Wednesday, May 23, 2007

Corporate America Doesn't Care if You Die

There's a bill before the Governor in Illinois right now that would allow juries to award damages for grief in wrongful death cases. I've heard the bill criticized as "an end run against damages caps" and here's my thought on that: Please, God, let it be so!

There are many things that I periodically refer to as "the root of all evil", including calculators, but in terms of American society today, the reduction or elimination of punitive damages and the capping of personal injury, product liability and medical malpractice claims truly is a significant root of a large portion of the evil. You may recall that the original quotation said, "the love of money is the root of all evil", and that's exactly the reason that punitive damages are so very important.

We hear a lot about "greedy trial lawyers" and I'm sure that there are many. But for better or worse (regardless of what the insurance industry lobby would like you to think), greedy trial lawyers have little impact on your quality of life. Corporations who value profits over people have a lot.

More than 20 years ago, as you may know, Ford made the decision not to mention the fact that a design flaw made the Pinto prone to explosion in low-speed, low-impact collisions. The company applied a formula set forth in an earlier court case, one that weighed the burden of making corrections against the harm of not making them, and decided that it wasn't worth the investment to fix the Pinto. Sure, some people were going to die, but it wasn't a LOT of people, and it would be expensive to fix the defect, so it would make more sense just to pay wrongful death claims for those who died than it would to make the necessary changes.

This isn't spin. That's what Ford executives reported, and they seemed to think they'd done the right thing. The formula was right there laid out for them in an opinion by the revered Learned Hand. They'd made a cost benefit analysis, and changing the design would have cost about $137 million, while the deaths, injuries, and property damage claims associated with the faulty design would likely not reach $50 million. In short, it made no sense to make the changes.

I hope that you're all shouting, "But...but..." right now and asking whether we really want to live in a society that assigns a monetary value to human life ($200,000 in Ford's case) and considers it a good trade if killing off a few people saves some money. The answer at that time was a resounding "no". But that answer seems to be changing, and it's changing as a direct result of the fact that judges and juries no longer have the discretion to make sure that it's not profitable for corporations to make this kind of decision.

The evidence in one of the many recent cases against Merck over the drug Vioxx was in many ways similar. Merck apparently made an assessment that indicated that the company could save $229 million by delaying revisions to its warnings. Naturally, some people who would have benefitted (as in, lived) if those warnings had been available to them and to their physicians earlier would be harmed, but not $229 million worth.

A Texas jury took a dim view of the analysis and awarded $229 million in punitive damages. Some coincidence, hm? The jury sought to wipe out the profit derived from the conscious decision to risk customers' lives in favor of the bottom line. Unfortunately, Texas law limits punitive damages, and the award was reduced to $5 million. While many were crowing about this "victory for common sense and proportion" and all of that, I'm sure no one was more delighted than Merck...because that punitive damages cap ensured that no matter how egregious their behavior, it would remain more profitable to kill people off it that were the economically efficient thing to do.

The jury awarded $229 million not to compensate the plaintiff, but to punish the defendant, to make sure that its bad behavior (murder) wasn't profitable, and to put other companies on notice that it wasn't acceptable to consciously decide the bottom line was more important than human life. The Texas punitive damage limitations wiped all of that out and instead delivered this message: When you decide to let people die so that you can make more money, you might end up profiting only $224 million instead of $229 million.

Probably not much of a deterrent.

It's nice to think that corporations will avoid killing people simply because they're operated by human beings and we'd like to think that avoiding killing people is sort of programmed into our hearts. But it hasn't happened that way.

It would be nice to think that the market will take care of this kind of problem itself, and that when a company shows itself to be willing to kill off its customers, people will stop doing business with it. But it hasn't happened that way. In the case of drug companies, in particular, it sometimes CAN'T happen that way, because those companies hold patents on life-saving medications.

In the past, we could at least count on the fact that when a company made its cost-benefit analysis, the threat of crippling punitive damages if they opted to kill people would go into the scales. Now that they're largely insulated from that risk, there's just no good reason to give much thought to keeping people alive.


Gerri said...

It is pretty sickening that human life is not valued more in corporate America.

Barb said...

Incidentally, Merck is also the company who manufactures the so-called cervical cancer vaccine and is a very heavy donor to Governor Good Hair's campaign. You know, the same governor who made US history by being the first to mandate the vaccine for sixth graders? Because (heavy sarcasm ahead) Texas is so CUTTING EDGE in healthcare for its citizens. (We Texans like to say that we're Mississippi with better roads.)

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