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I was reading an article at Law.com about government investigation into CEO compensation. The article had some interesting facts, such as explaining how Exxon Mobil's former CEO's compensation package of $400 million per year worked out to over $144,000.00 per day. Exxon isn't the only company that believes in paying its executives outlandish salaries. For example:
This Moneycentral article shows:
- During a five-year period, Pfizer's stock fell 35%, but it's CEO "earned" $15.5 million per year.
- AT&T's stock price dropped 40% over five years while its CEO received $17 million per year, plus a pension of $5.3 million per year for life... and unlimited use of the corporate jet.
- The CEO of Safeway has been paid $10.4 million per year during a five-year period in which Safeway's stock lost 54% of its value.
Another Moneycentral article explains:
- The CEO of Ciena was paid $41.2 million dollars during the same five year period that Ciena's stock lost 93% of its value.
- Sanmina-SCI gave its CEO a $19 million "performance bonus" after its stock lost 78% of its value.
- Albertson's has seen its stock prices decline by 39% in the same four-year period it paid its CEO $76.2 million.
And this article at Moneycentral explains that shareholders at Home Depot are so angry at CEO Bob Nardelli that they showed up at the annual meeting to protest. What did he do wrong? Under his "leadership," Home Depot's stock price dropped 9%, while he received over $20 million per year in salary. The fact that Lowe's stock has gone up 185% during the same time Nardelli has run Home Depot surely didn't help matters.
Clearly, high CEO salaries are an epidemic. Merely by showing up to work, CEOs are getting paid tens of millions of dollars per year, even while they run their companies into the ground. Shareholders are getting soaked twice. First, they lose billions as companies are mismanaged into the poorhouse. And second, they stand helplessly by while these incompetent CEOs "earn" tens of millions of dollars and receive pensions that include corporate cars and corporate jet privileges.
Yet rookie legislator Patrick McHenry doesn't think that inept CEO's making millions of dollars hurt shareholders. Instead, he believes, "Trial lawyers are the ones who are sopping up investor wealth in this country."
That McHenry wouldn't see anything wrong with Exxon paying its CEO $400 million while we pay through the nose for gas isn't surprising... Exxon was one of McHenry's biggest campaign contributors. And that McHenry has such a hatred for trial lawyers and a strong desire to end malpractice suits isn't, either... the American Medical Association was his single biggest campaign contributor.
None so blind as those who are paid not to see, eh Pat?
I was already planning on having a good memorial day weekend. It's even better now that Houston jurors found the architects of the Enron conspiracy guilty.
Let's just hope these swindlers receive a sentence commensurate with the severity of their crimes against America.
The central tenet of the argument for tort reform is that the costs of the tort system, which are claimed to be unnecessarily high, are passed on to consumers in the form of unnecessarily high prices. There is even a clever name for the purported markup: “the tort tax.” Reduce or eliminate the tort tax, and supposedly, businesses will pass the savings onto consumers by lowering prices. The easiest way to illustrate the folly of the “repeal the tort tax and we all benefit” argument is to show that even those who make it acknowledge it is false.
Recently, Senate Democrats proposed a temporary gas tax holiday – a period of 60 or more days in which the .18 cent per-gallon Federal gas tax would be suspended. The Democratic Senators offered this suggestion as a way to offer tangible relief from high gas prices to Americans. They argued that by slashing .18 from the cost of gas, the average American would save money every time they purchased gas. But the chances of the gas tax holiday going into effect are slim, because the Republican majority in the Senate opposes it.
It’s surprising that many Senate Republicans, many of whom have yet to see a tax that isn’t a blasphemous blight upon humanity, would oppose eliminating the gas tax. But what’s even more surprising is the reason why they oppose it. According to the New York Times, they oppose it because the tax isn’t paid directly by consumers at the pumps, but by oil companies at the refineries. What’s the problem? They believe that the oil industry would simply keep prices where they are now and enjoy an extra .18 per gallon in profit.
Yet many of the same legislators argue for tort reform on the grounds that businesses would pass on any savings derived from tort reform. Their reaction to repealing the gas tax makes it clear: Even if businesses will save money from tort reform, they will not pass those savings onto the consumers unless they are forced to.
When I did my stint in the Senate, it was a serious no-no for any Senate staff to work on ANYTHING campaign related while on the Senate clock. Apparently, it's illegal for taxpayer dollars to support campaign activities.
Are the rules different in/for the White House & its staff? I ask because virtually every news story about Karl Rove mentions that his new job is to work 100% on the November campaign. If anyone knows why it's OK for taxpayer dollars to pay Rove's salary to be a political consultant for the Republican Party, please let me know.
