ThePopTort

Terrors’ Incidental Insurance Victims

Mass casualties aren’t just for wars anymore.  Let’s put aside “terrorism” for the moment.  Think about the carnage over the last week due to corporate negligence and recklessness.  There was yesterday’s horrific building collapse in Bangladesh, killing hundreds and injuring thousands of workers making cheap goods for Wal-Mart, while likely being paid about $37 a month. Earlier today, there were explosions on two fuel barges in Mobile, AL, leaving three people severely burned.  This follows last week's horrific fertilizer plant explosion in Texas, which “killed at least 14 people, injured 200 and damaged dozens of buildings.”  (See more updates here.)

Back to terrorism.  Looks like corporate profiteering may play a role here too, at least as victims try to recover. The Wall Street Journal reports today that if the Boston Marathon bombings are officially declared acts of terrorism, the insurance industry would not liable for many business claims and in any event, the industry's liability is capped. They made sure of that 11 years ago.  Specifically,

Companies could lose insurance payouts for property, lost income and other damage if the bombings are officially declared an act of terrorism by key U.S. officials, under an 11-year-old law that hasn't yet been tested, according to industry executives and lawyers, as well as city and business leaders in Boston.

The reason: After the Sept. 11, 2001, terrorist attacks, policies sold to business customers typically haven't covered losses stemming from "terrorism" unless the customer pays extra for the coverage. … If there is no terror finding, damages would be covered in general under regular property-and-casualty policies, said Robert Hart wig, president of the trade group Insurance Information Institute.

Large numbers of businesses in the area around the Boston bombings are believed to lack added terrorism protection, though figures aren't yet available, city and state officials said Wednesday. Nationally, about 60% of businesses pay extra for terrorism coverage, with a higher percentage in New York and some other big cities such as Boston, according to industry estimates. But many small businesses forgo high-price terrorism coverage, and Boston's Copley Square is filled with small bars, restaurants and shops.

Rattlesnake Bar & Grill on Boylston Street, which was closed for part of last week, doesn't have terror coverage. Co-owner John Gardner estimates lost business in the tens of thousands of dollars and holds out hope his insurer will cover some losses. He called the possibility that a terror declaration could keep him from getting compensated "the frustration of dealing with insurance companies."

The article makes reference to a law enacted in 2002 after insurance exes marched into the White House demanding the federal treasury provide a “multi-billion-dollar insurance ‘backstop,’ essentially capping the liability of the property/casualty insurance industry, an industry worth hundreds of billions of dollars, in the event of future terrorist attacks.”  This was something the heavily-capitalized property-casualty insurance industry did not need.  But no one ever said the insurance industry was shy about threatening to pull the rug out from under the U.S. economy to get what it wants, creating an atmosphere of “crisis” to promote its legislative agenda while at the same time escaping any meaningful public scrutiny or regulatory control.

Sorry about that, Boston.  (For more, see this study from the Center for Justice & Democracy, "Shakedown: How The Insurance Industry Exploits A Nation In Times Of Crisis." )

Mandatory Binding Arbitration's Super Critic

I’m sure if Lex Luthor thought about it, in his quest for world domination he would have insisted on mandatory binding arbitration to resolve all of his disputes. Only the mind of a power-mad, evil scientist could have come up with a system like this, where consumers and workers are forced to give up their legal rights to sue in court against misbehaving corporations who harm them. (See the Center for Justice & Democracy’s new fact sheet for more background.) In fact, back in the late 1990s, Superman himself did battle against this evil device!  (OK, not really Superman, but close.)

You may recall that in May 1995, the actor who famously played Superman, Christopher Reeve, was rendered quadriplegic after falling from a horse in a riding accident.  Sadly, he has since passed away.  But in 1998, when the Alabama law firm Beasley Allen challenged the state's mandatory binding arbitration rule on constitutional grounds, Christopher Reeve filed an amicus brief in support of Beasley's case.  He wrote,

One of the hardest things I have had to do since my disability is to deal with insurance companies.  I found them to be callous and to try to set up any roadblocks they can to keep from paying legitimate claims. I am totally against binding, mandatory arbitration in insurance policies.

Unfortunately, the scourge of mandatory binding arbitration continues to this day and while we no longer have the Man of Steel to come to our aid, we do have Amalia D. Kessler, professor of law and legal history at Stanford University.  Kessler has a butt-kicking op ed in today’s New York Times called “Stuck in Arbitration," writing:

[A] growing number of consumers and job seekers discover, when something does go wrong, that they have unknowingly agreed to waive their right to file a lawsuit. Instead, they must submit to arbitration.

