the jere beasley report oct. 2003

I.CAPITOL OBSERVATIONS

A Battle LostThe crushing defeat of Amendment

One on September 9th was a real sur-prise. I felt the vote would be a nega-tive one, but never thought that themargin would be so great. Some havecalled it “a battle lost.” Others havelabeled the fight as a “courageouseffort.” In any event, I believed that theapproval of this Amendment wascrucial to the future well being of allAlabamians and I haven’t changed myopinion.The ultimate question will be“who really lost the battle?” Withoutquestion, the people have spokenclearly that they want no additionaltaxes and want the size of state govern-ment reduced drastically. Obviously,folks around the state haven’t been sat-isfied with the performance of stategovernment in recent years.Taking allof this into account, there is usually asilver lining even in the darkest cloud.Maybe that silver lining is the simplefact that people will now get moreinvolved in the operation of state gov-ernment and will demand that somemeaningful changes in the way we dobusiness in Alabama finally take place.It isn’t enough to just be againstincreasing taxes—now actions must betaken that will make governmentoperate more efficiently and hopefullymuch more effectively. If nothing else,the campaign brought some most

serious financial problems into focusand brought public awareness to amuch higher level. It was most interest-ing, however, to observe the first fewdays of the special session. It appearsthat folks still want the services, butjust don’t want to pay for all of them.We are going to the printer just as thesession ended on September 26th.TheGovernor and Legislators were able topass both budgets. Unfortunately, lotsof folks are going to be hurt badly and agood number of programs will beseverely damaged. The real problemswere simply postponed until nextyear’s regular session.

The Governor RecognizedIt is rather significant that Governing

Magazine, a national publication thatcovers state and local government,named Governor Bob Riley its PublicOfficial of the Year for proposing histax and accountability plan.The Gover-nor, who was said to have “shown rarecourage and admirable leadership,” is toreceive the award on November 13thin Washington and will be featured inthe November issue of the magazine.This marks the 10th year that Govern-ing Magazine has given its Public Offi-cial of the Year awards.The awards aregiven in 10 categories, ranging fromcity officials to governor. One governoris selected each year.

Governing Magazine releases a bien-nial assessment of state governmentmanagement and performance. Youmay recall that Alabama got a D gradein 1999 and a C minus in 2001. In Feb-ruary of this year, the magazine pub-

JEREBEASLEYREPORTJEREBEASLEYREPORTBeasley,Allen, Crow, Methvin, Portis, & Miles, P.C., Attorneys at Law OCTOBER 2003

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T H E

IN THIS ISSUEI. Capitol Observations . . . . . . . . . . . . 1

II. Monsanto Update . . . . . . . . . . . . . . 3

III. Legislative Happenings . . . . . . . . . . 6

IV. Court Watch . . . . . . . . . . . . . . . . . . 6

V. Congressional Update . . . . . . . . . . 10

VI. Campaign Finance Reform . . . . . . 11

VII. Product Liability Update . . . . . . . . 12

VIII. Mass Torts Update . . . . . . . . . . . . . . 13

IX. Insurance and Finance Update . . . 17

X. Premises Liability Update . . . . . . . 19

XI. Workplace Hazards. . . . . . . . . . . . 19

XII. Transportation . . . . . . . . . . . . . . . 20

XIII. Firestone. . . . . . . . . . . . . . . . . . . . 22

XIV. The National Scene . . . . . . . . . . . . 23

XV. The Corporate World . . . . . . . . . . 27

XVI. Business Litigation . . . . . . . . . . . . 30

XVII. Arbitration Update . . . . . . . . . . . . 31

XVIII. Nursing Home Update. . . . . . . . . . 32

XIX. Healthcare Issues . . . . . . . . . . . . . 35

XX. Environmental Concerns . . . . . . . . 38

XXI. Tobacco Update . . . . . . . . . . . . . . 40

XXII. Predatory Lending Update. . . . . . . 41

XXIII. The Consumer Corner. . . . . . . . . . 42

XXIV. Recalls Update . . . . . . . . . . . . . . . 47

XXV. Special Feature: MMI . . . . . . . . . . 48

XXVI. Firm Activities . . . . . . . . . . . . . . . . 48

XXVII.Closing Remarks . . . . . . . . . . . . . . 50

Arbitration

lished a study of state tax systems thatrated Alabama’s as one of the threeworst in the nation, in part because ofits reliance on high sales taxes and thelowest property taxes in the nation.OurGovernor has established himself assomeone who had the courage toaddress his state’s financial problems.His biggest challenge now faces himwith the Legislature having entered intoa special session on September 15thdevelop workable budgets for educa-tion and the operation of state govern-ment. I admire Bob Riley for hiswillingness to put his political future onthe line and for doing what he believedwas best for Alabama. I am still con-vinced that his plan was a good one andsincerely hope and pray that our statewon’t suffer unduly in years to comebecause of its rejection.Regardless, I amfirmly convinced that Bob Rileydeserves the honor he will receive! Ipredict that history will prove him tohave been a worthy recipient.

More Tax Breaks For The RichThe New York Times reported earlier

this year that Alfa Mutual Fire InsuranceCompany, because of a loophole in thetax code, has saved about $58 millionin federal corporate income taxes overa 3-year period.This apparently comesabout due to an exemption created byCongress some 50 years ago.The loop-hole is said to be legal and I am surethat it is. In 1954, Congress exemptedinsurance companies from taxes undercertain conditions.This related to theamount of premiums collected eachyear. However, Congress did not limithow much in assets these insurancecompanies could own and invest freeof taxes. It appears that Alfa sets asideas reserves far more money than everwould be needed to pay claims. Thecompany then invests that money tax-free, according to the Times article.Apparently, the law does not apply tolife insurance, but covers only propertyand casualty. I understand that Alfa uses

its fire insurance company to get thissubstantial tax break. I have to wonderhow many other tax breaks of this sortAlfa now enjoys.

Alabama Good For BusinessWith all of the talk about how bad

Alabama’s courts have made it for Cor-porate America, it is most interesting toread where Alabama is listed in the top10 for being a “good place” for businessto locate. In fact, our state is ranked asnumber 4, which is not too shabby.According to the report, a pro-businessregulatory environment, affordablehousing and a good year-round climatehave combined to make Alabama amecca for fast-growing start-ups. Thereport, written by Philipp Harper, useda great deal of data collected by somevery talented researchers.The result ofthis research was Microsoft Central’slist of the 10 best and 10 worst states inwhich to be an entrepreneur. Theresearch came from two reports, eachreleased in July 2002:“Small BusinessSurvival Index 2002: Ranking the PolicyEnvironment for EntrepreneurshipAcross the Nation”and “EntrepreneurialHot Spots:The Best Places in Americato Start and Grow a Company, 2001.”The “Survival Index” is a product of theSmall Business Survival Committee, anadvocacy group based in Washington,D.C. The “Entrepreneurial Hot Spots”were identified by Cognetics, aWaltham, Mass.-based firm whose mainresearch focus is America’s fastest-growing small companies.

The Small Business Survival Commit-tee’s index identifies 20 different waysin which government imposes costs onbusiness, and then measures the per-formance of the 50 states and the Dis-trict of Columbia in each area. Thefactors being analyzed include taxes,electricity costs, workers’ compensa-tion costs, total crime rate, right-to-work laws, number of bureaucrats, andstate minimum wage. Each state isassigned a numerical score in each cat-

egory, and then an aggregate score.Thelower a state’s total score, the friendlierit is to small business. Obviously,Alabama is most attractive to business. Ihave been convinced for years that thebiggest drawback to our state’s actuallybringing new industries into the state isour system of public education, whichhas been underfunded for years.

This is the way the states stack up:1. Nevada2. Florida3. Texas4. Alabama5. Virginia,Arizona (tie)6. Tennessee7. Colorado8. South Carolina9. Georgia

The DOT Lawsuit After years of waiting, hundreds of

plaintiffs in the racial discriminationlawsuit against the Alabama Depart-ment of Transportation have finallyreceived funds.This result came aboutover 18 years after the suit was filed.Checks totaling $46 million were dis-tributed to African American plaintiffs.There were 2,500 blacks eligible to fileclaims. Of these, 1,800 met the filingdeadline. White plaintiffs, who joinedthe suit after it was filed, will receive$8.4 million.The money for black andwhite plaintiffs has been held in sepa-rate escrow accounts since 2001.Thesettlement covered back-pay claimsfiled by persons who worked for DOTfrom May 1979 to May 2001.The thingthat puzzles lots of folks is the fact thata consent decree was entered in thiscase by the court in 1994. Many believethe case should have been over yearsago. In fact, had DOT faced up to theproblem when the lawsuit was firstfiled, it would have been resolved then.Had that been done, the state wouldhave saved a tremendous amount ofmoney.The decree set the proceduresto be used in calculating the amount

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each plaintiff will receive. Factors suchas job history, experience and qualifi-cations taken from claim forms werefed into approved computer programsthat calculated individual awards. Gov-ernor Riley and Joe McInnes, DOTDirector, are to be commended forputting this case on the fast track forcompletion.

The Tri-State River Pact In TroubleWe reported last month that the Tri-

State River Pact appeared to be a surething. Now, Florida has thrown amonkey wrench into the process.Theriver-sharing agreement involvingAlabama, Florida, and Georgia is nowin trouble. According to the AtlantaJournal-Constitution, the Governorsof Alabama and Georgia demandedthat Florida Governor Jeb Bush keephis word, which appeared to be a rea-sonable request. Florida tried to addsome conditions regarding flow levelsof the Chattahoochee River as itcrosses the Florida line into theApalachicola River and into oyster-richApalachicola Bay.The states had untilAugust 31st to either extend theirnegotiations or sign a deal, and neitherone happened. Now, the only option isfor the U.S. Supreme Court to decidethe issues. In fact, Governor Jeb Bushlet it be known that was his intent.

The states have debated for 5 yearshow to meet the water needs of met-ropolitan Atlanta and farming in south-west Georgia while ensuring enoughstill flows into the environmentallysensitive Apalachicola Bay in Florida.The Chattahoochee flows from Atlantato Columbus, where it forms theborder between Alabama and Georgia.The Flint forms south of Atlanta andflows southwest to Lake Seminole. Itconverges with the Chattahoochee toform the Apalachicola, which flowsthrough the Florida Panhandle to theApalachicola Bay, which produces 90%of Florida’s oysters and 10% of the

nation’s. Lots of folks don’t realize howimportant “water issues” are for ourcountry.This is only a small but impor-tant part of the total picture. It is hardto justify in this case how GovernorBush could go back on his agreement.

II.MONSANTOUPDATE

An Historic Environmental Settlement After years of protracted litigation,

the federal and state court Monsantolawsuits were settled. A global settle-ment with a value in excess of $700million was reached in late August forproblems related to polychlorinatedbiphenyl (PCB) contamination thatoccurred over decades in Anniston willfinally be taken care of. The settledclaims include those in the Alabamafederal district court case, Tolbert v.Monsanto Co., and the state courtcase,Abernathy v. Monsanto Co.Afterextended negotiations that lasted forover 12 weeks, Monsanto, SolutiaCompany, and Pharmacia Corp. haveagreed to pay damages and fundmedical and prescription benefits andcommunity improvement programs.Pfizer, a non-party, will also contributeabout $25 million to the total package.More than 20,000 current and formerAnniston residents were involved inthose two civil actions. The courtorders in the two cases were signedon September 9th. This gives finalapproval to the settlement.

This is a positive end to decades ofcontamination. The settlement willbring badly needed relief to residentsof west Anniston and the surroundingarea.This was far and away the largestsettlement of a toxic torts lawsuitarising from environmental contamina-tion in United States history. Previ-ously, the Erin Brockovich settlement

of $333 million was the largest. Envi-ronmental and legal experts fromaround the country are characterizingthe global settlement as the most sig-nificant settlement ever in a case ofthis sort.

Company documents dating back tothe 1930s revealed that Monsanto hadbeen aware of the health hazards ofPCBs for decades and failed to warnthe public of the danger. Despite thisknowledge, the company allowed thePCBs to be released into the air, water-ways and food chain of the residentsof west Anniston. It is hard to under-stand how the federal government andspecifically the EPA could haveallowed this sort of thing to go on forso many years before taking any realaction.This is clear evidence of whatcan happen when you have weak reg-ulation of an industry.

The settlement agreement incorpo-rated the consent decree (or settle-ment agreement) entered into by theEnvironmental Protection Agency(EPA) involving Solutia and Pharmacia(Monsanto’s successor), which nowmandates a total clean-up of residentialand commercial properties contami-nated by PCBs. Further steps will betaken to study and remedy PCB prob-lems in public lands and waterways inthe area. Clearly, our lawsuit broughtabout the consent decree and actuallymade it much stronger. U.S. DistrictJudge U.W. Clemon required signifi-cant modifications to the agreementmaking the decree much better thanoriginally proposed. It is most impor-tant that the clean-up and remediationwill now be under Chief JudgeClemon’s supervision and control.Thatis a huge accomplishment and willassure that the clean-up and remedia-tion jobs are done properly.

Judge Clemon and Alabama CircuitCourt Judge Joel Laird announced theglobal settlement of the two PCB-related personal injury lawsuitsbrought against Monsanto Company,Pharmacia Corp. and their subsidiary


company, Solutia, Inc. in a news confer-ence in Anniston.As part of the settle-ment, our federal court clients will beeligible for compensation paymentsadministered by a court-appointedSpecial Master, referred to as a Settle-ment Administrator, from a $300million settlement fund. The funds tobe provided for a variety of commu-nity-based projects will improve thelives of residents in the community,which was an important part of the set-tlement.

Lawyers who handled the federalcourt case were: Rhon Jones, MarkEnglehart, David Byrne, Scarlette Tuley,and Larry Golston for our firm; JohnnieL. Cochran, Jr., Keith Givens, and JockSmith for the Cochran, Cherry, Givens,& Smith firm; Bob Roden, David Shelby,Sherry Thomas, and Jodi McKelvin ofShelby, Cartee; Frank Davis, and JohnnyNorris of Davis & Norris; and the firmof Burr & Forman. I was privileged tohave been a part of the team.

The state case clients were repre-sented by Donald Stewart and two out-of-state firms.The state litigation startedup some 10 years ago. Donald Stewartactually commenced this fight prettymuch alone over 10 years ago and isdue special recognition for his valiantefforts. I was privileged to work withsome good lawyers and for some fineand deserving clients.The result in thetwo cases will make sure that residentsin west Anniston will be able to live inthe future without having the fears anduncertainty of PCB contaminationaffecting their lives. Future generationswill benefit from what happened in thetwo courthouses. Up until the last year,nobody in legal circles gave the twocases much chance for success. It tookyears of hard work, two very goodjudges, and the jury system to makethis settlement a reality.

More On The Monsanto SettlementThe amount of money being paid by

the defendants to compensate injuredpersons in the federal and state courtcases is historic. Perhaps as importantto our clients, and we believe equallyhistoric, are the obligations that thepact imposes on non-party and phar-maceutical giant Pfizer Inc. to supplyvarious health-related benefits to theAnniston community. Some are on a“one time basis,” while others extendfor up to 20 years. Pfizer agreed reluc-tantly to provide these benefits in ourfederal case under the threat of beingadded as a defendant, which wouldhave forced it to shoulder the responsi-bility it assumed upon recentlymerging with defendant Pharmacia.The Pfizer-funded benefits will addressthe harm to the health of our clientsand other Anniston residents that wascaused by decades of exposure todefendants’PCBs.

Under our federal settlement, Pfizermust provide:

A $2 million grant to establish orimprove a community health clinic inwest Anniston to serve low-incomepatients in Calhoun County;

A $500,000 grant to be used to payfor medical examinations for uninsuredpatients in Calhoun County;

Prescription drug benefits for plain-tiffs for up to 20 years,unless terminatedearlier for good cause. Specifically,patients who meet certain eligibility cri-teria would receive, through the healthclinic, free medicines, including many ofPfizer’s leading medicines that treat con-ditions that are particularly prevalentamong poor patients.This benefit is esti-mated to have a value of up to $1million per year;

Expanded marketing and usage ofthe Pfizer Share Card program.This willenable low-income Medicare eligibleenrollees who do not qualify for orwho otherwise lack prescription drugcoverage (an estimated 4,000 persons

in Calhoun County) to obtain Pfizermedicines for a $15 co-payment perprescription. With substantial enroll-ment, this benefit is estimated to have avalue of up to $2.3 million per year.

In addition to the initial $2 millionmedical clinic “seed grant” from Pfizer,the other defendants will pay $2.5million a year for each of the next 10years to continue funding that clinic.Pfizer’s contributions – not includingthe $25 million in annual payments bythe other defendants — may reach asmuch as $75 million over the next 20years. Medical monitoring andresources to address health care needshave been major concerns of the Annis-ton community ever since awareness ofPCB-related health problems first arose.Health care benefits were a critical partof our first settlement demand in thiscase, and we would not have agreed tosettle without them.

As noted above, the settlement in ourfederal case also incorporated theconsent decree negotiated by the EPAto recover costs of clean-up fromdefendants Solutia and Pharmacia. Asdescribed in earlier issues of thisReport, the first proposed agreementbetween EPA and defendants was sub-mitted for federal court approvalshortly after a Etowah County jury inthe state court cases had found Mon-santo, Solutia and other defendantsliable on multiple counts for decades ofsecretly poisoning Anniston and its resi-dents. The timing and content of thefirst proposed agreement smelled of a“sweetheart deal” between defendantsand the Bush Administration (some ofwhose high officials had ties to thedefendants), designed to avoid muchmore stringent clean-up requirementslikely to have been imposed by thestate court. (For more detailed informa-tion on the circumstances surroundingthe origin of the decree, go to the Website of the EnvironmentalWorking Group, a citizen organization that actively fought to bring the Annis-ton PCB story to light, at



www.ewg.org/reports/whitman).AfterEPA and defendants Solutia and Phar-macia made significant changes to theproposed agreement in response topublic comments (especially criticisms)of the decree and pressure from thecourt, Judge Clemon approved therevised decree on August 4th of this year.

In its improved final form, the EPAconsent decree addresses claims relat-ing to costs of testing, assessment andremediation of properties within speci-fied areas of Anniston and nearby com-munities. While not perfect, theimportant relief it provides to thoseresidents within a defined geographicarea includes the following:

• Solutia will immediately begin workon an investigation/feasibility studyto determine the full extent of PCBpollution in Calhoun County;

• Solutia will carry out an expeditedtesting program and clean up thoseresidential properties that have PCBlevels between one and ten parts permillion;

• EPA will conduct an assessment of allPCB pollution in the local water-ways, landfills and floodplains;

• EPA will serve as the lead govern-ment agency overseeing the assess-ment and emergency and finalclean-up of PCB pollution in CalhounCounty;

• Solutia will pay $12 million over 12years to fund educational grants forprograms for western Anniston chil-dren;

• Solutia will provide additional grantsto local community groups and hirequalified experts on environmentalclean-up measures and communityrevitalization.The costs associated with just these

phases of the consent decree are esti-mated at approximately $51 million.Judge Clemon’s ongoing oversight ofthe parties’ performance under thatdecree, along with the appointment ofa special Technical Special Master –

which the court insisted on as a condi-tion of approving the decree – toadvise the court on the technicalaspects of the decree, are the best guar-antees that EPA and the defendants willhave their “feet held to the fire”and willnot shirk their clean-up responsibilitiesto the people of Anniston and neigh-boring areas under the decree.

As a further part of our federal courtsettlement, as the lawyers for the plain-tiffs, we insisted on the appointment ofa “settlement administrator.” This offi-cial, under the oversight of JudgeClemon, will determine what claimswill be paid, which plaintiffs will beentitled to be paid, and how much eachperson will receive out of the federalcourt settlement fund. With only twospecific exceptions, all expensesrelated to administration of the settle-ment fund – including the costs ofhiring persons with specialized expert-ise to help set up the settlement“matrix”– will be paid by defendants.

I am most pleased that Judge Clemonhas selected as settlement administra-tor the Honorable Julius L. Chambers, ahighly distinguished attorney in Char-lotte, North Carolina. A foundingpartner in North Carolina’s first racially-integrated law firm, Mr. Chambers haspracticed law for nearly 40 years,taught at some of the United States’leading law schools, served as univer-sity chancellor of his undergraduatealma mater, acted for several years asDirector-Counsel of the NAACP’s LegalDefense and Educational Fund (a posi-tion previously manned by the Honor-able Thurgood Marshall, later the U.S.Solicitor General and Justice of the U.S.Supreme Court), and handled numer-ous landmark civil rights cases in theU.S. Supreme Court. I don’t think JudgeClemon could have made a betterchoice.

I also can’t say enough about JudgeClemon’s role in bringing about the set-tlement. With the permission of theparties, Judge Clemon actively partici-pated in settlement talks that extended

over nearly three months, the mostactive such role I have ever seen ajudge play. With the assistance of anoutstanding mediator, Professor EricGreen of the Boston University Schoolof Law, Judge Clemon brought to thetable not only the parties in the casebefore him, but also the plaintiffs in thestate court cases, the EPA, and Pfizer,and even enlisted the help of thecircuit judge presiding over the statecases, Judge Joel Laird. Without JudgeClemon’s persistence and creativity inhelping to broker an agreement, Idoubt very much the global settlementwould have been achieved.

Both those involved in the settlementand those outside it recognized the sig-nificance of this achievement to thepeople of Anniston. David Baker, a statecourt plaintiff and the tenacious headof Anniston’s grass-roots citizen groupCommunity Against Pollution (CAP),said of the settlement: “It is an eye-opener of the community to know thatMonsanto is trying to do the rightthing.” Shirley Baker, a federal courtplaintiff and director of health issuesfor CAP, following a joint press confer-ence called on the day after the agree-ment was reached, exclaimed that “Wewant to let everybody know this is awonderful day.We are elated.”And, ananalyst for the Environmental WorkingGroup remarked upon the announce-ment of the settlement that “Thisshould mark the beginning of the endof Monsanto’s toxic legacy in Anniston.We’re sure there will be much-deservedcelebration in the community tonight.”We feel blessed to have been given theresponsibility for helping to representall these plaintiffs’ interests, andhumbled to have been part of thisoutcome.


III.LEGISLATIVE HAPPENINGS

The Special SessionGovernor Riley called the Legislature

to the State House to deal with whatmany believed to have been a most dif-ficult – if not impossible – task: to ade-quately fund public education and theoperation of state government withexisting revenues.A look at the budgetproposed on the first day of the sessionrevealed that it would require somereal and substantial cuts in bothbudgets. The legislative leadership,however, decided to make the cuts lesssubstantial and came up with revisedbudgets for the general fund and theSpecial Education Trust Fund. Thesession started on September 15th andended on September 26th. GovernorRiley signed both the education budgetand the general fund budgets. Severecuts were imposed on many state gov-ernment functions.While this sessionwas tough, it will be mild compared towhat is in store for the Legislature nextyear. The present budget cuts will beinsignificant in the scheme of things.Next year’s budgets will really get theax. If my information is correct, thefuture cuts will literally shut downmany of the state agencies. We are infor some “tough times” in Alabama.TheGovernor and the Legislature did thevery best they could under most diffi-cult circumstances. I would rank thesession a success taking everythinginto consideration.

Nursing Home Immunity Bills On HoldThe nursing home industry saw fit

not to inject their immunity bills intothe special session. Had they done so, itwould have been a mistake in myopinion. The Legislature has to deal

with the state budget, which is the onlyreason they are in Montgomery, andanything else should have beendeferred to another day. Since thenursing home bosses didn’t mind virtu-ally destroying the last session, someobservers had believed the bills wouldsurface during this emergency sessionof the Legislature.To the nursing homebosses’ credit, they did the right thing –for a change.

IV.COURT WATCH

Chamber Of CommerceThe U.S. Chamber of Commerce is

beating its chest and saying that it willagain target the Alabama SupremeCourt in next year’s elections. TheChamber has bragged about its successin taking over the judicial branch ofgovernment in several states. Aspokesman for the Chamber said thegroup won 32 out of 35 judicial racesin 2000. Insiders say the Chamberhopes to raise more than $100 millionthis year from Corporate America anduse it to “buy” their version of “justice.”It has been revealed from news reportsthat the Chamber has given tremen-dous sums of money to state-basedpolitical action groups, which in turngave the money to judicial candidatesbacked by the Chamber. It is difficult tounderstand why the Chamber wouldtarget Alabama.The Alabama Legislaturehas passed nearly all of the tort reformthat the Business Council and othergroups requested.We were all told thatthis was the end of tort reform inAlabama. I understand from representa-tives of our local Chamber of Com-merce that it does not approve of theU.S. Chamber’s judicial politics. I don’tbelieve that citizens in Alabama wantany further tort reform and for thatreason are probably questioning whyAlabama is being targeted. With all of

the corruption that has been exposedin Corporate America and the hurt anddamage that it caused, it would appearthe U.S. Chamber would make that itstarget. Instead, they target the victims.

The Role of LitigationThe role of litigation in preventing

product-related injuries in this countryis well documented.Without the courtsystem, and specifically the civil jury, Iam convinced that there would havebeen few significant developments inthe evolution of product safety in theUnited States. If we had depended onthe federal government, including Con-gress and NHTSA, to do the job, wewould have seen little progress in thisimportant area. If you are interested insome good information on this subject,I recommend an article published inthe Epidemiologic Review (EpidemiolRev 2003; 25:90-98). The article iswritten by Jon S. Vernick, Julie SamiaMair, Stephen P. Teret, and Jason W.Sapsin from John Hopkins BloombergSchool of Public Health.You can obtaincopies of the article from John Hopkinsby writing them at 624 North Broad-way, Baltimore, Maryland 21205. Youcan also reach Jon S.Vernick by e-mailat [email protected].

Reflections From Jurors In The PCBs Trial A great deal has been written about

the historic PCB settlement referred toabove. A jury in Etowah County,Alabama, had been hearing state courtcases for about one year when both thestate and the federal cases were settled.I believe you will find the followingAssociated Press report concerning thethoughts of the men and women whomade up this jury most interesting. Inmy opinion, jury service is one of thehighest callings that men and womencan have today. Unfortunately, manypoliticians fail to recognize this.The fol-lowing will give you some insight on



how our jury system works and howimportant it is to our country.

It’s been kind of like a marriage —for better or worse, in sickness andin health, ‘til death do they part. Itdidn’t exactly take a death to partthem, but it did take the conclusionof the longest-running jury trial inthe state’s history.A settlement hasbeen announced that Solutia Inc.and Monsanto Co. agreed to pay$700 million to settle claims bymore than 20,000 Anniston resi-dents over PCB contamination.Thecase was filed in Calhoun Countyin 1996, but transferred to EtowahCounty in July 2001 and the jurywas selected in January 2002.

The 15 jurors still are not releasedfrom duty until the final papers aresigned, Calhoun County CircuitJudge Joel Laird said. The jurorscannot talk about the case untilthey are released, but he did allowthem to talk about the effects of the20-month trial.The jurors, all fromEtowah County, can now go back totheir families and jobs on a full-time basis.The jurors collected theirfinal checks from Etowah CountCircuit Clerk Billy Yates on Fridayand cleaned out the jury roomthat’s been like home for 20months. The last meeting of thegroup was emotional at times. Atotal of more than $45,000 hasbeen paid by the state to the jurorsat a fee of $10 per day and 5 centsa mile,Yates said.

Collections of snacks, paper plates,a cooler and a coffee maker werestacked on the large conferencetable that has served for many“round-table” discussions — andnot just about the evidence in thetrial. “We’ve all gained weight,”Kathy Walker said. For the firstseveral months, jurors could noteven talk about the case while inthe jury room, so they learnedabout each other. Vicki Judd’s

daughter, Brianna, was fourmonths old when the trial began.She celebrated her second birthdaySunday. Judd brought pictures everymonth to keep everyone up to dateon her baby, telling stories of herfirst steps and her first words.

