Wampum

First Rate Hackery

In December of 2003, Stuart Taylor and Evan Thomas wrote a cover story for Newsweek about the tort system. Their thesis was that the tort system in America was out of control and imposed huge social and economic costs on Americans.

Stephanie Mencimer wrote a critique of the Newsweek piece in the Washington Monthly in which she argued that Taylor and Thomas’s alarm was false as a result of their uncritically accepting the spin of tort reform advocates. In essence, Mencimer argued that the Newsweek article was a piece of pro-tort reform hackery.

Stuart Taylor then took to Overlawyered.com to defend his article and to charge that Mencimer’s piece was a “shockingly inaccurate and misleading regurgitation of personal-injury-lawsuit lobby propaganda.”

The Washington Monthly has now printed Taylor’s response and included Mencimer’s rebuttal. It will come as no surprise that I think that Mencimer wins the fight by knockout. I have previously noted that the Taylor and Thomas article was a particularly dishonest effort.

Today, I wish to focus on one small part of the Newsweek article that, though particularly egregious, was ignored by Mencimer in her critique. Taylor and Thomas wrote:

While doctors win most malpractice cases that go to trial, their insurers lose often enough to want to settle many claims. (In California recently, a couple won a $70 million judgment against Stanford University Hospital and two other health-care centers for failing to prevent their child from becoming disabled by a rare birth condition.)

I chose that paragraph because it includes both spin and outright dishonesty. The inclusion of that paragraph demonstrates that Taylor and Thomas had little regard for whether the facts fit their thesis. It is also symptomatic of the way tort reformers twist the facts in pursuit of a political agenda.

Let’s take the spin first. A couple sued a hospital “for failing to prevent their child from becoming disabled by a rare birth condition.” While that may be literally true, it is very misleading by omission. Taylor and Thomas make it sound as if the hospital was sued simply because the newborn had a birth defect and that the hospital had nothing to do with the outcome. That is not the case.

According to Public Citizen, the case involved the family of Michael Cook. Cook was indeed born with the rare birth defect of Phenylketonuria or PKU.

Phenylketonuria (PKU) is a genetic inborn error of metabolism that is detectable during the first days of life with appropriate blood testing (newborn screening).

The absence or deficiency of an enzyme that is responsible for processing the essential amino acid phenylalanine characterizes PKU. With normal enzymatic activity, phenylalanine is converted to another amino acid (tyrosine), which is then utilized by the body. However, when the phenylalanine hydroxylase enzyme is absent or deficient, phenylalanine abnormally accumulates in the blood and is toxic to brain tissue.

Without treatment, most infants with PKU develop mental retardation. Those with untreated PKU may also develop additional neurologic symptoms.

Forty or fifty years ago, PKU often resulted in permanent mental retardation. Medical science has progressed since then:

Before the 1960s, most infants born with PKU developed mental retardation and cerebral palsy. Although treatment for PKU using a low phenylalanine diet was first described in the 1950s, the inability to detect PKU early in the child's life limited effective treatment.

The first newborn screening test was developed by Dr. Robert Guthrie in 1959 specifically to test for PKU. This simple, yet very effective and economical test was developed to screen newborn infants for PKU before leaving the hospital.

Today, all states routinely screen newborns for PKU. To test for PKU, the infant's heal is pricked and a few drops of blood are taken. This blood sample is then tested in a state laboratory for abnormal amounts of phenylalanine.

Not only do all states test newborns for PKU as a matter of practice, such testing is required by law in every state, including California. The timing of the test is critical:

Experts recommend that testing for PKU should be done when the infant is at least twenty-four hours of age but less than seven days old. If an infant is tested too soon after birth, there is a chance that some cases of PKU will be missed as the phenylalanine level will not have risen yet.

