Most homeowners, with todays’ mortgage crisis, have felt the ramifications of a declining economy, whether through a pending foreclosure, a cut in credit lines, etc. What is less understood are the tremendous title issues that have been created by all this foreclosure activity throughout the country. Its actual ramifications may take years to truly access.
Mortgages bundled into securities were a favorite investment of speculators at the height of the financial bubble leading up to the crash of 2008. The securities changed hands frequently, and the companies profiting from mortgage payments were often not the same parties that negotiated the loans. At the heart of this disconnect was the Mortgage Electronic Registration System, or MERS, a company that serves as the mortgagee of record for lenders, allowing properties to change hands without the necessity of recording each transfer.
MERS was convenient for the mortgage industry, but courts are now questioning the impact of all of this financial juggling when it comes to mortgage ownership. To foreclose on real property, the foreclosing party must be able to establish the chain of title entitling it to relief. But MERS has acknowledged, and recent cases have held, that MERS is a mere “nominee”—an entity appointed by the true owner simply for the purpose of holding property in order to facilitate transactions. As recently as July, MERS announced that it would no longer foreclose in its own name on behalf of noteholders. Recent court opinions stress that this defect is not just a procedural but is a substantive failure, one that is fatal to the plaintiff’s legal ability to foreclose.
That means hordes of victims of predatory lending could end up owning their homes free and clear—while the financial industry could end up skewered on its own sword.
The Massachusetts Supreme Judicial Court issued a court decision , which made it clear that the banks' foreclosure practices -- and indeed, the standard securitization deal -- violated longstanding basic Massachusetts real estate law, and thus, many completed Massachusetts foreclosures were invalid (US Bank National v. Ibanez) . The foreclosing banks, which had either since sold the properties or still "owned" them, had no right to foreclose, and therefore had never owned those properties. So who owns them now? Well, the fact that it's a question is the very definition of "clouded title."
Many title insurance agents and companies have declared these properties as uninsurable, meaning the owner could not deliver clear, insurable title to a property buyer. This could make the property unsalable. The problem is worst for properties improperly foreclosed on that were still bank-owned. Those properties were truly uninsurable. That's because the bank couldn't make a claim on the title insurance policy it had purchased when making the original loan, since it was the entity that clouded the title. Indeed, honoring that policy would be like letting an arsonist collect on fire insurance. Thus much of the current bank-owned inventory in Massachusetts is largely uninsurable and thus unsellable.
When it comes to the clouded title problem, one group is wholly innocent: the borrowers -- "deadbeat" or not. The title issues have been created by the banks themselves. And since the mortgage industry's robo-signing scandal first broke, people have been aware that banks have been illegally foreclosing on homes.
Here’s the problem, simply: Because of these bad titles, property owners can't prove they own the properties they think they bought, and banks can't prove they had the right to sell them.
Even though it's impossible to know how many properties are affected, estimates range between 60 and 70 million. And now that many foreclosures are being carefully scrutinized, flawed processes and paperwork seems to be the normal, not the exception.
You can't sell real estate when you can't establish that you own it -- banks won't loan money for purchasers to buy the property. That's because the bank wants to be sure that if it forecloses, it will get good title to the property. That, of course, kind of got lost in the frenzy and drive to make as much money as possible. That's why banks won't approve a mortgage for a property if a title insurance company won't insure its title. And title insurance companies won't do that if they know the title is clouded.
While there is plenty of blame to go around include our government regulators and elected officials, the largest share of the blame still must go to banks and their lawyers. Because without them, the clouded title mess wouldn't exist. Here's how all of them created the crisis.
First, banks across the nation have used fraudulent documents to "prove" they have the right to foreclose. This is the classic robo-signing situation.
While the issue is clearest in judicial foreclosure states like New Jersey -- where the documents are getting more scrutiny -- the problem exists everywhere. In nonjudicial foreclosure states, the problem frequently surfaces first in federal bankruptcy courts when banks ask for permission to foreclose on debtors in bankruptcy. The problem also shows up in state courts as homeowners try to fight the foreclosures.
For this title clouding problem, blame should be placed on the mortgage servicers, who generally are the big banks.
Second, as both the Ibanez case and Kemp v. Countrywide Home Loans out of New Jersey illustrate, banks' standard securitization procedures may have failed to properly assign the promised mortgages to the pooled trusts, which means those securities aren't really mortgage-backed after all. It also means that the ownership of those mortgages (and in some states, title to the properties) remains with different banks that were part of the securitization processes -- banks that may or may not still exist today.
For this problem, blame the securitizers, who include the big banks, Wall Street, and their big law firm attorneys.
Third, foreclosure attorneys have processed their filings in illegal ways. For example, in Pennsylvania, the attorneys have done foreclosures with papers no lawyer reviewed, bearing signatures forged with the firms' named partners' permission. Those foreclosures, which were done via the illegal practice of law, appear to be void -- and there are many. Or consider that several Maryland firms have also had underlings forge lawyers' names on foreclosure documents, including on more than 1,000 deeds.
Considering that speed over substance has replaced good lawyering and following of state-mandated procedures, it's impossible to believe that these problems are limited to only a handful of states.
For this problem, blame both the foreclosing banks and their foreclosure lawyers. Blame the banks, because it was their relentless cost cutting that got us the current foreclosure business model. Blame the lawyers, because they knew what they were doing was illegal and let their greed get the better of them.
Fourth, and perhaps most problematic, is the MERS debacle.
