Claims and Bad Faith Law Blog

Rescind the "Religious Employer" Exemption to Health Care!

    So, apparently the dozen lawsuits filed by various Vatican-led persons, in the names of Catholic institutions also led by men, challenge the regulations published under the Affordable Care Act requiring that all plans and policies offered by Employers to their Employees shall include preventive health services for women.  The ACA mandates that preventive health services for women be provided.  Specifically, the ACA mandates that preventive health services for women be included in such policies and plans, as are recommended by the Health Resources and Services Administration.  See the post here on May 24, 2012 , "The Faith of ACA:  Good Faith, Bad Faith, no Faith?".

    The HRSA has determined that preventive health services for women must include contraceptive services.  See Download Institute of Medicine July 2011 Report Brief with Recommendations Commissioned by HHS.  As required by Congress in the ACA, Federal agencies charged with implementing the ACA have required in regulations that preventive health services for women must include contraceptive services.  These are apparently the regulations challenged in the lawsuits.

    Anyone familiar with the process of how administrative agencies promulgate rules and regulations, is familiar with required "comment periods".  These are periods of time during which comments must be solicited from the public on proposed regulations, before those regulations can become final.  Accordingly, there was a proposed comment period before the challenged regulations became final.

    The self-proclaimed Catholic organizations took the opportunity to comment, as did others.  See, e.g., Download Catholic Medical Assn.09.17.10 Letter.(taking position against providing contraceptive services as a part of required women's health coverage);  Download Religious Coalition for Reproductive Choice.09.17.10 Letter. (taking position in favor of providing contraceptive services as a part of required women's health coverage).   After the comment period was over, the Federal agencies carved out an exception for "religious employers".  According to newspaper reports, the Obama Administration went further after some persons objected, who described themselves as Catholic officials; the Obama Administration expressed its willingness to require only Insurance Companies to offer contraceptive services, not to require (apparently) that all Employers offer plans and policies containing provisions for contraceptive services.  See Editorial, "For Contraceptives, a Catholic Exception?" (Los Angeles Times Online, posted Wednesday, May 30, 2012).

    The answer from these self-described officials came when they filed their lawsuits to challenge regulations that do not take effect until late in 2013 at the earliest, in 12 different Courts where one would have been enough, in an election year.

   Well, defenses aside for the moment, here is a proposed solution to the pending plaintiffs and their prey, the Obama Administration:

Rescind the "religious employer" exemption.

    The Affordable Care Act does not contain any exemption.  See "Congress Did Not Exempt Anyone From Women's Health Requirements," posted on Insurance Claims and Issues Weblog on May 23, 2012.  Arguably, there is no authority for promulgating a regulation that does contain an exemption, even an exemption for "religious employers".  See  "They Should Be Ashamed," posted on Insurance Claims and Issues Weblog on May 21, 2012.  That would squarely put the burden on these plaintiffs to prove that when they act as Employers, they should be treated differently from every other Employer offering Health Insurance to Employees in the United States.

    Let them try to prove that, if they can.

Please Read The Disclaimer.

       

When RISK MANAGERS Took Risks, Made Profits, Who Knew From Losses?

This post follows previous posts on similar subjects on Insurance Claims and Issues Web Log on May 14, 2012 and on May 15, 2012, and on Insurance Claims and Bad Faith Law Blog on May 15, 2012.

    When the Great Recession started, Wall Streeters said that they had no idea that loss could follow risk.  They attempted to make us believe flimsy excuses along the lines of "Who knew?"  Or, "It was a perfect storm," or "a black swan," something that is so far out of the realm of human experience that they just could not anticipate it.

    They were wrong.  We know now that not only did they anticipate it, they did not care so long as they made money for themselves.

    Now we read recent newspaper reports that JPMorgan Chase has lost Billions of Dollars trading in credit derivatives, particularly Credit Default Swaps, the same instruments that nearly brought down the house or, more accurately, definitely brought on the Great Recession.

    At first JPMorgan announced that its losses were $2 Billion.  Now JPMorgan is announcing that the losses are $3 Billion, with more to come.  And JPMorgan representatives are eerily echoing the false excuses of the first days of the Great Recession.  'Who knew?' 'No-one could have anticipated this loss,' and so on.

    These things were not true in late 2007.  They are not true in the Spring of 2012, either.

