Litigation

I had to double-check, to make sure that it wasn’t The Onion.  It’s not; seen at ABC News:

Chambers says in his lawsuit that God has made terroristic threats against the senator and his constituents, inspired fear and caused "widespread death, destruction and terrorization of millions upon millions of the Earth’s inhabitants."

The Omaha senator[…] also says God has caused "fearsome floods … horrendous hurricanes, terrifying tornadoes."  He’s seeking a permanent injunction against the Almighty.

The article at ABC provides a bit of the background behind why Chambers has filed this suit.

Sadly, the judge before whom Chambers v. God is being brought appears to lack a sense of humor, and is threatening sanctions against Senator Chambers.  I can think of a few different approaches to dismiss the case – Sovereign Immunity, separation of church and state, lack of non-hearsay evidence….

I’m no fan of music or video piracy.   I’m even less of a fan of the overly-heavy-handed tactics taken by the recording and movie industries to protect their intellectual property.

So, I was very amused to read that the over-breadth and sloppiness of RIAA/MPAA takedown practices was confirmed by accusations laid against HP Laserjet printers for infringing file downloads:

But the study, released today by Tadayoshi Kohno, an assistant professor, Michael Piatek a graduate student, and Arvind Krishnamurthy, a research assistant professor, all at the University of Washington, argues that perhaps those takedown notices should be viewed more skeptically.

The paper finds that there is a serious flaw in how these trade groups finger alleged file-sharers. It also suggests that some people might be getting improperly accused of sharing copyrighted content, and could even be purposely framed by other users.[...]

An inanimate object could also get the blame. The researchers rigged the software agents to implicate three laserjet printers, which were then accused in takedown letters by the M.P.A.A. of downloading copies of “Iron Man” and the latest Indiana Jones film.

I think that "pop" you heard was a few bittorrent piracy cases disappearing from legal dockets in various courtrooms countrywide.

Last week, I expressed concerns about the politicization in the identification of judges and attorneys general, and pondered about the potential drag on society from political motivations trumping objective justice.

Another area of the judicial system that I worry about is just how overloaded the entire system seems to be, and how slowly the wheels of justice move.

This is a subject I have a personal interest in, thanks to what my family has been through in the past several years, after my wife was disabled in a car accident. 

For example, it took just shy of 3 years for Social Security disability payments to start up.  Two thirds of that time was just spent waiting, for my wife’s case to move up through a very long queue on the docket, before it could be reviewed by an Administrative law Judge.

Then there’s the lawsuit associated with the accident itself.  We’re scheduled to go to finally go trial this October, 6½ years after the accident.   True, our case is a little unusual, but the slowness with which the wheels of justice have turned has been remarkable.

Tort reform is a popular subject for those of us in the insurance industry to prattle on about, when talking about what’s wrong with the country.  And, while I do share many of my colleagues’ concerns about excessive awards, jurisdictions in which rulings tend to be biased against industry, and the degree of influence trial lawyers associations seem to have… I wonder if a decent part of the problem is structural.

Considering the speed with which the world moves today, shouldn’t we be attempting an objective look to the mechanics with which the legal system operates?

Yes, easing the drag caused by the presence of some frivolous lawsuits on the docket would help “real” cases move forward faster, but surely we have enough creativity in this country to look at how the legal system can be made to operate more efficiently, without significantly impairing the prospects of fairness for all parties involved.

One of the biggest sources of silliness I see in America today is just how litigation-happy our society seems to have become.

Yes, there is no question in my mind that when a person, business, or other entity errs and harms another, indemnification is in order.  The threat of punitive damages is a handy incentive for Big Business to not behave badly.   And I don’t, as a matter of principle, share conservatives’ fear of “activist judges”.

However, some of the, um, “creative”  legal theories espoused by some judges, and the grandstanding by certain attorneys general is certainly sufficient to give even well-behaved businesses a healthy sense of paranoia, and a desire to avoid admitting wrongdoing except when absolutely necessary.

No, AG offices and the judiciary aren’t the sole cause of litigation madness in this country.  But they do play a role, I think.