People Over Profits just issued a press release detailing how Senators voted on the medical malpractice bills that were recently defeated in the Senate. If you're not a member of People Over Profits yet, go join.
Here's the voting breakdown. Note that only three Republicans had the courage to put the interests of their constituents ahead of the campaign contributions from the insurance industry. For your convenience, I highlighted them. If you live in their districts, it would be especially nice for you to drop them an email or call them to thank them for voting for your rights.
And if you live in Senator Rick Santorum's district, why not email or call him to tell him what a worthless hypocrite he is, and demand that he return the $500,000 he and his wife received in noneconomic damages from a lawsuit against a chiropractor who injured his wife so severely she had a hard time losing weight from her pregnancy? And I thought Rick was opposed to obesity lawsuits! But it's always different when you (or your wife) is the plaintiff....
| Voted for the Rights of Victims |
Voted with the Insurance Industry |
Akaka (D-HI)
Baucus (D-MT)
Bayh (D-IN)
Bingaman (D-NM)
Boxer (D-CA)
Byrd (D-WV)
Cantwell (D-WA)
Carper (D-DE)
Clinton (D-NY)
Crapo (R-ID)
Dayton (D-MN)
Dodd (D-CT)
Dorgan (D-ND)
Durbin (D-IL)
Feingold (D-WI)
Feinstein (D-CA)
Graham (R-SC)
Harkin (D-IA)
Inouye (D-HI)
Johnson (D-SD)
Kennedy (D-MA)
Kerry (D-MA)
Kohl (D-WI)
Landrieu (D-LA)
Lautenberg (D-NJ)
Leahy (D-VT)
Levin (D-MI)
Lieberman (D-CT)
Lincoln (D-AR)
Menendez (D-NJ)
Mikulski (D-MD)
Murray (D-WA)
Nelson (D-FL)
Nelson (D-NE)
Obama (D-IL)
Pryor (D-AR)
Reed (D-RI)
Reid (D-NV)
Salazar (D-CO)
Sarbanes (D-MD)
Schumer (D-NY)
Shelby (R-AL)
Stabenow (D-MI)
Wyden (D-OR) |
Alexander (R-TN)
Allard (R-CO)
Allen (R-VA)
Bennett (R-UT)
Bond (R-MO)
Bunning (R-KY)
Burr (R-NC)
Chafee (R-RI)
Chambliss (R-GA)
Coburn (R-OK)
Cochran (R-MS)
Coleman (R-MN)
Collins (R-ME)
Cornyn (R-TX)
Craig (R-ID)
DeMint (R-SC)
DeWine (R-OH)
Dole (R-NC)
Domenici (R-NM)
Ensign (R-NV)
Enzi (R-WY)
Frist (R-TN)
Grassley (R-IA)
Gregg (R-NH)
Hagel (R-NE)
Hatch (R-UT)
Hutchison (R-TX)
Inhofe (R-OK)
Isakson (R-GA)
Kyl (R-AZ)
Lott (R-MS)
Lugar (R-IN)
Martinez (R-FL)
McConnell (R-KY)
Murkowski (R-AK)
Roberts (R-KS)
Santorum (R-PA)
Sessions (R-AL)
Smith (R-OR)
Snowe (R-ME)
Specter (R-PA)
Stevens (R-AK)
Sununu (R-NH)
Talent (R-MO)
Thomas (R-WY)
Thune (R-SD)
Vitter (R-LA)
Voinovich (R-OH)
Warner (R-VA) |
MSN Money reports that a class action lawsuit has been filed against all the major telcos over the probably-unlawful disclosure of telco records to the government. I can't wait to see what comes out during this lawsuit... if anything. Surely the DOJ will intervene and try and get this lawsuit dismissed due to national security concerns.
Rah rah to the war on terrorism, but this is ridiculous. I'd rather live in a dangerous democracy than a safe dictatorship.
Standard and Poor's recently issued a report (U.S. Medical Malpractice Enjoys Profitability, But Tort Reform Still Uncertain And Volatility Anticipated) that predicts a "soft" cycle in malpractice insurance prices. Or, in other words, S&P predicts that malpractice premiums will decline. However, a portion of the report concerns me: "More and more medical malpractice business is being placed in alternative risk mechanisms, threatening the profitability of traditional medical malpractice insurers. A growing number of doctors are choosing to self-insure or opt out of the traditional insurance market by setting up RRGs and captives. In addition, more insurers are entering the medical malpractice market and putting pressure on established players. These start-ups are capitalized with $5 million or less, which leaves them with insufficient surplus to survive the more turbulent parts of the market cycle. The only way for new entrants to survive will be for them to grab market share and market to doctors who want better rates. Underfunded and underpriced, these companies have high rates of failure. As such start-ups falter, business should flood back into the traditional marketplace and possibly reverse market softening."
