ThePopTort

The Insurance Profiteers

A few years ago, an article in Business Insider posed the age-old question, “Is there such a thing as too much profit?” Or to put it another way, is it right that companies are allowed to do anything and everything to (legally) increase profits even if those decisions ruin the lives of their employees, customers and communities? As the writer wrote,

I initially thought, "What kind of hippie question is this?" but I was in for a surprise. Regardless of someone's politics or economic point of view, everyone I spoke with reached the same conclusion. Ultimately, the answer is:

His answer was: "it depends," which is honestly a better answer than I’d expected from a Business Insider writer.

This question came to mind the other day after reading news reports of Travelers insurance company’s third quarter 2020 profits, headlines like, "Travelers Reports Strong 3Q with Profit More Than Doubling."

Doubling. During a pandemic, while the company’s own commercial customers (and so the nation’s economy) are collapsing in large part due to the insurance industry's decision to fight claims – especially over “businesses interruption” losses (see here and here) - and at the same time, being forced to pay ever-increasing insurance premiums. And just to fully fill out this picture, insurers are also receiving a direct financial windfall from the pandemic itself, especially in personal lines like auto insurance. The Consumer Federation of America and the Center for Economic Justice have been up in arms about this, most recently last week:

The Consumer Federation of America (CFA) and Center for Economic Justice (CEJ) criticized insurance companies for opposing a proposed regulation by the Nevada Division of Insurance to ban the use of credit information to increase insurance rates for the duration of the COVID-19 pandemic. This rule is modest, but it will help make insurance more affordable and ensure that consumers are not harmed by large premium increases due to declines in their credit score over the past eight months. Yet auto insurers remain steadfastly opposed to the proposal, and even tried to weaken it.

“Insurance companies have reaped massive profits due to the COVID-19 pandemic and its effects, including significantly increased unemployment, which caused a huge decline in driving, car accidents, and insurance claims. Yet they are opposed to any efforts to protect consumers from harmful credit scores resulting from the pandemic,” said Michael DeLong, CFA’s Insurance Advocate. “This proposed rule is limited, but it will protect consumers from insurance premium hikes caused by declines in their credit scores. We are encouraged that Nevada’s Division is pushing back against industry attempts to undermine this badly needed rule, and urge the Division to enact it as soon as possible.”

And there's more. The insurance industry is also taking advantage of people who have been hurt by low-balling settlement offers to exploit trial delays. We covered this problem here.

Back to price-gouging. In early March, the Center for Justice & Democracy and CFA released How the Cash Rich Insurance Industry Fakes Crises and Invents Social Inflation, showing that this industry was, once again, causing a national insurance crisis of skyrocketing rates, while sitting on more cash than at any time in its history. Now months into the pandemic, we see the continuation of ever increasing insurance rates on businesses throughout the country.

Travelers just boasted about sticking almost all of its commercial policyholders with higher premiums. As one Wall Street Journal reporter wrote, the company's excessive third quarter profits have much to do with insurance rates, which they insist on increasing because (they say) claims might go up in the future even though they have no evidence of this, and today claims are in fact way down. Less driving, people aren’t working, the economy is in shambles.

So to sum up, the insurance industry is hoarding money, fighting claims, and dumping risk while making a windfall due to fewer claims, delayed jury trials, and low-balling settlement offers while shaking down their policyholders with price hikes.

So I guess in answer to our first question, yeah. It's a thing.

I-Feel-Like-I’m-Fixin-To-Die-Small-Business-Rag

Long long before Tik Tok there was Woodstock, that 3-day music festival in 1969 featuring 32 acts before nearly a million people. In addition to all the peace and love at Woodstock, there were some serious protest performances. One sticks in my head right now, Country Joe and the Fish’s anti-war diddy I-Feel-Like-I’m-Fixin-To-Die-Rag: “Ain't no time to wonder why, whoopee we're all gonna die.”

If I were a small business today, that’s exactly how I’d feel right now. So many have already died, and many more will also die if government aide doesn’t come quick. The U.S. House keeps trying to do that, while the Trump Administration and Senate Leader Mitch McConnell keep trying to nickel and dime the lifeblood out of the U.S. economy.

There’s plenty of blame to go around. Here are some top contenders.

Big businesses lobbyists including the U.S. Chamber of Commerce.  Thanks to these guys, Mitch McConnell got it into his trippy brain that money to help small businesses survive must be contingent on giving big corporations immunity for killing or sickening workers and customers. What’s more, they claim small businesses demand such a thing. In fact, they absolutely do not. They never have.

