ThePopTort

Minnesotans Leading the Anti-Arbitration Charge

Shout out today to the state of Minnesota, whose officials (OK maybe not every official) are taking the lead in trying to wipe out the terribly unfair process known as mandatory binding arbitration.

In 2009, we covered the “consumer protection lawsuit by Minnesota Attorney General Lori Swanson” which had “resulted in arbitration behemoth, the National Arbitration Forum (NAF), pulling out of ‘the business of arbitrating credit card debts and other consumer collection disputes nationwide’”

So we were delighted to see AG Swanson as a lead witness in yesterday’s U.S. Senate Judiciary Committee hearing called “Arbitration: Is It Fair When Forced?”, presided over by U.S. Senator Al Franken (D-MN), probably the Senate’s single best advocate for consumers on this issue. Here’s the web cast.

As the Minneapolis Star-Tribune reported,

Minnesota Attorney General Lori Swanson criticized the mandatory arbitration industry Thursday in testimony before a U.S. Senate panel.

The hearing was held by Sen. Al Franken, D-Minn., a critic of mandatory arbitration and author of legislation limiting its use in workplace disputes involving defense industry workers. Also present was Sen. Amy Klobuchar, D-Minn.

Swanson, who has testified in Congress before against mandatory arbitration, cited her 2009 suit against the Minnesota-based National Arbitration Forum (NAF), the nation’s largest consumer arbitration company. 

The suit alleged pervasive bias against consumers by a private dispute resolution company that is “in essence an arm of the collection industry.”…

According to Swanson, millions of people give up their legal rights because of "fine print" language in consumer contracts.

We wish this was all it took to protect consumers from these clauses - smart state AG’s - but unfortunately, we have a U.S. Supreme Court determined to step in the way.  In fact, this week the court heard yet another case involving anti-consumer arbitration ("The Supreme Court justices asked the question half a dozen ways: When Congress writes legislation that says, 'You have a right to sue,' why doesn’t that mean that consumers have a right to file a lawsuit in court?).  The case prompted this editorial today from the New York Times, which explains the case pretty well:

The question of how far companies can go in taking away their customers’ right to sue returned to the Supreme Court this week. The case involves a subprime credit card company called CompuCredit, which was sued by three customers in federal court for deceptive practices under the 1996 Credit Repair Organizations Act.

The company argued that they were barred from bringing lawsuits because their contract allowed them to enforce their rights only through arbitration, which prevents them from having their dispute resolved by an impartial judge and jury in a public court.

The act was passed to shield people from companies making bogus promises of credit repair. It says: “You have a right to sue a credit repair organization that violates” the act and a “waiver by any consumer of any protection” shall be “treated as void” and “may not be enforced by any federal or state court or any other person.” Despite that clear language, CompuCredit’s lawyer insisted that the wording is not “sufficiently explicit” to create a right to sue if a contract contains an arbitration clause.…

In AT&T Mobility v. Concepcion in the spring, the court’s conservative majority upheld an arbitration clause in a cellphone contract that forced consumers to waive the right to take part in a class action. The case drew attention to the wide corporate effort to have a privatized system of justice barring people from their day in court. In this case, the justices should rule that a statute explicitly creating a right to sue trumps a contract allowing only arbitration.

Yes, you would think.

The Foreclosure Blues (with Some Purple Tint)

We were a bit taken aback by the news that Prince, now on tour and in the midst of 21-dates in LA, happens also to be “singing the same tune as millions of American homeowners: The Foreclosure Blues.”  Apparently, the 20 acres that he owns in Minnesota, where his home once stood, has been scheduled for auction to satisfy his mortage, althought the Star-Tribune reports “Prince contended Thursday afternoon that the ‘payment has been made’ for the full amount and was sent to the Bank of New York Mellon Trust Co. ‘about four or five days ago.’”  

So the big question is, will the bank even care?  Clearly for most Americans, they could care less.

For example, JPMorgan Chase just settled for $56 million a class action brought by 6,000 active-duty miliatary families, “who were overcharged on their mortgages.  [The bank also] cut interest rates on soldiers’ home loans and return homes that were wrongfully foreclosed upon.”

