Justinian Lane

Could the Las Vegas Hepatitis Problem Have Been Prevented By Stiffer Penalties?

I grew up in Las Vegas, and will always think of it as home even though I'll likely never live there again.  So I've followed the story of the Hepatitis outbreak more closely than if it would have happened in some other city.  Today I came across an op-ed comparing the harsh penalties that the Nevada DMV imposes on irresponsible drivers with the light penalties the endoscopy clinic received when it violated health and safety regulations:

In fact, the average procrastinating car owner could easily end up spending more than the amount that the Bureau of Licensure levied against the endoscopy center for each of its three "deficiencies." Although the city of Las Vegas forced the closure of the clinic and muscled a $500,000 fine against the managing doctors, the state penalized the center just $3,000 for three areas of concern. That's just $1,000 per violation despite the fact each of those "deficiencies" could end up costing lives. And the agency never calculated the number of days the center was deficient in an effort to roll up the fines.

Add to the annual car registration costs a few overdue tickets, an insurance lapse, and an emission repair bill, and you're spending upward of $1,000. And there's no grace period.

It has not been that way at the Bureau of Licensure, where, until the health department and the press exposed its downright dainty approach to potentially deadly problems at the endoscopy center, it has been one amazing grace period. Rules were broken, but it was business as usual.

Obviously, some well-connected, politically active physicians have exercised far greater lobbying power than average automobile drivers. Rules are rules, but some are applied more strictly than others.

Lahontan Valley News and Fallon Eagle Standard - Opinion

It amazes me that so many conservatives think that the death penalty is an effective deterrent to crime, but don't think that large financial penalties won't deter misconduct among corporations or medical professions.  I wonder if this case would have turned out differently had the fines been $10,000 or $100,000 each.  It's certainly possible that a kick to the groin would have gotten these doctors' attention in a way that a slap on the wrist certainly didn't. 

While the sheer number of people who may have been exposed to Hepatitis (over 50,000) makes this case standout, the pattern behind it is very typical: An industry with lax regulation routinely ignores safety regulations.  Small fines don't correct the problem.  Someone gets hurt or dies.  And then the tort system has to step in to correct a problem that never should have occurred in the first place. 

What do you think?  Does self-regulation work?  And is it fair that the "reform" measures Nevada passed to protect its doctors from frivolous lawsuits will protect these "doctors" as well? 

Justinian Lane: Author Bio | Other Posts
Posted at 2:03 PM, May 27, 2008 in Medical Malpractice | News
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"It amazes me that so many conservatives...don’t think that large financial penalties won’t deter misconduct among corporations or medical professions."

I don't know anyone who doubts the power of financial deterrence, let alone the hoardes of "so many conservatives" as you state. If anything, the "conservative" argument tends to be the exact opposite: huge financial penalties deter not only misconduct, but *all* conduct, such that the industry or practice tends to not take place at all.

Think, for example, of the "conservative" quasi-economic argument for tax cuts: if taxes are too high, individuals will have little incentive to work, and will draw less income. This in turn *lowers* the tax base, thwarting the entire purpose of the tax hike in the first place.

Posted by: Lawyer | May 27, 2008 3:07 PM

A quasi-argument indeed. The tax rate would have to be pretty high for me to figure I'm better off having no income and being homeless than working and paying taxes to the government.

Posted by: Justinian Lane | May 27, 2008 3:40 PM

It is remarkable how consistent Justinian Lane is. Lawyer made two arguments; the first utterly refuted Lane's original straw-man; the second was simply an analogy. Lane responds by ignoring the first argument (thus failing to defend his indefensible post) and mischaracterizing the second. Either Lane doesn't know the difference between "less income" and "zero income," or he is fundamentally dishonest.

Posted by: Ted | May 27, 2008 11:23 PM

It's also amazing how consistent you are, Ted. Rather than respond to the substance of my post, you instead attack me for an unrelated point. I'll presume your silence means you agree that a $1,000 fine is appropriate when a multimillion dollar enterprise puts lives at risk to make a buck.

