H e l p i n g t h o s e w h o n e e d i t m o s t f o r o v e r t w e n t y - f i v e y e a r s

THE

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B e a s l e y , A l l e n , C r o w , M e t h v i n , P o r t i s & M i l e s , P . C . , A t t o r n e y s a t L a w

AUGUST 2006

A NATIONAL LAW FIRM LOCATED IN MONTGOMERY,ALABAMA

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I.CAPITOLOBSERVATIONS

A SAD DAY FOR ALABAMA

It appears that the guilty verdictsagainst Don Siegelman and RichardScrushy came as a surprise to many so-called judicial system experts. But, anumber of lawyers who kept up withthe trial had a different view of how ithad been going.Frankly,because I didn’twitness any part of the trial and only gotmy information from media reports, Iwon’t speculate on whether the ver-dicts were justified by the evidence ornot. In any event, regardless of how youmay have felt about the guilt or inno-cence of the defendants when the trialstarted, the guilty verdicts in any corrup-tion case involving a former governorand a powerful corporate executivewould be considered by many as a blackeye for the state. It’s a sad commentarywhen powerful men abuse their posi-tions—assuming that the jury verdictwas correct—regardless of who theyare and what position they hold. Itshould be noted that a public official orcorporate executive, or a lawyer inprivate practice for that matter, can stillabuse the trust that goes with their posi-tion and yet not be guilty of a crime.

As far as this specific case is con-cerned, the nation only sees a guiltyverdict in a high profile criminal caseagainst a once-powerful state officialand a corporate executive with verystrong political connections. For anystate, that can never be good news.Evenso, good can still come for Alabama as aresult of this trial if a renewed pushcomes about for a complete reform ofthe financing of political campaigns anda reworking of the laws that govern theethical behavior of public officials andthe conduct of elections in our state. Ihope reform of that nature will becomea reality and very soon.

All of us must have compassion forthe families of all of the defendants,including the two who were convicted,all of whom have had to see a family

member undergo years of investigationand then go through a lengthy trial thathighlighted the news on a daily basis.On a personal note, I have known MackRoberts, one of the defendants, for over30 years. Based on what I have knownabout him, I would never believe thatMack would ever knowingly break anycriminal law. In my opinion, he is com-pletely trustworthy and totally honest. Iwas very happy to see Mack found notguilty by the jury.

Interestingly, there were several indi-viduals involved in the trial whose lightsshone brightly throughout the entireordeal and continue to do so. Forexample, the two primary prosecutorsfor the government, Louis Franklin andSteve Feaga, did exceptionally good jobsin handling a most complex case againsta formidable team of lawyers represent-ing the defendants. I believe the federallawyers were smart to try the caseinside the courtroom and not getcaught up in the afternoon news confer-ences that were held daily by thedefense team. Certainly, Judge MarkFuller, who presided over the trial,received extremely high marks for hishandling of a most difficult case. Fromall accounts, the judge did a great job.

Finally, all Alabamians should be gladthat this chapter in our state’s politicalhistory is nearing a completion.Therehas to be a lesson to be learned by all ofus from this trial, and that is noperson—regardless of his or her posi-tion or status—is above the law.

THE TIMING IS RIGHT FOR REFORM

Alabama’s election laws, whichinclude the financing of campaigns, andour laws relating to lobbying are badlybroken and must be fixed. It would behard for anybody to defend the currentsystem or to convince me that we don’tneed total reform in these criticallyimportant areas.An editorial appearedin The Birmingham News on July 9th

that is pretty much on target.While youmight not agree with the writer that aspecial session of the Legislature is agood idea, I believe you will agree thatthere is a definite need in Alabama for

the type reform mentioned.The edito-rial in its entirety is set out below foryour consideration:

In Tennessee, a federal sting opera-tion led to the indictments of fivecurrent or former lawmakers onbribery and extortion charges. InFebruary, the Legislature passed asweeping ethics bill that limitscampaign contributions to candi-dates and political action commit-tees and reins in lobbyists’ winingand dining of public officials. InNorth Carolina, a state investiga-tion resulted in three people being

IN THIS ISSUE

I. Capitol Observations . . . . . . . . . . . . 2

II. The National Scene . . . . . . . . . . . . . 5

III. Legislative Happenings . . . . . . . . . 10

IV. The Corporate World . . . . . . . . . . 11

V. Campaign Finance Reform . . . . . . 14

VI. Product Liability Update . . . . . . . . 14

VII. Mass Torts Update. . . . . . . . . . . . . 17

VIII. Business Litigation . . . . . . . . . . . . 25

IX. Insurance and Finance Update . . . 26

X. Premises Liability Update . . . . . . . 29

XI. Workplace Hazards. . . . . . . . . . . . 30

XII. Transportation . . . . . . . . . . . . . . . 33

XIII. Arbitration Update . . . . . . . . . . . . 35

XIV. Healthcare Issues . . . . . . . . . . . . . 35

XV. Environmental Concerns . . . . . . . . 39

XVI. Tobacco Litigation Update. . . . . . . 40

XVII. The Consumer Corner. . . . . . . . . . 42

XVIII. Recalls Update . . . . . . . . . . . . . . . 47

XIX. Firm Activities . . . . . . . . . . . . . . . . 48

XX. Special Recognitions . . . . . . . . . . . 49

XXI. Some Closing Observations . . . . . . 50

XXII. My Parting Words . . . . . . . . . . . . . 51

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charged with violating that state’slobbying laws by not disclosingthey were under contract to influ-ence lawmakers to pass the statelottery. Last week, the Houseagreed almost unanimously toban lobbyists and their clientsfrom giving big gifts to lawmakersand executive branch officials.TheSenate could go along this week.

In Alabama, a federal probe nettedpublic corruption convictions lastmonth of former Gov. Don Siegel-man and HealthSouth founderRichard Scrushy. So far, though,there is nothing but talk about theneed for reforming Alabama’scampaign finance and lobbyinglaws. It is a popular subject on thecampaign trail. Just about everycandidate has come out in favorof banning money transfersamong PACs that are designed tohide from the public the truesource of a contribution. So let’ssee those candidates on the hotseat. Governor Bob Riley, after theprimary runoff on July 18th,should call lawmakers into specialsession to reform Alabama’s cam-paign finance and lobbying laws.He should do so now, rather thanwaiting for the regular legislativesession that starts in March, for acouple reasons:

• To put legislative candidates on thespot. If, as seemingly all of themclaim, they want reform, they willpass Riley’s bills. If not, they haveto answer to voters in November.Riley’s Democratic opponent, Lt.Gov. Lucy Baxley, presides over theSenate. Could she afford for theLegislature not to pass reform bills,especially since she made thempart of her platform?

• Timing is everything. When theLegislature convenes in its regularsession, the Siegelman convictionwill be nine months old. Re-electedlawmakers will be sitting fat andhappy for the next four years, andmany won’t want to cut off thelobbyists’ entertainment spigot, or

make it harder to be re-elected.They will start dealing withbudgets and the hundreds of otherbills that are part of a regularsession. Campaign finance andlobbying reform likely will sufferthe fate it has in the past severalsessions: death.

Riley, for his part, said Friday hebelieves campaign finance andethics reform is “a great idea,” butsaid he would be accused of politi-cal grandstanding if he called aspecial session this summer. Twoyears ago, Democrats accusedRiley of exactly that when the gov-ernor tried to call the Legislatureinto special session to deal withaccountability bills, including billsthat would ban money transfersbetween PACs and force lobbyiststo disclose every cent they spendon lawmakers. (For the record, weprefer a bill that would ban virtu-ally all lobbyists’ spending onpublic officials.)

The timing for a special sessionthis summer may be wrong politi-cally for Riley, but that works bothways. It is wrong politically forDemocrats, as well. But that’s themain reason the timing is as rightas citizens could hope for to actu-ally get the Legislature to passserious campaign finance and lob-bying reform bills. Call a specialsession, Governor.

It may be wishful thinking, but Ibelieve a special session limited toreform might just accomplish thatwhich hasn’t happened in any regularsession on that subject over the past 30years. Governor Riley and Lt. GovernorBaxley would do the people of Alabamaa great service if they would simply joinhands—forgeting politics for a spell—and support a special session of the Leg-islature limited to reform of our brokensystems relating to elections, ethics, andlobbying. In 5 to 10 days the legislatorscould come to Montgomery—perhapsduring the week after Labor Day—passa package of reform bills—and then gohome. Any member of the Legislature

who has opposition in the general elec-tion and who opposed reform duringsuch a session—given that the publicclearly wants meaningful reform—would be guaranteed to get a visit toBuck’s Pocket in early November. Ofcourse, a good package of bills wouldhave to be prepared in advance of thesession. I would suggest that formerGovernor Albert Brewer be selected todraft the legislation with the assistanceof former Supreme Court JusticesGorman Houston and Ralph Cook.These men could do the job quickly andwell, in my opinion.Source: Birmingham News

ALABAMA IS STILL OPEN FOR BUSINESS ANDIS DOING VERY WELL

A report released in late June of thisyear by a leading national firm has to beconsidered great news for Alabama’seconomy. The report from IndustrialInfo Resources, a Texas-based firm, gaveAlabama outstanding marks for itsindustrial development efforts. Ourstate has 193 active industrial projectsworth a total of $3 billion, a 9% jump inproject expenditures from the sametime in 2005, according to data from thestudy.Alabama received extremely highmarks in the study for its industrialgrowth. It’s real good to know that ourstate is recognized as a good place forbusiness and industry.

Neal Wade, the director of theAlabama Development Office, has donea tremendous job in selling Alabama’sbusiness climate to industry prospects.But when you consider all that Alabamahas to offer, selling our state shouldn’tbe that difficult. Unfortunately, Neal andothers have to overcome the negativeinformation put out by the “tort reform-ers” concerning our state. While falseand certainly misleading, it still causesproblems. I realize that Alabama’s recordgrowth in the important area of indus-trial development is a bitter pill forthose folks to swallow. Clearly, the storythey tell the public through the mediaand by way of political ads is nothinglike the truth when it comes to what allis going on in Alabama.

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The truth is that Alabama has beenvery good for business and still is.WhenI was a mere child, I used to ask mymother how certain things would be if Itried them. On occasion, she wouldanswer:“the proof is in the pudding.” Ittook me a good while to figure outwhat she meant by that statement. Ifinally figured it out—it’s sort of likewhen an industrial prospect is lookingat Alabama as a possible location and isbeing told about all of our state’s advan-tages. Once they try Alabama, theyalways seem to like it here. So when youconsider that Alabama was named asState of the Year for the fourth consec-utive year by Southern Business andDevelopment magazine, it’s a prettygood indication of what’s happing inour state.That ranking, based on corpo-rate and industrial jobs created andinvestments, placed Alabama over 16other Southern states. The State ofAlabama also received the “GoldenShovel” award, which was based, amongother economic indicators, on jobscreated and amount of company invest-ment.This sort of factual reality makes itreal hard on those who try to sell themyth that Alabama is “Tort Hell” andthus bad for business. Business locatorslike Alabama. I guess the proof really isin the pudding!Source: The Montgomery Advertiser

ALABAMA MOVED ENTIRE 2008 PRIMARY TOFEBRUARY

As everybody now knows, theAlabama Legislature has moved thestate’s entire primary election—not justthe presidential preference primary—from June to February in 2008.This wasdone by mistake and it wasn’t discov-ered until late June.You will recall thatthe lawmakers wanted to make Alabamaan early primary state so that presiden-tial candidates would have to come inearly to campaign. Before this discovery,election officials were voicing concernover the fact that the new primary date,February 5, 2008, is also Mardi Gras Day.While it doesn’t affect most of our state,Mardi Gras Day is a major holiday andtourist event in Mobile.As it now stands,

the legislation moving up the presiden-tial preference primary has set allprimary elections for the first Tuesday inFebruary.

Alabama’s presidential preferenceprimary was moved from being one ofthe last in the nation to being one of thefirst. I believed that was a good move.Under the new law, in 2008 it would gofrom June 3rd to February 5th.This wouldput Alabama’s primary shortly after theIowa caucuses and New Hampshireprimary. Obviously, this would makeAlabama—a southern state—most impor-tant in the selection process for bothparties. It’s my belief that no candidatecan be elected president unless theycan do well in the south.

Unless the date is changed, the 2008primary election for the state SupremeCourt and other state appellate courts,the presidency of the Public ServiceCommission, many county commissionseats, and a good number of circuit anddistrict judgeships will be shifted fromJune to February. In an added twist, theLegislature left the primary runoff forstate and county offices on the lastTuesday in June.That means a candidateinvolved in a run-off would have to runfrom February 5th to June 24th. Thiswould mean that the run-off campaignswould take more than four months, andthat simply won’t work.

It should be noted that Alabama is oneof four states being considered by theDemocratic National Committee for aneven earlier primary. The DNC willdecide on August 17th whether the DNCapproves Alabama. If so, I suppose thenew law would have to be changed toaccommodate that decision. But, therehas been opposition to even having anearlier primary in any state because ofthe historical significance of the earlyvoting in Iowa and New Hampshire.

TEXAS AND DRUG MAKER SETTLE MEDICAIDFRAUD CASE

The State of Texas has reached an$8.5 million settlement with Illinois-based Baxter Healthcare Corp. foralleged Medicaid fraud. A scheme toreport falsely wholesale prices of spe-

cific drugs and devices prescribed forMedicaid patients, thus defrauding thestate Medicaid program, was the basisfor the complaint against the drugcompany. Specifically, Baxter wasaccused of falsifying wholesale prices inTexas of I-V fluids and injectable med-ications. The State of Texas has beenvery active in going after the drug com-panies that have been cheating thatstate. It certainly appears that the drugindustry took the same approach withthe states that Exxon took with Alabamaon royalty payments—that it couldcheat and most likely never getcaught—and it hasn’t worked for thatindustry either.Source: National Law Journal

A BRIEF LOOK AT THE RUN-OFF ELECTIONS

As predicted, very few peopleshowed up to vote in the July 18th run-off election in Alabama. It may wind upbeing less than 10% of the registeredvoters. A few counties broke the lowvoter turn-off trend because of heatedlocal races. Otherwise, things statewidewere pretty dull. Perhaps, the loss byGeorge Wallace, Jr. in the lt. governor’srace was the biggest news on July 19th.His defeat brings to an end a politicalcareer for a candidate with the mostfamous name in the history of Alabamapolitics.

As for Luther Strange, the winner inthat race, some political observers arenow asking why close to $3 millionwould be spent in a race for an officethat has absolutely no power or author-ity.They might also wonder where thatmoney came from. Remember, thisspending was just in the primary. Thefall contest pitting Luther against JimFolsom could be even more costly. Inmy opinion, Luther and Jim are after anoffice that should be completely takenout of the legislative branch of govern-ment, but that’s another story foranother day. I will write more on thatthought in a future issue.

For now, I sincerely hope that all ofthe candidates who survived the pri-maries—Republicans and Democratsalike—will put their respective cam-

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paigns on hold until after Labor Day.That would be doing the people ofAlabama a tremendous favor.There willbe plenty of time for running and politi-cal promises in the fall.

II.THE NATIONALSCENE

ORDINARY FOLKS HAVE A NEED FORLOBBYISTS TOO

The large and powerful companies inCorporate America (sometimes referredto as “Fat Cats”) have always had readyaccess to the seats of power at thenational level, and that has also been thecase in almost every state capitol inAmerica. In recent years that access hasbecome much easier. Lobbyists repre-senting these Fat Cats, who actually aremore powerful than some of the electedofficials, virtually control much of whathappens in government.To say that Cor-porate America is well stocked with lob-byists is a gross understatement.Unfortunately, there are few organiza-tions that really represent the interestsof working men and women, theowners of small businesses, senior citi-zens and minorities. Groups such asAARP, Common Cause, Public Justice,Center for Justice & Democracy, andPublic Citizen are a few that readilycome to mind. I have known for severalyears of the good work that PublicCitizen has done. I am not sure,however, that most American citizensreally know much about the consumeradvocacy organization. For that reason, Iwill discuss some of what Public Citizenhas done and some of its current proj-ects.

For 35 years Public Citizen has takenon and challenged the corporate FatCats in our country and has representedthe public’s interest in the halls ofpower.The consumer advocacy grouphas also had to take on the federal gov-ernment in the process.They have doneall of this with a relatively small staff.Currently, Public Citizen has a number

of issues and projects they are involvedwith. Some of them include:

• Public Citizen is spearheading effortsto clean up corruption in Washingtonand expose Congressional abuses;

• They are challenging limits on com-pensation to victims of corporatewrongdoing;

• They are opposing federal pre-emption of state liability claims;

• They are advocating strong safety andhealth standards for motor vehicles,food,drugs, and medical devices;

• The group is pushing for energy con-servation and fuel economy to reduceglobal warming;

• They are seeking public financing ofelections;

• Public Citizen continues to be aleader in the fight for victims ofasbestos exposure;

• They have battled the U.S. Chamberof Commerce and other tort reformgroups which undermine citizenaccess to the courts; and

• Public Citizen has opposed price-gouging by oil companies.

We need other groups that—likePublic Citizen—refuse to accept corpo-rate or government gifts or donations.As a result they can be free and inde-pendent in their work. Over the 35years of their existence, Public Citizenhas been a steadfast beacon for inde-pendence, truth, and justice. Theirgoal is to secure corporate and govern-ment accountability. I sincerelybelieve that Public Citizen is a groupthat should be supported by any citizenwho believes in freedom and justice forall Americans. I also believe strongly thatwe need more groups like PublicCitizen to carry on the fight.

CENTER FOR JUSTICE & DEMOCRACY STUDY

The Center for Justice & Democracyreleased a new study last month reveal-ing how the U.S. Chamber of Com-

merce provides substantial financial andstrategic assistance to local front groupsto influence state elections, includingfunding major media buys to smearlocal candidates in political racesaround the country. The report, “TheSecret Chamber—The Inner Workingsof the U.S. Chamber of Commerce andthe Hijacking of an Election,” drawsfrom a cache of newly-released papersand deposition testimony uncovered inconnection with litigation surroundingthe failed 2004 election bid of DeborahSenn for Washington State AttorneyGeneral. Joanne Doroshow, ExecutiveDirector for the Center for Justice &Democracy,had this to say:

Most people believe the Chamberis an apolitical and innocuousbusiness support organization.Butit is anything but. This group hasits hands in just about every levelof electoral politics, dipping intothe very foundations of our demo-cratic process. It is important thatthis effect, which has largely stayedunder the radar, become known tothe public.

I would recommend that you obtain acopy of the full report. It tells how theU.S. Chamber has been used by power-ful special interests in a manner thatfew people—once they learn what isgoing on—would ever tolerate. Some ofwhat the Chamber does in politicalcampaigns is nothing short of “gutterpolitics” of the worst sort. Apparently,the leadership of the U.S. Chamber con-dones this sort of thing. In the process,the Chamber is taking in and spendingtens of millions of dollars in politicalraces around the country.You can readthe full report by going to www.cen-terjd.org/lib/studies.htm.

ANOTHER RECORD REVENUE YEAR FORINDIAN GAMBLING

Last year, tribal casinos received $22.6billion in gambling revenue. In compari-son, this was double the take of Nevadagambling. In fact, it was a record year forIndian casinos.That was a 15% increasefrom the $19.6 billion that Indian

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casinos reaped in 2004, according to theNational Indian Gaming Association.Tribal gambling has recorded double-digit growth almost every year sinceCongress created the legal frameworkfor it in 1988.There are now 408 Indiangambling facilities nationwide, including247 full-service casinos with slotmachines and other Las Vegas-stylegames in place. Other gambling centersare smaller or offer video poker, bingo,or other similar games.

This is a very large operation, withfacilities being operated by 223 Indiantribes in 28 states. Indian gambling gen-erated 600,000 jobs nationwide lastyear, according to the report. Nevadacasinos brought in $11.6 billion fromgambling in 2005, according to theNevada Gaming Control Board. Whenyou are comparing the Indian tribe gam-bling to the Los Vegas operations, thereis a very big difference. Unlike Indiancasinos, though, Nevada casinos rely onhotels, restaurants, and shows for abouthalf their revenue, pushing their totaltake for 2005 past $20 billion. TheIndian casinos took in almost all of theirmoney strictly from gambling, with onlya very small percentage coming fromnon-gambling entertainment. Nowonder Jack Abramoff saw the opportu-nity to make millions when he set outto cheat and steal from the tribes herepresented.Source: Associated Press

A GEORGIA PRIMARY ELECTION RACE SENDSA STRONG MESSAGE TO THE NATION

I don’t believe anybody can nowdispute the fact that Ralph Reed wasclosely connected to Jack Abramoff, thecorrupt influence-peddler and lobbyistreferred to above,and that corruption inand around government is now anational issue.These two men benefitedfinancially in a very big way from theirvery close association. It was madequite apparent in Reed’s first ventureinto politics as a candidate how theAmerican people really feel about cor-ruption in influence-peddling govern-ment. As you probably know, RalphReed—with all of his political connec-

tions and access to huge sums of cam-paign money—lost his race in Georgia, arace that everybody said when he quali-fied couldn’t be lost. In fact, right up toelection day, the polls showed the raceto be a dead heat. It is most significantthat Reed was not only defeated, he wasbeaten soundly.That loss is being seenas most important from a national per-spective in relation to the fall elections.I believe it’s an indicator of the public’sattitude concerning corruption andinfluence-peddling in government. If Iam correct, this will be a major factor inthe fall elections.

The fact that Reed took gamblingmoney initially seemed to come as a sur-prise to many of Reed’s followers andsupporters, especially those connectedto the Christian Coalition.According toa U.S. Senate report, an Indian tribe sentReed, the former Christian Coalitionleader, more than $5.3 million throughintermediaries to satisfy what weredescribed as his “political concerns.”Thegambling money came to Reed for hiswork in Alabama to defeat a state lotteryand video poker legislation in 1999 and2000 on behalf of the Mississippi Bandof Choctaws. Reed clearly wanted tohide the source of his newly foundwealth. His rejection in Georgia, a fairlyconservative state, and one whereRepublicans in national elections havedone very well, is most significant anddoesn’t bode well for a number ofRepublican candidates in this fall’s con-gressional races.

As you may recall, the Mississippitribe was a client of Abramoff.Accord-ing to Nell Rogers, a Choctaw official,Reed didn’t want to be paid directly bya tribe with gambling interests.Accord-ing to Ms. Rogers, who testified beforethe Senate Indian Affairs Committee, thepayment method was recommended byAbramoff “to accommodate Mr. Reed’spolitical concerns.” Obviously, a majorconcern to Reed was that it would bevery difficult for him to explain to ordi-nary folks, who were sending their hardearned money monthly to the ChristianCoalition, why he was taking millions ofdollars of gambling money and workingfor the casinos.That certainly didn’t fit

his public image and the conservativemessage of morality that he preached.

The bipartisan Senate report clearlytied Reed to the influence-peddlingoperation run by Abramoff on behalf ofIndian tribe casinos.The report by theSenate Indian Affairs Committee por-trayed Reed as a central figure inAbramoff’s lobbying operation, whichhas been the focus of a criminal investi-gation by the Justice Department. Itseems that Reed used his contacts withconservative Christian groups in theSouth and Southwest beginning in thelate 1990s to block the opening orexpansion of casinos that mightcompete with the gambling operationsrun by Abramoff’s clients.

As you know,Abramoff and his formerpartner, Michael Scanlon, have pleadedguilty to conspiring to corrupt publicofficials and bilking some Indian tribeclients out of tens of millions of dollars.These confessed criminals are still coop-erating with a federal grand jury investi-gation that is threatening to derail thecareers of several members of Congress.It was significant that Reed’s name wasinvoked repeatedly at the trial of DavidH. Safavian, the former White House aidewho was convicted of lying to federalinvestigators in a matter that involvedAbramoff, Congressman Bob Ney (R-OH),and Reed.The Senate report,a resultof a two-year investigation by the IndianAffairs Committee, said of Abramoff andScanlon, ”The depth and breadth of theirmisconduct was astonishing.”

The Senate report documented pay-ments to Reed from two sources, $1.3million from the Choctaw Indians ofMississippi, paid through Abramoff’s lawfirm, Preston Gates, through May 1999,and $4 million that Reed and his associ-ates received from organizations con-trolled by Scanlon in 2001 and 2002.The report found that Reed’s involve-ment with Abramoff’s Indian tribeclients actually dated from 1998.At thattime, Reed sent a telling e-mail messageto his close friend Abramoff, noting thathe was “done with electoral politics”and,“I need to start humping in corpo-rate accounts!—I’m counting on you tohelp me with some contacts.” That

pretty well explains what Reed andAbramoff set out to do.The sad part ofthis story is how Reed used some goodfolks in the Christian community for hispersonal financial gain. It’s obvious thatthe people of Georgia won’t tolerate ahypocrite, and that’s good news. Itcaught up with Reed in his bid forpublic office, and it will likely catch upwith others in the fall elections.

Reed’s loss in Georgia sends a clearmessage to all national politicians andone that they best take to heart. Thatmessage is that folks don’t like hyp-ocrites, and neither will they toleratecorruption and greed.Source: Associated Press

TEXAS INDIAN TRIBE SUES ABRAMOFF ANDREED

In a related matter, a Texas Indian tribefiled a federal lawsuit last month allegingthat Jack Abramoff, Ralph Reed, and theirassociates engaged in fraud and racket-eering to shut down the tribe’s casino.The Alabama-Coushatta tribe of Liv-ingston,Texas, alleged that the defendantsdefrauded the tribe, the people of Texas,and the Legislature to benefit another ofAbramoff’s clients—the LouisianaCoushatta tribe—and “line their pocketswith money.” Coushatta tribe perma-nently shut down its casino.The fundingfor economic programs evaporated, over300 jobs were lost in Polk County, andthe Alabama-Coushatta tribe has spentyears struggling to recover and revitalizeits economy through other means, thetribe said in its lawsuit.

The lawsuit, filed in the U.S. DistrictCourt for the Western District of Texasin Austin, also names Abramoff’s ex-busi-ness partner Michael Scanlon, a formeraide to former Rep.Tom DeLay, R-SugarLand; Neil Volz, a former aide to Rep.Bob Ney, (R-OH); and Jon Van Horne,Abramoff’s former colleague at his lawand lobbying firm, Greenberg Traurig.Although the tribe alleges GreenbergTraurig was part of the scheme, it didnot name the law firm as a defendant. Itwas reported by Associated Press thatthe tribe has been in settlement discus-sions with that firm.Source: Associated Press

IT APPEARS THAT ROVE MAY HAVE DODGEDA BULLET

I have always felt that regardless ofwhat he might have done, Karl Rovewas too smart and perhaps too power-ful to ever be indicted for a criminaloffense. It now appears that I wascorrect, now that more details of theValerie Plame leak investigation thatresulted in the indictment of one pow-erful person are coming out. In his syn-dicated column released on July 12th, theultra-conservative columnist RobertNovak—with close ties to the BushWhite House—revealed his side of thestory relating to the Plame affair. Thecolumnist now says Rove was a con-firming source for his story on the CIAofficer. Novak—for whatever reason—underscores Rove’s role in a leak Presi-dent Bush once promised to punish. Infact, the President said he would firethose responsible for the leak. But, Idoubt seriously that this President couldever afford to fire Rove.Source: CBS News

LAWSUIT FILED OVER CIA LEAK BRINGS INSOME BIG NAMES

Joseph Wilson and his wife, ValeriePlame, the CIA officer whose identitywas leaked to reporters, have filed acivil lawsuit in federal court againstVice-President Dick Cheney, Karl Rove,and Scooter Libby. These defendants,along with other White House officials,were accused in the suit of conspiringto destroy Ms. Plame’s career. Cheney,Rove, and Libby were accused of reveal-ing Plame’s CIA identity in seekingrevenge against Wilson for criticizingthe Bush administration’s motives inIraq.The lawsuit accuses Cheney, Libby,Rove, and 10 unnamed administrationofficials or political operatives ofputting the Wilsons and their children’slives at risk by exposing Plame. It wasalleged in the complaint:

This lawsuit concerns the inten-tional and malicious exposure bysenior officials of the federal gov-ernment of ... (Plame), whose jobit was to gather intelligence to

make the nation safer and whorisked her life for her country.

As you know, Libby is the only Admin-istration official who has been chargedcriminally in connection with the leakinvestigation. He faces trial in Januaryon perjury and obstruction-of-justicecharges, accused of lying to FBI agentsand a federal grand jury about when helearned of Plame’s identity and what helater told reporters. I am not sure wherethis suit is headed, but it has the poten-tial of uncovering more of how thisAdministration deals with their politicalenemies.Source: Associated Press

DEMOCRATS SHOULD DO WELL ON NATIONALLEVEL THIS FALL

According to a recent poll, it is nowvery clear that Republicans could losecontrol of Congress in November.Thelatest Associated Press-Ipsos poll foundthat Americans, by an almost 3-to-1margin, hold the GOP-controlled Con-gress in low regard and want Democratsto take control after a dozen years ofRepublican rule.According to the poll,the Democrats hold the edge among“persuadable voters,” a prospect thatdoesn’t bode well for the Republicans.Democrats also do much better withvoters who label themselves as “conser-vative,”and that was a shocker.

