By David P. Renovitch
Illinois Attorney General Lisa Madigan has filed a lawsuit in Cook County Court alleging Standard & Poor’s committed consumer fraud in causing the housing market to crash. S&P is a credit-rating company that graded mortgage-backed investments in the years leading up to the housing market crash. Madigan alleges S&P did not exercise proper independence and objectivity when it gave high ratings to mortgage-backed investments it knew were unworthy and risky. The lawsuit alleges S&P did so to increase its own profit and market share.
Madigan stated S&P “… used every trick possible to give deals high ratings in order to retain clients and generate revenue. The mortgage-backed securities that helped our market soar – and ultimately crash – could not have been purchased by most investors without S&P’s seal of approval.” The lawsuit cites numerous internal emails and conversations among S&P employees as evidence of its misrepresentations. For example, in one email, an employee stated an investment “could be structured by cows and we would rate it.” The lawsuit also cites to congressional testimony by a former managing director at S&P who testified that “profits were running the show” and ratings were assigned to risky investments to help drive profit margins for their clients.
Mortgage-backed securities are financial products made up of a pool of mortgages that are bundled and sold as a security. They are backed by residential mortgages. Pension fund and 401(k) managers relied upon S&P ratings to make decisions as to whether these were appropriate investments for their clients.
Madigan has been successful in the past in her efforts to go after lenders following the housing market crash. In December of 2011, Madigan and the U.S. Department of Justice agreed to a $335 million settlement with Countrywide for discriminating against minorities during the sub-prime mortgage lending binge. In 2008, she headed up a lawsuit against Countrywide leading to a nationwide $8.7 billion settlement over predatory lending practices. She also reached a $39.5 million settlement with Wells Fargo over deceptive marketing of risky loans called Pay Option ARMS.
Posted by Attorney David P. Renovitch. Renovitch has extensive litigation experience in matters related to insurance companies and their insureds, real estate, construction, banking and lending, especially in the areas of title litigation, recoupment and mechanic’s lien litigation.
01/31/12 9:55 AM
Litigation, Real Estate | Comment (0) |
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S&P Sued for Allegedly Contributing to Housing Collapse
By Jeffrey R. Schmitt
On Wednesday, January 11, 2012, the United States Supreme Court granted victory to religious organizations across the nation by confirming that their First Amendment freedoms insulate churches and schools from certain employment discrimination claims. Some will consider this a landmark decision, and it may be the Court’s most significant church-state ruling in decades. The decision in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC confirmed churches’ and schools’ autonomy to make decisions about whom to hire and fire, when those employees have job duties related to the ministry of the organization.
The Court ruled against an elementary school teacher in her employment discrimination claim against Hosanna-Tabor Evangelical Lutheran Church and School, of Redford, Michigan, holding that the First Amendment protects the school from the reach of anti-discrimination laws, when the claims involve certain employees. The ruling was in line with many lower federal court rulings, but the issue had not previously been presented to the United States Supreme Court.
In the decision, written by Chief Justice John Roberts, the Court confirmed the “ministerial exception” to certain anti-discrimination laws, concluding that the courts could not force the school to reinstate the teacher, Cheryl Perich. Perich claimed she was fired because she pursued a claim under the Americans with Disabilities Act, alleging she suffered from narcolepsy.
While the Supreme Court confirmed the ministerial exception for religious organizations, such as churches and schools, it did not provide a strict test for determining exactly who was considered a “minister” for purposes of the exception. However, the Court’s ruling is clear that the exception applies to a class of employees broader than merely clergy. Perich was an educator, and was responsible for teaching secular courses, in addition to religion class, and she attended chapel with students. However, she had formal religious training and had recently been designated as a “called” teacher of the school, as opposed to a lay or contract employee. Chief Justice Roberts’ opinion is clear that her duties with respect to religious instruction at the school were sufficient for her to fall under the umbrella of the ministerial exception. The Court was further not persuaded that the small amount of time spent by the teacher teaching religion class during her work day was a significant factor, stating “the issue before us, however, is not one that can be resolved with a stopwatch.”
