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									THE                                                                                    FEBRUARY 2006

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

                  Helping those who need it most for over twenty-five years

I.                                           avoiding hitting the curb on his left as      INTERSTATE CRASH CASE SETTLED
CAPITOL                                      he drove off from his parked location.
                                             The driver was using one of his left side       Our firm has negotiated a settlement
OBSERVATIONS                                                                               in a wrongful death arising out of an
                                             mirrors to watch the curb and was not
                                             keeping a proper lookout for persons          interstate highway crash that occurred
MONTGOMERY DEATH CASE SETTLED                out front in the vehicle’s path.The child     in Baldwin County, Alabama. We repre-
                                             was first hit when the vehicle was trav-      sentated the families of two ladies who
   Our firm settled a wrongful death         eling between 2 and 5 miles per hour          were state employees traveling to an
case that was set for trial on January 9th   after traveling around 30 feet.The child      educational seminar in Mobile. While
in Montgomery County Circuit Court.          and his bicycle were caught under the         stopped in traffic due to a prior acci-
The case involved a 5-year-old child         front bumper, then drug for at least 35       dent along with a number of cars, an 18-
who died as the result of being run over     feet under the front of the vehicle           wheeler plowed into their car at a high
by a large beer distributing truck. The      before the child slipped loose.The child      rate of speed.The ladies in our car were
case was brought by the parents against      was then run over by the right rear           killed instantly. The families filed suit
Bama Budweiser of Montgomery, Inc., a        outside trailer drive tire. According to      against the trucking company which
wholesale beer distributor of Anheuser-      the investigating officer, the truck then
Busch. The vehicle involved was a            traveled for another 100 feet before                  IN THIS ISSUE
tractor-trailer unit, which was being        coming to a complete stop. Had the
driven by a driver with only six months                                                     I.     Capitol Observations . . . . . . . . . . . . 2
                                             driver been keeping a proper lookout at
experience with a vehicle of this type.      the outset, he would have seen the child       II.    Legislative Happenings . . . . . . . . . . 8
Before his employment by Bama Bud-           and the vehicle could have been
weiser, the driver had never before                                                         III.   Court Watch . . . . . . . . . . . . . . . . . 11
                                             stopped in less than 10 feet. Even after
driven a tractor-trailer rig. During dis-    hitting the child initially, the vehicle       IV.    The National Scene . . . . . . . . . . . . 13
covery, we were surprised to learn that      could have been stopped before the
the company had no safety department,                                                       V.     The Corporate World . . . . . . . . . . 18
                                             child was actually run over. Had the
even though it had 30 tractor-trailer        tractor-trailer been stopped at that           VI.    Campaign Finance Reform . . . . . . 21
units and employed 30 drivers. Neither       point, the injuries substained would
did the company have a safety director       have been relatively minor and certainly       VII. Congressional Update . . . . . . . . . . 22
or safety officer.There were no regular      not life-threatening. The child died on        VIII. Product Liability Update . . . . . . . . 24
meetings attended by the drivers where       the scene from his injuries.
safety was even a subject of discussion.       The case, which was to be tried before       IX.    Mass Torts Update. . . . . . . . . . . . . 28
The only training of drivers was done        Circuit Judge Gene Reese, was settled for      X.     Business Litigation . . . . . . . . . . . . 31
by supervisors who rode with them for        a confidental amount just before jury
a time after the drivers were initially      selection.The case was handled by Julie        XI.    Insurance and Finance Update . . . 32
hired.While Anheuser-Busch required a        Beasley of our firm, who did an excellent
periodic ride with the drivers by super-                                                    XII. Predatory Lending. . . . . . . . . . . . . 35
                                             job for the family.The fact that the beer
visors, it appeared this was primarly        delivery truck was very large and was          XIII. Premises Liability Update . . . . . . . 35
geared toward sales and marketing.The        used for deliveries at stores where
only written guidelines for the drivers                                                     XIV. Workplace Hazards. . . . . . . . . . . . 37
                                             people, including children, are expected
and supervisors dealt with matters relat-    to be makes training of drivers very           XV.    Transportation . . . . . . . . . . . . . . . 41
ing to the sale of beer.                     important. In this case, we felt that there
   The tragic incident occurred on April                                                    XVI. Healthcare Issues . . . . . . . . . . . . . 46
                                             was a definite need for a structured train-
5, 2005, at a convience store located on     ing program. After the incident, the           XVII. Environmental Concerns . . . . . . . . 48
the Troy Highway within the city limits      company made no changes in either its
of Montgomery. The child, who was                                                           XVIII. The Consumer Corner. . . . . . . . . . 50
                                             training or safety programs. I hope the
riding his bicycle, was hit by the vehicle   company will put a good safety program,        XIX. Recalls Update . . . . . . . . . . . . . . . 52
in a drive around on the convenience         including better driver training, in place
store premises. The driver had been                                                         XX.    Firm Activities . . . . . . . . . . . . . . . . 52
                                             now that the case has been settled. I sin-
parked while unloading beer at the           cerely hope that it will do so.                XXI. Special Recognition . . . . . . . . . . . 53
store. As he started off from a parked
position, he was preoccupied with                                                           XXII. Some Parting Words . . . . . . . . . . . 54

2                                                BeasleyAllen.com
was based in Tennessee.This tragic case        (in which 79 pharmaceutical compa-            ALABAMA DENTISTS SUE INSURANCE
is just another example of how the             nies are currently defendants), now           COMPANY
trucking industry has to do a better job       pending in the Circuit Court of Mont-
                                                                                                Our firm has filed suit against Blue
on safety.The amount of the settlement         gomery County,Alabama, Circuit Judge
                                                                                             Cross and Blue Shield of Alabama
is confidential and there are a few non-       Charles Price had denied the pharma-
                                                                                             (BCBS) on behalf of the Alabama Dental
monetary matters that have to be done          ceutical companies’ motions to dismiss.
                                                                                             Association.This Association is made up
before the settlement will be final. Cole      Since that time, these defendants
                                                                                             of 1,600 Alabama dentists. Our lawsuit
Portis and Julia Beasley handled the case      decided to challenge Judge Price’s order
                                                                                             alleges that these dentists have been sys-
for the firm and did a very good job for       by filing an emergency motion with the
                                                                                             tematically underpaid by BCBS for their
our clients.                                   Alabama Supreme Court by way of a
                                                                                             treatment of BCBS insured’s.These den-
                                               writ of mandamus. The thrust of the
                                                                                             tists have been victimized by BCBS long-
                                               defendants’ appeal was to challenge the
UPDATE ON AIR POLLUTION VERDICT AGAINST                                                      standing monopolization of Alabama’s
                                               judge’s finding that, under well estab-
CONTINENTAL CARBON                                                                           healthcare market. Primarily, the case
                                               lished law, the statute of limitations does
                                                                                             focuses on the fraudulent claims prac-
   Last month, U. S. District Judge Mark       not apply to the sovereign, known in
                                                                                             tices at Blue Cross.When a dentist treats
E. Fuller entered an Order denying the         the law as nullum tempus occurrit
                                                                                             a patient with BCBS insurance, the
post-trial motions of two defendants in        reipublicae. In layman’s language, that
                                                                                             dentist submits an invoice for payment
a very serious air pollution case that our     simply means the statute of limitations
                                                                                             of services to BCBS. This invoice is in
firm has been working on. In the               doesn’t apply to a state such as
                                                                                             the form of codes. Each specific treat-
motions filed by Continental Carbon            Alabama.
                                                                                             ment or service has a specific code.The
and its parent company, China Synthetic           After the pharmaceutical companies
                                                                                             lawsuit alleges that BCBS utilizes a com-
Rubber Corporation, the defendants had         filed their joint writ of mandamus, our
                                                                                             puter system to automatically manipu-
asked the Court to reverse the jury            firm, along with our co-counsel, Hand
                                                                                             late these codes.This has resulted in the
award of $20,709,000 entered on behalf         Arendall filed a “preemptive response.”
                                                                                             delaying, diminishing, or denying of the
of our firm’s clients, the City of Colum-      On Friday, January 20th, the Alabama
                                                                                             dentists’ claims.As a consequence, both
bus, Georgia, Action Marine, Inc., and         Supreme Court unanimously denied the
                                                                                             dentists and patients are adversely
two individual plaintiffs. In its order, the   defendants’ writ of mandamus, thereby
                                                                                             affected.Alabama dentists are entitled to
Court refused to grant the defendants’         affirming the trial judge’s prior order.
                                                                                             be paid in a timely fashion for rendering
request for a new trial or reduce the             The State of Alabama views this
                                                                                             dental services to BCBS patients. But,
size of the jury’s award. The jury’s           recent ruling by the Alabama Supreme
                                                                                             BCBS current methods do not properly
verdict consisted of $1.9 million in com-      Court as another positive development
                                                                                             and fairly handle the claims of these
pensatory damages, $1,294,000 in case-         in this case against the pharmaceutical
                                                                                             dentists. BCBS has been sued by dentists
related expenses and $17.5 million in          industry for price-gouging the state.The
                                                                                             and physicians in other states for these
punitive damages. Although the defen-          ruling will certainly help our discovery
                                                                                             same fraudulent practices.
dants still have the option of appealing       efforts in determining what the true
this case to the 11th Circuit Court of         price was for these millions of drug pre-
Appeals in Atlanta, the District Court’s       scriptions for which the state was over-      ALABAMA HEAD INJURY FOUNDATION DOES
Order is an extremely promising devel-         charged as a result of the                    GOOD WORK
opment for our clients who have suf-           pharmaceutical industry’s fraudulent
                                                                                                The Alabama Head Injury Foundation
fered years of harm due to carbon black        pricing scheme.The amounts of money
                                                                                             (AHIF) was founded by professionals
air pollution released by the defendants’      that the State of Alabama will be due to
                                                                                             and families in 1983 to increase public
plant, which is located in Phenix City,        recover in this case will be very large. In
                                                                                             awareness of traumatic brain injury and
Alabama. David Byrne from our firm has         addition, we believe that under the facts
                                                                                             to stimulate the development of sup-
been working hard on this case and has         as we believe they will unfold, punitive
                                                                                             portive services. Today, AHIF is among
done a great job.                              damages will be assessed.We will con-
                                                                                             the largest state brain injury associa-
                                               tinue to update our readers on any new
                                                                                             tions in the nation, with model pro-
                                               developments of a significant nature as
SUPREME COURT REJECTS DRUG COMPANIES’                                                        grams and statewide services. Its
                                               they occur in this case.
APPEAL                                                                                       mission is to improve the quality of life
                                                                                             for survivors of traumatic brain injury
  We previously reported in the case of
                                                                                             and for their families.Whether an injury
State of Alabama v. Abbott Labs, et al.
                                                                                             involving the brain is mild or severe, the

                                                   BeasleyAllen.com                                                                  3
lives of the injured person and their        peoples were unable to get their pre-       THE PROBLEMS CAUSED BY THE
family are changed forever.The impact        scriptions under the new plan. Most all     GOVERNMENT NEW DRUG PLAN CONCERNS
can be both emotionally and financially      Alabama pharmacists were filing the         ALL OF US
devastating.AHIF provides information        prescriptions at their own expense.           I have discussed the new federal drug
to help clients and families fully under-    Medicaid Commissioner Carol Her-            plan at length with my brother, Billy
stand the results of injury. AHIF helps      rmann-Steckle told the Associated Press     Beasley, a pharmacist, who operates two
them access available resources and          that her agency will temporarily cover      retail drug stores in Barbour County.
provides services and programs that          the prescription costs for Medicaid par-    Billy also serves in the Alabama Legisla-
meet the unique needs of individuals         ticipants whose drugs the agency rou-       ture and is quite familiar with the Med-
with traumatic brain injury as well as       tinely bought before Medicare Part D        icaid and Medicare programs. He tells
spinal cord injury in certain programs.      took effect January 1st. The 88,000 are     me that the current problems with the
The following traumatic brain injury         elderly and disabled people whose low       new drug plan have been a nightmare
facts will give you an idea of the need      incomes made them eligible for both         for people. As we all know, the cost of
that exists:                                 the federal Medicare program and the        Medicaid to the state has been a con-
                                             state Medicaid program.                     stant problem for years. Finding ade-
• Every 21 seconds another person sus-
                                                These people, known as “dual eligi-      quate funding for the Alabama Medicaid
  tains a traumatic brain injury in the
                                             bles,” were assigned by the federal         program has been an ongoing one.The
  United States.
                                             Centers for Medicare and Medicaid Ser-      state continues to apply a band-aid
• Every year, over 1.5 million Americans     vices to one of the private prescription    approach to the program’s fiscal
  sustain a traumatic brain injury.          plans participating in the Medicare drug    problem.As a practicing pharmacist, my
                                             program. Local pharmacies were unable       brother deals every day with the health
• 5.3 million citizens (2% of U.S. popula-
                                             to find many of them listed in the com-     care needs of ordinary people and really
  tion) live a life with a disability
                                             puter system after the program began        understands how people have been
  because of a traumatic brain injury.
                                             on January 1st. The state Medicaid          affected.
• In Alabama, over 1,500 people are dis-     Agency was to cover the cost of drugs         Billy foresees an immediate negative
  abled by traumatic brain injury each       for two weeks. At the end of that time      impact on the General Fund budget
  year.                                      the agency was to review and deter-         because the State of Alabama will now
                                             mine whether Medicare’s problems            have to pay back to the federal govern-
• Major causes of brain injuries are         have been resolved. If the problems can
  motor vehicle crashes (50%), falls                                                     ment about $40 million under the new
                                             be solved within two weeks, it will be a    drug plan. That’s because of compli-
  (21%), assaults and violence (12%),        major miracle.The decision to continue
  and sports and recreation (10%).                                                       cated changes in the Medicaid and
                                             paying for the prescription drugs will      Medicare programs that came with
  If you are not familiar with the AHIF,     cost Alabama at least $15.7 million. Med-   Medicare Part D, the prescription drug
or simply want more information about        icaid will ask private insurers who were    plan referred to above that is causing
the organization, I encourage you to go      supposed to pay for the drugs under         major problems for all states, including
to their website, www.AHIF.org. I            Medicare Part D to reimburse the state.     Alabama. It appears that the people
believe that after seeing the good work         The more we learn about the new          who were to be the beneficiaries of the
they are doing, you will want to get         drug plan, the worse it appears to be. It   new plan were not the top priority for
involved in some manner. If you know         was passed by Congress primarily to         Congress. Last month, I wrote on some
of any person who has suffered a brain       benefit financially the powerful insur-     of the problems relating to this new
injury, I highly recommend AHIF as a         ance industry and the pharmacy benefit      drug program and at that time the prob-
group to contact.                            managers, and that’s a shame. Governor      lems were just beginning to surface. In
                                             Riley should be commended for step-         my opinion, the problems arising from
                                             ping in to help out. But, I suspect the     the new drug plan will have to be
STATE OF ALABAMA GETS INVOLVED IN DRUG       need for the state to help will not go
PLAN PROBLEMS                                                                            addressed by Alabama legislators who
                                             away any time soon.                         are trying to develop a budget for the
   Because of the multitude of problems                                                  cash-strapped General Fund this year.
with the new Medicare drug plan, the                                                       My brother, who has spent a consider-
State of Alabama will have to provide                                                    able amount of time studying the new
financial help to 88,000 of Alabama’s                                                    drug plan, is greatly concerned with
neediest citizens.This is because these                                                  what Congress has done to the Ameri-

4                                                BeasleyAllen.com
can people. Billy explained to me that a     that this firm was the Bush-Cheney cam-               assistance.Florida’s most recent alloca-
major factor in the Medicaid funding is      paign’s media firm. It might just be                  tion for $200 million in relief funding
the result of “dual eligibility,” where      another coincidence that National                     will bring the total to over $1 billion
many people in Alabama are eligible for      Media is the primary media firm for the               received by that state’s agricultural
both Medicaid and Medicare benefits.         drug industry.This firm had done an ad                industry from the U.S. Secretary of Agri-
Billy has spent a tremendous amount of       campaign for the drug industry front                  culture over the last 15 months. Com-
time trying to unravel the mysteries of      group “Citizens For Better Medicine”                  missioner Sparks asked Alabama’s
Medicare Part D and, in my opinion, he       which spent tens of millions of dollars               Congressional delegation to push for a
has become an expert on the subject.         on ads attacking lawmakers who were                   release of agricultural funds that are des-
Hopefully, he will be able to help the       fighting at that time for lower prescrip-             perately needed for Alabama farmers.
Riley Administration and his fellow legis-   tion drug prices.You may recall the ads               Commissioner Sparks had this to say
lators deal with this complicated issue.     showing a fictitious senior citizen                   concerning the USDA’s failure to act:
   In between trying to get his business     named “Flo” on television who preyed
                                                                                                     We commend the US Senate for
computer software ready for the multi-       on seniors’ fears that Congress was
                                                                                                     their efforts to include funds for
ple kinds of insurance cards he              going to hurt them. The firm also
                                                                                                     disaster victims in the Defense
expected his customers to present after      attacked doctors and pharmacists and
                                                                                                     Appropriations bill, but the funds
January 1st and helping people in            made them a target.These connections
                                                                                                     were taken out because of pres-
Barbour County decide what to do, Billy      involving the Bush Administration, the
                                                                                                     sure from the House leadership
says he has really been swamped. He          drug industry and National Media may
                                                                                                     and the White House. I understand
tells me that people in his area are         be nothing more than a coincidence,
                                                                                                     that the people in Florida also
totally confused over the new plan. Inci-    but it sure makes me wonder.
                                                                                                     need help, but Alabama farmers
dentally, there have been price increases    Source: Public Citizen and www.americanprogress.org
                                                                                                     need help and have not received a
from most of the drug companies of
                                                                                                     dime. I have sat and talked with
about 12% on the average since the plan
                                             THE USDA FAILS MOST GULF COAST STATE                    farmers in South Alabama who
when into effect. I guess that should        FARMERS                                                 had tears in their eyes because of
have been anticipated since the drug
                                                                                                     the damage they had to their crops
industry virtually wrote the bill that was     Apparently Alabama Agriculture &
                                                                                                     and property. They have tried to
passed by Congress.When the taxpayers        Industries Commissioner Ron Sparks’
                                                                                                     work through the proper channels
find out that the government can’t even      criticism of the failure of the U.S.
                                                                                                     to get help, but there are no funds
negotiate the cost of drugs with the         Department of Agriculture (USDA) to
                                                                                                     coming in for them. When Secre-
drug companies, there will be some           help Alabama farmers have paid off.
                                                                                                     tary Johanns came to tour the
awfully mad folks around the country.        Alabama farmers had been treated badly
                                                                                                     destruction caused by Katrina, we
The federal bureaucracy has created a        in the aftermath of Hurricane Katrina. In
                                                                                                     couldn’t even get him to come to
monster and one that will be most diffi-     my opinion, based on what I have
                                                                                                     south Alabama. The Secretary
cult to control. The cost to the federal     learned, the Commissioner’s criticism
                                                                                                     wanted these farmers to go up
government will be much greater than         was certainly justified. Up until mid-
                                                                                                     and meet with him hours away in
the public was led to believe during the     January, the farmers in our state had
                                                                                                     Mississippi. We have even tried to
time the bill was making its way             received no relief for the damages suf-
                                                                                                     have conference calls with the Sec-
through Congress.                            fered as a result of the storm.The Com-
                                                                                                     retary and he has been unavail-
                                             missioner’s dissatisfaction with federal
                                                                                                     able.The farmers in this area have
                                             relief efforts intensified after the USDA
POLITICAL COINCIDENCES                                                                               suffered for long enough. I am not
                                             released another $200 million for relief
                                                                                                     going to stand by while they are
  The Bush Administration, using tax         efforts in Florida.Alabama farmers sus-
                                                                                                     ignored by Secretary Johanns.
dollars, funded political ads touting the    tained over $650 million in damages as
                                                                                                     Times of disaster should not be
Medicare bill and that raised some con-      a result of Katrina. I was shocked to
                                                                                                     just a photo opportunity for politi-
cerns at the time. However, I didn’t         learn that when Katrina hit, many
                                                                                                     cians.These farmers need help and
realize which media firm got the work.       farmers in our state were still waiting
                                                                                                     they need it now.
Now the Associated Press has reported        for clean-up checks from Ivan. Until
that the White House gave the $9             Commissioner Sparks got on the case,                    As we all know, hurricanes caused
million ad contract to National Media,       the federal government had virtually                  extensive agricultural damage in 2005
Inc. I’m sure it was just a coincidence      ignored Alabama farmers’ requests for                 throughout the Gulf Coast region. Other

                                                  BeasleyAllen.com                                                                          5
states in addition to Alabama have like-       Previous efforts in recent years to        November 2008 on approving the new
wise expressed disappointment in the        rewrite the 1901 constitution have            constitution, which if ratified, would go
federal government’s lack of assistance     failed. Similar efforts to call a constitu-   into effect on January 1, 2009. I support
to farmers. It appears that Louisiana,      tional convention have also failed. Sup-      the constitutional convention approach
Mississippi, and Texas are in the same      porters of a new constitution have            and hope the legislators will give the
boat with Alabama. For example,             argued that the old document is out-          voters a chance to approve it. If this
Louisiana’s combined agriculture losses     dated, has had to be amended more             happens, it can be the dawn of a new
from both Hurricanes Katrina and Rita       than 700 times (mostly on local               day in Alabama.
are expected to total more than $2          matters), and includes racist language.       Source: Associated Press

billion. While Florida’s agricultural       Opponents have argued that the effort
industry obviously has tremendous           to rewrite the constitution is simply an
                                                                                          MERCK AND MEDCO TO PAY $7.8 MILLION TO
needs, all of the states along the gulf     attempt to raise taxes, legalize gambling,    THE STATE OF OHIO
coast were hit very hard. Farmers in        and give counties more power. In my
each of the states have to wonder why       opinion, people should be given the              The State of Ohio has won a $7.8
they have been ignored by the USDA.         opportunity to decide whether they            million award against Merck & Co. and
We are happy to see Florida farmers,        want a new constitution that would            Medco Health Solutions Inc., which is a
who are deserving, get help from the        protect the interests of all the people of    former Merck subsidiary, for defrauding
federal government. But farmers in the      Alabama. Personally, I believe the 1901       and violating its legal duties to the State
other states, who are equally deserving,    Constitution, with all of the amend-          Teachers Retirement System of Ohio
and are really hurting, need immediate      ments, is no longer a workable docu-          (STRS). State Attorney General Jim Petro
assistance.                                 ment and is badly in need of revision.        sued Medco for overcharging the teach-
  Commissioner Sparks is to be com-            Lenora Pate, co-chair of Alabama Citi-     ers’ pension fund.The verdict is the first
mended for his stand. I hope Alabama’s      zens for Constitutional Reform, says that     time a U.S. jury has recognized that a
congressional delegation will help him      more than 60,000 Alabama residents            company managing pharmacy benefits
out in this battle. I am reasonably sure    have signed a petition calling for a new      has a legal duty to act in the best inter-
that Senator Shelby will, and hopefully     constitution. She told the Associated         est of retirees and pensioners. It will
others will get involved. There was no      Press:“We are still living under a consti-    likely have repercussions for the entire
justifiable excuse for the USDA’s failure   tution designed for a post-Civil War era,     pharmacy benefit manager industry.
to respond to the needs of farmers. It      even though we are living in a post-9/11      Medco is among the largest PBMs in the
took political pressure to get the gov-     era.” Opponents of a new constitution         industry, and the verdict is the largest to
ernment agency to listen. Now, the          have already announced they plan to           date in favor of a single state against
USDA should act!                            fight the latest effort to rewrite the        Medco.
                                            1901 document. Senator Little says the           The suit was filed in 2003 to recover
                                            latest proposal for a constitutional con-     damages from Medco for overcharging
                                            vention contains safeguards to prevent        STRS for certain prescription drugs and
                                            special interest groups from controlling      mail-order dispensing fees, and for
   Senator Ted Little and House Speaker     the proceedings. Candidates for dele-         wrongfully withholding drug makers’
Pro Tem Demetrius Newton will try           gate positions would be prohibited            rebates from STRS.The jury found that
again to set up a convention to rewrite     from accepting contributions of more          Medco owed a fiduciary duty to STRS
Alabama’s 1901 constitution. The two        than $100 from any one source, includ-        Ohio and breached that duty in the
veteran lawmakers have called the doc-      ing political action committees. Elec-        amount of $915,000. They also found
ument archaic, unjust, and much too         tions for delegate positions would be         that Medco is liable for constructive
long.They have introduced a proposed        nonpartisan.According to the proposed         fraud and awarded damages in the
constitutional amendment in the             amendment, delegates would meet in            amount of $6.9 million.The jury found
regular session to let voters decide in     July 2007 in the old House chamber at         further that Merck is jointly liable for
November whether they want to hold a        the Alabama Capitol in Montgomery to          the actions of Medco, but did not tor-
convention to write a new constitution.     begin the convention, which would be          tiously interfere with the contract or
If approved, voters would return to the     completed by May 2008. If given the           business relationship between STRS and
polls in April 2007 to elect 210 dele-      opportunity by the Legislature, and the       Medco.The jury was unable to reach a
gates—105 men and 105 women—from            convention process is completed,              verdict on whether Merck and Medco
the state’s 105 state House districts.      Alabama residents would then vote in          should be forced to pay punitive

6                                               BeasleyAllen.com
damages to STRS for misconduct. That             This is a sneak attack on con-             no clue what is going on at the FDA. If
issue will be the subject of another trial       sumer rights. President Bush is            they actually knew how powerful the
that has yet to be scheduled.                    once again abusing his executive           drug industry is and what influence the
Source: The Business Journal                     powers, this time in his attempt to        companies exercise over the FDA, it
                                                 protect the big pharmaceutical             would likely cause a major consumer
                                                 companies from the consequences            rebellion against the federal govern-
DRUG COMPANIES                                   of their actions. Thousands of             ment and the politicians who take the
                                                 people in this country have died           drug industry money.
  The Food and Drug Administration, at           or been seriously injured by drugs            According to the Wall Street Journal,
the request of the Bush White House, is          approved by the FDA, and this              inclusion of the new FDA policy in the
doing its best to give drug companies            administration is saying it doesn’t        drug-labeling rule had caused a great
virtual immunity from lawsuits. On               think people should have any               deal of disagreement between FDA
January 19th, in what has been labeled           recourse.                                  career officials and Bush Administration
by some as a sneak attack, the FDA                                                          appointees. I really believe that there
                                                  In effect, the FDA has, without any
announced its final rule on new federal                                                     are dedicated employees at the FDA
                                               statutory authority, declared that feder-
requirements for drug warning labels. If                                                    who badly want the authority to prop-
                                               ally-approved      medication       labels
the courts follow this new rule, it could                                                   erly regulate the drug companies. Unfor-
                                               preempt state law. The drug industry’s
have disastrous effects on the rights of                                                    tunately, the Bush Administration—at
                                               goal is to make sure that persons killed
people injured by dangerous and unsafe                                                      the urging of drug company lobbyists—
                                               or seriously injured by unsafe drugs
drugs to recover damages under state                                                        has pushed this anti-consumer measure
                                               won’t be able to pursue legitimate
statutory and common law. In the pre-                                                       through the FDA. I don’t believe people
                                               claims in court against the drug compa-
amble of the final rule, the FDA states its                                                 will stand for this sort of thing once
                                               nies. Most likely the effect of what has
position that these new federal require-                                                    they realize what is happening. Due to
                                               done is to give drug companies a tool to
ments preempt all state tort liability                                                      the total lack of notice regarding the
                                               use in future court cases filed in the
claims based on inadequate drug                                                             FDA’s intention to preempt state tort
                                               future.The companies would be able to
warning labels. Such an attempt to                                                          law, there was no opportunity for
                                               claim that they weren’t required to
preempt state tort liability, if adopted by                                                 people to react or comment prior to the
                                               warn consumers about any known
the courts, would have significant impli-                                                   issuance of the final rule. The FDA
                                               safety risks because the FDA deter-
cations in failure to warn cases. Interest-                                                 admitted at a press conference called to
                                               mined the safety issue didn’t warrant
ingly, the FDA provided no notice of                                                        announce the new rule that the liability
                                               inclusion on a medicine’s label.The new
their intention to include this language                                                    provisions were added behind the
                                               policy—which addresses state liability
in the final rule. In fact, in the notice of                                                scenes, after the agency consulted
                                               laws—has now been written into a
proposed rule-making, issued December                                                       with the drug industry. Inserting lan-
                                               broadview drug-labeling rule.
22, 2000, the FDA stated:                                                                   guage in the final rule counter to the
                                                  If the proposed changes come about,
                                                                                            proposed language is highly unusual
  FDA has determined that this                 drug-product safety in the United States
                                                                                            and deprives organizations such as
  proposed rule does not contain               could suffer a major setback.When you
                                                                                            Public Citizen and individuals their right
  policies that have federalism impli-         consider how many drugs were
                                                                                            to comment in the rule-making process.
  cations or that preempt State law.           approved by the FDA and later had to
                                                                                               We are facing a major healthcare
                                               be pulled from the market because of
   The Bush administration had previ-                                                       crisis in this county caused by the
                                               serious safety problems, it’s obvious this
ously failed to persuade Congress and,                                                      number of unsafe drugs put on the
                                               rule—if followed by the courts—will be
with a few exceptions, the courts (where                                                    market by drug companies—after FDA
                                               very bad for people who have to take
it has filed amicus briefs) to shield drug                                                  approval—and the latest FDA action
                                               prescription drugs in this country. As
makers from liability.This new tactic of                                                    could add to this crisis.As we all know,
                                               you know, the conduct of pharmaceuti-
writing preemption language into federal                                                    the current environment in Washington
                                               cal companies and the FDA has been
regulation notices is an attempt to                                                         is very antagonistic to defenders of the
                                               called into serious question in recent
bypass Congress and override consumer                                                       civil justice system and the right to a
                                               months and with good reason. It has
protection liability laws. Joan Claybrook,                                                  jury trial. Powerful industries, such as
                                               been quite obvious over the past several
President of Public Citizen, had this to                                                    the drug industry, that have been unable
                                               years that the FDA is little more than an
say on what the FDA has done:                                                               to win special protections from legisla-
                                               extension of the powerful drug indus-
                                                                                            tive bodies are now manipulating the
                                               try. Ordinary folks in this country have

