Debt Collection Companies Being Sued for Harrasment & Deceptive Tade Practices in Ohio, West Virginia, & New York

Ohio Attorney General filed a lawsuit Wednesday against a Cleveland debt collection agency
after getting calls from more than 200 Ohio residents complaining of threats, harassment and deception. Read the Ohio AG lawsuit here.

National Enterprise Systems of Solon, Ohio is accused of illegal collection practices.

The lawsuit was filed in the Cuyahoga County Court of Common Pleas.

According to the lawsuit, debt collectors with National Enterprise Systems of Solon used abusive language, failed to verify debts and made unauthorized withdrawals from consumer bank accounts in violation of state and federal law.

Officials in West Virginia have also filed a similar lawsuit against the firm. Read the WV complaint here.


New York Attorney General has shut down a New York collection operation that consisted of at least nine debt collection companies across Western New York, run by Buffalo resident Tobias Boyland.

According to hundreds of consumer complaints filed with law enforcement agencies across the country, Boyland's employees violated state and federal law by routinely posing as law enforcement officials, threatening to arrest consumers and throw them in jail unless they made arrangements to pay the company immediately.

The Attorney General filed suit against Central Resource Management, Final Claims Asset Locators, Final Control Asset Locators, Interchange Payment Solutions, Next Step Services, Portfolio Asset Assurance, Silverbay Services, and Teleport..

Read the NY Complain Here.


Read the article here: http://www.dispatch.com/live/content/business/stories/2009/07/22/Collection_agency_lawsuit.ART_ART_07-22-09_A6_8LEHS6P.html?sid=101

Minnesota Attorney General Sues National Arbitration Forum for Fraud, Misrepresentation, Deceptive Trade Practices

Minnesota Attorney General Lori Swanson filed suit this week against the National Arbitration Forum of Minnesota, the nation's largest arbitration company for consumer credit disputes, accusing it of consumer fraud, false advertising and deceptive trade practices by "misrepresenting its independence" and hiding its "extensive ties" to the collection industry.

The Attorney General's lawsuit claims the National Arbitration Forum has ties to debt-collection law firms and works against consumers by virtue of having a mandatory arbitration clause set forth in a credit card, bank, or retail contracts. Hundreds of thousands of consumer disputes are resolved each year not by a judge or jury, but by a private arbitration system.

The Attorney General’s suit alleges that the National Arbitration Forum represented to consumers and the public that it is independent and neutral, operates like an impartial court system, and is not affiliated with and does not take sides between the parties.

The lawsuit alleges that the National Arbitration Forum, while holding itself out as impartial, works behind the scenes—alongside creditors and against the interests of ordinary consumers—to convince credit card companies and other creditors to insert arbitration provisions in their customer agreements and then appointing the Forum to decide the disputes.

The lawsuit alleges that the Forum pays commissions to executives whose job it is to convince creditors to put mandatory arbitration clauses in their customer agreements. The suit alleges that the Forum does this to generate arbitration filings in the Forum—and hence, revenue—for itself.

The lawsuit alleges that, despite telling consumers and the public that it is not affiliated or aligned with the collection industry, the Forum in fact has financial ties to the collection industry.

The lawsuit alleges that, beginning in 2006 and through 2007, Accretive—a family of New York private equity funds—engineered two transactions. In the first transaction, Accretive formed several equity funds under the name “Agora” (meaning “Forum” in Greek), which invested $42 million in the Forum.

In the second transaction, three of the country’s largest debt collection law firms—Mann Bracken of Georgia, Wolpoff & Abramson of Maryland, and Eskanos & Adler of California—merged into one large national law firm called Mann Bracken. Accretive then acquired the majority interest in a debt collection agency called Axiant, which acquired the collections operations of Mann Bracken. Through these transactions, Accretive took control of one of the country’s largest debt collection enterprises and became affiliated with the Forum, the country’s largest consumer collection arbitration company. The lawsuit alleges that Accretive principals remain actively involved with the Forum.

The lawsuit states that, in 2006, the Forum processed just over 214,000 consumer collection arbitration claims, of which 125,000, or nearly 60 percent, were filed by the above law firms.

Swanson said that the Forum was aware of the affiliation problem in 2006 when it negotiated its relationship with Accretive. She pointed to an email from an officer of the Forum to the hedge fund stating: “…we should certainly plan for unwinding any deal in the event shared ownership becomes an acute issue.”

We'll follow this interesting story.

View the complaint here:
http://capwiz.com/nacanet/attachments/MN_Complaint_Against_NAF.pdf

Sources:
MN Attorney General Press Release

http://www.politicsinminnesota.com/2009/jul14/3464/swanson-files-suit-against-national-arbitration-company

Business Week

FDA Eyes Acetaminophen & Evalutes Risks Assocaited With Its Use

The Food and Drug Administration is pondering what to do about the wildly popular painkiller in Tylenol, Excedrin, Nyquil, TheraFlu, Vicodin, Percocet and many other commonly used drugs to treat aches and pains and alleviate fevers.

