Personal Injury and Social Security Disability Blog

Farmers Given OK To Raise Texas Homeowners Insurance Rates (Again)

I just wrote last week about the ridiculous situation in Texas regarding homeowners insurance policies and rates. And now, in a relentless effort to make Texas more "business-friendly" by ensuring that Texans continue to pay the highest premiums in the country, our Insurance Commissioner has approved another rate increase by Farmers. This increase is 10%. Apparently the almost 4% increase by Farmers in March of 2011 was not "business-friendly" enough for the company.

It could be worse though. In its initial filing Farmers actually said an increase of 52% could be justified, but the company was willing to settle for only 10%. What a racket!

Report: Decade-Long Review Shows Texas Supreme Court Is Activist, Ideological

I wrote last month about the Texas Supreme Court, and the fact that studies have revealed it to be business-friendly. Now the consumer group Texas Watch has issued a lengthy report detailing this bias by the Court in favor of businesses over consumers. Here are the details from Texas Watch:

The Texas Supreme Court has a long history of favoring corporate defendants over families and small businesses, according to a decade-long review of the Court’s decision making by Court Watch, a project of the non-profit Texas Watch Foundation.

Court Watch reviewed the 624 cases involving consumers decided by the Court between 2000 and 2010. The report, “Thumbs on the Scale: A Retrospective of the Texas Supreme Court, 2000-2010,”finds that the state’s high court for civil matters “has marched in lock-step to consistently and overwhelmingly reward corporate defendants and the government at the expense of Texas families.”

“The Texas Supreme Court is an activist, results-oriented body that over the last 10 years has developed into a safe haven for corporate defendants at the expense of individuals, families, and small business owners,” said Alex Winslow, director of Court Watch. “The statistics speak for themselves. The court’s pro-defendant ideology can not be disputed.”

 

 

AAJ Assails Supreme Court Ruling That Credit Repair Firms Can Require Binding Arbitration

The ABA Journal reported that the Supreme Court "has ruled that consumers who received the Aspire Visa credit card are bound by a mandatory arbitration provision in their applications." Justice Antonin Scalia wrote the majority opinion in the case, CompuCredit Corp. v. Greenwood, with Justice Ruth Bader Ginsburg was the only dissenter. The class-action lawsuit under the Credit Repair Organizations Act featured plaintiffs who claimed they were promised $300 in available credit for a low-rate Aspire Visa card, but were charged $257 in fees during the first year, noting that the Act requires credit repair organizations to tell consumers, "You have the right to sue a credit repair organization that violates the Credit Repair Organization Act." Gary Paul, president of the American Association for Justice, "criticized the decision in a press release." The AAJ release stated, "With this ruling, the US Supreme Court has given corporations a way to escape accountability by forcing consumers into a rigged and biased forced arbitration process, even when Congress expressly provides a remedy in a court of law."

The Los Angeles Times adds that although the 1996 law specifically gave customers the right to sue any firm in violation, the Supreme Court "ruled Tuesday that credit repair companies could block such lawsuits and instead force disgruntled customers into binding arbitration if they had agreed to such a provision in the fine print of their agreements." The Times observes that the decision "is another in a string of high court rulings in recent years that have backed an arbitration clause over a customer's right to file a lawsuit," and notes that the trend "alarms some consumer advocates, who complained that arbitration proceedings typically favor companies and remove the strong deterrent of class-action lawsuits."

The AP reported that the 9th Circuit had interpreted the 1996 law's provision giving consumers a right to sue as being "a right to go to court, rather than be forced to submit to arbitration," although two other federal appellate courts had ruled otherwise. Reuters and the Wall Street Journal /Dow Jones also reported the story.

Some major credit cards are dropping arbitration. Even as the Supreme Court was overruling a 9th Circuit decision that the Credit Repair Organizations Act barred mandatory binding arbitration, CreditCards.com reports that some of the nation's largest credit card companies, including Chase, Bank of America and Capital One, "have announced that they are dropping the arbitration requirement from their consumer agreements or will not enforce it." The article also noted that the Minnesota attorney-general had sued a major arbitration firm for deceptive practices, and that the American Arbitration Association had called for reforms in mandatory arbitration. 

From the American Association for Justice press release.

 

Texas’ New Insurance Chief Being Watched by Consumers, Lawmakers, and Industry

Texas has long had one of the weakest insurance departments in the nation — a department controlled by the insurance industry, and not at all helpful to consumers who have complaints. But now there is a new head of the department, and we can at least hope for improvement. However, so far there does not appear to be much reason to expect a shift from protecting insurance companies to protecting insurance consumers. The Dallas Morning News ran a profile of Eleanor Kitzman. Here are excerpts:

Five months on the job as Texas’ top insurance regulator, Houston native and former insurance executive Eleanor Kitzman is under close scrutiny by consumer groups, lawmakers and insurers as she deals with the first major rate filings of her tenure.

