Watchdog Blog

Amendment Goes Down the Hatch

by Kiren Gopal

In a resounding defeat of Senator Hatch’s medical liability amendment, the Senate H.E.L.P. Committee voted 13-10 yesterday against imposing an arbitrary cap on damages.  This is an important signal to the Finance Committee that restrictive limits on medical liability will not address our rising health care costs or incentivize a reduction in avoidable medical errors.  The amendment would have also imposed contingency fee limits, restrictive statutes of limitations, and raised the burden of proof.  Measures like these do nothing to combat the very real problem of medical malpractice.  “Between three and seven Americans die from medical errors for every one who receives a payment for any malpractice claim,” according to Public Citizen’s latest study.  Given these staggering statistics, limiting negligent provider accountability is not a sensible solution.   

Ignoring Patient Safety = $1 Trillion Waste

Former Bush administration Treasury Secretary Paul O’Neill identified a simple but crucial element that should be front and center in the health care reform debate and legislation: improving patient safety, which would, in turn, reduce health care costs.

O’Neill rhetorically asked in this New York Times op-ed piece:

• Which of the reform proposals will eliminate the millions of infections acquired at hospitals every year?

• Which of the proposals will eliminate the annual toll of 300 million medication errors? 

• Which of the proposals will eliminate pneumonia caused by ventilators?

• Which of the proposals will eliminate falls that injure hospital patients?

• Which of the proposals will capture even a fraction of the roughly $1 trillion of annual “waste” that is associated with the kinds of process failures that these questions imply?

“So far,” O’Neill wrote, “The answer to each question is ‘none.’”

O’Neill calls it waste – that is, the unnecessary harms done to patients on a daily basis and, he estimates, a trillion dollars in annual costs to address those harms. He said that hospitals themselves can adopt simple processes, such as hand-washing and proper preparation of surgical sites, to cut down on costly injuries and deaths. He also suggested that members of Congress seek more information on the dire problem of hospital-acquired infections, provider errors and other similar “waste indictors.”  To sum up, he said: “(A)ny health care reform that does not address the pervasive waste and the associated burden of needless suffering for patients and staff alike will give us little to celebrate.”

Congress should heed O’Neill’s call. 

Misplaced Malpractice Reform

by Kiren Gopal

According to President Obama, health care reform should control costs, expand coverage, improve care, and guarantee choice.  As Congress works to find politically palatable solutions to achieve those goals and health care interests continue to lobby – to the tune of $1.4 million daily – some legislators instead choose to offer proposals to limit medical liability.

These proposals are based in part on the theory that frivolous malpractice claims are epidemic and represent a significant component of health care costs.  But according to the latest Public Citizen study of the National Practitioner Data Bank, nearly two-thirds of the individuals who were compensated in 2008 suffered an injury that resulted in “significant permanent injury, major permanent injury, quadriplegia, brain damage or the need for lifelong care, or death.” These claims can hardly be described as frivolous. Perhaps the most telling point from the NPDB study is that the medical malpractice liability system accounts for just 0.6 percent of national health care costs. Reducing accountability for medical malpractice is clearly an unsuitable focal point for reducing unnecessary costs. 

Poll: Americans Oppose Forced Arbitration, Demand Corporations Be Held Accountable

Wide support exists across party lines for Arbitration Fairness Act; consumers, employees from around U.S. lobby lawmakers today

Washington, DC – Americans widely oppose corporations using mandatory binding arbitration clauses in the fine print of consumer and employment contracts, according to national polling of likely voters conducted by Lake Research Partners.

Forced arbitration clauses are hidden in the fine print of everything from cell phone, home, credit card and retirement account terms of agreement to employment and nursing home contracts. Just by taking a job or buying a product or service, consumers and employees are forced to give up their right to take their case to court if they are harmed by a corporation.

Arb Study Points Out System's Lack of Checks and Balances

Opponents of the Arbitration Fairness Act strained to see a glass half full in a new study on consumer arbitrations administered by the American Arbitration Association, but they didn’t realize that the tonic contained a poison pill.

The study – released Wednesday by the Searle Center, a conservative Northwestern University think tank – found that consumers received an award in 53 percent of the cases they initiated and received about 52 percent of the amount they sought in those cases. Businesses received an award in 84 percent of cases they brought and won 93 percent of what they ask for in those cases. This means that businesses got roughly 78 percent of what they sought compared to 28 percent for consumers.

Update on Consumer and Civil Justice News

Happy holidays. With so many people on hiatus from last week until January 5, we thought a brief recap of some recent consumer and civil justice news might be useful:

• CBS News legal analyst Andrew Cohen responded to an absurd proposal from the U.S. Chamber of Commerce to President-elect Obama: the way to get the country back on track economically is to exempt companies from legal liability. Cohen analogized this selfish and short-sighted appeal to "child who kills his parents and then begs for mercy because he is an orphan." I like to think of it as a drunk driver who gets pulled over and then suggests to the police that the best way to resolve the situation would be to give him his keys back and look the other way while he drives himself home. Cohen recognizes this shameless argument for what it is: nonsense.
• Following the Fed 's recent enactment of new credit card rules, Sen. Robert Menendez (D-N.J.) called on lenders to comply with the reforms ASAP, rather than by the July 2010, date required by the rules. Other lawmakers have pledged to act quickly for more timely and comprehensive reforms. Last weekend, the New York Times editorialized that "promptly passing a credit card reform package" should be a priority for the next Congress.
• Class action lawsuits have been useful to consumers challenging baseless early termination fees (ETFs) in cellular telephone contracts. A recent story in the Times reported on efforts by Sen. Herb Kohl (D-Wis.) to investigate rate setting for cell phone text messaging plans. Perhaps unsurprisingly, those rates appear to be as baseless as ETFs. In another similarity to ETFs, consumers have begun filing class actions over text messaging rates.
• New America Foundation's blog has been following an old but infuriating story about a shady student lending practice in which lenders, like Ohio-based Key Bank, partner with unlicensed and unaccredited trade schools, disburse student loan money to the schools, and then refuse to discharge students of their debts when the schools go out of business. There is an FTC rule designed to protect students in these situations. One way that Key Bank has been evading the rule and other charges of unfairness over its practices is by including Binding Mandatory Arbitration clauses in the promissory notes. Key Bank insists that these are old cases, and it has ceased student loan operations (for the time being), but Key also received $2.5 billion from U.S. taxpayers (via the U.S. Treasury) as part of the bailout package.

Meanwhile, we must wait until after the New Year for word on a potential economic stimulus bill. Until this week, all signs seemed to indicate that authority for judges to modify mortgages would be included as part of the package. Now that congressional Republicans have indicated a willingness to drag their feet, the question appears to be not only whether the provision will be included in the stimulus, but also when the stimulus will be enacted.  Stay tuned.

Happy new year to all!

The CPSC and Voluntary Safety Standards

In a Washington Post article yesterday noting a 46 percent drop in the number of toy recalls, Consumer Product Safety Commission Acting Chair Nancy Nord partially attributed the significant decrease of dangerous toys on the shelves to stronger voluntary safety standards. Ironically though, at a conference last month, Nord told her audience that the agency’s voluntary standards work will be scaled back, and data reports and important “safety work” would be delayed. She blamed the cut back on the agency’s implementation of the Consumer Product Safety Improvement Act, which was enacted this summer. According to Nord, the CPSC is unable to implement the new law and conduct other important safety activities at the same time. 

The Other Bad News for Consumers: Forced Arbitration

Due to the extensive coverage of the recent economic meltdown and the presidential race, it's been easy to miss some other news very relevant to consumers and corporate accountability.  Over at Tortdeform, they have some excellent posts about issues covered by the New York Times. 

