Civil Arbitration (MAR) Update

ICYMI, yesterday two EAGLE members of WSAJ, Celia Rivera of Olympia and Marshall Casey of Spokane, testified in the legislature in support of ESHB 1248, which would adjust the civil arbitration limits in Washington from $50,000 to $75,000, increasing the number of people and businesses who could seek justice without going to trial. This is an access to justice issue, making it possible for smaller cases to be heard without the expense of a full day in court.

Watch their testimony here:

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Thank you for the opportunity to be heard and to speak in favor of one of the most important court room efficiency and cost savings measures we believe you will see this year. The use of civil arbitration, known as the Mandatory Arbitration system, is along with the increased usage of District Courts, already saving the superior courts thousands and thousands of hours of court and judicial docket time, and saving litigants thousands of dollars in costs in every successful MAR case. Last year this committee expanded the District court usage across the state. This bill will dramatically expand the use of the arbitration system, with tremendous savings for the state, counties, citizen litigants and the small businesses that utilize this process. This is a true win-win.

Background:

Mandatory Arbitration (MAR) is used as a streamlined procedure for resolving disputes within our court  system when a claim is less than $50,000, exclusive of fees, interests or costs. An arbitrator reviews the case instead of a judge, and issues a decision. MAR is a simplified and economical tool for obtaining the resolution of disputes. It is also less formal than Superior Court with limited discovery, and allows for a much quicker resolution of disputes than going to trial. Arbitration can be completed in 2-3 months instead of the several years in can take to get a date due to an overburdened court system. Cases are arbitrated within 2-3 months and the vast majority are resolved in that time, many without arbitration.

The MAR system also works efficiently by incentivizing both sides to come to the table to reach a good faith agreement. This is because if an offer of compromise is rejected by one of the parties and a trial de novo is ordered, the requesting side must better its position in Court or beat a compromise offer, or risk paying cost and fees to the other party.

Forty-five percent of all filings in our state’s Superior Court are civil cases. The remaining cases include criminal (15%), domestic (14%) and other (26%). All criminal and domestic cases are heard ahead of any civil action, thus showing MAR as a useful tool in quickly resolving civil disputes.

The MAR system was first passed into law in 1979 and implemented in 1980. The program was originally made discretionary for counties to adopt, but the Legislature later mandated its use for all counties with a population of 150,000 or more. A filing fee of $220, paid by the plaintiff, covers the cost of the program. 

The program is so successful and cost-efficient, its jurisdictional limits, $10,000 originally, have been consistently raised to take on more cases and ease court congestion: $15,000 in 1982; $25,000 in 1985; $35,000 in 1988; and $50,000 in 2005 (population requirement reduced to 100,000).

Changes to the MAR system made by HB 1248
As a useful tool for lessening the burden on our already stretched courts, HB 1248 will improve and update the MAR system by:

  • Raising the limits to $75,000, a compromise from last year’s bill;
  • Raising the filing fee from $220 to $250 (paid by the plaintiff), providing much-needed income that goes directly to our budget-crunched counties, and increasing the filing fee for requesting a trial from $250 to $350, another boost for cash strapped local county systems;
  • Require that an aggrieved party who is filing the trial de novo must sign the declaration providing more flexibility in scheduling and discovery by requiring hearings to be held between 21 and 75 days after filing.

The value of this concept:

WSAJ has reviewed extensive research on the MAR program, especially in King County where the Judges conducted an extensive survey over the last three years. In addition, a member of ours hired some college researchers to also look at great depth in the system as it exists around the Puget Sound area counties.

First, some results from the judicial survey. While this is limited to King County for now, we are gathering information from other counties, too, and we have looked at this now on a county by county basis as well as state wide. But King County does account for over half the state wide total of MAR cases, so it is a significant sample.

Over the last seven years, in King County, an average of roughly 1400 cases per year are noted for arbitration. It is worth noting that 42% of these cases settle before the arbitration is even conducted. Of the other 58%, two-thirds of the arbitrations resolve the dispute once and for all. Only about 33% of those arbitration awards results in a trial de novo request, and of those requests, approximately 10% of them actually go to trial. That is fewer than 2% of the total number of cases noted for arbitration. Up until a request for de novo is made, these case never enter a judicial docket.

