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Thursday, March 25, 2004 03:30 pm

Mad County

How one Illinois county’s legal system became a poster child for excess — and why Springfield feels the heat

art924
COVER ILLUSTRATION BY BARRIE MAGUIRE

Twenty years ago, critics slammed Madison County, Ill., as a "cesspool," but they weren't referring to its heavy industry -- the refineries, chemical plants and steel mills that spewed pollution into the air and the nearby Mississippi River.

Instead, they pointed to Madison County's other big business: its court system. Critics claimed that juries in this southern Illinois county near St. Louis were too generous to plaintiffs, that the county's judges were too chummy with the personal-injury lawyers who appeared before them.

Times have changed. Now, Madison County -- the focus of biting criticism from business groups and the media -- has evolved from a "cesspool" into a "hellhole," and its judges are feeling the heat.

"Just the pejorative words 'judicial hellhole' taint our entire county," says Madison County Chief Judge Edward C. Ferguson. "I don't think it's fair, and it's bad manners, too."

Madison County courts have been the subject of a spate of highly critical reports released by pro-business groups and a stream of negative media coverage. Class-action lawsuits have run amok and medical-malpractice suits are driving physicians from the county, the reports claim. As the chorus of cries for change swells, business groups are pushing legislation in Springfield to cap damage awards and limit attorneys' fees, and what would have been a routine statewide judicial race has suddenly turned white-hot.

Other judges from around the state are taking notice. Ferguson says he's concerned: "When I go to the chief-judges' meeting, you have these other judges saying, 'Hey, what is going on down there? Are you a bunch of crooks?' "

Terrence J. Lavin, president of the Illinois State Bar Association, is also worried. He admits that Madison County is "a demographic that is widely known to be sympathetic to plaintiffs so that the jury verdicts tend to be higher than they do in other parts of the state."

But he's upset, he says, about "the innuendo that's passed around that there's some sort of corruption going on."

And the medical-malpractice debate, Lavin says, is "dominated by scare tactics and anecdotes."

However, Edward D. Murnane, president of the Illinois Civil Justice League, a coalition of business interests, says the system needs reform, and he asserts that all of the attention on the downstate county is well earned.

"We're not using Madison County to scare people," Murnane says. "Madison County is scaring people very well on its own."

 

In 2003, the American Tort Reform Association, a coalition of big-business and corporate interests, identified 13 jurisdictions where, it said, "the law is consistently applied unfairly." It claimed that Madison County is one of the worst: Three-fourths of the judicial campaign contributions there came from personal-injury lawyers, and the number of class-action lawsuits increased by 2,050 percent between 1998 and 2001, ATRA claimed. That, according to the organization, was enough to qualify Madison County as a judicial hellhole.

Then, earlier this month, the U.S. Chamber of Commerce-affiliated Institute for Legal Reform released a Harris Interactive Survey of 1,402 senior corporate lawyers. The attorneys who represent companies were asked to grade the states for legal fairness. Illinois ranked a dismal 44th in the nation -- behind all of its neighboring states. According to U.S. Chamber of Commerce president Thomas Donahue, Illinois dropped 10 places in the survey because of Madison County's popularity with "opportunistic trial lawyers" who flock to courts in "out-of-the-way places that are stacked in favor of plaintiffs' attorneys."

But it wasn't just the critical reports released by pro-business groups that turned up the heat under the Madison County legal system -- the heat was also generated by some of the decisions coming out of the courtroom.

The most infamous is the $10.1 billion verdict in July that came from a class-action lawsuit against Philip Morris over light cigarettes. The suit alleged that the tobacco company misled smokers to believe that light cigarettes were less hazardous. After the judgment came down, Madison County Judge Nicholas Byron ordered the company to post a $12 billion appeal bond. Although Byron changed his mind and cut the bond requirement in half, the plaintiff's attorney appealed to the Fifth District Appellate Circuit, which overturned the bond reduction. The Illinois Supreme Court took the appeal and reinstated the $6 billion bond.

Corporations and business groups saw inequity, but class-action lawyers around the country smelled opportunity.

Even Ferguson admits, "Since we've had the tobacco class-action verdict, I think this last year [filings] went up tremendously." However, he disputes the claims that the number of class-actions suits increased from 1998 to 2001 by more than 2,000 percent.

