Obama's Civil Justice Related "C"

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

Over on the Tortellini there's an excellent post on the questionable access to justice credentials of the rising Democratic star Barack Obama. I might also note that Obama got a "C" on the Drum Major Institute'sMiddle-Class Scorecard in large part because of his support for the ironically labeled Class Action Fairness Act of 2005.

The Tortellini post is excerpted below, and my previous commentary on the Class Action Fairness Act is here:
The Top Seven Bad Things About the Class Action "Fairness" Act, Top Three Misconceptions on Which the Class Action "Fairness" Act is Based, The Top (and only) Two Good Things About the Class Action "Fairness" Act


Obama's anti-consumer vote

As Obama-mania sweeps across the land and has Democrats everywhere buzzing, I find myself a bit wary of it all. Not that I'm a single-issue voter, but when it comes to civil justice issues, Illinois senator Barack Obama is a bust. His willingness to buy the corporate line about class action "reform" last year prevents me from joining the hallelujah chorus.

The 2005 Class Action Fairness Act (CAFA), a pet cause of George W. Bush, essentially forced most state consumer class actions into the backlogged and Republican dominated federal courts. Like the bankruptcy bill before it, class action reform was a special interest extravaganza, with the insurance, credit card, banking, pharmaceutical and auto industries hiring so many lobbyists that there was nearly one for every member of Congress. (You can read more about some of the chicanery involved in selling CAFA in my book.) (keep reading)

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The "Safety is Too Expensive Business Model:" Your NYC Homes, Offices & Schools

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


In the final phase of its response to the events of September 11, 2001, the U.S. Environmental Protection Agency (EPA) today announced the beginning of a $7 million program to test indoor spaces in Lower Manhattan.
"It is time to begin this final phase in EPA's response to the terrorist attacks of September 11," said Alan J. Steinberg, EPA Regional Administrator. "We hope that the program will provide peace of mind to people who live and work in Lower Manhattan."- EPA Press Release 12/06/2006  

I think the EPA's hope might be more attainable had it not waited until more than five years after the 9/11 attacks to begin an effective  WTC dust indoor cleaning program in NYC. While the EPA slowly developed and implemented this "final" program, the residents of Lower Manhattan, and possibly some parts of Brooklyn have been exposed to toxic WTC dust through the indoor contamination of their homes, office buildings, and schools.

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Highway Robbery: The High Cost of Automobile Insurance in New York

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

Highway Robbery:
The High Cost of Automobile
Insurance in New York

The Office of the New York City Comptroller just released a report disclosing the disproportionately high profits as well as high premiums for auto insurance in New York.

Here's an overview from the report:


Since 2001, New York's status as one of the most expensive states to insure an automobile has been reinforced by statewide premium increases that were substantially greater than the inflation rate and exceeded 40 percent in much of New York City for some major insurers.

An analysis of automobile insurance industry financial data by the Office of the New York City Comptroller determined that these increases were excessive relative to national averages and in relation to other states and led to unprecedented auto insurer profitability within New York State. Overall premiums should be reduced by at least 15 percent on average--at least $1.5 billion statewide--to bring rates back to historical balance.

Key findings on automobile insurer profitability:

* From 2000 to 2005, automobile insurance premiums in New York increased nearly 29 percent, to $10.5 billion. At the same time, losses (claims payouts) decreased more than 20 percent, to $5.1 billion. Chart 1 illustrates this divergence.

In contrast, premiums increased 33.8 percent nationally, moderately faster than New York, yet losses nationally actually increased 12.9 percent. Looking further back, from 1990 to 2005, premiums increased nationally at a rate 1.6 times as fast as losses. In New York during this period, premiums increased at a rate 4.6 times as fast as losses. Nationally, the property and casualty insurance industry, which includes automobile insurers, is expected to report record net income of $60 billion in 2006, up from a near record $43 billion in 2005; New York drivers are contributing disproportionately to
this success.