Since all of these medicines have considerable amounts of acetaminophen in them, when you take them collectively, you're getting pretty close to the maximum daily allowance.

After a two day meeting, the FDA panel is calling for sweeping changes to review acetaminophen's safety since years of public education efforts have failed to alleviate the problem.

The FDA now recommends lowering the maximum amount allowed in over-the-counter medications from 4 grams to a lower, undisclosed amount. It also recommends adding a visible warning label on combination drugs that contain acetaminophen, and decreasing the dosage of Extra Strength Tylenol.

ACETAMINOPHEN DANGERS

Acetaminophen is generally very safe and effective, but in excess doses it can cause liver failure. And because acetaminophen is so common -- more than 24 billion doses were sold last year in the United States -- even rare side effects can add up to a lot of problems.

According to the FDA, from 1998 to 2003, acetaminophen was the main cause of acute liver failure in the United States.

According to a June 2006 report published in Pharmacoepidemiology and Drug Safety, between 1990 and 1998, each year there were an estimated 56,000 emergency room visits, 26,000 hospitalizations, and 458 deaths related to acetaminophen overdoses.

A 2007 report from the Centers for Disease Control and Prevention estimates that there are 1,600 cases of acute liver failure each year in the United States, and acetaminophen is the leading and most common cause of liver failure.

The drug is an ingredient in so many products that people often don't realize they are getting multiple doses that could exceed the safe levels. The panel even went as far as to narrowly recommend pulling Vicodin, Percocet and similar products that combine acetaminophen with powerful narcotics from the market altogether.

Now, while the FDA usually follows the advice of its advisory panels, it doesn't have to, and is unsure at this time what action they will take. The FDA panel was split about pulling drugs like Vicodin & Percocet since these drugs are important to so many millions of Americans.

More than 200 million doses of those drugs that combine acetaminophen with narcotics were sold last year in the United States, making them the most common prescribed class of drugs.

The agency could leave drugs like Vicodin and Percocet on the market with stronger, more prominent warning labels. They could also work out a compromise with the companies that make these products where they voluntarily reduce the dosages and take other steps to make them safer.

In the meantime, officials say consumers should pay careful attention to how much acetaminophen they are getting from various products to reduce the chances of suffering complications.

Sources:

Washington Post

WKBW - Buffalo

Examiner.com

Florida appellate court upholds Florida law against generic drug switching - even if the generic has been FDA approved

Today, a Florida state appellate court ruled that a Florida law banning the substitution of certain drugs must be followed, even if a generic version gets federal approval from the Food and Drug Administration.

A three-judge panel of the 1st District Court of Appeal unanimously said it would be unconstitutional for the Florida Legislature to give up its authority over generic swaps to the federal Food and Drug Administration.

The Florida law lists the drugs for which generics cannot be substituted. The appellate court ruled that the Legislature has to make any changes in that list.

The court sided with Abbott Laboratories, which appealed Administrative Law Judge Susan B. Harrell's decision to remove a thyroid drug, including its name-brand Synthroid, from the list.

"It upholds a fundamental right of patients to receive the medications that are prescribed and intended by their doctors," said Abbott spokesman Scott Stoffel in Chicago.

Abbott's drug is prescribed for patients whose thyroid glands don't make enough of a hormone that regulates energy and metabolism. Synthroid also is used to treat or prevent goiters - an enlargement of the thyroid gland - that can result from hormone imbalances, radiation treatment, cancer or surgery.

Harrell had ruled that a generic version made by Mylan Pharmaceuticals Inc. could be substituted because the FDA in 2007 had given it an A rating, which meant it was the therapeutic equivalent of Synthroid.

Harrell based her ruling on another provision of the law that removes a generic from the list if it gets an A rating in the FDA's "Orange Book."

District Judge William A. Van Nortwick wrote that Harrell should not have applied that provision to editions issued after the law was passed in 2001.

It's up to the Legislature to update the list each year based on revised versions of the Orange Book, though it isn't required to follow the FDA's guidance, Van Nortwick wrote.

Source: http://www.miamiherald.com/news/florida/AP/story/1108552.html

Debate about Generic Drug Substitution & US Marshals seize Generic Drugs from Caraco Parmaceutical Detroit-Based Plant Today

The headline about US Marshals seizing drugs and raw materials from a generic drug manufacturer grabbed my attention today and reminded me about what I heard earlier this week about 'generic drug substitution' or 'therapeutic switching.'


