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Monthly Archives: December 2008

Simon mall gift cards not subject to certificate statute

A Superior Court judge in Massachusetts has ruled that Simon gift cards which charge fees and expire before seven years do not come within the scope of the Massachusetts gift certificate statute. The decision was issued in the case where the Massachusetts Atty. Gen. brought an action to enforce the state’s gift certificate law against the shopping mall owner that sells the cards. This decision certainly represents a disappointment to consumers and will allow the mall owner to charge its monthly “dormancy” fee against any account that retained a balance six months after issuance of the card, and a “reissue” fee for issuance of a new card when value remained in an account after the expiration date shown on the card, twelve to fifteen months after issuance.

To view a copy of the full decision by the court, click here.

Several years ago, in one of our client newsletters, we warned people about expiration dates which sapped the value of gift cards. Last year, we reported on a settlement reached by the Federal Trade Commission with Kmart about fees it was charging on gift card users (See Gift card settlement). Last month, we warned you about gift cards that lose their value when a company goes bankrupt (See post by clicking here). The Massachusetts legislature attempted to rein in bank-issued gift cards by outlawing the fees the cards depend on for a profit as reported by the Boston Globe in an April 2006 article. The text of that bill can be viewed by clicking here. The gift certificate statute was amended, but the provisions protecting consumers from these gift card practices were not enacted. In fact, the legislation which passed specifically stated that a gift certificate shall not include any electronic card usable with multiple unaffiliated sellers of goods or services. To view the complete text of the legislation amending the gift certificate statute, click here.

Despite all of this press and attempts to control the problem, the malls seem to be winning the battle and consumers will continue to bear the costs.

Secret deals with insurer behind rising health costs in Massachusetts

For years, we have been brainwashed into thinking that lawsuits and litigation have been behind the rising costs of health insurance in this nation. Indeed, the insurance industry and United States Chamber of Commerce have made a concerted effort over the years to convince people that lawsuits are out of control and destroying the healthcare system. We discussed this corporate gall in a recent post which you can view by clicking here.

For the last several days, the Boston Globe has been running a spotlight series on healthcare, highlighting a sweetheart handshake deal between Blue Cross Blue Shield (a health insurer) and Partners Healthcare (one of the biggest hospital companies in Massachusetts) which has resulted in skyrocketing healthcare costs having nothing to do with litigation. The deal wasn’t reduced to writing because a written agreement between the state’s biggest hospital company and its biggest health insurer that would make insurance more expensive statewide might raise legal questions about anticompetitive behavior.

As reported in the Globe, as part of the deal, Blue Cross gave Partners doctors and hospitals the biggest insurance payment increase since Massachusetts General and Brigham and Women’s hospitals agreed to join forces in 1993. In return, Partners would protect Blue Cross from its biggest fear: that Partners would allow other insurers to pay less. Those who helped broker the deal say Partners promised to push for the same or bigger payment increases for everything from X-rays to brain surgery from Blue Cross’s competition, ensuring that all major insurers would face tens of millions in cost increases. Blue Cross called it a “market covenant.”

The deal, never before made public, marked the beginning of a period of rapid escalation in Massachusetts insurance prices, a Spotlight Team investigation has found, as Partners repeatedly used its clout to get rate increases and other hospitals tried to keep up. Individual insurance premiums have risen 8.9 percent a year ever since the “market covenant,” state figures show, more than twice the annual rise in the late 1990s.

To read the full report about this deal and its consequences to healthcare consumers, please click here.

For more information, we urge you to visit Health Care for America Now. Health Care for America Now is a national grassroots campaign organizing millions of Americans to win a guarantee of quality, affordable health care for all. At that site, you’ll also find out how the insurance industry bends the rules to cost you more money.