First, Kia Franklin relayed the news that a recent Department of Health and Human Services study cited 94% of nursing homes for violations of federal health and safety laws.  This underscores the need for legislation banning forced arbitration, which nursing homes use to immunize themselves from the accountability when they violate the law or hurt their residents through negligent treatment or abuse.  (Follow up on the Times story from Tortdeform here.  Read more about the nursing home arbitration bill here.)

Next, Justinian Lane recaps a study by two law professors about the reluctance of companies to use arbitration when dealing with one another.  The professors cited in the story have been following this issue for some time now, and their results have consistently shown the hypocrisy of corporations that tout arbitration as a fair, efficient, less costly method of dispute resolution between companies and consumers, or employers and employees, but not between one another.

A New Era for Consumer Product Safety

It’s been a little over a month since the president signed the Consumer Product Safety Improvement Act of 2008, which reformed product safety law and bestowed more resources and responsibility upon the oversight federal agency, the Consumer Product Safety Commission. The CPSIA is a welcome improvement to product safety regulation, giving the CPSC the resources it needs to protect the public. As we’ve mentioned before, highlights of the bill are that it requires that children’s products be tested before they are sold and bans lead and toxic phthalates in toys; requires the CPSC to create a publicly accessible consumer complaint database; increases civil penalties that CPSC can assess against violators; and protects whistleblowers who report product safety defects. In short, this bill makes big, important changes in product safety law.

So what has the CPSC been up to since the bill’s passage? About two weeks ago, the agency held a public meeting to discuss its work in implementing the new law and built a web site devoted to CPSIA implementation. The web site contains summaries and interpretations of the new requirements, and a helpful timetable referred to as CPSC “Required Actions” under the Act, which lists its tasks (a majority of which is rulemaking) for the coming months and years. Conspicuously absent from its “Required Actions” list, however, is the consumer complaint database – a crucial part of this product safety overhaul.

Protect the Elderly from Forced Arbitration

by David Arkush and Christine Hines

Yesterday the Senate Judiciary Committee followed its counterpart in the House and approved an important arbitration bill to protect residents in nursing homes and assisted living facilities, the Fairness in Nursing Home Arbitration Act, S. 2838. The legislation, which a House committee approved in July, will make it easier to hold these facilities accountable for negligent or reckless acts that harm their residents. It prevents nursing homes from forcing residents to agree to arbitration before a dispute arises, allowing residents to turn to the courts in the event their nursing homes cause them serious injuries or death. Without this protection, nursing homes can force residents to take disputes to private arbitrators chosen by the nursing home itself. Guess who wins cases there?

More Information Means Safety for Consumers

Anyone who has been following the progress of the consumer product safety reform legislation, H.R. 4040, closely knows that a proposed database housing consumer complaints has been one of the major points of contention during the legislative process.  (We have previously discussed the database here.)  While the conference committee negotiates the contours of the safety database, we have this story:

In 2002, engineers from the Consumer Product Safety Commission (CPSC) privately warned nail gun makers that the nail gun industry’s efforts to reduce the rising number of injuries with its tools wouldn’t really work; this, according to recently disclosed federal documents.

For some reason, the CPSC engineers’ views, warnings, and requests for additional study of nail guns safety features, were not addressed or disclosed publicly to US consumers.  Meanwhile, thousands of workers and home consumers continued to buy or rent nail guns at giant hardware stores nationwide during the country’s most recent housing boom.  Because of this, those sent to hospitals—both workers and home consumers—with hand, foot, knee, and head injuries that were caused by air-powered nail guns climbed to 42,000 in 2005, up significantly from 12,982 in 2000, according to federal hospital injury data.

This is a perfect example of the necessity of a public repository of consumer safety complaints.  If the proposed database had existed at the time of these nail-gun injuries, the hospital injury data would have been entered in the database and available to the public.  Consumers could have seen the upward trend in nail gun-related injuries and known to avoid that particular product.  This is not a one-time story.  As one of our recent reports demonstrates, industry and the CPSC are failing drastically to warn consumers promptly about serious product hazards.

With a product safety database available on the Internet, consumers will not have to rely as much on the manufacturers or the CPSC to protect them.  They will be able to help themselves by doing their own research.  A free exchange of information will save government resources and make everyone safer.

Civil Justice Is Not About Special Interests

By Graham Steele & David Arkush

Far too often, the press covers civil justice issues purely as battles between special interests -- business versus "the trial lawyers" -- without much discussion on how the policies at issue would affect the public.  We weren't surprised when the Wall Street Journal presented our opposition to pre-dispute binding mandatory arbitration as kowtowing to the trial lawyers.  The editorial board of the WSJ is unabashedly conservative and pro-business, and a battle between powerful, well-resourced special interests provides a compelling narrative.  We were happy to set them straight.  But this story line persists with too many of the civil justice issues that we work on here at Public Citizen -- and in too many publications from which we expect better.

If you read the CL&P blog over the weekend, you saw an example in a brief excerpt of a recent NY Times Magazine article about the "tort war" between the United States Chamber of Commerce and the American Association for Justice (formerly the Association of Trial Lawyers of America).  The article mentions two important pieces of legislation, the Arbitration Fairness Act and the Sunshine in Litigation Act, but discusses them in the frame of the "tort reform battle" rather than reporting on their value to the American public generally:

At the federal level, trial lawyers are pushing for a law that would make it easier for consumers to sue instead of having to submit to binding arbitration, as many contracts — for credit cards, for example — now require. The trial lawyers are also trying to make it harder for defendants to keep legal proceedings secret.

These proposed laws might benefit trial lawyers, but much more important is that they will benefit the public. That's why we're working to pass them:

Business Week Looks Inside Arbitration Firm, Finds Shady Practices

By Graham Steele

In case you missed it, Business Week published an excellent story last week that highlights the abuses of pre-dispute binding mandatory consumer arbitration.  As you probably know by now, many consumer service contracts (credit cards, cell phones, cable/internet/telephone service, car purchase agreements, computer purchase agreements, etc., etc.) force individuals to resolve disputes in arbitration instead of court. Despite its innocuous sounding name, arbitration is a legally binding process. Most egregiously, companies that force their customers into arbitration actually hire the very arbitration firms that rule on disputes.

If you're an American consumer, chances are that you could be required to submit to arbitration before the NAF: their list of corporate clients includes Bank of America, Citibank, Discover, General Electric, JPMorgan Chase, Lowe's, Sears, Circuit City, Sallie Mae, and Toyota Motor Credit.  The article describes, in vivid detail, NAF's private, for-profit dispute resolution enterprise designed to secure repeat business for them and the highest possible judgment for their corporate clients.  Arbitration companies are essentially operated like judgment mills: consumers are rarely given notice and a chance to participate, most arbitrator decisions are made in a few minutes, and arbitrators are pressured to aware fees that would not be authorized in civil court. 

Some of the article's key findings:

• NAF actively markets itself to large companies as providing a “marked increase in recovery rates over existing collection methods.” The article also explains: "current and former NAF arbitrators say they make decisions in haste—sometimes in just a few minutes—based on scant information and rarely with debtor participation."
• NAF educates its corporate clients on ways to manipulate procedural rules to their advantage, even explaining how corporations can bring poorly documented cases with assurance that they won’t lose: either the consumer will not respond and the company will win by default, or, in the event that the consumer disputes, the company can ask for a stay or a dismissal. (If the case is dismissed, the company can always re-file later.)
• Companies can also exploit rules and basic institutional pressures on arbitrators to ensure that they get a sympathetic “judge.”  They can drop and re-file a case if they get an arbitrator that they don't like, or simply demand that an arbitrator that they don't like be removed from all of their cases.
• As part of an ongoing business strategy, NAF colludes with law firms specializing in debt collection to promote the use of arbitration to the law firms' corporate      clients.  This is akin to a judge coordinating with lawyers to persuade the lawyers' clients to bring suits to the judge – with the judge getting paid more when he hears more cases and the lawyers getting paid more when they win.

