Articles Posted in Court Access

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A report broadcast last Sunday on 60 Minutes brought into stark detail alleged abuses in the insurance industry. CBS News found a pattern, which it believes is replicated nationwide, of insurance giants failing to pay life insurance policies despite knowing that the insured person had died.

The report quotes Florida’s insurance commissioner calling the behavior “unconscionable, indefensible” and alleging that it is close to universal in the industry. Simply put, it involves insurance companies knowing that a person has died but failing to inform the beneficiaries of life insurance policies. Instead, the company simply waits for premium payments from the now-deceased policyholder to stop coming in, then cancels the policy for non-payment and pockets what would have been the benefit owed to a surviving spouse, children or grandchildren.

CBS adds: “In a little-known series of settlements, 25 of the nation’s biggest life insurance companies have agreed to pay more than $7.5 billion in back-death benefits. However, about 35 insurance companies have not settled and remain under investigation for not paying when the beneficiary is unaware there was a policy, something that is not at all uncommon.”

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It is an election year, so between now and November we can expect to hear many politicians at the national, state and local levels complain about trial lawyers and call for “tort reform.” As an article published this week in Slate outlines, however, an often disingenuous campaign designed to ‘protect’ big business frequently has an even more shocking effect – protecting child abusers and other people who injure children.

The article begins with the story of an Ohio pastor who was convicted of raping a 15-year-old girl in 2008. In addition to his criminal trial the man was sued by the girl and her family in civil court. As I have written in this space on many occasions, this right alone is important and worth defending. Access to courts for victims and their families is essential if justice is going to be served. As the article notes, quoting a legal scholar at New York University, often “the civil justice system is the only way for a perpetrator to be held directly accountable to the victim.”

A court awarded the victim $3.6 million in damages, but because of award caps required under Ohio’s tort reform laws she was only able to collect $350,000 – less than one-tenth of what the jury decided was her due. The girl and her family are now suing to have those caps declared unconstitutional on the grounds that they are “arbitrary and unreasonable, and thus a denial of due process.” Specifically, there is a strong argument to be made that damage caps violate the US Constitution’s guarantee of a trial by jury. An inherent part of that right is letting the jury decide what is fair – something that the tort reform movement seeks to stifle.

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As the holiday season kicks off this is a good moment to remind ourselves how important safety is, particularly when it comes to preventing injuries to children, especially since some dangers are not as obvious as one might imagine.

A recent report from Michigan Radio, the state’s public radio network, focused on potentially hazardous toys and other common items, taking its cue from an annual survey issued by the state’s Public Interest Research Group. The good news from the PIRG report is that “none of the toys this year tested positive for lead,” but the radio network went on to note that other hazards remain. In particular it quotes an emergency medicine specialist urging parents “to look out for toys that can break into small parts.”

A particular focus of the report is devices that are not toys but which children are apt to play with such as key fobs, small flashlights or inexpensive watches that may contain small ‘button-style’ batteries. These can be “particularly dangerous” if they are swallowed: the moisture in a child’s body can activate the battery’s contacts leading to dangerous burning of the esophagus. The report notes that many of the potential dangers stem from the fact that by law “button batteries have to be held in place on toys with screws – but that’s not a requirement for other common devices.

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Last week the United States Chamber of Commerce released its annual “Lawsuit Climate Survey” – a report the Chamber has published since 2002. The Survey is worth examining because its conclusions can tell us a lot about both the Chamber as an organization and about big business’ priorities and views of our justice system.

According to the website Public Justice, the Chamber’s “report summarizes the answers of a ‘nationally representative sample of 1,203 in-house general counsel, senior litigators or attorneys, and other senior executives who are knowledgeable about litigation matters at companies with annual revenues over $100 million.’” It is, in short, a survey designed to gauge the views of big business toward our courts, and to rank those courts in terms of their favorability toward large companies and their legal agendas.

According to Public Justice, the Chamber finds that state courts are generally more favorable toward companies than federal courts, and that they have become steadily more business-friendly over the last decade, albeit at a slow pace. “In 2003, Corporate America’s lawyers gave the state courts a score of 50.7; in 2015 they gave them a score of 61.7,” the website reports. In assigning letter-grades to states based on the ‘business-friendly’ record of their courts 52% of all state courts were awarded either an ‘A’ or a ‘B’.

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With the return of baseball there is also renewed interest this week in “subrogation” – a term that most non-lawyers aren’t familiar with, but one which could ruin the lives of many accident victims here in Oregon and elsewhere even as it enriches their insurance companies.

As outlined in a recent Bloomberg Business story, subrogation, a concept whose origins lie in the American Revolution, is a legal doctrine that allows insurance companies to claim damages from third parties in cases where they must pay claims. “An insurer, for instance, might seek to be repaid by the maker of a faulty furnace that caused a fire in a building the company covered,” the news agency writes. Few would argue with a straightforward example like that, but as is so often the case in modern America big business has turned a well-intentioned legal doctrine on its head in the service of its own bottom lines.

What has brought subrogation into sudden focus is the case of Bryan Stow, the San Francisco Giants fan who was beaten nearly to death in the parking lot of Dodger Stadium on Opening Day four years ago. Last year, Bloomberg reports, Stow won an $18 million judgment against the Dodgers and his two assailants (both of whom are now in prison) but “he has yet to receive any money” because his insurance company is aggressively using the legal system to try to claim millions from the settlement. This is happening even as his medical bills continue to mount, and as the 46-year-old faces a life of hospital visits, physical therapy and expensive ongoing medical care – not to mention decades of lost wages and the long-term emotional effect on him and his family.

