October 14th, 2011

The Failure of Medical Malpractice Caps (Healthcare Costs Rise in Texas)

Public Citizen released a report this week on the abject failure of a $250,000 medical malpractice cap put in place by Texas in 2003. Why is this is important? Because as I discussed two days ago, so-called conservatives are trying to expand federal power to implement a similar scheme on the federal level.

So it’s important to note that such a scheme fails not only on the constitutional level as viewed from exercising federal power over state claims, but that it fails on a state-wide level as well in that it does not lower healthcare costs as it was intended to do. It may lower the number of malpractice suits by its grant of protections and immunities to those that negligently injure others, but it doesn’t improve healthcare costs.

Most significantly, the report contradicts the “defensive medicine” theory, which holds that fear of litigation is to blame for stark increases health care costs. While the number of lawsuits plummeted, and with it the fear of being sued, Medicare costs rose 13% faster than the national average. According to the report, “health insurance costs have outpaced the national average and the percentage of residents lacking health insurance has risen.”

Some other findings:

Medicare spending specifically for outpatient services in Texas has risen 30.7 percent faster than the national average;

Medicare diagnostic testing expenditures in Texas have risen 25.6 percent faster than the national average;

Premiums for private health insurance in Texas have risen faster (51.7 percent) than the national average (50 percent);

The percentage of Texans who lack health insurance has risen to 24.6 percent, solidifying the state’s dubious distinction of having the highest uninsured rate in the country;

The per capita increase in the number of doctors practicing in Texas has slowed to less than half its rate in the years leading up to the caps;

The per capita number of primary care physicians practicing in Texas has remained flat, compared to a sharp increase in the years leading up to the caps; and

The prevalence of physicians in non-metropolitan areas has declined.

This is the synopsis of the report, from Public Citizen:

“A common perception among policymakers and pundits is that medical malpractice litigation is significantly, or even chiefly, to blame for skyrocketing health care costs and steadily diminishing access to care. But analysis of data in Texas, which in 2003 imposed some of the strictest liability caps in the country, tells a far different story. While litigation over malpractice in Texas has plummeted dramatically since the caps were imposed, residents of Texas (except for people with financial connections to liability insurance companies and, to a lesser extent, doctors) have realized few, if any, benefits. Instead, the health care picture in Texas has worsened significantly by almost any measure.”

The full report is here: A Failed Experiment; Health Care in Texas Has Worsened in Key Respects Since State Instituted Liability Caps in 2003

I had addressed the problems in Texas back in 2009 in this post: Do Texas Med-Mal Damage Caps Work? (What Do You Mean By Work?)

So the bottom line is this for medical malpractice caps: Injured people have the courthouse doors slammed in their faces; Those that are negligent are protected; There is zero benefit to the public at large; And insurance companies pocket most of the difference.

October 13th, 2011

NY Top Court: Law Firm Burned in Check Scam Can’t Blame Bank, as Bank Not Liable for Clearing Bogus Check Because “Cleared” Is Ambigious

This is what banks used to look like.

Another law firm gets burned in a check scam, and now New York’s top court weighs in on the subject: Don’t blame the banks, the court ruled today, because when a bank tells you a check has “cleared,” the word “cleared” is actually “ambiguous” and the bank can’t be held to it.

The last several years have seen a spate of scams targeting law firms who are asked to make an easy collection of money. The client is always on some distant soil, and the purported debtor is local. And the scam works by the lawyer collecting the money, depositing it in his escrow account, waiting for the money to clear, and then wiring the bulk to the client while keeping a fee. The scam works because after the collected funds have cleared, and after the funds wired out, the bank then discovers the fraud, reverses itself, and asks the law firm to pony up the funds for the bogus check.

Cleared, say the banks, doesn’t really mean cleared.

On this fact pattern, New York’s Court of Appeals tossed out the suit by a firm against its bank that had cleared its collection of funds for a presumed client, only to see the check later turn up bogus. And the Court said this was the fault of the law firm, not the bank, and that the firm must bear the loss. The case is Greenberg, Trager & Herbst, LLP v HSBC Bank USA.

