In April, 2001, Alabama radiologist George H. Martindale got what seemed like an easy part-time job. An industrial testing company, N&M Inc. in Pascagoula, Miss., asked him to provide a second reading of X-rays of patients diagnosed with silicosis by another doctor who had conducted full medical exams. Over the course of about a year, Martindale -- the father of four college-bound teenagers -- read thousands of X-rays. At $35 a pop for just a few minutes work, the part-time gig brought in nearly $265,000 before he quit in June, 2002.
Last fall, Martindale discovered to his surprise that his cursory second opinions -- done without the benefit of direct physical examinations or medical histories -- had been used as clinical evidence by people making silicosis claims in a mass- tort lawsuit in Texas against more than 20 companies. Instead of supporting the alleged victims, Martindale backed off his reports. That drew the ire of Waco plaintiffs' lawyer Billy H. Davis Jr., who fired off a terse letter asking Martindale whether he could rely on reports the doctor had signed. Martindale shot back: "I learned that you had cited me as the diagnosing physician in certain silicosis cases. I told you that I personally had made no diagnoses," he wrote in a March letter obtained by BusinessWeek. "It was never my expectation that I would be identified as the 'diagnosing physician' in lawsuits." The letter also suggested that Davis had sought to prevent Martindale from speaking to the defense team, something Davis vehemently denies. "At no time did we ever attempt to influence Dr. Martindale's testimony," Davis says. Martindale declined comment.
Under questioning from defense lawyers, Martindale disavowed any diagnoses of silicosis for any of the alleged victims. His testimony was one of the key pieces of evidence that caused U.S. District Court Judge Janis Graham Jack of the Southern District of Texas to toss out many of the claims. "These diagnoses were manufactured for money," Jack thundered. She noted that of the 10,000 alleged silicosis victims in the lawsuit, 99% of them had been diagnosed by the same nine doctors. One doctor, she wrote, had his secretary fill out patient diagnoses on blank forms. Another analyzed 1,239 patients in 72 hours. And many of the silicosis victims had at one time been diagnosed with -- and filed claims for -- asbestosis. "These diagnoses were about litigation rather than health care," wrote Judge Jack.
Companies have been saying as much for years. Their gripe: that some plaintiffs' lawyers steer would-be clients in mass tort cases to unscrupulous or easily manipulated doctors who are predisposed to diagnose serious illnesses. Defense attorneys claim that medical screeners are paid more to deliver a positive diagnosis than a negative one. These questionable practices, defense attorneys charge, are used to validate injury claims in lawsuits involving everything from diet pills to welding material.
In the old days, business lawyers usually whined about these problems while writing checks to their courtroom adversaries. But now they're attacking opposing attorneys and doctors with unprecedented fury and tactical creativity. Expensive investigations into the legitimacy of medical diagnoses, which led to the Jack opinion in In Re: Silica Products Liability Litigation, are just the beginning. Corporate complaints about mass tort fraud have spurred criminal convictions, ongoing criminal probes in three states, and an inquiry by the House Energy & Commerce Committee. The U.S. Chamber of Commerce has also begun building a database that will be used to identify relationships among screening companies, doctors, plaintiffs' law firms, and claimants, and keep an eye out for repeat plaintiffs. "We are at a turning point," says Lisa A. Rickard, president of the Chamber's Institute for Legal Reform. "The business model that the plaintiff bar has been using in mass torts is now coming into question and under scrutiny not only by judges but by prosecutors."
Plaintiffs' attorneys say the vast majority of mass tort claims are valid, with real victims and real illnesses brought on by corporate misconduct. They accuse business groups of exaggerating the importance of the misconduct uncovered so far to generate political momentum for protective legislation, such as a proposed asbestos bill that would limit lawsuits. "If you had 100,000 asbestos claims a year filed, there's going to be some small number of those claims that are fraudulent," says Frederick M. Baron, a partner with Baron & Budd in Dallas and a former president of the Association of Trial Lawyers of America. Baron says encouraging criminal and congressional probes is "another tactic of defendants who are trying to game the system."
Baron and others note that business has tried any number of novel tactics to undermine mass-tort cases throughout the years, with little luck. On Oct. 26 a judge dismissed a four-year-old civil racketeering case brought by G-1 Holdings Inc. against Baron & Budd and other asbestos plaintiffs' firms, ordering G-1 Holdings to pay the defendants' legal fees. And even in the wake of Judge Jack's highly publicized verbal lashing, not all judges are moved by defense lawyers' pleas to search for improper ties between plaintiffs' lawyers and medical experts. On Oct. 24, Judge Judith K. Fitzgerald of U.S. Bankruptcy Court in Wilmington, Del., turned down a request by WR Grace lawyers to send questionnaires to plaintiffs' attorneys but allowed the company to question claimants about connections between the lawyers and doctors who submitted diagnoses of asbestosis.
