Courtesy of gobblr.com

Wanna know a secret?  I’m Yelp Elite.  In fact, I’ve been so since 2006.  (Be jealous.)  I stumbled upon the website one day while trying to find some new restaurants and quickly learned that it’s not only a great reference point, but seriously amusing.   Since then, Yelp slowly became a fun hobby of mine – posting reviews and pictures of hotels, restaurants, spas, etc.  It’s almost therapeutic for me, in some way.  So, imagine my shock when I heard that my beloved website was served with a lawsuit, alleging *gasp* extortion.

Extortion, eh?  ”The crime of obtaining money or some other thing of value by the abuse of one’s office or authority.“  Whenever I hear that word, the mob and politicians come to mind — or, even the David Letterman story.  But, Yelp certainly does NOT come to mind.

So what’s the deal with the lawsuit?  Well, Cats and Dogs Animal Hospital in Long Beach is accusing Yelp employees of using high-pressure sales tactics to entice business owners to pay Yelp for an advertising contract.  According to TechCrunch, a “sales representatives [allegedly] repeatedly contacted the hospital demanding payments of roughly $300 per month in exchange for hiding or deleting the review.” When Cats and Dogs declined to pay the price, the hospital claims that a (potentially fraudulent) negative review popped up the next day, and Yelp refused to remove it.

If Yelp actually is calling businesses and offering to remove negative comments at a cost, then it’s safe to say that that would be considered an unethical business practice. In fact, there are other internet businesses out there, like Rip-Off Report, that claim to provide consumers with an honest forum to praise or vent about businesses, but apparently apart of their business model allows companies to “pay away” negative comments.

Since Yelp’s tag line is “Real People, Real Reviews” and the idea is to encourage users to submit realistic reviews about businesses, Cats and Dogs request to remove its negative reviews, in an effort to make it appear that there have never been any complaints, may seem suspicious to some. As an avid Yelp user that’s written my fair share of negative reviews, those critiques from consumers can be legitimate.  Example here. Most of the time reviewers are not trying to be malicious; instead, they are letting other potential customers know about their experience and what to expect.

In response, Yelp’s CEO, Jeremy Stoppleman, issued this statement, calling the allegations “false and easily refuted”.  Stoppleman also implied that since the lawsuit was conjured up by law firms, they just might be interested in claiming a portion of the huge funding that Yelp recently received.    He also points out here that a pretty good segregation of duties exists regarding Yelp’s Account Execs”

“We take the church/state separation thing seriously. Sales representatives (also known as Account Executives or “AEs”) cannot write reviews on Yelp. This is clearly communicated internally, and employees within the sales department are trained and re-trained that any deviation from these high standards would result in their termination.”

Additionally, Yelp’s business model is much like the business model of Facebook, in that it generates a large portion of its revenue based on the amount of ads/ad contracts sold.  Even though the majority of their revenue comes from advertisement on the site, it would seem to be both illegal and unethical for them to exert resources to devise a plan of internally creating negative business reviews to extort businesses for the removal of those reviews.

What’s your take on the lawsuit?  Does it seem like a legitimate extortion scheme at its finest?  Or, is the lawsuit merely a way for businesses to blame Yelp for all their negative reviews?

Posted by Melanie on March 11, 2010 at XYZ TIME.

Property of ABC News

Last Tuesday, the Supreme Court heard the McDonald v Chicago case, in which the plaintiffs argued to lift the handgun ban the city of Chicago placed on its residents back in 1982. This case brings to light two countering sides to the debate – those that believe the handgun ban is necessary to further combat Chicago’s rampant violence and those that believe that owning a handgun within the city limits is their right as American citizens. The debate also calls into question the Second Amendment, which protects the right to keep and bear arms, and specifically brings to light the issue of whether or not state and local governments have the right to establish bans when the federal government doesn’t include such restrictions.

The plaintiffs in the McDonald v Chicago case come from a diversity of backgrounds and include Otis McDonald, an older, retired African-American man, Adam Orlov, a former police officer and current businessman, and David and Colleen Lawson, a mixed-race couple. Some believe that the balance of the plaintiffs’ diversity was intended to help the public relation’s image of the case, which may or may not be the case (especially given that a website was created on behalf of their case, which shows a concerted effort to promote the case and its plaintiffs).

