The State of Oregon Department of Consumer and Business Services reportedly fined Bankers Life and Casualty Co. $150,000 over its sale of unsuitable annuities to seniors. Bankers’ Life reportedly refunded premiums to approximately 20 Oregon seniors who were paying so much on annuity contracts that they could not afford to cover living expenses.

Interesting legal question as to whether Bankers’ Life sharp practices qualify as elder financial abuse under ORS 124.110. That statute is designed to protect seniors from financial abuse. It’s a powerful law that provides a means of checking physical or financial abuse of Oregon seniors.

I don’t have any knowledge of the State’s actions, other than the media reports. It’s good that the State took action. My hope is that the affected seniors got fairly compensated for all of their harms and losses. I have to wonder whether there are other victims out there, as it’s hard to imagine that Bankers’ Life only sold 20 of these types of policies to vulnerable Oregon seniors.

David Sugerman

I grew up on Mad magazine, and one of my favorite features was “What they say…What they really mean.” And I’m reminded of that feature with this L.A. Times report on the Food and Drug Administration staff’s opposition to preemption.

Digression, first off, to credit reader JW on the pithy term “Kleptocracy” to describe the current regime’s fondness for allowing all its friends to gather at the trough. JDub says that he got it from wiki. Even so, his reverb is worthy of thanks and recognition.

And then some legal geek background on preemption. It’s a federal legal doctrine–based in the U.S. Constitution’s supremacy clause–that allows federal law to preempt or displace or block all state laws in a particular field. “State laws” is read broadly to include even a claim that might be based on state law. What it means for purposes of the kleptocracy is that a corporate wrongdoer who injures a citizen need not answer in court if the claim is preempted by federal law.

So one more little piece of foundation for this forehead smacker. Next week, the U.S. Supreme Court hears argument in the case of Wyeth v. Levine, Case No. 06-1249. In that case, the Bush Administration and FDA counsel are arguing that federal Food and Drug Act should preempt state law claims.  That’s to say, if you’re injured by a dangerous drug regulated by the FDA, our kleptocrats believe that you shouldn’t be able to sue.

The LA Times article demonstrates the inane basis of the argument. FDA staff knows full well that the agency does not and cannot protect consumers from drug company mistakes and misconduct. So it’s folly to assert that preemption should limit these claims. Back to Mad. They say: “Preemption is the best way to protect consumers because the FDA rigorously monitors drug safety.” What they really mean: “These consumer lawsuits from unsafe products are eating at our profits. We don’t like them.”

David Sugerman

I would be remiss if I didn’t note this New York Times report on prison sentences for former insiders at Milberg Weiss for their roles in the former high-flying class action law firm’s kickback scheme. Interestingly, both former partners, Steven Schulman and David Bershad, reportedly cooperated with federal investigators to provide critical detail on the law firm’s misconduct.

There’s a certain level of sad irony in this. I won’t defend Milberg Weiss. They did wrong, and the take down is the right result. But the sad thing is that their securities work was one of the few thin forms of protection when Wall Street engaged in misconduct.  So I’m hoping that these take downs are just a prelude for the next round. Because I have to imagine that there are some people at AIG, at Bear Stearns, at some of the investment firms and credit rating agencies who did similar or worse.

David Sugerman

At first glance, this prediction bodes well for consumers. As reported here in the Seattle Post-Intelligencer, Congress will move to add Wall Street financiers to the list of those who will be held accountable for funding predatory mortgages.

The technical term is assignee liability. It’s important to understand the underlying concept because it plays a big part of what’s gotten us to the present crisis.  Banks were writing ridiculous and nasty mortgages and lending money to borrowers who had no business taking on mortgage commitments.

The banks and lenders would then group and package the bad loans into large pools, and through a series of sales and transactions, parts of these large groups of stinking bad loans wound up being traded like baseball cards on Wall Street. Actually, that’s a little unfair because for reasons beyond my comprehension, baseball trading cards actually have “value.” But I digress.

For years, the Bush Administration and the Free Marketeers (AKA “The Smartest People in the Room”) opposed rules that would allow asignee liability. To their way of thinking, buyers of the stinking bad loans should never, never, never have to answer to the borrower who may have been duped or otherwise wronged by the predatory loans.

The new rules would allow the borrower to chase the assignee, the Wall Street purchaser of the stinking horrible loans. It makes sense for a number of reasons, not the least of which is that our Wall Street purchasers are the recipients of socialist handouts.  Yes, Senator McCain and Senator Martinez, I used that very word to describe the Wall Street bailout…if you want to accuse your rivals of importing socialism into American life, you best go back and explain that whole bailout thing. Ugh, better have more coffee–or less–as I’m digressing again.

