Minnesota Attorney General Settles with Accretive Health

Back in April, we posted about a debt collection company, Accretive Health, that allegedly staffs hospitals and then uses its staff's proximity to patients and patients' health records to collect patients' debts for the hospitals. We discussed the Minnesota Attorney General's efforts to crack down on Accretive. The AG's most recent federal court complaint against Accretive is here.

Now, U.S PIRG's consumer blog is reporting that the Minnesota Attorney General has settled with Accretive. The settlement involves restitution, a $2.5 million civil penalty, and a ban on Accretive doing business in Minnesota for six years. For more information, read the Minnesota Attorney General's press release (scroll down on page to see the release). 

The settlement must be approved by the federal court.

Protecting Against Disclosure of Consumers' Personal Information (or Not)

This column by David Lazurus illustrates how difficult it is to protect consumers' personal information when the law demands that the consumer opt out -- that is, when a bank or other business is permitted to share a consumer's personal information with other companies unless the consumer says no.

Climate Change

How does climate change affect consumers? Well, life is going to become a lot more costly if you (or your kids) have to pick up and leave your (their) coastal residence(s) because your (their) area will soon be under water. More immediately, if the very hot and dry conditions this summer are a result of climate change, then we have climate change to blame for higher food prices and energy bills.

James Hanson, the head of NASA's Goddard Institute for Space Studies, has written this opinion piece on climate change. He and his colleagues sure think that the recent weather is related to climate change. Here's an excerpt:

In a new analysis of the past six decades of global temperatures ..., my colleagues and I have revealed a stunning increase in the frequency of extremely hot summers, with deeply troubling ramifications for not only our future but also for our present. This is not a climate model or a prediction but actual observations of weather events and temperatures that have happened. Our analysis shows that it is no longer enough to say that global warming will increase the likelihood of extreme weather and to repeat the caveat that no individual weather event can be directly linked to climate change. To the contrary, our analysis shows that, for the extreme hot weather of the recent past, there is virtually no explanation other than climate change.The deadly European heat wave of 2003, the fiery Russian heat wave of 2010 and catastrophic droughts in Texas and Oklahoma last year can each be attributed to climate change. And once the data are gathered in a few weeks’ time, it’s likely that the same will be true for the extremely hot summer the United States is suffering through right now.

Key Republican lawmakers disagree, saying that the weather sometimes runs hot and sometimes runs cold, but there's no hard evidence of climate change.

David Reiss on Shadow Banking and Mortgages

David J. Reiss of Brooklyn has written Consumer Protection Out of the Shadows of Shadow Banking: The Role of the Consumer Financial Protection Bureau, Brook. J. Corp. Fin. & Com. L., 2012 (Forthcoming).  Here is the abstract:

Consumer protection remains the stepchild of financial regulation. Notwithstanding the fact that the economic doldrums we find ourselves in originated in the under-regulated subprime mortgage sector, relatively few academic commentators focus on the role that consumer protection can play in reducing such risks as well as in restoring the balance between consumer and producer in the financial markets. This essay suggests that consumer protection regulation has an important role to play in the regulatory structure of the shadow banking sector.

This essay does four things. First, it describes the role of shadow banking in the residential mortgage market — the shadow mortgage banking sector, as it were. Second, it contrasts two mortgages. One is emblematic of shadow mortgage banking during the Subprime Boom. The other is Dodd-Frank’s response to the excesses of the Subprime Boom — the “Qualified Mortgage.” It then evaluates whether “Qualified Mortgages” can restrain some of shadow mortgage banking’s excesses, and finds that they may be able to do so. It concludes by reviewing the first steps taken by the Consumer Financial Protection Bureau as it begins implementing Dodd-Frank’s mortgage-related provisions.

Is Salt Bad for You?

Of course it is. If you eat too much of it, your blood pressure will likely go up permanently. And hyypertension is a risk factor for heart disease and other serious illnesses. This is the conventional wisdom, and it has been for decades. In this New York Times column, Gary Taubes, an independent investigator with the Robert Wood Johnson Foundation, says that there is little evidence that high salt intake causes hypertension and that, overall, the relevant studies are inconclusive. Hat tip to Rosie Dillon.

