ThePopTort

For Senior Citizens, The Good and the Bad

For seniors, I’ve got some good news and some bad news today.  The good news first.

AARP has started an online dating service!  Actually, AARP members qualify at age 50 (much to the dread of every person who, the day after they leave their 40s, starts receiving AARP membership solicitations), so this isn’t exactly senior-exclusive news.  I mean, The Rolling Stones are celebrating their 50th anniversary as a band.  Am I right? 

Unfortunately, though, today’s senior citizen bad news is a little more overwhelming.

Today comes word out of Lumberton Mississippi that the U.S. Department of Justice is joining a whistleblower lawsuit against a former south Mississippi nursing home operator who “charged Medicare and Medicaid for services that he didn’t provide or for services so bad they were ‘effectively worthless.’”  To put it mildly.  Writes the Associated Press, 

Douglas K. Mittleider and companies he controlled ran the nursing home from October 2005 until May 2012. The suit says Mittleider and his companies withheld employees and supplies, letting the nursing home run down while providing only the bare minimum of cash to operate. Among items that were supposedly rationed to save money were towels, garbage bags, laundry bags, medical tubing and oxygen bottles. Staff members were sometimes asked to delay cashing their paychecks.

The suit says residents suffered pressure ulcers, falls, dehydration and malnutrition. In one case, a snake was found in the bed of a patient complaining of leg pain. Residents complained of being hungry and one administrator used personal money to buy them snacks, the suit says.

This was apparently part of a “nationwide scam by Mittleider to bilk nursing homes for money while stiffing creditors.”   He could “face triple damages for all the money his companies have received from federal programs, plus civil penalties.”  

As if that weren’t bad enough, last week, a medical malpractice lawsuit was filed against an Illinois nursing home after 57 maggots were discovered in the ear of a 90-year-old Alzheimer’s patient. 

And the plight of nursing home residents during Hurricane Sandy, revealed in this terrifying New York Times story last week, continues in the news.  Here’s yesterday’s letter to the editor from Suzanne Mattei, Executive Director of New Yorkers for Patient and Family Empowerment:

Your revealing investigation of the hazards suffered by nursing home residents after Hurricane Sandy raises many disturbing questions. How many residents failed to receive needed medication? How many suffered health effects from the “cold, wet darkness” that ensued when the power went off?

And what effects have been suffered by the people in the affected communities who live at home but need home care or other assistance? Let’s remember that the power failure affected people both inside and outside the evacuation zone.

These and more questions about our health care system’s preparedness and response must be examined in public settings. We will need all of our elected officials — at both the state and the local level — engaged in ferreting out the facts and finding solutions for the future.

One thing is certain: This should never happen again.

Boy, let’s hope not.

The Newest Senior Citizen Entitlement: Fraud, Abuse and Neglect Without Recourse

Robert Wagner is an 82-year-old former movie star (really more of a TV star and don't let that 43-year-old photo fool you), who lately is probably better known to the non-elderly as 1. the guy who argued with Natalie Wood before her body was found off Catalina Island, and 2. star of reverse mortgage commercials.  Not that we have anything personally against “RJ” as his adoring former leading ladies lovingly called him at a recent "92nd Street Y" event (in New York City) called, “Pioneer Women of Television.” Doesn’t he know that he’s a spokesperson for an industry that has been ruining the lives of his own age group? 

At least that’s according to today’s New York Times front-page story about how reverse mortgage loans, “which allow homeowners 62 and older to borrow money against the value of their homes and not pay it back until they move out or die” and “are supposed to help seniors stay in their homes are in many cases pushing them out.” The Times found rampant abuse against the elderly by many in the reverse mortgage industry:

Some lenders are aggressively pitching loans to seniors who cannot afford the fees associated with them, not to mention the property taxes and maintenance. Others are wooing seniors with promises that the loans are free money that can be used to finance long-coveted cruises, without clearly explaining the risks. Some widows are facing eviction after they say they were pressured to keep their name off the deed without being told that they could be left facing foreclosure after their husbands died.

