Dec. 12, 2002 – One of the most successful litigation lawyers in the territory defended multimillion-dollar jury awards in her remarks before the Rotary Club of St. Thomas Thursday — and took flak for it from some in the audience who said the local insurance industry has been crippled by such awards.
St. Croix attorney Lee Rohn was introduced as having appealed more big-dollar lawsuits to the 3rd Circuit Court of Appeals than any other attorney in a district encompassing Delaware, New Jersey, Pennsylvania and the Virgin Islands.
But she told the Rotarians that such liability cases are not to blame for insurance that's both expensive and hard to come by. Instead, she said, the fault lies with the insurers themselves, with bad investments, with lawyers who exercise poor judgment, and with professions that refuse to police the bad actors within their ranks.
"The real correlation is between insurance company investments and activity on the stock market," Rohn said, citing a study by the national Center for Justice & Democracy which found no correlation between jury awards and insurance rates.
The same goes for the reinsurers — companies that insure the insurance companies. After heavily investing in the bond market, Rohn said, reinsurers suffered their own financial losses when the market began to soften.
She criticized the insurance industry as one where clients pay in advance of their needs and then get "punished" when a need arises. Industry claims of an insurance crisis aren't new, she said, citing similar cries heard in the 1960s, '70s and '80s. Over the years, she said, insurance premiums have skyrocketed, but the size of awards for malpractice and personal injury cases have remained the same.
Reacting from the audience, insurance company owner Jim Tunick said the industry may have been reckless with investments in the days when the stock market was robust. But he called some of Rohn's comments "irresponsible" and asked, "Why are you protesting tort reform when you are in the position you're in?"
Tort reform is one avenue for governments to curb abuses of the legal system by lawyers and clients bringing civil suits. An example in the Virgin Islands is the medical malpractice caps enacted in the 1970s. Gov. Charles W. Turnbull reportedly is assembling a group to look at how the system is working.
Rohn said tort reform wouldn't be necessary if V.I. lawyers would properly assess the value of the liability lawsuits. She recalled one case she brought against a large local retailer which she said could have been settled for around $35,000. But the defense attorney representing the company refused to settle, and the case went to trial and the jury awarded $650,000.
It was an argument an attorney in the audience, Adriane Dudley, found hard to swallow. More goes into a lawyer's decision to fight or settle than considerations driven by ego, she said — such as the risks in letting the jury decide, whether the company has insurance, and the cost of doing business in the territory.
Companies that don't have insurance at all tend to settle and will sometimes do so in high-dollar figures, Dudley said. Because of the high cost and sometimes scarcity of insurance locally, there are more than just mom-and-pop stores going without these days, she said. "The insurance market is drying up. It's not completely dried up, but it's drying up," she said.
Dudley also charged that the Center for Justice & Democracy is neither impartial nor completely in the public interest, since it favors jury awards in personal liability cases. (For more information about the organization, visit the CJ&D Web site.)
In response to the criticism of her comments, Rohn said no one in the audience could prove the insurance industry has suffered more from its own financial misjudgments than from payouts on liability cases. "I think its important that we get a dialogue started," she said.
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