GlobalTort : Commentary from lawyers and experts on mass torts, law, insurance and science

Wonderful news. Our government has seen the light, and now opposes patents for simply reporting the structure of genes.  Bravo for the Obama Administration. Courtesy of the NYT, here is the link to Justice's brief, filed Friday.  The NYT article is here, by Andrew Pollack. 

As I've argued before in this post, patents for reporting gene structures are improper and need to be eliminated because they are simply a report of facts. So, in my view, this policy decision is great news for cancer patients who need science to move faster. Clearing out patents inevitably will  speed up genomic research.  On the other hand, some will wring their hands, but wrongly. Scientists and businesses with a real long term interest in a science subject can apply and leverage their knowledge over years because they are experts. The news, however, is not good for raw capitalists who simply want to buy an asset (a patent), and milk it for multiples of earnings. That's not a real loss. That's the kind of short-term thinking that produced CDOs and other poor financial products.

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It's ironic how views shift to fit the situation. Normally, plaintiff's lawyers are complaining about corporations trying to keep secret the facts related to underlying bodily injury claim information.  But when it comes to asbestos bankruptcy tort claim trusts, the world is turned upside down. In the tort claim trust world, it's some plaintiff's lawyers and some trust claim administrators who want to suppress access to information about underlying claims. These issues matter  for far more than just asbestos cases because tort claim trusts are increasingly being recognized as a big deal due to the use of trusts for BP, for priest molestation cases, Chinese drywall cases, and others.  

Do some plaintiff lawyers and some trusts really try to keep secret their claims informaton ? You bet. The proof ? Many prior posts on this blog detail efforts to keep secret information about claims submitted to trusts. See, for example, this post from March 2009 regarding the Manville trust taking trust claim information out of the relatively public domain it was in prior to the action by the trust. Anyway, of note today, more proof was just filed yesterday. It's a declaratory judgment suit filed by several asbestos trusts that want to keep their claims data out of the hands of insurers and co-defendants in tort cases.  Thanks to a friend sending it along, an image of the declaratory judgment complaint is here.

The suit is an obvious effort by some lawyers and some trusts to put a lid on the growing scrutiny of asbestos trusts. Why do they want a lid? Because lawyers and others around the country finally woke up and started paying attention to the fact that asbestos trusts hold tens of billions of dollars, and every year distribute several billion dollars, mainly in secret.  As long-term readers know, I've been barking for a long-time about this secrecy and public policy travesty. To recap briefly on others paying attention, some insurers started paying attention and taking action, including Jack Cohn and others writing scholarly articles about asbestos trust secrecy, as previously described here, with links to their articles. RAND perceived the issue and has underway a major study of the asbestos bankruptcy trusts,  as previously described here.  The GAO also woke up and asked for investigation, as described here.  Some state AG's also started paying attention to bankruptcy trusts, as previously described here. The topic also has been covered in litigation conferences. As previously described here, we focused on the topic during an asbestos bankruptcy conference I co-chaired last June.

The new DJ complaint  seeks to posture the suppression of information as a pious effort to save trust fund money. Saving money and being efficient is great, but secrecy is improper. 

Less credible are the allegations that bankruptcy courts carefully weighed public policy issues and made careful choices about state law and state tor claims. That's nonsense. Indeed, during the June 20, 2010 asbestos bankruptcy conference hosted by Perrin Conferences, we presented a panel of federal and state court "asbestos judges" who spoke to each other about how their court systems intersect. The unanimous view was that the conference panel was really the first time for any real discussion between court systems.. Moreover, all of the judges acknowledged that they have little or no clue about what happens outside their own court systems. The claim of careful prior consideration also fails when one considers Professor LoPucki's detailed book and articles on forum shopping and other abuses in the bankruptcy system, as previously described here. In short, as he detailed, bankruptcy plan orders are entered when there are no objectors, every objector has a price, and many prior plan confirmations were later shown to be have been very badly done.

Ironically, I recently wrote this post asking if scholars will pay more attention to tort claim trusts. One hopez the scholars engage and weigh in as amici and witnesses in this new DJ case. Some eminent bankruptcy law scholars previously weighed in on the Travelers/Manville case. One hopes they weigh in again.

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For readers outside of Illinois, the following may offer some insights into the insanity of our  judicial elections, and the growing cancer of undisclosed campaign contributions.

Start here with a New York Times article chronicling donations to the US Chamber of Commerce, and it's subsequent and grossly unfair attacks on a sitting Illinois Supreme Court judge who faces the electorate this year.  Or, go here to the National Public Radio view. 

Are those two views skewed by "liberalism" ?  Judge for yourself. But know that  even the conservative Chicago Tribune is appalled, as explained here. Consider also  these comments from Fox News, generally known for arch conservatism.

