Blog Ipsa Loquitur

The 4th Circuit Court of Appeals has just dismissed a lawsuit brought against the Patient Protection and Affordable Care Act. You can read the full opinion on the court’s web site (PDF link). The court ruled that the plaintiff, the Commonwealth of Virginia, had no standing to challenge the law, and so dismissed the lawsuit.

For a super short summary of standing, imagine me suing Michael Jackson’s doctor for malpractice; that lawsuit would be swiftly dismissed for lack of standing. Standing is a judicial concept meaning something like ‘plaintiff has suffered or will imminently suffer an injury caused by the defendant, over something a court can redress.” So while I might be sad that the King of Pop is dead, I’m not really injured in the kind of way his family and employers are; even if sadness were an injury (it’s not), the court can’t really do anything about it. Without standing, the lawsuit is dismissed.

Some news outlets are reporting this as big news, but it’s really rather inconsequential. Two of the circuits have already split on the issue of the Constitutionality of the PPACA, so the Supreme Court is almost certain to resolve the discrepancy.

How does a discrepancy arrive in the interpretation of federal law, you ask? Why, Dear Reader, I’m so glad you did. There are 11 subdivisions of the federal court system, called circuits. They’re laid out this way for historical reasons that make their boundaries look pretty random today. You can also tell that when they were drawing up the 9th Circuit, there probably weren’t a lot of folks in California yet, because that circuit is huge. Each of these circuits has its own districts courts and courts of appeals, and judicial precedent from one of the circuits doesn’t bind the other.

When the circuits have all agreed about an interpretation of a federal law, the Supreme Court won’t necessarily weigh in. But when there’s a disagreement, the Supreme Court usually steps in to ensure uniform application of federal law. Given the ambitious size and scale of the PPACA, I can’t imagine the Supreme Court would decline to hear the case.

Published on under The News

Everyone clicks “I accept” on those terms of service or end user license agreements when registering for a web site or installing software. I’m a lawyer, and frankly, I think you’re nuts if you bother to read them. They’re often poorly-written, they often contain clauses that allow one party (not you) to change the terms at any time, and there’s no opportunity to meaningfully bargain over the terms of the contract.

But they are legally binding, by and large. It’d be kind of nice if these contracts weren’t virtually unreadable. Earlier this week, Gregg Bernstein, a master’s student at Savannah College of Art and Design, unveiled a new format for these agreements. While it doesn’t (and can’t) address the problems of being a daily one-sided affair, Gregg’s new design is immeasurably better than the status quo.

Read his thesis at I agree to _____. And for Pete’s sake, somebody give this guy a job.

Published on under Irreverently Irrelevant

From the Christian Science Monitor: the US government is suing banks for making lousy loans!

A U.S. regulator sued 17 large banks and financial institutions Friday over losses on about $200 billion of subprime bonds, which may hamper a broader government settlement of the mortgage mess left over from the housing crisis.

The lawsuits by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, surprised investors, dragging down bank shares and could add billions of dollars of legal costs at perhaps the worst possible time for the industry.

Ahem. bahahahaha

Published on under The News

One of my favorite blogs, written by an Emergency Department physician (WhiteCoat), covers a lot of medical issues and medical policy news; I’m always intrigued by perspectives on these topics other the litany of articles by lawyers and economists. It’s journalism from the trenches, and everyone can appreciate a perspective informed by a career on the front lines. If a doctor says a certain part of the health care system sucks, or a “reform” would actually make things worse, it’s hard to argue.

A few weeks back, a hospital in New Orleans settled a class-action lawsuit for $25 million. The hospital was sued after Hurricane Katrina: the complaint chiefly focused on the allegedly insufficient disaster preparation of the hospital’s owner, Tenet Healthcare Corporation. Such failure to prepare was alleged to have caused injury to hundreds of patients, and led to the death of forty-five of them.