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01/12/12 12:10 PM
Employment Law, Litigation | Comment (0) |
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Supreme Court Ruling Protects Religious Organizations from Employment Discrimination Claims
By Jeffrey R. Schmitt
A recent article by the St. Louis Post-Dispatch reports that the Moody’s Credit Agency has downgraded the State of Illinois’ credit rating to A2. The Post-Dispatch reports that this is the lowest mark Moody has given to any state, and, in part, the state’s severe pension underfunding has contributed to this credit problem.
The impetus of the story is new legislation passed by the Illinois legislature which outlaws “double dipping” by union officials. According to the article, union officials allegedly misused the pension system to secure large public pensions based upon short teaching stints and even substitute teaching for as little as a single day. Certainly this kind of abuse, if true, is, or should have been, discouraged by all the players involved, including both the state and the public pension plan trustees.
As highlighted by the rest of the article, Illinois continues to face a significant fiscal and budgetary problem, due to many factors, including public pension liabilities. The author notes that the crisis currently amounts to an $83 billion funding shortfall, resulting in the worst unfunded pension liability in the nation, with only 43% of the long-term pension obligations currently funded. Part of the fault certainly lies with the State of Illinois for its failure to fund in earlier, more prosperous times. If uncorrected, this funding shortfall will continue to cause headaches for Illinois lawmakers and public pension plans alike. Ultimately, if not corrected, the continuing trend could possibly cause personal financial losses to deserving retirees across the state.
While unions and public pension plan officials urge the state to fully fund the pension liabilities, lawmakers continue to evaluate plans for both the temporary and permanent fix to the state’s pension woes. Employees and retirees will be keeping a close eye on these legislative developments, and some options may threaten continued benefits for future and/or existing employees.
As the author of the article correctly points out, any attempt by the Illinois legislature to modify the retirement benefits of existing employees entitled to those pensions will almost certainly raise serious legal and constitutional questions that the Illinois, or perhaps even Federal courts, will ultimately decide.
Posted by Attorney Jeffrey R. Schmitt. Schmitt practices in commercial litigation including banking, real estate, construction, and other matters for individuals and businesses.
01/11/12 4:05 PM
Litigation | Comment (0) |
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Pension Underfunding Contributes To Illinois Credit Downgrade
By Christopher D. Vanderbeek
Missouri Appeals Court Says Employees Can Sue Employers in Civil Court for Occupational Disease Claims
Missouri’s Western District Court of Appeals recently decided that an employee can sue his employer in civil court for an “occupational disease” claim. In KCP & L Greater Missouri Operations Co. v. Cook, the employee claimed that he contracted mesothelioma as a result of his employment. The court ruled that Gunter was allowed to file suit in civil court because, under Missouri law, the workers’ compensation forum is not the exclusive forum for a claim premised on an “occupational disease” injury, such as mesothelioma, even if the injury is allegedly work-related. (Note the distinction between an “occupational disease,” which develops over a period of time, versus an injury that happens instantaneously or acutely as a result of a single accident.)
This is a major change from prior law. Historically, the exclusive remedy for every employment-related injury was a workers’ compensation claim. And workers’ compensation is a system that clearly benefits employers (as well as third-party workers’ compensation insurance carriers). Relative to the civil realm, the workers’ compensation system places a dramatically lower ceiling employer and insurer liability vis a vis employee benefits.
There are generally two types of “occupational disease” injuries. The first type is an actual disease, such as mesothelioma, that results from an employment condition. The second type is a “repetitive use” injury, which results from the employee overusing the injured body part. Although it is yet to be seen whether or not Missouri courts will allow pursuit of repetitive use claims in the civil forum as well, a plain-language reading of the court’s opinion in KCP & L suggests that they will.