The election ultimately will bedecided in 435 House districts and 33Senate contests, in which incumbentstypically hold the upper hand. But thesurvey underscored the difficultyRepublicans face in trying to persuade ahighly skeptical public to return themto Washington.To take control of Con-gress, the Democrats must displace 15Republicans from House seats and sixRepublicans from the Senate. The AP-Ipsos survey asked those polled if the“election for the House were held today,would they vote for the Democratic orRepublican candidate” in their district.Based on the response, Democrats werefavored 51% to 40%. Interestingly,because those wanting a changeincluded a good number of so-calledconservative voters, it is very bad

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news for Republican candidates.I suspect the Reed loss in the lt. gover-

nor’s race in the Republican primary inGeorgia—a rejection of the poster-boyof the conservative wing of the Party, areaction to corruption and influencepeddling—will get the attention ofthose who are in charge of the nationalRepublican Party. Incidentally, theGeorgia vote came after the poll men-tioned above was done. All of thisshould help Democratic candidates inthe Congressional races this fall. But, weshould remember—the national Demo-cratic Party is certainly capable ofmessing things up between now andElection Day in November, so staytuned!Source: USA Today and Associated Press

GLOBAL WARMING SIMPLY CAN’T BEIGNORED OR DISMISSED ANY LONGER

All Americans should be bothshocked and greatly concerned overhow the Bush White House and many inCongress have virtually ignored theobvious dangers associated with globalwarming. In my opinion, the weight ofevidence on this issue is not only over-whelming, but highly disturbing. Wehave had clear warning signals over thepast several years indicating that some-thing is badly wrong as a result of globalwarming pollution. It seems clear thatthe earth’s climate is being changed at arapid pace.The repercussions are beingfelt and killer heat waves, more fiercestorms, shrinking ice caps, and rising sealevels are all examples. It is sad—buttrue—that the U.S. is the world’s largestemitter of global warming pollution.There are many examples of what ishappening that should make PresidentBush and others wake up on the issueof global warming. For example, theeffect that global warming is having onwildlife is beginning to show up aroundthe world.The following are five shock-ing examples of what’s happening rightnow relating to wildlife that should beclear warning signals:

• Coral reefs have undergone exten-sive damage, called coral bleaching,

because of increasing temperature ofocean waters. In one year alone, 16%of the world’s coral reefs were wipedout.

• Surprised researchers found deadpolar bears far out at sea last year.Forty percent of the ice in the Arctichas already melted and polar bearsmust travel further and further to findfood.The bears simply couldn’t swimfar enough to reach the receding ice,and many of them drowned!

• Thousands of caribou calves havebeen swept to their deaths whenmigrating across rushing rivers thatshould have been iced over.

• Penguins struggle for their livesbecause they cannot find enough oftheir main food source, krill, whichare dying off because of rising oceantemperatures.

• Beautiful Monarch butterflies expe-rienced a mass die-off in 2002 due tohazards caused by the increased rain-fall attributed to global warming; sci-entists fear that this is the first ofmany similar incidents.

Wildlife and nature are speaking to uson this critically important issue, and it’stime for each and every one of us tolisten. That certainly includes ourelected leaders and those who run thelarge and powerful oil companies. Wecan’t afford to let these oil companiescontinue to set policy for our nation’sgovernment in this important area ofconcern. All American citizens, eventhose who head up major corporations,have a vital stake in this battle. Each ofus can play a vitally important role in anationwide movement to address globalwarming. We simply can’t afford to sitback and let the oil companies and afew politicians dictate our nation’spolicy on global warming. If you agree,let President Bush and your U.S. Sena-tors and members of Congress knowhow you feel. If you want more informa-tion on the subject of global warming, agood source is www.environmentalde-fense.org.

U.S. SUPREME COURT WILL HEAR STATES’CASE AGAINST EPA OVER CLIMATE CHANGE

During his first run for the presidencyGeorge W. Bush was telling the votersthat once elected, he would make surethat carbon dioxide was properly regu-lated. But in early 2001, shortly aftertaking office, President Bush changedhis tune. One reason he gave for thechange of mind was that it would betoo expensive to force reductions of theleading heat-trapping “greenhouse gas.’’Of course, that is at the very heart of thedebate over global warming. Since Bushwas elected, almost nothing of conse-quence has been done to avert the mostserious problem of climate change. Infact, the White House has pretty muchdanced to the tune played by the oilcompany executives on this issue. Nowthe U.S. Supreme Court is involved, andwhat it does may force the president toshift gears once again. On the otherhand, the High Court could accept theAdministration’s argument that thereare other and cheaper ways to addressclimate change. In any event, the jus-tices have agreed to take up a casebrought by a dozen states to require theEnvironmental Protection Agency (EPA)to regulate carbon dioxide releasedfrom the tailpipes of automobiles andother motor vehicles.

The ruling could be one of theCourt’s most important ever involvingthe environment because it will deter-mine how the nation addresses globalwarming. As you may know, the stateshave been in a running pollution battlewith the Bush Administration for thepast several years.The Supreme Courtwill decide whether the EPA is requiredunder the federal Clean Air Act to treatcarbon dioxide from automobiles as apollutant harmful to public health.

Repeatedly, President Bush hasrejected calls by environmentalists andsome lawmakers in Congress to regulatecarbon dioxide, favoring voluntaryactions and development of new tech-nologies to curtail such emissions. But adozen states argued that carbon dioxideand other heat-trapping chemicals fromautomobile tailpipes should be treatedas unhealthy pollutants and regulated.

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The states filed a lawsuit in an effort toforce the EPA to curtail such emissionsjust as it does cancer-causing lead andchemicals that produce smog and acidrain. That certainly seems a logicalapproach to the problem.This will bethe Supreme Court’s first major caseinvolving climate change.

Reduction of all greenhouse gases isabsolutely necessary if we are to reducethe amount going into the atmosphere. Ibelieve most American citizens believethat prompt action on climate change iscritically important.The states involved,which together account for more than athird of the car market, contend theClean Air Act makes it clear that carbondioxide is a pollutant that should be reg-ulated if it poses a danger to publichealth and welfare.They argue it doesso by causing a warming of the earth.

In their appeal, the states contendedthat the case “goes to the heart of theEPA’s statutory responsibilities to dealwith the most pressing environmentalproblem of our time,” the threat ofglobal warming. California, Connecticut,Illinois, Maine, Massachusetts, NewJersey, New Mexico, New York, Oregon,Rhode Island,Vermont, and Washingtonare the states that brought the lawsuit.They were joined by a number of cities,including Baltimore, New York City andWashington D.C.; the Pacific island ofAmerica Samoa, the Union of Con-cerned Scientists; Greenpeace; andFriends of the Earth. The case will bewatched closely.Source: The Insurance Journal and Associated Press

LONG-STANDING PROBLEMS AT FDACONFIRMED

Over the past few years, we have fre-quently written about the many prob-lems at the federal Food and DrugAdministration (FDA). Recently, a surveyby the Union of Concerned Scientistsconfirmed what many medical andhealthcare experts have felt relating tothe performance of the FDA. Dr. SidneyWolfe, Director of Public Citizen’sHealth Research Group, issued the fol-lowing statement relating to the study:

In research results released today,

the Union of Concerned Scientists(UCS) confirmed a long-standingproblem at the U.S. Food and DrugAdministration (FDA): Agencyworkers who analyze drugs forsafety and effectiveness are beingthwarted in their jobs, and as aresult, drugs with questionablesafety records are approved for useby millions of Americans.While thetendency may be to blame thecurrent administration, thisproblem has been going on wellbefore President Bush took office.In fall of 1998, Public Citizen con-ducted a similar survey as UCSand found that drug officers thenhad serious concerns about thesafety of the drugs the agency wasapproving. Then, as now, the offi-cers said that standards had sunkand that drugs were beingapproved too quickly and withoutregard for patient safety. Nineteenmedical officers identified 27drugs put on the market duringthe previous three years that theythought should not have beenapproved. Eight medical officersreported 14 instances in threeyears in which they had beeninstructed not to present their ownopinion or data to an FDA advi-sory committee when doing somight have reduced the likelihoodthat a drug would be approved.

The culprit is two-fold. First, FDAuser fee legislation creates aninherent conflict of interest. Underthis legislation, companies—pri-marily drug companies—this yearwill pay $380 million to the FDA.An agency cannot effectively regu-late industries that pay the salaryof so many of its employees.Second, there is a dangerous lackof congressional oversight of theFDA. The last serious oversighthearing was held 20 months agoby Sen. Charles Grassley (R-Iowa).Meanwhile, the agency continuesto approve drugs that have nounique benefits but serious risksthat can endanger the lives ofthose who take them, and fails to

promptly remove drugs from themarket once presented with evi-dence of dangers. It is inexcusablefor Congress to sit idly by whilepatients die needlessly. Until userfee legislation is repealed and Con-gress holds regular oversight hear-ings—as it used to—the publicwill see the same survey resultsrepeated in future administra-tions.

I hope President Bush and the leadersin Congress—both Republicans andDemocrats—will unite on this issue andcorrect the problems that exist at theFDA. While these problems have beenidentified on numerous occasions, theylinger on. We can no longer afford tosweep them under the carpet.The timeto act is now. It will take the repeal byCongress of some bad laws, passage ofsome needed legislation to strengthenthe agency, and finally more fundingfrom our lawmakers.This is somethingthat—in the interest of public health—can’t be ignored any longer.Source: Public Citizen

FDA ISSUES FEWER CITATIONS RELATING TOSAFETY AND QUALITY

I have said on a number of occasionsthat the Food and Drug Administration(FDA) is little more than an extension ofthe powerful drug industry.That’s why Iwasn’t surprised to learn that the FDA isciting fewer companies for poor qualityor safety standards despite a relativelyconstant number of violations by com-panies.This information comes from acongressional report and ties in withthe conclusions reached by the UCSsurvey. The FDA issued 535 warningletters in the fiscal year ended Septem-ber 30th, a 15-year low and down 54%from five years earlier.The report, result-ing from an inquiry initiated by Rep.Henry Waxman (D-CA), also says thatthe FDA has routinely rejected enforce-ment recommendations of its fieldinspectors and sometimes responded soslowly that it missed internal deadlinesto take action.

The FDA in a statement respondedthat the numbers from the report don’t

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tell the whole story and that the agencyprotects the public by concentrating onhigh-risk cases.The FDA claims compli-ance has actually improved. In review-ing thousands of pages of FDAdocuments, according to USA Today,congressional investigators found atleast 32 cases in which inspectors’ callsfor warning letters, product seizures, orcourt injunctions were denied. Exam-ples in the report show how far apartinspectors and decision-making officialscan be:

• The FDA’s Denver office in 2001 rec-ommended a warning letter to acompany whose hangover treatmenthad what inspectors said was a toxiclevel of caffeine. Three people whotook it were admitted to emergencyrooms. FDA headquarters said theconcerns didn’t meet the “regulatorysignificance threshold for enforce-ment.”

• An “anti-itch” cream contained noactive ingredient. It took FDA head-quarters 11 months to reject aninspector’s call for a warning letter.Documents indicate the FDA notedthat the company was a “very smalloperation,”which is irrelevant.

I have little confidence in the FDA’sability to do its job properly.The powerand influence of the drug industry is sogreat in Washington that the FDA hasbeen made largely ineffective in its regu-latory role.A major problem is that Con-gress has underfunded the agencyconsistently, which has made the FDAfar too dependent on the drug compa-nies for financial assistance.That has ledto the “tail wagging the dog” in toomany areas of regulatory concern.Source: USA Today

EXPERIMENTS ON HUMANS TO INCLUDECHILDREN

It appears that the Bush Administra-tion had a great deal of help from thepesticide and chemical industries whenthe Environmental Protection Agency(EPA) proposed rules authorizing exper-iments on humans with pesticides andother chemicals. Notes from meetings

with pesticide industry lobbyists, whichraise some interesting questions, havebeen made public by Public Employeesfor Environmental Responsibility(PEER), a Washington, D.C. public inter-est group. Industry requests for exemp-tions allowing some chemical testing onchildren, along with other requestedprovisions, were incorporated into thehuman testing rule that was ultimatelyadopted on January 26th.

According to PEER, at the August 9,2005 meeting, held inside the Presi-dent’s Office of Management andBudget (OMB), representatives of thepesticide trade association, Crop LifeAmerica, as well as Bayer Crop LifeScience, met with OMB and EPA offi-cials. Also attending was a former topEPA official, James Aidala, who now actsa lobbyist at a law firm representingchemical companies.The meeting notesdetail industry concerns about the textof a proposed rule that the Bush Admin-istration first made public a month lateron September 12th. One could concludefrom the meeting notes that the pesti-cide industry’s top objective was gettingaccess to children for experiments.

The deadline for EPA final approvalfor a controversial class of pesticidesderived from nerve agents calledorganophosphates was August 3rd.Thisappeared to be a top industry priority.At press time, we hadn’t heard whetherapproval was given, but I suspect it was.Interestingly, the human testing ruleadopted by EPA earlier this year con-tains the loopholes advocated at theOMB meeting for exposing children topesticides. These include testing onworkers and exposures unconnectedwith the approval process for new pes-ticides or new uses for existing agents.In addition, the rule broadly allowsdosing experiments on infants and preg-nant women using non-pesticide chemi-cals. PEER Executive Director Jeff Ruchmade this observation:

Using human beings as guineapigs to test the toxic strength ofcommercial poisons has become acentral regulatory strategy underthe Bush Administration.

Although there is nothing inherently

wrong with government officialsmeeting with representatives of a regu-lated industry, it is important that otherviews be heard at similar meetings andseriously considered. I also believe thatall meetings of this kind should be madepublic and not hidden from view. It cer-tainly appears that testing of the sortdescribed above should be a matter ofpublic interest.

III.LEGISLATIVEHAPPENINGS

NEW ALABAMA CHILD SAFETY SEAT LAWLAWS IS IN EFFECT

Alabama children now come under astronger child safety seat law thatrequires booster seats for the first timein the state. The new law, pushedthrough the Legislature largely byVOICES for Alabama’s Children, tookeffect on July 1st.This is a needed changefor Alabama children and a good movefrom a safety standpoint. State SenatorQuinton Ross, motivated by the death ofhis own niece in an accident in 2003,worked with VOICES for three longyears to get the Legislature to finallyapprove the stricter child safety seatlaw. Interestingly, the bill finally passedon the final day of the regular session.

For years, state law has required chil-dren 3-years-old and under to use safetyseats. Those 4 and 5 had to berestrained, but it could be with adultseat belts. Children that age aren’t tallenough for seat belts to secure themproperly during a collision, whichmeant that they were at risk of signifi-cant injury.The legislation will requirechildren to be in rear-facing car seatsuntil they are 1 year old or weigh 20pounds.Then they must be in forward-facing car seats until they are 5 year-oldsor weigh 40 pounds, in booster seatsuntil they turn 6, and in regular seatbelts until they turn 15.The last require-ment applies to the rear seats becausestate law already requires all front-seatoccupants to wear seat belts.The newlaw covers passenger cars, pickup

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trucks, vans with seating capacity for 10or less, minivans and sports utility vehi-cles.All of the legislators, and especiallySenator Ross, should be commended forpassing this needed legislation.

OTHER SAFETY LAWS THAT WERE PASSED

In addition to the child restraint law,the Alabama Legislature passed someother safety laws during the last regularsession. Some of these new laws includethe following:

Motorists will be required to moveover a lane when approaching astopped emergency vehicle on a four-lane highway.

It will now be a separate crime toshoot into an occupied or unoccupiedschool building or school bus.

The publication of Social Securitynumbers on state documents will berestricted.

The state’s ban on students carryingcell phones to public schools wasrepealed. Each city or county schoolboard will now be able to set its ownpolicy.

IV.THE CORPORATEWORLD

STATES SUE CHIP MAKERS OVER PRICEFIXING

A number of states filed a lawsuit lastmonth against seven global memorychip makers, accusing the companies ofovercharging their customers and pricefixing. Earlier, New York AttorneyGeneral Elliot Spitzer filed a separatelawsuit to recover damages for con-sumers in his state.These developmentsopen a new chapter in the four-year-oldinvestigation that has already led tolarge fines for the companies and prisonsentences for several executives.

The multistate suit, filed in federal Dis-trict Court in San Francisco, accused thechip makers of conspiring to fix pricesand manipulate supply from 1998 to2002. Consumers and equipment manu-

facturers were overcharged. The endusers—the consumers—may have over-paid for the memory chips by hundredsof millions of dollars because of theprice fixing.The case involves dynamicrandom access memory, or DRAM,chips, which are commonly used in per-sonal computers, printers and electron-ics devices like cell phones and digitalcameras.The chip companies named inthe multistate suit include InfineonTechnologies, Hynix Semiconductor,Micron Technology, Mosel Vitelic, NanyaTechnology, Elpida Memory, and NECElectronics America. California and Illi-nois are the co-leaders in the suit, whichinvolves 34 states, including Florida,Massachusetts, Maryland, Ohio. andPennsylvania. as plaintiffs.

The computer makers that boughtthe chips include Apple Computer, Dell,Gateway, I.B.M., Hewlett-Packard andCompaq Computer, which merged withHewlett-Packard in 2002. The civillawsuit grew out of the criminal casebrought by the Justice Department in2002 charging Hynix, Samsung, Infi-neon, and Elpida of conspiring to fixprices of DRAM chips. In that case,Micron agreed to cooperate with inves-tigators in exchange for amnesty fromcriminal charges, while Samsung, Hynix,Infineon, Elpida, and 12 chip companyexecutives pleaded guilty to pricefixing. Collectively, the companies andindividuals paid more than $730 millionin fines, and several executives receivedprison sentences.Source: New York Times

CRIMINAL ACTS AND CORPORATE FRAUD AREOUT OF CONTROL

Over the past few years, we have wit-nessed the worst examples of corporatecrime and intentional fraud committedby corporate bosses that our countryhas ever experienced. From Enron toWorldCom, with many other corpora-tions in between, we have seen somereal bad conduct by corporations andtheir bosses. The following are a fewexamples: cheating the government onfederal contracts, fraud involving mutualfund practices and finite reinsurance

transactions, securities fraud of all sorts,corporations cheating the federal gov-ernment, large and small, on govern-ment contracts and on federalprograms; cheating of the federal gov-ernment by companies doing businessin Iraq;massive fraud relating to Katrina;actual looting of corporations by theirbosses; failures by corporations to fundemployee pension plans—and the listgoes on.

Sadly, bad conduct by some corpora-tions and their bosses has dominatedthe news on the business pages almostdaily, and that has been the case for thepast five years. It has become common-place for the news media to reportcases in which corporate executiveshave cheated the government, othercompanies, the public, and even theircompanies’ own employees and share-holders.When will all of this stop?

The American people want corporatefraud and criminal activities by corpo-rate executives to be stopped now, andthey expect government to act aggres-sively to accomplish that goal. Clearly,the federal and state governments havea shared responsibility to make thishappen. It’s also essential for the crimi-nal and civil courts to be kept open andavailable to deal with this most seriousproblem, which that has become like acancer in our country. I suppose that allof this sort of thing has been going onfor years, but the public just didn’tknow about it. I have always suspectedthat the “tort reform” movement wasdevised by smart folks in the very begin-ning to protect corporate wrongdoers. Iam now firmly convinced—more thanever—that I was on target at the time inmy suspicions.

BOEING GETS FAVORABLE TREATMENT IN AMOST SERIOUS CRIMINAL CASE

The federal government has settled itscriminal case against the BoeingCompany. The timing of the JusticeDepartment’s announcement concern-ing the settlement of Boeing’s criminalcase, however, was more than just alittle interesting.A news release on thesettlement was put out on June 30th, the

Friday before the July 4th weekend—arather strange time to talk about such asserious case. Obviously, none of thenational media representatives hadBoeing on their minds during thatweekend. Clearly, the announcementdidn’t concern just another run-of-the-mill Justice Department criminal case.Could it be that this deal is not one thatthe government is real proud of?

In any event, the Justice Departmentannounced that Boeing will not becriminally prosecuted for its allegedcriminal activity. Instead, Boeing willpay a $50 million criminal penalty andanother $615 million as a civil penaltyto resolve federal claims against thecompany. The case involved thecompany’s improper hiring of theformer Air Force Acquisition Chief,Darlene A. Druyun, by Boeing. Thecharges against Boeing would be classi-fied by any standard as major.The settle-ment also dealt with Boeing’s handlingof a competitor’s proprietary data andinformation in connection with theEvolved Expendable Launch VehicleProgram and certain NASA Launch Ser-vices Contracts.

There were several interestingaspects of this non-prosecution agree-ment. It appears that Boeing’s lawyerswere able to get some extremely favor-able language put in the settlementagreement. It’s apparent that Boeing hadgood reason for not wanting the fulldocument released to the news mediaand ultimately to the public. I surely dohope that this isn’t typical of how thegovernment plans to handle major crim-inal case in the future.

HEALTH CARE PROVIDER TO SETTLEMEDICARE CHARGES

We are still getting reports of compa-nies that have been caught cheating thefederal government on government pro-grams. One recent case involved SaintBarnabas Healthcare System, which willpay $265 million to settle federalcharges that it cheated Medicare out ofmore than $500 million by inflatingcharges for seriously ill patients. Prose-cutors alleged that Saint Barnabas hospi-

tals deliberately inflated charges forpatient care under the Medicareprogram. The hospitals apparentlystarted tacking on extra charges, such asthe cost of nursing and housecleaning,making treatment appear more costlythan it actually was.

Prosecutors became aware of the alle-gations in 2002 when three whistle-blowers filed suits alleging Medicareovercharges. This is just anotherexample of a situation where a corpora-tion cheats the government on a federalprogram designed to help citizens. It’simpossible to understand how anycompany could believe cheating theU.S. taxpayers who pay the cost offederal programs can be justified.Thosecompanies are also cheating the verycitizens who are to be the beneficiariesof those programs, and that is a sadcommentary on our times.Source: National Law Journal

TENET TO PAY $900 MILLION FOR CHEATINGTHE GOVERNMENT

Over the past year,Tenet HealthcareCorp., the nation’s second largest hospi-tal chain, has been in the news for anumber of reasons. Now Tenet hasagreed to pay $900 million to settleclaims brought by the U.S. JusticeDepartment that it had systematicallycheated Medicare by using severalillegal billing practices.The settlementstems at least in part from a whistle-blower lawsuit filed in November 2002by two whistleblowers

The claims against Tenet that led tothis settlement included allegations thatit was abusing a Medicare provision thatprovides for supplemental payments forunusually expensive cases, referred to as“outliers.”Those claims against Tenet ledto a massive investigation that includedprosecutors in the Eastern District ofPennsylvania; the Central District of Cal-ifornia; the Northern District ofAlabama; the Eastern District ofLouisiana; the Eastern District of Mis-souri; and the Western District of Ten-nessee.All corporations that engage inhealth care fraud in any form must bebrought to justice. Fraudulent efforts by

hospitals or other health care providersto claim excessive sums from theMedicare program simply can’t be toler-ated. It’s good to see the Justice Depart-ment aggressively going after thesewrongdoers.Under the terms of this set-tlement,Tenet, which is headquarteredin Dallas but operates dozens of hospi-tals throughout the United States, willpay a total of $900 million over a four-year period, plus interest, to resolvevarious allegations involving its billingsto Medicare and other federal healthcare programs.The settlement also saysTenet will waive its right to pursuereceipt of $175 million in certain outlierand disproportionate share paymentsthat have never been recorded by thecompany pending a resolution of theseissues and the uncertainty that theywould ever be received.

According to Tenet, this settlementwill bring to a close several previouslydisclosed investigations, including oneby the U.S.Attorney in Los Angeles intoMedicare outlier payments; and sixothers relating to physician financialarrangements by the U.S. Attorneys inLos Angeles; El Paso, Texas; Memphis,Tenn.; St. Louis, San Francisco and NewOrleans, as well as civil litigation overMedicare coding that the Department ofJustice filed against the company inJanuary 2003.

The bulk of the settlement—morethan $788 million—related to claimsarising from Tenet’s receipt of excessive“outlier” payments, which are intendedto be limited to situations involvingextraordinarily costly episodes of care.Tenet inflated those charges “substan-tially in excess of any increase in thecosts associated with patient care andbilling for services and supplies not pro-vided to patients,” according to theJustice Department.

About $47 million of the settlementapparently related to claims that Tenet“paid kickbacks to physicians to getMedicare patients referred to its facili-ties. It was alleged that Tenet billedMedicare for services that were orderedor referred by doctors with whom Tenethad “an improper financial relationship.”Another $46 million apparently were

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related to claims that Tenet engaged in“upcoding,” a term that refers to situa-tions in which improper diagnosiscodes were assigned to patient recordsin order to increase reimbursement.

Finally, the settlement calls for Tenetto enter into a multi-year “corporateintegrity agreement” with the Office ofInspector General (OIG) in the U.S.Department of Health and Human Ser-vices. Interestingly, OIG promised not toexclude Tenet hospitals from any federalhealth care program if Tenet willexecute an acceptable corporateintegrity agreement.The plan calls forTenet to employ an independent revieworganization to provide an externalreview of the company’s ongoing com-pliance in the areas of Medicare coding,physician financial relationships, settingof hospital charges, and quality of care.

It should be noted that the Tenet set-tlement is similar to other settlementreached by the Justice Department withhealth care providers including the oneinvolving St. Barnabas Healthcare men-tioned above. I am told there will bemore settlements of this nature involv-ing others coming very soon. For thelife of me, I can’t understand how anycorporate board could allow itscompany and top executives to lie,cheat, and steal in its dealings with thefederal government.The old excuse that“everybody is doing it” is clearly no justi-fication. Repeat violators should bebanned from participating directly orindirectly in federal programs by con-tract or otherwise. In my opinion, that’sthe surest way to stop corporations likeTenet and many others from cheating,getting caught, paying a fine, and thenbeing allowed to keep on doing busi-ness with the government.Source: The Legal Intelligencer

MOTOROLA SUED OVER ADELPHIA FRAUD

Adelphia Communications Corp. suedMotorola Inc. for $1.1 billion, claimingthe maker of cable boxes helped Adel-phia founder John Rigas direct a fraudthat led to the cable company’s col-lapse.The suit claims Motorola falsifieddocuments to help Rigas and his son

Timothy Rigas book “phantom income.”The suit filed in U.S. Bankruptcy Court,just hours after cable box maker Scien-tific-Atlanta Inc. agreed to pay $20million to settle a Securities andExchange Commission lawsuit claimingit also helped the Rigas deceiveinvestors.Adelphia said that “Motorolawas an active and knowing participantin the Rigas insiders’ fraudulentaccounting scheme.”Source: Associated Press

MORGAN STANLEY TO PAY $10 MILLION FINE

Morgan Stanley has agreed to pay a$10 million civil fine to settle chargesby the Securities and Exchange Com-mission (SEC) that it failed to maintainsafeguards to prevent the misuse ofinside information. The SEC also cen-sured the securities firm under the set-tlement. The investment house hasagreed to refrain from future violationsof the securities laws. Morgan Stanley,the third-largest U.S. securities firm bymarket value, also agreed to hire anindependent consultant to review itspolicies and practices for preventingmisuse of confidential company infor-mation. In a civil lawsuit, the SEC saidMorgan Stanley for years failed to ade-quately maintain and enforce proce-dures to prevent the misuse of insideinformation regarding companieswhose securities are held in hundredsof thousands of employee andemployee-related accounts.The agencydid not say whether any illegal insidertrading or other improprieties hadoccurred using inside information as aresult of the alleged lapses.

From at least 2000 to 2004, MorganStanley failed to conduct needed sur-veillance of hundreds of thousands ofemployee and employee-relatedaccounts to detect possible insidertrading, according to the SEC. Interest-ingly, this was the second SEC fineagainst Morgan Stanley in recent weeks.On May 10th, the firm agreed to pay $15million to settle charges by the SEC thatit repeatedly failed to provide tens ofthousands of e-mails that the Commis-sion sought in major investigations over

several years. I hope the firm haslearned its lesson and doesn’t just con-sider the fine as a part of the cost ofdoing business.Source: Associated Press

TECHNOLOGY FIRM SETTLES SEC CHARGES

Technology company Scientific-Atlanta Inc. has agreed to pay $20million to resolve federal regulators’ alle-gations that it helped now-bankruptAdelphia Communications Corp. toinflate its earnings improperly by some$43 million in 2000.The Securities andExchange Commission (SEC) reportedthe settlement with Scientific-Atlanta, acable television technology companythat was acquired by Cisco Systems Inc.in February for $6.9 billion.The SEC saidthat Scientific-Atlanta, a maker of boxesthat go on top of cable TV sets, enteredinto a marketing agreement with Adel-phia in 2000 that Adelphia misused toinflate its earnings by around $43million.Adelphia asked Scientific-Atlantato increase the price of the boxes it soldto the company and give the amount ofthe price increase back to Adelphia asmarketing support payments.Adelphiaused the price increase to inflate itsearnings artificially.Source: National Law Journal

COUNTY MEDICAL CENTER SETTLESKICKBACK ALLEGATIONS

Not all of the wrongdoing relating tofederal programs involves large corpora-tions. For example, Marion CountyMedical Center, located in MarionCounty, South Carolina, has agreed topay the United States $3.75 million toresolve allegations of health care fraudagainst the government.The settlementresolves allegations that Marion CountyMedical Center submitted false claimsto Medicare, Medicaid, and TRICARE, theU.S. military’s health care program, byengaging in financial relationships withcertain physicians that were prohibitedunder the Stark Law and/or the Anti-kickback Statute. The settlement alsoresolves allegations that Marion submit-ted claims to Medicare for professional

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services for initial hospitalizations thatwere coded at a level higher than theservices that were provided.Source: Department of Justice News Release

V.CAMPAIGNFINANCE REFORM

PUBLIC FUNDING OF CAMPAIGNS FORFEDERAL OFFICE MAY BE THE ANSWER

Four major national campaign reformorganizations have launched a cam-paign to build public and politicalsupport for comprehensive publicfinancing of congressional campaigns.Common Cause, Public CampaignAction Fund, Public Citizen, and the U.S.Public Interest Research Group (USPIRG) unveiled their “Voters First”pledge that they will ask all congres-sional candidates to sign. The pledgeincludes specific policies to make elec-tions fair for all, restore congressionalaccountability, and protect voters’ right-to-know. Candidates for federal officewill be asked to support a comprehen-sive agenda to clean up Congress.Theywill be asked to sign the pledge in con-gressional districts across the country.

A nationwide public opinion revealedthat many voters are tired of politicianswho put the public’s interest behindthe agendas of big political donors andWashington lobbyists. The pollingshowed that voters are ready toembrace substantive reform that willhelp put their concerns at the top ofthe congressional agenda after the fallelections. In the wake of massive lobby-ist scandals, the soaring costs of nationaland state campaigns, and almost totaldiscontent with Washington generally,voters are clearly ready for a more open,clean, and fair system of campaignfunding, according to the pollsters.Thesurvey also found that candidates whosign a pledge to support reform wouldreceive a dramatic boost from voters.For example, a Republican candidategains 26% and a Democratic candidategains 13% over an opponent from the

other party who refuses to sign a pledgeof support, the polling revealed.Common Cause President ChelliePingree, who sees a need for promptaction,observed:

The scandals have made clear tovoters that money talks. A publicfinancing system for Congresswould go a long way towardputting constituents’ concerns first,and involving lots of new peopleand fresh ideas in the politicalprocess.