WhiteCoat posted a rather narrow-minded critique of a legal system that allows for this sort of result, titled “Where Are Force Fields When You Need Them?” In the comments of his blog post, I attempted to explain why the settlement wasn’t a miscarriage of justice, and what the legal standard was for a lawsuit like this (hint: it does not involve Force Fields).

If you scroll down to the comments section, you’ll see that I was not what one could safely call “successful.” I may have more success if I’m not constrained to a comment on someone else’s blog. Let’s try that again.

Not All Liability is the Same

Fundamentally, lawsuits like this are about negligence. The hospital was negligent in planning for a disaster, so sick people died. The supermarket was negligent for not cleaning a spill on the floor, so someone slipped and fell. The guy tossing his cigarette in the bushes was negligent, so the lawn caught fire and your whole house burned down. These scenarios all have a lot more in common than “something bad happened, and we will hold someone accountable.”

Note: there is a legal standard where that’s all the plaintiff needs to demonstrate. It’s Strict Liability, and it’s harsh. Way harsh. The plaintiff doesn’t have to show fault, or carelessness, or recklessness, or malfeasance, or anything other than “this guy did this, now where’s my money?” That’s not what the Tenet lawsuit is about, nor should it be: we’re only going to be discussing Negligence now.

We see Strict Liability chiefly in products liability cases. Say you were using a chainsaw when the chain broke and cut your leg; the legal system doesn’t require you to figure out where the design flaw in the chainsaw lay, or whether it was the fault of the steel supplier, the plastic supplier, the assembly robot, the assembly robot installation guy, or any of the five thousand other people remotely related to the production and sale of the chainsaw. That’s silly. It’s almost as simple as ‘show up at the courthouse and bring your receipt.’

Negligence Was the Case they Gave Me

Defined briefly, Negligence is the breach of duty of reasonable care owed to a person who was foreseeably injured by a defendant’s unreasonable act. There’s a lot to unpack here, but the key word is “reasonable.”

This is really where WhiteCoat missed the point. His big gripe is that, for a hurricane as devastating as Katrina, only force fields or nuclear-powered hovercrafts would have saved everyone. He’s probably right. But we’re not looking at the results and saying “Tenet should have done better” here. That’s not how Negligence actions work.

In the best case scenario, maybe there could have been no deaths, maybe there could have been forty deaths, or maybe four hundred deaths, and this case still could have turned out the other way. It’s irrelevant. Negligence isn’t about a failure to have the best possible results, or even the failure to have good results. It’s a failure to act reasonably, thus causing injury to people to whom you owed a duty to act reasonably.

If you don’t act reasonably, yes, it’s likely that you’ll fall short of the ideal outcome, and someone could suffer an injury. The Negligence lawsuit happens when someone is injured, but the defendant is not liable because he could have done better by not injuring anyone. The defendant is liable because he owed a duty to exercise reasonable care, he failed to do it, and someone was injured.

Meet the Tenet Healthcare Corporation

So here’s the deal. Tenet owns lots of hospitals, but they’re not terribly good citizens. They have settled a number of lawsuits over the years with just about everyone they deal with: patients, employees, investors, regulators, labs, etc. They have paid a lot of money to avoid juries over the last decade: $29 million for Medicare fraud in 2002. $17 million for overcharging federal health care programs in 2002. $54 million for medical necessity fraud in 2003. $30 million for overcharging patients in 2005. $395 million for unnecessary open heart surgery in 2005. $900 million for Medicare fraud in 2006. $215 million for misleading its investors in 2006. $85 million for denying employees overtime pay in 2009.

This does not represent every lawsuit Tenet has defended. Not even close. These are the cheaper(!) ways out of some of the closer calls they might have had. You could say that this is symptomatic of a legal system that’s gone out of control, and just doesn’t know when to stop second-guessing hardworking professionals.