“On her first birthday we joked thatwe’d still be here when she was 2,”Judd said.“We didn’t have any ideathat would really happen.” JamesNeff shared the word of his wife’spregnancy and was still aroundwhen their baby daughter wasborn. He also lost his mother andfather-in-law in the 20 months ofjury duty. Rhonda Salster’s son is astudent at Highland School andshared her grief with the jurorswhen the school was destroyed byfire. “We’ve shared books, recipes,”Salster said.“This is a life-changingexperience I’ll never forget. I would-n’t trade it for nothing in the world.”Placing 15 strangers in the sameroom, day in and day out, for 20months can be testing, said ShirleyBeasley, who works in home health.

“We’ve had some good days andbad days,” she said. One juror losther job, another had a problemgetting all her pay from heremployer and one man was turneddown for a new job because therewas no way to know how long thetrial would last. Some were luckyenough to have no problems at all.Joel Smith, a supervisor at GadsdenWaterworks, said he lost no pay, nomoney and no seniority.“I want tothank my employer for not givingme a hard time,” he said. With atleast one pastor in the group, it wasnot unusual for discussions to turnto belief in God.“It was divine inter-vention to bring us together,” saidJohnny Flenoir, who works with theHeadstart program in Gadsden.“Weended up cooking, talking, we expe-rienced sickness, death. ...” Flenoirsaid.“It’s like a family. To put these

people together was not always easyevery day.”

He asked the judge for permissionto go by Headstart a few minuteseach day, to visit with the pre-schoolkids. “Don’t forget to come to myhomecoming,” Donnie Ewing toldhis friends before leaving the juryroom. Ewing, pastor at Lighthouseof Hope, reminded them of the date,September 21. The stress, at times,was high, but the positive out-weighed the negative, most jurorssaid.“Through it all we persevered,”said Gale Chaffin, a teacher at JobCorps.“I kept believing there was apurpose for this,” she said.“I knew Ihad a chance to make a difference.”The jurors learned a better appreci-ation and understanding of thejudicial system.“It was a good expe-rience,” Smith said. “We probablyknow more about PCBs thananybody in the world.”

Persons who fail to recognize andappreciate how valuable the jurysystem is to the citizens of our country,have most likely never had the oppor-tunity to serve on a jury. Many of ourcitizens try hard to avoid jury servicewhen called to serve. Hopefully, theabove report will help to explain whyjury service is critically important andmay prompt all of us to answer the callwhen we are called for jury duty.

Exxon Deals With Punitive DamagesA few weeks ago, a federal appeals

court ordered an Alaska court to recon-sider a multi-billion dollar punitivedamage award against ExxonMobilCorp. arising out of the Exxon Valdezoil spill.The original verdict was for $5billion as damages to punish Exxon forspilling 11 million gallons of crude oilin the Prince William Sound in 1989.The federal appeals court in San Fran-cisco felt the award was excessive andsent the case back to the trial judge in


Alaska. Subsequently, the trial judgereduced the award to $4 billion in anorder entered last year. Exxon appealedagain, saying the reduced figure wasstill too high.The same appeals courthas now sent the case back to the trialjudge for further consideration.

35 States File Amicus Brief Attorneys General from 35 states,

including Alabama, supported by 43state bank commissioners, have filed anamicus brief in support of ConnecticutBanking Commissioner John P. Burke ina case pending in the U.S. DistrictCourt for the District of Connecticut.The case is styled,Wachovia Bank N.A.and Wachovia Mortgage Corporation v.John P. Burke, Civil Action No. 303 CV070738 (JCH).Wachovia has challengedConnecticut’s authority to license andsupervise Wachovia Mortgage Corpora-tion, a state-chartered mortgage lender.The case raises the issue of whetherstates have authority to license and reg-ulate state-chartered non-bank sub-sidiaries of national banks. Wachoviaclaims in its suit that federal law pre-empts the authority of state officials toregulate their mortgage subsidiary.Thispresents a most important issue thataffects all states. The state group’samicus brief contends that state-char-tered operating subsidiaries of nationalbanks do not possess any blanketimmunity from state regulation. NewYork Attorney General Eliot Spitzermade this observation:

This case is another illustration ofthe unrelenting efforts by federalregulators to undermine the states’ability to protect their citizens fromfraudulent and deceptive corporatepractices. Protecting consumersfrom such practices has alwaysbeen a priority for state regulators,and today consumers need moreprotection, not less.

This case is part of a campaign by theComptroller of the Currency to obtain

through the courts a new body of lawand a new regulatory structure toshield national banks and their non-banking subsidiaries from state law andstate law enforcement. It is believedthat the Comptroller’s efforts willundermine our nation’s long history ofcooperative federalism in the regula-tion of financial services providers.Theefforts by the federal government aredangerous for both consumers andfinancial institutions. State law and statelaw enforcement long have provided acheck on abusive practices.

The courts have repeatedly upheldthe authority of states to regulate state-chartered providers of financial serv-ices, particularly in the area ofmortgage lending. In recently enactedfederal banking laws, particularly the1994 Riegle-Neal Banking and Branch-ing Efficiency Act, Congress reaffirmedthe states’ authority to apply consumerprotection laws to all financial institu-tions engaging in business with theircitizens. In the specific field of mort-gage lending, the business in whichWachovia Mortgage engages, bothfederal and state courts have upheldthe validity of state laws designed toprevent lenders from engaging infraud, predatory lending, redlining andother unconscionable practices.

Cost Of Medical Malpractice Has Not Cut Access To CareA study by the General Accounting

Office confirms that rising medical mal-practice liability insurance costs havenot significantly reduced access tohealth care.The GAO report,“MedicalMalpractice: Implications of Rising Pre-miums on Access to Health Care,”studied the experience of physicians innine states. Five of the states—Florida,Nevada, Pennsylvania, Mississippi andWest Virginia—had reported medicalmalpractice coverage-related problems,while the other four—California, Col-orado, Minnesota and Montana—hadnot. While the GAO found isolated

instances of reduced access to healthcare in the five problem states, it alsofound that “many of the reportedprovider actions were not substanti-ated or did not affect access to healthcare on a widespread basis.”

The GAO noted that “some reports ofphysicians relocating to other states,retiring or closing practices were notaccurate or involved relatively fewphysicians” in the five problem states.The report concluded that it was tooearly to determine the real effect of tortreform measures. However, at thispoint, it is quite clear that many of themyths created by the tort reformerssimply aren’t true. Nevertheless, thishasn’t kept those in Corporate Americawho are financing the tort reformmovement from putting out moreuntruths to the media and the public.

American Medical AssociationShould Notify Lawmakers AboutFalse StatementsEight consumer groups have called on

the American Medical Association (AMA)to notify federal and state lawmakers, aswell as the AMA’s own membership, thatit has made false statements about theimpact of medical malpractice insur-ance problems on access to health carein the United States.The action comes inresponse the GAO study mentionedabove. The GAO examined the basisbehind the AMA’s efforts to enact severe“caps” or limits on compensation forpatients injured by medical malpractice,specifically looking at whether access tohealth care has been affected. Based onnew evidence compiled by the GAO,according to the groups’ letter,“AMA anddoctors’ groups have misled, fabricatedevidence, or, at the very least, wildlyoverstated their case about how thesemedical malpractice insurance problemshave limited access to health care.”Clearly, the AMA has been part of a polit-ical campaign to pressure lawmakersinto severely limiting injured patients’rights.



The groups are requesting that any“AMA representative who has testifiedfalsely before any state legislative body orCongress on any of these matters beimmediately suspended and precludedfrom providing testimony to any govern-ment body in the future.”The letter wassigned by four national consumergroups: Center for Justice & Democracy,Public Citizen,U.S.Action and U.S.PublicInterest Research Group; and four localgroups from the five so-called “crisis”states that GAO examined: Florida Con-sumer Action Project,Progressive Leader-ship Alliance of Nevada, Citizens forConsumer Justice (Pennsylvania) andWest Virginia Citizen Action.According tothe groups,“GAO’s findings should be oftremendous concern to the AMA leader-ship and to its members. It demonstratesthat the AMA has abused its leadershipon this issue by promoting false informa-tion to Congress, state lawmakers, thepublic, and to your own members:doctors who legitimately want theirinsurance problems solved.”Thanks tothe Center for Justice & Democracy forfurnishing this information to ourreaders. Hopefully, the AMA will do theright thing and do it promptly.

Failure To Preserve E-Mails BringsCriticism From Judge Most all businesses and many individ-

uals now utilize e-mails on a regularbasis. In litigation, it is important to askfor and get e-mail traffic from defen-dants. Recently, a New York federaljudge castigated UnumProvident, thenation’s largest provider of disabilityinsurance, which has been accused in aclass action suit of plotting to denyhigh-cost claims, for failing to take ade-quate steps to prevent the erasure of e-mails ordered preserved by aDecember agreement. Policyholdershad sued the Chattanooga,Tennessee-based disability insurer in Novemberfor allegedly providing incentives toemployees to deny claims. In discovery,the plaintiffs had sought records of the

e-mails sent in the three days followingthe airing of each of two televisionreports on UnumProvident’s allegedplot: an October 13, 2002, broadcast ofNBC’s “Dateline” and a November 17,2002, episode of CBS’s “60 Minutes.”Instead of preserving the e-mails as itagreed to do, UnumProvident limitedefforts to taking a “snapshot” of thecompany’s e-mail system betweenDecember 20 and December 23, 2002,failing to prevent the erasure of earliere-mails stored on backup tapes.Whilethe judge found that the company’sactions to be unintentional, the courtcriticized UnumProvident’s poor com-pliance with the December 27thpreservation order.

Judge Allows 9/11 Suits Against Airlines A federal judge has ruled that law-

suits can proceed against airlines, thePort Authority of New York and NewJersey and the Boeing Co. for injuriesand deaths in the September 11th ter-rorist attacks. The 49-page ruling byU.S. District Judge Alvin Hellerstein wasbased on the cases of about 70 of theinjured and representatives of thosewho died in the 2001 attacks on theWorld Trade Center, the Pentagon andthe crash of a hijacked plane in Penn-sylvania.The judge said the Port Author-ity, which owns the World Trade Centerproperty, “has not shown that it willprove its defense of governmentalimmunity as to negligence allegationsmade by WTC occupants.”

The defendants had argued that thelawsuits against them should be dis-missed because they had no duty toanticipate and guard against deliberateand suicidal aircraft crashes into thetowers. They also contend that anyalleged negligence on their part wasnot the proximate cause of the deathsand injuries. It is most significant thatthe judge believed that the evidence hehad seen does not support Boeing’sargument that the invasion and

takeover of the cockpit by the terror-ists frees it from liability. It was con-tended by the plaintiffs that Boeingshould have designed its cockpit doorto prevent hijackers from invading thecockpit.This was certainly an alterna-tive that was available to the industry.The plaintiffs had also argued thatAmerican and United Airlines and thePort Authority were legally responsibleto protect people on the ground whenthe hijacked aircraft smashed into thetwin towers, causing them to collapse.It will be most interesting to see howthese cases proceed.

The Lawsuit DeadlineVictims of the terrorist attacks had to

file their lawsuits before the 2-yearanniversary of September 11th expired.The State of New York extended its dead-line to file wrongful-death suits in con-nection with the attacks until March2004. In most states, including Alabama,wrongful-death lawsuits must be filedwithin 2 years from the date of death.Some lawyers believe New York’s exten-sion might be legally challenged or couldapply only to residents of New York. Forthis reason,families from New Jersey andPennsylvania sought to preserve theirright to sue. Others likely did the same.Many of those who filed lawsuits wantanswers concerning what happened onand leading up to September 11th.

Abuse Cases Settled For $85 MillionThe Boston Archdiocese has agreed to

pay $85 million to settle more than 500lawsuits from individuals who claimRoman Catholic priests abused them.Todate, it is the largest known payout by aU.S. diocese to settle molestationcharges. The settlement was finalizedafter months of negotiations. It marks amajor step toward quieting the crisis thathas torn at the fabric of America’s fourth-largest archdiocese for nearly 2 years.Unfortunately, the scandal has spread


throughout the country and beyond.Under the terms of the agreement,victims would receive awards rangingfrom $80,000 to $300,000.The amountof awards to victims will be decided by amediator, based on the type of sexualabuse, the duration of the abuse, and theinjury they suffered.This is a sad chapterin the history of our country.There arelessons to be learned and hopefully theyhave been learned by all concerned.

The Federal Government Can SeekMoney From Implant Settlement A federal appellate court has ruled

that the federal government can seekreimbursement for the cost of treatingwomen with silicone breast implantsunder a $4.2 billion settlement ofimplant claims.The U.S.Court of Appealsfor the Eleventh Circuit ordered a lowercourt to reinstate the government’slawsuit seeking money for the cost ofcovering Medicare beneficiaries. Theruling stemmed from a 1995 settlementof thousands of lawsuits by women whoclaimed implants endangered theirhealth or made them sick.The govern-ment sought money through the settle-ment for the cost of caring for womenwho blamed health problems onimplants.The lower court dismissed thecase and the government appealed.Theeffect of the 11th Circuit decision is thatthe case can now go forward.The settle-ment initially involved eight companies,but it now involves only Baxter Interna-tional Inc., Bristol-Myers Squibb Co., 3MCo., Union Carbide Corp. and UnionCarbide Chemical and Plastics Co.

V.CONGRESSIONALUPDATE

End Of Summer RecessCongress returns to our nation’s

capitol with a healthy backlog of signif-

icant legislation waiting for them.Hopefully, some of the measuresbacked by consumer groups will beginto move.The lingering war in Iraq, thefailing economy, a rapidly rising deficit,and the upcoming presidential racewill definitely have an effect on whathappens in Congress. I suppose itwould be asking too much to requestthat all members of Congress put theinterests of people back home abovethe special interests that seem to haveso much control over what happens inWashington for a change.With all of theproblems facing folks in this country, itis now time for the powerful specialinterest groups and their lobbyists totake a back seat and let the systemwork. Congress needs to get down towork and consider legislation that ben-efits real people and not just the pow-erful corporate world. People don’ttrust the politicians, and that isn’t con-fined to Alabama. It would help a greatdeal if the politicians started listeningto ordinary or what some refer to as“regular”people – for a change.

Seniors Still Getting The ShaftMany senior citizens believe that

they would be better off without eitherof the “dueling”prescription drug plansfacing Congress this fall. The planincludes a complicated set of premi-ums, deductibles, co-payments, andgaps in coverage. When members ofCongress returned to Washington, theyhad to realize that something has to bedone to resolve this problem. Mostcapitol observers believe Congressneeds to come up with a compromiseplan in the next two months. Refusal tosolve this mounting problem will be amajor factor in the presidential electionnext year. Obviously, there are hugerisks in doing nothing, for both thePresident and for Republicans wholead Congress. They have promisedaction and haven’t delivered.

Failure to reach a satisfactory agree-ment will cause a terrific backlash

among senior citizens and especiallyfrom the AARP membership. In spite ofall the warnings, it appears that anumber of GOP lawmakers will opposeany prescription drug program thatcosts more than $400 billion over thenext 10 years. It is difficult to under-stand how they can support spendinghundreds of billions to occupy andrebuild Iraq, but can’t find money forsenior citizens in this country.

The Blackout Hearings Congress is busy attempting to find

out what caused the recent blackoutthat paralyzed a portion of the country,including New York City, for a consider-able length of time.The first questionbefore Congress must be whether ourelectric transmission system should bedesigned for reliability or for Enron-style power marketers. Unfortunately,the White House and certain membersof Congress seek to exploit the recentblackouts by providing more large sub-sidies for the energy industries. Deregu-lating transmission, as proposed by thePresident and the House of Representa-tives, will erode reliability while provid-ing hefty profits to an electric industryundeserving of such subsidies. If theblackout hearings are to have anymerit, they must focus on how deregu-lation by federal and state governmentshas affected reliability and affordabilityin America’s electricity markets.

Many consumer groups believe thatelectricity deregulation has eroded reli-ability by favoring the needs of powermarketers over the needs of con-sumers.These marketers move electric-ity over longer geographic distances inpursuit of higher profits.The consumergroups believe consumers will benefitfrom decentralized, local markets.America’s transmission system wasdesigned to accommodate local elec-tricity markets - not the large, free-wheeling trading of electricity featuredunder deregulation. Sending powerover a much wider area strains a trans-



mission system designed to serve localutilities. It simply can’t be shown thatderegulation has helped consumers inlocal markets anywhere.

The Bush Energy PlanRather than require electric compa-

nies to return to their century-old obli-gation to re-invest in transmission, thePresident and the Republican leader-ship in the House of Representativesapparently propose increasing powerprices by allowing owners of transmis-sion lines to charge whatever pricethey choose. Section 16011 of theHouse energy bill would saddle con-sumers with as much as $100 billionfor the construction of new transmis-sion lines that big energy companiesare seeking. Consumers clearly don’tneed this sort of thing.This consumer-funded subsidy will prioritize the con-struction of power lines preferred bythe power marketers who are intent onmoving large loads of electricity thatwill bypass the needs of local house-holds.The focus of the hearings shouldbe on protecting consumers by re-eval-uating the wisdom of deregulation.ThePresident should put the needs of con-sumers first and make sure that Con-gress does its job.

VI.CAMPAIGNFINANCE REFORM

Supreme Court Hears CampaignFinance Case The U.S. Supreme Court is deciding

what to do in one of the most impor-tant cases that it will hear this year.TheHigh Court was told last month thatCongress overstepped its bounds inpassing legislation imposing compli-cated new rules intended to clean upelection campaign finances. The infa-mous Kenneth Starr told the Court that

the law “intrudes deeply into the politi-cal life of the nation” and “in a word,goes too far.” Starr, the former inde-pendent counsel who investigatedPresident Clinton at a cost nearing$100 million, is now serving as the leadattorney for challengers to the law. It issignificant that the Justices returnedearly from their summer break for thefirst time in nearly three decades tohear arguments in this important case.Clearly, the results in this case willguide next year’s campaigns. Justicesclosely questioned lawyers whocontend the law is an unconstitutionalinfringement on free speech rights.

Groups as varied as the AmericanCivil Liberties Union and the NationalRifle Association are challenging the2002 law, which bans huge, unlimiteddonations to political parties known as“soft money,” and tightens controls onpolitical advertising in the weeksbefore an election. Governmentlawyers were defending the law. Thismay well be the last chance for years tocome to curb the flow of big moneyinto national political campaigns. Itprobably made the walls tremble whenStarr characterized the new law as “afederal intrusion on state sovereignty.”

Senators John McCain (R-Ariz.) andRussell Feingold (D-Wis.), principalauthors of the law under challenge,attended the session and sat side-by-side in the Court.The question beforethe High Court deals with First Amend-ment free-speech protections. It isinteresting to note that the Justicesspent a great deal of time dealing withthe “federalism” overtures of the case.Seth Waxman, the lawyer arguing infavor of the law, made the most tellingstatement of all when he said:

We have a dialectic going on herebetween people who want to usemoney to influence people in gov-ernment and the institutions thatneed to preserve a sense of integrityand faith in the process.

I hope and pray that the Justices whosit on our nation’s highest court will do

the right thing and uphold the law inthis case. The First Amendment wasnever intended to protect the sort ofthing we have experienced on thepolitical scene over the past severalyears. Confidence in government canonly be restored if we “clean up” thepolitical spending abuses.

Alabama Legislature Should ActThe Alabama Legislature should do

something about our weak and totallyineffective campaign laws.The spend-ing by opponents to the Riley Tax andAccountability Plan is clear and con-vincing evidence that the legislatorsneed to rewrite the laws that governpolitical spending in Alabama. Millionsof dollars appear to have been fun-neled through groups formed just forthis fight, with absolutely no reportingrequirements. Voters are entitled toknow “who” is putting up politicalmoney so they can decide “why” theyare doing it. Our election laws inAlabama are woefully inadequate andmust be changed before the next elec-tions.

As if we didn’t already know howbad things are here, we were remindedagain when Alabama got an “F” in a newnational study that ranked our statealmost at the bottom. The public’saccess to information about the financ-ing of political campaigns was thesubject of this study, called “GradingState Disclosure.”The results gave an “F”to 17 states and ranked Alabama 47thamong the 50 states. According to areport on the study,Alabama “has signif-icant room to improve,”which I believeis a gross understatement. It should benoted that only the Alabama Legislaturecan solve this problem. As the studypointed out, the Secretary of State’soffice does well considering how weakour current laws are. The voters saythey don’t trust politicians. Passingsome meaningful campaign financereform legislation on the local levelwould go a long ways toward restoring


confidence in our system of govern-ment in Alabama.

VII.PRODUCT LIABILITY UPDATE

Significant Jury Award In AlabamaOn Friday,August 30th, a jury sitting

in Lamar County, Alabama, awarded a$12 million verdict to Donna Blair, aresident of Monroe County, Mississippi,in a case involving a defective productthat killed her son.This product liabilitylawsuit was brought in Alabama againstPro Tech Industries, Inc. for its defectivecab guard.The cab guard was installedon the truck to make sure that thetruck driver’s load would not intrudeinto the cab. Instead of designing andmanufacturing a cab guard that works,however, Pro Tech used poor designand fabrication and inferior weldingprocedures that resulted in a failure.The result was Tim Morgan’s death. ProTech failed to do what it should havedone to save money and therefore putprofits over the safety of its consumers.The Pro Tech cab guard was so danger-ous that the judge ruled it was defec-tive as a matter of law. In fact, thedefendant’s lawyers were unable to putan expert witness on the stand todefend the improper design.

Shockingly, Pro Tech claimed andadvertised that its cab guard met theminimum federal standards and pro-vided maximum protection, eventhough it clearly did not.The minimumstandards require the cab guard to beable to withstand one-half of the loadapplied uniformly across the back ofthe guard. Pro Tech never tested themodel cab guard on this truck and thatis absolutely indefensible.

Tim Morgan, the decedent, wasdriving a log truck for Eskeridge Truck-ing Company when the passenger side

wheels went off the side of the road.Before he could ease the truck backonto the road, the truck tipped over onthe passenger side. This should havebeen a survivable accident. However,when the vehicle turned over, part ofthe load slid forward, hitting his ProTech protection device – the Pro Techcab guard. The Pro Tech protectiondevice failed, allowing the few logs thatslid forward to press against the backof the cab, causing nearly three feet ofintrusion into the occupant compart-ment.This should never have happenedand wouldn’t have if the design hadbeen adequate.

This verdict sends a message to man-ufacturers of all products that safetymust be a major concern. Corporationscannot put their own profits over thesafety of its customers. Tim Morgandied a tragic death and one that should-n’t have happened. We have nowdemanded that Pro Tech recall thesedangerous products and fix thembefore someone else is killed orseverely injured. Pro Tech has soldapproximately 30,000 of these guards.Each of them is very dangerous andwill not protect the driver as required.There will be many more victims, suchas Tim Morgan, if this product is notrecalled immediately. It should benoted that the $12 million verdict is thelargest verdict on record for LamarCounty,Alabama.The verdict included$6 million in punitive damages. Ourfirm, along with Clatus Junkin of Junkin& Harrison in Fayette,Alabama, repre-sented the family of the victim.

Suit Settled Against GM The woman who received a debilitat-

ing brain injury when her van crashedinto a boulder has now settled herlawsuit against General Motors Corp.We reported on the 3-week trial inMaine that ended in a mistrial in June.Now, because of this settlement, thecase will not be tried again. Terms ofthe settlement are confidential. The

plaintiff claimed that a defective seatand seat belt in her Chevrolet Luminawere to blame for the brain injury shereceived in the March 2, 1999 crash.She had significant medical bills, willnever again be able to hold a job, andwill need care for the rest of her life.

During the trial, the jurors heard tes-timony from experts in car seat design,crash reconstruction and kinematics -the science of how bodies move insidevehicles during crashes. GM memosthat described an internal debatebetween engineers and other companyofficials over the safety of seats like theones in the plaintiff’s van were put inevidence. Ultimately, the eight jurorswere divided 4-4, resulting in a mistrial.The case had been scheduled to betried again early in 2004.

Defective Doors Cause ThousandsOf Deaths Each YearThe danger of being ejected from a

vehicle is well known throughout theautomobile industry.Automobile manu-facturers are familiar with research andstatistics revealing that the likelihoodof serious injury or death is 400%greater if a vehicle occupant in a colli-sion is ejected as opposed to beingkept in the survival space (seated posi-tion) of the vehicle. It is now wellsettled that automobile manufacturersare required to design automobiles thatare crashworthy. Crashworthinessmeans that a vehicle, if properlydesigned and manufactured, willprotect the occupant from seriousinjury or death in a survivable collision.Accordingly, automobile manufacturersmust design vehicles with safetydevices such as doors, airbags, seats,seatbelts, and the like to protect occu-pants in the event that a collisionoccurs.The goal is to protect occupantsfrom serious injury or death in colli-sions that are survivable.There can beno serious dispute that doors on yourautomobile should not spring open in asurvivable wreck.



There has been a tremendousamount of research over the years todetermine what types of accidents areconsidered survivable. Scientific studieshave been done to determine theforces a human being can undergo andsurvive in a collision. Once that scien-tific data was gathered, minimum stan-dards were put in place for theprotection of the consuming public.These minimum standards promul-gated by the federal governmentrequire automobile manufacturers toconduct crash tests with instrumentaldummies in the vehicle to determinewhether a vehicle meets certainminimum crashworthiness require-ments. These dummies are used tomeasure the forces that a real personwould experience if they were in asimilar collision.

The forces involved are measured inunits called “G” forces. To pass theseminimum standards, the dummies’chest loads must be below 60 G’s.Theforces to the occupant’s head arerequired to be below 1,000 on a scalecalled “The Head Injury Criteria,” com-monly referred to as the “HIC.”The cri-teria are based on studies conducted bythe government, the medical commu-nity and the automobile industry.Thisunit of measurement for the headinjury criteria is based on scientificdata proving that an occupant in a 30mph offset frontal collision should beable to withstand 80 G’s to the head.

Accordingly, in collisions where theforces are below 60 G’s to the chest and80 G’s to the head, an occupant shouldsurvive the collision without life-threat-ening injuries.This is based on studiesconducted by the National HighwayTraffic and Safety Administration.However, many occupants are dying incollisions well below this thresholdlevel. In many cases, doors on vehiclesare opening in collisions, allowing occu-pants to be ejected.When an occupantis ejected, the likelihood of seriousinjury or death increases by at least400%. This is because the occupant

could be run over by other vehicles orfall on the road surface where fatal headinjuries are often sustained.All of thisshows the need to always wear yourseatbelt and make sure everyone else inthe car is belted as well.While this willnot assure survival without injury, thestatistics clearly show that belted occu-pants do much better in crashes overall.

Fuel-Fed Fire Claims 3 MembersOf Family Tara Howell Parker, the wife of

NASCAR driver Dale Jarrett’s crewchief, and her two younger sisters weretragically killed last month in NorthCarolina.The three sisters were headedwest on an interstate highway in aLincoln Towncar Limousine afterattending a concert. Construction andheavy traffic brought their vehicle to astop near an overpass. That’s when aFord F-150 pickup – which Greensboropolice say was driven by a drunkendriver – hit the vehicle from the rear.The 1998 Lincoln’s gas tank was rup-tured, sparking a fiery explosion thatkilled all three sisters.The Lincoln hadthe same fuel tank design as the FordCrown Victoria, which has been theculprit in a great number of fire relateddeaths. Two people in a 1997 Ford

Escort – who became involved in thewreck after the truck pushed the limointo it – were not injured.

Parker, a 29-year-old former MissWinston, who 2 years ago received aheart transplant, was married to Shawn

Parker, crew chief for NASCAR’s No. 88car. Two months ago, the coupleadopted a son, Jagger, and recently pur-chased a motor coach so they couldstay together at the racetrack as afamily. Her step-sister, Mysti HowellPoplin,24,was a new mother, raising an8-month-old daughter with herhusband.The youngest was half-sisterMegan Elizabeth Howell, 16, a highschool junior, who was a popularstudent.

