It's hard to believe it has been a whole year since the BP oil spill in the Gulf, possibly the worst environmental disaster this nation has experienced. As a result of the blowout, 11 employees died, and the coastal and gulf ecosystems were irreversibly devastated as 206 million gallons of oil emptied into the Gulf; that's 19 times more than the infamous Exxon Valdez spill.
And in the year since that tragic disaster, the blame game has already started. BP has filed suit in federal court against Cameron International, alleging negligent design of the blowout preventer. On Wednesday, BP sued cement contractor Halliburton for fraud and negligence. BP has also sued Transocean, the owner of the rig, for over $40 billion in damages. You can read more about the legal battles here.
Unfortunately, the blame game does not help the rig workers' families and business owners who have had to close shop in the aftermath. As NPR reported earlier this year, BP has been slow in its efforts to compensate families with the $20 billion compensation fund that was created. Only $3.5 billion in compensation has been provided, and many families and businesses are struggling while BP adjusters decide whether and how much to pay out claimants.
NPR covered the story of two sisters who saw their profitable beach-wedding business go under due to the BP spill. After closing their doors, the sisters had a $240,000 loss on their hands. After six weeks waiting on BP, the sisters received a check for $7,700. No explanation was given for that figure.
This tragic story illustrates some of the problems that result by giving negligent corporations the power to create and oversee compensation plans like the one BP is still administering. We have already discussed House Bill 2031, which would encourage other BP-like voluntary compensation plans. The bill has now passed committee. Hopefully the lessons of BP will teach our Texas congressmen and congresswomen that compensation plans are not the answer.
Thursday, April 21, 2011
Tuesday, April 12, 2011
The Results Are In
Many politicians are looking to Texas as a rolemodel, particularly in terms of the blessings that resulted from our 2003 wave of medical malpractice reform. According to an article here, this view is flawed. There is no disputing that soaring medical costs are a problem that frequently overburden families throughout the country. Nevertheless, Texas is a lesson in how malpractice reform is not always the answer.
For instance, Alex Winslow of Texas Watch, a consumer rights advocate, states that health care costs have soared faster in Texas than anywhere else in the county. As a result, Texas has the lowest number of insured individuals in the country; about one in four Texans has health insurance. Many news sources have reported on the exodus of physicians swarming into Texas. While there is some truth to this, The Center for Public Integrity reports that Texas ranks 41st in the number of doctors per capita, indicating the doctors are still badly needed in the Lone Star State.
Many will point out, as several news sources have long indicated, that Doctors have seen a 25% drop in medical liability insurance rates. Nevertheless, the fact remains that ordinary consumers are finding it more difficult to find insurance and more expensive to pay their medical bills.
Consequently, Texas is not the idyllic example of the advantages of medical malpractice reform. There are some benefits, but there are significant drawbacks as well. You can read The Center for Public Integrity article here.
For instance, Alex Winslow of Texas Watch, a consumer rights advocate, states that health care costs have soared faster in Texas than anywhere else in the county. As a result, Texas has the lowest number of insured individuals in the country; about one in four Texans has health insurance. Many news sources have reported on the exodus of physicians swarming into Texas. While there is some truth to this, The Center for Public Integrity reports that Texas ranks 41st in the number of doctors per capita, indicating the doctors are still badly needed in the Lone Star State.
Many will point out, as several news sources have long indicated, that Doctors have seen a 25% drop in medical liability insurance rates. Nevertheless, the fact remains that ordinary consumers are finding it more difficult to find insurance and more expensive to pay their medical bills.
Consequently, Texas is not the idyllic example of the advantages of medical malpractice reform. There are some benefits, but there are significant drawbacks as well. You can read The Center for Public Integrity article here.
Friday, April 1, 2011
Voluntary Compensation Plans in Texas
As you may know, several Texas congressmen and congresswomen have proposed bills in an effort to promote more tort reform. A couple of these bills involve "voluntary compensation plans." In a nutshell, these plans would be offered by individuals and corporations that, for one reason or another, are concerned they could be liable in court. Consequently, they would create a voluntary compensation plan to allow those who were injured by the plan creators to receive some sort of financial compensation under the plan rather than duke it out in court. If you are confused, consider the Deepwater Horizon oil spill last year. As a result of that spill, a compensation plan was created to aid victims of the Gulf Coast disaster. Similarly, Texas House Bill 2031 and Senate Bill 21 would effectively encourage those who are injured to settle instead of resorting to litigation.
From our perspective, there is nothing inherently wrong with the idea. But there are some significant problems with the way these bills are laid out. First, they are fuzzy on what kind of compensation these negligent corporations would have to offer. Advocates of these plans would say that the plan inherently has to be reasonable because there are certain cost-shifting mechanisms involved in the legislation. However, these mechanisms appear to disproportionately benefit the plan creators. And in cases where the plan offers a grossly inadequate amount, claimants could be forced to wait before litigation could ensue if the defendant elects to abate or suspend the lawsuit.
We are also concerned that the bills would discourage victims from seeking legal advice from qualified attorneys. Under the proposed law, attorneys who represent injured individuals would have to inform their clients that, "if the claimant or potential claimant seeks compensation from the plan without the assistance of the attorney, the claimant or potential claimant will not owe the attorney any fee for services in connection with that claim for compensation." Our concern here is that needy clients who are desperate for immediate results would be encouraged to forgo their legal rights and settle for less without the assistance of an attorney.
We think HB 2031 and SB 21 make for bad law. But we encourage Texans to come to their own decisions and read the bills for themselves. You can access the text of HB 2031 here and SB 21 here.
From our perspective, there is nothing inherently wrong with the idea. But there are some significant problems with the way these bills are laid out. First, they are fuzzy on what kind of compensation these negligent corporations would have to offer. Advocates of these plans would say that the plan inherently has to be reasonable because there are certain cost-shifting mechanisms involved in the legislation. However, these mechanisms appear to disproportionately benefit the plan creators. And in cases where the plan offers a grossly inadequate amount, claimants could be forced to wait before litigation could ensue if the defendant elects to abate or suspend the lawsuit.
We are also concerned that the bills would discourage victims from seeking legal advice from qualified attorneys. Under the proposed law, attorneys who represent injured individuals would have to inform their clients that, "if the claimant or potential claimant seeks compensation from the plan without the assistance of the attorney, the claimant or potential claimant will not owe the attorney any fee for services in connection with that claim for compensation." Our concern here is that needy clients who are desperate for immediate results would be encouraged to forgo their legal rights and settle for less without the assistance of an attorney.
We think HB 2031 and SB 21 make for bad law. But we encourage Texans to come to their own decisions and read the bills for themselves. You can access the text of HB 2031 here and SB 21 here.
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