Corporate gall that simply goes too far

A CBS News report from Andrew Cohen has revealed a tale of corporate gall that shocks the conscience. The report outs a plan by corporations seeking to “reform” the very system they broke. Here are some of the highlights from the report:

Like the child who kills his parents and then begs for mercy because he is an orphan, the U.S. Chamber of Commerce now is begging President-elect Barack Obama to protect corporate interests in the nation’s civil litigation system as a way of restoring jobs and bolstering an economy shattered largely (as we now know) by corporate greed and misfeasance.

The Chamber has been pushing tirelessly for decades to rein in plaintiffs’ attorneys (who look to punish corporate negligence or fraud with civil lawsuits), deregulate industry and commerce (we all know how well Wall Street did with its freedom), and nullify important consumer protection laws (like the one in Maine which is allowing smokers to go after tobacco companies for false advertising). The lobbying effort has been national and local, highly-public and super-secret, and devastatingly successful.

Thanks in part to the Chamber and its Orwellian-named Institute for Legal Reform, the Securities and Exchange Commission backed off its scrutiny of screwy deals and schemes, the Congress was lax in its oversight of the mortgage industry, litigators were thwarted or punished, and the White House and Justice Department pushed a legal doctrine (“preemption”) that almost always helped employers over employees.

All of these things, and more policies and practices endorsed by the Institute, helped unshackle the savageries of corporate America and left individuals less protected against an ever-freer and more predatory market.

To read the full report, click here. If you are as appalled as the rest of us, let President-elect Obama, your Senators, and Congressman know that enough is enough, and that you would like them to pass laws that put people first.

Two cases that are sure to raise the public’s ire

Several years ago, it was the scalding coffee case. Then it was the reports of people suing fast food restaurants because the food made them fat. Well, this week, there is more legal news that is sure to give rise to some heated discussions at the water cooler and holiday gatherings.

In a divided opinion by the California Supreme Court, a young woman who pulled a co-worker from a crashed vehicle after a night of Halloween revelry in 2004 could be civilly liable because the care she rendered wasn’t medical. In this case, defendant Lisa Torti removed plaintiff Alexandra Van Horn from a vehicle involved in an accident and, by so doing, allegedly caused Van Horn to become paralyzed. In the resultant suit for negligence, Torti argued that she had provided “emergency care at the scene of an emergency” and was immune under California law. But the California Supreme Court disagreed, concluding that the Legislature intended for section 1799.102 to immunize from liability for civil damages only those persons who in good faith render emergency medical care at the scene of a medical emergency.  Because Torti was not rendering “medical” care, she lost.

In dissent, three of the seven justices said that by making a distinction between medical care and emergency response, the court was placing “an arbitrary and unreasonable limitation” on protections for those trying to help. They argued that the aim of the legislation was clearly “to encourage persons not to pass by those in need of emergency help, but to show compassion and render the necessary aid.” The dissenters went on to say: “One who dives into swirling waters to retrieve a drowning swimmer can be sued for incidental injury he or she causes while bringing the victim to shore, but is immune for harm he or she produces while thereafter trying to revive the victim. Here, the result is that defendant Torti has no immunity for her bravery in pulling her injured friend from a crashed vehicle, even if she reasonably believed it might be about to explode.”

To view the court’s opinion, click here. To view the Los Angeles Times report on the case, click here.

On the other side of the country, Roy Pearson, the former administrative law judge who unsuccessfully sued his dry cleaner for $54 million over a pair of lost pants, had his case tossed out by the District of Columbia Court of Appeals. To view that opinion, click here.

Pearson argued that it was not a case about a pair of suit pants. Rather, it is about whether the owners of a neighborhood business misled consumers with a sign that claimed “Satisfaction Guaranteed.” There is an unconditional guarantee, he argued, unless the merchant indicates otherwise. By Pearson’s interpretation of the sign, the owners of the now-defunct Custom Cleaners owed him $18,000 for each day the pants were missing over a nearly four-year period. In that time, Pearson’s demand went up to $67 million.