There is also an investigation by all 50 state Attorneys General of foreclosure scandals like “robo-signing,” where banks hired people to forge official names on documents so they could take away people’s homes without verifying any facts.  Iowa AG Tom Miller, who is in the midst of crafting a major settlement with the banks, has gotten into a bit of a campaign finance mess due to donations to him from “out-of-state lawyers who make a living representing big banks” but Miller objects strongly to the implication of a conflict.  At least he's trying to hold the banks accountable, so much so that “Oklahoma’s attorney general said he is prepared to break ranks” with the settlement that Miller and the Justice Department are crafting.  He doesn't like banks being forced “to pay at least $20 billion in fines and use the money to reduce the principal on mortgages of ‘underwater’ borrowers, who owe more on their loans than their homes are worth.  ‘I have asked my attorneys to prepare me for an option that does not require that,' he says."  Hope his constituents remember that.

And then there’s the heartwarming story of South Carolina’s Keith Gamble.  As the Richmond Post-Dispatch reports, what started as a hobby “is now a risky, exciting, full-time job: buying properties at the monthly foreclosure sale and flipping them."  He says, "Some people's bad fortune is other people's opportunity.  I know that sounds callous.” 

Honestly, when it comes to the foreclosure business, who isn’t?

Guidant’s Government Payback

We are in an endless, circular debate in this country about medical tests and procedures (too many and why?) and lawsuits (too many and why?).  The tale of Guidant’s Ventak Prizm 2 implanted defibrillator tells the story in many twisted ways but all with the same conclusion: if unneeded procedures are happening, “fear of lawsuits” isn’t why, and victims are being stiffed from every angle.  

Earlier this month, a study published in the Journal of the American Medical Association said that one in five patients who receive dangerous implantable heart defibrillators, or ICDs, probably don’t need them.

Is this being done because doctors fear they’ll be sued if the don’t implant these dangerous medical devices?  Of course not.  They’re just practicing bad medicine.  In fact, the Director of the University of North Carolina McAllister Heart Institute said,  “We know that over half of individuals who should get an ICD implanted based on guidelines actually don't receive one, for a variety of reasons. This is a far bigger problem.” 

Defibrillators are stopwatch-sized devices that can deliver a 700-volt electric shock to restore a proper heart rhythm.  Thousands of Guidant defibrillators were implanted with major defects that repeatedly shocked, injured and killed patients.  They did so much damage that last year, Guidant (now owned by Boston Scientific) pled guilty to two misdemeanors, was hit with $296 million in fines and fees and was ordered to serve three years probation.  If there’s a lawsuit problem with these devises, it’s clearly the lack of them. In 2008 the industry received immunity for making unsafe defibrillators, courtesy of the U.S. Supreme Court (Riegel v. Medtronic). 

But the government’s legal rights were never taken away, and now it wants its money back!  AP writes that yesterday, the government brought suit against Guidant “for violat[ing] the False Claims Act by submitting false or fraudulent claims to the Medicare program. The government says roughly 2,000 false claims were submitted to Medicare for patients who had the defective models implanted.”  The Minneapolis Star-Tribune writes,

"When companies like Guidant request and receive federal dollars for products they know to be defective, the United States is committed to aggressively seeking the recovery of those payments," said John Marti, first assistant U.S. attorney in Minnesota.  In a statement, Boston Scientific spokesman Paul Donovan said the company has been "aware of the government's interest in this civil matter, and we have previously disclosed it in our regulatory filings. Guidant plans to respond to the government's allegations and claim for damages in the appropriate fashion."

That’s all great, but when the court ruled in Medtronic, it removed the most significant and effective financial consequence to a company for choosing to keep a dangerous heart device on the market.  For proof of that, check out Boston Scientific’s reassuring response to this most recent government suit, to quote, “it doesn't expect the civil lawsuit …  to cost the company a significant amount of money.”  Certainly not compared to all the damage it did to the victims of this disaster.  

Towards that end, here is the opening from the Center for Justice & Democracy’s study, Heart Sick. It’s a shocker (no pun intended):

As the widow [Kathleen Gohde] bent toward Allan Gohde's coffin in July [2005], she was startled by a loud beeping coming from his chest. The source of the noise was an implanted Guidant Corp. defibrillator, the same model that was linked to the death of a 21-year-old man [in] March.  Both men died after their defibrillators failed to deliver a life-saving jolt to their hearts. As it turns out, the beeping that Gohde heard was a signal of a device malfunction, and if it hadn't sounded, the family might never have known why he died.