    The office of JPMorgan from which the announced losses are originating is a huge clue.  JPMorgan Chase turned its Risk Management office into a profit center.  Anyone who looked at the fact that profits were being generated by Risk Managers should have known, in fact almost certainly did know, that something was glaringly, terribly wrong at Diamond Jamie's place.  See Jessica Silver-Greenberg and Ben Protess, "Bank Regulators Under Scrutiny in JPMorgan Loss / Risk Was Played Down / No Overseers Assigned to Investment Unit That Lost Billions" p. A1, col. 6 (New York Times Nat'l ed., Saturday, May 26, 2012):  "But JPMorgan's office, with a portfolio of nearly $400 billion, had become a profit center that made large bets and recorded $5 billion in profit over the three years through 2011."

    Those who have eyes to see with, let them see, and ears to hear with, let them hear.  It is not truthful to claim that you could not see something that was so unusual it had to have been seen, or that you could not hear what everyone else could hear including that there was a whole lot of shakin' goin' on at JPMorgan even before Billions of Dollars in losses arrived at the door.

P.S. on so-called regulation by the Wall Street-controlled OFFICE OF THE COMPTROLLER OF THE CURRENCY, which has jurisdiction over the activities in question at JPMorgan:

"The Office of the Comptroller of the Currency has also faced scrutiny about whether it is too cozy with the banks it oversees."  Id.

Duh.  What was your first clue?

Please Read The Disclaimer.

The Faith of ACA: Good Faith, Bad Faith, no Faith?

    This post continues where two posts on Insurance Claims Issues Blog left off, the first one on Monday, May 21, 2012 and the second on Wednesday, May 23, 2012.

    Congress expressed its clear intent in the ACA statutes that "preventive health services" must be included among "essential health benefits" --and that the Secretary of Health and Human Services must fill in gaps with rules and regulations that Congress intended would be more specific than the statutory language.

"Essential health benefits" are described in general terms in Section l302(b) of the ACA [42 U.S.C. § l8022(b)]:

(b) ESSENTIAL HEALTH BENEFITS.­

(1) IN GENERAL.-Subject to paragraph (2), the Secretary shall define the essential health benefits, except that such benefits shall include at least the following general categories and the items and services covered within the categories:

(A) Ambulatory patient services.

(B) Emergency services.

(C) Hospitalization.

(D) Maternity and newborn care.

 (E) Mental health and substance use disorder services, including behavioral health treatment.

(F) Prescription drugs.

(0) Rehabilitative and habilitative services and devices.

(H) Laboratory services.

(i) Preventive and wellness services and chronic disease management.

(j) Pediatric services, including oral and vision care.

[Emphasis added.]

"Preventive health services" are special, or at least they are treated that way in the ACA and in the Regulations which it generated. Section 1001 of the Affordable Care Act adds section 2713 of the Public Health Service Act, which in turn amends Part A, Title XXVII, Public Health Service Act [42 U.S.C. § 300gg et seq.]:

SEC. 2713 [42 U.S.C. 300gg-13]. COVERAGE OF PREVENTIVE HEALTH SERVICES.

(a) IN GENERAL.-A group health plan and a health insurance issuer offering group or individual health insurance coverage shall, at a minimum provide coverage for and shall not impose any cost sharing requirements for­

(1) evidence-based items or services that have in effect a rating of 'A' or 'B' in the current recommendations of the United States Preventive Services Task Force;

(2) immunizations that have in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved; and [sic]

(3) with respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration. [; and]

(4) with respect to women, such additional preventive care and screenings not described in paragraph (1) as provided for in comprehensive guidelines supported by the Health Resources and Services Administration for purposes of this paragraph.

(5) [F]or the purposes of this Act, and for the purposes of any other provision of law, the current recommendations of the United States Preventive Service Task Force regarding breast cancer screening, mammography, and prevention shall be considered the most current other than those issued in or around November 2009.

[EMPHASIS ADDED.]

To be continued on Insurance Claims and Issues Weblog at www.insuranceclaimsissues.typepad.com, including the story of how the Affordable Care Act contains NO EXEMPTIONS for Employers required by the ACA to offer Plans and Policies which contain coverage for women's health, INCLUDING OFFERING COVERAGE FOR CONTRACEPTIVE SERVICES, whereas the Regulations DO.

Please Read The Disclaimer.

FORCED-PLACED INSURANCE UNDER INVESTIGATION.

 

    Until we have decided cases to report on, we will clearly be able to make do with governmental investigations of the practices involved in forced-placed insurance.  That is the insurance "which mortgage lenders take out when borrowers stop making payments on their homeowner's insurance."  Mary Williams Walsh, "New York Investigates Bank Payments to Insurers" p. B1, col. 2 (New York Times Nat'l ed., "Business Day" Section, Tuesday, May 22, 2012).