VIII.MASS TORTSUPDATE

The Powerful PharmaceuticalIndustryIt is undisputed that the pharmaceu-

tical industry is one of the most power-ful political forces in this country.Theirinfluence over both Congress and theFederal Drug Administration is frighten-ing. The companies have tremendousamounts of money to spend on politicsand on the molding of public opinion,and they spend it freely.To give you anidea of the size of this industry, con-sider the following:

The top 10 listed above do notinclude such companies as Schering-Plough Corp., with sales of $5.9 billionand Abbott Laboratories with sales of$5.6 billion. In fact, the company listedas number 20 by IMS Health is a

COMPANY LOCATION TOTAL SALES IN THE USA (IN BILLIONS)

Pfizer New York $20.0

GlaxoSmithKline Middlesex,England 17.9

Johnson & Johnson New Brunswick,NJ 13.7

Merck & Co. Whitehouse Station,NJ 13.0

AstraZeneca London 10.8

Bristol-Myers Squibb Co. New York 9.0

Novartis Basel, Switzerland 8.2

Pharmacia Corp. New York 7.5

Wyeth Madison,NJ 7.5

Eli Lily and Co. Indianapolis 6.9


company called Purdue Pharma out ofConnecticut with sales of $1.9 billion.When the average consumer is havingdifficulty paying the high prices of pre-scription drugs in this country, it is sig-nificant that the drug industry ismaking record profits.Voters may soonbegin to wonder what is going on inWashington and demand somechanges.

Information About “Bad Medications”Many of us don’t know enough

about the prescription drugs we take.Most of the information we get mostlikely comes from “marketing” effortsby the drug company. If you are con-cerned about medication that you,family members or friends are taking,you should consider visiting a Websiteat www.worstpills.org. This Website,sponsored by consumer advocacygroup Public Citizen, provides valuableinformation about medications and theside-effects and injuries they can cause.There are also other excellent publica-tions put out by Public Citizen, whichyou will find helpful and informative. Irecommend that you visit this con-sumer advocacy group’s Website,www.citizen.org.A great deal of goodinformation on issues affecting con-sumers is readily available. I encourageany person who believes in consumerrights to join Public Citizen and con-tribute financially to their efforts.

Petition To Ban Diet DrugRenewed Public Citizen is informing the public

that the diet drug Meridia® has beenassociated with the deaths of 49patients since it came on the market 5years ago.The group has now reneweda petition to the Food and Drug Admin-istration to have the drug banned.Public Citizen, which initially peti-tioned the FDA regarding Meridia®more than a year ago, supplemented its

effort with new information from theFDA “adverse event” database throughthe end of March. In addition to the 49deaths, Public Citizen said 124 usershave been hospitalized for seriousheart and cardiovascular problemssince the drug was approved.“There isno justification in continuing to marketa drug that provides minimal weightreduction while increasing the likeli-hood of injury and death,” the petitionsaid. Many of the newly reporteddeaths, according to the petition, wereof people younger than 50.

Dr. Sidney Wolfe, director of PublicCitizen’s Health Research Group, saidhe had been told that the FDA is study-ing whether weight-loss drugs such asMeridia®, which contain amphetamine-like compounds, cause more heart andcardiovascular disease than otherweight-loss medications. According toinformation from Dr.Wolfe, a troublingnew category, which was not addressedin Public Citizen’s original petition, isthe impact of Meridia® on the develop-ing fetus. Apparently, when pregnantwomen take the drug, the new analysisindicates a link to spontaneous abor-tions, stillbirths and congenital malfor-mations, including those of the heartand central nervous system in the fetus.

After the initial Public Citizen peti-tion was filed, the FDA began an addi-tional review comparing adverse eventreports for Meridia® and for Xenical,another major weight-loss drug thatdoesn’t have amphetamine-like compo-nents. Abbott Laboratories, the manu-facturer of Meridia®, claims the drug issafe.To the contrary, Dr.Wolfe believesthis drug increases the risk of death.Public Citizen said in its petition theaverage weight loss announced at thedrug’s approval was 6-1/2 pounds aftera year of taking 10 milligrams daily.Thepetition also said cardiovascular birthdefects were reported in four babiesborn to women taking the drug, whichare consistent with those seen inanimal studies done before approval ofthe drug. Last year, the FDA repri-

manded Abbott for not properly report-ing the deaths of patients takingMeridia®.The agency said informationabout seven deaths was not reportedproperly, one death was not reported atall, and reports on three other deathswere incomplete.Abbott has acknowl-edged the error, but said the problemsoccurred before it owned the drug,which was developed by Knoll Phar-maceuticals.This, in my opinion, is noexcuse for Abbott not reporting theseevents to the FDA as soon as theylearned about them.

Even before it approved the drug, theFDA was concerned about the safety ofMeridia®.An FDA advisory committeein 1997 voted 5-4 that the benefits of thedrug did not outweigh its risks. Icommend Dr.Wolfe and Public Citizenfor their efforts to protect consumers onhealth issues.Their persistence is payingdividends.At this time, no date had beenset for a hearing on the petition.

Serzone® Should Be Pulled From The MarketSerzone®, an antidepressant drug

manufactured by Bristol Myers SquibbCompany, was first approved for mar-keting in 1994. Concerns over liver tox-icity arose after marketing of the drugon a worldwide basis. In January 2001,Canadian officials required BristolMyers Squibb to send a warning tophysicians in that country about theliver toxicity associated with the drug.On January 8, 2002, the FDA orderedthat a “black box warning” be placedon the package warning of cases of life-threatening liver failure and death thathad been reported in patients treatedwith Serzone. In January 2003, the man-ufacturer withdrew Serzone from theSwedish market after the SwedishMedical Products Agency announcedthat liver enzyme monitoring would berequired in their product label.WhenBristol Myers Squibb learned that otherEuropean countries were consideringsimilar monitoring and labeling



changes, the company withdrewSerzone® from the entire Europeanmarket that same month. On March 6,2003 Public Citizen filed a petitionwith the FDA to ban Serzone® in theUnited States, citing its dangerouspropensity to cause liver damage.

On August 29, 2003, Bristol MyersSquibb announced that it was dis-cussing the safety of Serzone withCanadian regulators, but declined tosay whether it is actually on the vergeof pulling the medicine from Canadiandrug stores. It is significant thatSerzone® has been pulled from allmarkets in the world except Canada,the United States and Australia. Itappears that the rest of the world hasstood up to the powerful drugcompany and questioned it about theliver toxicity associated with this drug.As a result, the company was forced topull the drug from those markets.Whyis the federal government in thiscountry dragging its feet on this deci-sion when people’s lives are clearly atrisk? What happened to the days whenthe FDA could be counted on to ensurethat Americans are sold only the safestdrugs? This episode may remind somepeople of the diabetes drug Rezulin®that also caused liver injuries. Rezulin®was pulled in most markets in theworld almost 2-1/2 years before it wastaken off the market in the UnitedStates. I have to wonder why I am sur-prised at the government’s inaction.Surely, it can’t be due to the money andinfluence of the powerful pharmaceuti-cal industry. The American peopledeserve better than they are gettingfrom the FDA.

Diabetes Medications Can Worsen Heart FailureOur law firm represents thousands of

individuals who have taken the drugRezulin (Troglitazone) to treat their dia-betes. Rezulin was withdrawn from themarket in March 2000 followingvarious reports concerning liver toxic-

ity. We also found that some of ourclients suffered injury to their heart ora worsening of their heart conditionfrom taking Rezulin. Risks associatedwith diabetes are hypertension andassociated heart problems.The diseaseprocess is serious enough withoutintroducing medications that can makea patient’s heart condition even worse.

Recent government-sponsored researchwas published in the July 2, 2003Journal of the American Medical Asso-ciation.The article states that diabetesdrugs Metformin (Glucophage), Rosigli-tazone (Avandia), and Pioglitazone(Actos) were being prescribed inappro-priately to patients with heart failureand that the inappropriate prescribingof these drugs has been increasing overtime. The research was done by theNational Heart Care Project, an initia-tive of the Centers for Medicare andMedicaid Services, to improve thequality of care for Medicare recipientshospitalized with heart failure. Thestudy was designed to determine theextent of use of Metformin or any glita-zone on patients hospitalized withheart failure who also had a diagnosisof diabetes.These medications containsome warnings about their use inpatients with heart failure. However,the authors of this study concludedthat the study “demonstrates thatelderly, diabetic patients hospitalizedwith heart failure are commonlytreated with antihyperglycemic (bloodsugar lowering) drugs that are not rec-ommended for patients with moderateto severe heart failure.”

The pharmaceutical companies man-ufacturing these medications, as well asthe FDA, should take action to ensurethat physicians prescribing these drugsunderstand they can worsen a diabeticpatient’s heart failure. Either the physi-cians are ignoring the warnings or thewarnings are not adequate and shouldbe strengthened. Based on our experi-ence, I believe the failure to provideadequate warnings by the industry isthe real culprit.

Baycol Class Certified In CanadaA British Columbia Supreme Court

Judge has issued an order certifying aclass of “all residents of British Colum-bia who ingested Baycol.” Justice Victo-ria Gray issued her reasons forcertifying the class on August 25th.Thecourt certified three common ques-tions: (1) whether Bayer breached itsduty of care; (2) whether Bayer’s mar-keting and sales were “deceptive orunconscionable acts or practices”; and,(3) whether Bayer’s marketing andsales of Baycol breached the Canadian“Competition Act.” The court did notcertify the issue of whether Bayerowed a duty of care to the people whoingested Baycol. Justice Gray stated that“access to justice is the overriding con-sideration. Only a class proceeding willput the parties on a more even footing.The cost of proving the common issuesis an overwhelming deterrent to indi-vidual claims, because the potentialside effects of Baycol, while serious,likely will not support individualclaims.” No court in the United Stateshas certified a Baycol class as of thiswriting. However, there are severalclass actions pending, and this rulingmay help attorneys for victims in thiscountry.

Federal Judge Denies Class ActionAgainst Bayer®

A U.S. federal judge denied classaction status to several thousand law-suits against German pharmaceuticalmaker Bayer over its anti-cholesteroldrug Baycol.The court ruled that thecases were too diverse in issues andmedical conditions to qualify as oneclass of plaintiffs who suffered fromthe use of Baycol. Bayer faces morethan 11,000 lawsuits nationwide bypeople who used the drug before itwas pulled off the market 2 years ago.About 100 deaths and 1,600 injuriesworldwide have been linked to amuscle disorder caused by the drug.


Bayer said it has paid out over $432million to settle 1,211 lawsuits involv-ing the drug.

Update On PPA Litigation Litigation surrounding the recalled

cough, cold and appetite suppressantactive ingredient Phenylpropanolamine(PPA) continues to develop andprogress in both state and federalcourts. Recent developments on bothfronts have piqued interest andprompted many cases to be set for trial.On September 4, 2003, Judge NormanAckerman, coordinating judge for thecomplex litigation center in the Courtof Common Pleas of Philadelphia,Penn-sylvania issued his Order and Opinionconcerning defendants’ attacks onplaintiffs’ generic causation experts.The attack, similar to a Daubert chal-lenge in federal court, sought toexclude critical evidence aboutwhether PPA can cause ischemic andhemorrhagic strokes in all groups ofindividuals.As in the earlier challengesin federal court, defendants set out abroad-based attack on the generalpropositions established in the Hemor-rhagic Stroke Project (The Yale Study),an industry-funded study that resultedin a published article in the NewEngland Journal of Medicine inNovember 2000.

As we reported many months ago,the Yale study is the culmination of alarge-scale, case-controlled studyfunded by two members of the PPAproduct manufacturing industry. TheYale Study was set up to investigate thepossible risk of hemorrhagic strokerelated to the use of PPA-containingappetite suppressant and cough/coldover-the-counter products. Industrymembers participated extensively inthe design of the study and receivedperiodic advanced updates on thestatus of the study. During the pen-dency of the study, statements weremade by the vice-president of the Non-Prescription Drug Manufacturers Asso-

ciation (an industry trade group nowknown as the Consumer Health CareProducts Association, or CHPA), thatthis research was being “conducted bythe manufacturers of PPA-containingweight control products to furtherconfirm the safety of PPA.”

In truth, the Food and Drug Adminis-tration had been expressing, at best,reservations over the safety of PPAsince 1985, when it deferred issuing atentative opinion on the safety and effi-cacy of the ingredient.At a time whenother cough/cold product active ingre-dients – phenylepherine and pseu-doephedrine – were tentativelyidentified as GRASE (Generally Recog-nized as Safe and Effective), the FDAdeferred its determination as to PPA.Likewise, in 1994, when the FDA tookfinal action to classify phenylepherineand pseudoephedrine as GRASE, theAdministration again deferred ruling onPPA because of safety concerns.

The judge’s ruling in the Pennsylva-nia court basically mirrors the ruling ofanother judge in a multi-district litiga-tion proceeding in a United States Dis-trict Court. Similar to the state courtruling, the prior federal court decisionconfirmed that “general causation”experts may testify that PPA is capableof causing ischemic and hemorrhagic(non-ischemic) strokes. With theserulings behind us, the path is nowcleared for judges to start setting casesfor trial in Philadelphia, and to beginthe process of remanding federal casesto the local United States DistrictCourts for the scheduling of trial dates.

Meanwhile, individual state courtPPA cases are progressing to trial. Ourfirst scheduled PPA trial is set to beginOctober 20, 2003 in Guilford County,North Carolina. In this tragic case a 54-year-old gentleman, with a remarkablyclean medical past, ingested a genericequivalent of a popular effervescentPPA-containing cold formula.Within 24hours, he suffered a massive intracra-nial hemorrhage that left him depend-ent upon a respirator to sustain his life.

When these measures were removed,his death was inevitable.

Ephedra Industry Goes BeforeCongressOn and off for the last 18 months we

have been reporting on the progres-sion of the growing litigation surround-ing various ephedra-containing dietarysupplements and energy products, andthe industry that makes them. Theunfortunate death of Baltimore Orioles’pitching hopeful, Steve Bechler, caughtthe attention of much of society. EvenCongress seemed to get the message.On July 23 and 24 of this year, theHouse Committee on Energy and Com-merce, Subcommittee on Oversight andInvestigations held hearings to investi-gate several key players in this industry.The validity of claims made by themakers of these very dangerous prod-ucts was given close scrutiny. Otherinvited guests included distinguishedmedical experts and family membersaffected by these products, notably thefamily of Steve Bechler. The hearingsdemonstrated the vast distancebetween legitimate science and medi-cine on one hand, and the companiesthat market these dangerous productson the other.

In an interesting twist of events, twoof the founding members and formerexecutives for Metabolife International,one of the largest manufacturers ofephedra-containing products, refusedto offer testimony. Instead, theyasserted a Fifth Amendment rightagainst self-incrimination, refusing toanswer questions or offer preparedstatements on the grounds that it mayimplicate criminal activity. Similarly, thetestimony of various industry membersunderscored what we have previouslyreported, that this is an industry lackingany legitimate scientific basis for itsproduct claims. It also showed that theindustry is totally without any safetysurveillance system.The claims of manyof the industry members provoked



interesting and stinging questions frompanel members.

The hearings, while not going so far as to provide a basis for removingephedra-containing products from the market, appear to be a very goodfirst step. The full outline of thehearing’s events can be viewed at the following Website: http://energy-commerce.house.gov/108/Hearings/07232003hearing1021/hearing.htm,or a link can be obtained throughwww.beasleyallen.com.We continue toinvestigate and file ephedra-relatedcases involving serious and catastrophicinjury.

IX.INSURANCE ANDFINANCE UPDATE

Uninsured Motorist Coverage–What Is It And Who Needs ItI find that a number of people who

have liability insurance on their vehi-cles don’t understand all of their cover-ages. A prime example is uninsuredmotorist coverage. Uninsured andunderinsured motorist coverage refersto the statute and interpretive case lawthat governs and attempts to solve thepeculiar problems that arise when anat-fault driver causes bodily injury toanother in a motor vehicle wreck, andeither does not have automobile insur-ance or has insurance that is insuffi-cient to fairly compensate a victim forall damages.Recognizing the havoc thatis often caused by an at-fault driver, theAlabama Legislature, through statute,forced Alabama insurance companiesto incorporate into their automobilepolicies coverage to provide theinsured monetary benefits if theinsured was injured by an at-fault driverwho lacked automobile liability insur-ance or had insufficient insurance tocover all damages.

Because the statute requiring

Alabama insurance companies to incor-porate uninsured/underinsured cover-age into their automobile policies wasnot very specific,Alabama courts havebeen forced to interpret the meaningof particular provisions to fill gaps forissues that were not addressed in the statute. The foundation for unin-sured/underinsured motorist law inAlabama is the Uninsured Motorist Act,passed in 1966, codified in the AlabamaCode at § 32-7-23.This statute has beenamended through the years, and in1985 the Legislature amended thestatute and in essence created what isreferred to as “underinsured” motoristcoverage in Alabama.

An automobile insurance company’sobligation in an uninsured motoristcontext is generally governed bystatute and the language within thepolicy issued by the insurancecompany. The uninsured motoristclaimant is generally concerned withthe insurance company’s duty to payunder the policy. Although the insur-ance company has a duty in an unin-sured motorist context to reasonablyinvestigate the claim and report its find-ings, the problem for the claimant isthat most uninsured motorist provi-sions only trigger the insurancecompany’s duty to pay after theclaimant has established, among otherthings, the fault of the uninsuredmotorist and the extent of the injuredclaimant’s damages. If the insurancecompany disputes that the uninsuredmotorist was at fault or disagrees withthe claimant’s assessment of damages,the insurance company simply doesnot have to pay. If this happens, gener-ally the claimant will have to file alawsuit to collect his or her benefitsunder the policy.

Generally, the question arises whenthere has been a wreck with an unin-sured at-fault driver,“Do I have cover-age and if so, how much?”The law inAlabama requires every insurancecompany that issues automobile liabil-ity policies to provide uninsured/

underinsured motorist coverage inevery policy that is issued in this State.According to the statute, the insurancecompany must include motorist cover-age in every policy unless the insuredrejects such coverage.Any rejection byan insured must be in writing. Even ifthe policy itself does not contain unin-sured motorist coverage, but theperson obtaining the policy does notreject the coverage, the courts in thisstate have interpreted that the cover-age will be provided.

Anyone who purchases an automo-bile liability policy in this state and isthe named insured under the policywill be provided uninsured/underin-sured motorist coverage to the extentof the policy limits they have pur-chased for the particular policy. If aperson is married (even if separated)and the spouse has a separate automo-bile insurance policy, this policy willprovide coverage to the injuredclaimant. If at the time of the wreck theinjured claimant lived with relatives orthe relatives lived with the injuredclaimant and those relatives possessedan automobile liability insurancepolicy, there is potential coveragethrough that particular policy. Like-wise, if at the time of the wreck theinjured claimant was an occupant in avehicle that was covered by an automo-bile liability policy that the injuredparty did not own, the policy that provided coverage for the vehiclewould provide uninsured/underinsuredmotorist coverage for the injured occu-pant. And, if at the time of the wreckyou were operating someone else’svehicle that was covered by an automo-bile liability insurance and you were apermissive driver or had permission todrive that person’s vehicle, their policywould provide uninsured/underinsuredcoverage to you.

Underinsured motorist coverage, likeuninsured motorist coverage, also hasits peculiarities. The problem for theinjured claimant is that most underin-sured motorist provisions only trigger


the insurance company’s duty to payafter the injured claimant has estab-lished, among other things, the fault ofthe underinsured motorist and theextent of the claimant’s damages.Further, underinsured motorist benefitsare not triggered until the injuredclaimant can establish that his or herdamages exceed the available coveragefor any applicable liability policies. Inother words, an injured claimant wouldhave to be able to prove that hisdamages exceeded or would expect toexceed the total amount of coveragethat the at-fault driver had at the timeof the wreck.

At this time, I am not aware of anynew developments that may have aconsiderable impact on the law ofuninsured and underinsured motorists.As you are aware, in May of 2000 theAlabama Legislature passed and ourGovernor signed a bill that requiredmandatory liability insurance.The Actstated that no person shall operate amotor vehicle or permit anotherperson to operate their motor vehicleunless the vehicle is covered by a liabil-ity insurance policy, or motor vehicleliability bond, or a deposit of cash.Theamount of insurance must be at least$20,000 per person and $40,000 peraccident. These amounts refer to thepolicy’s liability coverage. Most insur-ance companies will only issue unin-sured or underinsured motoristcoverage equal to or less than theamount of liability coverage.

I would recommend that everyonecheck his or her declaration sheet.Thisis the part of the policy that providesinformation concerning the variouscoverages afforded by the policy. Mostwill find that the cost of uninsuredmotorist coverage is relatively cheapconsidering the amount paid for liabil-ity coverage. I wholeheartedly recom-mend that if you have the minimumlimits, you should increase both yourliability and your uninsured motoristcoverages immediately. If you don’tknow what your limits are, call your

insurance agent and find out.You canadd as much as $500,000 in UM cover-age with most companies and up to$1,000,000 with a few. It only takes onecatastrophic car wreck with an unin-sured or underinsured motorist to findout that you are inadequately coveredwhen it comes to this type of coverage.So, I would add as much under your“UM” coverage as possible or as muchas you can afford.

Hyundai Settlement Thrown Out In November of last year, our firm

filed a class action lawsuit againstHyundai Motor Company in Tennessee.We alleged that the carmaker fraudu-lently misrepresented the horsepoweron several models of cars. Before wecould even begin conducting discovery,Hyundai attempted to settle a nationalclass action in Texas with very littlevalue for consumers.However, the filingserved to effectively stay our lawsuit.Asa result, we joined with several otherlaw firms across the country to stopwhat we consider to have been a“sweetheart deal” in Texas.That nationalclass action settlement, which Hyundaitried to push through the Texas court,has now been overturned. On August27th, a federal district court in Beau-mont,Texas, set aside the class actionsettlement in which Hyundai had proposed to resolve a decade of horsepower misrepresentations with“coupons.”After admitting to overstatedhorsepower affecting more than 1.3million vehicles, Hyundai had sought toforeclose any future claims by giving“coupons”to affected car buyers.

The case arose out of Hyundai’sadmission in September 2002 that ithad misstated horsepower by as muchas 9% on over 1.3 million vehicles soldin the United States from 1991 through2002.As its proposed solution, the carmanufacturer offered extended war-ranties or roadside assistance to a smallfraction of affected purchasers. Classaction litigation ensued nationwide,

and Hyundai quickly settled the claimsin Beaumont,Texas, for new car rebatesor oil change coupons.The proposedsettlement was entered into withoutthe benefit of any investigation by thesettling parties and before Hyundai wasrequired to produce any documents inthe other pending class actions. Classaction plaintiffs nationwide, includingour clients, intervened in the Beaumontlawsuit and prevailed. Now, Hyundaimust turn over documents andproduce its top executives for ques-tioning under oath. This will includeHyundai’s former CEO Finbarr O’Neill,who recently resigned. The investiga-tion uncovered evidence suggestingthat Hyundai deliberately overstatedhorsepower figures for a number ofyears. Moreover, it was revealed thateven Hyundai’s current, “corrected”horsepower numbers for some of itsmost popular vehicles – including theV6 models of the Tiburon, Sonata, andSanta Fe – are still significantly greaterthan revealed by Hyundai’s own inde-pendent testing, which the companyhas kept secret.

Lawyers for other vehicle ownersargued the “coupon settlement” wasunfair and would cost Hyundai only $6million. The Texas judge reversed hispreliminary approval, citing evidencegathered by the objection owners thatmight help them obtain a larger settle-ment.This included evidence, the judgesaid, that the inflated horsepowerfigures “were approved by high-leveldecision makers at Hyundai and thatHyundai’s actions may have been influ-enced by a desire to enhance its com-petitive standing in the marketplace.”The objecting car owners claimHyundai’s overstatement of horse-power was deliberate. Hyundai had aconscious plan to intentionally misrep-resent horsepower to gain a competi-tive advantage in the marketplace.Theclass action plaintiffs requested that thecourt set aside the settlement based onevidence that:

Hyundai knew that it was misstat-

ing horsepower. Internal communi-cations among Hyundai executivesdemonstrate their concern thathorsepower figures would affectcompetitive standing in the market-place. Years before admitting to their “mistake,” Hyundai’s CEO,Finbarr O’Neil, and Hyundai’s legal,public relations, and product plan-ning departments approved the use of uncorroborated horsepowernumbers.After investigation by theKorean and Canadian govern-ments, Hyundai felt compelled toadmit that its figures were inaccu-rate in the United States.

Hyundai is still misrepresentinghorsepower. Before disclosing theunderstated numbers, Hyundaicommissioned horsepower testingon four of its vehicles’ engines bySouthwest Research Institute(“SwRI”). SwRI was recently in thenews as the Texas company thattested for NASA the devastatingeffects of foam on the space shuttlewing. Even though the testingsought to maximize the horsepowernumbers, SwRI’s findings werelower than what Hyundai nowclaims are “accurate” numbers.Having learned the preliminaryfindings, Hyundai executivesdirected that the final report bedirected to their outside attorneysin an apparent attempt to hide thefindings. Hyundai had other testresults available as well to indicatethat the “corrected” figures are stilloverstated. Hyundai has neverreleased these findings to the public.

The coupon settlement is unreason-able. The proposed, abusive settle-ment would have given consumerscoupons that could only be used topurchase new Hyundai vehicles or,in some instances, oil changes atHyundai dealerships.This contrastswith Mazda’s recent program forpurchasers of its RX-8, who arebeing given $500 debit cards and

free maintenance for similar horse-power overstatements.Additionally,the settlement would have reducedbenefits available to some Hyundaiowners, who have been able tonegotiate cash awards by complain-ing to Hyundai’s customer servicedepartment.

Hyundai Motor America announcedin late August that CEO Finbarr O’Neil,had resigned to take a position withMitsubishi North America, Inc.We nowplan to request a lift of the stay in Ten-nessee. If this is granted, we can thengo forward with class certification onbehalf of consumers. Now that the set-tlement has been set aside, we expectthat Hyundai will face several classactions dealing with this subject in dif-ferent states.

X.PREMISES LIABILITY UPDATE

Another Hot Coffee CaseA man who said he suffered severe

burns when a pot of hot coffee wasspilled into his lap at a Disney restau-rant 2 years ago was awarded $668,000by a jury.A 28-ounce pot of coffee wasspilled on the 33-year-old as he dinedwith his wife and daughter at theDisney Polynesian Resort in 2001.Theman suffered extensive blistering, aswell as pigmentation changes to hisgenitals and groin, according to courttestimony.As all of you know very wellby now, in 1994, a woman was badlyburned after spilling coffee from aMcDonald’s restaurant in New Mexico.She was subsequently awarded $2.9million by a jury. The award wasreduced to $640,000 on appeal andwas then settled out of court.That casebecame the rallying cry for tort reformacross the country. Unfortunately, thereal facts of the case were never dis-cussed by either the tort reformers or

the media. The fact that the ladyreceived severe third degree burnsover her body or that McDonald’s madeits coffee much hotter than any of itscompetitors, making it unreasonablyhot for a drive-through window sale,was lost in the media explosion thatfollowed the verdict. Neither was thefact that McDonald’s had a number ofprior claims ever discussed.The case isstill being used by the tort reformers tosell their anti-consumer message.

XI.WORKPLACE HAZARDS

Three Persons Killed In TV Tower Collapse Three workmen were killed in

Huntsville when a tall television towercollapsed during maintenance. Thetower, which rose over 1,000 feet,including antenna, fell to the groundwhile the work was being done. Twoworkers died at the scene and the thirddied later at Huntsville Hospital. Thethree men were above the 700-footlevel, adding support to the tower andputting in equipment for digital cable,when the tower buckled below them.The tower collapsed on itself before thetop part fell over.The tip of the antennalanded behind the television station,which sits atop Monte Sano Mountain.SpectraSite Communications, which islocated in Irving,Texas, owns the towerand employed the three workers. Atpress time, the cause of the accidenthad not been determined.An investiga-tor from the Occupational Safety andHealth Administration has already beento the site.The tower, leased to WAAY-TV,was put up in 1976.