If this decision sounds somewhat familiar, it is because I’ve covered appellate rulings on this twice before. In February, the Second Circuit Court of Appeals held against the law firm in similar circumstances: See, So, You Think It’s Safe To Disburse Those “Available” Funds In Your Account? At that time, a friend sagely wrote to me:

When I was taking my commercial paper course in law school 8,000 years ago, the teacher – who was a good guy and nobody’s fool – said that the underlying principle that trumped all other is simply this: “the bank wins”. Everything else is a corollary, an elaboration, a commentary, or (once in a blue moon) an exception to this.

And I hit the subject again in June of this year when the Appellate Division, Third Department, also ruled against a law firm. See, When A Law Firm Gets Scammed, Must the Liability Insurer Defend and Indemnify?

In today’s case, after $197,750 had been collected by Greenberg, Trager and Herbst, and after HSBC told a firm partner the money had cleared, the firm took a $10,000 fee and wired the rest to the fictional client. You know the rest. Despite the partner having called the bank to make sure the check had “cleared”, the high Court tossed out the firm’s claim for negligent misrepresentation.

In dismissing the claim, the Court wrote that the bank’s statement that the check had “cleared” was:

an ambiguous remark that may have been intended to mean only that the amount of the check was available (as indeed it was) in GTH’s account. Reliance on this statement as assurance that final settlement had occurred was, under the circumstances here, unreasonable as a matter of law.

But the comment that really strikes home, and the one thing every lawyer must know in dealing with potential clients, is this that comes from the opinion regarding the law firm:

[It]was in the best position to guard against the risk of a counterfeit check by knowing its ‘client'”

Justice Piggot dissented, being unhappy that summary judgment was granted to the bank on the negligent misrepresentation claim. He felt that, since “a bank has a duty to exercise ordinary care when dealing with its customers,” there was a question of fact for a jury. Unlike the majority, he finds no ambiguity in the word “cleared’ and noted:

Indeed, the Federal Trade Commission in a bulletin addressed to consumers states that “it’s best not to rely on money from any type of check . . . unless you know and trust the person you’re dealing with or, better yet — until the bank confirms that the check has cleared“

And Justice Piggott had scathing words for the two banks involved regarding these check scams:

Counterfeit check scams are pervasive. That Citibank could not recognize one of its own checks as counterfeit is testament to the seriousness of this problem within the banking industry. It is no answer that Citibank and HSBC seemed to stumble along over a period of ten days resulting in one of their customers being bilked out of $187,500. This problem has long been known to the banks and a mere recitation of their normal practices does not, in my view, establish the appropriate standard of care in this day and age and certainly not their entitlement to summary judgment.

If you haven’t received these scam emails, it means just one thing: You have have a brand new email address that the scammers haven’t found yet.

Update (10/14/11): This post proves I’m a lousy headline writer. Better ideas:

Banker to Lawyer: The check cleared. Ct App translation: You’re screwed, brother (Scott Greenfield via Twitter)
If your bank says a check has “cleared,” you’re liable if they’re wrong. (David Wells via Twitter)
Banks Not Liable Over Check Deposited by Swindled Law Firm (NYLJ)
Court to Lawyers: The Bank Always Wins (Didn’t you learn that in law school?)
Banks no longer required to mean what they say (Elie Mystal via Twitter)
Another Meaningless Question: Has the Check Cleared? (Joshua P. Fershee @ Business Law Prof Blog)

October 12th, 2011

The Conservative Attempt to Federalize Tort “Reform”

As many of you know, there is a congressional “Super Committee” set up to look for ways to better balance our budget via expenditure cutbacks and/or revenue increases. And among the ideas floated by certain conservatives, is to sneak medical malpractice “reform” into the package.