Or, you could see a company with a demonstrated history of executive malfeasance. Lying to investors, lying to regulators, lying to patients, mistreating employees, defrauding Medicare; hospitals owned by Tenet have a long history of this kind of behavior. One of the other commenters on WhiteCoat’s blog post used to work at a Tenet facility. She says:

They’re cheap bastards that will compromise patients’, families’ and staff safety for a buck. I live in St. Louis, worked at my hospital for 9 years and NEVER once saw them run through even a basic tornado drill. Most of the nurses I work with don’t know the basics to this.

(For those outside the US, St. Louis is in a state that has seen nearly 2000 tornadoes in the last 60 years, though only a few dozen were within St. Louis, they’ve injured over 600 people. Tornadoes in the midwest are a serious danger.)

This is not a company that seems to keep a tight leash on what their hospitals are up to. Indeed, if you read the original New York Times article about the Hurricane Katrina Aftermath trial, you get a distinctly different impression.

The class-action suit is expected to highlight desperate e-mail exchanges, not previously made public, between the hospital and its corporate parent.

“Are you telling us we are on our own and you cannot help?” Sandra Cordray, a communications manager at Memorial Medical Center, which sheltered some 1,800 people, wrote to officials at the Tenet Healthcare Corporation’s Dallas headquarters after begging them for supplies and an airlift.

Tenet corporate headquarters did not have an emergency command system in place and established one as the disaster unfolded. Company officials lobbied hard to get federal rescuers to prioritize Memorial, warning that dozens of patients were in danger of dying.

If Plan B was really “lobby federal officials,” I think they must have become used to solving their problems by throwing lots of money around. (See: that paragraph above with all the $$$ for settlements.) Tenet may not have been on the ball. The fact is that they just paid $25 million to keep a judge from asking a jury if they were negligent. That means Tenet thinks at least twelve people might see it that way, too.

Hurricanes and Hospitals: A Primer

Why would a jury see it this way, anyway? Again, Reasonableness is the key word in avoiding liability in a lawsuit like this. What’s a reasonable way to handle this situation? Force fields and hovercrafts are way, way beyond reasonable, though they would probably work. The reasonable way to handle the situation may still result in some fatalities: certainly, in the case of hurricane Katrina, most folks were not completely and omnisciently prepared for how badly that ended up going. And that’s okay.

However, a failure to make reasonable preparations for a hurricane when you’re a hospital in a hurricane-prone town below sea level isn’t okay. What would have been reasonable? That’s a good question. From the New York Times article again:

It has been previously reported that [Tenet’s subsidiary] Memorial did not act on a 2004 recommendation to move components of its electrical system above the ground floor. New documents raise questions about whether design, maintenance or other factors led to the total failure of backup power after the floodwaters rose.

The Times article also mentions that the backup generators might have failed due to improper maintenance, not rising floodwaters. Not keeping your backup generators ready to generate power for more than a few hours might mean you’re not reasonably prepared for a disaster. Deciding to keep sensitive electrical equipment below sea level also might mean you’re not reasonably prepared for a disaster. These are the sorts of issues that would have come out at trial, and Tenet decided to skip the trial and go right to the checkbook.

Really, the point is that Tenet did not need to plan for every contingency, save every life, and magically turn back the waters. The legal system doesn’t hold a hospital to this kind of standard, which is great, because no one could have. I certainly can’t, otherwise I’d have a great line for my cover letter when sending my resume to Tenet Healthcare: “boy, can I save you guys a lot of money in (some of your smaller) settlements!” Tenet needed to be reasonably prepared; that’s all the law requires. No force fields, no hovercrafts, no perfect outcomes, no happy people.

One last bit that really confused me was WhiteCoat’s insistence that it’s never fair to look back on someone’s actions and tell them that they should have acted differently. Virtually all legal actions are retrospective judgments of past behavior. Golly, OJ, you really shouldn’t have stabbed your wife to death. Gee, Kenneth Lay, you shouldn’t have committed all that corporate fraud. Wow, Dominic, you really shouldn’t have written libelous things about Mr. Simpson or Mr. Lay. Lawsuits talk about things that happened in the past because that’s how we evaluate our actions.

