BY SMALL LAWSUITS. SENATORS THANK YOU FOR INVITING ME TODAY TO SPEAK ON THIS IMPORTANT ISSUE AND TO REPRESENT THE TENS OF THOUSAND BUSINESSES, THEIR EMPLOYEE, THEIR NEIGHBORS AND THEIR COMMUNITIES WHO ARE STRUGGLING WITH THIS THIS ISSUE. ON BEHALF OF THEM, I ASK FOR YOU TO WORK AGAINST UNWARRANTED AND ABUSIVE LAWSUITS IF A LAWSUIT CAN CLOSE AN ENTIRE FACILITY THAT'S MEANT TO BENEFIT CHIRCH AND FAMILY, IT CAN HURT ANYONE. AND IT HAS TO STOP. THANK YOU AGAIN FOR HAVING ME HERE TODAY.
00:28:21	>>	THANK YOU VERY MUCH. OUR NEXT WITNESS IS DR. DAVID TISHER. HE HAS A SURGICAL PRACTICE IN BEAUMONT, TEXAS. HIS INTEREST ARE IN SPORTS MEDICINE AND ORTSCOPIC SURGEON. HE SERVES AS A TEAM PHYSICIAN IN THE HOSPITAL AND ALONG WITH SEVERAL AREA HIGH SCHOOLS AS WELL. HE SERVED BOTH WITH THE TEXAS MEDICAL ASSOCIATION AND THE MEDICAL ASSOCIATION AS ORTHOPEDIC SURGEON AND ON THE COMMITTEE. AND IS A MEMBER OF AOES. THE DOCTOR PLAYED PIVOTAL ROLLS IN MEDICAL LIABILITY REFORM ESTABLISHING CAPS ON NONECONOMIC DAMAGES THAT HAVE SERVED AS A MODEL FOR THE MATION. DR. TISCHER IS A PAST PRESIDENT OF THE TEXAS ORTHOPEDIC SOSEYATION AND CONTINUES TO SERVE AS THE -- ORTHOPEDIC ASSOCIATION AND CONTINUES TO SERVE AS SUCH. HE COMPLETED HIS POSTGRADUATE TRAINING AT BROOK ARMY MEDICAL CENTER ATFORD SAM HOUSTON TEXAS. HE WAS DECORATED FOR SERVICE IN OPERATIONS DESERT SHIELD AND DESERT STORM. WELCOME DR. TISCHER, WE'LL BE HAS BEENER TO RECEIVE YOUR TESTIMONY.
00:29:55	>>	THANK YOU. IT'S AN HONOR TO BE HERE. IT'S INTERESTED THAT THE PUBLIC DEBATE SEEMS TOE BE CREATING JOB, SMALL BUSINESSES AND HEALTH CARE. AND THE PRESIDENT'S VERY CLEARLY TALKING ABOUT THAT. WELL, IN MEDICINE, WE TRY TO GO BASED UPON EVIDENCE BASED MEDICINE. YOU TO PROVE THAT IT WORKS BEFORE WE'RE GOING TO GIVE THAT BILL OR DO THAT TYPE OF SURGERY. WELL IT IS ONE PLACE WHERE IT IS WORKING. IT'S CALLED TEXAS. AND WE MADE SOME VERY DIFFICULT DECISIONS IN THE EARLY PART OF THIS DECADE. RIGHT NOW THE TEXAS ECONOMY IS RESILIENT. DOCTORS ARE FLOODING INTO THE STATE. AND SMALL BUSINESSES WHICH DOCTORS ARE INCREASING NOT DECREASING. DOCTORS ARE REALLY A SMALL BUSINESS WHEN YOU LOOK WHAT THEY DO AND WHERE THEY ARE. AND UNLIKE BASKETBALL TOWN YOU CAN'T PICK UP BASKETBALL TOWN AND MUY TO A MORE FRIENDLY VENUE, BUT YOU SURE CAN A DOCTOR'S PRACTICE. SENATOR ALEXANDER WHEN TEXAS WAS IN ITS EARLY FORMATIVE STAGE, FOLKS FROM TENNESSEE HUNG A SIGN UP ON THEIR DOOR IT SAID G.T.T., GONE TO TEXAS. WELL, THERE'S A LOT OF THOSE SIGNS HANGING OUT ON DOCTOR'S DOORS. WE'RE THE BENEFICIARIES AND PATIENTS WHO WANT ACCESS IN TENNESSEE ARE PAYING THE PRICE. WE KNOW FROM OUR ESTIMATES A DOCTOR'S PRACTICE AND THE ECONOMIC ACTIVITY THAT HAPPENS WITH THAT, BRINGS ABOUT $700,000 TO THE COMMUNITIES THAT HAVE THOSE. SO IN THE RURAL AND POORER PARTS OF THE STATE OF TEXAS, OUR LAWSUIT REFORMS WITH REGARD TO MEDICAL LIABILITY HAVE BEEN A TREMENDOUS BOOM. NOW YOU'RE GOING TO HEAR A LOT OF MISINFORMATION AND IT'S FROM THE USUAL SUSPECTS. AND I KNOW THAT'S A LITTLE DIFFICULT TO BELIEVE. THEY WOULD SAY, ONE THAT THERE WASN'T A CRISIS. TWO, THAT IT DIDN'T WORK. THREE THAT THE RATE OF INCREASE IN DOCTORS IS EQUAL TO THE RATE OF THE GENERAL POPULATION GROWTH AND IT GOES ON AND ON. IN YOUR PACKET I'VE GIVEN YOU A LOT OF MATERIAL THAT BASICALLY REBUTS THAT. THERE'S A POWER POINT WHICH SHOWS YOU THE STATISTICS OF HOW WE WERE IN A CRISIS. IT SPECIFICALLY TALKS ABOUT BEFORE THE REFORMS. THERE WERE 17 CARRIERS. IT WENT DOWN TO FOUR. WE HAD NO CARRIERS, POLICIES FOR MANY OF OUR PHYSICIANS. AND PHYSICIANS HAD TO PAY IN MANY CASES SIX FIGURES IN ORDER TO COVER THEMSELVES ON AN ANALYZED BASIS. QUADRUPLED IN NONECONOMIC DAMAGES DURING THAT SAME PERIOD OF TIME. IT WAS BASICALLY AN EXPLOSION OF LITIGATION. AT THAT SAME TIME 87% OF THOSE LITIGATION CASES NEVER WENT ANYWHERE. THEY WERE DROPPED OR DISMISSED. BUT EVERY ONE OF THEM COST AN AVERAGE OF $25,000 TO DEFEND. WELL, WHO BARES THOSE COST? ULTIMATELY YOU CAN PUT A DOLLAR AMOUNT ON COST, BUT IT'S ABOUT ACCESS TO CARE. WHAT HAPPENS WHEN THEY HAVE A HIGH RISK OF BEING SUED OR THEY'VE BEEN SUED OVER AND OVER AND OVER AGAIN OFTENTIMES AND VERY COMMONLY NOT WITH ANY PARTICULAR MERIT TO THAT. ONE THEY MOVE TO MORE FAVORABLE VENUE. TWO THEY LIMIT THEIR PRO-PENCE TOY TAKE THOSE TYPE OF CASES THAT ARE LITIGATION-PRONE. THEY RESTRICT THE TYPE OF PRACTICE THAT THEY HAVE TO LESS HIGH-RISK CASES. SO THE PEOPLE THAT VERY MUCH NEED THAT CARE THE MOST ARE PROBABLY NOT GOING TO HAVE ACCESS. YOU CAN'T PUT A NUMBER ON THAT. BUT HERE THE NUMBERS ARE COMPELLING. AND WHAT YOU CAN FIND ON THE VERY LAST PAGE, TWO PAGES HERE, YOU'LL SEE A GRAPH THAT SHOWS THE NUMBER OF NEWLY LICENSED PHYSICIANS IN TEXAS. HERE'S WHERE WE WERE AT BEFORE REFORM. HERE'S WHERE WE'RE AT NOW. AND IF YOU LOOK AT THE PAGE IMMEDIATELY BEFORE THAT, THESE ARE APPLICATIONS. THE APPLICATIONS ARE THE LEADING INDICATOR. YOU HAVE TO APPLY BEFORE YOU CAN GET A LICENSE. SO WE KNOW THAT NEXT YEAR WE'RE GOING TO BE UP HERE AND UP HERE. THIS IS A 60% TO 0% INCREASE OVER WHAT WE HAD BEFORE REFORMS. WE WERE LICENSESING A LITTLE MORE THAN 200 DOCTORS A YEAR. WE'VE GONE FROM 48 PER CAPITA DOCTORS OF THE STATE TO 43RD. AND AS THAT PENDULUM CONTINUES TO SWING YOU'RE GOING TO SEE MORE