WASHINGTON -- The American Tort Reform Foundation was less critical of West Virginia's legal system this year, but still ranked it as the No. 2 Judicial Hellhole in the country in its annual report released Tuesday.
The ATRF dropped West Virginia from the top spot, citing what it says is an improved relationship between state Supreme Court justices and reform efforts by Gov. Joe Manchin. The report commends the commission created by Manchin to explore a different method of selecting judges in its "Points of Light" section.
Retired U.S. Supreme Court Justice Sandra Day O'Connor served on the commission, which recommended probing the establishment of a business court.
"The commissioners deserve a great deal of credit for the thoughtful roadmap they have provided to West Virginia policymakers," the report says.
"Economic growth and job creation have been stymied in the Mountain State because of its courts' reputation among business leaders. Fearing unfair trial court decisions, and frustrated without a guaranteed right to appeal those decisions, too many businesses and companies leave the state or choose to avoid it altogether in the first place.
"West Virginia trial judges know that there is a high probability that their cases, however extreme, will not be challenged on appeal. This creates the wrong incentives for fair and impartial decision making."
Still, the ATRF says more action is needed.
"The recommendation is praiseworthy. But until West Virginia adopts systemic reforms or shows consistent evidence of fair rulings, it is unlikely to shed its reputation as a Judicial Hellhole," the report says.
It lists four reasons why the state continues to be ranked as a Judicial Hellhole every year:
First is the lack of an intermediate court of appeals. Forty-eight other states have such courts, and three of five Supreme Court justices must agree to hear an appeal.
"While the West Virginia Supreme Court of Appeals opts to hear one of every three cases for which review is sought – a high percentage for discretionary review53 – this provides little solace to parties who receive no appeal at all," the report says.
"This has occurred even in cases involving hundreds of millions of dollars in punitive damages, as well as trial court decisions permitting novel and constitutionally questionable practices."
Second is a "fact-based perception" that the state judiciary views in-state plaintiffs in a better light than out-of-state corporate defendants. The report cites former state Supreme Court Justice Richard Neely.
"As long as I am allowed to redistribute wealth from out-of-state companies to in-state plaintiffs, I shall continue to do so," Nelly wrote.
"Not only is my sleep enhanced when I give someone else's money away, but so is my job security, because the in-state plaintiffs, their families and their friends will re-elect me. It should be obvious that the in-state local plaintiff, his witnesses and his friends, can all vote for the judge, while the out-of-state defendant can't even be relied upon to send a campaign donation."
Third is procedural unfairness that forces defendants to settle cases that lack merit. The report is critical of consolidating thousands of individual cases against out-of-state defendants and permitting "unorthodox trial plans that have a fact-finder consider whether the defendant's conduct warrants punitive damages even before certifying a class or determining compensatory damages."
And last are departures from the core principles of tort law. Those departures include medical monitoring claims that punish defendants in cases where no physical injury is alleged, the state Supreme Court's rejection of the learned intermediary doctrine and allowing tort claims out of the Workers' Compensation system.
By refusing the learned intermediary doctrine, the state Supreme Court required drug companies to notify all users of any possible side effects. Forty-seven jurisdictions have ruled that physicians (learned intermediaries) have some responsibility to do so.
Federal courts in West Virginia had applied the doctrine before the state Supreme Court decision. Then-Chief Justice Robin Davis called it a "useless 82-year-old relic."
And in 2007, DuPont was ordered to pay $130 million in medical monitoring for Harrison County residents who lived near one of its zinc-smelting plants.
As usual, the report explores state Attorney General Darrell McGraw's relationship with private lawyers. He has given state contracts to lawyers who contribute to his campaign without soliciting bids from other firms.
Private attorneys represented the State in litigation against OxyContin-maker Purdue Pharma, leading to a $10 million settlement in which they earned more than $3 million.
McGraw did not distribute the rest of the settlement to the state agencies named as plaintiffs, instead using it on day report centers. He also gave $500,000 to the University of Charleston for a pharmacy school.
Recently, the Departmental Appeals Board ruled the federal Centers for Medicare and Medicaid Services was owed $2.7 million from the settlement. CMS has taken the amount from the state's Medicaid program.
"McGraw does not provide an open and competitive bidding process to select law firms, opting instead to base the decision on personal preferences," the report says.
"Such a process not only risks depriving the state of the best possible use of taxpayer dollars, but is prone
to a perception of unfairness and cronyism. His office keeps the settlement money, which is doled out to his favorite causes.
"Moreover, the plaintiffs' lawyers hired to represent the state receive lucrative fees from the litigation. In turn, many donate heavily to McGraw's reelection campaigns. Over this time, the Attorney General's symbiotic relationship with the plaintiffs' bar has only grown more entrenched."