KUFM Commentaries 2008
Return To All Commentaries
Delay, Deny, Defend (January 22, 2008)
Yes, Hunt Is A Trial Lawyer (February 19, 2008 )
Preempting Our Constitutional Rights (March 18, 2008)
Justice Belongs To People (April 15, 2008)
Preempting Our Safety (May 13, 2008)
Founders Wary Of Corporate Influence (June 10, 2008)
Delay, Deny, Defend
January 22, 2008
Last week the insurance commissioner in Florida suspended Allstate's right to sell new insurance policies in Florida until Allstate produces subpoenaed documents on how it determines their premium rates. In November, Washington state voters approved an initiative implementing legislation that holds insurance companies liable for up to treble damages and attorney fees for wrongfully denied or delayed insurance claims - even though the insurance industry spent a record eleven MILLION dollars to fight the initiative. In September, a Missouri court ordered Allstate to pay a $25,000 per day fine until Allstate produces subpoenaed documents on its claims handling policies and procedures - the tab is nearing three MILION dollars as Allstate continues to refuse to produce the documents.
The story behind these stories is an industry wide practice of insurers delaying, denying and aggressively defending legitimate insurance claims - claims from their own insureds and from those injured by their insureds. And the name behind that story is McKinsey & Company, a giant of the business consulting industry hired by Allstate, State Farm and other insurance companies.
The public cover story has been that the claims handling policies and procedures refined by McKinsey were all designed to fight growing fraud in the car accident business. The center piece is what has become known as the Three Ds - delay, deny and defend. An integral component of the Three Ds is making low ball offers to those that have been injured - often amounting to less than the documented costs the injured person has incurred. Does it work? Over 80% of accident victims, according to those familiar with the industry, accept the get tough, low ball take it or leave it offers.
Experts say the new get tough strategy is adding up to billions in profit for the insurance companies and little, if anything, for the public. With the get tough approach, individual policy holders get dragged into court on minimum damage claims that previously were settled, yet there are no corresponding reductions in premiums - the touted benefit for fighting supposedly fraudulent claims.
Allstate's training manual details how that was going to be done. First, force what the manual calls smaller walk away settlements - the "take it or leave it offer." That's the low ball offer that over 80% of injured people will take. If that doesn't work, the Three Ds are brought out.
Deny - that's the "leave it" of the low ball offer. Delay: make numerous requests for information from the injured person, sometimes asking for the same information that has already been provided; submit the injured person to more medical examinations; refuse to provide information the injured person requests, then provide some of the information, and stall until absolutely required to provide the full information; schedule numerous depositions of potential witnesses and possible experts; file numerous motions with the court over multiple issues; and many more keeps the matter from getting before a court for years.
Defend - the result of the delay is that an injured person walks into the courtroom two, three or four years after the crash, and they don't look injured at all. The insurers' attorneys want the jury to forget about the medical bills incurred at the time of the crash, the testimony of the pain suffered in the weeks and months after the crash - they want the jury to ask themselves where's the evidence, today, of the pain?
And, it works all too often - juries will find damages in an amount less than what the injured person actually incurred just in medical costs.
But, the real payoff to the Defend strategy is that it forces an injured person's attorney to front expensive litigation costs, which in the end, she won't get back. By making these already relatively low dollar cases so expensive to litigate, fewer and fewer attorneys will take them.
Which means more and more injured people that accept the initial "take it or leave it" low ball offer. And that means more and more profit for the insurance industry. The property casualty insurance industry (those who sell coverage on homes and cars) is reaping huge profits. Property casualty insurers reported their highest profits ever, $64 billion, in 2006. This trumps the previous record profit of $44 billion they made in 2005, even after accounting for Katrina claims. Experts predict that 2007 looks like another stellar year for the industry.
Could that be why an Allstate is willing to pay $25,000 per day fines to keep their policies and procedures manuals out of the public eye, or why they are willing to risk losing the right to sell policies in one state? Is the money made by delay, deny and defend worth the price of secrecy? Evidently.
The insurance industry has awakened to the fact that its reputation has been seriously damaged. Frank Luntz, the Republican pollster and wordsmith, author of "the Healthy Forests Initiative" moniker has been hired to try and improve the industry's image. Maybe the industry should spend less time and money on a smoke and mirrors image campaign and just try paying legitimate claims on time and in good faith.
