I recently watched the movie version of John Grisham’s “The Rainmaker”, and I liked the move so much, that I went to Half Price Books and purchased the novel that day. I thought that it presented the trials and tribulations of being a recent law school graduate, trying to make it as a solo-practicing lawyer quite well. I could relate to the fears that the main character Rudy Baylor must overcome as a newly practicing attorney. Going to court is pretty intimidating at first, especially when you are all by yourself, and don’t have the support of a firm with more experienced attorneys to bail you out if you get in over your head. I could also relate to the financial difficulties of the main character, when you don’t necessarily know when and where your next fee is going to come from, and you’ve got bills to pay. As a result, I read this book in 3 days, and enjoyed it immensely.
Although I generally could relate to Rudy Baylor, a couple of things that he did really bothered me. First of all, at the beginning of the novel, a lot of his behavior seems to be motivated by either greed or envy, especially the later. He seemed to hold a lot of resentment towards a lot of different people, and he acted on this resentment from time to time, such as when he destroyed property at a law office because they wouldn’t hire him.
The other thing that really bothered me were his improper ex parte communications with the trial judge throughout the novel. Before I explain what an ex parte communication is, let me explain the basic outline of the plot. The major conflict in the novel is a lawsuit Rudy Baylor files against a very corrupt insurance company, who has denied the claim of his client, who is dying of leukemia. The insurance company has wrongfully denied his client’s claim, and now they file suit, although it is now too late for the client to get the bone marrow transplant that would have saved his life. An ex parte communication is a generally prohibited communication between a party and/or their attorney or representative and the judge when the opposing party, their attorney and/or their representative is not participating in the communication regarding some substantive issue regarding the case before the judge. I am always careful not to engage in ex parte communications with a trial judge because it would get me in trouble, but I also agree that it is, ethically, totally improper, and I think that it can rightfully be prohibited. Our System is an adversarial system, where both parties argue their sides of the case, and then an impartial third party (the judge and/or jury) decides who is right and who is wrong. This system best ensures that the truth will prevail because each side has an incentive to makes its best argument to the judge or jury. Justice should be “blind” in the sense that the winner of a trial should not be based on personal contacts or friendships between a party’s lawyer and the judge, because we are a “nation of laws, not of men”. Ex parte communication would corrupt this adversarial system by allowing you to argue your side of the case without the judge hearing from the other side on the matter, which would thwart a just outcome.
Despite the fact that ex parte communication with the trial judge is improper, the main character, Rudy Baylor, does it over and over again throughout the novel. For instance, in Chapter 26, Rudy Baylor goes to Judge Tyrone Kipler’s office and explains to him why the case should be “fast tracked”, and the insurance company’s lawyer(s) are not there. In Chapter 34, Rudy Baylor, Judge Kipler and the insurance company’s lawyer are having a phone conference over a discovery dispute during a deposition, and the judge orders the insurance company lawyer off the phone, so that he can talk to Rudy Baylor alone. The judge is also hardly what I’d call impartial, since he clearly wants Rudy Baylor to win, and does everything he can to make this happen in the novel, although I agree that, given the set of facts in the novel, Rudy Baylor probably should win.
I agree that, morally, the executives at the fictional insurance company (“Great Benefit”) did something wrong for the simple fact that they had a policy of denying all insurance claims without regard of their merit under the insurance contract. At some point in the novel, it is revealed that the insurance company instructed its employees in their procedures manual to initially deny all claims. I think that this would be fraud. Generally, if you enter into a contract with someone with the present intention of never performing under the contract, then I believe it is considered fraud. While it is not fraud to default on the contract at some later time, so long as you intended to perform at the time you entered into the contract, if you intend to default on the contract at the time you entered into it, then that is fraud. Regardless of the present state of law, I think that it should be fraud, because you are, in essence, taking values from someone, without ever intending to reciprocate. In essence, you are conning them out of values that they wouldn’t part with, if they knew that you didn’t plan to live up to your end of the agreement. Great Benefit was incurring a debt, or obligation, when it accepted people’s insurance premiums. By deciding it was going to initially deny all claims, its managers had a present intention not to pay out under the insurance contract. I think that any corporate executive who instructed the corporation’s employees to deny all claims, regardless of the fact that some of the claims were legitimately covered under the policy, would be guilty of the criminal act of fraud, and could be jailed and/or fined.
Furthermore, if someone did die in the scenario outlined in Grisham’s book, then I think the insurance company executives responsible for the fraudulent scheme to initially deny all claims, despite some of them being meritorious, might be guilty of manslaughter, because they engaged in a reckless act (denying claims regardless of the fact that they were supposed to be covered under the insurance contract), which resulted in the death of an insured person.
I would also note that I do not consider the scenario outlined in the book to be very likely to happen under pure capitalism. I note this fact because I think that Grisham’s probable agenda in writing “The Rainmaker” is to push for Canadian-style socialized medicine. I had never read a “legal thriller” before I read “The Rainmaker” last week. (I have always preferred science fiction novels.) But, I have seen several of the movie versions of Grisham’s novels, and they always have a socialist political-viewpoint. So, I suspect that the message of “The Rainmaker” was: “Private insurance companies are evil because capitalism is evil, so we need socialized medicine, similar to the Canadian version.” However, Grisham is mistaken if he thinks the current American health care system is a free market.