MERS mortgages have questionable validity. Whether or not the MERS model is legal seems now to depend on which judge is making the decision. Cases in different states, and even within the same state, are coming out differently. Where the MERS model is illegal, foreclosures done by MERS or by the people it assigns the mortgage to have clouded titles. Even where the MERS model is legal, the system's incredibly sloppy record keeping could leave multiple banks believing they have the right to foreclose on a given property.
For the MERS problem, blame the following, in no particular order: Fannie Mae and Freddy Mac, who were instrumental in creating it; Covington and Burling, the law firm that blessed it; Moody's, for blessing it as well; and the big banks who ran with the flawed system and made it what it is today.
If you are facing mortgage problems and difficulty with your lender, please contact our office for a free consultation. If you would like to learn more about clouded titles, visit www.cloudedtitles.com.
This article was compiled from research and opinions of Mitchell C. Beinhaker, Esq. For comments or more information, email mcb@beinlaw.com.
May 20, 2011
ERISA (The Employee Retirement Income Security Act) - A Trap for the Unwary
ERISA, the Employee Retirement Income Security Act, is an oxymoron, at least with respect to employer-funded health insurance plans. By looking at the title of the Act, one would think that it was enacted to protect employees. In practice, however, with respect to health insurance benefits, it protects only insurance companies and employers.
In theory, the insured employees are supposed to select a doctor of their choice whereby they pay their co-pay plus a deductible (if any). The employee and the doctor both expect that the balance, or at least a specified portion of the balance (typically 80%), will be paid by the health insurance company. The insurance company has pre-contracted individual doctors or “participating providers” (providers) in their network who have agreed to accept a predetermined rate for specific services provided. In the case of such “in-network” providers, the system usually works just as intended.
The situation where ERISA hurts the unsuspecting employee and the doctor is when the employee chooses a “non-participating” or “out-of-network” provider for services. In practice, the employee typically does not have, and has not been given, a fully copy of his or her health insurance plan. The law only requires that the employer deliver a “summary of benefits.” The out-of-network doctor also has no access to the plan document.
Before treatment begins, the nonparticipating doctor’s office secures preauthorization from (or at a minimum confirms coverage with) the health insurance company for the required procedure. However, preauthorization does not assure the nonparticipant doctor that he or she will be paid for their work. In an effort to protect itself, the nonparticipating doctor will typically have the patient sign an “assignment of benefits.” This authorizes (i) the insurance company to pay the nonparticipating provider directly, (ii) the nonparticipating doctor, on behalf of the employee, to appeal any payment decisions of the insurance company, and (iii) the release of confidential medical records of the patient needed to appeal the case. The assignment of benefits form usually obligates the patient personally for any monies that the provider cannot collect from the patient’s health insurance company.
After the services are performed, the nonparticipating provider then bills the insurance company the usual and customary fee for any such procedures for the geographic area in which such services or procedures were performed. Standard operating procedure on the part of many health insurance companies is to pay an out-of-network provider a small percentage of the usual and customary fee. The provider, relying on the assignment of benefits, then institutes a “provider appeal.” After putting the appeal on the shelf for many months (or losing it once or twice), the insurance company may tell the provider that it has no appeal rights and all appeals must be instituted by the patient. Or, in the alternate, the insurance company may write to the patient (who no longer has contact with the provider) denying the appeal and sending him or her one or two pages from the plan which sets forth the patient’s appeal rights.
The patient may not communicate with the provider in time for a first level appeal to be instituted, or the plan may require a series of appeals (typically two in-house and another by an independent authority) before any legal action may be taken: the filing of a lawsuit in federal court under ERISA to enforce the health insurer’s payment obligations.
It is only after such a lawsuit is filed by the provider, that the provider is informed (for the first time) that the insured’s plan prohibits the assigning of benefits to a provider, and, thus, the provider does not have standing to bring the suit. Even if the provider enlists the patient as an additional plaintiff, curing the standing issue, the insurance company then claims that the patient did not exhaust his or her administrative remedies (2 timely internal and 1 external appeal) before filing a lawsuit. Very few patients or providers have the time or energy (or even can cooperate and coordinate with each other) to jump through these hoops. Unfortunately, case in and case out, the complaint can be dismissed on summary judgment on this basis. When faced with such a motion, the plaintiff (provider and patient) must allege and provide proofs that even had they appealed through all levels, their appeal would have been futile. This is not an easy burden to overcome. And only after a plaintiff survives this motion practice, can the case be heard on its merits. Unfortunately, few patients or providers can afford extensive and expensive litigation in federal court even if they can get past the “procedural” hurdles of nonassignment and nonexhaustion. Most of these cases die on the vine, a victim of attrition.
The State of New Jersey, Department of Insurance and Banking (“DOBI”) has recognized this inequity and has set up an arbitration procedure for providers against in-state insurance companies which gives the provider its own rights and the ability to dispute allowed fees. Unfortunately, DOBI does not make this program available against out-of-state insurance companies. This leaves the provider and the patient with the ERISA system in which the cards are stacked against them. The end result is that the out-of-network provider is usually left to accept ridiculously low reimbursement amounts and/or having to sue their patients for unpaid balances.
Neither option is attractive or particularly good for business. If the provider sues their patient, the patient may be saddled with a huge judgment (for 20 years or more) that he or she cannot afford to pay or, if they have assets, their assets may be attached and can deplete their life savings.
New patients and providers dealing with out-of-state insurance companies would be wise to learn the pitfalls in the system which can potentially expose each to great, sometimes catastrophic, loss.
If you are a medical professional (especially a specialist) who does not participate in many (or any) networks, have your office manager or billing professional contact our office for a free, in-house consultation. We’d be happy to review your files and help you better navigate these treacherous waters. If you are a patient facing a legal battle from a provider trying to collect, also give us a call for a free consultation.
Mark D. Miller, Esq. is a partner in The BeinhakerMIller Law Firm. He specializes in commercial litigation, consumer fraud, and estate litigation. Specifically for medical practices, the firm provides ERISA litigation, PIP arbitrations and handles other related medical collection issues. Questions can be emailed to Mark at mdm@beinlaw.com.
In theory, the insured employees are supposed to select a doctor of their choice whereby they pay their co-pay plus a deductible (if any). The employee and the doctor both expect that the balance, or at least a specified portion of the balance (typically 80%), will be paid by the health insurance company. The insurance company has pre-contracted individual doctors or “participating providers” (providers) in their network who have agreed to accept a predetermined rate for specific services provided. In the case of such “in-network” providers, the system usually works just as intended.
The situation where ERISA hurts the unsuspecting employee and the doctor is when the employee chooses a “non-participating” or “out-of-network” provider for services. In practice, the employee typically does not have, and has not been given, a fully copy of his or her health insurance plan. The law only requires that the employer deliver a “summary of benefits.” The out-of-network doctor also has no access to the plan document.
Before treatment begins, the nonparticipating doctor’s office secures preauthorization from (or at a minimum confirms coverage with) the health insurance company for the required procedure. However, preauthorization does not assure the nonparticipant doctor that he or she will be paid for their work. In an effort to protect itself, the nonparticipating doctor will typically have the patient sign an “assignment of benefits.” This authorizes (i) the insurance company to pay the nonparticipating provider directly, (ii) the nonparticipating doctor, on behalf of the employee, to appeal any payment decisions of the insurance company, and (iii) the release of confidential medical records of the patient needed to appeal the case. The assignment of benefits form usually obligates the patient personally for any monies that the provider cannot collect from the patient’s health insurance company.
After the services are performed, the nonparticipating provider then bills the insurance company the usual and customary fee for any such procedures for the geographic area in which such services or procedures were performed. Standard operating procedure on the part of many health insurance companies is to pay an out-of-network provider a small percentage of the usual and customary fee. The provider, relying on the assignment of benefits, then institutes a “provider appeal.” After putting the appeal on the shelf for many months (or losing it once or twice), the insurance company may tell the provider that it has no appeal rights and all appeals must be instituted by the patient. Or, in the alternate, the insurance company may write to the patient (who no longer has contact with the provider) denying the appeal and sending him or her one or two pages from the plan which sets forth the patient’s appeal rights.
The patient may not communicate with the provider in time for a first level appeal to be instituted, or the plan may require a series of appeals (typically two in-house and another by an independent authority) before any legal action may be taken: the filing of a lawsuit in federal court under ERISA to enforce the health insurer’s payment obligations.
It is only after such a lawsuit is filed by the provider, that the provider is informed (for the first time) that the insured’s plan prohibits the assigning of benefits to a provider, and, thus, the provider does not have standing to bring the suit. Even if the provider enlists the patient as an additional plaintiff, curing the standing issue, the insurance company then claims that the patient did not exhaust his or her administrative remedies (2 timely internal and 1 external appeal) before filing a lawsuit. Very few patients or providers have the time or energy (or even can cooperate and coordinate with each other) to jump through these hoops. Unfortunately, case in and case out, the complaint can be dismissed on summary judgment on this basis. When faced with such a motion, the plaintiff (provider and patient) must allege and provide proofs that even had they appealed through all levels, their appeal would have been futile. This is not an easy burden to overcome. And only after a plaintiff survives this motion practice, can the case be heard on its merits. Unfortunately, few patients or providers can afford extensive and expensive litigation in federal court even if they can get past the “procedural” hurdles of nonassignment and nonexhaustion. Most of these cases die on the vine, a victim of attrition.
The State of New Jersey, Department of Insurance and Banking (“DOBI”) has recognized this inequity and has set up an arbitration procedure for providers against in-state insurance companies which gives the provider its own rights and the ability to dispute allowed fees. Unfortunately, DOBI does not make this program available against out-of-state insurance companies. This leaves the provider and the patient with the ERISA system in which the cards are stacked against them. The end result is that the out-of-network provider is usually left to accept ridiculously low reimbursement amounts and/or having to sue their patients for unpaid balances.
Neither option is attractive or particularly good for business. If the provider sues their patient, the patient may be saddled with a huge judgment (for 20 years or more) that he or she cannot afford to pay or, if they have assets, their assets may be attached and can deplete their life savings.
New patients and providers dealing with out-of-state insurance companies would be wise to learn the pitfalls in the system which can potentially expose each to great, sometimes catastrophic, loss.
If you are a medical professional (especially a specialist) who does not participate in many (or any) networks, have your office manager or billing professional contact our office for a free, in-house consultation. We’d be happy to review your files and help you better navigate these treacherous waters. If you are a patient facing a legal battle from a provider trying to collect, also give us a call for a free consultation.
Mark D. Miller, Esq. is a partner in The BeinhakerMIller Law Firm. He specializes in commercial litigation, consumer fraud, and estate litigation. Specifically for medical practices, the firm provides ERISA litigation, PIP arbitrations and handles other related medical collection issues. Questions can be emailed to Mark at mdm@beinlaw.com.
April 30, 2010
New Jersey Consumer Fraud - Even When You Win, You Lose
This is an article written by Mark Miller as a guest author for a colleague of ours. You can access it at http://www.stopcollector.com/blog/2010/04/new-jersey-consumer-fraud-even-when-you-win-you-lose/
April 20, 2010
Consumer Fraud, Justice and JetBlue Airlines
I recently had the fortune to get away from the office for a few days and take my wife and kids to Florida. We missed a huge storm up here and had beautiful weather down there.
But our story starts some time before our trip... We first attempted to book our airline tickets on JetBlue. Everyone knows they have the bigger seats, video monitors and the like. And when traveling with three kids, we need all the help we can get. They also were advertising a very low fare.
My wife and I logged on to their website and booked tickets for the five of us. We went through the entire process: picking the outbound flight, seats, food choice, etc; picking the inbound flight, seats, food choice, etc. We then got to the point where you agree to all their terms and click "book it". So we agreed and clicked. We were then provided with a message that bascially said, "the fare we had chosen was no longer available. Perhaps someone else booked the fare before we did. Our credit card would not be charged."
Frustrated, we ran a new search on the JetBlue site and found that the available fares had in fact increased. I never really understood the pricing with airlines - the price should be "the" price. You don't call Amtrak for a fare quote and find that if you don't book it quick enough the price increases! Can you imagine if an electronics store raised the price on a particular TV as it sold out? People wouldn't go there anymore. Anyway, I am digressing...
We found a similar fare on Continental (actually $3 whole dollars less, but later discovered that they have a bag checking fee of $25 per bag) and given our budget constraints, price won over comfort and gadgets.
Two weeks after booking, my wife was balancing our checkbooks. She discovered that JetBlue had, contrary to what we were told from their website, in fact charged us for the five tickets. We had not received any confirmation or receipt and had no confirmation number.
We called JetBlue. After holding for 30-45 minutes, the answering representative informed us that she could not find any reservation in our name in their systems. I told her that we had been charged and would like a refund (which we needed for spending money for our trip). She did some more searches in their system and finally found a reservation in our name. Apparently, and according to her, JetBlue had been changing over their computer systems and the changeover may have caused an error in their system giving us a "not available" message, but charging us anyway because (perhaps) the person who "grabbed" our fare might have changed his or her mind. I told her I understood, but their "not available" message caused me to book other tickets on another airline. Kindly arrange for a refund, I told her.
I was soon to discover that there is nothing "kind" about seeking a refund from an airline. Getting a credit is fairly easy - but then they have my money and I have to plan another trip to benefit from the credit. And I am not interested in depositing money with JetBlue (albeit at "no interest") in anticipation of my next trip which may or may not happen within the next 12 months.
The customer service representative (ironic name) told me she was not authorized to issue a refund (I guess she needs a promotion to have this authority). I would have to speak with a supervisor. She asked me to hold and transferred me where I proceeded to wait another 45 minutes to an hour. When I finally reached the next "level", this higher up (who apparently was some kind of supervisor - not so sure what she supervisors, but anyway...) who at first couldn't find our mysterious reservation either. She finally found it, but then also informed me that she was only authorized to issue a credit (seems I was transferred to a colleague, not a supervisor). The day was moving on and I also needed to bill some clients for some work in order to make up for the time I was losing trying to reconcile their "system glitch".
The next day I got back on the phone and basically got the same run around as the day before. Finally, and very frustrated, I contacted my bank to contest the charge from my account (I had used our debit Mastercard for payment). The bank had me fill out a formal inquiry form, credited the withdrawal back to our account and began their investigation. About a week later, the bank contacted me and informed me that JetBlue wouldn't refund my money without proof of what we said was posted on their website - the fare was nonrefundable and only a credit would be provided. The bank took the money back out of our account.
I got back on the phone. Waited and got through. Explained the story and was transferred. Waited, waited, and waited. Finally, I got a supervisor on the phone but this guy could only credit me back the fare less $100 per ticket (apparently there are different "types" of supervisors at JetBlue and they all have different "powers" to do certain things). Well $100 per ticket was more than half the total fare so I said "no." He said he understood, but he was not authorized (what a shock) to refund all of our money. I could wait for a higher level supervisor (not sure where this beanstalk ends), but the wait time was at least 45 minutes. I had already gone through more than 2 hours of my time and had to pick my son up from religious school. So I said I couldn't hold any longer, but could I have a direct number to call back on so I wouldn't have to be on hold so long. He informed me that they did not have any direct numbers (another shock) and that my only option was to call back on their toll-free number and start the hold process all over again. Which I did the next day.
I held for about 20 minutes and reached a CSR. I explained the story and asked for a supervisor (the right supervisor). The message on hold said I had 60 minutes to wait. About 55 minutes in, the message suddenly changed and my wait time jumped back up to 60 minutes.
I was frustrated and spent. I had wasted more than $1,500 of my own billing time and was at the end of my rope. I shared my frustration with my partner, the litigator in our firm and we decided to file suit. We'd sue for consumer fraud, unjust enrichment, and breach of contract. The consumer fraud claim carried treble damages, attorney's fees and court costs.
