Watchdog Blog

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:

NAF's Weak Response to Business Week

By Graham Steele & David Arkush

The National Arbitration Forum (NAF) has responded to Business Week's investigation of NAF's shady, for-profit arbitration practices. The rebuttal is full of irrelevancies, inaccuracies, and misrepresentations:

• NAF argues that "arbitration outcomes are the same as court outcomes for similar types of cases," citing a Chamber of Commerce-funded report by Catholic University law professor Peter Rutledge. But the Business Week story explains that NAF markets itself by saying the opposite -- that arbitration provides a "marked increase in recovery rates over existing collections methods." (Not to mention that companies can "control the [arbitration] process and timeline," and that "93.7% [of arbitrations] are decided without consumers ever responding.")  Who do you think NAF is lying to -- the public or its clients?

House Report Re-Confirms Abramoff-Bush Connection

For the second time, an investigation by the House Oversight and Government Reform Committee, led by Rep. Henry Waxman (D-Calif.), confirmed extensive communications between disgraced lobbyist Jack Abramoff, who is now serving a prison sentence, the White House and President George Bush. A September 2006 report by the same committee identified 485 contacts between Abramoff and the Bush Administration over the brief career of the scandal-tainted lobbyist; the new report identifies 70 additional contacts.

Despite vociferous denials by White House officials of knowing Jack Abramoff, including denials by President Bush, even the earliest of records demonstrated that Abramoff did indeed visit White House officials. Convicted lobbyist Jack Abramoff made at least two visits to the White House during the Bush administration, according to Secret Service logs released in 2006 under a court order. The logs did  not say with whom Abramoff met or what they discussed and "appear to be incomplete," said Tom Fitton, president of the watchdog group Judicial Watch, which requested the records.

The Department of Justice investigation of Abramoff, originally led by DOJ Public Integrity Section chief Noel Hillman, slowly but surely climbed the ladder from an investigation of Abramoff’s wire fraud to Sun Cruz investors in Florida to corruption in Washington, D.C. Most observers thought Hillman would stop the investigation with a conviction against Abramoff. But in January 2006, Washington was stunned by news that Hillman worked out a plea bargain with Abramoff, easing his sentence in exchange for information about bribery and corruption with lawmakers.

As the investigation by the Department of Justice showed signs of uncovering more of the Abramoff-Bush connection, Bush appointed Hillman to a judgeship in federal district court in Baltimore on January 27, 2006.

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.

Campaign Finance Reformers Open the Floodgates

By David Arkush and Craig Holman. Originally published in Roll Call ($).

The presumptive presidential nominees, Sens. John McCain (R-Ariz.) and Barack Obama (D-Ill.), are exploiting a major loophole in the campaign finance law. Both Senators are setting up joint fundraising committees that allow the wealthy to donate $70,000 or more on behalf of their campaigns.

You might wonder how this squares with the $2,300 limit on contributions from individuals - contribution limits that the Bipartisan Campaign Reform Act of 2002 sought to protect by banning large soft-money contributions.

Heres how McCain Victory 2008, one of the candidates new joint fundraising committees, is accepting $70,100 from donors: The first $2,300 is treated as a contribution to the McCain campaign. Then, $2,300 goes to McCains compliance fund. The next $28,500 is earmarked for the Republican National Committee. And the remainder - up to $37,000 - is split between the Colorado, Minnesota, New Mexico and Wisconsin Republican parties.

McCain set up at least six joint fundraising committees. Obama announced on April 25 that he, too, will set up a joint fundraising committee with the Democratic National Committee.

Another Abramoff-related Conviction

The conviction of John Albaugh, staffer for "Representative #4" (Rep. Istook), for corruption in accepting gifts from Abramoff (meals, hotel suites, travel, sports tickets) represents the 14th conviction related to the Abramoff probe.

Following one fundraising dinner held at no charge at Abramoff's restarurant (Signatures), Istook called Abramoff at Albaugh's suggestion asking Abramoff "which particular projects [Abramoff's] clients want in the transportation bill," according to court documents ($).

And these lawmakers insist they cannot be bought for a dinner. [This one was an undisclosed fundraising dinner to boot.]

Abramoff continues to cooperate with authorities.