February 27th, 2023

Warren Buffett’s Myth of “Free Money” (And how to stop it)

Warren Buffett, aka The Oracle of Omaha

In his annual letter to shareholders this past weekend, Warren Buffett referred to a portion of Berkshire Hathway’s money as “cost free.” He previously has referred to some of Berkshire’s cash as “free money” so this is nothing new.

That “free money” — which I will explain in a moment is not really free, hence the title of this post — is from the insurance businesses that Berkshire owns.

As a brief ‘splainer if you don’t want to Google “Warren Buffett Free Money Insurance:” The insurance biz makes money two ways. The first is by taking your premiums and then years later paying out claims. If the underwriters are doing their jobs well, an insurance business will take in for example, $100 in premiums and pay out $90 in claims and operating costs.

This is a great business, because unlike making widgets where you have to first spend for the raw materials before making and selling the widget, with insurance premiums you actually get the revenue up front and pay later.

Which brings us to the second part of the insurance business, which Buffett calls the “free” part. What happens to those premiums in the interim? Known as the float, that money gets invested. And if you are a conglomerate like Berkshire, you have plenty of businesses to invest in.

So even if an insurer’s underwriters fail at their jobs, and they pay out $105 in costs and claims for each $100 in premiums, they still may have profited with an additional $30 or more in “free” money that was invested in the intervening years.

As Buffett explained in 2019:

If our premiums exceed the total of our expenses and eventual losses, our insurance operation registers an underwriting profit that adds to the investment income the float produces. When such a profit is earned, we enjoy the use of free money – and, better yet, get paid for holding it.

How much they actually make all depends on how long they can invest that float. Delay, delay, delay is, therefore, sometimes in the best interests of the insurance company.

But as I said, the money isn’t free. It has a cost. And that cost is borne by the people that lost their homes to a fire, flood or hurricane (BH owns property insurers), or were injured in car collisions (BH owns Geico), or injured due to medical malpractice (BH owns MLMIC) .

If a claim is delayed because of bad faith on the part of the insurer, the claimant effectively becomes the banker for Berkshire Hathaway. Buffett gets to keep using money to which the claimants are entitled. For free.

A brief example from one of my own cases so you can see it in practice, but any personal injury attorney can relate similar ones:

Simple car collision. Easy liability. Significant injuries. The injured can’t work. The insurance coverage is only $100K. Geico offers $4K eight months after the collision. Hey, maybe the injured is desperate and Geico won’t need to even pay the claim? Five months later they are big sports and increase the offer to $5K. Eighteen months after initial offer they are $12.5K.

Without dragging the whole story out, it takes Geico almost 3 ½ years from its first offer to tender its $100K policy (and over four years from date of collision). Free money? For Berkshire, yes. They were able to invest the money the whole time. But that is money that should have been in the hands of the injured claimant.

Given that Berkshire as a whole has had average annual returns of 20% since 1965, it’s easy to see how the use of that money can pile up — for Berkshire. But not for the injured person that has to lean on friends and relatives to get by.

The problem, here in New York, is that we don’t have a statute that explicitly deals with bad faith insurance tactics. Other states do. Just not New York.

To pursue a bad faith claim in an auto case for example, one must first take a verdict in excess of the insurance policy (years after the injury has taken place) and then the insured person against whom that excess verdict was taken (previously known as the defendant) can sue their own insurance carrier.

But the people who were actually injured can’t do it. They have to hope that the insured will get on board with this. And if the insured is judgment-proof, they may just walk away and say tough noogies.

New York, it should be clear, needs bad faith legislation to prevent this abuse — which will stop insurance companies from using bad faith tactics to stall the payment of claims.

The pandemic has made things worse, with extensive backlogs in the courthouse. As I noted in 2021, a year into the pandemic, if we had a decent bad faith statute many of these delays would vanish.

Even Alabama handles bath faith claims better than us.

Warren Buffett’s Geico, you will not be surprised to learn, wants immunity from bad faith claims. They want the “free money” to continue.


February 15th, 2023

Pediatric Gender Transition and Medical Malpractice (Updated)

Reading the article from Jamie Reed was shocking: I Thought I Was Saving Trans Kids. Now I’m Blowing the Whistle.