     Two forced-place insurance companies, Assurant and QBE Insurance, reportedly control "about 90 percent of the market" (in New York State).  Id.

     "The [New York] state Department of Financial Services is looking into whether the insurance firms effectively bought their dominant positions by paying kickbacks to banks disguised as commissions or other business, according to the department's superintendent, Benjamin M. Lawsky."  Id.

     The New York department is also "considering whether to require rebates for homeowners who were overcharged for the coverage."  Id.

 

Please Read The Disclaimer.

Federal Court: No Jury Trial for ERISA Fiduciary Breach Claim.

    In Ehlen Floor Covering, Inc. v. Lamb, 2012 WL 1698351 (M.D. Fla. May 14, 2012), Download Ehlen Floor Covering, Inc. v. Lamb (M.D. Fla. Case No. 2.07cv666, Order Filed May 14, 2012) PUBLIC ACCESS, a Federal Court just joined other District Courts in resolving the issue of whether there is a right to a Jury Trial on a Breach of Fiduciary Duties Claim under ERISA. 

    The District Court answered in the negative in this case.

    So far, according to the District Court, there are no applicable Circuit Court of Appeals' decisions to provide guidance on this question, and none from the U.S. Supreme Court, either.

Please Read The Disclaimer.

Cavalcade of Risk #157, the Bad Faith Part.

    I am pleased to be hosting Cavalcade of Risk Number 157, which I have broken into two parts for your linking-reading pleasure.  In this part, we begin with Risk Management Monitor's post exploring the subject of  "Who Pays For the Cost of Cyberwar?"  They have provided this enticing Summary -- There’s no doubt fraud, committed by both external and internal parties, is on the rise as methods for committing theft become more available and easier to hide due to technology. And according to a recent survey by the Association of Certified Fraud Examiners, businesses around the world lose an estimated 5% of their annual revenues to fraud, for a total loss of more than $3.5 trillion.

      Our Cavalcade of Risk of Bad Faith closes with this post from Oblivious Investor Blog about the Securities Investor Protection Corporation, entitled "SIPC:  What it Covers and Coverage Limits."  Summary: Despite the important role it plays, many investors know little about the SIPC and the protection it provides.

Enjoy linking and reading!  The next Cavalcade will come your way on May 30 and will be hosted by Nina Kallen at Insurance Coverage Law in Massachusetts, http://insurancecoveragemassachusetts.blogspot.com.

Please Read The Disclaimer.      
    

Tuesday in Tampa: JPMorgan Shareholders Deserve More Than Apologies.

"If the trades at issue were proprietary trading, as now appeqrs to be the case,  they would be banned by the Volcker Rule.  And if derivatives rules under Dodd-Frank had been in effect, these trades would almost certainly have been required to be cleared and transparently executed.  The losing nature of the trades, therefore, would have been obvious to market observers and regulators for quite some time and the losses would not have piled up opaquely." 

Prof. Michael Greenberger of the University of Maryland School of Law, quoted by Gretchen Morgenson, "Fair Game /  At JPMorgan, the Ghost of Dinner Parties Past" p. 1, col. 1 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, May 13, 2012).  

 

    The current leadership of JPMorgan Chase will appear before the Annual Shareholders Meeting in Tampa, Florida today, Tuesday, May 15, 2012.  They have spent lots of the shareholders' money arguably to block the shareholders' interests and advance their own interests.  They have spent millions of dollars to pay lobbying fees, first,  to obtain an exemption from the Volcker Rule against proprietary trading -- which means trading with the shareholders' own money -- in favor of redefining "hedging," and second, to delay the implementation of any rules under Dodd-Frank regulating derivatives trading.  They now contend that the announced loss of $2 Billion on their watch, with announcements of more bad news expected to come shortly, was permitted by the exemption and of course that derivatives rules are not in effect yet.

    Observers of the situation see something different.  They see proprietary trading prohibited by the Volcker Rule or, at the very least, a need for accurately defining "hedging" so as to never again allow this sort of failure, in which corporate shareholders pay for the risks taken by corporate officers who stand to gain but not to lose.

    Mr. Jamie Dimon, the current head of JPMorgan, reportedly "does not agree".  See Gretchen Morgenson, "Fair Game / At JPMorgan, the Ghost of Dinner Parties Past" p. 1, col. 1 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, May 13, 2012).

    We do not need Mr. Dimon's admission.

    We have the evidence, including Expert Opinion Testimony which is not in serious dispute.

    Last but not least, if the Glass-Steagall Act had not been repealed, JPMorgan's losses would never have happened.  Some even say that the depression through which we are now living would never have happened either.