The three judge panel disagreed. In the opinion, the court ruled that Pearson’s argument that a “Satisfaction Guaranteed” sign is an unconditional and unlimited warrant of satisfaction had no basis and that when the trial judge rejected that claim, it showed basic common sense.

While the tossing of the pants suit by the courts was wise, it still remains a blemish on the integrity of the legal system. It makes it more difficult to pursue a legitimate claim in a climate that has been polluted by such cases. The American public will not be any less charmed with the California decision, but at least that case remains to be decided by a jury which will have the final say.

Escalators may be inherently dangerous

Some safety advocates have taken the position that escalators are inherently dangerous. As reported in the Atlanta Journal-Constitution: “Several times a week people are injured on metro Atlanta escalators, reports to Georgia regulators show,” and “some safety advocates say escalators are inherently dangerous and question the blame recently heaped on Crocs-type shoes, which several children were wearing in highly publicized accidents across the country, including at Atlanta’s airport.”

“If escalators were designed properly and met all the standards, it wouldn’t matter that they were wearing Crocs,” said Scott Anderson, a Houston petroleum engineer who petitioned the U.S. Consumer Product Safety Commission in 1997 to require closing dangerous gaps along the sides of escalator stairs.

Across the nation, the CPSC estimates, nearly 11,000 people were treated in hospitals last year for injuries involving escalators, mostly falls. Escalators carry about 90 billion riders a year, the agency estimates.

Our firm has handled a number of cases involving injuries on escalators. The industry is very defensive of the subject of dangerousness, but the statistics outline the need for stronger safety measures to protect consumers.

To view the full article from the Atlanta paper, please click here.

Illinois lawyer responds to WSJ editorial

In a letter to the Wall Street Journal, Philip Harnett Corboy Jr., president of the Illinois Trial Lawyers Association, offered a well reasoned and necessary response to that paper’s editorial urging the Illinois Supreme Court to impose arbitrary limits on jury awards. The case and editorial was the subject of one of our recent posts (click here for that post). The full text of that letter is included below:

In your Dec. 1 editorial “Messing With Malpractice Reform,” you urge the Illinois Supreme Court to “side with the patients and the rule of law” in considering a case that could overturn the state’s cap on damage awards. Yet the editorial never mentions the patient who is at the center of that case. 

She is a three-year-old little girl named Abigaile LeBron, whose life has been forever changed by the severe brain damage she suffered as a result of medical negligence. It is likely that Abigaile will have to be fed through a tube for the rest of her life. She will never develop cognitively or physically as her peers do. And she will likely never live independently. It is inarguably a very painful tragedy for Abigaile and all who know and love her. 

The insurance industry and its brethren in the tort reform world have argued that Abigaile’s compensation for lifelong disability, pain and suffering should be arbitrarily limited, despite what a jury of average citizens may decide. The question before the Illinois Supreme Court is whether the Illinois Constitution allows Abigaile’s rights to be limited in this fashion to the benefit of insurance company profits. Twice before, our state’s highest court has decided in favor of patients and against the insurance companies that would limit these rights to protect their own profits. No new arguments have been offered by the insurance industry. 

You argue that a reduction in malpractice premiums and the return of doctors to the state have resulted from the law containing caps. Nothing could be further from the truth. Not one case has been litigated under the new cap in Illinois. The simple fact is that those positive developments have resulted from strong, long-suppressed insurance reforms in the legislation. That law has now forced malpractice insurance companies to provide greater transparency on rate-setting and payouts that has in turn spurred competition, motivated more companies to enter the marketplace, and lowered premiums for doctors. Important to the discussion for your readers is the additional fact that Illinois’ largest malpractice insurer has reported that payouts have remained flat for the past 13 years. By the way, it’s the same insurance carrier that admitted during the run-up to this legislation in 2005 that capping awards would not guarantee lower premiums for its doctors. 