Maybe it’s my imagination, but casual observation has me wondering about a correlation between how judges and AGs are selected, and their respective nuttiness.   After all, when political motivations are in play (such as a desire to be reelected, or a desire to support the leader upon whom your appointment depends), they do expose one to the potential for less-than-purely-objective thought.

Here in Connecticut, we’re treated to quite a bit of entertaining grandstanding by Attorneys General, both by what we see from our own AG Blumenthal, plus the entertainment that can be derived by watching Massachusetts’ AG at work.   Previously, we also had the regional entertainment of New York’s former AG Spitzer.

And while I have personal reason to be thankful for the tenacity of Blumenthal’s office, I can’t help but wonder how much of his antics are politically motivated, rather than a promotion of justice and the rule-of-law in the state.

So, I’m left wondering — should we, as a society, be looking for more objective ways to select our Attorneys General and our judges?

Perhaps moving to a system where such individuals were identified by bipartisan/nonpartisan committee, and appointed to terms detached from our current election cycles would promote a bit more stability, fairness and predictability.

It may be boring, but sometimes boring is good for society.

David Rosmiller has posted a decision from the Fifth Circuit Court of Appeals on the Broussard Katrina-slab case:

We REVERSE the judgment of the district court entering JMOL in favor of the Broussards. We REVERSE and VACATE the jury’s award of punitive damages. We AFFIRM the district court’s admission of testimony from the Broussards’ expert witness. We AFFIRM the district court’s denial of State Farm’s motion to change venue. We REMAND the case for a new trial.

The Broussards were the State Farm policyholders who brought one of the landmark Katrina slab cases. The judge in the case essentially ruled from the bench that State Farm was liable to pay policy limits since they “failed to prove” the damage wasn’t caused by flood, and let a jury determine punitive damages.

(Yes, I know that a lawyer could wax poetically to point out the technical inaccuracies in that last statement. However, I’m not a lawyer. Net effect was that it was a big slap-down upon State Farm.)

So, with the appellate decision, State Farm looks to get its day before the jury in this case.

As someone who’s been in claims limbo for over six years due to my wife’s car accident, I can empathize with the Broussards over what waiting for the appeal, and now the new trial, must feel like to them.

Hopefully, the aftermath of this and the other Katrina homeowners cases will lead to better coordination between wind and water claims, as well as less of a need to plug extremely paranoid scenarios into the cat models…all of which should mean not-quite-as-astronomic costs for Gulf coast insureds.

You’ve already probably heard this news, but in case you haven’t and were wondering about all the raucous partying occurring in Bloomington, Illinois. From an AP article at the Wall Street Journal:

Citing ethical breaches, a federal judge Friday barred a group of Mississippi attorneys once affiliated with a well-known tort lawyer from representing any policyholders in lawsuits against State Farm Fire & Casualty Co. over Hurricane Katrina damage.

U.S. District Judge L.T. Senter Jr. in Gulfport, Miss., also disqualified two key witnesses in the lawyers’ cases from testifying against State Farm or their former employer, a firm that helped the Bloomington, Ill.-based insurer adjust Katrina claims.

Senter’s rulings cited improper payments that Richard “Dickie” Scruggs [...] made to Cori and Kerri Rigsby.

The Rigsbys, of course, are the two sisters who allegedly “liberated” some apparently damning paperwork from adjusting firm they formerly worked for, and which assisted State Farm in dealing with claims in the wake of Katrina.

Before I get into this week’s plank, I need to remind folks of my blogging disclaimer — that even though I blog as “Mike the Actuary”, the views expressed here should not be considered professional statements of opinion; nor should they be considered to reflect the opinions of my employers past or present.

I make that reminder because I’m about to violate one of the rules I have for myself when posting my thoughts to this website — I generally avoid writing about topics “too close” to my day job or to matters at home….except for today.

I also make that reminder because I’m going to cross the line that some of the stodgier members of my profession would draw when defining “unprofessional conduct”.  So, I need to be up-front that I’m writing today as an aggrieved consumer and blogger, not as an actuary.

