PREVIOUS RULINGS ON PUNITIVE DAMAGES

Latest Supreme Court decisions curtailing punitive damages awards:

Philip Morris USA v. Williams (2007) -- The court threw out a $79.5 million award to a smoker's widow, saying jurors were not properly limited in their consideration of harm caused to people who were not part of the lawsuit.

State Farm Mutual Auto Insurance v. Campbell (2003) -- Any punitive damages award more than 10 times the actual damages for an injury is presumed excessive, and juries may not consider out-of-state wrongdoing when weighing a company's actions. The court tossed out a $145 million award against State Farm for acting in bad faith by not settling claims against a policyholder involved in a fatal accident.

BMW v. Gore (1996) -- Punitive damages may not be "grossly out of proportion to the severity of the offense," the court said as it invalidated a $2 million award to the owner of a BMW for a flawed paint job.

Honda Motor Co. v. Oberg (1994) -- States may not prohibit judges from reviewing and reducing juries' punitive damages awards. The court struck down an Oregon law that gave juries the final say on such awards.

(c) USA TODAY, 2008

BUFFETT'S MUNI MOVE: NOTHING RISKED, SOMETHING GAINED

Warren Buffett's offer to stand behind municipal bond payments is like offering auto insurance to a driver with a perfect record. Municipal bonds, or munis, are one of largest and safest corners of the bond market. There are about $1.7 trillion worth of such bonds outstanding, says the Securities Industry and Financial Markets Association. Munis are sold mainly by state and local governments to pay for projects such as roads, schools and hospitals. Munis are popular with high-income investors because the payments are often tax-exempt. But they're also relatively safe. If a city gets into financial trouble, it can charge higher taxes, close libraries or parks. There have been some high-profile muni bond debacles, including Orange County in the 1990s. Still, only about one muni bond a year, on average, has gone into default over the past 40 years, says Bill Larkin, a bond investor at Cabot Money Management. Less than 0.25% of muni bonds historically go into default, says Michael Decker at SIFMA. There are 2 million munis outstanding. Excluding riskier muni bonds issued for special purposes in partnership with outside companies, such as some toll road projects, the muni default rate is essentially zero, Decker says. Compare that with the 35,000 business bankruptcy filings each year on average this decade, according to BankruptcyData.com. Buffett may not be taking a giant risk in offering insurance to the three main insurers that stand behind muni payments. Even so, the offer exposes vulnerabilities in the muni market, including: •Stress on some lower-rated munis. Thanks to their relative safety and preferred tax status, cities and states can borrow inexpensively: Muni bonds are yielding roughly 3.4% for a bond maturing in 10 years, S&P says. That's even cheaper than the 3.78% 10-year Treasury yield. But where there is some strain is among munis issued by government-backed entities with low credit ratings, Larkin says. Most professional investors will only buy these m unis if they are guaranteed by insurers like MBIA, Ambac Financial and Financial Guaranty Insurance. That guarantee may give a lower-rated muni a AA or higher rating. But the insurers also guaranteed some mortgage loans. If the insurers are hit with an avalanche of mortgage claims, investors worry there may not be enough left to back the insured munis. Consider a San Jose, Calif., redevelopment muni that matures in 2028, Larkin says. The muni is yielding 5.04%, despite being insured, because investors doubt the insurance has any value. •Potential for a ripple effect. If the insurers backing the riskier munis lose their top credit ratings, the riskier munis themselves will lose their high ratings, too. That could cause investors who can only own highly rated munis to sell some of the riskier munis, setting off a selling spree. "My biggest concern is with the insured muni bonds," says Bill Hornbarger, bond strategist at A.G. Edwards. •Exposure to recession. States and cities may come un der pressure as the economy slows. At least 20 states are facing spending cutbacks, says Allen Sinai of Decision Economics. Local governments that counted on rising tax receipts due to rising property values now have budget shortfalls, says Dean Baker of the Center for Economic and Policy Research. Having Buffett ready to cover losses will reassure investors there is a safety net in the market, he says. That would be critical if the slowdown causes more cities to struggle. "It's hard to believe we're not going to have more (muni defaults) than that would normally be the case," Baker says.