As head of the agency that regulates the state’s multibillion-dollar insurance industry, Kitzman will make decisions that directly affect the pocketbooks of most Texans — those who buy auto, home, health or other types of insurance — as well as the business fortunes of hundreds of insurers.

Her lengthy background in the industry — including the auto insurance business she started in South Carolina — gives her a leg up in overseeing the market, but also makes some consumer groups skeptical about whether she will hold companies accountable for anti-consumer practices.

“I have a different agenda than I did when I was running my insurance business or working as an attorney for insurance companies,” Kitzman said in a recent interview. “I know how the business works, so I know what insurance companies can do.”

Kitzman insisted her background and knowledge of insurance put her in position to “better serve consumers in every way.” But, she added, “having a robust, competitive market is very good for consumers.” She added: “I can also recognize gratuitous whining [by insurers] when I see it.” But consumer advocates fear she’s already shown her tendency to favor insurers.

In her first major decision last fall, Kitzman approved a rate plan by the state’s largest insurer, State Farm, that will begin switching many of the company’s homeowner policies to a higher deductible. Policyholders will have to shoulder a greater share of their property losses — while paying slightly higher rates. The overall rate increase was only 2 percent in North Texas, but Kitzman acknowledged to a Senate committee that State Farm customers will be getting less coverage for their money because of the new deductible.

A leading consumer group, Texas Watch, accused her of giving in to the “biggest bully” in the Texas insurance market. “This was Commissioner Kitzman’s first big test, and she failed miserably,” said the group’s Alex Winslow. “Insurance companies and their lobbyists are crowing over the decision.”

The "I Have A Dream" Speech

It is difficult to comprehend the profound impact on millions of people that a 16-minute speech delivered almost 50 years ago has had. We need to listen to this speech more often than once per year. Here are links to the text and to the audio. Please take a few minutes on Martin Luther King, Jr. Day to refresh your memory.

Governor Perry’s Texas Supreme Court Picks Criticized As Too Business-Friendly

Anyone in Texas who is involved in consumer rights or plaintiff law has had concerns for years about the makeup and the big-business proclivities of the Texas Supreme Court. So it came as no surprise to us to read a recent article in the Dallas Morning News regarding Governor Rick Perry's appointments to the Court. Here are excerpts:

Over his 10 years in office, Rick Perry has picked more Texas Supreme Court justices than any other governor, and if he wins the White House, his choices could be a clue about what kind of justices he would nominate in Washington.

While Perry has been praised even by his critics for bringing diversity to the state’s highest civil court, critics say the governor leaned heavily on conservative, business-friendly ideology and gave too little consideration to judicial qualifications.

Texas high-court judges are elected, but the governor fills vacancies when sitting justices step down, so six of the nine current justices (all are Republicans) are Perry picks. Of those, four are racial minorities, two are women, and two have no prior experience as a judge. A Perry spokeswoman said the governor appoints the most qualified people based on their experience, background and legal philosophy.

What the appointees have in common, consumer groups, environmental watchdogs and other Perry critics say, is a strong enough leaning toward corporate interests that it’s nearly impossible for individuals to win cases against large corporations.

“Over the last decade, the Texas Supreme Court has become a safe haven for big insurance companies and corporate wrongdoers and has developed a well-earned reputation as results-oriented,” said Alex Winslow, director of Texas Watch, a consumer advocacy group. “Time and again, this activist court has rendered decisions that defy logic, ignore precedent, and rewrite the law in order to reach a result that benefits a few powerful corporate interests.”

The justices say this criticism lacks merit because they are following the law as the Legislature enacted it.

“The court’s role is to interpret the laws as written by the Legislature,” said Justice Eva Guzman. “So if the Legislature has passed a law that tends to favor individuals over corporations, or vice versa, then the court interprets the law to give effect to the Legislature’s intent as expressed in the words of the statute.”

Statistics show recent court decisions tend to favor oil companies, insurance firms and other big businesses. A report by Texas Watch found that since 2000, consumers have won 22 percent of cases in the high court, while defendants have won 75 percent.

Many point to the difficulty, for instance, of bringing suit against a nursing home or hospital. While lawmakers enacted measures in 2003 to cut down on lawsuits against doctors, the court has construed those statutes to mean that almost any suit over what happens in a medical environment is a malpractice case.

That means when patients suffer things like spider bites and sexual assaults, it’s tough to win at the Supreme Court.

“This court twists and contorts basic logic to reach its conclusions,” Winslow said. “The court has broadened and expanded an already draconian law and made it even worse.”