One attorney handling the case, Alan Gura, is no stranger to the gun control debate as he fought on behalf of Washington D.C. residents to lift its handgun ban in 2007. The District of Columbia v. Heller case was the first to hold that the Second Amendment protects an individual’s right to possess firearms for private use. Of course, because the ruling was determined with regards to the District of Columbia, a federal enclave, the decision did not extend to local and state governments. If the Supreme Court rules in favor of the Chicago residents/plaintiffs in the McDonald v. Chicago case, then this ruling has larger implications for other local and state governments to overturn restrictive hand-gun bans.

During the D.C. case, Gura, along with attorneys Robert A. Levy (who funded the case) and Clark M. Neily III, devised their strategy from civil rights attorney Thurgood Marshall’s approach of creating a diverse panel of plaintiffs to fight specific laws and restrictions that racially segregated education. The legal approach of including plaintiffs of diverse backgrounds is intended to show how the gun control restriction can and does affect a variety of Chicago residents who feel that the current ban violates their right to protect themselves and their home.

According to the Chicago Tribune, the justices are poised to overturn the Chicago gun ban:

Chief Justice John G. Roberts Jr. called it an “extremely important” right in the Constitution. Justices Antonin Scalia and Samuel A. Alito Jr. echoed the theme that the court had endorsed an individual, nationwide right in their decision two years ago. The fifth member of the majority, Justice Clarence Thomas, did not comment during the argument, but he has been a steady advocate of the Second Amendment.

If the Supreme Court’s decision, which should be delivered in several months, is in favor of the plaintiffs and strikes down Chicago’s hand-gun ban, then the ruling could challenge the constitutionality of other local or state gun regulations.  The decision would, of course, determine just how far the Justices’ guidance could extend — meaning if it would only include an allowance for hand-guns at home, or if it would also allow carrying hand-guns in public.

It is interesting that residents of Chicago, a city known for its gang violence, are calling to lift gun ban regulations, as one would imagine the regulations were put in place to deter the widespread usage of gun violence in the city. However, given that all four of the plaintiffs in the McDonald v Chicago court case argue for the right to bear/keep arms to further protect themselves, their family, and their home, one must wonder just how safe and protected Chicago residents feel with the current ban. The plaintiffs argument suggests that law abiding citizens are left essentially defenseless, with the Chicago police as their only protection against the ills of the city; whereas, the guns end up in the hands of deviants with intent to commit crimes.

Does this case highlight a larger breakdown of a city’s justice system? Could the plaintiffs’ concerns be a larger commentary about how criminals manage to stay armed and dangerous in Chicago and how law-abiding citizens feel near defenseless with only the reactive actions of the police as protection? If the laws and police are not able to keep the peace, then does that mean that a city has failed its residents?

Posted by Adrienne on March 10, 2010 at 2:35 pm.

Courtsey of: kopiwrite.com

Does this sound familiar to you? You have a 10 page paper due at 8am. It’s currently 4:35am…and you’re nowhere close to being finished. To make matters worse, you’ve had 18 cups of coffee over the course of 3 hours. At this point, your judgment is slightly impaired and you start to think, “If I just cut and paste THIS paragraph, no one will know, right?”

According to Merriam-Webster Dictionary, plagiarism is:

• to steal and pass off (the ideas or words of another) as one’s own : use (another’s production) without crediting the source
• to commit literary theft : present as new and original an idea or product derived from an existing source

Since plagiarism seems like the biggest educational crime one could ever commit, most people refused to do it. However, I once knew someone who was accused of plagiarizing his ENTIRE final paper (*cough* for Geography). He had to attend an ‘ethics’ trial at the school and, eventually, ended up getting kicked out.  Oops.

A slew of plagiarism reports in the news lately might help to illustrate that it, in fact, extends beyond the classroom to the worlds of entertainment and journalism!  Harry Potter author, J.K. Rowling, is accused of stealing the idea of Harry Potter and the Goblet of Fire from Adrian Jacobs. Jacobs created a character called Willy the Wizard, which  tells the tale of wizard colleges, tournaments, etc. In the anime world, the popular Incarnate had its production stopped when charges of plagiarism arose against its creator, Nick Simmons. And, the Black Eyed Peas were also recently served with a lawsuit by Manfred Mohr, a producer who claims BEP’s ‘Boom Boom Pow’ is quite similar to Mohr’s ‘Boom Dynamite’. (But one wonders if these truly constitute plagiarism or if the accusers are merely looking for a way to make a quick dollar off of celebrities.)