AND MORE DOCTORS FLOOD INTO THE AREA. IN THE EXAMPLE JUST PRIOR TO THAT, I HAVE FACTS ABOUT MEDICAL LIABILITY REFORM. THESE ARE REAL FACTS, REAL STATISTICS. IT'S NOT JUST IN THE URBAN AREAS THAT PEOPLE ARE PRACTICING NOW. WE NOW HAVE DOZENS OF COUNTIES THAT HAVE THEIR FIRST OBSTRIGS. AND WE HAVE AN ENTIRE CATHOLIC HEALTH CARE SYSTEM CALLED CHISTUS WHICH HAS NO O.B. OPENING. THEY'RE NOT SEARCHING FOR NEW OBSTRIGSES. IN BEAUMONT WHERE I PRACTICE IT WAS ONE OF THE FOUR LITIGATION HELL HOPE HOLES. WE HAD FOUR COUNTIES IN COUNTIES IN TEXAS. NONE OF THEM ARE ON THAT LIST ANYMORE. TEXAS WAS IN A SEVERE CRISIS STATE BEFORE WE PASSED REFORMS. NOW WE'RE NOT ON A WATCH LIST. SO WHAT WE WOULD SAY TO THE SENATE AND CERTAINLY TO THIS ADMINISTRATION AND TO THE CONGRESS AND TO THE AMERICAN PEOPLE IS THAT WE HAVE AN EXAMPLE OF HOW TO DO IT. AND HOW TO DO IT RIGHT. AND IT'S WORKING. IT'S WORKING FOR JOBS. IT'S WORKING FOR SMALL BUSINESS. IT'S WORKING FOR HEALTH CARE. NOW A LOT OF PEOPLE THINK, WELL IT REALLY DOESN'T HAVE ANYTHING TO DO WITH THE FEDERAL GOVERNMENT. WELL, THAT'S NONSENSE. WE KNOW AND I THINK SENATOR -- CONGRESS BURGESS IS CARRYING A BILL WHICH WOULD INSTITUTE A TEXAS-SIZED CAP AT THE FEDERAL LEVEL. BILLIONS OF DOLLARS OF SAVINGS THROUGH THE MEDICARE SYSTEM BECAUSE THE MORE WE PAY IN LIABILITY COSTS, THE MORE WE GET PAID BY MEDICARE. I THINK THAT'S SOMETHING WHERE DOCTORS ACTUALLY AGREED TO A PAY CUT IF YOU COULD CUT OUR LIABLE COST. AND THIS TYPE OF THE PLAN REALLY DOES THAT. SO THOSE TYPE OF REFORMS HAVE TO BE MEANINGFUL. THEY HAVE TO BE MEASURABLE. AND THEY HAVE TO BE SUSTAINABLE. AND WE BELIEVE THAT OURS ARE. AND I'LL STOP THERE AND BE REDO I ANSWER ANY QUESTIONS THAT YOU MAY HAVE.
00:36:21	>>	THANKS DR. TISCHER. OUR NEXT WITNESS IS PROFESSOR CHRISTOPHER DRHOSEL THE PROFESSOR AT THE UNIVERSITY KANSAS SCHOOL OF LAW. HE'S A SCHOLAR IN ECONOMICS ARBITRATION. HE'S A REPORTER FOR THE U.S. LAW ON COMMERCIAL ARBITRATION AND HAS AUTHORED A CASE BOOK ON COMMERCIAL ARBITRATION. HE IS ALSO THE CHAIR OF THE CONSUMER ARBITRATION TASK FORCE AT NORTHWESTERN UNIVERSITY SCHOOL OF LAW. IN THAT CAPACITY, HE CONTRIBUTED TO A REPORT THIS MONTH ON CONSUMER ARBITRATION BEFORE THE AMERICAN ARBITRATION ASSOCIATION. PRIOR TO TEACHING THE PROCESSOR WAS IN PRIVATE LAW PRACTICE IN WASHINGTON, D.C. AND SERVED AS A LAW CLERK FOR THE IRAN U.S. TRIBUNAL. THE CHIEF JUSTICE OF THE FIFTH CIRCUIT AND BYRON WRIGHT OF THE UNITED STATES SUPREME COURT. PROFESSOR, WELCOME, AND WE'LL BE HAPPY TO RECEIVE YOUR OPENING STATEMENT.
00:37:31	>>	THANK YOU VERY MUCH. I'M VERY HAPPY TO TALK ABOUT ARBITRATIONS. IT'S NICE TO BE IN A SETTING OF ARBITRATION. IT'S A PERFECT TOPIC FOR THIS HEARING BECAUSE THE GROWTH IN THE YOUTH OF ARBITRATION IS ILLUSTRATING THAT SOMETHING'S WRONG WITH IT. THE REASONS THAT THEY CONTRACT FOR ARBITRATION IS POTENTIAL PROBLEMS WITH THE COURT SYSTEM. THAT IT'S TOO EXPENSIVE, THAT THERE'S A RISK OF FRIVOLOUS AND UNEXPECTED LAWSUITS. IT IS AN ALTERNATIVE THAT RESOLVES DISPUTES THAT PARTIES HAVE FOUND UNATTRACTIVE BECAUSE OF SOME OF THE UNCERTAINTIES OF THE COST -- COURT SYSTEM AND THE COST. IT HAS BECOME CONTROVERSIAL PARTICULARLY IN THE EMPLOYMENT CONTRACTS AS BEING UNFAIR TO CONSUMERS, UNFAIR TO EMPLOYEES. SUPPORTERS CITE THAT IT CAN BE LESS EXPENSIVE THAN LITIGATION AND THAT IT MAY ENHANCE ACCESS OF CONSUMERS AND EMPLOYEES TO DISPUTE RESOLUTION FORUM IN EVALUATING ARBITRATION AS A SUBSTITUTE FOR LITIGATION, THERE'S A NOTABLE LACK PARTICULARLY IN SOME SETTINGS THAT YOU HEAR ANECDOTAL STORIES IN ARBITRATION, BUT IN THE CONSUMER SETTING THERE'S HAS BEEN LITTLE RESEARCH. AND WITH THE CONSUMER ARBITRATION TASK FORCE, WE HAVE TRIED TO ADDRESS AT LEAST SOME OF THOSE SHORT FALLS IN A REPORT THAT AS YOU NOTED WE RECENTLY ISSUED ON CONSUMER ARBITRATION. IT FOCUS ON THE AMERICAN ARBITRATION CASES AND HOW IT HANDLES ARBITRATION CASES. WE REVIEWED FILES THAT THEY ADMINISTERED FROM APRIL TO DECEMBER 2007 AND EVALUATED HOW THE ARBITRATION PROCESS WORKED ON A VARIETY OF DIMENSIONS. INTERESTINGLY THE SAMPLE OF CASES THAT WE LOOKED AT CERTAINLY INCLUDES LARGE BUSINESSES, BUT IT INCLUDES A SMALL NUMBER OF BUSINESSES AS WELL THAT HAVE USE ARBITRATION FOR RESOLVING DISPUTES. THE CASES INVOLVE A WIDE RANGE OF DISPUTES AND TOOK PLACE ALL OVER THE COUNTRY. JUST TO GIVE YOU SOME IDEA OF WHAT WE FOUND -- WHAT WE FOUND FOR EXAMPLE, WAS THAT THEY HAVE ADOPTED A SYSTEM WHERE BI-CONSUMERS ARE CHARGED LOW FEES $125, FOR A SMALL CLAIM BELOW $75,000. IN FACT THE FEES THAT THE CONSUMERS HAVE TURN OUT TO BE LESS THAN THAT BECAUSE THE ARBITRATOR IS OFTEN PROTECTED CONSUMERS FROM SOME OF THOSE FEES AND ASSESS THEM TO THE LOSING PARTY. THE AVERAGE TIME IT TOOK FROM START TO FINISH TO RESOLVE DISPUTES IN TRIPLE A CONSUMER ARBITRATION WAS LESS THAN SEVEN MONTHS. ONE THING THAT WE INTEND TO DO WITH THIS STUDY IS TO HAVE FIRM DATA ON THE COURT SYSTEM. BUT MY SBUTION THAT SEVEN TO EIGHT MONTHS IS SUFFICIENT. CONSUMERS PREVAILED IN JUST OVER 50% OF THE CASES THAT THEY BROUGHT RECOVERING LESS THAN $20,000. CONVERSELY BUSINESSES PREVAILED. AND 83% OF THE CASES RECOVERING FOR THAN $20,000. THE DIFFERENCES THERE IS THAT BUSINESSES BRING DIFFERENT TYPES OF CLAIMS THAN CONSUMERS DO. BUSINESSES ARE MORE