                                                   BeasleyAllen.com                                                                 7
federal rule-making process to attack          this back-door rule-making process.                  Montgomery. A verdict in the case
the civil justice system.The drug indus-       Eliminating the rights of individuals to             should come down well before the
try could never get Congress to do what        hold drug companies accountable                      Democratic primary on June 6th.
the FDA has now done concerning pre-           when they are at fault in putting unsafe
emption. Fortunately, the courts have          drugs on the market will put patients at
rejected the preemption argument time          even greater risk.The FDA’s poor record              II.
and again. The new rule will not take          of approving harmful drugs based on                  LEGISLATIVE
effect until June 30, 2006, which will         limited, and even fraudulent, clinical               HAPPENINGS
give time for folks to find out how this       trials performed by the drug companies
new rule will affect them and what’s           has created a most dangerous situation.
happening to their rights.                     Both the FDA and the big drug compa-                 SOME ISSUES FACING THE ALABAMA
  It must be emphasized that Congress          nies share the blame for the serious                 LEGISLATURE
has never given the FDA the statutory          problems caused when dangerous and                      When the legislators came to Mont-
authority required to promulgate rules         unsafe drugs are put on the market. I am             gomery on January 10th, as expected,
preempting state tort law in this area.        confident that the courts will say no to             they found a number of major issues
In the opinion of most legal scholars,         the FDA’s opinion on preemption,                     facing them.While some of these issues
the FDA has clearly overstepped its            which is not based on any authority                  have been around for a long time, some
authority. I am convinced that the FDA’s       given to the FDA by Congress, and will               are relatively new. Because it is an elec-
new rule is unconstitutional under the         summarily reject it.                                 tion year, we can expect a lively session.
same analysis the U.S. Supreme Court           Sources: The Wall Street Journal, Associated Press
                                                                                                    The following are a few of the issues
                                               and Public Citizen
offered in Medtronic v. Lohr, 518 U.S.                                                              that will challenge the legislators:
470 (1996), which upheld state tort law
claims against a medical device manu-          A QUIET POLITICAL SEASON                             • Education Budget: With tax collec-
facturer.The Wall Street Journal recently                                                             tions swelling because of the eco-
reported:                                         Thus far 2006 has been a very quiet                 nomic recovery, an extra $1 billion
                                               and uneventful election year in                        above this year’s $5.39 billion budget
    Last July, a federal judge in Min-         Alabama. I had expected things to pick                 will be available. Governor Riley
    nesota turned down a Pfizer                up significantly by this time, but that                wants to spend $500 million of it on
    request to bar a suit over the anti-       certainly hasn’t been the case. The                    school and college construction proj-
    depressant Zoloft, writing that            primary elections aren’t that far away                 ects. His Republican opponent for
    ‘federal    labeling      laws       are   and people may get more in tune with                   governor, Roy Moore, is calling for a
    minimum standards; they do not             politics in the upcoming weeks. I would                $500 million tax refund.
    necessarily shield manufacturers           encourage folks to get actively involved
    from state law liability. ... state-law                                                         • General Fund Budget: Tax collec-
                                               in political races this year. If ordinary
    protections reinforce and enhance’                                                                tions for the budget that finances non-
                                               folks don’t get involved, their inaction
    federal efforts to protect the public.                                                            education agencies have not grown
                                               will play right into the hands of the
                                                                                                      like education taxes have. This is
   However, the fact that the drug indus-      special interest groups. Those well-
                                                                                                      where some serious funding prob-
try could get the FDA to rewrite the           financed groups will spend whatever it
                                                                                                      lems will arise. Legislators will likely
rules so that companies such as Merck          takes to elect candidates of their choice.
                                                                                                      have their own ideas on how to deal
and Co. and Pfizer could possibly                                                                     with the surplus.
escape accountability for putting dan-         JUDGE SETS SIEGELMAN CASE FOR TRIAL
gerous and deadly drugs on the market                                                               • Income Tax: Governor Riley wants to
is the scariest example yet of how much          I believe that most folks will agree                 use the projected surplus in the educa-
control these big corporations have            that Don Siegelman should get his day                  tion budget to start a five-year plan to
over our political process in Washing-         in court before he has to go before the                raise the threshold at which Alabami-
ton. The drug companies will stop at           voters in his attempt to take back the                 ans pay income taxes.The Governor’s
nothing to avoid being held account-           governor’s office.A federal judge has set              plan would raise the threshold for a
able when they put unsafe drugs on the         the government corruption trial of the                 family of four from $4,600, which is
market that are harmful to people.What         former governor and three co-defen-                    the lowest in the country, to $15,000
they couldn’t get done in Congress,            dants for May 1st.The case will be tried               by 2011. That would save taxpayers
they’re trying to accomplish through           before U.S. District Judge Mark Fuller in              $214 million annually.

8                                                   BeasleyAllen.com
• Raises: The Alabama Education Asso-       • Property Reappraisals: Bills have          • A recommendation was made to add
  ciation is seeking about a 5% raise for     been offered to end annual property          five days to the state’s school year for
  school workers. The Alabama State           reappraisals return to the state’s old       a total of 180 instructional days.
  Employees Association will also seek a      system of reappraising property every
                                                                                         • He proposed pay raises for school
  raise for state workers. Groups repre-      four years for tax purposes. This
                                                                                           teachers and state employees.
  senting retired teachers and retired        appears to be a hot political issue.
  state workers are seeking a 7% hike in                                                 • A plan to require lobbyists to report
                                            • Eminent Domain: The governor is
  pension benefits. Governor Riley rec-                                                    everything they spend on entertain-
                                              backing a proposed constitutional
  ommended pay raises for teachers                                                         ing public officials was suggested.
                                              amendment to restrict state, county,
  and state employees.
                                              and city governments from using            • Term limits for state legislators were
• Campaign Finance And Lobbyist               eminent domain to obtain private             called for. It would restrict serving in
  Reform: The scandals in Washington          property. The fight will be over             each house to 12 years.
  have made the public—including              whether the constitutional amend-
                                                                                         • He recommended enacting a constitu-
  Alabamians—aware of how badly we            ment should be like a state law the
                                                                                           tional amendment to restrict the use
  need reform of our political system.        Legislature passed last year to restrict
                                                                                           of eminent domain by city, county,
  This is the time to act on the state        eminent domain or whether it should
                                                                                           and state governments to obtain
  level to pass meaningful reforms of         be stronger. That would be done by
                                                                                           private property.
  political campaign spending and lob-        removing a section of last year’s law
  bying activities.                           that allowed governments to use            • A state sales tax holiday was proposed
                                              eminent domain to remove blighted            for back-to-school purchases.
• Religion: Bills are being offered to
                                              areas. According to all polling data,
  provide a Bible literacy course in                                                     • He called on the Legislature to rede-
                                              this also is a highly popular political
  public schools, put “God Bless                                                           fine sweepstakes and bingo to restrict
  America” on Alabama car tags, and                                                        the types of gambling machines used
  post the Ten Commandments in              • Consumer Issues: The need to pass            in Alabama.
  public schools.Who said this was an         strong consumer protection laws is
                                                                                         • Possession of each individual item of
  election year session?                      great. Dealing with the evils of preda-
                                                                                           child pornography would be a sepa-
                                              tory lending should be a top priority.
• Prisons: The governor’s prison over-                                                     rate offense under the Governor’s
                                              As you will probably already know,
  crowding tax force has recommended                                                       proposal.
                                              Governor Riley ignored these issues
  a package of bills, including providing
                                              in his talk to the Legislature.              While this is an ambitious program, it
  more drug and alcohol counseling to
                                                                                         appeared to be well received by most of
  try to reduce recidivism and adopting
                                                                                         the legislators. About the worst thing
  voluntary sentencing guidelines that      HIGHLIGHTS OF GOVERNOR RILEY’S STATE
                                            OF STATE ADDRESS                             said about the talk was that Governor
  would make sentences for the same
                                                                                         Riley sounded a lot like Bill Clinton.
  crime more consistent from county to
                                               I, like many Alabamians, watched Gov-     Because we are in an election year,
  county. The prison issue is one that
                                            ernor Riley’s State of the State address     however, it will be difficult to get many
  must be faced now. Additional funds
                                            on January 10th with great interest.The      of the more ambitious proposals
  for building new prisons must be
                                            Governor covered a large number of           approved. I had hoped that the gover-
  found.The Alabama prison system is a
                                            issues and challenged the legislators in a   nor’s speech would have included a
  “ticking time bomb,” and that can no
                                            talk that generally has received very        push for stronger consumer protection
  longer be ignored.
                                            high marks.The following are the high-       laws and specifically a plan to stop or at
• Tough On Crime Issues: We need to         lights of the address:                       least curtail the evils of predatory
  pass legislation that will strengthen                                                  lending in Alabama. But, this was not the
                                            • A tax cut was called for that would
  the hands of law enforcement person-                                                   case. I would have also liked to have
                                              affect all Alabamians by raising the
  nel in Alabama.There are a number of                                                   heard something on campaign finance
                                              threshold where citizens start paying
  areas that should be addressed includ-                                                 reform, which is badly needed in
                                              the state income tax.
  ing the protection of children and                                                     Alabama, mentioned in the speech.
  women.The prison system needs men-        • He proposed a $500 million construc-       Unfortunately, that didn’t happen. Nev-
  tioned above have to be considered          tion program for public schools, two-      ertheless, I believe that Governor Riley
  when making it tougher on criminals.        year colleges, and universities.           should add reform of our extremely

                                                BeasleyAllen.com                                                                 9
weak laws dealing with political cam-          mindful of Big Business’ never-ending        Watch will work with Alabama Arise
paigns to his legislative program.             attempts to take away our right to a         and the Appleseed Center for reform
                                               jury trial.These attempts include the        of landlord tenant laws.
                                               spreading of fallacies such as the
ALABAMA WATCH PRESENTS A LEGISLATIVE                                                      • Environmental Justice Legislation
                                               courts are clogged with frivolous law-
AGENDA                                                                                      is a necessity. The environmental
                                               suits, and legislation that limits
                                                                                            justice legislation should be intro-
   A good number of supporters joined          Alabamians’ right to go to court.
                                                                                            duced again. It’s a fair piece of legisla-
Alabama Watch on January 10th at the
                                             • Children’s Safety: Despite the               tion that calls for ADEM to publish
State House for a news conference at
                                               passage of the Baby Douglas bill in          demographics of proposed sites for
which a legislative agenda for the 2006
                                               2004 and the activism of children’s          landfills and environmentally danger-
session was unveiled. Joining Alabama
                                               groups throughout Alabama, our chil-         ous industry.As Alabama attracts more
Watch at the event were Alabama Arise,
                                               dren are still not safe. Kids Watch will     industry, we must insure that our
the Appleseed Center, the Community
                                               monitor legislation that affects chil-       communities of color do not continue
Action Partnership, and The Ordinary
                                               dren and offer reasonable solutions to       to have a disproportionate share of
People Society. Barbara Evans of
                                               problems created by our lack of              the environmental risk.
Alabama Watch announced the forma-
                                               funding for basic state services. Kids
tion of Kids Watch, which is a group of                                                   • Our     Workers      Compensation
                                               Watch volunteers will connect with
volunteers, made up of parents and                                                          System is unfair to workers. The
                                               children’s organizations to offer
grandparents. This group will monitor                                                       tragedy at the coal mine in West Vir-
                                               support and guidance from a parent’s
legislation that affects children. An                                                       ginia brings to mind the plight of the
advisory council consisting of child                                                        surviving families from the Brook-
advocates and parents will be formed to      • Open Government is a right, not a            wood Mine disaster a few years back.
work on legislative issues. Tara Kyser         privilege. The passage of the Open           Often times workers are required to
from Kinston,Alabama, will be the vol-         Meetings Act in 2005 was a step              work in unsafe conditions. Our
unteer coordinator. Mrs. Kyser and her         forward, but Alabama needs a new             workers compensation system does
husband Chris had a baby who died in a         Open Records Act as well. Alabama            not provide enough benefits for
home daycare center only hours after           Watch will work with the legislative         Alabama workers and their families,
he was enrolled there.This tragedy has         process to insure that Alabamians have       and it needs reform.
motivated the couple to get involved in        access to affordable public records.
                                                                                          • Our State Constitution needs
the effort to help other families.There is
                                             • Insurance is still a problem. As             reform. Alabama Watch supports the
a definite need for an organized effort
                                               long as there is no law to stop insur-       move for a constitutional convention
of this sort. I would hope that Voices,
                                               ance companies from charging premi-          and a new constitution.We join with
another group looking out for children
                                               ums based on credit ratings,                 ACCR in calling for a vote on a new
in our state, would work with Kids
                                               consumers lose. Last year’s storm            constitution.
                                               damage and resulting insurance prob-
   Because there are over 500 registered                                                  • Our elderly and disabled citizens
                                               lems have exposed the insurance
lobbyists in Alabama—with very few of                                                       must be protected. Arbitration
                                               industry as callous and profit-driven at
them representing the interests of                                                          clauses in nursing home contracts
                                               the expense of customers. We are
Alabama consumers—it is good to                                                             have become commonplace. Arbitra-
                                               calling on all gubernatorial candidates
know that Alabama Watch has an agenda                                                       tion is detrimental to persons placed
                                               to commit to ending arbitration in
that is consumer-friendly.The “wish list”                                                   in nursing homes.We want to see an
                                               insurance so consumers can have
for the 2006 session announced by                                                           end to arbitration in nursing home
                                               their day in court if needed.
Alabama Watch is set out below:                                                             contracts.We want families to be able
                                             • Landlord Tenant Laws must be                 to install video recorders in patient
• Access to the Courts: Alabama citi-
                                               changed. It’s a fairness issue. If a         rooms.A nursing Home Bill of Rights
  zens have allowed the basic American
                                               rental property falls into disrepair         should be passed during this session.
  right of redress in the courts to be
                                               through no fault of the tenant, the
  taken away from them. Consumer                                                          • Payday Loan interest rates must
                                               only thing a tenant can do is move.We
  arbitration, with its up-front expenses                                                   be lowered. We see payday loan
                                               need substantive changes in our anti-
  and lack of accountability, is a scourge                                                  outlets on nearly every corner in
                                               quated landlord tenant law that pro-
  for consumers seeking justice.                                                            every city, particularly in cities with a
                                               vides fairness to both parties.Alabama
  Alabama Watch believes we must be

10                                               BeasleyAllen.com
  high percentage of military person-        Texas. As you know, the powerful               Copyright Royalty Judges. The Copy-
  nel. Since Alabama legitimized the         Republican Congressman was indicted            right Royalty and Distribution Reform
  payday lenders their numbers have          in Texas on campaign-finance-related           Act of 2004, which became effective on
  mushroomed. We realize folks need          charges.The New York Times Regional            May 31, 2005, phased out the previous
  access to money, even those with bad       Newspapers reported that records in            system and replaced it with the Copy-
  credit, but the percentage of profit       the Alabama Secretary of State’s office        right Royalty Board made up of three
  for payday lenders is outrageous.          revealed that DeLay’s Alabama PAC,             permanent judges. It is quite an honor
  These companies target our military        named Americans for a Republican               to be selected for this most important
  personnel and low income people,           Majority, transferred $25,000 in               position. Judge Sledge will do an out-
  getting them in debt and keeping           October 2002 to his Texas PAC, known           standing job in my opinion.The reason
  them there. The people who go to           as Texans for a Republican Majority.           John Nichols was so proud when he
  payday lenders get deeper and              Apparently, the transfer occurred one          talked to me is that Judge Sledge is his
  deeper in debt. Payday lenders should      month after the Texas PAC allegedly sent       son-in-law. I am happy to report the
  be put under the Small Loan Act and        money to Texas state House candidates          appointment and wish this distin-
  their interest rates capped at 37%. It’s   in violation of state law, according to        guished Alabama citizen the very best in
  the right thing to do.                     DeLay’s indictment.We don’t need folks         his new job.
                                             such as DeLay and Jack Abramoff in our
   Alabama Watch’s legislative agenda is
                                             political system at any level. Neither do
certainly consumer-friendly, as it should                                                   SUPREME COURT OVERTURNS VERDICT
                                             we need PAC to PAC transfers of cam-
be, and that’s good. I hope there will be                                                   AGAINST MINISTER
                                             paign money in Alabama. Congress and
widespread support in the legislature
                                             all state legislative bodies, including that      The Alabama Supreme Court has over-
for this agenda.The Governor, Lt. Gover-
                                             of Alabama, must take all appropriate          turned the $1.7 million jury verdict, that
nor, the President Pro Tem of the Senate,
                                             action required to put a stop to this sort     had been returned against a Mont-
the Speaker of the House, and other leg-
                                             of thing. My question is—why did               gomery minister who had an affair with
islative leaders should put their power
                                             DeLay need a PAC in Alabama? I wonder          a woman he had counseled about her
and influence behind bills, that if
                                             how many other states were used by             marriage. The high court, following
passed, would improve the lot of
                                             this once powerful politician to do his        current Alabama statutory law, reversed
Alabama consumers. It should be undis-
                                             dirty work.                                    the judgment against the minister, who
puted that consumers in Alabama are
                                             Sources: Associated Press and New York Times   has resigned from his church.The deci-
treated by many of our elected officials
                                                                                            sion was based on a law that bars civil
as second-class citizens. I commend
                                                                                            litigation in cases of that sort. Justice
Barbara Evans, her small staff, and the      III.                                           Woodall, who wrote the court’s
members of Alabama Watch for their
dedication and hard work. I encourage
                                             COURT WATCH                                    opinion, suggested that the Legislature
                                                                                            should take action to correct the exist-
you to join Alabama Watch if you
                                                                                            ing law. He wrote in the opinion:
haven’t done so.You can contact them         ALABAMIAN APPOINTED TO JUDICIAL POST
at 278 Harriet Tubman Road, Lowndes-                                                          The very idea that a marriage
boro, AL 36752, or by phone at (334)            My long-time good friend, John                counselor who owes a duty to a
284-0555.                                    Nichols, stopped me at church recently           husband and wife can escape lia-
                                             and told me about some very good                 bility for the consequences of his
                                             news. He related that Judge James S.             extramarital affair with a party to
THE DELAY ALABAMA PAC                        Sledge was recently appointed to the             the marriage is, I respectfully
                                             position of Chief Copyright Royalty              submit, absolutely horrid public
  I was shocked to learn that Tom
                                             Judge. Judge Sledge, a resident of               policy. If I were a member of the
DeLay, the indicted Congressman from
                                             Gadsden,Alabama, will serve a term of            Alabama Legislature, I would
Texas, who is in big trouble both
                                             six years. He recently retired as the U.S.       immediately amend the law.
because of his illegal actions in Texas
                                             Bankruptcy Judge in the Northern Dis-
and because of his involvement in the                                                         A husband had sued the minister after
                                             trict of Alabama, where he served since
Washington scandal, had actually                                                            discovering the sexual relationship
created a political action committee in                                                     between the minister and his wife in
                                                Three highly qualified individuals
Alabama.The DeLay PAC sent money to                                                         2000. At the time, the wife was the
                                             were appointed to serve as the first
a suspect fund in his home State of                                                         church secretary.The couple had gone

                                                  BeasleyAllen.com                                                                 11
to the minister for marital advice. Last      ines Parish, the localities hit hardest by     Association, are pursuing a class
year, a jury returned a verdict in favor of   flooding. It will now be impossible to         action lawsuit against oil and gas com-
the husband after hearing the evidence.       get juries that will reflect the demo-         panies in south Louisiana.The defen-
I agree with Justice Woodall and hope         graphics of pre-Katrina days.                  dants include Shell Pipeline, Chevron,
the Alabama Legislature will pass a bill         It has become very much evident that        Bass Enterprises Production, and
during the current session to correct         the insurance companies have taken             Sundown Energy. The groups allege
the existing law. No minister who vio-        advantage of thousands of homeowners.          that more than 9 million gallons of oil
lates his trust and calling and commits       Many of their policyholders have no            escaped the companies’ facilities
an act of this sort, should be able to        home or business and yet owe mortgage          during Katrina and destroyed oyster
escape legal liability to a family he has     payments.They are tired of waiting for         beds and fishing grounds along the
virtually destroyed. Hopefully, somebody      answers.This has become another major          Gulf Coast.
in the Legislature will get involved and      disaster for these folks. I didn’t expect
                                                                                           • The eroding wetlands dispute: A
introduce the needed legislation and          the numbers of lawsuits filed to slow
                                                                                             separate suit against more than a
then work hard to get it passed.              down. In fact, they will likely increase.
                                                                                             dozen major oil and gas producers
Source: Associated Press                      People are in need and are hurting. Most
                                                                                             alleges that drilling and pipeline activ-
                                              haven’t hired a lawyer because they
                                                                                             ities in southeast Louisiana caused the
                                              expected their insurance company to do
COURTS FLOODED BY LAWSUITS AFTER                                                             destruction of marshes that would
KATRINA                                       the right thing and pay claims promptly.
                                                                                             have limited hurricane damage to
                                              Instead, insurance companies have been
                                                                                             New Orleans.
  Thousands of Katrina victims have           very slow in paying claims. As a result,
had to file suits over flood damage,          thousands of insurance claims are piling     • The levee-failure lawsuits: Several
insurance settlement disputes, alleged        up in state courts. More than 50 insur-        suits target the U.S. Army Corps of
wrongful deaths, oil spills, ruined oyster    ance companies have been sued after            Engineers and local levee boards,
beds, eroded wetlands, evictions, and         refusing to pay for damages. Hopefully,        alleging that design and construction
disputes with contractors involved in         some order will come to a very bad situ-       defects in the levees holding back
rebuilding efforts.The new lawsuits are       ation and soon.                                Lake Pontchartrain led them to fail
being filed into a court system that is       Source: USA Today                              and flood the city.
struggling mightily to recover from the
                                                                                           • The Mississippi River Gulf Outlet
disruptions caused by the flooding and
                                              A SAMPLING OF MAJOR LAWSUITS PENDING           suit: A suit against the Army Corps of
evacuations that followed Katrina,            IN LOUISIANA                                   Engineers alleges that the 66-mile
which hit on August 29th. Because of the
                                                                                             channel, which was dug in the late
storm, many of the court systems were           While there have been a tremendous
                                                                                             1950s through St. Bernard and Plaque-
virtually shut down.The local courts are      number of lawsuits filed in Louisiana,
                                                                                             mines parishes to create a shortcut
now in a struggle to catch up with the        some have received more attention than
                                                                                             for ships traveling to New Orleans,
backlog of trials, while handling the         others.These are a few of the more sig-
                                                                                             makes flooding worse in those
new litigation related to Katrina. It will    nificant lawsuits that have been filed in
be virtually impossible to get juries that    the federal courts in Louisiana:
                                                                                           Source: USA Today
reflect the make-up of the population.
                                              • The Murphy Oil USA Inc. lawsuits:
In some places, getting a jury will be
                                                Several class action suits have been
impossible. This will be a big problem                                                     MCDERMOTT ASBESTOS SETTLEMENT
                                                filed against the company, which
because of the area’s diminished popu-                                                     APPROVED
                                                operates a refinery in St. Bernard
lation. New Orleans presently has an
                                                Parish. An oil tank at the refinery          A judge has approved McDermott
estimated 150,000 to 190,000 residents,
                                                spilled more than 1 million gallons of     International Inc.’s plan to settle as
down from about 462,000 in 2004. A
                                                crude oil, which contaminated more         many as 300,000 asbestos injury claims.
shortage of jurors — and the court
                                                than 2,500 homes and prompted 19           The amount of the settlement ranges
delays that could result — could partic-
                                                separate class action lawsuits.            from $375 million to $955 million in
ularly affect residents and business
                                                                                           costs for the company, depending on
owners who badly need to resolve              • The fisheries case: Several commer-
                                                                                           whether Congress creates a national
insurance disputes. It will especially          cial fishermen’s groups, including the
                                                                                           trust fund to handle all such cases. A
hard to reschedule jury trials in Orleans       United Commercial Fishermen’s Asso-
                                                                                           U.S. district judge signed off on the
Parish, St. Bernard Parish and Plaquem-         ciation and the Louisiana Shrimp

12                                                 BeasleyAllen.com
agreement, which was in a bankruptcy          probe in Washington. Abramoff, who           reaching effect in Washington. Federal
reorganization plan for the Babcock &         will face up to 11 years in federal prison   investigators are said to be looking at
Wilcox Co., a wholly owned McDer-             and will pay $26.7 million in restitution,   about half a dozen members of Con-
mott unit that has been the target of         admitted to corrupting government offi-      gress at present. The probe is said to
asbestos claims. Babcock & Wilcox once        cials and defrauding his own clients out     involve at least two dozen lawmakers
used asbestos to insulate boilers. McDer-     of $25 million. Abramoff admitted that       and staffers, with many more suspects
mott, an offshore energy services and         he did not disclose receiving kickbacks      waiting in the wings. According to a
engineering company, put the unit             on payments from Native-American             CNN report, Abramoff is said to have
under bankruptcy protection in Febru-         tribes to a partner’s public relations       thousands of e-mails in which he
ary 2000.                                     firm. Abramoff and his politically con-      describes influence-peddling and
   Part of the settlement hinges on what      nected partner, public relations expert      explains what lawmakers were doing in
happens in Congress.As you know, Con-         Michael Scanlon, had referred to their       exchange for the money he was putting
gress currently is considering the estab-     scheme as the “Gimme Five Program.”All       into their campaign coffers.Apparently,
lishment of a $140 billion trust fund to      of the corruption and outright stealing      Abramoff has been cooperating with
compensate people sickened by expo-           described by Abramoff is so bad that it      the Justice Department for months
sure to asbestos. The Babcock & Wilcox        reads like fiction. Unfortunately, it is     without any kind of plea deal. I hear that
settlement calls for $1.1 billion in insur-   very real, and the magnitude is shaking      a great deal of information has already
ance payments and a $350 million              the very foundation of our federal gov-      been produced to the investigators with
payment from McDermott to a separate          ernment. It’s quite obvious that             much more to come. Significantly,
trust fund handling the Babcock &             Abramoff and Scanlon couldn’t have           Abramoff won’t be sentenced until his
Wilcox case, regardless of the federal        done all the damage they did without         cooperation with the probe is com-
bill’s fate. If the bill is not passed and    the help of politicians in high places. I    plete, and that can’t be good news for
signed into law by November 30th,             suspect that some very prominent             his cadre of “political buddies.” I under-
McDermott will pay an additional $350         names—other than those already               stand that Abramoff has kept extremely
million, along with a $250 million note.      named—will surface over the coming           good notes and records concerning the
On the other hand, if the bill is passed      weeks.                                       web of corruption he and his friends
by November 30th, McDermott will pay             Court documents described how             have spun over the past several years.
only an additional $25 million.               Abramoff and Scanlon cheated clients of      We will most likely see a domino effect
Source: Associated Press                      Abramoff’s lobbying firm by urging           once the noose starts to tighten around
                                              them to use Scanlon’s public relations       some political necks.You will find that
                                              firm, which in turn paid Abramoff mil-       financial loyalty of a political nature
IV.                                           lions of dollars in kickbacks. Interest-     doesn’t last very long when folks start
THE NATIONAL                                  ingly,Abramoff is a longtime associate of    pleading guilty and cooperating with
SCENE                                         several top GOP leaders, including           the prosecutors. My mama told me
                                              former House Majority Leader Tom             when I was a small boy that “if you lie
                                              DeLay,Americans for Tax Reform direc-        down with a dog who has fleas, you will
ONE OF THE WORST CORRUPTION SCANDALS          tor Grover Norquist, and former Christ-      get up scratching.” I suspect there are
                                              ian Coalition chief Ralph Reed. I am         lots of folks “scratching” in Washington.
  The more we learn about Jack                reasonably sure that there are a number         The court documents allege Abramoff
Abramoff, the high-powered Washington         of extremely nervous “politicians” in our    deprived his clients of his honest serv-
lobbyist, the more we realize how wide-       nation’s capitol. How widespread this        ices by overcharging them to fund the
spread the corruption in our nation’s         scandal’s net will reach is the topic        alleged kickback scheme with Scanlon.
capitol actually is. If the scandal were a    around Washington these days. I don’t        Listed in the court documents are four
hurricane, it would be a strong category      believe the public had any idea how          Native-American tribes that contracted
5.Abramoff pleaded guilty last month to       bad things had gotten in our nation’s        Abramoff’s services.The documents said
conspiracy, fraud and tax evasion             capitol.                                     the tribes gave millions of dollars to
charges. The most significant develop-           It shouldn’t be overlooked that           Scanlon’s firm, which then paid
ment, however, is the fact that this once-    Scanlon, a former aide to DeLay, has also    Abramoff 50% of the profits it made.
powerful man has now agreed to                been cooperating. The cooperation            According to the documents:
cooperate fully in the federal corruption     deals worked out with Abramoff and
                                              Scanlon will certainly have a wide-