The American medical system is not a free market for several reasons, some of which I will now note. First, Medicare and Medicade drive up prices by providing free medical care to people, who then have no incentive to economize on their use of health care. Second, there probably is no industry more regulated than the health care industry. Patients aren’t free to choose who will provide them with health care thanks to medical licensure statutes. This means they must go to a government-approved doctor. Licensure statutes artificially limit supply by arbitrarily limiting the number of medical practitioners, thereby driving up prices. Patients aren’t free to choose which drugs they will consume, since they must get permission from a government-approved doctor before they can purchase so-called “prescription drugs” from a government-approved pharmacist. Once again, licensure statutes for pharmacists artificially limit supply and drive up prices. When it comes to drugs and medical devices, the government won’t allow innovators to market new drugs and medical products without government approval from the Food and Drug Administration, which can take years. Furthermore, taxes are structured to favor third-party payment of health care, because the government favors employer-provided health insurance by giving companies a tax break for providing it, but if employees want to get their own health insurance, they don’t get the same tax break. This also tends to make people dependent on their employer for continued health-coverage. Additionally, although I think this is less of a problem now, thanks to tort reform, doctor’s malpractice insurance expenses were outrageously high because of arbitrarily high punitive damages awards.
I tend to think that punitive damages awards should be capped. (In a civil suit, “punitive damages” are not the damages a plaintiff receives to repair the damage done to him by the defendant, they are an extra money award given to the plaintiff, just to punish the defendant’s wrongful conduct.) In the book, the fictional insurance company is hit with a massive punitive damages award, but I’m not sure that this is the best way to deal with the problem. I think that the management responsible for the fraudulent scheme in the novel would need to have been removed. The stockholders are probably not responsible at all, yet, they are the ones being punished with a high civil punitive damages award. I think it would make more sense to allow the criminal justice system to handle punishment, rather than the civil courts. As I said earlier, the corporate executives in the novel would probably be guilty of fraud and manslaughter for instituting a policy of denying all claims, which resulted in death.
I also find it doubtful that someone would actually not be able to receive treatment for leukemia under capitalism, even if they had no health insurance, and the treatment cost $200,000, which is how much the bone marrow transplant that the fictional insurance company refuses to pay for in the novel costs. First, I would note that I am uncertain what the cost of $200,000 reflects. Is the $200,000 cost mostly just to cover the “R&D costs” (“Research and Development”) of the procedure, or the actual costs of labor and materials? If the $200,000 cost is mostly to cover the costs of the R&D that went into developing the intellectual property for the procedure, then it would be possible under capitalism for the owners of the intellectual property to give a massive discount to those who actually couldn’t afford the procedure due to poverty. For instance, if $150,000 of the cost of the procedure is to help cover the per-unit costs of the R&D that went into developing the patents and other intellectual property, while only $50,000 represents the cost of labor and materials, then the manufacturer could give a discount to this particular patient, after doing an audit of his personal finances to confirm that he is in fact poor. Even if they could only charge this particular patient, say, $60,000, they would still be making $10,000 on the sale, which is $10,000 they otherwise wouldn’t have gotten. As long as they can perform a financial audit of the patient to determine that he isn’t lying about being poor, then the medical provider can charge rich people more, and poor people less, for the same procedure, and this would likely be the most profitable business plan they could adopt. For instance, with most pharmaceuticals, the manufacturing costs for the drug are extremely low. The reason they cost so much is to cover the expenses of R&D that went into the drug. This means that drug manufacturers could reduce the sales price for those who are genuinely poor, and charge rich people more, without much difficulty, and they would have an incentive to do so, because even if they make a lower profit on the drug for that particular customer, it is still a profit.
Even assuming that the $200,000 cost of a bone marrow transplant is mostly to cover the cost of labor and materials, rather than the cost of research and development, I think that the chances of a poor person getting a loan to cover the costs would be very good under capitalism. According to the novel, the chances of long-term success for the bone marrow transplant were around 90%. The character with leukemia is in his early 20’s, which means that, but for his leukemia, he would probably live to be about 75. So, his chances are 90% that he will live for another 50 years. This is a pretty good bet for an investor. Assume that he works for 50 years and that he can make about $30,000 per year on average, which is about $15 per hour, working 40 hours per week, 50 weeks out of the year. (This is an extremely low-ball figure in my opinion.) This means he would make $1,500,000 over 50 years. Assume he can live off of $15,000 per year ($11,000 is the approximate US poverty line). Then, he can pay $15,000 towards the $200,000 loan every year. Say that $10,000 of the $15,000 he pays every year is interest. This means the loan would be paid off in less than 40 years. The average yearly interest rate the creditor would get would be about 5% under this payment plan. (Actually, it would be a higher interest rate, since he is paying $5,000 towards principle every year, which means principle is being reduced every year, but I can’t remember how to figure the actual average interest rate over 40 years).
Five percent APR is about what you would pay towards a mortgage on a house. Certainly if someone is willing to give you a loan at 5% for a house, they would be willing to give you a loan at 5% for an operation to save your life, especially if the bankruptcy laws said that such a loan is non-dischargeable and they are allowed to garnish your wages and seize all assets if you default on the loan.
This all assumes that there are no private charities that would help a poor person with leukemia (doubtful), and that nobody else, such as his parents, friends, or family members, would be willing to sign a contract making themselves legally responsible for paying part of the loan, which is also a doubtful premise -I would certainly be willing to pay a portion of a friend or immediate family member’s loan for an operation to save their life.
This also assumes that it would, in fact, cost $200,000 under pure capitalism for a bone marrow transplant. I would note that capitalism creates the social conditions of freedom necessary for technological innovation, and reductions in the costs of products. For instance, fetal stem cell research creates the promise that we will soon be able to grow cloned organs and tissues in the lab, which will be a perfect match to your own body’s genetic code, thereby eliminating the risk of tissue rejection. But, every time medical innovators, who are the true “rainmakers”, get hit with massive punitive damages awards in court, or a new regulation by the government, technological innovation tends to dry up.
