Demystifying Malpractice Fabrications

Traducers of health care reform often unfurl nasty lies about medical negligence but a new white paper brings down this issue contiguously, disparaging the monotonous myths with profound research and science.

In a series of reports from the American Association for Justice (AAJ), show the errors and faults behind the most widely used talking points for health care reform challengers.

Fabrication #1: Malpractice claims increments health care costs.

Actuality: The National Association of Insurance Commissioners (NAIC) states that the total amount spent in defending claims and compensations martyrs was a mere 0.3% of all total health care costs. The Congressional Budget Office (CBO) and Government Accountability Office (GAO) have also found corresponding data.

Fabrication #2: Tort reform will demit insurance rates.

Actuality: Tort reforms are approved under the guise that they will lower physician’s liability premiums. This never happens. While insurers do pay less money when damage awards are awarded, they do not pass savings along to their doctors by lowering their premiums. Even the most vehement reform will have no effect on insurance rates.

AAJ President Anthony Tarricone stated, “All the facts and evidence show that tort law changes will do practically nothing to lower costs or cover the uninsured. It’s no wonder why the tort reformers, insurance lobby, and other corporate front groups have to gin up lies and phony stats, since no legitimate data or research supports their claims. Our focus should be on reducing the 98,000 deaths by medical error that occurs every year, not limiting patients’ legal rights.”

Fabrication #3: Malpractice claims raise doctors’ premiums.

Actuality: Research has found that there is minimal interconnection between malpractice premiums paid by doctors and malpractice payments. A collaborate study of the leading medical malpractice insurance companies’ financial statements  discovered that  these insurers artificially raised doctors’ premiums and hoodwinked the population about the nature of medical litigations. A past AAJ report on malpractice insurers found they had earnings higher than 99% of Fortune 500 companies.

Fabrication #4: Doctors are absconding.

Actuality: Where would they go? American Medical Association states that the number of practicing physicians in the United States has been growing profoundly for decades now, not decreasing. So not only are there more doctors, but the number of doctors is rising faster than the population growth. Despite the sniveling that doctors are running away to other states and countries, in actuality the number of physicians is growing in every single state, and yet only four states saw growth slower than their population growth and oddly enough these four states all have medical malpractice caps.

Fabrication #5: Too many “superficial” malpractice lawsuits.

 Actuality: There is a pandemic of medical negligence, not lawsuits. In fact, only one in eight patients injured by medical negligence actually files a lawsuit. Civil filings have actually declined eight percent in the last decade alone, and are less than one percent of the entire civil docket. A Harvard study in 2006 found that ninety-seven percent of claims were creditable, stating, “Portraits of a malpractice system that is stricken with frivolous litigation are overblown.”

Content provided by Colorado Personal Injury Lawyers McCormick & Murphy.

Lawsuit Loans – Arguments on Both Sides

I was having a conversation with one of the principles at Law Leaf the other day and we were once again discussing the lawsuit loan industry. The company first contacted this blog several years ago and after a discussion I thought it would be a good idea to devote a small section of our site to the industry. For those people that are unfamiliar with the term “lawsuit loan”, by definition it’s a non recourse advance against a lawsuit. Lawsuit loans have been around for more than a decade but I’m told very few people know they exist. I was one of those people a few years ago.

I must admit I still have some mixed opinions about the industry. I can relate to both sides of the argument and quite frankly I’m probably one of the few people that actually pay attention to the direction of the industry. The industry is rapidly growing. Over the last several years, I’ve spoken to several attorneys that have given up their law practice for a shot at the legal financing industry. I know one attorney that is now in the lawsuit loan industry that was actually against the practice of lending money against pending cases (go figure).

I have mixed opinions because I’ve heard both sides of the story more than once. I can relate to both sides of the story and surely understand why each side is taking such a hard position. I think we can admit it all comes down to money.

The insurance industry and the Chamber of Commerce argue the industry is creating frivolous lawsuits. They also believe the industry should abide by state usury laws (usury laws will allow a lender to collect on their investment up to a certain percentage).

Insurance companies are losing tens of millions each year because of the lawsuit loan industry. The insurance industry is a huge money maker and yes I’ve got stock in some of these companies. I believe while only a very small piece of the pie is being chipped away, the insurance industry sees the business of lending money to plaintiffs as lost revenues. Secondly I don’t believe for one second the industry is creating frivolous lawsuits. I don’t know one investor that would put their hard earned dollars into a frivolous investment. In fact the majority of all lawsuit loan companies in the United States only work with personal injury victims that already have attorneys. These companies will never lend money for legal fees and if they believe the person will lose the case, they won’t invest in it.