But here’s the real disappointment of the Seattle PI report. This is all about the future and prevention. Not a bad thing to be sure, but it’s a deafening silence about THIS round of problems. The Bush Administration declared class warfare on the middle class when they tried to limit the bailout to Wall Street and banking failures. Consumers were left in the drink without a boat, without a paddle, and without a life jacket.  So you’re talking about assignee liability in the future.  And in the meantime, consumers are supposed to ???

David Sugerman

News today is that the Oregon Supreme Court issued this opinion that could help Oregon consumers with property damage insurance claims.  I have to confess that insurance policy cases make for dry reading.  So it can be hard to follow these types of cases.

Here’s what the Court decided.

When you are in a wreck, the company that insures your car must restore the car to its pre-collision condition.  If it cannot, the insurance company must pay the consumer the diminished value of the vehicle.  It’s a nice result for consumers. Consumers get nickled and dimed to the poorhouse, and this is simply one modest change that helps consumers get the benefit of the insurance that they buy.

This really becomes more of an issue when you’re injured in a car crash. It’s bad enough that you have to deal with the physical injury, the pain, and the long process of getting back to health.  But when–on top of that–you’re being nickled and dimed by your insurance carrier, it just seems like there’s something wrong. After all, when we pay for insurance, we should get full coverage. The Court ruled the right way today, and that’s a good thing.

It will be interesting to see whether the Oregon insurance industry lobbies for a re-write of this rule when the Oregon legislature reconvenes in a few months. Wouldn’t suprise me a whit. But then I take a fairly jaundiced view of these things.

David Sugerman

With the help of my good friends Scott Shorr and Bob Udziela, I recently co-authored this amicus brief in the U.S. Supreme Court case of Philip Morris v. Williams.  We provided the brief on behalf of Retired Oregon Supreme Court Justices Leeson, Linde, Roberts and Unis.

The brief focuses on whether the Oregon Supreme Court correctly applied Oregon law in affirming a large punitive damage award against Philip Morris. It was a thrill working with Scott and Bob. More so because of the distinguished group of judges that we represented.

We did the brief pro bono, which means for “the good.” That’s to say, it’s a unpaid volunteer effort to help the Court understand some of the fine details of Oregon law. Snarky admission: I am way short on love for the tobacco industry.

While I’ll never see a dime for my work assisting to hold them accountable for their outrageous misconduct, I take pride in having been in the fight.

David Sugerman

Oh bother! Looks like my overzealous handling of Wordpress comment management systems led me to delete a number of comments.  The problem arises because I literally get showered with spam comments. And if I don’t screen them, you’ll get to see all sorts of offers for miracle cures, nasty pictures, and the like.

I am especially apologetic to readers who commented and whose comments were deleted. Regardless of whether we agree or whether you think I’m nuts, I would never intentionally delete or not publish a legitimate comment.  I guess I’ll need to be more careful in the future.

Thanks for your understanding.

If any of my smart readers have a legal and effective means of dealing with spam comments, I’m all ears. I’m reluctant to close comments or refuse to take them. But I may have to go there.  Seriously, if you have real suggestsions, please feel free to email me. Mine is dfs[with the universal sign here--choke on this, bot swine--for "at"]pspc.com.

David Sugerman

I’ve been amazed by the one-sided nature of the bail out relief package. The Bush plan that gave $700 billion to bail out Wall Street’s greed mongers failed to provide meaningful relief for homeowners in trouble.

I suppose it’s easy to be critical of consumers who got in over their heads by buying more house than they could afford. But if you’re going to help one side, fairness requires that you help the other.

Finally, this proposal to at least delay foreclosures. Not sure whether it has any real chance of going anywhere. But still. Consumers teetering near the brink should follow this development closely, as it may provide a means of keeping people in their homes.

David Sugerman

I’m not a big fan of the U.S. Chamber of Commerce. For years, they’ve led a concerted effort to bar the courthouse doors for ordinary Americans.  And now we learn that the Chamber is at the center of the deregulation frenzy that led to the Wall Street financial collapse.  Among the many points of interest:

• U.S. Chamber received  some $23 million (through a foundation) paid by AIG to lobby for changes in regulatory oversight
• The same U.S. Chamber champions the $700 billion bailout (Query: How much is that really going to cost us?)
• The U.S. Chamber used “tort reform” as the wolf-in-sheep’s-clothing approach to strip away post-Enron reforms.

Look at this video where the Chamber begs and bullies for the bailout.  Against the backdrop of their responsibility, this is goofy.  Shameless.

David Sugerman