July 23, 1997

Via Facsimile (212) 643-7831 and Regular Mail

Mr. Pete Hamill, Editor in Chief
Daily News
450 West 33rd Street
New York, New York 10001

Dear Mr. Hamill:

This letter is written in response to your editorial of July 20, 1997 entitled "Not What it Seems." The editorial contains numerous inaccuracies and untruths. The editorial also reflects a lack of objective research and it is apparent that no effort was made to confirm whatever sources of information were utilized if only in drawing the conclusions made in the editorial.

To the extent that the editorial mischaracterizes and misstates the case to be made against the Fair Insurance Claims Settlement Act we will attempt to set the record straight. However, to the extent that you have mischaracterized and misstated the facts with respect to the contribution of my firm in support of the Bill, and further, to the extent you have attempted to characterize the firm of Wilkofsky, Friedman, Karel & Cummins as "ambulance chasers", we believe that your editorial is actionable.

The law firm of Wilkofsky, Friedman, Karel & Cummins has represented Martin Goldstein's family with respect to his lawsuit in which he is attempting to recover insurance proceeds due him as a result of the fire that occurred at his home. I am also a member of the Board of Directors and General Counsel to the group Citizens Against Unfair Insurance Practices. It is the first consumer oriented insurance lobby in the history of the State of New York and was formed by Martin Goldstein as a result of the absence of any consumer protection laws to protect a homeowner in the situation Mr. Goldstein found himself in when his insurance carrier heartlessly refused to pay his claim.

Mr. Goldstein is in fact a registered lobbyist but is paid $100.00 per week by Citizens Against Unfair Insurance Practices. While this law firm has been paid the nominal sum of $100.00 per year by Citizens to be its counsel, and thus have contributed my time and effort to the cause of getting consumer friendly legislation passed, and the firm has contributed approximately $1,000.00 over the past two years, your statement that Goldstein is paid by this firm is false, and shockingly, no effort whatsoever was made to confirm this stated fact despite the fact that you did go to the trouble of calling our receptionist to verify the type of cases handled by the firm.

Furthermore, the statement that Mr. Goldstein has acknowledged the primary funding for the group's radio commercials comes from trial lawyers, is again untrue and unverified. The fact is that of the money raised in this grass roots effort over the last two years, an overwhelming majority has come from contributions in the amount of $25.00 per person and other contributions made by citizens and businesses interested in having better consumer protection laws with respect to the insurance industry.

I have been representing victims of insurance company misconduct for over 16 years, take a great deal of pride in our accomplishments in asserting the rights of the consumer against insurance companies who are often callous and irresponsible when it comes to the rights of their policyholders and regularly act in bad faith when administering legitimate claims. This situation exists because there is no legislated motive encouraging them to process claims in a manner consistent with their fiduciary responsibilities to the public.

I hereby challenge you to either support your comments or correct them forthwith in a manner calculated to be as visible as the offending editorial.

Other errors abound in your editorial as well. The Bill does not promise to avoid boosting premiums as stated, but specifically and explicitly prohibits insurance companies from passing along increased costs as a result of awards made pursuant to the Bill. In short, research has disclosed that there is no correlation whatsoever between the existence of similar consumer-oriented legislation in other states and increases in premium rates. What research have you done to confirm your statement that the passage of the Bill will "almost certainly boost insurance premiums?"

Once again you are inaccurate when you state that Mr. Goldstein responded with radio commercials when the Bill passed the Assembly but not the Senate. The fact is that the Bill did pass the Assembly in a vote of 113-31 and has passed the Assembly every year for the past 10 years. It is also a fact that Senator Bruno has never allowed the Bill to reach the floor of the Senate for a vote. So in fact, the Bill did not fail to pass the Senate but the Senate was deprived of the opportunity of deliberating on the Bill and either voting it in or voting it out. The facts further disclose that virtually every Democratic senator has committed to voting for the Bill and the Bill has 6 Republican sponsors and 7 additional Republican Senators, all of whom have committed to voting for the Bill reflecting the needed majority of 32 votes required to pass the Bill. Once again it would seem that the democratic process in the New York Legislature stops at the door of Senator Bruno. It was these facts that motivated the publicity campaign accurately disclosing the fact that Majority Leader Bruno has received over $70,000.00 in contributions directly from the insurance industry in the last two years. In addition, the Republican committees have also received over $160,000.00 in that period of time.