This means that over 80% of these 1400 cases never require a single moment of judicial docket time. They are handled and resolved completely separate and apart from the judicial docket and cost the court system nothing. Those litigants get to see their cases resolved in a fraction of the time and for a fraction of the cost that a trial for the same case would have required.

Without going into too much statistical detail, we believe that looking at our responses in our own survey about how this change would impact civil litigation that the number of cases noted for MAR would increase by as much as 20-25% the number of cases moving on to the MAR track.  

The benefits from this are many and help all parties. The increases could raise as much as an additional $250,000 for counties through the increased filings and increase in arbitration fees, and also increase monies raised through the de novo filings by another $150,000 or so. (Please note, these are very rough projections because it is impossible to know what the exact impact will be. But I am happy to share my methodology with you.) The counties will save thousands of hours of court time and judicial docket time. The pressure on court funding by the state will be slightly alleviated.

An additional major consideration in looking at this bill is the fact that citizen-litigants and the defendants in these cases that go to trial spend as much is 10 times as much in out-of-pocket cost in the same case if it is handled through MAR. Literally, as much as 10 times the out of pocket costs. Cases that might cost $2,000 out-of-pocket going through mandatory arbitration can cost as much as $20,000 or more out of pocket to go to trial.  That is largely a result of the cost of expert witness time and other additional costs that trial requires, and of course it costs counties thousands of dollar an hour to run a jury trial. All these costs are reduced dramatically under this proposal.

This bill is a true win-win for all parties. The demands and the pressure on the state for additional judicial slots will decrease. Counties are perhaps the biggest beneficiaries as they will also see a tremendous reduction in the judicial dockets and pressures and the time and money spent conducting jury trials. At the same time they will also benefit significantly from the increase in the filing fees. Citizen litigants will see their cases resolved in a fraction of the time and for a fraction of the cost that they would have to spend to go to trial. This will be a dramatic increase in access to justice for run of the mill cases that nonetheless jolt the citizen’s life. Small businesses, who file between 25 – 30% of these cases will also enjoy the same benefits, and finally defendants will also enjoy a swift and certain resolution for a fraction of the cost and can go on with their lives.

It is not often that we have an opportunity to make such a simple and yet dramatic change that provides so many benefits. The MAR program is a very successful one and national model, and this takes it to a new level. The pioneers of this program and the original legislature that adopted it deserve great credit, and the sponsor and great group of co-sponsors deserve credit for bringing this idea forward.

Let’s build on the history of success, and let’s work together to pass SHB 1248. We look forward to working with you as this moves forward. Thank you for considering our views.

 

 

 

 

Reduced Benefits Send Workers into Poverty

While reduced benefits pile medical bills on injured workers who are unable to return to work, plummeting them into poverty, insurance companies are making record profits. In 2013, insurers had their most profitable year in over a decade. At the same time, employers are paying the lowest rates for workers’ comp insurance since the 1970s, and some of the lowest costs are in Washington state.

Graphic via The Stand

Graphic via The Stand

Supporting workers is inexpensive for employers, but insurance companies focused on their corporate profits continue to claim that cutting benefits helps small businesses.

Here in Washington, we do not allow private insurers to sell insurance and loot hundreds of millions of dollars in profits. Instead, we reinvest this money in our insurance funds. Using investment returns, we maximize financial stability, keep premiums lower for employers, and keep benefits fairly strong and accessible for injured workers. Washington is also the only state in the nation where workers pay a share of the premium, further lowering employer costs, and creating ownership and partnership in our workers’ comp system. While we are far from perfect, this study shows Washington does have a better way. It also serves as a warning of why we don’t want to start down that other road.

Washington Workers’ Comp

This week, workers’ compensation is all over the news. NPR and ProPublica are releasing a series investigating the destruction of WC across the country. What stands out? Washington is among the fairest WC systems in the country.

NPR says:

Until recently, America’s workers could rely on a compact struck at the dawn of the Industrial Age: They’d give up their right to sue. In exchange, if they were injured on the job, their employers would pay their medical bills and enough of their wages to help them get by while they recovered.

No longer.

Over the past decade, state after state has been dismantling America’s workers’ comp system with disastrous consequences for many of the hundreds of thousands of people who suffer serious injuries at work each year, a ProPublica and NPR investigation has found.

