WEST VIRGINIA RECORD

WASHINGTON – West Virginia’s Supreme Court of Appeals has been ranked as the third worst Judicial Hellhole, according to the American Tort Reform Association’s annual report.

“This year’s report shines its harshest spotlights on New York City and California,” ATRA President Tiger Joyce said. “But West Virginia’s plaintiff-friendly high court, as well as high courts in Florida and Missouri, also come in for stiff criticism.”

West Virginia has been a cited in the ATRA report since it was created in 2002, and the state has been listed as a Judicial Hellhole annually since 2003.

This year’s report says West Virginia’s Supreme Court “is the main contributor to the state civil  justice system’s poor reputation” and “rarely misses an opportunity to abandon traditional tort law and embrace novel theories of liability.”

“In the past year alone, it has imposed a duty on home and business owners to protect visitors from open and obvious conditions, required certification of a class action of individuals united by the fact that they suffered no injury and permitted recovery of inflated damages for fictional medical costs,” the report states. “The state’s only appellate court also allowed scientifically unsound expert testimony and rendered a transparently results-oriented decision, written by a plainly conflicted chief justice, which sustained a significant portion of a flawed punitive damages award. Even one of the concurring judges viewed the court’s reasoning in that case as ‘positively silly.’

“And one case the high court remanded, due to a trial court’s inadequate analysis, resulted in an even larger award.  Meanwhile, the plaintiffs’ lawyer-dominated state Legislature in 2014 sought to expand civil liability further, but things could change as voters saw fit on Election Day to install new majorities in the statehouse for 2015.”

ATRA’s report says that while biased decisions by trial courts usually spur a jurisdiction’s reputation as a Judicial Hellhole, “it’s interesting to note that in three of the five West Virginia cases profiled in this year’s report, lower courts applied sound principles but were reversed by the high court.”

REVERSAL NO. 1

Just as last year’s Judicial Hellhole report was released, the state Supreme Court ruled 3-2 that a parking lot owner who removed for repair stairway handrails damaged by skateboarders is subject to liability when a person with significant mobility issues attempts to navigate them.

That ruling reversed Berkeley Circuit Judge Gina M. Groh, who had found that “a property owner is not liable for injuries sustained as a result of dangers that are ‘obvious, reasonably apparent, or as well known to the person injured as they are to the owner’” and dismissed the case.

In his dissent, Justice Allen H. Loughry II wrote “decisions like these that have given the state the unfortunate reputation of being a ‘judicial hellhole’” and place an “impossible burden” on property owners of making their premises “injury proof.” Justice Brent Benjamin filed his own dissenting opinion, expressing concern with the ruling’s “real world impact,” which would require a full jury trial to decide premises liability cases where the law would not ordinarily recognize a duty of care.

“With this decision, our traditional concept of personal responsibility now no longer exists in the realm of premises liability,” he wrote. “Where the open and obvious doctrine once operated to prevent meritless suits from proceeding through the court system, I fear that the elimination of the doctrine will throw open the courthouse doors to frivolous claims.”

REVERSAL NO. 2

Last fall, the Court also reversed a decision of Marshall Circuit Judge David W. Hummel, who had granted summary judgment for CSX in a case because, he found, the plaintiffs’ three expert witnesses failed to show scientific evidence supporting their theory that exposure to diesel fumes could cause railroad workers to develop multiple myeloma.

Loughry again dissented, saying the plaintiffs’ experts relied on studies that did not even mention the disease and relied on animal studies that suggested only the “biological plausibility” of a tie to it.

“Daubert commands that in court, science must do the speaking, not merely the scientist,” Loughry wrote, adding that that the majority had “simplistically view[ed] the mere qualification as an expert as all that was necessary to get the opinions of these experts before the jury.”

REVERSAL NO. 3

The ATRA report also cites a state Supreme Court ruling from earlier this year in which “it certified a class where the class members shared this fact: they experienced no injury.”

