Letter: Cellphones don't always signal prosperity

So commentary columnist Elizabeth Hovde thinks that we should stop giving food stamps to the not so needy, whom we can all recognize because they have both cellphones and SNAP cards ("Stop feeding the not so needy," Sept. 8)? Whenever the well-off write about how the not-really-needy folks are sponging off public benefits for their lavish cellphone-using lifestyle, I know that these writers have never been in the death grip of a boa constrictor service contract.

Boa constrictor contracts work like this: The company advertises a great monthly rate that you can easily afford when things are going OK for you financially. That's the rate that is splashed all over the flyers and posters and TV and radio ads. That rate is just sucker bait.

Then something happens: You're laid off, your hours cut or your partner's are, you come down with a bad case of the doctor copays or car repairs, your bus system quits running on weekends. It doesn't matter why you can no longer afford the service that you could once handle. Because no matter why, you are going to be told that you can only cancel or switch to a cheaper plan by paying several hundred dollars first. And if you just cancel the traditional way, by not paying, you are going to find yourself hounded by collection agencies for the monthly charges, plus the penalties, and then sued for them, plus court costs and attorney fees, and you'll have your wages garnished and your credit ruined. All because you couldn't afford to pay a penalty to stop a service contract you could no longer handle.

We need to do two things: Force companies to fully disclose how much their service contracts really cost, and let struggling folks cancel without getting hammered with penalties.

On the first, our motto should be "Service Contracts Oughta Reveal Everything," which spells SCORE.

SCORE would mean that anything that comes with an early-cancel penalty -- cellphone, Internet, satellite TV, gym membership, alarm system -- the company would have to tell you, in big bold type, at signup time, the true total of all the payments you must make to get past any penalties. That's first.

Second, we should require that contracts with early-cancel penalties must have waivers so that any customer on public benefits (such as SNAP, Medicaid, public housing) can cancel a contracted service without penalty.

Until we do a much better job of making sure that everyone knows what they're getting into with service contracts (with SCORE disclosures) and until we prevent early-cancel penalties from putting the squeeze on the poor, I suggest that Hovde just be thankful for the privilege that allows her to casually equate having a cellphone with being "not so needy." I see plenty of consumers who are being squeezed to death by contracts that they would love to escape, if it didn't cost more to cancel the contracts than to keep paying.

JOHN GEAR  

Gear is a Salem attorney.

Another Oregon attorney writes:

Nice letter.

Apparently, Ms. Hovde must not realize that the people who qualify for food assistance generally have the least expensive and crappiest version of everything that she and her family rely on for their daily life, like:

* generic unhealthy processed food;
* clothing from thrift stores or Wal-Mart;
* cars with duct tape—if at all;
* unattractive and often unsafe housing;
* cheap and sometimes dangerous toys with little educational value for their children;
* less responsive medical care;
* less responsive public safety providers;
* crappier schools;
* crappier neighborhood infrastructure;
* three-year-old game systems because it’s cheaper to entertain three kids with a game system then taking them to the moves once a month; etc.
 
She also apparently doesn’t understand life changes.  I often see my clients qualifying for food assistance post-divorce when they already have nice cars (with zero value), good clothes (that won’t be replaced), smart phones on a family plan (that now isn’t being paid by the ex), three children and a spouse who is reluctant to provide adequate support.

I also bet Ms. Hovde has never seen the 10 page application for state assistance asking for the income information for everyone in the applicant’s household, and asking for the value of the persons vehicle, and other worldly possessions….

I’ve seen some real cases of benefits fraud in my work—eg. a trust-funder collecting TANF, OHP, SNAP who then faked earning $15K per year to claim an Earned Income Credit on his federal returns— so I know they exist, but anything that makes it harder for poor people to get help is a really bad idea.

Sep11
Vulnerable Nursing Home Patients Need Ability to Sue in Court as Government Agencies Fail to Protect Them
By Leslie Bailey, Staff Attorney, Public Justice

According to a new report just released by the Center for Investigative Reporting and reported by KQED, the failure of California regulators to adequately investigate and pursue claims of abuse and misconduct by nursing assistants and health aids is “putting the elderly, sick, and disabled at risk.” In fact, the regulators that are charged with protecting vulnerable patients in nursing homes and assisted living facilities are either conducting “cursory and indifferent” investigations, or simply closing cases without taking any action at all. The report underscores how critically important it is for people to have the ability to sue when loved ones are harmed by nursing home neglect—or worse.

Take Elsie Fossum. One morning in July 2006, the 95-year-old was found lying in a pool of blood, her arm broken and her face described by the registered nurse in charge at the nursing home as “beaten to a pulp.” Within a few weeks, Elsie died as a result of the wounds she’d suffered. A nurse suspected one of the nursing assistants, and a report was filed with the Department of Health. But according to KQED, the agency shelved the case for 6 ½ years and finally closed it without any investigation. 

The CIR report paints a grim picture. There are approximately 160,000 nursing assistants and in-home health aids working at hospitals, nursing homes, and mental health facilities throughout California. As of 2009, the backlog of reported abuse and theft cases was so high that is was deemed a “crisis.” But rather than prioritize investigating, according to the report, “the state Department of Public Health quietly ordered investigators to dismiss 1,000 pending cases … often without a single phone call.” While the number of cases closed without action is on the rise, the main tool by which the agency is supposed to protect patients from abuse—revoking the licenses of nursing home employees—has plummeted in recent years. In other words, the abusers are permitted to continue working at their jobs, where they can continue to commit more horrific abuse. It’s gotten so bad that even a former Public Health director warns Californians: “do not count on the government taking care of you.” 