Many workers who do not receive sufficient compensation plummet into poverty, unable to return to work and coping with insurmountable medical bills.

Thirty-three states have cut benefits or made it harder to qualify. ProPublica says:

Presented with ProPublica and NPR’s findings, Sen. Bob Casey, D-Pa., one of the leading worker advocates in Congress, said the changes undermine the basic protections for injured workers.

The rollback “would be bad if it were happening in one state,” he said. “But the fact that a number of states have moved in this direction is disturbing and it should be unacceptable to people in both political parties.”

“They call them reforms,” Casey added. “That’s a real insult to workers.”

The WC system has been designed to protect our workers when they are injured in the workplace. When we roll back their benefits, we are no longer protecting them. WSAJ supports our workers and protecting our state’s strong workers’ comp system.

Holding Tort “Reform” Unconstitutional

The Center for Justice & Democracy posted their fact sheet on “Cases Where ‘Tort Reforms’ Have Been Held Unconstitutional,” highlighting each state. What did it have for Washington?

Washington – Schroeder v. Weighall, 316 P.3d 482 (2014) (eliminating the tolling of the statute of limitations for minors in medical malpractice claims violates the equal protection clause of the state Constitution).  Putnam v. Wenatchee Valley Medical Center, 216 P.3d 374 (Wash. 2009) (medical malpractice certificate of merit statute ruled unconstitutional); Sofie v. Fibreboard Corp., 771 P.2d 711 (Wash. 1989) (cap on non-economic damages for personal injury at a rate of 0.43 times average annual wage and life expectancy violates jury trial guarantee).

You’ll remember we posted earlier this autumn about the Sofie v. Fibreboard case; we celebrated its 25 year anniversary at our annual Amicus luncheon in late October. ICYMI, you can read the recap here.

The case found that tort deform violated our right to trial by jury. WSAJ continues to advocate for open access to the courts and justice.

Washington among least expensive workers’ comp states

Workers’ compensation, as described by Cornell University, is made of “laws [that] protect people who are injured on the job. They are designed to ensure that employees who are injured or disabled on the job are provided with fixed monetary awards, eliminating the need for litigation.” Workers’ comp is how we protect employees. It is a vital part of our state’s framework and helps injured people seek justice. But some people are attacking it, according to The Stand.

According to the latest state-by-state comparison on national business competitive assessments, Washington is among the least expensive states for actual employer costs paid for workers’ compensation.

Chief Actuary for the Washington State Department of Labor and Industries (L&I), only ten state have less expensive coverage to employers:

Strangely, (or perhaps not so strangely) the Washington Roundtable, which represents big business CEOs in the state, tried to declare that “Washington is the most expensive state in the nation for workers’ compensation benefits paid per covered worker.” This was partially in response to L&I’s proposal to increase the average workers’ comp rate by 1.8 percent to keep up with wages and to help rebuild the system’s reserves.

As it would turn out, the Roundtable wasn’t referring to what employers pay, but to the benefits provided to injured workers. That is, they aren’t complaining about the cost, but our high level of care for injured and disabled workers.

They point to reports from the Oregon Department of Consumer and Business Services and the National Academy for Social Insurance, picking out certain statistics, ignoring the rest, and not noticing that these studies fail to take into account several factors. Oregon’s study, for example, misses additional costs such as the Stay at Work program and Supplemental Pension Fund, retrospective refunds, and that Washington is the only state in the nation where workers pay a portion of the cost.

Big businesses are trying to misuse this data to encourage policy makers and legislators to cut benefits to workers. This is simply another case of putting profits over people.

Wage Theft Update

Salon earlier this week explained some of the ways wage theft affects so many workers. Some of those most affected include:

Undocumented immigrants

Many undocumented immigrant day labors survive by standing on street corners and selling their labor to drive-by construction and landscaping contractors. Unfortunately, far too many contractors refuse to pay after the work is done… If they report the theft, they run the risk of being reported to U.S. Immigrations and Customs Enforcement. Instead, most just go back to their corners hoping to find more scrupulous contractors.