                                                  BeasleyAllen.com                                                                13
• Starting in 2001,Abramoff persuaded        ordinary people, has proposed reforms         tory agencies who leave an agency and
  a Louisiana tribe to pay nearly $30.5      to the lobbying system related to cam-        go to work for the very companies they
  million for “grassroots work” to a         paign fundraising, including:                 were regulating. Hopefully, Congress
  Scanlon company, which, in turn,                                                         will take action to prohibit this revolv-
                                             • Prohibiting lobbyists from serving as
  kicked back nearly $11.4 million to                                                      ing door.
                                               the treasurers of officeholders’ cam-
  Abramoff.                                                                                Source: Public Citizen
                                               paign committees or leadership politi-
• In 2001 Abramoff also persuaded a            cal action committees; and
  Mississippi tribe to give nearly $14.8                                                   PRESIDENT BUSH SHOULD PROVIDE A FULL
                                             • Prohibiting lobbyists from making,          ACCOUNTING
  million to Scanlon, who funneled
                                               soliciting or arranging campaign con-
  nearly $6.3 to Abramoff.
                                               tributions to those whom they lobby,           Public Citizen has called on President
• A Michigan tribe gave $3.5 million to        except to members who represent             Bush to provide a full accounting of the
  Scanlon’s firm in 2002; $540,000             the lobbyists’ own district.                sources of the $100,000 or more that
  ended up in Abramoff’s pocket.                                                           Jack Abramoff raised for his 2004 presi-
                                               If Congress is unwilling to stem the
                                                                                           dential campaign. The campaign gave
• Also in 2002, a Texas tribe gave $4.2      flow of lobbyist contributions, Public
                                                                                           Abramoff the title of a Bush “Pioneer” in
  million to Scanlon, and nearly $1.9        Citizen recommends the following
                                                                                           2004 for raising at least $100,000 in
  million found its way to Abramoff          reforms:
                                                                                           amounts of up to $2,000 from his
  Scanlon pleaded guilty in November         • Requiring lobbyists and lobbying            friends and associates. Frank Clemente,
to a single conspiracy count as part of a      firms to disclose their campaign con-       director of Public Citizen’s Congress
deal with the Justice Department. He           tributions and the amount and dates         Watch, observed:
agreed to pay about $19.7 million in           of any campaign funds raised through
                                                                                             Abramoff has now pleaded guilty
restitution for kickbacks he admitted          fundraising events that the lobbyist or
                                                                                             to fraudulently raising hundreds
receiving, and promised to testify             firm sponsored.This provision is con-
                                                                                             of thousands—if not millions—of
against Abramoff. I am reasonably sure         tained in legislation recently intro-
                                                                                             dollars to curry favor in Washing-
that the corruption issue will be hot in       duced by Senator John McCain
                                                                                             ton. The public deserves to know if
congressional elections this year. I am        (R-AZ), S. 2128, and Representative
                                                                                             any tainted money ended up in
told by reliable sources that some very        Chris Shays (R-CT), H.R. 4575; and,
                                                                                             the Bush campaign.
big names will be directly involved in
                                             • Requiring that the original source,
the probe before it’s over. While                                                             Federal disclosure laws do not require
                                               conduit and amount of all contribu-
Abramoff and Scalon are clearly crimi-                                                     individuals who raise, or “bundle,” a
                                               tions “bundled” by lobbyists and
nals, they had lots of help from power-                                                    large number of separate contributions
                                               others be fully disclosed.
ful politicians in very high places.                                                       for political candidates to disclose their
Regardless of who all is involved, justice      In addition to these recommenda-           role in the fundraising unless they phys-
must be done concerning this massive         tions, I suggest that Congress close the      ically handle the checks. President
scandal. The guilty must pay the price       revolving door between Congress and           Bush’s 2000 and 2004 campaigns
for their wrongdoing and that means          lobbying firms.That’s a major reason for      bestowed the title of “Pioneer” on those
prison time, in my opinion.                  the current problems in Washington. No        who raised at least $100,000 and
                                             member of Congress should be allowed          “Ranger” on those who raised at least
                                             to lobby or work for a firm that per-         $200,000. The Republican National
CONGRESS MUST ACT PROMPTLY                                                                 Committee has announced that Bush’s
                                             forms any kind of lobbying activity in
  Congress must pass fundamental lob-        Washington for a period of five years. It     campaign would donate the $2,000 that
bying reforms to clean up the horrible       should be noted that 43% of members           Abramoff, his wife and one of his tribal
mess that exists in Washington.The cor-      leaving Congress for the private sector       clients each contributed to the cam-
ruption in our nation’s capitol is said to   since 1998 have gone on to become             paign ($6,000 total) to a charity. But, the
be much deeper than originally               high paid lobbyists. In fact, a prohibition   campaign has not revealed the sources
thought. It appears our government in        of that sort of thing should also apply to    of the rest of the money Abramoff raised
Washington has become rotten to the          senior congressional staff and executive      for it and has not announced any inten-
core, and that is totally unacceptable.      branch officials. Specifically, it should     tion to return it or donate it to charity.
Public Citizen, a group that speaks for      apply to persons employed by regula-          President Bush needs to set an example
                                                                                           and reveal just how much money

14                                               BeasleyAllen.com
Abramoff raised for him and who that            resolved by phone, pharmacists will be      agers and then the folks receiving the
money came from. I don’t believe it’s           allowed to bill the State of Illinois for   prescription drugs. Hopefully, it will
enough for the President to simply say          the cost of the drugs. At press time,       eventually help seniors and the poor in
he didn’t really know Abramoff very             Rhode Island officials had plans to         our country. In the meanwhile the plan
well. The public deserves much more             launch an emergency program.                will likely force some small-town phar-
than that.                                         Governor Huckabee, who is chairman       macies into bankruptcy unless they get
                                                of the National Governors Association,      some permanent relief. The insurance
                                                said he spoke with Health and Human         companies and pharmacy benefit man-
                                                Services Secretary Michael Leavitt, and     agers will rake in tremendous profits,
                                                that Leavitt assured him a solution was     and the people and drug stores will
   As previously mentioned, the new             in the works for Medicare program that      wind up being hurt the most. Congress,
Medicare drug program is causing major          started January 1st. Governor Huckabee      at the request of lobbyists for the drug
problems all over the country.Alabama,          estimated Arkansas would spend              industry, the insurance industry, and the
California, Arkansas and Illinois have          between $2 million and $6 million to        pharmacy benefit managers, and the
joined about half a dozen other states          help pharmacies fill prescriptions that     Bush White House, deleted a provision
taking emergency measures to help resi-         the new federal program is rejecting. He    that would have allowed governments at
dents struggling to get prescriptions           said he hoped the federal government        the federal and state levels to negotiate
filled under the new program. By neces-         would reimburse the state’s expenses.       prices with the drug companies. Does
sity, there will be others following their         In some cases, people who enrolled       that make any sense? I would like for
lead. Seniors and disabled citizens are in      in plans have discovered they aren’t        somebody to explain why the power to
danger of losing needed medications             listed as participating when pharmacies     negotiate prices was stripped from the
because of significant problems with            check their computers. Other benefici-      bill. It might have something to do with
the new federal Medicare prescription           aries found they were listed as owing a     the large price increases put in place by
drug program.                                   $250 deductible when they should have       the drug companies since January 1st.
   Governor Mike Huckabee was one of            been paying only a few dollars per pre-
the first governors to take action. He          scription. Last month, New Hampshire
                                                                                            ORGANIZATIONS FACE COMPUTER ATTACK
declared a public health emergency in           authorized up to $500,000 for payments
Arkansas on January 11th and                    to pharmacists who give a 10-day               A recent report should get the atten-
announced the state would provide               supply of drugs to people having            tion of every American citizen who runs
short-term aid to pharmacies to help get        trouble getting their medicines. South      a business that uses computers.The FBI
medicines filled.The Arkansas Governor          Dakota allowed people who qualify for       reports that 9 out of 10 organizations in
stated:                                         both Medicare and Medicaid to get a 30-     this country are victims of some sort of
                                                day supply of medicine. Vermont, Con-       computer security incident. Shockingly,
  It’s become apparent that there
                                                necticut, Massachusetts, and North          one-fifth are hit more than 20 times a
  are a number of people in our
                                                Dakota had already announced plans to       year. Almost two-thirds suffer financial
  state, particularly the elderly and
                                                help low-income residents get their         loss as a result of the cyber incidents.
  the most frail, who are in a life-or-
                                                medicine if pharmacists were having         The 2005 FBI Computer Crime Survey is
  death risk over getting medica-
                                                trouble confirming coverage through         based on responses from a cross-section
                                                the new Medicare benefit.                   of more than 2,000 public and private
   Alabama Governor Bob Riley                      President Bush, at the urging of the     organizations.Among its findings:
announced on January 15th that Alabama          insurance industry, pushed the Medicare
would pay for prescription drugs for            bill through Congress. His forces were      • Frequency of attacks. Nearly nine out
poor people in our state for two weeks.         warned at that time that they were creat-     of 10 organizations experienced com-
It will cost Alabama $1 million per day         ing an unworkable monster that could          puter security incidents in a year’s
for the first two weeks to fill their void. I   wind up being a fiscal disaster. It now       time; 20% of them indicated they had
will be surprised if this cost in Alabama       appears that the warnings were right on       experienced 20 or more attacks.
doesn’t exceed the estimated $15.7              target. As I mentioned last month, I        • Types of attacks.Viruses (83.7%) and
million. Illinois officials sent notices to     believe that the failures of the new drug     spyware (79.5%) headed the list. More
pharmacies last month detailing where           plan will be a major campaign issue this      than one in five organizations said
to call if Medicare patients can’t get          year. It was created to benefit insurance     they experienced port scans and
medicine. If the problem can’t be               companies and pharmacy benefit man-           network or data sabotage.

                                                    BeasleyAllen.com                                                              15
• Financial impact. Over 64% of the         making needed changes.The survey can               term.They will have to see whether it
  respondents incurred a loss. Viruses      be found at http://www.fbi.gov/                    will ever work and whether new leg-
  and worms cost the most, accounting       publications/ccs2005.pdf                           islation will be needed.To recap the
  for $12 million of the $32 million in     Source: Insurance Journal                          issue, as you know, Congress passed
  total losses.                                                                                the Medicare Modernization Act in
                                                                                               2003, which included the “Part D”
• Sources of the attacks. They came         LEGISLATIVE ISSUES TO WATCH NATIONALLY
                                                                                               drug benefit. But, states have much of
  from 36 different countries.The U.S.
                                               We mentioned a number of issues                 the responsibility for implementing
  (26.1%) and China (23.9%) were the
                                            facing the Alabama legislature in the              the program. Another issue that’s
  source of over half of the intrusion
                                            Legislative Outlook Section. Many of               likely to cause plenty of consternation
  attempts, although masking technolo-
                                            those issues are not unique to Alabama.            is the “clawback” provision of Part D.
  gies make it difficult to get an accu-
                                            Legislative bodies in most states came             Under the clawback, states must make
  rate reading.
                                            back into session last month and found             monthly payments to the federal gov-
• Defenses. Most said they installed        common issues awaiting them. Their                 ernment that are intended to com-
  new security updates and software         members will be spending an unusual                pensate the federal government for
  following incidents, but advanced         amount of time dealing with issues that            taking on prescription drug costs pre-
  security techniques such as biomet-       involve other levels of government and             viously borne by the states. But law-
  rics (4%) and smart cards (7%) were       will be dealing with a number of issues            makers have argued that states will
  used infrequently. In addition, 44%       created especially for them by the                 lose money overall, and some, such as
  reported intrusions from within their     federal government.                                Kentucky, New York and Texas, may
  own organizations, suggesting the            The best example of the latter is the           pursue legal action. Legislators,
  need for strong internal controls.        Medicare Drug Benefit Act passed by                however, cannot do much for now,
                                            Congress.As we all know by now, a pre-             except perhaps to take a stance
• Reporting. Just 9% said they reported
                                            scription drug benefit was added to                similar to what New Hampshire
  incidents to law enforcement, believ-
                                            Medicare in 2003, which gave states a              adopted last year: refusing to make
  ing the infractions were not illegal or
                                            large role in implementing the program.            clawback payments while litigation is
  that there was little law enforcement
                                            As a result, legislators in all states will be     pending. I predict that this issue will
  could or would do. Of those report-
                                            dealing with problems created by the               be around for a good while.
  ing, however, 91% were satisfied with
                                            new law, which went into effect on
  law enforcement’s response.And 81%                                                         • Eminent Domain – As a result of the
                                            January 1st.As predicted, the states will
  said they’d report future incidents to                                                       U.S. Supreme Court’s landmark deci-
                                            have to spend large sums to correct
  the FBI or other law enforcement                                                             sion, which affirmed the use of
                                            problems created by what Congress
  agencies. Many also said they were                                                           eminent domain for economic devel-
                                            did. In my opinion, it will be very costly
  unaware of InfraGard, a joint                                                                opment, more than 20 state legisla-
                                            for the states.
  FBI/private sector initiative that                                                           tures are likely to consider bills
                                               There are common issues that will be
  battles computer crimes and other                                                            restricting eminent domain this year.
                                            dealt with in most all states.The follow-
  threats through information sharing.                                                         Last fall’s ruling generated an immedi-
                                            ing are some of those issues that the leg-
                                                                                               ate backlash. A few states, including
   This new survey differs from the         islators will have to grapple with:
                                                                                               Alabama, Delaware, Ohio and Texas,
annual CSI/FBI Computer Crime and
                                            • Reform of the Political System – I               have already passed measures restrict-
Security Survey conducted by the Com-
                                              believe people in every state will               ing eminent domain.
puter Security Institute and the FBI.
                                              demand reforms of political cam-
Almost three times as many organiza-                                                         • Health Insurance – Legislators will
                                              paigns and lobbying activities. This
tions were surveyed in the new study.                                                          grapple with conflicting impulses
                                              will be the only good thing coming
The survey focused more on new tech-                                                           when considering health care issues
                                              from the Washington scandal.
nologies, where attacks originated, and                                                        this year. Many want to expand cover-
how organizations responded.There is        • Medicare Part D – With the                       age to the nation’s 45 million unin-
an urgent need for vigilance against          Medicare prescription drug benefit               sured and improve the quality of care
both internal and external cyber              having gone into effect the first of             for everyone else. At the same time,
assaults. Anybody who operates a busi-        January, state lawmakers already                 Medicaid expenses represent ever-
ness, large or small, should study this       know that it is a disaster in the short          larger shares of state budgets, leading
survey and use the data as the basis for                                                       to a desire in some circles to cut

16                                               BeasleyAllen.com
  costs. In the face of this conundrum,       • Emergency Planning – Driven by               Federal law prohibits the broadcast of
  an increasing number of policy                Hurricane Katrina and fears of avian      indecent material during certain hours
  makers are looking to the private             flu, not to mention ongoing homeland      of the day when children are most likely
  sector to shoulder more of the                security concerns, legislatures will      to be in the viewing audience. In its
  burden, either willingly or forcibly.         consider a variety of measures related    Pacifica ruling, the U.S. Supreme Court
                                                to emergency planning. Improving          upheld the indecency law as constitu-
• Property Taxes – With rapidly rising
                                                communication among local govern-         tional. H.R. 310 would increase the fines
  real estate values hitting homeowners
                                                ments and between state and local         that the FCC could impose on a broad-
  with higher taxes, legislatures across
                                                governments will be a top area of         caster who violates the indecency law,
  the country will consider cutting prop-
                                                concern. People on the Gulf Coast are     and repeat violators would be subject to
  erty taxes this year. But the impetus
                                                still hurting and very much upset         losing their broadcast license. The
  behind the bills will have as much to
                                                with the government’s responses.          Senate was to have held yet another
  do with school funding and a desire to
                                                                                          hearing on indecency.The FCC must be
  shift certain taxes from the local level    • Telecommunications Regulation –
                                                                                          given the enforcement tools it needs to
  to the state level as it will with any        A variety of telecom issues are on the
                                                                                          protect American families. Members of
  property tax revolt. States that will         legislative agenda for a number of
                                                                                          the Senate should look out for the inter-
  likely discuss property tax cuts include      states.
                                                                                          est of America’s families and not the
  Alabama, Idaho, Indiana, Nevada, New
                                                                                          interests of a handful of powerful media
  Jersey, North Dakota, Pennsylvania,
                                              SENATE STALLS ON HIGHER FINES FOR           corporations. The industry that is
  South Carolina, and Texas. Because
                                              INDECENT BROADCASTS                         making billions selling filth, is counting
  property taxes generally are levied at
                                                                                          on people who support decency in
  the local level and often fund public         As you may recall, the U.S. House of
                                                                                          broadcasting to sit back and do nothing.
  school systems, any discussion of prop-     Representatives passed the Broadcast
                                                                                          They don’t believe that people will get
  erty taxes almost inevitably links to       Decency Enforcement Act in 2004.That
                                                                                          involved, speak up, and demand action
  school funding. In my state of Alabama,     bill finally would have allowed the
                                                                                          by the Senate.The special interests are
  the annual reappraisal of property has      Federal Communications Commission
                                                                                          hoping that H.R. 310 will be stalled
  become a hot issue.                         (FCC) to impose meaningful fines for
                                                                                          again so they can continue to pour
                                              indecent television and radio broad-
• Immigration – With immigration                                                          graphically sexual and profane material
                                              casts. But the House and Senate couldn’t
  issues roiling all levels of government,                                                into our homes every day. Please don’t
                                              agree on the same bill. As a result, no
  legislatures will host a variety of spir-                                               let that happen. A public hearing was
                                              legislation was passed. In February
  ited    immigration-related        policy                                               held in the Senate during the week of
                                              2005, the House reintroduced and again
  debates. To proponents of stricter                                                      January 16th. At press time, to my
                                              approved (by a vote of 389-38) the
  enforcement of immigration laws, the                                                    knowledge, no action had been taken
                                              Broadcast Decency Enforcement Act
  increasing focus on illegal immigrants                                                  by the Senate committee on the bill.
                                              (H.R. 310). The bill stayed in the Senate
  is the result of lawmakers’ finally                                                     Please take the time today to write your
                                              for the entire year of 2005 with no
  paying attention to the concerns of                                                     senator and ask for help. It’s not too
                                              action being taken. We cannot let
  their constituents.                                                                     late for the Senate to act. Tell them you
                                              another year go by without the passage
                                                                                          need their support and need it now.
• Pension Plans – Many legislatures           of this important legislation. Two years    Source: Parents Television Council
  will have little choice this year but to    ago - when it seemed that the FCC and
  invest large sums of new money in           Congress were serious about cracking-
  state pension systems or to pursue          down on indecency—some of the               ADVERTISING LINKED TO TEEN DRINKING
  overhauls to make them less gener-          offenders took steps to reduce the
                                                                                            Over the past few years, the alcohol
  ous. In terms of the sheer amount of        amount of raw sex and language in their
                                                                                          industry has stepped up its advertising
  money involved, no fiscal challenge is      broadcasts. Emboldened by two years
                                                                                          campaign directed at young people.
  more daunting than unfunded                 of inaction, broadcasters are once again
                                                                                          Young people who view more alcohol
  pension liabilities. Even many small        trying to push the envelope. I urge you
                                                                                          advertisements tend to drink more
  states have long-term liabilities in        to contact your senators and tell them
                                                                                          alcohol, according to a new study in the
  excess of a billion dollars, and in         that people throughout America are
                                                                                          January issue of Archives of Pediatrics
  many larger states the totals come to       demanding action. Ask them to pass
                                                                                          & Adolescent Medicine. Several studies
  tens of billions.                           H.R. 310!

                                                  BeasleyAllen.com                                                               17
have found an association between              efforts. Alcohol advertising was a         Plainfield.” Personally, I hope the town
exposure to alcohol ads and youth              contributing factor to youth drink-        wins this battle. We should do every-
drinking, but have not been able to            ing quantities over time.                  thing in our power to keep sexual pred-
establish a cause-and-effect relationship.                                                ators under control and as isolated as
                                                David H. Jernigan, Ph.D., of the Center
The alcohol industry has no federal                                                       possible.
                                             on Alcohol Marketing and Youth at
restrictions on its advertising but is
                                             Georgetown University, wrote in an edi-
subject to voluntary codes dictating that
                                             torial that the research “calls into ques-
70% of the audience for their advertise-                                                  V.
                                             tion the industry’s argument that it’s
ments be adults older than age 21.The
                                             roughly $1.8 billion in measured media
                                                                                          THE CORPORATE
authors report that these ads still                                                       WORLD
                                             expenditures per year have no impact
appear frequently in media aimed at
                                             on underage drinking.” Dr. Jernigan says
young people. It didn’t take a study or
                                             the fact that young people were more         CONSULTING FIRM REVERSED THE FINDINGS
any intense research to convince me
                                             likely to drink more over time in envi-      OF A MAJOR CANCER STUDY
that alcohol advertising aimed at young
                                             ronments with more alcohol advertis-
people would pay off for the industry in                                                     A consulting firm hired by Pacific Gas
                                             ing, even when controlling for alcohol
more sales and more drinking by                                                           & Electric Co. (PG&E) to fight the “Erin
                                             sales in those environments, strongly
persons exposed to the ads. In any                                                        Brockovich” lawsuit distorted data from
                                             suggests that it is exposure to alcohol
event, the authors reported:                                                              a Chinese study to plant an article in a
                                             advertising that contributes to the
  It is important to control for total       drinking. These and other recent find-       scientific journal reversing the study’s
  alcohol     consumption        levels      ings, Dr. Jernigan writes, “point to         original conclusion that linked an indus-
  because markets with greater sales         alcohol advertising as an important          trial chemical to cancer, according to
  may attract more alcohol advertis-         arena for interventions seeking to           documents obtained by Environmental
  ing from brands competing to sell          reduce underage drinking and its tragic      Working Group (EWG). The Wall Street
  in markets with more heavy                 consequences.” I would hope our politi-      Journal reported that the San Francisco-
  drinkers. Even with this control,          cal leaders would find a way that meets      based consultants, ChemRisk, “con-
  young people drank 3% more per             constitutional muster to control alcohol     ceived, drafted, edited and submitted to
  month for each additional dollar           advertising clearly aimed at young           medical journals” a “clarification” of the
  spent per capita in their market.          people.                                      Chinese study, according to documents
  Youth in markets with high adver-          Source: www.consumeraffairs.com              filed in another chromium lawsuit
  tising expenditures ($10 or more                                                        against PG&E. They did so despite a
  per person per month) also                                                              letter of objection from the Chinese sci-
                                             LAWSUIT ON TOWN’S SEX OFFENDER BAN           entist who led the original study, calling
  increased their drinking more
  over time, reaching a peak of 50              The town of Plainfield, Indiana, is       their reversal of his findings an “inap-
  drinks per month by age 25. Given          defending an Indiana Civil Liberties         propriate inference.”
  that there was an impact on                Union suit challenging the town’s ordi-         Through the state Public Records Act,
  drinking using an objective                nance banning sex offenders from parks       EWG obtained many of the documents
  measure of advertising expendi-            and recreational areas. The ICLU filed       cited by the Journal.They are available
  tures, the results are inconsistent        the suit on behalf of a Marion County        at www.ewg.org. In the Brockovich
  with the hypothesis that a correla-        man alleging that Plainfield’s ban on sex    case, residents of Hinkley, California,
  tion between advertising exposure          offenders using town parks is unconsti-      sued PG&E for dumping hexavalent
  and drinking could be caused               tutional. The suit seeks an injunction       chromium in their drinking water. In
  entirely by selective attention on         against that portion of the town’s ordi-     1997, PG&E paid $333 million to settle
  the part of drinkers. The results          nance.Thus far, no injunction has been       the case, but another lawsuit against the
  also contradict claims that adver-         issued, and the ordinance remains in         company over chromium pollution is
  tising is unrelated to youth drink-        effect.The lawsuit concerns a 2002 ordi-     set for trial next month.The fraudulent
  ing amounts: that advertising at           nance setting regulations for town           article has influenced chromium regula-
  best causes brand switching, only          parks.Among the provisions was a ban         tions by state and federal agencies,
  affects those older than the legal         on anyone listed on the Indiana Sex          including the Environmental Protection
  drinking age or is effectively coun-       Offender Registry “from all parks and        Agency. ChemRisk, perpetrator of the
  tered by current educational               other recreational areas of the town of      deception, continues to work for corpo-

18                                                BeasleyAllen.com
rate and government clients including       career of consulting for big polluters        companies, airlines, hotels, rental car
the Department of Energy and the            including PG&E, ExxonMobil, and Dow           agencies, and travel service providers.
Centers for Disease Control.                Chemical. In 2002, his appointment to a       The companies did not disclose the
   The article was published in the peer-   federal committee on the health effects       existence of these travel rebates to the
reviewed Journal of Occupational and        of chemicals was blasted by independ-         government and did not reduce travel
Environmental Medicine. EWG has             ent scientists as part of a Bush              reimbursement claims by the amounts
written the journal’s editors urging        Administration pattern of packing             of rebates.The settlement resolved sepa-
them to set the record straight and bar     environmental panels with industry-           rate complaints that were filed in 2001
the scientists who were involved from       friendly experts.                             under the False Claims Act.
its pages. EWG Senior Vice-President        Source: EWG                                   Source: Associated Press

Richard Wiles wrote to the journal:

  The scientific community must be          RESTATEMENTS OF CORPORATE EARNINGS            THE PUBLIC DESERVES A LOOK AT CEO
  notified that a paper circulating                                                       SALARIES
                                              The number of earnings restatements
  in the published literature is
                                            by corporations in 2005 set an all-time         It has become quite apparent that the
  fraudulent, the paper must be
                                            record. It appears that 971 public com-       annual compensation packages for the
  retracted, and those responsible
                                            panies restated their earnings in the first   big bosses in Corporate America have
  for the incident must be appropri-
                                            10 months of the year. In contrast, there     gotten totally out of hand. As a result,
  ately disciplined.
                                            were only 619 for the entire year of          federal regulators have now launched
  EWG has also written the Centers for      2004.Although final figures for the last      an effort to force corporations to more
Disease Control, which recently             two months of 2005 aren’t in, the total       clearly disclose just how much they’re
renewed ChemRisk’s multi-million dollar     number of restatements for the year has       paying top executives and directors. In a
contract for a key project at the Los       been estimated to reach 1,200.                bid to enable investors to compare one
Alamos National Laboratory, urging the        Earnings restatements are generally         company against another, and to deter-
agency to take prompt action against the    bad news for companies and their              mine fairness, the Federal Securities and
company. EWG, in its letter, stated:        investors. They raise the question of         Exchange Commission (SEC) has pro-
                                            whether management has been manipu-           posed a slate of new rules that would
  ChemRisk’s current contract must
                                            lating the numbers. Stock prices often        require corporations to lay out—in
  be cancelled and the firm barred
                                            drop when companies acknowledge a             plain understandable English—the total
  from seeking future contracts
                                            restatement is required.As a result, com-     compensation packages for their top
  from the CDC or other govern-
                                            panies try to avoid restatements at all       executives and directors. At present,
  ment agencies.
                                            cost.To put things in perspective, there      most investors have no idea how much
   The documents obtained by EWG            were 514 restatements in 2003, 330 in         their companies are actually paying the
show that ChemRisk employees — with         2002, and 270 in 2001.                        bosses.There can be little doubt that a
the knowledge of PG&E’s attorneys—          Source: USA Today                             real need for full disclosure of CEO
hired one of the original study’s authors                                                 compensation packages exists. SEC
as a “consultant,” and conducted a new                                                    Chairman Christopher Cox had this to
                                            CONSULTING FIRMS SETTLE FEDERAL CASES         say:
analysis of his data that deliberately      WITH THE GOVERNMENT
ignored evidence of an association
                                                                                            Simply put, our rules are out of
between stomach cancer and hexava-            Four consulting firms will pay $25.5
                                                                                            date. Our disclosure rules haven’t
lent chromium in drinking water.They        million to settle cases alleging they over-
                                                                                            kept pace with changes in the mar-
then wrote and submitted the article for    billed the U.S. government for travel.
                                                                                            ketplace, and in some cases disclo-
publication without disclosing that they    BearingPoint, Inc., Booz Allen Hamilton,
                                                                                            sure obfuscates rather than
worked for ChemRisk or that PG&E had        Inc., Ernst & Young, and KPMG LLP have
                                                                                            illuminates the true picture of
paid for the new “study.” Nowhere in the    settled lawsuits concerning false claims
published article are the names of the      submitted to various agencies of the
ChemRisk employees who worked on            U.S. government in connection with              Under the proposed rule, which was
it, or any indication that it was part of   travel reimbursement. The payments            approved unanimously by the five-
PG&E’s legal defense strategy. The          from the four firms will exceed $26           member commission, companies would
founder and president of ChemRisk is        million. All four firms received rebates      be required to calculate a single figure
Dennis Paustenbach, who has made a          on travel expenses from credit card           that quantifies all aspects of direct com-