New Medicare Rule May Improve Patient Safety

Safety incidents for Medicare patients resulted in a shocking 238,337 potentially preventable deaths and cost Medicare $8.8 billion from 2004 to 2006, according to HealthGrades fifth annual Patient Safety in American Hospitals Study [pdf]. But improvements may be on the way. Starting in October, Medicare will stop reimbursing hospitals for procedures in which inexcusable errors are made.

The HealthGrades Study measured the incidence of 16 patient safety indicators among Medicare patients at virtually all of the nation’s nearly 5,000 nonfederal hospitals. The patient safety indicators used had been developed by the U.S. Department of Health and Human Services’ Agency for Healthcare Research and Quality (AHRQ).

In 1999, the Institute of Medicine estimated that as many as 98,000 people die every year and countless others suffer injuries because of medical errors. At that time, IOM believed that it was a reasonable goal to cut medical error-related deaths and injuries by 50 percent over the next five years. While the HealthGrades study reported some progress in reducing overall death rates among Medicare patients that experienced one or more patient safety incidents (-5 percent), some indicators showed an increase. The incidence of bed sores; post-op respiratory failure; post-op pulmonary embolism or deep vein thrombosis (clot); post-op sepsis (infection); and post-op abdominal wound separation/splitting actually increased when compared to 2004. Unfortunately, as the HealthGrades study demonstrates, progress in reducing the toll of medical errors has been uneven at best.

Whistleblowers: Best Defense Against Corruption

By Angela Canterbury. Originally published on The Hill's Congress Blog.

For years now, corrupt interests have co-opted our government for political gain and private profiteering. Our best line of defense when the law is ignored and regulation fails are the informed insiders who believe so strongly in the importance of accountability and saving taxpayer dollars - and often saving lives - that they are willing to risk their careers and safety to expose government wrongdoing.

It is a national disgrace that speaking out about government fraud, misconduct, waste and corruption is still such a risky endeavor. More often than not, whistleblowers suffer from some form of serious retaliation, including threats, demotion or outright firing for exposing wrongful conduct. Conscientious civil servants deserve strong statutory protections, not risk and intimidation. Yet many end up sacrificing because the 1989 Whistleblower Protection Act has been interpreted and enforced in a way that weakens the protections Congress intended - protections that government whistleblowers desperately need.

It’s time to end the discrimination and retaliation - as well as the unmistakable and deeply chilling message it sends to all employees that they should keep quiet, or else. Congress should complete the marathon legislative effort to restore a credible Whistleblower Protection Act.

Stupak’s Effort to Arm the FDA with Subpoena Power Over Company Records

After years of discussion, Rep. Bart Stupak, the Michigan Democrat who runs the investigations panel of the House Commerce Committee, has, again, wisely urged the FDA to support Congress’s addition of subpoena power to FDA’s arsenal of tools needed to make our food and drug supply safe. Some food and drug industry folks immediately criticized the idea, claiming the result would simply be more bureaucratic meddling in their affairs. To date, there has been no official response from the FDA.

Recent episodes of contaminated foods and drugs again raise disturbing questions about whether the Food and Drug Administration has the tools and resources necessary to protect the public. Often the agency, it seems, is the last to learn of hazards threatening us all.

The FDA does no testing of its own, and in making decisions it must rely on the test results submitted by manufacturers. Dr. Sidney Wolfe, director of Public Citizen’s Health Resource Group, previously noted that “the FDA is extraordinarily dependent on the companies to be honest.”

If the FDA is really serious about cracking down on unsafe products, why doesn’t it accept Stupak’s offer to authorize the subpoena power?  Some fear that the FDA no longer has consumer protection as its first priority, but has been co-opted by the industry it is supposed to oversee.

Time for Congress to Pass Strong Consumer Protection Law

By Joe Newman
Cross-posted from CitizenVOX

Right now, leaders in the House and Senate are preparing to make decisions behind the scenes that will have a tremendous impact on consumer protection in this country. If they can put aside partisan differences and ignore the lobbyists from the manufacturing industry, they have a chance to craft a bill that should help to stem the flood of life-threatening, hazardous products that led to a record number of recalls last year. On Thursday, parents and consumer activists rallied near the Capitol to urge Congress to pass the strongest protections possible. It’s especially an important issue for parents. Last year some 25 million hazardous toys and children’s products, many laden with high concentrations of lead, were recalled.

The U.S. Senate and House of Representatives have each passed a version of the Consumer Product Safety Reform Act (S. 2663/H.R. 4040) and senior members from both houses of Congress are meeting in conference to negotiate a compromise bill.

The Senate and House bills take important steps toward better protecting American consumers by giving the CPSC more resources, improving product testing standards and increasing the penalties manufacturers face for violating the law, among other improvements.

You can take action by writing your member of Congress and urging them to pass the strongest bill possible.

Stroll for Safety in DC Tomorrow

Dangerous toys are still on the shelves. We need your help to make sure Congress enacts the kind of toy safety our children deserve by banning phthalates and significantly reducing levels of lead in kids’ toys.

Bring your kids -- America’s littlest consumers -- to a stroller rally tomorrow at the Capitol to tell Congress toys should be safe enough for kids!

With your help, we recently pushed the House and Senate to pass legislation that will make consumer products safer.  Now a conference committee is reconciling the differences between the two bills, including banning the use of lead and phthalates -- an industrial plasticizer and a powerful reproductive toxin -- in children’s products.

Join us TOMORROW at the Capitol to tell Congress to get tough on toys!

Also, if you haven’t already, please send an instant email now to your members of Congress! 

The rally and press conference will start at 10 AM TOMORROW, Thursday, May 15, 2008 at the Upper Senate Park on Constitution Ave between New Jersey and Delaware Avenues, in Washington, DC.

Questions?  Send an email to action@citizen.org for more information, or to let us know you're coming.  Don't forget to tell your family and friends with kids in the DC area!

Heritage Foundation Opposes Consumer Information, Well-Working Markets

This piece from Heritage is really rich -- it argues against Senate legislation that would require the Consumer Product Safety Commission (CPSC) to host a public database of consumer complaints.

[Background: Product safety legislation has passed both the House and Senate and is being negotiated in an informal conference. The House provision on the database would require CPSC only to create a plan for the database, then report back to Congress. We and other consumer groups support the Senate bill over the House bill because CPSC should have the authority -- even the requirement -- to create the database as soon as possible, not just develop a plan to create it and then await further instruction. Making this information available to the public would help consumers protect themselves when the CPSC fails to act -- and the agency is notoriously slow to act, whether by informing the public about hazards or issuing new safety rules. With a public database, consumers could do their own research on products to see whether problems exist.]

There are several serious flaws in Heritage's argument, starting with its surprising conclusion. The piece criticizes the Senate's database provision by arguing that the CPSC should not host a database at all, but then it concludes by promoting the House provision, which would require the CPSC to "craft a detailed implementation plan" for a database -- presumably so the agency can implement it. If Heritage really believed its argument, we could expect it to oppose the database all together, not to support the crafting of an implementation plan.

Where Customers are Never Right

Over at Creditcards.com -- a website that helps people pick (you guessed it) credit cards -- there is an article warning consumers about binding mandatory arbitration.  They highlight the dangers of forced arbitration and its differences from the civil justice system. 