LIKELY TO PREVAIL. IT'S EASIER TO ESTABLISH THE CLAIM AND THE AMOUNT THAT CONSUMERS ARE IN THE CASES THAT THEY ARE BRINGING CERTAIN CLAIMS FOR DEFECTIVE PRODUCTS OR SORT OF POORLY RENDERED SERVICES HARDER TO PROVE. HARDER TO RECOVER. THE DIFFERENCE BETWEEN BUSINESSES AND CONSUMERS DOESN'T SHOW ANY UNFAIRNESS THAT IN THE ARBITRATION PROCESS. THE SETTING DEALS WITH CLAWS THAT ARE UNFAIR TO CONSUMERS BASTED ON DIFFERENT SOURCES OF PROVISIONS THAT RESTRICT RECOVERY OF DAMAGES. THE TRIPLE A ADHERES TO WHAT'S CALLED THE CONSUMER DUE PROCESS LAW. IT IS REQUIRES TO BE FAIR TO ALL PEARS. AND THE ENFORCEMENTS OF THAT PROTOCOL. IT FOUND IN 98% OF THE CASES THE ARBITRATION AGREEMENT COMPLIED WITH OR THAT THE TRIPLE A IDENTIFIED AND ENFORCED THE PROTOCOL IN THE CASES BEFORE IT. THOSE ARE JUST HIGHLIGHTS OF THE STUDY. IT'S A VERY LONG STUDY AS YOU MAY HAVE NOTICED. AND I'M NOT CLEARLY GOING TO WANT TO TALK ALL OF IT. BUT I'M HAPPY TO DISCUSS OTHER FINDINGS OR THE ARBITRATION GENERALLY, IF YOU HAVE OTHER QUESTIONS.
00:42:43	>>	FEW PROFESSOR. MY FINAL WITNESS IS TED FRANK WHO'S AN EXPERT IN CIVIL LITIGATION IN LAWSUIT ABUSE. HE ENJOYED A SUCCESSFUL 11-YEAR LAWYER BEFORE JOINING THE AMERICAN INSTITUTE IN 2006. HE FOCUSES ON CLASS ACTIONS, MASS TORTS AND SIL JUSTICE REFORM. HE'S A FREQUENT CONTRIBUTOR TO OVERLAWYERED.COM WHICH DOCUMENTS ABUSE TO THE AMERICAN JUSTICE SYSTEM. HE'S A PRESIDENT OF THE CHICAGO SCHOOL OF LAW. HE CLERKED FOR FRANK EASTERBROOK OF THE SEVENTH CIRCUIT. HE JOINS US TODAY TO DISCUSS THE ECONOMIC COST OF LITIGATION. WELCOME, MR. FRANK. WE'LL BE GLAD TO RECEIVE YOUR OPENING STATEMENT.
00:43:32	>>	MR. CHAIRMAN, I FOOD IN TO RUN TO THE FLOOR -- I NEED TO RUN TO THE FLOOR. I'LL BE BACK SHORTLY.
00:43:37	>>	THANK YOU, MEMBERS OF THE CONFERENCE FOR YOUR KIND INVITATION TO TESTIFY ON EXCESSIVE LITIGATION. JUST TO CLARIFY, I'M A RESIDENT FELLOW AT THE AMERICAN ENTERPRISE INSTITUTE, BUT I AM NOT TESTIFYING ON THEIR BEHALF. AND THE VIEWS THAT I SHARE TODAY ARE MY OWN. OUR NATION'S LITIGATION SYSTEM MORE THAN OTHER NATIONS. ALL OF THESE RAISE COSTS TREMENDOUSLY. YET DESPITE THESE INCREASED COGS FROM THESE UNIQUE FEATURES THERE'S NO EVIDENT THAT THE UNITED STATES TORT SYSTEM PROVIDES MARGINAL BENEFITS COMPARED TO OTHER NATIONINGS. IT'S QUITE LIKELY THAT THIS SYSTEM HAS DISTORTING EFFECTS THAT MAKES IT WORK MORE THAN OTHER NATIONS. AND MR. HOWARD HAS WRITTEN THREE BOOKS SHOWING THAT. MY WRITTEN TESTIMONY EXPLORES EXISTING STUDIES ON THE DIRECT AND INDIRECT OF THE UNITED STATES TORT SYSTEM. I CONCLUDE THAT THE DIRECT COST THAT THE UNITED STATES ECONOMY FROM TORT LITIGATION ARE $250 BILLION A YEAR AND THAT'S ABOUT TWICE WHAT -- TWICE RELATIVE TO THE SIZE OF THE ECONOMY OF WHAT OTHER INDUSTRIALIZE DS NATIONS SPEND. SO IN OTHER WORDS, WE'RE SPENDING AN EXTRA $128 BILLION THAN THAT OF COMPARABLE INDUSTRIALIZED NATIONS. BUT IT'S IMPORTANT TO REALIZE THAT THE INDIRECT CAUSE CASTED BY EXCESSIVE LITGATION FAR OUTWEIGH THESE COSTS. BUSINESSES INCUR NONLEGAL EXPENSES FROM DOCUMENT MANAGEMENT SYSTEMS TO EXECUTIVITY TIME LOST IN DEPOSITIONS TO PRETRAIL PREPARATION. INDIVIDUALS CHANGE THEIR BEHAVIORS BECAUSE OF THE DISTORTING EFFECT OF THE TORT SYSTEM. FOR EXAMPLE BECAUSE OF THE RISK OF EMPLOYMENT LITIGATION, EVERY EMPLOYEE IS A POTENTIAL LAWSUIT. NOW EMPLOYERS ARE RATIONAL ECONOMIC ACTORS. AND CONFRONTED WITH THIS POTENTIAL COST, THEY REDUCE WAGES OR SUBSTITUTE AWAY FROM LABOR INTO OTHER MEANS OF PRODUCTION TO REFLECT THESE ADDITIONAL COSTS. AND STUDIES HAVE SHOWN AND I ESTIMATE THAT THERE'S OVER $400 BILLION A YEAR AND MILLIONS OF LOST JOBS FROM THE EFFECT OF TORT LITIGATION ON WAGES. FEAR OF LIBLET CAUSES DOCTORS TO ENGAGE IN DEFENSIVE MEDICINES. AND PHARMACEUTICAL COMPANIES TO CUT BACK ON RESEARCH AND DEVELOPMENT. AS I DISCUSS IN MORE DETAIL IN MY WRITTEN TESTIMONY, I ESTIMATE THAT THESE COSTS ADD UP TO $375 BILLION A YEAR AS WELL AS THOUSANDS OF LIVES LOST. IT CAN BE ESTIMATED, A ROUGH ESTIMATE BETWEEN $600 BILLION AND $900 BILLION OR 4% TO 6 1/2% G.D.T. IN SHORT WE CAN ACHIEVE BETTER RESULTS THAN THE STIMULUS PACKAGE SIMPLY BYPASSING COMPREHENSIVE TORT REFORM. I WANT TO ERP SIZE THAT THESE ARE LARGE NUMBERS. FIRST I'VE USED CONSERVATIVE ESTIMATES. IN EACH OF THE CATEGORIES I'VE DISCUSSED. OTHER ECONOMISTS HAVE LOOK TAT SAME DATA AND THEY'VE COME AWAY WITH HIGHER NUMBERS. NONE OF THESE NUMBERS ARE REFLECTING TORT LIBET IN THE PAST FEW MONTHS. THE LILY LED BETTER ACT ALL OF THESE ADD COSTS TO EMPLOYERS WILL PUT BUSINESSES OUT OF BUSINESS AND WILL COST JOBS. THIRD, I HAVE AM NOT TRYING TO ESTIMATE A NUMBER OF IDENTIFYINGING LITIGATION ON THE ALLEGATION OF ECONOMIC RESOURCES. I DON'T MEASURE THE DAMAGING EFFECTS ON THE CULTURE THAT MR. HOWARD DESCRIBES. THE DEMAND FOR LAWYERS IS SUCH THAT EVEN IN THE MIDDLE OF A RECESSION, A 25--YEAR-OLD LAW SCHOOL GRADUATE WILL MAKE MORE THAN A U.S. SENATOR. AS A RESULT WE HAVE A DISTORTION IN OUR ECONOMY MANY OF THE BEST GRADUATES WILL CHOOSE TO BECOME ATTORNEYS RATHER THAN ENGINEERS WILL PEOPLE PRODUCE THINGS RATHER THAN PROMOTE THE TRANSFER OF WEALTH. I HAVE NOT MEASURED THE ECONOMIC EFFECTS ON THE COST OF CAPITAL. $600 BILLION IS ALMOST CERTAINLY AN UNDER ESTIMATE OF THE AMERICAN TORT SYSTEM. I WELCOME YOUR QUESTIONS.