The Center for Justice & Democracy’s new study, Limiting Lawsuits: Small Businesses’ Least Concern, shows this clearly, noting “as we have reported for years and do so again, internal small business surveys consistently show that restricting lawsuits, or the ‘cost’ of lawsuits, is an issue of less importance to small businesses than almost any issue they could possibly face, or on which they want lawmakers to focus.” CJ&D even reports on surveys done since the pandemic hit, including one by Wells Fargo over the last two quarters:

Q2 2020 Survey. When over 1,475 small business owners were asked to indicate challenges experienced as a result of COVID-19, lawsuits wasn’t among the list of 14 options. When asked, “Thinking ahead to the next 12 months, as a small business owner, what do you need to feel confident you could recover from the economic impact of COVID-19?” limiting lawsuits was not mentioned.

Q3 2020 Survey. When 600 small business owners were asked, “What do you think is the most important challenge facing you as a small business owner today?” lawsuits were not mentioned. When asked to “select the reason why you feel you might have to close” as a result of the pandemic, lawsuits wasn’t on the list.

Incredibly, the U.S. Chamber’s  own surveys show that small businesses could hardly care less about their lobbyists’ obsessive focus on limiting lawsuits. For example, according to the Chamber’s own push poll, only 22 percent of “Mom and Pop” stores, i.e. those with 1 to 5 employees, believe that limiting lawsuits is an important issue.

The Insurance Industry. As CJ&D also notes,

The property/casualty insurance is an industry with vast power and economic control over the ability of small businesses to survive the pandemic.… Many small businesses dutifully paid premiums for “business interruption” insurance coverage, expecting claims would be paid when they were forced to close due to lockdown. Instead, insurers have denied all of these claims and fought small businesses in court, which has resulted in the single largest category of COVID-related litigation to date. The U.S. Chamber is actively supporting the denial of these claims.

TBD: The U.S. Supreme Court

As if things couldn’t get worse for small businesses, a case being argued Wednesday (tomorrow), called Ford Motor Company v. Montana Eighth Judicial District and Ford Motor Company v. Bandemer, has the potential to do enormous further damage to them. Let’s hope not. 

As the small business advocacy group, Main Street Alliance, wrote in a recent op ed, the case  will determine “whether victims of alleged car defects can sue the auto manufacturer in states outside its home state. … If Ford prevails, it may be the first of many big, future losses for small businesses."

The case does not hinge on Ford’s guilt, but how difficult the corporation thinks it should be for someone to hold them accountable. … The added barrier to hold corporations accountable will ultimately mean small businesses are taking on the burden of corporate malfeasance.…

In this case, despite the polarized nature of our courts, a bipartisan group of more than 40 state attorneys general have filed a brief with the U.S. Supreme Court against Ford in this case. They agree that corporations should not be allowed to invent new procedures to avoid lawsuits, and small businesses should not have to worry about being sued for a defective product they didn’t create.

There’s a new poll out, which sorta summarizes all of these points at once. It shows that “an overwhelming majority [74%] of voters believe the Senate should prioritize coronavirus relief over confirming Supreme Court nominee Amy Coney Barrett,” whose confirmation would push the court into an even greater anti-small business direction. As Country Joe may have put it back when Mitch McConnell was a mere 26-year-old (I know, hard to imagine), “Yeah come on all of your big strong men, Small Businesses need your help again.” Take it away Joe.

Calling All Real Housewives: Time to Condemn the Insurance Industry

Century 21, 2001. It survived.

The Real Housewives of New York (RHONY) don’t always get it right but at least they try. Like the time they hosted an event to honor the work of our friend Bridie Farrell, a leader in the effort to change statute of limitations laws for child sexual abuse survivors. The event quickly turned into what Andy Cohen called one of the most “cringeworthy” events in Housewife history, which is saying something.  At least a lot of people suddenly knew about Bridie.

Sonja Morgan is a RHONY star who hasn’t always gotten it right but clearly has tried. As fans of the show know, she recently did a deal with New York’s most famous discount department store, Century 21. She "was planning to be Chief Lifestyle Officer taking people on shopping sprees… helping ‘people transition through hard times in their life’” such as providing “wardrobes for people who need to ‘get a leg up on a job interview,’ or folks who are ‘going through a sex change, coming out or coming back from the military.’” Who didn’t admire her for that and hoped it worked out?

Century 21, 2020. It didn't survive.

The insurance industry, that’s who. This industry’s greed has now destroyed Century 21 and with it, Sonja’s admirable plans. It should be noted that Century 21’s flagship story, directly across from the World Trade Center, survived 9/11. Back then, the insurance industry did the right thing, paid claims it owed, and helped Century 21 survive and grow. Isn’t that how insurance is supposed to work? You pay premiums (sometimes for years), and if something unexpected happens, insurers pay your claims.