One of the most alarming is that unlike court judges, arbitrators do not have to obey the rule of law.  They can ignore key evidence and flout the law because their decisions are usually secret (unless both parties agree to make them public) and are rarely appealable to a real court.  It’s no surprise then that Public Citizen’s report, The Arbitration Trap, uncovered that consumers lose 94 percent of the time in arbitrations in California.

Want to avoid forced arbitration?  Your only choices are to get an AARP card (if you happen to be a senior citizen) or join one of the credit unions that doesn't require it. 

If you get trapped in arbitration, read their tips to help keep things fair.

Nursing Home Arbitration

The Wall Street Journal recently published ($) an excellent front-page article describing one of the more egregious incarnations of binding mandatory arbitration – nursing home admission agreements. The money quote:

Nursing homes' average costs to settle cases have begun dropping, according to an industry study, even as claims of poor treatment are on the rise. The industry notes arbitration is slicing the number of patients winning big punitive judgments, the added penalties for severe negligence that can pump up the size of jury awards. Meanwhile consumer advocates, plaintiffs’ lawyers and even some arbitrators are decrying the practice.

The article goes on to describe the case of one Mary Hight, whose nursing home wouldn’t call an ambulance despite her being dehydrated and ill for days. Her daughter, Janice Cowart, resorted to pushing her uphill to a nearby hospital, where she died the next day. Even though the “arbitrator found the home was negligent both in allowing Ms. Hight to become dehydrated and failing to get her to an emergency room,” he only awarded $90,000. After legal fees from the arbitration, “We didn’t get one cent,” said John Estep, Janice Cowart’s brother.

Will the Pro-Civil Justice Candidates Please Stand Up?

Public Citizen is proud to join the Drum Major Institute and its coalition of organizations to support the “Pro Civil Justice Presidential Platform.”  Our goal is to get the attention of the presidential candidates and ask them to support our civil justice platform:

•Provide counsel for people who cannot afford it any important case;
•Ban forced arbitration in consumer contracts;
•Stop federal preemption of state consumer protection laws;
•Reduce secret settlements that keep health and safety information from the public;
•Ensure injured patients’ right to justice; and
•Effectively regulate the insurance industry to curb unfair practices.

These issues have been conspicuously absent from the candidates’ stump speeches.  We are not sure why, but we are going to find out.

WSJ's Recent Run on Forced Arbitration

by David Arkush and Taylor Lincoln

Wall Street Journal readers have heard a lot about binding mandatory arbitration recently. On Saturday, the newspaper’s editorial board used the Chamber of Commerce's biased survey on arbitration as justification for a fact-twisting polemic against the civil justice system. Today, the paper reported on a lawsuit against the National Arbitration Forum by the city of San Francisco, and readers weighed in with views on arbitration far more reasonable than those of the editors.

The Journal's editorial touted a recent Chamber survey claiming that 82% of voters would prefer to resolve a dispute with a company in arbitration in contrast to only 15% in litigation. Of course, survey participants were not informed that if a company forces you into arbitration, the company picks who resolves the dispute (what would Memphis think if Kansas got to pick the referees for tonight’s NCAA championship game?). Participants also weren’t told that these biased decisions are binding and almost always final -- meaning no appeals even if the decisions contain “silly factfinding” or are just plain “wacky.” (The are quotes from the Supreme Court and a federal appeals court!) Needless to say, the Journal’s opinion writers didn’t mention these flaws in the survey.

U. S. Chamber of Commerce Attacks Arbitration Fairness Act, Surprised?

The U.S. Chamber’s Institute for Legal Reform (ILR) yesterday launched a campaign to scuttle important consumer legislation pending in Congress.  The attack is aimed at the Arbitration Fairness Act (S. 1782/H.R. 3010) which is designed to protect consumers, employees and others from having binding arbitration imposed as the only means by which their disputes may be resolved.  For those of you who don’t know, the current problem with arbitration is its growing use by business to provide an edge in resolving disputes with their customers – and it’s appearing everywhere.  If you have a cell phone, credit card, bank account, auto loan, brokerage account, or a number of other goods services, chances are you’ve signed away your right to sue if things go wrong, without even knowing it!

This recent attack by the Chamber is in response to Public Citizen’s detailed report issued last fall which found that arbitrators employed by the National Arbitration Forum ruled against consumers in 94.7 percent of the 19,000 cases involving credit card holders.

Unsealing Safety

It would have been easy to miss a recent New York Times article about a class-action lawsuit brought by disgruntled consumers against Microsoft for misleadingly marketing Microsoft Vista as being ready for use on certain computers for which it was clearly not ready.  This case became more interesting when discovery led Microsoft to disclose a series e-mails to the company from some customers, who also happened to be Microsoft executives, documenting their own troubles with Vista. (Microsoft’s own Vice President in charge of Windows product management complained that incompatibilities with Vista turned his laptop into “a $2,100 e-mail machine[.]”)

Civil litigation serves the public good in a variety of ways: it helps to create accountability to the public in business, and deters potential bad behavior.  This case is also a prime example of how lawsuits increase transparency.  In the absence of formal legislative hearings, litigation gives the public a unique opportunity to peek into the inner workings of corporations that make obfuscation a routine business practice with the help of restrictive secrecy policies and high-powered PR masters.  Without a class action suit against Microsoft, the public likely never would have learned of the 200 or so e-mail messages and internal reports documenting the Vista marketing strategy and cataloging the various difficulties that Microsoft's own executives had with the program.

A Win in the Senate!

Today the Senate passed the Consumer Product Safety Commission (CPSC) Reform Act by a vote of 79-13.  After about three and a half days on the Senate floor, the bill emerged a bit stronger than it was going into the week.  This is a real victory for consumers.  You can read our coalition press release here and my press statement here.

We hope to see more changes at the CPSC than this bill provides, but we'll leave those for another day.  Tonight, we can relax and celebrate a little!

Consumers Are Winning on Product Safety in the Senate

by David Arkush

Here's an update on the CPSC bill (S. 2663) on the Senate floor this week.  The short story is, consumers are doing very well in the Senate so far this week.  Here are some highlights:

• On Tuesday, pro-consumer senators fought off the first attack on a strong CPSC bill: an attempt to replace the current Senate bill with weaker bill that passed the House in December.  You can view our comparison of the House and Senate bills here.  The attempt lost 57-39.  Not only did this stop a broad frontal assault on the Senate bill; it showed that opponents of the bill cannot muster the 40 votes they would need for any major blocking action.

What is the Hold Up with Product Safety?

The Consumer Product Safety Commission (CPSC) has been "working on" several rules to ensure product safety since at least 2004 (two since 1994!). These rules cover hazards that the agency itself blames for more than 900 deaths and more than $460 million in property damage every year.

These unfinished rules would help protect the public from:

• Bed rails, crib slats and baby bath seats that can suffocate, strangle or drown infants;
• Excessively flammable upholstery, bed linens and clothes that are among the leading causes of fire-related death in U.S. homes; and
• Cigarette lighters that, by the CPSC’s own analysis, fail to meet an industry-created voluntary standard at least 60 percent of the time.

Current law requires the agency to produce a final rule within 14 months of adopting an Advance Notice of Proposed Rulemaking (ANPR), a standard the agency has met only once since President Bush took office in 2001. Since 1990, the CPSC has completed 38 rules; just four of those were during the Bush administration.

Public Citizen’s new report, “Held Back: Incomplete Consumer Product Safety Commission Rules, Class of 2007,” details each of the rules that are in development and the reasons for the delays.