The Land of Milk And Mess Ups

Dallas-based national dairy processor Dean Foods was forcing farmers in Vermont and other northeastern states to work with them.  Now they are going to pay - $30 million, that is - to settle a class-action suit for this violation of federal antitrust laws.  (The deal awaits court approval.)  Also today, Dean “announced plans to issue $400 million in new debt to pay down old debt and named a new chief accounting officer.”

Take note, dairy farms. Just cause you’re “getting squeezed by big-box stores and supermarket chains looking for price concessions” so that your stock “is off 53 percent this year, making it the worst performer in the Standard & Poor’s 500 Index” does not mean you get to violate the law.

And by the way, that also includes producing raw milk with E. Coli.

In Minnesota,

State Agriculture Department investigators Tuesday seized hundreds of gallons raw milk and other food produced by a Gibbon dairy farm that has kept churning out product despite a state order to stop.  Raw milk produced by Mike Hartmann's farm was fingered by the state for eight cases of E. coli O157:H7 in May, and seven instances in July and August of other stomach bugs that cause diarrhea and abdonimal pain.…

Seized were 'hundreds of gallons of raw milk', along with cream, yogurt, cheese and meat. … Raw milk isn't pasteurized -- treated with heat to kill pathogens -- and public health authorities widely decry it as dangerous. But some natural food advocates see it as a healthful tonic of sorts, superior in taste and nutrients.

Hhmm … nah.

What’s Clogging the Courts? Debt Collections, That's What

Unless you’re about 200 years old, you probably don’t remember debtors’ prisons, given that the U.S. abolished them in 1833. At least that’s what we thought.

Two Minnesota legislators announced yesterday that they will be introducing legislation to deal with “a growing public concern -- highlighted in a continuing Star Tribune series, ‘Hounded’ -- that debtors are being sued for money they don't owe and, increasingly, jailed when they fail to appear in court.”   Apparently the paper found that “use of arrest warrants against debtors jumped 60 percent in the past four years, with 845 cases in 2009. Some debtors who were arrested said they were unaware they had been sued for their debts and were required to appear in court.”

All of this comes on the heals of an incredible report issued Monday from the Federal Trade Commission, Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration, that found “that the system for resolving consumer debt collection disputes is broken, and recommends significant litigation and arbitration reforms to improve efficiency and fairness to consumers.” (text here)

The report “recommended that state governments toughen laws to reduce the number of unsubstantiated lawsuits against debtors. It called on states to require collectors to offer more proof of debts in their lawsuits, and to curb suits over debts for which the statute of limitations has expired.”

In addition, “The Commission vote to issue the report was 5-0. Commissioner Julie Brill issued a concurring statement in which she urged Congress to enact a temporary ban on the mandatory arbitration of consumer debt collection disputes. ‘Such a ban should remain in place until the arbitration process can be shown to be fair, transparent, and as affordable as traditional litigation, and until consumers have a meaningful opportunity to opt out of pre-dispute arbitration without losing access to the credit services they seek,’ she said.”

The Minnesota lawmakers have been pushing this issue for years, and believe – hopefully – that the FTC report will “strengthen[] the case for changing the law."

Also incredibly, the New York Times reported that debt collection law firms have been clogging the courts with these lawsuits.

The litigation boom has been propelled by fundamental changes in the way debts are collected, particularly for credit cards.… Collection law firms are able to handle such large volumes of cases because computer software automates much of their work.…  Once the data is obtained by a law firm, software like Collection-Master from a company called Commercial Legal Software can “take a file and run it through the entire legal system automatically,” including sending out collection letters, summonses and lawsuits, said Nicholas D. Arcaro, vice president for sales and marketing at the company. … Most consumers fail to show up in court, and those who do rarely have a lawyer.

…

Lawsuits are sometimes filed against the wrong people, critics say. Other times, they say, the amount owed is incorrect or includes questionable fees and interest that has been added to the balance.