00:48:32	>>	THANK YOU VERY MUCH, MR. FRANK. AND I APPRECIATE EACH OF YOU BEING ABLE TO TESTIFY. I WOULD LIKE TO ASK SOME QUESTIONS AS WE FLESH THIS OUT A LITTLE BIT. MR. FRANK, LETS ME START WITH YOU AND THEN I'M GOING TO ASK MR. HOWARD TO COMMENT ON THIS. AS YOU ALLUDED A LOT OF HIS WORK HAS BEEN DEALING WITH HOW THIS LITIGATION ATMOSPHERE IN OUR COUNTRY SORT OF CHANGES THE CULTURE IN A SUBTLE AND NOT SO SUBTLE WAYS. BUT I WANT TO TALK WITH YOU ABOUT OUR GLOBAL COMPETITION, WHEN IT COMES TO JOB CREATION AND BEING ABLE TO RETAIN PEOPLE IN JOBS DURING A TOUGH ECONOMIC ENVIRONMENT. THE COST OF LIABLE INSURANCE, DO THE COST OF LET'S SAY PAYING FOR EMPLOYEES WHO ARE UNPRODUCTIVE BECAUSE THEY HAVE TO LEAVE THE JOB IN ORDER TO TESTIFY IN DEPOSITIONS OR IN COURT OR IN OTHER WAYS, HOW DOES THAT -- HOW DOES THIS IMPACT THE UNITED STATES IN TERMS OF OUR ABILITY TO COME NEAT A GLOBAL ECONOMIC ENVIRONMENT THAT OUR LITIGATION SYSTEM SYSTEM SO COSTLY AND TAKES SO MUCH TIME FROM EMPLOYEES AND EMPLOYERS ALIKE?
00:49:46	>>	IT'S CLEARLY A VERY LARGE DRAG ON THE ECONOMY AND ON OUR COMPETITIVENESS. AND THERE HAVE BEEN A NUMBER OF STUDIES SHOWING THIS IN THE FINANCIALS INDUSTRY, IN THE FINANCIAL INDUSTRY THERE'S BEEN THE BIPARTISAN STUDY BY MAYOR BLOOMBERG AND SENATOR SCHUMER, LAMENTING THAT LITIGATION COSTS ARE HURTING THE COMPETITIVENESS OF ONCE WAS THE FOREMOST FINANCIAL INDUSTRY IN THE WORLD. THE NATIONAL ASSOCIATION OF MANUFACTURES HAS RELEASED A CITY A DRAG OF SEVERAL PERCENT ON MANUFACTURING INDUSTRY FROM JUST DIRECT TORT COST NOT EVEN INCLUDING THE INDIRECT TORT COST THAT ME AND MR. HOWARD HAVE DISCUSSED. AND THAT CERTAINLY HURTS OUR MANUFACTURING CAPABILITY AND SO ON AND SO FORTH. THE C.E.O. OF CHRYSLER HAS SAID THAT LITIGATION COSTS RAISE THE COST OF EVERY CAR BUILT IN AMERICA BY $1,000. AND THAT'S BILLIONS OF DOLLARS A YEAR TO CONSUMERS AND NO TELLING HOW MANY LOST SALES AND LOST PRODUCTION WE'VE HAD BECAUSE OF THAT.
00:50:53	>>	I'VE HEARD YOU USE THE TERM "TORT TAX" WHICH I'VE HEARD AND READ BEFORE. BUT IS IT YOUR CONTENTION THAT THESE INCREASED COSTS ON SMALL AND LARGE BUSINESSES ALIKE ARE ABSORBED BY THOSE BUSINESSES OR ARE THEY PASSED BY THE ULTIMATE CONSUMER SM
00:51:10	>>	WELL, IN A LOT OF WAYS IT'S LOST. WE DON'T SEE THE PRODUCTS THAT PEOPLE WHO DON'T BECOME DOCTORS, THE DRUGS THAT AREN'T BUILT. IT'S A TORT TAX IN THAT IT'S WEALTH DESTRUCTION. CERTAINLY THE DIRECT COST, THE $128 BILLION, A LOT OF THAT GETS PAST TO CONSUMERS. WE SEE THAT IN CARS. A LOT OF IT WE SEE IN JOBS THAT AREN'T CREATED, THE BUSINESSES THAT ARE NOT STARTED. AND THOSE COSTS AFFECTS FAMILIES, THOUSANDS OF DOLLARS A YEAR.
00:51:45	>>	MR. HOWARD, AS I'VE NOTED YOU'VE WRITTEN EXTENSIVELY AND SPOKEN EXTENSIVELY IN THIS AREA FOR FORCING BIPARTISAN COALITIONS TO DEAL WITH THIS ISSUES. I MENTIONED THAT YOU HAVE A BOOK CALLED "LIFE WITHOUT LAWYERS."
00:52:05	>>	HAVING BEEN A LAWYER FOR 30 YEARS AND I HAVE A DAUGHTER WHO'S ABOUT TO GRADUATE LAWSUIT, COULD YOU EXPLAIN WHAT YOU MEAN BY THAT? AND HOW THAT PERTAINS TO THE CONVERSATION WE'RE HAVING HERE TODAY.