Yet today, the industry is refusing to pay pandemic-related claims knowing that by doing so, they are destroying businesses like Century 21, and severely weakening the U.S. economy. In other words, it has now wrecked a company that the terror attacks couldn’t. Not to mention that it’s pulled the rug out from under Sonja Morgan.

The only thing insurers seem inclined to do during this pandemic is to hold onto all their money and add to their already huge $800 billion (give or take) surplus. The industry’s entire response to this pandemic has been either to try to escape responsibility for virus-related claims or dump risk while at the same time price-gouging customers with completely unjustified rate hikes.

In fact, as we’ve noted before, when this pandemic began, the industry had already started raising rates on its business customers using its go-to excuse – “out of control” U.S. juries, which rule in only 2 percent of cases. In fact, they created their own lingo for this so-called nonexistent “problem”  – social inflation. Blaming juries has always worked whenever the industry has wanted to jack up rates or cancel coverage. Incredibly, this is true even now, when the entire civil jury system is on hold and American jurors themselves are sick and dying of a pandemic and insurers are low-balling every claim. 

Back to Bravo world. Say what you will about the lifestyles of Bravolebirities, there is one interest that seems to be shared by a lot of them: pet rescue. While most sane people see pet adoption as one of the few silver linings of quarantine, the insurance industry sees it rather as a new way to screw their policyholders. According to them: Pet adoption means dog bites; Dog bites mean people running to court; People running to court means “social inflation;” Social inflation means insurers being forced to cancel coverage and price-gouge. 

There is no actual data to back up any of this. That’s never stopped the insurance industry. And incidentally, way to encourage pet adoption, you creeps.

Your move, Real Housewives everywhere. Join us!

New York Hospitals Doing Harm

It’s hard to reconcile. Doctors live by an oath so well-known that we can all recite it: “first, do no harm.” Their work through the worst of the pandemic in New York was utterly heroic. Yet when it comes to the activities of leaders and lobbyists who represent the institutions they work for, the opposite is true.

The Greater New York Hospital Association (GNYHA) has historically been one of the most powerful and insidious anti-patient “tort reform” groups in New York State. Run by Ken Raske, GNYHA wastes an enormous amount of its budget on lobbying, politics and PR efforts, offending nearly everyone except – ironically - those who do harm. It is the single largest “hospital and nursing home” contributor to federal candidates in the country, far surpassing any other donor. It’s hold over Governor Andrew Cuomo is legendary, dating back to Cuomo’s first few months in office nearly a decade ago. (More about that here, here, here.)    

It may be no surprise that Raske was behind New York’s broad immunity legislation, snuck into law as part of Cuomo’s budget in the early days of the pandemic. Fortunately, lawmakers finally woke up to this troubling law and recently rolled it back. However, taking no hint whatsoever from their own state, which decided that broad immunity was harmful and immoral, GNYHA has now moved on to the entire country. In fact, it seems that Senate Majority Leader Mitch McConnell specifically invited them to add its revolting agenda to McConnell's national corporate immunity bill. Raske’s fingerprints are apparently all over it. 

Yet let there be no mistake. If New York’s bill was cruel, this national bill is utterly depraved. For example, in the federal bill, any patient suing for malpractice – including in non-emergency situations – must prove misconduct so extreme as to resemble the crime of reckless homicide. Even if a patient wins, they have no right to non-economic damages at all.  And there’s more, ensuring that even the most obvious case of medical malpractice won’t go forward for the next five years.

Helping Raske in DC is Albert Pirro.  According to recent reporting,

McConnell’s new legislation reflects the Trump administration’s push for a liability shield at the same time that GNYHA has hired Trump’s former lawyer and prolific GOP fundraiser Albert Pirro Jr. as a Washington lobbyist. 

Pirro is a long-time personal friend of the president — their relationship began 30 years ago when Trump hired him as a real estate attorney. He is the ex-husband of Fox News’ Judge Jeanine Pirro and was once sentenced to 29 months in federal prison for tax offenses....

Pirro has only been filing disclosures as a Washington lobbyist since 2017, when Trump became president. GNYHA — which is one of only three Pirro lobbying clients in Washington — has paid Pirro’s firm nearly $2.3 million since hiring him in 2017. 

So, somehow GNYHA found $2.3 to pay a lobbyist, while at the same time pushing legislation to eliminate all non-economic compensation to every child catastrophically-injured by medical malpractice, anywhere in the nation.

Anyone know how to reach Hippocrates?

NFIB Says, Once Again, that “Lawsuits” Are of Small Concern For Small Businesses

Dunno, somehow we thought it might be different this year.

Every four years, the National Federation of Independent Business (NFIB), which fashions itself as the nation’s largest small business lobby group (and indeed, it spends millions lobbying Congress and states each year), publishes a member survey. This is to present an accurate picture of current small-business problems. It’s called Small Business Problems & Priorities. It includes the most important and least important concerns out of 75 possible problems faced by small businesses. This is supposed to inform NFIB’s lobbying priorities because, they allege, “NFIB was founded on the principle that the membership governs.”