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A recent article in Slate highlighted an important but little noticed executive order signed by President Obama on the last day of July. According to the online magazine, the “Fair Play and Safe Workplaces” order, as it is formally known, “requires companies bidding for federal contracts worth more than $500,000 to make previous violations of labor law public, if they have any to report.” A less well-publicized, but potentially further-reaching, provision “says that companies with federal contracts worth more than $1 million can no longer force their employees out of court, and into arbitration, to settle accusations of workplace discrimination.”

As the article goes on to note, arbitration clauses buried deep in the fine print have been spreading widely since a Supreme Court ruling (focused on cellphone contracts) upheld them in 2011. The result has been a loss of court access for many Americans. This trend reached both absurd and frightening proportions earlier this summer when food giant General Mills tried to contend that by ‘liking’ any one of its many products on Facebook or other social media sites, or simply by purchasing an item, customers would surrender the right to sue the company ever, over anything.

General Mills later retreated in the face of a storm of public criticism, but the incident highlighted a trend in corporate America that is little-noticed but deeply disturbing: efforts to use ‘terms of service’ to force ordinary Americans to surrender our constitutional right to a trial by jury, as guaranteed by the 7th Amendment. Slate, citing figures compiled by the watchdog group Public Citizen, notes that since that 2011 Supreme Court decision “at least 139 class action suits have died” including cases “brought by consumers who said they’d been stung by predatory lenders, or misleading mortgages, or false promises by vocational schools. And also on the line are complaints by employees of discrimination on the job.”

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A significant case involving alleged negligence leading to an industrial accident became more serious last week when obstruction of justice charges were added to it, according to the Associated Press. The news agency reports that a San Francisco-based “federal grand jury charged Pacific Gas & Electric… with lying to federal investigators in connection with a fatal pipeline explosion that killed eight people and leveled a suburban Northern California neighborhood in 2010.”

The AP reports that the new charge sheet lists a total of 28 counts against the utility giant, replacing an earlier indictment containing only 12 charges. It accuses PG&E of “lying to National Transportation Safety Board investigators after the blast.” In particular, it alleges that the company sought to mislead government officials about “pipeline testing and maintenance procedures.” A spokesman for PG&E told AP that he had not yet seen the charges, but that the company was expecting them. The company disputes the allegations.

If these charges are proven they reflect about as clear a case of bad corporate citizenship as one could imagine. Lying to federal investigators not before but after the company’s negligence has led to the deaths of eight people gives new meaning to the idea of putting profits before people. Righting wrongs like this is why we have an independent court system.

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In a reversal that highlights the power of public opinion, the Oregon Department of Transportation (ODOT) is backtracking on a plan to stop receiving reports on hazardous materials shipments that it is supposed to be regulating.

According to an article published in The Oregonian earlier this week ODOT had planned “to stop asking railroads for annual reports showing where crude oil moves in the state… because The Oregonian successfully sought to have them made public.” In other words, because a newspaper successfully argues that Oregonians have a right to know about hazardous materials being shipped through our state the state agency charged with regulating that industry planned to stop collecting the reports – reports which are required by law.

At the risk of stating the obvious, hazardous materials shipments are inherently risky. The possibility of an Oregon industrial accident as a result of negligence or improper training or procedures anywhere along a long chain of suppliers and hundreds of miles of railway track is significant. That is why ODOT is supposed to be regulating hazardous materials shipments: to exercise government’s function as the people’s representative in the interests of public health and safety. After the backlash prompted by the announcement the newspaper quotes ODOT director Matt Garrett acknowledging “in an interview that ODOT needed to begin fulfilling its duty as the state’s rail safety regulator to protect Oregonians, not the companies it oversees.”

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An article this week in The New York Times highlights the extraordinary measures some companies will take to avoid responsibility for their own actions. According to the newspaper, “General Mills, the maker of cereals like Cheerios and Chex as well as brands like Bisquick and Betty Crocker, has quietly added language to its website” that strips consumers of their right to sue the company for actions as simple as downloading a coupon or ‘liking’ the company or its products on Facebook.

Even more extraordinary, the paper reports: “In language added on Tuesday after The New York Times contacted it about the changes, General Mills seemed to go even further, suggesting that buying its products would bind consumers to those terms.”

The website language requires disputes with the company to be settled through arbitration rather than in the courts. Arbitration clauses have been common in the financial industry for decades but have steadily crept into other areas of American life in recent years. Large companies prefer arbitration because, unlike a trial, it is not open to the public and because the process, while supposedly fair, tends to favor deep-pocketed businesses. Since a 2011 Supreme Court ruling upholding the use of arbitration clauses in cellphone contracts this legal device has spread rabidly through the corporate world.

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A few days ago Michael Smerconish, a long-time talk-radio fixture who recently began hosting a show on CNN, ended his daily broadcast with a short commentary (see link below) that began as an essay about the GM ignition-switch scandal but ended up making a broader – and more important – point.

I have written several times recently about the ignition-switch situation. The faulty switches, mainly in Chevy Cobalts though other models are also effected, can sometimes turn the entire car off while it is moving at highway speeds, causing drivers to lose control. In the process they can also disable airbags. The problem led to fatal auto accidents involving at least 13 deaths (that is the number GM publicly acknowledges) and the recall of millions of vehicles – some of which have been on the road for more than a decade. The scandal has grown as it becomes clear that GM knew about the problem for years but was unwilling to spend pennies per car to fix it.

Telling his audience about the lawsuit that began the process bringing all of this to light, Smerconish recounts the story of a family searching for answers in the wake of the death of their 29-year-old daughter, of their decision to hire a lawyer and of that lawyer’s move to commission an independent assessment of the car. Everything that has happened in the years since began with this one case.

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