As for the difference between less income and zero income? If most people told their bosses, "I'm only gonna work 60% as hard as I have been - cut my pay accordingly," they'd end up with zero income. But perhaps it works differently at economic think tanks.

Posted by: Justinian Lane | May 28, 2008 11:42 AM


It's unclear what your point is in your comments.

In any event, the example of the conservative case for tax cuts was just that, an example, so don't get too sidetracked.

The purpose was to show that "conservative" arguments tend to emphasize the *power* of financial incentives -- when you tax companies, they change their behavior and make less stuff.

Thus, your claim that conservatives don't think financial penalties will change companies' conduct reflects ignorance.

Posted by: Lawyer | May 28, 2008 4:04 PM

Lawyer & Ted: Do you agree that punitive damages are a financial penalty? If you do, then you must disagree with Chrysler AGC Steven Hantler & Vanderbilt Professor W. Kip Viscusi, both of whom argue that punitive damages don't act as a deterrent.

Hantler: “There is compelling evidence that punitive damage awards have no significant deterrent effect on corporate behavior whatsoever.”

Viscusi: "There is no evidence of a significant deterrent effect based on an original empirical analysis of a wide range of risk measures for the states with and without punitive damages."

Viscusi: "...if you’re out there searching for some kind of deterrent effect produced by punitive damages, you simply can’t find it."

So unless Viscusi and Hantler are liberals...

Posted by: Justinian Lane | May 28, 2008 5:31 PM

I'm well familiar with Viscusi, whom I'm representing in a Supreme Court brief we're filing next week where he is an amicus.

You mischaracterize his argument, Justinian, but that's not surprising since you haven't ever honestly addressed a real tort reform argument. Viscusi doesn't say that punitive damages inherently fail to deter, he says punitive damages, as applied in the random way the American justice system applies them divorced from actual wrongdoing, has no effect because innocent corporations are essentially as likely to be punished as wrongdoers, and because the magnitude of the punitive damages usually reflects the size of the corporation rather than any particular wrongdoing. Thus, what they deter is investment, rather than wrongdoing, because of the increased likelihood of arbitrary expropriation. Which is exactly what Lawyer explained to you in the very first comment in the thread.

This isn't high-school debate. You don't win points by taking sentences out of context and twisting them. I don't know whether your consistent misrepresentations are because you're incapable of understanding the underlying arguments or because you're so partisan that you realize the only way to win the argument is to undermine the truth, but either way, it's really not worth the keystrokes.

Posted by: Ted | May 28, 2008 7:30 PM

If this isn't high school debate, why are you using the No True Scottsman fallacy regarding punitive damages?

I'd be more than happy to have a debate about punitive damages with you or anyone, for as long as you like. But not in this thread, because once again you've hijacked a thread to grind your personal ax with me. The relevant point of my post is that once again lax oversight of physicians has led to egregious malpractice, and that once again, it's going to be the tort system that has to correct the problem. The same tort "reforms" that are supposed to protect good doctors from bad lawyers are in this case going to protect bad doctors. If we're going to make it harder to sue doctors, we ought to make it even harder for things like this to happen. I question whether self-regulation and $1,000 fines are the way to do so.

Posted by: Justinian Lane | May 28, 2008 8:00 PM

"The same tort "reforms" that are supposed to protect good doctors from bad lawyers are in this case going to protect bad doctors."

And once again, Justinian lies. How are the "bad doctors" protected by tort reform here? The license has been revoked, and the investors who funded the fly-by-night endoscopy center lost their investment, and the doctors were fined $500,000 and are facing litigation. What tort reform would prevent the victims from recovering their medical expenses? Nevada doesn't even *have* tort reform, yet this incident happened. Blaming this incident on tort reform is both irrational and dishonest.

If anything, tort reform would make more likely that the people who are really injured recover, because the money won't be sopped up by people without injury suing.

(I'm assuming for the sake of argument that the center is guilty of the charges: Dr. Dipak Desai says they're not true.)

(Also, add "No True Scotsman" fallacy to the list of things Justinian talks about without understanding.)

