Alabama Personal Injury Blog - Fraud

Why are Medical Bills so High?

Jon Lewis — Sat, 05 Dec 2009 13:49:34 GMT

Did you know that hospitals and physicians rarely ever receive the amount they charge for their services? Health insurance companies do not pay the actual bills invoiced by medical professionals. Why is that?

We had a client who was injured in a truck collision. His injuries were serious enough to warrant several nights in the hospital and a couple of surgeries. What were his medical bills? Approximately $72,000.00. What did the hospital and physicians get paid? $11,714.01, approximately 16% of the amount billed.

If you had a retail store, would you accept 16% of your prices? Why do hospitals and doctors? Are they over-charging, or are they getting paid too little?

What if you don't have health insurance? What happens then? Well, I can tell you that I handled collections for a hospital about 13 years ago, and if patients came in for emergency treatment and didn't have insurance, we sued them for the full amount, not 16%. Why do private pay individuals have to pay the full amount? I understand why health insurers receive a discount, but an eighty-four percent (84%) discount? What if Bill Gates doesn't want to get health insurance? He can pay any amount billed so why doesn't he receive the same discount as a company like BlueCross?

Is this a form of fraud or misrepresentation? In Alabama, BlueCross BlueShield has such a monopoly on health insurance that they dictate to hospitals and physicians what they can charge for their services. Many doctors speak poorly of BlueCross BlueShield as a result of their influence. Some won't even accept their rates as a result. Should the health insurance companies be setting the rates for medical treatment? Is that capitalism?

I don't have the answers to all these questions, but I think they need to be discussed, especially in light of healthcare reform. What are your thoughts?

Originally posted at InjuryBoard by Jon Lewis

Good News from Minnesota in the Arbitration Battle

Jason Knowles — Fri, 11 Sep 2009 13:06:40 GMT

On July 14, 2009, Minnesota Attorney General Lori Swanson filed suit against the National Arbitration Forum (NAF) of Minnesota, the nation’s largest arbitration company for consumer credit disputes, accusing NAF of consumer fraud, false advertising, and deceptive trade practices by “misrepresenting its independence” and hiding its “extensive ties” to the collection industry. When filing the suit, Swanson said in a press release: “This is a classic case of the little guy being stepped on by fine-print contracts.”

For several years now, credit card companies, banks, retail lenders, automobile sellers, and cell phone service providers have been inserting mandatory pre-dispute arbitration clauses in the fine print of consumer agreements. In many cases, the consumer does not know or understand that he is waiving an important right.

Swanson’s lawsuit charged that NAF works behind the scenes, “alongside creditors and against the interests of ordinary consumers”, to convince credit card companies and other creditors to insert arbitration provisions in their customer agreements and then appointing itself to resolve the disputes. The lawsuit alleged the NAF pays commissions to executives to convince creditors to insert mandatory arbitration clauses in customer agreements, thus generating arbitration filings and revenue for itself.

Fortunately, within days after being sued, NAF agreed to stop handling cases involving banks and credit card issuers over unpaid bills. Under the agreement with the Attorney General, NAF will no longer be allowed to settle disputes between consumers and credit card companies.

This is a significant victory for American consumers.

(source: Saint Paul Legal Ledger)

Originally posted at InjuryBoard by Jason Knowles

Check Fraud

Gaines Drago — Wed, 05 Aug 2009 11:06:12 GMT

Nearly all of us have had it happen to us at least once. First all oxygen appears to be sucked from the room, then, almost simultaneously, your stomach is twisted into a pretzel as if you are one of the performers from Cirque de Sole, and it is only after the flood of fear that the true fun begins. No, I am not talking about the newest rollercoaster at Six Flags, but rather having someone access your checking account. The world is becoming more sophisticated and in turn so are criminals becoming more adept at procuring your money, and while most of the time, simply by reporting your information to the bank you are able to recover your money, there are several rules that if you do not know could prevent you from recovery and worse leave you financially responsible.