Close with a look at comments from Crain's Chicago Business. As it's name suggests, Crain's is all about business. It's leading voice is Greg Hinz . He offered  some well stated editorial commentary on the election and the actions of the US Chamber of Commerce. Here are key excerpts:

"For anyone who doubts that the state's method of electing judges has as much to do with deception and politics as justice, take a look at the mud-filled battle over whether Thomas Kilbride should be retained on Nov. 2 as a member of the Illinois Supreme Court.

***

The Illinois Civil Justice League sees it differently. The group has been very active in tort-reform issues of late, and it has jumped into the Kilbride retention race, helped by a $100,000 donation just the other day from the American Justice Partnership, with another $150,000 on the way from the U.S. Chamber of Commerce.

In an ad and on its website, the league has focused not on med-mal but on felons, blasting Justice Kilbride for allegedly being too weak on crime.

What does the latter have to do with the former? “At election time, we focus on what's going to move the voters,” league head Ed Murnane candidly concedes. Med-mal and tort reform are “not the kind of things voters typically pay attention to.”

Beyond that, a league radio spot on crime had to be revised after stations refused to run it on factual grounds. Justice Kilbride and some outside reviewers say the attacks are unfair, citing, for instance, a technical dissent on one sexual assault case because he wanted to issue a supervisory order rather than a writ of mandamus.

Mr. Murnane replies that the judge didn't do what prosecutors wanted him to do, and that's all that counts. Justice Kilbride responds with a long list of endorsements, including one from former Gov. Jim Thompson, an ex-prosecutor.

***

Judge for yourself, folks. But cases like this make my skin crawl. Judges need to worry about the law—not about offending, or pleasing, someone with a big wad of cash. There has to be a better way."

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Late stage cancers usually kill the victim, brutally. That's especially true for the vicious cancer commonly known as mesothelioma. Therefore, researchers continue to seek out biomarkers to try to find tumors before they manifest themselves clinically. Success could provide great news for mesothelioma victims. Research success also would bring new issues for defendants and their insurers. 

"[A]ll 23 malignant pleural mesothelioma cases were positive for CD146 by either OJ79 or EPR3208. On the other hand, CD146 expression was undetectable in all reactive mesothelium cases by OJ79 and EPR3208. The sensitivity of OJ79 and EPR3208 was 94 and 90%, respectively, and the specificity was 100% for both clones. We propose that CD146 is a sensitive and specific immunocytochemical marker enabling differential diagnosis of malignant pleural mesothelioma from reactive mesothelium."

News of these developments is published online in various places. The places include a September  1, 2010 article on Asbestos.com, a website that is highly visible on Google  to people searching for information on mesothelioma. The website is owned in part by a plaintiff's firm known as The Peterson Firm. The website, however, says very little about the firm itself, except that it involves Carl H. Peterson. For more on the Peterson firm, go to this page on "Corporation Wiki."   In any event, the Asbestos.com article includes the following text:

"In a recent article published in the online publication Modern Pathology, researchers may have found a new biomarker for malignant pleural mesothelioma. They also believe the biomarker may help differentiate malignant mesothelioma from reactive mesothelium.

The biomarker being evaluated is a cell adhesion molecule known as CD146. Previous studies have revealed the molecule’s presence in malignant melanoma, prostate cancer and ovarian cancer. In order to test its diagnostic utility, researchers examined the increased expression of CD146 in malignant pleural mesothelioma and reactive mesothelium using two clones of CD146 antibody on smear specimens of effusion fluids. The two antibodies were OJ79 and EPR3208.

Immunocytochemical stains were measured as zero for negative, one for weak positive, two for moderate positive and three for strong positive. For OJ79, CD146 expression was detected in 15 of 16 malignant pleural mesotheliomas with a median immunostaining measurement of three. For EPR3208, 19 of 21 malignant pleural mesotheliomas displayed a median CD146 expression measurement of two.

In all reactive mesothelium cases, CD146 expression was undetectable when using OJ79 and EPR3208. The researchers concluded that CD146 is a sensitive and specific immunocytochemical marker for distinguishing the difference between malignant pleural mesothelioma and reactive mesothelium.

Current methods for diagnosing pleural mesothelioma often make it challenging for doctors to differentiate it from other pleural conditions. The symptoms of such diseases are very similar and a diagnosis usually requires a doctor who is familiar with pleural conditions.

Testing for another unique biomarker will help doctors distinguish mesothelioma from other conditions, making a correct diagnosis easier for doctors. Early detection and treatment for mesothelioma is crucial for patients hoping to combat the disease.

Additional information on mesothelioma may be found through the Mesothelioma Center.

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This story from the Montreal Gazette recounts apparent new investment in asbestos mining in Quebec's Jeffery mine. It's disappointing that the reporting lacks substance, and instead is limited to regurgitating spin.