It should concern all American citi-zens that, even with all of the scandalsand wild political spending, neither theBush Administration nor Congressseems overly concerned. Public CitizenPresident Joan Claybrook, who believesthat inviting a Clean Elections’ system offull public financing for Congressionalcampaigns is the answer, observedwhen the movement was announced:

Government ethics—especiallythese days—is a laughable oxy-moron. Congress has some ethicsrules on the books, but no one iswatching.Congressional ethics rulesregarding gifts and travel need tobe strengthened—and enforced.

Nobody can dispute that at present,political campaigns are totally domi-nated by special interest money.Tremendous sums of money are beingdonated directly, as well as indirectly, topolitical campaigns, and as the oldsaying goes—“money talks.” For thatreason, among others, the politicalplaying field must be shifted in a direc-tion that gives ordinary folks a realvoice in government on the federallevel. The Voters First Pledge calls oncandidates to put voters ahead of lobby-ists and the suppliers of their fundingby supporting legislation to:

• Make Elections Fair. Establish andenforce campaign spending limits byproviding a set amount of publicfunding for all candidates who agreeto take no private contributions.

• Restore Accountability. Pass andenforce meaningful new restrictions

on gifts and travel from lobbyists andother powerful interests for membersof Congress.

• Protect Voters’ Right-To-Know.Require full disclosure on the internetof all lobbyists’ contributions and anyfundraising help members of Con-gress get from lobbyists.

While I have never believed thatpublic financing of political campaignsin federal elections would ever happenin my lifetime, I have now changed mymind—the reason being that votersappear to be ready to demand a changein that direction. Frankly, this approachmay be the only answer. What do youthink?Source: Public Citizen

VI.PRODUCTLIABILITY UPDATE

NEW DRUG MAKERS’ LABELING IS DESIGNEDTO PROTECT CORPORATE WRONGDOERS

As of June 30th, drug manufacturerswere required by the Food and DrugAdministration (FDA) to provide moreconcise and better organized patientinformation package insert sheets. Onthe surface, this seems like a good thing,and it really should be. Any drugapproved within the last five years mustnow have new requirements imple-mented gradually over the next sevenyears.The inserts must feature:

• a table of contents;

• a toll-free number to encouragereporting of adverse drug events;

• the initial date of FDA productapproval; and

• a section called “Highlights” that willsummarize some of the most impor-tant drug information including bene-fits, risks, and usage.

Unfortunately for persons who havean adverse result because of using a“bad drug,” there is a more sinister

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aspect to this labeling change request.Some believe that the label changes willmake it more difficult to sue drug manu-facturers in product liability lawsuits. Inan effort to aid the drug manufacturers,the FDA included wording in the newrequirement that could exempt themfrom state product liability lawsuits.While I doubt that will ever happen, Ido anticipate that it will be used as adefense in cases. If the courts followestablished law, it shouldn’t be aproblem.The adequacy of informationprovided in the information sheets tohealthcare professionals and to patientshas recently been a source of classaction lawsuits over drugs such asVioxx, Bextra, and Celebrex. Drug com-panies simply haven’t consistently fur-nished adequate information on certaindrugs.The FDA’s new rules could be apositive step in improving medicationuse if fully implemented. But, the FDAhas no business trying to block the con-stitutional right of a victim, or a victim’sfamily in case of death, to file a civillawsuit in court.Source: Insurance Journal

SENSOR MAKER MAY BE AT FAULT IN FORDTRUCK FIRE LAWSUIT

You will recall that Ford MotorCompany has encountered lots of prob-lems with fires relating to Ford F-150pickups. A Massachusetts-based manu-facturer of sensors and controls that hasbeen implicated has denied responsibil-ity for a pickup truck fire that an Iowaman says killed his wife last year. Alawsuit was filed against Ford Motor Co.and Texas Instruments Inc. arising out ofthat incident. It was alleged that a faultycruise control switch caused the fire in2005 that spread from a garage and intothe Iowa family’s home. A 74-year-oldwoman died in the fire that destroyedthe home.The lawsuit blamed the fireon the cruise control deactivationswitch in the 1996 Ford F-150 pickup.

The switch was manufactured byTexas Instruments’ sensors and controlsdivision, which was sold to Bain CapitalLLC, of Boston, for $3 billion in April. Itis now known as Sensata Technologies

Inc., and is based in Attleboro, Mass.Thelawsuit, originally filed last year in aTexas federal court, was transferred toIowa in February.The lawsuit claims thecompany rushed to design a switch forFord to cement its relationship with theautomobile manufacturer and to wardoff competitors. It is claimed that thecompany learned of design problemswith the cruise control switch as farback as 1991.

The lawsuit claims Ford and theswitch manufacturer tried to get eachother to indemnify the other fromdamages in lawsuits related to enginecompartment car fires they believedwere related to the switch. It is allegedthat the switch manufacturer failed toexercise reasonable care in the design,manufacturing,and testing of the switch.The lawsuit also claims the switch manu-facturer agreed to support Ford’s initialrecall of cars and supplied new switcheseven though those switches were alsofaulty. It was claimed that the companyacted in an effort to preclude govern-ment intervention. The NationalHighway Traffic Safety Administration(NHTSA) opened a series of investiga-tions into Ford engine compartmentfires between 1998 and last year. Thelawsuit claims the switch manufacturerwas at fault for failing to address prob-lems with the switch in a timely andeffective manner. Sensata denies the alle-gations, claiming the switches compliedwith government and industry standardsand were a state-of-the-art design at thetime they were made.

Interestingly, Sensata claims that theswitches were misused in an unforesee-able manner by others and claimed thattheir switches were only a componentin a larger assembly that was under theFord’s control.The company said it wasFord’s duty to inform consumers of anypotential hazards. Ford recalled nearly800,000 vehicles in January 2005because of a cruise control switchproblem. Last September, the recall wasexpanded to include 3.8 millionpickups and sport utility vehicles fromthe 1994-2002 model years.The broad-ened recall would seem to indicate Fordhad knowledge of the problem, but

delayed action. Ford takes the positionthat the fire in this case did not origi-nate in the pickup. NHTSA, in Septem-ber, was investigating 1,170 allegationsof engine fires related to cruise controlswitches. Lawsuits similar to this onehave been filed in Georgia and Arkansas.Source: Insurance Journal

GROUP SEEKS PROBE INTO EFFECTIVENESSOF FIRESTONE RECALL

A research group has asked federalhighway safety officials to study theeffectiveness of the big Firestone tirerecalls of 2000 and 2001. SafetyResearch & Strategies Inc. says sometires weren’t replaced and continue tobe linked to rollover crashes on FordExplorers. In a filing with the NationalHighway Traffic Safety Administration(NHTSA), the group cited four cases inwhich spare tires not captured duringthe recalls were put into service andlater failed, allegedly causing crashes.The result was one death and threecrippling injuries. The group wantsNHTSA to initiate a “recall query,” aninvestigation into whether a past recallwas adequate. If the regulatory agencydetermines the efforts weren’t suffi-cient, it could order further steps by thecompanies, such as additional advertise-ments. Safety Research & Strategies is aresearch group that specializes in motorvehicle safety issues.

As of late last year, federal authoritieshad linked 271 fatalities to accidentsinvolving Firestone tires, most involvingFord vehicles. Bridgestone Corp.’s NorthAmerican unit, which produces the Fire-stone brand, and Ford Motor Co. brokeoff commercial relations in 2001 in adispute over which company was toblame for a rash of deadly rollover acci-dents involving Explorer sport-utilityvehicles equipped with certain Fire-stone tires. Bridgestone, which is basedin Japan, announced a recall in August2000.But, Ford demanded a much largerreplacement program in 2001. WhenBridgestone refused, Ford recalled thetires on its own. Later in 2001, Bridge-stone announced a more limitedreplacement program of its own.

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As you will recall, Ford and Bridge-stone settled their dispute last year, withthe tire company agreeing to pay theauto manufacturer $240 million. Bridge-stone says it replaced more than 6.3million of the 6.5 million tires it origi-nally estimated were in use in August2000.Thus far, Bridgestone has settledmore than 2,300 personal-injury law-suits arising from the recalled tires. Ourfirm has handled a number of casesinvolving Ford and Firestone tires overthe last few years. Significantly, and notcoincidentally, each of these cases alsoinvolved Ford Motor Company as adefendant.Source: Wall Street Journal

THREE TOYOTA EXECUTIVES ACCUSED OFFAILING TO RECALL VEHICLES

Three executives at Toyota MotorCorp., a company that built a globalbusiness on a reputation for quality,have been accused of failing to recall avehicle they knew was faulty and couldcause injuries in an accident. Interest-ingly, the accusation came from Japan-ese police officials.These officials filedpapers with Japan’s prosecutors’ officerelating to the need for a recall. It wasalleged that three Toyota officials, allresponsible for quality control, failed torecall faulty models of the Hilux Surf, arecreational vehicle sold in Japan.

The problem, a faulty relay system ofrods in the steering column, was said tohave surfaced in Hilux models builtfrom 1992. It was alleged that Toyotaknew about the problem from around1995 or 1996.The police further allegedthat Toyota officials knew the problemmight lead to an accident. Even so, theofficials failed to issue a notice of recall,according to the police.The filing to theprosecutors’ office alleges that the faultmay have led to an accident in August of2004, when a Hilux veered out ofcontrol and hit an oncoming car. Fivepeople were injured in the accident.

Even though there were customercomplaints about the Hilux in 1996, thecompany decided a recall wasn’t war-ranted. But in March and April 2004, thecompany received new customer com-

plaints of a problem, and in October,Toyota decided to recall 330,000models made between 1988 and 1996.But, Toyota said the recall had alreadybeen under consideration in July, beforethe August accident. Recalls havebecome common in the global automo-bile industry as cars have grown morecomplex. But the allegation that Toyotafailed to issue a recall even though itknew of the problem is potentially a farmore serious matter.Widespread cover-age of a scandal at Mitsubishi MotorsCorp., when courts concluded thatfaults with a vehicle weren’t disclosedand later led to a pedestrian death,caused serious damage to the Mitsubishibrand and contributed to a sharpdecline in its sales.Source: Wall Street Journal

LAWSUIT ARISING FROM FAULTYREFRIGERATOR SETTLED

Mr. and Mrs. Randall Rutz, who wereavid campers, were sleeping in theircamper back in 2005 when it caughtfire.The cause of the fire was traced tocracked tubing in the camper’s Norcoldrefrigerator, which resulted in it leakingflammable hydrogen. Randall Rutz, whowas 46-years-old at the time, died ofsmoke inhalation and third-degreeburns to more than 70% of his body. Hiswife, Brenda Rutz, suffered second- andthird-degree burns as well as injuries toher lungs and vocal cord. She has per-manent scarring and still has a tra-cheotomy in place.A lawsuit was filedagainst the manufacturer of the refriger-ator and the seller of the camper.

The case, which included the wrong-ful death claim and the wife’s personalinjury claim, was settled for a total of $7million.Apache Village, a camper dealer-ship in Hazelwood, Missouri, paid $1.5million, and Norcold and its insurer paid$5.5 million. It appears that Norcoldknew of the potential fire hazard asearly as 1999. In 2000, the companynotified federal officials that it wasrecalling more than 40,000 refrigera-tors. Unfortunately, neither Mr. and Mrs.Rutz, nor the two previous owners ofthe camper, ever received notice of the

recall. Norcold could have easily foundthe owners of all the campers by havingtheir Vehicle Identification Numberstracked, but that wasn’t done until late2004. It should be noted that Mrs. Rutzreceived a recall notice from thecompany seven months after the fire.Obviously, Norcold didn’t do an ade-quate job of getting the refrigeratorsrecalled. But, the company contendedthat it followed federal regulations inconducting the recall.

A Norcold official testified that, asrecently as April of this year, there werestill about 14,000 defective refrigera-tors, part of the recall, that haven’t beenreplaced. Discovery in the case revealedthat before the Rutz fire, Norcold wasaware of 216 fires that involved prop-erty damage. Apparently, there hadn’tbeen any injuries or fatalities in thosefires, and that’s good. But, the Rutz caseis one that—with a proper recall—could have been avoided.Source: News Democrat

TRIAL STARTS IN LAWSUIT AGAINST FORDAND SEAT BELT MAKER

Jury selection began on July 17th inGreenville County, South Carolina, intwo lawsuits against Ford MotorCompany and three other defendants.The product-liability cases, filed inDecember 2002, arose out of a single-vehicle crash involving a Ford Explorerthat killed one passenger and left thedriver in a wheelchair. Allegationsagainst Ford and three other defendantsare centered on the seat belts and speedcontrol of a 1995 Ford Explorer XLT.Sonya Watson, who was 17-years-old,was driving the Explorer on an inter-state highway. There were four otherpassengers, including the driver’s grand-mother and two other relatives. Thedriver lost control of the Explorer, andthe SUV hit a grass median area.Whenthe driver attempted to get back on thehighway, the vehicle rolled, flippingabout three or four times. One passen-ger, a 46-year-old female, died from mul-tiple trauma after she was ejected fromthe vehicle.

A wrongful death suit was filed by the

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victim’s family against Ford,TRW, Inc.,TRW Vehicle Safety Systems (whichmade the vehicle’s seat belts), and D&DMotors. The lawsuit claims that theExplorer was defective in several partic-ulars, including the front and rear seatoccupant restraint systems, the frontseat system, the chassis, steering andcomponent sub-assemblies; the electriccruise control and its accelerationsystems. It was alleged that because ofthe defects the vehicle accelerated sud-denly, the driver lost control, she tried tocorrect, and the Explorer rolled over.

A second suit against Ford and otherdefendants was filed by Ms.Watson andother family members, including heryounger sister, who was also in thevehicle at the time of the accident.Thatlawsuit seeks damages for bodily injury,pain and suffering, medical expenses,permanent impairment, permanent dis-figurement, lost wages, parental loss ofconsortium,and punitive damages.Ford,as is usually the case, will defend thecase aggressively.They will claim drivererror, denying that the Explorer has anydefects, and will say it’s perfectly safe.The trial of the cases is expected to lastthree weeks.Source: Yahoo News

BAD NEWS FOR FORD IN EXPLORER CASE

Ford Motor Company got some badnews when a state appeals court in Cali-fornia approved $82 million in damagesin a case brought by the family of awoman who was paralyzed when herFord Explorer rolled over and the roofcaved in. On July 19th, the court reducedthe award but said in its opinion thatlarge damages were clearly justified as aresult of Ford’s Motor Co.’s recklessconduct in marketing an unsafeproduct. Benita Buell-Wilson, who was46-years-old, was injured in a rolloveraccident in January 2002.

Ms. Buell-Wilson was driving a 1997Explorer on a California freeway whenher SUV went out of control and rolledover. The pillars holding up theExplorer’s roof crumpled, crushing thedriver as she hung upside down fromher seat belt. An athletic woman, who

was then completing a master’s degreein education, she was left a paraplegic.Ms. Buell-Wilson remains in constantpain and has to be cared for by herhusband and children.

The court said there was evidencethat Ford had known that the Explorerwas unstable and prone to rollovers, butthat the company had decided not tomake changes because that would havecut into profits.The court also consid-ered evidence that the roof of thevehicle was weak and stated in theopinion that Ford could have strength-ened the Explorer for about $20 pervehicle. A jury had awarded Ms. Buell-Wilson and her husband $122 million incompensatory damages and $246million in punitive damages. After apost-trial hearing, the trial judge foundthose amounts excessive and reducedthe total award to $150 million.

In its opinion, the appeals court saidthe reduced award for Ms. Buell-Wilson’s pain and suffering and lostquality of life was still too large andreduced those damages to $18 million.Other compensatory damages awardedto the couple were not changed,however, leaving their total compensa-tory damages at $27.6 million. Signifi-cantly, the court said punitive damagesof $55 million were appropriatebecause of the “catastrophic nature’’ ofMs. Buell-Wilson’s injuries and Ford’s“reckless disregard for the safety ofothers’’ in its design of the vehicle. Fordcan still appeal to the CaliforniaSupreme Court. If that appeal is unsuc-cessful, Ford will most likely petitionthe U.S. Supreme Court for a review.Source: Associated Press

VII.MASS TORTSUPDATE

PUBLIC’S OPINION OF FDA HAS GONESOUTH IN RECENT YEARS

Based on the experience we havegained from drug industry litigation, Ican certainly understand why the

public’s opinion of the Food and DrugAdministration has deteriorated overthe past few years.This belief has beenverified by a recent study that dealtwith opinions of the FDA’s perform-ance. It determined that the decline wasthe result of sinking confidence in thefederal government combined with anincreasing number of drug-related law-suits. The research was conductedbetween 2003 and 2006 by theChicago-based legal consulting firmZagnoli McEvoy Foley (ZMF). Theresearch illustrates that the FDA’s posi-tive “halo effect,” which benefited phar-maceutical companies in the past, hasbeen tarnished in recent years. Theresearch in 2003 and early 2004involved jurors and mock jurors frommock trials questioned by ZMF. Thesepeople had been involved in about adozen pharmaceutical products liabilitycases around the country.The personsinvolved consistently gave commentsdisplaying their trust in the FDA, sayingfor example, that “a drug can be trustedif FDA approves of it.”

In addition, the fact that a drug hadFDA approval could immunize a pharma-ceutical company of guilt in a juror’seyes,as a result of the “rubbing off”of theFDA’s perceived credibility, according toAndrea Blount, a ZMF consultant, whoworked on the research. By 2005, theFDA’s status had started to decline, withmany of those questioned saying that theFDA doesn’t do an adequate job of pro-tecting American citizens from the possi-ble dangers of defective drugs, accordingto the research. The erosion in confi-dence, according to ZMF’s research, wasspurred by an apparent loss of confi-dence in the federal government in thewake of failed relief efforts for HurricaneKatrina victims, concern over the Iraqwar, and increasing numbers of prescrip-tion drug-related lawsuits.As a result ofthese qualitative observations, accordingto Ms. Blount, ZMF decided to test itsfindings with a formal poll. In February2006, the firm conducted a nationwide,online survey of jury-eligible Americansto assess their attitudes about the phar-maceutical industry and the FDA.Accord-ing to Ms. Blount, less than one-third of

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those surveyed held a positive percep-tion of the FDA.

It’s fairly easy to see why a personwho hasn’t dealt with the drug industrywould have believed that the FDA wasdoing its job. For example, most folksalso believed that the FDA actually testsdrugs, which is not true. Most of thosesame folks believe that all FDA fundingcame from the government, whichagain is only partially true. In fact, a lotof the funding comes from the pharma-ceutical companies in many forms. Aswe have reported consistently, the FDAis understaffed and underfunded. I amconvinced that is a major reason for theagency’s repeated failures to do its jobwell. The pharmaceutical companiesinfluence the FDA’s conduct in so manyways that it is easy to understand whymany observers see the FDA as almostan extension of the drug industry.

FINAL JUDGMENT IN FIRST VIOXX TRIAL

A final judgment has been signed bythe judge in the first Vioxx case to go totrial. You will recall that a Texas juryreturned a $253.4 million verdictagainst Merck & Co. last summer onJune 23rd. District Judge Ben Hardin,who presided over the trial, signed thefinal judgment awarding the plaintiffs$26.1 million in damages, plus $1.25million in pre-judgment interest. JudgeHardin ordered Merck & Co. Inc. to paythe plaintiff $24.45 million in actualdamages, but reduced the $220 millionin punitive damages awarded by thejury to the statutory cap in Texas of$1.65 million.The jury in the case foundthat Merck’s wrongdoing was a con-tributing cause in the death of RobertErnst, a 59-year-old Wal-Mart employee,who died in 2001 after taking Vioxx.

The jury also found that Merck’sfailure to warn about Vioxx’s dangerouscondition and the drug’s defectivedesign were producing causes in Ernst’sdeath. It was significant that JudgeHardin denied Merck’s motion seekinga judgment notwithstanding the verdict.Mark Lanier, of the Lanier Law Firm inHouston, who represented the victim’sfamily, says he is pleased with the judg-

ment. However, Mark will appeal it onthe grounds that Texas’ statutory cap onpunitive damages is unconstitutional.Mark, who is a very good lawyer, did anoutstanding job in this case. He is to becommended for taking Merck on beforeall of the damaging information wasknown by the medical community andby the public.

MERCK’S MISREPRESENTATIONS WILL AFFECTNEW TRIAL MOTIONS

Vioxx cases that resulted in verdictsfor Merck & Co. may have to be triedagain. The reason that new trials arelikely to be granted as a result of aprominent medical journal contradict-ing a key defense used by Merck inthose cases. The New England Journalof Medicine issued a correction thatstated that the conclusions of theAPPROVe study—a study written byMerck consultants and employees andthe one upon which Merck based its liti-gation defense—were false. Specifically,Merck had touted the study as evidencethat Vioxx elevated the risk of cardio-vascular problems only after 18 monthsof use. After reviewing previously unre-leased data, the Journal editorsannounced that the “18 month” defensewas incorrect. Merck was aware of theinternal data and the falsity of thestudy’s conclusions before the studywas published. The fact that Mercklied—and was caught after intentionallyusing the 18-month-use myth in trials—is a most serious matter. It’s an issue thatmost judges would consider compellingin dealing with new trial motions.

Merck has used the 18-month thresh-old as a cornerstone of its defense in allof the Vioxx lawsuits involving short-term use. The Journal correction cer-tainly casts serious doubt on thatdefense and in my opinion should prob-ably kill it altogether. So far, Merck haslost three Vioxx cases and won four.Two of Merck’s wins came in caseswhere the patient took the drug for afew months. It’s quite clear that Merckhas been lying to courts and juriesabout the APPROVe data. Merckmanipulated the data so the drug would

look much safer than it actually was.Andy Birchfield and Leigh O’Dell of

our firm have filed a motion for a newtrial in the Irvin case that was retried inNew Orleans. Initially, the basis wasthat, among other things, a Merckwitness had lied under oath about hiscredentials. But, the recent develop-ments add greatly to the motion.Theybelieve the misrepresentations byMerck and the subsequent Journal cor-rection will now bolster the motionbecause these occurrences show Merckcommitted a “fraud on the court” bysaying Vioxx’s risks don’t appear for 18months when Merck knew that to be afalse statement. The Irvin family hasfought a good fight against tremendousodds in their case and clearly deserves anew trial. If it’s granted, it would be athird trial of their case. The first trialresulted in a mistrial because the jurycouldn’t reach a verdict. The secondone—held in New Orleans after Katrinahad virtually shut down the city—resulted in a defense verdict.

MERCK WINS CASE IN NEW JERSEY

After a lengthy trial a jury in NewJersey returned a verdict in favor ofMerck & Co. Jurors decided that Vioxxwas not responsible for the heart attackof the 68-year-old plaintiff.The case wasthe first in which jurors consideredwhether Merck failed to warn patientsabout the drug’s cardiac risks, ratherthan just doctors as in earlier trials.Thejury found that Merck failed to warn thefemale plaintiff of the cardiac risks ofthe drug. But, the jury found that Vioxxwas not a substantial contributing factorin Elaine Doherty’s 2004 heart attack.

Lawyers for Mrs. Doherty, a grand-mother of six, claimed during the trialthat Vioxx was a major cause of herheart attack and that Merck downplayedthe risks of Vioxx both to doctors and topatients. Mrs. Doherty, the first femaleVioxx user to have a case tried, hadtaken Vioxx for over two years beforesuffering a mild heart attack in January2004. I suspect the facts that the plaintiffhad not suffered a major heart attackand was apparently in reasonably good

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health at present played a major role inthis case’s outcome.

THE CALIFORNIA TRIAL AGAINST MERCKSHOULD BE OVER SOON

As previously reported, our firm ishelping to try the case involvingStewart Grossberg against Merck & Co.in California. We hope that the case,which started on June 21st,will go to thejury around the first week of thismonth. Paul Sizemore from our firm isassisting some very good lawyers fromGirardi & Keese, a California firm, intrying the case. I understand from Paulthat the case has gone well thus far. Mr.Grossberg took Vioxx for a number ofyears and suffered a heart attack. I hopethe jury will return a favorable verdictfor him in this case.

MORE VIOXX CASES ARE SET FOR TRIAL THISYEAR

A number of other Vioxx cases will betried in both federal and state courtsthis year.The case of Barnett v. Merck &Co., which is in the MDL, will be tried in New Orleans starting on July 31st.Mark Robinson of the California firm of Robinson, Calcagnie & Robinson,along with Andy Birchfield and LeighO’Dell from our firm, will try this casefor the plaintiff. Another case, Dedrickv. Merck, will also be tried in NewOrleans on November 27th. Andy Birch-field and Leigh O’Dell are handling theDedrick case, which also will be triedbefore U.S. District Judge Eldon Fallonin the MDL. Unfortunately, NewOrleans is still a city with a tremendousnumber of distractions for potentialjurors. Conditions there are still verybad, and its people, who are still hurtingfrom Katrina, are greatly concernedover the possibility of another stormcoming in.

Currently, there are two state courtcases scheduled to be tried in Alabama.The Crook case is scheduled to be tried in the Circuit Court of JeffersonCounty starting on October 23rd. SteveHeninger and Lew Garrison,of the Birm-

ingham firm of Heninger GarrisonDavis, LLC, and at least one lawyer fromour Mass Torts Section will try this casefor the plaintiff. Another case,Albrightv. Merck, will also be tried in JeffersonCounty starting on December 11th.This case will be handled by theHeninger firm with our assistance.

There are other state court cases cur-rently set for trial that our firm won’t beactually involved in.The Anderson caseagainst Merck is set for trial in the TribalCourt of the Mississippi Band ofChoctaw Indians and is scheduled tostart on August 7th. My friend, DaveMatthews, who is with Abraham,Watkins, Nichols, Sorrels, Matthews &Friend, located in Houston,Texas, is han-dling this case. Two other cases, Hatchand McFarland, both against Merck, arescheduled for trial in New Jersey, start-ing on September 11th. But, Merck ishard at work trying to sever the cases soit can proceed with the trial of only oneplaintiff. Those cases are handled bythe Seeger Weiss and the AnapolSchwartz firms. The Miller case, alsohandled by Dave Matthews, is set fortrial in Harris County,Texas, on Novem-ber 8, 2006. Finally, the Schwaller caseagainst Merck is set for trial in MadisonCounty, Illinois, on December 11, 2006.That case is being handled by JohnDriscoll of the St. Louis, Missouri firm,Brown & Crouppen. Hopefully, each ofthese cases will go to trial as scheduledthis year.

VIOXX, CELEBREX AND BEXTRA CONTINUE TORECEIVE BAD REVIEWS

Several of our readers have asked meto explain in more detail some of thehistory behind the drugs referred to asCox-2 inhibitors and also to give moreinformation on some of the recentdevelopments.These once-popular pre-scription drug painkillers, namelyVioxx, Celebrex, and Bextra, continue toreceive negative reviews concerningtheir safety risks for consumers.Thesedrugs have either been pulled from themarket or been required to contain a“Black Box” warning.That type warningis the strongest warning a prescription

drug can have on its label.As you know,the cardiovascular risks associated withthese medications are great. It seemsthat more damaging information isrevealed almost daily that had beenwithheld from the FDA, the medicalcommunity and the public.

Specifically, Vioxx was withdrawnfrom the market in September 2004,because of its increased risk of heartattacks and strokes in users of thisdrug. Nonetheless, Merck, the manufac-turer of this drug, has claimed thattheir internal study called “APPROVe”was the first indication that thecompany had of cardiovascular safetyrisks associated with Vioxx. Merckalso stated that this risk did not presentitself until after 18 months of use.But, after extensive discovery ofMerck’s internal documents, it is appar-ent that there were several studies indi-cating an increased risk of heart attacksand strokes for both short and long-term users. Recent information, whichwill be discussed below, not onlydestroys Merck’s 18-month argumentsfor all Cox-2 drugs, but it also revealsadded risks to users of these drugs.

As you know, the Food and DrugAdministration (FDA) took Bextra offthe market and required Celebrex tohave a Black Box warning on its label,because of an increased risk of heartattacks, stokes, and serious allergic skinreactions in users of these Cox-2 drugs.Pfizer, the manufacturer of Bextra andCelebrex, also has several internalstudies that show increased risk of heartattacks and strokes in users. Despite theFDA’s rulings, Pfizer’s internal studies,and safety risks associated with Pfizer’scompetitor drug—Vioxx—Pfizer con-tinues to deny any health risk associatedwith the use of Celebrex and Bextra.

In recent months, several publishedarticles and studies have providedfurther concern for risk associated withthe Cox-2 drugs. Last month, the NewEngland Journal of Medicine (NEJM),one of the world’s leading medical jour-nals, significantly weakened Merck’sargument concerning the “APPROVe”study which it said shows Vioxx had anincreasing cardiovascular risk only after

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18 months of use.After a more detailedreview, the NEJM deleted several ofMerck’s references to safety risks onlyappearing after 18 months of use.Merckhas relied on this myth of a required 18months period of use to discredit thevalid claims of users who took Vioxx forsome period less than 18 months. Nowjuries will less likely be persuaded byMerck’s well-paid experts and companyemployees that a consumer has to be onany of the Cox-2 drugs for a certainamount of time before the safety riskmaterializes.That has been proved to bepatently false.

A follow-up review to Merck’s“APPROVe”study has confirmed that theincreased risk of heart attacks andstrokes remains in a user up to one yearafter Vioxx usage has stopped. Previousassumptions were that once a userstopped using any of the Cox-2 drugs,the chance of cardiovascular risks wasterminated. Now, consumers of Cox-2drugs must face health hazards fromthese drugs long after they quit usingthem. Potential claims against the Cox-2manufacturers may also increasebecause of the additional number ofinjured victims who have suffered a car-diovascular risk within this time periodafter stopping the use of the drugs.