Update On McWane, Inc.McWane, Inc., which has been criti-

cized for a poor safety record, has been




fined $103,500 by OSHA for safety vio-lations. These violations were uncov-ered during government inspections ofMcWane’s Anniston plant. McWaneadmitted to 21 serious and 3 repeat vio-lations at the M & H Valve Fire HydrantPlant. These violations were for leademissions, fall hazards, material storage,operating unguarded machinery, andelectrical hazards, according to OSHA.McWane’s safety record has been oneof the worst in the country. Nineworkers were killed and another 4,000injured since 1995 at the company’splants. OSHA issues a “serious citation”when there is a “substantial probabilitythat death or serious physical harmcould result.” Hopefully, this companyhas seen the “light” and will work dili-gently to make the workplace safe forits employees.

Electrocution Hazards In TheWorkplacePower line contacts account for

numerous serious injuries and fatalitiesat jobsites. The National Institute forOccupational Safety and Health esti-mates an average of 411 deaths peryear occur on job sites as a result ofelectrical contact.Tragically, all of theseaccidents could have been preventedhad proper hazard recognition and pre-vention procedures been used. Manyproducts that are regularly involved inpower line contacts are not designedto protect operators and ground per-sonnel should a power line contactoccur. Products that are regularlyinvolved in power line contacts arecranes, bucket trucks, drill rigs, forklifts,man lifts and other aerial lifts. Therehave been insulating devices andvarious types of warning devices avail-able to manufacturers and distributorsof these products for many years. Sadly,most product manufacturers choosenot to equip their products with theseimportant safety devices.

Family Settles Refinery Blast CaseThe operator of a Delaware oil refin-

ery has agreed to pay $36.4 million tosettle a lawsuit by the family of aworker killed when a tank of sulfuricacid exploded and collapsed in 2001.The 50-year-old victim, a boilermaker,was on a catwalk above the tank whenit erupted at the Motiva Enterprisesrefinery.The worker died in a flood ofleaking acid.The settlement had to beapproved by a federal judge. Under thecourt-approved settlement, the widowwill be paid $12.9 million.The couple’sfive children will be paid $2.1 millioneach.The balance of the settlement willgo to attorney’s fees and other legalcosts.The company, jointly owned andoperated by Saudi Refining Inc. and theShell Oil Co., had been cited repeatedlyfor safety violations.

Investigators said the tank thatexploded was poorly maintained andhad not been designed to store spentsulfuric acid laced with hydrocarbons.A month before the accident, oneinspector had recommended that it beshut down immediately and repaired.Another inspector warned in a memo:“This tank farm needs attention now!”The settlement was reached 2 weeksbefore the wrongful-death lawsuit wasto go to trial.

The refinery has been previouslyfined $296,000 for the explosion, inwhich six other workers were injured.The company, based in Houston, says itwas committed to improving work-place safety and had worked to addressthe factors that contributed to thisexplosion. Davis was an employee ofthe maintenance subcontractor at therefinery. His death has promptedDelaware lawmakers to remove a capon financial penalties for corporationsconvicted of criminal conduct and topass a new law regulating above-ground chemical storage tanks.

Sloss Industries Faces Fines ForSafety ViolationsOSHA has issued eight citations

against Sloss Industries for failing toprotect its employees. The federalagency found unsafe working condi-tions while investigating a March 5thaccident at the company’s Tarrant cokeplant. OSHA has proposed $105,000 infines. An employee lost his leg in thelatest accident.The worker fell underthe moving wheels of a rail car, and as aresult his leg was severed. OSHA issuedsix serious citations against Sloss withproposed monetary penalties attached.There were also 2 repeat citations.OSHA has a responsibility to assure thatemployers provide safe working placesfor their employees. Protectingworkers’ safety and health must be apriority for all employers.According toOSHA,“If this company had establisheda policy of safe working practices andequipment maintenance programs, thisaccident would have been prevented.”

XII.TRANSPORTATION

Alabama Ranked Fifth In FatalCrashes Anybody who lives in Montgomery

couldn’t have been overly surprised atthe findings from a recently releasedreport. Red-light running has reachedepidemic proportions in Alabama,according to a University of Alabamatraffic analyst. In fact, Alabama ranksfifth in the nation in the number offatal crashes caused by motoristsrunning red lights.This is according toa 2000 ranking by the Insurance Insti-tute for Highway Safety. Daniel S.Turner, Director of the University Trans-portation Center at the University ofAlabama, and other researchers tookthe rankings one step further. Theystudied statistics for a 9 year period



from 1993 to 2001 and found therewere 47,501 traffic crashes caused byred-light running in Alabama. Thecrashes resulted in 16,500 injuries and194 deaths during that period.

I can certainly understand the magni-tude of the problem.Almost every dayon the way to work, I see at least 2 or 3motorists running a red light. In fact, Ican’t recall a single workday this yearwhen I failed to observe a violation ofthis sort. Many times the light changedto red several seconds before a vehicle“flew” through the intersection. I havelearned to sit and wait until all of thevehicles come through on red beforeproceeding through the intersection.

Nationally, there are 200,000 crashesat red lights and 1,100 deaths eachyear, according to the Federal HighwayAdministration. The tragic result ofthese statistics is that some 16,000 fam-ilies in Alabama have been affectedbecause someone caused a wreck byrunning a red light. Clearly, traffic acci-dents caused by motorists running redlights are easily prevented. State lawsmust be strengthened.According to Dr.Turner, stronger legislation, a publicawareness campaign and trafficcameras would be a start to reducingthe number of red-light deaths in thestate. Red-light wrecks are usuallymore severe because they usually resultin T-bone accidents where a vehicle ishit in its least-protected side.

Aviation DisastersAviation disasters fall under a highly

specialized area of law that involvesmany federal acts, regulations, treaties,and a variety of state and federal laws.Our law firm has a great deal of experi-ence in aviation litigation and productsliability litigation.We have learned thataviation disasters require a specializedknowledge of structural design andmechanical information related to theaviation industry.Although the UnitedStates may be the safest country in

which to fly, it also has the highestnumber of accidents in the world.Avia-tion law relates to accidents and inci-dents that occur almost on a daily basisin this country. Aviation incidentsinvolve commercial airliners, militaryaircraft, and smaller civilian aircraft.Avi-ation law is also a mixture of productsliability law that requires an expertisein the design of aircraft. Many aviationdisasters occur as a result of air trafficcontroller negligence, maintenance orrepair negligence, pilot error, and/ordefectively designed aircraft.

Aviation litigation is governed, inpart, by the Federal Aviation Act andregulations that set minimum standardsfor aircraft manufacture, pilot conduct,and flight operations.The Federal TortClaims Act is also federal law thatapplies to claims brought againstcertain federal employees or branchesof the federal government.Aviation lawcan also include the Foreign SovereignImmunities Act, which governs suitsagainst foreign airline carriers and man-ufacturers, as well as foreign govern-ments.There are also a number of stateand federal choice of law rules that willapply to any aviation disaster thatoccurs in this country or involves U.S.-based carriers. Aviation litigation alsoinvolves questions of state and federaldamage standards that may apply todeath cases, as well as personal injurycases, depending on the forum inwhich a case is brought. Certain federaland state law also applies to militarycontractors who manufacture militaryaircraft for the United States govern-ment. There may also be numerousinternational treaties that govern theliability of airlines for certain typeflights, particularly international flights.Based upon the complexity of the lawand potential claims that are available,it is imperative to seek legal advice.

Many persons don’t know what todo if a family member is involved in anaviation disaster. In many cases, airlinesand/or manufacturers of aircraft will

contact the survivors of an aviation dis-aster or their families. An insurancecompany representing an airline or amanufacturer may offer to settle afamily’s claim very quickly. An insur-ance company may also attempt tooffer some type of “advance” to helpwith many of the costs faced by fami-lies as the result of a death or severeinjury.Persons should not accept any ofthese offers or sign anything withoutspeaking to a lawyer. In manyinstances, an insurance company willoffer to settle a claim for an amountsubstantially less than the person isentitled to.Therefore, it is important tobe advised of all of your legal rights andthe damages you may recover in an avi-ation disaster.

NTSB Wants Tougher Inspections The National Transportation Safety

Board wants more thorough inspec-tions of planes that have suddenlychanged speeds because of weather,pilot error or mechanical problems.Aletter was sent by NTSB to the FederalAviation Administration saying currentprocedures may be inadequate. TheBoard recommended that the FAArequire closer inspections of planesafter they’ve been maneuvered vio-lently and that such incidents bereported. Airplanes that have flownthrough extreme turbulence may notbe inspected closely enough afterwardfor hidden structural damage, accord-ing to federal safety investigators.

The potential problem came to thesafety board’s attention during its inves-tigation of American Airlines Flight 587,which crashed in Queens, New York in2001, killing all 265 aboard.The AirbusA300-600’s rudder suddenly beganswerving violently, causing the tail finto break off.As a result of that investiga-tion, the tail fin of another American A-300 that had been severely buffeted in1997 was reinspected. Cracks werefound and it was replaced.


Wellstone Crash Victims ReachSettlementFamily members of the late U.S.

Senator Paul Wellstone and five otherpassengers killed in an October planecrash have reached a $25 million insur-ance settlement with the company thatoperated the airplane involved.All sixpassengers died in the October 25thcrash. This settlement will avoid thecase being forced to go to court. Alawsuit was to be brought against Avia-tion Charter Inc. and its affiliated com-panies. The National TransportationSafety Board has not determined thecause of the crash. However, prelimi-nary reports released by the safetyboard this spring suggested pilot error.The twin-engine Beechcraft King AirA100 crashed as it approached Eveleth-Virginia Municipal Airport en route to afuneral that Senator Wellstone plannedto attend. Investigation of the crashrevealed that the pilots “failed to main-tain appropriate power and airspeed.”Italso appeared that the company wasnegligent in hiring, supervision, trainingand retention of the crew.The passen-ger settlements allocate a specificamount of money for the families ofeach victim. Trustees for each victimwill disburse the money under arrange-ments that will be subject to courtapproval.

Ford Dealer Ordered To Pay Damages For Selling LemonA used Ford Explorer sold by a

Kansas City Ford dealer in 1994 for$25,000 turned out to be a “lemon”andthe case went to court.A jury returneda verdict that will require the dealer-ship to both return the purchasemoney and to pay $840,000 in punitivedamages because the business “know-ingly” sold the purchaser a lemon.Thedealership acknowledged that thesport-utility vehicle had been wreckedand later salvaged. However, aspokesman said the business simply

made a “mistake” in selling it.The jurorsheard evidence that it was “business asusual”for the dealership to sell salvagedvehicles without informing their cus-tomers. Evidence at trial revealed thatthe purchaser’s troubles began a fewmonths after the sale. Repairs includedan engine, two transmissions and arusted windshield frame.The purchasertestified he didn’t know the Explorerwas a salvaged vehicle until 1999 whenhe tried to trade it and saw the automo-bile history report. The purchaserstated that he bought from a franchisedealer so that he would be sure to get aquality car. The dealership plans toappeal the jury verdict.

XIII.FIRESTONE

Firestone Lawsuit Settled After MistrialA major lawsuit against Bridge-

stone/Firestone Inc. and U-Haul Inter-national Inc. in a Ford Explorer rollovercase has been settled.The suit, filed bythree college students injured in a 1999crash in Texas, claimed the Firestonetires and faulty brakes on a rental trailercontributed to the wreck. One of theplaintiffs suffered brain damage in thewreck. The others alleged that Fire-stone and U-Haul acted with gross neg-ligence, fraud and malice in placingdefective products on the market. Asexpected, Firestone and U-Haul blamedthe wreck on operator error.The com-panies claimed the three college stu-dents were impaired by marijuana,fatigued from final exams and ignoredinstructions for towing the rentedtrailer. The crash occurred June 17,1999, as the students were en route toBay City, about 65 miles southwest ofHouston, from California, where theyattended college. The Ford Explorerwas towing a trailer.

The case, originally filed in Bay City,went to trial in April 2002. The court

declared a mistrial when one of Fire-stone’s lawyers, in opening statements,violated limitations on what jurorscould be told. The case was thenmoved to Houston on a change ofvenue after the plaintiff’s lawyersargued publicity about the mistrial hadprejudiced any future jury picked inthe county where the case had beentried.The suit had been set for trial onAugust 25th. In April 2001, the threeplaintiffs settled with Ford Motor Co.,which also had been a defendant in thesuit.As has been widely reported anddiscussed, Bridgestone/Firestonerecalled millions of Wilderness tires inAugust 2000. It also has paid tens ofmillions of dollars to settle lawsuitsover the tires, which federal safety offi-cials found were prone to separate athigh speeds. However, a tremendousnumber of meritorious cases are stillpending.

The Multi-District LitigationWe are still working to get our cases

out of the federal district court so theycan be tried back in the courts wherethey rightfully belong.While it has beena long and trying experience, ourclients have been very patient. Cer-tainly, they deserve their day in court.Hopefully, that will come very soon.Ford Explorer rollover accidents precip-itated by detreading Firestone tires tookthe lives of hundreds and injured count-less more before the public was finallymade aware of the threat posed to theirsafe travel by this SUV and tire combina-tion. It has been over 3 years since theAugust 2000 recall of millions of Fire-stone tires. Hundreds of lawsuits werefiled in the United States federal courtsfor accidents occurring in the UnitedStates as well as accidents in foreigncountries. Ford and Firestone petitionedthe joint panel on Multi-District litiga-tion to centralize discovery in one U.S.District Court.This resulted in the cre-ation of the MDL litigation.The assign-ment of U.S. District Judge Sarah Evans



Barker of the Southern District ofIndiana has proved to be a good one.Judge Barker, with the able assistance ofU. S. Magistrate Judge Sue Shields, hasmanaged the massive discovery effortof hundreds of lawyers gathering evi-dence from thousands, if not millions,ofpages of documents and over a hundredwitnesses.This has taken much time, aswe are approaching 3 years since theMDL proceeding started.

The common discovery effort of theplaintiffs’ committee is very beneficialto all the victims of Ford and Fire-stone’s recklessness with both safetyand the truth concerning their prod-ucts. It will help those yet to sufferfrom accidents to happen in the future.However, this MDL process has beenlong and frustrating to those we repre-sent, like severely brain-damaged ErikaBrzobohaty, who suffers minute byminute as hours turn to days, and daysinto years of agony.Her brother,Andres,lost his life at age 13 in the same acci-dent on April 18,2000.Erika’s distress isso great that she often wishes to joinher brother in death. She and her familywant their day in court, and we arefighting hard to get their case back tothe original court in Alabama. Discov-ery is over in the Brzobohaty case.Nowthe defendants are using motion prac-tice at the MDL level to delay remandto Alabama. The tactics include thefiling of motions by Ford that should beheard by the Alabama U. S. DistrictJudge (not the MDL court) in hopes ofavoiding a trial date as long as possible.In my opinion, this is shamelessconduct for those who appear to beinsensitive to the suffering they con-tinue to cause. Hopefully, this will notprove a safe harbor for long,as we pushfor hearings on the motions andremands. “Justice delayed is justicedenied.” The truth is waiting to berevealed. Once that happens, the jurywill speak like a mighty wind againstthose building defenses on foundationsof quick sand.

XIV.THE NATIONALSCENE

Our Country Can’t Afford The Bush DeficitLast month, the Congressional

Budget Office (CBO) forecast a federalbudget deficit of $480 billion in 2004.This is a record shortfall that many inCongress believe will go even higher.Obviously, this poses most seriousproblems for President Bush as heseeks re-election. In its bi-annualbudget outlook, the CBO, a nonpartisanagency, also confirmed an earlier pre-diction of a $401 billion deficit in 2003and forecast a cumulative budgetdeficit of $1.4 trillion over the nextdecade.The report comes at a very badtime for the Bush Administration. Overthe past few weeks, fiscal bad news hascome in droves.This has put the BushAdministration on the political defen-sive and it may not be able to “spin”itself out of this mess.The White Househas predicted that federal budgetdeficits would balloon to $455 billionthis year and $475 billion in 2004 – farabove the previous record of $290billion reached in 1992.The bad newsis – this is without factoring in themounting cost of the U.S. occupationof Iraq. President Bush’s message to thenation on Sunday, September 7th wasmost alarming.The cost of $87 billionto occupy and rebuild Iraq is muchmore than the people were led tobelieve. I suspect the numbers we aregetting now are low. Remember, theoriginal cost of the Iraq War was $79billion. The money now beingrequested is on top of that.

It is impossible to explain or justifyhow we can run a deficit over the nextdecade of $3.7 trillion. Many believethat if money from the Social Securitysurpluses, now being used to pay forother federal programs, is not factored

in, the decade-long deficit will be $6.3trillion. It is difficult to understandhow, all of a sudden, we are headed inthat direction. Our economy simplywon’t be able to tolerate such a deficit.I understand that the CBO numbers donot take into account the $1.2 trillionthat will be lost if tax cuts scheduled toexpire over the next decade are madepermanent. In addition, another $878billion in new tax cuts over the comingdecade are being sought by the WhiteHouse. This fiscal year’s deficit hasalready exceeded the old record of$290.4 billion set in 1992 when thecurrent President’s father was in theWhite House. Republicans argue thatsince the economy is much largertoday than it was then, the budgetshortfall will have less of an impact.They claim it is not a record whenmeasured as a percentage of grossdomestic product. I understand thatmany economists look more at the per-centage of GDP than raw dollars inassessing the impact of federal budgetdeficits on the economy. Either wayyou look at it, a deficit of this sizemakes no sense.

Clearly, the deficits, the tax cuts, andthe political reasoning behind themwill be election issues next year.Recentpolls haven’t been very kind to Presi-dent Bush, revealing a growing discon-tent with his handling of the economyand the budget.The deficit and the Iraqspending are being discussed all overthe country and even the ultra-conser-vative wing of the Republican Party isfeeling the heat. It doesn’t take a politi-cal genius to figure out that theeconomy will be a key issue next year.It will definitely affect the President’sre-election bid. I believe it will also spillover into congressional races.

Halliburton Is Doing Even BetterIn Iraq Than ReportedWhile the nation is suffering, Hal-

liburton, the company formerly headedby Vice President Cheney, is doing very


well. This company won contractsworth more than $1.7 billion underOperation Iraqi Freedom.The companynow stands to make hundreds of mil-lions more dollars under a no-bid con-tract awarded by the U.S.Army Corpsof Engineers, according to a report inthe Washington Post. Newly availabledocuments apparently reveal that Hal-liburton is doing very well. It is nowquite obvious that the size and scope ofthe government contracts awarded toHalliburton in connection with the warin Iraq are significantly greater thanwas previously disclosed. It points outrather clearly the U.S. military’s increas-ing reliance on for-profit corporationsto run its logistical operations.Accord-ing to the Post report, independentexperts estimate that as much as one-third of the monthly $3.9 billion cost ofkeeping U.S. troops in Iraq is going toindependent contractors. Services per-formed by Halliburton, through itsBrown and Root subsidiary, includebuilding and managing military bases,providing logistical support for the1,200 intelligence officers hunting Iraqiweapons of mass destruction, deliver-ing mail, and producing millions of hotmeals. Halliburton employees and con-tract personnel have become an inte-gral part of Army life in Iraq.

While we are losing military person-nel in Iraq on almost a daily basis, it isdisturbing to discover how some largecorporations are profiting from the“war” and “the ongoing rebuildingefforts.”While most Americans may stillbelieve the President did the rightthing in going to “war,” it has becomevery clear that the original reasonsgiven for the mission have changed dra-matically.The more we learn about the“planning” for the “war” and “occupa-tion” of the country, the more weshould all be concerned. I suspect wewill see the President’s “war ratings”tumble over the next few months.

Bush White House Derails Effective RegulationThe Bush Administration has pro-

posed broad new standards for federalregulatory agencies that would requirethem to seek independent appraisals ofthe scientific basis for many new rulesbefore issuing them. The announce-ment by the Office of Management andBudget (OMB) was very popular withgroups linked to industry, and thatcomes as no real surprise. However,consumer advocates correctly warnthat the proposal would paralyze newregulations and stymie enforcement.While all regulatory agencies would becovered by the proposed executiveorder, the Department of Agricultureand the Army Corps of Engineerswould be among those especiallyaffected. The proposal would requireagencies to systematically seek “outsideopinions” when evaluating scientificfindings or disagreements. This is aprocess referred to as “peer review.” Inmy opinion, this is nothing but a planto weaken regulation that is alreadyweak in too many areas.

John Graham,the Administrator of theOMB’s Office of Information and Regu-latory Affairs, has been openly hostile tohealth and environmental regulations.We warned months ago when Grahamwas appointed to this position that itwas a “gift” to Corporate America. Itappears that the gift has now beendelivered.This is just another weaponfor the Bush Administration and its cor-porate allies to use against protectiveregulation.According to the proposal,which is expected to go into effect inFebruary, if a regulation costs privatefirms more than $100 million a year andcompanies challenge the quality of thescience behind it, regulators mustconvene a panel of experts fromoutside the agency to reevaluate thescience.A number of scientists, publicinterest groups and Democrats havecharged that the Bush Administration istaking the teeth out of regulatory agen-

cies, replacing scientists critical ofindustry with those sympathetic to cor-porate and ideological interests.Agen-cies are often wary of potentialconflicts of interest in the opinions ofindustry scientists. Many believe thatimportant public protections dealingwith the environment,health, safety andcivil rights regulations get stopped intheir tracks because peer reviewbecomes a hurdle you cannot get over.This appears to be a valid assessment.This significant change will have long-lasting ramifications. Hopefully, therewill be enough public outcry that KarlRove, the real architect of this proposal,will rein in Mr.Graham.

The Bush Record On JobsIt is now becoming more apparent

that the Bush White House has no clueon what is happening to our nation’seconomy.We are clearly heading in thewrong direction.We have seen that taxcuts for the rich are certainly not theanswer. Our economy is in a tailspinand jobs are being lost. It now appearsthat George W. Bush will become thefirst President since Herbert Hooverwhose presidency will have a loss ofjobs, and that’s not good by any stan-dard. Many believe that the President’stax cuts have hurt the nation dramati-cally and that he is pandering to theelite in our society. I share that view.The tax cut, the largest in Americanhistory, has so far “cost” America 1.7million jobs with more to come. For agood comparison of how this Presi-dent’s record compares to previouspresidencies since World War II, checkout the following compilation releasedrecently by the International Associa-tion of Machinists.This group looked atthe average growth in monthly employ-ment during the terms of the lastfifteen presidential administrations.Thisis what they found:

• Truman First Term: 60,000 jobsgained per month



• Truman Second Term: 113,000 jobsgained per month

• Eisenhower First Term: 58,000 jobsgained per month

• Eisenhower Second Term: 15,000jobs gained per month

• Kennedy: 122,000 jobs gained permonth

• Johnson: 206,000 jobs gained permonth

• Nixon First Term: 129,000 jobsgained per month

• Nixon/Ford : 105,000 jobs gained permonth

• Carter: 218,000 jobs gained permonth

• Reagan First Term: 109,000 jobsgained per month

• Reagan Second Term: 224,000 jobsgained per month

• George Bush: 52,000 jobs gained permonth

• Clinton First Term: 242,000 jobsgained per month

• Clinton Second Term: 235,000 jobsgained per month

• George W. Bush : 69,000 jobs LOSTper month

While the Bush Administration isdoing its best to take care of the super-rich, they are ignoring the plight ofworking men and women and retirees.There are some alarming signs that wemust consider: national unemploymenthas now increased to 6%, the highest inalmost a decade; the states, includingAlabama, face the worst budget crisissince the 1930s; primary services suchas schools, basic health care, sanitation,and law enforcement are being largelyignored, and more tax cuts for therichest among us are on the horizon.Frankly, unless things are reversed veryquickly, this President – even with hisrecord campaign war chest – will havedifficulty convincing voters to granthim a second term.

Skyrocketing Gas Prices HurtFolksOver the Labor Day weekend, we

saw record increases in gasoline prices.With our economy in the tank, this wasnot good news. Americans who canleast afford to pay higher prices for gasare hurt the worst. Instead of promot-ing policies that would moderateprices - such as stronger fuel economystandards and tighter oversight of BigOil—Congress is heading towardpassage of anti-consumer energy legis-lation that would do little but providebillions in taxpayer subsidies on energycompanies. The nationwide averageprice for gasoline soared to a new all-time record, hitting $1.75 per gallon -just in time for one of the heaviestdriving seasons of the year. Some indus-try analysts blamed a broken pipelinein Arizona and the temporary shut-down of seven refineries caused by themassive electricity blackout in theNortheast. However, disruptions of thatsort occur periodically and should notcause this type of price spike.The gov-ernment’s failure to promote conserva-tion and to exercise proper oversightof the industry are to blame. Forexample, Congress should require oilcompanies to maintain minimumreserves and adequate inventories. Abigger problem, on the supply side, isindustry consolidation that gives ahandful of companies tremendouspricing power through mechanismssuch as keeping inventories of crudeoil and refined gasoline low in advanceof peak demand periods. I believe thisis referred to as manipulation! Exxon-Mobil, ChevronTexaco, ConocoPhillips,BP and Shell control 15% of the world’soil production.These top five corpora-tions now produce more oil every daythan Saudi Arabia, Kuwait and Yemencombined.When you have a handful ofmega-corporations dominating themarket, gasoline prices will be manipu-lated.

The problem started when the

Federal Trade Commission (FTC)allowed massive consolidation of theoil industry in 1999 and 2000. Thesenew mega-corporations are nowinvolved in all facets of the oil and gasindustry: exploration, production, refin-ing, transportation and retail sales.Thisvertical integration has resulted in ahandful of corporations controlling asubstantial percentage of the domesticoil and gas market. This allows thesecompanies to artificially inflate pricesand take advantage of any supply dis-ruptions by sticking it to consumers. Inresponse to this latest gasoline crunch,the consumer group Public Citizenurges that the following be done:

• Congress should raise CAFE (Corpo-rate average Fuel Economy) stan-dards for all passenger vehicles,including SUVs, to 40 mpg, to bephased in by 2015;

• The federal government shouldrequire oil companies to maintainsufficient reserves and inventory toreduce price volatility;

• Congress should immediatelyconduct hearings to determine thecause of price spikes and conductregular reviews of the status of com-petitive markets in the oil industry;

• Congress must reject the currentenergy legislation now pending in aHouse-Senate conference committee.

With the power and influence of theoil and gas industry in the Bush WhiteHouse, things aren’t looking very goodfor the consuming public on any issuerelating to that industry.

Groups Challenge Anti-Porn Tactics On Web Two civil liberties groups have sued

Pennsylvania’s Attorney General, claim-ing his tactics to stop child pornogra-phy also cut subscribers across thecountry from legitimate Web sites.Thelawsuit was filed in U.S. District Courtin Philadelphia. The groups haveaccused Attorney General Mike Fisher


of creating a “system of secret censor-ship” that goes unchecked by statecourts.Anybody who does anything tofoster and encourage child pornogra-phy should be “horse-whipped” in myopinion. Child pornography shouldnever be protected by the First Amend-ment. Efforts by law enforcement offi-cials to put a stop to this filth should beencouraged by the courts and backedby Congress.

The lawsuit challenges a system ofnotices the Attorney General’s officesends to providers to block access tosites it considers child pornography. If aprovider does not respond to thenotice, the Attorney General can thenseek a court order under a 2002 statelaw that authorizes the blocks andimposes a first-offense fine of $5,000for noncompliance. A spokesman forthe Attorney General said the “infor-mal” notices are part of a policy devel-oped in concert with the providers.The lawsuit asks the court to invalidateboth the policy and the law, saying theyinterfere with free speech and inter-state commerce. It also seeks to invali-date the notices that have resulted inblocking an estimated 725 sites.Amongthe companies that have receivedorders from the Attorney General’soffice are Comcast CommunicationsInc., Earthlink Inc. and Microsoft Corp.To my knowledge, only one — World-Com Inc. — has protested the notice.Acounty judge subsequently orderedthat company to comply. It is high timethat our courts stop pandering to the“smut peddlers,” which are making mil-lions dealing in child pornography. I saymore power to the Pennsylvania Attor-ney General. We should encourageothers to join him, including AttorneyGeneral John Ashcroft.

