Minorities Rarely Winners in Class-Action Lawsuits, by Kevin Martin

A New Visions Commentary paper published September 2000 by The National Center
for Public Policy Research, 501 Capitol Ct., N.E., Washington, DC 20002, 202/543-4110, Fax 202-543-5975, E-Mail [email protected], Web
http://www.nationalcenter.org. Reprints permitted provided source
is credited.

Personal injury lawyers have long touted their work as noble and altruistic – saving poor consumers, union workers and minorities from the unbridled greed of Corporate America.

The reality, unfortunately, is far different. Such lawyers heavily recruit class-action plaintiffs in minority areas with promises of a big-bucks payoff. When the awards come in, however, the lawyers walk away with millions of dollars, while minority plaintiffs average less than $200 for their cameo roles in class actions.

Indeed, class action lawsuits are one of the biggest scams ever perpetrated on African-American communities. One wonders why this burgeoning scandal has attracted only scant attention in the mainstream media. It may well be that to ask that question is to answer it. In the meantime, insurance premiums and health-care costs skyrocket, the price of basic consumer goods soars and well-paying jobs depart for cheap-labor lands. The impact of the latter is especially negative for black Americans: we’re all familiar with the old saying, "last hired, first fired."

Increasingly, class action lawsuits seem less about protecting innocent victims and more about padding personal injury lawyers’ bank accounts. Real unbridled greed resides with these lawyers, whose ranks, we might add, include disproportionately few people of color.

This clearly is the case with the class-action lawsuits filed against health maintenance organizations, or HMOs. A handful of lawyers – masterminded by Mississippi’s notorious Dickie Scruggs (the brother-in-law of Republican Senator Trent Lott of Mississippi), is launching a barrage of lawsuits against health-care providers nationwide.

Their clearly stated intention: drive up the fees HMOs charge patients so the HMOs are capable of paying off huge damage awards to the lawyers and their clients.

Whatever gripes we have with our HMOs, one thing is clear – lawsuits that drive up patient premiums won’t fix anything. More likely, they’ll force HMOs out of business and deprive poor neighborhoods – already suffering doctor shortages – of any medical care.

This is an issue of critical importance to the African-American community. Right now, roughly 40% of America’s African-American population of more than 35 million people – some 14 million – are without health insurance, according to U.S. Census Bureau statistics. That’s a horrific situation, and more lawsuits are only going to make it worse.

In Illinois, the worst state, more than 1 million African-Americans – nearly 50% of the population – are without health care, and the number of people without this vital protection is increasing by 9,000 each month.

Minority communities and low-income families are the most vulnerable, and they will bear the disproportionate risk of losing health coverage as a result of the growing number of class action lawsuits against health plans.

The price employers and consumers pay for health care will increase dramatically as HMOs are forced to spend millions of dollars just to defend themselves against class-action. If they lose, the settlements could run to billions – sending premiums into orbit.

That’s bad news for consumers. According to the Journal of Health Economics, every 10% increase in the cost of insurance creates a three to four percent decrease in the number of people who can afford to purchase coverage.

Ask owners of African-American businesses and they’ll tell you that one of their greatest concerns is maintaining their ability to provide health care insurance for their employees and their families. Every increase in the cost of providing health care forces small businesses to tighten budgets in other ways.

It might mean that a decision is made not to hire more people or give well-earned pay increases. Worse yet, it might cause the minority small business owner to cut health care benefits for employees altogether.

It’s difficult enough for small businesses to survive in today’s environment of legal terrorism. A few out-of-control lawyers already have targeted small businesses with a wave of questionable lawsuits alleging violations of the Americans with Disabilities Act. In addition, there’s been a large increase in the number of questionable "slip and fall" lawsuits.

Juries in Illinois and many other states, unfortunately, are far too willing to reward claims that border on the bogus, if not the fraudulent.

In a booming, low-inflation economy like ours, companies can’t pass those damage awards on to consumers; instead, they’re forced to take the money out of current budgets. When this happens, all too often, health care coverage is one of the first items pared back.

Americans clearly have every reason to focus their efforts on providing coverage to the uninsured, while thwarting the abusive lawsuits that jeopardize the coverage of those already insured.

We should put the burden of reforming health care in Congress where it belongs, rather than tack it on lawsuits that will only make the nation’s health care problems worse.

The result is likely to be much better than the scenario scripted by personal injury lawyers. That’s a worst-case scenario and then some – one that leads to dizzying new rounds of higher premiums, fewer employers willing to provide coverage, and a steadily escalated growth in the ranks of the uninsured and, eventually, a health care system tottering on the edge of bankruptcy.

That’s bad news for everyone, and it’s especially bad news for America’s 35 million African-Americans!

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