Now, as the vast baby boomer generation heads for retirement and more seniors grapple with dwindling savings, the newly minted Consumer Financial Protection Bureau is working on new rules that could mean better disclosure for consumers and stricter supervision of lenders. More than 775,000 of such loans are outstanding, according to the federal government. …

Mark S. Diamond, a former subprime mortgage broker in Chicago, who has been sued for fraud by the Federal Trade Commission and the Illinois attorney general, faces a federal lawsuit filed in June by seniors who claim that he sold them reverse mortgages and either pocketed their loan amounts or promised to put the proceeds toward home repairs that never materialized. A lawyer for Mr. Diamond did not return calls for comment. Some solicitations reviewed by the Consumer Financial Protection Bureau present reverse mortgages as “free money” or mistakenly tell seniors that they could never lose their home. One Maryland reverse mortgage lender tells seniors that they can put the proceeds toward a vacation: “Just because you’re retired doesn’t mean you don’t need a vacation every now and then.” Last year, the Massachusetts Commissioner of Banks issued cease-and-desist orders to a handful of reverse mortgage firms for operating without a license. In its advertising, one of those mortgage brokers falsely promised seniors “you won’t lose your home.”

In addition to the Illinois AG, Minnesota AG Lori Swanson, who has been a star on the financial crime and arbitration abuse fronts (see e.g., here) is “working on reforming the reverse mortgage market.”

But that’s not the only problem for seniors these days. It’s not enough that many healthy seniors are losing their homes and sick seniors often must live out their remaining days in nursing homes. Now, wealthy trade associations (like the American Health Care Association – the largest trade association representing the interests of many nursing homes) are targeting them too, hiring insurance consulting firms to issue reports trying to convince lawmakers to strip away the legal rights of families when nursing homes abuse and/or neglect their loved ones. See this response from Consumer Voice to an outrageously misleading report issued earlier this year from Aon Risk Solutions.  See more here and here.  In an earlier post, we discussed the enormous pitfalls posed by unethical pre-dispute (and pre-treatment) mandatory binding arbitration clauses in nursing home contacts. 

No doubt, "RJ" has enough money and people around him to protect him from fraud, abuse and neglect, which jeopardizes the “non-celebrity” elderly.  So if we can’t get his attention, how about those 75 million baby boomers who are on the verge of retirement (many of whom are caring for elderly parents as we speak)? 

Robbing Banks - (Customers, That Is ... And Without the Weapons)

As famous Depression-era bank robber John Dillinger once said, “OK, boys; let's go make a withdrawal.” If only bank robberies today were so simple.  Over the weekend, the New York Times ran a fascinating account about how J.P Morgan had “descended on Washington … to obtain special breaks that would allow banks to make big bets in their portfolios, including some of the types of trading that led to the $2 billion loss now rocking the bank.”  Writes the Times,

Several visits over months by the bank’s well-connected chief executive, Jamie Dimon, and his top aides [including Ina Drew, JPMorgan’s chief investment officer who was just forced out the company] were aimed at persuading regulators to create a loophole in the law, known as the Volcker Rule. The rule was designed by Congress to limit the very kind of proprietary trading that JPMorgan was seeking.…

JPMorgan wasn’t the only large institution making a special plea, but it stood out because of Mr. Dimon’s prominence as a skilled Washington operator and because of his bank’s nearly unblemished record during the financial crisis.

I guess they finally got with the program.  And once again, far too many bank customers have been left holding the bag due to banking misconduct.  For example, last week:

TD (“Toronto Dominion”) Bank agreed to pay $62 million to settle U.S. lawsuits accusing it of charging customers excessive overdraft fees.

The Canadian lender's TD Bank unit joined Bank of America Corp, JPMorgan Chase & Co and several smaller lenders in settling litigation over the fees, which are usually assessed when customers overdraw their checking accounts.

TD did not admit liability in agreeing to the settlement, which was reached on May 8th, according to a court filing.

The settlement requires approval by U.S. District Judge James Lawrence King in Miami. He oversees overdraft cases against more than 30 lenders that were consolidated in 2009.

Bank of America's $410 million settlement won final court approval last May, and is the largest to date. Other settlements include $137.5 million by Royal Bank of Scotland Group Inc's Citizens Financial unit and $110 million by JPMorgan. Citigroup Inc and Wells Fargo & Co are among the larger banks that have yet to settle.