00:52:18	>>	WELL, I THINK -- THE TITLE OF THE BOOK IS INTENDED TO SUGGEST THAT PEOPLE LIVING THEIR LIVES SHOULD BE ABLE TO FOCUS ON THEIR GOALS, NOT WORRY ABOUT THE LITTLE LAWYER ON THEIR SHOULDER WHISSER PG ON THEIR EAR THAT THEY'RE GOING TO GET IN TROUBLE. ALTHOUGH THE PORTION OF LAWYERS HAVE DOUBLED FOR THE REASONS THAT THE OTHER REASONS AND MR. FRANK HAVE TESTIFIED. PEOPLE CAN'T SUCCEED IF THEY'RE SELF CONSCIOUS. IT'S A COGNITIVE PROBLEM. I TALK ABOUT IT IN THE BOOK. IF YOU'RE WORRIED THAT YOU'RE GOING TO GET IN TROUBLE, THE MIND SET OF THE DOCTOR IS, WELL, MAYBE IT'S UNLIKELY THAT THAT HEADACHE COULD BE A TUMOR, BUT YOU NEVER KNOW. AND THE INSURANCE COMPANY WILL PAY FOR IT. SO I GUESS I'LL ORDER AN M.R.I. PRETTY SOON YOU HAVE $202,000 WASTED AND THAT ADDS UP TO AN EX-THERE BILLION DOLLARS IN DEFENSIVE MEDICINE. SO IF PEOPLE DON'T TRUST THE SYSTEM OF JUSTICE, THEY WON'T BEHAVE COMPREHENSIVELY. YOU NEED THEM TO FOCUS ON THEIR GOALS NOT WORRY ABOUT THE DISTRUST OF JUSTICE. NOT WORRYING ABOUT THE LAWYER. SO THAT'S REALLY WHAT THE BOOK IS ABOUT. ON GLOBAL COMPETITIVENESS WITHOUT ANY QUESTION THE MOST IMPORTANT THING THAT COULD HAPPEN TO THIS ECONOMY IS TO OVERHAUL THE LEGAL INFRASTRUCTURE TO MAKE IT RELIABLE. FOREIGN INVESTORS SAY THEY WON'T COME BECAUSE THEY'RE SCARED OF THE -100 CHANCE OF A ROW ROE VERDICT THAT RUINS THEIR BUSINESS. WHY SHOULD THAT TAKE THAT RISK? EMPLOYMENT CAN'T BE FIXED BECAUSE YOU CAN'T ALIGN THE INCENTIVES OF THE DOCTORS. SO IT RIPPLES OUT THROUGH SOCIETY. IT COULD HARDLY BE MORE IMPORTANT.
00:54:19	>>	DR. TISCHER, YOU INDICATED, OF COURSE, YOU AND I KNOW EACH OTHER WELL AND AM FAMILIAR WITH THE TEXAS EXPERIENCE. AND I TRY NOT TO EMPHASIZE THAT TOO MUCH IN WASHINGTON BECAUSE PEOPLE DON'T APPRECIATE AS MUCH IN WASHINGTON AS I DO AND YOU DO AND WE TALK ABOUT WHY TEXAS IS A MODEL IN THIS AREA. BUT I THINK IT'S TRUE. BOTH MR. FRANK AND MR. HOWARD HAVE TALKED A LITTLE BIT ABOUT THIS PHENOMENON OF VOTING WITH YOUR FEET. IF YOU'RE AN EMPLOYER DECIDING WHERE TO PUT YOUR BUSINESS, YET THE COST OF OVERHEAD, INSURANCE COST, LITIGATION COST ARE TOO HIGH. YOU ALLUDED TO THE FACT THAT IN TEXAS WE FOUND A LOT MORE PHYSICIANS ARE WILLING TO COME AND PRACTICE THEIR PROFESSION IN TEXAS. AND THERE'S A LOT MORE ACCESS TO HEALTH CARE IN TEXAS BECAUSE THERE ARE MORE DOCTORS PROVIDING THAT HEALTH CARE BECAUSE OF THE CERTAINTY OR AT LEAST GREATER CERTAINTY CAUSED BY THE TORT REFORM EFFORTS IN OUR STATE. BUT COULD YOU TALK JUST A LITTLE BIT ABOUT THE IMPACT ON HIGH-RISK SPECIAL TISS IN SIMILAR BECAUSE I THINK THIS IS AN AREA WHERE THERE MAY BE A DOCTOR IN TOWN. THERE MAY NOT BE A NEUROSURGEON. WE TALKED ABOUT AN O.B.G. DOCTOR.
00:55:43	>>	HI THE HIGH RISK SPECIALTIES WERE THE ONES THAT WERE HIT THE HARDEST. OUR PEDIATRIC SOME SPECIALTIES, ORTHOPEDIC SURGE RIRKS ON STE TRICKS. E.R. MEDICINES. SOME OF THE CRITICAL CARE AREAS. THOSE ARE THE AREAS THAT WE HAVE LACK OF ACCESS. IT'S THE SUBTLE STUFF THAT YOU CAN'T MEASURE THAT ARE KILLING US. DEFENSIVE MEDICINE IS BAD MEDICINE. IT'S ORDERING TESTS AND PROCEDURES TO COVER MY REAR END. IT'S NOT TO MAKE IT ANY BETTER. I KNOW IN TALKING TO COLLEAGUES THAT MANY OF THEM FEEL EMBOLDEN AT THIS POINT IN TIME THAT THEY'LL ONLY LOOK AT THE FACTS IN THE CASE AND SIMPLY SAY, YOU REALLY DON'T NEED THAT TEST. WE'RE GOING TO WATCH YOU FOR ANOTHER 60 DAYS IF. IF YOUR HEADACHE DOESN'T GO AWAY, YOU DON'T NEED THE TEST. I THINK THIS GOTCHA MENTALITY THAT GOES ON WITH THE COURT HAS REALLY GOT TO HAVE SOME LIMITATION. I THINK THE DOCTORS WOULD QUIT COMING IF THEY HAD A STABLE ENVIRONMENT IN THE OTHER 49 STATES. BUT I DO KNOW THIS -- WE DON'T WANT ANY FEDERAL REFORM TO USURP WHAT WE'VE ALREADY DONE THERE. IN YOUR MATERIALS, YOU ALSO HAVE A STUDY BY DR. RAY PERRYMAN. I KNOW YOU'RE VERY SIMILAR WITH DR. RAY PERRYMAN. IT TALKS ABOUT THE LIABILITY ASPECTS BUT THE BUSINESS CLIMATE. TEXAS IS HOME TO MORE FORTUNE 500 COMPANIES THAN ANY OTHER STATE IN THE COUNTRY. I THINK IF YOU WOULD HAVE TOLD NEW YORK THAT 30 YEARS AGO, THEY PROBABLY WOULD HAVE NOT BELIEVED THIS. BUT CAPITOL IS GOING TO MOVE TO WHERE IT GETS TREATED APPROPRIATELY. WHERE IT HAS A HIGHER POTENTIAL RATE OF RETURN. SO AS WE LOOK AT THAT, ALREADY FIVE SHORT YEARS THE PEDIATRIC SPECIALLIES IN FIVE YEARS HAS DOUBLED. THE NUMBER OF SURGEONS IN FIVE YEAR, ONLY FIVE YEARS UP 12%. NEUROSURGEONS UP 5%. AND IN MY COMMUNITY IN OUR TRAUMA CENTERS WE HAVE 24-7 COVERAGE FOR ALL OF THOSE SPECIALTIES. THAT'S ONLY FIVE YEARS. IT'S NOT VERY LONG. I THINK AS YOU SAW BY THESE STATUS -- STATISTICS CONTINUES TO UPSWING. WE HAVEN'T ADDED MEDICAL STUDENTS. THESE ARE DOCTORS -- SOME OF THEM THE BEST AND THE BRIGHTEST IN THIS COUNTRY THAT ARE COMING TO TEXAS AND OUR ABILITY TO RECRUTE IS IN-- INCREASING. 98 OF APPLICANTS GOT A LICENSE. SINCE REFORM IT'S AT 85%. WE'RE ABLE TO BE VERY SELECTIVE. AND THAT'S THE ATTRACTION THAT WE HAVE. AND I CAN TELL YOU FROM A PERSONAL STANDPOINT I'VE HAD PARTNERS THAT RETIRE OR LEFT E.R. CALL OR LIMITED THEIR PRACTICE. THAT'S VERY SUBTLE. THEY STILL HAVE A LICENSE. THEY'RE STILL IN PRACTICE, BUT THERE'S NOT ACCESS FOR THE PATIENCE. AND IT'S THOSE HIGH-RISK CASES. WHEN DO YOU LET YOUR KID RIDE HIS BICYCLE? DO YOU HAVE A SURGEON TO SAVE HIS LIFE? THESE ARE THINGS THE PUBLIC DOESN'T UNDERSTAND IS HAPPENING TO THEM. PEOPLE HAVE TO UNDERSTAND THIS QUESTION -- DO YOU WANT ACCESS TO EMERGENCY CARE? OR DO YOU WANT ACCESS TO THE COURTS? AND THAT'S THE REAL QUESTION.