What This Means for Missouri Employers
This does not necessarily mean that a large number of employees will pursue injury claims in civil court. Repetitive use injuries like carpal tunnel syndrome are caused by repetitive use of the injured body part, plain and simple. It would be difficult for an employee to prove that his employer’s negligence cause this sort of injury. To prove negligence, an employee must prove that the employer knew or should have known that a harmful condition existed and that its employees were at risk as a result. If the employee cannot prove negligence, it would be foolish for his attorney to file a civil lawsuit rather than a workers’ compensation claim.
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11/23/11 10:59 AM
Business Law, Employment Law, Litigation | Comment (0) |
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Occupational Disease Claims: Civil Court an Option for Employees
By Laura Gerdes Long
Fate of the Patient Protection and Affordable Care Act Lies in Hands of Supreme Court
According to the National Law Journal, the Supreme Court justices granted review in three of the five petitions that it had before them regarding the Patient Protection and Affordable Care Act, all from the 11th Circuit Court of Appeals. That court had struck down the mandate that individuals who can afford health insurance must purchase coverage or pay a penalty.
The Journal article lists the issues on which the Court would hear arguments and the amount of time allotted to each issue, for a total of five and one-half hours.
Oral arguments will be made by the United States Solicitor General, 26 state attorneys general (handled by a single lawyer from a Washington firm), and the National Federation of Independent Business (NFIB).
Typically, Supreme Court oral arguments are scheduled for two hours of argument. Arguments are likely to be held in March.
Undoubtedly, with all of the questions raised by the health care act, five hours will not be sufficient time to answer all of them.
Posted by Attorney Laura Gerdes Long. Long practices in tort, insurance defense, legal malpractice, health care, and employment law. Well-versed in employment law policies and processes related to HIPAA, she serves as a trainer and advisor to health care providers, insurers, self-insured employers, and municipalities.
11/17/11 1:37 PM
Business Law, Healthcare, Litigation | Comment (0) |
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Supreme Court: Will Five and a Half Hours Be Enough?
By Laura Gerdes Long
The federal government’s efforts at incentivizing medical providers to use electronic health records (EHRs) may be putting some practices at risk.
In “Electronic Records May Increase Malpractice Lawsuit Risk,” Neil Versel with Information Week refers to a white paper published by the AC Group, a Montgomery, Texas, health IT research and consulting firm. The white paper describes the kinds of risks that medical practices may face if they try to implement EHRs too quickly without the appropriate vendors.
Even vendors who have been certified by the Office of the National Coordinator for Health Information Technology (ONC) have been found lacking in the area of “medico-legal training.” For example, according to Versel, it has been discovered that ONC certification may not require providers “to check drug orders against laboratory results or take into account social and family medical history in creating alerts,” such as the need for more frequent mammograms for a female patient with a mother who has had breast cancer.
Here are just a few other issues that have arisen :
- Critical safety alerts are being missed due to incomplete medication lists;
- Problems with time synchronization of records between electronic charting systems; and
- A high percentage of EHRs do not run drug interaction checks when filling prescriptions.
So to the medical practice community: buyer beware.
Posted by Attorney Laura Gerdes Long. Long practices in tort, insurance defense, legal malpractice, health care, and employment law. Well-versed in employment law policies and processes related to HIPAA, she serves as a trainer and advisor to health care providers, insurers, self-insured employers, and municipalities.
10/28/11 12:03 PM
Healthcare, Litigation | Comments Off |
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Electronic Health Records: Could Your Practice Be at Risk?
By David P. Renovitch
Two of the largest players in the mortgage industry, Fannie Mae and Freddie Mac, are eliminating their respective foreclosure attorney networks in an effort to establish more uniform foreclosure practices. Fannie Mae currently has 191 law firms in its Retained Attorney Network. The Federal Housing Finance Agency, which oversees Fannie and Freddie, instructed the two companies to “transition away” from the current law firm approval network and allow servicers to choose firms that “meet certain minimum, uniform criteria.”