                                                 BeasleyAllen.com                                                                19
pensation—salary, bonuses, stock              compensation packages.There must be         finance reporting than had been the
options, and perks. Companies also            an element of fairness involved, and I      case in the past. Previously, litigation
would have to reveal how much they            believe the disclosure rules could help     against technology and communica-
would have to pay out in retirement           bring that about.                           tions companies were the major source
benefits. In addition, the payouts for sev-   Source: Houston Chronicle                   of class action securities fraud. The
erance packages where an executive is                                                     report indicates that traditional older-
actually kicked out would be covered.                                                     line firms such as consumer noncycli-
                                              THE NUMBERS OF STOCK FRAUD LAWSUITS
When corporation is taken over, the           ARE DOWN                                    cals and pharmaceuticals are now
golden parachute payments would also                                                      accounting for a larger percentage of
have to be disclosed. Shareholders will          With all of the corporate fraud and      the action than before.You can read the
be shocked once they get this informa-        other wrongdoing being reported on an       full report at securities.stanford.edu.
tion. Perks, such as use of corporate jets,   all too frequent basis, there is some       Source: San Francisco Chronicle

will have to be disclosed if the value of     good news to report in one area of
those benefits exceeds $10,000. Current       concern. Shareholder class action law-
                                                                                          EX-STOCKBROKER TO PAY $153 MILLION
rules require disclosure only if the value    suits alleging securities fraud declined
of a benefit tops $50,000. This is the        in 2005, according to a report released        Former Las Vegas stockbroker Daniel
first attempt in 14 years by the SEC to       last month. The number of securities        Calugar has agreed to pay $153 million
overhaul executive compensation dis-          fraud class actions filed in 2005 fell to   to settle charges he illegally traded
closure. The public will now have a           176, a 17% decline compared with            mutual funds.This is the largest penalty
chance to comment on the proposed             2004, according to the report by the        imposed on an individual by US regula-
rules. SEC officials are hoping to have a     Stanford Law School Securities Class        tors in the three-year probe of the fund
final rule in place by the end of the year.   Action Clearinghouse and Cornerstone        industry. Calugar, former head of Secu-
This would be in time to ensure better        Research.The 2005 filing rate was about     rity Brokerage Inc., will surrender $103
information about executive pay in next       10% below the historic average of 195       million in gains and be fined $50
year’s proxy statements to shareholders.      lawsuits a year from 1996 (when the         million. He previously paid $72 million
   It has been acknowledged that in           annual study began) through 2004.           to end a civil class action suit. Calugar
recent years, executive compensation             The reduction of lawsuits likely         earned $175 million from fraudulent
packages for many large corporations          resulted from two major factors: first,     trading, more than any other investor
have gotten out-of-hand. At present,          the sharp stock price declines of 2000      charged by regulators, according to civil
chief executive officers make about 400       and 2001 are now far enough in the          charges filed by the SEC in 2003. He
times the salary of the average worker.       past that we’re no longer experiencing      cheated other fund shareholders by
This is up from 40 times just a few           the echoes of those declines; and next,     buying and selling fund shares after the
decades ago, according to numerous            there’s the possibility that improved       4 p.m. market close in New York, which
studies. I believe that the investor          corporate governance in the wake of         is illegal, and making rapid trades, a
outrage—once these totals are                 the massive corporate frauds, and espe-     practice most companies said they pro-
released—will put a halt to excessive         cially those involving Enron and World-     hibited. Calugar bought and sold funds
paying of executives and directors. Men       Com, is causing a reduction in the          managed by Alliance Capital Manage-
and women who work for a living               number of fraud lawsuits filed. But, it’s   ment Holding LP, MFS Investment Man-
deserve to be adequately compensated,         much too soon to draw any real conclu-      agement, Franklin Resources Inc., and
and there should be a good bonus for an       sions about the effect of any improved      Bank of America Corp.’s Columbia Man-
outstanding performance for those who         corporate governance, much of it man-       agement Group. Each company has
do really outstanding work.A good argu-       dated by the Sarbanes-Oxley Act.There       settled trading cases with regulators. It
ment can be made that large companies         simply hasn’t been enough time to get a     should be noted that the government
benefit from the work and direction of        good read on the effect of this Act.The     has received more than $3.9 billion in
their executives.That type performance        fact that the overall stock market was      penalties as a result of the probe.
should be rewarded, but there should          less volatile in 2005 also played a role       The proposed deal with Calugar must
be reasonable limits placed on the            and helped moderate shareholder suits.      be approved by a U.S. District Judge to
amounts paid.We can’t expect workers             According to the report, the 2005 law-   become effective. Calugar will be per-
at a company to barely get by on their        suits tended to focus more on allega-       manently barred from any association
salaries when big bosses at their compa-      tions     of    false   forward-looking     with a securities brokerage. Late trading
nies are receiving unreasonably large         statements and misrepresentations in

20                                                 BeasleyAllen.com
and market timing practices seek to          VI.                                           pharmaceutical        industry      spent
profit from the fact that mutual funds       CAMPAIGN                                      $673,701,988 for lobbying activity.
are valued once a day, while the securi-                                                   During 2004, the amount totaled
                                             FINANCE REFORM
ties they own trade more often. Orders                                                     $123,298,552. If you question these
submitted after 4 p.m., New York time,                                                     numbers, they can be verified by going
are executed at the next day’s price to      THE TIME FOR CONGRESS TO ACT IS NOW           to the Senate Office of Public Records
prevent fund buyers from profiting                                                         and checking filings there. The last
from potentially market-moving events           If the unraveling scandal involving Jack   updated figures will be in June 2005.
after the close. Market timing involves      Abramoff and his political buddies—out-       When I check to see what the industry
buying a fund’s shares and then quickly      lining the massive corruption being           had spend, I must confess I was
selling them, which can raise a fund’s       unraveled in Washington—doesn’t bring         shocked. It is unbelievable that corpora-
transaction costs and reduce gains for       about some real campaign finance              tions could spend this kind of money
long-term holders.                           reform, nothing ever will. I really believe   with very little oversight or control by
   According to the SEC, Calugar was the     that the public is finally ready to demand    the federal government. The following
biggest market timer at New York-based       real action and not just news releases        companies and organizations, ranked
Alliance. His relationship with the          from members of Congress on this issue.       according to the amounts spent, are the
company began in April 2001, when the        In my opinion, anybody who refuses to         five highest spenders and they don’t out-
firm started to allow him to make fre-       back campaign finance reform now              spend the rest on the list by very much:
quent trades in its mutual funds in          should not be returned to Congress.The
exchange for keeping ‘’sticky assets” in     time to act is now, before the politicians    Pharmaceutical Research $72,720,000
its hedge funds.About $64 million of his     involved find a way to shift the public’s     & Manufactures of America
profit came from rapid trades in the         attention from the scandal to some other
company’s technology funds. Calugar          manufactured crisis. We must clean up         Pfizer Inc.                  $43,522,720
made a ‘’sticky asset” offer to MFS of       the fraud and corruption that have
Boston and was rebuffed, according to        become a way of life in our nation’s          Merck & Co.                  $40,710,294
the SEC. Still, Calugar was able to market   capitol. It was interesting to see the
time the company’s funds.                    members of Congress—both Republi-             Eli Lilly and Co.            $36,510,000
   Calugar started trading with Franklin     cans and Democrats—lining up to say
in 2001, in an arrangement contingent        how they were going to reform the way         GlaxoSmithKline              $32,427,000
on Calugar’s investing in a new hedge        lobbyists operate. It will be even more
fund. The SEC and New York Attorney          interesting if some strong legislation is       You can get a great deal of very inter-
General Spitzer accused Boston-based         passed that will clean up the mess. Presi-    esting information from the Center for
Columbia of permitting nine investors,       dent Bush should make this reform his         Public Integrity. For example you will
including Calugar, to make $2.5 billion      top priority and force Congress to act.       learn that corporate lobbyists spend
in rapid trades between 1998 and 2003.       This is his last chance to regain some of     nearly $13 billion since 1998 to influ-
Alliance settled for $600 million in fines   his lost popularity.                          ence members of Congress and federal
and foregone management fees in                                                            officials on legislation and regulation.
December 2003. MFS agreed to $351            PHARMACEUTICAL COMPANIES SPEND BIG            The group’s website is www.publicin-
million in fines and lost fees in February   BUCKS                                         tegrity.org
2004. Bank of America paid a total of
$675 million over claims including the         Over the past several years the phar-
                                             maceutical industry has maintained a          SUPREME COURT DODGES CAMPAIGN
trades by Calugar.
                                             virtual stranglehold over the federal gov-    FINANCE ISSUE
Source: Bloomberg News
                                             ernment and specifically over the FDA,           The U.S. Supreme Court had a chance
                                             the agency that has the duty to regulate      to give the county some direction on
                                             the drug companies. The industry has          campaign finance reform, but unfortu-
                                             done this by donating tremendously            nately the justices failed to do so.
                                             large sums of money to politicians and        Instead, the High Court wants a lower
                                             lobbyists who represent their interests.      court to take a new look at a challenge
                                             On the lobbying expenditures alone, it        to federal restrictions on political adver-
                                             was reported that from 1998—2004 the          tisements. That was the effect of the

                                                 BeasleyAllen.com                                                                  21
court’s January 23rd ruling. The High            and lobby reform legislation should be     in outright bribery and the number of
Court, by its action, will delay a major         passed in every state legislative body     means he employed. Several lobbying
ruling on the constitutionality of ad            this year. Reform in each area is badly    reform bills have been introduced in
limits until after this year’s elections. Jus-   needed and the reform effort must be a     Congress. Senator Russ Feingold (D-WI)
tices could have used the case, brought          serious one. If the states would take      and Representative Marty Meehan (D-
by an anti-abortion group, to spell out          action, I believe we could reduce the      MA) have written separate measures
when so-called grass-roots ads are               cost of government drastically and at      that would enhance much-needed lob-
allowed at election time. Without                the same time improve the delivery of      bying disclosure and regulate the
dealing with that issue, the court over-         needed services to the public.Alabama      conduct of lobbyists. Senator John
turned a decision that barred Wisconsin          should take the lead and be an example     McCain (R-AZ) and Representative
Right to Life from broadcasting ads that         for other states to follow.We have very    Christopher Shays (R-CT) have intro-
specifically mentioned Senator Russ              weak laws relating to political cam-       duced similar measures that focus on
Feingold, (D-WI), by name during his             paigns and to lobbyists in Alabama.We      enhancing disclosure more than regulat-
2004 re-election campaign. Interest-             actually have a Fourth Branch of gov-      ing the behavior of lobbyists.
ingly, Senator Feingold co-authored the          ernment in Alabama—the group of              Congress needs to take the necessary
campaign finance law with Senator                powerful corporate lobbyists.When you      action to change the system in Washing-
John McCain, (R-AZ).                             consider that we have over 500 regis-      ton, not only to prevent an Abramoff-
   The justices said that the Supreme            tered lobbyists in Alabama—with very       type scandal but to change the
Court’s 2003 ruling upholding a federal          few representing consumer interests—       fundamental nature of how our federal
campaign finance law left the door               it tells the story of how government       government operates. Public Citizen has
open for future challenges on the issue          operates. We need reform of the            prepared a detailed analysis of the bills
of free-speech. However, the Court may           system and we need it now. In my           referred to above showing that taken
well have taken the first step toward            opinion, reform should be a major          together, they could have had a signifi-
undermining the 2003 ruling without              political issue in Alabama this year. If   cant impact on preventing many of
overruling it.At least that’s the opinion        you agree, contact the Governor, Lt.       Abramoff’s most egregious abuses. But
of Richard Hasen, an election law expert         Governor, Speaker of the House and         they also clearly don’t go far enough in
at Loyola Law School as told to the Asso-        your local Senators and House members      fundamentally changing the system.
ciated Press.The case now returns to a           and urge them to get involved in this      There are five key requirements to
three-judge federal panel in Washington.         fight.                                     accomplish that goal, which these bills
I had hoped that the Court would have                                                       meet to varying degrees.Those are:
dealt with the free speech issue.Wiscon-
                                                                                            • Enact public financing of elections to
sin Right to Life had challenged the part        VII.
                                                                                              remove special interest money from
of the 2002 campaign finance law that            CONGRESSIONAL                                the system. Barring that, ban lobbyists
bans the use of corporate or union               UPDATE                                       from contributing to those whom
money for ads that identify federal can-
                                                                                              they lobby, bundling campaign contri-
didates two months before a general
                                                 CONGRESS COULD HAVE PREVENTED THE            butions from friends and colleagues,
election.The commercials urged people
                                                 ABRAMOFF SCANDAL                             and organizing fundraising events.
to call the two Wisconsin senators and
ask them to oppose Senate filibustering            The influence-peddling scandal of        • Make it harder for public officials and
of President Bush’s judicial selections.         Jack Abramoff, who is now not only a         staff to pass through the revolving
New Chief Justice John Roberts                   disgraced lobbyist but an admitted           door—either from government
announced the unanimous decision,                felon, has cast a pall over Capitol Hill     service to the private sector or vice
which was not signed.                            and brought the integrity of the federal     versa.
Source: Associated Press
                                                 government into question. Unfortu-         • Ban all privately funded travel for law-
                                                 nately, corruption by lobbyists and law-     makers, staff and federal officials,
NEED TO ACT ON THE STATE LEVEL                   makers doesn’t begin or end with             whether lobbyists attend the events
                                                 Abramoff. It’s a systemic problem and        or not.
  States, including my home state of             one that is most serious. Some say that
Alabama, should do their part in clean-          lobbying today is essentially legalized    • Enact an iron-clad ban on all gifts
ing up the political process in this             bribery. Abramoff was an aberration          from lobbyists to lawmakers.
country. Both campaign finance reform            only to the degree to which he engaged

22                                                   BeasleyAllen.com
• Establish an independent ethics            ethics and lobbying laws has been             for parties held to “honor” or “recog-
  watchdog in Congress with signifi-         entrusted to the very people least inter-     nize” specific members, such as the
  cant powers that will not be stymied       ested in their enforcement—the law-           lavish parties held at the national
  by partisanship and that has the           makers themselves. It is like the fox         party conventions.
  resources to enforce the laws.             guarding the hen house and we all
                                                                                         • Oversee and enforce ethics rules
                                             know that’s not good for the chickens
   The American people deserve a                                                           and lobbying laws through an
                                             as a general rule.
federal government that is responsible                                                     independent congressional Office
                                               The proposals referred to earlier offer
to their needs and one that is free—to                                                     of Public Integrity and increased
                                             some significant changes in ethics and
the extent possible—of the corrupting                                                      penalties for violations. The office
                                             lobbying laws, but also have shortcom-
influence of the Jack Abramoff’s of this                                                   would monitor and oversee financial
                                             ings. However, they can be made
world. To accomplish that needed                                                           disclosure and lobbying reports,
                                             stronger and that’s what needs to
reform, Congress must act promptly and                                                     advise members, staff and lobbyists
                                             happen.The six benchmarks for lobby-
with unwavering conviction. It’s time to                                                   on compliance with the rules;
                                             ing reform that the national watchdog
clean up the fraud and corruption that                                                     conduct investigations of non-frivo-
                                             organizations urge Congress to use
the Abramoff scandal has put into                                                          lous allegations of ethics violations,
                                             when developing bipartisan legislation
national focus. It’s not asking too much                                                   present cases involving potential
of our elected officials to get the job                                                    ethics violations; to congressional
done now!                                    • Break the nexus between lobby-              ethics committees for consideration
   Fortunately, Congress appears to have       ists, money and lawmakers: By               and action; and refer potential lobby-
finally awakened to the corruption that        capping contributions to candidates         ing law violations to the Justice
festers under the influence-peddling           from lobbyists and lobbying firm PACs       Department for civil enforcement.
system in Washington. The legislative          at $200 per election; prohibiting lob-
                                                                                         • Slow the revolving door: By pro-
proposals offered so far are good first        byists and lobbying firms from solicit-
                                                                                           hibiting members of Congress and
steps, but much more needs to be done.         ing,     arranging     or   delivering
                                                                                           senior executive branch officials from
There is a need to work toward                 contributions, and from serving as
                                                                                           making lobbying contacts or conduct-
strengthening the pending reform bills         officials on candidate campaign com-
                                                                                           ing lobbying activities for compensa-
as they go through the legislative             mittees and leadership PACs; and pro-
                                                                                           tion for two years after leaving their
process continues.A coalition of seven         hibiting     lobbyists    and     their
national reform groups, at a press con-        organizations from paying or arrang-
ference on January 23rd, released six          ing payments for events “honoring”        • Place sunshine on lobbying activi-
benchmarks for lobbying reform that            members of Congress and political           ties and strengthen financial dis-
they will use to judge the merits of the       parties, and from contributing or           closure reports: By requiring
current proposals being considered by          arranging contributions to entities         establishment of a robust disclosure
Congress in the next few months. The           established or controlled by members        system on the Internet; ensuring that
groups are Public Citizen, Common              of Congress, such as foundations.           lobbying firms disclose grass-roots
Cause, Democracy 21, Public Campaign,                                                      lobbying activities and the financial
                                             • Prohibit private interests from
Campaign Legal Center, U.S. PIRG and                                                       backers of stealth lobbying coalitions
                                               financing trips or subsidizing air
League of Women Voters.                                                                    are also disclosed; and requiring lob-
                                               travel for members of Congress
   The roots of the disease that affects                                                   byists to file a list of the members’
                                               and staff, executive branch offi-
Washington lie in the way election cam-                                                    offices and the congressional commit-
                                               cials, and federal judges. Corpora-
paigns are financed, largely with special-                                                 tees they lobbied during the quarter.
                                               tions and others should be prohibited
interest money rather than through
                                               from making privately-owned planes           The organizations also called for
modest citizen contributions and public
                                               available for members to travel at the    fixing the presidential public financing
funds; the way lobbyists and lawmakers
                                               cost of a first class air ticket rather   system in time for the 2008 elections,
can discuss legislation and government
                                               than the cost of a chartered plane.       extending public financing to congres-
contracts while on exclusive golf
                                                                                         sional races, replacing the Federal Elec-
courses and in luxury resorts, beyond        • Ban gifts to members of Congress
                                                                                         tion Commission with a real campaign
the watchful eye of the public and with        and staff. The gift ban should close
                                                                                         finance enforcement agency, closing the
the trips paid for the lobbying interests;     the existing loophole in the gift rules
                                                                                         loophole for 527 groups, and abolishing
and the way ensuring compliance with           that allow lobbyists and others to pay
                                                                                         leadership PACs. A recent Washington

                                                 BeasleyAllen.com                                                              23
Post/ABC News poll reported that 90%           who has served as IIHS president for the      who was badly burned, in a horribly dis-
of the American people believe it              past 20 years, has been an extremely          figured condition. That case was tried
should be illegal for lobbyists to give        hard-working and most effective               and a jury turned a verdict against Ford
members of Congress gifts, trips or            spokesman for auto safety. Under his          in the amount of $43.9 million. The
other things of value.Two-thirds of the        leadership, there have been significant       Lincoln in that case, which had the
American people believe further that it        improvements. The effective work of           same design, was struck in the rear by
should be illegal for lobbyists to make        IIHS has forced both the National             another vehicle and the Lincoln burst
contributions to members and other             Highway Transportation Safety Adminis-        into flames.The case is now on appeal.
federal candidates. A more detailed            tration (NHTSA) and the automobile               The fuel tank design and location in
explanation of the six benchmarks for          industry to place safety at a higher level.   the present case involving a Lincoln
lobbying reform is available at each           In my opinion, the pressure applied to        Town Car limousine is the very same as
of the group’s websites and at                 the industry by IIHS has been responsi-       that found in the Ford Crown Victoria
www.CleanUpWashington.org. I en-               ble for a number of significant changes       and the Mercury Marquis. As you will
courage all of our readers to get actively     in the way the industry deals with safety     recall, the Ford Crown Victoria was
involved in this most important battle         concerns. The new president will be           used by law enforcement agencies in
sitting on the sidelines simply won’t get      Adrian Lund, who now serves as COO of         the U.S. The police vehicles were
it. I am convinced that our government         the Institute. I hope there won’t be any      involved in a tremendous number of
in Washington is worth saving and I sin-       slow-down or change in direction by the       fuel fed fires, where the vehicles were
cerely believe most American citizens          IIHS. We certainly wish Mr. O’Neill the       struck in the rear, and burst into flames,
feel the same way!                             very best and sincerely thank him for his     resulting in at least 12 known deaths.
Source: Public Citizen                         dedication and hard work.                     Ford fixed this problem—as previously
                                                                                             reported—by adding a safety shield
                                                                                             made of rubber and plastic, costing
                                                                                             approximately $100, to the police vehi-
  In my opinion, members of Congress                                                         cles. Since that time, there has been no
who are connected in any way to the               A lawsuit, filed after a Lincoln Town      deaths to my knowledge involving
current scandals will have a hard time         Car limousine, made by Ford Motor Co.,        these vehicles.All of the vehicles were
getting reelected in November. I believe       burst into flames in a rear-end collision,    designed with the fuel tank being
that anybody tied closely to the               killing the wife of a former NASCAR           placed behind the rear axle extending
Abramoff scandal will be looking for           crew chief and her two sisters, has been      into the trunk where it was exposed to
other work. People in this country are         settled.The safety of the fuel-tank system    all sorts of sharp objects. It doesn’t take
sick and tired of sending men and              in Lincoln Town Car limousines, manu-         a safety engineer to see that this is a ter-
women to Congress and then finding             factured by Ford, was at issue in this        rible design and one that is extremely
out that they are really controlled by the     case.The three young women, who were          dangerous. If Ford could solve the
corporate lobbyists. In my opinion,            ridding in the rear compartment of the        problem with the police cars—why
votes and support for the new drug law         limousine, were stopped in traffic on a       didn’t they provide the same fix for pri-
will be an issue for several Congress-         North Carolina highway back in 2003,          vately owned vehicles which have the
men to overcome. I predict a significant       after attending a concert, when this inci-    very same problem?
number of new faces in Congress and            dent occurred. A pickup truck struck             In addition to fixing the police car
that won’t be bad for America.                 their vehicle in the rear. The three          problem, Ford has now provided the
                                               victims were burned to death from the         safety shield for all Lincoln Town Cars at
                                               flames that quickly engulfed the entire       no cost to the owners. In fact, the safety
VIII.                                          vehicle after the fuel tank was punc-         shield is now standard equipment on
PRODUCT                                        tured.The driver was able to escape just      these cars. However, Ford has refused to
                                               before the flames reached him. He was         provide the same safety fix to the pri-
                                               unable to help the passengers.                vately owned vehicles with the identical
                                                  This is not the first Lincoln Town Car     fuel tank design.You may be shocked to
IIHS PRESIDENT TO RETIRE                       to be involved in a fuel fed fire. A man      learn that with some 3 million cars man-
                                               and his wife were involved in a prior         ufactured by Ford on the road with this
  Brian O’Neill, president of the Insur-                                                     bad design, Ford has never even notified
                                               incident in Illinois, which resulted in
ance Institute for Highway Safety (IIHS),                                                    the owners that they could buy the
                                               the husband’s death and left his wife,
will retire at the end of the year. O’Neill,

24                                                 BeasleyAllen.com
safety shields for about $100 and have        documents made public during the               rocker and toggle switches in 2003, says
them installed. Since these Ford vehicles     Florida trial showed Ford knew first-          there is still no date-certain when this
are on the road with the identical safety     hand that stronger roofs can prevent           will go into effect.That is inexcusable.
problems, you would expect Ford to be         injuries and deaths in rollovers. It is well     Ms. Fennell said lever switches and
concerned enough to at least warn             known in safety circles that Ford and          auto-reverse mechanisms—in which
people who have these cars. No other          most other carmakers don’t do crash            closing windows stop and retract on
American made vehicle has this fuel           tests of moving vehicles to design cars        contact with hard objects—are standard
tank design. Interestingly, NHTSA, which      and trucks — despite an advertisement          in Europe and Japan.While the top U.S.
is supposed to be making sure that auto-      shown in court suggesting Volvo did            automakers include these safety fea-
mobiles are safe for use, refuses to act      that to design the XC90. If Volvo, a           tures in cars bound for Europe, they typ-
and says that this is a consumer issue.       wholly owned subsidiary of Ford, can           ically are not options in domestic
Why am I not surprised to hear NHTSA          perform these kinds of tests, why              models. That shouldn’t be tolerated.
take this position?                           doesn’t Ford?                                  Kids and Cars estimates that power-
Source: Miami Herald                          Source: Associated Press                       accessory strangulation accounted for
                                                                                             3% of the 700 nontraffic automobile
                                                                                             fatalities involving children 15 and
VERY GOOD MIX                                                                                younger in the U.S. from 2000 to 2004.
                                                 Kids and Cars, the child-safety advo-       Congress should not have to make
   When Ford Motor Co. and Volvo              cacy group, is pointing to the recent          NHTSA implement the provisions of the
joined forces in 1999, I wondered             death of a Colorado child as another           Act, but it appears that they may be
whether Ford would upgrade its safety         example of why automakers should               forced to do so. We can’t afford to let
profile or whether Ford would actually        change the way they design and build           things drag out any longer.
drag Volvo down. It appears now that          power windows. I have touched on this
Ford is trying to more closely align itself   safety issue previously, as far back as
                                                                                             REPLACEMENT PARTS FOR RECALL OF
in advertising with Volvo.A Ford adver-       2004, but unfortunately the problem is         TRUCKS AND SUVS SHOULD BE READY
tising campaign launched in October           still with us. The 3-year-old Colorado
touts the safety innovation achieved in       Springs girl was choked to death when             Ford Motor Co. has promised that
part by “Ford and our Volvo division          her head was caught in a car’s power           replacement parts used in its recall of
working together.” Unfortunately, that’s      window. She died a tragic and totally          3.8 million pickup trucks and sport
not what we see in the real world. For        preventable death.                             utility vehicles will be available this
example, in product-liability trials, Ford       Kids and Cars lobbied Congress and          month.Apparently, a lengthy delay was
tries to distance itself from safety-con-     had legislation passed that will force the     caused because of production prob-
scious Volvo. The best example comes          automobile industry to install a new           lems. In September, the automaker
from a Florida products liability case.A      kind of switch in car doors.The switch         recalled 1994-2002 model-year vehicles
Florida court order barring the release       is designed to make it more difficult for      amid complaints of engine fires linked
of Volvo crash-test documents used in a       children to accidentally activate power        to the cruise control switch system.The
case against Ford has become a hot            windows.The group also wants sensors           recall, the fifth-largest in U.S. history,
topic. Ford asked to have the trial           in power windows that would stop the           covered the F-150 pickup, Ford Expedi-
exhibits sealed last spring after it lost a   windows from rising when they hit an           tion, Lincoln Navigator, and Ford
case involving a Ford Explorer rollover       obstruction, like a child’s head or neck.      Bronco. Ford’s investigation found that
accident.                                     Congress recently passed legislation           brake fluid could leak through the
   It would be good from a safety per-        requiring the safer switches, but the bill     cruise control’s deactivation switch into
spective for Ford to adopt Volvo’s safety     did not include a hard deadline for            the system’s electrical components,
philosophy and use its programs. If tests     automakers to comply.The child’s death         which could cause corrosion.The corro-
and designs are good enough for Volvos,       in Colorado comes five months after            sion could cause a buildup of electrical
they should also be good enough for           Congress passed the new requirements           current which could cause overheating
Ford to use on all Ford vehicles. Trial       for automakers regarding electric              and a fire.
Lawyers for Public Justice, the law firm      windows. Provisions in the 2005 trans-            Ford dealers were told to install a
representing consumer group Public            portation bill mandate lever switches.         fused wiring harness to act as a circuit
Citizen on the Florida documents issue,       Janette Fennell of Kids and Cars, who          breaker in the system. The harness
says Volvo crash-test videos and internal     launched a national campaign against           would cut off electrical current to the

                                                   BeasleyAllen.com                                                                 25
switch if the current increases. Ford told   related to sudden distortions of the          cles are safe and meet federal standards.
the National Highway Traffic Safety          neck that commonly occur in rear-end          Some of the companies take issue with
Administration (NHTSA) in early Sep-         crashes. The most common symptom              the test, contending that variations in
tember that the replacement parts were       reported by whiplash victims is pain          the crash could produce different
expected to be available in mid-             resulting from mild muscle strain or          ratings for the same vehicle. The six
October. The supplier and Ford appar-        minor tearing of soft tissue. Other           2006 SUVs receiving the top score were
ently ran into delays producing the          injuries include nerve damage, disc           the Ford Freestyle, Honda Pilot, Jeep
wiring harnesses. Ford now says it will      damage, and in the most severe cases          Grand Cherokee, Land Rover LR3,
notify customers the first week of this      ruptures of ligaments in the neck and         Subaru Forester, and the Volvo XC90.
month that they’ll be able to have the       fractures of the cervical vertebrae.            The IIHS gave “poor” ratings to the
new part put in their vehicles. As an        Whiplash injuries can be sustained in         Chevrolet TrailBlazer, Ford Explorer, and
interim step, Ford said “owners could        any type of crash but occur most often        Toyota 4Runner (all SUVs), as well as
have their speed control system discon-      in rear-end collisions. In our practice we    the Chevrolet Silverado pickup truck.
nected until the part becomes avail-         find that juries are not overly sympa-        Some seats in Ford F-150 and Dodge
able.”                                       thetic to clients who suffer these            Dakota pickups also rated “poor.”All the
   As we all know, the Ford F-series truck   injuries. In fact, the jurors are highly      others earned “acceptable” or “marginal”
has been the best-selling full-size pickup   suspect of claims of this sort. It requires   ratings. Despite their rugged images,
for nearly three decades. NHTSA has          a great deal of medical proof to con-         Adrian Lund, a top official with the IIHS,
received hundreds of complaints of           vince a jury that the injuries are real. In   said:
engine fires linked to the cruise control    any event, the injuries need to be
                                                                                             The tests show seats and head
system. As previously reported there         avoided.
                                                                                             restraints in many models would-
have been allegations of at least three         IIHS’s study clearly shows that head
                                                                                             n’t do a good job of protecting
deaths cited in news reports, and there      restraints are an essential safety feature
                                                                                             most people in a typical rear
have been a number of lawsuits filed.A       and that many of these soft tissue
                                                                                             impact in everyday commuter
delay of over four months seems a long       injuries are easily and inexpensively pre-
                                                                                             traffic. The tests were designed to
time to wait for a solution to what          ventable. Just as airbags and seat belts
                                                                                             see if seats help the torso and head
appears to be a most serious safety          have helped to prevent life-threatening
                                                                                             move together in a crash, which
problem. I hope the problem is close to      injuries and fatalities, good headrests
                                                                                             helps prevent whiplash injuries.
a solution.                                  can prevent these other soft tissue
Source: Associated Press                     injuries.The automobile manufacturers            This is the first time the IIHS has
                                             should get on with the important work         carried out a dynamic test with SUVs
                                             of improving the design of seat and           and pickup trucks.The test was carried
OF SEAT AND HEAD RESTRAINTS IN SUV’S         head restraints in SUVs, and all other        out in two stages. First, the seats were
                                             motor vehicles, to help prevent               measured to determine the head
  The American Insurance Association         whiplash injuries. It’s certainly not         restraints’ geometry and to determine
(AIA) is backing recommendations from        asking too much of them.                      the preconditions for protecting the
the Insurance Institute for Highway          Source: Insurance Journal                     head of a person of normal height. Only
Safety (IIHS) to improve the safety and                                                    seats with good or acceptable head
design of seat and head restraints in                                                      restraint geometry went on to the
                                             MANY SUVS AND PICKUPS FAIL TO
SUVs. Neck sprains and strains are the       PROTECT NECK                                  second stage, the dynamic crash test.
most frequently reported injuries in                                                       Here, a moving platform was used to
insurance claims in the U.S. These             Head restraints in several sport utility    simulate a situation where a car stand-
injuries are said to account for more        vehicles and pickup trucks did a poor         ing still was hit from behind by a
than one-half of all auto crash injury       job of protecting test dummies from           vehicle of the same weight driving at 20
claims. The IIHS’s study shows that          neck injuries in a simulated rear crash at    mph. The test method and the evalua-
effective head restraints reduce the rear-   20 mph. Only six of the 44 SUVs and           tion criteria have been developed
ward motion of an occupant’s head in a       none of the 15 pickups tested earned          within the framework of broad interna-
rear-end crash and decrease the likeli-      top scores of “good” for their seat and       tional cooperation between experts in
hood of sustaining a whiplash injury.        head restraints in tests conducted by         preventive whiplash injuries (IIWPG —
  Whiplash and whiplash-associated dis-      the Insurance Institute for Highway           International Insurance Whiplash Pre-
orders describe a range of neck injuries     Safety (IIHS).Automakers say their vehi-      vention Group).