This was someone that worked as a case manager for a gender transition clinic dealing with adolescents for four years — and no one works in such an environment by accident as is clear by her intro — and finally felt the need to rip off the band aid for this particular clinic. It isn’t pretty and I urge you to read it. This is The Washington University Transgender Center at St. Louis Children’s Hospital, so by superficial appearances not a fly-by-night operation.

Now before I go into a couple of the specifics that leaped off the page at me, I stress that this blog is not about the pros/cons of transgender treatments, and most certainly not about culture wars. It isn’t what I do here, as should be clear from the blog’s title for the past 17 years.

It’s about the doctors who were doing the treating.

The clinic, Reed writes, wasn’t always as large as it is now:

Until 2015 or so, a very small number of these boys comprised the population of pediatric gender dysphoria cases. Then, across the Western world, there began to be a dramatic increase in a new population: Teenage girls, many with no previous history of gender distress, suddenly declared they were transgender and demanded immediate treatment with testosterone. 

Given the amount of press that transgender issues have contributed to, it likely isn’t a surprise that more kids are consulting with them. They went from 10 calls a month to 50, and from predominantly boys to predominantly girls.

Many of these kids, as Reed writes, were not suffering from gender dysphoria as an isolated issue, but had other comorbidities:

The girls who came to us had many comorbidities: depression, anxiety, ADHD, eating disorders, obesity. Many were diagnosed with autism, or had autism-like symptoms. A report last year on a British pediatric transgender center found that about one-third of the patients referred there were on the autism spectrum.

Frequently, our patients declared they had disorders that no one believed they had. We had patients who said they had Tourette syndrome (but they didn’t); that they had tic disorders (but they didn’t); that they had multiple personalities (but they didn’t). 

Now I think anyone reading the article to this point — assuming its accuracy — would probably agree that these children should probably have a pretty darn good psychiatric/psychologic evaluation before undergoing treatments that could be irreversible. So what kind of therapy/evaluation was required?

To begin transitioning, the girls needed a letter of support from a therapist—usually one we recommended—who they had to see only once or twice for the green light. To make it more efficient for the therapists, we offered them a template for how to write a letter in support of transition. The next stop was a single visit to the endocrinologist for a testosterone prescription. 

That’s all it took. 

Once or twice. That was it. For a girl that may have serious other comorbidities to take testosterone that may make her sterile?

People make mistakes in life as adults, never mind as children. There is, for example, a 50% divorce rate for people who swore they would be happy forever, and people who join cults. And the history of humanity is replete with people talking themselves into doing awful things to others, convinced they are doing the right thing. You will find this in almost any war or atrocity for example. The human brain can be quite malleable.

So in order to fulfill the doctors’ oath to “Do no harm,” you would think serious evaluations would be done for adults, and even more extensively for children.

And some serious education because, as Reed writes, many young patients (or their parents) are not well-educated on the subject. It’s hard to give an informed consent without being properly informed.

What are the odds that a jury would find that such minimal evaluation — if that is all that took place — would constitute a departure from customary and usual practice? High. Very, very high.

But — and I know this is tough to believe — it actually gets worse. Some of these kids were psychiatric referrals. And no matter the condition, the treatment was the same — gender transition:

Besides teenage girls, another new group was referred to us: young people from the inpatient psychiatric unit, or the emergency department, of St. Louis Children’s Hospital. The mental health of these kids was deeply concerning—there were diagnoses like schizophrenia, PTSD, bipolar disorder, and more. Often they were already on a fistful of pharmaceuticals.

This was tragic, but unsurprising given the profound trauma some had been through. Yet no matter how much suffering or pain a child had endured, or how little treatment and love they had received, our doctors viewed gender transition—even with all the expense and hardship it entailed—as the solution.

Another thing that will come as no surprise is that many of those that began gender transition changed their mind. This is hardly shocking given the tender years of the patients, minimal evaluations and oft-times serious psychological problems.

You would think that the reasons for a change of mind would be really, really important. Gaining knowledge — from both successes and failures — is a critical piece of science so that fewer errors occur in the future. It’s how medicine marches forward.

But obtaining knowledge was discouraged by at least one of the doctors:

Because I was the main intake person, I had the broadest perspective on our existing and prospective patients. In 2019, a new group of people appeared on my radar: desisters and detransitioners. Desisters choose not to go through with a transition. Detransitioners are transgender people who decide to return to their birth gender. 