Links to more information on Deny, Delay and Defend tactics.
This is Al Smith for the Montana Trial Lawyers Association.
February 19, 2008
Last week's announcement by Jim Hunt that he was running for Congress brought immediate attacks from the Montana GOP. Hunt's chief negative according to the Montana GOP? He's a trial lawyer. A label that has become, consciously, a smear word in the GOP lexicon. The trial lawyer bashing was no surprise, given the decades long campaign by corporations and their GOP lap dogs to paint trial lawyers as evil doers on par with communists.
The Commonweal Institute, a nonpartisan think tank incorporated in Washington, DC, released a report prior to the 2004 election revealing the workings of the so-called "tort reform" movement. The report, "The Attack on Trial Lawyers & Tort Law" reveals the political and economic motivations of the "tort reform" movement. For more than three decades, business interests have invested billions of dollars to sell the public a distorted view of our legal system. Influencing public opinion has been a key strategic aim of the business-driven campaign for so-called "tort reform," which is designed to limit corporate responsibility and accountability, prevent civil lawsuits against corporations, and restrict citizens' ability to pursue recourse in the courts. In addition to these corporate backers of tort reform, however, there are also right-wing think tanks and other organizations, including the Montana GOP, that have played a major role in promoting "tort reform."
The GOP has also been dutifully and actively spouting the corporate "tort reform" disinformation campaign as part of its campaign against the American consumer. GOP consultants such as pollster Frank Luntz, have been pushing tort reform since the early 1990s. "It's almost impossible to go too far when it comes to demonizing lawyers," Luntz wrote in a memorandum to Republicans running for re-election. "Make the lawyer your villain by contrasting him with the little guy,' the innocent hard-working American who he takes to the cleaners."
That the Montana GOP would attack Hunt as a trial lawyer was to be expected. The effort to diminish or immunize corporations from having to be legally accountable and responsible for the harms they cause Montanans, "tort reform" as they call it, is enshrined in the platform of the Montana GOP.
Representative Rehberg has dutifully towed the GOP line during his time in Congress. He has consistently voted to limit corporate responsibility and accountability, prevent civil lawsuits against corporations, and restrict citizens' ability to pursue recourse in the courts. The one exception, to Rehberg's credit, is his support of the people of Libby - the only time I am aware of when he actually put the rights and needs of Montanans ahead of corporate interests seeking to avoid accountability and responsibility.
But the Montana GOP and their spin masters like Frank Luntz have it backwards when it comes to Jim Hunt - he doesn't clean out the little guys. He fights for Montana citizens who have been harmed by others, whether they are individuals, corporations or governmental entities.
In one case Hunt is known for he represented three boys whose mother was slain by their stepfather. Their mother was the victim of repeated domestic violence. The sheriff's office was well acquainted with the abuse, having made numerous visits to the residence. Knowing the abuser had a gun that the woman and others had been threatened with, even having emptied it of shells on occasion, the sheriff did not arrest the abuser or take the gun. The sheriff also failed to give the woman notice of her rights and options available to her as a victim of domestic abuse. After years of inflicting abuse, brandishing of the gun and threatening to harm himself and others, the abuser killed the boys' mother. Fighting against a system that protects governmental entities from accountability and responsibility, Hunt sued the sheriff and county, and he was able to achieve some justice for these boys' loss of their mother. The decision also sent a message to all Montana counties that failure to protect future victims of domestic violence could have consequences.
Recently, Hunt took on Allstate insurance. Allstate insured a Hardin warehouse, including property in rooms the owner leased in the building. A fire in the building destroyed personal items and business merchandise of one of the building's tenants. Allstate refused to honor the owner's request that the company pay for the tenant's items destroyed by the fire. Hunt represented the tenant and secured a decision from the Montana Supreme Court requiring Allstate to honor its policy.
Perhaps the easiest way to contrast Hunt, the trial lawyer, with Rehberg, the corporate poster boy, is to look at the Patient Bill of Rights. Hunt has supported a patient's right to hold an HMO legally accountable for the harm they cause when they wrongfully deny or withhold necessary and covered medical care - a position supported by the American Medical Association, among other healthcare providers. Simply, Hunt supports the proposition that patients and their physicians should make treatment decisions, not insurance industry bean counters more interested in profits than proper care.