In Tabata v. Charleston Area Medical Center, the hospital accidently allowed a patient database to become publicly accessible on the Internet, but there was no evidence anyone actually accessed the database, which could be found through advanced searching techniques. Kanawha Circuit Judge James C. Stucky threw out the case, finding “Plaintiffs have not shown that the members of the class have suffered any injury, much less a similar injury.”

Citing to numerous courts from across the nation, Stucky found “the risk of future identity theft, especially when not accompanied by any present injury, is not an injury in fact.”

The high court reversed Judge Stucky in a 4-1 decision in May. The majority noted that the class members had “no evidence of unauthorized access of their personal and medical information, no evidence of actual identity theft, and no evidence of economic injury arising from the alleged wrongdoing,” but nevertheless found their interest in privacy was sufficiently violated to bring a claim.

In dissent, Justice Menis Ketchum called the case a “typical example of a frivolous class-action lawsuit” and noted that the plaintiffs’ lawyer admitted that no unauthorized person accessed the medical records or personal information, which was quickly secured by the medical center when it learned of the mistake.

“No harm, no foul,” he would have ruled.

ATRA’s report cites Paul Bond, a partner in Reed Smith’s data privacy, security and management group in Princeton, N.J., who calls the decision a “breakthrough for plaintiffs’ counsel.”

“Plaintiffs attorneys who have a choice of any venue to litigate over a data security breach would naturally choose a West Virginia state court in light of this precedent,” Bond says.

HEALTH CARE ‘STICKER PRICE'

ATRA also mentions a June Supreme Court ruling allowing jurors only to consider the prices listed on medical bills when calculating awards for damages.

“The ruling blindfolds jurors from learning the actual value of treatment and requires them to reach inflated verdicts in personal injury cases,” ATRA states in the report. “Another 4-1 majority found that the ‘collateral source rule’ entitles a plaintiff to recover the billed rate for medical services because the discounted rate is a result of the insurance policy for which the plaintiff paid.

“The fallacy of this argument, as judges in some states have observed, is that the amount of a health insurance premium is based on an insurer’s payment of a negotiated rate,” ATRA states. “Policyholders do not pay premiums based on list prices. If they did, insurance rates would be much higher. At a more fundamental level, the law should not permit plaintiffs to recover amounts billed but never paid ‘for the simple reason that the injured plaintiff did not suffer any economic loss in that amount,’ as the California Supreme Court recognized.”

“It is difficult to conceive how allowing the plaintiff to present to the jury fictitious evidence of amounts paid for medical services, while preventing the tortfeasor from challenging that evidence, serves the interests of justice,” Loughry wrote in dissent. “Are we to blindly accept the fiction that hospitals and other medical providers routinely and as a matter of freely-negotiated contracts accept less than the reasonable value of their services?”

MANOR CARE

The state Supreme Court’s handling of a 2011 Kanawha County verdict of $91.5 million in a nursing home case also is mentioned in the ATRA report.

“As discussed in past Judicial Hellholes reports, the preposterous, single-plaintiff verdict stemmed from the death of a very ill 87-year-old woman at a nursing home, which her son’s lawsuit attributed to understaffing,” ATRA states. “It was the highest ever in the state against a nursing home and one of the largest verdicts in the country in a personal injury case.”

In June, the state Supreme Court found that the trial court had committed errors.

“But instead of ordering a new trial, the majority instead used a strained reading of the law to shrink but ultimately sustain as much of the originally gigantic award as it possibly could,” ATRA writes. “In Manor Care Inc. v. Douglas, a divided high court found that now retired Kanawha Circuit Judge Paul Zakaib had improperly submitted erroneous claims to the jury and gave them a confusing and inadequate verdict form that may have resulted in duplicative damages and an unwarranted punitive damages award.