Police officials view check fraud as a "white collar crime", often going unprosecuted or resulting in either probation or a light jail sentence due to outdated state laws. Majority of the check fraud being conducted today is by organized gangs. But with the use of computers and scanners, the average person is now getting involved due to its simplicity of counterfeiting a stolen check. It has been reported that many of these gangs are involved in more serious crimes such as money laundering, drugs, and prostitution to name just a few. When an individual becomes involved it has been reported that he does to support a drug problem or to get out of debt. Check Fraud actually funds those criminal activities. http://www.ckfraud.org/depository.html

Recent changes in the Uniform Commercial Code have shifted the liability of forged checks off the banks and onto account holders. These new laws stress "due diligence" and "comparative negligence", where parties split check fraud liability and monetary losses based upon the respective levels of fault. http://www.ckfraud.org/depository.html The main thrust of these changes has come from Uniform Commercial Code Art. 4 part four. U.C.C. § 4-406. The bank first is required to send the customer a statement. This statement must be detailed enough to allow the customer to locate any charges that appear false or suspicious. The customer must promptly and diligently review this statement to determine whether any payment was not authorized or if any signature is not correct. The customer must then notify the bank and relay all relevant facts. If the customer delays too long in returning this information to the bank, the bank may not be required to return used funds or the customer may have to pay a portion of the used sums. U.C.C. § 4-406(4) (d). State statutes can differ as to what a reasonable time is in which the individual can notify the bank, but some limit it to thirty days after receiving the statement. And in nearly all states if the bank is not made aware within one year of the customer receiving a statement, the customer is precluded from asserting any claim against the bank.

The key is to act quickly and cooperatively with the bank in resolving what is undoubtedly a major headache, which if left untreated can turn into a major financial problem. One last tidbit of advice, while no one likes to receive and review their bank statements, it is imperative that you keep a close watch over your finances. One of the best methods of doing this is to view your account online. Nearly every bank will have the option of online statements as well as paper statements. These online statements are great because they are archived on your computer. Good luck and I hope this helps prevent you from becoming a victim.

Originally posted at InjuryBoard by Gaines Drago

Is it Fraud?

Jon Lewis — Wed, 15 Jul 2009 18:30:47 GMT

What is fraud? What is misrepresentation? Many people think they have been defrauded when they have not, and many people don't know that they have been defrauded when they actually have been.

In Alabama, fraud is statutorily defined and interpreted by case law. The statute is as follows:

Section 6-5-101

Fraud - Misrepresentations of material facts.

Misrepresentations of a material fact made willfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently and acted on by the opposite party, constitute legal fraud.

(Code 1907, §4298; Code 1923, §8049; Code 1940, T. 7, §108.)

As you can see, fraud can be made by mistake and innocently, but if you rely on the mistaken misrepresentation, it constitutes fraud. In addition, silence can constitute fraud:

Section 6-5-102

Suppression of material facts.

Suppression of a material fact which the party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from the particular circumstances of the case.

(Code 1907, §4299; Code 1923, §8050; Code 1940, T. 7, §109.)

Of course, the issue in these cases centers around what constitutes "material". Typically, this can arise when there is a fiduciary relationship between the parties.

There are numerous elements to fraud. Not only does one have to prove that there was misrepresentation of a material fact, but you have to show some form of reliance. In other words, you have to rely on the misrepresentation and act to your detriment. Then, you must show that you have been damaged in some form or fashion.

How does this work? Well, I have a case right now where my clients purchased a home. The contract showed that the home was on a sewer. The seller and agent checked the box showing that it was on a sewer. They didn't know that it wasn't on a sewer, but they represented, in writing, that it was on a sewer. My clients bought the house. After a year, the clients find out that the home was not on a sewer or septic system. It was tied to an underground well. They had to pay a plumber to come out and connect the home to the sewer lines.

In this case, the seller misrepresented that the home was on a sewer system (even though it was innocent, and they didn't know). My client relied on the representation and bought the house at a certain price (they wouldn't have paid the same amount if they had known there was no sewer or septic system). They were damaged in that they had to pay to have the line dug up and connected to the sewer. That is a fraud and misrepresentation claim in Alabama.