So while debt collections are skyrocketing, personal injury lawsuits continue to drop.

For Franken, Arbitration is No Joke

If anyone expected Minnesota Senator Al Franken’s artistry for comedy to blunt his interest and mastery of certain very serious legal and frankly (excuse the pun), not the hottest button issues around, you would be very mistaken. This is one pissed-off guy, and the issue for him is mandatory binding arbitration.

As we’ve noted a number of times, his interest in this issue originally stemmed from the Jamie Leigh Jones gang-rape case (here, here) but it’s certainly gone much further than that.  Last week, on the floor of the U.S. Senate, he savaged the U.S. Supreme Court’s recent pro-business, anti-consumer decisions, discussing, among other things, both the Jamie Leigh Jones case and the horrendous decision last week where the Court ruled that “an arbitrator – not a court – gets to decide if an arbitration clause is valid.”  (He repeated it three times. Check out the video below.) 

And yesterday, he raised the whole thing again at the Elena Kagen Supreme Court nomination hearings.  (As a side note, while there have been plenty of news reports about Kagen’s great sense of humor, don’t think for a minute that the Minnesota Senator who improvised so hilariously on SNL instigated any of that.)  

The Minneapolis Star Tribune reports:

Taking his turn, Franken pursued an issue he championed in the Senate: Barring federal contracts to defense companies that force workers to resolve disputes through mandatory arbitration rather than the open court, a measure inspired by the Jamie Leigh Jones rape case.

"Chances are, if you have a cell phone, a credit card, or you work, you're likely to have signed a contract with a mandatory arbitration clause," Franken said. "These clauses basically say 'if we violate your rights, you can't take us to court.'"

Senator Al Franken has not only become the Senate's staunchest civil justice advocate, he commands attention and gets things done.  Who knew? 

Watch Franken on the Senate floor here:

Democracy Now! Lawsuit Over Gestapo Tactics

The new Arizona immigration law has its share of critics, not the least of whom is Republican Congressman Connie Mack of Florida, who likened the law to “a time during World War II when the Gestapo in Germany stopped people on the street and asked for their papers without probable cause."  Legendary sports reporter Art Spander wrote, “The law harkens back to Germany of the 1930s, the Soviet Union of the 1950s, very un-American, very frightening.”

That’s not the only thing reminiscent of those periods, however.  Consider the beating-up and arrest of journalists covering political conventions.  Democracy Now!  host and journalist Amy Goodman and two producers have just filed a federal lawsuit in Minnesota alleging that law enforcement during the last Republican National Convention in St. Paul “culminated in the unlawful arrests and unreasonable use of force against three Democracy Now! journalists, Amy Goodman, Sharif Abdel Kouddous and Nicole Salazar, violating their First Amendment rights as members of the press to report on matters of public concern and the public actions of law enforcement.” The journalists are represented by the Center for Constitutional Rights “and co-counsel Bruce Nestor of De Leon & Nestor, and Weil, Gotshal & Manges LLP.”

Matt Snyders of City Pages wrote,  “During the RNC, St. Paul transformed into a transient militarized zone. At behest of the party of 'small government,' law enforcement agencies spied on peaceful protest groups during the lead-up to the RNC, conducted multiple house raids once it rolled into town, and on the last night of the convention orchestrated a dragnet that swept up dozens of credentialed journalists, including (full disclosure) the author of this post."

As for the Democracy Now! group, “Nicole Salazar was cornered, assaulted and arrested by police, despite repeatedly identifying herself as a member of the press.  Following her arrest, Sharif Abdel Kouddous -a Democracy Now! producer with whom Nicole was videotaping police activity that day- was similarly arrested and assaulted by law enforcement.  When co-worker Amy Goodman heard of their arrests and came to the site to question officers about the incident and locate her colleagues she was also arrested.” 

Check out the video.

Docs Blinded by Dollar Signs

We’ve said many times – and the evidence seems to keep on comin’ – that if there’s a problem with doctors’ ordering too many tests, the reasons have to do with the fees they get, not “lawsuits.”

Like this story out of (guess where?) Texas.  Texas Health Arlington Memorial Hospital just coughed up $1 million to settle a suit with the U.S. Attorneys office who said they had a deal with a doctors’ group to run a blood gas lab and then submitted claims to Medicare for “interpreting” blood tests that didn’t need to be interpreted at all. 