26                                                BeasleyAllen.com
   Given that only 6 of the 44 vehicles      emergency physician who took part in          in a 1997 crash. The judge found that
tested proved to offer effective protec-     the study, told the Associated Press:         Hyundai Motor Co. deliberately with-
tion against whiplash injuries, it’s quite   “We’re not saying they’re worse or that       held documentation concerning other
obvious that there is needed improve-        they’re terrible vehicles.We’re challeng-     crashes in which front seats collapsed
ment. The overall assessment includes        ing the conventional wisdom that every-       backward. Jesse Magana was riding in
both the seats’ measured geometry and        one assumed they were better.”                the front passenger seat of a rented
the results of the dynamic test.The IIHS       The study was sponsored by Partners         1996 Hyundai Accent when the driver
emphasizes that effective protection         for Child Passenger Safety, a research        swerved to avoid an oncoming truck
against whiplash injuries is an impor-       project of Children’s Hospital of             and struck two trees.The force from the
tant factor for reducing both human suf-     Philadelphia and State Farm Insurance         airbag apparently broke the passenger
fering and the cost of rehabilitation.       Co.The researchers looked at accidents        seat’s reclining mechanism. As the car
Collisions from behind are very              involving nearly 4,000 children under         spun, Magana, who had been wearing a
common, and neck injuries are the most       age 16 between 2000 and 2003, and             seat belt, was ejected out the back of
common type of serious injury arising        found child injury rates of about 1.7% in     the hatchback.As a result, he was badly
from car accidents. The movement of          both cars and SUVs. The study, which          injured and left paralyzed. A woman
the head and upper body must be syn-         was the first on SUVs and child safety,       sitting in the back seat suffered a
chronized. According to the IIHS, the        examined only 1998 or newer cars and          broken leg when the seat came crash-
key to effective protection is that the      SUVs with second-generation airbags.          ing back on her.
seat occupants’ head and upper body            On average, the SUVs weighed 1,300             Magana sued Hyundai for damages
should move in harmony during the col-       pounds more than the cars studied.The         and made a request for Hyundai to turn
lision sequence. The reason for              study found that the extra weight of          over documentation of allegations of
whiplash injuries is usually that the        SUVs enhanced safety, reducing the risk       seat-back failings in Accents and other
head cannot keep up with the body as it      of injury by more than a third. But that      Hyundai models. The automaker
jerks forward under the force of the         was offset by findings that SUVs were         responded by saying no such evidence
impact. For this reason, the seat and        more than twice as likely as cars to roll     existed - a position it consistently main-
head restraint must interact to support      over in crashes. Children in rollovers        tained until last fall.At that time, under
the head so that it accelerates together     were three times more likely to be seri-      court order, Hyundai finally began
with the upper body. It is also important    ously injured than those in non-rollover      turning over documentation of nearly 50
that the head restraint is sufficiently      accidents, according to the study. It had     complaints of seat-back failure. At that
high and positioned close to the head. It    been assumed by a number of safety            time, the trial judge made this statement:
also reduces the subsequent forward          experts that heavier SUVs were safer
                                                                                             A fair trial on the merits is not
motion. More information about the test      than cars. This was the belief of the
                                                                                             possible at this time, given the
can be obtained from the IIHS website:       researchers when they launched the
                                                                                             posture of this case. The failure to
www.iihs.org                                 study a year ago. I hope SUV safety will
                                                                                             disclose in a timely manner was
                                             improve because of legislation
                                                                                             highly prejudicial to the entire
                                             approved by Congress last year that
STUDY SHOWS CHILDREN NO SAFER IN SUVS                                                        process.
                                             requires the National Highway Trans-
  Children are no safer riding in sport      portation Safety Administration to               The case had been tried back in 2002,
utility vehicles than in passenger cars,     develop standards for automakers to           resulting in the jury awarding Magana
largely because the doubled risk of          address SUV rollovers. It is critically       $8.1 million. Hyundai won on an appeal
rollovers in SUVs cancels out the safety     important, that SUV makers solve the          with the reversal based on improper
advantages of their greater size and         rollover problem. If that happens, SUVs       testimony being allowed at trial. The
weight, according to a recent study.         could become much safer for children.         case was sent back for a second trial.
                                             Source: Associated Press                      Before the second trial, the plaintiff’s
Researchers said the findings from the
study, published last month in the                                                         lawyers again asked for information on
journal Pediatrics, dispel the bigger-                                                     similar seat-back failings. Hyundai then
                                             SEAT FAILURES REPORTED IN HYUNDAIS
equals-safer myth that has helped fuel                                                     provided evidence of two cases. One of
the growing popularity of SUVs among           A state judge called off a trial that had   the incidents predated the first trial in
families. SUV registrations climbed 250%     been scheduled to begin recently and          the Magana case. In November of last
in the United States between 1995 and        instead awarded a Washington State            year, the trial judge granted the plain-
2002. Dr. Dennis Durbin, a pediatric         man $8.1 million for injuries he suffered     tiff’s motion to compel discovery and

                                                  BeasleyAllen.com                                                                27
forced Hyundai to turn over all police       behind the wheel. The crash fractured          very small number of potential jurors.As
reports, consumer complaints, legal          the lady’s skull in seven places, and she      you can imagine, it is virtually impossi-
complaints, expert testimony and other       lost one of her arms to amputation.            ble to find jurors in New Orleans. We
evidence relating to allegations of seat-       GM had contended that Ms. Peters            were greatly concerned that because of
back failure on all Hyundai vehicles.        mistakenly hit the accelerator instead of      the very bad conditions still existing in
Since that order, the company has pro-       the brake pedal, which is always the           New Orleans, finding enough people to
vided 40,000 pages of documentation -        defense in cases of this sort, and             make up the needed jury venire was
covering nearly 50 alleged cases of seat     claimed that the Cutlass was not defec-        going to be extremely difficult and that
failure in ‘90s and 2000 model               tive. Jurors awarded Peters $20 million        has proved to be true. But, we were
Hyundais, many of them Elantras and          in compensatory damages, an additional         ready to go to trial because we knew
Accents. Contending that more cases          $10 million for her husband, and $50           Judge Fallon wanted to move the case
existed that has not been included in        million in punitive damages against GM.        along. Our client and her family have
Hyundai’s response and that company          In its decision, the appeals court said        been through a tough ordeal since the
officials had not been truthful in deposi-   the trial judge unfairly prejudiced the        death of Dicky Irvin.They went through
tions, the plaintiff’s lawyers moved for     jury by allowing seven people to testify       a very difficult trial in Houston and saw
sanctions. In an oral ruling from the        about their own accidents involving            first hand how Merck operates. The
bench, the judge called Hyundai’s            sudden acceleration in GM vehicles and         family feels strongly about their case and
behavior “egregious” and entered a           by admitting into evidence 139 com-            they want a jury to hear first-hand how
default judgment against the company.        plaints of sudden acceleration against         bad Merck truly was when it comes to
Hyundai plans to appeal.                     GM. The appeals court said the plain-          the marketing of Vioxx. We learned a
Source: Associated Press                     tiff’s lawyers didn’t provide enough evi-      great deal in the first trial and believe
                                             dence to show that the incidents were          that a favorable verdict for the Irvin
                                             similar to what happened in this acci-         family will be obtained this time. Hope-
GENERAL MOTORS VERDICT                       dent. Normally, a trial judge is in the best   fully, justice will prevail during this trial.
                                             position to determine whether a prior
  A Missouri appeals court has over-         incident is similar to the incident giving
                                                                                            FOURTH VIOXX CASE IS UNDERWAY
turned an $80 million verdict against        arise to a suit.
General Motors Corp. This is in a case          Finally, the appellate court said the          The fourth Vioxx lawsuit against
arising out of a September 2000 drive-       husband wasn’t entitled to punitive            Merck & Co. is being tried in Texas.The
way accident that left the driver of an      damages from GM because there wasn’t           family of Leonel Garza has sued Merck,
Oldsmobile in a vegetative state. On         enough evidence showing GM knew                blaming Vioxx for Garza’s fatal heart
January 17th, the Missouri Court of          the cruise control systems had a defect        attack in 2001. The trial started on
Appeals for the Western District ordered     and failed to warn consumers about it.         January 24th, in a state court in Starr
a new trial, saying the circuit judge at     There was a dissenting opinion that said       County. Mr. Garza had been given a one-
the trial level allowed improper evi-        that jurors were not unfairly prejudiced.      week supply of Vioxx 25 mg samples
dence that unduly prejudiced the jury.       The dissenting judge favored sending           for arm pain about one month before
The appeals court also said the              the case back to the lower court for a         his death. In this case, Merck will
woman’s husband didn’t provide               new award phase.                               attempt to continue to sell the myth it
enough evidence to show he should            Source: Associated Press
                                                                                            has created, which is that only Vioxx
receive punitive damages.The family of                                                      use for at least 18 months causes
Constance Peters contended that her                                                         heart attacks.That is not true and Merck
injury back in 2000, occurred when her       IX.                                            knows      it. Nevertheless, Merck
1993 Oldsmobile Cutlass Supreme sud-         MASS TORTS                                     spokespersons continue to tell the
denly sped backward out of her drive-        UPDATE                                         media on almost a daily basis that only
way, striking a tree and landscaping                                                        long-term use is a safety problem. If you
timbers. It was contented—and I                                                             haven’t known about the upcoming
thought sufficiently proved—during a         THE NEW ORLEANS TRIAL
                                                                                            trial, you would have wondered I
nine-day trial in 2002 that the car’s                                                       suppose why Merck started bombard-
                                               By the time this issue is received we
cruise control was defective and mal-                                                       ing the television channels in the area
                                             should be into the retrial of the Irvin
functioned when the vehicle raced                                                           with ads telling folks how the company
                                             case in a New Orleans federal court.We
backward with the then-60-year-old lady                                                     really cares about people.
                                             were required to select a jury from a

28                                                BeasleyAllen.com
   The lawyers representing the Garza          DEATHS WITHHELD FROM FEDERAL                  tions elsewhere in the medical industry
family say that Merck has tried to stall       REGULATORS DURING STUDY OF HEART              about the accuracy of studies of drugs
the case, originally set for trial on Febru-   DRUG                                          and medical devices. Dr.Arthur Caplan, a
ary 14, 2005, hiring state legislators, who       It now appears that the Scios unit of      medical ethicist at the University of
are lawyers, to get continuances. In this      Johnson & Johnson failed to tell federal      Pennsylvania, observed:
case there have been two removals to           regulators about the deaths of two              When you’re talking deaths in
federal court, both of which resulted in       patients in a clinical trial of its heart       clinical trials, mistakes are not an
remands. It appears that the hiring of         failure medication Natrecor. The two            option. It’s just an area where we
multiple Texas state representatives has       deaths were also omitted from a report          have to have absolute, foolproof
been for the sole purpose of “stalling this    of the trial published in the October           reporting in place.
trial.”At least that’s what Joe Escobedo       issue of The Journal of Emergency
Jr., who represents the Garza family,          Medicine.That article reported 6 deaths          The average person doesn’t realize
believes and has stated publicly. Texas        within 30 days among 237 patients             how significant the marketing of drugs
has a rather weird law that says a lawyer      given Natrecor or other treatment in          to the medical community is. Doctors
who is a member of the Legislature can         hospital emergency rooms in 2001 and          rely on the medical journals to keep
get an automatic continuance of a              early 2002. Five of those deaths were of      them informed on drugs that are
lawsuit if he or she becomes counsel of        people who had taken Natrecor. The            coming on the market.They expect and
record for a party. This law is used by        two additional deaths raised the total to     are entitled to good and reliable infor-
corporate defendants on a regular basis        seven among Natrecor patients. This           mation. Last month, Merck was accused
to avoid trials by hiring a legislator at a    failure seems to follow a pattern of such     of misrepresenting the results of a clini-
later date to join the defense team. It is     conduct by drug manufacturers.                cal trial of the painkiller Vioxx to mini-
usually done at the last minute and guar-         Dr. Franklin Peacock of the Cleveland      mize its heart risks. That study was
antees a continuance. I hope this case         Clinic was the principal investigator in      published in November 2000, almost
will result in a verdict against Merck         the study. Neither Dr. Peacock or the         four years before Merck stopped selling
which certainly appears to be justified.       company have disclosed how the deaths         the drug because of serious safety con-
                                               had been omitted from the results. A          cerns. As we reported previously, the
                                               final analysis of the results is said to be   Vioxx accusation came from Dr.
ENDING DOCKET                                  underway and will be submitted to the         Gregory D. Curfman, the editor of The
                                               Food and Drug Administration (FDA),           New England Journal of Medicine,
   To say that Superior Court Judge            according to a Scios spokesman.               who said the authors of a Vioxx study
Carol Higbee, the judge who is oversee-        Natrecor was approved by the FDA in           had deleted data about strokes, heart
ing the state court Vioxx lawsuits in          August 2001 for use in acutely-ill heart-     attacks, and other vascular problems suf-
New Jersey, has a tremendous case load         failure patients. It quickly became a big     fered by some patients. As expected,
is a gross understatement.As has been          seller for Scios. Sales were helped by use    Merck has denied mishandling the data
reported, Judge Higbee is the New              of the product in less severely ill           submitted for publication.We expect to
Jersey judge assigned to thousands of          patients, known as off-label use, some-       explore that matter further in our next
cases brought in New Jersey state              times in outpatient clinics in cardiolo-      Vioxx trial, which is a retrial of the Irvin
courts against Merck & Co. The New             gists’ offices. Sales reached $400 million    case in New Orleans.
Jersey lawsuits, which numbered 4,333          in 2004. Questions arose about the               While the findings of the Natrecor
at press time, blame the pharmaceuti-          drug’s safety that year.                      study were presented earlier at medical
cal company for heart attacks and                 The Justice Department is also investi-    conferences, it was not until October
strokes suffered by Vioxx users. Merck         gating whether Scios promoted the drug        that the complete results were pub-
still says it plans to fight these lawsuits    for unapproved uses. According to the         lished in The Journal of Emergency
one-by-one, and that it has no plans for       New York Times, Medicare and Medicaid         Medicine.At that time, Dr. Peacock and
a global settlement.The next case to be        will no longer cover the drug’s outpa-        colleagues (one of whom was a Scios
tried in New Jersey will start on the          tient use. This was a major blow. Scios       executive) reported that five Natrecor
27th of this month.                            has consistently defended Natrecor’s          patients had died within 30 days. The
                                               safety.The failure of researchers to accu-    deaths included those from causes
                                               rately collect and report the death data      clearly not related to Natrecor use,
                                               in the Natrecor trial comes amid ques-        including an accident, the study
                                                                                             reported. In the meantime, Scios had

                                                   BeasleyAllen.com                                                                   29
undertaken a retrospective review of          commitments and is giving the FDA            problems. It seems obvious that safety
the study to look at mortality in patients    monthly progress updates. Guidant had        was totally disregarded and that’s bad
up to 180 days after treatment. It            15 days from the date of the warning         news.The case, which was scheduled to
appears that was when the two addi-           letter, sent December 22nd, to update the    go to trial this month, is the first arising
tional deaths were discovered. In any         agency on the corrective actions it has      from Guidant’s recalled defibrillators.
event, the FDA needs to take strong           taken to “address the deviations” noted        Even with all of its safety problems,
action to prevent more problems such          in the warning letter.                       Guidant is going to be purchased by
as this one from occurring in the future.        Since June, Guidant has recalled or       Boston Scientific Corp. for $27.2 billion
Drug companies must be required to be         issued warnings about 88,000 heart           in cash and stock.This tells us how good
totally honest in all of their dealings       defibrillators and almost 200,000 pace-      the cardiac rhythm management busi-
relating to drugs they put on the             makers because of reported malfunc-          ness—a $10.3 billion market—really is.
market.                                       tions. The company is under                  The transaction must be approved by
Source: New York Times                        investigation by federal and state offi-     the federal regulators and the sharehold-
                                              cials and faces lawsuits over its recalls.   ers of both companies before it’s a done
                                              The company now says that projected          deal.
                                              failure rates have nearly doubled in light   Sources: New York Times and Associated Press

   Unfortunately, the Guidant Corp. saga      of new evidence relating to its pace-
continues and that’s bad news from a          makers. Doctors reported that at least
                                                                                           WIDOW OF STATE TROOPER SUES DRUG
safety perspective.The Food and Drug          145 of 16,000 patients have experi-          COMPANIES
Administration warned the medical             enced failure from a faulty hermetic
device maker in late December that the        seal. They projected there may be               The widow of a Oklahoma state
company has failed to resolve all of the      another 54,000 units that have defective     trooper, killed by a methamphetamine
problems the agency found earlier this        parts. Guidant is among three U.S. com-      addict, has sued companies that make
year during an inspection at the              panies that dominate the global market       and/or sell pseudoephedrine. As you
company’s cardiac unit in St. Paul, Min-      for implantable heart defibrillators and     may know, pseudoephedrine, a main
nesota.The company received the FDA’s         pacemakers: industry leader Medtronic        ingredient in a number of decongestant
warning letter on December 23rd—some          Inc. of Fridley, Minnesota; Guidant; and     medications, is used in illegal metham-
three months after Guidant replied to a       St. Jude Medical Inc. of Little Canada,      phetamine labs.The wrongful-death suit
report by the agency on manufacturing         Minnesota.                                   claims that drug companies and suppli-
and record-keeping problems it found             If the above problems weren’t             ers—including Pfizer, Wal-Mart, Wal-
during an August inspection of its St.        enough, The New York Times and two           green, Dollar General and United
Paul operations.The FDA’s letter states       Texas plaintiffs have now received           Supermarkets—knew methampheta-
that it will not approve for sale certain     access to documents that apparently          mine addicts were buying the drug to
Guidant devices made at its St. Paul          show Guidant Corp. continued selling         get high and not to treat a cold. It is also
operations until the problems are cor-        some models of its heart defibrillators      alleged that makers of the drugs knew
rected. It also said it will not approve      after knowing the devices could mal-         how to make the pseudoephedrine
new requests for certificates that are        function. The petition to urge the           tablets without allowing drug addicts to
needed before Guidant can market over-        release of documents was filed as part       extract the ingredients needed to make
seas devices made at the plant.               of a lawsuit by two Corpus Christi resi-     methamphetamine. Ricky Ray Malone,
   The FDA’s four-page letter states that     dents against Guidant. The lawsuit           who was convicted of killing the state
the “significant violations” of the federal   accuses the maker of heart defibrillators    trooper, was high on methamphetamine
government’s good manufacturing prac-         of knowingly selling a defective             during the December 2003 shooting.A
tice requirements found at the St. Paul       product. A State District Court Judge        mobile methamphetamine lab was
facility “may be symptomatic of serious       granted the motion to release the docu-      found in Malone’s car.
underlying problems in your firm’s man-       ments.The handwritten notes from Fred
ufacturing and quality assurance              McCoy, president of Guidant’s Cardiac
                                                                                           UTAH FAMILIES SUE PAIN-PATCH MAKERS
systems.”The company said it has com-         Rhythm Management division, are said
pleted 90% of the commitments it made         to show a decision was made to sell off        Surviving family members of three
to the FDA in its initial response to the     defective inventory.The notes show           Utah citizens who died after using a
agency’s concerns. It also said it was on     McCoy “evaluating and considering            pain medication skin patch have filed a
schedule to complete its remaining            what should we do” after learning of the     lawsuit against the manufacturers of the

30                                                BeasleyAllen.com
patch. The families contend that the         approved, it would settle lawsuits           vices have been investigating charges of
patches leaked and caused drug poison-       pending in the U.S. District Court in Los    misconduct in billing and recruitment
ing. Their lawsuits bring to five the        Angeles and California Superior Court        of doctors. Last year Tenet settled law-
number of actions filed in U.S. District     in Santa Barbara. Insurance will cover       suits brought by uninsured patients
Court in Utah over the use of the patch.     $75 million of the $215 million payout.      who claimed they were overcharged at
Autopsy reports said the deaths resulted     Two former executives will pay $1.5          the company’s hospitals, setting aside
from drug poisoning after the pain           million out of their pockets. The law-       $30 million to resolve the suits.
patches made by Janssen Pharmaceutica        suits arose amid chaos at the company        Sources: Reuters News Service and Bloomberg News

were used. The company, located in           beginning in 2002, including probes
New Jersey, manufactures, markets, and       into overbilling to Medicare.The settle-
                                                                                          CLASS ACTION LAWSUIT FILED AGAINST
distributes the patch.Alza Corp., a patch    ment covers a consolidated series of         HOME DEPOT
distributor, is also a defendant.The fami-   lawsuits filed against the company on
lies filed independent lawsuits in state     behalf of shareholders who bought              A class action lawsuit filed in state
courts, but they were removed to Utah’s      Tenet securities between January 11,         court in Florida alleges that Home
U.S. District Court at the request of the    2000, and November 7, 2002.The suits         Depot automatically adds a 10% charge
companies.                                   alleged that Tenet made false and mis-       to all rental equipment to cover possi-
   The latest lawsuits claim the three       leading statements about Medicare pay-       ble damage to tools without telling cus-
persons were prescribed the patch for        ments and other issues. Tenet also is        tomers that the charge is optional. The
different medical conditions, and all        under investigation by the U.S. Securi-      suit seeks class action status for the esti-
were found dead in their homes within        ties and Exchange Commission, which          mated thousands of customers in
one or two days of receiving them.The        says the company misled investors            Florida who rented equipment from
Duragesic patch is designed to deliver       about the Medicare probe and other           Home Depot during the last five years. It
the pain-killer fentanyl in controlled       problems.                                    claims that Home Depot is violating
doses. The lawsuits claim wrongful              Many knowledgable observers believe       Florida’s Deceptive and Unfair Trade
death, including product liability and       that the Medicare probe is still the main    Practices Act as well as Florida’s
negligence, for failing to research and      problem for the company. In fact, the        Uniform Commercial Code, and that a
design the patch. The lawsuits also          securities litigation may turn out to be a   class should be certified.The suit seeks
allege the companies misrepresented          relatively small item in the scheme of       both damages and an injunction forcing
the safety of the patch for human use.       things.As reported,Tenet also has prob-      the Atlanta-based home improvement
The families are seeking punitive            lems relating to Hurricane Katrina. Six      giant to stop the practice. Interestingly,
damages and damages to cover medical         of Tenet’s hospitals were destroyed in       the suit claims that Home Depot fur-
and funeral costs. In July, the U.S. Food    that storm and the flooding. Even            thers its deception by listing the waiver
and Drug Administration issued a public      excluding the hurricanes losses, lower       as a tax. According to this suit, Home
health advisory warning that use of the      patient volume and very high bad debt        Depot had 1,061 tool rental centers
patch could cause death from overdose.       led to a third-quarter operating loss of     throughout the United States as of 2004.
Source: Salt Lake Tribune                    $385 million. Tenet still faces criminal       According to the complaint, the
                                             charges involving its physician recruit-     damage waiver covers liability for acci-
                                             ing practices in San Diego. On another       dental damage to the rented equipment,
X.                                           front, the company has settled the bulk      but not losses or damages due to theft,
BUSINESS                                     of lawsuits over doctors whom authori-       burglary, misuse or abuse, theft by con-
LITIGATION                                   ties said conducted unnecessary heart        version, intentional damage, disappear-
                                             surgeries at one of its Northern Califor-    ance or any loss due to the customer’s
                                             nia hospitals.The settlement followed a      failure to care properly for the equip-
TENET SETTLES HOLDER CLASS ACTIONS           three-year criminal probe, but the SEC       ment. The latter category includes
                                             investigation is ongoing.                    failure to use proper fuel, oil and lubri-
  Tenet Healthcare Corp., the large hos-        As you may recall from a previous         cants and not exceeding the equip-
pital chain, has settled class action law-   issue,Tenet is also the object of a probe    ment’s rated capacity.Another problem
suits filed by shareholders for $215         regarding physician recruitment. The         with Home Depot’s waiver policy, the
million. The agreement must receive          U.S. Justice Department, the Securities      suit states, is that the company charges
court approval to become final. If           and Exchange Commission, and the             the fee on equipment that “is almost
                                             Department of Health and Human Ser-          impossible to damage,” such as

                                                 BeasleyAllen.com                                                                       31
wrenches. It also describes the 10% fee      claims as of October 30th. For foreign       XI.
as being “exorbitant.”                       charges made before February 1, 1999,        INSURANCE AND
  The suit states that Home Depot fails      the total payment will be $15 per claim.
                                                                                          FINANCE UPDATE
to give customers the written terms and      Charges made after that date will be
conditions of the contract, which            reimbursed based on the total conver-
describes the damage waiver, until after     sion fees charged, according to the          THE INSURANCE INDUSTRY’S FAILED
they sign the contract. Consequently,        agreement.                                   RESPONSE TO HURRICANE KATRINA
the suit says, customers are not
                                                                                            Americans for Insurance Reform
informed of the scope of the damage
                                             BLOCKBUSTER TO PAY $140,000 MORE             (AIR) released a comprehensive report
waiver prior to agreeing to rent the
                                             OVER LATE FEES                               last month, documenting the insurance
tool. It appears that Home Depot is not
                                                                                          industry’s poor response to Hurricane
the only large retailer that charges a         Blockbuster has agreed to pay
                                                                                          Katrina. The report, entitled The Insur-
damage waiver fee on rental equipment.       $140,000 to settle a lawsuit brought by
                                                                                          ance Industry’s Troubling Response To
Lowe’s, one of its competitors, rents        the state of New Jersey that said its “no
                                                                                          Hurricane Katrina, details actual case
equipment through NationsRent, which         late fees” program was misleading and
                                                                                          studies of numerous Gulf Coast resi-
charges a 14% damage waiver fee.             incomplete. More than $90,000 of the
                                                                                          dents, revealing a significant pattern of
                                             money will be refunded to about
                                                                                          callousness, unfairness, and generally
                                             75,000 customers who paid “video
AMERICAN EXPRESS SETTLES CARDHOLDER                                                       inept performance by many companies.
SUIT                                         restocking fees,” while the remainder
                                                                                          In some cases, insurers’ conduct wors-
                                             will pay for state investigative costs.
                                                                                          ened the suffering of policyholders,
  A settlement in the amount of $75          Attorney General Peter Harvey made
                                                                                          many of whom were left hungry and
million has been approved between            the announcement. Settlement terms
                                                                                          homeless by the hurricane.
American Express Co. and thousands of        require Blockbuster, the nation’s largest
                                                                                            One of the contributors to the report,
cardholders who contended in a class         movie-rental chain, to ensure that cus-
                                                                                          Joanne Doroshow, AIR co-founder and
action lawsuit that they paid hidden         tomers are clearly notified of all terms
                                                                                          Executive Director of the Center for
transaction fees for charges made in         and charges under the “no late fees”
                                                                                          Justice & Democracy, said:
foreign currencies. The settlement,          program.
approved by a U.S. District Judge, affects     The State of New Jersey filed the            This report shows that many poli-
more than 833,000 cardholders who            lawsuit in February. This came shortly         cyholders who were exhausted,
paid some form of transaction fee from       after Blockbuster instituted the policy        traumatized, and without food,
March 28, 1997, through October 15,          with signs touting “the end of late fees.”     water or a roof over their heads,
2004. Settlement amounts could range         The fine print, however, said the              looked to their insurance carriers
from $15 to millions of dollars. The         company would charge consumers if              to come to their aid as they strug-
lawsuit, initially filed in state court in   they kept the movies too long, then            gled to survive. But what many
August 2003 and then removed to              charge a $1.25 restocking fee if the           found was not help at all, but
federal court, claimed that American         movies were returned. In March, Block-         rather resistance by insurance
Express failed to adequately inform          buster agreed to pay $630,000 to 47            companies to pay them anything,
cardholders that they would be charged       states that threatened to sue, and to          leaving victims frustrated and
an adjustment of up to 2% for the con-       make refunds to customers who were             angry, not to mention destitute.
version of charges made in foreign cur-      charged the purchase price of DVDs or
                                                                                            The report also warns that the prop-
rencies to U.S. dollars. Instead, the fee    videos that they returned more than
                                                                                          erty/casualty insurance industry, which
was embedded in the transaction              seven days late. Recently, Blockbuster
                                                                                          made huge profits in 2005 despite the
amount that showed up on cardholders’        stores in several Southern states have
                                                                                          hurricanes, appears to be using the dis-
bills, making it “invisible to consumers.”   resumed charging late fees because they
                                                                                          aster as an excuse to unfairly raise rates
  Since the suit was filed, American         can’t keep popular movies on their
                                                                                          and flee certain areas, leaving policy-
Express has changed its notification         shelves.
                                                                                          holders in the lurch. AIR makes certain
practices to spell out the conversion        Source: USA Today
                                                                                          recommendations for insurance indus-
fees more clearly. About 8.8 million
                                                                                          try reform and improvements to the
notices were mailed out to American
                                                                                          National Flood Insurance Program. The
Express cardholders potentially affected
                                                                                          report also contains tips to help policy-
by the settlement, with 833,751 filing
                                                                                          holders deal with insurance companies.

