Law Commons^™

Mandatory Rules And Default Rules In Insurance Contracts, Tom Baker, Kyle D. Logue

Law & Economics Working Papers

The economic analysis of contract law can organized around two general questions: (1) what are the efficient or welfare-maximizing substantive rules of contract law; and (2) once those rules have been identified, when if ever should they be made mandatory and when should they be merely “default rules” that the parties can contract around if they wish? Much of contract theory over the past twenty years has been devoted to developing answers to those two questions. The same two questions can be posed with respect to the rules of insurance law. Although previous scholars have examined particular substantive doctrines of …

Duty In The Litigation-Investment Agreement: The Choice Between Tort And Contract Norms When The Deal Breaks Down, Anthony J. Sebok, W. Bradley Wendel

Cornell Law Faculty Publications

Litigation investment, which is also known as “litigation finance” or “third party litigation finance,” has grown in importance in many common law and civilian legal systems and has come to the United States as well. While many questions remain about both legality and social desirability of litigation finance, this paper starts with the assumption that the practice will become widespread in the US and explores the obligations of the parties to the litigation finance contract.

The first part of the article uses an example to illustrate the risks imposed by one of the other party on the other which should …

Insuring Island States: The Role Of Insurance For Small Island States In Responding To The Adverse Effects Of Sea Level Rise, Maria Antonia Tigre

Elisabeth Haub School of Law Student Publications

Small island states are likely to suffer the greatest impact of sea level rise. They are also generally low emitters of greenhouse gas emissions (GHGs), meaning they have contributed little to the problem of human-induced climate change. For an array of reasons, including their reduced economic and political power relative to the international power of other states, these smaller islands and states have come together, forming the Alliance of Small Island States (AOSIS). Jointly, they have been battling to gain the attention of the international community in their search for solutions. However, they are still left with many unanswered questions …

Rediscovering The Sawyer Solution: Bundling Risk For Protection And Profit, Jeffrey W. Stempel

Scholarly Works

No abstract provided.

Central Falls Retirees V. Bondholders: Assessing Fear Of Contagion In Chapter 9 Proceedings, Maria O'Brien

Faculty Scholarship

Modern Chapter 9 litigation has been characterized by extraordinary protections for municipal bondholders, and Central Falls is no exception. Although not well understood by politicians, fear of contagion has encouraged the adoption of legal arrangements that have limited the bankruptcy courts’ ability to include bondholders in the cost of restructuring municipal debt. This preference for bondholders (and, by extension, their insurers) has meant increased misery for taxpayers and retirees. Given that all of these actors appear to have been complicit to some degree in the creation and maintenance of the fiscally imprudent conditions that triggered bankruptcy and that evidence of …

Can Consumers Make Affordable Care Affordable? The Value Of Choice Architecture, Eric J. Johnson, Ran Hassin, Tom Baker, Allison T. Bajger, Galen Treuer

All Faculty Scholarship

Starting this October, tens of millions will be choosing health coverage on a state or federal health insurance exchange as part of the Patient Protection and Affordable Care Act. We examine how well people make these choices, how well they think they do, and what can be done to improve these choices. We conducted 6 experiments asking people to choose the most cost-effective policy using websites modeled on current exchanges. Our results suggest there is significant room for improvement. Without interventions, respondents perform at near chance levels and show a significant bias, overweighting out-of-pocket expenses and deductibles. Financial incentives do …

Following English Footsteps? An Empirical Study Of Singapore's Reported Insurance Judgments And Disputes Between 1965 And 2012, Christopher C. H. Chen

Research Collection Yong Pung How School Of Law

This article presents an empirical study of the development of Singapore’s insurance contract law in relation to English law. The gene of Singapore’s insurance law is very English. The empirical data show a lack of momentum in driving insurance law forward by case law. This may justify further legislative reform to address not only the known doctrinal issues inherited from English law but also the specific problems facing consumer insurance. Singapore’s competitiveness in the global insurance market will be an instrumental factor to determine how far Singapore continues to follow English law in the future.