Posted by: Ted | May 29, 2008 8:43 AM

Nevada doesn't even have tort reform? Check out Walter wrote about the ballot measures that were passed and capped noneconomic damages at $350k in med mal suits. And lawmakers in Nevada are considering exceptions to the cap in cases of gross negligence. Or are damage caps not tort reform now?

For the record, I didn't blame this incident on tort reform. I blamed it on lax oversight of a largely self-regulated industry and laughable fines. I pointed out that the tort system is going to have to clean up a mess that never should have happened in the first place.

No True Scottsman: "All Scotts do X. But Y is a Scottsman, and he doesn't do X. Ahh, but Y isn't a true Scottsman."

You: "Punitive damages deter bad conduct. But Viscusi and Hantler says punitive damages in Americca don't deter bad conduct. But America doesn't have true punitive damages."

Posted by: Justinian Lane | May 29, 2008 10:37 AM

"You: 'Punitive damages deter bad conduct. But Viscusi and Hantler says punitive damages in Americca don't deter bad conduct. But America doesn't have true punitive damages.'"


Ted didn't claim that "America doesn't have true punitive damages." What he said was:

"Viscusi ... says punitive damages, as applied in the random way the American justice system applies them...has no effect because innocent corporations..."

He was not changing the definition of "punitive damages" as you accuse him of doing. He was taking issue with your naked assertion that Viscusi and Hantler say that corporations don't react to financial penalties.

It would be far more honest for you to say that Viscusi, et. al., (as opposed to "so many conservatives," by the way) believe that *random* financial penalties don't deter conduct. This is far from supporting your assertion that "so many conservatives believe that large financial penalties...deter misconduct."

Essentially, you forgot to qualify the "so many conservatives" and neglected to mention that the financial penalties must occur at random.

Posted by: Lawyer | May 29, 2008 12:43 PM

... and a comment about laughable fines at a medical facility turns into another talk about punitive damages. I don't think you're just baiting me, so I'll respond.

First, if you want to criticize how someone characterizes Viscusi, criticize Hantler. He's the one who uses Viscusi's research to support his claim that "...punitive damage awards have no significant deterrent effect on corporate behavior whatsoever.” I disagree with him, so we're on the same page apparently.

Second, I also disagree with Viscusi that punitive damages are applied randomly in this country - let alone so randomly as to decrease any deterrence value they may have. The post about carbon nanontubes shows that businesses are terrified of punitive damages.

And finally, let's not have a "no true conservative" debate. Suffice it to say that I've met several ill-informed individuals who describe themselves as conservatives and who believe punitive damages don't deter bad conduct. The term conservative is so generic that it's hardly worth fighting over. Hey, Bush calls himself a conservative and there are plenty of people who disagree.

With all that out of the way, do you (or does anyone) else agree with me that (a) $1,000 fines are too small when lives are at stake, and (b) damage caps shouldn't protect these doctors?

Posted by: Justinian Lane | May 29, 2008 1:25 PM

How is a $500,000 fine and loss of license -- before any civil liability -- "laughable"?

"The post about carbon nanontubes shows that businesses are terrified of punitive damages."

No, the post about carbon nanotubes shows that businesses care about worker and product safety and are already taking inexpensive precautions.

"$1,000 fines are too small when lives are at stake"

Not necessarily: lives are at stake when someone speeds, but I don't think speeding tickets should be over $1000.

Lives are at stake when trial lawyers and their supporters put profits before people and campaign against tort reform, but I don't think they should be fined at all, no matter how reprehensibly selfish and dishonest their position may be.

The damages caps aren't relevant in the case of these doctors, who will be bankrupted by the economic damages if the allegations are true.

Posted by: Ted | May 30, 2008 7:27 AM

Yep, those damned greedy trial lawyers are to blame for everything. And you accuse me of being too partisan to have a discussion with.

Whether or not the doctors are bankrupted by economic damages or not is irrelevant to whether they should be protected by damage caps. Can you give me a compelling reason to cap noneconomic damages in case of gross negligence?

Posted by: Justinian Lane | May 30, 2008 11:12 AM

"Can you give me a compelling reason to cap noneconomic damages in case of gross negligence?"