My partner drafted the complaint and we faxed to JetBlue's corporate headquarters in Brooklyn. Now the wheels of justice were in motion. A few days later, a paralegal from JetBlue (apparently this was not a large enough matter to concern their attorneys) called me and my partner and said they would refund my money. She admitted that it had been a computer glitch and she apologized. She said it was only a mistake and begged me to take the refund. Now let's take a moment to think about what I had gone through to get to this point. Hours of waiting, a declined inquiry through my bank and an offer to refund about half of the fare. It had taken the preparation and filing of a civil complaint (actually, we hadn't filed the complaint at this point so we hadn't gone out of pocket for the $22 filing fee). But my partner did prepare the complaint which would have cost any client of ours $1,800 to $2,000.
So, I said "no". They had to do better than that. Pay me some extra money (on top of the refund) and pay my partner $1500 for legal fees. The paralegal (after more begging) told us she was only a paralegal who settles small claims matters and she was not authorized (another shock) to settle for more than a refund. I told her you'd better get an attorney on the phone.
Too make a long story shorter, we never connected with the attorney and had to file the complaint. It was served on JetBlue and we got a court date - today. I am sure you are not surprised to hear that.
Now consumer fraud carries with it (normally) treble damages, attorneys fees and court costs. But going to court "is like a box of chocolates. You never know what you're gonna get." We basically got a grumpy older judge who pretty much admonished me and my partner for spending so much time on this matter and told us basically if we wouldn't accept a refund and settle this he'd make us wait all day in court and wouldn't hear our case until 4:30. (And I thought attorneys get more understanding, not less, from the courts). It was about 9:30 at that time. The attorneys for JetBlue were from a large firm in NYC and were apparently sent there on their very first case - how exciting. The judge also said to my partner, "c'mon - they're just children" (referring to our esteemed adversaries). Like I said, you never know what you're gonna get. So, reluctantly, we agreed to take a refund. The good thing is they handed us a check right then and there. My partner and I have wondered if they had a whole series of checks in their briefcase, depending on how things went. But we'll never know.
We also learned something from this newbie attorney (who my partner complimented on doing a great job and wished him well). The newbie submitted a brief claiming that federal aviation legislation pre-empts state consumer fraud statutes. And he found a supreme court case where, in a 5-3-1 vote, the Supremes found in favor of American Airlines that the federal legislation does, in fact, supercede the state statutes (actually my partner read the case law, but I got the basic gist). The court was divided on the issue, but for now, it appears that you cannot win on a consumer fraud claim against a common carrier airline. This was, therefore, just a breach of contract case and a refund is pretty much what we are entitled to (We could have gotten reimbursed for the additional Continental baggage fees, but I forgot about that at the time - oh, well.) In a funny twist, however, the law firm emailed over the stipulation of dismissal as well as a release between the parties. The release included a non-disclosure agreement which we are unwilling to agree to (plus he had already given us the check). Maybe we'll end up getting something for our troubles afterall (free tickets?) if they want a non-disclosure that bad. But I hope that doesn't make it too hard for the young attorney - he seemed like a nice guy and my partner said he graduated from my law school. Looks like a learning experience for all of us.
The thing that upsets me the most is that the average joe would not take things to the level that I did. I know the system and have a partner who was willing to help. Most people would have to spend more than they were trying to get in a refund and would just have to settle for a credit. So the airlines gets the use of the money and you have to incur the expense of a trip to "use" the credit.
Hopefully we all learned something from this. 1) Consumer fraud, although a great statute for consumers, does not apply to the airlines; 2) next time, we'll just fax over the complaint and settle for the refund (no filing necessary); 3) if your a lay person, go down to small claims court, get the forms, fill them out and fax them to the airlines (no filing necessary either) and you'll get a refund; 4) hopefully JetBlue will learn that they should give their CSRs some way to "elevate" problem situations that need a supervisors attention (but I doubt it).
But our story starts some time before our trip... We first attempted to book our airline tickets on JetBlue. Everyone knows they have the bigger seats, video monitors and the like. And when traveling with three kids, we need all the help we can get. They also were advertising a very low fare.
My wife and I logged on to their website and booked tickets for the five of us. We went through the entire process: picking the outbound flight, seats, food choice, etc; picking the inbound flight, seats, food choice, etc. We then got to the point where you agree to all their terms and click "book it". So we agreed and clicked. We were then provided with a message that bascially said, "the fare we had chosen was no longer available. Perhaps someone else booked the fare before we did. Our credit card would not be charged."
Frustrated, we ran a new search on the JetBlue site and found that the available fares had in fact increased. I never really understood the pricing with airlines - the price should be "the" price. You don't call Amtrak for a fare quote and find that if you don't book it quick enough the price increases! Can you imagine if an electronics store raised the price on a particular TV as it sold out? People wouldn't go there anymore. Anyway, I am digressing...
We found a similar fare on Continental (actually $3 whole dollars less, but later discovered that they have a bag checking fee of $25 per bag) and given our budget constraints, price won over comfort and gadgets.
Two weeks after booking, my wife was balancing our checkbooks. She discovered that JetBlue had, contrary to what we were told from their website, in fact charged us for the five tickets. We had not received any confirmation or receipt and had no confirmation number.
We called JetBlue. After holding for 30-45 minutes, the answering representative informed us that she could not find any reservation in our name in their systems. I told her that we had been charged and would like a refund (which we needed for spending money for our trip). She did some more searches in their system and finally found a reservation in our name. Apparently, and according to her, JetBlue had been changing over their computer systems and the changeover may have caused an error in their system giving us a "not available" message, but charging us anyway because (perhaps) the person who "grabbed" our fare might have changed his or her mind. I told her I understood, but their "not available" message caused me to book other tickets on another airline. Kindly arrange for a refund, I told her.