32                                                BeasleyAllen.com
Report contributor and AIR co-founder       • Incredibly slow response to policy-         risk coverage on new construction
J. Robert Hunter, who is Director of          holders, with two callers typifying the     should be initially provided for five
Insurance for the Consumer Federation         problem:“Our money is running out           years on a policy purchased by the
of America, and former Federal Insur-         and our insurance companies can’t           builder and sold along with the struc-
ance Administrator and Texas Insurance        tell us when or if any help is on the       ture.
Commissioner, observed:                       way,” and,“I haven’t paid premiums to
                                                                                        • Reasonable deductibles and limits
                                              two companies all these years to be
  It is vital that the states of Missis-                                                  should be standardized under policy
                                              starving, struggling, and homeless.”
  sippi, Louisiana, Alabama and                                                           terms set nationally.
  Texas take firm steps now to              • Insurance carriers unreachable or
                                                                                           Insurance should be a policyholder’s
  assure homeowners that insur-               simply refusing to respond at all.“I’m
                                                                                        road to recovery at times of personal
  ance will be available and afford-          a 70-year-old woman, I need to pay
                                                                                        crisis. After Katrina, many insurance
  able as the next hurricane season           rent at the place I’m living and I just
                                                                                        companies have too often been more
  approaches.                                 don’t have any money,” said one caller
                                                                                        like stone walls, blocking the way for
                                              who could not get any response from
   Among the measures called for are: a                                                 policyholders to recover. Many things
                                              her carrier.
moratorium on cancellations and non-                                                    went terribly wrong in the insurance
renewals of homeowners insurance            • Homes further damaged by Hurricane        industry’s response to Katrina. If major
policies to give states time to develop       Rita when companies failed to send        changes aren’t implemented, the same
plans for insuring homes that could not       adjusters after Katrina, which would      tragic stories could unnecessarily repeat
get or keep private insurance; a freeze       have allowed people to make repairs.      themselves. AIR is a coalition of over
on home insurance prices; mitigation          “There wouldn’t be half as much           100 public interest organizations from
measures that prohibit or control con-        water damage if they had been able to     around the country that seek stronger
struction in high risk zones; and market      get an adjuster out here in a reason-     oversight over insurance industry prac-
conduct examinations by states to             able amount of time,” said one hotline    tices. It is a project of the Center for
determine if insurers have been engag-        caller.                                   Justice & Democracy. For more infor-
ing in unfair claims practices in viola-                                                mation and a copy of the report,
                                               AIR calls on Congress in the report to
tion of state law. The case studies                                                     see http://insurance-reform.org. (Full
                                            require the Federal Emergency Manage-
contained in The Insurance Industry’s                                                   Report here: http://www.insurance-
                                            ment Agency (FEMA) to obtain updated
Troubling Response To Hurricane                                                         reform.org/pr/KATRINAREPORT.pdf)
                                            flood maps by January 2007, noting that
Katrina, were gleaned from hundreds
                                            use of outdated flood maps was directly
of calls that came into AIR’s Katrina
                                            responsible for much of the carnage         AMERIQUEST SETTLEMENT AFFECTS ALABAMA
Insurance toll-free hotline, established
                                            and destruction. Other measures that        CONSUMERS
on September 12, 2005. This unprece-
                                            AIR recommends include:
dented hotline allowed AIR to monitor                                                      Ameriquest Mortgage Co., the nation’s
complaints, refer them to government        • Requiring that actuarial rates be         largest home lender to people with bad
officials where appropriate, and keep         charged for each property, without        credit, has settled the case brought by
records of hurricane-related insurance        subsidies, and disclosed at the time of   state Attorneys General and federal
problems. Among the most common               sale so that people buying unsafe         lending regulators for a total of $325
problems were:                                structures have fair warning, and         million. The Orange, California-based
                                              establishing a program for low-           firm, which has specialized in making
• Companies attempting to avoid any
                                              income residents to help cover insur-     high-cost home loans to people who do
  liability under homeowners policies
                                              ance payments.                            not qualify for less expensive mort-
  declaring all damage to be flood-
                                                                                        gages, agreed to the settlement to
  related, which insurers said was not      • Government spending on loss preven-
                                                                                        resolve charges brought by a multi-state
  covered, even though this position          tion measures.
                                                                                        task force that has been investigating
  was not supported factually or legally.
                                            • Requiring insurance companies             allegations that the company over-
  As one hotline caller who was told
                                              writing property coverage to take all     charged and defrauded consumers.
  this said, “I’m basically going to be
                                              homeowners and small business             Thousands of homeowners nationwide
  hung out to dry by my insurance
                                              property risks that meet national miti-   had alleged in lawsuits that they were
                                              gation standards for disaster risk. All   financially damaged—in some cases
                                                                                        losing their homes, being forced into

                                                BeasleyAllen.com                                                              33
bankruptcy or seeing their credit              status should be granted.                    damages to policyholders of the Ten-
destroyed—after        they    obtained           The lawsuit contends that State Farm      nessee and Virginia Companies. Out of
Ameriquest loans they were unable to           is obligated to fully cover the losses of    the $700 million plus in total losses,
repay. As part of the agreement, the           everyone named in the suit who pur-          ROA only has $128 million in available
company will also change business              chased the all perils policy. State Farm     assets.
practices at ACC Capital Holdings, the         denied coverage under one of the plain-        The U.S. Attorney in Virginia has
holding company for three retail sub-          tiff’s homeowner’s policy, citing an         already indicted the former President
sidiaries, Ameriquest Mortgage Co.,            exclusion for water damage that              and Executive Vice-President of ROA,
Town and Country Credit Corp., and             includes tidal surge. But, it is contended   Ken Patterson and Carolyn Hudgins.
AMC Mortgage Services Inc. Outside             that the policy is worded so that all        They entered guilty pleas and have been
monitors will observe the company’s            damage is covered unless it would have       sentenced to 12 ? and 5 years in federal
operations to ensure that it operates in       occurred “only” as a result of the tidal     prison, respectively. At this time, they
accordance with the agreement. In              surge. Wind damage is a covered peril,       remain free pending their cooperation
some cases, specific practices will be         and because it contributed to the            of the ongoing criminal investigation.
barred.                                        damage of the home it should be              The evidence seems to point towards
  The Bush White House was watching            covered, the suit alleges.As reported last   an investigation of John William Crews,
this matter closely because billionaire        month, U.S. Senator Trent Lott (R-MS), is    the former General Counsel to The Reci-
Roland E. Arnall, Ameriquest’s founder         also among homeowners suing the              procal Group and a founder of ROA.
and principal shareholder, is President        company. His case is filed separately and    Crews’ former law firm, Crews &
Bush’s nominee to be ambassador to the         is not in the class.                         Hancock, which is a Defendant in our
Netherlands. Interestingly, Arnall has                                                      case, netted more than $63 million in
been the president’s single largest cam-                                                    legal fees for the work they supposedly
                                               COURT GIVES APPROVAL TO PAY RECIPROCAL
paign contributor since 2002. Of                                                            did for ROA and affiliates.After the Vir-
course, he has also been a prominent                                                        ginia and Tennessee insurance compa-
campaign contributor to many Democ-               The State Corporation Commission of       nies were placed into receivership, the
rats as well as other Republicans.Attor-       Virginia (SCC) essentially acts like the     Crews & Hancock law firm disbanded.
ney General Troy King says the State of        Alabama Department of Insurance.The
Alabama will receive about $4.15               SCC last week approved payments total-
                                                                                            CALIFORNIA FIRM SETTLES INSURANCE
million from the settlement, which             ing $77,500,000.00 to policyholders of       PROBE
covers 49 states and the District of           insurer Reciprocal of America. ROA is a
Columbia. Alabama consumers will               Virginia-based insurer and reinsurer that       An insurance industry consulting firm
receive Alabama’s share of the settle-         is closely related to The Reciprocal         has agreed to pay $2 million in restitu-
ment funds based on several factors            Alliance, Doctors Insurance Reciprocal,      tion after taking payments from MetLife
which will determine specific amounts          and American National Lawyers’ Insur-        Inc., Prudential Financial Inc., and
for individuals.                               ance Reciprocal, the three companies         UnumProvident Corp. to steer cus-
                                               our firm represents that are in receiver-    tomers to those companies. San Diego-
                                               ship in the state of Tennessee.              based Universal Life Resources Inc. and
IN GULF COAST AREA                                The order by the SCC allowing distri-     its chief executive, Douglas Cox, were
                                               bution to ROA policyholders also leaves      also accused of charging secret fees for
   Homeowners in the Gulf Coast area           open the possibility that policyholders      “communications services,” including
have filed a class action lawsuit against      of the three companies we represent          printing informational materials, far
State Farm Insurance Company. Plain-           may be able to recover some of their         above the going rate. The agreement
tiffs in the suit allege that State Farm has   losses.As you will recall, our firm repre-   resolves a complaint filed by New York
denied payment of damages to their             sents the three Tennessee insurance          Attorney General Eliot Spitzer’s office
homes, even though the homeowners              companies in a lawsuit filed against         and a citation filed by the state Insur-
purchased the “all perils” homeowner           General Reinsurance Company, Price-          ance Department in November 2004.
insurance policies. The class action           WaterhouseCoopers, and members of            Spitzer’s original lawsuit said Universal
lawsuit was filed last month in U.S. Dis-      the Boards of Directors for fraudulently     Life collected more than $11.5 million
trict Court in Gulfport, Mississippi on        scheming to cause the collapse of our        last year in hidden payments. Under the
behalf of homeowners in the area. A            clients’ through a reinsurance scam.The      agreement, Universal Life, which has
judge will decide whether class action         scam resulted in over $700 million in        brokered employee benefit plans and

34                                                 BeasleyAllen.com
insurance coverage on behalf of compa-       as a strong 10. I sincerely hope that the      only make loans that are large enough
nies such as Safeway Inc., Intel Corp.,      Alabama Legislature will take action           not to trigger rate caps. In Virginia, Iowa
Northrop Grumman Corp., and others,          during the current session to undo what        and Kansas, lenders claim their loans are
will adopt new fees and business prac-       it did concerning payday loans in the          open-ended to get around state limits
tices to avoid conflicts of interest,        regular session last year. The Act that        for small loans. The industry is report-
Spitzer said.                                became law is very weak, allowing the          edly pushing for state laws to legalize
   General Spitzer has alleged that bid-     industry to charge exorbitant interest         title loans without rate caps or adequate
rigging by insurance companies, along        rates, and to continue taking advantage        protections. CFA’s study, “Driven into
with special commissions aimed at            of folks who need help and not harmful         Debt: CFA Car Title Loan Store and
steering customers to insurers in            conduct.The payday loan industry is a          Online Survey,” documents that lax state
exchange for bonuses, is widespread.         multi-billion dollar industry and has          laws result in the most abusive loans.
That can keep customers from receiv-         become very powerful politically.              For example, according to CDA, Ten-
ing the best deal. He stated:                                                               nessee and Mississippi permit loans up
                                                                                            to $2,500 to be due in thirty days.
  The agreement with ULR repre-              CAR TITLE LOANS ARE BAD NEWS
                                                                                            Georgia permits title lenders to keep all
  sents another milestone toward
                                               There is another form of predatory           the proceeds earned from selling a
  curtailing undisclosed contingent
                                             lending that is extremely bad for con-         repossessed car. Online lenders are now
  commissions in the insurance
                                             sumers, referred to as a “title loan.” Cash-   entering the title loan market, claiming
  industry. Consumers of insurance
                                             strapped consumers are being pushed            to use the lax regulatory environment
  products benefit when these con-
                                             into expensive, high-risk loans, using         in New Mexico or Delaware to market
  flicts are exposed and eliminated.
                                             their automobiles as collateral.The Con-       loans nationwide.
   Universal Life also agreed to allow a     sumer Federation of America (CFA) says            It is apparent that title loans are
monitor of its insurance business prac-      car title lenders charge consumers             extremely expensive for borrowers. For
tices for five years. You will recall that   300% annual interest in some states for        some states, title loan stores charge a
the biggest settlement of Spitzer’s insur-   small cash loans secured by the title to       median 25% per month finance charge
ance probes involved Marsh & McLen-          cars. These are cars owned free and            which translates to 300% annual inter-
nan Companies Inc.There, the world’s         clear of any type mortgage or lien.The         est, plus additional fees average $25 per
largest insurance brokerage, in January      loans are for a fraction of the car’s value,   loan. CFA urges states to close loopholes
of 2005, agreed to pay $850 million in       but failure to pay in full at the end of       being exploited by title lenders and to
restitution to end an investigation into     the month can lead to late-night repos-        reject industry-backed model legislation
bid rigging and price fixing.That settle-    sessions by lenders holding a duplicate        to legitimize predatory title loans. States
ment became a model for other insur-         set of keys. Jean Ann Fox, director of         that fail to protect their consumers from
ance company settlements.                    consumer protection for Consumer Fed-          one-sided title loans should repeal or
Source: Insurance Journal                    eration of America, says:                      reform their laws. Kentucky and Florida
                                                                                            did this, and that’s the good news.The
                                               Title loans trap borrowers in per-           bad news is that most states have failed
XII.                                           petual debt through unaffordable             to act.
PREDATORY                                      balloon payments, high interest              Source: CFA News
                                               costs, and the threat of reposses-
LENDING                                        sion. Title loans for up to half the
                                               value of the consumer’s car cost             XIII.
PAYDAY LOANS ARE STILL A BIG PROBLEM           ten times more than it would to              PREMISES
                                               get an auto loan to finance the
   As mentioned previously, the payday                                                      LIABILITY UPDATE
                                               purchase of the same car.
loan operations, which are spreading
like kudzu around the country, are             CFA said a survey of title lenders in
                                                                                            OVERHEAD POWER LINES & HEAVY
extremely bad for consumers. In fact,        eleven states and online found almost          EQUIPMENT CREATE SAFETY HAZARDS
there are few businesses preying like        half of the states permit predatory title
blood-suckers on low-income citizens         lending, either through weak authoriz-           Construction and farm workers using
that in my opinion are any worse. On a       ing laws or failure to close consumer          heavy equipment like cranes, augers,
scale of 1 to 10 (with 10 being the          loan loopholes.According to the survey,        and liquid fertilizer sprayers are subject
worst), I would rank the payday lenders      in California and South Carolina, lenders      to serious injuries or even death from

                                                 BeasleyAllen.com                                                                   35
accidental contact with overhead                Sensors attached to the booms or                       while working in Alabama. He was splic-
power lines.Typically operators use the         machine extensions are effective in pre-               ing lines together that became ener-
heavy machinery to move loads on the            venting contacts. Anytime a part of a                  gized from a generator being used in a
job site. Unfortunately, the reach of the       machine gets close to a power line, the                building after Hurricane Dennis. The
booms or extensions from the machines           sensor will alert the operator of the                  power lines had been damaged by the
is long enough to bring overhead power          hazard.This safety device is useful when               storm.The Pike Electric company crew
lines into play.When a machine contacts         the operator’s line of sight is obstructed             was working in the Flomaton area at the
an overhead power line, the body of the         by the machine or weather conditions.                  time in the aftermath of Hurricane
machine becomes energized.Anyone in             Sensors used for this purpose are similar              Dennis.We filed the lawsuit in Escambia
contact with both the machine and the           to proximity warning devices. Proximity                County,Alabama, on behalf of the wife,
ground is subject to serious bodily             warning devices can warn of an                         naming Alabama Power, which con-
injury and/or death. General safety rules       impending contact and even prevent                     tracted with Pike Electric, for the North
with respect to operating machinery             the contact in certain applications.                   Carolina company to do certain work,
around power lines and power line                  Another safety device is an insulating              and the homeowner as defendants.The
clearance can prevent many of these             link. Insulated links provide electrical               victim was working in an elevated
unfortunate incidents. But, given the           insulation between the load and the                    basket splicing two lines together when
severity of the potential injuries, it is not   machine.The insulated link is different                the lines became energized. Among
wise to rely solely on human percep-            from the sensor in that the sensor                     other things,Alabama Power Company
tion.                                           assists in preventing a contact, while the             failed to provide the lineman a safe
   Typically, utility lines are not insu-       insulated link works in the event of a                 workplace and failed to inspect the area
lated. Given this fact, the National Elec-      contact. Insulated links have proven to                for potential hazards.This appears to be
trical Safety Code (NESC) requires a            be effective in reducing injuries.                     a case of clear liability and hopefully the
minimum distance of 10 feet from                However, insulated links cannot insulate               defendants will accept their responsibil-
power lines and 25 feet from transmis-          the entire machine.A worker in contact                 ity so we can provide for the family
sion tower lines. In addition to NESC           with parts of the machine other than                   which has suffered a terrible loss.
minimum clearance distance require-             the isolated load is not protected and is
ments, general safety rules suggest oper-       subject to injury.
                                                                                                       2004 DISNEYLAND ACCIDENT INJURED FAMILY
ators of heavy machinery be wary of                Sensors and insulated links, while
the presence of overhead power lines            effective in preventing injuries, are not                 A Colorado family has sued the Walt
so they can maintain the minimum                used enough by manufacturers. Manu-                    Disney World Co. for injuries suffered in
clearance distance and avoid a contact.         facturers, with full knowledge of the                  a 2004 accident on Disneyland’s Big
General safety rules also suggest using         effectiveness of these safety devices,                 Thunder Mountain Railroad. Gerald and
someone whose sole purpose is to                rely on training to protect farm and con-              Norika Cope of Telluride, Colorado, filed
ensure a contact does not occur. This           struction workers. Manufacturers prefer                the lawsuit in Orange County Superior
person is known as a spotter.Adherence          to rely on training instead of technology              Court on behalf of themselves and their
to these safety rules and regulations can       simply because training is cheaper.Their               two minor children. The accident
reduce the number of injuries and               machines can be sold for a cheaper                     occurred July 8, 2004, when, in what
deaths caused by contact with overhead          price and they can reap larger profits.                park officials described as a “bump,” two
power lines. Even the most effective            But, safety should be a top priority and               trains “made contact” as one returned to
training can be flawed when it relies           the reducing of deaths and serious                     the loading station. State investigators
solely on human conduct.The best evi-           injuries must be their goal.                           attributed the incident, just months
dence of this proposition is the consis-        Source: National Institute for Occupational Safety &
                                                                                                       after the ride had reopened following
tent number of injures caused by power                                                                 an accident that killed a passenger, to a
line contacts on a yearly basis. While                                                                 software glitch and mistakes by an inex-
training is always important, mechanical        SUIT FILED IN LINEMAN’S DEATH                          perienced operator.This is just another
means of preventing these incidents are                                                                of a growing number of accidents at
also readily available and effective and           We are representing a Georgia family
                                                                                                       amusement parks involving rides.
should be employed.                             in a lawsuit arising out of the electrocu-
   Currently, there are at least two safety     tion of Ronnie Allan Adams Jr., a resident
devices that could decrease or eliminate        of Wintersville, Georgia, who died on
contacts with overhead power lines.             July 13th. Mr. Adams was electrocuted

36                                                   BeasleyAllen.com
WIDOW FILES A LAWSUIT BASED ON A LACK        million and the Careys’ landlords will           FDA task force, formed in September to
OF SECURITY                                  pay $175,000. To NStar’s credit, the             review and improve the agency over-
                                             company did the right thing and agreed           sight of defibrillator and pacemaker
   The widow of a man who was mur-
                                             to settle.As a result, the Carey family can      safety, is expected to release its recom-
dered at a Kansas City carwash has sued
                                             now move on with their lives as best             mendations this spring. I have to
the company that operated the facility.A
                                             they can.                                        wonder once again why the FDA hasn’t
robber fatally wounded the man while
                                             Source: Associated Press                         done a better job of carrying out its
he was on the premises. The widow
                                                                                              responsibilities on safety, something that
contends in the lawsuit that the
                                                                                              the American public is certainly entitled
company that owns Russell’s Car Wash         XIV.                                             to expect.
is legally responsible for her husband’s
death. Her husband, who was 71 years
                                             WORKPLACE                                        Source: New York Times

old, was shot with a shotgun at the car      HAZARDS
wash on December 28, 2003. He died                                                            DEATHS IN THE WORKPLACE ON THE RISE
several days later.The lawsuit contends                                                       NATIONWIDE
                                             PLAN TO REQUIRE MORE DATA ON SAFETY
that the owner and operator of the car       ISSUES
                                                                                                 On the national level, in 2004, a total
wash were at fault for having a nonfunc-
                                                The Food and Drug Administration              of 5,703 fatal work injuries were
tioning video surveillance system in an
                                             (FDA) will soon propose guidelines               recorded in the United States.This was
area known for violent crime.The dece-
                                             intended to make annual safety reports           an increase of 2% from the 5,575 fatal
dent was the director of the Jackson
                                             filed by medical device makers more              work injuries that were reported in
County Sports Complex Authority at the
                                             complete and more accessible to the              2003.According to the Bureau of Labor
time he was killed.
                                             public. Dr. Daniel G. Schultz, the director      Statistics, the total number of fatalities
                                             of the FDA’s Center for Devices and              in 2004 was the third-lowest annual
JURY AWARD IN THE BOSTON GAS-BLAST           Radiological Health, told the New York           total recorded by the fatality census,
DEATHS                                       Times that the new reporting guidelines          which has been conducted each year
                                             were part of a broader effort to improve         since 1992. The tragic accident that
   The parents of two little girls tragi-
                                             the agency’s monitoring of medical               caused the deaths of 12 men at Inter-
cally killed in a 2002 gas explosion at
                                             devices after they are approved for sale-        national Coal Group’s Sago Mine in
their apartment home have received a
                                             Over the last year, the FDA has come             West Virginia is a sad reminder of how
$17.2 million settlement from the gas
                                             under scrutiny by some lawmakers con-            dangerous the mining occupation is for
company and other defendants. Heath
                                             cerned that it has failed to aggressively        its workers and especially when the
and Tara Carey and their daughters, 4-
                                             monitor medical device safety. The               mines are not properly maintained.The
year-old Iris and 5-year-old Violet, were
                                             agency’s handling of the Guidant Corpo-          West Virginia tragedy also graphically
asleep in their second-floor apartment
                                             ration heart defibrillators put the issue        points out how critically important the
in Hopkinton, Massachusetts, when the
                                             in focus.                                        need is for improving mine safety. In
early-morning blast buried them in the
                                                The FDA regulates hundreds of                 fact, according to newly released data
rubble.The parents suffered only minor
                                             medical products including heart defib-          from the U.S. Department of Labor’s
injuries, but the girls were killed.A cor-
                                             rillators, surgical tools, artificial hips and   Bureau of Labor Statistics, the mining
roded gas company pipe in the damp
                                             diagnostic equipment. One major chal-            industry has the second-highest fatality
basement of the building was blamed as
                                             lenge faced by the FDA is the fact that          rate per 100,000 employees. Only the
a source of the leak.A state investigation
                                             the agency receives safety data about            agriculture industry (which includes
in 2003 found that NStar Gas Co. may
                                             products in ways that are incomplete or          forestry, fishing, and hunting) has a
have violated state and federal pipeline
                                             lacking in uniformity. In addition, what         higher rate of death on the job.
safety regulations and the company was
                                             information it does receive is often not            Overall, the rate at which fatal work
fined $200,000. Workers had noticed
                                             shared by offices within the FDA device          injuries occurred in 2004 was 4.1 per
the problem months before the explo-
                                             center.Apparently, this effort by the FDA        100,000 workers, down from a rate of
sion, but failed to schedule repairs.
                                             will try to fix those problems. One goal,        5.3 fatalities per 100,000 workers ten
Under the agreement NStar is paying
                                             for example, is to try to make all filings       years earlier.Workplace homicides were
$12.5 million in settlement of the case.
                                             with the agency electronic rather than           down sharply to the lowest level ever
Inner-Tite Corp., the manufacturer of
                                             on paper, as is now the case.A separate          recorded by the fatality census, which is
the equipment that rusted, will pay $4.5
                                                                                              good news. Unfortunately, however, fatal

                                                  BeasleyAllen.com                                                                   37
injuries resulting from being struck by      warning; faulty or inadequate tunnel           gering fires and explosions.
an object rose 12%, overtaking work-         supports; and a dangerous buildup of              Government documents reveal a high
place homicide as the third-most-fre-        flammable coal dust.The mine’s safety          rate of injuries and accidents at Sago.
quent type of fatal event.                   record came into sharp focus as officials      Although no miners were reported
   By far, the majority of work-related      searched for explanations for the under-       killed at the mine since at least 1995, 42
fatalities were caused by highway inci-      ground explosion last month that killed        workers and contractors were injured in
dents. In 2004, there were 1,374 fatal       the 12 miners and seriously injured            accidents since 2000, according to avail-
highway incidents, representing about        another. That record, as reflected in          able records. The average number of
one of every four fatal work injuries in     dozens of federal inspection reports,          working days lost because of accidents
2004.The second-leading cause of death       shows a succession of operators strug-         in the past five years was nearly double
on the job involved falls, predominately     gling to overcome serious, long-standing       the national average for underground
from roofs or ladders. There were 815        safety problems.                               coal mines, according to MSHA. Some
fatal falls reported in 2004, a 17%             Over the past two years, the mine was       serious accidents fortuitously caused no
increase over 2003.While the construc-       cited 273 times for safety violations, of      injuries. For example, in the past year,
tion industry ranks fourth for the rate of   which about a third were classified as         large sections of the mine’s rocky roof
fatal injuries per 100,000 workers, it       “significant and substantial,” according       collapsed on at least 20 occasions—but
recorded 1,224 fatal work injuries in        to documents compiled by the Labor             not when workers were in the affected
2004—the most of any industry sector         Department’s Mine Safety and Health            tunnels. Some of the collapsed sections
and an increase of 8% from a year            Administration (MSHA). Many were for           were rocky slabs as long as 100 feet.The
earlier. In comparison, the mining indus-    problems that could contribute to acci-        most recent roof collapse occurred on
try recorded 152 fatal work injuries in      dental explosions or the collapse of           December 5th, less than a month before
2004, while agriculture recorded 659         mine tunnels, records show. In addition,       the recent explosion.
fatalities.                                  16 violations logged in the past eight            Our hearts go out to the families of
                                             months were listed as “unwarrantable           the miners who were killed and to the
                                             failures,” a designation reserved for          survivor and his family. Government at
                                             serious safety infractions for which the       both the federal and state levels must
  The number of Alabama workplace            operator had either already been               work to improve safety in coal mines in
fatalities has increased for the second      warned, or which showed “indifference          this country. Since the Sago mine inci-
year in a row. A report from the U.S.        or extreme lack of care.” Sixteen viola-       dent, there have been other incidents in
Department of Labor shows fatalities in      tions in less than a year is a very high       Kentucky and West Virginia resulting in
Alabama totaled 133 in 2004, an              number. It certainly appears that this         three more deaths of coal miners.There
increase of 7% from 2003 and a 30%           mine had a very poor safety record.            will always be danger for folks working
increase from 2002. The greatest                Sago, a relatively small mine that listed   in mines, but everything possible must
number of workplace fatalities in            145 employees last year, was operated          be done to minimize those dangers.We
Alabama occur in the transportation          by Anker West Virginia Mining Co. until        should look at the current state of the
industry.This is not too surprising based    about three months ago, when it was            law as it relates to safety for miners and
on our experience dealing with the           purchased by International Coal Group          take the necessary corrective action.
trucking industry.                           Inc. In MSHA’s reports, 18 of the 46           The Bush Administration is now review-
                                             most recent violations were listed as          ing safety equipment used in the
                                             “significant and substantial.”Among the        nation’s mines after previously scrap-
SERIOUS SAFETY VIOLATIONS EXISTED AT THE     problems cited: inadequate safeguards          ping similar initiatives started by the
                                             against the collapse of the mine roof,         Clinton Administration.
  The tragic occurrence at West Vir-         and inadequate ventilation to guard            Source: Washington Post

ginia’s Sago Mine has brought the issue      against the buildup of deadly gases.
of coal mine safety back to the public’s     Other inspection reports over the past
                                                                                            WHITE HOUSE TO REVISIT MINE EQUIPMENT
attention. Over the past four years,         two years fault the mine for “com-             SAFETY
federal mining inspectors documented         bustibles,” including a buildup of flam-
a litany of problems at the Sago mine.       mable coal dust and a failure to                 The Mine Safety and Health Adminis-
These problems included: mine roofs          adequately insulate electric wires.            tration (MSA), the federal agency that
that tended to collapse without              Sparks from electrical equipment can           oversees coal mine safety, is currently
                                             ignite coal dust and methane gas, trig-        seeking public input on how to better