Rehberg has consistently supported the insurance industry. Rehberg has characterized the patients' right to hold HMOs legally accountable as just a benefit to trial lawyers, which is simply untrue. Trial lawyers can collect attorney fees for cases where HMOs wrongfully deny or delay care under current law. Legal accountability of HMOs is not about attorney fees, it is about justice for the patients and their families who have been harmed.
It is simple - Hunt, a trial lawyer who advocates for people injured by corporations - Rehberg, a corporate good old boy who advocates to protect corporations from injured people.
This is Al Smith, a proud Trial Lawyer.
March 18, 2008
I've spoken before about the Bush administration's crusade to use federal administrative rules to preempt state laws that protect consumers. Agencies like the Consumer Product Safety Commission and the Food and Drug Administration are attempting to use rules so that the industries that they supposedly regulate do not have to be accountable and responsible in state courts for the harms they cause.
Last week the Insurance Institute for Highway Safety released a report on vehicle safety that illustrates how this rush to protect industries endangers all of us. The report deals with the automotive industry and a little regulatory history is necessary to put it in context.
Back in August of 2005 the Bush administration began this strategy of using federal administrative rules to preempt state laws that protect consumers. The National Highway Traffic Safety Administration (NHTSA) announced a proposed administrative rule for new roof crush standards for automobiles. Never mind that the standards were written by the auto industry and their agents in NHTSA. Never mind that the standards do little to actually protect citizens from known safety hazards that account for 6,000 to 7,000 deaths each year. Never mind that the industry has known about a clear link between roof crush and severe injury since the 1960's, yet they continue to lobby for and get standards that fall well short of what they can do to protect consumers.
No, the real kicker was that a part of the proposed rules would prevent state courts from holding corporate manufacturers accountable for their failure to provide safe vehicles. NHTSA has set safety standards for years, usually only after the auto manufacturers have agreed to the standards, and often, only after they have been repeatedly sued in state courts for failing to take reasonable and feasible steps to market a safe vehicle.
Corporate auto makers have been very successful at convincing NHTSA of their point of view. Maybe the revolving door of working at NHSTA, then working for the corporate auto makers, then working for NHSTA again and so on, has something to do with that. They have been less successful, however, in convincing juries in state courts that they should not be held accountable for injuries and deaths that could have been prevented with reasonable and feasible safety modifications.
The proposed roof crush rule takes care of that. It specifically prohibits state court actions if the vehicle meets NHSTA standards.
Now I'm sure that when I've commented on roof crush standards before that there were people out there who thought - oh, it's just the self serving opinion of another one of those trial lawyers. Well, my previous comments were inspired by information uncovered by trial lawyers over the years in the course of representing families devastated by severe, debilitating injuries and deaths due to defective vehicles - information pried from the auto industry's own scientific experts, and information readily available from other scientific experts and safety advocates.
The auto industry and NHSTA have consistently downplayed or denigrated such information critical of the industry's performance. They have quibbled for decades now over whether strengthening roofs made any real difference to the safety of vehicle occupants. They have diverted attention from roof crush by stressing seat belts and airbags, adopting the stance that only one thing could be improved, without explaining why consumers shouldn't be protected with both better restraint devices and better roof crush standards
The Insurance Institute's recent report confirms what trial lawyers and safety advocates have been saying for years - stronger roof crush standards will save lives. The Institute's President was unequivocal- "What we do know from this study is that strengthening a vehicle's roof reduces injury risk and it reduces it a lot."
The Insurance Institute's report Roof Strength and Injury Risk In Rollover Crashes can be found on their website at www.iihs.org. It concentrates on SUVs, which have a tendency to roll over easier than other vehicles and provides a chart to show which SUVs have stronger roofs.
NHSTA has delayed implementation of it's 2005 proposed standards. With the Insurance Institute report, maybe they will finally adopt more appropriate standards so that avoidable deaths can be reduced - some 200 lives per year could be saved in SUVs alone. Even if that happens, NHSTA still needs to remove the language that adherence to its regulations preempts state laws.