The CPSC is hamstrung by rulemaking procedures that are far more burdensome than those of most federal agencies. The rulemaking procedure established by Congress during the Reagan era requires the agency to provide double the usual amount of notice and opportunity for public comment, to explain repeatedly why it is not deferring to industry’s voluntary proposals, and to prove that any rule imposes as little burden as possible on industry.

Moreover, the agency’s procedures call for it to halt any rulemaking if industry creates a voluntary standard that appears likely to address the problem – even though such voluntary standards are unenforceable. Not surprisingly, industry often derails the CPSC’s efforts by strategically adopting voluntary rules.

These problems point to the need for Congress to reform the CPSC to fulfill its mission of protecting the public from hazardous products.  The Senate is considering a bill now that would give the CPSC some much-needed muscle.  You can write your senators here now.

Learn more and read the report at www.ToyingWithSafety.org.

Industry and Republican Allies Gear up to Fight Moderate Consumer Health and Safety Bill

by David Arkush and Graham Steele

Republicans and Democrats in the Senate recently spent weeks negotiating a moderate, bipartisan consumer product safety bill, the “CPSC [Consumer Product Safety Commission] Reform Act of 2007” (S. 2663). After these negotiations concluded, and with the bill cued go to the Senate floor soon, industry is making a last-ditch effort to derail or further weaken it. This week, Senator Jim DeMint (R-SC) and a few other Senate Republicans, apparently playing the role of mouthpiece for industry, circulated a strategy packet for defeating the CPSC bill. The packet includes a list of “Top Ten Reasons to Oppose the CPSC ‘Reform’ Act,” which is riddled with misstatements about the bill. Apparently, industry knows it can’t win an honest debate against an important consumer safety law, so it’s going dirty.

Wall Street Investors Oppose Arbitration

Who doesn't like binding mandatory arbitration?  In addition to Comcast customers, KBR employees, car dealerships, and credit card holders, now public investors have voiced their opposition.

According to a recent survey by the Securities Industry Conference on Arbitration (SICA), participants in the NASD and NYSE arbitrations overwhelming felt they were unfair and were dissatisfied with the outcome.  The North American Securities Administrators Association offers a glimpse into why--

Currently, almost every broker-dealer includes in their customer agreements a predispute arbitration provision that forces public investors to submit all disputes that they may have with the firm and/or its associates to mandatory arbitration. Securities arbitration cases are heard by a three-member panel that includes one “non-public” or securities industry member, and two “public” members, who may have worked in the industry. Neither of the public arbitrators is required to be an investor advocate, even though the non-public arbitrator is required to be an industry representative.

It's no wonder that many investors could feel "trapped."

Some interesting numbers:

• Nearly half of the customers who expressed their views believed their arbitration panel was biased;
• 62 percent believed the arbitration process was unfair;
• 70 percent were dissatisfied with the outcome;
• 49 percent stated that the arbitration process was too expensive, and;
• A striking 75 percent of customers who compared their arbitration process to their civil litigation process indicated that arbitration was “very unfair” or “somewhat unfair” compared to court.

Download the full report.

Why is Sessions Keeping Bush's Secrets?

Some presidents just have more to hide than others. 

We have been working to expose the secrets of the current administration, but now another senator is standing in the way.  Senator Jeff Sessions is the latest to block a bill that would return the presidential records to the American people.   

Bush's Executive Order 13233 was a direct attack on the Presidential Records Act of 1978, a law passed in the wake of Watergate that makes presidential records the property of the American people.  A president should not be allowed to legislate and lock away his records with a stroke of a pen.

But this is not just about Bush.  It's about the records of ALL presidents.

The bipartisan bill to undo the Bush order has passed the House by a veto-proof margin and is close to becoming a law, but Senator Sessions is still standing in between the people and their right to know. 

What you can do: Call Senator Sessions' office and ask why he is blocking S. 886 and tell him to stop obstructing a vote.

Time to Put Safety First

Defective and dangerous products - from lead-painted toys to vacuum cleaners that catch fire - are being allowed onto our store shelves and into our homes.  The Consumer Product Safety Commission (CPSC) has failed to do its job and protect American consumers. 

Public Citizen just released a study showing that manufacturers often wait nearly three years before telling the CPSC about defective products that can kill people - and the agency typically takes another seven months to warn the public.  Some of these products include infant swings implicated in six deaths.

We need a strong, effective agency that can warn the public quickly about dangerous and defective products - and enforce the law against violators.  Under current law, the CPSC must ask permission from manufacturers to get vital safety information to the public.  What's more, the agency can't fine companies enough to make sure that they comply with the law.

The status quo is unacceptable - the CPSC should protect American consumers, not manufacturers!

The Senate commerce committee recently reported out the Consumer Product Safety Reform Act of 2007 (S. 2045), a bill that would give the CPSC much-needed muscle.  Now it goes to the full Senate for approval.  But, as happens all too often in Washington, D.C., bills that are carefully honed in committee become unrecognizable after amendments, concessions and the inevitable congressional horse trading take their toll on a proposal’s original intent.

Please urge your senators to ensure that the Senate bill passes intact - without weakening changes - for everyone's health and safety. 

New Study Shows Deadly Delays in Notification of Dangerous, Defective Products

Today we released a new report showing that despite a law requiring manufacturers to provide the Consumer Product Safety Commission (CPSC) with "immediate" notification of dangerous products, there are long delays before the public learns of dangerous, defective products.

The study, Hazardous Waits: CPSC Lets Crucial Time Pass Before Warning Public About Dangerous Products, covers 46 cases since 2002 in which the CPSC fined manufacturers for failing to adhere to the law requiring prompt reporting.  In addition, companies fined for tardy reporting took an average of 993 days - 2.7 years - between learning of a safety defect in their products and notifying the CPSC.

Perhaps as shocking, the CPSC then took an average of 209 additional days before disclosing the information to the public - even though each case concerned a product defect so dangerous that the item was recalled.  Under current law, the CPSC cannot disclose information about dangerous products without court approval or manufacturer agreement.

Among Public Citizen's findings:

• Graco waited 11 years to report its faulty infant swing, which was linked to reports of 181 falls that resulted in six deaths and nine serious injuries, including bone fractures and concussions. Graco made the report only after CPSC staff contacted the company.
• Hoover waited five years to report a vacuum cleaner with a faulty switch that had caused at least 96 fires. The CPSC then took another 279 days before negotiating a recall and informing the public.
• By February 2000, Polaris Industries had received 1,147 reports of faulty oil lines on its ATV, including 42 instances where the hot oil started a fire and 18 cases in which the oil seriously burned a rider.  But the company didn't report the defect to the CPSC for another year.

It's time to change the law to give the CPSC the authority to truly protect consumers.  Read the study and more about the problems with the CPSC.

Halliburton Victim Twice Over

Today, Jamie Leigh Jones will appear before the House Judiciary Committee and tell how she was gang raped by her co-workers in Iraq while working for a Halliburton subsidiary called KBR. Afterwards, her assaulters confined her to a shipping container and warned that if she left Iraq for medical treatment, she’d be fired. That’s where she was found by agents sent by the U.S. embassy to rescue her — after her father called their congressman, Representative Ted Poe (R-Texas).

Now, Jamie Leigh Jones has been victimized twice over. Because KBR/Halliburton requires employees to sign contracts containing a binding mandatory arbitration (BMA) in the fine print, Jones is being denied her constitutional right to bring her perpetrators before a jury and be heard.

But Jamie Leigh Jones will be heard by Congress today — and then, lawmakers should waste no time in re-opening the doors of justice for Jones and the rest of us. It’s time to ban binding mandatory arbitration in employment and consumer contracts once and for all. There may be no other device being used today by Halliburton and other corporate giants that does more to systematically deny rights to workers and consumers.