Once again this year, what NFIB dubs, “Cost and Frequency of Lawsuits/Threatened Lawsuits,” is an issue of less importance to small businesses than almost any issue they could possibly face, or on which they want lawmakers to focus. According to the NFIB’s 2020 small business survey (just released), this issue ranks 69 out of 75 possible small business concerns. That’s an even lower rank than it was four years ago. It is of less concern to them than, say, “Access to High-Speed Internet” (#63).  Perhaps even more telling, when NFIB broke down the results into “clusters” of issues looking specifically at “Costs,” the topic “Cost and Frequency of Lawsuits/Threatened Lawsuits” ranked dead last.

Drilling down to business size, it is also clear that for “Mom and Pop” establishments, this issue is even less important to them. For small businesses with 1 to 4 employees, the issue came in at #70. For those with 5 to 9 employees as well as 10 to 19, the issue ranked #72.

And it doesn’t matter the state. Here are the state “Cost and Frequency of Lawsuits/Threatened Lawsuits” rankings, all out of 75 possible concerns:

Texas: #64

California: #65

Ohio: #70

New York: #71

For years, NFIB has devoted its substantial lobbying muscle to limiting lawsuits, arguing that this is an urgent issue for small businesses. It obviously isn’t yet it remains an important priority for NFIB lobbyists. 

NFIB’s disconnect from its own members when it comes to liability issues has been going on for years. 

NFIB says it has “an ear to the ground on what’s happening in Washington, D.C., and the state capitals.” Maybe it needs to put those ears near the voices of its own members. It is clearly not hearing them.

Confidential Zoom Recording: The Five Families of Corporate Immunity

The following is a transcript obtained from a confidential source of a Zoom meeting held 2 p.m. on July 26, 2020, hosted by Senate Majority Leader “Don Mitch” McConnell.

Don Mitch: As you know, this is our regular weekly meeting of the five families charged with writing the "Freedom to Kill Workers, Consumers, Students and Elderly Act." While I do miss getting together at our old joint, the back room of the Swamp Restaurant Supply company, today we'll have to Zoom it because I have some important news to tell you about. We finally have a bill!

First, introductions. You all know me, Don Mitch. I’m here with my underboss, Johnny “Tex” Cornyn, whose name goes on everything we do here, so figured it was important to bring him along.

I see Pauly “Corporate Felony” Rhodes, from the U.S. Chamber of Commerce.

Also, Joey “Kill Grandma” Montgomery, representing the nursing home industry.

Louie “Hydroxychloroquine” Chadwick, on behalf of Big Pharma.

And Al “Screw All Businesses” Huntington, from the property/casualty insurance industry. Looks like we are all here.

Also joining us today is Baby “Agent Orange” Bleach, who is observing for the White House. Unless there is some objection … welcome Agent Orange. Just a word of caution about what you say here. We know Rudy’s your friend but remember this is the same guy who ran the SDNY back in the 1980s when he took down our mentors with those RICO charges. Don’t know if I trust that guy. No leaks, please.

(No response)

Kill Grandma: We are all grateful to Don Mitch for calling this meeting.

Don Mitch: Thank you Kill Grandma. Also a few other thank you’s are in order. I want to thank Corporate Felony in particular for your loyalty and hard work. Your organization, the U.S. Chamber of Commerce, which has been in my ear nonstop since this all started, has proven not only to be a great Consigliere but also a fabulous bagman! You’ve got some great earners in your organization. Your shakedown of politicians around the nation has been something to behold.

Corporate Felony: Thank you Don Mitch. You inspire me every day.

Don Mitch: I also want to give a particular shout-out to “Screw All Businesses.” The insurance industry has been an unsung hero in all this. Your ability to escape your responsibility for paying virus-related claims and then scaring small businesses to death by threatening never to cover them – all while hitting them with rate hikes! This has been a model for us all. A true North Star. We will follow you anywhere.

Screw All Businesses: I am honored and grateful that you have included me in this effort, Don Mitch.

Don Mitch: So let’s get down to it. As I mentioned, we have a bill. Now I’m not going to read all 65 pages of it. Gotta be nuts to do that. But rest assured, it’s got all of our top priorities so let’s review:

Most importantly, we have a bill that allows you to get away with murder, which I know is an important goal for all of you. Let me explain.  