In this case, capping noneconomic damages will ensure that the people who get a hold of the now-frozen assets of the doctors are the people who are actually injured, rather than the people who got to the courthouse first. Or do you not care about basic fairness and justice?

Posted by: Ted | May 30, 2008 5:45 PM

Justinian, the reason you're impossible to have a discussion with is because you keep changing the subject. You asked whether "$1,000 fines are too small when lives are at stake" and I pointed out a couple of examples that would affect you personally, and, rather than acknowledging that you were wrong in your rhetorical question, or attempting to defend the irrational principle you were suggesting, you insult me.

"Whether or not the doctors are bankrupted by economic damages or not is irrelevant to whether they should be protected by damage caps."

This is irrational again. If the doctors are bankrupted by economic damages, then the noneconomic damages caps are not providing any protection.

Posted by: Ted | May 30, 2008 5:52 PM

You accuse me of changing the subject when you already tried to hijack this into a discussion on punitive damages? Nice.

Fine, I'll address your silly hypo. If I'm doing 70 in a 65, a $1,000 fine is probably a bit much. But if I'm doing 170 in a 65, it's probably OK. Or, if I've gotten a dozen tickets for going 70 in a 65 in the past 6 months, a $1,000 fine is also probably OK. The size of the fine should relate to the frequency of the misconduct, the danger caused by the misconduct, and the wealth of the defendant. The last one is especially important if you're trying to deter bad conduct.

Yes, actually the caps are protecting the doctor because under no circumstances will he have to pay damages in excess of the cap. We both just assume that the doctors will be "bankrupted" by economic damages. But that assumption may very well be false. First, economic damages for those who don't have hepatitis will be small. (So small they probably won't be able to find a lawyer to take their case on a contingency fee basis.) Second, these doctors may have large insurance policies. And third, these doctors have a ton of money. (Some of which may have even come from insurance fraud, but that's a different story.) So rather than change the subject again, you could answer whether you think damage caps ought to apply in cases of gross negligence or intentional torts.

Posted by: Justinian Lane | May 30, 2008 6:41 PM

Caps on noneconomic damages benefit doctors by preventing cases from ever being filed.

Posted by: mythago | June 2, 2008 10:07 PM

"Second, these doctors may have large insurance policies. "

My mistake: I don't know why I even began to assume that when you decided to post about a subject you knew what you were talking about. As has been widely reported, the doctor's insurance limit is $3 million. That's 12 cases of capped non-economic damages.

"And third, these doctors have a ton of money."

At $250,000 a pop, with thousands of plaintiffs, the doctors would have to be billionaires for caps to make a difference. Since none of the doctors are on the Forbes 500, we can therefore safely assume that the caps do not make a difference.

Since you've made it clear that you're just making stuff up at this point without doing any basic research into the case or critical thinking about what you're talking about, I'll stop wasting my time here.

Posted by: Ted | June 2, 2008 11:33 PM

Ted, are you aware that judgments last for years, and that you can enforce them at a later date? Just because these doctors may not have the assets now to pay larger judgments doesn't mean they won't ever have them.

Are you also aware that the only plaintiffs likely to hit or exceed the cap are those who actually contracted Hepatitis, a number well under 100 last I read?

Do you have a copy of the doctors' malpractice policy? I'm curious as to whether that's a $3 million aggregate policy, or a $3 million per-incident policy. If the latter, what's the aggregate? Presumably, whatever the aggregate is, its calculated yearly. Since these bad practices have been going on for four years, your calculations could underestimate the number of claimants elligible. And is each doctor covered separately by the policy, or is it just one policy for the clinic? There are two clinics - do they each have their own policy? And did the doctors do any work at any hospitals or other facilities that might have additional coverage that extends? I'm guessing all of these things weren't widely reported and I know they make a big difference as to the accuracy of your calculations.

Posted by: Justinian Lane | June 3, 2008 11:01 AM

"Just because these doctors may not have the assets now to pay larger judgments doesn't mean they won't ever have them."

Justinian, it's so unfair of you to feed my OCD twisting yourself into such ludicrous contortions just to avoid admitting that you're wrong.

