Shutting the Courtroom Door: How the Corporate Right Mobilized in the States

Thursday, January 4, 2007

Increasing Democracy

Shutting the Courtroom Door: How the Corporate Right Mobilized in the States

When an impeccably pro-business outfit like Business Week declares victory for the business lobby in shutting the courtroom door to victims of corporate negligence, you know injured consumers and workers have been losing badly. But this week's cover story, How Business Trounced The Trial Lawyers, illustrates how the corporate right leveraged campaign contributions in the last decade to hijack state policy on civil justice.

Changing State Policy: The first step was corporate lobbies recognizing that state policy mattered more than federal policy. After ignoring state policy for many years, "by the mid-'90s, national groups like the U.S. Chamber of Commerce and the American Tort Reform Assn. realized...'that the greatest return on investment is at the state level.'" This quickly led to vastly more money spent in the states than by defenders of consumer rights and changes in state law that left injured consumers and workers with few options for legal redress:

  • Courthouse doors have slammed shut on a wide variety of claims. Michigan, for example, has virtually wiped out all lawsuits against drugmakers in the state.
  • Six states have passed laws seriously restricting the kinds of asbestos suits that can be filed, and 23 now have statutes saying you can't sue the likes of McDonald's for making you fat.
  • The American Lawyer, an influential trade publication, recently declared an end to the era of mass-injury class actions...As for class actions in Texas, a series of judicial rulings has set the bar so high for a judge to approve them that it's effectively impossible to meet, practitioners say.
  • Damage limits in many states have rendered medical malpractice litigation nearly comatose.
  • Georgia, for instance, limits punitive damages to $250,000, unless "the defendant acted with a specific intent to harm," and New Hampshire bars them altogether.
  • The far-ranging changes passed by Texas lawmakers in 2003 included one that bars injury suits against a seller more than 15 years after a product is sold. One result: After a doctor was decapitated by a Houston hospital elevator in August, 2003, no suit could be filed against the manufacturer, since the elevator was too old.

Taking over the courts. Bush's political advisor, Karl Rove, was a key player in mobilizing business lobbies to intervene in judicial elections. "By 1998, had converted the makeup of the Texas Supreme Court from 100% Democratic to 100% Republican. He played a similar role in flipping Alabama's high court." "In 2004, for example, business groups spent $21.5 million on state supreme court elections, eclipsing the amount spent by plaintiffs' attorneys and their allies ($13.3 million)." The result:

  • The Alabama Supreme Court reversed 27 of 31 plaintiffs' verdicts during its 2004-05 session.
  • According to Texas Watch, an Austin consumer advocacy group, of the 69 consumer cases accepted for appeal by the Texas Supreme Court during its 2005-06 term, it decided against the consumer in 57, or 83%, a trend Texas Watch says has been consistent for the past six years.
  • "When you have a large verdict that you receive from a jury, you can't settle the case anymore because the defendants will walk in and say: We know we're going to win in the Supreme Court," says Frederick M. Baron, a Dallas attorney.

So What About the Benefits of "Tort Reform"? The business lobby has won the battle for "tort reform", so where are all the promised benefits? Remember when people said tort reform would slash health insurance costs? Instead, as a 2005 Economic Policy Institute paper detailed, the costs of medical malpractice were always overblown by "tort reform" lobbyists and health care costs continue to rise across the country. Texas was a leader in slashing injured patient rights, yet it remains the state with the highest number of uninsured in the country with family health insurance policy rates rising at a rate nearly three times faster than wages and inflation.

The only thing that has changed in the wake of "tort reform" are escalating corporate profits at the expense of consumer and workers' pocketbooks -- a triumph of using lobbying power to rob from working families to benefit the wealthy.

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Growing Economy

State Officials Admit Privatization Failed in Texas

Last fall, we highlighted how corrupt privatization of social services management in Texas had handed Accenture a billion dollars in revenue, even as the company's incompetence led to many families being unjustifiably denied public services.

Well, Texas Health and Human Services Commissioner Albert Hawkins has admitted that the privatization boondoggle is a failure and pulled the plug on a key part of the contract with Accenture. The $899 contract will be reduced by $356 million and ended in 2008, two years earlier than planned. More importantly, Accenture will be relegated largely to back-office data entry role for the remainder of its contract. The company will no longer be involved in the key role of determining whether Texans qualify for food stamps, Medicaid and other welfare programs. Those functions will instead return to the hands of state workers. 900 temporary employee hires in the state have been made permanent and the state has scrapped plans to cut 2,900 jobs, reducing employment by only 700 positions.

"They should have never (embarked on privatization) in the first place," said Rep. Garnet Coleman, D-Houston, a Progressive States board member, when interviewed by the Houston Chronicle. "I'm glad they woke up from whatever episode they were having." He said privatization "never saved a dime. It only paid the people who didn't need to be paid, and the people it cost were the children and their families who tried to enroll (in services)."

As the Austin Statesman noted in an editorial:

The Accenture experience has taught us important lessons that legislators should take to heart. State employees are indeed better suited for administrative functions. Another is that privatization is no guarantee that taxpayers are going to save money.

Hopefully, if Texas officials can admit that privatization of public services is usually a route to ripping off taxpayers and hurting users of government services, other state officials will learn that lesson.

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Valuing Families

Crossroads for Health Care Reform in Maine

Two years into Maine's DirigoChoice insurance program, designed to expand access to health insurance to Maine's uninsured individuals and small businesses, the state is grappling with how to fund the program. While the program's governing board recently voted to assess a controversial assessment paid by insurers and self-insured companies, a separate Governor's Blue Ribbon Commission has proposed alternative funding that relieves insurers of their responsibility to help fund the program. Instead of keeping insurers, hospitals, and large businesses at the table through "pay or play" or "fair share" initiatives and enhanced cost containment, the Commission wants to replace the insurer assessment with general fund revenue raised on the backs of consumers.