In June, The Circulation-Journal of theAmerican Heart Association reported astudy showing that the risk of deathand/or recurring heart attacks increasedin users of Cox-2 drugs who have hadprevious heart attacks.The study lookedat patients with first-time heart attacksbetween 1995 and 2002. The studyrevealed that 9,773 patients experi-enced re-hospitalization for heartattacks and 16,573 patients died whileusing NSAID’s, such as these Cox-2inhibitors.There were a total number of58,432 patients included in this study.This study confirmed that Cox-2inhibitors increase the mortality rate forusers with previous heart attacks.There-fore, these drugs should always havebeen used, if at all, with extremecaution. Nonetheless, the manufacturersof these Cox-2 drugs have consistentlydenied their prior knowledge of cardio-vascular safety risks associated with

their drugs.These companies have alsofailed to warn doctors to use cautionwhen prescribing these drugs topatients with the risk factors mentionedabove.

As litigation continues over the Cox-2inhibitors, the additional reports andstudies relating to the safety risks associ-ated with these drugs will ultimatelymake it difficult for the manufacturersof these drugs to defend these claims.But, because of the power, influence,and wealth of the companies involved,it will never be easy to try these cases. Itwill always be a battle to the end withcompanies like Merck and Pfizerinvolved.

JURY FINDS THAT PAIN PATCH CAUSEDWOMAN’S DEATH

A Texas jury has returned a verdictagainst Johnson & Johnson in a deathcase involving a Duragesic pain patchmanufactured by the company.The suit,brought by the family of a Texaswoman, resulted in a verdict of$772,500.The 42-year-old woman diedin 2004 after a patch, designed torelease pain-killing drugs that she wasusing to manage pain from a car wreck,leaked. I believe that this was the firsttrial involving this product.The Houstonstate court jury found the two Johnson& Johnson units that make the Dura-gesic pain patches responsible for thewoman’s death. It might be helpful togo into the history of the patch.

In 2005, the Duragesic patch gener-ated worldwide sales of about $1.6billion for Johnson & Johnson. Thepatches have caused other problems.The Food and Drug Administration ispresently investigating 120 deaths tiedto pain patches made by Johnson &Johnson and Mylan Laboratories Inc.Johnson & Johnson added warnings lastJuly to the patch’s label, saying doctorsshouldn’t prescribe them for patientswho can’t tolerate similar drugs or whomay be prone to abusing them. Thepatches, introduced in 1990, release theopiate fentanyl. According toresearchers, fentanyl can cause addic-tion or death. Mylan Labs, which is

located in Pennsylvania, began market-ing a generic version of the patch in2005. Over 80 million Duragesicpatches are sold each year in thiscountry.Thus far at least 100 other law-suits have been filed involving thepatches. Interestingly, the FDA hasn’tseen fit so far to order the patchesremoved from the market.

During the trial in Texas, the familycontended that managers at JanssenPharmaceutica Inc. and Alza Corp., twoJohnson & Johnson units that makeDuragesic patches, sped up productionin 2003 and 2004 when faced with theloss of patent protection. Competitionfrom generic patches caused Duragesicsales to fall 28% to $325 million in thefirst quarter of this year, according todata obtained by Bloomberg News.Thefamily in the Texas case contended thatthe woman’s system was flooded withfentanyl after her patch leaked. Reportswere produced at trial showing sheactually had 10 times the therapeuticdose of fentanyl in her body when shedied.Other evidence in the case showedthat Johnson & Johnson recalled a batchof Duragesic patches four days after thedeath in this case in February 2004 aftergetting reports of leaks.An FDA reportsaid the company recalled a total of 2.5million patches between April 2003 andJune 2004 because of consumer com-plaints about leaks.Source: Bloomberg News

THE NUMBER OF PAXIL LAWSUITS ISINCREASING

A number of lawsuits involving thedrug Paxil have been filed around thecountry.As has been reported previously,the antidepressant can cause addictionand severe drug withdrawals. Sometimesthese can be life-threatening.The populardrug is a very big seller for GlaxoSmithK-line, its maker, which has marketed itheavily using advertisements featuringhigh profile spokespersons. In August2004, SSRI Citizen, a consumer advocacygroup, announced antidepressants likePaxil are “Unsafe At Any Dose,”as part of anational awareness campaign.

As powerful drug companies, enjoying

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multi-billion dollar profit generators likePaxil, try to increase drug revenues evenmore, medical experts, regulators, andpatients worry that the information theyreceive is filtered to allow the maximumamount of returns instead of keepingpatients safe. I believe the system mustbe changed for medical decisions so thatboth the medical community and thepublic are properly informed aboutdrugs being put on the market.

AN IMPORTANT RULING BY A FEDERAL JUDGEIN ANOTHER PAXIL SUIT

The widower of a woman who com-mitted suicide after taking the anti-depressant drug Paxil has won asignificant ruling in a wrongful deathsuit against the drug’s manufacturer.This ruling by a U.S. District Judge inPennsylvania will allow the plaintiff topursue his claim that the company hidthe truth about the drug’s side effectsfrom the FDA. The judge refused todismiss the suit on statute-of-limitationsgrounds as requested by the defendant.The judge found that the plaintiff mustbe allowed discovery on issues relatingto when the manufacturer first learnedof Paxil’s alleged risk of suicide. Thejudge’s ruling stated in part:

Discovery is necessary in order toallow [plaintiff] to uncover rele-vant information solely in thedefendant’s control. Issues thatmust be fleshed out include: thedate and extent of defendants’alleged knowledge of Paxil’s risk ofsuicidality; the scope of defen-dants’ duty to disclose the risk andits efforts, if any, to do so; and itscommunications, if any, with Mrs.Hoppe or her doctor or others sim-ilarly situated.

In the suit, plaintiff Jon R. Hoppeclaims that when his wife was pre-scribed Paxil to treat her depression, thedrug “actually worsened the effects ofher depression and induced her tocommit suicide.” The suit alleges thatMrs. Hoppe hanged herself in her base-ment in September 2002. It was con-tended by the plaintiff—in opposition

to the defendant’s motion to dismiss—that SmithKline fraudulently concealedPaxil’s risk of suicidality from the 1990s,when they gained actual knowledge ofthe risk, until the spring of 2004 whenthey were ordered by the Food andDrug Administration (FDA) to changePaxil’s labeling and notify the healthcare community.

Documents from the company showthat the manufacturer knew as early as1997 of studies showing suicidality inPaxil users. In 1993, the FDA approvedPaxil as safe and effective for use byadults based on information SmithKlinehad provided during the FDA’s approvalprocess. But soon after the drug wenton the market, hundreds of cases of sui-cidality in Paxil users were reported,including one Paxil user’s murder of hisfamily and subsequent suicide that wasthe subject of a February 2000 lawsuit.Despite those reports, SmithKline “con-tinued to adhere to the false claim thatPaxil suicide risks are not significantenough to warrant action.” Of the ninestudies SmithKline allegedly commis-sioned on the use of Paxil, it madepublic the results of only one. In April2004, the FDA ordered SmithKline torevise Paxil’s label to add warningsabout the risk of suicidality. In May2004, the company sent a “Dear Doctor”letter to health care providers to notifythem of the labeling change.The Paxilcases are tragic examples of how drugcompanies put profits over the welfareof their customers.Source: The Legal Intelligencer

THE RISKS OF TAKING FOSAMAX APPEAR TOBE GREAT

Last month we wrote about themounting problems associated with thepopular osteoporosis drug Fosamax.Since that time it has become mostapparent that the problems are wide-spread. As a result, the Fosamax litiga-tion scene will be very active.Osteonecrosis of the jaw (ONJ), a disfig-uring condition that leads to the break-down of the jawbone and loss of teeth,is clearly a most serious matter. Fosamaxhas been taken by a tremendous

number of women for stronger bones.Unfortunately, they were never warnedby Merck & Co. of the risks associatedwith Fosamax. It is now abundantlyclear that Merck knew about the risks.The FDA had actually asked the drugcompany to warn about ONJ. Obviously,Merck had a duty to inform doctors andpatients. For years, doctors and dentistshave known about the increased risk ofONJ caused by chemotherapy. But, themedical community had little, if any,knowledge connecting Fosamax useand ONJ.

In January 2005, the FDA recom-mended that Merck change Fosamax’slabel to include ONJ warnings. As aresult, the company revised its packag-ing information in July of last year.As westated last month, this drug is one ofMerck’s best sellers, with $3.2 billion insales and 22.4 million prescriptionswritten in 2005.The company says onits website that most reported cases ofbisphosphonate-associated osteonecro-sis have been in cancer patients treatedwith the drugs intravenously. The state-ment says:

ONJ is not well understood andmay occur for a number ofreasons….In controlled clinicaltrials involving more than 17,000patients, contributing as much as10 years’ data with alendronate[the technical name for Fosamax]there have been no reports of ONJ.

At its 2006 annual meeting, the Ameri-can Association of Endodontists saidthat until further information becomesavailable, all patients taking bisphospho-nates should be considered at some riskfor ONJ. Patients were told to informtheir dental care providers and otherspecialists that they are on the medica-tions. It has been reported that somedentists actually turn away patients whotell them that they are on bisphospho-nates. Others ask those patients to quitthe medication until their dental treat-ment is finished.

Perhaps it would be helpful to set outexactly what osteoporosis is all about andhow Fosamax comes into the picture.First, let’s take a look at osteoporosis.

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• Osteoporosis is thinning and weaken-ing of the bones.

• It affects mostly women aftermenopause.

• In both men and women, osteoporo-sis may also be caused by certainmedicines called corticosteroids, usedto treat some leukemias and also tosuppress rejection after bone marrowand organ transplants.

• Osteoporosis can cause fractures,which may happen during everydayactivities, such as lifting, or from aminor injury that would normally notcause bones to break.

Fosamax, which is being taken by atremendous number of women, is madeby Merck & Co.As advertised and pro-moted by Merck, Fosamax is said to befor:

• The treatment or prevention of osteo-porosis in women after menopause.

• Treatment to increase bone mass inmen with osteoporosis.

• The treatment of osteoporosis inpeople taking corticosteroids.

Our firm continues to investigatepotential claims for women who havetaken Fosamax and who have sufferedsevere injuries and disability as a result.Any person who is now taking Fosamaxshould contact their personal doctorand discuss whether they should remainon the drug. If you need additional infor-mation on the ongoing litigation overthe drug, you can either go to ourwebsite, BeasleyAllen.com, or contacteither Jerry Taylor or Chad Cook directlyat our office (800-898-2034).

IT’S NOT THE FIRST RODEO FOR SMITH &NEPHEW

At the end of June, the Antitrust Divi-sion of the U.S. Department of Justice(DOJ) issued a subpoena to the globalmedical technology company Smith &Nephew,Europe’s largest seller of ortho-pedic devices. Earlier that month, theDOJ had already issued subpoenas to

other orthopedic companies, such asJohnson & Johnson, Stryker, Biomet, andZimmer Holdings—all competitors ofSmith & Nephew. Specifically, the sub-poena was targeted at Smith &Nephew’s orthopedics business andrequested documents from January2001 to the present over possible viola-tions of U.S. antitrust laws. Reportedly,the subpoena concerns the manufac-ture and sale of orthopedic implantdevices.

This is not the first time the companyhas been subpoenaed by the U.S. gov-ernment. In March 2005, Smith &Nephew’s orthopedics division, alongwith its rivals, received a subpoena fromthe U.S.Attorney’s office over compen-sation agreements between thecompany and orthopedic surgeons. Atpress time, that investigation was still inprogress.

Smith & Nephew, an internationalcompany operating in 33 countriesaround the world, has annual sales of$2.6 billion. In September of 2003,Smith and Nephew withdrew two of itsknee replacement products from theU.S. market after potential problemswere identified.Those devices were theOxinium Genesis II and the Profix II,which were implanted between Febru-ary of 2002 and September 2003. Ourfirm is currently representing individu-als who were injured by these devices.Smith & Nephew marketed thesedevices to be implanted withoutcement, even though the FDA had notapproved that method. A cementlessdevice is more easily replaced at a laterdate, because it doesn’t require the trau-matic chiseling of hardened cement.This is an attractive selling point, espe-cially for a younger patient who willlikely require another replacement laterin life. What these patients did notbargain for, however, was a device thatloosened and resulted in disablinginjuries. It will be interesting to seewhat the DOJ investigation and the dis-covery from our cases reveal concern-ing any deals made with doctors in thecontext of these knee devices.Source: USA Today

DRUG TRIALS MAY INFLUENCE DOCTORS’PRESCRIBING PATTERNS

A Danish study that was reported inthe June 21st issue of the Journal of theAmerican Medical Association dealswith a situation that directly affects howdrugs are prescribed in this country.Doctors who participated in a drugcompany-sponsored trial of asthmamedications were more likely to pre-scribe that company’s drugs.But,partici-pating in the trial had no impact on thephysicians’ adherence to internationaltreatment guidelines for asthma, accord-ing to the study. Dr. Bruce M. Psaty, pro-fessor of medicine and epidemiology atthe University of Washington, Seattlewho was the author of an accompany-ing editorial in the journal, said:

The study authors conclude—andI think correctly—that physicianinvolvement is a powerful tool forinfluencing specific drug prefer-ences.

According to Dr. Psaty’s editorial, thispattern is part of a much broaderpicture. Regarding influencing prescrip-tion practices,Dr.Psaty stated:

There are many areas of influencewhere industry tries to influenceprescribing practices. There isinfluence on trial reporting andresults, and also the trial questionsthey agree to fund.

More and more studies and papers areaddressing this larger picture, includinga recent report that found that clinicaltrials funded by drug companies andother for-profit entities were more likelyto report positive findings for the drugin question than similar trials funded bynonprofit groups. A study publishedearlier this year found that the drugindustry is paying for more and moremedical research, with half of all studiesnow funded solely by the private sector.Although doctors are often involved incompany-sponsored clinical trials, theeffects of their participation have notbeen fully studied, according to back-ground information in the new paper.

Drug companies used to pay doctors

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to participate in “seeding” trials, wherethey put patients on a drug and agreedto collect minimal data. Thus, using acompany’s drugs can raise physicians’comfort level, and that’s the company’smotivation. Dr. Psaty had this to say onthe practice:

No good information comes fromit, but the physician learns how tospell the drug name and theappropriate dosing. He feels com-fortable with it.

Although those trials are no longerallowed, the trials that are the subject ofthe new study are only marginally differ-ent.The authors involved in the studycompared 10 Danish medical practicesthat were involved in a trial of asthmamedicine with 165 practices that werenot participating in any such trial.Thestudy involved 5,439 patients beingtreated with asthma drugs in the trial-related practices and 59,574 patients inthe control practices. Use of inhaledsteroids among asthma patientsincreased from 68.5% to 72.9% duringthe second year in the practicesinvolved in the trial and from 69.1% to73.3% in the other practices. The trialhad no impact on how doctors adheredto international treatment guidelines,but it did affect which specific drugswere favored.The study was sponsoredby drug manufacturer AstraZeneca,Denmark. The company contributeddata for the trial,but was not involved inthe study’s design and interpretation ofthe data. Use of the sponsor’s drugincreased from 74.8% to 81.5% in thepractices participating in the trial butonly from 73.6% to 76.6% in the controlpractices. It would be great if we couldseparate the scientific aspect of thesetrials and the marketing issue. In regardto the small trials,Dr.Psaty says:

The scientific rationale for launch-ing these thousands of small trialsis not clear.My own bias is that thehealth of the public would bebetter served by fewer small trialsand more long-term studies thatfully address the health benefitsand health risks of drugs. I’m notagainst companies coming up

with good products. I’m for it, andthose products can then be usedappropriately to enhance thehealth of the public.

I hope the FDA will take action tomake sure that drug companies actresponsibly and separate real trials fromtrials designed for marketing to theextent possible. In my opinion, the FDAhas a responsibility to make sure trialsare properly carried out over an ade-quate period of time with results thatcan be trusted.Trials that are motivatedby marketing should never be allowed.Source: HealthDay News

FDA EXPECTS HIGHER RATE OF FAILURETHAN GUIDANT

A Guidant Corp. implantable heartdevice may fail about 10 times moreoften than the company projected lastyear, according to a Food and DrugAdministration (FDA) analysis that cameto light in a Texas lawsuit.The confiden-tial FDA document, written on June 16,2005, was unsealed in a product liabilitylawsuit involving Guidant’s defibrilla-tors.The FDA analysis found thousandsof units of one Guidant model mayexperience malfunctions within fiveyears. After Guidant began its recall, itsaid no more than 292 of the units werelikely to break down. The agency’shigher projection will be a factor in law-suits by patients who received thefaulty devices.

As you know, Boston Scientific boughtIndianapolis-based Guidant in April for$27.5 billion.According to a regulatoryfiling by Boston Scientific, more than3,000 patients could pursue liabilityclaims related to the defibrillators.Therehave been about 340 cases already filedin the courts so far, according to informa-tion from the company. Guidant recalled109,000 faulty defibrillators in 2005. Inits memo, the FDA said “most” of the16,000 recalled Contak Renewal defibril-lators may have damaged insulationwithin five years, and 40% of thosedamaged devices would fail to producean adequate electrical shock in a medicalemergency. At that rate, at least 3,200

Renewal units were likely to fail. Regard-ing another heart device problem, somehospitals in this country have cut backon their use of drug-coated heart stents,citing a Swiss study that found uncoatedstents had fewer complications.The onlydrug-coated stents in the U.S. market aremade by Boston Scientific and Johnson& Johnson.Source: Bloomberg News

BOSTON SCIENTIFIC RECALLS GUIDANTDEVICES

In a follow-up to the above, BostonScientific Corp. has now recalled nearly23,000 heart pacemakers and defibrilla-tors that could fail because of an electri-cal flaw.The company has asked doctorsto check 27,000 patients who had beenimplanted with potentially faultydevices.This is the second time BostonScientific has warned about products ofthe former Guidant Corp. since thecompany bought Guidant in April.Apparently, it will take Boston Scientificas long as two years to fix design, manu-facturing, and supplier problems thatcontributed to a wave of recalls andwarnings last year involving nearly300,000 devices. It appears the prob-lems involve far more than Guidant’sshortcomings in failing to promptlynotify doctors, patients, and regulatorsabout device flaws.A spokesperson forBoston Scientific says:

In truth, there are deeper issuesthat will require time to address,that will lead to problems that willthen have to be communicated. Itwill take 18 months to two yearsto get all of those things taken careof.That should never happen, andit happened batch after batchafter batch, and now we’re payingthe price

The latest recall involved certainbatches of a low-voltage capacitor pro-vided by an outside supplier. Qualitycontrol reviews should have detectedthe problem. Instead, five malfunctionswere reported in devices that either hadalready been or were about to beimplanted in patients. No deaths were

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linked to the five malfunctions, but intwo cases pacemaker patients temporar-ily lost consciousness, according to thecompany. In four cases, patientsrequired surgery to replace devices.

Boston Scientific is asking its salesforce and managers of hospital invento-ries to return some units of six modelsof defibrillators and pacemakers thathave potentially faulty low-voltagecapacitors, which are used to store elec-trical charges. The company is recom-mending that people see their doctorsat the earliest opportunity.The companywas advising doctors to check for signsof a malfunctioning capacitor, such asprematurely dead batteries or a devicethat stops working as intended torestore a normal heart rhythm. Devicesaffected include Insignia and Nexusbrand pacemakers, Contak RenewalTR/TR2 cardiac resynchronization pace-makers, and Ventak Prizm 2,Vitality, andVitality 2 cardioverter defibrillators.

Since June 2005, Guidant has issuedsafety warnings or recalled more than88,000 defibrillators, and has recalled orissued warnings on about 200,000 pace-makers. Boston Scientific also inheritedliability lawsuits connected with theproducts, which have been linked to atleast seven deaths. Guidant had beencriticized for failing to notify doctors,patients, and regulators of the extent ofits product problems, and Boston Scien-tific has vowed to do a better job.Source: Associated Press

EVIDENCE IN SUIT LINKING MERCURY ANDAUTISM FOUND TO BE LACKING

Parental advocates fighting to prove alink between mercury-containing vac-cines and autism suffered a setback lastmonth when a federal judge dismissed alawsuit against a producer of a treat-ment given pregnant women.The Dis-trict Court Judge determined that amother of an autistic child “failed topresent sufficient evidence” that wouldsuggest a link between RhoGAM andautism. The anonymous mother hadsued producer Ortho-Clinical Diagnos-tics, Inc., a subsidiary of Johnson &Johnson.

Between 1968 and 2001, RhoGAMcontained the thimerosal preservative,which advocates have cited as a sourceof mercury poisoning.Amy Carson, co-founder of Asheville-based MomsAgainst Mercury, said mercury-basedvaccines, many of which containthimerosal, have led to mercury poison-ing, which is frequently identified asautism. Ms. Carson believes that theresult in the North Carolina case was asetback for other similar claims. I amnot sure that will be the case becausecausation can be a case-by-case issue.But, the science problems would be amajor concern if that was the realreason for the court’s ruling.Source: Winston-Salem Journal

THE FDA MAY HAVE MADE ANOTHER MAJORMISTAKE

A federal drug safety official believesthat a controversial antibiotic made by aFrench drug company should be with-drawn from the market. Dr. DavidGraham, who is with the Food and DrugAdministration’s drug safety office,believes that the agency’s approval ofKetek, (also known as telithromycin), anantibiotic made by Sanofi-Aventis was amistake. Dr. Graham (who is said to beon the drug industry’s worst enemieslist) questioned the approval processused by the FDA, writing in an internalmemo:

It’s as if every principle governingthe review and approval of newdrugs was abandoned or sus-pended where telithromycin isconcerned.We don’t really know ifthe drug works; no one is claimingit works better than other, saferdrugs; and we’re flying blind as faras safety goes, except for our ownA.D.R. data that suggeststelithromycin is uniquely moretoxic than most other drugs.

Dr. Graham concluded that theagency should recommend the drug’s“immediate withdrawal.” Since Dr.Graham’s e-mail message, the FDA didannounce changes to Ketek’s labelemphasizing that the drug could in rare

circumstances cause serious liver injury,liver failure, and death. In addition toliver problems, Ketek can also causeblurred vision and loss of conscious-ness. In patients with myasthenia gravis,a rare neurological disorder, it can causedeath.

More than five million prescriptionsfor Ketek have been written in theUnited States since its approval in 2004.Fourteen adult patients have sufferedliver failure after taking Ketek.At leastfour of them have died. Twenty-threeothers have suffered serious liver injury.Most of the reported problems involv-ing Ketek occurred in otherwisehealthy patients.

It appears that the FDA approvedKetek based partly on the company’sreported experience with the drug inother countries, which is called post-marketing surveillance. In the UnitedStates, many drug problems are notreported to the agency, and such surveil-lance is even less reliable in othernations, according to Dr. Graham’s e-mail message and other documents thatwere reviewed by the New York Times.Dr.Graham made this statement:

For FDA to refer to its being reas-sured by postmarketing data fromLatin America and Europe as abasis for declaring ‘Ketek is safe’ isin my opinion a great abuse ofsuch surveillance data.

This appears to be another example ofhow the FDA fails to perform its respon-sibility to protect the public health relat-ing to drugs approved for sale in the U.S.I suspect there will be further develop-ments concerning this drug.Source: New York Times

MEDTRONIC SETTLES ACCUSATIONS ONKICKBACKS

Medtronic, one of the nation’s largestmedical device manufacturers, hasagreed to pay the federal government$40 million to settle accusations that itsspinal-implant division had paid kick-backs to doctors as a way of inducingthem to use its products. The JusticeDepartment accused Medtronic of

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paying kickbacks through what officialsdescribed as “sham consulting agree-ments, sham royalty agreements andlavish trips to desirable locations”offered to doctors by the company from1998 to 2003.

Complex back surgery has become alucrative business for companiesmaking implants, and Medtronic wasaccused of spending tens of millions ofdollars on consulting contracts andother types of payments to prominentspine surgeons. It was claimed by awhistleblower who managedMedtronic’s travel services that thecompany gave some surgeons “exces-sive remuneration, unlawful perquisitesand bribes in other forms for purchas-ing goods and medical devices.”Source: New York Times

VIII.BUSINESSLITIGATION

ALABAMA POWER COMPANY SUES CABLECOMPANIES

Alabama Power Co. has sued one cellphone company and eight cable televi-sion companies over unpaid bills. Theutility company says it will take downthe defendants’ transmission gear fromelectric poles unless these defendantspay for the space. The state’s largestelectric utility sued the companies inmid-June, claiming unpaid bills of morethan $1 million. Defendants in this caseinclude Charter Communications (thelargest Alabama cable company); cableoperator Comcast; and Cingular Wireless(the cell phone company which is ajoint venture between BellSouth andAT&T).The suit, filed by Alabama Powerin the Circuit Court of Jefferson County,alleges that each cable company signeda contract agreeing to pay rent in returnfor the right to attach onto electricpoles the gear that transmits TV signalsto customer homes. It is alleged in thesuit:

Alabama Power may terminatethe respective pole attachment

agreements and remove the cableaccess television equipment of thedefendant.

Alabama Power says that Comcastowes $434,967; Cingular Wireless owes$3,574; and Charter owes $689,000.Obviously this is not just a run-of-the-mill collection lawsuit.Alabama Poweralso sued Coosa Cable, Mediacom,Northland, Sky Cable, Southern Cable,and West Alabama Cable for lesseramounts than the amounts allegedlyowed by Charter and Comcast.All butthe Cingular Wireless contract wereagreed to in March 1993, with Cingu-lar’s dating from 1998. I must admit thatI was shocked to learn that these cablecompanies wouldn’t pay their debts.Source: The Birmingham News

ENERGY UNIT SETTLES CLASS ACTIONLAWSUIT OVER ACCOUNTING PRACTICES

Williams Cos. Ins. will pay $290million to settle a shareholder classaction. The lawsuit was the result ofaccounting practices related to energytrading and potential liability associatedwith Williams Communications GroupInc., a former unit of Williams. Thatcompany later went bankrupt.The set-tlement covers investors who pur-chased Williams securities between July24, 2000, and July 22, 2002.Williams hadguaranteed more than $2 billion ofWilliams Communications debt.Source: National Law Journal

MUSIC INSTRUMENT MAKER SETTLESPRODUCT DISPARAGEMENT LAWSUIT

First Act Inc., a Massachusetts musicinstrument maker, has settled its lawsuitagainst Brook Mays Music Co. for $16.7million. Earlier a jury had found that thedefendant had falsely disparaged theproducts of the bargain-priced musicalinstrument maker. The settlementcomes after the jury verdict in 2005 inwhich a civil jury awarded First Act$20.7 million. Brook Mays had plannedto appeal, but the settlement will endthe lawsuit, and it appears all parties aresatisfied with the result.

The history of the case is as follows.In December 2005, a jury in Bostonruled unanimously in favor of First Act.The company had sued Brook Mays in2003 after the Dallas-based retailer senta flier to band directors and consumersclaiming that First Act and otherimported instruments were of poorquality and that repair parts might notbe available. First Act labeled the flier as“a calculated smear campaign.’’ Thecompany said it had a nationwidenetwork of repair technicians and thatBrook Mays’ statement was false. FirstAct’s strategy of selling instrumentsthrough mass retailers instead of tradi-tional music stores has caused anuproar in the band-instrument market.You would have to go back to theadvent of catalog retailers decades agoto find a similar situation.

Other companies, such as guitarmakers Fender and Yamaha, also sellinstruments at big retailers. But, itappears that First Act may have beenthe first to sell band instruments at massmerchants such as Wal-Mart Stores Inc.Brook Mays has 63 stores in eight states,mostly in the South, and apparently sawthis as a threat to their business.Source: Claims Guides

GABELLI TO PAY $130 MILLION TO SETTLELAWSUIT

One of the country’s best-knownmoney managers, Mario J. Gabelli, andsome of his affiliated companies haveagreed to pay $130 million to settle acivil fraud lawsuit that accused Gabelliof orchestrating a scheme to deceivethe Federal Communications Commis-sion (FCC) in its auction of cellphonelicenses in the late 1990s. The settle-ment was approved last month by aNew York federal judge. The lawsuitagainst Mr. Gabelli was filed more thanfive years ago by a whistle-blower, alawyer who was involved in theauction, under the False Claims Act.Thelawsuit accused Mr. Gabelli and otherGabelli affiliates—mostly friends andassociates of Mr. Gabelli with little, ifany, experience in the communicationsfield—of creating a series of sham com-

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panies that bid for FCC licenses at a dis-count under a program that favoredminorities and small businesses.Many ofthose licenses were later resold withhefty profits, according to allegations inthe lawsuit.Source: New York Times

IX.INSURANCE ANDFINANCE UPDATE

VESTA INSURANCE GROUP IS IN DEEPTROUBLE

Vesta Insurance Group, which isbased in Birmingham, Alabama, is inserious default on loan agreements.Texas regulators have now taken oversix of the company’s subsidiaries. Regu-lators have also seized control of Vestacompanies in Hawaii and Florida.Thiswould mean that eight of the company’s10 subsidiaries have now been seized.Six insurers owned by Vesta will beoperated by the Texas Commissioner ofInsurance as part of a court-orderedrehabilitation. The court order putsVesta in default on long-term debt secu-rities.Vesta’s last annual report, whichwas filed in 2004, revealed that thecompany had about $218 million of out-standing debt securities. Vesta said atthat time it would not be able to pay theentire amount if creditors demandedimmediate repayment after a default.

Vesta was once one of the state’smost valuable publicly traded compa-nies, and one with some real strongpolitical connections.The State of Texashas taken over Vesta Fire Insurance,Vesta Insurance Corp., Shelby Insur-ance, Shelby Casualty Insurance,TexasSelect Lloyds Insurance, and SelectInsurance Services. After the takeover,Texas Select was actually shut down.Florida is operating Florida Select Insur-ance. Hawaii is operating HawaiianInsurance & Guaranty. It has beenreported that Vesta, which lost $318million from 2001 through 2004, hasn’tfiled Securities and Exchange Commis-sion financial documents in two years.

The company’s shares have beenremoved from the New York StockExchange. The company’s troublesbegan back in 1998, when the companybegan examining accounting irregulari-ties and Chief Executive RobertHuffman resigned.The company erased$49 million of profit reported for 1993to 1997.Vesta said $29 million of profitcame from premiums improperlyreported as income. I am told that wewill be hearing lots more about thiscompany in the coming weeks andmonths.Vesta’s problems could prove tobe embarrassing for a few politically-connected lobbyists and perhaps apublic figure or two in Alabama.