Generic Drug Substitution:

A debate seems to be brewing about pharmacists dispensing generic versus the brand name drug written on the prescription. A few days ago, it was reported that people suffering from epilepsy that are given generic, instead of the suggested brand named drug, are having increased seizures. This 'therapeutic switching' or generic substitution

Read the Detroit Free Press article. "To her surprise, Pauley found a generic drug, not Lamictal, a brand-name drug that had effectively controlled most of Cheyenne's seizures. In the next week, Cheyenne, age 11, had 21 seizures -- many more than usual."

A fierce legislative campaign is playing out in Michigan and other states over generic substitution and therapeutic switching, a practice that allows health insurers to fill a prescription with drugs similar to brand-name drugs.

Usually, a doctor can stop a switch by writing "DAW" on a prescription. But problems still can occur, and appeals are time-consuming. The Michigan Osteopathic Association (7,000 members) and the 3,000-member Michigan Association of Family Physicians have some worries. They're concerned that the preference by many health plans toward generics and nearly equivalent drugs called therapeutic substitutes leave too many patients and their doctors out of the decision-making about which drug they can prescribe or use.

Today, generic drugs made by Caraco Pharmaceutical Laboratories Ltd. were seized by U.S. authorities for violating manufacturing standards.

This is rather troubling since Caraco manufactures and markets 67 different products, according to the company’s Web site. The FDA said the seizure could affect 33 drugs in different dosages. Sun Pharmaceutical Industries Ltd., a Mumbai, India-based drugmaker, owns 76 percent of Caraco’s stock, according to Sun’s Web site.

Drugs and raw ingredients for pain, heart ailment and psychiatric medications were confiscated today at three Detroit, Michigan facilities to prevent Caraco from distributing its products until the manufacturing deficiencies are corrected, the U.S. Food and Drug Administration said in their statement.

The FDA said drug seizure could lead to shortages of one pill, choline magnesium trisalicylate, a generic pain-relief medication. If you are taking this, the FDA suggested consumers to contact their doctors about other alternative pain-relief medications.

Inspectors who visited the Caraco facilities in May 2009 found “serious violations” of manufacturing standards and “serious deficiencies” in quality control, Deborah Autor, director of the Office of Compliance at the FDA’s Center for Drug Evaluation and Research, said in a briefing with reporters.

In October 2008, the FDA issued a warning letter to Caraco after inspections in May and June found manufacturing deficiencies, including the cross contamination of two drugs.

In April 2009, Caraco announced a voluntary recall of some undisclosed products, according to an April 17 federal regulatory filing.

During a May 2009 inspection of Caraco plants, the FDA found “unresolved violations” of manufacturing standards.

“Given the firm’s history, we thought this was the next appropriate step to protect the public’s health,” Autor said.

Corrective actions had been taken and “continual improvements” are being made while Caraco works with the FDA to resolve the agency’s concerns, the company said in a statement.

The drug seizure “may have a material adverse effect” on near-term operations, though the company hasn’t determined the financial impact, Caraco said in its statement.

Mesothelioma

Yesterday, I met with a client of mine. He is in his 80's and was diagnosed two months ago, with mesothelioma. He starts chemotherapy next week.

He reminded me much of my grandfather, whom I was very close. He was a child of the depression and World War II. He smiled and laughed as he described, in perfect detail, many aspects of his life that even his children had not known. His wife of 63 years nodded and smiled as he spoke of their life together her "country cooking". It made me yearn for the conversations that I had with my grandfather, who was of the same generation, grew up working in the mines, and believed in working hard, playing by the rules, reading his bible, and giving something back, especially to those in need or without.

I worry about his condition in 6 months and whether he will be alive a year from now.

We have all heard of Mesothelioma. We see ads on television day and night. We know the stories about the industry having knowledge of the dangers of asbestos going back to the turn of the century, but some basic information bears repeating.

Background

Mesothelioma is a rare form of cancer in which malignant (cancerous) cells are found in the mesothelium, a protective sac that covers most of the body's internal organs. Most people who develop malignant mesothelioma have worked on jobs where they were exposed to and inhaled asbestos particles.

Mesothlium cells are found in the sac lining of the chest (pleura), the abdomen (peritoneum), or the heart (pericardium). The specific type of mesothelioma is named for the tissue where the cancer originates.

Approximately 70% of mesothlioma cases starts in the chest (pleural mesothelioma), which surrounds the outer lining of the lungs and internal chest wall.

Symptoms of the illness typically take 20 to 50 years to appear. While there is no cure, treatments involve a combination of surgery, chemotherapy and radiation.

Although reported incidence rates have increased in the past 20 years, mesothelioma is still a relatively rare cancer. About 2,000 new cases of mesothelioma are diagnosed in the United States each year.

Mesothelioma occurs more often in men than in women and risk increases with age, but this disease can appear in either men or women at any age.