Companies like Law Leaf & Oasis argue the insurance industry is one of the main reasons why the industry exists. They believe if the insurance industry did a better job offering victims faster and more affordable settlements from the start, there would be very little need for legal financing. They also argue against usury laws because a lawsuit loan is non recourse, meaning there is no guarantee the investor will receive their investment back.

While the lawsuit loan industry isn’t making the type of profits the insurance industry is making, they seem to be doing well. I personally know insurance companies can be tough and yes some will force people into early settlements to protect their profits. However I do believe the Chamber of Commerce has a point regarding rates. I’m not 100% sure what the rates are on a single investment but I hear they can be high if the case lags on. If a lawsuit loan company is making an investment in a case, you better believe it’s a sound investment; I’m sure they are not taking long shots by any means. I am a capitalist through and through but I do believe there should be some limits on how much you can charge a person. Lawsuit funding companies argue that there is a shot that a case could be lost for a whole host of reasons, but quite honestly I question how many of these cases are actually lost each year.

My Opinion:

I have a network of colleagues and friends that represent a broad scope of industries here in the United States. I have a rather large network of folks that work in the legal industry and several good friends that work in the insurance industry. I’ve heard both sides of the argument over the past few years and this is what I’ve concluded.  A lawsuit loan is expensive but when push comes to shove, it can actually be a better option in comparison to settling a case too soon. On the flip side, if a person is holding out for a few thousand dollars and it’s between taking the settlement offer or borrowing against the case, take the offer.

Payday Loan Rates

Payday loan rates are under major scrutiny. I do not intend to break down the rates for each state, nor will I go into the legal ramifications if a company is caught charging higher rates within a specific state. There was a past comment on an article that outlines the rates in each state. There is a link in the comment which will allow you to view the current payday loan rates within each state. I suggest you view the link if you are interested in looking at an advance.

As we uncovered in previous articles, payday loans are very expensive. In some cases a lender may charge upwards of over 400% for a cash advance. While this may seem to go against usury laws, there are many states that allow companies to charge exorbitantly high rates for their money. There are two sets of arguments.

There is an argument from the perspective of the lender. Payday loan companies argue they have to charge high rates because many people default on their loans. The industry argues without the high rates companies could be in jeopardy.  It is also important to understand the vast majority of people receiving payday loans don’t pay the full amount back on their next paycheck. This will ultimately increase the amount the borrower will have to pay back. There are some states that will allow a lender to rollover payments which in turn result on more interest and a higher payback.

I have looked at several consumer sites and they believe payday loan companies aren’t telling the whole truth. While the industry argues rates are high because of defaults, some consumer advocacy groups would beg to differ. There were two studies that I read which stated that payday loan company’s only write off a small percentage of their loans each year. While these groups argue that the percentages are much smaller than what the industry is alleging, there is very little information or statistical data on this topic. In fact, the two studies that I came across were from the mid to late 90’s.

As we mentioned in a previous article, each state makes up the laws that oversee the industry. These laws are being disputed on both sides of the aisle. If a company violates state laws they could be forced to pay harsh penalties and possible legal recourse.

Consumer groups recommend an alternative to paying high rates for payday loans:

  • Negotiate payment plans with your creditors – The problem is that most applicants aren’t trying to get a payday loan to pay off their creditors. They are trying to get an advance to pay for groceries, gas, gas and electrical bills and other expenses. If you are trying to secure an advance to pay off credit card bills etc. there is no question you should try setting up a payment plan instead of getting an advance.
  • Secured credit cards – The problem is that most credit card companies will not lend money to a person that has already defaulted with another credit card company.
  • Get an advance from your employer – I believe this is probably the best alternative however some people may feel uncomfortable asking their employer for an advance and some companies may not provide advances to their workers.

I guess when I look at the industry as a whole, I can understand both perspectives. I also know if a company has a choice to lend at a lower or higher rate, they will probably always charge the higher rate. The rates for payday loans are likely to change; it’s just a matter of time. Whether the change has a negative impact on the borrower or the lender is to be seen.

Payday Loan Brokers

Payday loan brokers are individuals or companies that serve as the mediator between the client and the direct lender. A broker is responsible for passing the names and information of applicants to a group of lenders, who in turn compete for their business; or at least that is what some brokers advertise.

Payday loan brokers serve an important role for some lenders because they are the marketing vehicle and lead generation source. A broker can help a company eliminate advertising and client acquisition expenses, ultimately increasing their operating budgets and hopefully profits. Most of the larger brokers in the industry have a network of direct lenders that will be given an opportunity to review the lead before purchasing it. Unlike other types brokering models in which a company gets paid a percentage of a transaction, payday loan brokers typically get paid on each lead.

