Litigation

Desert Shadow Endoscopy Center, Teva, and Baxter Healthcare: that $500 million punitive damage award in Nevada

By Ted Frank

Carter's account actually understates how outrageous the verdict—and the behavior of the elected judge who permitted this case to get to a punitive damages verdict—was.

First, it is important to recognize the wrongdoing of the Desert Shadow Endoscopy Center that infected as many as 115 people with Hepatitis C. Abandoning basic medical practices such as sterilization and not reusing needle was part of the Center's business model, which borders on, and perhaps was, criminal behavior; the doctor involved surrendered his medical license. The idea that a different warning label would have changed the behavior of the Center is simply insane: even homeless heroin users know not to reuse needles, and so do nurse anesthetists averaging over $100,000 a year. They simply chose to disregard the warning for their own benefit.

Second, as the Abnormal Use blog documents, much of the jury's anger against the innocent bystander reflected a Cartmanesque petulance that the defendants failed to kowtow to the jury enough: Teva Pharmaceuticals didn't send an executive to monitor the trial, and Baxter Healthcare's executive offended the jury by "stammering" on the stand. As I've noted elsewhere, it is a severe problem for American business if it becomes more important for executives to be skilled in giving smooth-tongued legal testimony than in running a business. When the consequences are risk of multi-million dollar liability for a $20 vial of medicine plus punitives damages, the game-show nature of our litigation system becomes readily apparent.

Even if and when punitive damages are reduced to a reasonable multiple, the two defendants are facing hundreds of millions in potential liability because of the volume of cases.

Note that the Desert Shadow Endoscopy Center case has led to calls for reversal of Nevada's medical malpractice reforms. This is a red herring. Current law was sufficient to bankrupt the doctor involved as well as all of his businesses. Uncapping damages would make no difference what victims could collectively recover from the culpable defendants.

Full post as published by Point of Law on May 24, 2010 (boomark / email).