In the journalism world, Daily Beast reporter Gerald Posner left the Daily Beast after accusations arose that Posner used the same material in his story as in a Miami Herald story. Most shocking, though, is the story of the New York Times reporter, Zachery Kouwe. Kouwe apparently incorporated an online Wall Street Journal article into his own NYT article on February 5th. A Times reporter using WSJ stories? What is the world coming to!  Kowe resigned from NYT on February 16th.

Plagiarism falls under US copyright law and, specifically, relates to the Fair Use Doctrine. Consider these four factors when determining if using content is ‘fair’:

1. The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes
2. The nature of the copyrighted work
3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole
4. The effect of the use upon the potential market for, or value of, the copyrighted work

So, since the last thing you want is to be slapped with a lawsuit and have your reputation ruined, keep these four factors in mind. Copy and Paste? You might want to think again!

Posted by Melanie on March 4, 2010 at 4:19pm.

Courtesy of: www.dantynan.com

I’m a fan of Google. A HUGE fan. For instance, Gmail and Gchat have both saved my life, and couple of yours, in the past. In my eyes, Google = best. However, when I heard the hype surrounding Google Buzz, I couldn’t help but think that Buzz might actually be a disaster.

My fears were actually confirmed when I received messages that were similar to this:

“Your high school Spanish teacher is now following you on Buzz!”

Like, excuse me? No.

Buzz just appeared in my Gmail one morning (February 9th, to be exact) – with no real warning or disclaimers for Gmail users. And, to make matters worse, I already had ‘followers’ and ‘people I followed’. Granted, these people were friends/family that I frequently emailed. But, did I actually want the world to see who I email on a daily basis? Not really…and I’m sure you do not want to, either. Can I get some privacy here?

Buzz is Google’s take on social networking – think Twitter in more than 140 characters and Facebook status updates. You can update your status, and it appears to all your followers – or anyone really, if you have a public status. So, if Google’s merely riding on the popularity of Twitter and Facebook, why are so many people grumbling about Buzz?

The main difference is that with Twitter and Facebook, a person consciously makes the decision to sign up for the websites. You know, they are usually convinced to join by a friend and, subsequently, go through the whole dilemma of ‘What should my Login be?’. But, Buzz didn’t give you the option to make that decision. If you are a Gmail user, then you automatically became a Buzz user…thus, giving the world a peek into your email contact list.

And, considering the many recent news stories about Buzz, I’m not the only one concerned about the privacy. According to reports, Washington DC based EPIC (or “Electronic Privacy Information Center”) filed a complaint with the FTC about Buzz. The complaint states that EPIC requests that the FTC:

• Compel Google to make Google Buzz a fully opt-in service for Gmail users.

• Compel Google to cease using Gmail users’ private address book contacts to compile social-networking lists.

• Compel Google to give Google Buzz users more control over their information, by allowing users to accept or reject followers from the outset.

Further, on February 18, 2010, Google was slapped with a class-action complaint by law firms in San Francisco and Washington DC. The complaint claims that Buzz “unexpectedly exposed relationships users had with others”. In addition, the complaint cites that Google Buzz  violates the Computer Fraud and Abuse Act.

Google has addressed user’s concerns since introducing Buzz. Users no longer automatically follow other users, thankfully. Instead, you are given ’suggestion’ boxes of people you may want to follow. And, if you want to get rid of Buzz completely, you can opt-out through your Gmail settings.

Although I’m a social media lover, Buzz still hasn’t won me over. I guess something about being ‘forced’ into it just didn’t appeal to me. For now, I’m perfectly content sticking with the other sites. Twitter, Yelp, Facebook – ftw!

(Want to know more about Buzz and Privacy Settings? Check out this article for helpful tips!)

Posted by Melanie on March 3, 2010 at 4:21pm.

Ahh, Facebook. During the many hours I spend on Facebook, I sometimes come across things I really shouldn’t see. For instance, there’s no need for me to see personal arguments play out on Facebook in angry status updates specifically directed to someone, and then retaliatory comments upon that.