First, you don’t have to comply with any real safety standards to get immunity under this bill. You get immunity for following the weakest possible standards or guidance that you can find at any level– even if the standards say you don’t have to do anything. Plus here’s the really great part: you get immunity just for saying you “tried” to comply with it instead of actually making a workplace safe. On top of that, the only cases that can go forward are cases involving things like “gross negligence,” which we have defined to basically resemble second degree murder. Who’s gonna be able to prove that? After all, you're the experts at covering your tracks when someone’s whacked. You’ll be fine.

Second, even on the off-chance that some sick and dying worker, consumer, student or elderly patient actually does bring a case, they will face evidentiary burdens that are basically insurmountable. Just to file a case, they will need to allege information with such specificity that we are pretty sure no claim will ever be filed.

Third, even if they go through all of that and win a case, they’ll get almost nothing. Non-economic damages are not just capped (like we’ve always wanted) – their completely gone! We’ve eliminated them. After that, whatever they get is cut even further by things like health insurance.

Fourth, all state liability laws that have blocked your ability to move forward with your dangerous and unsafe plans are wiped out  And we’ve forced all these cases into federal court where, of course, they have absolutely no business being, and which we’ve been packing with our own judges!

Now, we are going to have to change the name from our working title, the "Freedom to Kill Workers, Consumers, Students and Elderly Act." Let’s do something both amusing and confusing. How about the ‘‘SAFE TO WORK Act?" We'll come up with some mumbo jumbo to fit the acronym. Any objections? Hearing none, the ‘‘SAFE TO WORK Act" it is!

Agent Orange: Don Mitch, I just want to make sure that all the lawsuits brought by my Boss, Don Don, aren’t harmed by this bill, and that he can still sue the pants off anyone he doesn’t like. He has a lot of those goin’.

Don Mitch: No worries. He’s completely protected, as always.

Hydroxychloroquine: I don’t know. The Democrats in Congress have called this - and actually all of your ideas – a non-starter. Is it really?

Don Mitch: Well I don’t know who they think they are. But we’re going to the mattresses on this boys. Finally we have gotten our chance to take complete control of the civil justice system. I want to thank whoever’s responsible for this pandemic. Take that message to your boss, Agent Orange. We could not be more grateful.  

And remember, if we are ever pinched for what we did here, just lie. Tex, can you be sure to delete this recording before anyone tweets about it.

Tex: Oooh. I think we might be too late.

End of recording.

The James Madison/Mitch McConnell Battle for the Nation's Health

Here’s a little ditty in honor of (and with apologies to!) the brilliant Lin-Manuel Miranda’s Cabinet Battle #2 from Hamilton, which of course, everyone can now catch on Disney Plus! 

Our inspiration? Yesterday's Wall Street Journal article outlining how Senator Mitch McConnell plans to try to hold hostage desperately needed federal funds by demanding brutal limits on the legal rights of all Americans. His ideas include legal immunity for bad actors whose workplaces are unsafe, massive federal “tort reform” like caps on damages and other limits on the power of local juries, and dumping all injury and medical malpractice cases into federal courts – the very courts he is now furiously packing with extremist right-wing judges. Oh, and it's retroactive to the 1918 Spanish flu. (Only kidding - just to last December!)

Our rap battle is between James Madison, who wrote the Bill of Rights when he was in the U.S. House (he later became President), and current Senate Majority Leader Mitch McConnell, who apparently couldn’t care less about the U.S. Constitution or the American public.

Secretary Alexander Hamilton presiding:

The issue on the table, whether unsafe businesses should be accountable during a pandemic
And do we reward bad actors, it seems academic
That we should stay out of it and instead protect workers and consumers
The decision on this matter IS subject to congressional approval
But you must get the nation to concur
President Madison, you have the floor, sir

President James Madison:

When we drafted the Constitution, when we were writing it
We promised Americans the Seventh Amendment
The right to civil jury trial, which
Someone now you want to destroy
Mitch
We expected future Senators like you to
Protect this right instead of what you wanna do
To make dangerous Big Businesses unaccountable
And make barriers to the courthouse practically insurmountable

Stand with the people who are suffering through this pandemic
I know the U.S. Chamber is in your ear and
Driven by greed want to strip people’s rights
I'll remind you that they are not elected leaders  
They know nothing of empathy
For the American people, their mountains of money, fraudulent supremacy
Concern for the public, their detested members don’t have any
Everything they do betrays the ideals of our nation
Ooh
Hey, and if ya don't know, now ya know, Mr. Hamilton

Hamilton:

Thank you, President Madison
Senator McConnell, your response

McConnell:

You must be out of your Goddamn mind if you think
I’m going to do one thing to anger my amoral friends
They paved my way into the Senate
A corrupt game, and I get the credit
What’s good for the U.S. Chamber is good for me
So for unsafe businesses and industries, immunity
Who cares about workers and consumers low on money
They’re unimportant to the nation’s recovery. 
Until we comply with the Chamber’s demands,
I’m holding the nation hostage, Congress do as I command!