The preemption of state lawsuits removes a significant incentive for industries to improve the safety of products. Often, industries agree to safety standards only after they have been held accountable by juries in state courts for injuries and deaths that could have been prevented with reasonable and feasible safety modifications.
We face two questions. First, do we want industries held accountable and responsible for the preventable harms they have caused? Most importantly, do we want federal administrative agencies telling us we cannot exercise our Constitutional right to go to our courts when we, our children, parents or spouses have been injured or killed by a defective product?
This is Al Smith for the Montana Trial Lawyers Association.
April 18, 2006
May 1st is Law Day, America's yearly celebration of and reflection upon the unique role our legal system plays in this nation's democracy. Law Day was first proposed by American Bar Association president Charles S. Rhyne in 1957. He envisioned a special day to honor our strong heritage of liberty, justice and equality under law. In 1961, Congress designated May 1 as the official date of Law Day.
In many places Law Day has become Law Week, as national associations are joined by state and local bar and trial lawyer associations, businesses and schools in conducting thousands of programs on America's legal system and the many freedoms and protections it provides us.
When we think of America's legal system, it seems we most often think of our criminal justice system and the protections it offers to hold criminals accountable while also shielding innocent citizens from governmental abuses. In some ways, the more remarkable part of our legal system may be our civil justice system and the contributions it and our jury system have made to consumer health and safety.
For over 200 years, the American justice system has been an important vehicle for positive social change. No matter their wealth or social standing, men and women across this country know that if they or loved ones are injured by another, they can hold the wrongdoer accountable. And, often they play a role in ensuring that no other family suffers the same tragedy, by forcing corporations to take unsafe products off the market.
Our justice system has resulted in improved health and safety for all Americans:
The anti-miscarriage drug DES, the Dalkon Shield IUD and super-absorbent tampons that cause toxic shock are no longer on the market, ensuring that the health of women will never again be jeopardized by these products.
Children's pajamas that burst into flames no longer sit on store shelves. Unsafe cribs no longer strangle infants.
Firestone tires that blew their treads causing accidents that injured and killed Americans are now off the market.
Auto fuel systems no longer explode upon impact. Garage doors now have automatic reverse mechanisms, trucks have back- up beepers, farm tractors have roll bars -- the list goes on.
These changes have come about thanks to courageous and determined citizens, and the attorneys who represent them. Together, they have forced the negligent and reckless to account for their acts. Our legal system provides for justice -- through juries composed of ordinary citizens acting as the conscience of the community.
The importance and success of our civil justice system cannot be overlooked, especially now that this very system is under continual assault by corporate America. At a time when Americans increasingly sense an erosion of personal responsibility in society, our civil justice system remains the one institution that holds individuals and corporations and their CEOs responsible for their behavior, and forces them to change their conduct for the better.
Corporate CEOs however, are continually seeking ways to avoid legal accountability. Every year the U.S. Chamber of Commerce, on behalf of the CEOs of the large corporations whose interests the Chamber serves, releases a report purportedly ranking the civil justice system's of all fifty states. How does the Chamber gather the data for this report? Do they study court data or conduct their own research of court statistics? No. Do they interview judges, plaintiffs and defendants, attorneys for plaintiffs and defendants, jurors, politicians, or even members of the public? No. The only thing they do is to poll some 1,500 attorneys who represent corporations. For Montana, there are usually fewer than 10% of the corporate attorneys polled who profess to having any knowledge of our civil justice system.
The Chamber has used the report in advertising in some states and in Washington DC to try to convince the public and lawmakers that corporations need more protections and citizens need fewer rights. Using this report to make public policy makes as much sense as polling 100 prisoners at Deer Lodge and using their views as the sole basis to revamp our criminal justice system – forget the judges, crime victims, prosecutors, or the public, make policy based solely on the opinion of wrongdoers.
But, don't be surprised if this year's report becomes a catalyst in Montana's Chief Justice and Attorney General elections. The minions of the U.S. Chamber have been very active in other states, running particularly nasty independent expenditure campaigns known more for their mudslinging and campaign finance violations than for educating the public.