Longtime readers are likely aware that I lead an “interesting” life.   My wife suffered a brain injury in a car accident almost six years ago, and we’ve had a lot of “fun” with doctors and lawyers since.

In the past few weeks, I’ve added “fun” with health plan TPA’s to the mix.   In a couple of surgeries last year, my wife had an occipital nerve stimulator implanted (a picture of her with the temporary stim can be found in the gallery).

Naturally, before proceeding with the treatment, we had “The Talk” with the surgeon’s business office about the related financial matters.   We were told that our health plan administrator (Aetna) was approving payment for the treatment…and we did indeed get approvals from Aetna before moving forward.

So, my wife had the surgeries, became a Borg…and has been doing generally better than she was this time last year.  It’s not been as miraculous a treatment for her as it has been for some other chronic pain sufferers…but we’ve seen a definite improvement.

Unfortunately, with our lives it seems that every ray of sunshine must be accompanied by some dark cloud.

Aetna became difficult post-surgery, and began postponing or outright denying the claims for parts of the surgery.  The reasons given at various times didn’t make sense — for example, declining the claim because of “lack of documentation”  even though hundreds of pages of documentation had been sent, multiple times.    The hospital bill collectors started calling us after Aetna declined because the procedure was “out of network” (even though the surgical facility selected was chosen because it was in-network to us, and we have out-of-network coverage to boot).

I had been kept mostly in the dark through the initial round of bureaucratic squabbling, but I very quickly submitted an appeal letter after my first collections call.  My appeal tackled each of the declination reasons I had been given, and pointed out the inconsistency of some claims having been paid, and others being open.

Of course, that appeal was denied….and Aetna started reclaiming the funds for the parts of the surgery it had already paid and closed the claims on.

Naturally, the question we asked while I started crafting my second appeal (and general nastygram) was, “can they do this?”  After all, it seems unfair for them to un-pay settled claims.

Well, the answer is not only apparently “yes”, but “there is no reason for them to not do this”.

Employer-provided health insurance is, like most employer-provided benefits, governed by a federal law known as ERISA, short for “Employee Retirement Income Security Act”; so-named since it was intended to address some shenanigans that arose during a pension crisis in the early 1970’s.

In some respects, it is a good piece of legislation.  I won’t go into full detail, but on the health insurance side, it requires health insurance plan administrators to communicate to employees what their rights are, and to specify a requirement for a formal appeals process, as well as deadlines in which decisions must be made in those appeals, under certain circumstances.

From the insurer/administrator’s point of view, it’s a great concept since, in return for setting up the ability for a formal appeals process, they are generally exempted from the maze of assorted state laws and regulations — especially if the health plan is an employer self-funded program (as is the case at most mid- and large-sized employers).

Unfortunately, for the employee, this preemption has some unfortunate side-effects.

For example, if the employee disagrees with the administrator’s decision, and receives unfavorable results from the internal appeals process, he or she can sue, in federal court.   However (based on what I’ve been reading, but IANAL), the trial is somewhat limited from what many of us would otherwise expect, in the following ways:

• There is no right to a jury.
   
• The federal judge is generally limited to looking at the medical records and the terms of the plan, to affirm or overturn the administrator’s decision.
   
• The court is generally limited to awarding only the costs of the treatment.   There is no prejudgment interest, no provision for punitive damages, and only rarely may attorneys fees be awarded.
   
• There appears to be no provision in the relevant federal laws and regulations to penalize administrators for acting in bad faith.

In other words, an unscrupulous TPA has almost no reason to authorize payment for a claim.  There is essentially no downside for them to simply denying a claim, as they are unlikely to be penalized for behaving badly.   As attorney fees are rarely awarded, it’s frequently difficult for an aggrieved party — particularly one facing a mountain of medical bills — to retain a lawyer to even attempt to pursue the matter to federal court.  And even if the decision is overturned, the administrator can look good to the employer by showing a lower level of cost, by virtue of having been able to collect interest on the much-delayed payment.