Hamilton:

Enough, Madison is right.
The nation’s too ill to start this kind of fight
We need to protect people and the Constitution both
I seem to recall that we all took an oath
The people need confidence
That bad actors will be accountable
And that being forced back to work
Won’t make their life struggles compoundable
It's a little disquieting you would let corporations blind you to reality
Mitch

McConnell:
Sir

Madison:

Draft a bill that helps the public
Did you forget your duty?

McConnell:
What

Madison:
It’s not about cruelty
You accumulate power while the nation’s infectious
And in our hour of need, you’re nothing but reckless
Someone oughta remind you

McConnell:
What

Madison:
You're nothing without the U.S. Chamber behind you
Mitch
Their lobbyists are calling

Medical Malpractice Insurance Magical Mystery Lore

Confused mixed messaging should be America’s top motto as we try to live (emphasis on that word) through a lethal pandemic. Trump pushed drugs that are harmful to COVID patients, according to his own FDA. Politicians in states now seeing terrible virus surges, like Texas, are refusing to tell people to wear masks even though mayors are begging for this - since masks clearly work. But confusion reigns. Just check out a recent The View, when all hell broke loose over discussion about the safety differences between indoor and outdoor events.

With this in mind, welcome to the latest edition of the Medical Liability Monitor (MML), a $500/year medical malpractice insurance trade publication. In service of pushing the agenda of insurers while at the same time negating it, this is confused mixed messaging at its best.

The agenda, to put it simply, is to price gouge doctors with unnecessary rate hikes and blame patients who are negligently injured and go to court. Before the pandemic hit, the industry was already talking about hitting doctors with premium hikes and blaming lawsuits for this, even though there had been no jump in claims, no trends at all in that direction, and huge industry profits. (See this report.)

Now that we are a few months into a global pandemic, most of us have adjusted to entirely different realities. For example, almost no one other than COVID-19 patients have been interacting with the health care system. And the legal rights of COVID patients who were negligently treated have been eliminated by “emergency” legislation or executive order in half the states.

If you read some of the nonsense coming out of the insurance industry, however, you might never know that. For example, the headline story in MML’s June 2020 issue, "A.M. Best Maintains Negative Outlook On MPL Segment For 2020, COVID-19 Outbreak Exacerbating Challenges For Insurers," is basically a list of greatest hit complaints about “deterioration in underwriting results” and “dim prospects for the segment's profitability” due to things like the “surge of litigation” from the pandemic. 

But keep reading. As to that litigation surge, they also write: “As of May 7, 2020, eight COVID-19-related medical malpractice lawsuits have been filed across the U.S., and more are likely to follow.” Eight. And no they are not. There are almost no COVID-related medical malpractice cases according to those tracking this. 

And then there are other articles to note in that same MML edition. Here is one called, “Almost 55% Fewer Americans Sought Hospital Care In March-April, Driving A Clinical And Financial Crisis In U.S. Healthcare,” with MML reporting:

The analysis reveals that, across all service lines, and in every region of the country, there was an average 54.5% decrease in the number of unique patients who sought care in a hospital setting. The sharp drop in encounters is linked to the cancellation of elective surgeries during this time period.

Surgeries are an interesting benchmark. There are about 400,000 preventable surgical errors each year in the United States, no doubt some of which lead to insurance claims. But as MML reports, due to COVID,

[T]here were significant declines in the number of hip (79% drop) and knee (99% drop) replacement surgeries as well as in spinal fusions (81% drop) and repair of fractures (38% drop). Coronary stents (44%drop) and diagnostic catheterization (65% drop) also saw significant declines. Overall diagnostic volume declined by 60%.

No procedures, no preventable errors, no insurance claims. Some state insurance departments have figured that out, as MML also wrote this article: “New Jersey Demands Premium Refunds, California Expands Its Refund Order.” They report:

New Jersey Department of Banking & Insurance last month issued Bulletin No. 20-22, which orders the state's insurance companies to make a partial premium refund or other adjustment for certain specified lines of insurance that have experienced a reduction in loss exposure due to the COVID-19 pandemic [including medical malpractice insurance].

Similarly in California, Commissioner Ricardo Lara is “requiring insurance companies to return partial insurance premiums to consumers and businesses amid the ongoing COVID-19 pandemic” including medical malpractice premiums.

So thanks MML. You’ve certainly help clear all this up!

Insurance Industry Low-Balling Lowlifes Carry On

Here’s an interesting factoid: 70% of insurance industry employees have attended “on-line happy hours” since the pandemic’s start – more than just about any other group in America. Honestly, if I worked in a morally bankrupt industry trying to take advantage of a lethal pandemic, economic collapse and civil unrest, I might turn to alcohol too.