I was soon to discover that there is nothing "kind" about seeking a refund from an airline. Getting a credit is fairly easy - but then they have my money and I have to plan another trip to benefit from the credit. And I am not interested in depositing money with JetBlue (albeit at "no interest") in anticipation of my next trip which may or may not happen within the next 12 months.
The customer service representative (ironic name) told me she was not authorized to issue a refund (I guess she needs a promotion to have this authority). I would have to speak with a supervisor. She asked me to hold and transferred me where I proceeded to wait another 45 minutes to an hour. When I finally reached the next "level", this higher up (who apparently was some kind of supervisor - not so sure what she supervisors, but anyway...) who at first couldn't find our mysterious reservation either. She finally found it, but then also informed me that she was only authorized to issue a credit (seems I was transferred to a colleague, not a supervisor). The day was moving on and I also needed to bill some clients for some work in order to make up for the time I was losing trying to reconcile their "system glitch".
The next day I got back on the phone and basically got the same run around as the day before. Finally, and very frustrated, I contacted my bank to contest the charge from my account (I had used our debit Mastercard for payment). The bank had me fill out a formal inquiry form, credited the withdrawal back to our account and began their investigation. About a week later, the bank contacted me and informed me that JetBlue wouldn't refund my money without proof of what we said was posted on their website - the fare was nonrefundable and only a credit would be provided. The bank took the money back out of our account.
I got back on the phone. Waited and got through. Explained the story and was transferred. Waited, waited, and waited. Finally, I got a supervisor on the phone but this guy could only credit me back the fare less $100 per ticket (apparently there are different "types" of supervisors at JetBlue and they all have different "powers" to do certain things). Well $100 per ticket was more than half the total fare so I said "no." He said he understood, but he was not authorized (what a shock) to refund all of our money. I could wait for a higher level supervisor (not sure where this beanstalk ends), but the wait time was at least 45 minutes. I had already gone through more than 2 hours of my time and had to pick my son up from religious school. So I said I couldn't hold any longer, but could I have a direct number to call back on so I wouldn't have to be on hold so long. He informed me that they did not have any direct numbers (another shock) and that my only option was to call back on their toll-free number and start the hold process all over again. Which I did the next day.
I held for about 20 minutes and reached a CSR. I explained the story and asked for a supervisor (the right supervisor). The message on hold said I had 60 minutes to wait. About 55 minutes in, the message suddenly changed and my wait time jumped back up to 60 minutes.
I was frustrated and spent. I had wasted more than $1,500 of my own billing time and was at the end of my rope. I shared my frustration with my partner, the litigator in our firm and we decided to file suit. We'd sue for consumer fraud, unjust enrichment, and breach of contract. The consumer fraud claim carried treble damages, attorney's fees and court costs.
My partner drafted the complaint and we faxed to JetBlue's corporate headquarters in Brooklyn. Now the wheels of justice were in motion. A few days later, a paralegal from JetBlue (apparently this was not a large enough matter to concern their attorneys) called me and my partner and said they would refund my money. She admitted that it had been a computer glitch and she apologized. She said it was only a mistake and begged me to take the refund. Now let's take a moment to think about what I had gone through to get to this point. Hours of waiting, a declined inquiry through my bank and an offer to refund about half of the fare. It had taken the preparation and filing of a civil complaint (actually, we hadn't filed the complaint at this point so we hadn't gone out of pocket for the $22 filing fee). But my partner did prepare the complaint which would have cost any client of ours $1,800 to $2,000.
So, I said "no". They had to do better than that. Pay me some extra money (on top of the refund) and pay my partner $1500 for legal fees. The paralegal (after more begging) told us she was only a paralegal who settles small claims matters and she was not authorized (another shock) to settle for more than a refund. I told her you'd better get an attorney on the phone.
Too make a long story shorter, we never connected with the attorney and had to file the complaint. It was served on JetBlue and we got a court date - today. I am sure you are not surprised to hear that.
Now consumer fraud carries with it (normally) treble damages, attorneys fees and court costs. But going to court "is like a box of chocolates. You never know what you're gonna get." We basically got a grumpy older judge who pretty much admonished me and my partner for spending so much time on this matter and told us basically if we wouldn't accept a refund and settle this he'd make us wait all day in court and wouldn't hear our case until 4:30. (And I thought attorneys get more understanding, not less, from the courts). It was about 9:30 at that time. The attorneys for JetBlue were from a large firm in NYC and were apparently sent there on their very first case - how exciting. The judge also said to my partner, "c'mon - they're just children" (referring to our esteemed adversaries). Like I said, you never know what you're gonna get. So, reluctantly, we agreed to take a refund. The good thing is they handed us a check right then and there. My partner and I have wondered if they had a whole series of checks in their briefcase, depending on how things went. But we'll never know.
We also learned something from this newbie attorney (who my partner complimented on doing a great job and wished him well). The newbie submitted a brief claiming that federal aviation legislation pre-empts state consumer fraud statutes. And he found a supreme court case where, in a 5-3-1 vote, the Supremes found in favor of American Airlines that the federal legislation does, in fact, supercede the state statutes (actually my partner read the case law, but I got the basic gist). The court was divided on the issue, but for now, it appears that you cannot win on a consumer fraud claim against a common carrier airline. This was, therefore, just a breach of contract case and a refund is pretty much what we are entitled to (We could have gotten reimbursed for the additional Continental baggage fees, but I forgot about that at the time - oh, well.) In a funny twist, however, the law firm emailed over the stipulation of dismissal as well as a release between the parties. The release included a non-disclosure agreement which we are unwilling to agree to (plus he had already given us the check). Maybe we'll end up getting something for our troubles afterall (free tickets?) if they want a non-disclosure that bad. But I hope that doesn't make it too hard for the young attorney - he seemed like a nice guy and my partner said he graduated from my law school. Looks like a learning experience for all of us.