38                                               BeasleyAllen.com
supply miners and rescuers with equip-        ginia has already passed legislation—       JUDGE AWARDS DAMAGES IN WINDOW
ment such as breathing apparatuses and        after the recent disasters—that will help   WASHER’S FALL AND DEATH
communications devices, according to          on safety. But the real action has to
                                                                                             It is extremely important that workers
The Associated Press. In recent years,        come from Congress and for anything of
                                                                                          be properly trained and equipped with
however, MSA pulled Clinton-era initia-       substance to happen the Bush Adminis-
                                                                                          safety equipment before being put in
tives examining safety equipment and          tration must give its full support.
                                                                                          dangerous jobs.A case that occurred in
mine rescue operations off its regula-        Source: Associated Press
                                                                                          Kansas City is a good example of what
tory agenda. Key among the items with-
                                                                                          can happen when this isn’t done. Leslie
drawn were those dealing with oxygen
                                              JURY VERDICT IN LAWSUIT INVOLVING A         James was untrained and inexperienced
packs that miners carry and the ability       SEWAGE TANK COLLAPSE                        as a window washer when he fell more
of mine rescue teams do their jobs.
                                                                                          than 80 feet to his death.The judge who
These issues will be re-examined,               A Florida jury awarded $30 million
                                                                                          heard the case awarded the workers
according to documents obtained by            last month to construction workers
                                                                                          family $7.25 million in a wrongful-death
The Associated Press, which noted that        injured when a roof collapsed over a
                                                                                          case.The case was tried without a jury.
the Sago Mine accident “underscored           sewage tank they were building, plung-
                                                                                          The judge found Quality Window Clean-
the vital role that mine rescue opera-        ing some down six stories and impaling
                                                                                          ing Inc. of Kansas City, at fault for pro-
tions play in response to catastrophic        two on metal reinforcement bars.
                                                                                          viding       no    training, inadequate
mine incidents.’’ In withdrawing the          Twelve plaintiffs, including construction
                                                                                          equipment, and unsafe working condi-
items during its first term, the Bush         workers and their families, will receive
                                                                                          tions.The judge also noted in his ruling
Administration cited changing priori-         the money. The Superior Court jury
                                                                                          that the owner had agreed with the
ties and resource concerns. Miners’           spent several days deliberating damages
                                                                                          Occupational Safety and Health Admin-
safety advocates felt at that time that the   after finding four companies liable for
                                                                                          istration to provide training after
action stopped potentially important          the October 2001 collapse at a water
                                                                                          another of his window washers fell and
safety rules from being put in place. In      pollution control plant. Two workers
                                                                                          died in 1996. James, who was 25 years
the opinion of many safety advocates,         were impaled in the web of metal rods
                                                                                          old, fell eight stories July 20, 2000, from
MSHA should impose new emergency              and wet concrete, while others were
                                                                                          a Research Medical Center roof, where
rules immediately that could go into          left clinging to bars 50 feet above the
                                                                                          he was operating a roller system that
effect without further studies. While         ground, when scaffolding supporting a
                                                                                          held up scaffolding for two other
studies are good, action is needed now        partially finished roof gave way.
                                                                                          workers who were working below.
to make the mines safer.                        The suit, filed in 2002, alleged claims
                                                                                             According to witnesses, the roller
   One of the items withdrawn called for      based on negligence, defective products
                                                                                          system started to fall off the roof, and
a review of oxygen units miners are           and named several defendants. Jurors
                                                                                          James tried to grab it to save the two
required to wear or keep within 25 feet       found Harsco Corp., a Camp Hill, Penn-
                                                                                          other workers. Instead, the falling appa-
of their work area.The goal was to elimi-     sylvania, industrial services company,
                                                                                          ratus flipped James off the roof and into
nate defects and improve inspections of       75% liable for the collapse. Harsco pro-
                                                                                          the air. The two other workers fell a
the air packs and ensure that the             vided shoring materials used on the
                                                                                          lesser distance and lived, although one
machines were actually providing the          tank. The jury concluded that the
                                                                                          was disabled permanently.While safety
one hour’s worth of air that is required.     shoring materials were damaged and
                                                                                          rules called for James to wear a lifeline
Common sense says that extra units            inadequate, and that many of the
                                                                                          attached to a harness, he didn’t have
should be stored in the mines and             shoring frames had cracked welds. DYK,
                                                                                          one on and wasn’t provided one to use.
readily accessible. Another item the          Inc. erected the shoring and scaffolding
                                                                                          A third window washer for the
Clinton Administration had been               and was held 15% responsible for the
                                                                                          company also fell and died two years
reviewing, but which was withdrawn            accident. David Gowers Engineering,
                                                                                          after James. OSHA previously fined
during President Bush’s first term,           LLC, based in Selma, Oregon, was found
                                                                                          Mannschreck $2,700 for James’ death,
involved the deployment of mine               3% liable and Quality Shoring and Scaf-
                                                                                          but found no violations for the other
rescue teams. The Administration was          fold Inc., (since purchased by DYK) was
                                                                                          death that happened two years later.
looking at ways to boost the number of        found 7% liable.
                                                                                          James, a construction worker, was
teams available and in proximity to the       Source: Associated Press
                                                                                          between jobs at the time. He took the
mines. Mine operators rely on teams
                                                                                          window-washing job to make a timely
that are up to two hours away, which
                                                                                          child support payment. The newly
union officials say is too far. West Vir-
                                                                                          hired employee was given no training

                                                   BeasleyAllen.com                                                               39
before being put on a dangerous job.         reflect the demographics of the U.S.          FAMILY OF SLAIN NURSE SUES STATE OF
The result was his tragic death.             work force from ages 18 to 65, the            WYOMING
Source: Kansas City Star                     researchers said. Seven percent said they
                                                                                              The family of a nurse who was killed
                                             had consumed alcoholic beverages at
                                                                                           at the Wyoming Honor Farm is suing
                                             least once during a workday. Lunch was
TOO MANY AMERICAN WORKERS DRINK ON                                                         that state. The lawsuit claims that the
THE JOB                                      the preferred time to drink, according to
                                                                                           state prematurely moved a prisoner to
                                             the study, which was funded by the
                                                                                           the Honor Farm from the Wyoming
   A recent study by the University at       National Institute on Alcohol Abuse and
                                                                                           State Penitentiary, where he had been
Buffalo’s Research Institute on Addic-       Alcoholism. Overall, 15% of respondents,
                                                                                           imprisoned on a 1995 rape conviction.
tions has revealed some disturbing find-     who were promised confidentiality,
                                                                                           The lawsuit also claims that Honor Farm
ings. Just over 7% of American workers       reported being directly affected by
                                                                                           corrections officers were improperly
drink during their workday, mostly at        alcohol at work, either by drinking on
                                                                                           trained and supervised.The 30-year-old
lunch, and even more, 9%, have nursed a      the job or shortly before heading to
                                                                                           inmate is awaiting a second trial for
hangover in the workplace, according         work or working with a hangover. Nearly
                                                                                           allegedly killing the nurse.The first trial
to the study. Young, single men are          one in five workers, 19%, made it a
                                                                                           in November ended with a hung jury.A
related most often to workplace-related      monthly habit and 11% reported weekly
                                                                                           second trial is scheduled for April 10th.
drinking, especially managers, salespeo-     use or impairment.The NIAAA estimates
                                                                                           The lawsuit names as defendants the
ple, restaurant workers, and those in the    nearly 14 million people in the United
                                                                                           Wyoming Department of Corrections,
media.The results appear in the January      States abuse alcohol or are alcoholics.We
                                                                                           the State Penitentiary, and the Honor
issue of the Journal of Studies on           have handled a number of lawsuits
Alcohol. Principal investigator Michael      where drivers of company vehicles had
                                                                                           Source: Associated Press
Frone says the national study was meant      been drinking on the job.Apparently, use
to help managers develop workplace           of alcohol on the job is a major problem
policy on alcohol use and to open the        nationwide. It should be noted that toxi-     PENNSYLVANIA COURT ALLOWS WAL-MART
door to exploring the causes and effects     cology tests are not required for every       WORKERS TO SUE FOR OVERTIME
of workplace alcohol use. Frone, who is      incident, which could mean that alcohol
                                                                                              Recently, a judge in Pennsylvania
a research associate professor in the uni-   could actually be involved in more cases
                                                                                           approved a class action lawsuit on
versity’s Psychology Department, stated:     than those reported.
                                                                                           behalf of employees who work for Wal-
                                             Source: Insurance Journal
  Of all psychoactive substances                                                           Mart Stores, Inc. It is alleged that the
  with the potential to impair cogni-                                                      retail giant pressured the employees to
  tive and behavioral performance,           JURY VERDICT IN FAVOR OF A WORKER             work off the clock. According to the
  alcohol is the most widely used                                                          suit, the lead plaintiff had to work off
  and misused substance in the                  A federal jury awarded $26.3 million       the clock to meet sales quotas. The
  general population and in the              to an Ohio man who was left a para-           lawsuit alleges further that the lead
  work force.                                plegic when a heavy piece of equip-           plaintiff not only worked through lunch
                                             ment fell on him in Waterbury,                breaks, but was also required to work
  Elena Carr, who coordinates a U.S.         Connecticut.The U.S. District jury found      eight to twelve unpaid hours per month
Labor Department program to combat           in favor of the 34-year-old plaintiff after   after her shifts ended. Wal-Mart officials
workplace alcohol and drug use, made         nearly 16 hours of deliberation. The          have denied any wrongdoing in the
this observation:                            panel found Arpin Logistics Inc. and          case.The company asserts that the certi-
                                             Paul Arpin Van Lines at fault.The plain-      fication alone does not prove any viola-
  It slows down your reaction time,
                                             tiff, an independent trucker contended        tion of state or federal overtime laws. In
  it impairs your decision-making.
                                             that a faulty lift gate on the truck caused   fact, Wal-Mart has indicated that it will
  In close to 19% of on-the-job fatali-
                                             the 2001 accident.At the time, the plain-     appeal the class action certification.
  ties, the person who dies tests posi-
                                             tiff was delivering a workstation for            Now that the court has certified the
  tive for either alcohol or drugs or
                                             engineering students at a college in          case as a class action, approximately
                                             Waterbury.While it was being lowered          150,000 current or former employees
  In the study, employees around the         from the truck on the lift gate the 800-      who worked at Wal-Mart or Sam’s Club
country were asked about workplace           pound workstation tipped and fell on          in Pennsylvania since March 1998 may
alcohol use during the previous 12           top of the plaintiff, crushing his back.      be entitled to receive compensation for
months. The sample was designed to           Source: Associated Press

40                                                BeasleyAllen.com
unpaid overtime. Nearly identical              The willful citation was issued for        XV.
claims have been made by Wal-Mart           failure to provide employees with cave-       TRANSPORTATION
employees in other lawsuits filed           in protection, such as sloping or
around the country. Last month, a jury      shoring, when working inside a trench
awarded Wal-Mart employees $172             more than five feet deep.As previously        RECENT COURT CASES RAISE QUESTIONS
million for illegally denying lunch         reported, a willful violation is defined as   ABOUT TRUCKING SAFETY
breaks. Before that, Wal-Mart settled a     an intentional disregard of or plain indif-     Over the past several years a “disturb-
similar case for $50 million. Our firm is   ference to the requirements of the            ing pattern of dangerous activity” by the
currently handling a number of lawsuits     Occupational Safety and Health Act and        nation’s trucking industry has devel-
involving unpaid overtime for employ-       its regulations. The repeat violations        oped.We find that a good number of the
ees. For more information on these          include placing excavated materials and       fatalities resulting from trucking acci-
claims, you can contact us at 1-800-898-    equipment less than two feet from the         dents involve driver fatigue. During
2034 or visit our website at                edge of the trench and not providing          2004, 5,190 people were killed in truck
www.beasleyallen.com.                       adequate means to exit the trench. A          crashes, an increase of 154 fatalities
Source: Associated Press                    repeat violation is one in which an           over 2003. Additionally, in 2004, the
                                            employer has previously been cited for        number of truckers killed in crashes
                                            the same or a substantially similar viola-    increased by 5%.A number of cases we
COMPANY FOR SAFETY HAZARDS                  tion that has become a final order.           have handled indicate that truck driver
                                                                                          fatigue is a major safety problem. Some
   Site Concrete Inc., a Grand Prairie,
                                            BIRMINGHAM INDUSTRY FINED BY OSHA             studies, including two by the National
Texas-based, construction company has
                                                                                          Transportation Safety Board, indicated
been cited for a failure to protect            Federal labor officials have proposed      that truck driver fatigue is a factor in
employees from cave-in and other safety     $91,500 in fines for Sloss Industries,        30% to 40% of severe crashes. No motor
hazards at a Wylie, Texas, construction     located in Birmingham, Alabama, for           carrier driver is allowed to drive more
site.The Occupational Safety and Health     exposing workers to safety and health         than 11 cumulative hours after 10 hours
Administration (OSHA) has proposed          hazards at its coke oven operations.The       off duty, according to new regulations
penalties totaling $117,500. The            Occupational Safety and Health Admin-         passed by the Federal Motor Carrier
company, an underground utility con-        istration (OSHA) proposed the penalties       Safety Administration. The federal and
tractor that employs about 1,200            after an inspection conducted under           state governments need to take all steps
workers, was cited by OSHA for one          the agency’s site specific targeting          necessary to change the trends that are
alleged willful and two alleged repeat      program. Robert Sanchez, Birmingham           developing. Stronger enforcement is
violations following an OSHA inspec-        area director for OSHA, said:                 obviously needed. In Alabama, that
tion.At the time of the inspection, com-
                                                                                          means more state troopers being hired
pleted under OSHA’s National Trenching        Site specific targeting identifies
                                                                                          and trained so that highway patrolling
and Excavation Program, four workers          industries with high injury and
                                                                                          can be brought up to needed levels.
were installing a new valve on the water      illness rates. From that listing
main inside a seven-foot deep trench.         establishments are randomly
Kathryn Delaney, OSHA area director in        selected for inspection.                    TRUCK DRIVER CHARGED IN DEADLY CRASH
Dallas, says:                                  Sloss was cited for 12 serious cita-         A truck driver has been charged with
  Since 1998, this employer has             tions, with proposed penalties of             homicide in a crash that killed five
  been inspected by OSHA 16 times,          $74,000, for violations that included the     people and injured 29 others on a bus
  resulting in $231,510 in fines and        lack of safety guards on equipment and        carrying high school band students
  penalties. Exposing employees to          exposing workers to fire hazards. OSHA        home from a weekend competition.The
  unsafe working conditions is              proposed one repeat citation, with a          man’s tractor-trailer had swerved off an
  unacceptable. Employers must              proposed penalty of $17,500, for trip-        Interstate highway and jackknifed
  follow safety and health standards        ping and fall hazards.                        across the bus’ path before dawn on
  to prevent injuries and fatalities,                                                     October 16th.The charter bus slammed
  and are responsible for providing                                                       into the rig, killing the band’s director,
  a safe and healthful workplace for                                                      his wife, their 11-year-old granddaugh-
  their employees.                                                                        ter, the driver, and a student teacher.The
                                                                                          bus had been carrying 44 students,

                                                BeasleyAllen.com                                                                 41
teachers, and chaperones from                  was not disciplined by the employer.         suits against the plane’s maker, an
Chippewa Falls High School. The 23-            The manager said he did not have any         airline, three part makers, and a mainte-
year-old truck driver faces five counts of     reservations about Ellison driving a         nance company. The pilots were ferry-
homicide by negligent operation of a           truck for Terrible Herbst despite these      ing a Pinnacle Airlines CJR-200 regional
vehicle, as well as 11 counts of reckless      incidents.                                   jet from Little Rock, Arkansas, to Min-
driving causing great bodily injury and        Source: Associated Press                     neapolis in October 2004 when they
nine counts of reckless driving causing                                                     reported engine failure. The plane
injury.                                                                                     crashed in a residential area in Jefferson
                                               SUIT OVER FATAL TRUCK CRASH SETTLED
Source: Associated Press                                                                    City, but no one on the ground was
                                                  A lawsuit stemming from a 2004 fatal      injured. The lawsuits, filed in Broward
                                               highway crash was settled recently in        County, Florida, allege that heat damage
CRASH VICTIM                                   Monterey, California, for $4.5 million.An    in the engine, caused by a faulty oil
                                               18-wheeler, loaded with 79,000 pounds,       pump, was among the problems making
   A jury has ordered three companies          of produce fell onto a Chevrolet Malibu      it impossible for the pilots to restart the
owned by Terrible Herbst, a company            after braking to a stop.Three men were       engines.
that operates 80 convenience stores and        trapped inside the crushed sedan,               The Federal Aviation Authority and
gas stations in Nevada, to pay a total of      which was under the truck, for more          National Transportation Safety Board
$14.1 million to the family of a woman         than two hours while rescue workers          will try to determine what caused the
killed by a drunken driver operating a         sawed through the truck’s bed to free        crash.The pilots were the only people
Terrible Herbst industrial truck in 2001.      them. Eventually, the flattened Chevro-      aboard the 50-seat regional jet, which
Ms. Rosa Delegado was getting into her         let was hoisted out by rescue squads.A       they were taking to Minneapolis. Pinna-
car on a city street when Darwin Ray           medical doctor, who was a successful         cle Airlines Inc., based in Memphis,Ten-
Ellison drove the large truck into the 58-     businessman from Mexico, suffocated          nessee, is a regional carrier for
year-old grandmother from behind. Ms.          inside the crushed car and was dead on       Northwest Airlines Corp.According to a
Delegado was pinned against her                the scene. His two colleagues were           transcript from the cockpit voice
vehicle, run over, and killed. Her family      finally removed from the car and air-        recorder released during public hear-
filed a civil lawsuit in 2001 against Las      lifted from the crash scene to area hos-     ings in June, 10 minutes after the plane
Vegas-based Terrible Herbst and two            pitals.                                      reached its maximum altitude of 41,000
other defendants. A Clark County jury             Suit was filed against the Smart Trans-   feet, the pilots reported to air traffic
awarded the family $4.1 million in com-        portation, the driver and the owner of       controllers in Kansas City that they had
pensatory damages and $10 million in           the produce trailer. A California            lost engine power.
punitive damages to be paid by Terrible        Highway Patrol investigation of the acci-       The families contend General Electri-
Herbst Inc., Herbst Supply Inc. and ETT        dent revealed that on the day of the         cal hid problems with the type of oil
Inc.                                           accident, the 18-wheeler had three axle      pump in the plane from the builder,
   Plaintiffs proved at trial that Terrible    brakes that needed repair and the lining     Montreal-based Bombardier Aerospace
Herbst and the other defendants were           of one brake was actually cracked. Even      Corp., which is also named in the
negligent by hiring Ellison, who had a         if the brakes had been in good condi-        lawsuit, along with its parent company,
history of drinking. Terrible Herbst           tion, the driver ran a stop sign going 55    Bombardier Inc. The resulting heat
claimed Ellison was a temporary worker         to 60 mph.Truck records indicate that        damage from the low oil pressure pre-
who took the company’s truck without           the contract driver for Smart Transporta-    vented the blades of the jet engine from
permission.The driver pleaded guilty in        tion had been working long hours, had        turning, according to allegations in the
2001 to driving under the influence of         been working hard and was really not fit     lawsuit. Maintenance company Parker
alcohol causing death, which is a felony.      to drive. He had picked up produce and       Hannifin Corp., part makers Honeywell
He was sentenced to 5 1/2 to 20 years          was on his way to New York City and          International and KGS Electronics, and
in prison.The facilities manager for Ter-      was on a very tight schedule.                Northwest Airlines are also named as
rible Herbst testified at trial that Ellison                                                defendants.
had once come to work smelling of                                                           Source: Associated Press

beer. The manager also said that on            FAMILIES OF PILOTS KILLED FILE LAWSUIT
another occasion, Ellison and another
                                                 The families of two pilots killed when
temporary worker asked him for per-
                                               their regional jet crashed into a neigh-
mission to drink beer at lunch. Ellison
                                               borhood have filed wrongful death law-

42                                                  BeasleyAllen.com
SUITS FILED AGAINST AIRLINE IN FATAL         and it has voluntarily grounded its          larger cities are implementing bans on
CRASH OF SEAPLANE                            other four planes.                           hand-held cell phones to address
                                             Source: Associated Press                     obvious safety issues. NHTSA’s official
  Family members of the 19 passengers
                                                                                          policy on cell phone usage while
who died in a seaplane crash off Miami
                                                                                          driving is as follows:
Beach have filed a class action lawsuit      DRIVER CELL PHONE USE INCREASES
against the airline. The father of the                                                      The primary responsibility of the
pilot killed in the crash has also filed        A recent research note by the
                                                                                            driver is to operate a motor
suit against the airline.The seaplane that   National Highway Transportation Safety
                                                                                            vehicle safely. The task of driving
crashed, killing all of the people aboard,   Administration (NHTSA) indicates that
                                                                                            requires full attention and focus.
had fatigue cracks in both wings,            driver cell phone usage was up during
                                                                                            Cell phone use can distract drivers
according to a preliminary federal           2005.The National Occupant Protection
                                                                                            from the task, risking harm to
report. The right wing of the Chalk’s        Use Survey found that there were 6% of
                                                                                            themselves and others. Therefore,
Ocean Airways plane separated from the       drivers nationwide using hand held
                                                                                            the safest course of action is to
fuselage shortly before the December         phones during vehicle operation. This
                                                                                            refrain from using a cell phone
19th crash, and investigators had earlier    was up from 5% in 2004.The 2005 rate
                                                                                            while driving.
found cracks on the right wing’s             is based on the finding that there were
                                             974,000 vehicles on the road at any             I tend to agree with this statement.
support beam. But the new report by
                                             given daylight moment that were being        While our firm has seen numerous
the National Transportation Safety Board
                                             driven by someone on a hand-held             cases where cell phone use was clearly
revealed that the left wing had fatigue
                                             phone. This figure did not include           a factor in causing a highway crash, I
cracks as well. The 58-year-old G-73
                                             drivers who were using hands-free            believe that it will take more than
Turbine Mallard plummeted into the
                                             phones. This survey also included the        studies to convince the public on this
ocean minutes after taking off for the
                                             first nationwide probability based esti-     issue. But, common sense tells me that
Bahamas.The safety board’s final report
                                             mate of the incidents of “hand-held          using a cell phone while driving a
will be completed later this year.
                                             device” use while operating a vehicle.       motor vehicle is a serious distraction. I
  The class action lawsuit alleges that
                                             The survey found that 0.2% of drivers        have to believe that talking on a cell
Chalk’s Ocean Airways failed to prop-
                                             were dialing phones, checking PDAs           phone while driving a motor vehicle is
erly maintain the seaplane. There is a
                                             (Palm Pilot, Blackberry), or otherwise       very dangerous.The Alabama Legislature
$50 million insurance policy available
                                             manipulating some type of hand-held          will be facing an effort in the current
to cover all claims. It appears that
                                             device while driving. Although not           session to ban cell phone use by drivers
Chalk’s Ocean Airways did not insti-
                                             included in the survey, it would be inter-   under 18 years of age. It will be interest-
tute detailed inspections of its fleet
                                             esting to see the percentage of vehicles     ing to see how that effort fares.The Leg-
after finding corrosion in the wing of
                                             with a DVD player in use while a             islature has rejected similar efforts in
one of its planes in the early 1990s.
                                             vehicle was in operation. I have even        the recent past that would have applied
Chalk’s, which flies between Florida
                                             heard of some after-market companies         to all drivers. Frankly, I don’t believe a
and the Bahamas, has lost hundreds of
                                             mounting DVD screens directly in the         limitation of this sort is any more
thousands of dollars in recent years,
                                             steering wheel after removal of the          needed for teenagers than it is for
according to data from the federal
                                             airbag.A report by the Insurance Insti-      drivers of all ages.
Bureau of Transportation Statistics.The
current owner, Jim Confalone, bought         tute for Highway Safety found that all
Chalk’s after it was forced into invol-      drivers are four times more likely to be
                                                                                          STATES SLOW TO MOVE TOWARD SAFETY FOR
untary bankruptcy in 1999 under pre-         involved in a highway crash with             YOUNGER DRIVERS
vious management when creditors              injuries when they are using a cell
                                             phone.This study revealed that the risk        Advocates for Highway and Auto
sued the airline. The Federal Aviation
                                             of crashes was the same for hand-held        Safety recently released its 3rd annual
Administration has grounded all sea-
                                             and hands-free phones.                       highway safety report entitled, “2006
planes similar to the Chalk’s plane
                                                Currently, no states have an outright     Roadmap to State Highway Safety Laws-
until they are inspected. About 25
                                             ban on cell phone usage. A few states        Players, Politics and Progress.” That
other Grumman G-73 seaplanes are in
                                             have restrictions on the manner of use,      report rates each state and the District
operation, according to FAA officials.
                                             such as requiring at least one hand on       of Columbia on their progress in adopt-
Chalk’s was the only one to operate
                                             the steering wheel at all times. Some        ing 14 essential laws to reduce the
the 1940s-era aircraft commercially
                                                                                          number one killer of Americans

                                                  BeasleyAllen.com                                                                43
between the ages of four and 34—               safety laws at a time when deaths              States were rated on seven basic
highway crashes.The new study found            and injuries continue unabated.              impaired driving laws. In 2005, only
little to no progress in enactment of          Most laws are languishing in a sea           seven of the impaired driving laws rec-
these 14 laws, despite 6.2 million motor       of political complacency in state            ommended by Advocates were passed
vehicle crashes in 2004 resulting in           capitals as bills fail to be intro-          by any of the 50 states: two Child
42,636 deaths, 3 million injuries, and an      duced, die or are bottled up in leg-         Endangerment (Massachusetts and
economic loss of $230 billion nation-          islative committees or are                   Montana); two High Blood Alcohol Con-
wide. Georges Benjamin, M.D., execu-           weakened by opponents.                       centration (BAC) (Massachusetts,Texas);
tive director of the American Public                                                        three Open Container (Colorado,
                                                There is still a great deal that legisla-
Health Association, stated:                                                                 Indiana, Montana); and one Repeat
                                             tive bodies need to address. The
                                                                                            Offender law (Massachusetts). In 2004,
  This is a public health epidemic by        Roadmap Report found that:
                                                                                            40% of deaths on our highways involved
  any measure and a political crisis
                                             • 28 states still need a primary enforce-      drunk driving. Jackie Gillan, vice-presi-
  in our state capitals.
                                               ment seat belt law. South Carolina was       dent of Advocates, stated:
  Advocates has identified 14 basic laws       the only state to enact such a law in
                                                                                              Enacting highway safety laws in
that each state should enact to signifi-       2005. More than half of those killed in
                                                                                              state legislatures is beginning to
cantly reduce highway deaths and               motor vehicle crashes are unbelted.
                                                                                              look like a board game. A few
injuries, such as:
                                             • 30 states still need an all-rider motor-       states move forward, many states
• a primary enforcement seat belt law,         cycle helmet law. Since 1997, motor-           are stuck in the same place while
                                               cycle fatalities have jumped a                 other states jump around and
• an all-rider motorcycle helmet law,
                                               staggering 89%, yet no state adopted           sometimes go backwards. The
• a booster seat law covering children         an all-rider helmet law in 2005.               winners and losers are American
  up to age 8,                                 Fifteen state legislatures considered          families but governors and state
                                               helmet repeal measures. States that            legislators are playing with their
• a four-point Graduated Drivers                                                              lives. Last year’s state legislative
                                               have repealed their all-rider laws have
  License program for new teen drivers,                                                       activity can best be characterized
                                               seen a significant increase in deaths.
  and                                                                                         by distraction, inaction and
                                               According to Advocates’ 2004 Lou
• seven drunk driving countermea-              Harris poll, 82% of Americans support          retraction.
  sures.                                       all-rider helmet laws.
                                                                                               Protecting the health and safety of
  The report found that no state had all     • 17 states need a booster seat law; 39        families on our streets and highways in
14 traffic safety laws, and only 16 states     states still need to upgrade their           states across the country should be a
and District of Columbia earned a good         booster seat law to protect children         high priority.With the majority of state
passing safety rating, which is green.The      up to age 8 or 80 pounds. Last year          legislatures, including Alabama, having
green states were Alabama, California,         only two states (WA and WV) enacted          opened their 2006 sessions last month,
Georgia, Illinois, Indiana, Louisiana,         Advocates’ recommended booster               it is hoped that this report will be
Maryland, New Jersey, New Mexico,              seat law.                                    received favorably. Advocates sent the
New York, North Carolina, Oklahoma,                                                         report to the nation’s governors and
                                             • 49 states do not protect teen drivers
Oregon, South Carolina,Tennessee, and                                                       urged them to accelerate adoption of
                                               with an optimal Graduated Drivers
Washington, plus the District of Colum-                                                     these basic highway safety laws to
                                               Licensing (GDL) program. This past
bia. Four states, Alaska, Arkansas, South                                                   ensure that all 14 laws are uniformly in
                                               year only one state - Nevada - has
Dakota and Wyoming, earned a danger                                                         effect across the nation. Advocates’
                                               enacted all four elements of a com-
rating of red, which means a state is                                                       report divided the 14 model laws into
                                               prehensive Graduated Drivers Licens-
falling behind. Thirty (30) states                                                          four issue categories.
                                               ing (GDL) program: in the learner’s
received a caution rating of yellow,                                                        • Occupant Protection (2 laws):
                                               permit stage, a six-month holding
which means a state needs improve-                                                            Primary Enforcement Seat Belt Law
                                               period and 30-50 hours of adult-
ment. Judith Lee Stone, president of                                                          and All-Rider Motorcycle Helmet Law.
                                               supervised driving; in the intermedi-
Advocates, observed:
                                               ate stage, a 10:00 p.m. to 5:00 a.m.
                                                                                            • Child Passenger Safety (1 law): Child
  This year’s scores show that 34              nighttime driving restriction and a
                                                                                              Booster Seat Law for ages 4 to 8.
  states lack fundamental traffic              passenger restriction.