In Tallahassee last week, the Florida Supreme Court heard a case brought by a homeowner over the practice of  “rampant fraud by … lenders” over foreclosure practices. Foreclosure cases have been rife with such practices as ‘robo-signing’ by bank employees who often knew little or nothing about mortgage documents they were hired to sign.”  But bank attorney Bruce Rogow argued, “The court has no say in those situations.  There is nothing that can be done, and this has been established for years in Florida.”  Well in that case ...

And speaking of mortgages, earlier this week, “Deutsche Bank AG (DBK) agreed to pay $202.3 million to settle civil claims that its MortgageIT unit lied to qualify thousands of risky mortgages for a federal insurance program in what the U.S. called a ‘massive fraud.’”  Apparently, says the government, “Deutsche Bank and MortgageIT falsely certified that they properly assessed the default risk of borrowers, qualifying loans for insurance by the Housing and Urban Development Department’s Federal Housing Administration. The bank admitted to some of the conduct alleged in the complaint, according to a statement today by the office of U.S. Attorney Preet Bharara in Manhattan. The U.S. sued under the False Claims Act, which permitted it to seek triple damages and penalties. “

Then of course, there’s the federal class action filed in Chicago earlier this month, claiming that “RBS Citizens bank made millions of dollars by taking advantage of customers' math errors: keeping for itself deposits greater than what was written on deposit slips.

Who needs guns?

Workplace Safety Goes Missing

The other day, Newt Gingrich called child labor laws “stupid.”  We report this not to make a statement about presidential politics, but to show where some people are when it comes to workplace priorities these days.  (Or as David Letterman’s put it, "this is the man we need to lead us into the 18th century.")  

Safety isn’t much of priority for many firms, which makes Newt’s idea especially wacky.  In fact, let’s “Span the World” of OSHA highlights this week (And yes, somebody got hurt.)

For the sixth time, OSHA (that is, the U.S. Department of Labor’s Occupational Safety and Health Administration) has cited a Wisconsin Rapids carbon steel foundry “for overexposing workers to crystalline silica, a known hazardous material.”

In upstate New York, OSHA cited the Wisconsin-based Briggs & Stratton Power Products Group,

for alleged repeat and serious violations of workplace safety standards at its Munnsville manufacturing plant. The lawnmower manufacturer faces a total of $125,000 in proposed penalties, chiefly for mechanical, electrical and fall hazards identified during an inspection begun in June by OSHA's Syracuse Area Office.

The sizable fines proposed in this case reflect both the gravity of these hazards and the fact that several are substantially similar to conditions cited in an earlier OSHA inspection," said Christopher Adams, OSHA's area director for central New York. "It's imperative that this employer not only corrects these latest hazards but also takes effective steps to ensure that they are corrected once and for all."

Down in Hot Lanta, OSHA cited Midsouth Steel Inc., "a general contractor performing steel fabrication and roof decking ... for four safety violations following an inspection that found workers exposed to fall hazards,” specifically, “allowing them to work at heights of 35 feet in an aerial lift without requiring the use of fall protection, exceeding an aerial lift's load capacity and failing to provide fall protection for employees working on a steep pitched roof.”  Three of these violations were “willful,” that is, “committed with intentional knowing or voluntary disregard for the law's requirements, or with plain indifference to worker safety and health."

In Illinois, OSHA cited “Igor Jerema Construction Co. in Buffalo Grove for four willful safety violations after a worker applying stucco at a home under construction in Burr Ridge fell off a scaffold and sustained a fatal head injury in May.”

In Texas, OSHA cited "Houston, Texas-based oil and gas drilling contractor Nabors Drilling USA LP for two alleged workplace safety violations after a worker was electrocuted at a Williston job site in May.”

Then of course, there’s retaliation against whistleblowers who report safety violations:

[OSHA] filed a lawsuit against the Angels With Paws animal shelter in Lakewood on behalf of an employee who was terminated in violation of the whistleblower provisions of the Occupational Safety and Health Act. The employee had complained about safety and health hazards to the animal shelter's management before filing a formal complaint about the hazards with OSHA. The employee was later discharged and then filed a whistleblower complaint with OSHA alleging retaliation by the defendants in violation of Section 11(c) of the OSH Act. OSHA's Whistleblower Protection Program conducted an investigation and determined the former employee's allegations had merit.

