Arbitrating Away Our Lives & The American Dream (Homeless in Houston - Vol. II)

Cross-posted from Tort Deform:The Civil Justice Defense Blog
By Jordan Fogal

One word is never mentioned as a cause of the rising foreclosure rates: arbitration.

Every reason imaginable is listed for the rise in foreclosures, except one: arbitration.

Perhaps, the word is not mentioned because it is being used in platform speeches by most Republican candidates and touted as one of their many accomplishments?  For example, Governor Perry here in Texas is mighty proud.

Conservatives say they have given us tort reform. Sounds like a present or a gift, doesn't it? They didn't do this for us. They did this to us.

Even if the public (besides the ones of us who have learned the hard way) does wake up by next year, 1.3 million homeowners nationwide will have lost their homes.

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It's The Insurance Industry, Stupid

Cross-posted from Tort Deform: The Civil Justice Defense Blog

By Laurie Gindin Beacham, Communications Director, Center for Justice & Democracy

In October, the Washington State Office of the Insurance Commissioner (OIC) fined Physicians Insurance, the leading medical malpractice insurance company, $450,000 for multiple violations of state insurance laws and regulations. The news was met by some with an exasperated,"again?" It's easy to see why.

In May 2004, the OIC fined Physicians $10,000 for 2003 violations of rate filing requirements under state law.  In March 2005, the OIC ordered Physicians to refund doctors more than $1.3 million plus interest for
excess medical malpractice premiums charged in 2003. The company was also fined $90,000 for non-compliance with insurance code regulations. Then, in July 2005, Physicians refunded yet another $900,000 in premiums due to
problems in their 2004 billing rates. The company also issued a rate reduction of 7.7 percent for 2005.

October's $450,000 fine stemmed from an October 2004 market conduct examination into the company's practices that uncovered serious and widespread compliance problems. The examination was terminated so the
company could make corrections. Insurance Commissioner Mike Kreidler, convinced the company has achieved that, has  "conditionally suspended" $400,000 of the current fine.

At first blush, this seems like the story of a wayward insurance company cheating its customers. And it is. But it's also the story of a problem that can be fixed when an insurance commissioner does his or her job, like
Kreidler did. Unfortunately, such strict oversight is the exception, and many state insurance departments don't have the authority for such aggressive regulation. Another exception is California, where passage in
1988 of Proposition 103 requiring stringent rate regulation finally got premiums under control. And in Illinois, after rate regulation legislation passed last year, the state's insurance division ordered a target rate
reduction of 3.5 percent for ISMIE, the state's largest medical malpractice insurer. That was followed by an announcement by another Illinois insurer in October that it would be lowering its rates by 30% and
expanding its coverage due to the recent insurance reform.

To understand the wider implications of these trends, they need to be seen in their larger context. For years, this country has been mired in a debate about medical malpractice insurance rates. Insurance companies, and
the politicians and business groups that look out for them, continuously blame malpractice lawsuits for premium problems. But as much as that might make intuitive sense, it's simply not true.

The reason rates spike has everything to do with the insurance industry's rate setting shenanigans. Rates are usually determined by the economic cycle and investment income. When investment income is up, insurers engage
in fierce competition to collect premium dollars to invest.  As a result, they lower their premiums - sometimes even under-pricing policies - to collect more cash for investing. When investment income is down, insurers
spike their premiums to make up for losses.

Last year, several national consumer organizations released a comprehensive study, written by former Missouri Insurance Commissioner Jay Angoff, showing that from 2000-20005, net malpractice claims paid by 15
leading medical malpractice insurers across the country had remained flat, while net premiums for doctors had surged 120 percent. Another study by Jay Angoff of Physicians Insurance in Washington State revealed that over
a ten year period through early 2005, premiums had soared while paid claims had actually dropped. In fact, after previously blaming lawsuits, Washington State Insurance Commissioner Kreidler said last year that he'd
come "full circle" and realized the insurance industry's contribution to medical malpractice problems.

However, many states have ignored this evidence, passing laws limiting compensation to injured patients, known as "caps," in malpractice suits.  Fortunately, when confronted with such an option last year, Washington State voters wisely voted down a ballot initiative imposing caps. Cap amounts are usually ridiculously inadequate for catastrophically injured patients who have had their lives devastatingly altered by medical malpractice, adding insult to horrible injuries.  And of course, caps fail to reduce premiums because lawsuits are not the real problem. In fact,
when the Illinois insurer recently announced its premium reduction, state officials specifically pointed out that the caps were not the reason. A review of states reveals no consistent link between insurance premiums and

Nobody denies that doctors' insurance rates sometimes reach burdensome and unfair levels. But time after time, the data, and stories like Washington State, teach us the same lesson. The insurance industry - which continues
to rake in record profits - is the culprit, and the solution is controlling their erratic responses to market forces. Misdirecting punishment to severely injured patients, on the other hand, is not. It not
only doesn't work, but it is cruel, to boot.

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Ground Zero Workers' Fight For Equal Justice Continues...

Cross-posted from Tort Deform: The Civil Justice Defense Blog.

"The response of the government to the health effects of 9/11 has been disgraceful in the extreme," 

- Congressman Nadler

"The attitude of government has been 'Help us clean up the mess and then we'll throw you overboard.'"

 - Congressman Nadler

"This is almost five years going, and I have to live with my three kids, my wife and myself," said James, 52, adding that the only income for the family is his 4-year-old son's $627-monthly disability check. "We use that for wash. We use that for travel. We use that for food." (link)

As I have discussed countless times on Tort Deform as well as in my op-ed for Tom Paine, the challenges faced by the Ground Zero Workers are emblematic of those faced by all injured Americans who attempt to access justice in our nation's courts and administrative agencies.

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Getting Away With Murder: Why You Can't Sue Your HMO

This excerpt is a chapter from the bookMaking a Killing: HMOs and the Threat to Your Health which you should buy).

When you next hear an insurance company executive complaining about how the insurance industry is being "victimized" by lawsuits, ask them about the subject of this post. Keep reading to understand a large and alarming loophole in our civil justice system.

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What Is The Supreme Court Doing Deciding How Much Is Too Much for Punitive Damages?

Cross-posted from Tort Deform: The Civil Justice Defense Blog

By Professor Alan Morrison, Founder, Public Citizen Litigation Group & Senior Lecturer, Stanford Law School

Last week I participated in a moot court for the lawyer who will represent the plaintiff defending a $79.5 million punitive damages award in the Supreme Court on October 31st. (Philip Morris v. Williams, No. 05-1256) The experience caused me to ask, what is the Supreme Court doing deciding how much is too much for punitive damages, and if the tobacco industry does not deserve to be hit this hard on punitive damages, why do we bother having them at all?

    Big business has been on a tear over punitive damages.  They have successfully lobbied some state legislatures to impose limits on multipliers or absolute caps, and they have also been working the courts, including the Supreme Court, asking for rulings that "excessive" punitive damages violated the Constitution.  

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