We have a doctor who has had his assets frozen, his license suspended, and is facing ginormous legal expenses in civil and possibly criminal proceedings. Please explain the scenario by which he is going to have more assets in the future than he has now with a $3 M insurance policy and a few million more in personal assets.

Your questions would be answered if you read the news coverage that you're purporting to write about. It's a $1M/$3M policy, i.e., $1M per incident, $3M aggregate. On a claims-made basis, so older policies have expired.

And it doesn't make a whit of difference to my calculations. Again: thousands of plaintiffs, at $250,000/pop before economic damages, equals over one billion dollars. The constraint here is not "caps" but assets, and multiplying the insurance by the implausible factor of ten doesn't change the fact that anyone who gets as much as $250,000 non-economic damages is taking money away from other plaintiffs rather than from the defendants.

To answer your earlier question, punitive damages and criminal remedies are available for intentional torts, so why do we also need to uncap noneconomic damages? If the unlikely argument is that resulting deterrence is insufficient, then increase the criminal enforcement.

Posted by: Ted | June 3, 2008 6:33 PM

What's the future scenario? He's acquitted in a criminal procedure and his medical license isn't suspended so he goes back to being a high-earner in a city in which his name isn't tarnished. Alternatively, he could have a great deal of family wealth. I recall reading that he tried to ship a couple of Mercedes back home to Dubai; maybe he comes from a wealthy family. Hypo: What if this guy was a sultan and worth tens of billions of dollars - then would you support waiving the cap?

Your figure of a billion dollars presumes that every plaintiff gets a large judgment. Again, only those who actually HAVE hepatitis and can trace it to him are going to get a large judgment.

I'll quit feeding your OCD and only note that you still haven't answered whether $1,000 fines are sufficient when a medical facility doesn't follow health code standards.

Posted by: Justinian Lane | June 3, 2008 8:56 PM

"I'll quit feeding your OCD and only note that you still haven't answered whether $1,000 fines are sufficient when a medical facility doesn't follow health code standards."

The question is moot: the medical facility wasn't fined $1,000: it was fined $253,000 and shut down. If there are multiple levels of enforcement, one has to look at the entire picture, not at the level that provided the least pressure.

Posted by: Ted | June 4, 2008 8:13 AM

Fined $253k AFTER this debacle. It's hardly deterrence if the fine comes AFTER the bad acts.

Posted by: Justinian Lane | June 4, 2008 10:13 AM

Justinian, you've said some phenomenally stupid things in your time, but your comment at June 4 10:13 AM--"It's hardly deterrence if the fine comes AFTER the bad acts."--seems to take the cake. Are you suggesting that the government fine people BEFORE they commit bad acts? You understand that Tom Cruise was just acting in Minority Report, and the government doesn't really have a group of psychics that can anticipate who is going to commit bad acts, right?

If your objection is that the $253,000 fine isn't deterrence because it came AFTER the bad acts, one wonders why you claim civil damages litigation deters, since it, too, invariably comes AFTER bad acts (and, unfortunately, almost as often after good acts).

Lawyer is right: you have to be just punk'n everyone on both sides of the debate, and DMI hasn't figured out that you're playing an elaborate joke on them. You can't possibly be so thoughtless as to mean half the things you say.

Posted by: Ted | June 7, 2008 11:01 PM

I agree with Justinian. The lawyer profession needs deterrence. I would use incapacitation of the lawyer hierarchy to deter and prevent further damage by this criminal cult enterprise. Federal marshals remove the hierarchy. They have brief trials for insurrection against the Constitution. Only excerpts from their decision are read as the sole evidence. No lawyer gotcha on any trivial, collateral corruption. They hang behind the court house, or go to federal prison for long sentences at hard labor, upon completion of the trial.

Replace these lawyers with wine besotted bums vomiting in the gutter for an immediate upgrade in common sense and clarity of decisions. Random selections from a jury pool would be responsible replacements. At least, there would be a lesser chance they would be self-dealing, rent seeking, cult criminals.

Posted by: Supremacy Claus | June 8, 2008 1:46 PM