"The people who criticize us haven't done any real analysis of the cases; they've gone on raw data," Ferguson says, "so it could be crummy class actions that would never see the light of day or it could be very serious class actions that have social significance."

But critics complain that often the cases have little to do with Madison County or Illinois.

A recent Chicago Tribune article provided a detailed account of a class-action lawsuit filed by a South Carolina lawyer against a Canadian at the request of an Irish investigative firm.

The case evolved after a Canadian telemarketer bilked 70,000 people of their savings and invested the money in foreign lotteries. The telemarketer, who was convicted of conspiracy and money laundering, caught the attention of Interclaim, an Irish firmthat tries to recover money for victims of white-collar crime. Interclaim spent more than $7 million tracking down hidden assets. Then it urged South Carolina lawyer Blair Hahn with Ness Motley law firm to file a class action. An investigator with the Irish firm later testified that Hahn recommended Madison County as the site for the suit to be filed because "he could 'manipulate' the court."

Unfortunately for Interclaim, Hahn settled the suit, receiving $2 million in legal fees. The victims were awarded $6 million but the hoops they had to jump through to obtain the money were complicated and onerous. Interclaim would receive nothing.

A Madison County judge preliminarily approved the settlement and Interclaim sued Ness Motley in a Chicago federal court for breaching its duty to Interclaim. A jury awarded Interclaim $8.3 million in compensatory damages and $27.7 million in punitive damages. Moreover, U.S. District Court Judge Rebecca Pallmeyer concluded that the class action settlement that received preliminary approval in Madison County was "not in the best interest of the class."

While the suit, and others like it, may not have much to do with Madison County, Ferguson says a judge can't prevent a lawyer from filing a case. And just because a class-action lawsuit is filed doesn't mean that a judge will eventually give it the certification it needs to become a legitimate class-action case.

But the civil-justice league's Murnane doesn't see a passive system that's being forced on judges: He believes the courts have had a hand in the problem.

"The courts are so friendly to the plaintiffs, they've attracted a lot of cases that don't belong in Madison County, particularly class-action cases, and they ought to stop doing that."

Even the bar association's Lavin says that he finds the controversy over class-action lawsuits in Madison County "troubling."

Those class actions, according to USA Today, include lawsuits that claim "Tyson pre-packaged chicken contains too much water; that a type of TV has fuzzy pictures and that AT&T and Lucent billed exorbitantly to lease phones." The telephone case was settled: Customers could receive a rebate check of up to $80; the 44 plaintiff's attorneys split $84 million in legal fees and expenses.

"When you have a situation where a lawyer can dream up a class-action lawsuit where lawyers make money and consumer groups get coupons, there's something wrong," Lavin says. "I think there are going to be some changes made that will restore the public's confidence in the class-action system in Illinois and across America."

Those changes could take three different forms. Congress is debating the Class Action Fairness Act, which should curb the number of class-action lawsuits filed in state courts. The legislation has picked up some steam, and Murnane says he knows whom to thank.

"The national Class Action Fairness Act would probably not be moving through Congress if it wasn't for Madison County and a handful of other judicial jurisdictions throughout the country," he says.

At the state level, Murnane's group supports Senate Bill 1158, filed last year by Sen. Kirk W. Dillard, R-Westmont. It proposes to cut back on class actions by making more rigorous the conditions a suit must satisfy before it can be brought. For a suit to be filed in Illinois, the plurality of the class members would have to be from Illinois, the incident would have to have taken place in Illinois or the defendant's principal place of business would have to be in Illinois.

The same criteria would be applied in the determination of the proper county for filing. The county with the most plaintiffs, the county where the incident took place or the county of the defendant's principal place of business would dictate where the case would be filed.

Last year the bill was transferred to the Senate rules committee, where it has languished ever since. "I think the prospects from the Legislature are pretty slim," Murnane admits. He blames the legislative leadership -- both the state Senate and House are controlled by Democrats -- which is "very supportive of the plaintiff's bar and the trial lawyers association."

The Illinois Supreme Court is also considering changing its rules on class-action lawsuits. One of the proposals is similar to SB 1158, Murnane says.

But there's no timetable for a decision.

"The rule-making at the Supreme Court level can sometimes be a very long and tedious process," Murnane says. "I really don't know where the timing is on this right now."