Actually, I have found that drinking helps get through the infinite number of online insurance industry webinars that I’ve listened to lately, where representatives try to explain the importance of exploiting these multiple crises. If there is one thing these companies know how to do, it’s holding onto money. In fact, the property/casualty insurance industry has stored away so much excess profit that it now sits on more surplus than at any time in history – a record level of well over $800 billion, which doubled from 2004 to 2018, quadrupled since 1994, and has risen by more 5,000% over the past 60 years. 

One of my favorite recent webinars was the May 19 presentation featuring insurance defense lawyer Ellen Greiper and James Dorion of insurance consultanting firm Willis Towers Watson, among others. They explained that while the backlog of cases due to pandemic-related court closures is, for most people, a troubling development, for insurance companies it could be a downright bonanza. In fact, it seems this is their ultimate fantasy come true. With no level playing field - in fact no playing field at all - insurance companies can finally force injured people to accept their lowball settlement offers.

A giddy Ellen Greiper put it this way: “I have had a flurry of phone calls, I would say in the last two weeks, from plaintiffs who are now willing to take that [settlement] amount I had offered before.… Those plaintiffs are realizing that they are not going to get a trial for at least two years [and they] may be out of a job now, or may be losing money that want to settle.” Echoed Mr. Dorian, “I’ve heard almost across the board from claim leaders at major insurance markets saying that they’re seeing opportunities and looking to capitalize on them where they can settle things more advantageously than they would’ve been able to a couple quarters ago.” (emphasis added).

Thank goodness for the California Department of Insurance, which is trying to get ahead of this cheating racket by sending notices to insurance companies, telling them that it is a violation of the California Unfair Practices Act to exploit the closure of the court system “by offering financially strapped claimants low settlements.”

“The department has been informed that some insurers and other persons engaged in the business of insurance in this state are unfairly taking advantage of the COVID-19 crisis and providing unjustifiably low settlement offers knowing financial need is high and recourse to the civil court system in the state is currently severely limited,” the notice said. “The department has also been informed that certain insurers and other persons engaged in the business of insurance in this state are lowering or failing to make settlement offers with full knowledge that, because of the reduced California court schedules, policyholders are unable to obtain prompt redress in the California court system.

“This lack of access to the California court system puts policyholders who are already in severe financial hardship at a disadvantage and vulnerable to unjust settlement practices,” it said.

Of course, low-ball settlement offers aren’t the half of it. The way this industry is trying to argue their way out of paying claims to their small business policyholders is utterly breathtaking. Take business interruption insurance, which is meant to cover business losses. Many businesses dutifully paid premiums for this coverage for years. They are now being told their policies cover neither losses due to the pandemic lockdown nor civil unrest that may have also forced businesses to close.  

First, ever since the nationwide lockdown, this cash-rich industry has been insisting they owe nothing to their business customers who paid premiums to cover business interruption losses. (See our earlier post.) They say either that the fine print in policies exempts virus-related business losses entirely, or even if it doesn’t, still limits what they owe because these businesses suffered no physical damage from a virus.   

Now that there is physical damage due to civil unrest, they’ve come up with new escape valves. For example, some say they will deny claims by arguing that if there are two concurrent causes for a business to be closed (i.e., pandemic and looting), they’ll only pay if the covered reason (say, looting) is the predominant cause of the shutdown. If not, they don’t have to pay a dime. And if they can’t get away with that, they’ll go the low-ball route and refuse to pay really what they owe saying essentially that since businesses are already losing money due to the virus, they are not making much anyway. That means less for insurers to restore. I mean, you could go in circles all day finding your way out of this logic. Former industry spokesperson Robert Hartwig summed up the windfall they expect over all this by saying that by refusing to pay what they owe, “The pandemic could cut industry losses from the civil unrest in half, from about $1 billion to $500 million.”  Whoop di doo.

But don’t pop the champagne cork yet, Mr. Hartwig. On June 4, the Consumer Federation of America brought this whole con job to light, calling on all major insurance companies to “not take unfair advantage of a two-pronged crisis that is wreaking havoc on so many small businesses in America” and “to pledge not to deny or underpay business interruption claims resulting from riots or civil disorder from businesses also impacted by the COVID-19 pandemic.” They said,

We write to ask you to make this very simple pledge to the businesses you insure across the country:

We pledge that our insurance company will not deny business interruption claims resulting from a riot or civil disorder because a business has been shuttered as a result of the pandemic or on the basis of a previous decision to deny a business interruption claim based on a virus exclusion in our policy.

We further pledge not to reduce the amount of payment available on business interruption claims resulting from a riot or civil disorder below the amount that would have been paid prior to the pandemic.