Nuclear Plants May Still Be VulnerableNuclear power plants in this country

may be at greater risk than we havebeen led to believe. The 103 nuclear

reactors in the country were neverdesigned to withstand the type ofattack we experienced on September11, 2001.We now know that al Qaedaspecifically discussed targeting nuclearfacilities. Nearly half of the facilitiestested under a U.S. Nuclear RegulatoryCommission (NRC) program between1991 and 2001 had serious vulnerabili-ties identified. Those tests have beendiscontinued, and the NRC now claimsthat security has been enhanced andthere’s nothing to worry about. But, a2002 report by the Project on Govern-ment Oversight found that securityforces at nuclear power plants remainunderstaffed, under-equipped andunder-trained. Further, nuclear facilityemployees surveyed in 2002 by theNRC Inspector General stated thatsafety training was based on outdatedscenarios and left nuclear sites vulnera-ble to sabotage.The agency has issuednew security regulations. Frankly, Idon’t know how effective they will be.

We will be spending at least $87billion for military and reconstructioncosts in Iraq, and that has gotten a greatdeal of attention. Many lawmakers arelining up to vote for that sort of spend-ing. It would seem prudent for Congress to mandate security improve-ments at commercial nuclear facilitiesas a part of our war on terror. Instead,Congress has worked against any legis-lation to improve nuclear security. Law-makers have stripped securityamendments introduced by Represen-tative Ed Markey (D-Mass.) from 2002energy legislation and allowed theNuclear Security Act of 2002 – whichwould have established an interagencytask force to evaluate security, emer-gency response and evacuation plans atnuclear facilities – to languish.

At press time, House and Senate con-ferees were meeting to reconcileanother package of energy legislation,passed separately by the House andSenate. I understand there are no provi-sions in either bill that address nuclearsecurity. It is unacceptable that energy

legislation could pass without provid-ing these protections for American citi-zens. The risk is too great to dootherwise. One year ago, Public Citizenjoined 10 other national environmentaland public interest groups to demandthat lawmakers enact legislation toaddress security concerns.The year haspassed, and millions who live and worknear nuclear facilities are still exposedto unconscionable risks. Public Citizenand the California group Mothers forPeace sued the agency this summer, sothat the public - not just the nuclearindustry - can have input on the rules.Hopefully, this lawsuit will achieve thedesired results and that is increasedsecurity at our nation’s nuclear plants.

Security Gap ExposedI have to wonder when the federal

government is going to realize that acargo plane can be used as a weaponby terrorists.The recent bizarre storyconcerning a man who “shippedhimself” across the country in a crateaboard a cargo plane has to make us allwonder. Certainly, this episode exposedholes in aviation security, which appar-ently had never been addressed by thehigh-profile security upgrades for pas-senger air travel. In fact, I am told thatalmost nothing relating to air cargo haschanged since the terrorist attacks 2years ago. Unlike commercial aircraft,no air marshals fly aboard cargo planes.Neither do the planes have bulletproofcockpit doors. In fact, some don’t evenhave doors. Not all shipping and freightemployees are subject to backgroundchecks. Airport areas where cargo ishandled are not as secure as passengerterminals. Any one of these lapsesshould be considered serious. In combi-nation, they should be enough to makeour national leaders take action.

Having said all of this, it is high timethat the federal government closes allgaps in our national security concern-ing aircraft flights. U.S. Senator KayBailey Hutchinson (R-Texas), a member



of the committee that oversees avia-tion, made this observation: “Despitethe progress made in passenger andbaggage safety, air cargo flies virtuallyunchecked in our skies.” If a man canput himself in a crate and ship himselfacross the country in a cargo plane, Isuspect that almost anything else cango undetected by the same route.Thisis intolerable and must be corrected.

Senate Coalition Votes To Rollback New FCC Media Ownership RulesIn a bipartisan 55-40 vote, the Senate

has rolled back the highly contentiousFederal Communications Commissionrules that would allow major media con-glomerates to own an even larger per-centage of the nation’s media andpermit cross-ownership of newspapersand TV stations in most communities. Itwill now be up to the House leadershipto pass a similar resolution to ensurethat these relaxed rules – which wouldthreaten media diversity and localism –are not enacted by the FCC.“The Senatetoday clearly re-established the principlethat separate ownership of dominantlocal newspapers and local broadcastersis essential to preserve the checks andbalances against media bias that ourdemocracy relies upon,” said Gene Kim-melman, senior policy director for Con-sumers Union.“It’s now time for federalregulators to listen to Congress and thepublic and revamp its rules to promotemore competition and diversity in localnews and information.”I understand thatmillions of people around the countrycontacted Congress to voice their oppo-sition.The Senate responded with a con-vincing vote.A ruling by the United StateCourt of Appeals for the Third Circuithas delayed implementation of the rules.

XV.THE CORPORATEWORLD

Senator Shelby Is LegitimatelyConcernedSenator Richard Shelby, Chairman of

the U.S. Senate Banking, Housing andUrban Affairs Committee, is concernedabout corporate misconduct in a seriesof high-profile accounting scandals.Aswe have mentioned on several occa-sions, these scandals have badlydamaged our economy by erodinginvestor confidence. The powerfulAlabama Senator has given his wordthat he will do everything within hispower to restore consumer confidencein our capital markets.This is most sig-nificant and should get the attention ofdecision-makers in Corporate America.Senator Shelby led the Senate bankingpanel oversight hearing on the Sar-banes-Oxley Act. It is essential that Con-gress and key government agenciestake every step required to restore con-sumer confidence and responsible cor-porate decision-making in today’sbusiness climate.

On this subject, Senator Shelby toldthe Birmingham News last month: “Ihave worked to help ensure that com-panies are held to these high standardsand wrongdoers are punished aggres-sively and to the maximum extent ofthe law.”Senator Shelby is not only verypowerful; he is also extremely wellrespected in our nation’s capitol. Hisreputation for being concerned for theplight of ordinary citizens has becomelegend in Washington.The Senator tolda meeting of the Society of Interna-tional Business Fellows in Birminghamlast month that large corporations muststrengthen “the tone at the top” and“internalize ethical financial reporting”in order to succeed. His advice to Cor-porate America was:“You can’t legislateethics, but you can make it tougher for

people who commit accounting fraudor manipulate earnings.”

Fraud Fines In Health Industry On The IncreaseThe Wall Street Journal has revealed

some shocking information concerningthe nation’s healthcare industry.According to the Journal report, thefederal government is on its way to col-lecting a record amount of fines andsettlements from the health-care indus-try this year. In the last three fiscalyears, the government has amassed$4.21 billion in fines, settlements andrestitution payments from its health-care investigations. It is most significantwhen we consider that this is well overthe $3.29 billion collected by the gov-ernment in the prior 10 years com-bined.The U.S. Department of Healthand Human Services Office of Inspec-tor General supplied this information.The federal government is expected tocollect more than $2 billion in pay-ments from HCA Inc.,Abbott Laborato-ries, AstraZeneca PLC, Bayer AG,GuidantCorp., GlaxoSmithKline PLC,Tenet Healthcare Corp. and Pfizer Inc.There are more settlements to come,according to the Journal report. Forexample, Schering-Plough Corp. antici-pates more than $150 million in liabil-ity from investigations by U.S.Attorneysin Boston and Philadelphia into allegedmarketing violations.

Enforcement actions have clearlyincreased.The number of federal crimi-nal prosecutions of health-care compa-nies and workers jumped 34% last yearto 333, nearly double the number 10years earlier. Between 1996 and thisyear, Congress more than tripled thebudget for Medicare and Medicaidfraud enforcement at the HHS Office ofthe Inspector General and more thandoubled the budget for the same typeof work by the Federal Bureau of Inves-tigation. Under a 1996 law, civil andcriminal penalties collected in health-fraud probes help fund enforcement of


antifraud laws. In addition, the late1990s saw a surge of employees andothers (known as “whistleblowers”)coming forward with fraud allegationsagainst drug companies and an increas-ing number of attorneys specializing inthose cases. If the government joins insuch a suit and wins a settlement, thosewho pointed out the fraud are entitledto a portion of the money collected.Now those cases, which can take yearsto unfold, are bearing fruit.

The companies have been underscrutiny for everything from how theymanufacture and price drugs to howthey pitch their products to doctorsand report data to regulators on patientdeaths and injuries. Guidant, forinstance, agreed to pay $92.4 millionand admitted it failed to report injuries,deaths and malfunctions linked to itsdevice for abdominal aortic aneurysms.Earlier this month, Tenet Healthcaresaid it would pay $54 million to settlegovernment allegations that itsRedding, Calif., medical center per-formed unnecessary cardiac proce-dures.The settlement didn’t include anadmission of wrongdoing. Bayer agreedto pay $257.2 million, including civildamages and a criminal fine, to settleallegations it cheated the Medicaidprogram out of discounts and rebateson two of its drugs. The companyagreed to plead guilty to charges it vio-lated the Food, Drug and Cosmetic Actand admitted it acted with “intent todefraud or mislead.”The enforcementspotlight has shifted to the pharmaceu-tical industry. Opinions vary onwhether the surge in penalties is due torising incidence of fraud or a moreaggressive stance taken by federalinvestigators.

The antifraud association, a nonparti-san group of insurers, self-insured com-panies and government investigators,estimates that 3% of the nation’s totalspending on health care is lost to fraudevery year. With this year’s projectedspending at $1.67 trillion, that meansmore than $50 billion is expected to belost, according to the association. Over

the years it became quite evident thatCorporate America was living by onestandard and street criminals another.Now we are seeing boardroom fraud,which certainly appears to be criminal,being exposed and prosecuted both inthe civil and criminal courts.

Asbestos Fine For W.R. GraceRecently, W.R. Grace & Co. was

ordered by a federal court to pay a $54.5million fine for asbestos cleanup costs ata Montana mining site. The court alsoruled that the Columbia, Maryland,company is responsible for all appropri-ate future costs to complete thecleanup. Grace estimated its total liabil-ity at about $110 million, payment ofwhich is subject to the outcome of itsChapter 11 bankruptcy proceedings.The ruling in favor of the federal govern-ment involves the largest fine ever in alawsuit brought under the federal Super-fund law. Based on Grace’s latest quar-terly report filed with the Securities andExchange Commission, the companyhad set aside $61 million by June 30 ofthis year to handle the lawsuit by theEnvironmental Protection Agency andfuture cost recovery claims expected tobe made by the agency.

SEC Charges American International Group With FraudLast month, the Securities and

Exchange Commission took enforce-ment actions against American Interna-tional Group, Inc. (AIG) and othersarising from an accounting fraud com-mitted at Brightpoint, Inc. The fraudcharges against AIG resulted from AIG’srole in fashioning and selling a pur-ported “insurance” product that Bright-point used to report false andmisleading financial information to thepublic.AIG agreed to pay a $10 millioncivil penalty to settle the Commission’scharges.The penalty reflects AIG’s par-ticipation in the Brightpoint fraud, aswell as misconduct by AIG during theCommission’s investigation of this

matter. Stephen M. Cutler, Director ofthe SEC’s Division of Enforcement,stated in a news release: “This caseshows that the Commission will pursueinsurance companies and other finan-cial institutions that market or sell so-called financial products that are, inreality, just vehicles to commit financialfraud.”

It appears that AIG worked hand inhand with Brightpoint personnel tocustom-design a purported insurancepolicy that allowed Brightpoint to over-state its earnings by 61%.The transac-tion amounted to a transfer of cashfrom Brightpoint to AIG and back toBrightpoint. By disguising the money as‘insurance,’AIG enabled Brightpoint tospread over several years a loss thatshould have been recognized immedi-ately. The SEC spokesman said thatduring the course of the Commission’sinvestigation,“AIG did not come clean.”AIG withheld documents and commit-ted other abuses, as outlined in theadministrative order, compounding itsoverall misconduct.

AIG developed and marketed a so-called “non-traditional” insuranceproduct for the stated purpose of“income statement smoothing,” i.e.,enabling a public reporting companyto spread the recognition of knownand quantified one-time losses overseveral future reporting periods. In thiscase, the key to achieving the desiredaccounting result was to create theappearance of “insurance.” Specifically,AIG agreed to make it appear that the“insured” (Brightpoint) was paying pre-miums in return for an assumption ofrisk by AIG. In fact, Brightpoint wasmerely depositing cash with AIG thatAIG then refunded to Brightpoint.AIGissued the purported insurance policyto Brightpoint to allow Brightpoint toconceal $11.9 million in losses thatBrightpoint sustained in 1998. As aresult of the transaction, Brightpoint’s1998 financial statements overstatedBrightpoint’s actual net income beforetaxes by 61%.

The Commission’s Orders direct



each respondent to cease and desistfrom further violating the respectivesecurities law provisions.The Commis-sion’s Order with respect to AIG alsodirects AIG to (i) disgorge, with pre-judgment interest, the $100,000 fee itcharged to Brightpoint for putting thePolicy together, and (ii) retain an inde-pendent consultant to make bindingrecommendations concerning AIG’sinternal controls to ensure that AIG’sinsurance products will not be used inthe future to violate the securities laws.In addition, the Commission has alsofiled a related civil action in federalcourt in New York.Without admittingor denying the complaint’s allegations,all defendants except one individualhave settled the civil action, with AIGagreeing to pay a $10 million civilpenalty and Brightpoint agreeing topay a $450,000 civil penalty. Other indi-vidual defendants agreed to pay a totalof $145,000.

Liability Of Directors And OfficersThe actions of companies such as

Enron,Arthur Andersen,Tyco, and nowlocal addition HealthSouth have causedgreat economic problems for ourcountry. Nowadays, it is almost impossi-ble to turn on the television or openthe newspaper without being con-fronted with yet another corporatescandal. In the wake of these revela-tions,Americans are losing their jobs,and investors in the stock market areseeing their retirement savings evapo-rate overnight. In an effort to confrontthe issue, separate corrective and reme-dial measures were taken by the Legis-lature and the Judiciary. Congresspassed the Sarbanes-Oxley Act in anattempt to curb corporate wrongdoingand increase accountability.

The question has been raised con-cerning legal exposure of corporateboards of directors. A Delaware courthas issued a landmark opinion examin-ing the legal duty owed by a board ofdirectors.And just recently, the AlabamaCourt of Civil Appeals addressed the

issue of personal liability of corporateofficers to creditors of their corpora-tion.These topics are discussed below.

Prompted by numerous corporateand accounting scandals, Congresspassed the Sarbanes-Oxley Act of 2002,compelling U.S. businesses to clean uptheir act.The Act directly affects pub-licly held companies and their employ-ees, specifically those most connectedwith the governance of public corpora-tions. It also affects corporate managersand directors, accountants, and lawyers.The Act’s goals are laudable: improvingpublic company accounting, reformingthe governance of public companies,increasing the personal responsibility ofChief Executive Officers (CEOs) andChief Financial Officers (CFOs) inissuing company financial statementsand security filings,making financial dis-closure more transparent and under-standable by investors, and enhancingthe objectivity of securities analysts.Among other things, the Act does thefollowing:

• It requires the CEO and CFO of a cor-poration to certify company financialreports.

• It establishes criminal liability forfailure of corporate officers to certifyfinancial reports, with penalties of upto 20 years imprisonment and $5million in fines for willfully certifying astatement that does not follow the Act.

• It requires the CEO and CFO toforfeit certain bonuses and compen-sation following an accountingrestatement that has been triggeredby a violation of securities laws.

• It prohibits insider trades duringpension fund blackout periods(periods when an officer or directormay not buy or sell shares ofcompany stock).

• It prohibits personal loans to direc-tors or executive officers.

• It requires executives and principalstockholders to report changes insecurities ownership within twobusiness days.

• It requires the disclosure of all off-balance-sheet transactions and rela-tionships that may have a materialeffect on financials.

• It creates the Public CompanyAccounting Oversight Board.

• It prohibits an outside auditor fromdoing non-audit services for theclient, such as consulting work.

• It directs the Securities andExchange Commission to issue rulesof professional responsibility forattorneys who practice before thecommission.

The Sarbanes-Oxley Act creates a spe-cific framework of corporate gover-nance by placing stringent controls overaccounting practices. It is a positive stepin preventing and identifying fraudulentbusiness practices. If they have not doneso already, any person who serves on acorporate board should become familiarwith its provisions.

The case of In re Caremark Interna-tional, Inc. Derivative Litigation,decided by the Delaware ChanceryCourt in 1996, has directly impactedthe role of the board of directors. In theseminal case, the shareholders of Care-mark International sued the corpora-tion and the board of directors forviolations of federal law occurringwhile the directors were serving on theboard. Caremark, a healthcare servicesprovider, had pleaded guilty to illegali-ties such as payments made to per-suade doctors to prescribe Caremarkservices.As a result, the company wasordered to pay $250 million in civil andcriminal fines, as well as reimburse-ments. Plaintiff-shareholders, on behalfof the company, sought recovery ofthese losses from the individual defen-dants who constituted the board ofdirectors.

The court concluded that a director’sduty of care arises in two distinct con-texts: a decision-making obligation anda non-decision-making (supervisory/monitoring) obligation. In reviewingthe decision-making process, the courtlooks to whether the process


employed in reaching the decision wasirrational or made in bad faith. Thecourt stated:“[A] decision substantivelywrong,…or ‘stupid’…‘egregious’ or‘irrational’, provides no ground fordirector liability, so long as the courtdetermines that the process employedwas either rational or employed in agood faith effort to advance corporateinterests.” (emphasis in original.)

In reviewing the monitoring aspectof the duty of care, the court observedthat the directors’ liability may arisefrom a failure of the board to be “rea-sonably informed.” In order to establisha duty of care for failure to monitor, thefollowing elements must be met: (1)the directors knew or (2) should haveknown that violations of law wereoccurring and, in either event, (3) thedirectors took no steps in a good faitheffort to prevent or remedy that situa-tion, and (4) such failure proximatelyresulted in the losses complained of.

The court opined that “it is importantthat the board exercise a good faithjudgment that the corporation’s infor-mation and reporting system is. . . ade-quate to assure the board thatappropriate information will come toits attention in a timely manner as amatter or ordinary operations, so that itmay satisfy its responsibility.” The courtheld that there was no evidence thatthe director defendants were guilty oftheir oversight function, because thecorporation had information systems inplace. Indeed, in order to establish lia-bility, a very high burden rests on theplaintiff, because only an “utter failureto attempt to assure a reasonable infor-mation and reporting system” is groundfor liability from a breach of the duty tomonitor.The Caremark opinion is rele-vant because it gives directors anadded incentive to establish compli-ance programs to detect corporatewrongdoing: avoid personal liability.

Just a few months ago, the AlabamaCourt of Civil Appeals issued a decisionregarding the personal liability of cor-porate officers and directors to credi-

tors of their corporation. In GalacticEmployer Services, Inc. v. McDorman,the plaintiff business brought a suitagainst a corporation, its officers and itsboard chairman, on theories of breachof contract, unjust enrichment, fraud,misrepresentation,civil conspiracy,neg-ligence, wantonness and vicarious lia-bility. Summary judgment was grantedto an officer and the board chairman,and plaintiff appealed.The issue beforethe Court of Civil Appeals was whetherthe corporate officers owed andbreached a duty to a third-party credi-tor in hiring and then failing to super-vise a deceitful CEO. The AlabamaCourt held that the chairman and thevice-president of the corporation werenot liable for the alleged negligence inhiring and supervising the CEO whohad personally committed the wrongscomplained of.

The Galactic court began its analysisby recognizing that “Alabama case lawprovides two differing theories pur-suant to which an officer or director[of a corporation] may be personallyliable, or owe a duty, to third parties.The first line of cases provides that [a]corporate agent who personally partici-pates, albeit in his or her capacity assuch agent, in a tort is personally liablefor the tort.” In those cases, the courts,although not explicitly stating the basisfor liability, have held officers anddirectors personally liable for theiractive participation in an intentionaltort.” The court cited examples inwhich officers or directors actively par-ticipated in formulating, manufactur-ing, labeling and distributing adefective product, breached a contract,or fraudulently asserted a corporateexistence, among other things. TheGalactic court called this theory of per-sonal participation the “general rule.”

The Galactic court then addressedwhether officers or directors may beheld liable to the corporation’s credi-tors for negligence.The court held thatAlabama is one of a number of jurisdic-tions that generally do not provide for

officer or director liability to creditorsfor negligent or ultra vires acts, on thebasis that there is no duty owed to thecreditor.The court noted that officersof a corporation are ‘trustees’ for itsstockholders,but not for its creditors.

Applying the two theories to the factsof the case, the Galactic court held thatthe corporate officers and directorswere not liable for their acts of negli-gence in hiring and supervising a “badofficer,” which resulted in the corpora-tion’s inability to pay the plaintiff. Inaddition, the court held that the plain-tiff-creditor failed to present substantialevidence of personal participation ofthe officers in an intentional tort,because they did not commit thealleged misrepresentations and fraudu-lent acts.A certiorari petition is pendingin the Alabama Supreme Court. If ourhighest court decides to grant certiorariand resolve this disputed issue, regard-ing duty to corporate creditors theimpact to corporate officers and direc-tors can be enormous.

I really can’t understand why thereshould be a legal distinction betweennegligent and intentional acts relatingto the duty owed by corporate officersand directors. There is a growingconcern with the unethical conduct onthe part of Corporate America. It makesno sense to restrict the legal duty owedby the corporate decision-makers.Hopefully, court decisions combinedwith congressional action will result inan increase in corporate ethics andaccountability.That is what people allover the country are demanding.

XVI.BUSINESS LITIGATION

Good Work Pays OffThe Business Litigation Division of

our firm was solely responsible for han-dling the Monsanto case in federal



court, which was discussed in anothersection of this issue. Rhon Jones, MarkEnglehart, David Byrne, Scarlette Tuley,and Larry Golston spent most of theirworking hours over the past 2 years onthis important project. Other full-timepersonnel who did outstanding work onthis case, include Donna Puckett, KristiHinton, Kelly Castleberry, Bonnie Foster,Teresa Curtis, Susan Harding, and Davidade Gonzalez. In addition, we had tobring in a good number of temporaryemployees to help out due to themassive amount of work required. It wasa team effort from beginning to thispoint. I was fortunate to have been apart of the team.There is much yet to bedone to make sure the settlement iscarried out. We are most fortunate tohave judges who have retained jurisdic-tion over the cases to make sure the cor-porate defendants do all that is requiredof them under the court orders.

Another Corporate LawsuitRather than go to mandatory, binding

arbitration,AT&T has sued its long- dis-tance rival, MCI in the courts. AT&T’slawsuit was filed in federal court andaccuses MCI and onvoy of conspiringto unlawfully route MCI phone calls viaCanada to AT&T.This allegedly woundup paying MCI costly fees to connectcalls.While some of these involve oldallegations,AT&T is now charging thatMCI (formerly WorldCom) withmassive frauds and dishonest measures.Apparently, a good number of compa-nies were involved in the improperrouting of calls by MCI. Several ofAT&T’s claims in its lawsuit seekdamages of not less than $10 million.The racketeering claims will carrytriple damages if proved.This is anotherexample of how Corporate America“likes” the court system when they arethe victims. It is also interesting to notethat these corporations don’t hesitateto sue for fraud and seek punitivedamages.

Lawyers Can Be WhistleblowersThe American Bar Association (ABA)

recently voted to allow corporatelawyers to reveal wrongdoing to acompany’s upper management. Ifupper management fails to act, thelawyer is now free to take confidentialinformation about the wrongdoingoutside of the company.The rule effec-tively allows lawyers to be whistle-blowers against corporations theyrepresent.The ABA’s action is a positiveresponse to recent corporate scandalsand cover-ups that have cost sharehold-ers millions of dollars and undercutpublic faith in the stock market. Hope-fully, this will prevent future corporatedebacles such as Enron if corporatelawyers take this new rule to heart.

Jury Awards $6 Million To Birmingham RV Cleaning CompanyRecently, a Jefferson County jury

returned a $6 million verdict in a tradesecrets lawsuit.As a result, a Michigancorporation must pay a small Birming-ham company for allegedly stealing itsconfidential product information todevelop a competing line in the RVcleaning industry.The jury ordered AnnArbor, Michigan-based Thetford Corp.,which produces cleaning products forrecreational vehicles, to pay $3 millioneach in compensatory and punitivedamages to Environmental Products ofAmerica.The lawsuit alleged that Thet-ford learned confidential informationwhile negotiating to acquire the five-employee Alabama company from 1999to 2001. Thetford subsequently usedthat information to develop a compet-ing product line.

Evidence at trial revealed that Thet-ford also stole some of EPA’s biggestclients while maintaining the acquisi-tion was continuing. The acquisitionnever went through and EPA filed suitin 2002. Many large corporationsbelieve they have to lie and deceive inorder to gain an unfair advantage.This

takes cases like this out of the normaleveryday competition that is anaccepted part of the business world.During the trial, testimony showedthere was a confidentiality agreementin the acquisition that restricted Thet-ford’s use of the information to assess-ing value to EPA. Instead, Thetfordallegedly stole the information andused it to compete against EPA. Obvi-ously, the jury, after hearing all of theevidence, agreed with the Alabamacompany. The case was handled byDennis Goldasich and Irby Fischer ofthe firm of Cross, Poole, Goldasich &Fischer from Birmingham.

XVII.ARBITRATIONUPDATE

Arbitration In Insurance PoliciesEvery now and then we hear about a

victory in the arbitration wars.The fol-lowing, while many may consider it asmall victory, is still a win.The NationalAssociation of Insurance Commission-ers has been working on an interstatecompact for uniform approval of insur-ance products.The first draft of NAIC’sfirst National Standards Document bansmandatory arbitration clauses.This pre-serves protections that exist in roughlyhalf of the states and potentiallyextends important protections in theothers.This comes as the result of a lotof folks working hard to lobby andeducate the Insurance Commissionersabout the problem. Our firm has playeda small part in that effort. Hopefully,there will be a model law, althoughobtaining that won’t be easy. Neverthe-less, this is a great first sign that thecommissioners are beginning to realizewhat is going on with the misuse ofarbitration. Paul Bland of Trial Lawyersfor Public Justice, Alice Weiss, andJackson Williams of Public Citizen aredue special thanks for their hard workon this project.


Waddell & Reed Ordered To Pay Ex-Broker You will recall an earlier piece on a

large arbitration award. Now, an arbitra-tion panel again has ordered a financialservices company to pay a formeremployee $25 million in punitivedamages. This comes seven monthsafter a New York appeals court over-turned the initial arbitration award.Waddell & Reed Financial Inc. says itwill again appeal the award, one of thelargest ever granted in arbitration. Let’stake a look at what brought all of thisabout. In August 2001, a three-memberarbitration panel of the National Associ-ation of Securities Dealers orderedWaddell & Reed to pay $27 million toConnecticut broker Stephen Sawtellefor allegedly smearing his reputationand trying to steal his clients after hewas fired in 1997. Mr. Sawtelle claimedhe was fired in retaliation for talking tothe Securities and Exchange Commis-sion as it investigated a former Waddell& Reed broker in the embezzlement of$3 million. A New York state courtreduced the compensatory damagesfrom $1.8 million to $1.08 million inJune 2002, but upheld $25 million inpunitive damages. In February, theAppellate Division of the New YorkSupreme Court found the punitivedamages were “grossly disproportion-ate to the compensatory damagesawarded” and ordered arbitrators toreconsider. The arbitrators reinstatedthe large award, according to reports,because of the “horrible campaign ofdeception and persecution” thatWaddell & Reed carried out against Mr.Sawtelle.

It’s Time For Consumers To UniteThe nation’s courts are still strug-

gling with the massive numbers of arbi-tration cases being appealed. I havereason to believe that consumers arefinally waking up to the fact that arbi-tration is no good for people and great

for Corporate America. Once con-sumers unite and take the fight to thepolitical arena and let their votes“count as one,” things will finallychange for good.The U.S. Chamber ofCommerce, which has become anextension of the National Tort ReformAssociation, can try to “buy” the courts.Consumers, on the other hand, don’thave either the finances or the desireto “buy” justice. However, they can jointogether and collectively influenceelections with their votes. Congresswill do something about arbitrationonce that occurs. But until they hearfrom folks back home on the issue,nothing but “talk” about the issue willoccur. Saving the jury system is a chal-lenge and one that must be met. It iscertainly time for consumers to uniteand take their battle to the politicalraces.