* The amount by which premiums exceeded losses in New York reached $5.4 billion in both 2004 and 2005, by far the largest such gap since at least 1990. From 1990 to 2002, the amount by which premiums exceeded losses ranged only from approximately $1.4 billion to $3.2 billion.

Rising premiums and decreasing losses led the private passenger automobile insurance loss ratio--the portion of each premium dollar that goes to pay claims--to plummet to an extraordinarily low 50 percent in 2000 and, notwithstanding small premium reductions, to only 48.4 percent in 2005. These were the lowest loss ratios in the nation. In fact, only seven times between 1990 and 2004 was the loss ratio less than 50 percent in any state. Historically, automobile insurer loss ratios have ranged between 60 percent and 75 percent.

* Return on net worth was an extraordinary 18.6 percent in 2004. Return on net worth is the main indicator of insurer profitability reported by the National Association of Insurance Commissioners (NAIC). In 2004 (the latest year available), return on net worth for private passenger automobile insurance was 18.6 percent, the highest New York return since at least 1990 and well above the 13.2 percent nationwide return. In fact, the New York return in 2004 substantially exceeded the nationwide return in any year between 1990 and 2004.
Underwriting profit in 2004 also was unusually high. Underwriting profit (or loss) is the amount left after losses, expenses and dividends are subtracted from premiums.

Typically, automobile insurers have an underwriting loss but still realize a profit due to investment income. Yet the underwriting profit for private passenger automobile insurance in New York during 2004 was 13.2 percent of  earned premiums, double the highest previous New York underwriting profit and more than double the highest national underwriting profit in the 1990-2004 period.

* A $1.5 billion annual reduction in premiums would restore to historical levels the gap between premiums and losses. This figure takes into account any conceivable increase in losses and inflation, and the phase-in of rate reductions approved by the Insurance Department in 2005 and the first half of 2006.

(link to full report)

To read a letter from the Comptroller to Governor Elect Spitzer, click here.

There's more...

Highway Robbery: The High Cost of Automobile Insurance in New York

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

Highway Robbery:
The High Cost of Automobile
Insurance in New York

The Office of the New York City Comptroller just released a report disclosing the disproportionately high profits as well as high premiums for auto insurance in New York.

Here's an overview from the report:


Since 2001, New York's status as one of the most expensive states to insure an automobile has been reinforced by statewide premium increases that were substantially greater than the inflation rate and exceeded 40 percent in much of New York City for some major insurers.

An analysis of automobile insurance industry financial data by the Office of the New York City Comptroller determined that these increases were excessive relative to national averages and in relation to other states and led to unprecedented auto insurer profitability within New York State. Overall premiums should be reduced by at least 15 percent on average--at least $1.5 billion statewide--to bring rates back to historical balance.

Key findings on automobile insurer profitability:

* From 2000 to 2005, automobile insurance premiums in New York increased nearly 29 percent, to $10.5 billion. At the same time, losses (claims payouts) decreased more than 20 percent, to $5.1 billion. Chart 1 illustrates this divergence.

In contrast, premiums increased 33.8 percent nationally, moderately faster than New York, yet losses nationally actually increased 12.9 percent. Looking further back, from 1990 to 2005, premiums increased nationally at a rate 1.6 times as fast as losses. In New York during this period, premiums increased at a rate 4.6 times as fast as losses. Nationally, the property and casualty insurance industry, which includes automobile insurers, is expected to report record net income of $60 billion in 2006, up from a near record $43 billion in 2005; New York drivers are contributing disproportionately to
this success.

* The amount by which premiums exceeded losses in New York reached $5.4 billion in both 2004 and 2005, by far the largest such gap since at least 1990. From 1990 to 2002, the amount by which premiums exceeded losses ranged only from approximately $1.4 billion to $3.2 billion.