Please Read The Disclaimer.

Foreclosers in Florida Follow Foreclosure "Mistakes Are Made" Business Model.

    The problems dumped on Florida's Judicial system by Foreclosure Fraud -- and on the Courts in other jurisdictions as well -- have been the subject of many posts here.  See, for example, the series on "Immunizing Foreclosure Frauds is Not an Option," posted on 09.29.11, 10.06.11, and 10.13.11.

    Solutions have been proposed to these problems.  For example, a  set of several solutions was posted here almost a year ago, on June 8, 2011, "Foreclosure Lawsuits Problems Attmept Overcoming Court:  No. 1, With Solutions."  The State of Missouri has followed one of its own solutions:  Missouri is criminally prosecuting Forgery initiated by Florida Foreclosure Facilitators, and the Missouri prosecution was posted here on February 9, 2012.

    Now another issue has arisen and is pending right now in front of the Florida Supreme Court:

    The issue is whether Florida banks should be able to escape punishment if they drop a foreclosure case because they realize they have fraudulent documents.  They are allowed to do so and then refile the case with proper documentation.

Kathleen Haughney, "Florida Justices Weigh 'Robo-Signing' Sanctions" p.A3, col. 1 (Orlando Sentinel, Wednesday, May 9, 2012).

    The Florida Supreme Court has scheduled Oral Arguments on the issue for today, Thursday, May 10, 2012.

    Reportedly, groups of bankers have filed briefs in which they take the position that they should be allowed to continue their foreclosure 'mistakes are made' business model.  See id.

    If mistakes were the only issue, then perhaps.

    But mistakes are not the only issue.  See all the posts and links, above.  No, the business model is the issue.  It is not compatible with the Justice system in Florida -- or anywhere else.

Please Read The Disclaimer.

Constructing many things on platform of Good Faith.

    Many things are constructed by the law on the equitable concept of Good Faith.  One of those constructs is Good Faith in reaching a settlement.  If a Court cannot find objective evidence of such Good Faith, the settlement in such a case is subject to begin set aside as if the settlement was never arranged.  Where Good Faith is found, on the other hand, the settlement will ordinarily survive.

    "In sum, we agree with the district court that the settling parties entered into their settlement agreement in good faith.  We therefore conclude that the district court did not abuse its discretion in approving the settlement agreement."  In re September 11 Property Damage Litigation, 650 F.3d 145, 154 (2d Cir. 2011).

Please Read The Disclaimer.

Fiduciary Law Solutions to Corporate Governance Issues Criminal Law Ignores.

   "I couldn't find a case of an executive at a major American-based, publicly traded company who was successfully prosecuted and sent to jail." 

James B. Stewart, "Common Sense / Bribes Without Jail Time" p. B1, col. 1 (New York Times Nat'l ed., "Business Day" Section, Saturday, April 28, 2012).

   "This case could turn out to be a poster child for individual liability."

Prof. Andrew Spalding, quoted by Stewart, New York Times, supra, commenting on allegations published in the New York Times that Wal-Mart executives allegedly participated in foreign corrupt practices including bribery in Mexico.  The Law Faculty Blog of the Chicago-Kent College of Law, where Prof. Spalding is an Assistant, Visiting Professor, provided a recent postwith links to other places where Prof. Spalding's various comments can be found.

   Criminal Law apparently has not been doing a very good job of policing corporate governance issues.  In particular, a common pattern reportedly emerges of companies admitting the facts of alleged corrupt foreign practices, followed by the corporation paying a fine, and ending with no individuals charged with a crime.  Stewart, New York Times, supra.

   This undoubtedly has something to do with the fact that officials at the Department of Justice and at the Securities and Exchange Commission who are charged with executing U.S. criminal laws, including the Foreign Corrupt Practices Act, have entirely avoided criminal prosecutions of corporate officers who, clearly, have the money at their disposal to contest criminal charges and force a criminal trial. 

   What is also clear is that the current system of criminal justice simply is not equipped to deal satisfactorily with -- including incapable of deterring  -- potential breaches of Fiduciary obligations.  In at least one field of corporate governance, Corporate Compensation, the field of Fiduciary Law lies open with solutions to the problems.  "Fiduciary Issue on Corporate Compensation, And How to Solve It," posted on Insurance Claims and Bad Faith Law Blog on Thursday, April 26, 2012.

   It is time to try the solutions offered by Fiduciary Law.  If it is good enough, as they say, for the claim handling practices of Insurance Companies, then it is certainly good enough for the alleged corrupt practices of corporations.

Please Read The Disclaimer.