At times, my friends have confided in me about hurt feelings when their friend(s) don’t share the same Facebook etiquette as they do — like when someone has supciously de-friended them or refused to answer their messages. What I say to those friends is that Facebook is not a reflection of real life. Different Facebook users have different habits, so there’s no real way to normalize behavior into standard expectations for all.

That being said, one standard of expectation that can be applied to the virtual world of social media is to not break the law. Crimes committed on Facebook do result in real consequences.

Therefore, Facebook should not be used for:

• Coercion – when someone is compelled to do an act contrary to his/her will: 19 year old Anthony Stancl was just sentenced last week to 15 years in prison for deception and coercion  by pretending he was a female and having 31 male classmates send nude pictures to him. Stancl threatened to release the nude photos to their high school if the boys didn’t  perform sexual acts for him.
• Harassment – repeated, intrusive, or unwanted acts, words, or gestures that are intended to adversely affect the safety, security, or privacy of another, regardless of the relationship between the actor and the intended target: Jessica Zamora-Anderson had her ex-boyfriend Paul Franco arrested last week after he took her “Facebook account hostage, changed her sexual preference to gay, and demanded cash for her profile’s safe return.”

While it’s certainly disheartening to see some use Facebook for malicious intent, it is refreshing to see that real consequences can and do apply to the virtual crimes some may commit. In fact, Facebook is proving to be such a beacon of safety for some that its even helping preempt nonexistent crimes. Just yesterday, Ardsley School District in New York shut down for the day when a parent called the authorities after viewing another student’s post that stated “combine” and “revenge”. It turns out that “’combine’ is not an abbreviated version of Columbine, but an in-school competition for members of the football team scheduled for [Monday].” Nevertheless, authorities thought it would be wise to allow enough time to conduct a thorough investigation, so they erred on the side of safety and closed the schools.

When logging on to social networking sites like Facebook with an axe to grind, here are a couple of things to consider before you strike:

1. It’s not wise to threaten or harass another user through Facebook. If you’re using your real name, you can be caught and prosecuted. Or, if you’re using an alias, your IP address can provide your whereabouts to authorities.
2. Facebook has an entire section under their Security terms about “Reporting abuse on Facebook”. Clearly, this has happened enough times for them to create some guidelines to help victims of Facebook abuse.

Although social networking sites like Facebook and Twitter seem to be good places for consumers to vent their frustrations about airlines, businesses, or media, it’s not proving to be the best place to air personal grievances with real-life friends or enemies. If a “friend” upsets you that much, then simply block or hide them, and maybe you can civilly salvage your relationship offline.

Posted by Adrienne on March 2, 2010 at 1:12pm.

From: LAist's 'therealquarrygirl' on Flickr

The 138-acre parcel of land to the west of the sign was purchased in the 1940s by Howard Hughes as a gift for his fiancée, Ginger Rogers, with plans to build an estate on the Peak.  The plans fell apart, together with the relationship.  But, Hughes, and later his estate held on to the land until 2002 when a Chicago real estate investment group purchased the land and secured rights to build luxury estates on the Peak.   When the parcel was offered for sale in 2008 for $22 million, the Trust for Public Land got involved.

Having secured an option  to purchase the parcel by April and conserve its natural attributes, the TPL launched a campaign to Save The Peak, and unlike Ke$ha’s prank, actually managed to win the support of the public to raise funds.  If the TPL meets its fundraising commitment and exercises its option to purchase the prime parcel of real estate, it will turn it over to the Los Angeles Park Service so that it is conserved in perpetuity as a part of Griffith Park.

The TPL’s mission is important.  It is but one of  numerous land trusts across the country  that embrace the opportunity to preserve natural resources from land loss for future generations.  And, just as there are numerous land trusts, there are numerous methods of attaining the conservation goal and the benefits that inure to the donors.

The Land Trust Alliance explains:

The most traditional tool for conserving private land, a “conservation easement” (also known as a conservation restriction) is a legal agreement between a landowner and a land trust or government agency that permanently limits uses of the land in order to protect its conservation values. It allows landowners to continue to own and use their land, and they can also sell it or pass it on to heirs.