I’ve railed many times against the abject hypocrisy of conservatives seeking to enlarge federal power by giving protections and immunities to those that injure others by negligence. Without me repeating myself, these are a a few, then I’ll get to the link I really want to send you to:

The New Congress and the Constitution (Will they really defend it?) (January 6, 2011)

Does the Tea Party Believe in Conservatism or Tort “Reform”? (8 Questions) (May 3, 2010)

The False Premises of Medical Malpractice “Reform” (Response to Richard Epstein in WSJ) (June 30, 2009)

Today it is someone else’s turn to hold the torch, that being Andrew Cochran, founder of The 7th Amendment Advocate, a website dedicated to educating the public and policymakers on the centuries-long history of the right enunciated in the 7th Amendment to a jury trial for civil suits.

And he writes today on the many conservative voices in academia that have risen up to oppose as unconstitutional the attempt to use federal power to limit the rights of the citizenry in state court claims: Letter to “Super Committee” Opposing Federal Tort Reform Proposals

Among those conservatives that have spoken out against the hypocritical usurpation of state rights are:

Professor Randy Barnett; longtime tort reform proponents Walter Olson and Ted Frank; Republican Members of Congress such as Sen. Tom Coburn and Reps. Ted Poe, John Duncan, and Ron Paul; and the largest association of state legislators in the country

Cochran today sends a 10-page letter to the Super Committee members, dwelling mainly on this issue: That conservatives cannot scream that President Obama’s health care law is unconstitutional as a federal power grab while at the same time asking to give the federal government more power.

The letter, filled with essential links and quotes, is here: Letter to “Super Committee” Opposing Federal Tort Reform Proposals.

October 10th, 2011

Shpoonkle – A Lousy Idea for Lawyers and Clients

There is a legal auction site called Shpoonkle. The gut instinct of many is to question the sanity of their name. But not me. I question the sanity of anyone that would use it.

According to this article at VentureBeat, this company seeks to have potential clients post information about their issues and then have lawyers bid on them. As per the article:

People who need legal representation but who don’t have time to call around for rates, or who might not be able to afford a lawyer in other circumstances, can post their needs and get bids. Attorneys then have to compete for a piece of the action. According to the company’s theory, this will lower legal fees.

I’ll get to the ethical issues in a bit, but first let’s tackle the most fundamental issue of anyone looking for an attorney: Getting the right one. And the article cites personal injury law as an example. According to CEO Robert Nitzig:

our users keep more of their winnings on contingency cases

I want to puke already. I don’t know any lawyer that meets personal injury victims that would ever refer to an award as “winnings.” Oddly enough, those that have lost a child, or a leg, or are living in constant pain, don’t see a settlement or jury verdict as “winnings.” I once took a verdict in a case for a Spanish-speaking client that was quite substantial. She was stone faced. I asked her daughter if she had translated the verdict for her mom, and the answer was yes. “Well,” I asked, “What did she say?” “My leg still hurts.”

Now to the guts of the issue: Is a client really keeping “more” of any recovery? Well, now that depends. Let’s say that, in a community where a 33% fee is the standard, that a lawyer “wins” the auction with a 25% bid and the case settles for $100,000. The client got an 8% bonus of about $8,000, right? But not if the case was worth $250,000 in the hands of someone with experience and a proper skill-set. The client, then, would be a huge loser.

You see, as per the article, this is a great site for new attorneys since 13,000 out of the 44,000 graduating law grads don’t have jobs. So how does the rookie lawyer have the knowledge to work the case up, appreciate the significance of injuries s/he has never seen before, know their value, know how to address the defenses and cross-examine the hired expert guns, and handicap the odds of prevailing? And even more importantly, does the newbie lawyer have the depth of experience and the cojones to say “no” when the adjuster calls with the 100K offer, when the case is worth more and that young lawyer is struggling to pay the rent?

There is an old saying that “you get what you pay for” and that is often true in the professions. Not all doctors are created equal, nor architects, nor lawyers. People pay for experience, because that experience is what benefits them in the long run.