For some, arbitration proves too costly to pursue. Among those who can afford the fees, many learn they cannot enforce their legal rights because arbitration decisions do not need to be based on the law; arbitrators have their own procedures, and some studies have found that they are systematically biased in favor of the companies that hire them. Lawyers are often unwilling to represent arbitration complainants because of award caps in the agreements. And increasingly, these accords bar class-wide arbitrations. Because arbitration decisions are typically not disclosed and not subject to appeal, consumers and workers are left without recourse and must bear the cost of unfair, deceptive and harmful practices.

What’s more, she writes, “It wasn’t always this way.”

While the [1925 Federal Arbitration Act] was initially envisioned as applying primarily to disputes between commercial equals, since the 1980s, the United States Supreme Court has interpreted it in ways that have facilitated corporate America’s efforts to force consumers and employees into arbitration. This trend has accelerated in the last few years.

She concludes,

But as deployed by corporations against many thousands of individual consumers and employees, it bears a troubling likeness to the 19th-century concept of conciliation as a practice suited only for a subservient underclass.

It is long past time for Congress to intervene. The Arbitration Fairness Act is no panacea, but it’s a start.

One can only hope.  For more information, go to Fair Arbitration Now.

Say Whaaaat?” Award to Alabama Senator Jeff Sessions

It has been way too long since our last “Say Whaaaat?” Award, our own special recognition of those daring soles who say things that practically defy human comprehension.  Today, we are especially thrilled to bestow this prestigious honor to one of ThePopTort’s most, shall we say, confused civil justice opponents – Senator Jefferson Beauregard "Jeff" Sessions III (R-AL), ranking member of the Senate Judiciary Committee. 

Now, I hope Sen. Sessions is more honored to be receiving this rare prize than one of those dime-a-dozen “2009 Legislative Achievement Awards” from the U.S. Chamber of Commerce for relentless efforts to immunize corporate and professional wrongdoers from liability.  I mean, we can think of boatloads of Congresspeople who might qualify for that.  

But it take a real hypocrite to get that Chamber award, and then turn around and “extoll the virtues of litigation” just because the catastrophic negligence (which it denies) of some company (i.e. BP) is about to destroy the livelihoods of thousands of voters in his state.  Wrote Dana Milbank in the Washington Post, quoting Sessions, “’They're not limited in liability on damage, so if you've suffered a damage, they are the responsible party,’ said Sessions, sounding very much like the trial lawyers he usually maligns.”

Now, we’re still a little unsure whether Sen. Sessions’ new-found commitment to his constituents’ legal rights will hold for very long, so here a few issues we’d like to explore further with him:

1. Will he back legislation just introduced by New Jersey Senators Robert Menendez and Frank Lautenberg, and Florida Senator Bill Nelson, called the “Big Oil Bailout Prevention Act,” that would correct a terrible law passed a few years ago and increase the liability cap for offshore oil spills from $75 million to $10 billion?   And, “in addition to forcing oil-spillers to cover the costs of economic recovery, the legislation would require companies like BP to spend future revenues on cleanup and containment costs that exceed the Oil Spill Liability Trust Fund's $1.6 billion. It would also eliminate the $1 billion cap on individual claims against the fund and allow community responders to access the fund for ‘preparation and mitigation up front.’”  The Associated Press wrote:

A law passed in response to the 1989 Exxon Valdez spill in Alaska makes BP responsible for cleanup costs. But the law sets a $75 million limit on other kinds of damages.

Kenneth Baer, spokesman for the Office of Management and Budget, also noted that if BP were found to have acted negligently in the spill or to have violated federal laws, the damages cap under the Oil Pollution Act would be lifted.

Baer said BP could also be held liable under additional federal or state laws.

"You can be sure that BP will be held accountable to the full extent of the law," he said.

Nevertheless, the existence of the liability cap might complicate Obama's commitments to make BP pay for numerous costs anticipated in the Gulf such as shortened fishing seasons and lost tourism. It is not clear how high those costs could rise.

Since BP is denying the accident was its fault ("In terms of the responsibility, I want to be clear, this was not our accident ...") and will no doubt fight falling within these exceptions, passage of this law seems all the more crucial. 

2. Will Sen. Sessions join Alabama’s Attorney General in telling BP to “stop circulating settlement agreements among south Alabamians” that “essentially require that people give up the right to sue in exchange for payment of up to $5,000” and encourage people “seek appropriate counsel to make sure their rights are protected.”

3. And the big hypothetical – what if this calamity happened somewhere else and not in Sen. Session’s backyard?  My guess?  We’d be looking for another awardee!