Medicaid and the November Elections

The Affordable Care Act (ACA) seeks to cover most of the millions of Americans who lack health insurance using several methods, none bigger that its Medicaid expansion. After the expansion, nearly all Americans with income up to 133% of the federal poverty level would be eligible for government funded medical care. (Without the ACA, Medicaid eligility not only requires poverty -- extreme poverty in some cases -- but also inclusion in a category, such as disability, being above or below a certain age, etc.)

Under the Supreme Court's recent decision in National Federation of Indepedent Business v. Sebelius, the ACA's Medicaid expansion survived, but states have the opportunity to opt out of it. The federal government is funding all of the new Medicaid costs for the first two years of the expansion and at least 90% of it after that, so it's unlikely that many (if any) states will opt out (though some are threatening to do so).

Okay, so that explains the Democratic Party's view of what the country should be doing about health care for poor people. And what about the Republicans? Well, if they win the White House and Congress in November, they want to enact major cuts in Medicaid, as explained in this article by Micahel Hiltzik. Another article provides more detail.

A Brief Commentary on Voter ID Laws

UPDATE and CORRECTION:  The website snopes.com says that the claim that Ronald Reagan was not issued a birth certificate until 1991 is false. It appears, in fact, that the birth certificate was first issued in 1942 (when Reagan was 31 years old). However, the snopes post on the Reagan birth certificate appears to confirm the basic point made by the ad: that people born outside of hospitals during Reagan's era may well not have birth certificates and, therefore, would have difficulty voting under some present-day voter ID laws.

Two New Class Action Articles by Rhonda Wasserman

University of Pittsburgh law professor Rhonda Wasserman writes frequently on class actions. She has just written two more articles -- one concerning the ramifications of the Supreme Court's decision in AT&T v. Concepcion and the other about secret class-action settlements. Abstracts of and links to both articles appear below.

Legal Process in a Box, or What Class Action Waivers Teach Us About Law-making, 44 Loy. U. Chi. L.J. – (2012) (forthcoming), http://ssrn.com/abstract_id=2117463

The Supreme Court’s decision in AT&T Mobility v. Concepcion advanced an agenda found in neither the text nor the legislative history of the Federal Arbitration Act. Concepcion provoked a maelstrom of reactions not only from the press and the academy, but also from Congress, federal agencies and lower courts, as they struggled to interpret, apply, reverse, or cabin the Court’s blockbuster decision. These reactions raise a host of provocative questions about the relationships among the branches of government and between the Supreme Court and the lower courts. Among other questions, Concepcion and its aftermath force us to grapple with the relationship between law and politics, the role of legislative history in statutory interpretation, the meaning of legislative primacy, the influence of federal agencies on the development of the law, and competing conceptions of the relationship between the Supreme Court and the lower courts.

Secret Class Action Settlements, 31 Rev. Litig. __ (2012) (forthcoming), http://ssrn.com/abstract=1988302

This Article analyzes the phenomenon of secret class action settlements. To illustrate the practice, Part I undertakes a case study of a class action lawsuit that recently settled under seal. Part II seeks to ascertain the scope of the practice. Part II.A examines newspaper accounts describing class action settlements from around the country. Part II.B focuses on a single federal judicial district – the Western District of Pennsylvania – and seeks to ascertain the percentage of suits filed as class actions that were settled under seal. Having gained some understanding of the scope of the practice, the Article then seeks to assess it normatively. Part III analyzes the policy debate surrounding secret settlements of civil suits in general, fleshing out the competing policy objectives served by public access to, and confidentiality of, settlement agreements. Finally, Part IV examines the statutory, logistical and policy-based constraints that call into serious question the legality, efficacy and wisdom of secret class action settlements.

David Friedman Explains Bait and Switch Regulation

David Adam Friedman of Willamette has written Explaining 'Bait-and-Switch' Regulation.  Here's the abstract:

'Bait and switch' can describe a range of commercial behaviors common in the everyday marketplace, but virtually ignored in the academic literature. The traditional definition of unlawful bait and switch applies to insincere offers to sell one item in order to induce the buyer to purchase another. Certain sellers have historically employed bait-and-switch tactics, including urban retailers, aluminum siding companies, and supermarkets.