But, there are other methods available as well:

• Resale of land once a conservation easement is in effect
• Outright donation of land for conservation where ownership rights transfer to a land trust or other suitable owner, such as a government agency. Then, the full market value of the donated land is tax deductible as a charitable gift under the US Tax Code.
• Bargain sale where a land owner sells land intended for conservation to a land trust at less than fair market value.  Benefits include: cash transfer to the owner, elimination of some capital gains taxes, charitable income tax deduction based on the value of the land between the bargain sale price and the assessed fair market value.
• Donation with a Lifetime Income:  the donation results in the donor receiving charitable gift annuities or charitable remainder trusts.  This is not the preferred method unless the landowner owns property which is highly appreciated.

If you are concerned about the unmitigated loss of open space in your own community, contact a local land trust or an attorney to learn more. The United States is losing land at an alarming rate, with more than 2 million acres of land lost every year to inappropriate development, according to a 2005 USDA/NRCS Natural Resources Inventory.  Because once land is lost or a habitat fragmented, it may take decades if not centuries for the land to recover, conservation easements protect vulnerable and essential habitats.  But to ensure expectations are properly managed and that all rights and responsibilities are properly explained, conservation easement transactions can become complex and can involve multiple tax issues. Nevertheless, they offer greater flexibility to property owners and conservationists in achieving conservation goals, and as a result, remain an essential tool in ensuring our natural environments prosper.

Posted by Krystyna on March 1, 2010 at 10:51am.

Now imagine that you are back in your doctor’s office several days later.  The blood tests that your doctor had submitted to a biotechnology company that patented a sequencing test for the cancer-related mutation whose presence you are attempting to discover were not processed.  The biotech company did not accept your insurance and you, as a person of limited means, could not come up with the $4,000 to have the test performed.  A cheaper test does not exist because the biotech company holds an exclusive patent to the genes as well as the process for isolating the relevant genes.  With the test, you and your doctors would have the knowledge to better assess your best treatment options.  Without it, you and your doctors are guessing.

That is the situation that informs the background of the Molecular Pathology v. U.S. Patent and Trademark Office case, 09 CIV 4515, heard in a Manhattan federal court earlier this month.  The case is relatively novel.  It asks whether genes, isolated from a human DNA sequence, are sufficiently new and useful to be patented under federal patent law.

Although approximately 20% of all human genes are patented, the gene mutations at issue in this case are the BCRA-1 and BRCA-2 genes, both of which are closely associated with breast and ovarian cancers.  The plaintiffs include a group of cancer patients who were unable to have the test performed, and numerous scientific and medical groups, including the named plaintiff, the Association for Molecular Pathology.

The defendant biotechnology company, Myriad Genetics, has been characterized by Chris Holman, a professor at the University of Missouri-Kansas City School of Law whose interest lies in biotechnology and intellectual property, as:

[a] leader in the commercialization of genetics diagnostic testing, probably best known for its BRCA tests used to assess a woman’s genetic predisposition to breast cancer. Since the late 1990s, the company has been the subject of widespread criticism, both in the U.S. and abroad, over what many have perceived to be overly aggressive patent enforcement policies, particularly with regard to its BRCA patents.

Under US federal patent law, inventors can exclude others from making, using, or selling the patented invention for 20 years.  Through its seven patents, Myriad has created a monopoly, which controls all testing related to BRCA1 and BRCA2 as well as the genes themselves.  Furthermore, a gene patent-holder can control any use of its patented gene during the 20-year patent period.  So, while Myriad may allow researchers to pay for the privilege of working with its patented genes to further research objectives, it is still criticized for its patent policies.

Professor Holman explains,

In fact, much of the criticism directed at so-called “gene patents” traces back to the controversy surrounding Myriad. To this day, allegations that Myriad’s patent policies have somehow unduly limited access to BRCA testing services, or even prevented competing laboratories from providing superior BRCA testing services, are cited in support of proposals to ban the patenting of genes and DNA.

Kevin Noonan, a lawyer practicing pharmaceutical patent law with McDonnell Boehnen Hulbert & Berghoff LLP and who holds a doctorate in molecular biology, writes “Genes are a product of nature…but the patents claiming genes do not claim products of nature.”  Noonan argues that instead the BRCA1 and BRCA2 genes are isolated or purified products of nature, in the form of cDNA or a recombinant molecule or vector, which are patentable under a precedent dating back to a 1912 adrenaline case,  Parke-Davis & Co. v. HK Mulford. Noonan also argues that human genes are not per se unpatentable because:

To be patent-eligible, an invention must be a machine, manufacture, process, or composition of matter, or an improvement thereof, and (per Supreme Court precedent) cannot be a mathematical formula, an abstract idea, or a product of nature.  To be patentable, on the other hand, an invention must be new, useful, and non-obvious.