Michael Cook was born with PKU. The hospital gave the test when he was only four hours old, instead of waiting the normal 24 hours. As a result, the test came back negative and Michael’s PKU remained undiagnosed. In fact, Michael’s PKU remained undiagnosed until he was six years old. According to Public Citizen:

Medical experts testifying at the trial stated that if the test had been performed as required by the standard, it would have detected Michael’s condition, and he could have gone on to lead a healthy life. Instead, Michael was not diagnosed until he was six years old, after the disease had permanently impaired him. Michael’s doctors testified that he now functions at a three-year-old level, is fed through a tube, and will never be able to work or live on his own.

Michael Cook could have lived a normal life if the hospital had simply done what it was required by law to do. If the hospital had performed to standards known since 1960, Michael would not be retarded, would not be fed through a tube, and would have the opportunity to live an independent life.

The statement that the Cook’s sued the hospital “for failing to prevent their child from becoming disabled by a rare birth condition” is literally true but incomplete. If I write that a jury found O.J. Simpson not guilty when the gloves worn by the murderer did not appear to fit his hands, I may have written the literal truth, but I have been grossly misleading.

Do Thomas and Taylor really believe that a hospital should not be held legally responsible for failing to comply with state law and standard medical practices when it results in tragic consequences for an innocent newborn? Maybe, but I think it more likely that they just want to elide the facts that do not fit with their political agenda.

That is the spin part. What about the outright dishonesty? The Newsweek piece describes the judgment as being for $70 million. That is simply dishonest. Public Citizen notes the following:

The jury awarded $56.3 million to cover the costs of future medical and attendant services, special education and rehabilitative care. Since Michael will never be able to work, $14.1 million was awarded to cover the loss of future earnings. The jury awarded only $500,000 in punitive damages, and the family can collect only half of this because California law caps non-economic damages at $250,000. Since this was a structured judgment rather than lump sum payment, with periodic payments over Michael’s lifetime, the present value of the award was only $8.3 million ($6.3 million for medical expenses and $1.8 million for lost wages) – the cost to purchase an annuity to provide the payments to Michael over his lifetime.

Yes, I know the total of the future expenses and the lost wages total to more than $70 million. The point is that those amounts are in the future.

What was the actual cost of the judgment to the defendant? It was not $70 million. It was $8.3 million, the cost of purchasing an annuity to make all required payments. From the point of view of the defendants, the cost of the judgment was $8.3 million, not $70 million.

What about from the plaintiffs' point of view? Did the plaintiffs receive $70 million? No. They received a stream of income. That income stream had a present value of, again, $8.3 million.

The difference between $70 million and $8.3 million is the interest that can be earned on the initial payments between the time of the judgment and the time the payments are due. The plaintiffs do not get that interest so it is patently dishonest to claim that they won a judgment of $70 million.

If the judgment had a cost to the defendant of $8.3 million and a benefit to the plaintiff of $8.3 million, it is dishonest to describe the judgment as being for $70 million.

Let’s reduce the numbers by a factor of 100 to make the point clear. Assume that you agree to take a job that pays $83,000 a year. Assume that you could take that money and buy an annuity that over time would pay out $700,000. Would it be fair to say that your salary was $700,000? Would it be fair to say that your employer was obligated to pay you $700,000 for one year’s work?

If Taylor and Thomas wanted to be truthful, they could have written:

A hospital, in violation of state law and medical standards, screwed up the timing of a routine test on a newborn. The error caused the baby permanent disability, including severe mental retardation, the necessity of being fed through a tube, and the inability to ever lead an independent life. The defendants were required to pay $6.3 million for needed medical expenses, $1.8 million for lost wages and $250,000 in non-economic damages.”

The reason they did not write that was that such a story did not fit their political agenda. The truth just did not have the emotional impact of "In California recently, a couple won a $70 million judgment against Stanford University Hospital and two other health-care centers for failing to prevent their child from becoming disabled by a rare birth condition."

The actual facts of the case were highly inconvenient to their thesis. When faced with inconvenient facts, they spun and lied. That is first-rate hackery.

Posted by Dwight Meredith at February 16, 2005 02:03 PM | TrackBack