A recent national survey of American voters’ attitudes toward the civil justice system reveals substantial concern about the misconduct and greed of large corporations.

According to the poll conducted by Hart Research Associates, while an overwhelming margin (74-11%) of voters believe that large corporations should give priority to being fair and responsible in dealing with their consumers and employees, a greater margin (83-7%) say that corporations put profits ahead of fairness.

On important issues of civil justice, respondents said that they consider corporate misconduct to be a substantially more serious national problem than so-called “lawsuit abuse.” More than 3 in 5 voters viewed as very serious problems corporations defaulting on pension obligations (64%), excessive CEO compensation (64%) and HMOs denying needed medical treatments (55%). 

Of significantly less or little concern among voters are charges that the system unfairly advantaged plaintiffs or their attorneys. Only one-third (34%) said that trial attorneys making too much money when they win lawsuits is a serious problem and just one-quarter (234%) are concerned about victims receiving too much money from juries in personal injury and medical malpractice cases. Among all groups of voters, concern about so-called lawsuit abuse is overshadowed by worries about corporate abuse of consumers, employees and shareholders.

Despite the efforts of business organizations to undermine the civil justice system, the survey shows the American public supports the nation’s courts. Americans believe the civil justice system provides essential safeguards at a time when corporate misconduct poses a serious problem. Almost three times as many individuals maintain holding corporations accountable when their actions harm consumers, employees, or communities (70%) is more important than calling for the civil justice system to limit the amount of compensation juries can award for pain and suffering “so that lawsuits do not cause as big a burden on our economy” (25%).

Additionally, those surveyed give priority to holding corporations accountable (61%) over “reducing the number of frivolous lawsuits” and penalizing those who file them (32%).

Reducing the number of “frivolous’’ medical malpractice suits is not a high public priority, indicating most don’t consider it an urgent problem. Asked to choose among competing health care policy priorities, voters assert that what matters most is ensuring that doctors and patients—not HMOs and insurance companies—make medical decisions, with 62% believing insurers’ denying coverage for needed treatments is a serious problem. Following closely behind is providing coverage to the uninsured, selected by 38% of voters. Trailing far behind at just 10% is the notion of “reducing frivolous medical malpractice lawsuits.”

The poll also established that candidates for public office who support the civil justice system have nothing to fear from voters. Asked whether Democrats go too far in siding with trial lawyers and blocking “needed changes” to the legal system, or that Republicans go too far in siding with big corporations and restricting people’s ability to seek justice and accountability through the courts, voters responded they are more concerned today about Republicans’ anti-civil justice posture (45%) than about Democrats’ siding with trial lawyers (34%).

Asked to choose between a pro-civil justice candidate and a candidate pledging to
restrict lawsuits, voters voiced their preference for the civil justice candidate by an overwhelming 65% to 26% margin. A pro-civil justice system candidate enjoys overwhelming support from Democratic voters (75% to 18%), as well as a very solid 38-point margin among independents (64% to 26%). Among Republicans, a narrow 53% majority favors the civil justice candidate.

For more information on the poll, visit http://www.justice.org/pressroom/CJSPollMemo.pdf

Buried in the fine print of a billing insert, employee handbook or health insurance plan, one always finds a long, muddled statement compiled in legalese, which unfairly tips the scales of justice – to the tune of a powerful thud. Called mandatory binding arbitration clauses, they waive consumers’ civil justice rights, instead funneling claims into a costly private legal system that favors corporate defendants. 

Mandatory arbitration clauses are undermining consumer protection, civil rights and other laws that level the playing field between big businesses and individuals. The individual is left with no choice but to waive these rights, because arbitration clauses are presented on a take-it-or-leave-it basis – often without a consumer’s knowledge.

The Federal Arbitration Act (FAA) was enacted in 1925 as an alternative forum to resolve disputes “between businessmen.” The FAA’s history clearly demonstrates Congress’ narrow intent, yet in the modern era the Supreme Court has glossed over this history, instead asserting that the purpose of the FAA was to overcome judicial hesitation “to enforce agreements to arbitrate.” The result has been an overwhelming expansion of the scope of binding arbitration well beyond what Congress ever intended. 

