Story originally appeared on Crain's Detroit Business.
A
lawsuit against Southfield-based Hantz Financial Services Inc. and
several of its senior executives is on hold until the Michigan Court of
Appeals decides whether to certify it as a class action on behalf of 300
investors.
A three-judge appellate court panel late
last month put a stay on the court case before Oakland County Circuit
Judge Leo Bowman, who had denied a request to certify a class of
investors who purchased promissory notes from Medical Capital Holdings
Inc. through Hantz.
Bowman, in his Jan. 28 dismissal
order, said he was "left with the distinct impression" that attorneys
for plaintiff-investor Anne Hanton filed her lawsuit mainly to get
around his ruling in their previous court case, where he already denied
class certification for another client.
The appeals
court agreed to review that decision and put a stay on the case until it
could decide the certification question on its own. Attorneys for
Hanton have told Crain's a class of claims would exceed $20 million in
potential damages, while Hanton's case taken alone has less than a
$250,000 value.
"We've gone two for two, since this is
the second action against us where class certification was denied by the
courts," said David Shea, attorney and general counsel for Hantz
Financial. "Our position is the courts have gotten it right, and we were
never attached to any allegations that were made against Medical
Capital. This is purely a plaintiff attorney-driven action."
Med
Cap, an Anaheim, Calif.-based medical receivables financing company, is
in receivership after raising about $2.2 billion from among 20,000
investors through nine private placement offerings of promissory notes
between 2001 and 2009.
Those sales stopped when the
U.S. Securities and Exchange Commission brought a civil action alleging
securities fraud and obtained a court injunction. The Financial Industry
Regulatory Authority has sanctioned more than 10 brokerage firms and
several individuals for selling interests in Med Cap through private
placements without a reasonable investigation -- but Hantz Financial was
not one of them.
The company did sell promissory notes
in the fifth Med Cap securities offering to about 300 customers, but
Shea said Hantz had done its due diligence and the notes were still
performing at the time it sold them. It stopped selling Med Cap in 2008
after learning one of the previous sales had defaulted.
No date is set for the appellate court to decide about class certification.
29 May 2013
Michigan lawmakers target Internet sales taxes
Story originally appeared on the Detroit News.
Lansing — Michigan lawmakers are pushing measures aimed at going after the hundreds of millions of dollars in outstanding taxes each year from sales over the Internet, but they may have to wait for a federal measure to pass for the dollars to really start rolling into the state.
Under bipartisan bills being debated in the state House, Internet retailers like Amazon or eBay would have to charge sales tax if they have distribution centers or warehouses in Michigan or are affiliated with in-state businesses whose websites steer customers to the larger retailer.
Supporters — like the Michigan Retailers Association — say the bills taken up by the House Tax Policy committee will bring in revenue and help level the playing field for local businesses that must collect sales taxes.
But Michigan's Treasury Department, while supporting the bills, estimates that the proposed law won't generate much revenue — unless the federal government takes action.
The U.S. Senate is expected to vote on legislation this week that would give states power to compel online retailers to collect state and local taxes for purchases made over the Internet.
States now can only require stores to collect taxes if the store has a physical presence in the state. Consumers are supposed to declare all remote sales — which includes items bought over the phone and on the Internet — when they complete tax returns and pay a 6 percent use tax. But since that isn't enforced, it rarely happens.
Tom Scott, spokesman for the Michigan Retailers Association, said the competitive advantage for online retailers hurts brick-and-mortar business' cash registers every week.
"This is a huge challenge for them," he said.
The Treasury Department estimates that $460 million in taxes from remote sales is due in Michigan this fiscal year and most of that will go uncollected.
While Michigan's proposed law would allow some of that to be collected, it doesn't apply to all Internet retailers and they can get around the law by breaking ties with their in-state partners or moving their warehouses to other states, House Fiscal Agency said in its analysis.
Scott said that while the bill won't bring in all of the uncollected revenue, it would require some of the largest online retailers, like Amazon, to start charging sales tax, which could have a huge impact on the state's small businesses.
