Revisiting the 14th Amendment:

In Addition to Civil Rights, We Should be Concerned about Corporate Rights and Health Care Rights and Pension Rights

With budget deficits, war and homeland security issues demanding a larger share of a declining tax base, we may need to broaden our definition of what constitutes security at home.

The federal courts are increasingly affording the protections of the 14th Amendment of the U.S. Constitution to corporations.

The 14th Amendment was intended to protect former slaves in the South after the Civil War. A court decision in 1886, Santa Clara County v. Southern Pacific Railroad, is credited with granting corporations all the rights of personhood. This may actually not have been the court's intention, and it may be a profound historical misreading, but subsequent court decisions have reconfirmed this interpretation.

The 14th Amendment's protections figured large in the Supreme Court's decision to protect George W. Bush from the dangers of a recount of the votes in Florida. The Bush side argued successfully that inconsistent standards for manual recounts violated his rights of due process guaranteed by this amendment.

Recently, the Federal Appeals Court in the 9th Circuit ruled in favor of Ford Motor Company in substantially reducing a punitive damage award in the death of a 3-year-old who was run over by the family vehicle in his own driveway when faulty brakes released while parked. It was proven in court that Ford knew of the defect, but had not yet issued a recall. The court remanded the case with instructions to the jury to consider only Ford's conduct in Nevada (where the accident occurred) and to not base the award of damages on sales of the vehicle in other states.

There are many other cases that could be cited where judges have modified jury awards downward using various justifications to enact their own version of tort reform.

The newly-formed Homeland Security Department accomplished yet another version of tort reform in the fine print of the legislation. Certain industries, such as airlines and pharmaceuticals, will be protected from class action suits (ditto the “Terrorism Insurance Act”), and damage awards will be severely limited. Passage of this Homeland Security legislation, in a patriotic fever, has gone part of the way to fulfill the Republican and corporate wish list in the glow of the party's mid-term election victories.

The plaintiff's bar is one of the enduring bastions of liberty and justice for all Americans; however, with both Houses of Congress now in the control of the Republican party, the battle over tort reform is soon to be engaged.

The title “tort reform” suggests that there is something that needs fixing. The allegation is that trial lawyers are money-grubbing ambulance chasers, and juries are bleeding-heart champions of the little man and are “runaways” in their awards.

The truth is that corporations suing other corporations are never tagged with such labels; and, if bad corporate behavior is to be restrained, the recent history of regulation does not offer much hope.

It falls to the people, represented by the aggrieved party and his or her lawyer to hit the corporations in the only place it really matters to them; namely, the corporate treasury. So all the efforts to cap punitive or exemplary damages and restrict awards to actual damages should start the alarm bells ringing.

Corporations routinely calculate the cost of lives that could be lost versus the costs of a better designed product, and the calculus will always favor the lower product cost, if the only damages are the cost of putting the body back together or burying it.

Workers compensation insurance is another example of avoiding blame assessment in the interest of a fast and sure medical and wage replacement compromise. Increasing insurance premiums has only a slight influence on driving better workplace safety.

Corporations and their legislative allies will argue that tort “reform” is needed to keep America competitive and jobs secure. Allowing destructive corporate practices to go unpunished, however, strikes me as exactly the wrong prescription for enhancing the viability of American corporations internationally.

Any sane industrial policy will recognize that consumers in other countries are not all dummies and may, in fact, prefer, say, non-polluting high-mileage Hondas over the gas-guzzling monsters still favored in Detroit.

Same Principle at Work in Health Care
Our security is also endangered by continuing to deal with public health in a for-profit regime. Seen as a zero-sum proposition, we are deterred from speaking of a national health solution, drowned out by the noise from the HMO's, pharmaceutical companies, and the American Medical Association. The vested interests prevent a rational look at alternatives, even as most western countries have had undeniable success with various versions of a nationalized health system, and at much lower cost than in the U.S.

In most countries of Europe, health care is guaranteed to everyone. In the US, 40 million citizens are uninsured and we have almost no public hospitals left.

An article in the current issue of Business Insurance indicates that Humana, Inc., one of the largest managed care companies, will take a charge of $145 million against earnings related to restructuring and the layoff of 2,300 workers. This must surely mean that they have been doing something very wrong. However, despite these charges, they had net profits of $145 million for the first 9 months of 2002, a 19.3% increase over the prior year. At the same time premium costs are skyrocketing.

On average, a retiree's health plan costs increased 16% between 2001 and 2002. It is predicted that this level of increase will continue for at least the next 3 to 5 years. The total monthly premium cost for family coverage at group rates—for large groups—is $729 per month, with the employer paying an average of 55% of the premium.

When asked, 80% of employers said that they would continue to increase retirees’ health premiums in the next three years, and 75% said they would raise deductibles. A frightening 23% said they would probably terminate coverage altogether.

Kaiser Family Foundation president Drew Attman said, “Employer-subsidized coverage is not collapsing, but it is eroding.”

As to small businesses, 52% of small companies provide health insurance to their employees, but this is down from 60% in year 2000. 78% of small business owners cited the cost of health insurance as their number one worry.

Finally, the bankruptcy of many corporations, both old technology and new, is having a terrifying effect on the Pension Benefit Guaranty Corporation. On December 5, this agency announced that it will take over the pension funds of National Steel Corporation, which is in Chapter XI bankruptcy. This will be the second most costly bailout in PBGC’s 28 year history. PBGC estimates its loss from this takeover to be $1.1 billion, and this amounts to only a partial guarantee of promised benefits.

An even bigger loss looms on the horizon. Bethlehem Steel’s pension program is more than $3 billion in the hole, and has recently gone public, suggesting that PBGC will have to take over their pension plans within the next few months. If that happens, it will exhaust the entire surplus of PBGC.

Just think—all this good news and we haven’t even touched social security and the collapse of the stock market or the bailout of the airlines, property-casualty insurance companies and soon, I’m afraid, the international banking system.

With budget deficits, war and homeland security issues demanding a larger share of a declining tax base, we may need to broaden our definition of what constitutes security at home.