The Center for Disease Control noted from a 2003 study that “because mesothelioma manifests 20--40 years after first exposure, the number of mesothelioma deaths will likely peak by 2010.”

If you or a loved one has been diagnosed with mesothelioma, please give me a call to discuss your case. 205-322-8880 or email me @ Chrish@PDKHLaw.com .

FDA urges consumers to stop using Zicam due to loss of sense of smell

The U.S. Food and Drug Administration advised consumer to stop using three Zicam products marketed over-the-counter as cold remedies because they are associated wtih the loss of sense of smell (anosmia) on June 16th.

The products are:
--Zicam Cold Remedy Nasal Gel
--Zicam Cold Remedy Nasal Swabs
--Zicam Cold Remedy Swabs, Kids Size (a discontinued product)

More than 130 reports of loss of sense of smell associated with the use of these three Zicam products were reported to the FDA. Many people who experienced a loss of smell said the condition occurred with the first dose; others reported a loss of the sense of smell after multiple uses of the products.

“Loss of sense of smell is a serious risk for people who use these products for relief from cold symptoms,” said Janet Woodcock, M.D., director of the FDA’s Center for Drug Evaluation and Research (CDER). “We are concerned that consumers may unknowingly use a product that could cause serious harm, and therefore we are advising them not to use these products for any reason.”

People who have experienced a loss of sense of smell or other problems after use of the affected Zicam products should contact their health care professional. The loss of sense of smell can adversely affect a person’s quality of life, and can limit the ability to detect the smell of gas or smoke or other signs of danger in the environment.

The FDA has issued Matrixx Initiatives, maker of these Zicam products, a warning letter telling it that these products cannot be marketed without FDA approval.

See the FDA website links below for more information on Zicam :
http://www.fda.gov/ForConsumers/ConsumerUpdates/ucm166931.htm

NIH provides information about homeopathy: http://nccam.nih.gov/health/homeopathy/

Green Lawsuits Starting to Sprout

Litigation over green buildings that don't get LEED certification (Leadership in Energy and Environmental Design), resulting in the failure of building owners to receive tax credits is on the rise.

Contractors have allegedly represented to developers and building owners that their building will be environmentally friendly and qualify for tax credits.

In a recent case, the developer claimed that a builder failed to meet environmental standards set by the U.S. Green Building Counsel, a Washington D.C. based non-profit that creates standards and certifies buildings as environmentally friendly.

Many municipalities have been offering tax credits or zoning variances for construction that meets the USGBC standards. It is expected that in the future, municipalities will require all buildings to meet such standards. What happens when buildings don't meet the standards?

The builders will claim that the certification entities have wrongfully withheld certification. They may even attempt to add the certification companies as defendants, which may be difficult since they are private companies who claim they have no legal obligation to approve projects.

Other issues in this area include what happens when buildings are built to green standards, but don't deliver green results and result in other unforeseen problems.

You can be sure there will be much litigation in this area in the days, weeks, and years to come.

Read this New York Times Article for more reveling information: http://greeninc.blogs.nytimes.com/2009/05/29/the-legal-risks-of-building-green/

Report by Harvard Law School Points to Potential Legal Problems in Building Green: view the PDF here: http://www.mgkflaw.com/Green%20Building%20Revolution.pdf

For more information about building green, view the NRDC site: http://www.nrdc.org/buildinggreen/leed.asp

Florida Department of Insurance Issues Show Cause Order Against Liberty National Life Insurance Company

On June 3rd, the Florida Department of Insurance issued an order for Liberty National Life Insurance Company to show cause why a final order suspending or revoking the Certificate of Authority currently held by Liberty National in the state of Florida should not be issued.



The Order arose out of a Market Conduct Examination which took place from June to November of 2008 at Liberty National offices in Birmingham, Alabama.

According to the Order, Liberty National was accused of unfair and deceptive conduct. Specifically, Liberty National is accused of discriminating against people solely because of the individuals national origin.

The order primarily involves individuals from Haiti who applied for insurance, but also addressed applications from individuals from Columbia, India, and Pakistan. The applications reviewed by investigators requested to know if the individual had lived in the United States for the last year. However, Liberty National had an underwriting policy that applicants born in certain countries would be rejected if they had resided in the United States for less than 10 years. This heightened underwriting standard applied to individuals from less developed countries. "This was in direct contrast to the written information provided to applicants as part of the application process that they must have resided in the U.S. for the past year to be eligible for life insurance coverage."


As a result, applicants were denied coverage based solely on their national origin.

Additionally, regulators determined that Liberty National represented a basis for denial as "information not received" which was a completely false and fabricated reason to cancel a policy when no actual reason existed. One underwriting file even contained a handwritten stating "Find a reason to cancel/decline. Info not received?"