“But the majority only cut $5 million from the award as improper, struck $1.5 million that it could not understand, and reduced the punitive damages proportionally from $80 million to $32 million. Justice Benjamin would not have permitted the punitive damages award, observing in his dissent that Judge Zakaib provided the jury with a confusing verdict form that was ‘woefully inadequate’ to sustain the extraordinary award.

ATRA notes that the form did not even ask the jury to evaluate whether the nursing home had committed the level of misconduct necessary to permit a punitive damages award.

Loughry also dissented, criticizing the decision as a “shockingly result-oriented analysis” in which the majority acted as a “super-jury” by adjusting an award that resulted from an “abominable” verdict form. He also found the court’s evaluation of the punitive damages award failed to apply the due process safeguards mandated by the U.S. Supreme Court.

Justice Margaret Workman, who agreed with the outcome, even had harsh words for her colleagues’ approach. She said the court could have reached the same result without “looking positively silly” by finding a portion of the verdict duplicated damages already awarded, rather than tossing it out “like so much garbage simply because [the court] claims to be confused by it.”

Related to that case, the ATRA report also mentions the Dec. 2 ABC News report on Chief Justice Robin Jean Davis’ husband Scott Segal’s plane being sold to prominent Mississippi attorney Michael Fuller, who had a case headed to the state Supreme Court.

ATRA’s report states that the decision “now smells that much more like plaintiff-friendly garbage in light of an ABC News Nightline investigation.”

“ABC News Nightline beat us to the punch with their scathing, December 2 critique of West Virginia Supreme Court of Appeals Chief Justice Robin Jean Davis’s failure to recuse herself from the appeal of a $91 million single-plaintiff verdict against a nursing home, even though the plaintiff’s attorney who argued to preserve the verdict on appeal had arranged for dozens of friends and associates to support the chief justice’s reelection campaign, and even though that same lawyer had purchased a Lear jet from her husband for more than a million dollars,” Joyce said. “One of Chief Justice Davis’s high court colleagues called the contorted reasoning laid out in the majority opinion she wrote ‘positively silly,’ but it preserved a roughly $17 million payday for the campaign-supporting,  Learjet-buying plaintiff’s attorney and his firm.”

ATRA notes that Davis, who authored the opinion, “received more than $37,000 in 2012 campaign contributions from a number of out-of-state people of modest means with no apparent connection to West Virginia judicial politics, other than their associations with Michael Fuller, the multimillionaire plaintiff’s attorney in Douglas.

“Chief Justice Davis received the contributions as the case was before her court. Many of the checks came from people who lived in Fuller’s home town in Plant City, Florida, and from Mississippi, where his firm is based. …

“With the trimmed but otherwise affirmed award, Fuller’s law firm will receive more than $17 million in fees.”

BIGGER THAN ORIGINAL VERDICT

In 2009, now retired Ohio Circuit Court Judge Arthur M. Recht ruled in a case in which Quicken Loans was accused of charging a Wheeling woman a high interest rate with an undisclosed balloon payment when she refinanced her home. The lender argued that the woman had lower monthly payments and received $40,000 at closing, which she used to buy a new car.

“Perhaps feeling a bit like a magnanimous game-show host, Judge Recht not only awarded the plaintiff about $17,000 in restitution, he voided the remainder of the $144,800 loan obligation – effectively giving her the home ‘and a new car!’” ATRA wrote. “Judge Recht also awarded the plaintiff nearly $600,000 in attorneys’ fees and legal costs under the state’s consumer protection law. And he imposed punitive damages three times the plaintiff’s compensatory damages. But instead of using the plaintiffs’ actual loss ($17,000) to make that punitive damages calculation, he threw in as an added bonus both the loan obligation and attorneys’ fees, ‘bringing your grand total for punitive damages, Lourie Brown, to $2.2 million!’”

When the Supreme Court first heard the case in 2012, it ruled Recht hadn’t conducted a “meaningful and adequate” analysis of the punitive damages award, which requires written findings explaining his reasoning. But it ruled that trial courts could include plaintiffs’ attorneys’ fees in compensatory-to-punitive-damages calculations when it sent the case back to the trial court for further consideration.