Translation: Fly-by-night insurers are going to setup shop and lure doctors in with artificially low rates. When it comes time to pay claims, the insurers will fold like a cheap towel, leaving malpractice victims uncompensated, and doctors hung out to dry. This will cause two things to happen. First, traditional insurers will take advantage of the decrease in competition by raising their rates. Second, trial lawyers and juries will be blamed for both the rise in premiums, and the failures of these boiler room insurers. Check back in early 2008 to see if I was right.
Is it any coincidence, by the way, that insurance profitability is up while the whole economy is up... or that it was down when the whole economy was down?
One of the most satisfying things in life is watching what happens when my political adversaries learn that their favorite sword has two edges.
Generally, it's conservatives who favor changes to the justice system that will reduce or eliminate the rights of injured citizens in order to protect excessively profitable corporations. These changes are radical restructuring of a justice system that has served our country well for hundreds of years. But instead of describing them as such, conservatives say they want to reform our justice system.
Those of us who value human life more than corporate profits bristle every time we hear these changes referred to as reform. We know that they aren't reform, so we often throw quotes around tort "reform" or call it tort deform - two ways to show readers that we don't believe radically tilting the scales of justice is reforming it. Conservatives generally laugh at both tactics, and undoubtedly pat themselves on the back for being such masters of doublespeak and stealing the word reform.
So it is with no small measure of joy that I've noticed many of the same conservatives who support tort reform strongly oppose the immigration bills in the legislature. Why? Because those who introduce the bills have referred to them as immigration reform. And the opposition has begun to call the bills immigration deform and immigration "deform."
It's no fun to have to explain why you oppose "reforming" something, is it boys?
Phrase of the day: "Rich mosaic."
Lawrence McQuillan, the author of the PRI's "study" of the tort system had the following to say when asked why Michigan's economy wasn't booming since Michigan has such a favorable legal climate:
"The business climate is a rich mosaic," McQuillan said. "It's not just one thing."
Or in other words, if your state's business climate is poor, tort reform won't help turn it around. But pass it anyway.
The Center for Justice and Democracy issued a press release condemning another "study" paid for by the corporate front group The American Justice Partnership and the Pacific Research Institute: "The Center for Justice & Democracy today called the newly released “U.S. Tort Liability Index” from The Pacific Research Institute (PRI) “unscientific and meaningless, relying on a combination of discredited studies from other corporate front groups and self-serving categories that have no bearing on a state’s business climate.”"
UPI points out that "the American Justice Partnership is an arm of the National Association of Manufacturers." (NAM) In case you missed my previous posts about the National Association of Manufacturers, its a special interest group run by former Michigan Governor John Engler. I contacted Mr. Engler to urge him to strip imprisoned former U.S. Representative Randy Cunningham of the award NAM bestowed upon him for legislative excellence.
Shortly after contacting Mr. Engler, I had literally dozens of hits from the National Association of Manufacturers. While they didn't formally strip Mr. Cunningham of his award - maybe it's in his jail cell with him today - they at least pulled most of their references to him from their web site. And no, NAM never thanked me for pointing out how bad it looked that they still had Cunningham's smiling face on their web site even after his conviction.
What's even funnier about this study than who paid for it is the fact that it completely contradicts the American Tort Reform Association's famed "Judicial Hellholes" report. While NAM and the PRI say that Texas has "the best legal climate in the nation" due to tort reform measures passed over the last several years, the Judicial Hellholes placed the Rio Grande Valley in Texas as the worst legal climate in the nation.
To my good friends at NAM, the ATRA, and PRI: Why don't you guys talk before you release your propaganda? It really hurts the cause to have one group talking about how Texas has the best legal climate in the nation, while another says it's the worst judicial hellhole in the nation. If you keep putting out contradictory information like this, the general public might figure out that everything else you claim is a lie, too.
Jeez - I thought you guys were professionals.
The New England Journal of Medicine recently published a study on medical malpractice cases. Most media outlets are running it with a headline along the lines of "40% of medical malpractice cases are groundless." Depending upon your opinion of the justice system, that statistic is proof that the justice system works, or is horribly broken. But the media got it wrong.
