High Court Picks Its Battles

The Supreme Court refused Monday to block a lawsuit over a magazine's critical safety reports about the Suzuki Samurai, a defeat for news organizations that wanted the court to clarify protections for journalists who warn about dangers from products.

The court also said it will settle a fight over patients' legal rights when their HMOs refuse to pay for recommended medical treatment.

The Suzuki case involves a lawsuit against the publisher of Consumer Reports magazine. The magazine had labeled the Samurai unacceptable in 1988 because of potential rollovers.

Consumers Union, which reports on the safety of products ranging from child safety seats to lawn mowers, argued that a lower court ruling in its case will silence journalists who have information about dangerous products but fear costly lawsuits.

Suzuki Motor Corp. says the magazine set out to discredit the inexpensive sport utility vehicles, known affectionately by some owners as "little mud bugs," to make headlines and money.

A divided panel of the 9th U.S. Circuit Court of Appeals said that Suzuki should have a chance to argue to a jury that the magazine rigged the testing of the vehicle and acted maliciously to damage Suzuki's reputation.

The Supreme Court refused to review that decision.

The case asked whether judges should independently review evidence in libel cases before trial, stopping expensive proceedings if there is insufficient proof that a false statement was made with actual malice.

News groups including The Associated Press had urged the court to review the case, arguing that the public has been protected over the years by reports on the dangers of smoking and fast food, among others.

Without court intervention, "virtually any product evaluation is at risk and this valuable journalistic genre is seriously compromised," the groups told the court in a filing.

The Samurai was first sold in the United States in the mid-1980s but sales plunged after the 1988 magazine report and other news accounts of possible dangers. The 1995 model was its last.

Carter Phillips, the Washington attorney representing the carmaker, said that Consumer Reports employees designed their road tests to get the Samurai to tip, and cheered when the vehicle did so. He said the magazine then used its reports to make money, in fund raising and subscription drives. Suzuki did not sue after the original report, but it did claim "product disparagement" in a 1996 lawsuit in California.

Jim Guest, president of Consumers Union, said the Supreme Court did not address the merits of the case. "But we believe it hurts consumers to let the 9th Circuit ruling stand with its chilling effect on those who report about safety and health," he said.

"This is likely going to encourage libel lawsuits against news organizations across the country and the question is whether it is in turn going to discourage aggressive reporting by journalist and consumer advocates," said CBS News legal analyst Andrew Cohen.

In the HMO case, the issue is whether state courts or federal courts should hear disputes over the treatments HMO's cover. State courts tend to order larger awards to patients in cases where they find an insurer at fault.

The court's answer could determine whether patients can win large amounts of money if insurers refuse to pay for beneficial or even lifesaving treatment. If the court sides with insurers, it would mean that state courts, and the potential they offer for big damage awards from juries, would be off limits for most negligence or malpractice suits against HMOs.

The court agreed to hear two appeals, one from a patient and one from an insurer.

The patient is a Texas man whose insurer, Aetna Health Inc., required him to try a cheaper alternative to the painkiller Vioxx, which his doctor had prescribed for arthritis. He claims he nearly bled to death after taking the alternative, and can no longer take painkillers absorbed through the stomach.

In the second case, Cigna Healthcare appealed a ruling involving a Texas hysterectomy patient who sued because Cigna would only pay for one day in the hospital after surgery, though her doctor had recommended a longer recovery. The woman said she suffered complications that forced her into the emergency room a few days later. A lower court ruled she could pursue the case.

In both instances, insurers claimed the original lawsuit belonged in federal court because the claim could have been brought under the 1974 law, the Employee Retirement Income Security Act, or ERISA. Once the suit was moved to federal court, the insurer asked that it be dismissed because it was an improper lawsuit under ERISA.

Lower courts have divided over the question of whether federal law allows the kind of negligence or malpractice suit at issue in this case.

"By taking the case the court has essentially agreed to create some clarity in a very murky area of the law," Cohen said.

On Monday the Supreme Court also: