Trial bar tries to end ‘forced arbitration’

The trial bar is hoping to build on gains made under the first year of the Obama administration by pushing legislation that would allow injured workers and consumers to sue instead of having their cases handled through arbitration.

Ending so-called forced arbitration has been a priority for the American Association for Justice (AAJ) for years, specifically in instances involving nursing homes. Contracts that residents sign before admission often prevent them or their families from suing the nursing homes for poor care.

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Other businesses have included arbitration clauses in contracts to minimize the risks of large jury trial awards or the costs of fighting claims in court.

Business groups, such as the U.S. Chamber of Commerce, have argued that arbitration is a lower-cost and often speedier option than jury trials but a process that still protects the rights of injured parties.

The AAJ, formally the Association of Trial Lawyers of America, has had limited success in Congress limiting the practice. The defense-spending bill included language to effectively prevent defense contractors from including arbitration clauses in contracts that relate to allegations of sexual assault, harassment or other forms of discrimination.

The attorney group, which spent more than $3.3 million on lobbying during the first nine months of 2009, is lobbying Congress to take up the Arbitration Fairness Act and the Nursing Home Arbitration Act.

The “fairness” act requires that workers or consumers determine whether they want to sue or use arbitration after a dispute has arisen. The nursing home arbitration act would eliminate forced arbitration clauses in nursing home contracts.

“We are not against arbitration as an alternative. We are against forced arbitration,” said Linda Lipsen, AAJ’s vice president for public affairs.

“Arbitration continues to be the fairest, fastest and more efficient way for all parties involved in a dispute to get it resolved,” said Matt Webb, senior vice president for legal reform policy at the Chamber.

The arbitration fight is part of a legislative agenda that has grown more aggressive since Democrats took over Congress in 2006. Previously, the trial bar largely had to play defense, including fighting efforts to limit jury awards.

One of its chief targets since President Barack Obama, himself a lawyer, took office has been to reverse the George W. Bush administration practice of adding so-called federal pre-emptions to protect companies against conflicting state consumer laws.

In a briefing to reporters, AAJ President Anthony Tarricone noted a recent move by the National Highway Traffic Safety Administration to remove pre-emption language from a rule relating to car seat regulations as a hopeful sign.

A bigger win for the trial bar relates to something that hasn’t happened. Democrats did not include substantive restrictions on medical malpractice awards, although the Congressional Budget Office found limits would save as much as $54 billion over a decade.

The Senate healthcare reform bill instead allows states to develop pilot projects as alternatives to the tort system. The House bill also tries to limit lower medical malpractice insurance costs in ways that don’t restrict jury awards.

Still, Tarricone said language in the healthcare reform bills could allow for “mischief making” that may eventually limit access to courts.

“The rights of individual patients should not be taken away,” he said.

In addition to arbitration bills, AAJ has backed the Medical Device Safety Act. That legislation is intended to reverse the effect of a Supreme Court decision that granted medical device makers immunity from liability if the Food and Drug Administration has approved their products.