XVIII.NURSING HOMEUPDATE

Nursing Home Neglect: A NationalProblemWe have consistently reported con-

cerns or problems with nursing homeneglect here in Alabama and surround-ing areas. However, the problems thatour elderly are currently facing in manynursing homes today are not just con-fined to the southeast. In fact, manyinstances of nursing home neglect andabuse are occurring throughout thecountry.These events are particularlytroubling, since approximately 1.7million elderly and ill residents live innursing homes nationwide.

According to a federal report, thenumber of nursing homes nationwidecited for serious patient care violationsremains unacceptably high. TheGeneral Accounting Office (GAO), Con-gress’ investigative arm and watchdogagency, found that about 20% of the

nation’s 17, 000 nursing homes werecited for violations that put elderly andsick residents at risk for physical harmor, in extreme cases,death.Even thoughthe study’s authors noted the severeviolations that state inspectorsreported between July 2000 andJanuary 2002 represented a declinefrom the previous eighteen months,government auditors declared the riskthat residents face in nursing homesremains “a cause for concern.”

This government report echoes arecent Gannett News Service (GNS)investigation that found nearly three-fourths of the most severe andrepeated nursing home patient caseviolations were clustered in a dozenstates spread throughout the nation.The GNS report also found significantweaknesses in the federal and statesafety net designed to protect nursinghome residents. The GAO report toofound that many state inspectionprocesses are too predictable, allowingnursing homes to prepare for theinspections. About one-third of themost recent state surveys nationwideoccurred on a regular schedule, allow-ing homes to conceal problems if theychoose to do so. And, according toGAO, states are failing to report seriousviolations to federal government asrequired. From January 2000 to March2002, the states referred 4,310 cases forpossible sanctions, but did not reportanother 711. Federal auditors foundthat despite recent efforts to improvenursing home inspections, weaknessesand inconsistencies remain. Forexample, federal surveyors who havespot-checked the work of their statecounterparts found serious patient careviolations at 16 of 85 nursing homesthat had been declared free of viola-tions. These violations include thenursing home staff’s failure to preventpressure sores, failure to consistentlymonitor pressure sores and failure topromptly notify the physician so thatproper treatment could be started.

The above-mentioned reports



explain how a resident in Montgomery,Alabama can suffer the same or similarinjuries as a resident in a nursing homein Lima, Ohio.This occurrence can bethe result of the same owners runningbelow average nursing homes in bothOhio and Alabama or individual nursinghomes modeling their “business”similarto other deficient nursing homes, inattempt to maximize their profitability.Whatever the reasons for this problem,unfortunately, it is nationwide.

Alabama Should Follow The Florida Senate’s LeadThe Florida Legislature has been

struggling to confront the issue of highmedical malpractice insurance premi-ums, as have numerous other statesaround the country. In Alabama, thenursing home industry, as many of youknow, proposed caps on damages inlawsuits during our last session, statingthat their liability insurance premiumshad risen dramatically in past years dueto lawsuits. In a press release last year,the Florida Medical Association said,“Due to an explosion of frivolous law-suits and excessive awards, medicalmalpractice insurance rates forFlorida’s doctors are skyrocketing.”

In a procedure that I hope otherState Legislatures will consider using,the Florida Senate placed insurancecompany officials and medical lobby-ists under oath to get the truth. SandraMortham, Chief Executive Officer forthe Florida Medical Association, whenasked under oath if the reason for themalpractice insurance crisis wasbecause of frivolous lawsuits, stated:“Certainly, I’ve never said that…(ourmembers are telling us) they are havingsubstantial problems paying their pre-miums.” Robert White, president of theFlorida Professional’s InsuranceCompany, which handles much of themedical malpractice insurance inFlorida, stated the following inresponse to a similar inquiry:“I don’tthink you can have a frivolous lawsuit

in the state of Florida. I think Floridafixed its frivolous lawsuit problem in1988.” He further stated:“I’m a believerthat there is no more malpractice thanthere was 10 years ago (and) as a per-centage of all the cases we see, thereare no more (malpractice cases) thanthere was 20 years ago.”This sworn tes-timony in Florida raised the question ofhow the conclusion was reached thatrising malpractice insurance premiumswere related to lawsuits. It was foundthat the information had come from astudy sponsored by the Florida Hospi-tal Association.

The Alabama Legislature and otherlegislatures around the country shouldsit up and take notice of what occurredin Florida. Politicians should not passlegislation that strips away the rights ofindividuals based on the self-reportedfindings of the very special-interestgroup that proposed the legislation. Icommend the Florida Senate on theirwillingness to put people under oath toget at the truth.As Florida Senator TomLee (R-Brandon) told the St. PetersburgTimes after hearing this testimony:“Weare not going to put legislative findingsin a bill that can’t be sustained by theevidence….”

In Alabama, the nursing home indus-try is preparing again to offer theirdamage caps bills during next year’ssession. I urge the Alabama Legislatureto make sure they know the truthbefore they pass legislation that willhurt Alabama nursing home residents. Iam convinced that the fear of perjurycharges would certainly get the atten-tion of persons giving testimony beforelegislative committees.

Long Term Care Facilities Form ARisk Retention Group There has been a great deal of talk in

Alabama about insurance companiesrefusing to write liability insurance fornursing homes. In fact, some facilityowners are claiming they can’t get cov-erage and that companies are leaving

Alabama. A group of long term carefacilities in Pennsylvania and Ohiorecently licensed a risk retention group(RRG) in Montana to insure their pro-fessional and general liability expo-sures. Faced with escalating insurancecosts – despite excellent loss experi-ence – the group worked with ORGCaptive Management to license theRRG in Montana in less than 6 weeks.Montana had prior experience licens-ing healthcare captive insurance com-panies.These companies are formed byhealthcare providers so that they caninsure themselves. The fact that thefacilities had excellent claims historiesand still were being charged large rateincreases is most significant. This ispretty good proof that the insuranceindustry is “crying wolf” as usual. It alsoreveals that there are companies eagerto write nursing home coverage.

Nursing Home Aides Beat 81-Year-Old ResidentIt was reported last month that an

81-year-old nursing home resident,Willie Mae Ryan, died after beingbeaten by nursing home aides while inher bed.The woman was a resident ofDallas County Nursing Home inArkansas. Two nursing assistants, 17-year-old Shermika Rainey and 44-year-old Gayla Wilson, have been charged inher beating death. According toreports, Wilson, one of the aides, toldRainey that she was tired of the resi-dent “being disrespectful” and led theteenager into her room. Rainey toldpolice that Wilson ordered her to holdRyan down while Wilson beat thewoman with brass knuckles.The poorwoman was transported to a hospitalwhere she died 2 weeks later. Thevictim’s family, along with the AmericanAssociation of Retired Persons (AARP),is encouraging the Arkansas Legislatureto pass better laws and regulations pro-tecting seniors from abuse. During apress conference following the death,the AARP called for the creation of a


special legislative committee to investi-gate the problem of inadequate nursinghomes and abuse.There has now beena civil lawsuit filed by the family againstthe nursing home for failure to super-vise its employees. The state did anassessment of the facility and learnedthat the home had placed residents in“immediate jeopardy” and delivered“substandard care.”

How Families Can Help Preventthe Development of Bedsores In a scenario that is all too common,

a family contacts us upon “discovering”that one of their family members whois a resident at a nursing home is suffer-ing from a bedsore. The horror andgrief that the family is experiencing atviewing such an open lesion on theirloved one is completely understand-able. Indeed, finding your mother orgrandmother with an open, draininghole in her body would cause even themost stoic of family members tobecome extremely upset. Unfortu-nately, we don’t see most of the familymembers until their loved one dies.

We have learned that many peoplesimply don’t know what a bedsoreactually is. Even when they see bed-sores, many consider them to be minorin nature. However, that is far fromaccurate. Bedsores are referred to bythe medical community as decubitusulcers. However, they can most easilybe understood by reference to anothercommon name, pressure sores. Thesewounds, as the name “pressure sore”indicates, are caused by pressure.Whenthe body is allowed to lie in one spotfor too long a period of time, pressurebuilds up over certain areas. Theseareas of increased pressure usuallyoccur over bony prominences and inbody parts wherein the skin is in closecontact with the underlying bone. Inthese areas of increased pressure,gravity causes the body’s own weightto cut off the circulation of blood tothis area. Once the circulation of blood

is cut off to that particular area, oxygenis unable to enter into the area ofincreased pressure.When this occurs,the skin essentially begins to die.

In normal, fully functional and cogni-tively aware individuals, it is commonfor the brain and body to sense areas ofincreased pressure.A common exampleis for someone who sits in a chair fortoo long a period of time in one partic-ular position to switch positions or insome way move their body so that thepressure from the chair is focused onanother part of the body.We do this lit-erally hundreds of times a day withouteven thinking about it.However,elderlyindividuals may be immobile, unable tomove themselves or may have mentaldeficits in which the brain does notrecognize the signals being sent fromthe body that pressure needs to berelieved by changing position. Forexample, a severely dementedAlzheimer’s patient may not under-stand because of her dementia that sheneeds to stand up, or at least movearound, in her chair or wheelchair. Shemay instead stay seated in her chair orwheelchair for hours at a time in oneparticular position without ever realiz-ing that her body is being damaged.

In a perfect world, the Alzheimer’sresident referred to above wouldreceive adequate nursing care andsupervision from the nursing homesuch that she would be moved aboutduring the day and not allowed toremain seated in one position.However, those familiar with thisnewsletter no doubt understand thatfamilies living in the real world cannotrely solely upon the nursing staff andnursing facilities to care for their familymembers. The corporations that runnursing homes generally keep themunderstaffed to such a level that thenurses in the facility do not have timeto turn and position residents in thefacility in accordance with recognizedstandards and practices. Thus, thefamily members of a nursing home resi-dent must do whatever they can to

help assure that their family member isnot afflicted with bedsores.

The first step in preventing bedsoresin family members is to be vigilant.Visityour family member at the nursinghome often.Also vary the times of yourvisits so that the nursing home staff willnot be able to expect you at a particulartime on a particular date.This assuresthat you will obtain a spontaneous andaccurate representation of what yourfamily member is experiencing in thenursing home when you are not there.

The second step, and perhaps themost difficult step, involves overcom-ing embarrassment. Pressure sores bytheir very nature generally occur inareas that we consider private. Forexample, bedsores commonly occur onthe buttocks or on the sacrum, thelower back, and upper buttocks area.Most family members do not wish toexamine another family member inthese private areas. However, if yourfamily member is immobile, unable tomaneuver himself or herself or suffer-ing from some type of cognitive deficit,you must take it upon yourself toexamine him or her from head to toe toassure that he or she is being takencare of.This type of resident is gener-ally unable to monitor themselves inthis fashion and will rely upon thenursing staff for such care.To keep thefacility “honest,” you must get past yourembarrassment and monitor, to theextent possible, your loved one.

Persons who have family members innursing homes should also familiarizethemselves with some common termi-nology utilized by nursing home per-sonnel in reference to bedsores. Youshould know that bedsores are catego-rized along a continuum from Stage I toStage IV. Stage I usually represents abeginning bedsore and can representan area of redness, while Stage IV bed-sores are generally deep, open woundsthat extend down into the muscle andsometimes the bone below the skin.These bedsores are generally measuredin centimeters and are described using



medical terms. Some of these medicalterms include; (1) necrotic tissue –dead tissue; (2) slough – dead or dyingtissue that has separated from thewound bed or sides of the wound; and(3) purulent drainage – pus filleddrainage. If left untreated, bedsores canworsen and become infected. Infectedbedsores can lead to a systemic infec-tion and ultimately kill the resident.

Finally, if a bedsore does develop, askquestions.Ask the nursing home “whydid this bedsore develop?”;“how did thisbedsore develop?”;“what is the status ofthis bedsore?”;“when will this bedsorebe healed?”; and “what treatment isbeing given to my family member toresolve this bedsore?”. These are allextremely valid questions that should beasked when any bedsore occurs. Indeed,assure that the nursing home is aggres-sively and steadfastly treating anybedsore that does develop, because animproperly treated bedsore can becomean infected, life-threatening ailment.

Please follow the above suggestions ifyou have a loved one in a nursinghome. Generally speaking, nursinghomes are short-staffed and, accord-ingly, bedsores are all too commonoccurrences.While family members andthe resident should be able to rely uponthe professional services of the nursinghome, the family should also “keep aneye out” for their family member. Failureto prevent bedsores is inexcusable andshouldn’t be tolerated.They can easilybe prevented. If they do develop, theymust be detected early and treated.Failure to do so can cost a life.

XIX.HEALTHCAREISSUES

Are Canada’s Cheap Drugs TheAnswer?A recent article in the USA Today

raised some most interesting questionsconcerning the purchase of prescrip-tion drugs by American citizens fromCanada.The Food and Drug Administra-tion has issued a warning concerningthe purchase of foreign drugs.The FDAsays that cities and states should notencourage people to purchase drugsfrom other countries, nor should theylook to import drugs from places suchas Canada to relieve their own strappedbudgets. The FDA, in response to theCalifornia Attorney General’s office,said any city or state that tried toimport drugs from Canada or othercountries would likely violate a federallaw and would raise public health con-cerns. Peter Pitts, the FDA’s associatecommissioner for external relations,told the USA Today: “Once you givepeople the false impression that order-ing over the Internet is OK, it opens upa Pandora’s box of dangers.”

Several states are considering legisla-tion to make it easier for residents tobuy drugs from Canada.The FDA letterand the interest by local governmentsin purchasing drugs from Canada comeas the drug industry tries to clampdown on international pharmacies inCanada — and as Canadians themselvesdebate the effects of the growing salesof drugs to U.S. residents, now esti-mated at close to $1 billion. USA Todayreports an increasing tension on bothsides of the border:

• Some Canadians say the internationalpharmacies are exacerbating a short-age of pharmacists by luring themfrom government-funded hospitalsand clinics. Conversely, the pharma-cies are providing clerical and

service jobs in some regions.

• Medical societies in Canada havecondemned as unethical the practiceof doctors paid to “co-sign” prescrip-tions for U.S. patients they havenever seen.

• Some Canadian pharmacists feardrug makers may limit supplies toCanada, raise prices or forego launch-ing new drugs there if foreign salescontinue.

• U.S. customers — often seniors onfixed incomes—are protesting asAmerican regulators try to clampdown on Canadian sales throughlegal actions against operators whohelp Americans purchase drugs viathe Internet. They say the servicesprovide drugs to people who other-wise would not be able to afford them.

On September 16th, the FDA tookaction to stop the influx of the Cana-dian drugs.This dealt with a mayor inSpringfield, Illinois,who refused to stopbuying from CanaRX, a Canadian sup-plier. According to reports, some10,000 city workers may save up to $9billion in their prescription drug pur-chases over a period of years.The FDAshould have to answer one very simplequestion:“How can Canadian pharma-cies sell drugs made by American drugcompanies for prices that are substan-tially less than what American citizenspay here for the identical drugs?”

Humana To Settle Shareholders’LawsuitPhysicians Corporation of America

Inc., now owned by Humana Inc., hasagreed to pay $10.2 million to settle ashareholders lawsuit claiming the stockprice was inflated. Settlement paperswere filed calling for a total recovery of81 cents per share, or 44 cents pershare after expenses, for the owners of12.6 million shares of common stock.Shareholders claimed Physicians Cor-poration tried to hide its losses on itsfinancial statements and issued mislead-


ing disclosures.That, they said, causedits stock price to be more than $5 ashare higher than it should have beenfrom March 31, 1996, to February 20,1997, as the company’s workers’ com-pensation business went sour. Physi-cians Corporation underwroteworkers’ compensation policies andadministered self-insured funds. Thecompany agreed to settle the 6-year-oldclass action lawsuit after a U.S. DistrictCourt Judge denied the company’s dis-missal motions and was ready to set atrial date.The two sides are asking forprompt preliminary approval and afinal hearing on the settlement packagein November.

Doctors’ Lawsuit Settled Cigna HealthCare has settled the

lawsuit brought by more than 700,000physicians, state and other medicalsocieties. The national class action,pending in a Miami federal court, wassettled with agreements for mutualtransparency and a cash payment tothe physicians from Cigna.The Philadel-phia-based health care company faceddoctors’ charges it violated federalstatutes against conspiracy, aiding andabetting claims, and claims of breach ofcontract, unjust enrichment and viola-tions of various state “prompt pay”statutes. In the settlement, Cigna said itwould:

• Allow physicians to choose betweentwo forms of monetary compensa-tion: a per capita, fixed payment froma $30 million settlement fund forphysician class members who com-plete a claim form; or doctors canresubmit claims for payment filedduring the class period;

• Contribute $15 million to a founda-tion governed by state medicalsociety parties to the settlement.Thefoundation would be for charitablepurposes including fostering publichealth improvement initiatives;

• Appoint an external party to review

and resolve billing or payment dis-putes;

• Pay a fee to physicians for administer-ing vaccines and other injectabledrugs, in addition to paying for thedrugs themselves;

• Create a physician Web site toprovide detailed information aboutCigna claim coding policies andother payment guidelines;

• Create a physician advisory commit-tee through which physicians canoffer input to Cigna;

• Limit physician fee schedule changesto one in any calendar year;

• Establish an e-mail procedure toallow physicians to make inquirieson fee schedules and to obtain claimcoding information;

• Eliminate the requirement that physi-cians submit copies of their medicalrecords to be paid for most officevisits occurring on the same day assurgeries and other procedures;

• Pay interest on fully documentedclaims not paid within the time limitsset in the agreement; and

• Pay legal fees to be determined by thecourt.

The doctors and groups who filedsuit put the value to physicians of busi-ness practice improvements and invest-ments at about $400 million. Theplaintiffs put the dollar value of physi-cian administrative overhead savingsfrom other changes and business prac-tices at about $300 million during theterm of the agreement.All of this makesthe settlement worth in excess of $700million.The plaintiffs said they expectthe agreement to streamline communi-cation between physicians and Cigna,to reduce administrative complexity inthe claims payment system and to helpimprove the quality of the health caredelivery system.The settlement is beingcalled a landmark that recognizes theimportance of physicians in health caremanagement.

Lead Poisoning Still A ProblemThere has been a great deal of atten-

tion concerning the problems causedby lead poisoning of children. Thefederal goal to eliminate lead poisoningin children by 2010 seemed achievablewhen it was set in 1991. Clearly, withbans on leaded gasoline and paint inplace, progress has been made. Thenumber of cases detected has fallen by50%. Still, hundreds of thousands ofsmall children, most of them black, His-panic and Asian, face one of the mostpreventable environmental hazards inthe nation. Unfortunately, this happenswhen they simply breathe inside theirhomes. Tests have shown that morethan 400,000 children from 1 to 5 yearsof age have blood lead levels above thatconsidered toxic by the Centers forDisease Control.That number would bemuch greater if the index was loweredas recommended. It would also bemuch higher if more children were reg-ularly tested.

Most cases occur in large and mid-size cities where housing once consid-ered good, is now deteriorating. Apoisonous substance, lead is present inpaint used on older buildings. Whenlead paint peels or is improperlyremoved, or even when it is scraped asa window is opened, it unleashes a dustfine enough to be both ubiquitous andundetected as children crawl on it andtouch it. Poisoning occurs when lead isswallowed or inhaled.While lead is dan-gerous to everyone, children run thehighest risk of neurological and cogni-tive damage. Lead poisoning problemsmost often arise in older buildings situ-ated in low-income neighborhoods.Physical damages suffered after expo-sure to lead poisoning include growthimpairment, diminished intelligence,decreased hearing ability, hyperactivityand an inability to concentrate, accord-ing to the National Center for Environ-mental Health. It takes very littleingested lead to damage the still-forming brains and nerves of children



or fetuses. Such damage can lead topermanent and debilitating health andlearning problems, such as lower IQ’sand retardation, and behavioral prob-lems. Lead poisoning does not typicallykill. Instead, it leaves a lifetime ofexpensive concerns — like specialschooling and medical care — thatsociety is left to absorb.While this is amost serious problem, there is a clearsolution if those in government do theright thing now. However, furtherdelays will only make the conse-quences of small children beingexposed to lead poisoning much moresevere.We must act promptly while thegoal is still in sight.

Warnings On New StatinDrug CrestorThe newly approved cholesterol drug

Rosuvastatin has come under thewatchful eye of Public Citizen.AstraZeneca will sell this drug underthe name Crestor. It has a significantpotential to cause kidney damage andfailure, as well as muscle destruction(rhabdomyolysis), according to PublicCitizen’s Health Research Group. TheU.S. Food and Drug Administration(FDA) approved the drug on August13th of this year. It is just now becom-ing available by prescription. PublicCitizen will issue a “Do Not Use!”warning about Crestor in the currentissue of Worst Pills, Best Pills News, anonline service and monthly newsletterthat contains information on drug safetyand effectiveness, dangerous dietarysupplements, drug-induced symptomsand drug interactions.Although the site,www.worstpills.org, usually requiresthat users subscribe to read its articles(which we do), the full text of thewarning on Crestor will be posted at nocharge because of the serious dangerthat Crestor users may face.

Public Citizen made a formal presen-tation to an FDA advisory committeein July, strongly opposing the drug’sapproval based on its unique kidney

toxicity. The drug was approved onthe condition that it be available onlyin 5, 10, and 20-milligram strengths,with restricted distribution of a 40-mil-ligram dose. Such restrictions,however, will not adequately protectpatients, according to Sidney Wolfe,M.D., director of Public Citizen’sHealth Research Group, who madethis strong statement:“It was irrespon-sible of the FDA to approve this drugwithout requiring routine urinetesting for protein and blood tomonitor for the early signs of kidneydamage.This drug is already showingsigns that it is too dangerous forpeople to take, and it is only a matterof time, after ‘enough’ people havebeen injured or killed, that it will haveto be pulled from the market.”

In studies before its approval, sevenpeople were struck by cases of rhab-domyolysis, an adverse reaction involv-ing the destruction of muscle tissuethat can lead to kidney failure. Baycol,another statin, was removed from themarket in the fall of 2001 after at least31 reports of fatal rhabdomyolysis. Formore than 3 years before it wasbanned, Public Citizen warnedpatients not to use Baycol. Even so,Baycol did not show life-threateningrhabdomyolysis in pre-approval clini-cal trials. I understand, based on infor-mation furnished by Public Citizen,that Crestor is the only statin to havethe reaction arise before its approval.Dr.Wolfe believes that, in addition tothe risks of kidney damage, patientsshould avoid Crestor because it hasnot been shown to reduce the risk ofheart attacks and strokes, which is abenefit of lower cholesterol levels.Three other statins - lovastatin, pravas-tatin and simvastatin – have shownsuch a benefit. It is significant thatPublic Citizen’s “Do Not Use!” warn-ings have preceded safety-relatedwithdrawals of drugs such as Baycol,Propulsid and Rezulin by months,sometimes years. For your informa-tion, the Health Research Group has

listed more than 200 drugs as “Do NotUse!”during the past 15 years.

Another Misfilled PrescriptionCaseThe family of a brain-damaged boy

who received methadone instead ofan anti-hyperactivity drug had filed alawsuit against Walgreens.After a mis-trial was declared by the trial judge,the family is now asking for millionsof dollars in sanctions against Wal-greens. The request was made afterthe mistrial was declared when astore pharmacist testified that a pre-scription that Walgreens said proved itcould account for all the methadonein its store was “forged.”The court wasgiven affidavits from jurors who saidthey had been prepared to return averdict of perhaps $350 million ormore in damages against Walgreensbefore the mistrial was declared.Thechild was a bright, hyperactive 7-year-old who was supposed to get ageneric version of Ritalin. Instead, hegot methadone, a drug used to weanaddicts off heroin.

On November 10, 2001, the boy feltill, went to sleep, and couldn’t beawakened. He spent six days in acoma and two months in hospitals,where diagnostic tests confirmedstrokes and permanent brain damage.After the boy’s hospitalization, statepolice seized vials of his medicine.One of them had the Ritalin clone, theother methadone.The judge declareda mistrial after the Walgreens pharma-cist testified about the allegedly fraud-ulent prescription. The Walgreenslawyers have withdrawn from thecase, disputing any allegation ofwrongdoing.Walgreens has denied allallegations in the lawsuit. Walgreenshas argued that its procedures safe-guarded against errors such as theone alleged to have occurred. Anyinjury to the child, the companyargued, was not Walgreens’ fault.

Interestingly, the Walgreens pharma-

cist testified that a Walgreens attorneytold him a missing prescription hadbeen found that reconciled an appar-ent discrepancy in the store’smethadone inventory.The pharmacist,who was also named in the lawsuit,said he believed the prescription hadbeen forged and that he told his super-visor about it. The motion for sanc-tions states: “Nothing was done byanyone at Walgreens ... until Mr. Mas-carenas (the pharmacist) decided toconfess this conspiracy in open courton August 5, 2003.”The lawyer defend-ing Walgreens denied that her law firmwas involved in any misconduct.

XX.ENVIRONMENTALCONCERNS

The New Boss At EPAIn August, President Bush named Utah

Governor Mike Leavitt to succeed Chris-tine Todd Whitman as head of the Envi-ronmental Protection Agency. Thisappointment has received mixedreviews. Environmentalists say there is adifference between the two former Gov-ernors. Ms.Whitman left the New Jerseygovernorship in 2001 to run the EPA.Sheresigned in May. Philip Clapp, Presidentof the National Environmental Trust, anadvocacy group, had this assessment ofthe appointment: “Like ChristieWhitman, Governor Leavitt started outwith a reputation as a moderate, butunlike her,he has taken a hard right turnon the environment.”Larry Young,execu-tive director of the Southern UtahWilderness Alliance, said Leavitt’s recordon public lands, wetlands conservationand sprawl issues was unimpressive.“It’san appointment that fits right in linewith the Bush Administration record.You’re not going to see any dramaticimprovement. It’s business as usual,”according to Young. All polls reveal thatDemocrats have at least a 2-1 advantage

over President Bush on environmentalissues. Most folks don’t trust the BushWhite House to protect the environ-ment. Not surprising, the Bush choice tosucceed Whitman was met with immedi-ate praise from industry groups and con-gressional Republicans.Clearly,GovernorWhitman earned the respect of environ-mentalists during her tenure as NewJersey governor. Her appointment in2001 was seen as a sign of the Presi-dent’s own moderation on the environ-ment. Instead, her resignation – aftercontinuous confrontations with theWhite House and other Administrationofficials who saw energy developmentas a bigger priority – gives a clear signalthat the Bush White House is environ-ment-unfriendly.

More Deception From WashingtonA scathing report by the Inspector

General of the Environmental Protec-tion Agency confirmed what some havelong suspected concerning the after-math of the World Trade Center’s col-lapse. The federal agency appears tohave systematically misled New Yorkersabout the risks the resulting air pollu-tion posed to their health.The questionis, why? Nobody should be shocked tolearn that the EPA did this under directpressure from the White House. In fact,the Bush White House intentionallychanged news releases prepared by theEPA.While the Bush Administration hasmisled the public on many issues, thisparticular deception is difficult tojustify.A draft EPA report released lastDecember conceded that 9/11 had ledto huge emissions of pollutants. In par-ticular, releases of dioxins — which arecarcinogens and can also damage thenervous system and cause birth defects— created “likely the highest ambientconcentrations that have ever beenreported,” up to 1,500 times normallevels. But the report concluded thatbecause the outdoor air cleared after acouple of months, little harm had beendone. We now learn that the Bush

White House altered the release to givethis false impression.

The main danger comes from toxicdust that seeped into buildings andremains in carpets, furniture and airducts.According to a recent report,busi-nesses that did environmental assess-ments of their own premises foundalarming levels not just of dioxins butalso of asbestos and other dangerouspollutants.The most shocking revelationfrom the new report is that under WhiteHouse direction, the EPA suppressedwarnings about known pollution prob-lems. Hundreds of cleaning workers andthousands of residents may be sufferingchronic health problems.