The Illinois Constitution was put in place to ensure individual rights and freedoms. While corporations and profit-hungry executives often stack the decks against individuals in the marketplace and the halls of government, the courtroom can still provide all parties with a level playing field. The Illinois Supreme Court will now decide whether that standard remains in place for patients like Abigaile LeBron. You should let it do its job. 

Philip Harnett Corboy Jr.
Illinois Trial Lawyers Association

To view the WSJ issue that contains the letter, click here.

Toxic toys mar holiday season

It is hard to fathom that in this day and age, we are still talking about toxic toys. With the advances in consumer product safety that have been fostered by consumer product safety litigation, it’s unconscionable that we could be taking such big steps backward. But international trade and differing safety standards in other countries have brought this issue to the forefront. Here are some of the highlights from recent press reports:

The Wall Street Journal (12/5, B6, Trottman) reports that Natural Resources Defense Council and Public Citizen “have gone to court to challenge the Consumer Product Safety Commission’s (CPSC) decision to allow makers of children’s products containing phthalates to continue selling those goods so long as they were made before a congressional ban takes effect Feb. 10,” arguing that “the congressionally mandated ban should apply retroactively to inventory made before Feb. 10. But the CPSC says it shouldn’t.”

The New York Daily News (12/5, Zambito) reports, “Phthalate exposure has been linked to decreases in male testosterone and malformations in genitalia of newborn boys, according to the lawsuit.” CongressDaily (12/5) reports, “House Energy and Commerce, Trade, and Consumer Protection Subcommittee Chairman Bobby Rush, D-Ill., plans to hold hearings on the CPSC guidance before the end of the 110th Congress, Rush spokeswoman Sharon Jenkins said.” The AP (12/5) also covers the story.

The Detroit Free Press (12/4, Szabo) reported, “Consumer advocates agree that parents have good reason to be careful” about the safety of children’s toys because “new lead standards — part of landmark consumer-safety legislation Congress passed in August — won’t take effect until Feb. 10, says Rep. Jan Schakowsky, D-Ill., a key supporter of the law. She warns that stores may mark down toys with high lead levels to sell them before the deadline.” She is “also concerned that the government won’t enforce a ban on hormone-like chemicals called phthalates.”

The AP (12/5) reports, “Nine toy companies, including Mattel Inc., agreed to pay a total of nearly $1.8 million to settle a lawsuit over Chinese-made toys tainted with lead, California state and local officials said Thursday.” The AP adds that the “companies admitted no wrongdoing as part of the settlement.” And, as part of the settlement, the companies “will immediately adopt new standards set forth in the Consumer Product Safety Improvement Act that bans lead from children’s toys but won’t take effect until February.” The Los Angeles Times (12/5, Lifsher) reports, “The firms as a group also must pay $550,000 into a fund to test toys for lead and improve outreach during future recalls, $460,000 to reimburse government agencies for environmental enforcement activities, $548,000 in civil penalties and additional attorney fees.”

Some concerned parents and research groups have established websites to help identify dangerous toys: amomsblog.wordpress.com and healthytoys.org.

We wish you a happy and safe holiday season and urge you to check these resources so that you can stay on top of consumer product safety issues.

Consumers pay heavy price for dangerous foreign products

Foreign manufacturers easily evade responsibility and accountability for producing hazardous products which can cost consumers and other third parties billions of dollars for a single product sold in the United States according to new analyses. In partnership with American University’s Washington College of Law, the American Association for Justice released two research papers related to dangerous foreign products.

The first paper, Defective Foreign Products in the United States: Issues and Discussion, argues foreign producers “are protected by the complex web of laws, policies, and practices that make it difficult if not impossible to sue successfully foreign manufacturers in domestic courts.” The paper looks at the favorable status enjoyed by foreign manufacturers who face “glaring discrepancies” in product liability insurance rates and can often set their prices lower because they are not subject to the equal prospect of restitution U.S. manufacturers face if a consumer is injured by their product.