The one colleague with whom I was able to share my concerns agreed with me that we should be tracking desistance and detransition. We thought the doctors would want to collect and understand this data in order to figure out what they had missed.

We were wrong. One doctor wondered aloud why he would spend time on someone who was no longer his patient. 

While Reed’s piece is filled with a variety of horror stories about the young patients, this part really struck me as the worst, as there is a world of difference between anecdotes and data. Anyone can find an anecdote to “prove” any point, but the bigger picture of what data shows is the way that science (and good government) advances for the better. Here, the collection of data was discouraged.

So the same mistakes would be made over and over.

As noted by Reed in closing about the experimentation on youth:

Experiments are supposed to be carefully designed. Hypotheses are supposed to be tested ethically. The doctors I worked alongside at the Transgender Center said frequently about the treatment of our patients: “We are building the plane while we are flying it.” No one should be a passenger on that kind of aircraft.

A final note on my own bias in writing this. My dad practiced medical malpractice law for 40+ years. He led a malpractice department of 10 attorneys. I heard, as a kid at the dining room table, many an opening statement being practiced by my father. He saw all the screw-ups. I continue to see them now.

For reasons that should be obvious, he was opposed to aggressive medical treatments unless necessary. When I had my wisdom teeth pulled in the 70s, he said “no gas.” Dentists were not anesthesiologists and he had seen the problems. (I got valium and novocaine and can still hear the crunch of the last tooth coming out.)

Reed’s article reads like a throwback to an era of non-scientific and experimental surgical practices, from leaches, to cough syrup with morphine and alcohol, to cigarettes for asthma.

I’m not going to sit here and say a pediatric gender transition should never be done, as I have not studied the issue and read the science.

But I will say that, if the article is accurate, that is is being done in a wholly unscientific way, without proper evaluations, and that many kids will be hurt as a result. And that proceeding in such fashion would make a very strong case for medical malpractice if the kids change their mind and irreversible changes have occurred.

Updated 3/6/23: The St. Louis Post-Dispatch did an article on Reed’s piece, with some people calling into question her comments: Parents Push Back on Allegations Against St. Louis Transgender Center. ‘I’m baffled.’


February 8th, 2023

Courts Should Keep Virtual Conferences

Supreme Court building, Brooklyn, New York

Three years ago a public health emergency was declared on a federal level. I was picking a jury in the Bronx as stories of the virus spread, and I quickly settled and got the hell out of there. I knew there was no way I would make it to verdict, and assumed it would be a long time before I would be able to resume. It was my last live court appearance before the world shut down.

That emergency will end on May 11th.

Since then the courts and lawyers have learned to navigate the world of litigation in a virtual manner. As the emergency sunsets, we should now utilize the new tools that we have all learned to use. It will be better for lawyers, clients and the courts.

In particular, this applies to the many, many court conferences that lawyers are compelled to attend that are better handled virtually. Some of these were little more than going to court, checking in in a 100+ case calendar call, and getting a new date to come back. Seriously.

Back in November 2008 I bemoaned the vast waste of lawyer resources by looking at just one Brooklyn courtroom, and conservatively estimated that $10M/year was being wasted there.

The majority of the time in that particular room was dedicated to preliminary conferences, compliance conferences, and discovery motions. Easily 95% of the issues were worked out by lawyers in the hallways, and then proposed orders submitted for signature. Hundreds of attorneys would file through this courtroom each day, and the 10 minutes of work you needed to do would take a few hours.

We need not go back to those days. There is no compelling reason that lawyers cannot be forced to “meet and confer” by phone to work things out. While it’s the standard in federal court, it was rarely done in state court.

Live court appearances have their place, of course, especially for esoteric motions (rare in the personal injury field where most are routine claims that the other side is simply failing to comply with a prior order). I would happily appear for summary judgment motions, pre-trial conferences and settlement discussions. But I do not want to come because the case is on for trial the first time, just to get an adjourned date three months away.

Unless you bill by the hour, no one wants to walk into a courtroom and see 100 lawyers waiting. Or 50. Or even a dozen.

As we pull out out of the pandemic our courts ought to appreciate that forcing lawyers to work stuff out that can be worked out in the hallway will also save them time. We have new tools and new ways of doing things. We can do this. Those tools and skills ought not be squandered.

