Consumer Law & Policy Blog

Romney and "Mandates"

At this point, we all know that Romney supported health care legislation that required people to buy health insurance or pay a tax. But I've never seen a defense from Romney as full-throated as this one from a 2008 Republican candidate debate:

 

Third Circuit addresses adequacy of class notice

In a decision issued this morning, the Third Circuit Court of Appeals vacated an order approving a class action settlement in a case against Sprint and AT&T Mobility involving the practice of charging a flat-rate early termination fee (ETF), regardless of how much time was left on a contract when the customer terminated it. Objectors to the settlement had appealed the district court's approval on two grounds: (1) the notice was inadequate because Sprint did not search its records to identify class members who had paid a flat-rate ETF, and (2) the named plaintiffs were not adequate class representatives because they are no longer Sprint customers. The majority of the Third Circuit's decision addresses the first point and makes a strong statement in support of providing individualized notice.

In the district court, Sprint had submitted a declaration stating that it would take several months and cost $100,000 to search its records to identify effected customers. Although some class members had already received individual notice of the proposed class action settlement, Sprint conceded that searching its records would identify millions of additional class members, who could then be sent notice. Looking to the Supreme Court's 1974 decision in Eisen v. Carlisle, and quoting Eisen's statement that, "individual notice to identifiable class members is not a discretionary consideration to be waived in a particular case. It is, rather, an unambiguous requirement of Rule 23," the Third Circuit held that the district court erred in not requiring the additional effort, given the information before it. Still, the Third Circuit did not itself hold that the notice effort was inadequate. Rather, it remanded the case to the district court to decide the issue "on a more complete record and with a fuller explanation." That said, the Third Circuit made very clear what it thought the lower court should decide: "we are not sure how it can be said that it is unreasonable for Sprint to search any of its billing records, but we leave that determination to the District Court."

As to the adequacy of representation, the Third Circuit expressed some sympathy with the objectors' position, but did not decide the issue. Instead, it suggested that the district court consider the objection again.

Although the court found merit in both objections, it seemed not to fault the settling parties too much, noting its "full appreciation for the considerable efforts that have been invested in the settlement of this class action." The case is called Larson v. AT&T Mobility.

National Roundtable on Consumer and Employment Dispute Resolution: Consumer Arbitration Roundtable Summary Report

Here, authored by Thomas Stipanowich of Pepperdine, Nancy Welsh of Penn State University, Lisa Blomgren Bingham of Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) and University of Nevada, Las Vegas, William S. Boyd School of Law, and Lawrence R. Mills. Here's the abstract

Building upon the work of the ABA Dispute Resolution Section's Consumer Arbitration Study Group, a National Roundtable on Consumer Arbitration was held in February, 2012, at Pepperdine University and was co-sponsored by Pepperdine School of Law, the Straus Institute for Dispute Resolution, and Penn State University, Dickinson School of Law. This Summary Report and its attachments: 1) summarize the discussions at the Roundtable and the Planning Committee’s conclusions; 2) provide an overview of related empirical studies and the range of dispute resolution programs and processes available to resolve consumer disputes; and 3) include an annotated list of key resources. Several work groups have been formed to carry on the work of this National Roundtable. A second National Roundtable focusing on employment dispute resolution will take place in September, 2012, at Penn State University, Dickinson School of Law.

In Texas, Employees' Claims Against Their Employers Can Be Health Care Liability Claims

As we have previously discussed, the House has entertained bills that would severely limit health care liability awards under state tort law. There are a number of problems with such tort reform, and Brian Wolfman has testified about some of them. One of the many issues is the question of what, exactly, counts as a "health care liability claim." Certainly, the quintessential claims proponents of reform are worried about are traditional medical malpractice claims. But is that all a health care liability law would cover?

Texas, which enacted comprehensive tort reform in 2004, is often held up as a model. Since 2004, the state has had the chance to figure out what "health care liability claims" means. Today, the Supreme Court of Texas expanded the definition by holding, 6-3, that an employee's claim against his employer was a health care liability claim subject to the rigid procedural requirements and limitations imposed by the Texas Medical Liability Act. In the case, Texas West Oaks Hospital, LP v. Williams, a mental health hospital employee sued his employer, seeking compensation for injuries he sustained during a fight with a hospital patient. Though there's a plausible argument that the claim fits within the statutory definition of "health care liability claim," one has to think that this isn't the sort of thing the legislature had in mind---it's not exactly a medical malpractice claim.

Judicial Restraint. Really?

The Chief Justice is being widely praised for showing judicial restraint in yesterday's Affordable Care Act decision. And, to be sure, the result is consistent with what he said is the Court's obligation to uphold the handiwork of the people's representatives whenever possible.

But Neal Katyal has explained today in the New York Times why, in his view, the medicaid and Commerce Clause rulings in yesterday's decision pose grave threats to congressional authority. He sees those rulings as of a piece with the Court's (and thus the public's) increasing comfort in throwing out legislation on constitutional grounds.

I want to write about something else that concerns judicial restraint: Why did the Chief Justice reach the Commerce Clause issue at all? If the so-called "mandate" was constitutional under Congress's taxing power, why did the Chief need to give his views on whether it was constitutional under the Commerce Clause? The Commerce Clause ruling ended up resolving nothing. Or put another way, the taxing power ruling ended up resolving everything about the constitutionality of the "mandate." The 5-justice "ruling" on the Commerce Clause issue is arguably dicta and not a holding of the Court. But that's not really my point. If the Court's membership stays constant for a while, the Commerce Clause analysis in yesterday's decision may become influential whether it's a holding or not. My point is simpler: Under standard principles of restraint, the issue did not need to be reached by the Chief Justice, who, because he did reach the issue, ended up forming a majority of sorts on the Commerce Clause issue. (The other four members of the taxing-power majority reached the Commerce Clause issue as dissenters.)