00:59:26	>>	DR. TISCHER,LES ANYBODY GET THE WRONG IMPRESSION, THE PRIMARY REFORMS IN TEXAS HAVE BEEN PUTTING CAPS ON NONECONOMIC DAMAGES AND PUNITIVE DAMAGES. SOMEONE WHO STILL SUFFERS AS A RESULT OF NEGLIGENCE ON THE PART OF THE HEALTH CARE PROVIDER STILL HAS JUST AS GOOD AN ACCESS TO THE CHOUSE AS THEY DID BEFORE THIS LEGISLATION PASSED, DO THEY NOT?
00:59:49	>>	REAL DAMAGES ARE NEVER CAPPED. WE'VE HAD A WRONGFUL DEATH CAP FOR 30 YEARS. THE NONECONOMIC CAP ONLY AFFECTS THOSE THINGS THAT ARE NOT MEASURABLE OR NOT QUANTIFYABLE. BUT WHEN IT COMES TO YOUR MEDICAL BILLS BEFORE OR AFTER A SETTLEMENT OR A JUDGMENT IF IT COMES TO YOUR DISABILITY PAYMENTS OR YOUR CARE PLAN IF YOU'RE DISABLED AND NEED SOMEBODY TO TAKE CARE OF YOU, THOSE ARE UNCAPPED. THE SKY'S THE LIMIT. BUT THOSE ARE OBJECTIVE MEASURES THAT GENERALLY BOTH SIDES, THE PLAINTIFF AND THE DEFENSE SIDE CAN AGREE WITHIN 10%. WHAT WARPED OUT OF THE JUDGMENTS THAT WERE HAPPENING BEFORE REFORM WAS A QUADRUPLING IN A 10-YEAR PERIOD OF THE NONECONOMIC SIDE OF THAT. SO THAT WAS WHAT EXPLODED. WHEN YOU GO TO COURT YOU'RE SUPPOSED TO BE GETTING DAMAGES THAT ARE REAL DAMAGES. THAT'S THE REASON YOU'RE IN COURT. IT'S NOT THERE TO DISCIPLINE DOCTORS. THAT'S WHAT THE MEDICAL BOARD DOES. IT'S AN INEFFICIENT WAY IF YOU THINK YOU'RE DISCIPLINING ANYBODY OVER THE BAD BEHAVIOR. IT'S VERY, VERY EXPENSIVE IN THE SYSTEM.
01:01:06	>>	YOU AND I HAVE TALKED ABOUT THE IMPACT LET'S SAY ON MEDICARE AND OTHER TIDELEMENT SPENDING WHICH IS GROWING INTO HUGE CRISIS PROPORTION SOME $67 BILLION THAT ARE NOT TOUCHED UPON IN THE BUDGETS PROPOSAL CLONG BE TAKING NOW. AND INNOVATIONS LIKE MEDICAL SPECIAL COURTS AND THE LIKE, COULD YOU EXPLAIN WHAT IMPACT YOU THINK THAT INNOVATION AND OTHERS WOULD HAVE ON THE UNFUNDED OBLIGATION TO THE AMERICAN PEOPLE WHEN IT COMES TO MEDICARE?
01:01:41	>>	THANK YOU, SENATOR. I DON'T THINK IT'S POSSIBLE TO CONTAIN HEALTH CARE COSTS UNLESS YOU CREATE A SYSTEM OF JUSTICE THAT THE PROVIDERS TRUST. BY THE WAY, THE CURRENT SYSTEM, IT SHOULD BE NOTED IS TERRIBLE FOR ENTER BY MISTAKES. A STUDY OF THOUSANDS OF CASES FOUND THAT IT TOOK AN AVERAGE OF FIVE YEARS TO GET THE SETTLEMENT, FIVE YEARS FOR PAYMENT. AND 54% OF THE COST WENT TO LAWYERS' FEES AND INSURANCE COMPANIES. SO YOU HAVE MOST OF THE MALPRACTICE DOLLAR NOT GOING TO PATIENT. A PATIENT WAITING FIVE YEARS OR A DOCTOR UNFAIRLY CHARGED OFTEN WAITING FIVE YEARS TO GET -- TO GET JUSTICE. MEANWHILE HE CAN'T SLEEP AT NIGHT. SO THE CURRENT SYSTEM DOESN'T WORK FOR EITHER SIDE. A BROAD COALITION HAS COME TOGETHER BEHIND THE IDEA OF DOING PILOT PROJECTS OF HEALTH CORPSE. INCLUDING AARP. ALL OF THE PASHTE SAFETY GROUPS. THESE ARE NOT TORT REFORMERS. AS WELL AS ALL OF THE PROVIDERS. THE WAY THIS WOULD WORK IS IT WOULD BE AN ADMINISTRATIVE PROCESS NOT UNLIKE WORKER'S COMP OR AN ARBITRATION SYSTEM BUT BY WRITTEN OPINIONS BY EXPERT JUDGES WHO WOULD BE ADVISED BY NEUTRAL EXPERTS AND ALL THE INFORMATION WOULD BE CAPTURED IN SETTLED CASES. DOCTORS AND HOSPITALS WOULD HAVE THE OBLIGATION TO DISCLOSE ALL THE INFORMATION ABOUT THE CASE. AND IT WOULD BE EXPECTED THAT MORE PEOPLE WILL BE COME PEN SAIDED IN AN AVERAGE OF TWO MONTHS WITH DRAMATICALLY LOWERED ADMINISTRATIVE COSTS. BUT THE MAIN VIRTUE IS NOT THAT IT'S A BETTER SYSTEM OF JUSTICE IS THAT DOCTORS COULD TRUST THE SYSTEM TO AFFIRMATIVELY PROTECT THEM IN THE SITUATION WHERE THE SICK PERSON GOT SICKER AND IT WASN'T THEIR FAULT. AND THAT FOUNDATIONAL LEVEL OF STRUST NOT THE ONLY THING NEEDED TO SAVE MEDICARE COSTS. WE ALSO NEED TO REFORM THE FIFA SERVICE MODEL AND REALIGN INCENTIVES WHICH IS UNAVOIDABLY COMPLICATED. I KNOW YOU'VE BEEN WORKING ON THAT. BUT IT IS ONE OF THE FOUNDATION NAL STEPS NEEDED. THE -- FOUNDATIONAL STEPS ARE NEEDED. THE ONLY PEOPLE OPPOSED ARE THE TRIAL LAWYERS.
01:04:12	>>	WHEN I WAS IN MY EARLY YEARS OF MY LEGAL PRACTICE, I BECAME CONCERNED THAT THERE WERE A LOT OF PEOPLE THAT HAD LEGITIMATE GRIEVANCES THAT UNLESS THEY COULD FIND A CONTINGENCY FEE LAWYER TO TAKE CONTINGENCY FEE INTEREST IN THEIR CASE THEN THEY WOULDN'T BE ABLE TO FIND A LAWYER TO TAKE THEIR CARE TO COURT, FOR EXAMPLE. AND SO IN THE EARLY STAGES OF BOTH MY LEGAL PRACTICE AND THEN MY JUDICIAL CAREER, JEFF JUSTICE WARN BERGER MADE A FAMOUS SPEECH WHERE HE SAID THAT THE TIME AND EXPENSE OF ORDINARY LITIGATION IS JUST ABAR TO ACCESS TO JUSTICE AS ANY OTHER IMPEDESTRIANMENT OR ANY OTHER OBSTACLE THAT YOU MIGHT MUTT IN THE WAY OF ANY ORDINARY SYSTEM. SO A MOVE WAS CREATED TO PROVIDE A LESS EXPENSIVE WAY FOR DISPUTES. AS YOU KNOW THEY HAVE LONG BEEN INCLUDED IN VARIOUS AGREEMENTS. I WOULD JUST LIKE TO ASK YOU -- ARE YOU BEGINNING TO SEE SORT OF A TREND HERE WHERE CONGRESS IS BEGINNING TO STEP IN AND SAY THAT CERTAIN TYPES OF ARBITRATION AGREEMENTS ARE UNENFORCEABLE? AND ARE YOU CONCERNED THAT BY CONGRESS INTERVENING INTO THESE CONTRACTUAL RELATIONSHIPS THAT BOTH THE EXPENSE AND DELAYS OF ORDINARY LITIGATION WILL DO NOTHING BUT INCREASE AND PERHAPS THERE ARE OTHER UNANTICIPATED UNNOBLE WAYS IN WHICH THIS WILL HAVE AN EFFECT. WOULD YOU SHARE YOUR THOUGHTS.