Hopefully state insurance regulators or lawmakers will take notice and get involved. I’d like to believe the industry would do the right thing on its own, but these are the same people still obsessing over a case they lost nearly a year ago involving a grandmother and grandchildren killed in a head-on tractor-trailer crash. On top of that, they have decided that now is a great time to price-gouge their customers with rate hikes even though the industry is still sitting on record-breaking mountains of cash and claims have dropped due to greatly-reduced accident frequency.

But maybe instead, they’ll decide to treat their customers fairly, act honestly, and do the right thing. Maybe they’ll try to restore their reputation and no longer be one of the most detested industries in America. Maybe they will step up and help this country at a time of multiple crises instead of finding ways to hurt us…  

Naaaaaaaahhh!  (Video below in honor of J. Robert Hunter.)

 

Immunity Backlash

Well that didn’t take long. Our last PopTort, Immunity Madness, focused on the push to immunize the nursing home industry from liability, removing the financial incentive for nursing home owners – including for-profit companies –  to maintain safety. No sooner did we post this than Big Business lobbyists started pushing hard to immunize all unsafe businesses, with Senate Majority Leader Mitch McConnell demanding that the next federal stimulus bill contain complete immunity for negligent companies. But his “red line,” as he called it, is now being called a “pipe dream.” (Malaphor alert!)

Starting with nursing homes, a New York Times article skewered Governor Andrew Cuomo for slipping nursing industry immunity into his budget, writing,

In New York, 5,300 nursing home residents have died of Covid-19. The nursing home lobby pressed for a provision that makes it hard for their families to sue.…

Advocates for nursing home residents said there were three longstanding safeguards against bad homes: family members who frequently visit; regular inspections by government regulators; and, as a last resort, lawsuits that can hold negligent homes accountable. But families can no longer visit. Regulators have largely stopped inspecting.

“All of the systems there to protect people are gone,” said Toby Edelman, a senior policy attorney at the Center for Medicare Advocacy. “To me, the combination — rules are waived, protections are waived, nobody is going in to check. And now immunity? That is a lethal combination.”

As if that weren’t enough, Nils Lofgren, E Street Band guitarist for New Jersey’s “pre-eminent hero,” came to realize that his neglected and infected mother-in-law was in a facility that had also been granted immunity by New Jersey’s Governor. Not giving up, he said,

We’re just horrified that people’s first reaction is, ‘Well we’re making a lot of money, but now let’s make sure we’re not liable for what we promised to do, in writing’.…Don’t forget, they look you in the eye and say your loved one will be cared for.… It’s unconscionable and immoral and disgusting.…It’s like their true colors are coming out, and I hope we can hold them accountable.

Editorials in other states started popping up urging lawmakers not to grant nursing home immunity. 

Then in Utah, which actually did go the next step and grant immunity to unsafe businesses, the impact of rewarding bad actors with immunity quickly became pretty obvious: 

Nearly half of the employees of a Utah County business tested positive for COVID-19 after the business instructed employees to not follow quarantine guidelines and required staff who had tested positive to report to work, according to a written statement from county executives.

The statement, which was released Monday evening and was signed by Utah County Commissioners Tanner Ainge, Bill Lee and Nathan Ivie and the mayors of each city in the county, said that 48% of employees of the unnamed business tested positive for COVID-19. 

Then, the Republican-led U.S. Senate Judiciary Committee held a hearing on the immunity issue. But rather than providing a forum to discuss McConnell’s “red line,” everyone rather chose to emphasize the far more urgent need for clear, science-based, and enforceable reopening guidelines. If that were done, liability – a red herring issue anyway - would take care of itself.

Unfortunately, so far all we have seen from the Trump administration is a politicized guidelines process, resulting in weak and biased guidelines. Even the CDC has been forced to step back from its public health recommendations.  

But the good news is, these immunity developments have now crystalized thought and analysis about it, leading to strong “anti- immunity, pro-strong regulation” editorials. See, for example, the New York Times. The Boston Globe. The Orlando Sun-Sentinel. The San Francisco Chronicle. The Waco Tribune-Herald. 

It also appears that the nursing home immunity issue was a bit of a bellwether, showing both the tragic public health impact and the potential political cost for politicians thinking about business immunity. In fact, when the issue of business immunity came up at Cuomo’s press conference last week, he punted to Congress and fell back on the message made clear at the Senate hearing: businesses should just comply with the regs.

Q: if businesses start to reopen, is there liability if there is an outbreak and should that we waived?

Cuomo: There is federal legislation now pending that is going to deal with this liability issue all across the board but it is a big question. If I’m advising the business owners, I say make sure you take all the required guidance and you follow the guidance. And the guidance is quite specific. So I would urge that they all do that. 

Mitch McConnell, you’re gonna lose on this. Move on.