Law.com reports: "The study found 3 percent of claims analyzed were filed by patients who had no injury. Of the claims that involved injuries, two-thirds were caused by medical error. But the remaining injury claims, or 37 percent, lacked evidence of a medical mistake, and most of those -- 72 percent -- were thrown out or otherwise resolved without a payout to the patient. "
The passage above actually shows that only 3% of medical malpractice claims were groundless - cases in which no actual injury occurred. In 97% of malpractice cases, an actual injury occurred. The remaining question is whether malpractice was the cause of those injuries. As it turns out, in 37% of cases, a judge or jury decided the answer was no.
If you believe that because 37% of malpractice cases end in the equivalent of a "not guilty" verdict that the civil justice system is broken, then you should also come to the conclusion that the criminal justice system is broken, too. In California, 32.5% of criminal prosecutions result in a "not guilty" verdict. In San Francisco, a whopping 62% of prosecutions end in acquittal!
Do either of those statistics mean that prosecutors are flooding the California courts with frivolous prosecutions? No. For the same reason, a finding that in 37% of malpractice cases no malpractice occured (but injuries did) isn't evidence that the courts are flooded with frivolous malpractice cases.
One statistic of the study does reveal a gigantic flaw in our civil justice system: 27% of victims of genuine malpractice received no compensation. That statistic is truly abhorrent. Imagine if juries in criminal cases found 27% of defendants to be guilty of the crime they were charged with... and then imposed no sentence whatsoever.
It's shameful that no legislator will have the backbone to use this study to truly reform the civil justice system by imposing minimum judgments against defendants who juries found to have committed malpractice.
It's not often that big oil backs down on anything, but in California, they backed down on their effort to eliminate punitive damages in many cases in California. From Law.com: "Chevron Corp. and its tort-reformer allies on Wednesday withdrew a proposed California ballot initiative that would have blocked plaintiffs from collecting punitive damages in some product liability cases....
The Chevron initiative would have barred consumers from collecting punitive damages against a manufacturer whose product complied with applicable state and federal rules. If approved, the measure may have aided Chevron and other MTBE producers now facing hundreds of contamination lawsuits."
The best part of the article is the tit-for-tat initiative battles between the Consumer Attorneys of California and various other industries: "The initiative's demise marks the third time in little more than a year that California trial lawyers have survived corporate-sponsored ballot-box threats. In early 2005, the pharmaceutical lobby withdrew a contingency-fee cap initiative after the Consumer Attorneys of California agreed to stay out of an ultimately unsuccessful campaign to cut prescription costs. And in February, a coalition of homebuilders and restaurant owners dropped its own lawsuit-limiting initiative after the Consumer Attorneys proposed, and later withdrew, three retaliatory construction-defect measures."
I tip my hat to the men and women in the Consumer Attorneys of California - you guys figured out how to play hardball.
If there's one thing I like about Republicans, it's got to be their knack for doublespeak in naming legislation. For example, the bill that prohibits an individual from suing companies who knowingly and intentionally put false information on his or her credit reports was named FACTA, "The Fair And Accurate Credit Transactions Act." And who can forget the Revocation of Civil Liberties Act Patriot Act?
But those names pale in comparison to the two bills recently defeated in the Senate, the "Medical Care Access Protection Act " and the "Healthy Mothers and Babies Access to Care Act."
Both bills were nothing more than reintroductions of the tired $250,000 cap on noneconomic damages in malpractice actions, but with much catchier names. Thankfully, every Senate Democrat, and a few wise Republicans had the integrity to oppose these bills.
Only in today's "war is peace" and "black is white" political climate could a bill that ensures incompetent and intoxicated doctors (and their insurance carriers) can't be held accountable for harming patients be called the "Medical Care Access Protection Act."
Perhaps the next round of tort reform bills will have such titles as, "The 'I Love America' Act," "The Women and Children Protection Act," or "The Protect Americans From Terrorists Act." Hank Greenberg would surely approve of the last title. After all, he famously compared trial lawyers to terrorists.
I'm incredibly proud to announce that an article I authored will be appearing in the July 2006 issue of TRIAL, the official publication of the Association of Trial Lawyers of America.
The article is entitled, "Corporate wolves in victims' clothing" and in it, I attack the hypocrisy of men like Hank Greenberg, Bernie Marcus, and Steven Hantler who have all profited in spite of (and in Hantler's case, because of) the legal climate in America.
After the issue is in print, I'll reprint the article here for those readers who aren't subscribers to TRIAL. Until then, here's the intro teaser: "To most tort ’reform’ advocates, the only good lawsuit is the one they file, the only injuries that deserve compensation are theirs, and damages paid to them (but only to them) should be unlimited. The right dose of ridicule can expose these hypocrites for what they are."
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