Even if federal legislation gets through the U.S. Senate this week, it likely has a long road ahead of it in the House.
"Everybody would like a federal solution, but we can't sit around and wait. We have to start doing something as a state," said Republican Rep. Eileen Kowall of White Lake, who is sponsoring one of the bills.
Other states like New York and Illinois have passed similar legislation. Kowall said that if more states follow, it will encourage Congress to finish the job.
Republican Gov. Rick Snyder has also called on Congress to take action. In a letter to the U.S. Senate last year, Snyder said "it's time for Congress to grant states the authority to enforce sales tax and use laws on all retailers in their state."
Others contend that the Michigan legislation could hurt the affiliate marketers, the small online-based businesses that have advertising agreements with larger Internet retailers, like Amazon.
Under the bills as introduced, online retailers would have to charge sales tax if they advertise on websites owned by these in-state businesses, said Rebecca Madigan, executive director of the Performance Marketing Association.
In states where similar legislation has passed, Internet retailers have cut advertising relationships with these businesses to avoid collecting the tax, which in-turn hurts those businesses, she said.
But James Hallan, president and CEO of the Michigan Retailers Association, said in his written testimony to the committee that "in other states where affiliates have been terminated by Internet-only retailers, like Amazon and Overstock, the companies have often reinstated those agreements."
The Michigan bill is likely to advance soon to the House floor.
Republican Rep. Jeff Farrington of Utica, chairman of the Tax Policy Committee, said it has broad support in the committee and members plan to vote on it in two weeks.
Majority Republicans in the House have suggested that they may want to see action on the issue this year. Their legislative agenda for this session includes closing the Internet tax loophole.
Scott said it is far from certain that the U.S. House will take up the measure once it passes the Senate and — if it does — it likely won't be for a while. In the meantime, Michigan must ease the burden on brick-and-mortar businesses, he said.
"It ends up costing them sales it ends up costing our state jobs and the problem keeps getting worse," Scott said, "which is why we are going to get action, it's just a matter of how soon."
Lansing — Michigan lawmakers are pushing measures aimed at going after the hundreds of millions of dollars in outstanding taxes each year from sales over the Internet, but they may have to wait for a federal measure to pass for the dollars to really start rolling into the state.
Under bipartisan bills being debated in the state House, Internet retailers like Amazon or eBay would have to charge sales tax if they have distribution centers or warehouses in Michigan or are affiliated with in-state businesses whose websites steer customers to the larger retailer.
Supporters — like the Michigan Retailers Association — say the bills taken up by the House Tax Policy committee will bring in revenue and help level the playing field for local businesses that must collect sales taxes.
But Michigan's Treasury Department, while supporting the bills, estimates that the proposed law won't generate much revenue — unless the federal government takes action.
The U.S. Senate is expected to vote on legislation this week that would give states power to compel online retailers to collect state and local taxes for purchases made over the Internet.
States now can only require stores to collect taxes if the store has a physical presence in the state. Consumers are supposed to declare all remote sales — which includes items bought over the phone and on the Internet — when they complete tax returns and pay a 6 percent use tax. But since that isn't enforced, it rarely happens.
Tom Scott, spokesman for the Michigan Retailers Association, said the competitive advantage for online retailers hurts brick-and-mortar business' cash registers every week.
"This is a huge challenge for them," he said.
The Treasury Department estimates that $460 million in taxes from remote sales is due in Michigan this fiscal year and most of that will go uncollected.
While Michigan's proposed law would allow some of that to be collected, it doesn't apply to all Internet retailers and they can get around the law by breaking ties with their in-state partners or moving their warehouses to other states, House Fiscal Agency said in its analysis.
Scott said that while the bill won't bring in all of the uncollected revenue, it would require some of the largest online retailers, like Amazon, to start charging sales tax, which could have a huge impact on the state's small businesses.
Even if federal legislation gets through the U.S. Senate this week, it likely has a long road ahead of it in the House.