Fortunately, we have the civil justice system, and anyone whose loved one is abused in a nursing home can file a lawsuit – right? Think again. As the Wall Street Journal reported, nursing homes—like pretty much all other businesses—are increasingly jumping on the forced arbitration bandwagon.  That is, they’re requiring everyone who checks in to sign a contract forfeiting their constitutional right to sue. Instead, per the fine print, any claims against the home or its employees must be brought in private arbitration, in a secret proceeding before a hired gun chosen by the nursing home. But of course, the last thing on your mind when you’re in the painful process of admitting an elderly parent to a home is the fine print of the nursing home’s multi-page contract. The nursing home, of course, knows exactly what it’s doing: a study done by the nursing home industry itself found that as arbitration has increasingly replaced court as the forum for dispute resolution, the amount of money recovered by abuse victims and their families has decreased—even as complaints about poor treatment have risen.  

If the government agencies charged with protecting our loved ones aren’t up to the task, then the only way to prevent more horrific abuses like that of Elsie Fossum is through private litigation. But the nursing homes know this, and they’re doing everything they can to use forced arbitration to exempt themselves from lawsuits. It’s time to fight back.

If you are facing an arbitration clause in a nursing home case, we can help. Email Leslie at lbailey@publicjustice.net or Paul Bland at pbland@publicjustice.net

For more information, you can also read our article, "Combating Abusive Arbitration Clauses in Nursing Home Contracts."

  1.  New interactive Form 1023 available for review
In an effort to make applying for tax exemption easier, the IRS Exempt Organizations (EO) office is in the development stage of an alternate version of Form 1023, Application for Recognition of Exemption. The new application is available for preview until September 20, 2013.

The Interactive Form 1023 (i1023) features pop-up information boxes for most lines of the form. These boxes contain explanations and links to related information on IRS.gov and StayExempt.irs.gov, EO’s educational website. When final testing is completed later this year, you'll print and mail the form and its attachments just like the standard Form 1023.

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The i1023 was developed from recommendations by the IRS’ Advisory Committee on Tax-Exempt and Government Entities (ACT).

• Today’s Arbitration Outrage: Second Circuit Says Destitute New York Resident Consumer Must Arbitrate Case in Arizona Leave a comment By Paul Bland, Senior Attorney @PblandBland
• Periodically, people ask me rhetorical questions like, "How much worse can the law of arbitration get? I mean, it's so incredibly bad that it has to have bottomed out, right?"
• As Jane Wagner famously wrote [for Lily Tomlin], no matter how cynical you become, it's never enough to keep up.
• The Second Circuit has just issued an opinion that reminds us that it is still possible for the law of arbitration to become even more terrible for consumers. In Duran v. The J. Hass Group, a woman who is essentially on the edge of being destitute alleges (very credibly) that she was the victim of a last-dollar scam, promised services that she didn't receive.
• The defendants allegedly operated a credit repair scheme, under which they took a fee of almost $4,000 from the consumer to settle all of her credit card debt, and then did nothing for her. So her credit card companies were suing her, she owed all the money that she’d owed when she first interacted with the defendants, and she was now completely broke. These allegations make an extremely strong claim under the Credit Reporting Act. The allegations and facts are discussed in greater detail in the district court’s opinion, available at 2012 WL 3233818 (E.D.N.Y. June 8, 2012).
• It probably will not surprise anyone who follows consumer law (although it would come as a surprise to nearly any actual consumer) that the defendant had an arbitration clause. What's striking is that the clause requires consumers (including the New York resident Ms. Duran) to arbitrate their claims across the country IN ARIZONA.  Now, courts have been striking down these kinds of distant forum provisions in decisions going back 20 years.  E.g., Patterson v. ITT Consumer Fin. Corp., 18 Cal. Rptr. 2d 563 (1993). But in the wake of more recent U.S. Supreme Court decisions, particularly the catastrophic Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772 (2010), a lot of bad actors out there have been experimenting with how unfair they can make their arbitration clauses and get away with it.
• This strategy worked pretty well for the defendants in this case. The Second Circuit required Ms. Duran to arbitrate her claim, and enforced the provision requiring it to take place in Arizona. They noted that there is a "logical flaw" and an "unusual" quality to the result, because if Ms. Duran's only remedy is to argue to the arbitrator that it's unfair and unconscionable to require her to arbitrate in Arizona, she first has to GO to Arizona to do it. Oh well, the Court explains, this is what the Supreme Court would have wanted.
• I think the decision is wrong, and that the better arguments are with the plaintiffs, and I'm very hopeful that a lot of other courts wouldn't go with this conclusion. 
• But the case does show how the U.S. Supreme Court's ongoing adventures in re-writing and expanding the Federal Arbitration Act have a cost. What will the next scam artist put in their arbitration clause? Is there any reason that the Second Circuit would not have enforced a clause requiring the arbitration to take place in New Zealand on Leap Day? After all, why couldn't the New Zealand arbitrator figure out if that's fair?  What if the arbitration clause required that the arbitration take place on the newly non-planet Pluto?
• If bad actors can get away with making arbitration clauses increasingly grossly unfair, and all the courts just wash their hands, do a Pontius Pilate, and say “well, this may SEEM really unfair, but oh well, it’s what the Supreme Court would have wanted,” mandatory arbitration will have no conceivable claim to any sort of legitimacy. It will become a complete joke, an openly rigged deal. 
  
• Because saying that a poor person in New York can only get a refund of money stolen from her if she travels across the United States to begin the process of trying to get it back IS a joke, and it IS a rigged deal.