Arbitration and the Godless Bloodsuckers

We have often written about problems with mandatory arbitration, but even we were shocked by the allegations made by Richard Neely, a former justice of the West Virginia Supreme Court, about the National Arbitration Forum, one organization that provides arbitrators for commercial disputes, in his article, Arbitration and the Godless Bloodsuckers.  Neely describes his solicitation to be an NAF arbitrator after he was no longer on the bench. Once he was assigned two cases, he discovered how insidious the process could be. For example, the arbitration company sent him a judgment form already filled out so that all he had to do was check the appropriate box for the credit card company to win and then sign his name. Not surprising, after he failed to award the credit card company all that they sought in the arbitration, he never received another case from NAF.

Neely is not the only person to criticize NAF. The Trial Lawyers for Public Justice have filed motions to strike the NAF from serving as arbitrators, citing things like NAF advertisements promising to reduce corporate customers’ bottom lines if they choose the NAF to arbitrate their disputes and close ties between NAF and various corporate entities that routinely use the NAF.

This type of information should be a wake-up call for consumers. Too often, consumers blindly agree to arbitration agreements without thinking.  Instead, consumers need to really read the agreements they enter into to look not only for mandatory arbitraiton clauses, but other issues as well.

If consumers do agree to mandatory arbitration agreements, they need to pay attention once disputes arise.  Too often, consumers get notice of an arbitration (and even lawsuits) and fail to respond.  The result is a default judgment entered against the consumer for the complete amount of the debt, and often additional fees.  Because arbitration awards are extremely difficult to overturn, consumers lose their rights to put their best foot forward on their claims.

We once again emphasize that not all arbitrations are bad. We routinely recommend voluntary arbitration when it fits the situation. But mandatory arbitration agreements present many dangers to consumers.

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Consumer Protection From Washington?

The last few years have been difficult for consumers on the federal level. More and more legislation provides immunity to various businesses for defective products or drugs, and new agency level interpretations of existing statutes have been interpreted as preempting more favorable state laws. But the last few weeks have brought some small glimmer of hope.

Yesterday, Senator Trent Lott announced that he had inserted a provision into legislation to investigate potential fraud in the insurance industry. Lott also announced that he plans to introduce legislation that would require insurance companies to make policies written in plain English understandable by the common man. This would be particularly welcome in Texas. Until a few years ago, virtually every homeowners’ policy was a standard policy, known as an HO-B policy. Consumers could compare apples to apples because the coverage was identical.  While the consumer might not understand all the terms of the policy, at least they knew that the rates quoted from several companies were for the same coverage. Now, there are many forms of homeowners’ insurance on the Texas market. While the choice may be a benefit, it is almost impossible for a lay person to understand the different policies and to make an apples to apples comparison of quotes between companies.  Requiring plain English so a consumer could make an informed choice when buying insurance would be a welcome change.

We have made other posts about Lott’s issues here.

In addition to Lott’s announcement yesterday, Congress is also acting on predatory lending affecting military personnel. An August USA Today story describes lending agencies offering military personnel, among others, payday loans — short term loans with interest rates that often approach 600 to 800 percent. Once in the system, it is difficult for a consumer to escape the cycle. The Senate and the Senate/House conference committee have recently passed the Talent/Nelson amendment to the defense budget appropriation bill that would limit interest rates on payday loans to military personnel and their families. The bill also provides that any agreement to arbitrate any dispute about the extension of consumer credit will not be enforceable against military personnel or their dependents. While the relief is currently limited in scope, we hope it is at least a mild recognition that some type of reform is needed for the general population.

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Supreme Court Scorecard

Texas Watch, an advocacy organization set out to improve consumer and insurance protection for Texas families, has published its Consumer Scorecard of Texas Supreme Court Justices.  After reviewing all consumer cases from the Court’s 2005-2006 term, Texas Watch gave each justice the grade of “F.”  In reaching those rankings, the survey had several startling findings:

1. In the term, consumers lost 84% of the time.  It was the highest percentage of losses in Texas Watch’s ten year history of reviewing the Court’s decisions.  Of note, consumers have never prevailed more than defendants during Texas Watch’s review.

2.  The Court overturned 81% of the consumer cases decided by juries.  In contrast, in the non-consumer cases, the Court only overturned juries 33% of the time.

3. The worst justice was Don Willett, a Perry appointee who had no judicial experience and little, if any, litigation experience before his appointment to the Court.  Justice Willett voted in favor of consumers a mere 11% of the time.

4. The Court voted in lockstep.  The average rate of agreement with the majority was 90%, showing that there is no voice of dissent to keep the justices in check.

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Texas Personal Injury: Remember the Two Second Rule

No, we’re not talking about cookies dropped on the floor. Think back to driver’s ed when you learned that you should follow two seconds behind the vehicle in front of you. Tailgating and aggressive driving are two of the leading causes of automobile wrecks. And now, police departments across the country have started taking action. A story on NPR this morning talked about Oregon and other states’ attempts to enforce the two second rule using new laser technology. Aiming the lasers at two vehicles, the police officers are able to calculate the time between the vehicles. The officers have found drivers following as little as ½ second behind another car — not enough time to even react, much less stop, if the lead car brakes. Don’t let that person be you. Remember the two second rule and protect yourself and fellow motorists.

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Medical Malpractice From A Consumer’s Perspective

A recent article in the Detroit News describes General Motors’ costs due to medical errors and inefficiencies and GM’s effort to force reform in the Detroit area. The real attention-getter in the article comes from the introduction:

Sam Shalaby is a car guy. He used to run a Delphi components plant in Dayton, and his language is still sprinkled with manufacturing terms 10 years after becoming the muscle behind GM’s health care efforts. He speaks of colonoscopies in terms of price per unit and extols the virtues of “brand management” for medical centers.

For a company man accustomed to having products recalled for minor design flaws, the error-prone American health care system is baffling. On an average day, General Motors Corp. estimates that one person it insures dies because of medical errors, and 40 are sickened by prescription drug mistakes.

The automaker loses about $4 million a day because of medical errors and inefficiencies.

GM data reveal massive differences in quality and price of medical care across regions of the country, and even between hospitals in the same city. What’s worse, hospitals sometimes make more money when they make mistakes because they profit from longer recovery times.

“If we ran an auto plant like they run hospitals, we’d be out of business,” said Shalaby, director of community health initiatives. “The medical system is so obsolete, no one understands how to make it work.”

The article is enlightening. If GM is losing $4 million a day due to errors and inefficiencies, what is the cost to the entire economy?

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Schuelke Law maintains offices in Austin, Texas. However, our attorneys and lawyers represent clients throughout the state of Texas, including Dallas, Houston, San Antonio, Forth Worth, El Paso, New Braunfels, San Marcos, Kyle, Buda, Round Rock, Georgetown, Lockhart, Bastrop, Elgin, Manor, Brenham, Cedar Park, Burnet, Marble Falls, Temple and Killeen. By Brooks Schuelke

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