Noonan’s position, and that of Myriad, is that the scientific innovation involved in first finding the BRCA1 and BRCA2 mutations and then isolating the gene makes its work patent-eligible and patentable.

Jane Bosveld, wrote in last month’s Discover Magazine, “many scientists believe Myriad’s control has slowed or blocked research” citing as an example the prohibition against developing a “more accurate screening test because doing so would infringe on Myriad’s patent.”  A geneticist at the Hospital of University of Pennsylvania criticized  the biotech company’s patent, stating “a number of researchers had been looking for the genes related to breast cancer and knew where the genes were likely to be.  Essentially the work was done for Myriad already.  Everyone knew where the gene was.”

Is this criticism warranted?

I am not arguing with Noonan’s or Myriad’s position as a matter of fact or law.  In fact, as the statute is written, Myriad’s actions were perfectly within the scope of law.  I am not even going to touch the criticism of biomedical professionals who argue that Myriad took advantage of the Human Genome Project.

Rather my issue with Myriad’s conduct is from a public policy standpoint.  As someone who would like to see companies balance their profit margins with a corporate moral responsibility code, in my humble opinion, Myriad Genetics falls short of the balance that can be achieved.  It’s monopoly on the screening process and the gene itself that essentially limits medical access to those who can afford the expensive screening test or who have acceptable insurance coverage.

I understand the need for companies to recoup its research and development costs and fully support the principles of capitalism.  However, I believe that companies have a certain responsibility to be a good moral actor.  Myriad’s actions prove that it is not a good actor.  For example, in 2002, French scientists who alleged that Myriad’s test “only assesse[d] 10-20% of potential BRCA1 mutations, identified a mutation that Myriad missed.  Although the French test had a greater breadth and was less expensive than the approximately $2,700 that Myriad charged French patients,” Myriad issued cease and desist letters to the French researchers.  Myriad has been just as aggressive in stymieing researchers who seek to develop more comprehensive screening tests during the Myriad BRCA1 and BRCA2 patent period.

But Myriad Genetics is not alone.  Athena Neurosciences, Inc. also used its patent monopoly on the APOE gene to prosecute physicians and laboratories that attempted to determine if patients “carry this genetic predisposition to Alzheimer disease” without relying on Athena’s screening products or devices.

Proponents of gene patenting will surely call me out on my views, but I am encouraged by the opposition voiced by such luminaries as the National Institutes of Health director Francis Collins and legal scholar Lori B. Andrews.  Both oppose broad human gene patents.  Mr. Collins recently wrote:

The information contained in our shared instruction book is so fundamental, and requires so much further research to understand its utility, that patenting it at the earliest stage is like putting up a whole lot of unnecessary toll booths on the road to discovery.

For further discussion on the patentability of human genes, please go here, here, and here.

As a college student, I worked in the laboratory of the director of the breast cancer research group at the University of Illinois and University of Illinois College of Medicine at Urbana-Champaign.  I was not involved in biomedical research, I only maintained the lab’s research library and performed some minor administrative tasks, but I came away from my time in Dr. K’s laboratory with a profound respect for the collaborative spirit and back-breaking work that is biomedical research.  The rewards are few and far between.  It may take months, years, and sometimes decades before a scientist makes a breakthrough.  But, isn’t it the purpose of the scientific community to spur on further innovation and discovery?  Doesn’t withholding information under a patent claim impede scientific research?

So, while I applaud Myriad Genetic’s innovation in identifying these genes, I wonder if an individual will be able to forgive the company and its corporate leadership the decisions that they made and continue to make by denying poorer individuals the chance to benefit from scientific innovations that are available to wealthy. After all, “there are no alternatives to the patented human genes in genetic diagnosis and gene therapy – and these inventions might mean the difference between life and death to the [patient].”  Truer words were never spoken, Lori Andrews.

Posted by Krystyna on February 25, 2010 at 12:42 pm.