Colloquially, this definition can also cover lawful or other borderline sales tactics, including the use of teaser rates or low introductory pricing, or even 'free offers.' Even common lawful tactics, like the deliberate routing of customers past other retail displays on their way to purchase high-volume or featured items, could be described as involving 'bait' to induce other purchases.

Why are some of these behaviors lawful and others unlawful? In this Article, I examine several different flavors of bait-and-switch tactics, exploring the underlying behaviors behind the tactics and the welfare implications of regulating them. Looking to the literature on commercial custom and norms, I find a pattern showing that bait-and-switch practices that align with custom and norms tend to be lawful, and those that do not, tend to be unlawful. Welfare advancement seemingly plays a distant secondary role in explaining bait-and-switch regulation.

My finding should compel regulators to consider whether the goal of elevating the market atmosphere by banning offensive behavior should trump welfare concerns. Further, my conclusion can also help advocates shape more effective arguments for adjusting trade practice regulation.

Paying The Lawyers' Expenses in Class Actions

by  Brian Wolfman

When a class action settles (or in the unusual case where the plaintiffs win a litigated judgment), the court awards the plaintiffs' lawyers fees and expenses from the class's recovery. That's a good thing because lawyers won't bring cases if they can't get paid. On the expense side, lawyers have to dig into their pockets to pay the costs of the litigation. One thing the lawyers must do is travel. They need to take trips to interview witnesses and experts, gather facts, take discovery, and attend court. And, so, when the plaintiffs win or settle, the class members should reimburse their lawyers for their reasonable travel expenses. The key word here is "reasonable."

Leigh Jones of the National Law Journal has penned this story about a federal judge presiding over a class action in Washington state who, Jones reports, slashed the lawyers' outlandish expense requests. Here's an excerpt:

A federal judge in Washington state has publicly disciplined two attorneys from a prominent plaintiffs' firm for claiming unreasonable expenses while handling a securities class action. ... The two attorneys were lead counsel for a plumbers pension fund in a 2007 case against Ambassadors Group Inc., a publicly traded student exchange company in Spokane, Wash. The case settled last year for $7.5 million. The attorneys originally claimed about $223,000 in expenses but revised that figure to $114,137 after Quackenbush questioned the amount, according to an opinion he issued in May. Following that revision, the judge and his staff took a closer look at other expenses claimed by the firm. Some of the more troubling expenses, the judge wrote in May, included a $400 claim for a "pre-mediation" dinner for four that included two $70 bottles of wine and a $60 tip. It is unclear which Robbins Geller attorneys claimed those expenses. [The Robins Geller firm represented the plaintiff class.] Also cited was a $1,676 first-class ticket for an investigator's air travel and another first-class plane ticket costing more than $2,100.

I admire Judge Quackenbush for really digging in. In my experience, sometimes no one cares or pays attention. In one case, I repeatedly asked the court-appointed Special Master (who was in charge of on-going fee and expense recommendations in the case) to limit reimbursement of air travel to regular coach fares. I was rebuffed, even though the first-class flights cost as much $8,000 each (and coach fares could be had for $1,000 or so). I complained that lawyers were getting reimbursed for meals at fancy restaurants -- gourmet meals on the class members' tabs without the class members' knowledge -- when perfectly good meals could be had for far less money. No one cared. In that case (and other class actions in which I've been involved), the lawyers booked rooms at the fanciest hotels in town.

These types of expense requests are just awful. It's fine if people want to stay at swanky hotels and eat at high-end restaurants. I love good food. But it's ridiculous for class members to foot the bill. What's the theory? That the lawyers have to eat and drink like kings and queens to do a good job in court the next morning? Please.

But there's more to it than just the odor created by an occasional National Law Journal article. And I'm not worried just because class members are paying a few thousand here and there for their lawyers' high-class habits (though that's bad).

The problem goes deeper. Class actions are important tools for justice. They have served us well for decades. I've been working on class actions for 25 years, and, in most cases, the lawyers do right by their clients. But, as our readers know, class actions are under fire in the courts and legislatures, generally for the wrong reasons (and precisely because they provide justice to people when individual suits and arbitrations can't). Do we really want to give ammunition to the anti-class-action crowd?

Listen up lawyers! Eat at the local deli. Shop around for a reasonably priced hotel. Fly coach. Or pay for the high life on your own.