Instead of castigating Senator Bruno for the contributions he receives from special interests which have obviously affected his judgment and prevented the Bill from being subjected to the democratic process, you assert that "Goldstein's hands are hardly clean." Martin Goldstein is merely a citizen homeowner whose rights have been trampled by a huge corporation which Mr. Goldstein feels is insufficiently regulated by the state. He has established a grass roots effort, the first of its kind in the State of New York, to get the word out as to this Bill which has been languishing in the legislature for over 10 years during which time insurance company lobbyists have had the Bill under their thumb without any input from a consumer-oriented lobby. The last time we looked, in a democratic society, where the votes exist in the Senate and Assembly to pass consumer-oriented legislation, one man should not have the ability to prevent its passage. Your conclusory comment that the Bill represents an "unnecessary and expensive sop to special interests" itself stands naked for what it is. The Daily News is the only newspaper in the State of New York to come out against this Bill. The insurance industry has run out of ammunition to defend its opposition and Senator Bruno has refused to confront the detailed and persuasive arguments rallied against his often made statement that the Bill will raise premiums.

The fact that consumers already have the right to sue insurance companies is as much a part of the problem as it is a solution. The fact is that consumers must pay attorneys to handle such cases, whereupon the attorneys often become a partner in the property damaged as a result of contingency fees. Most consumers who have suffered some major casualty or disaster are unable to afford to pay lawyers on an hourly basis to represent their interests and are compelled to hire those attorneys on a contingency basis. Insurance companies, fully aware of this circumstance, have made a practice for many years of taking advantage of this reality to offer insureds less than they are entitled to under the terms of their contract in light of the reality that the insured will have to give away a substantial portion of his claim merely to litigate the matter. This has resulted in a practice whereby insurance companies often understate the value of losses incurred and brazenly dare their customer to hire counsel and sue, full in the knowledge that a fully successfully litigant will merely recover back his claim and then have to share the proceeds with his attorney. This Bill attempts to reign in this practice by requiring the insurance carrier to pay the attorney's fee in the event they are guilty of egregious conduct which falls under the legislation. In addition, in order to avoid the possibility of large and extravagant punitive damage awards awarded by runaway juries, the Bill caps punitive damages at one time the amount of physical damage incurred which will prevent some of the problems seen elsewhere around the country with huge punitive awards.

The goal of the Bill is litigation avoidance, not increased litigation.

I believe you were also factually inaccurate when you pointed to $9 million in fines to 52 insurance companies in 1996. Our information reflects that the fines were less substantial. The editorial also seemed to take comfort at the fact that there were only 3,112 successful consumer complaints filed with the Insurance Department last year, as if this was an acceptable state of affairs. You have failed to consider the thousands of consumers across the State of New York who have been forced to start law suits against their insurance company to recover legitimate amounts owed and the countless others who have accepted the insurance company's treatment without challenge, either out of ignorance, apathy or by resignation. There is a tremendous need for consumer protection legislation against crooked insurance companies as you recognize. However, to conclude that this Bill is about raising premiums to make ambulance chasers rich is a failure on the part of the Daily News to due justice to this important issue and treats complex and significant issues with trite phrases which mislead the Daily News' reading public.

You have an obligation to set the record straight and either confirm the facts or retract them. It is indeed a sad day when, with the swipe of a pen, you can condemn a worthwhile consumer cause such as this, as well as a law firm committed to representing consumers victimized by two disasters, one natural and one perpetrated by their insurance company.

Absent an acceptable response to the foregoing we will have no alternative but to consider further actions.

Very truly yours,

WILKOFSKY, FRIEDMAN,
KAREL & CUMMINS

By: JONATHAN J. WILKOFSKY

cc: Michael Goodwin, Editorial Page Editor
Daily News - Via Fax (212) 643 7831 and Regular Mail
Martin Goldstein - Citizens Against Unfair Insurance Practices

For More Information Contact:

Wilkofsky, Friedman, Karel & Cummins
299 Broadway - Suite 1700, New York, NY 10007
Tel: 212-285-0510
FAX: 212-285-0531
Internet: info@wfkclaw.com

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