Originally posted at InjuryBoard by Jon Lewis

Aura Financial Services Inc. - Greedy Scams

Jon Lewis — Thu, 18 Jun 2009 21:02:29 GMT

What is the problem with our capitalistic society? Greed! Fraud! Scams! The recent economic collapse and corporate fraud highlights this problem. How do we protect against this problem? Our judicial system. No, say it ain't so. We have to resort to trial attorneys to protect us against such corporate abuse? Yes we do.

http://www.youtube.com/watch?v=GQnCFdjLJAM

Recently, this type of greed was illustrated by the brokers at Aura Financial Services Inc. According to the Birmingham News, brokers at Aura Financial churned customer accounts from 2005 through April 2009. The company and its brokers allegedly pocketed one million dollars in commissions and other fees while their customers lost the value from their accounts. According to Katherine Addleman, director of the Securities and Exchange Commission's Atlanta regional office, "This is the worst example of churning I have seen in 23 years with the SEC."

What is "churning"? This is where brokers trade stocks, mutual funds, and other securities unnecessarily in order to make more commissions and fees off of the trades. There is no reason to do this but for greed. Instead of taking care of their clients, they basically "steal" their money. Why? Greed.

Both the SEC and the Alabama Securities Commission have filed claims against Aura. What does that do? Well, they will probably end up fining them, and maybe, the people who lost money will recoup some of their losses through the restitution process. But, how else can the company be punished for the actions of its brokers and their like of monitoring them? Through civil lawsuits. The threat of a civil lawsuit keeps people honest. However, there is no such threat in this situation. Why you may ask? Arbitration.

That's right. Cases involving broker misconduct go to arbitration. No jury. No Judge. No appeal. You only get arbitrators who were involved in the industry. This process is governed by the Financial Industry Regulatory Authority (FINRA).

This is why we need the Arbitration Fairness Act. This Act will help eliminate arbitration in the consumer setting. The Federal Arbitration Act was originally intended for commercial disputes; however, corporations have abused it and used it as a shield from liability and accountability in consumer transactions. Call your legislators and tell them you want this Act passed, and the next time a corporation defrauds you, your peers can decide your case, not some industry insider.

Originally posted at InjuryBoard by Jon Lewis

$89 Million Settlement

Jon Lewis — Sat, 23 May 2009 10:35:20 GMT

The State of Alabama settled a lawsuit with six (6) pharmaceutical companies according to the Birmingham News. InjuryBoard member, Beasley Allen, and the law firm of Hand Arendall settled six Medicaid drug pricing lawsuits. The firm has already obtained several large jury verdicts for the State totaling $352.4 million, and those are being appealed.

70 drug companies have been sued by the State alleging that they manipulated drug prices which Medicaid must pay for prescription drugs. Ten companies have already settled for $35 million.

With four jury verdicts and sixteen substantial settlements, it is clear that these companies engaged in fraud against the State of Alabama. Once again, corporate greed shines through. When will a sense of right and wrong overtake greed?

Originally posted at InjuryBoard by Jon Lewis

Fraud against the government

Pete Burns — Wed, 08 Apr 2009 14:29:00 GMT

If you are aware of your employer or another company being paid government funds for work that was not done you may be able to file suit in behalf of the United States Government. Those are called Qui Tam suits and the person who files such a suit, the Relator, is entitled to a percentage of any recovery. With all of the stimulus money flowing we can expect a lot more of this activity. Citizens need to protect the federal treasury by aggressively pursuing these wrongdoers. There is whistleblower protection available in most situations.

Originally posted at InjuryBoard by Pete Burns

Arbitrators do not have to follow the law

Pete Burns — Tue, 17 Mar 2009 13:13:05 GMT

Arbitration is an illogical procedure for dispute resolution in our society. Arbitration clauses are buried in consumer contracts of all sorts and until you have a legal problem most people either don’t notice the clauses or assume they are a reasonable alternative to our “costly” legal system. In truth arbitration is frequently more expensive than our court system and the result dramatically less predictable.

The United States has an advanced judicial system and to abandon it in favor of arbitration makes no sense. First, our judges are either appointed by the President of the United States with the advice and consent of congress or, in Alabama, elected by the people. Neither is a guarantee of integrity but both provide dramatically more vetting and assurance than the ad hoc procedure for selecting arbitrators. AAA, the most widespread arbitration organization, gives the parties the right to deselect from a panel provided by AAA. Unlike Judges who are paid with tax dollars, arbitrators are paid $150 to $300 per hour by the litigants. In my experience arbitration is dramatically more expensive than our judicial system.