TEXT OF INFO BOX BEGINS HERE

Municipal bonds by the numbers

$1.7 trillion

value owned by investors

$11 billion

daily trading volume

5.1 million

households that own them directly or indirectly

50,000

state and local governments that sell them

Source: The Securities Industry and Financial Markets Association

(c) USA TODAY, 2008

DEBATE REVS UP OVER HIGHER AUTO INSURANCE IN LOUISIANA

Gov. Kathleen Babineaux Blanco must soon decide whether to veto a bill raising Louisiana's minimum liability auto insurance coverage — and driver premiums — or sign it into law, which insurance industry experts say would increase the number of uninsured motorists. Senate Bill 223 by State Sen. Mike Michot, R-Lafayette, raises the minimum liability auto insurance policy from 10-20-10 levels ($10,000 for bodily injury for one person, $20,000 for all injuries and $10,000 for property damage) to 25-50-25. Blanco has until July 18 to decide. Blanco's special counsel Kimberly Robinson said the governor has not decided whether to sign the bill. "She is considering the requests, the legislation and the impact on vehicle owners," Robinson said. Proponents say the minimum liability increase is long overdue as it has not been adjusted since 1983 and the cost of replacing automobiles has significantly increased. Opponents, including a national insurance industry trade group, say more than doubling the minimum coverage levels will add another exorbitant expense to post-Katrina budgets and force many drivers who can't afford the increase to forgo insurance. "We think it's a pretty dramatic increase and it's going to ultimately raise rates on about 40 percent of the drivers in the state," said Jeff Brewer, spokesman for the Property Casualty Insurers Association of America. PCIAA represents more than 1,000 companies writing 41 percent of all U.S. automobile, homeowners, business and workers compensation insurance. The association wants Blanco to veto the bill. The National Association of Insurance Commissioners estimates the state had 350,000 uninsured drivers and 2.5 million insured drivers in 2004. "The cost increase could be $100 to $200 per (six-month policy) for drivers," Brewer said. "We're concerned that kind of increase, particularly at this time, could result in a lot of people being in a position where they drop their insurance." "There is an insurance crisis right now and we're hurting," said state Sen. Francis Heitmeier, D-Algiers, who voted against the bill. "With all that poor, working-class folks are going through right now, this wasn't the proper timing. We need to give people time to put money away. The people who can least afford it will be hurt the most." Increase ‘long overdue' Supporters acknowledge poor people will be significantly affected by the increase but say the hike is necessary to cover accidents where liable drivers have insufficient coverage. "The time is long overdue for an increase," said Michot. "More and more people are being left short as a result of this (minimum). It is meant to bring a little more fairness with claims as a result. Uninsured motorists ... are a huge problem but it's unrelated. Enforcement needs to be stepped up." "The value of automobiles has substantially increased since (the state) established that law," said state Sen. Tom Schedler, R-Mandeville. "I felt it was time we looked at it and addressed it." Brewer said most auto claims don't top $10,000. "If you make the assumption that every accident you end up with a totaled vehicle, then the cost of vehicles increasing does enter into it. But the fact of the matter is the vast majority of auto accidents don't rise above the $10,000 limit, which is what it was," Brewer said. Michot said the timing of the increase can't be helped. "When is the timing ever good?" he asked. Michot and Schedler also cite Louisiana as "one of the states with the lowest minimum requirement." If so, Louisiana is far from alone. Insurance.com, an independent agency based in Ohio, names Louisiana as one of 29 states at or below the $10,000 minimum requirement, including four with a $5,000 minimum. Premium increases questioned Supporters claim premiums will not increase significantly. "I ran my own policy limits with State Farm and (the increase) would only be $5 a month," Michot said. "Between $40 and $50 was the number I heard," said Schedler. PCIAA analyst Diana Lee questions those estimated increases. "It would be really hard to see how you would only pay $5 more when you're getting twice the coverage," said Lee. Lee analyzed the average cost of the current minimum liability policy, which is roughly $400 for six months. "Add on the 10-20 uninsured motorists and the total is $440," said Lee. "If we were going to 25-50-25, the new base rate would be $470 and the uninsured motorist rate would be $75 ... for a total of $545," she said. Schedler said if premium increases reach the $200 range, "maybe I would have felt differently." Brewer said consumers have the right to increase their under-insured motorist protection if concerned about being left in the lurch. "Most accidents are going to be covered even with the minimum limits," he said. "If you want to protect yourself more, you always have that option." Blanco conferred with Insurance Commissioner Jim Donelon before deciding what to do. Donelon introduced a similar bill in the Legislature six years ago. "No doubt the burden of higher costs will fall on the poorest drivers who purchase the minimum (policy)," said Donelon. "The insurers ... are unanimously opposed to it, the reasoning being it will drive people out of the market. This will help people protect themselves from the negligent actions (of drivers) even though that person is poor. This helps make their costs cheaper." Donelon was scheduled to report to the governor last Friday.

by Jaime Guillet

MASSACHUSETTS HOUSE BILLS WOULD PROVIDE ‘NON-TORT' AUTO INSURANCE ALTERNATIVE

While attention is focused on whether Massachusetts will change the way it regulates auto insurance, a battle over other issues related to the industry may be brewing. Bills that could significantly shape the future of auto tort claims have been reported favorably by the House Committee on Financial Services One bill, House 914, would allow consumers to opt out of the current tort system in exchange for what the bill's sponsor calls a "full no-fault option." Rep. William N. Brownsberger, D-Belmont, says the legislation would "give consumers the choice to have a streamlined recovery, at a lower cost, in return for giving up the right to sue for pain and suffering. They could still [recover] the actual costs of the accident, but they'd get out of the litigation business."

In exchange for giving up their right to sue, consumers could benefit from lower premiums, Brownsberger said "The idea is that people who are not a part of [the tort system] wouldn't have to pay for it," explained Brownsberger, who is a lawyer. But Michael C. Najjar, a Lowell attorney who testified against the bill on behalf of the Massachusetts Academy of Trial Attorneys, said there is no evidence that the bill would save consumers money . Najjar pointed to recent decreases in the state's auto insurance rates and noted that premiums in New Jersey skyrocketed when a similar "choice" bill was made law in that state. He also warned that consumers would sign up for the lower premiums without truly understanding the rights they were giving up, "People will just buy the cheapest insurance, and no one will tell them they can't collect," he said. Asked how such a bill would impact trial attorneys, Najjar said it would probably "decrease the number of personal-injury claims where we're taking a fee out for pain and suffering."

Another bill reported favorably, House 915, would discourage motorists from driving uninsured by limiting their ability to collect pain-and-suffering damages, even if the other party in an accident is at fault.

"This targets a standing problem" said Brownsberger. But Najjar said uninsured drivers already face significant criminal penalties and that the number of uninsured drivers has been shrinking in recent yearsl. A third bill, House 916, was also reported favorably and would create a commission to study increased auto insurance competition. Brownsberger predicted that the bill will be more of an initial priority to legislative leaders than the more dramatic concept of allowing consumers to opt out of the tort system. "You've got the insurance commissioner expressing serious interest in competition. That's where the first move would be. Once people get used to the idea of having a choice, they would start to inquire more about how their insurance works, and you'll get a variety of choices," said Brownsberger.