PolitiFact Calls Governor Perry's Tort Reform Claims False

The Hill "Healthwatch" blog reported, "The website PolitiFact.com on Friday threw some cold water on Texas Gov. Rick Perry's (R) claims about tort reform in his state -- claims tort-reform supporters often tout as a model for other states." While campaigning, the governor has said that "Texas gained 21,000 new doctors because of malpractice reforms in his state." However, PolitiFact "found that in the years since Texas's tort reform law passed, the number of doctors in the state has risen only slightly more than the overall population." Therefore, the site called the claim "false."

Marilyn Werber Serafini also cited the PolitiFact analysis in NPR's "Health" blog, noting that "Texas has only about 13,000 more doctors in the state and the historic trends suggest that population growth was the driving factor." PolitiFact's Jon Greenberg also noted other aspects of "PerryCare," including that "'Rick Perry believes the best way for the federal government to improve health care is to stimulate job creation so more Americans are covered by employer-sponsored health plans,' according to his campaign website."

Additionally, the Daily Kos highlighted a number of reports debunking Perry's tort reform claims. A July article from the Austin American-Statesman reported that "almost half of the state's job growth in the past two years came in the education, health care and government sectors." More recently, an August Washington Post article noted Perry's job growth claims but said "he is less forthcoming about the 26% of Texas residents who lack health insurance - ranking 50th among the states - compared with a national average of 17%." And a Public Citizen report said Perry's 2003 tort reforms haven't tamed health costs but "Texas Medicare reimbursements have actually been rising faster than the rest of the country."

From the American Association for Justice news release.

Businesses’ Fear of U.S. Jury System is Irrational

Why does the business community seem to be so afraid of jury trials? The U.S. Chamber of Commerce has spent many millions of dollars in the past few years lobbying Congress to loosen regulations on business and to restrict the use of jury trials in disputes between consumers and businesses. The Houston Chronicle ran an excellent editorial recently questioning this fear. The authors are attorney Tom Melsheimer and judge Craig Smith. Here are excerpts:

With no shortage of real threats to keep U.S. executives awake at night, it's surprising that so much time and energy is wasted trying to make sure that 12 average citizens in a jury box are not allowed to hear their business grievances. This fear of the jury system has become a pervasive phobia for many in corporate America.

Take former Halliburton subsidiary KBR, which spent four years and no doubt an enormous amount of legal fees fighting tooth and nail to keep a jury from hearing Jamie Leigh Jones' claims that she was drugged and raped by a KBR coworker while working for the defense contractor in Iraq. Like many of its business peers, the Houston-based KBR instead preferred to have the claim handled discreetly, behind closed doors, in what is widely believed to be a more business-friendly arbitration venue. In fact, the case wound up in a federal courtroom in Houston only after U.S. Senate intervention that made a sexual assault exception for the standard employee arbitration clauses for defense contractors.

Funny thing, when jurors were finally allowed to weigh the evidence earlier this month, they agreed that Jones' claims were not supported by the evidence and testimony. Meanwhile, the public airing of the allegations in open court revealed key holes in the evidence and gaps in Jones' account of what happened. The jury also heard compelling evidence that she had exaggerated and embellished her claims, among them that KBR locked her in a shipping container and restricted her access to a telephone after she reported the attack.

Had this case been resolved in arbitration as KBR had originally hoped, the outcome likely would have been the same. But the lack of transparency inherent in arbitration proceedings would have done nothing to resolve doubt about the allegations and the final outcome. KBR's favorable outcome would have been additional ammunition for those inclined to think the worst of its parent company at the time, Halliburton, whose former CEO, former Vice President Dick Cheney, was one of the Iraq war's most vocal supporters.

Of course there are plenty of examples of individual jurors behaving badly, but as the KBR case and so many others show, jurors do take their oaths seriously and there's good reason to support the unbeholden jury system guaranteed by our Founding Fathers in the Bill of Rights.

The long and admirable fight of Jones to remove her case from arbitration and take it to a jury had a prominent role in the Hot Coffee documentary now in regular rotation on HBO. The film's namesake case, the 1994 verdict by a New Mexico jury against McDonald's for serving dangerously hot coffee and causing disfiguring burns to an 81-year-old woman, is another popular, if misguided, reference point for those who want to criticize our jury system.

A look at the facts shows the outcome to be another example of the system working, as opposed to a poster child for tort reform. Everyone blamed Stella Liebeck for spilling coffee on herself, but no one, until the jury, considered that the company might bear some responsibility for ignoring repeated warnings and a documented string of injuries. This notion of shared responsibility doesn't let the individual off the hook. It just doesn't put them on the hook alone.

Jurors make a solemn pledge, and it's reassuring to know that that still means something today. That's why a jury could rule against a woman who claimed KBR was responsible for her sexual assault. That's how a jury could hold a business partially responsible for knowingly selling coffee so hot that it caused disfiguring burns.

Melsheimer is the managing principal at Fish & Richardson in Dallas.Smith is judge of the 192nd Civil District Court in Dallas County.

