More Attacks on Arbitration

By June 9, 2008General

The House Judiciary’s subcommittee on commercial and administrative law will hold a hearing Tuesday on H.R. 6126, the “Fairness in Nursing Home Arbitration Act of 2008.” (Hearing notice here.) The CRS summary for the bill, introduced May 22, states: “Provides that a pre-dispute arbitration agreement between a long-term care facility and a resident (or anyone acting on the resident’s behalf) shall not be valid or specifically enforceable.”

So apparently to the sponsors, fairness means NO arbitration whatsoever.

Sponsored by Subcommittee Chairwoman Rep. Linda Sanchez (D-CA) — and cosponsored by Judiciary Chairman John Conyers (D-MI) — the House bill is the companion  to the Martinez-Kohl anti-arbitration measure, S. 2838. As we’ve noted before, the plaintiff’s bar has embarked on a multifront campaign against arbitration since the big profits lie in litigation and jury jackpots, not balanced settlements reached through discussion.

On May 1, the National Association of Manufacturers joined other business trade associations in writing a letter to Congress defending arbitration, citing 13 separate bills where it has come under attack. From the letter:

If successful, these legislative efforts would retroactively declare unenforceable potentially millions of provisions for the orderly and economical resolution of disputes. Opponents of pre-dispute arbitration have neglected to realize that, if enacted, these provisions will actually limit the realistic opportunity for an average consumer, employee, and investor to obtain a remedy if a dispute arises. Evidence shows that arbitration can be very useful in the context of low-value claims. Studies show that plaintiffs’ lawyers are reluctant to take cases involving relatively small claims because they seek larger potential attorneys’ fees than would likely result from these cases. According to one survey, plaintiffs’ employment lawyers said they would not take a case unless it was worth at least $60,000, on average. Therefore, without the option of arbitration, consumers would be faced with two choices–to try to navigate the legal system on their own, or to abandon their claim. The only real beneficiaries of these anti-arbitration provisions and bills would be class action lawyers who would benefit from both the rare blockbuster claim and the possibility of bringing more class action lawsuits–lawsuits that provide little benefit to class members while ensuring large payouts to class action attorneys.

The trial lawyers have made nursing homes the most prominent target in this broad assault, finding it a fruitful area for emotional pleas.


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