And if lawyers resist the efforts to “meet and confer,” or create more problems by ignoring prior discovery orders, then the courts should start assessing costs. In New York, this isn’t much on a monetary basis as it is limited by CPLR 8202 to just $100. But no one wants those assessed against them, despite being minimal, and it may help to decrease the court’s workload when they see unreasonableness.

New York’s trial courts, of course, are legendary in ignoring any form of costs or sanctions. Our appellate courts, by contrast, will often impose costs. (For the out-of-town readers, this has nothing to do with legal fees, but things like court fees and printing fees.)

So as we emerge into the bright light of day post-pandemic, the courts should seize the opportunity to make the most of the skill and tools we have acquired these past three years, and improve upon what existed before.

For the love of God, please, no more cattle calls.


January 31st, 2023

Hochul Chooses Profits Over People; Vetos Grieving Families Act

The bill had sailed through New York’s Assembly for three decades. Then in June 2022, it finally passed the state Senate 57-6.

Late last night, seven months after it finally passed, Gov. Kathy Hochul vetoed the bill. There wasn’t enough time to study it, she said.

Seriously. That was an excuse.

That bill is the Grieving Families Act, an update to New York’s first-in-the-nation wrongful death law, in 1847.

The law, as it currently stands — and has stood since the time that southern states still allowed people to own other humans and work them to death — gave the immediate families of those killed by negligence the right for recompense for pecuniary loss. Essentially, the lost wages of the family breadwinner.

The bill Hochul vetoed, which I wrote about in 2017 and again in July 2022 after it finally passed, is an update to bring New York into line with 48 other states, including the deep red south. It would permit recompense for grief to close family members in addition to the lost wages.

Now no one would ever pretend that money is a perfect solution to the lost life of a loved one, as nothing in this world would be. But we use money as a yardstick to measure accountability as it is the best tool we have. And I know from firsthand experience that the overwhelming majority of New Yorkers agree with this as I, and every other personal injury attorney, ask this as a standard question during jury selection. Rare is the person that says no, even though they know that this would be the ticket to getting bounced from the jury panel.

In addition, the Grieving Families Act extends the statute of limitations from its current dismal two years to three and one-half years.

Why is two years dismal? Aside from trying to recover from the grief, a family must also petition the Surrogate’s Court for letters of administration. Because without letters, you don’t have a proper party under our Estates Powers and Trusts law to bring suit. No standing.

Think that’s easy? The two years is not measured from the time letters are issued by the Surrogate, but from death. I currently have a petition pending in one county for 16 months. 16 months! Do the math.

Hochul tried to claim that she wanted a reasonable bill. She said so in an op-ed in yesterday’s Daily News. The Governor, and it dismays me to use this language as I voted for her, is full of shit.

Allow me to deconstruct the lousy excuses — bearing in mind that when one makes bad arguments it means that they don’t have good ones:

First, she claimed, as I opened in this piece, that there wasn’t enough time:

This bill passed at the very end of the legislative session; the bill was approved in committee and voted on by both the Assembly and Senate, in full, on the very same day. What was missing was a serious evaluation of the impact of these massive changes on the economy, small businesses, individuals, and the state’s complex health care system.

Assemblywoman Helene Weinstein carried this bill for 29 years. Then there was another seven months after Senate approval. So this was not an honest excuse. As we say in other contexts, res ipsa loquitur. The thing speaks for itself. Or in this case, the calendar.

Hochul pretended to offer a compromise, which wasn’t a compromise at all, but completely eviscerated the bill. She said it should only apply to those under 18.

So who does this exclude? Well, everyone that is retired. Because families don’t feel grief over the negligent death of a retired parent?

It excludes the families of those that are unemployed or underemployed, which affects minority and immigrant communities more than white ones. Do they not feel grief over loss due to negligence?

It excludes stay at home, child rearing parents. Does the child of such a victim not feel grief? The spouse and the parents?

It excludes — get this — victims of medical malpractice. Do these families not feel grief when someone dies from medical negligence? Gosh, I wonder how that snuck into her “compromise?”

Hochul was not tinkering around the edges of the bill. She was completely neutering it.