Congress is beginning to focus.

A Holiday Wish: Safer Toys

The Consumer Product Safety Commission (CPSC) is supposed to monitor and protect us from dangerous toys and thousands of other products.  Instead, it has been notoriously cozy with the manufacturing industry.  The result: deadly toys and products on our shelves and in our homes.

On Thursday, December 12, the House Committee on Energy and Commerce failed to adequately strengthen the “Consumer Product Safety Modernization Act” (H.R 4040).

The House bill does not do nearly enough to strengthen the agency, which presently doesn't have the same power as other regulatory agencies.  Many improvements in authority and standards are needed.  Congress at the very least should require CPSC to give consumers an “early warning” about potentially dangerous products, mandate broader pre-market testing requirements of toys, provide for more timely product recalls, and allow CPSC to stop potentially hazardous imports at ports of entry.

Representatives Edward Markey (D-MA), Jan Schakowsky (D-IL) and Anna Eshoo (D-CA) should be commended for their efforts in trying to improve the bill.  But the committee has rejected their sensible amendments - including one by Eshoo to reduce the allowable level of lead in children's products.  It seems the Democratic leadership on the committee has cut a deal with the Republicans to pass a watered-down, industry-friendly bill. 

Are most of the committee members really more interested in protecting industry profits and their campaign contributions than consumers?

It’s not too late for the committee to put safety first, as they will resume consideration of the bill again Tuesday, Dec. 18.

The Consumer Product Safety Commission has been giving many gifts to industry. Now it’s time for Congress to go back to the workshop and put something better under the tree for consumers.

Tort Costs Plummet in 2006, So Says Insurance Industry Consultant

U.S. tort costs plummeted in 2006, admits insurance industry consultant, Towers Perrin in its 2007 update issued yesterday.  Given exploding prices both in the grocery store and at the gas pump, this latest admission is a welcome change from other “news.”  TP reports the largest percentage decrease in the 56-year period contained in their study and the first decrease since 1997, a decrease of 5.5 percent in 2006 from 2005.

Having panned TP’s objectivity and methodology in past years, we are wary of their conclusions generally. As in the past, TP concedes here that its study examines only one side of the U.S. tort system; the costs. It makes no attempt to measure the benefits of tort for consumers and the public. They do (somewhat disingenuously) say “any connotation that an increase in tort costs is undesirable is unintended.” As noted in the past, TP includes as part of its cost estimate administrative expenses that are commonly characterized as very inefficient. Half of the costs they report are not costs in any real sense; they are merely transfer payments from wrongdoers to victims. 

Given that this study is one-sided, based on faulty methodology and has no apparent purpose, what is the point of the update? Perhaps its purpose can be found in the “future implications” section of the study where TP opines that tort costs will rise in 2007, 2008 and 2009. That “nugget” may provide just what the enemies of our legal system need to carry on their campaign to limit the rights of victims to recover damages when they are injured.  However, before industry moguls pin their hopes on that prediction they should remember that in 2006 TP predicted by 2007 tort costs would hit their highest levels since 1987.(1)  As we have said in the past, when it comes to TP, don’t believe most of what you read.

(1) 2006 Update on U.S. Tort Cost Trends, Towers Perrin, www.towersperrin.com/tillinghast

A Self-Inflicted "Crisis"

When NY’s Superintendent of Insurance announced a 14 percent across-the-board rate hike for medical liability insurance on July 1, 2007, doctors raised a hue and cry that the increase threatened a crisis in access to care because doctors could no longer afford to practice in New York and would be leaving the state or otherwise restricting their medical practices.  As in the past, doctors again blamed the premium increases on skyrocketing claims and lottery awards and demanded tort reforms that would cripple meritorious malpractice claims by the victims of medical negligence.

Today Public Citizen released a report that exposes these claims of the doctors as full blown, deliberate and obvious exaggeration: A Self-Inflicted “Crisis:” New York’s Medical Malpractice Troubles Caused by Flawed State Rate Setting and Raid on Rainy Day Fund. These same claims have been made by doctors during each of the three cycles of rising premiums that have occurred over the past thirty-plus years. Our report shows that rising malpractice premiums are not the result of any escalation in the frequency or severity in malpractice payments. The increase has nothing to do with patients, lawyers, judges, or our courts. It reflects an insurance problem.

Public Citizen’s analysis of the best available New York data demonstrates that the number of malpractice payments made on behalf of doctors in 2006 was at its lowest point since 1991. The total amount of malpractice payments for doctors, adjusted for inflation, was near or below fifteen year average in three of the past five years.

The amount of malpractice litigation in New York has not changed appreciably over the past eleven years. Thus, it is clear that the 14 percent increase in premiums did not reflect a sudden or dramatic change in either malpractice payments or litigation behavior.

A Lemon Court

Car dealers aren't doing much for their image these days - so, buyers beware.  Though it's not surprising, Mother Jones reports that car dealers are increasingly turning to a sneaky little device to relieve themselves of accountability when a deal goes bad: binding mandatory arbitration. If you were to try to sue them for say, selling you a lemon, you might find yourself tapped in arbitration.  Binding mandatory arbitration is a losing proposition for consumers, as we found in our recent report on how credit card companies use the predatory practice.

Ironically, these same car dealers fought tooth and nail just a few years ago to ban similar arbitration clauses in their contracts with car manufacturers:

The National Automobile Dealers Association wrote members of Congress in 2000 that if they weren't outlawed for the dealerships, mandatory binding arbitration clauses would allow "multinational motor vehicle manufacturers…to be able to unilaterally deny small business automobile and truck dealers rights under state laws that are designed to bring equity to the relationship between manufacturers and dealers." Congress agreed and passed legislation protecting the dealers.

The good news is that Congress is considering a ban on binding mandatory arbitration in consumer and employment disputes.  Please take a minute now to let your members of Congress know that you want to keep your right to take shady businesses to a public court with a judge or jury, instead of being trapped in a rigged, for-profit system where bad business practices flourish.

Party at Joan's

Earlier this month, the Wall Street Journal ran an editorial accusing us of being hand-puppets of their favorite boogie men-- the trial lawyers--because we oppose binding mandatory arbitration.  According to the Journal, our work to preserve the constitutional right to a trial by jury makes us all cabernet-swilling sell-outs. 

In her published letter to the editor, Public Citizen President Joan Claybrook sets them straight: 

"Party at Joan's"
November 17, 2007; Page A9

Your Nov. 7, broadside ("Party at Ralph's") on arbitration was baseless. We
oppose mandatory not voluntary arbitration requirements buried in the fine print of consumer contracts because they shred consumers' legal rights in favor of a secret, expensive, business-dominated system.

The consumer attorneys attending a reception at Public Citizen's office are
legal aid and private attorneys who toil in some of the least glamorous
corners of the law. They see firsthand the unfairness of this
industry-created system to avoid accountability. They work for consumers
harmed by home foreclosures, truth-in-lending violations, unfair debt
collection practices, predatory lending, auto dealer fraud and other
marketplace abuses.

To acquire a credit card, buy a home or car, open a bank account, use a cell
phone or get cable television, consumers usually must sign a contract
mandating arbitration to settle disputes. A mere signature effectively
eliminates their constitutional right to the public courts, extinguishes the
right to appeal, favors corporate repeat offenders whom arbitrators want to please and imposes substantial upfront costs.

License to Malpractice

Some of you might have heard about the doctor in New York, Dr. Harvey Finkelstein, who risked exposing over 600 people to HIV, hepatitis and other deadly diseases by reusing syringes. Among the many horrendous practices brought to light with this case, there are two that particularly highlight issues with the state’s health officials and medical board.