The thing that upsets me the most is that the average joe would not take things to the level that I did. I know the system and have a partner who was willing to help. Most people would have to spend more than they were trying to get in a refund and would just have to settle for a credit. So the airlines gets the use of the money and you have to incur the expense of a trip to "use" the credit.
Hopefully we all learned something from this. 1) Consumer fraud, although a great statute for consumers, does not apply to the airlines; 2) next time, we'll just fax over the complaint and settle for the refund (no filing necessary); 3) if your a lay person, go down to small claims court, get the forms, fill them out and fax them to the airlines (no filing necessary either) and you'll get a refund; 4) hopefully JetBlue will learn that they should give their CSRs some way to "elevate" problem situations that need a supervisors attention (but I doubt it).
March 23, 2010
Three Steps to Stop Debt Collector Harassment
(This is a "guest" blog from my colleague Sergei Lemberg. You can email Sergei with any questions or comments at slemberg@lemberglaw.com)
In today’s economy, an increasing number of people are finding themselves on the receiving end of debt collector harassment. Consumers are being inundated with phone calls, letters, and other forms of harassment by debt collection agencies that are willing to stoop to any level to collect on a debt.
If you’ve been the victim of debt collector harassment, there are three primary steps you should take.
First, it’s important that you understand the law. After all, knowledge is power, and there’s a powerful federal law on the books that outlines the differences between legal and illegal debt collection practices. It’s called the Fair Debt Collection Practices Act. You should become familiar with those practices that cross the line, and document every interaction you have with a debt collection agency. If you keep a logbook of your conversations and correspondence, it will be tremendously helpful if you should sue them under the FDCPA.
Second, you should write what’s called a cease and desist letter. According to the Fair Debt Collection Practices Act, a debt collection agency must stop contacting you once they receive a cease and desist letter. While this doesn’t erase a legitimate debt that you owe, it does prevent them from harassing you. If they continue to contact you after you’ve sent a cease and desist letter, they’re in violation of the FDCPA.
Third, you should contact an attorney. The Fair Debt Collection Practices Act says that, if you have an attorney, the debt collection agency may no longer contact you directly. All correspondence and calls must go through your attorney. When you select an attorney who specializes in fair debt law, he or she will most likely represent you free of charge. This is because the FDCPA specifies that, if a debt collection agency violates the law, it is responsible for paying your attorney fees. In addition, a fair debt attorney may also be able to collect damages on your behalf in an amount up to $1,000. Alternately, if you have a solid case against a collection agency, the chances are good that they’ll back down and settle your outstanding debt for pennies on the dollar.
In today’s economy, an increasing number of people are finding themselves on the receiving end of debt collector harassment. Consumers are being inundated with phone calls, letters, and other forms of harassment by debt collection agencies that are willing to stoop to any level to collect on a debt.
If you’ve been the victim of debt collector harassment, there are three primary steps you should take.
First, it’s important that you understand the law. After all, knowledge is power, and there’s a powerful federal law on the books that outlines the differences between legal and illegal debt collection practices. It’s called the Fair Debt Collection Practices Act. You should become familiar with those practices that cross the line, and document every interaction you have with a debt collection agency. If you keep a logbook of your conversations and correspondence, it will be tremendously helpful if you should sue them under the FDCPA.
Second, you should write what’s called a cease and desist letter. According to the Fair Debt Collection Practices Act, a debt collection agency must stop contacting you once they receive a cease and desist letter. While this doesn’t erase a legitimate debt that you owe, it does prevent them from harassing you. If they continue to contact you after you’ve sent a cease and desist letter, they’re in violation of the FDCPA.
Third, you should contact an attorney. The Fair Debt Collection Practices Act says that, if you have an attorney, the debt collection agency may no longer contact you directly. All correspondence and calls must go through your attorney. When you select an attorney who specializes in fair debt law, he or she will most likely represent you free of charge. This is because the FDCPA specifies that, if a debt collection agency violates the law, it is responsible for paying your attorney fees. In addition, a fair debt attorney may also be able to collect damages on your behalf in an amount up to $1,000. Alternately, if you have a solid case against a collection agency, the chances are good that they’ll back down and settle your outstanding debt for pennies on the dollar.
March 17, 2009
Doctors & Their Personal Affairs
I work with a lot of doctors. Most of them are just too busy to pay close attention to their personal affairs. So wills, estate planning, insurance and other personal matters, as well as their business agreements, employee issues, etc... often get overlooked. Issues are addressed on a reactive, rather than a proactive basis. There is little planning and protection, but rather reaction to situations that have already arisen.
Here's a few things you should know:
1. ASSET PROTECTION DOESN'T WORK. Well, actually it does, but you cannot create an asset protection plan once litigation has begun or is on the horizon. It will be deemed a fraudulent transfer and you can be subject to both civil and criminal penalties. No legitimate attorney should even do it for you. By asset protection, I don't mean moving your assets offshore to Nevis or the Cayman Islands. Offshore asset planning may bring more scrutiny from various government agencies than you'd like to welcome.