An informed reporter (increasingly, an oxymoron), would ask whether the Jeffrey Mine's chrysotile, like many others,  includes the far more carcinogenic amphibole fibers. One would also ask what will be done when there is an end to the  useful life of an asbestos product. How will it be removed? Will the remover know its content? Or, will the user be uninformed and exposed to a potent carcinogen if in fact amphibole fibers are present ?

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This AmLaw article provides a helpful account of  a ruling allowing Chevron to depose plaintiff's counsel. The opinion is here, and is worth reading. The deposition arises because of statements in outtakes from a film regarding Chevron and environmental harm. Litigation and media surely are common companions these days. 

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Times surely change in the litigation industry. Once upon a time (that is,  the late 1980s), the Johns-Manville asbestos claim trust was considered a novel and creative approach for resolving massive amounts of  litigation arising from asbestos products. Today, twenty years later, consultants increasingly market chapter 11 "liquidating trusts" as the means to resolve claims and achieve a clean break from the past. Thus, Huron Consulting recently sent out an enewsletter promoting the use of liquidating trusts to resolve claims. The same information is on Huron's website, at this page, and part of its message is set out below the line. Meanwhile,  the BP Fund continues to provide a high profile example of using a trust to resolve claims outside of chapter 11.

Unfortunately, Huron and others are not addressing whether the the use of  trusts is being done well, and whether it is producing sound outcomes that are consistent with sound legal or social policy. One hopes that bankruptcy, due process, tort law and insurance scholars will spend more time thinking and writing about those issue.

____________________________________________________________________________

"A liquidating trust can be a valuable tool for resolving Chapter 11 cases in which:

• consensus cannot be achieved among the stakeholders.
• major litigation or environmental concerns are lingering and preventing the timely confirmation of a plan of reorganization or liquidation (a "Plan").
• the company is looking for a clean break and cost-effective vehicle to wind down the estate.

A liquidating trust is a separate legal entity that contains all or selected assets and stakeholder interests and becomes a successor in interest to the debtor. It allows for concluding a bankruptcy case with less bankruptcy court oversight and creditor involvement than exists prior to confirming a Plan, while allowing for redress to the bankruptcy court and when necessary to accomplish the goals of the Plan and corresponding trust agreement.

In some situations, multiple trusts will be created in order to represent the interests of different stakeholders. For example, certain hard assets may be transferred into a trust for the benefit of secured creditors, while a separate trust is created for unsecured creditors. Claims such as avoidance actions may be transferred to the second trust in order to allow for a recovery to those unsecured creditors. "

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Here is a media article on a Tasmanian government proposal to develop legislation to pay compensation to asbestos victims. Payments would be funded through a tax on employers. 

Go here for the government's announcement, and it's fairly detailed regulatory impact statement. In short, the proposal is still fluid but is centered around an asbestos compensation fund that would be administered by a special court.  Comments are due by November 12.

According to the media article:

"Under the scheme it is proposed a 64 year old worker with a fatal disease, like mesothelioma, will be entitled to receive compensation of approximately $500,000.

"An 83 year old worker suffering the same condition will be entitled to receive about $250,000."

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The plaintiff's committee has been appointed for the BP MDL litigation.  This article lists the lawyers, each appointed for one year.  The group includes an interesting mix of lawyers from a wide variety of firms. It will be interesting to watch how the litigation intersects with the BP Fund.

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The promise of actually putting stem cells to work continues to draw closer.  ScienceDaily and Cell Stem Cell very cool graphics explaining the conclusion) bring the news that Karolinska Institute scientists headed up a global group of researchers who  have now used genetic fate mapping to follow some parts of the actual path of stem cell activity after traumatic injuries to the spine. The Cell Stem Cell link above connects with a very cool graphic explanation of the process. In words, Karolinska's press release explains the conclusion as follows: 

"The research group has identified a type of stem cell, called an ependymal cell, in the spinal cord. They show that these cells are inactive in the healthy spinal cord, and that the cell formation that takes place does so mainly through the division of more mature cells. When the spinal cord is injured, however, these stem cells are activated to become the dominant source of new cells.

The stem cells then give rise to cells that form scar tissue and to a type of support cell that is an important component of spinal cord functionality. The scientists also show that a certain family of mature cells known as astrocytes produce large numbers of scar-forming cells after injury.

"The stem cells have a certain positive effect following injury, but not enough for spinal cord functionality to be restored," says Jonas Frisén. "One interesting question now is whether pharmaceutical compounds can be identified to stimulate the cells to form more support cells in order to improve functional recovery after a spinal trauma."

The Karolinska Institute is a major Swedish medical center; its nonresearch activities include selecting the annual Nobel Prize winner for medicine. The Karolinska press release is here. The abstract is here.