Meanwhile, in parts further north, a self-styled Minnesota-based “country doctor” named Stanley Gallagher has agreed, along with Wheaton County Hospital to pay a $900k settlement for unnecessarily admitting patients to the hospital and keeping them there too long in order to inflate their bills to Medicare.

In one glaring example, a “a 91-year-old man with a history of back pain was admitted [to the hospital] because he had pain radiating down the back of his leg. He spent six days in acute care and was treated with oral pain medication and physical therapy.”  To the astonishment of no one, government “medical experts said that treatments did not require acute level in-patient care.” 

Meanwhile, “Gallagher was disciplined by the Minnesota Board of Medical Practice in 2004 for delivering substandard care, although the sanctions were lifted in 2006.”  Another theme of ours, with Minnesota ranking at the very last in the country for serious disciplinary actions against doctors.

Anyway, you get this idea.  There are too many bad docs out there who view their license to practice medicine as a license to gouge.  Here’s hoping Congress takes note as it prepares to “reconcile” the House and Senate health care bills.

Al Franken’s Defense Amendment, Providing Recourse for Rape Victims, on its Way to Becoming Law

Clearing the way for the real squeaker 60-40 Senate vote on health care at 1 a.m. this morning, was another key weekend Senate vote – the 2010 Defense Appropriations bill – which passed Saturday night by a less squeaky margin 88-10.  The bill kept in tact Senator Al Franken’s amendment, which prohibits the Defense Department during this appropriations year, from contracting with companies that prohibit rape victims from accessing the courts.  It will now be sent to the White House where President Obama is expected to sign it into law. (It already passed the House.)

The most shocking thing about all of this was not just that it was needed in the first place, but that lots of Senators voted against it with the apparent backing of the U.S. Chamber of Commerce.

In an op-ed published in today’s Minneapolis Star Tribune, Franken writes passionately about the company’s policy of denying such victims the right to bring lawsuits against those responsible, forcing them into mandatory binding arbitration.

No corporation -- no matter how powerful, how well-connected, how seemingly impenetrable -- should be permitted to rob its workers of their rights.

But that's exactly what happens when someone signs up to work for companies like KBR. Most people don't realize it when they're signing a stack of employment papers, but they're agreeing to give up their right to have their day in court.

In arbitration, there is no public record of the proceedings, no transparency and no accountability. It's the employer that typically pays for -- and in some cases, even selects -- the arbitrator. That's why in rape cases, the outcome of the binding arbitration has stipulated that the victim remain silent. There is no way for the next 20-year-old woman who signs up to work for KBR to hear about what happened to [rape victim] Jamie Leigh Jones….

Hopefully, this represents another nail in the coffin for these involuntary, unfair schemes. 

Al Franken Helps Pass an Amendment That Will Give KBR Rape Victims Their Day in Court

The long and very brave saga of Jamie Leigh Jones, the KBR/Halliburton employee who says that while in Iraq she was “drugged” and “raped in her company barracks by several co-workers"—and whom the company originally tried to prevent from suing by claiming her employment contract’s mandatory arbitration clause actually covered this kind of violent assault—continues to take incredible new turns.  First, a federal court refused to allow KBR/Halliburton to force her into arbitration. 

And yesterday, newly minted democratic Senator Al Franken's (D-MN) amendment to a defense-spending bill that prohibits “the Defense Department from contracting with companies that require employees to resolve sexual assault allegations and other claims through arbitration” passed the Senate 68-30.  Notably, it garnered support from 10 Republican senators, including every female member of the GOP.

Said Jones, who went public with her claim in 2007, "It means that every tear shed to go public and repeat my story over and over again to make a difference for other women was worth it."

"The constitution gives everybody the right to due process of law," Franken said during the debate on the amendment.  "And today, defense contractors are using fine print in their contracts do deny women like Jamie Leigh Jones their day in court… The victims of rape and discrimination deserve their day in court [and] Congress plainly has the constitutional power to make that happen."

A vote on the full defense bill will come later, but Franken said he fully expects his amendment to remain a part of it.