While the set-up for each broker may be different the industry norm for the larger companies tends to follow the same model. When a broker receives a lead it’s disseminated through a chain. This chain is set up through a tiered system. These tiers allow selected lender to review an application and make a purchase. If the companies in the first tier opt out of a lead, the application will be sent to a second tier of direct lender. At this point the cost of acquiring the lead begins to decrease. This is called the tiered approach and most of the larger brokers have implemented a system that handles the different tiers. The first tier will always pay the most for a lead, while the last tier will get the lead at a large discount.

How do payday loan brokers advertise?

The majority of the top brokers in the industry use the internet as their number one advertising vehicle. Their websites are optimized to catch keyword phrases of potential clients searching for payday loans. When a client hits a site they will be giving an option to make a call through a toll free number or fill out an application. The application typically includes all the information that is needed to quickly underwrite a case and make an approval.

The other form of advertising is broadcast emails. Many of these brokers have a database of names of past clients and prospects. They will send out weekly, monthly, quarterly and yearly emails. In these emails are direct links to their website which a person can easily fill out an application and submit.

As social media takes off we are finding an increase in brokers that are using Twitter, Facebook and other social media platforms as a way to advertise their services.

Ongoing Legal and Regulation Issues

After doing research on this topic, I found a few interesting facts regarding payday loan brokers. As we discussed in a previous post, the payday loan industry is highly regulated. There are dozens of consumer advocacy groups that are fighting against the industry for lower rates and in some cases ceasing payday loans altogether. These regulations are directed towards the lender and not the broker. A broker doesn’t have to register with a state nor do they have to be licensed to sell leads. This is not uncommon because there are dozens of different industries within the financial markets in which an entity doesn’t have to be licensed. The big concern is lenders trying to pass as brokers in order to charge higher interest rates.

After federal regulators found that some lenders were partnering with national banking institutions in order to evade consumer protection laws, lenders began looking at other avenues in which can be used to sustain the rates they were used to charging applicants. According to a recent study by CRL, some lenders were posing as brokers in order to avoid interest rate caps. This is an ongoing problem that regulators are concerned about.

It’s my opinion that regulations will begin affecting brokers as well. As companies continue to game the system, regulators will be forced into making it mandatory to vent brokers as well; and this could have a grave effect on those companies that rely on brokerage firms to supplement their lead generation.

The first step is already happening. Today many states require brokers to list a disclaimer on their website stating they are not a direct lender.  I’m sure more laws will follow.

Payday Loan & Direct Lenders

Did you know that most of the payday loan companies on the internet (or those that you can find doing searches) are not direct lenders? Based upon the information I found, the majority of the direct lenders in this industry count on brokers. We will talk a little more about pay day loan brokers in articles to come.

The payday loan industry is a big business. The rates are high and the returns are plentiful. When a direct lender receives a lead from a potential prospect it’s in their interest to qualify and approve the client as fast as possible. You will find dozens of websites around the internet advertising they can approve an applicant within minutes. This has some validity. The majority of people will apply with more than one company, and it’s the company that approves the client first that has the best chance of securing the business.

There are different models when it comes to investments. A direct lender may receive their money through angel funding, banks, private investors or in some cases the principles may be the primary funding source. While most people believe that an investor will make money on every investment it’s just not true. Lenders are lending to individuals with less than good credit so it’s not uncommon for a loan to default. I have seen averages between 20% -40%+ of all loans will end up in default. Take this number with a grain of salt because these numbers are based upon the lenders.

As you can imagine, the payday loan industry is highly regulated. The majority of states have regulatory boards that oversee the industry in their respected states. If a payday lender decides to do business within a state, they must abide to the laws of the land. There are close to 20 states that prohibit high cost payday lending. Georgia is one state which prohibits direct lenders from doing business. According to CFA, a direct lender that is caught doing business in Georgia will be in violation of racketeering laws. In other states there are criminal usury laws in place which prohibits a lender from charging over a certain rate annually. There are other states that have no laws in place; hence there are no caps on what a direct lender can charge.

While I’m finding information on the Internet that makes suggestions that a company will do business in all 50 states, it’s highly unlikely the transaction is taking place in that state. A company that is a direct lending source must abide by state laws and if they don’t, legal problems are certainly to follow.

Payday Loans

I have made a decision to write a few articles about the payday loan industry. In these series of articles, I intend to write about the legal aspects of loaning money against future paychecks. I also plan on writing about the following:

In order to discuss this topic with some intelligence (I don’t have much) I did some research on the industry. I am taking an unbiased perspective and will provide the pros and cons of the industry. It is important to first understand what a pay loan is. A payday loan also referred to as a cash advance is a short-term loan (typically 1 or 2 weeks) that is borrowed against an applicant’s next paycheck.

