Eating crow on the 2014 ethics amendment

When early voting started last year, I posted a guide on the 5 constitutional amendments that were on the ballot. With a year to reflect on how the changes worked out in practice, I can't put into words how disappointed I am in the result on the ethics amendment. Here was my assessment last year:

Proposed Amendment No. 3 is really several issues in one. It contains much needed campaign finance reform, like prohibiting gifts from lobbyists and restricting legislators from becoming lobbyists for two years after elected service. It creates an independent commission to set salaries of elected constitutional officers (e.g., governor, legislators, secretary of state, judges, etc.). Finally, it extends term limits for the legislature. This amendment was a compromise between several different factions in the legislature. I voted yes because I think campaign finance reform was needed, and after speaking with legislators on both sides of the aisle, I think having legislators with additional institutional knowledge may be beneficial to the Legislature as a whole.

What wound up happening? The Arkansas Times ran periodic updates on how the prohibition on gifts from lobbyists was roundly ignored. Even officials who get caught turning in false ethics reports now have a 30-day window to file amended reports without punishment. There's no teeth to the ethics laws anymore. Anyone getting caught gets to say, "no harm, no foul."

The "independent commission" gave state officials huge pay raises — except for public defenders, who make (at best) about 60% of what prosecutors make. This exacerbates an already problematic access to justice issue in the state.

It's probably too early to say one way or the other what the long-term effects of the term limit extension will be. The pay raises given to legislators, however, mean that any individual legislator stands to earn far more during his or her time in office than before. Historically, Arkansas' legislature was inhabited by ordinary citizens — lawyers, doctors, farmers, etc. — not professional politicians. In my opinion, the result of the amendment is an ill-advised move towards a class of professional politicians.

I'd be lying if I said I wasn't disillusioned by the abuses of the ethics amendment.

Today is Election Day – Please Vote!

“A man without a vote is a man without protection.” — Lyndon B. Johnson.

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There are a ton of interesting and important races on the ballot this election cycle. We have one of two U.S. Senate seats up for grabs today, and the winner will head to the U.S. Capitol (pictured above).

Meanwhile, in Arkansas, the constitutional offices are closely contested. Governor, Lt. Governor, Attorney General, Secretary of State, and many others have seen tight polling over the last few weeks. Quite a few House seats are close, including one sought by a long-time friend, Jeremy Ross.

Many state races, including our local house race between incumbent Richard Womack and challenger Damon Daniels, have turned into a de facto referendum on President Obama's policies — particularly the Affordable Care Act. It will be interesting to see how Arkansas handles Medicaid expansion, since Arkansas is one of few southern states to see a substantial drop in the percentage of uninsured. Here in Clark County, we went from 25% uninsured to 13% uninsured — a 12% drop. That's phenomenal. 

There are 5 issues on the statewide ballot, and you can see my thoughts on those elections here. Two counties are holding local option elections (links to results for Columbia and Saline Counties) in an attempt to change from dry to wet. If Issue 4 on the statewide ballot passes, the whole state will go wet. That would certainly be in line with what's happened in Arkansas over the past 6 years on a county-by-county basis; however, it would make Arkansas somewhat of an outlier in the South, since most other Southern states have similar wet/dry laws. I wonder if, as it did in 2010, if today's wet weather foreshadows the results of these wet/dry elections?

Out in Virginia, Hilary's brother, Brad Martin, is running for a seat on the Virginia Beach City Council.

I'll be watching closely as the evening progresses. Here's the link to the Arkansas Secretary of State's website, where voting will be reported once the polls close. Good luck to all the candidates out there.

What races have you most interested in this election?

A lawyer's take on the proposed amendments to the Arkansas Constitution

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Today marks the first day of early voting. As a lawyer, I think I have a duty to discuss with my friends the meaning and implications of proposed changes to the law on the ballot.

The short version: NO on Issues 1 and 2; YES on Issues 3, 4, and 5.

Now for the long version. The legislature has the right to propose 3 constitutional amendments every 2 years, as follows:

Proposed Amendment No. 1 (referred by the Legislature):

Proposed Amendment No. 1 provides for review and approval by the Legislature of administrative rulemaking. I am voting no. I think legislative interference with administrative rulemaking takes power away from professionals and makes it part of the political process. This will further slow down the administrative process, which is already slow because it requires notice of proposed rulemaking by the legislative body that in turn permits public comment. Besides, if the Legislature doesn't like the way its laws are interpreted through administrative rulemaking, it means the law needs to be rewritten with greater clarity. I think this is a legislative power grab and, as such, is unwise. I voted no because there is no upside unless you're a legislator.

Proposed Amendment No. 2 (referred by the Legislature):

Proposed Amendment No. 2 sets additional limits on citizens who try to petition for constitutional or legislative amendments. Petitioning is the very first right reserved to the people in the Arkansas Constitution (see below for examples – 2 citizen proposals are on the ballot). It is the way the citizens propose new laws when they don't like what the government is doing. Here, the legislature is trying to limit citizens' access to government. Like Issue No. 1, I believe this is an unwise legislative power grab. I voted no.