For a complete copy of the report, contact Chris Hellums at Chrish@PDKHLaw.com

Are Debt Collectors out of Control?

It all started with a call from a potential client. When the call started, I could tell it was going to be a long conversation. The call was from an elderly woman who sounded as if she was at her wits end. As she told her story, I realized that I had to see if I could help.

Her daughter had gotten into drugs and stolen her identity. She had taken out credit cards and incurred debt in her mother’s name. When her mother found out, she talked with her daughter and told her that there must be consequences for her actions. She contacted the police and filed a complaint against her daughter. This was a difficult decision as she loved her daughter and realized that her actions would effect her daughter’s life. However, she was even more concerned if she did not do something. Her daughter plead guilty and entered into a restitution agreement.

Image via Wikipedia

Shortly thereafter, the mother and true victim began getting calls and letters from debt collectors. She explained the situation to them. She provided them a copy of the complaint she filed. She provided them with a copy of the guilty plea. She even obtained a letter from the District Attorney who prosecuted her daughter describing what happened and stating that she was not now, or had she ever been, a participant in the fraud and in fact, was a victim.

These collectors did not care. Day and night they called. They called at home. They called at work. They even called at her husband’s work. They threatened to garnish her wages. They threatened to take her house. They threatened just about everything you could threaten.

She then went to an attorney. She paid him thousands of dollars to write letters to these people in hopes that would stop the harassment. Nothing seemed to work.

Somehow she found me late one afternoon. Up until this point in time, I had never handled a case like this one. I researched the issues and began looking at consumer sites such as budhibbs.com.

I filed suit against the various creditors and debt collectors.

After filing suit, I received the first of what has become common in these types of cases. The attorneys for the various entities call and say they cannot find my client’s account, their client has no record of any calls to my client. They would never call at work. My client must be mistaken. Fortunately, my client had kept recordings from her answering machine and had co-workers listen in on conversations. Ultimately, we settled with the debt companies and collectors. My client received economic compensation and on some level, felt vindicated.

Since that time, I have represented a number of client’s in these types of transactions.

I advise them all to do the following:

1. Document every conversation
2. Document any phone number which calls them
3. Retain all letters received from any bill collectors
4. Dispute all accounts with the various Credit Reporting Agencies
5. Obtain a police report
6. Send a letter, certified mail, to each creditor and debt collection company

I also tell my clients to be prepared to receive more harassing calls and letters stating that the creditor or debt collectors have completed their investigation and determined that they owe the debt.

To understand why this occurs, consumers need to know more about how the industry works. Stay tuned to future postings about how the industry operates, the tactics they use, and where to go for help.

Chris Hellums is the managing shareholder of Pittman Dutton Kirby & Hellums. He can be reached at CHRISH@PDKHLaw.com or toll free at 866-515-8880

Congress Must Act on Nutritional and Dietary Supplements

We must tighten laws on nutritional and dietary supplements. It is that simple. All day and all night we are barraged with commercials touting (and showing) the benefits of these products. And yes, from time to time, there are articles or exposés which reveal that the women in the ads have lost the weight not from taking the product, but either by gaining the weight on purpose, or comparing against pictures taken shortly after having a baby.

However, this is not enough to deter Americans quest for a bottle cure, and while spending some money on a product that simply does not work is acceptable to many, what most don’t realize are the real dangers of these types of products. Many assume that manufactures cannot make the exaggerated claims on television unless they are true, or because the Food and Drug Administration regulates prescription drugs so heavily, that they regulate these as well. These assumptions are simply incorrect. The truth of the matter is that the exaggerated claims are made because there is so little regulation and because there is so much money to be made---$22 Billion-a-year. Yes, that is correct, Billion, not Million.

A 1994 law leaves this industry lightly regulated. Supplement manufacturers don't have to provide scientific proof of a product's purity, safety or effectiveness before they put it on the market. Instead, the FDA generally does not step in until after problems are reported.

The industry argues that the current regulation works well and that one bad apple is not representative of an industry whose manufactures, for the most part, go to great lengths to ensure they sell a safe, quality product. The problem is that the Hydroxycut has become just another addition to a long list of dietary and nutritional supplements that were heavily hyped and then discovered after perhaps millions were sold, to pose significant and harmful risks. Last year, Total Body Formula, was recalled after it was determined that it contained toxic amounts of Selenium---the same substance that killed polo horses in Florida. If selenium will kill horses, imagine what it would do to humans. StarCaps, a product used by overweight Minnesota Vikings Kevin and Pat Williams, was found late last year to contain an unlisted prescription diuretic that could increase users' risk of heat stroke and dehydration. In 2004, the FDA banned ephedrine diet aids after a major study linked the products' use to more than 16,000 adverse events, including cardiovascular problems.