Now let us go the dynamics of the auction site itself. According to the article:

People who need legal representation but who don’t have time to call around for rates, or who might not be able to afford a lawyer in other circumstances, can post their needs and get bids.

This raises two distinct ethical issues: First, clients may be seen to have waived their attorney-client privilege by making the information available in such a fashion. They haven’t contacted one lawyer, they have contacted every lawyer in the database that can access the information and who have not agreed to represent the potential client. What if this was a slip and fall in a restaurant, and it just so happens that the restaurant lawyer can access the information also? Now what? Now the information that the client distributed to, potentially, hundreds or thousands of mystery lawyers, may be anything other than confidential.

How stupid does someone have to be to distribute their confidential information about a legal issue to lord-knows-how-many mystery people?

How do you pick the right lawyer? In one of my very first first posts when I created this blog almost 5 years ago, I wrote on just that subject, and addressed this fundamental question: There are so many attorneys and legal websites, how do I select a law firm? While it may not be the most inspirational writing, I stand by the fundamentals of how to find a lawyer, and a lowest-bidder auction certainly isn’t one of them

And as to the Shpoonkle name, I won’t criticize it’s Yiddish sound. After all, many colorful Yiddish words start with “sh” (or “sch”). Some that spring to mind are shlemiel, shemendrick, shnook and shmoe, all of of which someone would have to be to get suckered by this auction shtick to use this shlock service. Which may result in the client getting shtupped.

Elsewhere:

Shpoonkle By Any Other Name (Simple Justice)

Any lawyer who signs up for this service should be immediately disbarred, then tarred and feathered, then publicly humiliated. It doesn’t matter how awful a lawyer you are, how pathetic your business, how grossly incapable you may be in getting any client to retain you. Those are all good reasons to apply for the assistant manager’s position at Dairy Queen. This is worse.

The Shpoonkle-ization of a Legal Profession w/o Doc Review Jobs (Solo Practice University)

Here you have a race to the bottom as lawyers bid against one another to pay the lowest fee to anonymous clients with legal problems.

Another Attempt at a Reverse Auction for Legal Services (Robert Ambrogi’s LawSites)

With its launch today, will Shpoonkle, the latest reverse-auction site for legal services, find itself suffering the same fate as its forerunners? Or is the time finally right for such a site?

October 7th, 2011

U-Haul and its Lousy Customer Service (Updated x3)

Maybe once or twice a year I use this blog to gripe about some consumer issue. Consumer issues aren’t 100% in my wheelhouse, but they are a close cousin to personal injury law. Last year it was snowboarder Tony Hawk, and before that it was Ink Jet Superstore. It’s my blog and I get to do that kind of thing.

Today I’m going to kick the fenders of U-Haul for its incompetent customer service. As regular readers know, I’ve been ultra-busy lately in my non-lawyering life being the Grand Poobah of a half marathon trail race that I founded (reviews of the race here). And to put that race on, I had to rent a van to haul around all manner of stuff for the almost 500 runners and 100+ volunteers who showed up. I made the mistake of picking U-Haul instead of a local company.

So what happened last Friday morning when I went to pick up the van, needed immediately to go fetch and haul many hundreds of medals, awards, goody bags, water bottles, signs, shirts and other stuff? The nice U-Haul guy says that he can’t rent to me yet; I have to call a special customer service number first.

Grrrrr. I’m in a rush. So I call, because I have no choice. And you know where this is going, right? Who has success calling customer service for anything, unless it’s Apple you are calling?

I finally get through after 15 minutes — I hear the phone go out of auto mode and it rings! — and then disconnects.

Grrrr. So the nice U-Haul guy – who is not to blame as he is following the computer orders or he loses the franchise — calls another number for me. And 15 minutes later I hear it disconnect. I’m ready to explode.