Seriously, when else would you sue? Before the negligence or any injury happens? Do you stand around and hope that Tom Cruise can crack the case before the court date? Doctors don’t give you chemo before you get cancer. Lawyers don’t file lawsuits before there’s an injury.

(Yeah, yeah, injunctions are prospective prohibitions on certain actions, but it’s just as unreasonable to expect patients sitting in a hospital to enjoin negligent preparation as it is to Minority Report your way through pre-emptive negligence actions.)

Part of what lawyers and the other risk-management types do is prospectively examine their clients’ potential liability from regulators or plaintiffs. I guarantee that Tenet’s legal department would have had conniptions if they knew the generators weren’t regularly repaired, or that a report suggesting the electrical equipment be moved off the ground was ignored. (Hell, I bet the doctors working in the hospital would have been pretty freaked out, too.) Then again, Tenet’s legal department seems to spend a lot of time negotiating settlements and writing checks to dodge juries, so maybe I’m giving them too much credit.

In that case, I’m for hire, guys.

Published on under Legal Theory

The Awl has a piece on the Aaron Swartz saga that I genuinely like, but has a few paragraphs that deserve some clarification.

It’s been widely asserted that Swartz intended to distribute the material he downloaded from JSTOR to the public, e.g. by posting the lot onto a file-sharing site like The Pirate Bay. And it’s no wonder that people are saying this, because the government’s indictment alleges it directly, but the indictment provides not a single shred of evidence to support these claims.

An explanation of criminal procedure would be helpful here. A grand jury only indicts someone for a crime after hearing evidence of the defendant’s guilt. The contents of the indictment do not represent the sum total of the evidence against the defendant; it represents the suspicions of the grand jury after having heard evidence against the defendant. The indictment’s allowed to be sparse.

I agree entirely with the ridicule of the U.S. Attorney Ortiz’s platitudes on stealing. Swartz wasn’t stealing, no matter how you slice it. Heck, he’s not even being charged with copyright infringement, which is usually what folks conflate with stealing. Neither hacking nor copying is stealing.

on pressing charges

The Awl article muses about why Swartz is still in hot water, as JSTOR doesn’t want to press charges. Pressing charges is something that happens on TV; that JSTOR and Swartz have kissed and made up already does not make Swartz a free man. In real life, when you’re a victim of a crime, you call the police. The police take your statement, write a report of their investigation, and ask you to sign a complaint – this is usually what folks mean by “pressing charges.” Obviously, the police can turn their report over to the local District Attorney’s office regardless of whether the victim signs a complaint. How else would anyone ever get charged for murder?

For federal crimes, it’s a little different. But take that last paragraph, replace “police” with “FBI/DEA/etc” and District Attorney with U.S. Attorney, and you have a reasonably accurate description of how federal crimes get prosecuted. The FBI doesn’t really go around asking if you’d like to press charges, generally because there are no low-stakes federal crimes.

Again, JSTOR doesn’t want to press charges, but they’re not involved in the trial. Criminal cases are between the government and the defendant. On the other hand, civil cases are between two private parties who are encouraged to settle out of court.

That being said, The Awl is absolutely correct about why the government is so interested in this relatively middling case; one of the reasons Swartz is being charged for this (even though the parties involved don’t seem to really care all that much) is that Swartz has been an agitator for years. I’m personally a fan of his work in liberating the PACER library, but he didn’t exactly endear himself to federal authorities with his quixotic work.

However, It should go without saying that prosecuting for X because you’re mad that you couldn’t prosecute for Y is not a terribly sound strategy.

on free

I sincerely love this next quote from The Awl:

But the worst misapprehension in Maxwell’s remarks is his total misunderstanding of what public domain really means. Shakespeare is “part of the shared heritage of all mankind,” too, but does that mean you can march into a Barnes & Noble and take any copy of Shakespeare that you want out of there for free? No! You have to pay Barnes & Noble and Penguin Classics or whomever for making it available to you in a form you can use, in this case a book. To fail to appreciate this point is to weaken the argument for open access by depriving it of clarity and focus.