“]

Times files | 1998

In the months following our entry, we remained curious about the effect of natural disasters on insurance companies and its treatment of policy-holders.  The recent situation in Florida is a perfect example.  Following a lengthy battle with the State of Florida to deregulate the insurance market in which the insurance giant’s bid for marked premium increases was denied, State Farm insurance has decided to pull out Florida’s property insurance market over a period of 18 months.  As a result, some 1.2 million property insurance policies will be dropped – the majority of which are held by homeowners in the hurricane-prone state’s coastal regions – which will likely push many into the already bloated state-run insurer of last resort, Citizens Property Insurance Corp.

The insurer’s plans reflect a compromise between it and the Florida Office of Insurance Regulation.  After announcing that it is losing approximately $20 million per month that it continues to operate in the state, State Farm Insurance attempted to withdraw its operations from Florida.  Following 11 months of stalled negotiations, State Farm backed off its plans to withdraw from the state completely; instead, it would plug its financial leaks by dropping policies, abstain from offering discounted rates, and increasing the average rates by approximately 15%, statewide.  The insurance giant promised that it would not leave policyholders stranded in the middle of hurricane season, but that its agents would aid customers in transferring their policies to one of 16 other insurers authorized to do business in the state.   Florida homeowners were outraged.  But, really, should they have been?

Hurricane insurance rates were rising. In addition to rising premiums, some vulnerable insureds were faced with higher deductibles before being dropped entirely by their insurance providers.  Homeowner insurance providers, like State Farm, were passing the costs of doing business onto their consumers.  The companies, paid out higher than expected claims following the devastation in the wake of Andrew.  (I’m sure the actuaries prognosticating those events weren’t around long following these natural disasters.)  So, to mitigate the risk of additional future claim payouts, companies sought out reinsurance.  And, that increased the company’s cost of doing business.  As a result, insurers passed along those costs to consumers – the affected ones and the non-affected ones, too.  It stands to reason, then, that with a glut of customers seeking new insurance providers, competition for new business would act as a control on prices, allowing consumers to obtain competitive prices.

Now, let’s backtrack for just a second.  Would a national catastrophic insurance program be the best way to handle vulnerable properties?  Should all taxpayers subsidize the decisions of those who chose to build in a low-lying or natural disaster-prone area?  More specifically, how many times should a company pay out on a claim before it chooses to terminate the policy?

The Economic Logician examined the moral implications of a national catastrophe insurance program last September.  In his post, he asked: “why did private insurance companies leave the hurricane insurance market in Florida?”  A comment left on his blog stated:   “The implied answer to your question about private companies is that the risk in general is not fully priced into the government policy, and that on a practical basis the political tendency regarding differential risk based on location on government-sponsored insurance is that very high rates on at-risk property would meet more organized resistance than more moderately higher premiums across the board, which would imply in-landers would subsidize coastal folks.”

Was the commentator on The Economic Logician’s post correct in his conclusions?   Well, we can take a look at FEMA and its flood insurance program for an answer.

In 1968, Congress established the National Flood Insurance Program (NFIP) to enable vulnerable property owners in participating communities to buy insurance to protect against flood losses.  In exchange, states and local communities committed to regulating construction in floodplains to reduce future flood damage.  The floodplain management usually regulates the construction or expansion of structures in flood-prone areas.  The insurance was meant to act as an alternative to federal disaster assistance.

But NFIP cannot work alone.  Rather, it is intended to act in concert with a private insurance coverage portfolio in a way that appropriately apportions risk.  Given this example, do you think that a national program – or even a state program like Florida’s Citizens Insurance – is the answer when a major disaster occurs and an insurance company is not equipped to handle the claims?

Posted by Krystyna on February 23, 2010 at 11:37am.

Thurgood Mashall - Attorney for Brown v. Board of Education case and the first African-American appointed to the Supreme Court.

Black History Month provides our country with the excellent opportunity to recognize those that tirelessly worked to ensure a better future for generations to come. As an African American with an interest in law, this month provides me with the opportunity to reflect upon just how far our country has legislatively come to inclusively encompass “liberty and justice for all.”

• 1654-1865: Slavery, which is forced labor where people are considered to be property of others, was a legal institution within the boundaries of much of the present United States.
• September 22, 1862: President Abraham Lincoln issued the Executive Order, as Commander in Chief, of the Emancipation Proclamation, in which its first executive order was to declare freedom of all slaves in all states.
• January 1, 1863: The second executive order of the Emancipation Proclamation specifically named 10 states that were to abolish slavery.