Mix that all up with a little bit of anthrax in the workplace (the federal government just settled with the family of Robert Stevens, a tabloid photo editor in Florida who was killed after receiving an anthrax letter in 2001), and voila!  A perfect place to send the kids!

Here’s the whole Letterman monologue. (As we’ve said before, we take no position on this election, but sometimes, well, we just can't resist the comedy.)

New York’s Semi-Transparent Insurance Problem

Do you know that if you live in New York State, insurance companies don’t have to publicly disclose anything to you about why your insurance premiums are going up?  New York State is so non-transparent that it’s big news when any of them agree to release anything.

So let me tell you about this big news: eight health insurers in New York State, with 90 percent of the market of small group and individual insurance plans, have now - gulp – formally ended their fight to keep secret documents showing why they want rate hikes.  Now they say, “the filings were no longer due confidentiality under a ‘trade secrets’ exception to freedom of information laws.”  (As the New York Times notes, “Some of the insurers have argued that disclosure would hurt their competitive position, and that the filings were too technical to be understood by consumers.”  Kinda like how credit default swaps ended up costing you your job and your home. Too technical.)

Says Benjamin M. Lawsky, superintendent of the State Financial Services Department,

“Transparency will promote competition and allow the public to make effective comments as part of the rate review process. I applaud these companies for their decision and hope the remainder of the industry will soon see the light.” …

Elisabeth Benjamin, founder of Health Care for All New York, a consumer advocacy group that has long battled for disclosure, said New York’s experience would have a domino effect nationally. “Consumers in Maine had to go to court to get some of this stuff that we’re going to get now,” she said. “I think the industry is going to have to do this everywhere.”

Well wait a minute. This “trade secret” argument is what companies always use to keep information from the public.  If New York health insurers are finally giving in, forget the other health insurance carriers.  What about the rest of the insurance industry – in New York State?  Their rate filings are all still secret.

Actually, it just so happens that yesterday, J. Robert Hunter, Director of Insurance for the Consumer Federation of America (and former Federal Insurance Administrator and Texas Insurance Commissioner), noted in a statement before a New York State work group examining that other controversial health care insurance line – medical malpractice - that  “the lack of transparency in this state is a serious problem and surely results in less patient safety.”  He goes on to list several types of missing data, the release of which would benefit policyholders and policymakers alike.  In fact, as we noted before, when Illinois forced out this data and better regulated rates, premiums for doctors dropped, competition among companies increased and new companies were able to enter the market.

Seems so smart.  Wonder if those Occupy folks have noticed yet?

Good News for Illinois Patients!

Back in February 2010, we told you a story that we thought “only a true cynic could appreciate.”  Here’s the gist.  When Illinois lawmakers passed their clearly unconstitutional “cap” on compensation for medical malpractice victims a few years ago, they also happened to enact one of the best med mal insurance regulatory laws in the country, including strong oversight over rates and new transparency requirements.  Except that they added a “non-severability” clause to the law, so that if the cap were struck down (virtually certain as the Illinois Supreme Court had previously struck down two similar “caps”), all of those great medical malpractice insurance regulatory laws would be thrown out the window, leaving Illinois medical malpractice insurers virtually free to once again charge doctors excessive rates. 

What we forgot to tell you, however, was that another critical part of the law was also thrown out because of this “non-severability” clause: a online database of physician profiles, so patients can learn at least something about the physician in whose hands they place their lives.

Well, we are happy to report that Illinois lawmakers have reinstituted this database!  Good for them. The Chicago Tribune, which has done fantastic a great job reporting on dangerous doctors (see our coverage here), reports:

The database can be accessed through the Department of Financial and Professional Regulation's website at idfpr.com under the "physician profile" link on the left side. There, patients can learn about a doctor's educational background and training, determine what type of insurance they accept and find out what languages are spoken in the office.

Also included is information about criminal convictions, disciplinary action against the doctor by regulators in Illinois and other states, and whether hospital privileges have been revoked.

Go here to find out about your Illinois doctor.  Now, how about that insurance reform?