Financial Reform - A Little Enforcement Would Be Nice

How to gut financial reform? Let me count the ways.  (Apologies to all PopTort poets for involving Elizabeth Barrett Browning in this mess!)  Of course, the “battalions of financial industry lobbyists descending on Capitol Hill,” as the President put it, already have.  And you knew their extreme fixation on preventing legal enforcement through the courts was bound to spill over into this fight.  So it has.

This weekend, as Senators try to figure out whether Senator Richard Shelby (R-AL ) will prevent the bill from even being debated (!), some key provisions may be “bargained out.”  What’s more, some were cut even before the current  bill was written. 

First, as is explained in more detail here, unlike the earlier financial reform bill, the current legislation omits much needed provisions to correct two U.S. Supreme Court decisions that essentially immunize banks, accountants, law firms and other institutions that help companies mastermind fraud (“aiding and abetting” fraud).  These decisions are a direct blow to defrauded American investors and make it more likely fraud will occur.  As it’s unlikely these critical provisions will be put back before (and if) the legislation proceeds to the Senate floor, expect Senator Arlen Specter (D-PA) who has been passionate about this issue, to try to put it back when it hits the floor.  (More background on Specter and the broader issue here.)  Let’s hope he succeeds.  Nothing like crooked accountants to compromise the integrity of American markets.

Second, there is an important pro-consumer anti-arbitration clause currently in the bill that may be at risk.  All this provision does is allow regulators to limit mandatory arbitration clauses in consumer and investor contracts, like credit cards.  Ironically, the banks themselves have already been sued by state Attorneys General over this widely-unpopular practice that forces consumers to resolve dispute in a grossly unfair and biased forum.  As a result, many banks have now actually backed off using forced arbitration.  (Click here for more information and to take action.)

And speaking of Attorneys General, Illinois state AG Lisa Madigan has an op ed today expressing real concern that the power of states to enforce financial regulations may also be on the chopping block!  (We’ve blogged here about her suit against Countrywide. ) This can’t be!  She writes in the State Journal-Register:

I’m among the handful of people who investigated and sued some of the largest subprime lenders for their illegal acts. I’ve testified repeatedly before Congress. They all act like this situation is dizzyingly complex. It isn’t. If they can create a trillion-dollar bailout in a few days, they can demand meaningful reform in less than a decade.

I have been in this fight for years. I welcome Washington’s newfound interest in cleaning up the mess, but I worry about its commitment to real change. Now, as Congress is on the verge of passing reforms, it appears they’re going to bargain away state enforcement powers. That’s not meaningful reform and Congress knows it. It is vital the state attorneys general retain authority to pursue fraudulent financial practices to make the process honest.

So let's see, we count three ways (so far.)  Let us know if we missed anything!

Excessive Radiation From CT Scan Leads to Class Action Suit

We’ve got a quick update on a story we told you about last week involving an Alabama woman named Becky Coudert who developed a bald strip around her head after being over-exposed to radiation via a “CT brain perfusion scan.”

Coudert has now filed a class action suit against the maker of the scanner, G.E., claiming she may have received ”up to 14 times the radiation required.”

Huntsville Hospital, where Coudert underwent her CT scan, is currently notifying some 60 other patients who may also “have been overexposed to radiation.”

Meanwhile, “[t]wo studies published in the Archives of Internal Medicine this week have raised additional concerns about the radiation risks” associated with CT scans.

Alabama Prisoners and Guards Agree: Substandard State Prisons are “Unconstitutional”

It’s often been said that politics makes strange bedfellows, but one doesn’t often hear about prison guards joining prisoners who are suing over substandard prison conditions.

Nevertheless, a group of corrections officers from Donaldson Correctional Facility in Bessemer, Alabama are supporting the prisoners in suing the state for “unconstitutionally crowded and dangerous” conditions.

In fact, despite reported pressure to keep quiet, “Corrections Captain Lloyd Wallace, president of the 500-member Alabama Correctional Organization, gave a sworn statement saying [all of] Alabama's prisons ‘are understaffed, overcrowded and are very dangerous,’" calling the situation a "ticking time bomb."  Alabama prisons are currently “stretched to the limit,” with over 25,000 prisoners living in facilities designed to hold 13,403.