Fast food workers

Next come the fast-food workers who work overtime, but rarely see the time-and-a-half to which they are entitled by law. Franchise managers at McDonald, Burger King, Pizza Hut, Wendy’s and the like steal those hours by fiddling with the logs.

Factory workers

Move up the food chain a bit and you’ll find the Amazon worker who must line up for 25 minutes to pass through “egress security”—screeners to stop pilfering. Amazon says this is not “integral and indispensible” to the job, and therefore, it is lawful not to pay for the time. The Supreme Court will soon decide whether efforts to halt merchandise theft will become legalized wage theft.

The Economics Policy Institute reminds us that workers are deprived of approximately $50 billion in wages each year. Compare that to a total of $13.6 billion in stolen goods/cars/etc. Fifty billion could pay for over 1.2 million jobs that pay $20 an hour.

The city of Seattle, after their historic wage increase, is working to institute protections against rising wage theft. The mayor has proposed an Office of Labor Standards that would employ minimum-wage investigators to protect Seattle workers from the wage theft crisis. The Seattle P-I has the story. 

Proposition 46 in California highlights barriers to justice around our county, although luckily not as much in Washington

Repost from The CMG Voice.

Posted Monday, October 6, 2014 by Tyler Goldberg-Hoss.

Soon Californians will vote on whether to change their state’s medical malpractice law in a key way – increasing the cap on verdicts for so called “non-economic” damages. Analyzing the ballot measure’s effects is useful when understanding what the laws are in Washington.

Currently in California, as it has been for years, there is a cap on the amount of damages awarded to a patient victim. If a jury finds that a health care provider was negligent and caused harm, the victim can be compensated for all of his or her economic damages – that is, lost past and future wages, medical expenses incurred and with reasonable probability to be incurred in the future, and the like. However, a victim can only recover $250,000 for non-economic damages – pain, suffering, loss of enjoyment of life, disfigurement, disability, and so on.

Yes on 46

Now, Proposition 46 includes a provision to increase that cap on non-economic damages to account for inflation. If passed, the cap would be $1.1 million. An interesting read on the issue and also on the other provisions in the bill (related to drug testing doctors) is found here:

California Proposition 46, Medical Malpractice Lawsuits Cap and Drug Testing of Doctors (2014)

In Washington, victims of medical malpractice are fortunate. There are no caps on damages that may be allowed for injuries due to the negligence of health care providers. So a jury is allowed to decide for themselves what the appropriate measure of damages is to compensate an injured victim.

This highlights the fact that across the nation, each state has different laws that apply to lawsuits involving medical malpractice. Some states, such as California, place caps on the amount of damages that may be allowed by a jury. Other states have different time limits for how long a victim has to file a lawsuit before he or she is barred from doing so (the statute of limitations). Others restrict the type of expert witness needed to support a claim for malpractice (must practice in the state, or must have the same training as the defendant doctor).

Some states force victims to file “Certificates of Merit” along with their complaint for damages, forcing plaintiffs to prove expert support for their claim prior to filing a lawsuit. Others have a notice requirement, forcing victims to give potential defendants notice for some period of time prior to filing a lawsuit. Still others have mandatory screening panels claimants must face prior to a jury trial.

In Washington, some of the above requirements existed at one time. However, over the course of the last few years, many of those (including the Certificate of Merit and Notice requirements) have been struck down as unconstitutional. Patient victims here have the Plaintiff Trial Lawyer’s Bar (Washington State Association for Justice) to thank for working with its membership to use the court system to strike down many of these restrictions as unconstitutional.

So patients here are fortunate relative to many other states. And, contrary to proponents of such restrictions on a patient’s ability to recover for harm caused by health care providers, malpractice insurance for doctors has not risen, and doctors have not left our state in droves.

From the archives

In 2007, WSAJ (then WSTLA) fought for Referendum 67, the Insurance Fair Conduct Act. The measure passed with 57% voter support on Election Day, November 6. The measure was a referendum on ESSB 5726. As Larry Shannon explained in a Trial News article at the time, the IFCA “requires the insurance industry to be fair and pay legitimate claims in a reasonable and timely manner.” It covers policyholders whose insurance company unreasonably denied their claim for coverage or payment of benefits, or that violated particular regulations governing claims-settlement practices.

Need more information? Visit the website for the Washington State Office of the Insurance Commissioner.

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