We should be proud of our justice system, and be ever-vigilant that citizens never lose their essential rights. In America, justice belongs to people, not politicians; to juries, not insurance companies; to individuals, not government; to injured workers and their families, not corporate CEOs.
This is Al Smith for the Montana Trial Lawyers Association.
(May 13, 2008)
Preemption has been used in the past where companies argued that legislation passed by Congress had preempted any claims brought under state laws. Such federal laws have been challenged on a constitutional basis, primarily arguing that the law in question did not specifically preempt state suits. Sometimes courts have held that state laws were not preempted because the legislation did not specifically provide that state suits were preempted. I've spoken before about the Bush administration's crusade to use federal administrative rules to preempt state laws that protect consumers, essentially bypassing Congress. Several agencies are attempting to use rules so that the industries that they supposedly regulate do not have to be accountable and responsible in state courts for the harms they cause.
Tomorrow, Congress will hold hearings on whether regulation by the Food and Drug Administration of drugs and medical devices should preempt lawsuits under state laws. Hearings are being held because the FDA has asserted in state law suits that its regulation of drugs and medical devices preempts state law suits against manufacturers that the FDA regulates, even if Congress has not specifically included statutory language to preempt state law claims.
The FDA and the drug companies argue that no citizen should be allowed to sue a drug maker for injuries associated with an FDA-approved drug. They claim that such lawsuits undermine the FDA's authority, and that FDA approval ought to provide the definitive word on a drug's safety.
Does it matter that all too often we hear of a drug's deadly or debilitating side effects only months to years after a drug has gained FDA approval? It doesn't seem to matter that we are told about drug company research that somehow bypassed the original FDA evaluation only after deadly side effects have taken innocent lives.
Is the FDA’s usefulness undermined by state law claims? Last year the FDA's own science advisory board concluded that the FDA was "so underfunded and understaffed that it's putting U.S. consumers at risk in terms of food and drug safety." The Government Accountability Office and the Institute of Medicine reached similar conclusions.
So who is the FDA useful to? The manufacturers of drugs and medical devices. Did you know that drug companies actually pay the FDA to evaluate new drugs as quickly as possible? Since 1992 the FDA has collected fees from pharmaceutical companies in return for promising to deliver quicker drug approvals. Drug companies provide nearly half of the FDA’s budget for reviewing new drugs. And, the FDA depends upon the drug companies to do the underlying studies to determine the efficacy and safety of new drugs.
But drug companies are not even required to hand over all of their drug research - the good, the bad and the ugly - to the FDA. It is alleged that the Ortho Evra patch has caused increased risks to women for heart attacks and strokes, and has caused at least 40 deaths. Johnson & Johnson internal correspondence uncovered in litigation show that the manufacturer knew of these risks due to elevated estrogen levels - years before it obtained FDA approval.
The company used an unsubstantiated assumption on absorption of estrogen into the bloodstream that resulted in higher levels of estrogen being delivered to a woman’s body. Did Johnson & Johnson report this to the FDA as part of the approval process? Well kind of, it included a single mathematical formula on the assumption in a 400 page report - with no explanation of the assumption. After FDA approval, adverse side effect reports started coming in - the FDA found out about these side effects some six years after manufacturer Johnson & Johnson did.
The purpose of state law claims against drug manufacturers is to make sure manufacturers are responsible and accountable for the harms they cause. It is not about banning drugs from the market, rather it is about consumers being able to make informed decisions about their healthcare. After the elevated risk of side effects of Ortho Evra caused the FDA to require new labeling and thus became public knowledge, prescriptions fell by 80%. Given more complete information, women could make their own informed decisions and many chose to avoid the risks.
Drug companies want preemption to hide behind the FDA's skirts. And the Bush administration is more than willing to use administrative preemption to extend those skirts and abolish U.S. citizens' rights to fend for themselves in court.
The preemption of state lawsuits removes a significant incentive for companies to improve the safety of their drugs. Often, big pharma agrees to safety standards only after they have been held accountable by juries in state courts for injuries and deaths that could have been prevented with full disclosure of all studies - to the FDA and the public.
This is Al Smith for the Montana Trial Lawyers Association.