A similar thing happened in Wal-Mart v. Dukes last Term. The Court had before it the overall question whether a large class of women alleging sex discrimination in employment had been properly certified. Two separate issues were presented: whether the class met the prerequisites for certification under Federal Rule of Civil Procedure 23(a), and, if so, whether the class could be certified as an injunctive/declaratory relief-type class under Rule 23(b)(2). The Court decided both issues against the class -- the second one by a 9-0 vote -- even though the ruling under Rule 23(a) definitively nixed the class certification. Indeed, the Court could have ruled only on the 23(b)(2) question because, as a practical matter, that also would have nixed the nationwide settlement (and, as noted, on that score, the Court was unanimous). But, as also noted, exercising no restraint, the Court went ahead and ruled on everything.

UPDATE

A couple additions:

First, as a friend of mine suggested to me today, it seems only fair to point out the Chief Justice's side of the story (from page 44 of his opinion):

JUSTICE GINSBURG questions the necessity of rejecting the Government’s commerce power argument, given that §5000A can be upheld under the taxing power.  …  But the statute reads more naturally as a command to buy insurance than as a tax, and I would uphold it as a command if the Constitution allowed it.  It is only because the Commerce Clause does not authorize such a command that it is necessary to reach the taxing power question. And it is only because we have a duty to construe a statute to save it, if fairly possible, that §5000A can be inter-preted as a tax.  Without deciding the Commerce Clause question, I would find no basis to adopt such a saving construction.

And here's Justice Ginsburg's view (from page 37 note 12 of her opinion):

The CHIEF JUSTICE states that he must evaluate the constitution­ality of the minimum coverage provision under the Commerce Clause because the provision “reads more naturally as a command to buy insurance than as a tax.” ... THE CHIEF JUSTICE ultimately concludes, however, that interpreting the provision as a tax is a “fairly possible” construction.  ...(internal quotation marks omitted).That being so, I see no reason to undertake a Commerce Clause analy­sis that is not outcome determinative.

Second, Prof. Bradley Joondeph over at scotusblog says that the Chief Justice's opinion is "a brilliant act of judicial statesmanship," a "Marbury for our times." And Marbury, too, could have avoided saying some pretty important stuff if it simply had held first (rather than last) that the Court lacked original jurisdiction to rule on Marbury's petition.

The Potential Impact of the Supreme Court's Ruling on Medicaid Expansion

As you are probably aware by now, the Supreme Court ruled yesterday 7-to-2 that the states have the right to back out of the Affordable Care Act's large Medicaid expansion -- that is, the states don't have to participate in the expansion if they turn down the federal funds available as part of that expansion (but they can still participate in the pre-existing Medicaid program). So, the question is: Which states will back out of the expansion?

Charles Ornstein at ProPublica has written this informative piece on that subject. And check out this interactive map of the United States, which allows you to see how many poor people could be affected by each state's decision whether to stay in or opt out.

A Reminder About the Success of the Massachusetts Health Insurance "Mandate"

Now that the so-called "mandate" has been upheld, it is worth repeating the gist of a CL&P post from 10 days ago discussing compliance with Romneycare's "mandate." A story by Sarah Kliff explained that even though the cost of the penalty for not buying insurance has been far lower than the cost of buying "mandated" insurance, people in Massachusetts have overwhelmingly opted for insurance. In other words, compliance with the "mandate" has been very high, and the number of uninsured people in Massachusetts has fallen fairly dramatically. The demographics and politics of Massachusetts are different from the Nation as a whole of course, but, still, the experience there suggests that the Affordable Care Act's goal of greatly reducing the number of uninsured Americans could be realized in the coming years.

What the Health Care Law Provides

With all the hubbub over the Supreme Court's decision -- and the legal arguments it resolved -- it seems worth reiterating what the law provides. Today's Washington Post has a good bit of coverage on that topic, including a timeline on the various provisions of the Act, discussing which ones are already in effect and when the others kick in, and an interactive tool that tells readers how the law affects them based on whether they have insurance, their income, marital status, etc.

 

President Obama's Reaction to Supreme Court's ACA Ruling

Click here or view the embedded video below:

 

Paper on Predatory Lending and the Subprime Crisis

 

Sumit Agarwal

 of the National University of Singapore and the Federal Reserve Bank of Chicago,

Itzhak Ben-David

 of Ohio State's Fisher College of Business,

Gene Amromin

 of the Chicago Fed,

Souphala Chomsisengphet

 of the Office of the Comptroller of the Currency (OCC

Douglas D. Evanoff

 of the Chicago Fed have written Predatory Lending and the Subprime Crisis.   Here's the abstract:

It is typically argued that predatory lending generated significant social costs and played a central role in creating the subprime crisis. However, there are few estimates of its true effect. We estimate the effect of predatory lending on the residential mortgage default rate using an anti-predatory program implemented in Chicago in 2006. Under the legislation, risky borrowers and risky mortgages triggered mandatory counseling. Following the legislation, market activity decreased by about 35%, where risky borrowers, risky products, and lenders who typically made riskier loans were most affected. Despite the sharp decline in market activity, 18- and 36-month default rates in the treated group exhibited a relative improvement of 12% and 7%, respectively. We estimate that predatory loans have a 6-7% higher default rate than nonpredatory loans. Our results suggest that predatory lending may have not been instrumental in precipitating the financial crisis as often believed.