EPA Allows Sale Of PCB-Contaminated Sites In another rather shocking develop-

ment, the Bush Administration is nowallowing the sale of PCB-contaminatedsites.This reverses a 25-year-old policybarring any such sales before the landis cleaned.The decision by the Environ-mental Protection Agency is not goodnews for environmentalists, who fearthe change will hide environmentalproblems instead of fix them.The EPAannounced that it planned to end theban on the sale of real estate contami-nated with PCBs, which is now classi-fied as a probable carcinogen. Aspreviously reported, the rule went intoeffect in 1978.

The decision is purported to bedesigned to spur the sale of contami-nated industrial sites that have laindormant for years.The push to developso-called brownfields, including PCBsites, has gained momentum recently ingovernment circles. Certainly, locatingnew business in aging city and towncenters is important. EPA claims themove is a “reinterpretation” of existinglaw to allow PCB sites to change handsbefore cleanup while still enforcingPCB regulations. Previously, the ownerof a PCB site had to clean it before anysale, which made good sense. Under




terms of the “reinterpretation,” PCBsremain banned, and the land must becleaned before it can be developed forindustrial or other usage, according tothe EPA. A spokesperson for the EPAtold media outlets, including USA Todayand the Associated Press, that the“policy will stimulate the cleanup andredevelopment of the sites. It willenhance redevelopment of contami-nated sites, which is the goal of thepresident’s brownfields program.”Frankly, I am most concerned over thischange in policy. It is most interestingthat we were never told of this devel-opment by the EPA or the defendantsin our PCB case until after the settle-ment was reached. I received a callfrom a reporter who is checking intothe matter questioning whether theAnniston plant site could be sold. In myopinion, that can’t happen because ofthe consent decree referred to inanother section of this issue.

Pollution Upgrade StalledIt appears that more than 100 power

plants, refineries and factories inAlabama will now be able to avoidcostly anti-pollution controls. As hasbeen widely reported, the Bush Admin-istration has changed a federal clean airrule, which in my opinion will not begood for the environment.A U.S. Envi-ronmental Protection Agency rulechange was signed and will now allowlarge portions of Alabama’s oldest coal-fired power plants to be overhauledwithout decreasing pollution. This isclearly contrary to the current interpre-tation of the federal Clean Air Act.According to the Alabama Departmentof Environmental Management, morethan 100 power, pulp and paper orchemical plants in Alabama could beaffected by the rule change. Environ-mental and public interest groups arelegitimately concerned and upset overthis turn of events.The EPA claims thechange won’t increase pollution.Instead, they say the rule was meant to

let a plant replace a piece of equip-ment with something identical or func-tionally equivalent, as long as the plantremains within its pollution permitlimits and the basic operating designremains the same.

The standard under the old rule con-sidered whether an equipment changewould increase emissions. Under thenew rule, it appears that the EPA willlook primarily, if not exclusively, at cost.Southern Co., the parent company ofthe Alabama Power Company, wasamong the industry leaders that led thecharge in Washington for the rulechange. I understand there are 10plants in Alabama that will be affected,with 6 of these being owned by TheAlabama Power Company. Several coal-fired power plants in central and northAlabama have been sued by the U.S.Justice Department for violating theClean Air rules that the Bush Adminis-tration has seen fit to change. However,I don’t believe the rule change willaffect the pending government lawsuitsagainst about 50 plants around thecountry, including the 5 Alabama Powerplants that upgraded their facilities butclaimed the changes were not enoughto require the more modern pollutioncontrol equipment. I am greatly con-cerned that the Bush Administrationhas no concern for environmentalproblems. In my opinion, that is wrongand will cost us greatly in the future.

Earlier this month, a federal judgeruled that FirstEnergy’s Ohio EdisonCo. violated the law by upgradingseven coal-fired power plants withoutinstalling pollution equipment. Thiswas the first time a judge had ruledagainst a utility in those cases. Industryadvocates have complained that thecurrent enforcement system is confus-ing, and has discouraged investmentand expansion at a time of increaseddemand for expanded and reliablesources of power. Industry and EPA offi-cials said the new rule would encour-age plant improvements, providegreater regulatory certainty and reduce

dangerous emissions. Environmental-ists, state officials and congressionalDemocrats who have long fought therule change – which was first reportedin the New York Times – warned that itwould undermine the only effectivetool to combat industrial polluters.They said it would allow antiquatedindustrial plants that should have beenshut down years ago to go on polluting– or even increase pollution – withoutfear of prosecution. New York AttorneyGeneral Eliot Spitzer, a leader in theeffort to prosecute utility polluters, hassaid he would file a court challenge tothe new rule as soon as it is published,probably shortly after Labor Day.

EPA Urges Look At Lower SootLimits I had never really thought of soot

being a health or safety problem.Thatis, until we handled a case involvingmassive amounts of soot in the air. Sci-entists at the Environmental ProtectionAgency have now urged the govern-ment to consider imposing stricterlimits on the level of soot in thenation’s air because evidence showsthat soot contributes to sickness anddeath at its current level. If you want tosee the draft report by the scientists, goto the agency’s Website.This came twodays after the EPA eased air pollutionrules for power plants planningupgrades. The report points out thatmany of the nation’s cities don’t meetthe current limit for yearly soot levels.

Soot consists of a mixture of liquiddroplets and specks of pollutionemitted by diesel-powered vehicles,power plants and factories.The scien-tists’ recommendations focus on thetiniest soot particles, which are themost dangerous to human health.Imposing tighter limits will certainlycause controversy because it couldlead to tighter regulation of powerplants, mines and other industry.Studies show that inhaling soot, whichis too tiny to see, contributes to heart

problems, lung cancer and asthma.Thedraft report concludes that “the avail-able evidence calls into question theadequacy” of current levels allowed bythe government and that “considerationshould be given to revising the current(soot) standards to provide increasedpublic health protection.”

After the current soot levels were setin 1997 during the Clinton Administra-tion, industry groups went to war.Theyclaimed the levels were based on “junkscience.” A lawsuit was filed and theSupreme Court ruled unanimously infavor of the EPA in 2001. This rulingcame one month after President Bushentered the White House. The BushAdministration then decided to retainthe Clinton Administration’s limits. Ifthe EPA actually goes through with itsproposal for new limits, they wouldtake effect no later than April 2005.Hopefully, the new levels will be put inplace. However, the fight is far fromover.

Firms Fooled The EPA On Cleanup According to media reports, docu-

ments show companies sharing liabilityfor pollution from a defunct fertilizerplant avoided expensive groundwatercleanup after presenting skewed orincomplete data to federal regulators.The Pensacola News Journal hasreported that, as a result, arsenic, leadand other toxic chemicals may haveseeped into Escambia County, Florida’s,drinking water and will remain in anaquifer for decades. Pollution from theplant also may be responsible forradium, which can cause bone andnasal cancer. However, that link has notbeen confirmed. The News Journalreported that drinking water in parts ofPensacola and Gulf Breeze has been“tainted” for at least 4 years. Houston-based Conoco, which last year mergedinto ConocoPhillips, owned the plantfrom 1963 through 1972.The plant waslast operated by Agrico Chemical Co.before closing in 1975.Those two com-

panies and three others that once hadan interest in the plant, DuPont,Williams Cos. and Freeport-McMoRan,entered an agreement with the Envi-ronmental Protection Agency todevelop possible remedies when theproperty was declared a federal Super-fund site in 1989.

Documents indicate the companiesplanned to use studies and design com-puter models to avoid the most costlyremedy, which would have been topump out and treat a plume of contam-inated groundwater, the newspaperreported.“Our goal was to see if we canestablish beyond question limits of theplume that are smaller than EPA’s,”Conoco consultant Michael McDonaldwrote in a 1992 memo.The companiesargued the plume, if left alone, wouldnot contaminate drinking water orharm nearby Bayou Texar. They per-suaded EPA officials that pumpingwould cause saltwater to seep into theaquifer. However, a Conoco consultantwrote in a 1993 letter to officials atWilliams that limiting it to one milliongallons per day would minimize thatpotential.According to an EPA official,the News Journal’s research mayprompt regulators to revisit the deci-sion against pumping.

The newspaper found that the com-panies’ research avoided evidence sug-gesting the plume had contaminatedwater supplies at least back to 1958when Pensacola closed a well becauseof it. In one instance, DuPont officialsedited out parts of a 1993 study indicat-ing the plume had caused high fluoridelevels in the bayou, writing in themargins that the data “kills us.” Cono-coPhillips and Agrico, a Williams sub-sidiary,have denied misleading the EPA.Conoco repurchased the site in 1995 tooversee cleanup efforts.

XXI.TOBACCO UPDATE

Reynolds Pays Sick Smoker R.J. Reynolds Tobacco Holdings Inc.

has become the second U.S. cigarettecompany to pay a jury award to asmoker who developed cancer. Eventhough the company paid, it says thecase would be appealed.A check wasreceived from R.J. Reynolds, the No. 2U.S. cigarette maker, for almost$196,000, payment for a Florida jury’s2001 decision against the tobaccocompany plus interest. R.J. Reynoldswould get the money back should it besuccessful on appeal.A jury had foundR.J. Reynolds liable for Floyd Kenyon’shealth problems, including lung cancer,and ordered it to pay $165,000 in com-pensatory damages. R.J. Reynolds thenappealed the case. Previously, Brown &Williamson Tobacco, a unit of BritishAmerican Tobacco Plc , had been theonly company to pay in a sick smoker’scase heard by a jury.The tobacco indus-try has lost several cases brought byindividual smokers, but the cigarettemakers have appealed each of thosecases. Grady Carter received $1.1million from Brown & Williamson in2001. The payment represented$750,000 in damages and $350,000 ininterest accrued since Carter won aproduct liability lawsuit against Brown& Williamson in 1996 in Jacksonville,Florida.

Illinois High Court To Hear AppealYou will recall that Philip Morris had

a very large judgment handed downagainst the company by an Illinoisjudge.The Illinois Supreme Court hasnow agreed to hear Philip Morris’appeal directly.The court also retaineda lowered bond in the case, which wasreported previously. The issue waswhether smokers were deceived about


the dangers of light cigarettes. TheSupreme Court said Philip Morris could“skip” the state intermediate appellatelevel and take its case directly to thetop court. The company would bebound by a $6 billion appeals bond,which is half the original amount. Inthe trial court, the state judge hadordered Philip Morris to pay $10.1billion in damages for misleading Illi-nois smokers into believing light ciga-rettes were less harmful than regularbrands.

State law ordinarily requires defen-dants to come up with the full amountof damages, plus interest, before theycan appeal. The trial judge ordered a$12 billion bond. Plaintiffs in the caserequested $14.64 billion. Philip Morrishad claimed that the large bond woulddrive the company into bankruptcyand force it to default on a $206 billion,25-year settlement in a nationwidetobacco case. This was the first con-sumer class action lawsuit over lightcigarettes to go to trial. It will be mostinteresting to see what the IllinoisSupreme Court does with this case.

XXII.PREDATORYLENDING UPDATE

Predatory Lending SettlementDidn’t Go Far EnoughMany consumer groups around the

country believe the $484 million settle-ment reached between Illinois-basedHousehold International and the Attor-neys General in all 50 states didn’t gofar enough. The settlement involvedseveral pending lawsuits that allegedpredatory lending practices.While thesettlement checks could soon be in themail, the relief they bring may in manycases only be temporary.That’s becausethe amount may not make up the dif-ference between the original loanamount and the additional debt

incurred by new loans, fees and serv-ices piled on by “predatory” lenders. Ifconsumers accept the settlement, theymust waive the right to file additionalclaims against Household or its partner,Beneficial Finance Corp.

For example, many consumersinvolved in the national settlement willreceive far less than what is needed toreach their equity stake before theloans were originated. In addition,some potential lawsuits failed to gainclass action status, leaving the borrow-ers to fight the predatory charges bythemselves. Many - especially olderpeople who are retired - do not havethe economic means to continue thebattle and could be facing foreclosureand bankruptcy. Our firm is represent-ing a number of consumers on theirindividual claims. For example, we rep-resent 1,800 customers in claimsagainst Beneficial.We tell our clients upfront that if they have acceptedpayment in the national settlement(each state was allotted a specificamount), they are not eligible for addi-tional relief.

The practice of “flipping loans” wasone of several popular avenues House-hold Finance Corp. and BeneficialFinance Corp.used to lure thousands ofborrowers into refinancing their homesat higher-than-market rates and fees.Sometimes, the lender would start thisflipping chain of expensive refinanc-ings by sending a “live” check in themail in an attempt to get consumers topay outstanding bills from the pro-ceeds of the check. Once the checkwas endorsed, consumers were on thehook for high-interest rate loans thatwere subsequently refinanced, or“flipped,” into a longer-term loan. Alltransactions carried fees usuallyfinanced into the balance, thereby cre-ating a debt load significantly greaterthan the combined amounts of theloans. Another angle to the “flip” waspromoted as a “debt reduction loan.”The lender would offer a credit-poorborrower a higher-than-market rate to

consolidate the first mortgage and out-standing consumer debt (such as creditcards), explaining that the borrowercould not qualify for a better ratebecause of a bad credit history.

The lender would subsequentlyinform the borrower that the house didnot appraise at an amount large enoughto justify the loan. The lender wouldthen grant the borrower a secondmortgage. Many times, this would be atan interest rate greater than 20%. Con-sumers should always do business witha lender they know or trust. If there isany doubt about a lender, always askfriends and business associates beforesigning anything. Unwanted solicita-tions should as a general rule beavoided. The offering of new ways toget you into a favorable financial posi-tion will probably get you into a “finan-cial mess.”The old saying that we haveall heard for years is still true in manycases,“If the deal sounds too good tobe true, it probably is.”

North Carolina Anti-PredatoryLending Law Good For ConsumersNorth Carolina’s anti-predatory

lending law has significantly reducedpredatory lending while maintainingconsumer access to subprime credit,according to a report by the Center forCommunity capitalism at the Universityof North Carolina at Chapel Hill. Thereport found that loans in North Car-olina containing prepayment penaltiesof 3 years or more – a typical character-istic of a predatory loan – dropped 72% after the law’s passage. By compari-son, the study showed that the numberof loans with prepayment penaltiesrose by more than 250% in neighboringSouth Carolina during the same timeperiod.The report also found that thenumber of loans to borrowers withimpaired credit increased by 31% sincethe full implementation of the law andsubprime home purchase loansincreased by 43%.

According to Dr. Michael A. Stegman,



director of UNC’s Center for Commu-nity Capitalism, the study shows thatsince the North Carolina law went intofull effect, the subprime market hasbehaved just as the law intended.Thenumber of loans with predatorylending characteristics has fallenwithout either restricting access toloans to borrowers with blemishedcredit or increasing the cost of theseloans.The report is the first analysis of astatewide predatory lending law thatlooks at individual segments of the sub-prime market. The database of loansincluded specific loan terms, some ofwhich may be predatory.

Lawmakers passed the North Car-olina Anti-Predatory Lending Law tocurb predatory lending abuses in thatstate. Major provisions of the law pro-hibit typical abusive lending practicessuch as the financing of singlepremium credit insurance, loan flip-ping and charging prepayment penal-ties on loans of less than $150,000.Thelaw also provided protections to bor-rowers on high-cost loans charging feesin excess of 5%, including requiringsuch borrowers to receive financialcounseling before closing their loan.Alabama should follow North Car-olina’s lead and get tougher on thepredatory lenders who prey onAlabama citizens.

XXIII.THE CONSUMERCORNER

A Consumer Class Action GetsNew LifeA federal appeals court has revived a

consumer class action suit that accusesFleet Bank of misleading customers bypromising a “fixed” low interest rate onits credit cards and then raising the ratejust one year later. In Roberts v. FleetBank, the U.S. Court of Appeals for theThird Circuit found that “Fleet’s solicita-

tion materials could cause a reasonableconsumer to be confused” about howlong the low rate would last.The appel-late decision revives a claim under theTruth in Lending Act that was dis-missed in June 2001 by a district courtjudge.The court upheld the dismissal ofa claim under the Rhode Island UnfairTrade Practices and Consumer Protec-tion Act (UTPCPA), finding that such alaw does not apply to “activities andbusinesses, which are subject to moni-toring by state or federal regulatorybodies or officers.” Fleet considers thatto be a victory.

The appellate court found that thelower court was correct in holding thatthe UTPCPA claim was exemptedbecause the Office of the Comptrollerof the Currency – the primary regula-tor of national banks under theNational Bank Act – has the power toregulate false and misleading advertis-ing. In dismissing the TILA claim,however, the lower court had sidedwith Fleet’s contention that thepromise of a “fixed” rate was not falsesince the term “fixed” simply meansthat the interest rate is not “variable.”Fleet claimed its credit agreementmade it perfectly clear that the terms ofthe credit card, including the interestrate, could be changed “at any time.”The court obviously disagreed.

The appeals court found that Con-gress amended the TILA in 1988because it “determined that consumerswere being inundated with credit cardsolicitations that failed to disclose basiccost information about the cards beingpromoted.”The appeals court said thatbefore passage of the Fair Credit andCharge Card Disclosure Act, the TILAdid not require issuers to provide suchinformation until the consumer actuallyreceived the card. “Congress decidedthat demanding early disclosure of rele-vant cost information from credit cardcompanies would enable consumers toshop around for the best cards,” thecourt wrote. Now under the TILA, acredit card provider must disclose

certain information in “direct mailapplications and solicitations,” includ-ing annual percentage rates.The appel-late court made this finding, which isvery important:

Fleet only mails the cardholderagreement after a consumer hasaccepted the invitation.Thus, a con-sumer will not learn, until after theacceptance of the invitation, thatthe APR can be changed by Fleet atany time. Indeed, Fleet’s practice ofmailing the cardholder agreementcontaining important rate changeinformation, after the consumeraccepts the card, is contrary to theTILA mandate that credit card solic-itations disclose all required information.

Spamming Lawsuit Filed By EarthLinkRecently,EarthLink Inc. filed a lawsuit

in federal court against 100 individuals,mostly located in Alabama and Canada,blaming them for millions of unwantedcommercial e-mail messages, otherwiseknown as spam. In the complaint,EarthLink, the third-largest Internetservice provider, accuses the Alabamaindividuals of using stolen credit cards,identity theft and banking fraud to fundInternet accounts and send out morethan 250 million pieces of junk e-mail.The defendants went undetected forabout six months by creating an elabo-rate chain of bogus names, falseaddresses and nonexistent companies,according to the lawsuit. It appears thatthis was a very tech-savvy spam ring.The ring used several tricks to cover itstracks, including leasing several tele-phone lines in Birmingham to connectto EarthLink automatically, even if thecompany kicked the bogus users off.

According to the lawsuit, the defen-dants also sent junk e-mail to some oftheir own accounts to monitor Earth-Link’s efforts to block unwanted mes-sages. EarthLink suffered roughly $5


million in damages from the Alabamaring alone. EarthLink can now sub-poena other companies for additionalinformation that could help in its inves-tigation. The lawsuit also accuses anadditional 25 “John Does” (personswhose actual names are unknown atthe time) in Vancouver, British Colum-bia, for a scheme known as “phishing,”in which spammers pose as Internetservice providers like America Online,to collect personal and financial infor-mation from unsuspecting subscribers.

Group Gets Private Data I doubt seriously that top government

officials such as CIA Director GeorgeTenet and Attorney General JohnAshcroft would want their Social Secu-rity numbers to be made public.However, the California-based Founda-tion for Taxpayer and Consumer Rightssays for $26 each it was able to pur-chase the Social Security numbers andhome addresses for Tenet,Ashcroft andother top Bush Administration officials.On the list was none other than theinfamous Karl Rove, the president’schief political adviser, who manybelieve is actually running the country.All of this illustrates the need forstronger protections of personal infor-mation. Specifically, the consumer advo-cacy group mentioned above isconcerned about legislation in Con-gress that would amend the Fair CreditReporting Act. The bill, sponsored byseveral members of the House, includ-ing Republican Spencer Bachus (R-Ala.),aims to prevent identity theft andimprove the accuracy of consumerrecords, among other things. One short-coming of the bill is a portion thatwould continue a current pre-emptionof tougher state privacy laws. However,since we really don’t have anything inAlabama to my knowledge, it wouldn’taffect us. Of course, our Legislaturecould take care of that by passing atough bill. Hopefully, that will happenvery soon. In the meanwhile, the federal

legislation should be amended toremove the objectionable parts.

Putting a stop to the trafficking ofinformation among corporate affiliatesis important because some companieshave hundreds of businesses under thefamily umbrella. For example, a bankingcorporation might have a number ofinsurance, securities and real estateaffiliates it does business with, andfinancial data might be swappedamong all of them. It is essential to stopthe swapping of information amongcorporate affiliates. In addition to SocialSecurity numbers, some online siteswill give out a person’s bank accountbalance for about $300. There are atleast a dozen sites that provide socialsecurity numbers and other privatedata. It appears that with little effort, ata modest cost, you can get this type ofinformation very easily on the Internet.The Bush Administration has urgedCongress to act quickly to strengthenthe nation’s credit laws and has praisedthe House bill.The bill is expected tocome up for a vote in the first fewweeks after lawmakers return fromtheir summer recess.

FTC Releases Report On IdentityTheft The Federal Trade Commission has

released the results from a 5-year analy-sis of identity theft. In 2002, the FTCreceived 161,819 complaints aboutidentity theft, which doubled thenumber from the year before. Still,agency officials acknowledge manypeople don’t report this crime. TheJustice Department estimated that asmany as 700,000 Americans are victim-ized annually. This results in costs ofmore than $1,000 each to right thedamage to their accounts and reputa-tions. Identity theft has become a mostsevere national problem. Credit cardfraud was the most common form ofidentity theft last year, accounting for42% of the complaints to the FTC. Nextin line, at 22%, was phone or utility

fraud.This was followed by bank fraudat 17%. Privacy advocates advise con-sumers to protect themselves fromidentity theft by checking their creditreports twice a year, shredding per-sonal documents before throwing themaway, and cleansing wallets of oldreceipts and printed Social Securitynumbers. In 2001, the FTC introduced aWeb site and toll-free phone numberfor identity theft victims. I fear that wehave seen just the tip of the iceberg.The problem will get much worse, inmy opinion, before it gets better. Thepoor economy has most likely intensi-fied the problem.

The federal government, in its firstcomprehensive look at identity theft,found that the crime has reached epi-demic proportions — touching nearly5% of adult Americans each year, andcosting banks, businesses and con-sumers upward of $50 billion annually.About 9.9 million individuals were vic-timized in 2002 and more than 27million have been hit by identity theftin the last 5 years, according to theFederal Trade Commission study. Thefindings are based on a telephonesurvey of more than 4,000 individuals.

The most common type of identitytheft involves a thief impersonatingsomeone to use an existing credit cardor checking account. But the moretroubling variety of identity fraud, inwhich new credit is issued to the crimi-nal in the victim’s name, ensnared 3.3million individuals last year.This lattertheft is more costly for both businessesand consumers to fix, because it oftengoes undetected for a long time. TheFTC has recommended steps tocombat identity theft, including creat-ing a standardized fraud alert; barringcredit reporting companies from releas-ing information that the consumer hadpreviously identified as fraudulent;boosting penalties for thieves; andforcing debt collectors and lenders toshare information with the victim.Many of these recommendations areincluded in pending legislation that



would revamp the federal Fair CreditReporting Act.

However, consumer advocates saidthe recommended steps do not go farenough. In its present form, the billdoes nothing to stop identity theft fromhappening, critics said. It only helpsvictims after the fact, they complained,and it would preempt many strongerstate laws that allow consumers to optout of information sharing betweencorporate affiliates.The Federal TradeCommission has documented that iden-tity theft is an epidemic. However, theirsolutions haven’t changed from whatthey were two months ago.

Five Vehicles Score Badly InBumper TestFive of six new vehicles scored

“poor” or “marginal” ratings in low-speed crash tests measuring thedamage from bumping into barriers atfive miles per hour, according to astudy released recently.The Infiniti G35luxury car from Nissan Motor Co. Ltd.sustained the most damage. The testconsisted of four crash tests on thefront and rear bumpers to simulatecommon mishaps in commuter trafficand parking lots. The tests were con-ducted by the Insurance Institute forHighway Safety, the auto safety researchgroup funded by the insurance indus-try.“The G35’s bumpers are a disaster,”Adrian Lund, chief operating officer forthe Institute, said in a news release.

The Mercedes E Class luxury sedanand the Nissan Quest minivan alsoscored “poor” ratings.The Toyota Siennaminivan and the Saab 9-3 car bothreceived “marginal” ratings. Only theMazda6 sedan performed reasonablywell, earning an “acceptable” rating.Thenew Saab 9-3, Nissan Quest and ToyotaSienna all sustained more damage thanthe previous models they replaced.TheQuest recorded the biggest jump indamage, to an average of $1,137 percrash test, up from $366 previously,which earned a “good” rating. The

bumpers on the Mazda6 were designedto absorb energy and keep it away fromthe body, the Institute said.The instituteconducts the tests and publicizes theresults in an effort to pressure automak-ers into making stronger bumpers. Ihave to wonder why NHTSA doesn’t dothis without the necessity of “outsideprodding.”

Don’t Fall For These Credit Card Tricks!Complaints about credit cards con-

tinue to be among the most commonconsumer grievance. As credit cardcompanies intensify their marketingcampaigns, more and more credit cardoffers arrive in our homes. It has beenreported that the average householdreceives eight credit card offers eachmonth. Although the competitionamong credit card companies is fiercerthan ever, consumer costs are soaring.With a nearly saturated market, lendersare looking for new ways to boost theirprofits - meaning bigger fees and higherinterest rates for all of us. But you canfight back, by being a cautious con-sumer. Liz Pulliam Weston, a columnistfor MSN Money, has compiled a list of“stupid credit card tricks lenders areusing to ding you, and what you can doto fight back,” and I pass it on for thebenefit of our readers:

Endless Fees – Fees are a big partof credit card company profits thesedays.The amount lenders have col-lected in late fees has risen morethan fourfold since 1996 – from$1.7 billion to $7.3 billion.About athird of credit card issuer profitsnow come from late fees, over-limitcharges and other penalties, accord-ing to Consumer Action. It’s not thatwe’ve become more remiss aboutour payments, it’s that the penaltiesare much greater.Consider:

• The average late fee is now $ 29.88,nearly three times the $ 11.96average charge in May 1994.

• Over-limit fees, which are added toyour bill when you exceed yourcredit limit,more than doubled in thesame period, from $12.56 to $ 27.40.

• Cash advance fees used to averageabout 2% with a $2 minimum and$10 maximum; today those chargesaverage 3%, with a $10 minimum andno maximum.

Unfortunately, it’s now easier tomake a late payment, becauselenders are reducing grace periods.The average grace period is justover 21 days now, as opposed tonearly 30 days in 1990. And somecredit card issuers now charge latefees if your check arrives just a daylate.This is how you can fight back:

• Send in at least a minimum paymentas soon as your bill arrives.You canalways send more in later.

• Set up an automatic transfer if youconsistently carry a balance. Thatway, you don’t have to worry aboutremembering to pay the credit cardstatement on the due date.

• If you’re charged a late fee, call thecard issuer and complain. Some arewilling to remove the fee if you’re agood customer and not habituallytardy.

• Don’t use a credit card to get cash. Itwas always a bad deal – now it’s evenworse.

Lower Your Balance – People withlarge credit card balances havealways paid more interest.They arenow paying higher fees as well.Citibank and Discover recentlyraised their late fees to $35 for cus-tomers with balances of more than$ 1,000; Chase Manhattan nowcharges the same fee if your balanceis over $1,200. Since the averageamount owed on a credit card inApril was $1,402, that means a lotof people will be paying the higherfees.Fight back:

• Pay down your balances. The more


debt you carry, the more interest andfees you’ll pay,which will likely affectyour credit rating.

• Call your credit card company andask for a lower rate. If you’re a goodcustomer, with good credit, thelender might be willing to rescindany increase.

