Grading Our Justice System, Part 2: McDonald’s: The Cup of Coffee that Just Keeps Spilling.

Like a zombie stubbornly shambling toward you, the McDonald’s coffee story refuses to go down, despite the fact that the real case is far different from what people have heard.  A respected journalism professor has called it one of the most misunderstood stories of our time.

79-year-old Stella Liebeck bought a cup of takeout coffee at a McDonald’s drive-thru in Albuquerque and spilled it on her lap. She sued McDonald’s and a jury awarded her nearly $3 million in punitive damages for the burns she suffered.

Typical reaction: Isn’t coffee supposed to be hot? And McDonald’s didn’t pour the coffee on her, she spilled it on herself! Besides, she was driving the car and wasn’t paying attention.

Now for the facts:

Mrs. Liebeck was not driving when her coffee spilled, nor was the car she was in moving. She was the passenger in her nephew’s car, that was stopped in the parking lot of the McDonald’s where she bought the coffee. She had the cup between her knees while removing the lid to add cream and sugar when the cup tipped over and spilled the entire contents on her lap.

The coffee was not just “hot,” but dangerously hot. McDonald’s corporate policy was to serve it at a temperature that could cause serious burns in seconds. Mrs. Liebeck’s injuries were far from frivolous. She was wearing sweatpants that absorbed the coffee and kept it against her skin. She suffered third-degree burns (the most serious kind) and required skin grafts on her inner thighs and elsewhere.

Liebeck’s case was far from an isolated event. McDonald’s had received more than 700 previous reports of injury from its coffee, including reports of third-degree burns, and had paid settlements in some cases.

Mrs. Liebeck offered to settle the case for $20,000 to cover her medical expenses and lost income. But McDonald’s never offered more than $800, so the case went to trial. The jury found Mrs. Liebeck to be partially at fault for her injuries, reducing the compensation for her injuries accordingly. But the jury’s punitive damages award made headlines — upset by McDonald’s unwillingness to correct a policy despite hundreds of people suffering injuries, they awarded Liebeck the equivalent of two days’ worth of revenue from coffee sales for the restaurant chain. That wasn’t, however, the end of it. The original punitive damage award was ultimately reduced by more than 80 percent by the judge. And, to avoid what likely would have been years of appeals, Mrs. Liebeck and McDonald’s later reached a confidential settlement.

Here is some of the evidence the jury heard during the trial: 

McDonald’s Operations Manual required the franchisee to hold its coffee at 180 to 190 degrees Fahrenheit;

Every one of McDonald’s competitors tested served their coffee between 30-40 degrees cooler.

Coffee as hot as McDonald’s, if spilled, causes third-degree burns (the worst kind of burn) in three to seven seconds;

Third-degree burns do not heal without skin grafting, debridement and whirlpool treatments that cost tens of thousands of dollars and result in permanent disfigurement, extreme pain and disability of the victim for many months, and in some cases, years;

The chairman of the department of mechanical engineering and bio-mechanical engineering at the University of Texas testified that this risk of harm is unacceptable, as did a widely recognized expert on burns, the editor in chief of the leading scholarly publication in the specialty, the Journal of Burn Care and Rehabilitation;

McDonald’s admitted that it has known about the risk of serious burns from its scalding hot coffee for more than 10 years — the risk was brought to its attention through numerous other claims and suits, to no avail;

In the 10 years prior to the case, McDonald’s coffee burned more than 700 people, many receiving severe burns to the genital area, perineum, inner thighs, and buttocks; 

Not only men and women, but also children and infants, have been burned by McDonald’s scalding hot coffee, in some instances due to inadvertent spillage by McDonald’s employees;

McDonald’s admitted at trial that its coffee is “not fit for consumption” at the time it’s sold because it causes severe scalds if spilled or drunk;

McDonald’s admitted at trial that consumers are unaware of the extent of the risk of serious burns from spilled coffee served at McDonald’s then required temperature;

McDonald’s admitted that it did not warn customers of the nature and extent of this risk and could offer no explanation as to why it did not;

Liebeck’s treating physician testified that her injury was one of the worst scald burns he had ever seen.