In addition to economy, predictability is sacrificed to arbitration. Judges take an oath to follow the law and if one party thinks the judge failed to do so she can raise the issue on appeal. Appeal is very restricted in arbitration and getting worse. On March 5, 2009 the U.S. Court of Appeals for the 5^th Circuit ruled in Citigroup Global Markets Inc. v. Bacon http://www.ca5.uscourts.gov/opinions/pub/07/07-20670-CV0.wpd.pdf that even if the arbitrator shows a “manifest disregard for the law that is no basis for appeal.

Why in the world do we want to sidestep a sophisticated set of laws enacted by elected officials and interpreted by qualified judges in favor of allowing some random arbitrator to do as he sees fit?

Originally posted at InjuryBoard by Pete Burns

Alabama Fraud

Jon Lewis — Thu, 26 Feb 2009 13:21:55 GMT

Another trial, another plaintiff's verdict. On Tuesday, a Montgomery County jury ruled in favor of the State of Alabama against German-based pharmaceutical company, Sandoz Inc. in the amount of $78.4 million. Fellow InjuryBoard member, Beasley Allen, represented the State.

This is the third verdict obtained by Beasley Allen against pharmaceutical companies for overcharging the State Medicaid program from 1991 to 2005. The other verdicts were against AstraZeneca ($215 million), Glaxo-SmithKline ($81 million), and Novartis ($33 million). Of course, all of these verdicts are either being appealed or are going to be appealed to the Supreme Court of Alabama.

It seems as though almost every significant verdict obtained by a plaintiff these days is certain to be appealed. In fact, this has become part of settlement negotiations. How? During mediation or settlement discussions, defendant attorneys always mention the fact that even if a large verdict is obtained, we will appeal the case, drag out the time for payment, and likely win the appeal. Is that what our appellate system is for? How can they threaten this?

Well, every appellate court judge in Alabama is Republican, save our Chief Justice, Sue Bell Cobb. Does that matter? It shouldn't, but unfortunately, a majority of the business community supports Republican candidates, and a majority of trial lawyers support Democratic candidates. Contrary to popular belief, we see who is winning that race. Whether the appellate judges rule for business interests a majority of the time because that is the correct legal decision or because their allegiance lies with that side is known only to the judge making the decision. However, there is a strong appearance of a conflict given our system and the rulings over the last few years.

Is this they way the system should work? What do you think? Let us know. Post your comments to this blog.

Originally posted at InjuryBoard by Jon Lewis

Unemployed? Beware Of Job Scams

Pete Mackey — Fri, 20 Feb 2009 08:00:00 GMT

The entrepreneurial spirit is a wonderful thing. To an entrepreneur, a problem is not a bad thing, it is an opportunity for a money making solution. Unfortunately, some entrepreneurs would rather feed at the bottom.

The financial crisis has brought about the newest of that ilk – companies who con the unemployed. In 2007, the Consumer Protection Agency received almost six thousand complaints about employment replacement services running various scams. One can only imagine what is going on today. Of course, the bad guys want your money:

... [T]he schemes often involve a firm requesting a fee in exchange for career advice along with access to employment opportunities inaccessible to the general public.

The request for upfront money, experts say, is the first red flag.

In almost every instance, consumer advocates contend, the "exclusive" job listings that illegitimate staffing firms share with clients are available to anyone with access to the Internet.

The list of ways that job seekers can be taken advantage of runs the gamut. At the same time, there are legitimate headhunters and employment agencies who can help place the unemployed in available jobs. The following are tips that may be helpful:

Never provide a credit card or social security number in response to an e-mail, snail mail or television advertisement.
Most requests for personal information have everything to do with identity theft and nothing to do with job placement.

Do not apply to a position without knowing the company’s name and physical address.

Never pay any type of fee for services without a face to face meeting and, even then, only after careful investigation. Check with your local Chamber of Commerce or Better Business Bureau.

It seems incredible that there are people out there that would take advantage of folks who are at such a disadvantage. Those soulless types who are willing to do so, however, realize that hard times increase their odds of success. Be aware.

Originally posted at InjuryBoard by Pete Mackey