"Everybody would like a federal solution, but we can't sit around and wait. We have to start doing something as a state," said Republican Rep. Eileen Kowall of White Lake, who is sponsoring one of the bills.
Other states like New York and Illinois have passed similar legislation. Kowall said that if more states follow, it will encourage Congress to finish the job.
Republican Gov. Rick Snyder has also called on Congress to take action. In a letter to the U.S. Senate last year, Snyder said "it's time for Congress to grant states the authority to enforce sales tax and use laws on all retailers in their state."
Others contend that the Michigan legislation could hurt the affiliate marketers, the small online-based businesses that have advertising agreements with larger Internet retailers, like Amazon.
Under the bills as introduced, online retailers would have to charge sales tax if they advertise on websites owned by these in-state businesses, said Rebecca Madigan, executive director of the Performance Marketing Association.
In states where similar legislation has passed, Internet retailers have cut advertising relationships with these businesses to avoid collecting the tax, which in-turn hurts those businesses, she said.
But James Hallan, president and CEO of the Michigan Retailers Association, said in his written testimony to the committee that "in other states where affiliates have been terminated by Internet-only retailers, like Amazon and Overstock, the companies have often reinstated those agreements."
The Michigan bill is likely to advance soon to the House floor.
Republican Rep. Jeff Farrington of Utica, chairman of the Tax Policy Committee, said it has broad support in the committee and members plan to vote on it in two weeks.
Majority Republicans in the House have suggested that they may want to see action on the issue this year. Their legislative agenda for this session includes closing the Internet tax loophole.
Scott said it is far from certain that the U.S. House will take up the measure once it passes the Senate and — if it does — it likely won't be for a while. In the meantime, Michigan must ease the burden on brick-and-mortar businesses, he said.
"It ends up costing them sales it ends up costing our state jobs and the problem keeps getting worse," Scott said, "which is why we are going to get action, it's just a matter of how soon."
House panel OKs $1M cap on medical benefits for auto victims
Story originally appeared on the Detroit News.
Lansing — A House committee Thursday approved sweeping changes to Michigan's generous medical benefits for auto accident victims in a move critics say will bankrupt severely injured drivers, shift costs to taxpayers and deny the injured long-term care.
In a party-line vote, the Republican-controlled House Insurance Committee approved capping lifetime medical benefits for auto victims at $1 million and $250,000 for injured motorcycle riders. The $1 million cap would remain the highest amount of any state in the nation.
The legislation, backed by Gov. Rick Snyder, faces political obstacles as it heads to the House floor.
The Democratic caucus passed a resolution Thursday opposed to the bill, and Oakland County Executive L. Brooks Patterson and at least 10 Republican House members said they don't want to change Michigan's personal injury protection law.
"I have major, major problems with this bill," said state Rep. Martin Howrylak, R-Troy. "Unfortunately, a million dollars doesn't get you anything in health care these days."
The committee heard two days of testimony from insurance industry executives who want medical expenses reined in and impassioned pleas from accident victims and their families worried about losing their care.
The legislation aims to give auto insurance companies the power to negotiate lower payments with doctors and hospitals.
"If the cost of delivering the MRI is $3,200, then everybody should have to pay $3,200," said Heather Drake, vice president of government relations for AAA Michigan.
The legislation will not affect drivers injured before Dec. 31 or those whose medical bills exceeding $500,000 are covered by the Michigan Catastrophic Claims Association, said the bill's sponsor, state Rep. Pete Lund, R-Shelby Township.
"The intent of this bill is, has been and will remain that people who are currently in the system will continue to receive the benefits that they receive," said Lund, the insurance committee chairman.
The legislation changes the definition of the type of medical care auto insurance companies will pay for from what is defined as "reasonably necessary" to "medically appropriate."
"We fear for many patients that's going to be a one-way ticket to the nursing home," said George Sinas, general counsel for the Coalition Protecting Auto No-Fault, a group opposed to the bill.