Teen Drinking, Distraught Parents and the Courts

There are a couple interesting cases in the Illinois court system – one just filed, one just finished –showing the frustration of parents of teens who die as a result of drinking. Whether the civil courts will be there for them is another story, however. 

Yesterday, the Illinois Supreme Court exonerated a couple - Sara and Jeffrey Hutsell - of any civil liability for death of 18-year-old Daniel Bell who died in a car crash after drinking at a party in their home. The court overturns an lower court decision that found them liable. The Chicago Tribune reports:

According to testimony in a six-day trial, about 30 teens showed up at the Hutsell home in the 700 block of Summit Drive that night at the invitation of their son. One teen said she recalled cans of beer in plain sight. Another testified he played a "beer pong" drinking game in the basement. More than one teen testified to seeing Jeffrey Hutsell in the basement when underage people were drinking.

In 2007, the Hutsells were convicted on misdemeanor criminal charges and Jeffrey even served some time in jail, but Illinois’ high court “ruled unanimously that Sara and Jeffrey Hutsell did not voluntarily undertake the duty to prohibit underage drinking and possession of alcohol. That meant their actions in 2006 could not be considered negligent."

But also this week, an entirely different kind of lawsuit was filed in Illinois by the distraught mother of a 15-year-old boy - "an honor roll student and lacrosse fanatic" - who died after he drank two cans of ‘Four Loko’ caffeinated malt liquor.  The manufacturer is Chicago-based.  The lawsuit alleges that “the controversial drink targets underage drinkers and should be banned.”

In this case, the teen was not driving, but rather “wandered blind drunk into a highway in suburban Washington D.C. and was hit by a car.” The Chicago Sun-Times reports,

Four Loko — nicknamed “blackout in a can” by young drinkers because of its high alcohol content — has been blamed for a spate of alcohol poisoning and binge drinking incidents on college campuses across the nation.

Phusion Projects did a voluntary recall of the product, before it was forced to decaffeinate the drink in November by the FDA, which warned that caffeine was an "unsafe food additive" in their products.

Phusion, which insists it does not market to underage drinkers, says it will fight the lawsuit in court. …

Rupp’s attorneys Jeffrey Simon and John Cooney said Four Loko’s sugary fruit flavors are designed to appeal to teens, to mask the smell and taste of alcohol and to encourage “chugging,” arguing the colorful design of the drinks cans is intended to blend in with non-alcoholic drinks in store coolers and confuse sales clerks and other adults.

The combination of stimulants including caffeine in the original Four Loko recipe gave drinkers an energy boost and masked the effects of the alcohol, Simon said, meaning they “keep drinking, instead of passing out.”

This is not the first lawsuit involving Four Loko: “[T]he parents of 20-year-old Florida State University student Jason Keiran — who shot himself after drinking Four Loko on Sept. 17 last year — previously filed a wrongful death suit.” Yet, “the deaths and other high-profile poisoning cases have only increased Four Loko’s popularity as a ‘taboo’ product, Simon claimed, pointing to websites where teens boast of “getting Loko’d.”

Medical Malpractice in Illinois: Is the Chicago Tribune On a New Path?

When it comes to the Chicago Tribune’s historical take on patients’ legal rights, it’s been like sitting through ad nauseam versions of the 1999 flick 10 Things I Hate About You.  Their editorials over several years have repeatedly endorsed draconian caps on compensation for patients (August 26, 2005 editorial "Ending the Exodus"), criticized Illinois courts for striking down caps as unconstitutional (February 5, 2010 editorial “A Disastrous Decision") and giving comfortable platforms to business-backed tort reform groups to recap the paper’s editorial position on all of the above (February 10, 2010 op ed, “Court Hands Victory to Trial Lawyers.”)

Could the paper be having a change of heart?

This week, the paper published several articles about doctors who sexually abuse patients (talk about medical malpractice!), and the failure of regulators to do anything about it.   That leaves the civil justice system as the last line of defense.

For example:

A Tribune review found that it took at least four patients coming forward with complaints of sexual assault and abuse before Ricardo Arze was charged in criminal court and had his license suspended. By that time, the family physician had allegedly assaulted at least 21 women and girls at his Arze Doctors Center in Berwyn, according to records. Berwyn police did not inform state regulators of the 2003 and 2005 allegations against Arze until 2007. State law does not require the department and police to share such information.