A second analysis, The Social Costs of Dangerous Products: An Empirical Investigation, looks at the costs of injuries and fatalities associated with three known dangerous products: Ford SUV’s with Firestone tires, the pharmaceutical drug Baycol manufactured by Bayer, and all terrain vehicles, or ATVs. These three products alone created nearly $4.7 billion in medical costs, lost wages, and other costs, excluding the cost of pain and suffering and other extended costs. The research compares compensation awarded in the tort system to the actual costs created by hazardous products and concludes restitution awarded through the tort system is less than the actual costs created by the dangerous products themselves. Although the actual costs are difficult to measure, “the tort system provides a valuable service for society to the extent it successfully deters the sale of dangerous products,” according to Shapiro, et al.

To view the AAJ press report on the studies, click here.

Medical malpractice caps argued in Illinois

The Illinois Supreme Court heard oral arguments in a case which calls into question the constitutionality of caps on non-economic damages in medical malpractice cases in that state. An Illinois trial court ruled last year in Lebron v. Gottlieb Memorial Hospital that the law violates the Constitution’s separation of powers clause by allowing the General Assembly to restrict deliberations by judges and juries. Circuit Court Judge Diane J. Larsen ruled that the cap on damages “operates as a legislative remittitur which ‘disregards the jury’s careful deliberative process in determining damages that will fairly compensate injured plaintiffs who have proven their causes of action'” and thus violates separation of powers. The full text of the ruling can be viewed by clicking here.

Illinois Trial Lawyers Association President Bruce Kohen praised Judge Larsen’s decision, calling it “an important victory for the rule of law and constitutional government over the rule of special interests.” He added that “today’s ruling provides further confirmation that, despite the power and influence of the insurance lobby, laws that violate the state’s Constitution will not stand.”

We have repeatedly noted that these efforts at “reform” are misguided and unjust. Our previous blog posts on the topic can be found by clicking here. These types of tort deform make bad law and do not encourage or mandate that individuals take responsibility for their actions. In 2007, Public Citizen issued a must-read report entitled The Great Medical Malpractice Hoax which goes to the heart of the issues being tested in the Illinois courts. The report examines the issue of medical liability in two parts. The first part reviews NPDB data and shows that the claims of the business and medical lobbies are exaggerated and unsupported by the facts. The second part examines data related to physician error and discipline. This section notes some disturbing trends and reveals that the real medical crisis is the high incidence of preventable medical error, as well as the lack of accountability for a small set of doctors who commit a substantial number of avoidable errors that seriously injure patients.

The Wall Street Journal is touting the benefit of medical malpractice reforms without in any way acknowledging the harms they have wrought on innocent consumers. In an editorial in today’s paper, the WSJ editors applaud the fact that in 2005 the Illinois legislature passed a law that artificially capped medical malpractice jury awards for pain and suffering at $500,000 against doctors and $1 million against hospitals.

Lawyers opposing the caps argued that the 2005 law limiting the amount of money juries may award in medical malpractice cases unfairly targets those most seriously injured who deserve the most compensation. It has been suggested that everyone must sacrifice on so-called tort reform efforts. But the sacrifice is uneven, said Michael Gottesman, a Georgetown University law professor representing Abigaile LeBron and her mother. The LeBron family’s non-economic damages, for example, might far exceed the caps, Gottesman said. In the case of a wealthy person whose injury causes millions of dollars in lost income, he would recover all of it because the law puts no restrictions on jury awards of economic damages.

“Even though the attorney general says health care consumers ought to contribute to the solution, the only people being asked to contribute to this solution are the most seriously injured people – almost by definition the people least capable of making this contribution,” Gottesman said.

The American Bar Association submitted a friend of the court brief urging the Illinois Supreme Court to find the caps unconstitutional. That brief can be viewed by clicking here.

You can view the oral arguments from the case by clicking here.