Incredibly, Hydroxycut was marketed as a better alternative after the ephedrine ban. It’s name comes from hydroxycitric acid, which comes from a tropical fruit. Reportedly, Hydroxycut sold 9 million units last year. After 23 reported cases of serious health problems in people taking the product, including liver abnormalities, heart problems and possible kidney failure -- Hydroxycut's manufacturer agreed to recall at least 14 products late last week.

The time has long come for Congress to more strongly regulate dietary and nutritional supplements. Of course, once this occurs, we will only have to worry about altered data being sent to the F.D.A. and a revolving door of regulators moving on to work for the industry.

Chris Hellums is the managing partner of Pittman Dutton Kirby & Hellums and is currently co-lead counsel of the Executive Committee to the Personal Injury Plaintiff's Steering Committee for the Total Body Multi-District Litigation. He can be reached at ChrisH@PDKHLaw.com

Debt Settlement Companies Under Attack by Authorities

Debt settlement companies are for-profit companies that claim that they can eliminate consumers’ debts by negotiating settlements with creditors that are a fraction of the consumer’s outstanding debt. If you watch television these days, their advertisements show up as often as those for drug companies. Many of these companies accomplish very little for consumers while charging exorbitant fees and make empty promises that leave consumers in worse financial state then when they began.

These debt solution companies prey on desperation, offering false hope and no help, often driving these consumers even further into debt and ruining their credit.

Some debt solution companies advise consumers to do one of the following:

1. Stop paying debts

The Problem: this causes customers to face unforeseen late fees, additional interest, increased collections attempts, and even lawsuits by their creditors.

2. Stop paying debts and, instead, to place money into savings account so that enough money will accumulate to allow a settlement offer to be made to any creditors.

The Problem: The debt settlement companies’ saving plans are often extremely unrealistic, so that the promised negotiated settlements do not occur, but the debt settlement companies’ still take their fees.

Also, the debt settlement plans are generally premised on consumers aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their precarious financial situation.

3. Ignore collection efforts or refer those efforts to the debt settlement company.

The Problem: it doesn’t work and consumers continue to find themselves subject to creditors’ collection efforts, including lawsuits, and consumers’ credit histories are further damaged when the consumers stop paying debts.

4. Seek additional sources of funds through means such as selling their blood plasma, mowing lawns, cutting down on car insurance and borrowing from their neighbors and church.

The Problem: Even for those consumers who can meet the requirements set out by a plan, their amount of aggregated savings is ordinarily insufficient to settle their debts. As a result, many consumers find themselves worse off financially because of these debt settlement plans.

I suspect that much litigation will arise against debt settlement companies who engage in this type of conduct.To read more about the actions being taken by the New York Attorney General, see here (http://www.oag.state.ny.us/media_center/2009/may/may19b_09.html)

Chris Hellums may be contacted at ChrisH@PDKHLAW.com

Debt Solutions companies under attack by authorities

Debt settlement companies are for-profit companies that claim that they can eliminate consumers’ debts by negotiating settlements with creditors that are a fraction of the consumer’s outstanding debt. If you watch television these days, their advertisements show up as often as those for drug companies. Many of these companies accomplish very little for consumers while charging exorbitant fees and make empty promises that leave consumers in worse financial state then when they began.

These debt solution companies prey on desperation, offering false hope and no help, often driving these consumers even further into debt and ruining their credit.

Some debt solution companies advise consumers to do one of the following:

1. Stop paying debts

The Problem: this causes customers to face unforeseen late fees, additional interest, increased collections attempts, and even lawsuits by their creditors.

2. Stop paying debts and, instead, to place money into savings account so that enough money will accumulate to allow a settlement offer to be made to any creditors.

The Problem: The debt settlement companies’ saving plans are often extremely unrealistic, so that the promised negotiated settlements do not occur, but the debt settlement companies’ still take their fees. Also, the debt settlement plans are generally premised on consumers aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their precarious financial situation.

3. Ignore collection efforts or refer those efforts to the debt settlement company.

The Problem: it doesn’t work and consumers continue to find themselves subject to creditors’ collection efforts, including lawsuits, and consumers’ credit histories are further damaged when the consumers stop paying debts.

4. Seek additional sources of funds through means such as selling their blood plasma, mowing lawns, cutting down on car insurance and borrowing from their neighbors and church.

The Problem: Even for those consumers who can meet the requirements set out by a plan, their amount of aggregated savings is ordinarily insufficient to settle their debts. As a result, many consumers find themselves worse off financially because of these debt settlement plans. I suspect that much litigation will arise against debt settlement companies who engage in this type of conduct.

To read more about the actions being taken by the New York Attorney General, see here (http://www.oag.state.ny.us/media_center/2009/may/may19b_09.html)

Chris Hellums may be contacted at ChrisH@PDKHLAW.com

What is going on with Juries these days???