Here’s another:

A Tribune review found that 16 individuals on the Illinois registry of sex offenders have held a state medical license within the past 15 years, and not one had his license permanently revoked following his conviction. The department has interpreted the state Medical Practice Act to mean it cannot permanently revoke a physician's license unless a doctor has been twice convicted of felonies involving controlled substances or public aid offenses. Nercy Jafari, who was convicted of sexually abusing a patient, was never punished by the department in any way. In response to the Tribune report, the state Department of Public Health moved to shut down the Grand Avenue Surgical Center in Chicago, where Jafari serves as medical director.

And there’s more:

A Tribune review found Bruce Smith, a Chicago gynecologist, was allowed to continue practicing for years despite multiple allegations of rape and sexual abuse. Authorities were dismissive of three patients who came forward with allegations of rape. And state regulators did not seek sanctions until a seventh woman alleged misconduct. The state's response was to suspend Smith's license for a minimum of nine months. Following the Tribune story, the state's attorney's office charged Smith with sexual assault in one of the cases. According to prosecutors, a rape exam of the alleged victim turned up semen in 2002, but officials did not initially request a DNA sample from Smith. In May, the state crime lab determined his DNA profile matched the semen.

It goes on and on and on.

But this devastating series isn’t the only surprise in the paper this week.

A few days ago, the paper endorsed the retention of Illinois Supreme Court Justice Thomas Kilbride, even though his ouster is a priority for tort reform groups.  Justice Kilbride sided with the majority in striking down Illinois’ unconstitutional cap.  The paper wrote, “we’re casting our vote to protect every judge's independence. An honest interpretation of the law, even if we disagree with it, is not reason to bounce a judge from the bench."

I don’t know if we’re on the road to revolution here, but as the Chinese Taoist Philosopher Lao Tzu once said, “A journey of a thousand miles begins with a single step.”

Atrazine - Weeding out Water’s Killer Weed Killer

How’s that for a tongue-twister? Granted, it’s not rubber baby buggy bumper (which kinda makes sense only after the 5th read).  Ours has a bit more meaning, though. 

This week, the Natural Resources Defense Council released an update of its 2009 study, Poisoning the Well, about atrazine, “the most commonly detected pesticide in U.S. waters” and “a known endocrine disruptor, which means that it affects human and animal hormones.”  In 2009, a New York Times investigation also found, “atrazine often washes into water supplies and has become among the most common contaminants in American reservoirs and other sources of drinking water ... [and that] new research suggests that atrazine may be dangerous at lower concentrations than previously thought.”

The Environmental Protection Agency, long ineffective under the prior Administration, apparently took notice of the first NRDC study, investigations by the New York Times and others, and began looking into the health effects of atrazine, finding it “more hazardous than previously believed.”  In April, the EPA had a serious of public meetings about this, with agri-business complaining that everything was fine until the New York Times and the Huffington Post got involved.

Clearly, according to the NRDC’s new study, Still Poisoning the Well, the health risks remain severe “throughout the Midwest and southern United States.”

Meanwhile, class action lawsuits have been stalled for several years in one of the worst hit states, Illinois.  In March 2010,

[F]ive American Water state subsidiaries in Missouri, Illinois, Indiana, Ohio and Iowa joined 19 other Midwest drinking water suppliers in a federal lawsuit against Syngenta [the leading manufacturer of atrazine,] and its Delaware counterpart Syngenta Crop Protection, Inc.  The plaintiffs’ allege that Syngenta has made billions of dollars selling atrazine while local taxpayers were left "the ever-growing bill for filtering the toxic product from the public's drinking water."  The plaintiff's attorney Stephen Tillery called the EPA's decision to reevaluate atrazine "long overdue."

The cases are now proceeding. But it seems like the power combination of the NRDC, the new EPA and trial attorneys has really upset the Wall Street Journal’s editorial board.  (Here’s their editorial, if you can access it without paying.)  We know a good way to calm down, WSJ.  Just repeat after us: Purple Paper People, Purple Paper People, Purple Paper People ...

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!