December 2007


Article in New York Times describes the worsening condition of the Social Security disability system. Some facts from the article: of the cases that are rejected initially, 2/3 of the people that appeal have their claims granted. Since 2000, the backlog of cases on appeal has soared from 311,00 to 755,000. In 2000 the wait for an appeal took 238 days, now the wait is over 500 days.

Many people lose their houses while waiting for their appeal to be heard. Some are kicked out of their apartments. Others die during the wait. Congress passed a bill that would have added more judges to the system, but unfortunately the bill was vetoed.

Addendum:  New York Times editorial about the situation does a good job of tracing the origins of the problems in the system.

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In 2003, as part of tort reform measures, Florida passed a horizontal immunity statute.  The statute require a worker on a jobsite working for one subcontractor, to prove gross negligence in actions against other subcontractors who negligently injure such workers on a jobsite.  The gross negligence standard means to knowingly undertake a dangerous act likely to result in injury. 

An article on Jacksonville.com talks about a recent verdict in a case using this new law.  The plaintiff lost, as the jury was unwilling to say gross negligence applied to the facts.  Another instance of working people suffering the consequences of tort reform and the businesses who paid for tort reform shirking their responsibility for their actions. 

Congress will soon take up the question of mandatory arbitration clause reform.  Mandatory arbitration clauses appear in various legal documents consumers come into contact with everyday.  Car salesmen include them in their contracts routinely.  Credit card companies also use them in all consumer contracts. 

The clause takes away the consumers right to sue the business if they are wronged by the business.  By agreeing to mandatory arbitration, the consumer agrees to address any grievance with the company they are doing business with through an arbitration company.  Why would a business, like a car dealership or credit card company want to arbitrate all claims against it?  Because the arbitration company they use will rule in their favor the majority of the time.  According to an article on the subject titled “Suckers Wanted”, arbitrators rule in favor of the businesses that hire them 94% of the time.  Pretty good odds. 

One of the reasons business wins over consumers in arbitration is that the businesses name the arbitrator.  So if an arbitrator rules in favor of consumers, he isn’t hired by the business again.  The article cites a study of HMO arbitration cases.  The study found that if an arbitrator ruled in favor of the patient, the HMO never hired that arbitrator again.

Congress is gearing up to amend the Federal Arbitration Act, to outlaw the type of mandatory arbitration clauses that consumers are bound by in credit card contracts and car sales contracts, as well as to stop mandatory arbitration clauses in employment contracts. 

The Chamber of Commerce is cranking up an ad campaign to convince the public that arbitration clauses are good and that trial lawyers are behind the anti-arbitration movement.  Larry Akey from the Chamber had the following quote in the article:

“Efforts to force people to hire attorneys for even the smallest dispute are wrong…(consumers don’t need a lawyer in arbitration). The real motive on the part of the trial bar is to wipe out prohibitions on class actions, not to protect consumers.”

No the real motive is to allow consumers to protect themselves when they transact business with an unscrupulous company.   

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