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What’sNews

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World-Widen Two appeals courts issuedconflicting rulings on whetherconsumers can get subsidiesfor health insurance boughton federal exchanges. A1, A4n U.S. intelligence officialspresented their most detailedcase yet that Russian-backedUkrainian separatists shotdown the Malaysian jet. A1nThe Netherlands said itwould take the lead in the crashprobe but accident investigatorshad yet to arrive at the site. A9n The U.S. barred flights toTel Aviv’s airport after a rocketfrom Gaza landed nearby, an-gering Israel, which called theban a boon to Hamas. A1, A6n Kerry held talks in a bidto end the Gaza conflict buthas encountered divisionsamong Mideast powers. A6n A surgical device used inhysterectomies could spreadmore types of cancer thanthought, research shows. A3n Businessman David PerduewonGeorgia’s GOPSenate nom-ination, setting up a race withDemocrat Michelle Nunn. A5n Several U.S. cities and atleast one state have offeredto shelter migrant minorsfrom Central America. A5nThe administrationwill un-veil new rules proposing tightersafety standards on trainscarrying flammable fuels. B2n Jakarta’s governorwas de-clared thewinner of Indonesia’spresidential vote. His opponentplans to contest the results. A7n Turkey detained dozens ofpolice officers who had helpedbring corruption chargesagainst the premier’s allies.A10

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The Fed has rebukedDeutsche Bank for finan-

cial-reporting problems at itsU.S. operations that the lenderknew about for years. A1nApple posted 12% profitgrowth and strong sales of itscurrent iPhone for the latestquarter, but iPad sales slid. B1nMicrosoft’s profit fell 7.1%as the company took a hitfrom acquiring Nokia’s money-losing cellphone business. B3n CIT is acquiring OneWest,formerly IndyMac Bank, for $3.4billion, a windfall for the groupthat bet on the failed lender. C1n U.S. consumer inflationrose 2.1% last month from ayear earlier, driven by ajump in gasoline prices. A2n Home sales climbed fora third straight month inJune, hitting the highestlevel since October. A2n U.S. stocks rose on stronghousing data and corporateearnings. The Dow added61.81 points to 17113.54. C4n Herbalife shares surged25% as Ackman’s fraud alle-gations against the companyfailed to sway investors. C1nGM knewmore than a de-cade ago about wider ignition-switch problems, recently dis-closed documents show. B2n Credit Suisse swung to aloss of $779.5 million on aU.S. legal settlement. C3n Coke’s soda volume re-turned to growth last quarter,but profit and sales fell. B4nComputer systems housingTheWall Street Journal’s newsgraphics were hacked. B6

Business&Finance

Two U.S. appeals courts is-sued conflicting rulings onwhether consumers can get sub-sidies for health coveragebought on the Affordable CareAct’s federal exchange, escalat-ing a legal battle that could com-plicate fall insurance enrollmentand jeopardize tax credits formillions of Americans.

In a blow to President BarackObama’s signature legislativeachievement, a panel of the U.S.Court of Appeals for the Districtof Columbia Circuit, on a 2-1vote, invalidated an InternalRevenue Service regulation thatimplemented a key piece of the2010 health law. The regulationsaid subsidies for health insur-ance were available to qualifyingmiddle- and low-income consum-ers whether they bought cover-age on a state or federally runexchange.

Two hours later, a three-judgepanel of the U.S. Court of Ap-peals for the Fourth Circuit inRichmond, Va., reached the op-posite conclusion, unanimouslyruling that consumers in statesrelying on the federal market-place could receive subsidies.

Tuesday’s rulings won’t havean immediate impact on the sub-sidies that an estimated 4.7 mil-lion Americans have received onthe federal exchange. But theyraise a new cloud of legal un-knowns that likely won’t be set-tled before open enrollment be-gins Nov. 15, because the casescould take a year or more toconclude in the courts.

If the two courts remain inconflict, it is a near certainty theSupreme Court will have to stepin to resolve the dispute, settingthe stage for a third high-courtruling on the health law. Shouldthe D.C. Circuit’s ruling eventu-ally prevail, it could cripple thelaw by making subsidies unavail-able in as many as 36 stateswhere the federal governmenthas run some or all of the insur-ance exchanges.

The Obama administrationsaid it would ask the full D.C. ap-peals court, which might bemore sympathetic to its position,to reconsider the case.

