Amend the SCRA to forbid discrimination based on membership in a Reserve Component or the possibility of future utilization of SCRA rights.

Under section 518 of the SCRA (50 U.S.C. App. 518), it is unlawful for a creditor or other party to discriminate against or take an adverse action against a servicemember based on the servicemember having applied for or received a stay, postponement, or suspension under the SCRA. Under the current law, it is not unlawful for a creditor or potential creditor to deny credit based on the prospective borrower’s membership in a Reserve Component and the possibility that the prospective borrower could be mobilized in the future and could apply for or receive a stay, postponement, or suspension. ROA proposes that Congress amend the SCRA to close this loophole. See Law Review 0943 (September 2009).

Amend the SCRA to broaden the types of leases and contracts which the person entering active duty can terminate without penalty.

Under the SSCRA, since 1917, a person entering active duty has been permitted to terminate a lease on premises (apartment, house, office, farm, etc.). In 2003, Congress broadened this provision to enable the person entering active duty to terminate a vehicle lease. In 2008, Congress enacted a new provision to permit a servicemember to terminate a cell phone contract under certain circumstances.

There are many other kinds of leases and contracts that the person entering active duty may need to terminate. For example, we have heard from a Navy Reserve medical corps officer who is a physician in private practice. He is going on active duty for at least a year, and he is closing his private medical practice. He has a lease on an expensive medical device, with four years left to go on the lease, and the lessor will not let him out of the lease. The lessor insists that this physician pay another $175,000 to lease a medical device—the physician will be on active duty in Afghanistan and does not need and cannot afford the device. Congress needs to amend the SCRA to include leases and contracts of this nature, in addition to leases of premises, vehicles, and cell phones. Please see Law Review 0944 (September 2009).

Amend the SCRA to broaden the types of insurance that the servicemember is entitled to reinstate after returning from active duty.

Under section 594(a) of the SCRA [50 U.S.C. App. 594(a)], a person returning from active duty is entitled to reinstate health insurance that was in effect on the day before the person entered active duty and that was terminated during the time the person was on active duty. In a recent (2009) case, the United States District Court for the Northern District of Texas ruled that income-replacement insurance (compensating the insured for income lost when sickness prevents the insured from working) is not health insurance for purposes of section 594(a). As a result, a Marine Corps Reservist is losing out on more than $450,000 in payments because he was called to the colors and deployed to Iraq in 2004-05. This is exactly the sort of harm that Congress enacted section 594(a) to prevent. Congress needs to amend the SCRA to clarify that the person returning from military service has the right to reinstate income-replacement insurance and other forms of insurance, as well as health insurance narrowly defined. Please see Law Review 0945 (September 2009).

Amend the SCRA to override agreements to submit future disputes to binding arbitration.

The SCRA should explicitly preclude the application of boilerplate agreements to submit future disputes to binding arbitration.  Arbitrators are supposed to apply substantive laws like the SCRA, but often they do not, and there is often no remedy when an arbitrator ignores the law.

For example, when a National Guard member or Reservist is called to active duty and has thereby suffered a substantial loss of income, the service member is entitled under the SCRA to have the interest rate on pre-existing financial obligations (credit cards, auto loans, etc.) reduced to 6% during the active duty period.  But if you have agreed to binding arbitration, the arbitrator may ignore this clear legal requirement and continue the interest rate at the higher contracted level, and there likely is no remedy.

Moreover, the arbitration agreement often requires both parties (the creditor and the debtor) to share in the costs of the arbitration, including the arbitrator’s fee, and to pay this money up front.  This requirement often places the entire process beyond the financial ability of the service member to participate. Thus, as with the Uniformed Services Employment and Reemployment Rights Act (USERRA), we favor a provision explicitly making unenforceable agreements to submit future disputes to binding arbitration. Please see Law Review 0847 (October 2008).