After about 45 minutes of grinding my teeth, pacing the floor and steam blowing out my ears, I get an actual, living, breathing, human on the phone, who tells me that there is an outstanding parking ticket for last year for $80 for the van Mrs. Poobah picked up. I tell said person that we never received this phantom ticket, but that that we did get a notice in the mail sometime after. That notice came from Vengroff, Williams & Associates, a Florida law firm. I immediately wrote to them for a copy of this phantom ticket so I could see if it was legit or not. I even put it on my office letterhead, in my capacity of representing Mrs. Poobah. But nothing ever came.

And there the issue lay dead. Until this year when I was finally told by some stony-voiced lady, an hour into my efforts to pick up this stupid van, that if I didn’t pay this $80 — which seemed to be ransom I had to pay to get the van we had reserved — then I would not get the van. So I said I would pay it if they sent me the phantom ticket. And I gave U-Haul the credit card info. I was not pleasant about it, though an hour earlier I no doubt would have been. Their agent promised to send me the ticket.

But they once again failed to send me a copy of the phantom ticket.

So there you have it: Another company that thinks customer service simply doesn’t matter. I say it does. I toyed with the idea of calling U-Haul to find the right person to straighten this out, but if I couldn’t get through the first time with any level of efficiency, why would I succeed now? Why spend an hour on the phone when I can write about this is just 20 minutes? And the irony is that their Twitter name is @UHaul_Cares. Maybe the company cares more about pretending to have customer service than actually having it.

Over at Simple Justice, Scott Greenfield has been gnashing his teeth about a crappy KitchenAid refrigerator and his attempts to get one that works that hasn’t been dropped. Then Greenfield took to Twitter to blast them up, down and sideways. If he has to waste days at home waiting for phantom rapairmen or deliverymen, well that gives him time to talk about KitchenAid’s failings. And now his refrigerator has its own hysterical Twitter feed (and now its own website) and the fridge has even been interviewed. (Update: Greenfield has now updated with a post exemplifying the utter failure of customer service: KitchenAid “There’s Nothing Else We Can Do.”)

Once upon a time, if you had a gripe against Big Corp., you could spend your days standing in front of their HQ with a picket sign for the world to see. But that world has changed.

Maybe one day corporations will get a better grip on this whole customer service thingie and the power of the individuals to self-publish to the world.

Update (2:50 pm): I emailed U-Haul customer service after this Twitter exchange:

@UHaul_Cares : @Turkewitz Mr. Turkewitz, we’d like to discuss with you further. Please email contact info to [email protected] or contact 8007893638

@Turkewitz: @UHaul_Cares You don’t really think I’m going to call a UHaul 800 customer service number again? Didn’t you read? bit.ly/pHfgwQ

But despite emailing them, no word back. So I got curious and Googled around a bit and found other horror stories about the company…I bet there is more out there, when I get the time maybe I’ll link to them too…

I Hate U-Haul Truck Rental (And so does everybody else)

Don’t Use U-Haul

Update #2 (10/9/11) – U-Haul finally sent me the ticket, a year after it was issued and eight months after I learned of it and demanded a copy. The citation was issued the day after we returned the van and on a street where we never took the van. And, more importantly, despite my calls to customer service being cut off twice after about 15 minutes each, without ever speaking to a human, I was told their 800 numbers were “in working order.” If the numbers are in working order then that means the customer service agents are not.

Update #3 (10/10/11) — U-Haul has reversed the $80 charge and apologized to me. One other thing worth noting, since the money is obviously the smaller of the issues: I don’t yet have an answer as to why their customer service reps kept cutting me off. They claim that they are investigating. If I get a definitive answer I will do another update. My best guess — and it’s just that, a guess based on a general perception of corporate stinginess when it comes to customer service, unless the company is named Apple — is that they are understaffed and overworked and that some folks were “clearing” the lines. It is possible that a rep or two could get blamed, when a larger issue might be a company trying to add a penny or two to the bottom line to make Wall Street happy, and done at the expense of customer service. I’d love to be proven wrong.

AMERCO is the holding company for U–Haul International. Stock: UHAL on NASDAQ.