(June 10, 2008)
Last week a discussion about gas prices peaked with a friend bemoaning that oil corporations dictate our energy policy. Recognition of corporate dominance of our public policy didn’t surprise me. We see it in insurance corporations controlling the debate over our health care policy. In Congress and in our state legislatures, we continually see laws churned out, at the behest of and to the benefit of corporations. But, must we accept this corporate dominance?
Corporations and their messages have become so pervasive that we hardly even question their place in our country anymore. It wasn’t always so. Most of us remember our grievances that led to the American Revolution as being against good old King George. What most of us don’t remember, or never learned, was that many of our grievances were with King George carrying out the bidding of the few corporations that dominated colonial America, like the East India Company. In 1776 we declared our independence not only from British rule, but also from the corporations of England that dominated and controlled us, and extracted wealth from us.
In the early days of our country, we the people, through our state legislatures, allowed corporations to be chartered to serve solely as a tool to gather investment and disperse financial liability for the public good, such as construction of roads, bridges or canals. Our country's founders retained a healthy fear of the threats posed by corporate power and sparingly granted corporations a limited business role.
These state laws, many of which remain on the books today, imposed strict conditions. A corporate charter was granted for a limited time and for a specific public purpose - build your road, dissolve the corporation and pay the stockholders. Corporations could engage only in activities necessary to fulfill their chartered purpose - no cigarette companies pushing macaroni & cheese, and beer too. Corporations could be terminated if they exceeded their authority or if they caused public harm. Owners and managers were responsible for criminal acts committed by the corporation. Corporations could not make any political contributions, nor spend money to influence legislation. A corporation could not purchase or own stock in other corporations, nor own any property other than that necessary to fulfill its chartered purpose.
Granted limited powers, corporations continually sought more from state legislatures. Mindful of the corporate tyranny they had cast aside in the Revolution, most opposed any further expansion of corporate power. Thomas Jefferson said, "I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country."
For 100 years after the Revolution, citizens and legislators tightly controlled the corporate chartering process. Having thrown off English corporate rule, we made certain that charters were issued one at a time, for a specific purpose and for a limited number of years, and, the laws restricting corporate actions were enforced by the states. Early legislators granted very few corporate charters, and only after debate. Citizens governed corporations by detailing operating conditions not just in charters but also in state constitutions and state laws. In Europe, charters protected directors and stockholders from liability for debts and harms caused by their corporations. American legislators rejected this corporate shield. The penalty for abuse or misuse of the charter was not a plea bargain and a fine, but dissolution of the corporation.
The men running corporations were not content. They continued to battle over charter controls, and then to control labor, resources, community rights, and political sovereignty. Ever more frequently, corporations abused their charters to become conglomerates and trusts. They converted the nation's resources into private fortunes, creating factory systems and company towns. Political power began flowing to absentee owners, rather than community-based businesses.
The most severe blow to citizen control of corporations was the 1886 Supreme Court case of Santa Clara County v. Southern Pacific Railroad. A case about local taxation powers became the precedent by which corporations became "persons" under the U.S. Constitution, entitled to all the rights of any other person, even though the Constitution never mentions corporations. The 14th Amendment, enacted to protect rights of freed slaves, has since been used to strike down hundreds of local, state and federal laws enacted to protect people from corporate harm.
Having gained Constitutional equality with we the people, corporations have moved on to demand special treatment. Not content with getting protection for directors and stockholders from liability for debts and harms caused by their corporations, a special immunity rejected when we the people still remembered our English corporate abusers, corporations now seek protections for the corporations themselves for the harms they cause. Whether it’s asbestos manufacturers, HMO’s, drug companies or makers of dangerous products, they all ply the halls of Congress, by the thousands, seeking, no, demanding, and getting, protection from "activist judges," trial lawyers and we the people.
Here, we ignore Article XIII, Section 1 of our Montana Constitution. It provides for our power to charter corporations, and a mandate to the Montana legislature to "provide protection and education for the people against harmful and unfair practices by" corporations.
We have gone from protecting people from harmful corporations to protecting corporations from accountability to the people they harm. If we want to protect ourselves, our property, our freedom, and our country, we need to heed the warnings of those liberal radicals that founded our country and reassert our power over corporations - entities that exist only because we the people allow them.
This is Al Smith for the Montana Trial Lawyers