Proposed Amendment No. 3 (referred by the Legislature):

Proposed Amendment No. 3 is really several issues in one. It contains much needed campaign finance reform, like prohibiting gifts from lobbyists and restricting legislators from becoming lobbyists for two years after elected service. It creates an independent commission to set salaries of elected constitutional officers (e.g., governor, legislators, secretary of state, judges, etc.). Finally, it extends term limits for the legislature. This amendment was a compromise between several different factions in the legislature. I voted yes because I think campaign finance reform was needed, and after speaking with legislators on both sides of the aisle, I think having legislators with additional institutional knowledge may be beneficial to the Legislature as a whole.

Proposed Amendment No. 4 (by petition of the people):

As indicated above, citizens have petitioned to get two issues on the ballot. The first is Proposed Amendment No. 4, a proposed amendment to the Arkansas Constitution that repeals initiated acts from 1935 and 1942, which established the procedure for making counties wet or dry with respect to alcohol sales. According to USA Today, in 2009 Arkansas was dead last in clarity of alcohol laws. This amendment would eliminate dry counties altogether, but would maintain laws and regulations about alcohol sales and service (e.g., liquor stores at least 1000 feet from churches and schools). I voted yes, even though part of my practice involves helping counties make the transition from dry to wet.

Proposed Issue No. 5 (by petition of the people):

Proposed Issue No. 5 deals with the minimum wage. It will increase from $6.25/hour now to $8.50/hour in 2017. Like the alcohol issue, Arkansas lags behind the rest of the nation on minimum wage. I voted for it, because more money in the pockets of working Arkansans means fewer people on public assistance.

These are just my views. Even if you disagree, please go vote. It's the most important right we have as Americans.

Nathan Publishes Article in the Arkansas Law Review

The summer 2014 edition of the Arkansas Law Review is out, and I wrote one of the feature articles. The article is about the Arkansas Deceptive Trade Practices Act (ADTPA). The ADTPA permits any citizen who has been the victim of a deceptive trade practice to bring suit against the bad actor. The act is very broad and consumer-friendly. We most often see it when the Arkansas Attorney General uses it to stop wrongful practices, like very high interest check-cashers.

The Act contains an exemption for conduct "authorized" by federal and state laws and regulations. Some Arkansas courts apply the exemption as written. For example, when the Environmental Protection Agency approved an estimated mileage sticker for the Toyota Prius, an ADPTA claim against Toyota for misleading mileage estimates failed. The conduct was "authorized" by the EPA. When the ADTPA exemption is limited like this, it is known as an application of the "specific conduct" rule.

Some Arkansas courts have interpreted this to mean that all "regulated" conduct is exempt from the ADPTA. For example, some insurance companies argue that their claims practices are regulated and any ADTPA suit against them must fail, even though the insurance code defines certain insurance practices as deceptive (like failing to give you a reason for denying your claim). Primarily, the federal district courts for the Eastern District of Arkansas apply the rule this way; it is known as the "general activity" rule.

The Arkansas Supreme Court hasn't specifically ruled on this exemption. However, many courts around the country have ruled on similar exemptions.  My article surveys 50 other states, and concludes that most states having a rule similar to ours apply the specific conduct rule.

The full citation for the article is: Nathan P. Chaney, The Arkansas Deceptive Trade Practices Act: The Arkansas Supreme Court Should Adopt the Specific-Conduct Rule, 67 Ark. L. Rev. 299 (2014). I'll post a link when it becomes available.

State Farm case filings skyrocket in Arkansas and the U.S.

I've got a couple of underinsured motorist ("UIM") cases pending against State Farm. One of the allegations in the cases is that State Farm denied my clients' claims because they were following a national policy to force claims into court.

Several books have been published about how insurance companies aggressively revamped their claims departments for maximum profit in the mid 1990's, which was a shift away from fairly paying claims. One such book is called Delay, Deny, Defend. The documents showing how this shift was designed call it a "zero sum game," meaning that where the insurance companies win, the insured people must lose. Of course, artificially lowering claim payouts regardless of merit is bad faith on an institutional level.

In connection with my cases, I've done some research on lawsuits involving State Farm in state courts in Arkansas and in federal courts around the country. Here's the chart of the number of State Farm cases in Arkansas over the past 20 years:  

 The trend holds true generally for national cases involving State Farm:

This case filing information is proof that State Farm has ramped up its litigation department in keeping with the delay, deny, defend strategy used by State Farm and other insurance companies.

These are just cases where State Farm was a named party. State Farm is involved in vastly more cases where State Farm stays in the shadows and defends cases against people who caused accidents. It's difficult to determine which insurance companies are involved in these types of cases, since the Arkansas Administrative Office of the Courts and its federal counterpart, Pacer, don't keep track of the identity of insurance companies in these "third party" cases. This prevents the public from identifying trends about which insurance companies are bogging down court systems across the country.

It sure seems like we need to change our laws to shine more light on these insurance company tactics. At the Chaney Law Firm, we fight to expose bad faith insurance tactics, one case at a time.