Nonetheless, business groups can feel the wind at their back. The Jack opinion has given cover to other judges who heretofore have been reluctant to question the veracity of thousands of possibly sick or dying plaintiffs. "Mass torts to an extent is mass politics. Judges don't want to take on the burden and accountability of getting rid of lots and lots of claims," says David M. Bernick, a partner at Kirkland & Ellis who is defending WR Grace (GRA ) and other corporations against asbestos claims. In federal court in Pittsburgh, Judge Joy Flowers Conti has indicated that she will allow USG (USG ) to send questionnaires to 1,000 out of 150,000 asbestos plaintiffs to determine the reliability of their medical diagnoses. "Judge Jack ruled on an issue that is common to thousands of claims," Bernick says. "If you don't have reliable data, you don't have a claim."
The ramifications of the defense bar's new aggressiveness could be far-reaching. Lawyers representing about 80 defendants in federal asbestos litigation in Philadelphia used Jack's ruling to help persuade federal Judge Charles R. Weiner to approve subpoenas for some 45 doctors and screening companies involved in diagnosing an estimated 150,000 to 200,000 asbestos plaintiffs. "We anticipate that the same thing that has happened in silica has gone on in asbestos for 10 or 15 years -- the same doctors, the same screening companies, some of the same lawyers creating diagnoses where none existed," says Walter G. Watkins Jr., a partner at Forman Perry Watkins Krutz & Tardy LLP in Jackson, Miss., whose firm helped expose diagnostic errors in the silica cases.
Lincoln Electric Holdings Inc. in Cleveland and other companies fighting claims against the makers of welding materials also are taking aim. In a case involving about 1,100 plaintiffs in U.S. District Court in Cleveland, defense attorneys are using questionnaires to root out suspicious claims. They say some 40% of plaintiffs claiming neurological damage as a result of inhaling welding fumes have been plaintiffs in silica or asbestos cases. A single physician has diagnosed a majority of the claims, says John Beisner, a partner at O'Melveny & Myers and lead counsel for the defense group. "It's possible the plaintiffs could have been exposed to both asbestos and welding materials," Beisner says, "but it's more likely that they're in the Rolodex of plaintiffs' counsel." Richard F. Scruggs, co-lead national counsel for plaintiffs in the federal welding cases, says it's not surprising that welders would be diagnosed with asbestosis; many of them worked in shipyards and other industrial environments. He notes that defense teams, like plaintiffs' attorneys, make repeat use of the same doctors. And he predicts Beisner won't get far with the silica connection because it is the silicosis cases -- not the welding cases -- that are dubious.
Cases such as these have attracted the attention of Representative Joe Barton (R-Tex.), chairman of the House Energy & Commerce Committee, and Oversight & Investigations Subcommittee Chairman Ed Whitfield (R-Ky.), who in August opened an investigation into medical screeners and doctors in mass tort cases. The lawmakers are looking at whether medical experts are ducking ethical obligations by giving allegiance to the law firms who hire them rather than the patients they examine. Mass tort medical experts often claim status as consultants, thereby avoiding a doctor-patient relationship that would oblige them to meet a higher standard of medical care, including finding treatments and follow-up with sick patients. The congressional inquiry will include a review of state medical licensing boards to determine if more oversight of screening is needed.
Meanwhile, the FBI and IRS have been prosecuting people accused of making fraudulent claims against Wyeth, (WYE ) based in Madison, N.J. The company made Pondimin and Redux, drugs that were taken as part of the fen-phen diet combination. Wyeth reached a $4 billion settlement in 1997 with dieters who claimed to have developed leaky heart valves as a result of taking the drugs. In that case, law firms trolling for clients set up roaming echocardiogram screenings, known to defense attorneys as echo mills, in airport meeting rooms and hotel ballrooms where they could attract thousands of would-be plaintiffs.
The fen-phen trust had expected about 36,000 claims; more than 87,000 poured in. A 2003 audit by Wyeth turned up widespread fraud, uncovering a number of echocardiograms that appeared to have been tampered with. The U.S. Attorney's Office for the Southern District of Mississippi in the past year has won more than a dozen convictions in the case. Among those sentenced: a former paralegal for Schwartz & Associates, a Jackson (Miss.) law firm representing fen-phen plaintiffs.
Now federal investigators in Philadelphia are looking at whether lawyers, doctors, and medical technicians conspired to submit bogus claims. "When a company is faced with one of these massive litigation situations, no matter how attentive you are, ...it's extraordinarily difficult for any company to protect itself," says Douglas A. Dworkin, deputy general counsel at Wyeth.
In hopes of making legal fraud easier to detect in the future, the Institute for Legal Reform has begun tracking repeat plaintiffs in mass tort cases. The Beta Project is compiling information on asbestos claimants as a first step toward building a massive database of tort claims that will track not only plaintiffs but their screeners, doctors, and law firms. Such a tool could be an enormous boost to defense attorneys attempting to identify bogus claims. "The goal would be to try to get evidence generated by these folks to be declared inadmissible," says Chamber Vice-President for Policy and Research Linda Kelly.
By Lorraine Woellert in Washington