Letting Insurance Companies Off the Hook: At issue is how or whether to replace the controversial Savings Offset Payment (SOP), an assessment paid by insurers and companies that self-insure. As described in a report by Mercer Consulting, the assessment encourages cost containment because the amount of the assessment is offset by savings in Maine's health care system. The state's insurance industry lobby and State Chamber of Commerce have sued to stop the assessment. Although those suits have so far failed in court, Governor John Baldacci charged the Blue Ribbon Commission to identify alternative funding for the DirigoChoice program in order to get beyond the controversy.

The final report has not been issued, but the Commission recently approved a patchwork of proposals that lets the very profitable insurance industry off the hook and relies primarily on increased "sin" taxes to fund the Dirigo program. A raise in the cigarette tax from $2.00 to $2.50 and taxes on snacks, bottled soft drinks and syrups, and beer and wine would provide the majority of funds needed to sustain the program. While raising cigarette taxes has proven effective at reducing smoking rates, letting insurers off the hook by replacing the assessment with general fund revenue that is raised on the backs of consumers is not a policy goal we can support.

While the Savings Offset Payment is not a perfect solution, it requires the insurance industry, the state's largest companies, and the hospital community to remain at the table and it encourages cost containment, which is vital to sustainable health reform. The decision by the Dirigo Health Board of Directors to levy the 2007 assessment is a welcome development. It will ensure continued funding for the Dirigo program in the event the legislature fails to act on alternative funding. And, it encourages those who do not support the assessment to work hard for a viable alternative that can be supported by progressive legislators, who could prevent any legislative action that would relieve insurers of their responsibility to be part of the solution.

Employer vs. Individual Responsibility: In addition to the funding question, the Commission has made several important proposals to improve access to insurance. These include allowing individuals to purchase insurance pre-tax and requiring insurers to cover dependents up to age 30, which would help address the high uninsured rates among "young invincibles." However, of mixed concern to consumer advocates, the Commission endorsed the concept of an employer and an individual mandate to purchase coverage. The mandate would be imposed on individuals with incomes above 400% of the federal poverty level and on employers with 10 or more employees. However, penalties for non-compliance would be much lighter on employers than for individuals - a dollar a day for each uninsured employee versus a fee paid by individuals equal to 50% of the cheapest DirigoChoice product multiplied by each month they were uninsured.

While a universal or single-payer system is preferable, Maine could strengthen and expand the Dirigo program by combining the insurer assessment with the revenue sources identified by the Commission. This keeps insurers at the table and increasing sin taxes has shown to help state's achieve important public health goals. Lastly, now would be a good time for Maine to enact and strengthen the employer mandate proposed by the Commission by establishing a more robust "fair share" fee for non-compliance - a significant fee that would constitute a real incentive for employers to provide coverage.

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Research Roundup

Education Quality & Voting Machine Malfunctions

This year's Quality Counts report from Education Week has broadened its traditional focus on K-12 education to examine what states are doing in early education to prepare students for public school -- and how K-12 education is helping students prepare for college and the workforce. The report finds that there is an upswell of state activity in early education efforts, but less success in aligning high school graduation requirements with college- and workforce-readiness standards. Highlights and rankings for each state are detailed here.

A report prepared by VoteTrustUSA,, and Voter Action has found that the 2006 mid-term elections were riddled by widespread voting machine malfunctions. Problems ranged from delays in poll opening to problems in vote tabulation to votes lost or changed on the voting machine screen. The report urges systematic reform of voting procedures and technology to prevent voter disenfranchisement.

Shutting the Courtroom Door: How the Corporate Right Mobilized in the States

Business Week, "How Business Trounced The Trial Lawyers"

Trial Lawyers for Public Justice, Access to Justice Campaign

American Association for Justice, Myths about 'Frivolous' Lawsuits

Drum Major Institute, TortDeform Civil Justice Defense Blog

State Officials Admit Privatization Failed in Texas

Progressive States Network, Stopping Privatization Profiteering

Texas Center for Public Policy Priorities, Statement on HHSC's New Strategy for Enrollment in Public Benefits

AFSCME, Power Tools for Fighting Privatization

Crossroads for Health Care Reform in Maine

Blue Ribbon Commission on Dirigo Health website and draft proposals

Consumers for Affordable Health Care - Consumer activism against insurance rate hikes

Anthem reports 16% profit on the DirigoChoice program

Maine People's Alliance - "Fox in the Henhouse" report critiquing Anthem Blue Cross and Blue Shield's role as the carrier of DirigoChoice

Maine Health Forum - An archive of health care news and information

Eye on the Right

Ever wonder whose paying the salary of those talking heads claiming global warming is not a serious problem? Most likely it's ExxonMobil, according to a new study by the Union of Concerned Scientists, which found that the company funneled nearly $16 million between 1998 and 2005 to a network of 43 rightwing advocacy organizations. This interlocking "echo chamber" of groups has tried to cast doubt on the facts in the face of a consensus of legitimate scientists that global warming and the attendant climate change is a serious threat to our planet and society.

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The Stateside Dispatch is written and edited by:

Nathan Newman, Policy Director
Mijin Cha, Policy Specialist
Adam Thompson, Policy Specialist
Matt Singer, Communications Director


Please shoot me an email at if you have feedback, tips, suggestions, criticisms, or nominations for any of our sidebar features.

Matt Singer
Editor, Stateside Dispatch


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