ILLINOIS ATTORNEY GENERAL SUES LIBERTYMUTUAL

Illinois Attorney General Lisa Madiganhas filed a lawsuit against LibertyMutual Insurance Company and sevenaffiliates, alleging that the company andits affiliates participated in a bid-riggingand business-steering scheme.The civilcomplaint, filed last month in CookCounty Circuit Court, alleges that thecompanies violated the Illinois Con-sumer Fraud and Deceptive BusinessPractices Act by paying undisclosedcontingent commissions to insurancebrokers and agents to induce them tosteer business to Liberty Mutual. Contin-gent commissions are payments thatinsurers pay to brokers and agents inaddition to the base commissions. Con-tingent commission amounts are usuallybased on the volume and profitability ofthe business a broker or agent producesfor an insurance company.The investiga-tion by the Attorney General’s officefound that, because contingent commis-sions are based on volume and prof-itability, they encourage brokers andagents to improperly steer their clientsto particular insurers in violation of thefiduciary duty they owe their clients.

The complaint also alleges that aLiberty Mutual affiliate company alsoparticipated along with several otherinsurers in a scheme led by Marsh &McLennan Companies, Inc., to rig bidsfor excess casualty insurance. The

lawsuit alleges that Liberty Mutual alsofailed to disclose its affiliate’s role in thebid-rigging scheme. Attorney GeneralMadigan stated:

It is of great concern that one ofthe country’s largest insurancecompanies would rig bids andinduce brokers and agents tobreach their duties to their clientsin the ways we have alleged in thislawsuit.

In its lawsuit, the State of Illinois seeksrestitution for injured policyholders,civil penalties under the ConsumerFraud Act, and an injunction that wouldbar Liberty Mutual from engaging in thealleged conduct in the future. Earlierthis year, the New York and ConnecticutAttorneys General filed similar com-plaints against Liberty Mutual based ontheir investigations of bid-rigging andsteering. The Illinois Attorney Generalhas been working cooperatively withthe Attorneys General of New York andConnecticut.The Liberty Mutual lawsuitis part of the Illinois Attorney General’swider investigation of the insuranceindustry, which began in late 2004.Todate, Illinois has settled with severalinsurers and brokers, resulting in therecovery of tens of millions of dollars inrestitution and penalties.Source: Claims Guides

THE NUMBERS OF UNINSURED DRIVERSINCREASING NATIONWIDE

If a person is injured in a motorvehicle accident in this country, thechances are about one in seven that theat-fault driver is uninsured.According toa recent Insurance Research Council(IRC) study, the estimated percentage ofuninsured motorists increased nation-ally from 12.7% in 1999 to 14.6% in2004. Interestingly, the magnitude of theuninsured motorists’ problem variedwidely from state to state. Unfortu-nately, Alabama doesn’t fare very wellwhen it comes to uninsured drivers onour highways. It should be noted,however, that a motorist with very lowliability limits is not much better thanone with no insurance if you or a

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member of your family suffer seriousinjuries or death from major motorvehicle collision with such a driver atfault.

In 2004, 25% of Alabama motoristswere uninsured. Our neighboring statescame out as follows: Mississippi 26%;Georgia 10%; Tennessee 21%; Florida19%; Louisiana 10%. The recentlyreleased study, Uninsured Motorists,2006 Edition, examines trends from1999 to 2004 in the percentage of unin-sured drivers by state. In 2004, the fivestates with the highest uninsured driverestimates were Mississippi (26%),Alabama (25%), California (25%), NewMexico (24%), and Arizona (22%). Thefive states with the lowest uninsureddriver estimates were Maine (4%),Vermont (6%), Massachusetts (6%), NewYork (7%), and Nebraska (8%). IRC esti-mates the uninsured driver population,using a ratio of insurance claims madeby individuals who were injured byuninsured drivers to claims made byindividuals who were injured byinsured drivers. The study containsrecent statistics by states on uninsuredmotorists claim frequency, bodily injuryclaim frequency, and the ratio of unin-sured motorists to bodily injury claimfrequencies. Elizabeth A. Sprinkel, seniorvice president of the IRC, who sees theproblem as significant, stated:

Even though most states requiredrivers to maintain insurance, theproblem of uninsured motoristspersists. Responsible drivers whopurchase insurance end up payingfor injuries caused by uninsureddrivers.

The IRC study examined data collectedfrom eleven insurers, representingapproximately 58% of the private pas-senger auto insurance market in the U.S.For more detailed information on thestudy’s methodology and findings,you can go to IRC’s website athttp://www.ircweb.org.The InsuranceResearch Council is a division of theAmerican Institute for CPCU and theInsurance Institute of America.The Insti-tutes are independent, not-for-profitorganizations dedicated to providingeducational programs, professional cer-

tification, and research for the property-casualty insurance business.

It’s quite apparent that a goodnumber of drivers on our nation’s high-ways don’t carry liability insurance.Many who do actually have very lowlimits. Because of this reality, all personsshould increase their own uninsuredmotorist coverage to the highestamount that can be written by theirown liability insurance companies.Thiswill cover persons under your ownpolicy adequately when they areinvolved in a collision with an unin-sured or under-insured motorist. Manypeople don’t realize they can get higheruninsured motorist coverage from theircompany.As a result they wind up withvery low limits, which will always bethe minimum required by state law.Most insurance companies like that situ-ation and won’t tell their customers thattheir uninsured coverage should beincreased to protect them and their fam-ilies.Source: Insurance Journal

PORT AUTHORITY IN MISSISSIPPI WILL FILESUIT AGAINST FORMER INSURER

The Jackson County, Mississippi PortAuthority plans to sue its former insur-ance carrier. Port commissioners will sueArch Specialty Insurance to try to settleunresolved claims of about $5 million instorm damage to the port. The lawsuitwill be filed in Jackson County CircuitCourt. It appears not only individualshave problems getting insurance claimspaid. Commissioners have canceled theirpolicy with the insurance company andapproved hiring Lloyd’s of London as theport’s new insurer. In addition to Archproviding primary coverage, excess cov-erage was provided from two other com-panies,Essex and Lloyd’s.

The dispute centers on damageassessments made by an adjuster fromArch and an independent adjuster. Animportant aspect of the probleminvolves the port’s loss of businessbecause of Hurricane Katrina.Arch paidsome money toward resolving claims,but company officials refused to joinport officials in reviewing other claims

and the difference in assessments fromArch and port adjusters.The delay hasprevented the port from receivingmoney from the Federal EmergencyManagement Agency, which isn’t avail-able until after insurance companiesmake settlements.Source: Insurance Journal

WORLD TRADE CENTER DEVELOPER AND THENEW JERSEY PORT AUTHORITY SUEINSURERS

The Port Authority of New York andthe State of New Jersey, together withWorld Trade Center developer Larry Sil-verstein,have filed a civil lawsuit againstseven insurers over delays in paymentsthey say are needed to rebuild on thesite of the September 11th terroristattacks. The Port Authority and Silver-stein filed their suit in a state court inNew York.Allianz Insurance Company,Industrial Risk Insurers,Travelers Indem-nity Company, Royal IndemnityCompany, Gulf Insurance Company,Zurich American Insurance Company,and Employers Insurance of Wausauwere named in the suit as defendants.According to Silverstein, some insurershave indicated they might halt monthlypayments following a new deal, calledthe Conceptual Framework, whichshifted responsibilities and financingbetween Silverstein and the Port Author-ity. Without the insurers’ funds, theWorld Trade Center site can’t be rebuilt,according to Silverstein.The ConceptualFramework is an agreement thatrealigns the interests in the World TradeCenter site in order to facilitate itsprompt redevelopment. It appears thatinsurance companies may be using theagreement as an excuse not to payclaims in a timely manner.

The lawsuit filed by these plaintiffsseeks a declaration that the ConceptualFramework does not impact theinsureds’ rights to recover fully allamounts currently due and to be paid inthe future by these insurers. Interest-ingly, Silverstein has been using $4.6billion being paid out in insurance pro-ceeds to pay rent for rebuilding rights atground zero and to build the 1,776-foot

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Freedom Tower, which has alreadybegan construction. Insurers are stillchallenging court rulings awardingthose proceeds. It appears that this liti-gation, which has been in the courtsnow for over four years, will be goingon for a good while longer. The latestsuit is just the last in a series of lawsuitsfiled involving insurance claims andcoverage issues arising after 9/11.Source: Insurance Journal

LAWYER AWARDED $11 MILLION BY JURY INSUIT AGAINST ALLSTATE

A state court jury in New Mexico hasawarded an Albuquerque lawyer nearly$11 million after she sued an insurancecompany that she contended literallydestroyed her law practice.The lawyerhad been a defense lawyer for AllstateInsurance Co. and apparently had donea considerable amount of work for thecompany over a period of time. Theinsurance company routinely hired thelawyer, Suzanne Guest, to represent thecompany in accident claims.

But when two accident victims suedboth Allstate and Ms. Guest, thecompany apparently went back on apromise to defend her. After thecompany refused to defend Ms. Guest,she then had to give up all her Allstatecases because an obvious conflict ofinterest was created. It was proved attrial that basically all the lawyer haddone in her practice was to work for All-state.The end result was that she had togive up her practice because of All-state’s actions in the case against her.The jury found Allstate at fault andawarded Ms. Guest $1.8 million in com-pensatory damages and $9 million inpunitive damages.Source: Insurance Journal

AUSTRALIAN LIQUIDATOR PURSUES GENERALREINSURANCE FOR $400 MILLION

As you are aware, our firm is repre-senting Tennessee Insurance Commis-sioner Paula Flowers, as the Liquidatorfor three failed Tennessee insurancecompanies. Our case has moved forward

and seeks damages against General Rein-surance, among others, whom we allegeare responsible for the financial collapseof three very large insurance companiesin the state of Tennessee.

A case that is very similar to ours hasbeen proceeding in Australia.There thecourt appointed a liquidator, TonyMcGrath, to see after the remainingassets of Australian insurance companyHIH. Just as in the United States, whenan insurance company suffers financialcollapse, instead of going into bank-ruptcy, the insurance regulators, knownas “liquidators” are appointed to overseethe remaining assets of the insurancecompany so that policyholders andstockholders are treated fairly.

In the HIH litigation, General Reinsur-ance is alleged to have been involved inreinsurance fraud that caused the col-lapse of the company. This is verysimilar to our case here.The basis of theclaims is that General Reinsurance wasinvolved in allowing HIH executives tofalsely boost their profits in the late1990’s through fraudulent reinsurancecoverage. Reinsurance is insurance cov-erage that one insurance company buysfrom another insurance company tohelp mitigate their liability should poli-cyholder claims exceed the originalinsurance company’s ability to pay. Inaddition to General Reinsurance, thereare several other defendants in this suit.One of the defendants is the interna-tional reinsurance broker Guy Carpen-ter & Company. There are also severalexecutives named as defendants.

TENET RECEIVES $340 MILLION FROMINSURERS FOR HURRICANE DAMAGE

Not all the news concerning TenetHealthcare Corp. is bad. Insurance com-panies have paid the Dallas-basedcompany $340 million to cover claimsfrom Hurricane Katrina. Five of Tenet’shospitals in the New Orleans area andone in Biloxi, Mississippi were damagedby the storm.Apparently, the Tenet set-tlement is one of the first major com-mercial property insurance settlementscoming after last summer’s hurricane.The settlement was paid by insurers

that underwrote Tenet’s property insur-ance in 2005 and 2006.

All of Tenet’s hospitals and its fivediagnostic imaging centers in the hurri-cane’s path suffered significant damage.Two of the hospitals in New Orleans—Memorial Medical Center and LindyBoggs Medical Center—have notreopened. The company plans to sellthose two hospitals and two others inKenner, Louisiana, and Gretna,Louisiana,by the middle of next year. It’srather interesting that these claims werepaid—arising out of the same storm—when others are being denied.Source: Insurance Journal

TRIAL OF FIRST KATRINA INSURANCELAWSUIT COMES TO END

The first trial to determine whetherinsurance policyholders who lost homesin Hurricane Katrina are entitled torecover losses that insurance companiesclaim were caused by flooding was com-pleted in Mississippi last month. Thelawsuit was filed on behalf of a policeofficer, Lt. Paul Leonard and his wife,who had taken out homeowners’ insur-ance with Nationwide Mutual InsuranceCo. long before Katrina destroyed theirPascagoula home on August 29th. Afterthe storm, Nationwide predictablyblamed the damage on water, not wind.The company claimed that Lt. Leonard’spolicy didn’t cover floods.

The Leonards contend that Nation-wide denied their claim without thor-oughly investigating the damage to theirhouse, which is located several hundredyards from the Mississippi Sound nearthe eastern end of the state’s shoreline.Because I attended a junior college inthat area, I am familiar with cities andtowns located along the Mississippi GulfCoast.

The Leonards, who purchased theirpolicy more than a decade ago, alsocontend that their insurance agent hadassured them they didn’t need to buyflood insurance for their home becausetheir policy would cover all hurricanedamage.The Leonard home and its con-tents sustained around $160,000 indamage. Evidence in this case, which

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was tried without a jury before U.S. Dis-trict Judge L.T.Senter,was completed onJuly 19th.The case was argued and sub-mitted to Judge Senter. At press time,there hadn’t been a ruling.Source: Associated Press

FEDERAL REGULATION OF INSURANCE WOULDNOT BE GOOD FOR POLICYHOLDERS

On July 11th U.S. Senator John Sununu(R-NH), who introduced the NationalInsurance Act of 2006 along withSenator Tim Johnson (D-SD), openedhearings on the federal legislation.TheAct would allow life and property/casu-alty insurers to choose federal ratherthan state charters under an “optionalfederal charter” regulatory system.TheSenate Committee on Banking, Housing,and Urban Affairs took up the subject ofinsurance regulatory reform at thehearing, which has attracted a great dealof attention. Senator Sununu, who is amember of the Committee, stated:

This hearing provides a welcomeopportunity for committeemembers to examine the issue ofinsurance regulatory reform,including the legislation thatSenator Johnson and I have putforth to improve the regulation oflife and property and casualtyinsurance. I look forward toreviewing the specifics of the‘National Insurance Act of 2006’with the witnesses today and atadditional hearings expected to beheld this summer and fall.

In effect, all of this is simply anattempt by the insurance industry totake away states’ authority to regulateinsurance and protect the public. Theregulation of insurance has traditionallybeen a state responsibility.This legisla-tion, which is being pushed by many inthe insurance industry, is not good forconsumers.

Reform at the state level is morelikely needed, and that would producebetter results than federal involve-ment in insurance regulation.This is aquestion involving traditional states’rights and I hope that view will

prevail in Congress. Unlike bankingand other financial service industries,the property/casualty insurance indus-try is primarily a state-based business.Although some insurance productscover interstate activities, most of thecompanies’ products that directlyaffect people—automobile, farm, andhomeowners insurance—are single-state products. State-level regulatorshave the best understanding of theproducts and the people for whomthey provide protection.

If anybody believes that federal regu-lation on any subject is superior to stateregulation, all they have to do is checkthe performance of the NationalHighway Traffic Safety Administration(NHTSA) and the Food and Drug Admin-istration (FDA).We need to strengthenthe role of the states in regulating insur-ance and not scrap the current systemin favor of a federal take over. Inciden-tally, Alabama’s Insurance Commis-sioner, Walter Bell, is one of the statecommissioners who is opposing the leg-islation. The Commissioner should becommended for his stand.

X.PREMISESLIABILITY UPDATE

CEILING COLLAPSE IN BOSTON TUNNEL KILLSMOTORIST

We have been hearing and reading inthe news for several years about all ofthe problems related to what is referredto as Boston’s Big Dig. Unfortunately, arecent tragic accident has put thetunnel back in the news.At least 12 tonsof concrete fell from the ceiling of thetunnel in mid-July, crushing a woman todeath. Nobody would expect that sortof thing to ever happen.As a result, newquestions are now being raised con-cerning the safety of the $15-billionunderground highway and tunnelsystem.The ceiling collapse in a connec-tor section of Interstate 90 followed awinter in which one of the country’smost ambitious urban infrastructure

projects has been plagued by fallingdebris, floods, leaking walls, and con-cerns about construction methods inthe transportation labyrinth. As youprobably know, this tunnel passes underthe Boston Harbor and ends at LoganAirport.The I-90 connector, opened in2003, runs under an industrial part ofsouth Boston near the city’s new con-vention center. Obviously, this tunnelhas very heavy traffic.

Milena Delvalle, a 38-year-old Bostonrestaurant worker, was killed in the acci-dent. She and her husband were headedto Logan International Airport to pickup relatives when at least four slabs ofconcrete—each weighing three tons—fell on their car.The husband was ableto escape through the driver’s sidewindow with only minor injuries. But,Mrs. Delvalle was tragically killed.Appar-ently, steel tiebacks that held the 40-footceiling sections in place gave way,causing the accident.The ceiling panelswere set in place in 1999, bolted to thetunnel roof by the tiebacks.At least 17areas of the Big Dig use similar con-struction, according to authorities.

To say that there has been a great dealof controversy surrounding the tunnel isan understatement. Governor Romneyand Massachusetts Turnpike AuthorityChairman have been at odds for severalyears.The Big Dig has long been faultedfor cost overruns,questionable construc-tion, and charges of an “ongoing patternof mismanagement.” In May, six contrac-tors who supplied concrete to the BigDig were charged with providing sub-standard materials. Building the Big Dig,a seven-mile system, has been comparedto constructing a project comparable tothe Panama Canal under a major Ameri-can city. The last major section of theproject was completed this year, butsome construction continues. GovernorRommey ordered a portion of the tunnelshut down when defective bolts werediscovered in that section. This latesttragic occurrence, resulting in a death, isanother sad chapter in a series ofmishaps. I hope this will be the last ofthis sort of thing to happen. But, basedon what we have learned, that mayprove not to be the case.

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NEW YORK TO SUE EXXONMOBIL OVER OILSPILL

ExxonMobil Corp. faces anotherlawsuit over the massive undergroundoil spill in Brooklyn that has causedproblems with the city waterway. Aspreviously reported, the leak was firstdetected years ago. A number of law-suits have been filed against the oilcompany because of the slow pace ofthe cleanup. New York state environ-mental officials are now taking the issueto court.An estimated 17 million gallonsof petroleum once lay in a vast plumebeneath the streets that were a majorhome to oil refineries for more than acentury.The countless spills that wentunnoticed for decades, eventuallyformed a 52-acre subterranean blob. Itappears that authorities have beenaware of the problem since 1978.ExxonMobil accepted responsibility formuch of the damage in 1990. It claimsto have pumped some 9 million gallonsout of the ground since that time.

In the latest filing the Department ofEnvironmental Conservation is pursuinglegal action against Exxon “to ensurethat the company fulfills its obligationto clean up petroleum contamination”in Brooklyn. Officials had been negotiat-ing with Exxon in an attempt toimprove the cleanup plan, but were dis-satisfied with the discussions. ExxonMo-bil, through a spokesperson, takes theusual company line, and says, thecompany is “committed to meeting ourenvironmental responsibilities at thesite.”The state also has negotiated withChevron Corp. and BP PLC, which alsohad facilities in Brooklyn, but hasn’ttaken legal action against them. Isuspect those companies are easier todeal with than Exxon, which in myopinion,believes it is above the law.Source: Forbes News

ORKIN WILL FINALLY PAY $4.6 MILLION TO AFORMER CUSTOMER

Recently, we reported on the longlegal battle between Orkin Exterminat-ing Company and homeowner CollierBlack. It now appears that the battle isover and that justice will finally be

done. Orkin, which is a wholly ownedsubsidiary of Rollins, Inc., has nowagreed to pay Mr. Black nearly $4.6million. The Orkin customer, whosePonte Vedra Beach home was severelydamaged by termites while under a life-time Orkin contract, took the Atlanta-based pest-control company toarbitration in 2003 and received a $4.2million judgment. Orkin appealed,taking the matter to court, with interestaccruing on the original judgmentaward. In February a federal appealscourt upheld the arbitration panel’saward.

In late June, a U.S. District Judgeissued an order setting the interest,which puts the total awarded at $4.58million. Mr. Black, a 53-year-old retiredpublisher, fought Orkin for severalyears. Largely as a result of the Blackcase, the Florida Attorney General’sOffice is currently investigating Orkin’sbusiness practices. State investigatorsare trying to work out an agreementwith Orkin that would include a cashsettlement and changes to thecompany’s procedures involving inspec-tions, treatments and repairs of homes. Ihope the Orkin customers around thecountry,who now total over 1.6 million,will get better treatment than theFlorida customers got.

FIRE VICTIM’S ESTATE FILE SUIT AGAINSTAPARTMENT BUILDING OWNER

The family of a 71-year-old womanwho died in a fire at her apartment in2005 has filed a civil lawsuit against theowner of the building. It is alleged inthe suit, filed in a Ohio state court, thatPerrysburg Ecumenical Housing Inc.was at fault for not installing a batterybackup for the smoke detector in thewoman’s apartment.The smoke detec-tor was hard-wired into the apartment’selectrical source and failed to go offbecause it had no battery back-up.Thefire knocked out electricity to the apart-ment, and as a result there was nowarning from the smoke detectors. Awarning device that doesn’t warn istotally worthless in situations such asthe one described above.

XI.WORKPLACEHAZARDS

CONSTRUCTION SITE CAUSES PERMANENTINJURIES TO ALABAMA MAN

Our firm handled a claim recently for aworker who was injured on the job whileworking at the Hyundai Plant in Mont-gomery,Alabama. Our client, Eddie Dean,suffered serious and disabling injuries inan incident that took place on March 17,2004, at the Stamp and Weld Buildinglocated at the plant. Mr. Dean wasemployed by PCE Constructors, whichsubcontracted to perform electrical workat the Hyundai plant. On that date, Mr.Dean and other PCE crew members wereremoving debris to provide a safe envi-ronment before moving and setting elec-trical switchgears in the building’ssub-station room.

As part of their clean-up, Mr. Deanpicked up one end of a pallet and theforeman picked up the other end todiscard it because the pallet wascovered with debris, empty concretebags, and blue dust. Mr. Dean took onestep and fell down into a hole. He actu-ally fell down a 21-foot open shaft to aconcrete floor below.There were manylarge holes in the floor in this building,but each was barricaded with steel andadequately marked as a “hazard”—except this one.The contractors respon-sible for securing the hole were at faultin failing to properly secure theopening in some manner and to warn ofthe hazard. No reasonable person underthe circumstances would have identi-fied it as a danger or hazard. Mr. Deandidn’t, nor did any of his co-workers,and as a result he became a victim.

Mr. Dean filed suit against multipledefendants because there were anumber of different corporationsinvolved at the worksite. Jay-Ton Con-struction, Inc., a defendant who washired by Jesco, was responsible forpouring concrete at this particular shaft.The shaft was 38 inches wide by 59inches long and 21 feet deep to the floorbelow. After pouring the shaft, Jay-Tonleft a hole in the floor leading to the

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shaft and covered it only with a woodenpallet, which was not properly securedto the cover. Jay-Ton failed to properlywarn of the hazards relating to this hole.There were no visual warnings of anykind.Those responsible left the hole inthis dangerous condition for a consider-able length of time. Jay-Ton had subcon-tracted with CCK South, Inc. andBurchette Concrete, Inc. to perform slaband concrete work at the stamp andwelding building.These companies hadleft a number of empty concrete bagsand other debris piled on top of thepallet,which also was covered with bluedust (material called “shake”). Jay-Tonfailed to check the work of these twodefendants and failed to require a clean-up of the mess they had left. Rust Con-structors, Inc., another defendant,provided safety training and safety meet-ings at the construction site. HyundaiMotors America was the general contrac-tor on the job site and responsible foroverall safety on the job site. Both Rustand Hyundai failed to implement ade-quate safety rules to prevent this type ofnear-fatal incident from happening.

As a result of the combined and con-curring negligence of these defendants,Mr. Dean suffered a most severe injuryto his left knee and has had to undergo5 surgeries on the knee. His doctorshave stated that Mr. Dean’s permanentinjury and resulting disability haveadversely affected his quality of life andhis ability to return to the type employ-ment he was engaged in.As a result ofthis catastrophic injury, Mr. Dean canneither stoop, bend, crawl, climb orkneel, which restricts his work poten-tial. He will be required to have at leastone knee replacement and probablyseveral during his lifetime.The numberwill depend on his age at the time ofthe first replacement. Mr. Dean alsosuffered other injuries, but his knee hascaused the main problem. Although atage 31, Mr. Dean had the potential tocontinue working in the constructionand welding fields, now he will mostlikely never be able to perform that typeof work again. As a consequence, Mr.Dean will have to be retrained for otheremployment.

The Dean case was settled after a suc-cessful mediation,with $1.5 million to bepaid immediately. In addition to thatamount, the liability insurance carrierwill also pay all past medical expensesand will pay all future medical expensesthat are related to Mr.Dean’s injuries.Thelife care plan for our client projectedfuture medical expenses at about$220,000.The liability insurance carrieralso agreed to reimburse the workers’compensation carrier for all subrogationclaims for payments of compensation,past medical bills, and indemnity pay-ments, and agreed to satisfy all subroga-tion liens for future medical payments.The workers compensation carrier willkeep medical benefits open. Julia Beasleyhandled this case for Mr. Dean and hiswife and did a very good job for them.

JURY RETURNS VERDICT IN MAINEDEFAMATION CASE

A federal court jury in Portland,Maine, awarded nearly $3 million to aMaine woman recently in a defamationlawsuit. Deborah Galarneau’s lawsuitclaimed she was defamed by MerrillLynch after she was fired in January2004. Merrill Lynch claimed it waslegally mandated to explain the firing tothe National Association of SecuritiesDealers. Galarneau said Merrill Lynchnotified the association that she wasfired for inappropriate bond trading andfor making decisions on trades that shewas not authorized to make. Ms.Galarneau said she had done nothingwrong and that Merrill Lynch’s actionsresulted in her inability to find workelsewhere.

In a defamation case, plaintiffs mustprove the actions against them weremalicious or motivated by ill will. In thiscase, the jury awarded $850,000 forcompensatory damages and $2.1million in punitive damages againstMerrill Lynch. Merrill Lynch says it willappeal.Ms.Galarneau,who was 57 yearsold, was a broker with Merrill Lynch inPortland for 15 years, beginning in1989. She sought damages for lost payand for future pay that she would haveearned if she had continued working to

retirement age in 2012. Interestingly, atleast two letters from Merrill Lynchattorneys had actually defendedGalarneau’s handling of the accountthat was in question.An internal reviewof her conduct also found no wrongdo-ing. Obviously, this was good evidenceat trial for Ms.Galarneau.

EXXONMOBIL ORDERED TO PAY $5 MILLIONTO WORKER’S WIDOW

A jury in Louisiana has orderedExxonMobil to pay $5 million to thewidow of a former contract worker atthe company’s Baton Rouge plant whodied of a disease caused by exposure toasbestos in the 1960s. The jury foundthat ExxonMobil was solely responsiblefor the worker’s contracting mesothe-lioma—cancer of the lining of the lungor abdominal cavity linked to asbestos.According to evidence in the case,Exxon knew about all the dangers sincethe 1930s and protects its own employ-ees from those dangers.The victim wasa contract worker at the Baton Rougeplant in the 1960s whose job was tochip paint with asbestos from pipes atthe facility. In the 1960s, ExxonMobilbegan using contract workers to dosome work at the plant. It appears thatExxon used precautions to prevent itsown workers from being exposed toasbestos, but failed to take the same pre-cautions for contract workers.

PIZZA HUT SETTLES OVERTIME SUITS BYEMPLOYEES

Pizza Hut has agreed to pay $12.5million to settle two class action law-suits involving overtime pay for man-agers at its company-owned restaurants.The settlement will end a federallawsuit claiming Pizza Hut, part ofLouisville-based Yum! Brands Inc.,improperly classified restaurant man-agers as exempt from overtime pay,even though most of their dutiesinvolved handling food, ringing upchecks and cleaning up, much likeworkers who get overtime. The settle-ment also covers a similar suit in Califor-

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nia state court. It will award the workers$1.35 million in the federal case and$11.15 million in the state lawsuit. PizzaHut will also pay the administrativecosts of handling and distributing themoney.The settlement has received pre-liminary approval from a federal judgelast week.

Although the workers’ lawyers hadestimated the federal case could involveas many as 3,100 workers and cost PizzaHut as much as $300 million in actualand punitive damages if it lost a jurytrial, the settlement terms limit the poolof workers to a few hundred.The effecton local managers likely is limitedbecause Louisville is a franchised marketand the federal case dealt withcompany-owned stores. Federal law anda court ruling limited the number ofpeople in the class. The federal settle-ment would apply to restaurant generalmanagers or training managers outsideCalifornia who have worked at Pizza Hutat any time since August 18, 2000, andwho signed on to the class action beforeNovember 4, 2005.The state settlementcovers the same positions for managerswho worked at Pizza Hut in Californiaany time since August 18,1999.

At press time, it was unknown as tohow many people will actually share inthe settlement fund. Eligible workerswill receive notice of the agreementand be given the chance to opt out.Thatwould let them keep the right to suePizza Hut on their own if they believethey deserve more in damages. Anyunclaimed money from the settlementwill be donated to the charity DoctorsWithout Borders, which is located inNew York.

MIGRANT WORKERS FILE A MOSTINTERESTING SUIT

A lawsuit was filed earlier this year inU.S. District Court in Nashville thatcould have national implications. Thesuit against Arkansas-based SuperiorForestry Service Inc. claims that thedefendant failed to pay about 41Mexican workers the prevailing wage asrequired by the Labor Department. Infact, it was alleged that the migrant

workers didn’t even receive theminimal wage. It was also alleged thatthe company didn’t pay correctly forthe pine trees planted by the workers.