Now normally,  I am a fan of streamlining regulation, avoiding litigation, and reducing drag on insurance and financial systems from questionable lawsuits and ridiculous punitive damage awards.

However, I also believe that entities operating in the insurance arena ought to act with the highest standards of good faith.    Sadly, that is not always true, as my ongoing experience with Aetna indicates.

So, for this week’s stint on the soapbox, I publicly wish for a little ERISA reform. 

I’m OK with attempting to streamline the dispute-resolution process, and I definitely don’t want to add additional litigation expense to the already too-quickly-inflating cost of health care in the U.S.   However, if some TPA’s are going to be inclined to abuse their decision-making authority (*cough* Aetna *cough*), perhaps some mechanism can be provided to consumers to disincent such abuse.

Heck, right now, I’d be happy with a provision that attorneys fees could be awarded to an aggrieved consumers…something that would create a bit more of an incentive for the TPA to avoid court.

I offer one additional tangential thought — I wonder how much of the underlying, structural expense aggravating medical cost inflation in this country is generated by slow-paying or underpaying TPA’s in this sort of a scheme.

In my wife’s case, if Aetna could have issued its denial pre-surgery, back when we were securing the necessary preclearances, we could have argued the matter then, avoiding the hospital losing interest on outstanding receivables, before the expenses were generated.  Also, had the denial stuck, my wife and I could have arranged other financing, rather than looking at scrounging something together now for some very large bills we’re fighting over.

Perhaps rather than spending so much energy on the rhetoric of universal health care, some of that effort could be diverted to fixing up the shortcomings of the system we already have in place.

Via CL&P Blog comes word of a new notice appearing at the entrance to Whataburger:

ARBITRATION NOTICE

By entering these premises you hereby agree to refer any and all disputes or claims of any kind whatsoever, which arise from the products, services or premises, by way of binding arbitration, not litigation. No suit or action may be filed in any state or federal court. Any arbitration shall be governed by the FEDERAL ARBITRATION ACT, and administered by the American Mediation Association.

Well, I suppose that’s one way to attempt to protect yourself from frivolous litigation.

Remember the $3,014,170,389,176,410 sought from the Army Corps of Engineers for post-Katrina flood damage in New Orleans?

The judge has thrown out the case, and federal bean-counters are thanking their preferred deities for legislated grants of immunity. From the AP:

U.S. District Judge Stanwood Duval ruled that the Corps should be held immune over failures in drainage canals that caused much of the flooding of New Orleans in August 2005.

The ruling relies on the Flood Control Act of 1928, which made the federal government immune when flood control projects like levees break.[...]

In his ruling, Duval said he was forced by law to hold the Corps immune even though the agency “cast a blind eye” in protecting New Orleans and “squandered millions of dollars in building a levee system … which was known to be inadequate by the Corps’ own calculations.”

But, Duval said, “it is not within the Court’s power to address the wrongs committed. It is hopefully within the citizens of the United States’ power to address the failures of our laws and agencies.”

I realize that judicial practices and litigation customs are different in other countries…but sometimes you see something that, regardless of nationality, causes you to say, “Dude, that ain’t right!” From a wire service story:

Enaitz Iriondo, 17, died instantly in August 2004 when businessman Tomas Delgado’s Audi A8 crashed into him at 100 mph near Haro in northern Spain, an Interior Ministry traffic report said. The speed limit was 55 mph.

Iriondo was not wearing reflective clothing or a helmet, the ministry report said. As the sun had set when he crossed the path of Delgado’s car from a side road, a regional court found both parties at fault and closed the case, the report said.

Delgado, whose insurance company paid Iriondo’s parents $48,500 in compensation for their son’s life, filed a suit in late 2006 to recover $29,400 in damages to his car and car rental costs, the ministry traffic report said.

Again, realizing that such things are viewed differently outside the U.S., this is the sort of situation where, even if the person who lost his life was partially at fault, the survivor should be thanking his lucky stars that he wasn’t hurt, and that he’s not being sued for an amount far in excess of his liability insurance limits.