Moreover, the Shriner’s Burn Institute in Cincinnati had published warnings to the franchise food industry that its members were unnecessarily causing serious scald burns by serving beverages above 130 degrees Fahrenheit.

In refusing to grant a new trial in the case, Judge Robert Scott called McDonald’s behavior “callous.”

In its ruling in the punitive damages phase, the Court found that McDonald’s had engaged in “willful, wanton, and reckless” behavior.

An expert witness for the company testified that the number of burns was insignificant compared to the billions of cups of coffee the company served each year.

At least one juror later told the Wall Street Journal she thought the company wasn’t taking the injuries seriously. To the corporate restaurant giant those 700 injury cases caused by hot coffee seemed relatively rare compared to the millions of cups of coffee served. But, the juror noted, “there was a person behind every number and I don’t think the corporation was attaching enough importance to that.”

In a story about the case published shortly after the verdict was delivered, one of the jurors said over the course of the trial he came to realize the case was about “callous disregard for the safety of the people.” Another juror said “the facts were so overwhelmingly against the company.”

That’s because those jurors were able to hear all the facts — including those presented by McDonald’s — and see the extent of Mrs. Liebeck’s injuries. Ask anyone who criticizes the case as a “frivolous lawsuit” that resulted in “jackpot justice” if they have done the same.

Jury Duty

I consider trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution.  -Thomas Jefferson

Jury duty is a privilege and an obligation. If you are called, go serve with pride. Who knows when it may be you who needs a jury on your side.

Eeny Meeny Miny Moe… Who should pay the medical bills?

When you go for medical treatment, the staff always asks for a copy of your health insurance information and then they bill your health insurance. If you are injured, the insurance process is very different. The medical facility not only wants to know who your health insurer is, they want to know about any other insurers: worker’s compensation, the insurer for the person who hit you, your automobile insurance. Why do the facilities ask for this information? The medical facility wants to figure out  if any other types of insurance may be applicable. For example, worker’s compensation, automobile insurance (yours or the person who injured you). They want to know all possible insurers to see who will pay the most on their bill. If you have ever looked at your explanation of benefits from your health insurer after a visit with your doctor, you will see that what you were billed and what was paid by your health insurer are often two different amounts. Health insurers and medical providers have negotiated amounts that they will pay and accept for various treatments/procedures. When an insured is injured and other insurers are involved, medical providers use that as an opportunity to try to get out of the negotiated reimbursement rate they agreed upon with the health insurer. The medical provider will attempt to bill insurers with whom they may not have agreements. The lengths to which these medical providers go in order to extract the largest payment continues to expand. For example, our office had a recent case in which a senior citizen who was riding in a car that was struck by a drunk driver was hospitalized for several weeks. Her bill from Summa was over $100,000. The lady was on Medicare and had a supplemental insurance policy with Medical Mutual. All of the doctors and various outsider medical providers involved in her care billed Medicare and Medical Mutual and were paid. 

Summa, however, elected not to bill Medicare and instead tracked down the responsible auto insurance company and sent their bill to an entity called American Medical Recovery and had them claim a lien on the proceeds from the insurance company of the person responsible for the collision. The responsible insurance company had a $100,000 policy limit. The responsible insurance company ultimately offered to settle their case for $100,000 (their policy limits). As there was no other insurance coverage available, the $100,000 limits were accepted. Then the responsible insurance company said, “Should we just send the check for $100,000 to American Medical Recovery since they claimed a lien in excess of $100,000?” Obviously, that would leave our client with nothing and would reward Summa for their creativity in refusing to accept the health insurance coverage that our client had at the time.