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Here is a recent press release issued by Slater & Gordon, an Australian plaintiff's firm in asbestos litigation.  The release focuses on CSR taking double the usual amount of time  to settle a mesothelioma claim.

Interesting tactic. One wonders if it will produce more speed in the future.  

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A brief story in AmLaw presents an interesting synopsis of a longer article in the New Jersey Law Journal regarding Prudential insurance allegedly improperly settling claims to avoid litigation and claim disclosures prior to an IPO. In short, the issues are now in court as new plaintiff's counsel seeks to invoke the crime-fraud exception to obtain communications regarding the prior settlement.  The key excerpt from the NJ article is as follows:

"It is unheard of for an adversary to pay a contingency fee up front," he said, especially when $4 million of it is nonrefundable and the amount of the payment is laid out in a separate agreement not signed by the clients and allegedly hidden from them. Snyder made repeated references to Prudential's conversion to a publicly traded company, which he said made it extra important to keep the claims -- which included allegations of red-lining minorities -- out of court and the public eye. Prudential did not go public until 2001, but in 1999, when the alleged bribe was paid, Prudential needed government approval, and bad publicity could have derailed the plans, the plaintiffs claim. "

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This popular press article provides a fair amount of detail on a ruling in Malta related to the mesothelioma death of a dockworker. The claims at issue were submitted by surviving family members. The gist of the ruling seems to be that constitutional remedies were not available because other remedies could be pursued.  Set out below are key excerpts from the article.

Claims were asserted "against the Malta Shipyards Policy Manager in the Infrastructure, Transport and Communications Ministry, the government’s principal doctor, the Executive Head of the Occupational Health and Safety Authority, the Police Commissioner and the Attorney General."

"The family ... argued that a number of Human Rights as outlined in the European Convention had been breached. The right of life protection, the right of not being subject to inhuman and degrading treatment and the right of respect to the individual’s private family life, and the right for information were among the rights claimed to have been breached. The court was consequently asked to quantify the appropriate compensation if it found the rights were breached and order for the amount to be paid.

"In reply to the family’s application, the authorities involved said the allegations made were “manifestly ill-founded”. They argued that according to the European Convention, the family did not qualify as victims because there was no adequate connection between the alleged health damage Mr Attard sustained and the family’s fundamental rights. It also seemed that the family had not exhausted the remedies made possible by law to qualify as victims under Article 34 of the European Convention."

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This September 23, 2010 district court opinion in Dixon-Rollins v. Experian Information (E.D. Pa.) illustrates why punitive damages awards and other sanctions are needed to deter repeated violations of law. In this instance, credit reporting company Trans Union repeatedly violated federal credit laws despite explicit rulings against it by the 3^rd Circuit and district courts. Ultimately, the district court (Savage, J.) awarded punitive damages at a 9x ratio in order to provide the “strong medicine” apparently needed to cause Trans Union to follow the law instead of saving money by using cursory, automated procedures. 

The next time someone complains about too many lawsuits,  send them the link to the opinion.

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Scientists are now another important step down the line towards creating useful pluripotent stem cells from skin cells. This research unfortunately is required because of the embryonic stem cell research restrictions imposed by persons who think their religious abstractions are more important than saving lives. (The mind still reels at trying to understand the moral compass  of the churches and individuals who insist their abstractions are more important than the lives of other human beings.)    

The gist of the research is that Boston scientists found a way to use messenger RNA to transform  skin cells into iPSCs (induced pluripotent stem cells). This method stands in contrast to other, harsher and less efficient methods. The September 30 research was reported here in ScienceDaily. The research is published here in a prestigious journal, Cell Stem Cell, and was published on an expedited basis. The research result  is indeed great news.

Unfortunately, great news also makes for great distortion. The conservative Washington Post reported the research here under a headline suggesting that original stem cells are now moot (“Scientists overcome hurdles to stem cell alternatives”). The same article also included a strong quote from an advocate for restricting stem research, Richard M. Doerflinger of the U.S. Conference of Catholic Bishops.

As usual, Mr. Doerflinger’s opinion is a religious view, and not a scientific view. This progress is not THE answer for the future. Indeed, if one goes  deeper into the article, it makes fairly plain that this is a  positive – but far from  final step – in going around the laws imposed by moral dictators who care so little for people who might benefit from stem cell treatments. Thus, the article states:

"Rossi and other researchers, however, said that embryonic stem cells are still crucial because, among other things, they remain irreplaceable for evaluating alternatives.

The new report provides a substantial advance," said National Institutes of Health Director Francis S. Collins. "But this research in no way reduces the importance of comparing the resulting iPS cells to human embryonic stem cells. Previous research has shown that iPS cells retain some memory of their tissue of origin, which may have important implications for their use in therapeutics. To explore these important potential differences, iPS research must continue to be conducted side by side with human embryonic cell research." (emphasis added).

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