Grassroot Perspective – April 25, 2003-Send the Disability Checks c/o Leavenworth; Crime Pays – Sort Of; Like We Really Needed a Poll to Discover this?; Cerebral Palsy Claims Drive Malpractice Insurance; Never Let Facts Get in the Way of a Lawsuit; Catch an Airline by the Toe; Next Time We'll Just Let Them Mug You; If You're Sick, Don't Call Us in the Morning; Long-term Care Crisis Builds

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“Dick Rowland Image”

”Shoots (News, Views and Quotes)”


– Send the Disability Checks c/o Leavenworth

A Los Angeles jury has ordered two insurance companies to pay a
66-year-old Beverly Hills lawyer $371,000 for stopping the man’s
$8,200-a-month disability payments in 1999. The insurance companies
believed he was faking his ailments. One of the companies will have to
continue paying him $4,700 a month in disability until he dies. It’s a
bit of a hollow victory, however. The lawyer is serving seven-and-a-half
years in federal prison for sinking his 76-foot yacht off the Italian
coast to collect on a $3.5 million insurance policy; the entire jury
award in his disability case must be put toward the $2.8 million he must
pay in restitution for his insurance fraud sentence. From the Associated

– Crime Pays – Sort Of

The family of a man who was electrocuted by a homemade booby trap when
he tried to break into a Chicago-area bar after hours was awarded
$75,000 in a wrongful-death jury trial. The bar owner installed the
anti-theft electronic device around a window after his establishment had
been burglarized three times in a month. Warning signs were placed
outside the building, including near the booby-trapped window. Jurors
were not allowed to be told the victim was drunk and on cocaine, nor
that he had served time for two previous burglary convictions. From the
Chicago Sun-Times

– Like We Really Needed a Poll to Discover this?

A national poll commissioned by the American Tort Reform Association
found 83 percent of Americans think there are far too many lawsuits
filed in the United States and that greedy personal injury lawyers are
to blame. Seventy-five percent think health-care costs have gone up in
the past year due to excessive malpractice litigation, and 76 percent
believe their access to quality health care is being threatened as a
result. Tort reform is favored by 42 percent of those surveyed; only 6
percent oppose reform. Even Democrats favor tort reform by a ratio of
four to one (39 percent vs. 10 percent). From a press release posted on
the Web site of the American Tort Reform Association

– Cerebral Palsy Claims Drive Malpractice Insurance

The Top Ten Jury Awards of 2002, a list compiled annually by Lawyers
Weekly USA, was dominated by awards against three traditional targets of
the plaintiffs’ bar: tobacco companies, car makers, and doctors. Three
of the awards — for $94.5 million, $91 million, and $80 million — were for
children who developed cerebral palsy as the alleged consequence of
oxygen deprivation during a botched delivery. It has been estimated that
such cerebral palsy claims are the single greatest factor in the huge
recent increase in malpractice insurance rates for obstetricians.

– Never Let Facts Get in the Way of a Lawsuit

While we’re on the subject of cerebral palsy-related lawsuits, a recent
widely publicized study by the American College of Obstetricians and
Gynecologists and the American Academy of Pediatrics found less than 10
percent of cerebral palsy cases result from so-called birth asphyxia;
most cases, therefore, are not the result of a doctor’s malpractice.
Reacting with their normal restraint, one Boston plaintiffs’ attorney
called the report “dangerous, intellectually indefensible, and morally
irresponsible.” From a variety of sources, including The New York Times
and The Wall Street Journal

– Catch an Airline by the Toe

A federal judge in Kansas City is allowing a discrimination case over a
nursery rhyme to go to trial. In February 2001, in an effort to get
passengers to take their seats on a crowded Southwest Airlines flight
boarding in Las Vegas, a 22-year-old white flight attendant said over
the intercom, “Eenie, meenie, minie, moe; pick a seat, we gotta go.” Two
African-American women standing in the aisle at the time said the rhyme
immediately struck them as racist and felt it was directed solely at
them. The attendant said she had never heard the racist version of the
rhyme and had used the phrase on several flights as a humorous way of
getting passengers to take their seats. Southwest is denying any
discrimination and has not asked the attendant to stop using the phrase,
although she no longer does so because of the incident. From The Kansas
City Star