2. YOU CAN WRITE A WILL ONCE YOUR DEAD. Of course you can't! Tax and estate planning is voluntary and should be done, and revisited on a regular basis, as soon as possible. Dying intestate (without a will) leaves a serious mess for your loved ones to clean up. Even a poorly written will leaves a big mess. Look at Anna Nicole Smith.
3. MONEY MAKES PROBLEMS GO AWAY. To the contrary, I've found that successful professionals often attract problems. Everyone and their grandmother brings "opportunities" your way and, suprisingly (I say that with jest), every deal looks good. That's called salesmanship. Don't substitute good due diligence for things that look good and good feelings you have for people (even if friends or relatives). Look at Bernie Madoff - blind trust was his key to the castle.
Best advice is to work with someone who advocates for your success and protection. Someone who has experience in negotiating deals, analyzing opportunities, protecting assets, and protecting your family.
We offer free, no obligation consultations, to any medical professionals who'd like to visit our office. We would also be happy to answer basic questions by email.
Here's a few things you should know:
1. ASSET PROTECTION DOESN'T WORK. Well, actually it does, but you cannot create an asset protection plan once litigation has begun or is on the horizon. It will be deemed a fraudulent transfer and you can be subject to both civil and criminal penalties. No legitimate attorney should even do it for you. By asset protection, I don't mean moving your assets offshore to Nevis or the Cayman Islands. Offshore asset planning may bring more scrutiny from various government agencies than you'd like to welcome.
2. YOU CAN WRITE A WILL ONCE YOUR DEAD. Of course you can't! Tax and estate planning is voluntary and should be done, and revisited on a regular basis, as soon as possible. Dying intestate (without a will) leaves a serious mess for your loved ones to clean up. Even a poorly written will leaves a big mess. Look at Anna Nicole Smith.
3. MONEY MAKES PROBLEMS GO AWAY. To the contrary, I've found that successful professionals often attract problems. Everyone and their grandmother brings "opportunities" your way and, suprisingly (I say that with jest), every deal looks good. That's called salesmanship. Don't substitute good due diligence for things that look good and good feelings you have for people (even if friends or relatives). Look at Bernie Madoff - blind trust was his key to the castle.
Best advice is to work with someone who advocates for your success and protection. Someone who has experience in negotiating deals, analyzing opportunities, protecting assets, and protecting your family.
We offer free, no obligation consultations, to any medical professionals who'd like to visit our office. We would also be happy to answer basic questions by email.
November 19, 2008
Accredited Investing
With the collapse of our financial system and a tightening of the credit markets for most business owners, the accredited investor will find opportunities abound.
In addition to a few other categories, an accredited investor is defined to include:
(a) any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of investment in the common stock of the company, exceeds one million dollars ($1,000,000);
(b) any natural person who had an individual income in excess of two hundred thousand dollars ($200,000.00) in each of the two most recent years or joint income with that person's spouse in excess of three hundred thousand dollars ($300,000.00) in each of those years and has a reasonable expectation of reaching that same income level in the current year; or
(c) any trust with total assets in excess of five million dollars ($5,000.000.00), not formed for the specific purpose of acquiring common stock, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.
There are an abundance of "private" equity opportunities for those investors that qualify as stated above. I have reviewed deals with investor relations firms, private hedge funds, real estate funds, and even a company in the high-end wholesale garden products business. Proper due diligence must be employed when reviewing any of these types of deals and "partnering" with a skill business attorney may help you make more rational decisions. Be prepared that all these deals will look good when presented by the owner who is seeking the capital investment. Here's a few basic rules (you will develop some of your own from experience): (1) always meet the owner - never invest where the owner is too busy or unavailable to meet with you; (2) do some background research on both the company and the owner - with the internet this should be somewhat easy; and (3) research the industry paying attention to particular trends which might help or hurt the company/opportunity.
My firm is in the process of publishing an accredited investor newsletter designed to highlight available opportunities and bring companies & investors together. If you'd like to be added to our mailing list, please email us.
In addition to a few other categories, an accredited investor is defined to include:
(a) any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of investment in the common stock of the company, exceeds one million dollars ($1,000,000);
(b) any natural person who had an individual income in excess of two hundred thousand dollars ($200,000.00) in each of the two most recent years or joint income with that person's spouse in excess of three hundred thousand dollars ($300,000.00) in each of those years and has a reasonable expectation of reaching that same income level in the current year; or
(c) any trust with total assets in excess of five million dollars ($5,000.000.00), not formed for the specific purpose of acquiring common stock, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.
There are an abundance of "private" equity opportunities for those investors that qualify as stated above. I have reviewed deals with investor relations firms, private hedge funds, real estate funds, and even a company in the high-end wholesale garden products business. Proper due diligence must be employed when reviewing any of these types of deals and "partnering" with a skill business attorney may help you make more rational decisions. Be prepared that all these deals will look good when presented by the owner who is seeking the capital investment. Here's a few basic rules (you will develop some of your own from experience): (1) always meet the owner - never invest where the owner is too busy or unavailable to meet with you; (2) do some background research on both the company and the owner - with the internet this should be somewhat easy; and (3) research the industry paying attention to particular trends which might help or hurt the company/opportunity.
My firm is in the process of publishing an accredited investor newsletter designed to highlight available opportunities and bring companies & investors together. If you'd like to be added to our mailing list, please email us.
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