Understanding Insurance Anti-Discrimination Laws, Ronen Avraham, Kyle D. Logue, Daniel Benjamin Schwarcz

Law & Economics Working Papers

Insurance companies are in the business of discrimination. Insurers attempt to segregate insureds into separate risk pools based on their differences in risk profiles, first, so that they can charge different premiums to the different groups based on their risk and, second, to incentivize risk reduction by insureds. This is why we let insurers discriminate. There are, however, limits to the types of discrimination we will allow insurers to engage in. But what exactly are those limits and how are they justified? To answer these questions, this Article articulates the leading fairness and efficiency arguments for and against limiting insurers’ …

Enough About The Constitution: How States Can Regulate Health Insurance Under The Aca, Brendan S. Maher, Radha A. Pathak

Faculty Scholarship

Last term, the United States Supreme Court upheld the constitutionality of the Affordable Care Act in a landmark decision. It is a forceful reminder that America’s oldest question — how power should be shared between federal and state sovereigns — retains powerful political salience. Critics have reflexively attacked the decision as an assault on states’ rights, while supporters have celebrated the result. Regrettably, insufficient attention has been paid to how, in actuality, health care regulatory authority has been and will be divided between federal and state governments. In this Article, we fill that gap. To do so, we apply “federalism-in-fact,” …

Review, From Industrial To Legal Standardization, 1871-1914: Transnational Insurance Law And The Great San Francisco Earthquake, Sachin Pandya

Faculty Articles and Papers

No abstract provided.

Explaining Variation In Insurance Anti-Discrimination Laws, Ronen Avraham, Kyle D. Logue, Daniel Benjamin Schwarcz

Law & Economics Working Papers

Discrimination in insurance underwriting is regulated at the state level. Surprisingly, there is a great deal of variation across jurisdictions in how and the extent to which risk classification by insurers is limited. Some states expressly permit insurers to consider certain characteristics, while other characteristics are forbidden or limited in various ways. What explains this variation across states? Drawing on a unique, hand-collected data-set consisting of the laws regulating insurer risk classification in all 51 U.S. jurisdictions, this Article argues that much of the variation in state-level regulation of risk classification can in fact be explained by focusing exclusively on …

Improving Retirement Savings Options For Employees, James Kwak

Faculty Articles and Papers

Americans do not save enough for retirement. One reason is that our retirement savings accounts — whether employer-sponsored defined-contribution plans such as 401(k) plans or individual retirement accounts — are heavily invested in actively managed mutual funds that siphon off tens of billions of dollars in fees every year yet deliver returns that trail the overall market. Under existing law, as interpreted by the courts, mutual funds may charge high fees to investors, and companies may offer expensive, active funds to their employees. This paper argues that the Employee Retirement Income Security Act should be reinterpreted, in light of basic …

Insurance And Climate Change, Peter Kochenburger, Joseph Macdougald

Faculty Articles and Papers

Climate change started as a scientific theory, became the subject of environmental policy and international negotiation, and today manifests itself within the courts in a series of boundary testing cases that challenge the settled concepts of risk and redress available under both environmental and insurance law. As our climate becomes increasingly unstable and the causal link between damage from sea-level rise and severe weather events becomes ever more tangible and traceable, courts at all levels wrestle with varying avenues of legal authority, including: the limitations of legal redress through the political question doctrine the appropriateness of traditional federal and state …

Segmented Settlements Are Not The Answer: A Response To Professor Squire’S Article, How Collective Settlements Camouflage The Costs Of Shareholder Lawsuits, Christopher C. French

Journal Articles

In his recent article, Professor Richard Squire offers a provocative theory in which he claims the underlying claimants in shareholder litigation against corporate policyholders are overcompensated due to what he describes as “cramdown” settlements, under which insurers are forced to settle due to the “duty to contribute” that arises under multi-layered directors and officers (“D&O”) insurance programs. He also offers a novel idea regarding how this problem could be fixed by what he refers to as “segmented” settlements in which each insurer and the policyholder would be allowed to settle separately and consider only its own interests in doing so. …

Issues Of Delay & Deviation In Marine Insurance: A Case Study Of Oliver V. The Maryland Insurance Company, 7 Cranach 487 (1813), Kyle Hildreth

Legal History Publications

An examination of the case Oliver v. The Maryland Insurance Company, 7 Cranch 487 (1813). In Oliver, Robert Oliver, the plaintiff, sued the Maryland Insurance Company, the defendant, in an attempt to recover on an insurance policy he had purchased for a shipment of goods aboard the snow Comet. The Comet was seized by a British ship on its return from Spain, and was condemned under the Orders in Council of 1807. The Court affirmed a lower court judgment that Oliver was not entitled to recover, because the Comet had engaged in an unreasonable delay and deviation …

Essential Health Benefits And The Affordable Care Act: Law And Process, Nicholas Bagley, Helen Levy