Your Credit Card Company IsWatching You – Most people knowby now that credit card companiesincrease their rates if consumersmiss a payment or two. And now,people are also discovering thatthey can lose a great rate if theymiss a payment on any account, orif they open too many accounts, orcharge too much on any of thecards they have. Lenders scan creditreports on a routine basis, lookingfor signs that their customers arepiling on too much debt or havingtrouble paying their bills. Payingonly the minimum means payinglots of interest, since it can takeyears, if not decades, to get rid ofyour debt this way. Providian, forexample, is boosting interest rates toan incredible 29.99% for customerswith “minimum payment activity.”How you can fight back:

• Be aware of your credit. Pay all yourbills on time, apply for credit spar-ingly, and don’t max out your creditcards.

• Be sure to always pay more than theminimum. Paying an extra $25 amonth on a $5,000 balance canshave nearly 16 years off the time ittakes to pay back the debt!

• Check your credit report at leastonce a year, and challenge any wronginformation. Credit bureaus arerequired by law to investigate anyitem you dispute and to remove itfrom your record if it’s not accurate.

The Balance Transfer Roulette –In the past, it was common to see0% balance transfer offers.Althoughthey are not as typical nowadays,

these seemingly tempting offers canbe traps in disguise.Examples:

• Many lenders now charge 3% whenyou transfer a balance to their card –a fee that can wipe out any interestrate advantage.

• Most cards that offer low rates onbalance transfers make up for it withhigh rates on new purchases.

• Some lenders may offer a great ratefor a balance transfer to a new card,but that doesn’t mean you’ll get it!You might be “pre-qualified” only fora higher rate.

Here’s how to fight back:

• Read the fine print. Avoid balancetransfers that apply only for a fewmonths, and lenders who might giveyou a higher rate than they actuallyadvertise.

• If the card charges a fee to transferyour balance, check if you’ll actuallysave money.

• Use one card for balance transfersand another for new purchases.

• If necessary, try to consolidate yourbalances to one or two cards. Thatwill make it easier to keep track ofdue dates, rate changes, and otherdetails.

• Try to pay off your balance as soon aspossible. The only way to win thecredit-card interest game is not toplay.

Now that you’re all set to fight back,here are seven rules of thumb to keepin mind:

• Shop around before accepting acredit card offer;

• Be sure to read the fine print;

• Limit yourself to one or two majorcredit cards;

• Try to pay off all balances in fullevery billing cycle;

• Reduce the number of direct mail

credit card solicitations by calling thepre-screening list at 1-888-5-OPTOUT.

• Check your credit reports at leastonce a year for errors and correctthem immediately. The three majorcredit bureaus are:Equifax: 1-800-685-1111Experian: 1-888-397-3742TransUnion: 1-800-888-4213

• If you believe you are the victim ofunfair interest rate charges, late feesor other penalties, and the creditcard company fails to address yourcomplaint, you should consult with alawyer to determine what your rightsare.

Hopefully, you will find the aboveinformation both practical and helpful.Much of it is plain old common sense,but we all need to be reminded fromtime to time. Many people don’t equatethe use of a credit card for purchaseswith the spending of cash, and that ispart of the problem. A good rule ofthumb is to avoid credit card use alto-gether or keep the number of cards inyour possession to one or two. If youdon’t have one, you can’t be abused,tricked,or mistreated.

Seniors Should Be On The LookoutFor Investment FraudThe Alabama Securities Commission,

under the excellent leadership ofDirector Joseph P. Borg, does an out-standing job. Joe, who is Alabama’s top“securities cop,” has issued a warningto senior citizens, many of whom arealso investors. Unsteady stock markets,record low interest rates and risinghealth care costs are combining tocreate a “perfect storm” for investmentfraud against senior investors. Thewarning alerted senior investors to thedangers of investment fraud and urgedseniors to take control of their financialhealth. In a news release, Joe stated:“I’m deeply concerned that a perfectstorm for investment fraud is brewing



and Alabama seniors are most at risk.These are dangerous times for seniors,our most financially vulnerable citi-zens.They need education, they needprotection.”The collapse of the bubbleeconomy, coupled with interest rates at45-year lows, and rising costs formedical insurance, prescription drugsand basic living expenses,have broughtcon artists from the side streets andback alleys to Main Street where olderinvestors live.

State securities regulators say olderinvestors are being targeted withincreasingly complex investment scamsinvolving unregistered securities, prom-issory notes, charitable gift annuities,viatical settlements, and Ponzi schemes,all promising inflated returns. Oppor-tunists know that seniors and othersliving on fixed incomes are beingsqueezed in the current financial envi-ronment.“Their products and pitchessound tempting to many seniorswho’ve seen their retirement accountsdwindle in recent years – and whodon’t have the benefit of time torecoup their losses.” In Delaware, forexample, a widow sold her house topurchase a promissory note offering 10to 50% annual returns in response to anad in a publication entitled “BetterYears.” The unregistered investmentturned out to be fraudulent, and the 78-year-old woman now lives with her sonand works as a convenience store clerkto make ends meet.

Recently, the Commission has beenvery concerned because a number ofsenior citizens in Alabama have consid-ered moving some very solventpension plan funds into high-riskinvestments such as options or initialpublic offerings (IPOs). Also, somesenior citizens are transferring theirentire pensions to callable CDs andlocking into a situation where theycan’t get to their money for 10 to 15years.The Commission has informationfor seniors to learn about differentinvestment products and solid invest-ing principles such as diversification

before they make an investment deci-sion.The Commission urges seniors notto be ashamed to admit that they havebeen victims of investment fraud.Their“silence” will only help the con artistslead another “victim into the trap.”Financial fraud must be reported socriminals won’t be able to steal retire-ment savings from unsuspectingseniors. Joe reminds us that “Commonsense tells you that if something soundstoo good to be true it almost always is.But you don’t have to rely on commonsense alone.” Senior investors cancontact their state securities regulatorwith any questions about an invest-ment. Seniors also can learn moreabout the dangers of investment fraudby visiting the online Senior InvestorResource Center at a site developedspecifically for senior audiences, whichoffers a variety of important informa-tion and resources.The Senior InvestorResource Center provides:

• A checklist of questions seniors canask before making an investmentdecision;

• Common sense solutions to protectyour nest egg from investment fraud;

• Information about the top frauds tar-geting seniors;

• Contact information for securitiesregulators in each state, the Districtof Columbia, Canada, Mexico, andPuerto Rico;

• An Investor’s Bill of Rights;

• An investor fraud awareness quiz andlinks to a variety of investor educa-tion publications; and.

• Programs offered by state securitiesregulators and others to help seniorsfight investment fraud.

Regardless of our age, it is never toolate to learn.The Commission offeredthe following tips to help seniorsprotect their retirement assets:

• Don’t be a courtesy victim. Conartists will not hesitate to exploit

your good manners.

• Save your good manners for friendsand family members, not strangerslooking for a quick buck!

• Check out strangers touting strangedeals.Trusting strangers is a mistakeeveryone makes when it comes totheir personal finances. Extensivebackground information on invest-ment salespeople and firms can befound in the Central RegistrationDepository (CRD) files available fromyour state securities agency.

• Always stay in charge of your money.Beware of anyone who suggestsputting your money into somethingyou don’t understand or who urgesthat you leave everything in his orher hands.

• Never judge a book by its cover. Suc-cessful con artists sound and lookextremely professional and have theability to make even the flimsiestinvestment deal sound as safe andsound as putting money in the bank.The sound of a voice, particularly onthe phone, has no bearing on thesoundness of an investment opportu-nity.

• Watch out for salespeople who preyon your fears. Con artists know thatyou worry about outliving yoursavings. Fear can cloud your goodjudgment.

• An investment that is right for youwill make sense because you under-stand it and feel comfortable withthe risk involved.

• Don’t make a tragedy worse withrash financial decisions.The death orhospitalization of a spouse has manysad consequences – financial fraudshouldn’t be one of them. If you findyourself suddenly in charge of yourown finances, get the facts beforeyou make any decisions.

• Arm yourself with information, andyour confidence will send con menrunning.


• Monitor your investments and asktough questions.Don’t compound themistake of trusting an unscrupulousinvestment professional or outrightcon artist by failing to keep an eye onthe progress of your investment. Insiston regular written and oral reports.

• Look for signs of excessive or unau-thorized trading of your funds.And ifyou are stalled when you want to pullout your principal or profits from aninvestment, you have uncoveredsomeone who wants to cheat you.

• Don’t let embarrassment or fear keepyou from reporting investment fraudor abuse. Con artists know that youmight hesitate to report that you havebeen victimized in financial schemesout of embarrassment or fear. Conartists prey on your sensitivities and,in fact, count on these fears prevent-ing or delaying the point at whichauthorities are notified of a scam.

• Every day that you delay reportingfraud is one more day that the conartist is spending your money andfinding new victims.

We appreciate very much the Com-mission furnishing this information tous so that we could pass it on. It is goodto know that we have dedicatedpersons such as Joe Borg in state gov-ernment. Fortunately, the “top cop” hasan excellent staff working with him.

Albertson’s To Pay $1.85 MillionFor Scanner OverchargesA California judge has ordered Albert-

son’s, Inc., the nation’s second-biggestgrocery chain, to pay $1.85 million forscanner overcharges in its store in thatstate.The judge ordered Albertson’s topay for penalties, costs and improve-ments, including hiring a scan coordi-nator whose sole duty is to ensureaccurate system pricing. The casegiving rise to the fine was brought bythe San Diego District Attorney’s office.The judge also imposed an injunctionon the grocery chain to institute a “give

away” program in all of its Californiastores. When an item rings up at ahigher price than advertised, Albert-son’s must give the customer the itemfor free, excluding liquor, tobacco anddairy products. If the customer isbuying more than one of the sameitem, only one will be given away free.The others must be sold at the lowerprice advertised. Over a 16-monthinvestigation, Weights and Measuresinspectors from 15 counties in Califor-nia documented 335 inspections at 157Albertson’s stores in which inspectorswere overcharged for items at check-out.There are 486 Albertson’s stores inCalifornia. During the inspections, con-ducted from September 1999 to theend of last year, inspectors discovered780 items were incorrectly priced,resulting in overcharges of more than$700.The consumer protection actionwas brought jointly by local DistrictAttorneys acting with the CaliforniaAttorney General’s Office in order toaddress violations that occurredthroughout the state.Albertson’s mustnow take specific steps to correctpricing errors when consumers com-plain, and scan coordinators mustcheck that prices advertised in themedia and in the store are the pricescharged at the checkout area.

XXIV.RECALLS UPDATE

Anti-Chemical Warfare HoodsRecalledAbout 2,000 filtered hoods designed

to protect the wearer from smoke andother contaminants are being recalledbecause they don’t protect againstcertain chemical warfare agents as themanufacturer had claimed. The U.S.Consumer Product Safety Commissionreports that the manufacturer, EssexPB&R Corp. of Edwardsville, Ill., hasagreed to refund money to people whobought the “Plus 10 Filter Breathing

Unit” hoods. The company marketedthese hoods as protection against suchagents as Sarin,Tabum and Soman.Thedevice — a plastic hood with a siliconneck seal and a filter in the front —were sold nationwide on Web sites andby independent distributors from 1993through last month for about $150.They are sealed in foil bags with blueand white labels that read,“It’s not just10 minutes of air. It’s a lifetime.”

Consumers should stop using theproduct immediately unless otherwiseinstructed, according to the Commis-sion. Federal regulators say the productcould still be used as a filter hood infire and smoke emergencies. To myknowledge, no injuries or incidentsinvolving the product have beenreported.

Recall Of Smoke DetectorsA product safety recall involving ESL

Smoke Detectors was announced lastmonth. Consumers should stop usingthe product immediately unless other-wise instructed.The units were manu-factured by GE Interlogix (GEI), ofTualatin, Oregon. These smoke detec-tors may fail to work properly uponinstallation or if there is an extendedloss of power. If the smoke alarms failto detect fire or smoke, it poses aserious hazard to occupants inside ofthe dwelling.This recall is being con-ducted to prevent the possibility ofinjuries.The ESL 500N smoke detectorsare hard-wired and require professionalinstallation. The recalled alarms havethe following model numbers, whichare located on the back of the detec-tors: 521NB, 521NCSXT, 541NB,541NCSXT, 541NCXTE, 521NBXT,521NCSRXT, 541NBXT, 541NCSRH,541NCSXTE, 521NCRXT, 541NCRXT,and 541NCSRXT. Also on the back ofthe alarms are the letters,“ESL,” and themanufacturing date code of “0223”through “0323” (23rd week of 2002through 23rd week of 2003). Units thatmay not work properly can be identi-



fied by the lack of the flashing red indi-cator light, although all units with theaforementioned model and dates codesshould be replaced.

Distributors, dealers and installers ofsecurity systems nationwide sold orinstalled these smoke detectors fromJune 2002 through June 2003 forbetween $125 and $175. Consumersshould contact the company to receivefree installation of a replacementsmoke detector. Consumers shouldcontact GEI at (800) 648-7422 between6 a.m. and 5 p.m. PT Monday throughFriday or log on to the company’s Website at www.ge-interlogix.com/500N.You can also contact your installer orservice provider to determine if youhave a recalled unit and/or to arrangefor the free installation of a new unit.

XXV.SPECIAL FEATURE: MMI

A few months ago, I included anarticle in the Report that mentionedMarion Military Institute. Red Wilkins, along-time friend from Bay Minette,called me and shared some things thathave happened at the school. He thensent me some information for readers.It appears that MMI, based on the fol-lowing, is on the right track. Last year,32 Marion Military Institute (MMI)cadets received appointments to theService Academies.This included 19 toWest Point, 8 to the Air Force Academy,and 5 to the Naval Academy. In addi-tion, 46 cadets received an AssociateDegree and were commissioned as offi-cers in the U.S. Army. Also, 91 of thecadets were enrolled in the Simultane-ous Membership Program with theAlabama National Guard and wereassigned to a variety of units providingfor homeland defense and othernational security requirements. Gradu-ates of MMI over the last 3 years haveattended over 40 different universities,including the University of Alabama,

Troy State University,UAB,and Samford.Other schools attended included suchout-of-state institutions as Texas A&M,George Washington University, Univer-sity of Maine, and Ohio State University.

On August 30, 2000, LieutenantGeneral (Ret) Robert F. Foley becamePresident of MMI. His appointmentcame after 37 years of active service inthe U.S.Army.As a former Commandantof Cadets at West Point, General Foleyhas a strong belief in character develop-ment. He believes that because of thestringent selection process, the enforce-ment of proper standards of conductand the development of a moral-ethicaleducation program, including facilitator-led small group discussions, the envi-ronment at MMI today is positive,caring, and wholesome.General Foley isconvinced that the school is a values-based education institution wherehonor and respect are preeminent inevery aspect of cadet life. At MMI, allcadets take an oath that “a cadet doesnot lie, cheat, or steal,” and all cadets areexpected to treat one another withrespect and dignity.That is certainly aworthy goal, whether it be in an educa-tional institution, in a family setting, orin the business world. I have to believethat General Foley is totally dedicatedto making all of this a reality at MMI.

The administration at MMI, includingthe Board of Trustees, is convinced thatsecurity is no longer an issue at MMIbecause the selective admissionprocess now allows only highly quali-fied men and women to enroll. Enforce-ment of standards and charactereducation will, to the extent possible,insure that MMI cadets have the rightkind of environment in which to liveand learn. General Foley, his staff andfaculty certainly appear to be dedicatedto providing intellectual, physical-ath-letic, and leader development experi-ence within a proper moral-ethicalclimate at the school. They want allcadets to feel good about “who theyare, where they are, and where they areheaded in life.”That is certainly good

news and I commend them for theirstand. I appreciate Red Wilkins bringingthe above information to my attention.

XXVI.FIRM ACTIVITIES

Managing Shareholder Appointedto Board at Brantwood Children’sHomeTom Methvin, who is our Managing

Shareholder, was recently appointed tothe Board of Directors at BrantwoodChildren’s Home. Tom’s appointmentwill be for 3 years. Brantwood providesresidential foster care, academic assis-tance and counseling for up to 30 youth,aged 10 to 20, who are neglected, aban-doned and/or abused.Tom is also on theBoard of Alabama Trial Lawyers for Chil-dren and the Cystic Fibrosis AdvisoryPanel. He serves on the Board of the LetGod Arise Prison Ministries and alsoserves on the Consumer Liaison Com-mittee of the Alabama Insurance Depart-ment, which helps design ways theDepartment can be more consumerfriendly.Tom was recently appointed tothe Executive Council of The AlabamaState Bar Association. This group isresponsible for running the activities ofthe Alabama State Bar Association.Withall of these activities,Tom still finds timeto spend with his wife,Amy, and theirtwo young sons.

Les PittmanRobert L. (Les) Pittman joined our

firm as a “runner” in the mid 1980s. Lesstarted his education at Auburn Univer-sity.He then spent 3 years in the UnitedStates Marine Corps and was honorablydischarged as a corporal. Following hisyears in the Marine Corps, Les returnedto college and got his degree. Hereceived his law degree while workingas a marketing representative forAlabama Gas Co. Les then served as a


law clerk to Supreme Court JusticeMark Kennedy.Les joined the firm as anassociate in 1993 and became a share-holder in 1999. He has participated inover 30 jury trials throughout the stateof Alabama. In 2000, Les began workingin the Nursing Home Litigation Divi-sion. Subsequently, he has handlednumerous cases. Several of theseresulted in substantial jury verdicts orsettlements for his clients. Les ismarried to the former Jessica Dilworthof Birmingham. They are members ofFirst Baptist Church in Montgomery,where Les is involved in the after-school tutoring program.

Clint CarterClint Carter, a lawyer in our Con-

sumer Fraud Division, represents indi-viduals and business plaintiffsthroughout the region and the country.He has recently been involved incomplex business litigation casesinvolving pharmaceutical pricing, aswell as the representation of state Med-icaid agencies involving average whole-sale price litigation. Clint is alsoinvolved in the representation of stateentities and their health and insuranceplans regarding the pharmacy benefitsmanagement industry. In addition, Clintrepresents policyholders and benefici-aries in cases dealing with insurancedisputes throughout the southeasternstates. He has additional areas of prac-tice in insurance fraud,consumer rightsand bad faith litigation. Clint has beeninvolved in several significant settle-ments on behalf of individual policy-holders and also businesses in casesagainst the insurance industry. Clint hasspoken at legal seminars on a widerange of topics including the trial ofinsurance fraud cases. Clint is marriedto the former Elizabeth K. Brannen ofFrostproof, Florida. Elizabeth is an attor-ney with Hill, Hill, Carter, Franco, Cole& Black of Montgomery. They attendchurch at St. John’s Episcopal Churchin Montgomery.

Ben BakerBen Baker joined our firm after prac-

ticing law in Birmingham for severalyears. He graduated from CumberlandSchool of Law in 1993. Ben specializesin personal injury/product liability liti-gation. He has appeared as a speakerfor various organizations including theAlabama Trial Lawyers Association, theBirmingham Bar Association, the Cum-berland School of Law, the NationalBusiness Institute, the Southern TrialLawyers Association and the JonesSchool of Law. Ben is married to theformer Kimberly Strag of AlexanderCity. They have one daughter, andrecently had a baby boy. Ben and hiswife are members of the EpiscopalChurch of the Ascension in Mont-gomery. One of Ben’s cases is featuredthis month under the Product LiabilitySection.

Ted MeadowsTed Meadows joined our firm in

2001 and became a shareholder in2002. He has spent his entire careerrepresenting victims who have beeninjured or defrauded. Now,Ted focuseson representing personal injury victimsthroughout the country in claimsagainst pharmaceutical companies andmedical device manufacturers. Ted isprimarily responsible for handlingSulzer, Lotronex™, and Meridia®claims. He is a national leader in theMeridia® and Lotronex™ litigationarenas with lawsuits filed in multiplestates.Ted is currently scheduled to trythe first Meridia® case ever to be triedin the country. It will be tried in CorpusChristi, Texas. He is married to theformer Carla Musgrove of Eufaula,Alabama. They have two children,Nathan and Amanda.Ted and his familyare members of Saint James UnitedMethodist Church, where he is activelyinvolved in the Music Ministry.Ted andCarla are avid runners. He enjoys com-peting in triathlons, but rumor has it

that Carla can take him on the shortdistances.

Scarlette TuleyScarlette Tuley graduated from the

University of Alabama in 1998.While atAlabama she was an editor of the Lawand Psychology Review and served onthe Honor Court Defense Counsel.Upon graduation Scarlette began herpractice with our firm focusing on per-sonal injury cases. Currently Scarlettedoes business litigation and environ-mental/toxic tort litigation. In her busi-ness practice she has representedhospitals, manufacturers, food pack-agers, lumber companies and contrac-tors. Scarlette is very involved with theWomen’s Bar in Alabama. She is thefounder and current President of theMontgomery County Women’s BarSection. Scarlette has presented contin-uing education programs on enivorn-mental litigation and the use oftechnology in case preparation and thecourtroom. Scarlette is married to JayTuley, a shareholder with the law firmof Nix, Holtsford, Gilliland, Higgins &Hitson, P.C. Scarlette and Jay have onevery young son, Beck, and are membersof Memorial Presbyterian Church.

Julie GrimesJulie Grimes, who started with the

firm in March of 1994, presently servesas our Accounting Manager. Basically,Julie oversees all the receipts andexpenditures of the firm and managesthe distribution of all the client settle-ments. Julie is married to Keith Grimesand they have two sons, Chris andCasey, and Keith has two daughters,Celeste and Katie.They are the proudgrandparents of four grandchildren,who all just happen to be boys, and areexpecting the arrival of their nextgrandchild in April of 2004. Julie’s sonChris, and grandson Chael, are bothcurrently serving in the United StatesMarine Corps. Julie, who graduated



from Troy State University with adegree in Education, was a high schoolteacher for 5 years. She taught musicand mathematics before changingstudies and careers and focusing onbusiness and accounting.We are mightyglad she came to work here. She is adedicated and very hard worker.We arefortunate to have her in charge of ourAccounting Department.

Keith ScottKeith Scott came to work for the firm

as an investigator in June of 2001. Hecurrently works in our PersonalInjury/Products Liability Division aswell as helping out with any otherinvestigative needs for the firm. Ourinvestigators have a busy schedule.They work with clients and witnesses.An important part of their workinvolves helping the lawyers in productliability cases. Often, Keith and theother investigators have to locate vehi-cles and parts to use during trials.Serving subpoenas on a daily basis isalso part of their work.Keith previouslyworked for the Montgomery PoliceDepartment and spent 14 years in theDetective Division before his retire-ment. Keith graduated from Troy StateUniversity with a degree in CriminalInvestigation and is also a graduate ofthe Police Academy.

Keith and his wife, Marion, have twochildren.Their daughter, Meredith, is 15years old and a sophomore at PrattvilleHigh School.Their son,Cy, is 11 years oldand attends 6th grade at Prattville Inter-mediate School. Keith and his family areactive members of Prattville UnitedMethodist Church. Away from work,Keith enjoys hunting and fishing. KeithScott is a most valuable member of ourfirm and is known for his dedication toour clients and for his work ethic.

Fran ParmerFran Parmer, who is one of our

medical advisors, works in our Nursing

Home section. Her job as a nurse-employee is to review all medicalrecords in order to determine the devi-ations from the standard of care by anursing home. She then compiles achronology, standard of care deviations(Red Flags), and summarizes her find-ings into a complete medical review forher lawyers. Fran assists the lawyers inpreparation for depositions, demandpackages, mediations, and trials. Shedeals with expert witnesses and assistsher lawyers in understanding all of themedical issues that surround a nursinghome case. Fran has been with us for 2years, working solely in the NursingHome Division during that time. Shehas a Nursing Degree and a Certifica-tion in Legal Nurse Consulting. In addi-tion, Fran is certified in adult andpediatric CPR and a member of theNational Legal Nurse Consultants. Sheis retired from Alabama Department ofPublic Health. Fran has a daughter,Nonet, who is married to John Reese,and one grandson she adores.

Greta BeasleyGreta Beasley works as a legal assis-

tant for Clint Carter in our ConsumerFraud Division.The Crenshaw Countynative started with the firm in May of1992 and worked for 4 years before sheleft for another job opportunity.Afterapproximately 2 years, Greta returnedto us in December of 1998 and hasbeen back now for nearly 5 years.Gretahandles global insurance settlements,helps with all aspects of discovery andcommunication with clients, and assistsin getting cases ready for trial. WhenGreta first came to work here in 1992,the firm was not separated into special-ized departments. She worked for DeeMiles and Julie Beasley as a legal secre-tary before being promoted to legalassistant. Greta was legal assistant forJulie Beasley and Les Pittman, workingmostly on personal injury cases, untilshe left in 1996.When Greta returnedin 1998, she became a legal assistant in

the Consumer Fraud Division. Sincethat time, she has worked exclusivelyfor Clint Carter. Greta is married toTerry Beasley and they have two chil-dren – Kayla, age 11, and Kyle, age 8.When not at work, Greta enjoys watch-ing her children participate in sports,swimming, and going shopping withher daughter. Greta is a good personand a definite asset to our firm.

XXVII.CLOSINGREMARKS

I started a very rough draft of thispart of the October issue a few daysbefore September 9th. Actually, I hadtwo versions: one if the voters did whatI thought would be the right thing andapproved Amendment One; the otherversion was if the voters rejected theRiley Plan. I have decided to useneither of them.To be perfectly honest,I knew from polls and having talked tofolks around the state that the plan wasin real trouble. Nevertheless, I stillwanted to write a positive piece on theoutcome without much hope that itwould ever be read. My hope was thatvoters would finally realize how impor-tant a yes vote would be for our state.How wrong I was! It doesn’t take apolitical consultant to teach us that it isalways difficult to sell tax increases tothe voters. Nobody wants their taxesraised, and now we know that about70% of all Alabama citizens apparentlydon’t trust our politicians. Those aretwo pretty big hurdles to clear.

It is interesting that few peoplearound the state trust the Legislature asa group, but most do trust and respecttheir own senator and House member. Ihave always found that hard to recon-cile. In any event, the attacks on theRiley plan were carefully planned bythe experts hired by the Alfa bosses,and were carried out with the expendi-ture of millions of dollars. In myopinion, we will live to regret the


outcome of this vote. Clearly, there isone lesson to be learned from Septem-ber 9th – “don’t try to raise taxes inAlabama!” Now, all of our politicalleaders have an obligation and duty towork together and make the best of avery bad fiscal situation. I pray that oneof these days we will work out of themonumental problems facing ourpeople.We can’t afford any more “band-aids” or “patches,” but it appears that iswhat we will be getting for a while.

A number of our readers have con-tacted us with great concern over theobvious decline in the moral structureof our country. Many concerned citi-zens appear ready to give up, sayingthat the United States is doomed.WhileI too am concerned, there is an answer

to all of our problems. Having heard somany comments over the past severalweeks about how morally and spiritu-ally corrupt our country has become, Ibelieve each of use has a duty to getinvolved and work to make thingsbetter. The most important tool wehave available to us is prayer. Unfortu-nately, as I have said before, most of usonly use this powerful tool when our“ox is in the ditch” or when we havesome “special needs.” We can start bypraying daily for our leaders. Each of ushas an obligation to pray constantly forour leaders at every level. We mustinclude those we don’t agree with orsupport.This is critically important.Weare all greatly concerned about ourcountry and the many problems facing

us, but sometimes all we do is worryand criticize others because we think“they” aren’t doing their part. Theformula for how we can help “save”America is basic, simple, and readilyavailable. God has been telling us thatHe is available and certainly willing tosupply our needs. It’s high time we lis-tened.

If My people, which are called by Myname, shall humble themselves, andpray, and seek My face, and turn fromtheir wicked ways; then will I hearfrom heaven, and will forgive theirsins, and will heal their land.

2 Chronicles 7:14



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the jere beasley report oct. 2003

Documents

year awards

state havent

size of state

governing magazine

finance update

governor recognizedit

operation of state government

product liability update