Like many people, I’ve had my issues lately with 60 Minutes. I was most recently annoyed in January when Lesley Stahl interviewed Steven Brill about Obamacare’s failure to control costs. The first thing out of Brill’s mouth was, “It doesn't do anything on medical malpractice reform.” None of the rest of the segment dealt with this topic. How could it? There's virtual consensus in the academic literature (like here, here) that limiting patients’ legal rights will do absolutely nothing to bring down health care costs - and probably raises them. Lesley Stahl let Brill’s remark just lie there, as if it needed no further explanation.
But last night, the show covered two important stories about victims of corporate abuse. In both cases, victims have hired lawyers and have even filed class action lawsuits. The show made those observations without any of their typically disparaging remarks about lawyers and lawsuits. (The late Andy Rooney once went on a rant about lawyers and lawsuits. To his credit, he read on air a Center for Justice & Democracy letter correcting falsehoods in his piece. Curmudgeon he was, but at least a curmudgeon with some integrity.)
But back to last night and the first story. Two and a half years after Hurricane Sandy, “[t]housands of [victims'] claims have still not been resolved and there is evidence that many homeowners were victims of what appears to be wide-scale fraud where original damage reports were later changed to make it look like the damage wasn't as bad.” The facts uncovered in this piece are horrendous. Indeed,
Just days ago the offices of HiRise Engineering were raided by the New York attorney general's office, which is conducting a criminal investigation into HiRise as well as the insurance companies that hired them.
HiRise, Wright Rlood, and U.S. Forensic all declined [60 Minutes’] requests for an interview. They have denied allegations of criminal activity and all three say they are cooperating with the investigation. More than 2,000 Sandy victims have filed lawsuits in federal courts.
Private insurance companies process flood claims, and this type of behavior is frankly business as usual following devastating hurricanes. But because the Federal Emergency Management Agency manages the flood program, the buck stops with them. The problem is, as NPR explains, the conflict of interest within FEMA:
The problem arises when FEMA tries to protect the interests of its policy holders while it also makes sure they don't get paid too much, says Ben Rajotte, a lawyer for the Disaster Relief Clinic at Touro Law School on Long Island.
"That provides tension within the program," Rajotte says. "Then that tension is magnified by the fact that you have basic fundamental principles of administrative law that we don't think are being followed."
Rajotte says his team of law students has tried to help local Sandy victims navigate the insurance maze, but he says they kept getting stuck in the flood program's dual roles. For example, he says, FEMA repeatedly changed how much proof was required to show damage losses.
"You have essentially FEMA making up the rules as it's going, and the rules favor the insurers," he says.
Here’s the other problem: “The National Flood Insurance Program is currently $23 billion in debt to the U.S. Treasury,” in other words, way under-resourced even without Frank Underwood in the picture. (House of Cards binge-viewers will know what I mean!)
Story #2 last night was equally disturbing. Turns out that Lumber Liquidators, “the largest and fastest-growing retailer of hardwood flooring in North America” is selling laminate flooring made in China, which “contains high levels of formaldehyde, a known cancer causing chemical.”
Denny Larson, who is executive director of a nonprofit group called Global Community Monitor, teamed up with Richard Drury, a prominent environmental attorney, to test Lumber Liquidators Chinese-made laminate flooring.
Anderson Cooper: Do you have any idea how much of this wood is in people's homes right now?
Richard Drury: We believe there are probably tens of thousands of households in California that have installed Lumber Liquidators Chinese laminates that may exceed formaldehyde standards
Anderson Cooper: Nationwide?
Richard Drury: Nationwide, its probably hundreds of thousands.… The average level in Lumber Liquidators products that we found was over six to seven times above the state standard for formaldehyde. And we found some that were close to 20 times above the level that's allowed to be sold.…
Drury and Larson, who are backed by short sellers -- a group of Wall Street investors who are betting the company is overvalued -- have sued Lumber Liquidators, accusing them of violating California's toxic warning statute. Drury has also launched a class action lawsuit against the company.
Anderson Cooper got into an exchange with the company’s founder and chairman Tom Sullivan:
Anderson Cooper: I just don't understand how a group can do tests on your Chinese-made laminates and every single one of those failed to meet the emissions standards.
Tom Sullivan: People have different reasons for this test. This is a group of lawyers who are suing us, selling short on our stock.
Anderson Cooper: But the short sellers are not conducting this test, it's these certified labs.
Tom Sullivan: But it started with short sellers.
No, actually, it started with him when the company decided to cut corners to increase its profit margins by 10 percent (as 60 Minutes points out).
Keep it up, 60 Minutes!