For context, one of Swartz’s fans by the name of Maxwell uploaded 33GB of public domain documents to a file-sharing site, in the name of giving the “shared heritage of all mankind” back to its rightful owners (us) for the right price (free). This of course confuses the price you pay for the public domain content with the price you pay for accessing the public domain content.

Sure, the information is like totally free, man; but the computers that host 33GB of scanned PDFs isn’t free; the internet connection for a frillion Gb of bandwidth a month isn’t free; the electricity that keeps all those computers computing and routers routing isn’t free; the salaries of the IT folks that keep all those computers computing aren’t free.

Maxwell’s almost certainly aware of this. His response, I imagine, is something like the following. Great news for JSTOR – we can save them tons of money every month. If the public mirrors the public domain files and makes them available on peer to peer networks, we can eliminate the need for servers, industrial levels of bandwidth, and so on. Of course, the computing power required to search 33GB of non-OCR’d PDFs is nothing to sneeze at.

The Awl makes the point that the various efforts to collate, compile, and make searchable all the public domain documents are the services for which the price is charged, not the public domain documents themselves. If Maxwell had transcribed these 33GB of public domain documents himself, well, he’d have invented Project Gutenberg.

on crimes

This one is less good:

Swartz is being charged with hacker crimes, not copyright-infringement crimes, because he didn’t actually distribute any documents, plus JSTOR didn’t even want him prosecuted.

Really? For the record, you don’t have to distribute an illegal copy of something to be guilty of copyright infringement. Again, what JSTOR wants doesn’t really enter into this picture. Swartz is being charged with hacker crimes because he did things to MIT’s and JSTOR’s networks that he wasn’t supposed to do. The Philadelphia trial lawyer has a lot more experience in the legal field than I do, but I don’t think that’s why his logic is beyond me. He writes:

JSTOR already settled their claims with him. What more needs to be done here? The “criminal violation” here arises not from any social duty — like, you know, our society’s communal prohibition on murder — but rather from Swartz “exceeding the authorization” imposed by JSTOR on its servers.

I’m not sure how to take that. Only crimes as serious as murder deserve prosecution? Only crimes forbidden in ancient times deserve prosecution today? Computer crimes are silly and there ought not to be any laws governing hacking? I must presume that if the Ten Commandments had forbidden computer hacking, I wouldn’t having written this sarcastic paragraph. There’s no serious doubt that hacking is less serious than murder, but again, you don’t get off the hook for federal crimes because you managed to get a pardon from your victim.

not for sale

On the other hand, the bit about wire-defrauding JSTOR by agreeing to the terms while intending to defy them is spot on. Again, like the MySpace case, common sense seems to require we don’t make a federal crime out of clicking “I Agree” to a EULA when we don’t actually agree. I like the bit about the pecuniary gain – while I think I can imagine cases where it’s possible to commit fraud without pecuniary gain, for the purposes of EULA-based wire fraud, I’m more comfortable with a pecuniary requirement. Not that Congress or the federal judiciary consults me, but it seems like the right result.

The latter half of the article veers off into discussing the wire fraud charge, and dissecting whether or not Swartz intended to make money off his JSTOR downloads. This is a good excuse for the warm and fuzzy bits about how Swartz is a nice guy. I believe he is; he spoke at my law school and talked about his career as an activist – the photo of him and Lessig is just icing on the gravy, as far as I’m concerned. Swartz has the pedigree. I’m sure he wasn’t trying to make money.

But really, the wire fraud charge is one of the weakest ones in the indictment. It’s the hacking charges that I think he’s really screwed on. All that sneaking around MIT and breaking into their server closets puts him in a rough spot, which I’ve gone on about at length before.

Published on under Legal Theory