State health officials delayed the public release of the information to patients, which inexcusably delayed testing and possible treatment for those exposed. Then the state’s medical board incredibly found “no evidence of wrongdoing.”

Unfortunately, this is by no means a singular example of the worst medical malpractice offenders being ignored by the New York State Medical Board. Of the 127 doctors in New York who have made 10 or more malpractice payments since 1990, less than one-third have had reportable licensure actions taken against them.

It is clear that we need to fix the system that allows monstrous unaccountability like Finkelstein. As our Director, Laura MacCleery, put it, “The ‘I’ll scratch your back’ culture in medicine, in which doctors have claimed they are competent to police themselves, must end before more people are killed by criminal negligence.”

Stay tuned for Public Citizen’s upcoming in-depth analysis of the state of medical malpractice and insurance in New York.

Hey, it's better than indentured servitude

The lending industry gets a lot of flak for the way it conducts business.  Tactics such as targeting the working poor and racial minorities, imposing prepayment penalties, forcing pre-dispute arbitration clauses into contacts and setting other devious debt traps have received a lot of scrutiny.  Sure, no one likes to see a veteran and his family get kicked to the curb.  But you have to admit, it's a heck of a lot better than indentured servitude.

Kidding aside, Congress is taking action to help protect consumers.  Or is it? 

On Thursday, the House passed the Mortgage Reform and Anti-Predatory Lending Act of 2007 (H.R. 3915) in a 291-127 vote.  While it would do some good like requiring lenders to evaluate a borrower's ability to repay a loan, there are several provisions that consumer advocates and public interest groups are warning will make things worse for borrowers [PDF].

For example, a broad preemption provision would make current and stronger state laws on predatory lending obsolete.  Homeowners whose loans were sold off--usually to some Wall Street investment group--would be unable to fight back in foreclosure because there would be no meaningful federal protection from abuses by the new owners of their loans.

See if your Rep. voted for H.R. 3915.  If so, tell them they just took a big step backwards for consumers (House directory | 202-224-3121).

RECALL Nancy Nord

While parents were in panic over the lead paint on their children's toys (like "Robot 2000"), what was the head of the government agency in charge of protecting us doing?  Traveling - on the dime of the very industries she is supposed to be regulating.

Nancy Nord, the interim Chairwoman of the Consumer Product Safety Commission (CPSC), has not shied away from that fact that she accepts lavish trips from the industries she regulates and even claims that it is perfectly ethical. 

The CPSC is charged with monitoring thousands of products that we use everyday, including toys, but has been systematically gutted by lack of funding and industry-friendly political appointees.  A proposed bill, the CPSC Reform Act of 2007, would help fix that.  It would more than double the agency's funding, give it new powers to punish those who sell dangerous products, and offer protection to government whistleblowers who courageously report wrongdoing within the agency.

Guess who isn't a fan?

Nord. She is also opposed to a bill that would make her agency more effective and better protect consumers from dangerous products. Could her position having anything to do with a recent free trip to New Orleans?  Or maybe she is just more interested in protecting industry profits than consumers.

You can tell your senators to "RECALL" Nancy Nord and to PASS the CPSC Reform Action of 2007 with additional ethics reforms to prevent staff from accepting industry-sponsored travel.

Scary Movie Night

Public Citizen and Americans for Fairness in Lending teamed up to invite people host a scary movie night in the spirit of Halloween.  We offered to supply hosts with a copy of Maxed Out (while supplies lasted), our report "The Arbitration Trap: How Credit Card Companies Ensnare Consumers," a discussion guide and party favors if they invited friends and family over to share horror stories of consumers being haunted by credit card companies.

The response has been amazing.  From Alaska to Maine and from Wisconsin to Texas, people signed up to host movie nights.  And they are not just happening in living rooms.  People are hosting movie nights at high schools, universities, churches, community centers and even one overseas military base.  Before long, we ran out of our supply of free DVDs, but people still wanted to educate others about this issue and so either bought or rented a copy to screen.

Here is some of the feedback we have received from hosts so far:

"My guests and I couldn't believe what credit card companies are doing with these arbitration clauses.  I cut my card up and am looking for one that does not use them."
-Michael from Illinois

"I've decided to cut back on my credit card use because I'm furious with the shady business tactics they use with us. I'm really glad I signed up for the movie night and will try to reorganize it again for maximum effect."
-Holiday from California

"Maxed Out movie night was great! ...we paused the movie several times to discuss what the movie was talking about...We have decided to get involved with the college and high school kids and make this a huge event."
-Nanette from Oregon

Interested in hosting a Maxed Out Movie Night?  Sign up here.  If you find a copy of Maxed Out, we will send you an event kit with everything you will need.

Consumers Win in Hearing on Capitol Hill

Written by Paul Bland

On October 25, 2007, the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law held its second hearing on H.R. 3010, Rep. Hank Johnson's Arbitration Fairness Act. (This Subcommittee has jurisdiction over the bill.) H.R. 3010 would ban the use of pre-dispute binding mandatory arbitration in consumer, employment, franchise and medical contracts. (The first hearing was held on June 12th. I testified at it, and my testimony and a transcript of the hearing can be found on the Public Justice website.)

Three members of the Subcommittee attended the hearing. The first is Subcommittee Chairwoman Linda T. Sanchez. Rep. Sanchez has not yet co-sponsored the bill, but she spoke very sympathetically towards the situation of consumers and employees who have been treated poorly in mandatory arbitration systems. It also can’t be understated that Rep. Sanchez showed that she has put a lot of time into understanding the details of the issue, and she (along with her staff) have obviously put a great deal of work into interviewing and locating witnesses and giving both sides an opportunity to develop an extensive record. The second is Rep. Johnson, the sponsor of the bill, who is a courtly freshman representative from Georgia and a powerful orator. The third member was Ranking Subcommittee member Chris Cannon, who is a huge and uncritical fan of mandatory arbitration. In the course of carrying the water of the Chamber of Commerce on the issue, Rep. Cannon’s duties apparently include trying to craft personal attacks on anyone who comes forward with an individual story of having been abused by mandatory arbitration.

There were two panels. On the first panel:

Laura MacCleery, Director of Public Citizen's Congress Watch Division, who spoke about Public Citizen's report ("The Arbitration Trap: How Credit Card Companies Ensnare Consumers") summarizing more than 34,000 arbitrations handled by the National Arbitration Forum in California, and who also spoke in some detail about the problem of arbitration clauses that ban class actions. I have written in several forums that our law firm’s experience (interviewing hundreds of consumers, and dozens of consumer lawyers, strongly supports the conclusions of Public Citizen’s groundbreaking report). Laura spoke with fervor and energy, and was very articulate. Rep. Cannon tried to get her to admit that Public Citizen’s report is very limited in scope, but Laura pointed out (correctly) that it covered EVERY SINGLE case that the National Arbitration Forum reported handling in California over a period of several years.

Written by Paul Bland

On October 25, 2007, the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law held its second hearing on H.R. 3010, Rep. Hank Johnson's Arbitration Fairness Act. (This Subcommittee has jurisdiction over the bill.) H.R. 3010 would ban the use of pre-dispute binding mandatory arbitration in consumer, employment, franchise and medical contracts. (The first hearing was held on June 12th. I testified at it, and my testimony and a transcript of the hearing can be found on the Public Justice website.)