In the last 6 months, our firm has obtained four multi-million dollar verdicts? For years, the jury system has been under attack by surrogates of mega corporations who claim that the jury system is out of control. For years, those attacks have been successful and juries have been reluctant to punish corporate wrongdoing.

Those trends seem to be changing. Recently, our firm conducted a focus group in a very conservative county. We represent several small businesses in that county whose insurance carrier denied their storm damage claims and effectively put them out of business. We conducted the focus group to gauge their thoughts on many issues, including punitive damages. We selected a conservative cross section, which included insurance agents and business owners. The results were striking.

Small town America is angry with corporate America. Small town America says corporate America is getting a bail out and small town America is not only getting left out, but forced to pick up the tab. One member of the panel spoke from the heart. He said that in the past he was reluctant to award significant damages in a civil case for fear that the trickle-down effect would hurt his local community, but now he believes otherwise.

When we hear about the excesses of corporate pay, it is easy to see why small town America feels like they do today.

For more on excessive corporate pay and golden parachutes, see the attached article:

http://finance.yahoo.com/career-work/article/107075/golden-coffins-golden-offices-golden-retirement?mod=career-salary_negotiation

Image by Roscoe Van Damme via Flickr

Image by Global Jet via Flickr

PDKH client awarded $17 million in damages today in a commercial case involving a logging skidder

PDKH client Chapman Logging was awarded $17,000,000.00 today by a Hale County jury. The case involved the sale of a defective skidder equipped with a Cummins engine. The case was tried by PDKH attorney David Hodge, along with Vance McCrary of The Gardner Firm and James Seale of Greensboro. Cummins was represented by Matt Landreau of Columbus, Ga.

David Hodge can be reached toll free at 866-515-8880 or by e-mail at DavidH@pdkhlaw.com

What are 412(i) Plans and what are the problems with these plans

412(i) is a provision of the tax code. A 412(i) plan is a defined pension plan. A 412(i) plan differs from other defined benefit pension plans in that it must be funded exclusively by the purchase of individual life insurance products (insurance and annuities). It provides specific retirement benefits to participants once they reach retirement and must contain assets sufficient to pay those benefits. To create a 412(i) plan, there must be a plan to hold the assets. The employer funds the plan by making cash contributions to the plan, and the Code allows the employer to take a tax deduction in the amount of the contributions, i.e. the entire amount.

The plan uses the contributed funds to purchase some combination of life insurance products (insurance or annuities) for the plan. As the plan participants retire, the plan will usually sell the policies for their present cash value and purchase annuities with the proceeds. The revenue stream from the annuities pays the specified retirement benefit to plan participants.

Where did the problems start?

In the late 1990's brokers and promoters such as Kenneth Hartstein, Dennis Cunning, and others began selling 412(i) plans designed with policies created and sold through agents of Pacific Life, Hartford, Indianapolis life, and American General. These plans were sold or administered through companies such as Economic Concepts, Inc., Pension Professionals of America, Pension Strategies, L.L.C. and others.

These plans were very lucrative for the brokers, promoters, agents, and insurance companies. In addition to the costs associated with administering the plans, the policies of insurance had high commissions and high surrender charges.

These plans were often described as Pendulum Plans, or other similar names. In theory, the plans would work as follows. After the defined pension plan was set up, the plan would purchase a life insurance policy insuring the life of an individual. The plan would have no cash value (and high surrender charges) for 5 or more years. The Corporation would pay the premium on the policy and take a deduction for the entire amount. In year 5, when the policy had little or no cash value, the plan would transfer the policy to the individual, who would take it at a greatly reduced basis. Subsequently, the policy would bloom like a rose, and the individual would have a policy with significant cash value which he or she could withdraw tax free.

Who signed off on the plan?

Attorney Richard Smith at the law firm of Bryan Cave issued tax opinion letters opinion which stated that many of the plans complied with the tax code.

So what is the problem?

In the early 2000s, IRS officials began questioning Richard Smith and others and giving speeches at benefits conferences wherein they took the position that these plans were in violation of both the letter and spirit of the Internal Revenue Code.

In February 2004, the IRS issued guidance on 412(i) and began the process of making plans "listed transactions." Taxpayers involved in listed transaction are required to report them to the IRS. These transactions are to be reported using a form 8886. The failure to file a form 8886 subjects individual to penalties of $100,000 per year, and corporations $200,000 per year. These penalties are often referred to as section 6707 penalties. Advisors of these plans are required to maintain records regarding these plans and turn them over to the IRS, upon demand.

