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Arbitration Unfairness

Check out a recent piece published in The Nation by Kia Franklin, the author of the Tort Deform blog and a strong voice in support of our civil justice system, who has also been kind enough in the past to cross-post an article on that blog from Yours Truly.

Kia focuses the spotlight on the continuing problem of arbitration clauses which impede the ability of workers and consumers to have access to justice.

Keep on keepin’ on, Kia!

I saw an excellent post about how Congress, including Democrats, weakened oversight of the financial system in the 90’s by restricting investor lawsuits. It is located on John Russonello’s blog, and I caught it after seeing it referred to in that venerable blog, Tort Deform.  Here is Mr. Russonello’s opening salvo:

President Obama’s pledge to bring back some meaningful regulation of the financial markets may be more difficult than he imagines. The reason: Senate Democratic leaders not only enabled the deregulation, they were cheerleaders.

In America, unlike other nations, the structure of investor protections against securities fraud stands on two separate legs: Government regulators and private lawsuits. Senator Chris Dodd, Chairman of the Senate Banking Committee, and other Democrats, worked diligently to saw off both legs.

Here is how the people’s representatives took the side of fraud defendants over the fraud victims.

We plaintiff lawyers see it all the time. Disability insurers commonly send injured people to their stable of doctors who say the person is able to work, often in contrast to the opinion of treating physicians, and then the insurance company denies the claim on that basis.  

In a way, it’s kind of like the equivalent of the law enforcement methods of Captain Louis Renault in Casablanca when he says, “Round up the usual suspects.” Meaning, the results are pre-determined and truth and justice are not even a part of the equation.

Recently, however, the Second Circuit penalized First Unum for this practice in the case of Zbigniew Slupinski, a former associate at Weil Gotshal, who was seriously injured on a business trip to Poland in August 1991 when the taxi he was riding in collided with another vehicle. Mr. Slupinski underwent a number of operations, and afterwards suffered severe pain and memory loss that left him unable to work.

He received long-term disability benefits from First Unum until 1995, when they were terminated because two physicians found that he could work full-time since he was able to “sit/stand/walk” for eight hours at a stretch.

Judge Griesa of the SDNY found that the record “overwhelmingly supports plaintiff’s claims that his severe and chronic pain prevents him from engaging in ‘any gainful occupation for which he is reasonably fitted.’” He also said that the doctors used by First Unum were not credible and that their opinions “could not possibly outweigh the numerous other medical opinions confirming Mr. Slupinski’s pain and inability to work.”  But the judge denied an award of attorney’s fees and prejudgment interest.

On appeal, the Second Circuit upheld the award of disability benefits while also awarding attorney’s fees and prejudgment interest to Mr. Slupinski. The Court said that the “ability to sit/stand/walk for a given period says nothing about his ability to concentrate” and that First Unum should not have ignored the “uniform and consistent view of Slupinski’s doctors that his pain was disabling because it prevented him from concentrating.” In short, First Unum had acted in bad faith.

Again, this is just another example of how insurance companies will go to lengths to deny legitimate claims, often relying upon questionable medical opinions. Unfortunately, as demonstrated by this case, many lower courts are reluctant to impose a fee award against insurance companies. If, however, they were willing to do so, as the Second Circuit did here, and if there were stronger consumer protection laws in New York, insurance companies might change their practices.

Now that Obama has become our 44th president, a feeling of excitement has infused the nation. He is young, level-headed, dazzlingly articulate and intelligent, and seems to carry so much promise. But as the excitement begins to wane as his honeymoon gets underway and reality sets in, we should keep an eye out for whether the Obama administration will enact real and meaningful change for consumers.

I believe that there should be an end to, among other anti-consumer practices: 1) jury and class action waivers; 2) mandatory arbitration clauses; 3) damages caps; 4) exorbitant credit card fees and bank surcharges; 5) payday lending industry usurious loans; and 6) National Bank Act preemption which prevents many consumer actions against banks.

Let’s see if this type of change is set to come.

We’ve bailed out the banks, we’ve bailed out insurance companies, we’re bailing out the auto industry … you’d think by now that even the most die-hard Libertarians among us would throw up their hands and admit that some regulation of industry is good.

Well, not Richard Epstein, a Law Professor at the University of Chicago, who, in a recent Forbes.com editorial, rails against the Lily Ledbetter Fair Pay Act of 2009 because, well, it inteferes with the precious free market.