Caps Myths Still Abound, Thanks To ISMIE

Cross posted from Illinois Deserves the Truth by Eric Bell

As the state Supreme Court gears up to look at med mal caps this fall, once again the press has started giving this issue a lot of attention.  The latest example, from Monday's St. Louis Post-Dispatch, is a welcome change from some of the biased coverage we've seen lately.  However, even in this article, ISMIE continues its baseless claims about the “positive” effects of Illinois’ heartless caps law, despite all sorts of evidence to the contrary.  Wouldn't it be nice to hear the consumer's perspective once in a while?

Let’s be clear: the cruel and unconstitutional “caps”, which were quickly struck down by a lower court, have nothing to do with the flattening of doctors’ insurance rates.  Modulations in the insurance cycle cause this (see here).  Stronger insurance regulation and oversight, passed in 2005, have also helped.  Our director of insurance, and even insurance companies themselves, have pointed out that it is the regulation—not caps—that has increased competition and lowered rates in Illinois.  THIS is why ISMIE’s policyholders have gotten rebates.

It’s hard to believe anyone would applaud something like “caps”.  The only purpose this cruel law serves is to prevent innocent victims of malpractice from receiving fair compensation for their injuries (not to mention disproportionately hurt minorities, women, and children).

Hopefully the public can see through all of ISMIE's lies.

Are Manufacturers Really Blameless for FEMA's Toxic Trailers?

Yet another situation where corporate wrongdoers are trying to hide behind an incompetent federal agency to immunize themselves for the harm they cause.

As part of Congress' ongoing investigation into FEMA's toxic trailers  provided to Hurricane Katrina victims, the House Oversight and Government Reform Committee held a hearing yesterday focusing on the manufacturers of the trailers.    

At the hearing, we got a sense of how manufacturers plan to blame the government for the companies' poisoning of Katrina victims with formaldehyde,

In advance of the hearing, a GOP staff analysis said companies that make recreational vehicles should not be blamed for high levels of formaldehyde in trailers that the Federal Emergency Management Agency set up to house people displaced by Katrina in 2005.

From the New York Times,

Democrats and hundreds of current and former trailer occupants who are suing the manufacturers do not accept this defense. Some Gulf Stream [one of the manufacturers of the trailers] employees complained they, too, were suffering effects from formaldehyde exposure, including nose bleeds, shortness of breath, dizziness and bleeding ears. One employee told Democratic investigators there was a foul odor in the plant as the trailers were being made.

''FEMA failed by ignoring the dangers of formaldehyde,'' Chairman of the House Oversight and Government Reform committee Henry Waxman said.

But the California Democrat insists Gulf Stream's failure is different: ''The company did test trailers after hearing the first reports of high formaldehyde levels. It found pervasive formaldehyde contamination in its trailers. And it did not tell anyone,'' Waxman said.

Gulf Stream's Shea said this is not the case. There was no actual ''testing'' of trailers, he said. Instead, there was informal screening with a handheld device that measures the level of formaldehyde in the air called a Formaldemeter, which is not a scientific test. And Gulf Stream asked FEMA if it should test the trailers, but FEMA said no, Shea said.

Wonder what "Heckofajob Brownie" would have said about all of this?

More Great Work from State AG's: Keep on keepin on

Here at The Pop Tort we are big fans of state Attorneys General and all the work they do to stop corporate abuse.  For further evidence of our fanship check out CJ&D's AG report and several of our past posts on just why and how state AG's rock.

So it comes as no surprise that recently we've seen even more evidence of state's Attorneys General championing issues for everyday folks. Here is a quick rundown:

In a great letter to the editor of the Charleston Daily Mail yesterday, CJ&D executive director, Joanne Doroshow, gave props to West Virginia Attorney General, Darrell McGraw, for his successful lawsuit against Visa and Mastercard on behalf of West Virginia consumers.(click here for the entire letter)

It wasn't just West Virginia's AG getting in on the act to protect consumers.  California Attorney General, Jerry Brown, and Illinois Attorney General, Lisa Madigan, recently filed suits against Countrywide, the largest home-loan lending company in the US, over deceptive lending practices.

Also not to be left out, New York Attorney General, Andrew Cuomo, announced that he is going to sue drug store giants, CVS and RiteAid, for selling expired products including milk, eggs, and baby formula.

I Guess It Could've Been Worse

Yesterday, the Tennessee State Senate passed a piece of legislation that would make it harder for victims of medical malpractice to bring a lawsuit in the state by setting up additional barriers within the legal system.  The House had previously passed the same bill – which means it is on its way to be signed by the Governor.

If only 2% of people injured by their doctors ever file a medical malpractice claim, how many Tennesseans with legitimate claims are going to be deterred by these additional barriers?

The only bright side is that the current bill does not include a cap on punitive damages – as was originally in the legislation.