In October of 2005, the IRS invited those who sponsored 412(i) plans that were treated as listed transactions to enter a settlement program in which the taxpayer would recind the plan and pay the income taxes it would have paid had it not engaged in the plan, plus interest and reduced penalties.In late 2005, the IRS began obtaining information from advisors and actively auditing plans and more recently, levying section 6707 penalties.

You may contact Chris Hellums at Chrish@pdkhlaw.com

For more information on 412(i) litigation, see http://412ilitigation.blogspot.com/

PDKH Lawyers obtain award for mother and daugher injured by drunk driver

Pittman Dutton Kirby & Hellums attorneys Chris Hellums and David Hodge of Birmingham, along with Tom Denham of Moulton recently tried and received a verdict in the Circuit Court of Lawrence County in the amount of $2,075,000. The verdict consisted of $850,000 in compensatory damages and $1,225,000 in punitive damages.

PDKH represented a family from Lawrence County whose lives were forever altered when they were hit head-on collision by a drunk driver on July 18, 2006. The driver of the other vehicle crossed the center line and hit the Lawrence County residents head on. At trial, PDKH lawyers Chris Hellums and David Hodge were able to introduce into evidence that at approximately 9:40 am in the morning, the driver of the other vehicle was intoxicated at a level of almost four times the legal limit and that his vehicle had open containers and empty bottles in the front seat.

The force of the impact was so great that the client's vehicle traveled 39 feet in the opposite direction from which it was traveling and caught fire. Heroic fellow motorists were able to pull the mother and daughter from the burning vehicle as it exploded in flames. The mother suffered numerous physical injuries including two collapsed lungs, a broken collar bone and broken ribs, all of which required multiple surgeries, extensive hospitalization and painful physical therapy. The 16 year-old daughter suffered a broken back and a spinal cord injury that left her paralyzed. After months of surgeries and physical therapy, coupled with a strong will to overcome and prayers from others, the teen was able to take her first steps without the assistance of a wheel chair. Even though the teen will never live without pain, she continues to work hard and undergo physical therapy as she attempts to walk normally again.

This case was tried by partners Chris Hellums and David Hodge. Chris Hellums can be reached at chrish@pdkhlaw.com and David Hodge can be reached at davidh@pdkhalw.com .

To read more:http://legacy.decaturdaily.com/decaturdaily/news/060719/wreck.shtml

http://legacy.decaturdaily.com/decaturdaily/news/060824/hurt.shtml

http://legacy.decaturdaily.com/decaturdaily/news/061010/morgan.shtml

Lawyer Chris Hellums appointed as Co-Lead Counsel for the Total Body Formula MDL

United States District Judge R. David Proctor of The United States District Court for the Northern District of Alabama, Southern Division, has appointed attorney Chris Hellums, of the Birmingham, Alabama firm of Pittman Dutton Kirby & Hellums as co-lead counsel of the Executive Committee to the Personal Injury Plaintiff's Steering Committee for the Total Body Multi-District Litigation.

If you have questions you can contact attorney Chris Hellums at ChrisH@pdkhlaw.com

Total Body Formula Recall

The U.S. Food and Drug Administration is advising consumers not to purchase or consume Total Body Formula in the flavors of Tropical Orange and Peach Nectar, or Total Body Mega Formula in the Orange/Tangerine flavor. The liquid dietary supplement products may cause severe adverse reactions, including significant hair loss, muscle cramps, diarrhea, joint pain and fatigue.
The Total Body Formula products are sold in eight-ounce and 32-ounce plastic bottles. The Total Body Mega Formula is sold in 32-ounce plastic bottles. Both products are distributed by Total Body Essential Nutrition of Atlanta. The company is the sole distributor of the products and has voluntarily recalled Total Body Formula in the flavors of Tropical Orange and Peach Nectar and Total Body Mega Formula in Orange/Tangerine flavor.

Batches of Total Body Formula contain excessive amounts of selenium.
“In excess, selenium is a toxin to humans and causes, among other things, hair loss, severe muscle cramps, motor neuron death leading in some cases to amyotrophic lateral sclerosis (Lou Gehrig’s disease), nausea, vomiting and diarrhea, and endocrine disturbances including thyroid hormone and insulin regulation problems.

The U.S. Food and Drug Administration released a warning Thursday, saying it has information on 23 people in Florida who “experienced serious reactions to these products seven to 10 days after ingestion.” The administration advised consumers not to “purchase or consume Total Body Formula” in tropical orange and peach nectar flavors, or the mega formula in the orange/tangerine flavor.

The FDA says the product has been distributed in 15 states, including Florida, Alabama, Georgia and Tennessee. Andrea Turner, a spokeswoman for the Tennessee Department of Health, told The Associated Press three people in her state have suffered hair loss and diarrhea after ingesting Total Body Formula.

If you have any questions or need assistance please contact Chris Hellums at ChrisH@pdkhlaw.com or call toll free 1-866-515-8880