This change was prompted by a report released earlier this month by the inspector general citing failure on the part of FHFA to stop abuses by Fannie-and Freddie-approved attorneys despite warnings. Some of the approved firms have been accused of mishandling paperwork for evictions and foreclosures, including falsifying signatures on affidavits submitted to the courts. The so-called robo-signing scandal which erupted last year led numerous services to temporarily suspend foreclosures.
Fannie Mae and Freddie Mac are government-controlled mortgage companies and have received over $170 billion in taxpayer assistance since they were placed in conservatorship three years ago.
Posted by Attorney David P. Renovitch. Renovitch has extensive litigation experience in matters related to insurance companies and their insureds, real estate, construction, banking and lending, especially in the areas of title litigation, recoupment and mechanic’s lien litigation.
10/24/11 6:00 AM
Business Law, Litigation, Real Estate | Comments Off |
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Fannie, Freddie Phase Out Approved Attorney Networks
By Jeffrey L. Michelman
October 28, 2011 is the Deadline to Protect Your Trademarks from the New .XXX Domain
In the Jurassic age of the Internet, it seemed that only some nerds (now mostly wealthy) understood the full potential of Internet commerce. Large and small businesses appeared to have failed to grasp the importance of web sites and a proper Domain Name for such sites as well as its use for email addresses. Both have blossomed across the world and become a gateway to new methods of selling products and promoting brand recognition and goodwill.
Unfortunately, many of the nerds became pirates, taking the names of big well known brands as their own Domain Names and then holding those names for ransom. For a fee the company that never thought or sought to register a Domain Name for itself found they had to hire counsel to get their names back.
In those days, the law was behind the technological advancements and (as with most things technical) failed to anticipate the problems for business. Rather we lawyers had to show the Federal and State legislatures as well as the courts what action was appropriate. Lawsuits flew from antique word processors and physically delivered to a court’s inbox.
How did such a thing happen in the tech savvy end of the last millennium? Simple, business failed to keep up with the developments in the Internet and its opportunities for new forms of commerce. And the lawyers who predicted dire consequences of this lack of attention went unheeded and unnoticed.
Today the cyberpiracy epidemic has dwindled to a trickle and filing lawsuits on line has become commonplace. There are a host of statutory prohibitions, remedies and even newly created quasi judicial bodies to battle the few pirates left sailing. One such entity created to “help promote the natural expansion of the net” is an international body known as the Internet Corporation for Assigned Names and Numbers, or ICANN.
Now, as legal problems were quieting down, this international power that directs Internet Domain Name usage has decided to stir up the pot with the issuance of two new policies that, if again unheeded by business, could cause as much upheaval, costs and litigation as occurred when Domain Names were new.
ICANN first approved a rapid and unprecedented policy allowing the expansion of the number of generic Top-Level Domains (gTLDs). Business owners by now are familiar with the .COM, .NET, .ORG, and .EDU specifically approved Top-Level Domains as well as those indicating a specific country. Domain registrants were free to register almost any sequence prior to the Top-Level Domain, but had few options when choosing a Top-Level Domain.
With ICANN’s new program, the Top-Level Domain Name space has been opened to allow the registration of nearly any combination of letters, including brands or other terms, such as .bank, .Lawyer, .plumber, .boeing, .nordstroms, .stlouis, etc. While the full impact of this expansion is uncertain, it is clear that regardless of their intent to participate in the new program, business owners will need to reevaluate the way they currently monitor and enforce their brands on the Internet.
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09/22/11 3:29 PM
Business Law, Emerging Business, Intellectual Property, Litigation | Comments Off |
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The Domain Name Game: Category 4 Internet Storm Warning for Business
By Christopher D. Vanderbeek
When a Missouri business is faced with a workers’ compensation case, what can its supervisory employees do to assist in the defense of the business?