His first error is to say that the Obama administration intends to “ratchet up government regulation of labor markets,” and then point to the Ledbetter Act as Exhibit A in its agenda. However, the Ledbetter Act is not accurately called a government regulation of the labor market, but rather a piece of civil rights legislation designed to provide a remedy to women who have suffered from pay discrimination. (Yes, the Act does make a reference to the Fair Labor Standards Act of 1938, but this comes after references to several civil rights acts).   

 

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Tort Reform is not the Answer

Here is a good op-ed from Leonard Sloane about how tort reform, if enacted, will lift the floodgates on corporate fraud and wrongdoing.

“Tort reform” doesn’t work. Texas is the national model for so called “tort reform,” but medical-malpractice insurance premiums there only went down by 1.2 percent… “Tort reform” leads to unsafe health care. What is even more ironic is the quality of health care in Texas has declined precipitously in the past year.

In condemning the gall and hypocrisy of corporate America, the CBS legal commentator Andrew Cohen recently said the “tort reform” advocated by Wall Street would “unshackle the savageries of corporate America and (leave) individuals less protected against an ever-freer and more predatory market.” That says it all.

Bloomberg reports that a recent study showed workers exposed to lead experience problems with memory and other cognitive function. In fact, as they reach the age where cognitive function slows, they have greater declines than unexposed workers.

The study was reported in the January issue of Neuropsychology which is published by the American Psychological Association.

I represent children who suffer from lead poisoning as a result of lead paint in their apartments. Children under the age of 6 are at significant risk of suffering cognitive impairments as a result of exposure to lead. The typical defense asserted in litigation is that the child’s deficits were genetic or caused by other factors.

The fact that this study shows that adults exposed to lead suffer cognitive impairments supports the claim that children exposed to lead are at high risk of suffering injury.

The New York Attorney General has entered into a settlement with UnitedHealth Group , the largest insurer in New York, concerning the method it used to calculate reimbursement for out-of-network services.

When an insured goes out of network, he receives a bill from the provider and the insurer customarily pays a percentage, say 70 or 80%, of what it has determined to be a usual and customary rate (UCR) for the service. 

In determining the UCR, United Health relied on data provided by a company named Ingenix that it owned and controlled. The result was that it determined low UCR’s and insureds were routinely had to pay a larger share of their medical expenses than they should have.

Under the settlement, United Health will pay $50 million to finance the creation of a new database. It will not have to reimburse its insureds but there is a class action pending.

The New York Times reports:

Mary Jerome, a professor at Columbia who was found to have ovarian cancer in 2006, said she had been left with unreimbursed medical bills amounting to tens thousands of dollars. Her complaints to the attorney general’s office helped spur the investigation.

Ms. Jerome, who said she had been treated at Memorial Sloan Kettering, in large part because her primary care physician recommended the hospital, expected she would have to pay no more than her $3,000 deductible for going out of network. But she said she had soon been swamped with bills that left her $70,000 to $80,000 in debt.

She found herself trying to decipher bills with more than 200 line items.

“You’re lying there in a morphine grip with someone draining your lungs, trying to figure this out, and you just cannot,” she said. “It cannot be done.”

Sick people poring over indecipherable medical bills… universal healthcare, anyone?

Cass Sunstein

Cass Sunstein

Cass Sunstein has been appointed to run the OMB Office of Information and Regulatory Affairs, which reviews major federal rules. While business has quietly applauded this move, liberals are worrying that Sunstein will not sufficiently support the rescinding of pro-business regulations enacted by the Bush administration or champion new ones pertaining to health and safety.

Sunstein, a prolific author and public intellectual, was a colleague of President-elect Obama’s when the two were both law professors at the University of Chicago.   

“He is smart and prolific, but he is a true believer in cost-benefit analysis,” said Rena Steinzor, a University of Maryland law professor and president of the Center for Progressive Reform, a liberal academic think tank in Edgewater, Md. “He would not have found an arsenic regulation to be justified. This makes him extremely conservative on regulatory issues.”

Read the full article by Cindy Skrzycki in the Washington Post here.

Elena Kagen, the well-respected Dean of Harvard Law School, has been nominated to be Solicitor General in the Obama administration. But is she qualified seeing that she has never argued a Supreme Court case, or for that matter, a single appellate case?

An article published in Legal Times discusses this issue and includes interviews with Supreme Court veterans and former SG’s who mostly believe that it doesn’t matter much.

Hey, long-time Manhattan District Attorney Robert Morgenthau has never tried a case. And did you know that the former head of FEMA, Mike Brown … well, never mind.

But whether her lack of experience dishing up arguments before appellate judges matters makes for interesting discussion. 

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