– Next Time We’ll Just Let Them Mug You

A recently hired desk clerk at a Comfort Inn in Cross Lanes, West
Virginia was appalled to discover the motel had installed audio and
video surveillance equipment in the front desk and lounge areas. He sued
his employer under the state’s wiretapping act and was awarded $500,000
in a jury trial. The defense argued, unsuccessfully, it is common
practice for motels to install such monitoring devices to provide
security for employees and guests. From The National Law Journal

– If You’re Sick, Don’t Call Us in the Morning

A federal court ruled in February that Pennsylvania Medicaid patients
who suffer from various smoking-related diseases are not entitled to
share in the loot the commonwealth is collecting from tobacco companies
as part of the 1998 $200+ billion national settlement. The court found
the 1999 amendments to the Medicaid Act give states the right to dispose
of the settlement funds for whatever purposes they deem appropriate. At
least in the Keystone State, helping sick smokers is not one of those
purposes. From The National Law Journal

– An Apology

A number of our loyal readers have wondered why we haven’t used the item
about a Montana resident named Bob Craft who changed his name to “Jack
Ass” five years ago as part of an anti-drunk driving campaign (don’t ask
for the details). Seems Mr. Ass recently stumbled across the MTV show
“Jackass” and has decided to sue the network for “plagiarizing” and
“defaming” his name. The reason we haven’t used the item is because we
find the whole matter jack-asinine. From The New Yorker, among others

Published by The Heartland Institute, a nonprofit 501(c)3 organization
founded in 1984.

Publisher: Joseph L. Bast

Editors: Diane Carol Bast, Paul Fisher, Dan Hales

Above articles are quoted from the Heartland Institute, Lawsuit Abuse
Forthnightly March 2003

”Roots (Food for Thought)”

– Long-term Care Crisis Builds

Author: Stephen A. Moses

Published: The Heartland Institute 03/01/2003

State governments face their worst fiscal crises in 50 years. The
federal budget flipped from a triple-digit surplus to a triple-digit
deficit. Medicaid, which accounts for 20 percent of state budgets and 7
percent of the federal budget, is a large part of the problem.

Long-term care (LTC) expenditures, consisting of payments for home care
and nursing home care, consume a quarter to a half of most states’
Medicaid budgets, and the federal government pays 57 percent of all
Medicaid costs. Nevertheless, punishingly low Medicaid and Medicare
long-term care reimbursements have driven thousands of nursing homes and
home health agencies into bankruptcy.

Is this just the price of providing a long-term care safety net for the
poor? Or have state and federal policies crowded out private financing
alternatives and exploded long-term care costs unnecessarily? The answer
may surprise you.

Medicaid Is Welfare

Medicaid is a means-tested public assistance program. It is welfare.
People who need acute, emergency, or preventive health care must be dirt
poor to qualify for Medicaid.

For anyone who needs nursing home care, however, the eligibility rules
are very different and highly generous. Despite the conventional wisdom
that people must be poor to qualify for Medicaid nursing home benefits,
income only disqualifies the top tier of seniors.

In 30 “medically needy” states, people qualify if they cannot afford
private nursing home care, which averages nearly $5,000 per month. In
the remaining “income cap” states, most people with monthly income in
excess of the ostensible $1,635 limit can set up Miller income trusts
and qualify immediately. As of 2003, married couples are allowed to keep
up to an additional $2,267 per month in income for the healthy spouse at
home while the ill spouse receives nursing home care paid for by

Nor do assets interfere with Medicaid nursing home eligibility for most
people. While Medicaid recipients are allowed only $2,000 in non-exempt
assets, they can also retain a home and all contiguous property of
unlimited value, a business including the capital and cash flow of
unlimited value, one automobile of unlimited value (if used for the
recipient’s benefit), a burial trust fund of unlimited value,
practically unlimited home furnishings, and many other exempt assets.