 

The other front in the tort-reform fight is medical malpractice. Once again, Madison County's been thrust to center stage.

Dr. Phillip W. Johnson is a family physician and a member of the board of directors of ISMIE Mutual Insurance Company, a malpractice-insurance company launched by the Illinois State Medical Society. In December, Johnson submitted a written statement to a medical-insurance summit sponsored by Senate Minority Leader Frank Watson, R-Greenville. He urged legislators to adopt a medical-malpractice reform bill that would cap awards.

According to Johnson's statement, ISMIE took in $29.6 million in premium payments over the last five years in Madison and St. Clair counties but paid out a whopping $33.5 million in verdicts, settlement and legal expenses.

Johnson blames the Metro East for cost increases. "The frequency of claims in the Metro East is also a significant factor for premium cost increases," he says. "Lawsuits against ISMIE policyholders in Madison and St. Clair counties are filed with 25 percent greater frequency than in other parts of Illinois, including the Chicago area."

Metro East hospitals have blamed high insurance premiums for the loss of physicians in the area.

But Ferguson thinks that blaming the Madison County court system is unfair. "It disturbs me that we're being blamed for doctors'leaving the county and the insufficient health care we're going to have around here. We don't have that many medical-malpractice cases. Quite frankly, we haven't had the huge judgments like they've had out in Cook County or some of the northern counties."

And Ferguson believes that the Chamber of Commerce and organizations involved in tort reform are using the controversy to bolster their own case.

"I think it was all right with the Chamber of Commerce that insurance companies charged as much as they possibly could and bilked their clients, but when they could turn that against the courts and lawyers involved in medical malpractice, they quickly jumped on the bandwagon."

Lavin, who is also a Chicago personal-injury lawyer, dismisses the doctors' claims: "There isa malpractice crisis -- it's that too many people are injured and killed by doctors who never get disciplined."

Doctors, Lavin says, are an "obedient population. The insurance industry gives them the shaft, then tells them to go to Springfield and complain about lawyers and lawsuits -- and they do it, even though the insurance company is the one making money off of it."

At a recent Senate committee hearing attended by almost 300 physicians, Lavin says, he countered their arguments with actual studies such as a report from the Congressional Budget Office and a study prepared by a Columbia University law professor who is also the principal investigator for the Pew Charitable Trusts Project on Medical Liability in Pennsylvania.

The insurance companies, Lavin argues, are suffering as a result of their own bad investments and want to blame the lawyers for premium increases. And if the system would discipline bad doctors, he says, there wouldn't be as many medical-malpractice cases.

Lavin says, "I was called a liar, I was called a whore, I was called an ambulance-chaser." He recalls that the doctors were "so mad that when they were leaving the room, they were basically spitting as they were yelling."

A slew of bills have been filed seeking reforms such as making it harder to sue doctors, immunizing emergency-department physicians from suits, removing some decisions from juries, limiting liability for obstetricians and imposing caps on judgments against doctors and hospitals.

"There has been very little activity on them so far," Lavin says. "I think the truth is that the Legislature is dealing with the heat of this, trying to let everything settle down a bit and trying to figure out where the truth is."

With respect to caps, they've passed before in the Illinois Legislature, only to be declared unconstitutional by the Illinois Supreme Court.

Now the business groups also have their eye on electing an Illinois Supreme Court justice.

The two lawyers squaring off for the spot are Republican Lloyd Karmeier, a trial judge and former state's attorney of Washington County who lives in Nashville,and Democrat Gordon Maag, a Fifth District Appellate Court judge who once practiced with the prominent personal-injury firm Lakin & Herndon in Wood River. The bar ranks him as "highly qualified," Maag as "qualified."

The ILCJ has backed Karmeier, and its political-action committee has donated money to his judicial campaign. The personal-injury lawyers are writing checks for Maag.

"I think the personal-injury lawyers are going to dig very deep -- they already have -- for Judge Maag," Murnane says. "They do not want to lose a friend."

But it won't just be the interest groups and trial lawyers watching the race. Judges such as Ferguson are also watching.

And although no one has come up to him and blamed him for doctors' leaving town, he says, "I'm sure people feel that way.

"And maybe they'll carry that with them to the ballot box, but I hope not," Ferguson says.

"There's a lot more to what we do than what is in the news."

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