Noah Schaffer

COMMENTARY: FIRST-SESSION KIBITZING, AND WHY COURTS SHOULD BE LIKE THE RMV

Another installment in my quest to visit 100 Massachusetts courthouses before the year is out. "I hope you enjoyed your dinner last night," the judge says to a jury in Concord District Court. "Did you stay up to watch the Red Sox last night? It went 11 innings before they blew it." The jury sits in a single row of chairs framed by a thin wooden railing and waits for the trial to resume. This courtroom provides a terrific perch from which to observe a trial. It's got a layout with elements of theater-in-the-round. The attorneys do their work in a sunken circle so that observers look down on all the action. Waves of tall brick walls spiral throughout this building, tying together courtrooms and making the building a quaint place to be. The attorneys in this case are arguing an auto-insurance matter. The claimants want cash for their stolen vehicle; the insurance company is suggesting that something fishy is going on. "You can't get to the bottom of things unless people give you honest information," says the lawyer for the insurance company in his closing argument. "And they have not provided it." The lawyer for the claimants then has his turn. "My clients have blemishes, but we all have blemishes," says the attorney. "How many molehills does it take to make a mountain? The emperor has no clothes. ... Or does he have clothes?" I'm confused, but then again, I tuned in late. In Newton District Court, there is an intercom announcement to alert people to the fact that the first session is beginning "in three minutes." Only a few courts seem to use the intercom system, and I wonder why. (This seems to come under the "makes-too-much-sense" category.) Is everyone aware that the Registry of Motor Vehicles has an electronic update-board system to alert "customers" as to when they will be helped? Is everyone aware you can monitor the wait times on the Internet? I mean, how terrific is that? Do you think maybe the courts have a bit of catching up to do? For all the earnest work that goes on in courts, let's face it: We are a system of primitive note-passing and nodding and whispering and searching for people who may or may not be in the building. Any of this sound familiar? Is attorney Parker here? Does anyone know? Put it on for second call. You haven't signed a waiver of counsel? Do that, then wait on a bench over there and the District Attorney's Office will find you. Victor Sanchez? Victor Sanchez? Victor Sanchez? Cripes. The Newton court provides another comfortable place for court business. The décor is colorful, with blue, brown and beige elements mixed with wood paneling in the main courtroom. In the row of seats in front of me, there are several seniors, and they are chatting in hushed tones. They seem to have no connection to any specific case and don't seem to be in a hurry to get anywhere. I mean, they're just sort of kibitzing. I start to wonder if they are simply spectators, fans of the court. There's a woman in custody who is here to answer charges of operating without a license and failure to wear a seatbelt. So, I'm umm wondering why she is in shackles. She appears behind the glass-windowed dock, looking weathered in something that appears to be a state-issued kimono kind of thing. It soon becomes clear. "Are you aware that the Taunton court is looking for you?" asks Judge Margaret A. Zaleski. "Yes," she says. "And the Fall River court?" the judge asks. "Yes," she says faintly. "How old are you?" asks the judge. I can't hear the answer, but man, she's young. "And you have three kids?" the judge laments. "I'm going to send you to Taunton to take care of that case," Zaleski says. The woman sinks in her seat and starts to cry. Later, I have the chance to sit down with Clerk-Magistrate Henry Shultz, who tells me that the Newton court is a "small but intellectual court." So, are those seniors sitting in the gallery really just there to watch all day? "Probably not," laughs Shultz. "But we do have our regulars here, a big senior-citizen population, retired people. We have to call for 'The Ride' a lot." The city's well-heeled population is reflected here in the court, says Shultz. "In Lowell, a small-claims dispute might be a dispute over a grocery bill," he explains. "In Newton, it's more likely a dispute over the custom-made drapes." Shultz has been at this for 37 years. "Every day is exciting," he says, his ear-to-ear smile appearing after every sentence. "I see the grandchildren of police officers I used to work with reporting for work. Sometimes I see the grandchildren of defendants as defendants." "Nothing is more important than the family," says Shultz, as if all of the court's business somehow comes down to that. "Nothing."

IN BRIEF: IN MICHIGAN IF YOU WERE TO ALLOW MOTORISTS ...

