Daily Archives: February 23, 2005

Lea Fastow’s motion to reduce sentence is denied

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The Chronicle’s Mary Flood, who continues to do a fine job of covering the Enron scandal, posted this article today regarding U.S. District Judge David Hittner‘s denial of Lea Fastow‘s motion to reduce her one year sentence for misdemeanor tax fraud to the seven months that she has already served. Here are previous posts on the Lea Fastow case.
Along with the the sad case of Jamie Olis and the Martha Stewart case, Mrs. Fastow’s case is another example of the egregious lack of prosecutorial discretion that exists in today’s “Justice” Department.

The pesky reality of high medical malpractice premiums

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This New York Times article entitled “Behind Those Medical Malpractice Rates” addresses the myth that Bush Administration and Republican Party-fueled propaganda campaigns continue to promote in their quest to limit for damage-limit legislation:

[F]or all the worry over higher medical expenses, legal costs do not seem to be at the root of the recent increase in malpractice insurance premiums. Government and industry data show only a modest rise in malpractice claims over the last decade. And last year, the trend in payments for malpractice claims against doctors and other medical professionals turned sharply downward, falling 8.9 percent, to a nationwide total of $4.6 billion, according to data.

Lawsuits against doctors are just one of several factors that have driven up the cost of malpractice insurance, specialists say. Lately, the more important factors appear to be the declining investment earnings of insurance companies and the changing nature of competition in the industry. The recent spike in premiums – which is now showing signs of steadying – says more about the insurance business than it does about the judicial system.

Even the connection limiting damages and reducing costs for doctors is not even well-established:

[S]ome researchers are skeptical that caps ultimately reduce costs for doctors. Mr. Weiss of Weiss Ratings and researchers at Dartmouth College, who separately studied data on premiums and payouts for medical mistakes in the 1990’s and early 2000’s, said they were unable to find a meaningful link between claims payments by insurers and the prices they charged doctors.
“We didn’t see it,” said Amitabh Chandra, an assistant professor of economics at Dartmouth. “Surprisingly, there appears to be a fairly weak relationship.

The Times article reiterates many of the same points that are made in the June 2003 GAO report entitled Medical Malpractice Insurance: Multiple Factors Have Contributed to Premium Rate Increases and this subsequent August 2004 Congressional testimony of GAO researchers on the same topic.
Make a note of the Times article and the these GAO resources the next time that you hear a demagouge declare that legislative caps on damages will reduce high medical malpractice premiums. Appealing to public bias against unpopular plaintiffs’ lawyers by promoting such legislation as a cure for high malpractice premiums amounts to rearranging the deck chairs on the Titanic. High medical malpractice premiums are a result of America’s broken health care finance system, and until we force our politicians to address the problems in that system, medical malpractice rates will continue to rise.
Hat tip to the HealthCareProf Blog for the links to the GAO resources.
Update: For a critique of the Times article’s conclusions, check out this Walter Olson post and this subsequent post over at the PointofLaw.com.

What’s going on at Brinker International?

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Another high-ranking executive at Dallas-based restaurant company Brinker International, Inc. resigned earlier this week. The resignation was the third of a high-ranking Brinker executive in the past month.
The latest Brinker executive to go was Wilson Craft, a 20 year veteran with Brinker who was most recently president of Brinker’s Chili’s Grill & Bar, which is Brinker’s flagship restaurant chain. Chili’s chief operating officer and the president of Romano’s Macaroni Grill, Brinker’s second-largest restaurant chain, resigned last month.
Brinker has long been one of the most successful restaurant companies in Texas, but the competitive pressures in that industry are absolutely brutal at this time. Other Brinker’s chains — none of which are close to as popular as Chili’s or Macaroni Grill — are Maggiano’s Little Italy, On The Border Mexican Grill & Cantina, Corner Bakery Cafe, Big Bowl Asian Kitchen and Rockfish Seafood Grill.

Continental wins right to fly non-stop to China

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The U.S. Transportation Department announced yesterday that Houston-based Continental Airlines and Dallas-based AMR Corp.’s American Airlines have won a lively contest within the U.S. airline industry to offer additional non-stop flights to China.
Continental will offer a daily, 13-hour nonstop flight to Beijing from Newark Liberty International Airport later this year while American will offer daily nonstop flights from Chicago to Shanghai beginning in April, 2006. Northwest Airlines Corp. and UAL Corp.’s United Airlines are the other U.S. airlines that are authorized to fly routes to the country.
Cargo shipments carrying goods from China to the U.S. have been leading the increase in air service between the two countries over the past several years. However, according to the DOT, passenger traffic between the U.S. and China rose over 35% from 2003 through November 2004. So, the new flights are consistent with Continental’s business strategy of emphasizing profitable international flights over less profitable domestic routes.