“This just lays another layerof uncertainty on top of an al-

PleaseturntopageA4

BY BRENT KENDALLAND STEPHANIE ARMOUR

RulingsCloudHealthSubsidyTwo Appeals CourtsSplit on Tax CreditsFor Millions

The U.S. barred flights to Is-rael’s main international airportoutside Tel Aviv for at least 24hours after a rocket from Gazalanded nearby, prompting Israelto angrily brand the ban a boonto Hamas’s efforts to isolate thecountry.

Prime Minister Benjamin Ne-tanyahu appealed to Secretary ofState John Kerry to restoreflights as the U.S. diplomat wasin Cairo trying to broker a cease-fire between Israel and Hamas,the Islamist group that rulesGaza.

“There is no reason for thesecompanies to stop flights,” IsraeliTransportation Minister YisraelKatz said. “They have given aprize to terror.”

The suspension comes amidgrowing anxiety about safety onthe part of airlines and passen-gers since a Malaysia AirlinesBoeing 777 flying over easternUkraine was shot down last week,killing all 298 people on board.

It was also a strategic victoryfor Hamas, striking a blow to Is-rael’s economy, its physical link

to the rest of the world, and itsinternational reputation for effec-tive security.

A number of European airlinesalso suspended flights.

Israeli aviation authoritieswere working to explain to for-eign carriers that Ben Gurion In-ternational Airport was still safefor landing and takeoff. El Al Is-rael Airlines Ltd., Israel’s nationalcarrier, said it would continueflying as scheduled.

Israel in recent years has de-veloped the Iron Dome air-de-fense system to protect its citiesand other sensitive targets froman increasingly sophisticated ar-senal of rockets in the hands ofHamas.

Israeli aviation officials saidIsrael had shifted the approachroute to the airport and deployedmultiple Iron Dome batteries inthe region as precautionary mea-sures to reassure airline and avia-tion officials that Ben Gurion Air-port remained safe.

But on Tuesday morning, tworockets got past the Iron Dome.One damaged a house near theairport, slightly injuring one per-son; the other hit a vacant kin-dergarten in the southern city ofAshdod.

The military says Iron Dome

has brought down 420 rockets, or86% of those fired from Gaza atpopulated areas, since Israellaunched a military offensiveagainst Hamas on July 8.

The last time foreign carrierssuspended flights to Ben GurionAirport was during the 1991 GulfWar, when Iraq fired Scud mis-siles at Tel Aviv, said Neri

PleaseturntopageA6

By JoshuaMitnick,Andy Pasztor

and Susan Carey

U.S.Bars Israel FlightsAfter Rocket Strike

An examination by the Fed-eral Reserve Bank of New Yorkfound that Deutsche Bank AG’sgiant U.S. operations suffer froma litany of serious financial-re-porting problems that the lenderhas known about for years butnot fixed, according to docu-ments reviewed by The WallStreet Journal.

In a letter to Deutsche Bankexecutives in December, a seniorofficial with the New York Fedwrote that reports produced bysome of the bank’s U.S. arms“are of low quality, inaccurateand unreliable. The size andbreadth of errors strongly sug-gest that the firm’s entire U.S.regulatory reporting structurerequires wide-ranging remedialaction.”

The criticism from the NewYork Fed represents a rebuke to

one of the world’s biggest banks,and it comes at a time when fed-eral regulators say they are in-creasingly focused on the healthof overseas lenders with sub-stantial U.S. operations.

The Dec. 11 letter, excerpts ofwhich were reviewed by theJournal, said Deutsche Bank hadmade “no progress” at fixingpreviously identified problems.It said examiners found “mate-rial errors and poor data integ-rity” in its U.S. entities’ publicfilings, which are used by regula-tors, economists and investors toevaluate its operations. Theproblems ranged from data-en-try errors to not taking into ac-count the value of collateralwhen assessing the riskiness ofloans.

The shortcomings amount to a“systemic breakdown” and “ex-pose the firm to significant opera-tional risk and misstated regula-tory reports,” said the letter fromDaniel Muccia, a New York Fed se-

PleaseturntopageA10

By David Enrich,Jenny Strasburgand Eyk Henning

Fed Raps Deutsche BankFor Shoddy Reporting

GideonMarkowicz/Eu

ropean

Presspho

toAgency

Rescue personnel at a home destroyed by a missile from Gaza near Ben Gurion Airport outside Tel Aviv.