01:06:04	>>	MY GUESS IS YOU HAVE A BETTER SENSE OF WHAT CONGRESS IS DOING THAN I DO. BUT THERE HAVE BEEN A NUMBER OF STATUTES PASSED IN RECENT YEARS THAT HAVE MADE UNENFORCEABLE PREDISPUTE CAUSES. THER SHOE OF ACCESS TO JUSTICE IS AN IMPORTANT ONE. IT'S SOMETHING THAT THE STUDY TOUCHED ON BECAUSE EVERYTHING WE SAW WITH A CASE THAT DIDN'T MAKE IT TO ARBITRATION. BUT SERBLY HALF OF THE CASES THAT WE LOOKED AT THE INDIVIDUAL, THE CONSUMER WAS ABLE TO PROCEED IN THE ARBITRATION PROCESS WITHOUT THE LAWYER. THAT THEY DID NOT NEED A LAWYER. IT WAS TRIKING TO ME -- STRIKING TO ME HOW EFFECTIVE CONSUMERS COULD BE ACTING WITHOUT LAWYERS. AND FRANKLY, IN SOME CASES AND THIS MAYBE WHAT MR. HOWARD, AN EXAMPLE OF SOMETHING FROM MR. HOWARD'S BOOK, LAWYERS ARE COUNTERPRODUCTIVE THAT THE INDIVIDUAL WAS VERY EFFECTIVE IN STATING THEIR CASE IN A VERY CONCISE STRAIGHTFORWARD MANNER. YOU WOULD GET LAWYERS INVOLVED AND INSTEAD OF HAVING A ONE-PARAGRAPH DESCRIPTION OF A CLAIM, YOU WOULD HAVE A 30-PAGE COMPLAINT THAT WAS WRITTEN IN LEGAL-ESE. YOU SEE SOME OF THAT IN ARBITRATION. BUT LESS THAN WHAT YOU WOULD SEE IN THE COURT SYSTEM. THE ONE STURDY. OUR STUDY IS LIMITED ABOUT WHAT IT CAN DO ABOUT ACCESS ISSUES. BUT THE ONE STUDY THAT HAZARDSED THAT ISSUE AND CERTAINLY SOME OF THE OTHER COME MEN TAYTORS HAVE SUGGESTED THAT ARBITRATION PROVIDES ACCESS TO PERSON WHO IS MAY NOT BE ABLE TO PROCEED IN THE COURT SYSTEM, THAT BECAUSE OF LOWER LEGAL FEES AND INFORMALITY OF THE ARBITRATION PROCESS, PEOPLE CAN BRING CLAIMS AND ARBITRATION THAT THEY MIGHT NOT BE ABLE TO BRING IT ALL IN THE COURT SYSTEM. AND TO THE EXTENT THAT STATUTES OR RESTRICT THE ABILITY OF ARBITRATION THEY MAY REDUCE THE ACCESS THAT INDIVIDUALS MAY HAVE TO THAT ALTERNATIVE.
01:08:16	>>	SO CONTRARY TO WHAT YOU EAR IN SOME QUARTERS, ACTUALLY ARBITRATION CAN ENHANCE PEOPLE'S ACCESS TO JUSTICE, RATHER THAN JEOPARDIZE THAT?
01:08:24	>>	PARTICULARLY FOR SMALLER CLAIMS THAT WOULD BE -- WOULD BE UNECONOMICAL TO BRING IN THE COURT SYSTEM. THAT'S WHAT THE SUDJI SUGGESTS.
01:08:34	>>	CAN YOU GIVE US AN EXAMPLE OF THE MORSE COMMON SORT OF ARBITRATION PRO I HAVES. WHAT KIND OF INSTRUMENTS, WHAT KIND OF CLAIMS IN YOUR EXPERIENCE ARE SUBJECT TO BE SUBJECT TO ARBITRATION PRO VISSES?
01:08:49	>>	IT VARIES TREMENDOUSLY. SOME INDUSTRIES HAVE VERY HIGH USES OF ARBITRATION CLAUSES SUSM AS THE CREDIT CARD INDUSTRY AND CELL PHONE INDUSTRIES, BUT AGAIN CAR DEALERS USE ARBITRATION CLAUSES. IN OUR SAMPLE I GUESS THERE WERE REAL ESTATE AGENTS. A BUSINESS THAT PROVIDED EXTENSIONS AND LIP LINING. THERE'S DIFFERENCES IN FREQUENT SI.
01:09:26	>>	THIS -- IN FREQUENCY.
01:09:28	>>	THEY AGREE TO CERTAIN PROVISION AS AN ALTERNATIVE EXPENSE AND TIME THAT WOULD BE EATEN UP DURING ORDINARY LITIGATION?
01:09:39	>>	ABSOLUTELY. THAT SOPHISTICATED BUSINESSES IN DEALING WITH EACHOR MOST DRAMATICALLY IN INTERNATIONAL SETTING FOR MANY SORTS OF CONTRACTS EVERYBODY, OR VIRTUALLY EVERYBODY USES ARBITRATION CLAUSES. THERE'S EXCEPTIONS ALWAYS, BUT THAT ARBITRATION -- THAT BUSINESSES AS WELL AS IN THEIR DEALING WITH OTHER BUSINESSES, CERTAINLY WE USE ARBITRATION CLAUSES. AND IN THE INTERNATIONAL SETTING, EXACTLY THE SORTS OF CONCERNS THAT WE'VE HEARD ABOUT THE AMERICAN LEGAL SYSTEM OFTEN WHEN BUSINESS -- WHEN PARTS OF OTHER COUNTRIES ARE DEALING WITH AMERICAN BUSINESSES THAT WOULD BE WHY THEY WOULD NOT WANT TO LITIGATE P ABOUT WHY THEY WOULD NOT WANT AN ARBITRATION COST.
01:10:22	>>	THANK YOU FOR BEING HERE. I THINK IT'S IMPORTANT THAT SOMEONE LIKE YOU COME AND TESTIFY AT A HEARING LIKE THIS BECAUSE IT'S EASY TO TALK IN POLICY TERMS AND IN NUMBERS, AND -- BUT IT'S ALMOST MORE POIGNANT AND I THINK MUCH MORE INFORMATIVE TO HAVE SOMEBODY RELATE THEIR PERSONAL STORY.
01:10:41	>>	LET ME JUST ASK YOU A LITTLE BIT ABOUT BASKETBALL TOWN. DID YOU SAY THAT IT EMPLOYED 12 PEOPLE?
01:10:47	>>	YES.
01:10:50	>>	SO WHEN BASKETBALL TOWN WENT AWAY THOSE 12 PEOPLE LOST THEIR
01:10:53	>>	YES, THEY DID.
01:10:55	>>	AND THEN THERE WAS AN ADDITION, THIS OTHER BUSINESS, THIS PIZZA BUSINESS -- HOW MANY PEOPLE DID IT EMPLOY?
01:11:03	>>	IT WAS A FAMILY-OWNED OPERATION. SO THE CUP THAT OWNED IT AND THEIR TWO KIDS OFTEN CAME IN ON WEEKENDS AND WORKED INSIDE THE PIZZERIA.
01:11:13	>>	SO PRESUMABLY THEY WERE ABLE TO FIND ANOTHER PLACE TO RUN THEIR BUSINESS OR ELSE THEY WERE PUT OUT OF BUSINESS.
01:11:20	>>	THEY WERE PUT OUT OF BUSINESS. THE WIFE WAS LOOKING FOR A JOB. AND AGAIN, THE KIDS ARE OFF TO COLLEGE RIGHT NOW. SO THEY'RE JUST STRUGGLING TO MEET THAT NEED AND THEN AGAIN PAY THE LEGAL FEES ON TOP OF IT THAT STEAM BE PILING UP.
