Access To Justice

News developments that we’ll be watching at Sokolove Law:

The U.S Food and Drug Administration (FDA) plans to study how medications taken in pregnancy affect mothers and their unborn children, according to a report from Reuters. The new study will be called the Medication Exposure in Pregnancy Risk Evaluation Program. Two-thirds of mothers-to-be have used at least one prescription drug during pregnancy, according to the FDA. There are few clinical trials that test the safety of medications in pregnancy due to concerns about the health of the mother and child.

A class-action lawsuit filed in Manhattan’s Federal District Court last week alleges that some New York debt collectors are using “fraudulent documents to surreptitiously win court judgments – all without the debtors’ knowledge,” writes The New York Times. The paper reports that use of the practice has been spurred by the recession and the rise in consumer debt actions.

Recent Recalls

General Motors announced a January recall of 22,000 Chevrolet Corvettes after finding problems with their removable roof system, writes The Burlington County Times. The recall applies to 2005-07 model year Corvettes and Corvette Z06 models. According to the article, GM told the National Highway Traffic Safety Administration (NHTSA) that the adhesive between the roof panel and the frame may separate, allowing the roof to come off while driving and posing an accident risk. GM will install a redesigned roof panel as a result. The automaker issued a similar recall in 2006.

Make personal safety one of your resolutions in the New Year. As always, Sokolove Law is here to help.

News developments that we’ll be watching at Sokolove Law:

Relief is in sight for some homeowners whose units were constructed with defective Chinese drywall. Lenders have been asked by the U.S. Department of Housing and Urban Development (HUD) to suspend or reduce mortgage payments temporarily for affected homeowners whose mortgages are insured by the Federal Housing Administration, according to an article in The South Florida Sun Sentinel. The HUD guidelines also urge lenders not to charge late fees and to let homeowners make up past-due payments.

The Associated Press reports that hundreds of people have sued the Tennessee Valley Authority in the aftermath of last year’s huge coal ash spill at its coal-fired power plant in Kingston. The AP says the December 2008 spill occurred when toxic muck breached a holding pond at the plant.

A class-action RICO settlement believed worth at least $184 million was granted final approval by a federal judge in a victory for its class of mostly elderly investors, writes Law.com. The investors, according to the article, claimed they were enticed by deceptive marketing used by sales agents and others to purchase long-term annuities from American Investors Life Insurance Co. that had maturity dates exceeding their own life expectancies.

We’ll be watching how these events play out.  Sokolove Law is here to help.

Think of it as a little holiday gift:  JP Morgan Chase & Co. announced that it was dropping mandatory arbitration clauses from its credit card contracts.  The move clears the way for credit card customers to file class-action and other lawsuits against the bank.  The Associated Press has the story here.

As I’ve written before, mandatory arbitration takes all of the fairness out of the system.  Essentially, customers are forced to bring their complaint before an allegedly unbiased arbitrator who will render an impartial ruling.  Of course, the problem is that the arbitrators are usually not impartial, and their rulings are rarely unbiased.

Thankfully, the credit card companies, under enormous pressure from lawmakers and consumer advocates, are removing these clauses from their contracts.  A Chase spokesman is quoted in the A.P. story as saying that removing these clauses and allowing consumers to sue: “is the right thing for our customers and our business, and reflects our commitment to clearer and simpler communication with our customers.”

But let’s be clear, it’s not exactly like the credit card companies have seen the light.  Instead, as the AP report makes clear, Chase’s decision comes just as the credit card giant settled a New York case over the issue.  Proving once again that the civil justice system is the safety net of last resort to make these companies do the right thing.

Last Thursday, a group of women’s rights advocates took their fight against the insurance industry to Capitol Hill.  Their mission: to end unfair insurance practices that discriminate against women.  Marcia Greenberger, co-president of the National Women’s Law Center testified before the Senate Health Education and Labor Committee on Thursday, outlining for the committee the unfair practices of health insurance companies.

Here is some of the information that Greenberger provided to Congress, as reported in the National Law Journal (subscription required):

•    Women are charged as much as 48% more for men than health insurance
•    Of the more than 3500 plans studied (by a 2008 study) 60 percent did not cover maternity
•    Women are regularly denied coverage for “pre-existing conditions” such as pregnancy, or c-section.
•    In eight states, insurance companies are allowed to use a women’s status as a survivor of domestic violence to deny coverage.

California Governor Schwarzenegger recently signed a law that bans so-called gender rating by insurance companies which results in higher premiums being charged to women than men.  It’s an important first step, one that the feds should follow.

That said, there’s much more to be done to curb the discriminatory practices of insurance companies.  I’ll have more on that in the future.

On my never-ending quest to ensure access to justice for all Americans, I am becoming particularly concerned about a trend affecting many of our clients, and that is, the practice of companies basically requiring their customers to go to arbitration if they have a dispute.

Here’s the background.  Essentially, buried in the fine print of that credit card application, purchase agreement, or other contract might be a clause that says that if you have a dispute with the company your doing business with, you agree to forfeit your right to sue the company.  Instead you and the company will go to arbitration.   Arbitration is a form of alternative dispute resolution whereby the parties agree to take their grievance to a third-party and to be bound by that third-party’s decision.

In the ivory towers of law school seminars (where alternative dispute resolution is often a required part of the curriculum) arbitration makes a lot of sense.  It cuts down on legal fees, frees up court time for more serious disputes and can be efficient for all involved.  But at what cost to legal rights?

Earlier this month, Public Citizen, a watchdog group issued a report called: Forced Arbitration: Unfair and Everywhere.  The report found “that seventy-five percent of companies in eight industries use forced arbitration. In most forced arbitration cases, consumers are stripped of their right to go to court over disputes when they open a bank or credit card account, obtain cell phone service, hire a stockbroker or buy a house.”

These stats might lead you to ask:  If Arbitration is so fair and unbiased, then why do big companies like banks and lenders favor it as their preferred method of dispute resolution?

The answer of course is that it’s often neither fair nor unbiased.

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