Law & Economics Working Papers

Beginning in 2014, the Affordable Care Act (ACA) will require private insurance plans sold in the individual and small-group markets to cover a roster of “essential health benefits.” Precisely which benefits should count as essential, however, was left to the discretion of the Department of Health and Human Services (HHS). The matter was both important and controversial. HHS nonetheless announced its policy on essential health benefits by posting on its website a 13-page bulletin stating that it would allow each state to define essential benefits for itself by choosing a “benchmark” plan modeled on existing plans in the state. On …

Developing A Durable Right To Health Care, Erin C. Fuse Brown

Faculty Publications By Year

The Patient Protection and Affordable Care Act’s (ACA) signature accomplishment was the creation of a statutory right to health care for the uninsured. This is a momentous change in policy, addressing one of the most vexing social issues of our time and affecting millions of people and billions of dollars of the U.S. economy. This ambition and the degree of societal and political debate leading up to the Act’s passage suggests that it is a “superstatute,” a rare breed of statute that can, among other things, create rights and institutions more typically thought to be the province of constitutional undertaking. …

The Benefits Of Mortality Risk Reduction: Happiness Surveys Vs. The Value Of A Statistical Life, W. Kip Viscusi

Vanderbilt Law School Faculty Publications

A principal component of many benefit-cost analyses (BCAs) of health, safety, and environmental regulations is the valuation of the fatality risk effects of the underlying policy. Government agencies currently value these expected effects using estimates of the value of a statistical life (VSL), that is, the tradeoff rate between money and very small risks of death. This measure corresponds to BCA's theoretically appropriate benefits measure, which is society's willingness to pay for the risk reduction. Here, I will review the VSL approach, compare it to suggested alternatives that use happiness measures of well-being, and address some of the misunderstandings that …

Intellectual Property And Public Health – A White Paper, Ryan G. Vacca, James Ming Chen, Jay Dratler Jr., Thomas Folsom, Timothy S. Hall, Yaniv Heled, Frank A. Pasquale Iii, Elizabeth A. Reilly, Jeffrey Samuels, Katherine J. Strandburg, Kara W. Swanson, Andrew W. Torrance, Katharine A. Van Tassel

Law Faculty Scholarship

On October 26, 2012, the University of Akron School of Law’s Center for Intellectual Property and Technology hosted its Sixth Annual IP Scholars Forum. In attendance were thirteen legal scholars with expertise and an interest in IP and public health who met to discuss problems and potential solutions at the intersection of these fields. This report summarizes this discussion by describing the problems raised, areas of agreement and disagreement between the participants, suggestions and solutions made by participants and the subsequent evaluations of these suggestions and solutions. Led by the moderator, participants at the Forum focused generally on three broad …

A Supreme Court Ruling That's About Way More Than Preemption, Nancy Polikoff

Articles in Law Reviews & Other Academic Journals

No abstract provided.

Insurance Law Principles In An International Context: Compensating Losses Caused By Climate Change, Sara Seck, Craig Brown

Articles, Book Chapters, & Popular Press

This article examines the challenges of paying for loss caused by climate change. It discusses how weather-related harms might become uninsurable by private companies in the future as the adverse effects of climate change increase in severity. Additionally, this article recognizes the difficulty in imposing civil liability on wrongdoers for climate-related harms, and explores options for state-sponsored or state-subsidized insurance. Finally, the authors examine possibilities for an international insurance fund, but eventually conclude that such a fund would unlikely be endorsed at the international level and would not benefit Canadians.

Human Rights, Civil Rights: Prescribing Disability Discrimination Prevention In Packaging Essential Health Benefits, Anita Silvers, Leslie P. Francis

Utah Law Faculty Scholarship

The promise of health care as a right has all too often proved hollow for people with disabilities. In this article, we argue that the understanding of health care as a human right, as found in the CRPD, fails to provide the theoretical machinery for responding to the pressing challenges of health care costs. These challenges are real and potentially devastating. We develop instead an account of health care as a civil right. What this right requires is dependent on the context and resources of the time, so long as all have meaningful access to the benefits provided. The ACA …

Unique Coverage Issues In Flood Losses, Wayne D. Taylor, Arthur J. Park, Sean O'Brien

Faculty Works

No abstract provided.