01:11:36	>>	SO EVEN THOUGH YOUR BASKETBALL TOWN WAS COMPLYING WITH ALL THE APPLICABLE REGULATIONS OF THE LAW, JUST THE VERY COST OF DEFENDING A LAWSUIT WAS ENOUGH TO GIVE THE ECONOMIC DEATH PENALTY, I GUESS, TO THOSE PEOPLE AT THAT -- IN THAT PARTICULAR SMALL BUSINESS?
01:11:52	>>	RIGHT. YEP. THAT IS CORRECT.
01:11:58	>>	AND CAN YOU -- ARE YOU -- CAN YOU TALK TO ME A LITTLE BIT ABOUT WHAT SMALL BUSINESSES DO ORDINARILY TO PROTECT THEMSELVES AGAINST THOSE FOR EXAMPLE THE COST OF INSURANCE? DOES THAT HAVE AN IMPACT ON YOUR BOTTOM LINE AND THE ABILITY TO HIRE AND RETAIN MORE EMPLOYEES? LET'S SAY YOU DECIDE TO SPEND WHATEVER IT TAKES TO PAY FOR LIABILITY INSURANCE TO PROTECT YOU FROM THOSE LEGAL FEES AND ANY JUDGMENTS. IS THAT SOMETHING THAT YOU WOULD HAVE TO TAKE INTO ACCOUNT IN DETERMINING HOW MANY PEOPLE YOU COULD HIRE?
01:12:31	>>	ABSOLUTELY. ABSOLUTELY. WITH A BUSINESS LIKE BASKETBALL TOWN, THE OVERHEAD, IT'S SO HIGH AND THE REVENUE THAT YOU GENERATE IS SO LOW. IT'S REALLY A LABOR OF LOVE WORKING AND MAVENTAINING A FACILITY LIKE THAT. -- MAINTAINING A FACILITY LIKE THAT. THE COST OF INSURANCE IT DEFINITELY AFFECTS THE BOTTOM LINE.
01:12:52	>>	WELL, I WANT TO THANK ALL OF YOU FOR BEING HERE TODAY. AND I WANT TO -- AND WE'VE HAD SENATOR SESSIONS, SENATOR ALEXANDER HERE. WE ALSO HAVE C-SPAN RECORDING THESE PROCEEDINGS. SO THERE'S GOING TO BE OTHER PEOPLE THAT WILL SEE WHAT WE'VE TALKED ABOUT HERE OTHER THAN THOSE OF US WHO ARE PHYSICALLY PRESENT. I WOULD JUST ASK -- IS THERE ANY OTHER TOPIC PERHAPS CLOSING COMMENT ANY OF THE WITNESSES MIGHT HAVE ON SOMETHING THAT YOU THINK IS IMPORTANT TO THE SUBJECT WE'RE TALKING ABOUT HERE BUT WE HAVEN'T HAD A CHANCE TO ASK YOU A QUESTION ON IT OR YOU HAVEN'T HAD A CHANCE TO OFFER YOUR COMMENTS ON IT? . . BECAUSE OF THIS THIS IS ACTUALLY A HIGHER AMOUNT, AND BECAUSE OF THESE FACTORS, THE TRULY INJURED PARTIES ARE NOT ONLY SEEING MORE DOLLARS, THEY ARE LOOKING AT THIS SOONER, AND THE LAWYER HAS TO SPEND LESS ON THE CASE, AND THIS IS A GOOD SCHOOL -- THE PUBLIC POLICY, IS THIS NOT WHAT WE ARE SUPPOSED TO BE DOING? THEY CAN TAKE CARE OF THEIR OWN MEDICAL BILLS, AND WE ALREADY SEE THIS IN THIS REGARD. THIS WAS NOT JUST THE NON ECONOMIC CAP, ALTHOUGH WE BELIEVE THAT THIS WAS THE CORNERSTONE. WHEN THE AMOUNT WAS OVER $100,000, AND WAS GOING TO PLAY -- PAY FOR THE MEDICAL CARE, THIS WOULD BE PAID OUT OVER A LARGE AMOUNT OF TIME. THIS WAY A PERSON WOULD NOT BE SPENDING THE MONEY LIKE THEY HAD WON THE LOTTERY, AND THIS WOULD BE AVAILABLE IN THE FUTURE. AND THERE WAS THE PROVISION RAISING THE BURDEN OF PROOF FOR EMERGENCY MEDICAL CARE, YOU OFTEN CANNOT HAVE A COMPLETE HISTORY, YOU ARE PRESENTED WITH THE EMERGENCY, AND WE THINK THAT THIS SHOULD HAVE BEEN THE HIGHER BURDEN OF PROOF. AND THEN, THE OTHER AREAS THEY HAD TO HAVE AN EXPERT, TO FILE THE REPORT AND SAY THAT THERE WAS NEGLIGENCE. YOU HAVE 150 DAYS TO PRODUCE THIS, AND THIS REPORT MAY BE -- MAYBE YOU DO NOT BELIEVE THE EXPERT. BUT THE COURT IS IN THE POSITION TO DISMISS THIS. THE OTHER PART THAT WE HAVE NOT SPOKEN ABOUT IS THE PART THAT THEY CONTINUE TO PUT INTO EVERY SINGLE BILL DEALING WITH HEALTH CARE, AND THIS IS THE PHYSICIAN SPECIALTY HOSPITALS. WE HAVE 50 OF THESE WITH 44,000 PEOPLE, AND WE HAVE MORE ON THE DRAWING BOARD. IF WE ARE TALKING ABOUT JOBS AND INNOVATION AND HEALTH CARE, AND EVERYBODY IS TALKING ABOUT THAT, WE HAVE TO TALK ABOUT WHAT THEY DID, THEY INVESTED IN THEIR OWN FACILITIES, AND WHAT BETTER WAY TO DO THIS THAN HAVE THE BOSSES IN THE OPERATING ROOM. WE BELIEVE THAT THIS IS A GOOD WAY TO GO FROM THE ECONOMIC STANDPOINT.
01:16:42	>>	WE SPOKE ABOUT THE ARBITRATION FAIRNESS ACT, AND I WOULD ALSO LIKE TO SAY THAT THIS WILL REDUCE THE ACCESS TO CREDIT. THIS IS REFLECTING THE FREE MARKET, AND THE ARBITRATION REFLEX FREE-MARKET COMPETITION, TO LOWER THE PRICES TO THE CONSUMERS. THESE WERE ADOPTED IN EFFORT TO HAVE A COMPETITIVE ADVANTAGE, TO HELP THE CONSUMERS GET DISADVANTAGE. WE HAVE AN ECONOMIST TALKING ABOUT THE REST OF A LIQUIDITY CRISIS, IT IS VERY STRANGE THAT CONGRESS WOULD PASS THIS LAW,. -- RAISE THE COST OF CREDIT TO THE CONSUMERS, AND SHRINK THE AVAILABILITY OF CREDIT EVEN FURTHER.
01:17:32	>>	THIS IS VERY IMPORTANT. THANK YOU FOR BEING HERE TODAY, AND THIS HAS BEEN VERY ENLIGHTENING. IT WOULD BE BENEFICIAL TO US AS WE COUNTER THE FIRST OF A NUMBER OF ATTEMPTS TO EITHER DEAL WITH HEALTH CARE WITHOUT HEALTH CARE LIABILITY, TO DEAL WITH ARBITRATION AND NOT RECOGNIZING THE IMPORTANCE THAT THEY HAVE IN TERMS OF ACCESS TO THE JUSTICE, AND THE ONGOING CONVERSATION ABOUT COMPETING IN THE GLOBAL SOCIETY WITHOUT ADDITIONAL COSTS BY THE AMERICAN BUSINESSES, AND HAVING NOT ONLY IN A CIVIL AND JUST SYSTEM, BUT ONE THAT IS FAIR TO THE PEOPLE WHO ARE SUED. THANK YOU VERY MUCH. THE HEARING IS ADJOURNED. [CAPTIONING PERFORMED BY NATIONAL CAPTIONING INSTITUTE] [CAPTIONS COPYRIGHT NATIONAL CABLE SATELLITE CORP. 2009]

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