Payday loans are very expensive and should only be intended as a short-term borrowing tool and not a long-term solution. There are some people that say that payday loans were first introduced in the early 1900’s under different names, however the term “payday loan” was introduced sometime in the 90’s.  Today there are over 20,000 storefronts throughout the United States that offer cash advances.

The underlying legal issues with payday loan advances are usury laws. Usury laws are in place to regulate the industry from charging excessive rates for borrowed money. There are interpretations on both sides as to what is excessive. These laws are typically set by each state. A state may determine that payday loan and cash advance transactions are illegal in the state. There are some states that make pay day lending illegal however there is an abundance of information on the internet that states some companies will still loan in that state because of loopholes.

The industry as a whole believes if a transaction occurs in a state in which cash advances are legal, than it shouldn’t matter where the borrower is located. The industry is regulated by each state and regulators range from state Banking Departments, Departments of Financial Institutions, State Boards of Collection Agencies to Departments of Corporations and so on. The regulators oversee the industry and are available for consumer complaints on any company providing pay day lender.

If you do a search on the internet for payday loan companies you will find the majority of the websites listed on the top pages of the search engines are brokers. Payday loan brokers are typically lead aggregators that have an automated process of getting leads out to the direct lenders. Because the payday loan industry is so competitive, most companies pay top dollar for these leads.

Most cash advance brokers have a disclaimer at the bottom of their websites that state the company is not the direct lender. This relieves most brokerage firms from potential legal issues that may arise from a transaction in a state which makes it illegal to perform payday loan advances.

While a simple cash advance may seem easy to grasp there are a lot of gray areas in the industry. As the industry matures I believe there will be stricter guidelines for the lender.

Tips on Hiring a Personal Injury Attorney

If you were involved in an accident you have the right to file an injury claim against the negligent party. Prior to filing a claim, you may consider hiring a personal injury attorney to help you through the process. The process can be complex and hiring the right attorney can be an important step in receiving full compensation for your claim.

A personal injury lawyer can provide the expertise in assuring you the full payout for your claim. One of the first steps when evaluating the right attorney is understanding that not all attorney’s practice personal injury law. Furthermore, a personal injury attorney may not specialize in a specific area of personal injury law.

If you are considering hiring a personal injury attorney consider the following tips:

One of the best ways of finding a reputable attorney is asking for a referral from a friend, colleague or family member.  You may find that someone you know has gone through the same process. They may be able to provide you valuable information on the process and their success with their attorney.

When a person can’t obtain a referral they should consider the internet as a viable source. There are list serves, forums and organizations that rate attorneys based upon their track record. These forums and organizations can provide you with a list of attorneys that have received awards from past successes.
Another source is visiting websites of local attorneys. When a person begins searching online for attorney in their area they can do a search by location and practice area. If you have been involved in a car accident you can easily search for a car accident attorney in your state or town.

When you begin looking through different websites try locating the experience of each lawyer. There are many attorneys’ that provide their experience on their website. You may find this information on the about us page. Attorneys may also provide information on the different practice areas. There are some attorneys that practice specific areas with personal injury law. A firm may be dedicated solely to motor vehicle accidents or wrongful death cases.  Another way of evaluating attorneys is locating their past settlements and verdicts. Some law firms will list past clients on their website and provide information on settlement reached and verdicts won.

When you have located a few different attorneys contact them and set up a phone conversation or meeting. Most attorneys will provide a free consultation that can be done in the office or by phone. When you contact a lawyer you should have a list of questions. These questions should be used to evaluate and make an informed decision whether you are working with the right attorney or not.

Some of these questions may include:

How many cases do you handle each year? Make sure the cases they handle are specific to your accident (wrongful death, slip and fall, auto accident etc.)

If a settlement can’t be reached with the insurance company, ask the attorney if they are experienced in going into litigation. This means if a settlement can’t be reached through negotiation, will the attorney file a personal injury lawsuit and be prepared to go to trial. There are some attorneys that may refer the case out if a settlement can’t be reached.

If you are filing a personal injury claim against an insurance company, ask the attorney if he or she has ever been involved in settlement negotiations and lawsuits with the company. If the attorney has successfully represented clients against the said insurance company, you may consider hiring the attorney.

Most personal injury attorneys will work on a contingency fee basis. They will provide their services to clients on a percentage of the proceeds. If the attorney successfully get a settlement or wins a verdict, they will receive a percentage of the cash award. If you are going to sign an agreement with the attorney, make sure the fees are spelled out on the agreement.

No matter who you hire, you should always feel comfortable with the attorney. A comfort level of experience and personality is always recommended.