The lawsuit, filed by the SouthernPoverty Law Center, involves the federalH-2B program for legal migrant workers.This program allows companies tobring in foreign workers to performlow-skilled, nonagricultural jobs that acompany hasn’t been able to fill locally.Companies must agree to pay the pre-vailing wage for their area and industry.In addition, they must provide workerswith a place to live. If a worker stays forthe whole term of the contract—usuallyless than a year—the company must paytravel costs home. Besides minimumand prevailing wage, the lawsuit allegesthat the company, located in Tilly,Arkansas, didn’t pay workers overtimefor working more than 40 hours aweek, didn’t give an accurate account-ing of their time and pay, and didn’t payin a timely manner.

The lawsuit claims the company vio-lated the Fair Labor Standards Act, andseeks back pay, travel expenses, othermonetary damages, and an injunctionprohibiting the company from violatingU.S. wage and working condition laws.If the plaintiffs prove a violation of theFLSA, the plaintiffs and others similarlysituated will be entitled to recover theirunpaid minimum and overtime wages,plus an additional equal amount in liqui-dated damages.

It’s most significant that this lawsuitcomes as Congress debates increasingthe number of foreign guest workersallowed to enter the country each year.It was reported in an article on thelawsuit appearing in The Tennesseanthat one of the workers frequentlyworked from dawn to dusk and six orseven days a week. Tree planters arepaid by the bag, earning $25 to $28 foreach 1,000 pines planted, instead of bythe hour, according to the SPLC. Thecase involves issues that could meanthat the guest worker visa isn’t anadvantageous path after all. One of theSPLC lawyers handling the case,AndrewTurner, says:

They (the workers) would have

been better off undocumentedthan captive to employers whodon’t comply with wage laws.

Lawyers for the plaintiffs are seekingclass action status for the case whichcould affect as many as 1,500 workers.The court originally denied class certifi-cation. But, the plaintiffs have beenallowed to renew their motion for aclass action.A trial date has not been setfor the case.This will be a most signifi-cant case and one that will be watchedclosely.Source: Associated Press

JURY FINDS FOR WELDING ROD MAKERS INSOLIS CASE

We wrote about the Solis welding rodcase last month. In that case, the juryfound that the makers were not liablefor the plaintiff’s health problems.TheSolis case was the first to go to trial ofabout 3,800 cases filed nationally.Defen-dants in the case were Cleveland-basedLincoln Electric Holdings Inc.; Troy,Ohio-based Hobart Bros. Co.;TDY Indus-tries Inc., part of Pittsburgh-basedAllegheny Technologies Inc.; and ESABGroup Inc., a Florence, South Carolina-based subsidiary of London’s CharterPLC. TDY stopped making weldingproducts in 1992.

It should be noted that this case washand-picked for trial by the weldingindustry under rules set by the trialjudge. I understand that the next case tobe tried will be selected by the plain-tiffs’ committee.As you know, there areother lawsuits pending in state courtsacross the country. Observers statedthat this case was weak on the causa-tion issue, which means that the jurycould have found an inadequatewarning, but that the plaintiff’s healthproblems weren’t actually caused bythe fumes from the welding rods.

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XII.TRANSPORTATION

MORE CAUSE FOR CONCERN OVER FUELTANK SAFETY

The explosion in mid-air of a Paris-bound jumbo jet about 10 years agoreceived a great deal of attention.As youmay recall, the incident killed all 230passengers aboard.Trans World AirlinesFlight 800 crashed minutes after takeofffrom New York’s John F. Kennedy Inter-national Airport.A spark ignited vaporsin a fuel tank located in the center ofthe Boeing 747’s wing. Officials sus-pected that a short circuit transferredexcess voltage into the tank.The 1996accident was thoroughly investigated bythe Federal Aviation Administration(FAA).

It appears that the primary cause ofthe accident—the flammability of fueltanks—hasn’t been fixed even though 10years have passed since the crash.Thereis a dispute between the FAA and theairline industry over whether theproblem is fixed. Part of the problemappears to be the result of cash-strappedcarriers not wanting to spend the moneyrequired to really fix the problem. Thecost of the modifications proposed bythe FAA, which the industry says is$420,000 per plane, is the problem.Safety experts acknowledge the FAA’sproposal to reduce the flammability offuel tanks is aimed at preventing a “rareoccurrence.” Even with a low level ofprobability, however, the consequencesof another explosion would result in amassive loss of life. Regulators note thatsince 1989, center fuel tank explosionshave caused four airplane accidents,leading to 346 fatalities.

After Flight 800 went down, the FAAissued more than 100 directives order-ing airlines to overhaul wiring and tocomplete assessments of fuel tanksystems to ferret out equipment orprocesses that could spark a fire andexplosion.The studies led to the discov-ery of 200 previously unknown ignitionsources.After the agency issued the pro-posed rule that would mandate its

system on numerous Boeing and Airbusmodels, it received comments from air-lines saying its analysis was flawed andthat the costs of the new system out-weighed its benefits. The FAA is stillreviewing comments and says its finalruling could come by September 2007.Also, Boeing says it will install a systemdesigned to reduce the flammability offuel tanks on its new 787 aircraft and istesting the system on other models. Ihope this safety issue will be resolved.Source: New York Times

CONCERN OVER AIRLINER ENGINE BREAKINGAPART

There is another safety concern relat-ing to jet engines and resulting fires.Anengine break-up that nearly destroyed aBoeing 767 in Los Angeles recentlywhile the plane was on the ground hasgotten the attention of federal investiga-tors. They are hoping that the failurewon’t indicate a recurrence of a mostserious problem that was supposed tohave been taken care of and eliminatedin 2003. Hopefully, that will be theinvestigators’ conclusions after thematter is fully investigated. Here is whathas been reported concerning the inci-dent so far.American Airlines mechanicswere testing the engine on June 2nd afterthe crew of an earlier flight hadreported that the engine wasn’t per-forming properly. During the test, aninternal disk came apart, slicing open afuel tank in the left wing.As a result, thefuel spilled onto the ground and caughtfire. Had this occurred in flight, it wouldhave been a disaster.

Fortunately, there were no injuriesduring this test. It appears that underthe rules of the National TransportationSafety Board, this event may not evenqualify as an accident because therewas no intention at the time to flythe plane. But experts told the NewYork Times that such “uncontained fail-ures”—so called because the enginecowling does not hold in the debris—actually resemble “a roulette game.”JohnGoglia, a former member of the boardand an aircraft maintenance expert, toldthe Times:

There’s 360 degrees around, andit’s really the luck of the drawwhich way the pieces come out. Ifthe parts fly off in flight and hitthe wing, where fuel is stored, orthe fuselage, the results could bepretty devastating.

You may recall that the first suchreported engine explosion occurredduring a flight of a United Airlines DC-10in 1989.That engine was mounted in thetail. The debris from the explosion dis-abled the plane’s hydraulic system.Thecrew was able to land that aircraft in afield at the airport in Sioux City, Iowa,maneuvering only by varying the thruston the two surviving engines.Tragically, inthat accident 111 people were killed.Theon-the-ground explosion in Los Angelesduring the test is similar to one inPhiladelphia in 2000, involving anotherBoeing 767 owned by US Airways. Inboth of these accidents, mechanics weretesting the engines by revving themtoward full power when they broke up,leading to catastrophic fires.

In addition to those incidents men-tioned above, an Air New Zealand 767suffered an uncontained failure at11,000 feet on a flight from Auckland,New Zealand, to Brisbane, Australia, in2002. Fortunately, that plane was able toland safely. But as a result, in March2003, the Federal Aviation Administra-tion (FAA) ordered inspections of thepart involved. Obviously, the agencybelieved the inspections would solvethe problem. Unfortunately, that mayturn out not to have been the case.

The engine in all of the incidents men-tioned was a variation of the popularGeneral Electric CF6.According to GE,about 3,400 of the engines were inservice, of which two-thirds reportedlywere inspected. GE claims that no prob-lems were found during the inspection.The engine involved in Los Angeles,however, was not due for inspection,according to investigators. The inspec-tion interval is usually set at half thenumber of flights at which engineersbelieve a problem will develop. Thepresent inspection limit now is 11,000“cycles,” or engine start-ups and shut-downs. Aviation experts say that one

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likely outcome was that the governmentwould require inspections at shorterintervals. The engines involved werebuilt between 1982 and 2001. In 2001,the company switched to a strongerdisk.The engines are used on a variety oflarge airliners.The FAA is currently inves-tigating the failure in Los Angeles. It willbe interesting to see what turns up. Ihope there will be an explanation thatisolates this incident, thereby not affect-ing other engines in service.Source: New York Times

CREW FATIGUE FOUND TO BE A CAUSE OFTRAIN COLLISION

The National Transportation SafetyBoard (NTSB) has reported that the crewof a Union Pacific freight train probablywas asleep when it collided with anothertrain in Texas two years ago.That colli-sion resulted in the release of a plume ofchlorine gas that killed three people andinjured 30 more.The wreck occurred onJune 28, 2004 near San Antonio. TheUnion Pacific train crashed into aBurlington Northern Santa Fe train as itmoved onto a rail siding. It was reportedthat both the engineer and the conduc-tor had worked very long scheduledhours in the days before the collision inMacdona,Texas, and had not gotten ade-quate rest because of their schedule.Theengineer had sped up the train as hepassed through signals directing him toslow down and to stop, which causedthe investigators to work hard at findingout why this occurred. It was the NTSBstaff’s conclusion that the two men were probably asleep at the time of the accident.

The Union Pacific locomotive hadslowed at a point where it didn’t have to,then the throttle moved for no clearreason and the train apparently acceler-ated through yellow lights and blastedright through a red stop signal at 45 mph.The investigation also found that the con-ductor had been drinking before the acci-dent. Union Pacific claims to haveimproved its safety practices since theaccident. Hopefully, the work schedulesof crews were affected by these changes.Source: Associated Press

JURY RETURNS VERDICT FOR FAMILY IN A 4-CAR COLLISION

A California state jury awarded $3.7million in damages to a family that suf-fered injuries during a crash involvingvehicles owned by Harris Ranch BeefCo. and FedEx Ground Package SystemInc. The jury found that California-based Harris Ranch should pay 80% ofthe damages and that Pittsburgh-basedFedEx Ground, the trucking division ofshipping giant FedEx Corp., should pay20%.A husband, wife, and their 11-year-old son sued FedEx Group and HarrisRanch after the 2003 accident. TheHarris Ranch tractor-trailer rear-endedthe FedEx Ground delivery van, whichcrossed the double yellow line and hita Toyota Tacoma before crashing intothe plaintiffs’ 1999 Doge Durango.Thewife had to be airlifted to a hospital,where she underwent emergencyabdominal surgery for severe internalinjuries. The damages included $2.5million for the woman’s “physical painand mental suffering.”Source: National Law Journal

SETTLEMENT REACHED IN AIRPLANE CRASHLAWSUITS

A settlement has been reached in thecases filed against Chalk’s OceanAirways arising out of a plane crash offthe coastline of Miami, Florida. Relativesof the 20 passengers and crew killed inthe seaplane crash last year have settledtheir claims. The crash involved aChalk’s Ocean Airways sea plane thatplunged into the ocean just off thecoast of Miami, Florida.All of the relatedlawsuits against the airline have nowbeen settled.The 58-year-old GrummanG-73T Turbo Mallard, owned by the FortLauderdale-based airline, crashed on aflight to Bimini, Bahamas on December19th of last year.The total amount of thesettlement will be about $51 million,which will come from insurance com-panies and will exhaust all of the avail-able insurance coverage.The seaplanecrashed shortly after takeoff when itsright wing broke off.The National Trans-portation Safety Board is still investigat-

ing whether it had adequate inspectionsand maintenance.Source: Orlando Sentinel

MORE LAWSUITS FILED IN NEW YORK BOATCASE

We have written in earlier issues onthe capsizing of a tour boat last fall onLake George, New York that killed 20people. There have been several law-suits filed arising out of that incident.Two more lawsuits have now beenfiled: One by the estate of a Michiganwoman that says the makers of the tourboat’s pump and engine should amongthose held responsible; and the other bythe estates of two other Michiganwomen against several companies andindividuals, including the boat’s owner,operator, and captain.At press time, theNational Transportation Safety Boardwas still investigating the incident andhadn’t determined the cause of theOctober accident.As a matter of inter-est, 19 of the 20 people killed werefrom Michigan and most were seniorcitizens.This was a tragic accident andone that should have never occurred.Source: Insurance Journal

U.S. SUPREME COURT BACKS WORKER INRETALIATION CLAIM AGAINST EMPLOYER

A new standard has been establishedfor anti-retaliation claims by workers.This came about when the U.S. SupremeCourt in late June affirmed a jury awardfor a female Tennessee forklift operatorwho was transferred to a more physicaljob after she filed a lawsuit accusing heremployer of sexual harassment. By a 9-0vote, justices said that Sheila White, whowas the only female on the job, wasimproperly punished with a suspensionfor 37 days over a Christmas holiday anda transfer from operating the forklift todoing more physical work as a yardworker. Clearly, this case sets a muchbroader, employee-friendly benchmarkfor anti-retaliation claims. The HighCourt’s ruling tilts the balance of powerin employment settings toward employ-ees. Under the High Court’s new stan-

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dard, employers are liable for unlawfulretaliation if their actions “interfere withan employee’s efforts” to ensure that heor she is not discriminated against in theworkplace. Under this ruling trial courtsmust determine on a case-by-case basiswhether “reasonable” employees wouldbe intimidated by actions taken byemployers against them.

One important aspect of the court’sruling is it appears that most employ-ment retaliation suits should be heardby a jury and not a judge. Without adoubt, employees will have more jobprotection as the result of this decision.Retaliation against employees who com-plain about discrimination or harass-ment on the job can’t be tolerated.

As a matter of interest, some 20,000retaliation cases were filed with theEqual Employment Opportunity Com-mission in 2004, a number that hasdoubled since 1992. The cases nowaccount for more than one-quarter ofthe federal agency’s docket. I wasn’t sur-prised to learn that the Bush Administra-tion, rejecting the broader standardused by the Equal Employment Oppor-tunity Commission, backed the railroadin this case.Source: Insurance Journal

XIII.ARBITRATIONUPDATE

CONSUMERS DON’T LIKE FORCEDARBITRATION

On a regular basis I continue to hearAlabama consumers complain aboutbeing forced to sign binding arbitrationagreements when they buy automo-biles, trucks, and other consumer prod-ucts. I also hear from folks who havevalid claims against companies arisingout of consumer transactions and wholearn to their detriment that they haveeither unknowingly signed an agree-ment that contained such an arbitrationprovision or had one placed in amonthly statement without their knowl-edge.These consumers then found theirclaims shunted into arbitration where

they have little change of success. Tosummarize all of this, consumers don’tlike mandatory, binding arbitration andcan’t understand how corporations canget away with this sort of thing.

Every single public opinion surveythat has polled the arbitration issuerecently has reported that folks all overthe country strongly dislike mandatoryarbitration that is binding.The thing thatreally concerns most of the folks I talkwith is that politicians don’t seem torecognize that there is even a problem.Consumers can’t understand why politi-cians won’t help them. My response issimply that consumers have very littlepolitical clout and that big money in theform of campaign contributions is thething that gets the attention of mostpoliticians. I hope that will change oneof these days.

MANY BUSINESSES DON’T LIKE BINDINGARBITRATION

It has become apparent that manybusinesses that have gone through anarbitration that was both mandatoryand binding—including those who pledto include such arbitration provisions intheir own contracts—are now havingsecond thoughts about the process.Many are finding arbitration to be bothlengthy and expensive. Often they findthat the sales pitch put out by the tortreformers that arbitration is quicker,cheaper and more efficient is far fromtrue. Having to pay three arbitrators insome arbitration proceedings at ratesthat are from $500 to $10,000 per day isnot too attractive to some of these cor-porations.Also, the lack of rules and pro-cedures in arbitration often causes theproceedings not to go well.The lack ofappeal rights and other enforceabilityissues continue to cause major con-cerns. Many times having to go to acourt to enforce an arbitration orderproves most difficult and adds addi-tional expenses.

As arbitration has fallen out of favor,mediation, another alternate resolutionmethod, seemingly is gaining tractionamong businesses.The mediation envi-ronment, which is less formal, tends tobe cheaper, less adversarial, and quicker

than an arbitration hearing. Also, itworks, which I can’t say for arbitration.At a recent continuing legal educationevent for corporate counsel held inAtlanta, Georgia, David C.Vigilante, asso-ciate general counsel and chief litigationcounsel at Turner Broadcasting, spoke.Mr. Vigilante reportedly told the audi-ence that he’s not a fan of arbitrationbecause the process requires compa-nies to give up some legal rights—andit’s binding. He called mediation “theworthwhile companion to its lessworthwhile…arbitration.” I suspectmore and more in-house counsel forcorporations are starting to share thosefeelings.

XIV.HEALTHCAREISSUES

THE FDA HAS A SIGNIFICANT BIRTHDAY

As we all know, the Food and DrugAdministration (FDA) has been aroundfor a long time. In fact, the agency hasjust celebrated its 100th anniversary.Asyou know, the FDA has the responsibil-ity by law to regulate industries that fallunder its control by law.The agency, as apart of its duties, is also supposed toprotect the public. Leading independentexperts on nutrition, food safety, anddrug safety believe that the FDA isfailing to protect Americans. Whilethe beleaguered agency obedientlyrushes expensive new drug therapieson the market, it does virtually nothingto help reduce the toll of diet-relatedand drug-induced disease in America,according to Public Citizen’s HealthResearch Group and the Center forScience in the Public Interest (CSPI).

Passage of the 1906 Pure Food andDrug Act took place 100 years ago.TheFDA was first known as the Bureau ofChemistry.A lot has changed in the 100years. Representative Henry A.Waxman, who battles for consumers,had this to say:

FDA was our country’s first con-sumer protection agency and

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Americans have relied on FDA toensure the safety of their food anddrugs for 100 years. Under theBush Administration, FDA hasundermined enforcement andbetrayed its consumer-first legacy.FDA must start enforcing the lawand return to a culture that placespublic health concerns ahead ofindustry profits.

Rep.Waxman is not the only nationalleader who is concerned over the FDA’sperformance. CSPI executive directorMichael F. Jacobson gave the followingappraisal of the agency:

The FDA’s centennial is not somuch a time to celebrate, but tomourn the FDA’s gradual descentinto irrelevancy. The great Repub-lican president Theodore Rooseveltwould be sick to his stomach if hecould see how Harvey Wiley’s hard-charging tiger of an agencybecame such a pliant pussycat.

According to Public Citizen’s HealthResearch Group, some of the problemsand failures at the FDA include:

• User fees. The FDA’s increasingreliance on so-called user fees fromdrug and medical device companiesencourages the agency to treat thosecompanies more like fee-paying cus-tomers. Instead of being fully fundedby the government, FDA took in $380million in user fees in the 2006 fiscalyear. Former FDA official Janet Wood-cock stated that the law authorizingsuch fees creates a “sweatshop men-tality” at the agency’s Centers forDrug Evaluation and Research.

• No Learning from Drug Mistakes.In testimony before the Institute ofMedicine, Public Citizen HealthResearch Group director Dr. SidneyM. Wolfe cited 13 instances of drugapprovals that either should not havebeen approved (including Crestor,Rezulin, and others), or should havebeen restricted (Accutane and others)or withdrawn (Baycol, Seldane, andothers) earlier than they were.

• Tobacco Failures. Five companies

illegally market and promote lasertreatment for smoking cessation.Public Citizen has petitioned the FDAto crack down on those companies,because the FDA hasn’t approved thedevice and there’s no evidence thetreatment works. Consumers who areconvinced to pay up to $399 for lasertreatment may be diverted from realprograms that work, such as nicotinegum or patches—thus fewer smokerswill be helped to quit.And, though ithad essentially removed nicotine-con-taining beverages from the market in2002, those drinks have reappeared.In June of this year, NICLite, whichthe company breathlessly says is the“World’s only Nicotine ReplacementDrink!,” and that it is “classified as aDietary Supplement by the FDA,”began a marketing campaign.Accord-ing to Dr.Wolfe, either the company islying about the status of these prod-ucts or the FDA inexplicably reverseditself and declared that they canlegally be sold as dietary supple-ments. Either way, it represents afailure of the FDA to enforce the lawof the land.

Dr.Wolfe, who in my opinion is one ofthe most dedicated consumer advocatesaround today,observed:

The FDA’s 100th anniversary prop-aganda campaign hides anddenies the many ways the agencyis engaging in an unprecedentedassault on the American public onbehalf of its drug, device, food,and other industry ‘clients’.

As you know, the FDA also has respon-sibility for our country’s food supply.CSPI says failures on the food side of theFDA include:

• Obesity. Over the past three decades,rates of obesity have doubled in youngchildren and adults, and tripled inteenagers. In 2003, then-CommissionerMark B. McClellan declared FDA’sintention to “confront the obesity epi-demic... to help consumers lead health-ier lives through better nutrition.”Three years later, according to CSPI,the agency has done essentially

nothing. Even with a food that’s amajor contributor to obesity—soda—FDA has declined to place healthnotices on cans and bottles, requireadded sugars to be listed separately onlabels, or require multi-serving contain-ers to list the number of calories forthe whole container.

• Heart Disease. One of the mostpotent promoters of heart disease isthe trans fat in partially hydrogenatedoil. Although after a 10-year slog theFDA finally required trans fat to belisted on nutrition labels—spurringsome manufacturers to abandon theoil—the FDA has done nothing to getrestaurants to disclose or eliminate it.In 2004 CSPI petitioned the agency toban partially hydrogenated oil and,until such a ban, to require disclosurein restaurants, but the FDA has notacted. The result: thousands ofunnecessary premature deaths everyyear.

• High Blood Pressure. Perhaps thesingle most harmful substance in thefood supply gets zero attention fromthe FDA—sodium chloride, or salt.CSPI and the American Medical Associ-ation want FDA to revoke the “Gener-ally Regarded as Safe”status of salt andto treat it as a food additive, subject toreasonable upper limits in packagedfoods. In 2004, the head of theNational Heart, Lung, and Blood Insti-tute estimated that cutting the sodiumcontent of the food supply in halfwould save 150,000 lives per year.

• Fraudulent Labels. Of 11,000employees, the FDA has a grand totalof four people at headquarters topolice food labels. Thus, supermar-ket shelves are graced with carrotcake virtually without carrots, fruit-less “fruit snacks” made with highfructose corn syrup, “whole wheat”products with a lot of white flour, andthe like. CSPI says the most significantFDA labeling initiative in recent yearswas an industry-written initiative tolet manufacturers place misleading“qualified health claims” on foodlabels. FDA’s own research foundthat the program confused con-

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sumers, but the program, pushed byfood companies, continues.

• Food Safety. Faced with the emer-gence of dangerous chemicals (suchas mercury or acrylamide) in food, theFDA takes years before acting—andeven then, its response is typicallytepid. Faced with outbreaks of bacte-rial pathogens in food,FDA is similarlynonresponsive: Salmonella in eggscould be all but eliminated with final-ized on-farm regulations to controlthe hazard, but those have beendelayed for years. Shellfish contami-nated with deadly Vibrio vulnificuskill 20 or so people every summer,but FDA relies on an industry-fundedpartnership with state governmentsto ensure shellfish safety.

Even though CSPI is a nonprofit organ-ization with only one lawyer on staff, ithas been able to force labeling changesfrom major companies such as Tropi-cana, Frito-Lay, and Pinnacle Foods.Youhave to wonder why the FDA can’t orwon’t do its job. Even when the regula-tory agency is handed neatly wrappedcomplaints on a silver platter, it is saidthat the FDA ignores these complaints inall too many cases. A major reason forthe FDA’s failures is their reliance on thedrug industry—an industry it’s sup-posed to be regulating and controlling—for help. Congress is a major part of theproblem since it fails to adequately fundthe FDA which allows the drug compa-nies in many cases to come in and fundstudies. Consider the following appraisalof an industry tactic,described as indus-try capture, on how the drug industryinfluences FDA actions:

• The FDA often relies on advisory com-mittees made up of outside experts tooffer science-based advice, particularlyon approvals of drugs and medicaldevices. But those panels ofteninclude—and are sometimes domi-nated by—scientists or researcherswho have direct financial relationshipswith the companies whose productsare under scrutiny. In recent years,FDA advisory committees evaluatingantihypertensives, various diabetesdrugs, and the pediatric use of anti-

depressants,have all included industry-funded scientists. On one committee,10 of 32 panelists investigating thecontroversial painkillers known asCOX-2 inhibitors, including Vioxx, hadties to the makers of those drugs.

CSPI and Public Citizen acknowl-edged that the FDA has many hard-working, diligent civil servants whosimply need more resources to do theirjobs effectively. Based on our experi-ence with the FDA and from drug litiga-tion, I agree with their assessment. Boththe Bush Administration and Congresshave severely hampered the agency in anumber of ways.Here are just a few:

• the Administration, by leaving theagency rudderless and without a per-manent commissioner for roughly70% of the Bush presidency; and

• Congress, by abdicating much of itsoversight responsibility,and by slashingthe headquarters staffing of the foodside of the agency by 11% since 1978.

Unfortunately, much of the attentionthe Bush Administration does pay to theFDA comes in the form of unwelcomepolitical interference. For example, theFDA’s failure to approve the over-the-counter use of the contraceptive Plan Bis one case where the agency has beenaccused of letting politics, rather thanscience, rule the day. Incidentally, SusanWood, the assistant FDA commissionerfor women’s health, resigned over thematter, citing political interference fromthen-Commissioner Lester Crawford. Iwill close on this subject by quotingwhat Dr.Wolfe of Public Citizen had tosay about the FDA’s anniversary and itsresponsibilities:

As we celebrate the 100th anniver-sary of this important agency,there are too many instances inwhich it appears to be movingback to the 19th century, whenindustry did whatever it wanted.All too often, the FDA seems toforget that it is a regulatoryagency with legally mandatedresponsibilities to protect thepublic.

If you believe that the FDA can do abetter job of regulating those industriesunder its authority, and in protectingpublic health, get involved and let yourelected officials on the national levelhear from you. Public pressure from realpeople—once it reaches a certain levelof intensity—is the only thing that willmake some politicians do the rightthing in most cases.Source: Public Citizen

PRESCRIPTION DRUG PRICES GOING UPUNDER NEW FEDERAL LAW

I continue to be amazed at how trulybad the new Medicare drug benefitprogram actually is. It will prove to beone of the worst things Congress, underpressure from the Bush Administration,the drug industry, and the insuranceindustry, has done in recent years.Thedrug and insurance companies, alongwith the pharmacy benefit managers(PBMs), are literally making a killing.Two recent surveys of drug prices byconsumer advocacy groups verify whatI have been saying for months. Thesestudies show a disturbing pattern ofprice increases as the new plan wasgetting under way. An analysis of 193brand-name prescription drugs by theAARP found that their average whole-sale prices increased 3.9% over the firstthree months of this year, almost fourtimes the general inflation rate. Thoseincreases are driving up retail prices forconsumers who pay out of pocket andwill result in higher insurance premi-ums for many of those who have drugcoverage. My brother, Billy, who has twopharmacies in Alabama, says that hisstores have received tremendous whole-sale price increases on drugs, and manyof his customers are being hurt badly bythe new program. In fact, some folkscan’t afford drugs under the new planthat previously they could afford to buy.

The second survey, by Families USA, apatient advocacy group, found that vir-tually all of the new private drug plansunder Medicare raised their prices forfrequently used medicines betweenmid-November 2005, when enrollmentbegan, to mid-April 2006. For 19 of the

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top 20 drugs prescribed for older Ameri-cans, these changes were virtually iden-tical, on average, to changes in thewholesale prices charged by manufac-turers. Congress should change the lawand should do so immediately. Oneglaring problem, for example, is notallowing the Medicare program to nego-tiate prices directly with the pharma-ceutical companies. Most Americancitizens are shocked when they learnthat the federal government doesn’thave the authority to negotiate priceswith the drug companies. This is justone of many problems, however, andbecause of the powerful forcesinvolved, don’t expect anything tohappen.The power and influence thatthe affected industries have in thisAdministration is awesome.Source: New York Times

FEDERAL GOVERNMENT PROBES DRUGBENEFIT CALL CENTERS

On another matter involving prescrip-tion drugs, the Government Account-ability Office (GAO) released a reportrecently that is most disturbing. Theconsuming public generally knows verylittle about the drugs prescribed forthem—other than what they get fromtelevision advertisements run by drugcompanies or when they see fit to asktheir local pharmacists for help.Becauseinsurance companies have a vestedinterest in the prescription drugprogram that went into effect onJanuary 1st, you would expect thoseinsurance companies that are a part ofthe new drug program to have goodanswers to legitimate questions askedby the public.

We now learn that insurance compa-nies offering prescription drug coveragethrough Medicare routinely failed toprovide accurate and completeresponses to questions posed over thetelephone by federal investigators. Manyof the 43 million people eligible forMedicare drug coverage rely on insur-ers’ call centers for information aboutwhat plan would best meet their needs.Recently federal investigators made 900calls to 10 of the largest drug plan spon-sors. I was shocked to learn that they

got a complete and accurate answeronly one-third of the time.The overallaccuracy and completeness rate for thecenters ranged from 20% to 60%.According to a report, only one insurergave the proper, full answer more thanhalf the time.

According to the investigators, insur-ers were unable to answer 15% of thequestions asked. It’s quite clear, basedon these reports, that Medicare benefici-aries face challenges in obtaining theinformation needed to make informedchoices. Accurate and understandableinformation should be available for ourseniors. Unfortunately, that doesn’tappear to be the case. Senior citizensare being hurt when they should bereceiving help.The Bush Administrationand its friends in the insurance industryshould make sure that the problems arecorrected.Source: Associated Press

DRUGS FROM CANADA SHOULDN’T EVEN BENECESSARY

A bill to let Americans import pre-scriptions drugs from Canada was await-ing final approval by a Senate-Houseconference committee at press time.The U.S. Senate voted on July 11th for abill that would ease a regulatory ban onCanadian medicine crossing the border.Although our citizens deserve cheapermedicine, I am not sure that this route isthe safest one to travel.The thing thatreally bothers me is how Canada cansell drugs to the United States muchcheaper than our citizens can buy thevery same drugs here. How can that be?A local doctor told me several monthsago the problem is that the U.S. subsi-dizes the rest of the world when itcomes to the cost of prescription drugs.From all accounts his assessment iscorrect. Our Washington politiciansneed to stop letting the powerful drugindustry run the show and instead takeaction to reduce the excessive costs ofall prescription drugs in the U.S.Ameri-cans should be able to buy prescriptiondrugs at home and not have to look atCanada or to any other foreign countryas a source of their needs.