So who was left? Kids killed in auto accidents? Is that about it? And the vast majority of those won’t have sufficient insurance anyway, with insurance policies ranging from an unconscionable 25K to 100K?

And more excuses: She claims that she needs ” time to look at data and grapple with complex issues, such as our state’s unique constitutional prohibition against limits on damages.

Well, Governor, we don’t have a “unique prohibition against limits on damages.” That is utter nonsense. New York has had limits on damages since at least 1812: See: How New York Caps Personal Injury Damages. It’s kinda on point.

But this excuse may be the one that really takes the cake: “It is reasonable to think that the legislation as drafted will drive up already-high health insurance premiums;

Well, there’s no easy way to say this, so here goes: Dead people don’t drive up healthcare costs. Sick people do. The insurance industry benefits when sick people die as healthcare payments stop. The insurance industry, oddly enough, doesn’t like to talk about that.

So yeah, I call bullshit on the Governor. Her attempts to claim she cares about the issue are empty, and she will embarrass herself by further repeating it.

It can never be said enough times: When people make bad arguments it means they don’t have good ones.


January 26th, 2023

James Dolan’s War Against Lawyers Is Costing Him

The deeply unpopular James Dolan.

Two months ago I wrote about James Dolan — the CEO of the Knicks, Rangers, Madison Square Garden and other venues — and his war against lawyers. He was banning the employees of any firm that sued his company from any venue he could control. It didn’t matter if you were the lawyer working on the case.

Some of that was plainly a violation of the Civil Rights Law, as I covered at that time, insofar as it pertained to events other than sports. Because one could not, under NY Civil Rights Law 40-B, prohibit people coming onto the land for public performances of “legitimate theatres, burlesque theatres, music halls, opera houses, concert halls and circuses.”

This would include Radio City Music Hall, the Beacon, and Madison Square Garden itself for non-sporting activities.

Since that time, the heat has gone up. Dolan was caught using facial recognition technology to find lawyers as they entered the Garden. Even for non-sporting activities. Violating the Civil Rights Law was something he apparently doesn’t care about.

As per the New York Times:

The company says “litigation creates an inherently adversarial environment” and so it is enforcing the list with the help of computer software that can identify hundreds of lawyers via profile photos on their firms’ own websites, using an algorithm to instantaneously pore over images and suggest matches.

I’m sure fans will think this was money well spent, as opposed to spending money on winning championships. The Rangers last won in 1994. And the Knicks last won in 1973.

OK, I digressed, but that was worth it, no?

The bizzarro theory that Dolan gave is that letting lawyers into the sporting arena would allow them unsupervised discovery outside the litigation arena. Right. As I’ve long said, when people make bad arguments it means they don’t have good ones.

Then legislators got in on this, with Senator Brad Hoylman sponsoring legislation to amend the Civil Rights law to include sporting venues.

Then New York Attorney General Letitia James got into the act, contacting Dolan because the use of facial recognition technology “may be plagued with biases and false positives” against people of color and women.

And now, as Dolan desperately tries to defend himself from accusations that he is an [insert favorite bad word], he’s decided to shoot himself in the foot. Claiming that the New York State Liquor Authority is threatening to take action against his liquor license, he’s deciding to take it out on the fans.

In a blowup during a television interview, he threatened to deprive fans of the high margin booze that he profits from selling. Really, you can’t make this stuff up. He hates lawyers so much — OK, not all lawyers, just the ones on the other side — that he is willing to lose money for no greater reason than pissing off people that are already paying him big bucks to go to games and events:

In a rambling and defiant interview on Fox 5 on Thursday, Dolan lashed out at his myriad critics, railed against bail reform, and threatened to withhold booze at a future sporting event if state regulators don’t drop their opposition to his surveillance practice.

This quote is a classic, as he seems to think that the championship-deprived fans that already despise him will take it out on someone other than him:

“So I have a little surprise for ‘em. They’re basically doing this for publicity, so we’re gonna give ‘em some publicity. What we’re gonna do, right, is we’re gonna pick a night, maybe a Rangers game, and we’re gonna shut down all the liquor and alcohol in the building. This isn’t gonna bother me because I’ve been sober 29 years. I don’t need the liquor.”

You can almost hear the “Dolan Sucks” chanting pouring down from the Garden’s rafters as Dolan competes for the title of Most Hated Man in New York.