Arbitration can be a valid and effective method of dispute resolution when agreed to voluntarily through negotiation by two parties of similar power, but when used by a dominant party to limit the legal recourse of a weaker party in a non-negotiable contract, it becomes an abusive weapon. And corporate wrongdoers caught red-handed are not shy to exercise this power in pummeling the disadvantaged consumer at the arbitration table – a table usually dominated by corporate defense attorneys and an arbitrator whose career relies on repeat business from the very corporate referrals over which he/she is arbitrating.  Clearly, the motive for fairness is being undermined at the very least.   

We must enable consumers to hold corporations accountable when they endanger the public with deadly drugs or food, when they collude to artificially inflate prices, or when they swindle shareholders and employees. In light of so many recent corporate scandals, it is time for Congress to look at amending the FAA to serve consumers, not corporate wrongdoers. 

The American Association for Justice (AAJ) recently released a report revealing the medical malpractice insurance industry has been price-gouging doctors through excessive premiums and needlessly contributing to the growing cost of healthcare.

Written by former Missouri Insurance Commissioner Jay Angoff, the study is based on recent annual reports from the top 15 medical malpractice insurers as rated by A.M. Best. The report shows that these insurers artificially raised doctors’ premiums and misled the public about the nature of malpractice claims – asserting that a so-called “malpractice crisis” exists. The report puts the lie to that claim.

According to the study:
• The medical malpractice insurers saw losses and projected losses plummet by 48% over the period 2003-2006.
• These incurred losses have declined every year for the past five years.
• These insurers’ 2006 surplus is 43% greater than their surplus in 2003 – five times the state-minimum surplus for insurer stability.
• Only three of the 15 leading insurers issued dividends to doctors in 2006.

Medical malpractice insurance companies have been price-gouging doctors, padding their pockets with excessive premiums and driving up the cost of healthcare. Cynically, these same insurance companies have been blaming high premiums on a so-called “malpractice crisis” that doesn’t exist. We have an insurance crisis, not a medical malpractice crisis.

The new report also demonstrates the difference between two types of losses in the insurance industry – incurred losses and paid losses. The industry evaluates its performance based on incurred losses (which include projections of future payments) and not paid losses (which are actual claims payments). This report takes into account both paid and incurred losses, and shows that although both have decreased, malpractice rates for doctors continue to increase. No matter how you look at it, doctors and patients are getting ripped off by the insurance industry.

AAJ calls for a thorough and immediate review of the insurance industry’s unscrupulous price-gouging and its effect on Americans’ access to a safe, affordable healthcare system.

For a copy of the report “No Basis for High Insurance Rates: An Analysis of the 15 Largest Medical Malpractice Insurers 2006 Financial Statements”, visit www.justice.org/pressroom/angoff

The national conversation about our civil justice system is too frequently supercharged by false claims of crisis and purposely misleading campaigns of disinformation.
Nowhere has this been more true that with a recent series of advertisement concocted by the U.S. Chamber of Commerce which outrageously claim the system levies an exorbitant price tag on the American public.

These ads cite figures that aren’t simply inaccurate – they have no bearing in reality. In this light, the American Association for Justice has called on the Chamber of Commerce to immediately halt this series of false, unfair and deceptive advertisements promoting its ongoing campaign to weaken the nation’s civil justice system.

“By airing and publishing these false, unfair and deceptive ads, the U.S. Chamber of Commerce is misleading the public in a cynical effort to weaken the civil justice system,” said Jon Haber, CEO of the American Association for Justice. “The Chamber and the stations and newspapers must take immediate action and stop airing and publishing them.”

The Chamber’s ads claim that “lawsuit abuse” costs the average American household $3,520 a year, based on a 2006 report by Tillinghast Towers Perrin. However, Russ Sutter, the chief author of the report, says the Chamber’s use of the data is “misleading.”

According to an online Wall Street Journal blog:

But Russ Sutter, a Tillinghast principal and primary author of the study, told me the firm’s numbers are being misrepresented by the U.S. Chamber Institute. The ads make the dubious assumption that every lawsuit in the tort system is frivolous. Mr. Sutter said his group didn’t try to evaluate the merit of individual lawsuits, but simply set out to calculate the cost of the entire tort system. “The way they use it makes it sound like the $3,520 is all for abusive lawsuits,” he told me. Furthermore, the ad “assumes all the costs we tabulate in our study are due to lawsuits. That’s a bit misleading” — because other costs associated with insurance are also included. 

Moreover, Sutter maintains his report is not intended to measure the cost of lawsuit abuse.  As the study itself unequivocally notes, “the costs tabulated in this study are not a reflection of litigated claims or of the legal system.’’ (Sutter’s comments can be found at http://www.blogs.wsj.com/numbersguy.)

