New York Times: Obama Administration Discrimination Settlement Was “Magnet For Fraud” That Enriched Trial Lawyers

by Hans Bader on April 26, 2013 · 1 comment

in Agriculture, Bailout Watch, Economy, Features, Legal, Politics as Usual, Zeitgeist

Obama RacineA page 1 New York Times story today describes how the Obama administration, despite opposition from civil servants, radically expanded a legal settlement that had already become a “magnet for fraud,” paying out vast sums of money over baseless claims of discrimination at the Agriculture Department in the Pigford case. As the Cato Institute’s Walter Olson notes, its story “today breaks vital new details about how career government lawyers opposed Obama appointees’ insistence on reaching a gigantic settlement for claims of bias against female and Hispanic farmers in the operation of federal agriculture programs” over the objections of “career government lawyers.” As the Times reports,

On the heels of the Supreme Court’s ruling [adverse to claimants and favorable toward USDA], interviews and records show, the Obama administration’s political appointees at the Justice and Agriculture Departments engineered a stunning turnabout: they committed $1.33 billion to compensate not just the 91 plaintiffs but thousands of Hispanic and female farmers who had never claimed bias in court.

The deal, several current and former government officials said, was fashioned in White House meetings despite the vehement objections — until now undisclosed — of career lawyers and agency officials who had argued that there was no credible evidence of widespread discrimination. What is more, some protested, the template for the deal — the $50,000 payouts to black farmers — had proved a magnet for fraud.

The ever-growing settlement became “a runaway train, driven by racial politics, pressure from influential members of Congress and law firms that stand to gain more than $130 million in fees.”

Even under the Clinton administration, before the settlement’s expansion under Obama, it had already showered money on many obviously undeserving people, even though back then it covered fewer potential claimants (it covered only black farmers back then, not women or Hispanics). As a Pajamas Media writer earlier asked, “If there are only 39,697 African-American farmers grand total in the entire country, then how can over 86,000 of them claim discrimination at the hands of the USDA? Where did the other 46,303 come from?” Yet 86,000 black farmer claimants had come forward to obtain payouts.

The Times story is partly behind a paywall, but Daniel Foster, who previously wrote about Obama administration abuses in the Pigford case, discusses five disturbing things to be learned from the news article. Earlier, Peter Schweizer and Lee Stranahan at Big Government wrote more about the dubious Pigford farmer settlement (see here, here, and here; FBI said to be interested; claimants’ own lawyer says they often got away with faulty claims).

The Obama administration has repeatedly loosened the requirements for payouts in the Pigford class-action lawsuit against the government, in order to make such payouts possible. Essentially, the Obama administration used the case to award race-based reparations to people who never farmed or even intended to farm. The government’s collusion with the plaintiffs’ lawyers in this case will ultimately cost taxpayers billions.

The Obama administration has repeatedly ripped off taxpayers to pay out settlements in legally-baseless lawsuits. It keeps paying off people, and trial lawyers, who sue the government under a disparate-impact theory rejected by the Supreme Court. It agreed to pay $62 million to settle a lawsuit that it could easily have won, in which the plaintiffs alleged that race-neutral government criteria for paying out housing assistance to Hurricane Katrina victims ended up benefiting blacks less on average than whites. “The formula for the federally funded Louisiana program awarded rebuilding grants up to $150,00 based on a home’s pre-storm value, rather than the cost of rebuilding from the storm damage. The suit argued that those rules hurt black homeowners, whose properties typically had lower values than whites.”

It did so even though a federal appeals court had already denied the plaintiffs’ request for an injunction against the government, noting that they had little if any chance of succeeding in their lawsuit, in Greater New Orleans Fair Housing Action Center v. U.S. Department of Housing and Urban Development (2011).

The federal appeals court’s decision was inevitable in light of the Supreme Court’s earlier decision in Alexander v. Sandoval (2001). That case ruled that outside the employment context, people bringing discrimination lawsuits under the civil-rights laws generally have to show intentional discrimination — not unintentional “disparate impact.” (Disparate impact is when a colorblind selection criterion impacts one racial group more than another — like when blacks and whites take the same test, but don’t pass it in equal rates.)

But the Obama administration doesn’t agree with this line of Supreme Court decisions, and it is ignoring them, in order to keep paying off people who sue the government under a disparate-impact theory — thus adding to the government’s indebtedness at a time when the federal government has already run up a national debt of $16 trillion.

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