Greater RisksFor Surgical Tool,Study Finds

Source: JAMA The Wall Street Journal

0

10

20

30

40%

'08 '09 '102007

Hysterectomy methods thatmost often use a morcellator,as a percentage of total

Laparoscopic1Q 2010 30.5%

Robotic9.5%

NEW RESEARCH: Morcellatorsmay spread more types of cancerthan previously thought. A3

Jenny, a golden retriever, hasnever sipped a daiquiri, but herowner likes her to smell likeone.

Once a month, Mike Sunseribathes his dog with daiquiri,piña colada or cosmopolitan-scented shampoo, part of theBarktini Blends line made byLawrenceburg, Ky.-based Glo-Marr Products Inc., which alsomakes a “Hair of the Dog” con-ditioner.

The fruity cocktail scentmakes washing the reluctantJenny more enjoyable, at leastfor Mr. Sunseri, a photographydirector from Versailles, Ky. “I’mthinking of which Caribbean is-land I can visit next,” he says.“Or scuba diving and which re-freshing cocktail would finishthe day perfectly.”

Fragrances usually aim tomake everyday products—andthe chores associated with

them—more pleasant,typically evoking pineforests, lemon grovesor flower gardens.Now, they promisehappy hour.

Scrubbing dishes,showering, lighting acandle or washing adog can all be oppor-tunities to escapewith a cocktail—or atleast the idea of one,product makers say.Household staplesnow smell like mar-garitas, tequila, piñacoladas, daiquiris and beer asthey attempt to elicit a happybuzz from even the most mun-dane everyday tasks.

“Instead of spring cleaning,I’m on a spring break drinking amargarita,” says Michelle Arnau,the home-care general managerfor San Francisco-based MethodProducts PBC, of its lime andsea salt dish soap and all-pur-

pose cleaner. The fra-grance became a per-manent part of itsproduct lineup in Aprilafter a brief run twoyears ago. “When youcan actually have afragrance that takesyou on an escape, itchanges the whole actof cleaning from thatmoment of ‘Ugh, Ihave to do it’ to ‘I ac-tually really enjoy it.’ ”

The quiet solitudeof washing dishes isparticularly conducive

to moments of scented intoxica-tion, Ms. Arnau says. “The fra-grance bloom is amazing in aconcentrated area like that,” shesays. “It transports you to won-derful places.”

The whiff of a cocktail can re-mind consumers of a tropicalgetaway, even if they’ve neverbeen on one, says Deborah Betz,

Pleaseturntothenextpage

BY ELLEN BYRON

When Doing Chores, Is It Ever Too Early for a Cocktail?i i i

Household Cleaners Evoke Happy Hour; Appletini Dog Wash

U.S. intelligence officials pre-sented reporters with their mostdetailed case yet Tuesday thatRussian-backed Ukrainian sepa-ratists shot down a Malaysia Air-lines jetliner last week, in a bidto counter what American offi-cials see as Russian efforts tomuddy the waters with claims ofUkrainian culpability.

The officials relied on photo-graphs, social media, and voice-print analysis of Ukrainian com-munications intercepts to maketheir public case that a likelySA-11 antiaircraft weapon firedfrom separatist-controlled terri-tory shot down the commercialairliner, killing 298 people onboard.

The evidence cited, however,didn’t raise the case for Russianinvolvement in the shoot-downto a new level of certainty. Offi-cials said they are still workingto refine evidence and may offermore in coming days.

Other U.S. officials, includingsome at the Pentagon, have saidmore assertively in recent daysthat Russia likely provided themissile system used by separat-ists to shoot down Flight 17. Themore restrained presentation byintelligence officials Tuesday re-

PleaseturntopageA8

By Siobhan Gormanin Washingtonand Paul Sonne

in Snizhne, Ukraine

U.S.LaysOut CaseAgainstRussia

Yehud: Locationof rocket strike

WESTBANK

I S R A E L

Tel AvivBen GurionInt’l Airport

Med.Sea

Jerusalem

DETAIL

The Wall Street Journal

5 miles

5 km

GAZA

Israel’s resolve remains............. A6 Mideast divisions undercut

Kerry’s peace effort.................... A6

International probe of downedflight slowly takes shape........ A9

Europe splits over sanctions... A9

Insurers, hospitals expect fallenrollment confusion................. A4

GOP governors face fallout.... A4

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