MARKETING THE ILLNESS AND THE CURE

I must confess that until recently theterm restless legs syndrome meantabsolutely nothing to me. Now adsappearing on television, in magazines,and on the Internet are aggressively mar-keting the first pill approved to treat thisonce-obscure condition, which causesan irresistible, sometimes debilitatingurge to move. Praised by some neurolo-gists and patients’ advocates for raisingthe profile of an under-diagnosed,under-treated condition, the ads are also raisingsome real concerns. Although I nowunderstand that restless leg syndrome(RLS) is a bona fide condition that canmake victims miserable, skeptics areafraid that hyper or fidgety people whosimply have a hard time sitting still, oreven twitch a little bit in their sleep, willreceive the inappropriate diagnosis of aserious neurological condition requiringtreatment with a powerful prescriptionmedication. GlaxoSmithKline Inc., thedrug company involved, has taken thenow-accepted position of aggressivelymarketing a drug that could be misusedor over-prescribed.

The debate has focused attention onwhat some have dubbed “disease-mon-gering”—taking something that iswithin normal bounds and labeling it adisease needing pharmaceutical treat-ment. Dr. Lisa M. Schwartz of DartmouthMedical School, says:

We’re increasingly turning normalpeople into patients. Shy peoplehave social phobia, requiring psy-chotropic drugs. High-strung boyshave attention deficit disorder and need amphetamines. Babyboomers with slightly elevatedblood pressure have pre-hyperten-sion and line up for beta blockers.A few nights of restlessness callsfor sleeping pills. The ordinaryexperiences of life become a diag-nosis, which makes healthy peoplefeel like they’re sick.

As I now understand it,RLS is a collec-tion of symptoms that has been recog-nized as a neurological condition sincethe 1940s. Victims frequently experi-ence an overwhelming urge to move

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their legs, often at night, sometimesaccompanied by what’s described as avague itchy, tugging or “creepy-crawly”sensation. Many sufferers jerk involun-tarily while sleeping.The symptoms aresometimes so intense so as to severelylimit victims’ lives, precluding jobs thatrequire long meetings or long planerides. For example, RLS can be so dis-ruptive that sufferers are disabled bysleep deprivation. Including milderforms, it may affect 3% to 15% of thepopulation. Although the conditionappears to run in families, the cause isunknown.

Last year, GlaxoSmithKline Inc. wonapproval for the first time to sell one ofthese drugs, Requip, specifically for RLS.The company spent about $27 millionto advertise the drug for that purpose in2005, according to TNS Media Intelli-gence, which tracks advertising. Sincethe FDA approval, and the advertisingcampaign that followed, sales of thedrug in the U.S. have jumped from $97million to $146 million. Supportersclaim that the campaign has been posi-tive, educating the public about a condi-tion doctors frequently miss, leavingvictims to suffer or have other condi-tions diagnosed and subjected to futile,perhaps dangerous, mistreatments.Interestingly, one of the supporters,Restless Legs Syndrome Foundation, anadvocacy group based in Rochester,Minn., gets about $450,000 in fundingfrom GlaxoSmithKline.

Because doctors don’t know a greatdeal about RLS, the massive advertisingcampaign referred to above could leadto doctors prescribing the drug whenit’s not necessary. On the other hand,researchers are concerned that patientsmay be suffering from non-RLS condi-tions that will go undiagnosed. Obvi-ously, when a company spends $27million to advertise a drug and the salesof that drug jump drastically, there hasto be a connection.Source: Washington Post

XV.ENVIRONMENTALCONCERNS

MERCK RESEARCH PLANT CHEMICALSRESPONSIBLE FOR FISH KILL

A research facility operated by Merck& Co. in West Point, Pennsylvania,dumped a chemical compound thatincluded cyanide into the sewer system,killing more than 1,000 fish in Wis-sahickon Creek, a tributary of theSchuylkill River.The U.S. EnvironmentalProtection Agency (EPA) said thatduring the course of a federal and stateinvestigation, the drug company cameforward to disclose that a vaccineresearch facility released about 25gallons of potassium thiocyanate intothe sewer on the morning of June 13th.That appears to have been the maincause of the fish kill. The compound“reacted in a bad way with the chlorina-tion system and created a chemical thatwas very toxic to the fish,” according tothe EPA. Potassium thiocyanate is usedfor making industrial chemicals, phar-maceuticals, and pesticides.

It appears that proper procedures forwaste disposal of the chemicals werenot followed by Merck. Chemicalsshould have been treated and rendered“neutral” at Merck’s own waste treat-ment facility before being released intothe sewer. Penalties could go as high as$32,500 for each violation, per day,under the Clean Water Act.The agency isnow trying to determine whether actualviolations have occurred. EPA officialsbelieve that the chemicals entered theUpper Gwynedd Township wastewatertreatment plant before flowing into thecreek.

Unfortunately, the Merck-related fishkill wasn’t the only problem.A large fishkill led authorities to issue health advi-sories for Wissahickon Creek and partsof the Schuylkill River in late June.People were told not to swim or splashin the water, drink from it, or eat thefish.The advisory was later lifted for theSchuylkill. Restrictions remain for theWissahickon, as authorities await theresults of testing.The creek faces other

problems as well. Problems at theAmbler sewage treatment plant sent55,000 gallons of raw sewage into theWissahickon. The state Fish and BoatCommission said no additional fishwere killed by the spill, which wascaused by electrical problems at theplant.Source: Associated Press

OIL COMPANY PAYS $12 MILLION TOREVERSE LAKE DAMAGE

Occidental Chemical Corp.has agreedto pay $12 million to help reversedamage to Lake Ontario caused byreleases from its Niagara Falls, NewYork, manufacturing plant. The agree-ment settles a 1983 lawsuit by NewYork State over polluting chemical dis-charges from the facility, and frees Occi-dental from further claims against theoperation.The settlement amount, to bepaid over four years, is designed to com-pensate the state’s residents for warn-ings against eating fish from thepolluted lake, state officials said. It wasreported that Occidental has alreadytaken steps to stop pollution form theplant.The settlement is meant to repairlingering environmental damage,according to Judith Enck, an environ-mental specialist in the New York Attor-ney General’s office.Source: National Law Journal

XVI.TOBACCOLITIGATIONUPDATE

TOBACCO MAY KILL ONE BILLION THISCENTURY

With the trends indicating that appel-late courts generally are favoring thetobacco industry, it might be a goodtime to take a look at what the tobaccoindustry is actually doing to folks whosmoke. If current trends hold, tobaccowill kill a billion people this century.According to public health officials, thiswill be 10 times the toll tobacco took in

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the 20th century.Tobacco accounts forone in five cancer deaths, or 1.4 milliondeaths worldwide each year, accordingto two new reference guides that chartglobal tobacco use and cancer. Lungcancer remains the major cancer amongthe 10.9 million new cases of cancerdiagnosed each year, according to theCancer Atlas.

Reducing tobacco use would have thegreatest effect of any single factor onglobal cancer rates, according to healthofficials. Improving nutrition and reduc-ing infection by cancer-causing virusesand bacteria could also cut rates dramat-ically. Dr. Judith Mackay, a World HealthOrganization (WHO) senior policyadviser, stated:

We know with cancer, if we takeaction now, we can save 2 millionlives a year by 2020 and 6.5million by 2040.

The new Cancer Atlas and updatedTobacco Atlas were released last monthat a International Union Against Cancerconference. The American CancerSociety published the two atlases withhelp from the Union,WHO and Centersfor Disease Control and Prevention.Anestimated 1.25 billion men and womennow smoke cigarettes, according to theTobacco Atlas.Although it’s difficult tounderstand why anybody would eversmoke, at the same time, it’s as certainas “death” and “taxes” that once youstart—for whatever reason—it’s virtu-ally impossible to stop, once you gethooked.Tobacco is the only product onthe market today that, when used by aconsumer exactly as the maker andseller intended for the product to beused, will actually kill the user.That’s asad commentary on the history of thetobacco industry in this country andour government’s repeated failures indealing with a most serious problem.

SURGEON GENERAL WARNS OF SECOND-HAND SMOKE

We have believed for a long time thatlots of people have been hurt,with manydying, as the result of second-handsmoke. Now, the Surgeon General has

declared that second-hand smoke does infact harm nonsmokers. I hope this willfuel nationwide efforts to ban smokingin public. On the subject of second-handsmoke, U.S. Surgeon General RichardCarmona had this to say:

The debate is over. The science isclear: Second-hand smoke is not amere annoyance, but a serioushealth hazard.

More than 126 million nonsmokingAmericans are regularly exposed tosmokers’ fumes—what Dr. Carmonatermed as “involuntary smoking”—andtens of thousands die each year as aresult, concludes the 670-page study.The report cites “overwhelming scien-tific evidence” that second-hand smokecauses heart disease, lung cancer, and ahost of other illnesses. It calls for com-pletely smoke-free buildings and publicplaces, saying that separate smokingsections and ventilation systems don’tfully protect nonsmokers. Seventeenstates and more than 400 towns, cities,and counties have passed strong no-smoking laws.

There is another part of this problem.Public smoking bans don’t reach insideprivate homes, where just over one infive children breathe their parents’smoke. Children’s bodies that are stilldeveloping are especially vulnerable.Second-hand smoke puts children atrisk of sudden infant death syndrome,orSIDS, as well as bronchitis, pneumonia,worsening asthma attacks, poor lunggrowth, and ear infections, the reportfound. Banning smoking in publicplaces doesn’t attack the problem in thehomes of American smokers.

Dr. Carmona implored parents whocan’t kick the habit to smoke outdoors,never in a house or car with a child.Opening a window to let the smoke outwon’t protect them. “Stay away fromsmokers,” he urged everyone else. Evena few minutes around drifting smoke isenough to spark an asthma attack, makeblood more prone to clot, damage heartarteries, and begin the kind of celldamage that over time can lead tocancer, he said.When questioned abouthow the Bush Administration would

implement his findings, Dr. Carmonawould only pledge to publicize thereport in hopes of encouraging anti-smoking advocacy. He said that passinganti-smoking laws is up to Congress andto state and local governments. Publichealth advocates believe the reportshould accelerate an already growingmovement toward more smoke-freeworkplaces. Matthew Myers, who iswith the Campaign for Tobacco-FreeKids,believes that:

This could be the most influentialsurgeon general’s report in 15years.The message to governmentsis:The only way to protect your cit-izens is comprehensive smoke-freelaws.

The report shouldn’t surprisedoctors. It isn’t a new study, but a com-pilation of the best research on second-hand smoke done since the last SurgeonGeneral’s report on the topic in 1986,which declared second-hand smoke acause of lung cancer that kills 3,000nonsmokers a year. Since then, scientistshave proved that even more illnessesare triggered or worsened by second-hand smoke. More than 35,000 non-smokers a year die from heart diseasecaused by second-hand smoke. Regularexposure to someone else’s smokeincreases the risk of a nonsmokergetting heart disease or lung cancer byup to 30%, Dr. Carmona found. Sometobacco companies are now acknowl-edging the risks. But R.J. ReynoldsTobacco Co., which has fought thesmoking bans, challenges the newreport’s call for complete smoke-freezones and insists the danger isoverblown.

In addition to the scientific report, Dr.Carmona issued some common senseadvice for consumers and employers:

• Choose smoke-free restaurants andother businesses, and thank them forgoing smoke-free.

• Don’t let anyone smoke near yourchild. Don’t take your child to restau-rants or other indoor places thatallow smoking.

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• Smokers should never smoke arounda sick relative.

• Employers should make all indoorworkspace smoke-free and not allowsmoking near entrances, to protectthe health of both customers andworkers, and offer programs to helpemployees kick the habit.

Source: Associated Press

CASINO WORKER SUES OVER SECOND-HANDSMOKE

New Jersey’s casinos, which recentlywon exemption from that state’s indoorsmoking ban that has now taken effect,may now have another reason to be con-cerned. In a suit filed on July 10th, a Tropi-cana Casino & Resort employee claimsthat his lung cancer was caused by 25years of involuntarily inhaling otherpeople’s smoke on the casino floors. Isuspect there will be more lawsuits likethis one filed over second-hand smoke.In this case, the employee, who claimshe never smoked, was diagnosed lastyear with lung cancer and underwentsurgery to remove the top lobe of hisright lung in September. He has 80% likelihood of cancer recurrence and issusceptible to numerous increased andlife-threatening health risks, such as dia-betes, according to his complaint.

By adopting the Smoke-Free Air Act,effective April 15th, New Jersey becameone of 11 states to ban smoking inindoor public places. Four other statesprohibit smoking in workplaces andrestaurants. Impetus for the ban grewfrom a 2004 study showing that in NewJersey, bars and restaurants had morethan nine times the levels of indoor airpollution than in New York City, whichhad previously banned smoking inthose establishments. Because of theirpolitical clout, casino gaming areas wereexempted from the New Jersey law. But,the exemption does not grant immunityfrom tort liability for lawsuits filed byemployees and patrons for personalinjuries caused by environmentaltobacco smoke exposure. It will bemost interesting to follow the progressof this case, which appears to be most

significant. It has already gotten theattention of business owners whosefacilities have allowed smoking over theyears.Source: New Jersey Law Journal

FLORIDA SUPREME COURT RULES FORTOBACCO INDUSTRY—BUT LEAVES A DOOROPEN FOR INDIVIDUAL LAWSUITS

Tobacco companies in the UnitedStates have won a major legal victory inFlorida. The ruling by the FloridaSupreme Court, in what is one of the lastremaining personal injury class actioncases against tobacco companies, is areal blow for victims.The court reverseda $145 billion punitive damages awardthat had been returned against tobaccocompanies for injuring smokers. Thecourt ruled that the award, which hadbeen the largest ever by an Americanjury, was excessive.The court also ruledthat smokers’ cases “are highly individu-alized”and as a result “do not lend them-selves to class action treatment.”

That ruling affects an estimated300,000 to 700,000 sick people inFlorida. The suit filed by Dr. HowardEngle, a pediatrician in Miami who hasemphysema, accused the tobacco indus-try of misleading people about thedangers of smoking. Originally filed in1994 on behalf of all addicted smokersin the United States, the 3rd DistrictCourt of Appeal permitted a trial onlyafter reducing the class to Floridasmokers.The case then was appealed toFlorida’s highest appellate court.

A majority of the state’s high courtdid, however, reinstate two individualjury awards. A $2.85 million damageaward, which had been returned infavor of a smoker, Mary Farnan, waskept intact. A $4.023 million award toanother smoker, Angie Della Vecchia,was also affirmed. But, another award, a$5.8 million award to Frank Amodeo,who like Farnan and Della Vecchia wasa cancer-stricken smoker who broughtthe original suit, was not restored in thecourt’s ruling.

The Florida court did support a partof the jury’s original verdict in the Englecase that found that smoking causes avariety of diseases, and that tobacco

companies concealed information andhad acted negligently.This part of thecourt’s ruling will result in a number ofindividual cases being filed in Florida.Those cases would be for specificdamages to individual smokers. It’s alsopossible that those cases could result inawards of punitive damages. So, whilethe class action lawsuit is over, individu-als can still file their own claims.Thoselawsuits will have to be filed within oneyear from the court’s ruling, as I under-stand it. If you or a family member havesuch a claim, contact a lawyer and findout exactly what can now be done onindividual claims. Failure to file suitwithin the designated time would barany claim.Source: Associated Press

THE FEDERAL GOVERNMENT’S CASE IS STILLBREATHING

Even before the Florida decision, thecivil racketeering case filed by theDepartment of Justice against PhilipMorris and several other large cigarettemakers appeared to be dead in thewater.The government, which originallyfiled its case in 1999, now seeksdamages of $14 billion over 10 years, aswell as fines if youth smoking rates donot decline, and government monitor-ing of company research and develop-ment. As you may recall, a nine-monthtrial concluded a little more than a yearago. According to sources, a ruling isexpected from Judge Gladys Kessler ofthe U.S. District Court for the District ofColumbia within the next few months.Tobacco companies have already wonseveral major victories in that case,including a ruling in February 2005 thatthe government cannot seek financialpenalties from tobacco companies forprevious wrongdoing, only for futureinfractions. In response, the JusticeDepartment cut its financial demandsfrom $280 billion to the current $14billion.The Bush Administration made itclear early on that it wanted this case togo away and not be a bother to thetobacco industry. While the case maystill be breathing, some say it’s on life-support with time running out.

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XVII.THE CONSUMERCORNER

A SHOCKING REPORT RELATING TOMEDICATION ERRORS

I was shocked to learn that medica-tion errors harm 1.5 million people andkill several thousand each year in theUnited States, costing the nation at least$3.5 billion annually.While I knew thatthe error rate was fairly high, I certainlydidn’t realize how bad it actually was.The Institute of Medicine, the nation’smost prestigious medical advisoryorganization, released a report,“Prevent-ing Medication Errors,” on July 20th thatrevealed the magnitude of the problem.It’s estimated that as many as 7,000persons die annually due to medicationerrors. Drug errors are so widespreadthat hospital patients should expect tosuffer one every day they remain hospi-talized, according to the report.

The report is the fourth in a seriesdone by the Institute of Medicine thathas called attention to the enormoushealth and financial burdens broughtabout by medical errors.You may recallthat the first report,“To Err Is Human,”was released in 1999.While that reportcaused a sensation when it estimatedthat medical errors of all sorts led to asmany as 98,000 deaths each year—morethan was caused by highway accidentsand breast cancer combined—unfortu-nately very few of the Institute’s recom-mendations from the report have beenimplemented.

The report contained a number ofrecommendations that will be fairlyeasy to do. For example, drug makerswere told to package more pills in indi-vidual packages. The companies werealso criticized for failing to disclose theresults of all clinical trials involving theirdrugs.That’s a much broader problemand one that has been debated for along time.An interesting aspect of thereport concerned the common practiceof drug companies providing free drugsamples to doctors.The Institute recom-mended that the practice should be dis-couraged because in many cases the

samples were poorly controlled.At least a quarter of the errors are pre-

ventable, according to the report. TheInstitute of Medicine urged major stepsbe taken by the government, healthproviders and patients alike. Four ofevery five U.S. adults take at least onemedication or dietary supplement everyday. Interestingly, almost a third take atleast five.The more a person uses, thegreater their risk of bad interactions.This is especially true if multipledoctors prescribe different drugswithout knowing what the personalready takes.The following are some ofthe report’s major recommendations:

• All prescriptions should be writtenelectronically by 2010, a move onespecialist called as crucial to safe careas X-ray machines.

• The government should the speedelectronic prescribing, including fos-tering technology improvements sothat the myriad computer programsused by doctors, hospitals and drug-stores are compatible. Fewer thanabout 20% of prescriptions are elec-tronic, said report co-author MichaelCohen, president of the Institute forSafe Medication Practices. E-prescrib-ing does more than counter bad hand-writing.The computer programs canbe linked to databases that flash analert if the prescribed dose seemshigh or if the patient’s records showuse of another drug that can danger-ously interact.

• Patients and their families must beaggressive in questioning doctors,nurses and pharmacists about medica-tions. Get a list of each drug you’represcribed, why and the dose fromeach doctor and pharmacy you use,and show it at every doctor visit.“Take active steps to make sure youknow what you’re getting, and is itwhat you need,” said report co-authorDr. Wilson Pace of the University ofColorado.

• The nation should invest about $100million annually on research into drugerrors and how to prevent them.Among the most-needed studies is theimpact of free drug samples, which

often lack proper labeling, on medica-tion safety.

• The Food and Drug Administrationshould improve the quality of druginformation leaflets that accompanyprescription drugs, but often haveincomplete information or are writtenin consumer-confusing jargon.

• The government should establishnational telephone hotlines to helppatients unable to understand printeddrug information because of illiteracy,language barriers or other problems.

The Institute of Medicine is an inde-pendent organization chartered by Con-gress to advise the government onhealth matters. It’s a group with credi-bility and one that should carry weightwith Congress and the healthcare indus-try. I don’t believe that most folks hadany concept of how bad the medicationerror problem is. For that reason, thisreport should be given immediate distri-bution nationwide. Clearly, it must betaken seriously by all concerned and itsrecommendations implemented.Source: Associated Press and New York Times

THERE CAN BE A SILENT KILLER IN OURHOUSES AND WORKPLACE

Hundreds of people die each yearfrom unintentional carbon monoxide(CO) poisoning associated with the useof consumer products. As you know,carbon monoxide is a poisonous gasthat results from the incomplete com-bustion of fuels such as natural or lique-fied petroleum gas, oil, wood, and coal.It is called the silent killer becausecarbon monoxide can’t be seen orsmelled. Although the Consumer Products Safety Commission (CPSC)keeps up with deaths related to carbonmonoxide, it should be noted that thehundreds of deaths caused annually bycarbon monoxide from consumer prod-ucts don’t include those deaths result-ing from fire or motor vehicles. I willconcentrate here on the problems thatarise from the use of consumer prod-ucts in the home.

According to the last statistics com-piled by the CPSC, the majority of deaths

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reported are caused by defective heatingsystems. LP-gas heating accounted forapproximately half of the estimatedheating deaths.While natural gas heatingaccounted for a lesser number, it wasstill a significant number of deaths. Itshould be noted that any fuel-burningappliances can be a potential source offatal or hazardous carbon monoxidelevels. Engine-driven tools, including cor-porate generators that are powered bygasoline, propane, or natural gasengines, produce large amounts ofcarbon monoxide. This occurs evenwhen sufficient oxygen is available forcombustion.These products may or maynot emit an irritating exhaust.

In order to detect carbon monoxide,every home should have a carbonmonoxide alarm in the hallway near thebedrooms and all sleeping areas. If youhave battery-operated devices, youshould check your batteries monthlyand replace them annually.With an elec-tric-powered alarm, make sure it has abattery back-up.There are certain stan-dards that the CO alarm must meet inorder to be reliable.You should check tobe sure that your alarm meets one ofthe following standards:

• Canadian Standards Association 6.19-01.2001;

• Underwriters Laboratories Inc. 2034,2nd ED:March 2005;or

• International Approval Services 696,2nd ED: June 1,1998.

You can get more information con-cerning the hazards related to carbonmonoxide—the silent killer—by goingto the CPSC website at www.cpsc.gov.

CPSC WARNS CONSUMERS ABOUT DANGERSOF TUBE KITING

Just before the July 4th holidayweekend, the U.S. Consumer ProductSafety Commission (CPSC) warned con-sumers about the possible dangers asso-ciated with a new type of waterrecreation known as “tube kiting.”TheCPSC is concerned as a result of deathand injury reports associated with tubekiting.The agency is currently investigat-

ing two versions of these products todetermine whether there is a significantproduct hazard.Tube kiting, a relativelynew form of extreme water sport, isextremely dangerous.The CPSC is awareof at least two deaths associated withtube kiting, which according to allreports is growing in popularity thisyear.A 33-year-old Texas man was killedin late April while tube kiting. In Wiscon-sin, a 42-year-old man died from injuriesassociated with tube kiting in June.TheCPSC is also aware of 12 serious injuriesassociated with tube kiting.The reportedinjuries include a broken neck, punc-tured lung, broken ribs, broken femur,chest and back injuries, and facialinjuries, such as jaw fractures. In oneincident a 14-year-old girl who was tubekiting lost consciousness when it fellabout 15 feet and struck the water.

Tube kites are very large, sometimesround, inflatable water devices that canbe more than 10 feet in diameter. Thetube is hooked to the back of a boat by atow rope, and the tube rider pulls backon a rope as the boat travels at speedsbetween 25 and 35 miles per hour.Theride begins when the tube is lifted intothe air trailing the boat. Possible reasonsfor incidents and injuries include:

• rider’s difficulty in controlling thetube;

• boat operator inexperience; and

• how the tube reacts in certainweather conditions.

The conditions of highest concern arewind gusts that can cause the tube tospin out of control, or sudden slowingor stopping by the boat operator, whichcan cause the tube to nose dive into thewater. In some cases, the sudden stop-ping of the boat might cause the tuberider to continue past the boat and hit itor hit other boats or stationary objects,such as a bridge. The National ParkService has banned the inflatabledevices in at least one of its parks, GlenCanyon National Recreation Area inUtah, which includes Lake Powell,where there have been at least fourserious injuries.Source: CPSC

MYSPACE CHANGES ARE NOT ENOUGH

Myspace.com, the popular onlinesocial network, has been in the newsrecently for a number of reasons, andmost of them are bad. MySpace.com,owned by News Corp., on its faceappears to be pretty innocent. Beforegoing further, I wonder how manyadults with children still at home evenknow what MySpace.com is all about. Isuspect most children—especiallyteenagers—have a pretty good idea ofits availability and know how it func-tions. Unfortunately, so do the adultsexual predators who are a menace tosociety. In my opinion, all of us need tofind out more about this site.MySpace.com, described as “a place forfriends,” and one “that lets you meetyour friends’ friends,” is very dangerousfor children. Viewers are invited to“create a private community.”The truthof the matter is that MySpace.com is avery dangerous place for youngsters.Clearly, the site has the potential forgreat harm to innocent children.

New security measures for youngusers of MySpace.com that have beenpromised won’t be enough to stoponline child predators, safety expertswarned. The popular online socialnetwork recently restricted adult accessto the information teenagers post aboutthemselves. MySpace users who are 18or over could no longer request to beon a 14- or 15-year-old’s friends’ listunless they already know either theyouth’s e-mail address or full name. Intheory, that means they won’t haveaccess to personal information on theirprofiles. But, Monique Nelson, executivevice president of online safety advocateWeb Wise Kids, believes the changesaren’t enough. In this regard, she says:

They’re going to lie about theirages. There’s no way to check ageverification. In that respect, I don’tthink that’s going to be very effec-tive.

It’s most significant that the changesreferred to above came only after a $30million lawsuit was filed by the motherof a Texas teenager who claims she was

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raped by a man she met through thesite. The lawsuit claims MySpace.comwas at fault for failing to protect teenusers despite numerous warnings of thedangers. Even though the site is sup-posed to prohibit children 13 and underfrom setting up accounts, the Austinteenager was only 13 when she set upher profile last year.

MySpace.com has no mechanism forverifying that users submit their trueage when registering. Under thechanges, any user will still be able to geta partial profile of younger users bysearching for other details, such asdisplay name.The difference is that cur-rently adults can then request to beadded to a youth’s list to view the fullprofile. That option will disappear foradults registered as 18 and over.Thoseunder 18 will still be able to makecontact.Without age verification, adultscan sign up as teens and request to joina 14-year-old’s list of friends, whichwould enable the full profiles. It’s timefor our elected officials to get in-volved and put real restrictions onMySpace.com. I would also encouragethe churches to take an active lead, andif nothing else, help educate both adultsand children about MySpace.com.Source: Forbes News Service

JURY VERDICT FOR FAMILY OF CHILD KILLEDBY LAWN MOWER

A state court jury in Virginia hasawarded $2 million to a couple whose4-year-old son died after being run overby a riding lawn mower at his day carecenter.The jury found the mower’s man-ufacturer, Cleveland-based MTD Prod-ucts Corp., legally responsible for theApril 2004 death of the child.The juryheld MTD Products liable for notdesigning a mower that automaticallystops its blades whenever it rolls back-ward.

DEBT COLLECTORS WHO PLAY ROUGHSHOULD HAVE TO PAY THE CONSEQUENCES

We have seen a tremendous rise inAmerican consumer debt over the pastfew years. It has been reported that the

level of consumer debt has nowreached the record level of about $2.2trillion. Federal government regulatorshave become greatly concerned overaggressive and sometimes unscrupuloustactics by debt collection agencies. InApril, the Federal Trade Commission,which enforces the Fair Debt CollectionPractices Act, the federal law thatgoverns debt collection practices,reported that it received 66,627 com-plaints against third-party debt collec-tors last year—more than against anyother industry, and nearly six times thenumber in 1999.

The collection agencies often buy thedebt from more established companiesfor pennies on the dollar and seek tocollect even if the debt has been paid orwas never valid to begin with. Some-times, consumers pay up simply becausethey are worn down by threats from thecompanies and are afraid that theircredit rating will be damaged. Threatsand intimidation are effective tools forthe representations of these collectionagencies. It should be noted that theirvictims are not just the poor and disad-vantaged. I understand that this breed ofdebt collectors will go after anybody.

Abusive, deceptive, and unfair tacticsby collection agencies can’t be toler-ated. Fortunately, the FCC is takingaction against debt collectors who stepover the line. Last July, the commissionwon $10.2 million—its biggest judg-ment for illegal collection practices—ina case against National Check Control ofSecaucus, New Jersey.That company—now out of business—overstated theamounts consumers owed and threat-ened them with arrest and prosecution.

New York’s Attorney General, EliotSpitzer, recently sued a national debtcollection company, accusing it oftrying in thousands of cases to collecton debts that could not be verified. Inits most recent annual report on the act,the FTC identified tactics that havebecome particularly common:

• misrepresenting the nature, size, andstatus of a debt;

• making constant harassing andabusive phone calls at all hours;

• contacting a debtor’s relatives,employers, and neighbors;

• failing to investigate claims by con-sumers that a debt is paid, expired, orfraudulent; and

• threatening to sue or seek prosecu-tion.

It should be noted that such threatsare illegal unless the collector has boththe legal basis to take action and theintent to take such action. In addition tofiling complaints with regulators, agrowing number of consumers aresuing over debt collection abuses,according to the National Association ofConsumer Advocates.The National Con-sumer Law Center, an advocacy organi-zation based in Boston, is working toprotect consumers against abusive col-lection practices. I hope other groupswill join in this battle.Source: New York Times

LAWSUIT FILED OVER BAD DOG FOOD

A woman in Fort Payne,Alabama, hasfiled a lawsuit against Diamond PetFoods Inc., contending that thecompany produced contaminated dogfood that killed two of her dogs. Thelawsuit, filed in DeKalb County CircuitCourt, accuses the company of negli-gence, breach of contract, fraudulentsuppression, and breach of warranty.Both compensatory and punitivedamages are being sought. It is allegedthat Diamond knew its product con-tained deadly levels of aflatoxin, afungus that grows on spoiled corn andis deadly if eaten by animals. Corn is aningredient in the company’s dog food.