Immediately following the Civil War, the Reconstruction Amendments were adopted between 1865 and 1870 to abolish slavery (13^th Amendment), broadly define citizenship (14^th Amendment, which overruled the Dred Scott v. Sanford ruling of 1857 that excluded slaves and their descendants from Constitutional rights), and grant voting rights regardless of “race, color, or previous condition of servitude” (15^th Amendment).

Although slavery took its rightful place as a part of American history, no longer revealing the hypocrisy of a nation that declared its independence from the British Empire in 1776 by stating “all men are created equal,” changing the mindsets and behavior of people proved to be a challenging feat unto itself.

• 1876-1965: Jim Crow Laws were instated as state and local laws that mandated “separate but equal” public facilities and government services, like education, between America’s blacks and whites, which legally upheld racial segregation.
• 1883: The Supreme Court ruled in Pace v. Alabama that Alabama’s anti-miscegenation statute prohibiting mixed-race marriages was constitutional.
• 1890-1908: Southern states of the former Confederacy created constitutions with provisions that disenfranchised most African Americans and poor whites by implementing discriminatory regulations like poll taxes and educational and character requirements.
• 1904-1965: There were a series of attempts to overturn states’ discriminatory voting practices, but none of them successfully re-established the 15^th Amendment voting rights for African Americans.
• 1924: The Virginia Legislature passed the Racial Integrity Act of 1924 requiring that a racial description of every person be recorded at birth, and made marriage between white persons and non-white persons a felony. This also instituted the colloquial “one-drop rule,” which refers to a person with any trace of African ancestry as black.
• May 17, 1954: With the monumental case of Brown v. Board of Education, the Supreme Court deemed that education of black children in separate public schools from their white counterparts was in fact unconstitutional.
• 1957: The Governor of Arkansas called the National Guard to deny entrance of nine African American students into Little Rock Senior High School in defiance of the 1954 Supreme Court ruling that ordered school integration. President Dwight D. Eisenhower federalized the National Guard, ordered them to return to their barracks, and then deployed elements of the 101st Airborne Division to Little Rock to protect the students’ return to school.
• 1962: James Meredith won a lawsuit that allowed him admission to the University of Mississippi in September of 1962. He attempted to enter campus on September 20, on September 25, and again on September 26, only to be blocked by Mississippi Governor Ross R. Barnett, who proclaimed that “no school will be integrated in Mississippi while I am your Governor.” The Fifth U.S. Circuit Court of Appeals held both Barnett and Lieutenant Governor Paul B. Johnson, Jr. in contempt, with fines of more than $10,000 for each day they refused to allow Meredith to enroll. Meredith, escorted by U.S. Marshals, entered the campus on September 30, 1962, and white students rioted that evening in protest.
• 1964: Civil Rights Act of 1964 was a landmark piece of legislation in the United States that extended voting rights and outlawed racial segregation in schools, at the workplace and by facilities that served the general public.
• 1964: The Supreme Court unanimously ruled that a cohabitation law of Florida that was a part of the state’s anti-miscegenation laws, was unconstitutional in McLaughlin v. Florida. This decision overturned the Pace v. Alabama ruling.
• 1965: The National Voting Rights Act of 1965 outlawed discriminatory voting practices that disenfranchised African Americans throughout the United States.
• 1967: The United State Supreme Court decided in Loving v. Virginia that Virginia’s Racial Act of Integrity of 1924 was unconstitutional, and further overturned the Pace v. Alabama decision.
• 1972: The Gates v. Collier decision was the first court intervention in the supervision of prison practices. It deemed that the trustee system, which was a strict system of discipline and security in some Southern states, and inmate abuse constituted cruel and unusual punishment and were in violation of Eighth Amendment rights.

The United State’s transformative legal history of African Americans truly exhibits the unceasing efforts of those that fought for justice and equality for all.

Main Source: Wikipedia

Posted by Adrienne on February 22, 2010 at 5:40pm.

Although settling a lawsuit is some clear indication of making a wrong right through financial compensation, are those responsible and liable for bad decisions during tough economic times able to just pay their problems away? Are they too big to go to jail?

Posted by Adrienne on February 17, 2010 at 2:48pm.