Rising premiums and decreasing losses led the private passenger automobile insurance loss ratio--the portion of each premium dollar that goes to pay claims--to plummet to an extraordinarily low 50 percent in 2000 and, notwithstanding small premium reductions, to only 48.4 percent in 2005. These were the lowest loss ratios in the nation. In fact, only seven times between 1990 and 2004 was the loss ratio less than 50 percent in any state. Historically, automobile insurer loss ratios have ranged between 60 percent and 75 percent.

* Return on net worth was an extraordinary 18.6 percent in 2004. Return on net worth is the main indicator of insurer profitability reported by the National Association of Insurance Commissioners (NAIC). In 2004 (the latest year available), return on net worth for private passenger automobile insurance was 18.6 percent, the highest New York return since at least 1990 and well above the 13.2 percent nationwide return. In fact, the New York return in 2004 substantially exceeded the nationwide return in any year between 1990 and 2004.
Underwriting profit in 2004 also was unusually high. Underwriting profit (or loss) is the amount left after losses, expenses and dividends are subtracted from premiums.

Typically, automobile insurers have an underwriting loss but still realize a profit due to investment income. Yet the underwriting profit for private passenger automobile insurance in New York during 2004 was 13.2 percent of  earned premiums, double the highest previous New York underwriting profit and more than double the highest national underwriting profit in the 1990-2004 period.

* A $1.5 billion annual reduction in premiums would restore to historical levels the gap between premiums and losses. This figure takes into account any conceivable increase in losses and inflation, and the phase-in of rate reductions approved by the Insurance Department in 2005 and the first half of 2006.

(link to full report)

To read a letter from the Comptroller to Governor Elect Spitzer, click here.

There's more...

How To Make the Next Enron Happen

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

If anybody has been up late at night thinking about how to make the next Enron scandal happen as quickly as possible, they need look no further than the recommendations soon to be released by a committee created by the U.S. Chamber of Commerce [a similar group known as the Paulson Committee released its own recommendations today].

Just a few years after the Enron scandal, big business is apparently trying to immunize itself from criminal prosecutions and private shareholder civil suits by rolling back the Public Company Accounting Reform and Investor Protection Act of 2002. This legislation was overwhelming passed by Congress  (House 423-3; Senate 99-0) to attempt to deal with the very problems highlighted by the Enron, Worldcom, and Tyco scandals.

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Frank Luntz's Tort "Reform" Talking Points

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

Here are some helpful tips for tort "reformers" across the country to help them properly frame their messaging. If this rhetoric sounds familiar to other readers, it's because you've been hit with this messaging on tort "reform" for a number of years now.

This post is just a glimpse into the political playbook of the tort "reform" movement and their political supporters.

The author of these tips is Frank Luntz.

Frank Luntz helped Newt Gingrich put together his "Contract With America" in 1994.

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Sue as I say, not as I sue

My op-ed was published in the West Virginia Record: Sue as I say, not as I sue.

NEW YORK -- In recent years, the courts of West Virginia have been a favorite target of the self-labeled tort "reform" movement.

In West Virginia, and across the nation, the U.S. Chamber of Commerce and state chambers are attempting to push forward what they term tort "reforms." These legislative initiatives limit, constrict, and sometimes eliminate Americans' ability to go to court when they are injured by others' misconduct.

Of course, these chambers of commerce represent corporate business interests, and the fact that they are so aggressively pushing these initiatives forward must indicate to you that corporations see it as in their financial interest to make it as hard as possible to sue them, no matter what injuries their actions cause. (keep reading op-ed)

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Ground Zero Workers Abandoned Once Again

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

As I briefly mentioned in a previous post,  the federal government was attempting to create guidelines for proving Ground Zero related deaths from autopsies that included a hard to meet burden of proof. At the time I wrote the previous post, the federal government's agency had submitted their Draft Guidelines for public comment.

After receiving these comments (many of which likely made the point I made in my previous post) the federal government has now decided to completely drop the creation of these guidelines.

Dropping these guidelines is not the correct approach.

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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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Diaries

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