The lawsuit alleges Diamond knew inSeptember 2005 that its products con-tained the toxin, but continued to sellthem until December 2005. Thecompany’s recall was at the request ofthe Food and Drug Administration.Diamond has confirmed that there aresimilar lawsuits pending across thecountry. Autopsy reports from theAlabama Department of Agriculture andIndustries confirmed that the pets diedfrom aflatoxin poisoning.

In December of 2005, Diamond Pet

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Food acknowledged that it discoveredaflatoxin in dog food manufactured atits facility in Gaston, South Carolina.Aflatoxin is a naturally occurring toxicchemical by-product from the growthof the fungus Aspergillus flavus oncorn and other crops. At that time,Diamond notified its distributors andrecommended that they hold the sale ofall Diamond Pet Food products formu-lated with corn that were produced outof the Gaston facility. States serviced bythe Gaston facility include Alabama,Connecticut, Delaware, Florida, Georgia,Kentucky (eastern), Maine, Maryland,Massachusetts, Mississippi, New Hamp-shire, New Jersey, New York, North Car-olina, Ohio, Pennsylvania, Rhode Island,South Carolina,Tennessee,West Virginia,Vermont, and Virginia.Source: Fort Payne Times-Journal

PERSONAL DATA BEING STOLEN

There have been a number of inci-dents in which personal informationand data of U.S. citizens have beenstolen.The sources of the stolen infor-mation are companies,entities, and evengovernment agencies. This appears tobe a growing and most serious problem.I will discuss a few of those incidentsbelow:

STATE DEPARTMENT SUFFERSWIDESPREAD COMPUTER BREAK-INS

In a most disturbing report, welearned last month that the StateDepartment has been the victim oflarge-scale computer break-insworldwide.Those incidents report-edly occurred over a period ofseveral weeks in June and July.TheState Department’s headquartersand offices dealing with China andNorth Korea were targeted, accord-ing to The Associated Press. Investi-gators believe hackers stolesensitive U.S. information and pass-words and implanted backdoors inunclassified government computersto allow them to return at will,according to the Associated Pressreport.This hasn’t received a great

deal of attention, but it surely seemsto be a most serious matter. Ifhackers can get into the govern-ment’s computers with apparentease, that is most disturbing.

RED CROSS LAPTOP WITH DONOR DATASTOLEN

A laptop containing personalinformation from thousands ofblood donors—including SocialSecurity numbers and medicalinformation—was stolen from alocal office of the American RedCross. But, officials claim that theinformation was encrypted. Thedata included matching names andbirth dates of donors from Texasand Oklahoma, as well as donors’sexual and disease histories. TheRed Cross doesn’t view this as asecurity breach at this point. Thelaptop was one of three stolen froma locked closet in the FarmersBranch office of the American RedCross in May, but the two others didnot contain the personal informa-tion.

It appears that local officialsalerted police and national RedCross offices. However, donorswere not notified about the missinginformation since the Red Crosstakes the position it had no legalobligation to do so.The laptops dis-appeared on two separate occa-sions in May, according to policereports.They could have been goneas long as a week before beingreported missing. Red Cross super-visors have their own user namesand passwords.Access is time-and-date based.The Farmers Branch RedCross had lost a laptop withencrypted donor information inJune 2005. It was reported thatsecurity in the Farmers Branchoffice was tightened after the mostrecent thefts.

WORKERS SUE UNION PACIFIC OVER IDTHEFT

Concerns about identity theft hasprompted a group of nine UnionPacific Corp. employees to file suitagainst the nation’s largest railroadover the way it uses Social Securitynumbers to identify employees.Thecompany said in May that a com-puter with names and Social Secu-rity numbers of 30,000 current orretired Union Pacific employeeshad been stolen from a personnelemployee on April 29th.The lawsuitwas filed in Pottawattamie County,Iowa, by the nine railroad employ-ees on behalf of a class that couldinclude 30,000 members, accordingto the lawsuit.

Union Pacific said in May that ithad notified the 30,000 peopleaffected, paid for their credit moni-toring for a year, and encouragedthem to put fraud alerts on theircurrent accounts. The companyclaims the employee violated UnionPacific policy by transferring workfiles to a private computer to workon at home, and the private com-puter was stolen. The plaintiffscontend that employees continueto be put at risk every day becauseSocial Security numbers are used toaccess routine information at work.

The lawsuit asserts that UnionPacific was at fault by failing toprotect employees’ Social Securitynumbers, by using them for pur-poses other than tax reporting, andby failing to use other employeeidentifying numbers. Union Pacificoperates 38,654 miles of track in 23states from the Midwest to the Westand Gulf coasts, and they have lotsof current and retired employees.

PERSONAL DATA WERE POSTED ONNAVY WEBSITE

Personal records for every Navyand Marine Corps aviator oraircrew member who has loggedflight hours in the past 20 yearshave been posted on a public Navy

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website for the past six months,compromising more than 100,000Social Security numbers.The NavySafety Center in Norfolk, Virginia,made an announcement relating tothis incident last month. Investiga-tors are said to be working to deter-mine how the records landed onthe Navy Safety Center’s website.Officials shut the website down onJuly 6th after a private citizenreported finding the full names andSocial Security numbers of affectedpersons posted. The list had beenposted since December of last yearand the safety center says itappeared to be “inadvertent” andthe result of “human error.”

The security breach involving per-sonal information is among severaldata losses involving the federal gov-ernment recently, including the lossof records related to more than 26.5million retirees and active duty mili-tary personnel on a laptop that wasstolen in May from a Veterans Affairsemployee’s home.The GovernmentAccountability Office, the Agricul-ture Department, the EnergyDepartment, and the InternalRevenue Service all announced thatthey have had similar personal datacompromised recently via websitepostings, Internet hackers, and lossof electronic equipment. In lateJune, the Navy announced that per-sonal information on 28,000 sailorsand their family members was com-promised when it appeared on apublic website.

The Navy Safety Center list wasapparently only discovered after itwas brought to the Navy’s atten-tion. The list is said to include allretired, active duty, and reservistpersonnel who have logged flighthours in the past two decades.Interestingly, the Center is acommand dedicated to improvingthe safety of Navy operations.Theinformation was included on 1,083computer disks that were sent to allNavy and Marine Corps commands.Navy officials are working on recall-

ing those disks. Navy officialsencourage anyone whose namecould have been on the list to care-fully monitor bank accounts, creditcards, and other financial transac-tions to make sure the informationis not being used fraudulently.Those who might have beenaffected can contact the Navy Per-sonnel Command call center at 866-827-5672 for more information.

It’s most apparent that we have amost serious problem relating to thetypes of incidents referred to above.Obviously, the risk to the individualsaffected is great. I hope some smartfolks are hard at work trying to find outhow this sort of theft can be stopped.Source: Associated Press, Washington Post, andHouston Chronicle

ALABAMA TO RECEIVE FUNDS FROMWACHOVIA SETTLEMENT

Under the terms of a settlementbetween state securities regulators andWachovia Capital Markets LLC of Char-lotte, North Carolina, Alabama willreceive over $300,000 as its share. Inannouncing the settlement, Joseph P.Borg, the Director of the Alabama Secu-rities Commission, , said it will include$40,000 for investor education.The set-tlement results from allegations ofpotential conflicts of interest betweenWachovia Capital Markets’ research ana-lysts and investment bankers. The set-tlement effectively resolves a 28-monthmultistate investigation by state regula-tors—including enforcement officialsfrom Alabama—of Wachovia CapitalMarkets, which operates Wachovia Cor-poration’s institutional brokerage andcapital markets businesses. The settle-ment relates to the following charges:

• State investigators determined thatWachovia Capital Markets failed tosupervise its employees in connec-tion with potential conflicts of inter-est between equity research andinvestment banking, as evidenced byresearch analysts’ participation incertain presentations with potentialinvestment banking clients.

• In addition, research analysts’ evalua-tions sought information regardingtheir interaction with investmentbanking and regarding the investmentbanking activity in their sector.Moreover, on occasion, WachoviaCapital Markets considered whethercompanies were potential clients indetermining to provide research cov-erage on those companies.

• Wachovia did not keep certain elec-tronic communications as required bystate securities laws. WachoviaCapital Markets’ e-mail system andprocedures were inadequate toensure all electronic mail communica-tions were retained and readily acces-sible. As a result, 20% of the e-mailfolders requested in November 2002could not be produced and 42% ofthe e-mail folders requested inJanuary 2003 were not producedpromptly. Wachovia Capital Marketsalso failed to maintain a system thatallowed it to locate and retrieve back-up tapes for its e-mail system.

The multistate settlement is related tothe April 2003 “global settlement” that12 other investment banks havereached with state, federal, and industryregulators. Under the terms of the set-tlement,Wachovia Capital Markets willpay a total of $25 million, including: $20million in penalties for failing to super-vise its employees in connection withpotential conflicts of interest betweenequity research and investmentbanking; $1.65 million in penalties forfailing to preserve required books andrecords; $3 million, to be used forinvestor education, as designated by theBoard of Directors of the North Ameri-can Securities Administrators Associa-tion, Inc.; and $350,000 for costs andexpenses associated with the investiga-tion. The investigation of WachoviaCapital Markets is part of a comprehen-sive regulatory effort to reform the rela-tionship between investment bankingand research and to manage appropri-ately conflicts of interest. Concerningthe statement,Director Borg observed:

Today’s agreement is a major stepin our ongoing efforts to help

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maintain investor confidence byensuring that all investors are pro-vided with objective research andtreated with fairness and honesty.

As I have stated on previous occa-sions, Director Borg and his staff con-tinue to do an outstanding job forAlabama citizens. This settlement isanother example of that good work.Weare most fortunate to have Joe Borg,who is one of the most respected of allprofessionals in his field, in Alabamastate government.

XVIII.RECALLS UPDATE

FEDERAL APPEALS COURT UPHOLDS AUTORECALLS BY REGION

A federal appeals court has unani-mously upheld guidelines from theNational Highway Traffic Safety Adminis-tration (NHTSA), the government’shighway safety agency, allowingautomakers to limit some vehicle recallsby region. Two consumer groups hadchallenged NHTSA’s policy that allowsautomakers to conduct recalls involvingdefects related to regional conditionssuch as snow or heat. Public Citizen andthe Center for Auto Safety asserted thata 1998 letter sent by NHTSA toautomakers offering guidelines on theregional recalls should be considered arule change requiring public comment.According to the consumer groups, thatamounted to a “de facto regulation” andviolated a federal law requiring that allvehicle owners be notified of a recallregardless of where they live or wherethe vehicle is registered.

The U.S. Court of Appeals for the Dis-trict of Columbia Circuit disagreed. Inits opinion, the court stated that the“guidelines are nothing more thangeneral policy statements with no legalforce.”According to the court, the guide-lines “do not determine any rights orobligations, nor do they have any legalconsequences.” Although that is thecourt’s ruling, I believe that vehiclerecalls should be national in scope.

TOYOTA TAKES A WEIRD POSITION WITHRECALL

Toyota will voluntarily recall nearly160,000 Toyota Tundra pickups this fallso that they can be made less safe forchildren riding in the front seat. Therecall is meant to make Tundras complywith safety regulations.The applicablerules say that vehicles built after 2002must have a child-seat anchor systemknown as LATCH in the front seat ifthey also have a front-seat airbag shut-off switch.The Tundra in question wasbuilt with an airbag shut-off switch, butnot the LATCH system.

Toyota will remove the airbag shut-offswitch.What Toyota is doing will makethe vehicles unsafe for small childrenriding in the front seat.Those shut-offswitches exist because airbags caninjure and even kill small children evenin minor crashes. Meanwhile, evenwithout a LATCH system, parents canstill install safety seats using seatbelts.Toyota originally discovered the compli-ance issue and, in a letter to theNational Highway Traffic Safety Adminis-tration (NHTSA) in July 2005, thecompany asked regulators to let them toignore it as “inconsequential to safety.”Fortunately, and perhaps surprisingly,NHTSA denied that petition. ThenToyota asked NHTSA to reconsider,arguing that the solution would beworse than the problem. Here is whatToyota proposed as a solution inOctober 2005.

[We] believe that the agencyshould understand that the likelyremedy is to remove the airbagcut-off switches.

Toyota is actually placing the blameon NHTSA.They say placing the LATCHsystem in the trucks’ front seats wouldbe far “too expensive,” claiming that therules required the switches to beremoved in order to comply.To complywith the rule,Toyota is currently build-ing new Tundra trucks without theswitches. The Tundra trucks beingrecalled do have back seats, althoughthey are very small ones. We all knowthat folks will sometimes put small chil-

dren in the front seats of cars and trucksfor various reasons. For example,according to NHTSA, the Tundra’s backseats are too small to fit rear-facingseats, the kind that infants ride in. In itsfinal decision, published on June 28,2006, NHTSA pointed out that themethod a manufacturer might choose toremedy a compliance issue is not adetermining factor when deciding thatit must be fixed, so Toyota’s warningmade no difference. Any issue NHTSAmight have with Toyota’s solution to theproblem will have to wait for anotherround of memos. NHTSA says they areclosely reviewing Toyota’s remedy.

By the way, in the event you don’talready know what LATCH stands for, itstands for Lower Anchorages andTethers for Children. Regardless of theuse of LATCH systems or airbag cut-offswitches, children are always safest in aback seat if at all possible.That shouldbe the rule and not the exception, but itis not always possible.

TOYOTA RECALLS 400,000 VEHICLES FORFAULTY ENGINES

Toyota is recalling more than 400,000vehicles with faulty engines, includingsome in this country.The recall affectsmore than a quarter-million vehiclessold in Japan.Twelve models manufac-tured in 2001, including Corollas andthe Prius hybrid, are involved.The recallalso affects about 150,000 cars soldoutside Japan, mainly in the UnitedStates and Canada.They also were man-ufactured in 2001. In the U.S.,more than25,000 cars sold under the name Echoand Yaris, as well as nearly 8500 Priusvehicles, are affected by the recall. Afaulty engine part could lead to an oilleak within the engine and cause it tostop completely. There have been noaccidents caused by the fault, accordingto Toyota.

NISSAN RECALLS ALTIMA AND SENTRASEDANS TO FIX ENGINE PART

Nissan Motor Co.has recalled 200,866Altima and Sentra sedans, the second

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recall for the models in recent weeks, tofix a faulty engine part that can causestalling.The new recall affects Altimasand Sentras from the 2003 model yearwith 2.5-liter four-cylinder engines,according to the National HighwayTraffic Safety Administration (NHTSA).Asensor can fail, causing the engine tostop while the car is moving.The recallis a setback for Nissan, Japan’s second-largest automaker, as it works toimprove its reputation for quality inNorth America. Consumer Reports in2006 ranked four of its models amongthe least reliable on the market.

The earlier recall, announced on June22nd, covered 97,000 Altimas and Sentrasfrom the 2006 model year.Their enginescan use too much motor oil or catch onfire. Nissan suspended sales of the carson June 2nd after more than 200 com-plaints, mostly from rental fleets, ofexcessive oil use.There were 17 reportsof engine fires. Nissan is in the processof moving its U.S. headquarters fromGardena, California, to Nashville, Ten-nessee. Owners were to be notified,starting on August 21st. According toNHTSA, Nissan will reprogram the elec-tronic control module, which appar-ently will fix the problem.

COMPANY RECALLS MORE THAN 170,000TRACTORS

Husqvarna Outdoor Products, Inc. isrecalling about 174,000 lawn tractors.The fuel line can separate from the fueltank outlet, creating a potential firehazard. So far, there have been threeinjuries because of the defect.The lawntractors were sold under the brandnames Husqvarna, Craftsman, PoulanPro, Poulan,Weed Eater, Southern States,and Murray. If you have one of therecalled tractors, stop using it andcontact Husqvarna at 866-284-8872.Husqvarna Outdoor Products, Inc. isheadquartered in Augusta, Georgia. Itstractors are made in Orangeburg, SouthCarolina.

XIX.FIRM ACTIVITIES

EMPLOYEE SPOTLIGHTS

Charles MyrickCharles Myrick, who is now one of

our very best employees, has workedfor the firm for almost five years as amail clerk. Charles and his co-worker,Fred Gamble, are responsible for sortingand delivering the mail for the wholefirm. Because of the size of the firm, andthe number of pieces of mail coming inand going out each day, this is a mostchallenging job. Charles is married toShelia, who is a nurse in the neo-natalintensive care unit at Baptist HospitalSouth, and they have a 19-year-old son.In his spare time, Charles enjoys watch-ing sports, mostly football. Currently, heserves as an usher at Christ CommunityChurch in Montgomery.

In 1990, Charles was in a real seriousaccident, suffering a severe head injury,and remained in a coma for over threeweeks.This man has come a long way,made a remarkable recovery, and hasovercome a great number of obstaclesthat were placed in his life. Charles is avery hard worker and is an inspirationto all of us. We are very proud ofCharles’ accomplishments, and I can say,without reservation, that he is a goodman and a most valuable employee.Weare blessed to have Charles with thefirm.

NEW LAWYER JOINS FIRM

Alyce S. Robertson, who joined thefirm on August 1st, has become ournewest lawyer.Alyce has practiced lawfor over 10 years, graduating from theUniversity of Alabama School of Law in1995. Her most recent employment wasin the Alabama Attorney General’s office,where, over a period of seven years, shehandled civil litigation involving stateagencies and employees. Alyce is cur-rently admitted to practice in all statecourts in Alabama and also is admitted tothe following federal courts:The UnitedStates District Courts for the Southern,

Middle, and Northern Districts ofAlabama; The United States Court ofAppeals for the Eleventh Circuit; and theUnited States Supreme Court.Alyce willwork in the firm’s Toxic Tort Section.Weare fortunate to have a lawyer withAlyce’s background, experience, andability join the firm. We are confidentthat she will be an asset to the firm.

BEASLEY ALLEN WEBSITE

We have a very good website, and ourInformation Technology Departmentdoes a good job of keeping it up to dateand timely. Last year we had over400,000 unique visitors and over 10million hits on the site. Interestingly, themost frequently viewed sections are thelawyer bios and the case informationparts. We find that our website is anexcellent way to keep folks informed ofwhat is going on at the firm. You canvisit our website by going toBeasleyAllen.com.

XX.SPECIALRECOGNITIONS

STATE TROOPERS ASSOCIATION

The Alabama State Trooper Associa-tion does a very good job for itsmembers and their families. Often,unfortunately, its good work is taken forgranted even by some of its ownmembers. The Association does anexcellent job of representing itsmembers and looking out for thewelfare of troopers’ families.They alsohave played a major role in working forlegislation that affects the safety of allAlabama citizens. Over the past fewyears, the Association has worked hardto accomplish the following:

• The Association has worked very hardon legislation affecting law enforce-ment and specifically public safety;

• They worked to increase pay scalesand benefits for troopers;

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• They provide life insurance thatcovers the officers;

• They provide scholarships for thedependents of its members; and

• They have established and sup-ported the “trooper teddy bearprogram,” to give teddy bears to trau-matized children at accident scenesand in hospitals.

It’s been my experience that manyAlabama citizens don’t realize howimportant the role is that Alabama StateTroopers play today in our state. Safetyon our highways is critically importantto all Alabamians, as well as to thosefrom outside the state who use ourhighways.We should thank those menand women who work hard to makethis a reality. I fully realize that over theyears state government has not done itsjob and as a result failed to adequatelyfund the Department of Public Safety.Asa consequence, trooper pay scales andbenefits have failed to keep pace withthose in other states.Also, the numberof troopers available for patrol duty inAlabama has been far too low, and safetyon the highways has suffered as a conse-quence. I hope all of that is finallychanging even though we are stillbehind other states.The Association hasworked hard and should be com-mended for those things that have beenaccomplished.

SHAREHOLDER SERVES ON CHILD PROTECTBOARD

We encourage all of our lawyers to begood citizens which requires participa-tion in the community. LaBarron N.Boone, a shareholder in our firm, hasbeen extremely active in a number ofareas. LaBarron currently serves on theBoard of Trustees of Child Protect, agroup that does good work. ChildProtect was incorporated in November1989 as the Children’s Advocacy Centerserving Montgomery, Autauga, Elmore,and Chilton Counties. Child Protectassists the Department of HumanResources and law enforcement agen-cies in their investigations of child

sexual and physical abuse cases. Validcases are turned over to the DistrictAttorney’s office in the appropriatecounty for prosecution. Child Protectpresently serves two judicial circuits,the 15th (Montgomery County) and the19th (Autauga, Elmore and Chilton Coun-ties). Child Protect, a non-profit, 501(c)3corporation, is dependent on commu-nity support to fulfill its mission ofserving children who are victims ofabuse. The organization is a chartermember of the National Children’sAlliance, a partner in River RegionUnited Way, and a part of the AlabamaNetwork of Children’s AdvocacyCenters.

LaBarron presently serves as staffattorney for Child Protect, handlinglegal matters the organization encoun-ters on a pro bono basis. He was thefirst recipient of the “Hands for ChildrenAward,” which is awarded to a memberof the Board of Trustees, last year. In myopinion, Child Protect does great workthat is badly needed. We are proud ofLaBarron for serving on their board andassisting in a most worthwhile manner.

ALABAMA STATE BAR PROMOTES LAWYERS’SERVICE DAY

On June 10th the Alabama State Barsponsored a statewide call to allAlabama lawyers to volunteer their timein community service projects. Theslogan for the event was “Lawyers Ren-dering Service.”Although many peoplein our profession give countless hoursto many worthy causes, this event was away for members of our state bar togive back to their communities in amore unified way. There were fourmajor projects set up across the state inthe cities of Birmingham, Mobile,Huntsville, and Montgomery. The goalwas to perform volunteer work inhomeless and children’s shelters, insoup kitchens, and at various schools inthe state.

Roman Shaul, a shareholder in ourfirm, was the chairperson for the Mont-gomery project. Several other lawyersfrom the firm participated. The eventwas well-attended, and many of the

lawyers who volunteered in Mont-gomery came from towns well over anhour away. The Montgomery projecttook place at Father Purcell Children’sCenter.The Montgomery-based Centeraccepts and cares for severely disabledchildren from all over the state. Thisfacility is so important because thereare very few places in Alabama that canprovide adequate, around-the-clock carefor children who are so young and stillmaintain some quality of life for them.The lawyers who participated helpedthe Children’s Center by painting partsof their building that were in dire needof touching up.A fresh coat of paint wasput on some playground equipment andphysical therapy stations. Afterwards,the volunteers met and played with thechildren. We are very proud of all thelawyers who volunteered their time tohelp those who are less fortunate intheir communities around the state.

THE AMERICAN CANCER SOCIETY DOESGOOD WORK

The American Cancer Society is anorganization that does very good work.Its goal of finding cures for cancer isone that our firm supports. On June24th, the American Cancer Society’sJunior Executive Board hosted itsannual Gala titled “A Summer Night’sDream.” Bill Robertson, a young lawyerin our firm, currently serves on thisBoard.The Board is made up of a groupof young professionals in the Mont-gomery business community who sharethe common goal of supporting thefight against cancer.The Board developsprograms to raise money for the non-profit organization. Its members serveas advocates to spread awareness aboutthe disease.

The June event was held at the MannWildlife Museum on the grounds of theMontgomery Zoo, with many areapatrons in attendance. During thegroup’s major fundraiser of the year,guests took tours of the museum andenjoyed a fun evening filled with goodfood, great music, and bidding opportu-nities during a silent auction.The eventraised about $10,000, which will be

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used to support the Cancer Society’sarea programs and services. We arepleased to have Bill involved in thisworthwhile project.

FIRST BAPTIST NEHEMIAH PROJECT

Chad Cook, one of our lawyers, wasrecently involved in an inner city revital-ization program, “The NehemiahProject,” sponsored by First BaptistChurch in Montgomery. First Baptistpartnered with several organizationsincluding Angel Haven Ministries, theYMCA, and Chisholm Baptist Church torebuild an area of Montgomery that hasbeen neglected for years. The core goalof The Nehemiah Project is to addressthe spiritual and social needs of Mont-gomery’s inner city by lifting up JesusChrist to the center of this area. Thisgroup, led by Douglas McElvy,past presi-dent of the Alabama State Bar, and hiswife Eleanor, has done a magnificent jobof implementing several programs forboth children and adults. These pro-grams include after-school tutoring,GED tutoring, neighborhood blockparties, alcohol and drug education, andregular bible studies. Eleanor McElvy,who is gifted musically, has led choirand music classes and helped produceplays with the children in the area.Future community programs includesports, adult literacy training, moneymanagement seminars, computer educa-tion, and infant care.This group has alsotaken on the monumental task of totallyrestoring abandoned or condemnedhouses, affording good folks who needaffordable housing a place to live.Thisgroup is living out Matthew 25:40. It isa great way to connect Jesus Christ witha community that needs help. It’s timeand effort well spent, in my opinion.Weneed more of this sort of thing, not onlyin Montgomery,but all over the country.

XXI.SOME CLOSINGOBSERVATIONS

FOOTBALL STARS SHARE THEIR FAITH

Shaun Alexander and Heath Evans,two very good professional footballplayers who have very close ties to ourstate, recently participated in a footballclinic for youngsters in Mobile. It goeswithout saying that Shaun was atremendous running back at the Univer-sity of Alabama during his college days.Heath, also a running back, had a verygood career at Auburn University.Thesetwo outstanding athletes have becomevery good friends and have a great dealin common. One thing that makes themrelate to each other so well is their pas-sionate love of their Lord and Savior,Jesus Christ.

The significant thing to report aboutthese two outstanding young men isthat not only are they outstanding ath-letes, but, more importantly, they arestrongly committed Christians. It’s sig-nificant that they not only “talk the talk,”but “walk the walk,” when it comes totheir faith. For example, Shaun told theyoung athletes at the Mobile clinic thathe has always had faith—both in hisspiritual and athletic lives—and that hecan’t separate one from the other.As weall know, Shaun’s faith and his play wereboth strong last season as he producedone of the best years ever for a runningback in the NFL. He was named theleague’s Most Valuable Player andrecently signed a new contract coveringsix years.

The effect that Shaun and Heath haveon young people is tremendous.Theirliving testimony is something thatyoung people can observe first-handand emulate. Athletics can play atremendous role in helping youngpeople find direction and purpose intheir lives at an early age.When personssuch as Shaun Alexander and HeathEvans give all of the credit to God fortheir many accomplishments, thatinspires young people. It also says agreat deal about the character of these

men. While in Mobile, Shaun gave fullcredit for all his accomplishments to hisfaith in God, stating:

I know I am going to have trialsand tests, but I know if I am obe-dient that everything’s going to beOK. It’s not something you acceptsometimes, but every day in every-thing you do. I’m not the greatestathlete. I’m not the fastest or thestrongest.But I know if I am obedi-ent there is going to be victory. …God did some big things for me.

It has to make all of us who have chil-dren or grandchildren in our schoolsfeel real good to know that men likethese two professional football stars arearound and willing to help them.This isone of the reasons why I support theFellowship of Christian Athletes sostrongly. In my opinion, the FCA does asuper job with young people. In fact,Shaun and Heath got their start with theFCA and it obviously had a tremendouseffect on their lives.Fortunately, they arenow hard at work helping others, andthat’s great news!

XXII.MY PARTINGWORDS

A Baptist pastor, who shepherds arather large church in an east Alabamatown, made a statement that I havewritten down as a reminder for mewhen I tend to let my temper or strongopinions get me in hot water, which Imust confess has happened on occa-sion. I have to be reminded from time-to-time that Jesus is in control of my life.As a result, all of my actions and reac-tions should be under His authority andcontrol. James L. Evans, who is seniorpastor at the First Baptist Church inAuburn,made this observation:

But embodiment is more than justtheological name dropping.We canpaste a “Christian” label on almostanything. But just because theoutside of the box says Christian

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does not mean Jesus is on theinside.

Sometimes we all tend to look at theoutside of boxes in life and acceptthings as true without ever opening thebox and taking a good look inside. Ihave to wonder how Jesus feels aboutgroups—and even persons for thatmatter—who put His label on theoutside of their box and yet have verylittle and sometimes absolutely nothinginside that even resembles Jesus or Histeachings. I believe we all know theanswer to that query! We must put Jesuson the inside of our box and then wecan show His presence on the outside.It will reflect in how we deal with folksand how we treat them in our daily livesand undertakings. In order to live a trueChristian life, Jesus Christ must beembodied in every aspect of our lives.We must not only bear the name ofJesus, but our thoughts, our words, ouractions and actually every part of ourvery being must be an embodiment of

our Lord and Savior. When that is thecase, folks who deal with us won’t haveto look inside our box in their deal-ings with us to decide whether we arereally sincere or not.

In closing this month, I am remindedof the words of Jesus from what isreferred to as the Sermon on the Mount,where He outlines the standards ofliving a Christian life. In His sermon,Jesus warned us:

Not everybody who says to me,‘Lord, Lord’ will enter the Kingdomof Heaven, but only the one whodoes the will of my Father inHeaven.”

Matthew 7:21

In fact, Jesus will tell some whoprofess publicly, loudly, and often oftheir close connection to Him that Henever even knew them.That will comeas a shock to many who have talkedthe talk—but never really accepted

Jesus—and as a result are unable towalk the walk. Unfortunately, for thoseat the final judgment, there won’t be asecond chance for redemption. Thisrelates directly to what Pastor Evanswas saying about labels and claims. Letme encourage you to examine whetheryou have a personal relationship withJesus Christ. We receive Jesus and Hiskingdom by admitting that we are sickspiritually and in need of a spiritualphysician, Jesus.

Without a doubt, Jesus knows what’sin our box! We can’t wait to acceptJesus. Neither can we fail to go aboutdoing His will in our lives once wemake that decision.We can let our lightshine, empowered by the Holy Spirit, inour daily walk, so that others will cometo know our Lord and Savior. If two foot-ball players can be an example byhelping others get to know JesusChrist—so should we. May God blesseach of you, your family, and co-workersduring the coming days.

BeasleyAllen.com 51

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