In Michigan if you were to allow motorists to choose less medical coverage on their auto insurance , they could save 10%. Also, they'd spend 90% more when they get hurt in a car. [ Detroit News ]

http://feeds.gawker.com/~r/jalopnik/full/~3/134701963/-279413.php

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By Ray Wert

COMMENTARY: SO MUCH FOR PROGRESSIVE INSURANCE COMPANIES

Progressive Direct issued a news release earlier this month touting the fact that it was lowering auto insurance rates in Colorado for the seventh time since 2003. Of course not every Colorado driver will see a decrease in their premiums — including me. Imagine my surprise when after reading the news release I realized that the company had increased my premium by more than $100 from what it was six months ago. I haven't had any wrecks. I haven't made any claims. I haven't received any moving violations. So why the out-of-the-blue rate increase? I called Progressive's customer service number to find out. The first person I talked with was very pleasant, but readily admitted that he couldn't answer my question. The woman I spoke with next responded to my questions, but didn't really have any good answers (at least in my opinion). My premium had increased, I was told, because my credit report was showing that in 2004 I was more than 30 days late (one time) in making a payment to some company that I've never even heard of. Heck, even if I had heard of it, I can't remember whether I was late paying a bill three years ago. My revolving credit balance also was "too high" on the day that Progressive decided to do the calculation and jack up my rate. When I mentioned my FICO score, I was told that it didn't matter because Progressive doesn't care about it when setting (jacking up) premiums. I was told that because of my 3-year-old late payment and my "too high" revolving credit balance (which often fluctuates depending on whether I'm waiting for an expense reimbursement check from work) I was a greater risk for missing a payment or making a claim and thus deserved a higher premium. I asked whether I had ever been late making a payment to Progressive (who I've had insurance with since 2004). The answer was no. I asked if I had had any claims or any moving violations. Again, the answer was no. I asked why my premium wasn't based on actual empirical data and my history with the company instead of on some screwed up algorithm. The answer was that's the way Progressive does business. Well, that's not the way that the right reverend's No. 2 son does business. And to say that I was overflowing with righteous indignation at that point would be an understatement. So, I asked to talk with someone who could actually resolve my problem and was told that there was nothing I could do, that I would have to live with the consequences of my less-than-stellar creditworthiness and that the company had every right to lump me into any category it wanted. To be really honest, I've never much liked insurance companies. They seem to love taking in premiums, but you'd better never ask for any of that money back in the form of a claim or they scream bloody murder, cancel your policy or cry that they aren't making enough profit. I still can't figure out how I suddenly became such an increased risk. But I am hopeful that there's another insurance company out there that will happily take my money every month without feeling the need to gouge me because some algorithm tells it to. Good deeds unrewarded Some of the latest news from Office Team was titled, "Don't let good deeds go unrewarded" (somehow I'm thinking Progressive is probably one of these companies, but maybe they do pass out bonuses and atta-boys to employers who stringently follow their silly edicts and run off paying customers). The gist of the OT survey was that more than a third (35 percent) of professionals polled said that businesses are ineffective at rewarding their employees' strong performance and that 30 percent of managers agreed. Diane Domeyer, executive director of Office Team said that businesses need to make retention a priority. "Rewarding employees for their accomplishments enhances productivity, reinforces positive behavior and builds staff morale and loyalty," she said. "Firms that fail to reward great work risk losing employees to businesses that do invest in recognition programs." And those rewards don't necessarily have to be monetary. Here a few other meaningful ways that OT says you can recognize good work: *Say thanks. Don't underestimate the power of saying "thank you," either in writing or in person. *Celebrate achievements. Honor employees' accomplishments in front of their peers. Staff events recognizing individuals or groups can enhance morale while highlighting exemplary behavior. *Give the gift of time. Reward staff accomplishments with extra days off or extended lunch breaks. Time away from the office allows staff members to recharge after major projects. *Provide plum assignments. Give strong performers the option of working on desirable projects. Doing so improves their motivation and enthusiasm for their work and encourages others to excel in their positions. Of course not having to jack up the employee portion of health care premiums also might be nice, but I'd be foolish to think that I was the only victim of the out-of-control insurance industry.

(c) 2007 Dolan Media