Sinas said most accident victims would likely go on the Medicaid health insurance rolls for the poor after breaking the $1 million cap.
The legislation contains some curbs on payments to family members who care for loved ones at home, though the committee restored 24-hour coverage for the severely disabled.
The committee's amended version of the bill eliminates a $50,000 cap on expenses insurers pay for accident victims to make their homes handicap accessible.
Under the proposal, rehabilitation services would be limited to "meaningful and measureable lasting improvement in the injured person's functional status."
Lund on Thursday said he doesn't know who would determine an auto accident victim's meaningful and measureable improvement.
Erica Coulston, 34, of Bloomfield Hills, who was paralyzed in a 2001 car accident, said the effort "is a mechanism for denial."
Coulston, co-founder of a spinal cord injury program in Southfield, testified her rehabilitative therapies paid for by her auto insurance have slowly improved her respiratory, digestive and mental health.
The legislation would require auto insurers cut premiums for all drivers next year by $125, though critics argue there's no guarantee premiums won't rise in 2015.
Lansing — A House committee Thursday approved sweeping changes to Michigan's generous medical benefits for auto accident victims in a move critics say will bankrupt severely injured drivers, shift costs to taxpayers and deny the injured long-term care.
In a party-line vote, the Republican-controlled House Insurance Committee approved capping lifetime medical benefits for auto victims at $1 million and $250,000 for injured motorcycle riders. The $1 million cap would remain the highest amount of any state in the nation.
The legislation, backed by Gov. Rick Snyder, faces political obstacles as it heads to the House floor.
The Democratic caucus passed a resolution Thursday opposed to the bill, and Oakland County Executive L. Brooks Patterson and at least 10 Republican House members said they don't want to change Michigan's personal injury protection law.
"I have major, major problems with this bill," said state Rep. Martin Howrylak, R-Troy. "Unfortunately, a million dollars doesn't get you anything in health care these days."
The committee heard two days of testimony from insurance industry executives who want medical expenses reined in and impassioned pleas from accident victims and their families worried about losing their care.
The legislation aims to give auto insurance companies the power to negotiate lower payments with doctors and hospitals.
"If the cost of delivering the MRI is $3,200, then everybody should have to pay $3,200," said Heather Drake, vice president of government relations for AAA Michigan.
The legislation will not affect drivers injured before Dec. 31 or those whose medical bills exceeding $500,000 are covered by the Michigan Catastrophic Claims Association, said the bill's sponsor, state Rep. Pete Lund, R-Shelby Township.
"The intent of this bill is, has been and will remain that people who are currently in the system will continue to receive the benefits that they receive," said Lund, the insurance committee chairman.
The legislation changes the definition of the type of medical care auto insurance companies will pay for from what is defined as "reasonably necessary" to "medically appropriate."
"We fear for many patients that's going to be a one-way ticket to the nursing home," said George Sinas, general counsel for the Coalition Protecting Auto No-Fault, a group opposed to the bill.
Sinas said most accident victims would likely go on the Medicaid health insurance rolls for the poor after breaking the $1 million cap.
The legislation contains some curbs on payments to family members who care for loved ones at home, though the committee restored 24-hour coverage for the severely disabled.
The committee's amended version of the bill eliminates a $50,000 cap on expenses insurers pay for accident victims to make their homes handicap accessible.
Under the proposal, rehabilitation services would be limited to "meaningful and measureable lasting improvement in the injured person's functional status."
Lund on Thursday said he doesn't know who would determine an auto accident victim's meaningful and measureable improvement.
Erica Coulston, 34, of Bloomfield Hills, who was paralyzed in a 2001 car accident, said the effort "is a mechanism for denial."
Coulston, co-founder of a spinal cord injury program in Southfield, testified her rehabilitative therapies paid for by her auto insurance have slowly improved her respiratory, digestive and mental health.
The legislation would require auto insurers cut premiums for all drivers next year by $125, though critics argue there's no guarantee premiums won't rise in 2015.
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