There are six essential tips to follow that apply in all workers’ compensation cases. These apply regardless of whether (a) an employee suffered a work injury that is indisputable and the injury is of the severity that the employee alleges; or (b) there is a dispute regarding an injury, such as conflicting accounts of how, when, and/or where an injury occurred.
Following these tips will result in a stronger defense for the employer and insurer. Conversely, ignoring them could irrevocably weaken the defense.
1. Be Proactive and Diligent.
- As soon as you find out that an injury has allegedly occurred, first write down all the facts you know.
- Next, speak to the injured employee and any witnesses. Witnesses would be any employees/vendors/visitors that were in the injured employee’s vicinity at the time of injury, even if they didn’t necessarily see the alleged incident.
- Note the conditions where the injury allegedly occurred and how it allegedly occurred.
In some cases, this is easier said than done. In cases where the injured employee does not immediately notify the employer of the alleged injury, it will not be possible to go to the scene of the alleged injury and speak to those present.
- In these cases, as soon as you become apprised of the alleged injury, write down the details as quickly as possible.
- Compile your witness list. Be sure to include any vendors and visitors who were in the vicinity at the time of the alleged injury.
- Figure out what employees were supposed to be working with the injured employee when the injury allegedly occurred. Find out if these employees were working with the injured employee at the time. Speak with the ones who were, with regard to the circumstances surrounding the alleged incident.
And part of being diligent is making sure to…
2. Pay Attention. Don’t just let the issue rest after the initial investigation.
- Take note of conversations in the days following the incident, as other employees might discuss the incident and pertinent information could arise out of their conversations.
- When the injured employee returns to work, note his or her interactions with other employees and take stock of the body part alleged to be injured.
- If you notice that there is or are one or two specific employees with whom the injured employee seems to talk to a lot and spend a lot of time around, seek out those employees, as they may have pertinent information.
- If possible, evaluate the injured employee’s behavior when he or she believes no one is watching.
And when being diligent and paying attention…
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09/11/11 6:00 AM
Business Law, Employment Law, Litigation | Comments Off |
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Six Must-Follow Tips for Employers with Workers’ Comp Cases
By Christopher D. Vanderbeek
Did you know that when a Missouri worker injures (or claims to have injured) himself during the course and scope of his employment, the worker’s employer automatically has a statutory duty to get the ball rolling to ensure that the worker receives workers’ compensation benefits? In Missouri, it starts with the employer filing a “First Report of Injury” with the state.
From this moment forward, the company will play a substantial and vital role in the defense of its interests, as well as the interests of its workers’ compensation insurance carrier. Other employees of the company, such as human resources personnel and the injured employee’s supervisors, are also in an invaluable position to assist in this defense.
For example, consider an employee who claims that a work-related injury has rendered him unable to use his dominant shoulder. If that same employee were to come into work one morning and brag to his co-workers that he caught a giant fish during the previous weekend, it would cast doubt on the severity, or even existence, of the shoulder injury. But without vigilance in reporting from other employees, it is likely that defense counsel would never come to know this information.
Missouri businesses must remember that when a worker allegedly suffers a work-related injury, defense counsel acts on behalf of the company’s workers’ compensation insurer as well as the company itself. This is because in every workers’ compensation claim filed in Missouri, both the insurer and the employer are named as defendants.
Furthermore, the more a company aids in the defense of a workers’ compensation claim, the lower the liability exposure likely will be. This in turn keeps the company’s insurance premiums lower than they would be otherwise.
Naturally, then, it is in the employer’s interest to assist in the defense of the claim.
Next up: Six must-follow tips when dealing with workers’ compensation cases.
Posted by Attorney Christopher D. Vanderbeek. Vanderbeek is involved in the evaluation and defense of workers’ compensation and other insurance claims, protecting the interests of employers and insurers.
09/6/11 10:00 AM
Business Law, Employment Law, Litigation | Comments Off |
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Workers’ Compensation Claims: What Comes First for the Best Defense