Just last year, the U.S. Chamber of Commerce had to pull ads falsely claiming that several candidates for Congress voted in favor of landmark legislation providing seniors with prescription drug coverage. In fact, three of the candidates had not yet been elected when the vote occurred and a fourth opposed it in a subsequent vote.

“The U.S. Chamber’s campaign of lies and deception must stop now. The Chamber knows the ads are wrong, and there can be no excuse to continue to run them,” said Haber. “The Chamber’s phony attack on our civil justice system is designed to enable corporate interests to evade accountability for wrongdoing and negligence.”

It’s been almost two years since Hurricane Katrina decimated the Gulf Coast and many wards in the great city of New Orleans continue to resemble the back lot of a WWII movie. The insurance industry, which many beleaguered residents trusted to help them rebuild, has instead abandoned them without hope. By blaming the destruction on floodwaters, uncovered under homeowner policies, rather than the winds and the rain, the insurance giants have deserted faithful premium payers and are now laughing all the way to the bank.  

This tragedy has focused national attention on a business that enjoys a perquisite available to very few others – immunity from antitrust laws. The bullying of Gulf Coast residents has angered the nation and it appears the U.S. Congress might finally be ready to address this special privilege afforded to an industry that doesn’t deserve it.   

The rationale behind Congress providing the insurance industry with such a powerful favor is something of a mystery to begin with. Beginning in 1868 and extending until 1944, insurance regulation was solely within the province of the individual states. That changed when the U.S. Supreme Court ruled, in United States v. South-Eastern Underwriters Association, that the business of insurance was involved in interstate commerce, hence shifting oversight responsibilities to the federal government.

Lawmakers reacted in knee-jerk fashion by adopting the McCarran-Ferguson Act, effectively exempting the insurance industry from most antitrust laws. While the solution was intended to be temporary, affording Congress an opportunity to sift through the implications of the court’s determination, it has now lasted more than 60 years.

The result has been arbitrarily high insurance premiums and a stubborn unwillingness on behalf of the companies to provide policy holders with the sort of assistance they often desperately need. This particular tragedy played out on the national stage in the aftermath of Hurricane Katrina. But it often has proved true in the handling of other, less publicized, disasters.

Under the present system, giant insurance companies, like Allstate and State Farm, can legally collude to fix prices, a chilling practice that serves as the very definition of anti-competitive conduct. McCarran-Ferguson also opens the door to agreements that assure policy holders don’t receive appropriate compensation in the wake of instances like Hurricane Katrina. And they can even divvy up areas, with one company agreeing to avoid areas monopolized by an alleged competitor.

If competition breeds lower consumer prices, as the marketplace generally holds, it stands to reason that a non-competitive environment, fueled by a lax regulatory regimen, results in higher costs to the public. It also, not surprisingly, stuffs more dollars into the pockets of the insurance industry. A.M. Best, a ratings agency, estimates that the property-casualty industry earned a record $68 billion in 2006. That’s an increase of $19 billion over 2005. This year, profits could total $62.2 billion if the storm season is relatively mild.

Even worse, it means the insurance industry can easily snub policy holders, leaving them with little leverage in attempting to collect due compensation on their policies. Gulf Coast residents, too many of whom lost practically everything they had during the 2005 hurricane season, turned to the insurance industry for relief, seeking recompense for the premiums they invested in, some for decades. The companies, as has now been thoroughly documented, turned their backs on policy holders.

Adding insult to injury, Allstate and State Farm recently announced that they are abandoning the Gulf Coast. This cruel move means potential residents, looking to plant new roots in the region, will find it difficult to get insurance to protect their property. At best, the price will prove exorbitant.

Exasperated Gulf Coast residents have, as a last resort, taken legal claims to court in a desperate effort to collect the compensation they richly deserve after years, sometimes decades, of pouring money into the insurance industry’s coffers. The courts remain the best place to hold these companies accountable.

Legislation has been introduced in both the House and Senate to deprive the insurance industry of this unwarranted favor. The repeal of McCarran-Ferguson is being pushed by lawmakers, like Sen. Trent Lott, R-Miss., and Sen. Mary Landreau, D-La., who suffered first hand from the storm and witnessed the tragedy that befell neighbors and friends. Hopefully the legislation stands a better chance of making it through Congress than a New Orleans homeowner’s claim has a chance of making it past the insurance company.