For people with really large financial holdings, Medicaid planning
attorneys can quickly shelter or divest their wealth to achieve
artificial impoverishment by means of sophisticated legal techniques.
These include special trusts, annuities, self-canceling installment
notes, life care contracts, and many others. Married couples can shelter
half their joint assets up to $90,660 in addition to all the other

The average American senior qualifies easily for Medicaid nursing home
benefits without fancy Medicaid planning, and virtually anyone else can
qualify by hiring a Medicaid planner. The legal fee to impoverish even
the well-to-do so they can receive Medicaid nursing home benefits is
roughly equal on average to the cost of one month in a nursing home as a
private payer.

The truth is that no one has to be poor to receive nursing home care
paid for by Medicaid. All anyone needs is a cash flow problem.
Consequently, many people who could afford home care or assisted living
by liquidating real estate or other exempt assets end up in nursing
homes on Medicaid because that is the cheapest alternative available to
them and their families.

Devastating Consequences

The consequences to America’s long-term care service delivery and
financing system have been devastating. The percentage of nursing home
costs paid by government (mostly Medicaid and Medicare) has been going
up for the past 13 years (from 49.6 percent in 1988 to 61.5 percent in
2001, up 11.9 percent), while out-of-pocket costs have been declining
(from 38.5 percent in 1988 to 27.2 percent in 2001, down 11.3 percent).

Thus, the consumer’s liability for nursing home costs has gone down
precipitously, while the government’s liability has increased
dramatically. No wonder nursing homes are struggling financially. Their
dependency on stingy government reimbursements is increasing while their
more profitable private payers are disappearing. And no wonder people
are not buying LTC insurance as eagerly as insurers would like them to.
Only 7 percent of seniors and hardly any of the baby boomers have
insured privately for long-term care.

Unfortunately, these problems are even worse than the preceding data
suggest. Over half of the so-called “out-of-pocket” costs reported by
the Centers for Medicare and Medicaid Services are really just
contributions toward their cost of care by people already covered by

These are not out-of-pocket costs in terms of asset spend-down, but
rather only income, most of which comes from Social Security benefits,
another government program. Thus, although Medicaid pays less than half
the cost of nursing home care (47.5 percent of the dollars in 2001), it
covers 70 percent of all nursing home residents. Because people in
nursing homes on Medicaid tend to be long-stayers, Medicaid pays
something toward nearly 80 percent of all patient days.

No wonder the public is not as worried about nursing home costs as LTC
insurers think they should be. No wonder nursing homes are facing
bankruptcy all around the United States, when so much of their revenue
comes from Medicaid, often at reimbursement rates less than the actual
cost of care.

Bottom Line

Well-intentioned but perversely counterproductive public policy has
anesthetized most Americans to the risk and cost of long-term care. For
nearly 40 years, they have been able to ignore the risk, avoid the
premiums for private insurance, and expect Medicaid and Medicare to pay
for their long-term care if and when it’s needed.

Unfortunately, that old system is falling apart as access to and quality
of government-financed long-term care have collapsed over the past
decade. Already now, and far more so in the future, access to quality
long-term care at the most appropriate and desirable levels (home care
or assisted living) will require an ability to pay privately.

We desperately need a change in public policy incentives to encourage
Americans to take the risk of long-term care seriously, to plan early,
and to save, invest, or insure so they can pay privately when they need
long-term care.

Stephen A. Moses is president of the Center for Long-Term Care Financing
in Seattle, Washington. He can be reached by email at, or by phone at 206/283-7036.

Above article is quoted from the Heartland Institute, Health Care News
March 2003

”Evergreen (Today’s Quotes)”

“For the saddest epitaph which can be carved in memory of a vanished
freedom is that it was lost because its possessors failed to stretch
forth a saving hand while there was still time.” — Justice George

“Act only on that maxim through which you can at the same time will that
it should become a universal law.” — Immanuel Kant

”’Edited by Richard O. Rowland, president of Grassroot Institute of Hawaii. He can be reached at (808) 487-4959 or by email at:”’ ”’For more information, see its Web site at:”’