Three members of the Subcommittee attended the hearing. The first is Subcommittee Chairwoman Linda T. Sanchez. Rep. Sanchez has not yet co-sponsored the bill, but she spoke very sympathetically towards the situation of consumers and employees who have been treated poorly in mandatory arbitration systems. It also can’t be understated that Rep. Sanchez showed that she has put a lot of time into understanding the details of the issue, and she (along with her staff) have obviously put a great deal of work into interviewing and locating witnesses and giving both sides an opportunity to develop an extensive record. The second is Rep. Johnson, the sponsor of the bill, who is a courtly freshman representative from Georgia and a powerful orator. The third member was Ranking Subcommittee member Chris Cannon, who is a huge and uncritical fan of mandatory arbitration. In the course of carrying the water of the Chamber of Commerce on the issue, Rep. Cannon’s duties apparently include trying to craft personal attacks on anyone who comes forward with an individual story of having been abused by mandatory arbitration.

There were two panels. On the first panel:

Laura MacCleery, Director of Public Citizen's Congress Watch Division, who spoke about Public Citizen's report ("The Arbitration Trap: How Credit Card Companies Ensnare Consumers") summarizing more than 34,000 arbitrations handled by the National Arbitration Forum in California, and who also spoke in some detail about the problem of arbitration clauses that ban class actions. I have written in several forums that our law firm’s experience (interviewing hundreds of consumers, and dozens of consumer lawyers, strongly supports the conclusions of Public Citizen’s groundbreaking report). Laura spoke with fervor and energy, and was very articulate. Rep. Cannon tried to get her to admit that Public Citizen’s report is very limited in scope, but Laura pointed out (correctly) that it covered EVERY SINGLE case that the National Arbitration Forum reported handling in California over a period of several years.

Credit Card Report on Marketplace and More

Last week we released our report on credit card companies forcing consumers into binding mandatory arbitration and interest has been very high.

Listen to a short piece on American Public Media's program, Marketplace, or you can read more on The Consumerist where Ben Popken blogged about what consumers are up against, as did Elizabeth Warren on TPM Cafe.  We are really pleased to have the word spread so that together we can end the predatory practice of mandatory arbitration. 

You can download The Arbitration Trap: How Credit Card Companies Ensnare Consumers here.  Also, learn what you can do to protect yourself and tell Congress to stand up for consumers. 

Beware the Arbitration Trap the Credit Card Companies Set for You

Earlier this summer, we sounded the alarm about binding mandatory arbitration (BMA) clauses in the fine print of cable bills sent out by Comcast.  Comcast was not the first company to pull this trick on consumers and, sadly, we’ve learned it is far from the last.

Today, Public Citizen releases a ground-breaking report, The Arbitration Trap: How Credit Card Companies Ensnare Consumers [pdf]. It shows how credit card companies rig their contracts with consumers, using binding mandatory arbitration to evade accountability, strip consumers of their rights and enforce their will. In fact, arbitrators rule for business between 94 and 97 percent of the time.

In a nutshell, BMA is private, corporate-dominated secret “court” that overwhelming rules against consumers. In this world, merely by signing your name on the dotted line, you have forfeited your right to a trial by jury. If someone steals your identity and runs out to buy a $4,000 plasma TV – and the credit card company wants YOU to pay for it – the dispute will automatically bypass the public civil justice system. Instead, it goes straight to an arbitrator who may have heard thousands of cases for that same credit card company. 

Intel Withdraws Class Action Ballot Initiative

A big win for the little guys! This week, Intel and its big-business allies at the California Chamber of Commerce and the misleadingly-named “Civil Justice Association of California” (CJAC) withdrew their ballot initiative aimed at rolling back Californians’ rights in court. The “time wasn't right,” said Intel spokesman Chuck Mulloy.

Why such an abrupt surrender? Perhaps it was the 30,000 faxes citizens organized by the Foundation for Taxpayer and Consumer Rights sent to Intel’s board of directors. Perhaps it was the sluggish fundraising. Or maybe the flurry of countermeasures filed in response, from a competing initiative enshrining the right to the class action to the “No Say, No Pay” act that would force top executives to disclose how much they pay themselves and allow their shareholders to dock their pay. Terrifying! Intel might also have been smarting from the initiative’s tendency to remind consumers of its egregiously racist advertisement. Or maybe it was simply the fact that this unpopular measure had no chance of passing.

Whatever the cause, we congratulate the Foundation for Taxpayer and Consumer Rights for its success, and Californians for keeping their constitutional rights!

Enough is Enough – Kyl Should Stop Blocking OPEN Government Act

Today, Public Citizen sent a letter to Senator Jon Kyl (R.-Ariz.), asking him to allow an important bill to increase access to government information to come to a vote in the Senate.

We’re not the only ones asking for a break. Last week, Sen. Dick Durbin (D.-Ill.), the Democratic whip, sought unanimous consent to bring up the OPEN Government Act again, which would critically improve the Freedom of Information Act (FOIA). The GOP again blocked consideration of the bill for the now-unmasked “Senator Anonymous ” – Senator Kyl (R.-Ariz.). At yesterday’s opening of the Senate session, Senate Majority Leader Harry Reid (D.-Nev.), asked for an end to objections over bringing the uncontroversial, bipartisan bill to the floor. Kyl did not back down.   

It’s time for Senator Kyl to stop obstructing a vote for FOIA and allow the OPEN Government Act to go to the floor. The bill would strengthen the law that provides access to government documents for the press and citizens. Senator Kyl is quibbling over a few parts of the bill, and Senators Leahy (D.-Vt.) and Cornyn (R.-Tx.) have tried to accommodate his concerns.

But there is a limit to how much compromise is deserved here. 

The current bill encourages the timely settlement of cases where the government lacks a reasonable basis to withhold information. The incentive it provides would strengthen FOIA, decrease the cost of litigation and benefit taxpayers. People of modest means should not be penalized when it comes to using FOIA.  In fact, the majority of FOIA requesters are individuals and businesses – taxpayers that deserve real and timely information about the actions of their government.

Senator Kyl should step aside now, and allow the Senate to vote on the OPEN Government Act.      

Comcast Getting Push Back

Last month, when we warned that consumer rights were being threatened by a little pamphlet quietly slipped into cable bills by Comcast, there was an outcry from Comcast customers. Now elected officials in Maryland are taking notice.

Today, the Washington Post reports that the Montgomery County Executive and at least one member of the state legislature are taking extraordinary steps to alert residents about the anti-consumer practice of binding mandatory arbitration:

"Comcast's unilateral action to change the subscriber agreement, with an artificial 30-day deadline, is simply anti-consumer," council member Duchy Trachtenberg (D-At Large), who chairs a management and fiscal policy committee, said in the release.

Jane E. Lawton (D), a state delegate who also serves as county cable administrator, called the policy change "one-sided."

County Executive Isiah Leggett said: "Vendors should not change the terms of service without first receiving the consent of the consumer, and the fact that Comcast has not done this is disturbing."

Comcast isn’t telling where else they are forcing consumers with disputes into binding arbitration without any recourse in the civil justice system.  We have heard reports of the notice being found in cable bills in Florida, D.C., Virginia, Delaware, and Massachusetts. However, Comcast operates in 39 states and the District of Columbia, so chances are other states are affected.      

What can you do? We have opt-out instructions and other ideas on our former blog post.  But you also might contact your county and state representatives and complain loudly about Comcast’s bad business practices.

Taking a Bite out of the Great Medical Malpractice Hoax

Laura MacCleery, Director of Public Citizen's Congress Watch division, debated Jim Copland of the Manhattan Institute for Policy Research on WNYC's "The Brian Lehrer Show."

The segment gets heated as they debate New York State's 14% increase in malpractice insurance and the civil justice system in preserving victim's rights. 

The show asks: what can be done to improve patient safety and hold the most dangerous doctors accountable? Is there really a medical malpractice crisis?

Click below to hear Laura debunk the myths and expose the lies told about doctors, patients and the insurance industry.