Health Insurance, Employment, And The Human Genome: Genetic Discrimination And Biobanks In The United States, Eric A. Feldman, Chelsea Darnell

All Faculty Scholarship

Does genetic information warrant special legal protection, and if so how should it be protected? This essay examines the most recent (and indeed only) significant effort by the US government to prohibit genetic discrimination, the Genetic Information Nondiscrimination Act (GINA). We argue that the legislation is unlikely to have the positive impact sought by advocates of genetic privacy and proponents of biobanks. In part, GINA disappoints because it does too little. Hailed by its promoters as “the first civil rights act of the 21^st century,” GINA’s reach is in fact quite modest and its grasp even more so. But …

The Law And Economics Of Liability Insurance: A Theoretical And Empirical Review, Tom Baker, Peter Siegelman

All Faculty Scholarship

We survey the theoretical and empirical literature on the law and economics of liability insurance. The canonical Shavell model predicts that, despite the presence of some ex ante moral hazard (care-reduction by insureds), liability insurance will generally raise welfare because its risk-spreading gains will likely be larger than its adverse effects on precautionary activities. We discuss the numerous features of liability insurance contracts that are designed to reduce ex ante moral hazard, and examine the evidence of their effects. Most studies conclude that these features work reasonably well, so that liability insurance probably does not generate substantial ex ante moral …

Retiree Out-Of-Pocket Healthcare Spending: A Study Of Consumer Expectations And Policy Implications, Allison K. Hoffman, Howell E. Jackson

All Faculty Scholarship

Even though most American retirees benefit from Medicare coverage, a mounting body of research predicts that many will face large and increasing out-of-pocket expenditures for healthcare costs in retirement and that many already struggle to finance these costs. It is unclear, however, whether the general population understands the likely magnitude of these out-of-pocket expenditures well enough to plan for them effectively. This study is the first comprehensive examination of Americans’ expectations regarding their out-of-pocket spending on healthcare in retirement. We surveyed over 1700 near retirees and retirees to assess their expectations regarding their own spending and then compared their responses …

The Gravitational Force Of Originalism, Randy E. Barnett

Georgetown Law Faculty Publications and Other Works

In part I of this essay, prepared for the Fordham conference on “The New Originalism and Constitutional Law,” I describe four aspects of the New Originalism: (1) The New Originalism is about identifying the original public meaning of the Constitution rather than the original framers intent; (2) The interpretive activity of identifying the original public meaning of the text is a purely descriptive empirical inquiry; (3) But there is also a normative tenet of the New Originalism that contends that the original public meaning of the text should be followed; (4) Distinguishing between the activities of interpretation and construction identifies …

Distinguishing Probability Weighting From Risk Misperceptions In Field Data, Levon Barseghyan, Francesca Molinari, Ted O'Donoghue, Joshua C. Teitelbaum

Georgetown Law Faculty Publications and Other Works

The paper outlines a strategy for distinguishing rank-dependent probability weighting from systematic risk misperceptions in field data. Our strategy relies on singling out a field environment with two key properties: (i) the objects of choice are money lotteries with more than two outcomes and (ii) the ranking of outcomes differs across lotteries. We first present an abstract model of risky choice that elucidates the identification problem and our strategy. The model has numerous applications, including insurance choices and gambling. We then consider the application of insurance deductible choices and illustrate our strategy using simulated data.

No Small Feat: Who Won The Health Care Case (And Why Did So Many Law Professors Miss The Boat)?, Randy E. Barnett

Georgetown Law Faculty Publications and Other Works

In this essay, prepared as the basis for the 2013 Dunwody Distinguished Lecture in Law at the Fredric G. Levin College of Law, University of Florida, I describe five aspects of the Supreme Court’s decision in NFIB v. Sebelius that are sometimes overlooked or misunderstood. (1) The Court held that imposing economic mandates on the people was unconstitutional under the Commerce and Necessary and Proper Clauses; (2) Whether viewed from a formalist or realist perspective, Chief Justice Roberts’ reasoning was the holding in the case; (3) The Court did not uphold the constitutionality of the individual insurance mandate under the …

Employer Costs And Conflicts Under The Affordable Care Act, Peter Molk

UF Law Faculty Publications

In January 2015, qualified employers must provide health care coverage under the Patient Protection and Affordable Care Act of 2010 or face a fine. As employers actively attempt to minimize the costs that they will incur, the possibility emerges that employers will retaliate against or harass employees who seek coverage. This Essay discusses the protections for employees under the law and the possible deficiencies in the law. It shows that employers and employees often have contrasting incentives – employers to avoid coverage, and employees to take coverage – and these incentives may result in employer harassment and retaliation of employees. …