The case went to Recht’s successor, Judge David Sims, who increased the multiplier from three to three-and-a-half and applied it to attorneys’ fees that had grown to $875,233 during the appeal.

“So he ultimately entered a $3.5 million punitive damages award that largely punished the mortgage lender for having had the temerity to appeal its case, rather than for actual harm its business practices may have caused,” ATRA wrote.

The Supreme Court heard the case again in April, but a ruling has yet to be issued.

HOPE FOR WEST VIRGINIA?

The Hellhole report does say there might be cause for celebration in West Virginia’s future.

“If there’s any reason for optimism, it may be found in Mountain State voters’ collective Election Day decision to wrest control of the legislature from the personal injury bar,” Joyce said. “Perhaps new legislative majorities and the governor can work to solve some of the problems the high court has helped create. …

“Public backlash against such economy- and employment-undermining priorities likely contributed to West Virginia voters’ recent decision to change party control of both houses of the state legislature beginning in 2015. The tectonic shift bodes well for legal reform efforts that can improve West Virginia’s business climate.”

ATRA also notes what it calls another positive change with state Attorney General Patrick Morrisey’s ethical reforms regarding the office since he took over for Darrell McGraw.

McGraw had been known for awarding no-bid contracts to contingency-fee lawyers and using settlement money for his own office’s use and self-promotion,” ATRA writes. “McGraw’s successor, Patrick Morrissey, has since undertaken ethics reforms, including a policy that provides transparency in the hiring of outside counsel.”

Morrisey says that policy has saved the state millions of dollars already.

“In a startling show of partisan politics, however, the House of Delegates narrowly passed its own so-called ‘Attorney General Ethics and Accountability Act,” ATRA notes. “It would have required the AG to hire outside counsel anytime a company or individual involved in a case had made a campaign contribution to the AG.

“If enacted, it would likely have led to chaos and substantial cost to taxpayers, as the state’s AG would frequently need to hire outside counsel, without government supervision, rather than follow a rational conflict-of-interest policy.”

ATRA says the bill was “so extreme” that it sparked a bipartisan group of 36 state attorneys general to send a letter to West Virginia lawmakers expressing concern with the “unprecedented nature of the proposed bill,” which died in the Senate Judiciary Committee.

ATRA called it “a waste of time that the legislature could have more productively used to improve the state’s poor litigation climate.”

ATRA also notes the 2014 election that has resulted in both houses of West Virginia’s Legislature having Republican majorities for the first time in decades.

Another positive mentioned is November’s $7.3 million payout to CSX Transportation by a Pittsburgh law firm, which had appealed a 2012 federal verdict in which two attorneys and a radiologist had been found liable for fraud for filing bogus asbestos claims.

“The Judicial Hellholes report has closely followed this litigation since the railroad took an unprecedented, encouragingly aggressive approach in responding to suspicious asbestos claims,” ATRA says. “A federal judge had found in an earlier, separate proceeding that the now deceased radiologist used by the lawyers to validate claims was among doctors who made diagnoses that ‘were driven by neither health nor justice – they were manufactured for money.’ …

The U.S. Court of Appeals for the Fourth Circuit considered the case on Oct. 28.

“Oral argument went poorly for the asbestos fraudsters’ lawyer,” ATRA writes. “The appellate judges did not seem receptive to the view that RICO (Racketeer Influenced and Corrupt Organizations Act) cannot apply to plaintiffs’ lawyers and expert witnesses who conspire to make fraudulent claims.

“Given the likelihood of a loss, the defendants apparently decided to withdraw their appeal, pay the full judgment plus interest, and pay CSX a few million dollars less in attorneys’ fees than they could have been required to pay under RICO.”

ATRA said it hopes CSX’s suit will serve as a model for other corporate defendants “plagued by litigation that is not only meritless, but fraudulent.”