A Lawsuit Is Never Frivolous When It's About Your Family

The Dallas Morning News columnist Steve Blow wrote last weekend about a local couple who have been picketing a nursing home because a relative died there. The couple is frustrated because every lawyer they've talked with has told them that lawsuits against nursing homes are essentially worthless in Texas since passage of "tort reform" in 2003. I agree with those lawyers.

The irony is that this couple describes themselves as conservative Republicans who are opposed to frivolous lawsuits. My guess is that they cheerfully voted for tort reform, thinking the changes in laws would never affect them. Now that the wife's father was allegedly killed through the nursing home's negligence, they suddenly have a different viewpoint on tort reform.

We get calls or e-mails every week from people in this situation, and we always have to explain that in Texas there is not much reason now for nursing homes, or to a slightly lesser extent doctors or hospitals, to worry about the level of care they give. They know they are not likely to be held accountable in the judicial system for their negligent acts. Here are excerpts from the newspaper column:

Bill owns a business installing audiovisual equipment. Kelly is a teacher. The Frisco residents identify themselves as conservative Reagan Republicans. Bill still considers himself a supporter of lawsuit limits.

“But you don’t throw the baby out with the bath water,” he said. “Frivolous lawsuits are one thing, but legitimate ones need to be heard. And they’re not.”

But when they consulted with attorneys, they heard the same story over and over. Sorry, the lawyers said, but we don’t take nursing-home cases anymore.

Lawsuit changes approved by the Texas Legislature in 2003 capped noneconomic damages at $250,000. And since elderly, infirm nursing-home residents can’t show loss of earnings or other economic damages, that $250,000 becomes the most they can receive.

Mounting a medical malpractice case is expensive and time-consuming, and lawyers say they simply can’t afford to pursue a case with a maximum award of $250,000. So the threat of lawsuits against Texas nursing homes has virtually disappeared — along with their incentive for quality care.

Consumer advocate N. Alex Winslow of Texas Watch said medical malpractice restrictions are “generally awful” in Texas, but their effect on nursing-home residents is “acutely despicable.”

“We’re talking about the most vulnerable in our society — the elderly and disabled. We should be doing everything in our power to protect them,” Winslow said.

He said he knows of no study to document a decline in nursing-home quality, but he is confident that lawsuit caps have caused it. “It has to have,” he said. “Absent the possibility of being held accountable, it’s human nature to start cutting corners.”

Strange Bedfellows — Pharmaceutical Companies and Fancy Restaurants

The Boston Globe ran an interesting article last week detailing how expensive restaurants have banded together to fight for repeal or amendment of a 2008 Massachusetts law banning pharmaceutical companies from giving gifts of $50 or more to doctors. The restaurants say this ban is hurting their business, because the pharmaceutical companies frequently bought expensive meals for the doctors they were trying to influence. Here are excerpts from the article:

With seating for 30 in a private dining room wired with projection equipment, Dalya’s Restaurant at Bedford Farms was well equipped to host dinners put on by pharmaceutical companies for doctors they hoped would use their products.

Owner Frans von Berkhout said doctors liked to come to his restaurant in Bedford because they knew they were in for a good meal. But in 2008, when the Legislature made such gatherings illegal as part of a broader effort to limit the relationship between physicians and marketers, Dalya’s lost about 10 percent of its business, he said.

He and other restaurant representatives appealed yesterday to a panel of lawmakers to roll back the law and allow the doctor dinners to go on, in the name of supporting small businesses.

Consumer advocates said the change would be a dangerous undoing of a law aimed at protecting patients and curbing prescription drugs costs, even as the national trend is toward stricter controls.

Some members of the Joint Committee on Community Development and Small Business said the negative impact on restaurants seemed like an unintended consequence of the 2008 law, generally referred to as the pharmaceutical gift ban, because it prohibits gifts of more than $50 to doctors.

But Senator Mark C. Montigny, a Democrat from New Bedford and an author of the original gift ban, said there was nothing unintended about the law.

“The corruption of the sacred doctor-patient relationship by the pharmaceutical industry by schmoozing at fancy restaurants is exactly the consequence that the law was intended to prevent,’’ he said.

Such dinners contribute to the “illegitimate relationship’’ between physicians and industry, he said. Advocates say such connections to marketers can make doctors feel obliged to prescribe high-cost brand name drugs, even when cheaper options may be more appropriate.

Such gifts aren’t free, said Amy Whitcomb Slemmer, executive director of the consumer group Health Care For All. “They come with strings attached.’’

The bill before the committee is one of two efforts to roll back the gift ban. In April, the House added a measure to its budget proposal, now being debated in conference committee, that would repeal the law altogether.

Advocates aid they are skeptical of the idea that the gift ban has hurt the economy. They point to talks of expanding the Boston Convention and Exhibition Center and to Department of Revenue numbers that show restaurant revenues are growing.