Let’s examine the legal issues here. Ohio has a statute that states healthcare providers must bill health insurers. You would think that statute would resolve the issue. By law Summa must bill the healthcare insurer, however, the Ohio Supreme Court in their own infinite wisdom has ruled otherwise. Thumbing their collective noses at the statute, the court recently held that a healthcare provider may bill whomever they like but can also collect from whomever they like. According to the Ohio Supreme Court, Summa’s action is perfectly legitimate. If our firm had adopted this position, our client would have received nothing. Summa would be paid $100,000, and our client the victim of a drunk driver who left her with some permanent injuries would get nothing. Well, that won’t happen on our watch. The thought of that prospect offends the common sense of justice. Decisions like this roll out of the Ohio Supreme Court on a regular basis and the average Ohio citizen has no idea of the implications of the rulings made by this court. Supreme Court decisions are set in the abstract and are frequently not easily grasped by voters.

Citizens receive a very rude awakening when they are confronted by an incident in which they find themselves injured and subsequently incur a large amount of medical bills. Ultimately, we must  blame ourselves, the Ohio electorate for electing politicians and this includes most judges or justices. Many of these politicians gained their positions with the financial backing of big business, the insurance industry and/or a special interest group. We as the electorate choose our judicial candidates by listening to sound bites on television created as advertising campaigns that are bought and paid for by a who’s who in the insurance industry.

Citizens who don’t vote, have no right to complain. Citizens who do vote need to look carefully at those seeking election. Who is financing their campaign? What is the agenda of those financing the campaign? What is the agenda of the candidate? It is our obligation as voters to pay attention to who we elect and what they do.

As Justice Warriors for our clients we are always looking for laws (tools) to use in our quest to seek justice for our clients. Help us help you. Vote for those who truly care about people.

Ohio Legislature finally represents the people not big money

The Ohio Legislature recently passed legislation beneficial for injury victims. If we represented you in the past, you may recall at the conclusion of the case, we discussed the various parties requiring payment. Health insurers, auto insurers and disability insurers all have their hand out to get any money back they paid to an injury victim. In the past insurance companies did not have the right to be reimbursed. Changes in insurance company contracts and legislation ushered in an era of subrogation, a right on behalf of insurers to “re-coop” their expenses, and obtain reimbursement, from their insured, when their insured recovered money for an injury. We think it’s unconscionable that insured’s have to pay for coverage for unforeseen events and then insurers on top of their hefty profits try to seek reimbursement for what they were obligated to pay.

Has anyone ever been refunded the premiums they paid for coverage when an insurance company gets reimbursed? Contact our office if an insurance company willingly refunded money. When subrogation and reimbursement policies started, the Ohio Supreme Court developed a Make Whole Doctrine.  Quite simply it states that before any insurance company can seek money the injured party has to be fully compensated. We think that only seems right.  The insurance companies, however, were not happy. They demanded the first dollar and every dollar until they were fully paid.  Then if any money remains, the injured party could retain what was left. 

The insurance industry poured a great deal of money into judicial and other political campaigns to assure their position carried the day. The Make Whole Doctrine was cast aside and the law of the land became: insurance companies first. This created scenarios where people who sustained severe injuries and huge medical bills recovered nothing because the health insurer took all of the available  recovery leaving the injured party with a shattered life, inability to work and no compensation. We are shocked that insurance companies could look at an injured party and take all the money even though the victim has to live with a horrible injury.  They argue that this policy helps keep premiums down.  Have any premiums gone down?

The unacknowledged problem with that approach is that society will pay the tab for the injured person to be on social security, welfare, Medicaid and Medicare while the health insurance industry executives pull down big salaries and donate big money into elections.

So what has our legislature done recently to ameliorate this problem?

They passed House Bill 64, which provides that insurance companies can only receive their proportionate share of the recovered funds available when the injured party is confronted with a less than full recovery.  The law went into effect this fall. It is not nearly as good as the Make Whole Doctrine, but it is a far sight better than what has been the law. After about a decade and a half of the law consistently and repeatedly diminishing the rights and recovery abilities of injured people there is finally a change for the good. The insurance industry has fought this bill. Several states have outright banned subrogation and reimbursement. Ohio is behind the curve but at least we have finally turned the corner.