44                                               BeasleyAllen.com
• Optimal Graduated Driver Licensing         driving causing death. If convicted, he       way to help his sister who had locked
  (GDL) Program (4 laws): 6-Month            could be sentenced to 16 years in             her keys in her car at her place of
  Holding Period, 30-50 Hours Super-         prison for the accident that occurred         employment. The defendant’s vehicle
  vised Driving, Nighttime Driving           just before 3 a.m. on November 14,            was equipped with a “black box,” which
  Restriction and Passenger Restriction.     2004, when he lost control of his car,        reportedly indicated that the defendant’s
                                             veered off an interstate highway and          car was going 90 miles per hour seconds
• Impaired Driving (7 laws): Repeat
                                             crashed into a roadside asphalt roller.       before colliding with Johnson’s car.
  Offender, Open Container, High BAC,
                                             Neither the driver nor a 16-year-old pas-        Based on observations by investiga-
  Mandatory BAC Testing for Drivers
                                             senger in the front seat were seriously       tors from the Major Crash Investigation
  Killed in Fatal Crashes, Mandatory
                                             hurt. But the impact ejected their back-      Unit, the defendant exhibited the odor
  BAC Testing for Drivers who Survive
                                             seat passengers—fellow high stu-              of alcoholic beverages and appeared to
  Fatal Crashes, Sobriety Checkpoints,
                                             dents—and they were killed.                   be under the influence of alcoholic bev-
  and Child Endangerment Laws.
                                                The driver’s blood-alcohol content         erages a short time after the actual
   In each category, states are given one    after the crash measured 0.14.The level       crash. Blood was taken and the defen-
of three ratings based on how many           at which drivers in Indiana are consid-       dant reportedly had a blood alcohol
optimal laws they have. Placement in         ered intoxicated is 0.08.The suits claim      content of .065. Accident reconstruc-
one of the three sections was based          that 21st Amendment was negligent             tion and subsequent testing on the
solely on whether or not a state has         because clerks at the store allowed the       “black box” inside the Buick showed
adopted a law as defined in the report.      teenager to buy alcohol without               that the defendant was traveling at
The ratings weren’t based on any evalu-      showing any proof of his age.The fami-        approximately 90 miles per hour at the
ation of a state’s highway safety educa-     lies filing this lawsuit want their actions   time of impact. It was later learned that
tion enforcement program or on fatality      to influence the behavior of teenage          he had fled a traffic stop by Metropoli-
rates. Partial credit was given for states   drinkers and those who supply them.           tan Police about 10 minutes before the
with booster seat and teen driving laws      Laws are enacted to protect minors            fatal crash. The defendant reportedly
that did not meet Advocates’ optimal         essentially from themselves.While some        had two previous impaired driving con-
definition. It appears that Advocates has    might question it, high school students       victions. This is a person who had no
done a very good job.The report and a        don’t usually have the maturity of judg-      business under the wheel of a car.
summary can be found on the website          ment that most adults have. Unfortu-          Source: Insurance Journal

for Advocates for Highway and Auto           nately, they don’t always fully appreciate
Safety (www.saferoads.org).                  the dangers and hazards associated with
                                                                                           FERRY PILOT GETS 18 MONTHS FOR FERRY
Source: The Insurance Journal                alcohol and the consequences of their         BOAT CRASH
                                             behavior.The sale of alcoholic beverages
                                             to minors by retail establishments is a         Richard Smith, the pilot at the helm of
                                             nationwide problem. Lawsuits like the         the Staten Island ferry during a 2003
   The parents of two teenagers killed in    one mentioned above are necessary to          crash that killed 11 people, has been
a drunken-driving accident have sued         help put a stop to such sales.                sentenced to 18 months in prison. As
the liquor-store chain where the 17-         Source: Indy Star                             second man, the city’s former ferry
year-old driver of the vehicle involved                                                    director, Patrick Ryan, was also sen-
bought alcohol. It is alleged that clerks                                                  tenced to one year in prison. Smith
                                             BLACK BOX AIDS POLICE IN DEATH
never checked the teenager’s ID. In the      INVESTIGATION                                 pleaded guilty in 2004 to negligent
lawsuit, parents of the two teenagers                                                      manslaughter and concealing his high
who were killed contend that operators         A Maryland man was sentenced to             blood pressure and a prescription for a
of a 21st Amendment store share              100 months in prison in connection            powerful painkiller on a Coast Guard
responsibility with the driver for the       with a fatal high speed car crash in          pilot’s license renewal form. Prosecu-
deaths.The families say that the 17-year-    Washington, D.C. in 2004. A fatal high        tors have said either disclosure should
old driver bought the beer and vodka at      speed crash took the life of John C.          have disqualified him from service. Ryan
the liquor store that he and three           Johnson, Jr. on November 30, 2004. A          pleaded guilty to related charges last
friends drank before deciding to drive       plea of guilty to one count of involun-       year, admitting he failed to enforce a
to Chicago in November 2004. The             tary manslaughter was entered by the          rule requiring ferries be operated by
driver, now 18, is facing prosecution as     driver. At the time of the collision,         two pilots whenever docking.
an adult on two counts of drunken            Johnson, a financial planner, was on his        The ferry crash was one of the worst

                                                  BeasleyAllen.com                                                               45
mass-transit disasters in New York              such behavior on the road.There is also        that because the number of young RNs
history. On a cold winter day, the ferry        a sample worksheet for calculating the         has decreased so dramatically over the
Andrew J. Barberi set out on a routine          costs of motor vehicle crashes to              past two decades, enrollment of young
run across New York Harbor from lower           employers. To develop the guidance,            people in nursing programs would have
Manhattan with about 1,500 passen-              OSHA joined forces with NHTSA, and             to increase by at least 40% annually to
gers.At the time, Smith was alone in the        NETS, a nonprofit organization dedi-           replace those expected to leave the
wheelhouse. As the vessel approached            cated exclusively to traffic safety in the     workforce through retirement. Efforts
Staten Island, Smith—suffering from             workplace.The motor vehicle guidance           must be made to recruit more young
extreme fatigue and admittedly on               is available from OSHA’s publications          people to fill the need for nurses. It will
painkillers—blacked out.The ship hit a          page on the web, (www.osha.gov) or             take a concerted effort by government,
concrete maintenance pier at full speed,        can be ordered by calling the publica-         the healthcare industry, and educational
injuring dozens of passengers. When             tions office at (202) 693-1888.                institutions to correct the shortage of
folks ride on a ferry, a bus, a train, or any   Source: The Insurance Journal                  nurses.
other form of public transportation,
they expect the operator to be properly
                                                XVI.                                           ALABAMA DOESN’T FARE WELL IN TRAUMA
trained, properly monitored, and prop-
                                                                                               CARE REPORT
erly supervised. It is also necessary for       HEALTHCARE
employers to do a thorough back-                ISSUES                                            There is another area of healthcare
ground check on persons who apply for                                                          where problems are evident. In a recent
such jobs.This case is one where none                                                          report, Alabama received very low
of those requirements were met and the          A SERIOUS HEALTHCARE SHORTAGE                  marks concerning emergency medical
results were very bad.                                                                         care. In fact,Alabama’s emergency care
                                                   We are facing a chronic national
Source: Associated Press                                                                       was said to be some of the worst in the
                                                nursing shortage in the United States,
                                                                                               nation.This is in spite of having doctors
                                                and this should be a major concern to
                                                                                               and nursery workers in this type care
OSHA OFFERING NEW GUIDELINES TO HELP            all of us. In my opinion, this is a health-
REDUCE MOTOR VEHICLE ACCIDENTS                                                                 who are well trained and who provide
                                                care crisis in the making.There are cur-
                                                                                               excellent care.According to the report,
                                                rently approximately 2.7 million
  The Occupational Safety and Health                                                           the problem arises because our state
                                                registered nurses in the U.S. It is pro-
Administration, the National Highway                                                           has too few trauma centers, emergency
                                                jected that there will be an overall
Traffic Safety Administration and                                                              rooms, and board-certified physicians.
                                                shortage of 808,416 Registered Nurses
Network of Employers for Traffic Safety                                                        The report also claims that an environ-
                                                (RNs) in the U.S. by the year 2020.
have developed a new set of guidelines                                                         ment that encourages medical malprac-
                                                Presently, nurses are in great demand all
for employers and employees who use                                                            tice lawsuits is a factor. I take issue with
                                                over the country.There are 45,550 RNs
motor vehicles for work purposes.The                                                           that assessment because it is totally
                                                in Alabama, with a vacancy rate for
new guidelines are designed to show                                                            false. In any event, the American College
                                                bedside RNs in our state of 18,220.The
companies how safe-driving practices                                                           of Emergency Physicians ranks Alabama
                                                projected overall RN shortage in
and safety-conscious behavior can help                                                         41st out of the 50 states and the District
                                                Alabama by 2020 is 8,353.
employees avoid tragedy.That’s certainly                                                       of Columbia, giving it a “D+” overall in
                                                   My wife, Sara, who graduated from
a worthy goal.                                                                                 what the college says is the nation’s
                                                Emory University with a degree in
  The 32-page Guidelines for Employers                                                         first-ever report card on emergency
                                                nursing, taught nursing for a while at
to Reduce Motor Vehicle Crashes offers                                                         care. Dr.Angela Gardner, chairwoman of
                                                Troy University School of Nursing. She
information to help employers design                                                           the task force that wrote the report,
                                                tells me that it takes a very special
an effective driver safety program in                                                          made this observation:
                                                person to work as a nurse today. Based
their workplace. It features a 10-step
                                                on my limited knowledge, I know that             If Alabama’s emergency medical
program outlining what an employer
                                                nurses are an essential part of the health-      system gets a D+ on an average
can do to improve traffic safety per-
                                                care system. It is quite clear that a con-       day, how can it ever be expected to
formance and minimize the risk of
                                                centrated effort must be made to address         provide expert, efficient care
motor vehicle crashes. The guidelines
                                                this growing problem. If this health care        during a natural disaster or ter-
include a detailed section on the causes
                                                crisis is not addressed, the quality of care     rorist attack?
of aggressive, distracted, drowsy and
                                                will suffer greatly. It has been projected
impaired driving, and tips for avoiding

46                                                   BeasleyAllen.com
   The report based its rankings on 50         Journal of the National Cancer Insti-         it is to give the correct drug to a
sets of criteria within four sections: resi-   tute (JNCI), have found that statins do       patient.The little boy died from a drug
dents’ access to emergency care, quality       not reduce the risk of cancer.                mixup an autopsy revealed, and not the
of care and patient safety, public health         The most recent studies that disprove      lead-poisoning treatment that was
and injury prevention, and the state’s         statins’ anti-cancer benefit were ran-        attempted to ease his disorder, accord-
medical liability environment.Alabama          domized studies, studies in which par-        ing to a federal health official who
ranks 45th for access to emergency care,       ticipants are selected by chance.These        reviewed the boy’s autopsy results.
and 49th for its lack of trauma centers        studies are believed to provide the           Instead of a synthetic amino acid that
and its shortage of board-certified emer-      strongest evidence. In the JAMA study,        treats lead poisoning, the child was
gency physicians. The report also said         researchers compiled data from 26 ran-        given a medication that removes
the state ranks 44th for its high number       domized studies involving more than           calcium, according to Dr. Mary Jean
of alcohol-related traffic fatalities, and     73,000 patients.The researchers in the        Brown, chief of the Centers for Disease
43rd in the nation for its per-capita          JAMA study found that statins have a          Control and Prevention’s lead poisoning
expenditure for Medicaid.                      neutral effect on cancer and cancer           prevention branch. It was described as
   How the report could cite medical           death risk in randomized controlled           “a case of look-alike/sound-alike medica-
malpractice lawsuits as one of the             trials. Furthermore, the JAMA study           tions.” The drug “acted as a claw” that
causes of the emergency room prob-             found that “no type of cancer was             pulled too much calcium from the
lems is beyond me. The courts are              affected by statin use and no subtype of      child’s blood, causing an emergency
clearly not guilty.Alabama is one of the       statin affected the risk of cancer.” In the   event.
hardest places in the country for a            JNCI study, researchers looked at data           The child was given Disodium EDTA,
person to win a medical malpractice            from more than 132,000 patients               instead of Calcium Disodium EDTA.The
lawsuit. Anybody who will simply take          enrolled in the cancer prevention study.      treatment the child was receiving, called
the time to check the court records will       The JNCI study was a little more spe-         chelation therapy, is FDA-approved for
find that there are very few medical           cific in that it analyzed the effectiveness   lead poisoning. The therapy has not
malpractice lawsuits even filed in             of statins in treating and preventing col-    been proven to help autistic patients,
Alabama.They will also find that a very        orectal cancer. Like the JAMA study, the      although some parents and doctors
small percentage of those filed are actu-      JNCI study found no evidence that             advocate it because they believe autism
ally won by the person suing.Very few          statin use is effective in treating or pre-   is caused by heavy metals. The child
of the cases filed are settled without a       venting cancer.                               died on August 23rd in his doctor’s office
trial. All of this makes that part of the         I had hoped that the study would           after his third chelation treatment.The
report highly suspect. I would challenge       have shown that it had a beneficial           autopsy report was reviewed by a
those responsible to check with all            effect concerning cancer, but that            doctor for the CDC. It’s extremely
available sources and find out the truth.      turned out not to be the case. C. Michael     important to make sure that the “right”
Incidentally, our firm doesn’t handle          White, a professor of pharmacy at the         medication prescribed is given to any
medical malpractice cases.                     University of Connecticut at Storrs and       patient. Quite often drugs come in pack-
Source: Montgomery Advertiser                  an author of one the studies, observed:       ages that look alike and with names
                                                                                             that actually sound alike. Extra precau-
                                                 We were very hopeful that we
                                                                                             tion must be taken in every instance for
CHOLESTEROL DRUGS DON’T FIGHT CANCER             would verify that there was an
                                                                                             obvious safety reasons—a mistake can
                                                 anti-cancer effect. We ended up
  Statins, which are used to lower cho-                                                      cost a life—and that’s exactly what hap-
                                                 showing no change in cancer or
lesterol, are the most commonly pre-                                                         pened in this case.
                                                 cancer death.
scribed medications in the United                                                            Source: Associated Press

States. Over the past few years non-ran-       Sources: Newsday and Associated Press

domized studies have suggested that                                                          STUDY OF HEART ATTACKS FINDS RISK IN
these drugs also reduce the risk of                                                          USE OF BLOOD THINNERS
                                               DRUG MIXUP RESULTS IN YOUNG BOY’S
cancer because of their powerful anti-         DEATH
inflammatory activity. But, two recently                                                       Patients being treated for heart
published studies, one published in the          A recent incident involving a 5-year-       attacks involving narrowed arteries and
Journal of the American Medical Asso-          old autistic boy, who was undergoing          clots that reduce blood flow to the
ciation (JAMA) and the other in the            chelation therapy and received the            heart are often given overdoses of pow-
                                               wrong drug, points out how important          erful blood-thinning drugs in the emer-

                                                    BeasleyAllen.com                                                                47
gency room, increasing their risk of            A separate study found that having a       in question was one of the largest and
serious bleeding, a study has found.          sibling with heart disease might be a        oldest GE plants in the country. It was
Excessive bleeding occurred at catheter       bigger predictor of a person’s own risks     used to make electric motors, gas tur-
sites, from existing stomach ulcers, and      than a parent’s health history. Family       bines, wire and cable, and other prod-
in the brain, where it was particularly       history, genes, and lifestyle factors are    ucts. Last year, the State of New York
dangerous, according to Dr. Karen             known contributors to heart disease,         gave final approval to General Electric
Alexander, a researcher at Duke Univer-       and it may be that siblings are more         remediation plan, which reportedly has
sity and the lead author of the study.        similar to each other than to their          already cost GE about $16 million. Phar-
This study was published in November          parents when it comes to lifestyle.          macia acquired Monsanto in 2000. Mon-
of last year in The Journal of the Ameri-     Source: New York Times                       santo then was spun off as an
can Medical Association. Of 30,136                                                         independent agricultural products and
heart patients treated last year at 387                                                    technology company in 2002.
hospitals in the United States, 42% were      XVII.                                        Source: Reuters News Service

given excessive doses of blood thinners.      ENVIRONMENTAL
Those given extra amounts of two              CONCERNS                                     TWELVE STATES OPPOSE BUSH PLAN ON
blood thinners—low molecular weight                                                        POLLUTION
heparin and glycoprotein IIb/IIIa block-
ers, which are sometimes called super-        GENERAL ELECTRIC WORKERS SUE                   The Bush Administration is trying
                                              MONSANTO OVER PCBS
aspirin—had about a 30% greater                                                            hard to make it easier for industry to get
chance of major bleeding than those             More than 500 General Electric Co.         away with polluting our environment.
given the recommended dose.                   employees have sued Monsanto Co.,            Attorneys General in 12 states say that
   The study suggests that 15% of the         along with two related companies,            the Administration’s plan to ease rules
bleeding episodes were from overdoses         claiming they were exposed to toxic          on reporting legal toxin releases would
and might have been avoidable. Heparin,       chemicals manufactured for decades by        compromise the public’s right to know
low molecular weight heparin, and the         Monsanto. The product liability suit         about possible health risks in their
glycoprotein blockers, which are              names Monsanto, Pharmacia, which is          neighborhoods. In a letter to the U.S.
injected or given intravenously, are effec-   now owned by Pfizer Inc., and bankrupt       Environmental Protection Agency (EPA),
tive at helping to prevent clots and          Solutia Inc. It was filed in mid-Decem-      the state officials say the proposals,
further heart damage. Dosages are com-        ber by 590 current employees of a            which include raising some reporting
puted according to age, sex, weight, and      General Electric plant in Schenectady,       thresholds and moving from annual to
kidney function, and sometimes require        New York. The suit claims personal           biennial reports, would have the great-
a calculator. The emergency room              injury and fear of future disease related    est harm in low-income neighborhoods
setting makes quick decisions necessary       to contamination by polychlorinated          where polluting facilities are often
by the doctors and nurses in many             biphenyls (PCBs), which were found to        located. The Bush Administration pro-
cases. Emergency room personnel often         be harmful to human health and banned        posed the changes in September as a
find themselves facing emergency situa-       by Congress in 1978.                         way to reduce the regulatory burden on
tions where time is of the essence. Study       The suit claims that Monsanto knew         companies by allowing some to use a
participants who got overdoses had            of the hazards of PCBs, but continued to     short form when they report their pol-
slightly longer hospital stays and higher     make the chemicals because of their          lution to the EPA’s Toxics Release Inven-
death rates than those who received the       profitability. Monsanto stopped making       tory Program. New York Attorney
recommended doses. The researchers            the chemicals nearly 30 years ago.The        General Eliot Spitzer said:
concluded that more research on the           lawsuit claims the hazardous chemicals         This EPA move appears to be yet
issue was needed. Dr. Robert Bonow, a         have been leaking from creek beds and          another poorly considered notion
former president of the American Heart        landfills. Interestingly, Monsanto says        to appease a few polluting con-
Association, made this observation:           that any liability most likely rested with     stituents at the expense of a valu-
  Even giving the right drug at the           General Electric, which was responsible        able program.
  right dose increases the risk of            for disposal of the chemicals. Monsanto
                                              spun off its chemicals business as              Also signing the letter were the attor-
  bleeding, and giving too low a
                                              Solutia in 1997. Solutia filed for bank-     neys general of California, Connecticut,
  dose could increase patients’ risk
                                              ruptcy protection in 2003. The facility      Illinois, Iowa, Maryland, Massachusetts,
  for clot-related damage.
                                                                                           New Hampshire, New Jersey, New

48                                                 BeasleyAllen.com
Mexico, Vermont, and Wisconsin. Wis-          very much on point. Even though parts              5,000 pounds instead of 500
consin Attorney General Peggy Lauten-         of the editorial are a little bit dated, it is     pounds — before triggering
schlager observed:                            set out in full below for your edification         requirements to report full
                                              and consideration.                                 details of how much was
  The public has a fundamental
                                                                                                 released and where it went.
  right to know what hazardous
  materials their children and fami-          DON’T DILUTE POLLUTION LAW                       • Permit the withholding of infor-
  lies are being exposed to.                                                                     mation on low-level production
                                                Smell something funny? It might                  of persistent and potentially
   The proposed changes, which require
                                                be poisonous emissions wafting                   deadly poisons such as lead and
congressional approval, would exempt
                                                from a nearby manufacturing                      mercury that build up in
companies from disclosing their toxic
                                                plant. Or it might be the odor sur-              people’s bodies.
pollution if they claim to release fewer
than 5,000 pounds of a specific chemi-          rounding a plan being pushed in                • Require reports only every other
cal—the current limit is 500 pounds—            Washington that would make it                    year instead of every year.
or if they store it onsite but claim to         harder for neighbors and local
                                                officials in hundreds of communi-              The rationale is to ease the paper-
release “zero” amounts of the worst pol-
                                                ties to know what potentially                  work burden on business, particu-
lutants.The chemicals involved include
                                                deadly pollution risks they’re                 larly what EPA officials like to call
mercury, DDT, PCBs, and other chemi-
                                                being exposed to. Twenty years                 “mom-and-pop shops” and others
cals that persist in the environment and
                                                ago, in response to demands from               that together account for less than
work up the food chain. Companies
                                                public safety officials and ordi-              1% of the nation’s toxic emissions.
must report any storage of dioxin or
                                                nary citizens across the country,              But a review of the latest inven-
dioxin-like compounds, even if none are
                                                Congress passed the Emergency                  tory, including information that
released.The inventory program began
                                                Planning and Community Right-                  would no longer be available
under a 1986 community right-to-know
                                                to-Know Act. It came in the wake               under the new rules, shows that
law. If Congress agrees, the first year the
                                                of the worst industrial accident in            many of these facilities are in or
changes could be possible would be
                                                history, a chemical spill at a U.S.-           near residential areas—many
2008. EPA officials say communities will
                                                owned insecticide plant in India               with large low-income or minority
still know about the types of toxic
                                                that killed more than 15,000                   populations.And many are in fact
releases, but not some details about
                                                people, and a serious chemical                 arms of major corporations such
how each chemical was managed or
                                                accident at the same company’s                 as Pepsi, Clorox, Raytheon and U.S.
released.A three-part series by The Asso-
                                                plant in West Virginia. The law                Gypsum. Even the business com-
ciated Press in December that analyzed
                                                mandated a publicly accessible                 munity is divided as to whether
EPA air pollution data for neighbor-
                                                annual report, known as the                    this “relief” is necessary or desir-
hoods nationwide underscored the
                                                Toxics Release Inventory, on poi-              able. Claims of the supposed costs
need for full and frequent disclosure.
                                                sonous substances being pumped                 to business of complying with
Source: Associated Press
                                                into the air, water and ground                 the reporting requirements have
                                                by refineries, chemical plants                 been hotly disputed. Emergency
THE BUSH ADMINISTRATION IS A FRIEND OF          and others ranging from food                   response officials have joined envi-
POLLUTERS                                                                                      ronmental activists in warning
                                                processors to makers of kitchen
                                                countertops. By spotlighting where             against reducing the reporting
   As mentioned above, there has been a
                                                dangerous pollutants come from,                requirements. Many say that more,
strong push by the Bush White House to
                                                it has helped reduce toxic chemi-              not less, information is needed on
further weaken our nation’s pollution
                                                cal releases by almost 65% over                toxic releases. They point to inci-
control laws and regulations.That is the
                                                the past two decades.                          dents such as the chemical soup
wrong thing to do and it shouldn’t go
                                                                                               that washed through New Orleans
unchallenged.Without a doubt, the Bush
                                                But now, under pressure from busi-             in the wake of Hurricane Katrina.
Administration has been the best friend
of industries that pollute our environ-         ness, the Environmental Protection             Friday is the deadline for public
ment of any administration in my life-          Agency (EPA) is proposing to:                  comment on key elements in the
time. The USA Today had an excellent            • Allow polluters to release 10                proposed changes, after which EPA
editorial in its January 11th issue that is       times as much toxic material —               will consider whether to go ahead

                                                  BeasleyAllen.com                                                                 49
  with this version of what it calls            to get a confirmed complaint, especially      increase in the cases of leukemia. The
  “burden reduction.” After two                 on an odor emission.While some of our         affected area was added to the federal
  decades, any bureaucratic require-            readers may not think this is a problem,      Superfund list in 1983. However, the
  ment is ripe for review. But the              I can assure you that it’s a big problem if   federal Environmental Protection
  sniff test for overhauling the Toxics         your house is near the plant and you          Agency gave the site a clean bill of
  Release Inventory should be the               have to deal with the odor on a regular       health in 1994 and removed it from the
  benefits or risks to public health,           basis. A spokesperson for a local envi-       list. But as additional contamination has
  not the financial gains for pol-              ronmental group lobbying for cleaner          been found, the company has had to
  luters.                                       emissions made this assessment:               return to the site on several occasions.
USA Today — January 11, 2006                                                                  In September, Ford signed a settlement
                                                  I am hopeful that we will see that
   It is very clear that the polluters have                                                   agreement with the federal agency to
                                                  this does make a change, but I
tremendous influence over those in the                                                        test the site again and devise a compre-
                                                  think we will have to continue to
White House who control President                                                             hensive cleanup plan.
                                                  monitor the industry to make
Bush. In my opinion, the American                                                             Source: New York Times
                                                  sure the equipment they have is
people don’t want the EPA to take
                                                  installed properly…and I do
major steps backward on environmental
                                                  encourage them to use less toxic            XVIII.
issues. If you agree, get involved and let
the politicians you send to Washington
                                                Source: Contra Costa Times
                                                                                              THE CONSUMER
know how you feel. I recommend that                                                           CORNER
you contact your Senators and members
of Congress and ask for their help in           RAMAPOUGH INDIAN TRIBE SUES FORD
this most important fight.                                                                    BEWARE OF TAX RELATED INVESTMENT
                                                   The Ramapough Mountain Indian              OPPORTUNITIES
                                                Tribe and other residents of Ringwood,
PACIFIC STEEL SETTLES OVER EMISSIONS                                                             With the tax season fast approaching,
                                                New Jersey, have sued Ford Motor
PROBLEMS                                                                                      Joseph Borg, Director of the Alabama
                                                Company over the dumping of thou-
                                                                                              Securities Commission, has warned
  Pacific Steel Casting in California has       sands of tons of paint sludge and other
                                                                                              Alabama investors to be cautious when
reached a settlement with the Bay Area          toxic material from the company’s
                                                                                              attending investment seminars offering
Air Quality Management District over            former assembly plant in nearby
                                                                                              tax-saving and tax sheltered investment
odor emissions that have been a con-            Mahwah, New Jersey.The lawsuit, filed
                                                                                              strategies.This warning focuses on semi-
stant source of complaint among nearby          in state Superior Court in Passaic
                                                                                              nars that may offer investors an oppor-
residents. The settlement requires that         County, New Jersey, claims that Ford
                                                                                              tunity to “move their money,”“maximize
Pacific Steel install a $2 million dollar       caused widespread contamination of
                                                                                              tax flow,” or “pay less taxes.”This type of
carbon filtration system on one of its          the soil and groundwater in a mountain-
                                                                                              marketing tactic could be used to
three plants. The company will pay              ous 900-acre part of Ringwood, near the
                                                                                              attract investors to a seminar where
$17,500.00 in fines and develop an odor         New York state line, during the 25 years
                                                                                              they will learn about a specific invest-
management plan approved by the Air             that the Mahwah plant was open. The
                                                                                              ment product or strategy that’s con-
District for the entire facility. Nearby res-   site includes two abandoned iron
                                                                                              nected to a promised tax break. In
idents have called the $17,500.00 “a            mines. Ford closed the Mahwah plant in
                                                                                              some cases, investors are audited years
drop in the bucket” for Pacific Steel. Res-     1980.While Ford admitts that a contrac-
                                                                                              later only to find that they could be
idents have also expressed disappoint-          tor it hired dumped wastes in Ring-
                                                                                              assessed for additional taxes, interest, or
ment over the requirement of five odor          wood, the company claims that the
                                                                                              penalties by the Internal Revenue
complaints required for penalties. Resi-        dumping went on for only four years.
                                                                                              Service. Commissioner Borg offers
dents claim that it will be difficult as it     Ford also claims that parts of Ringwood
                                                                                              seven tips to help you protect your
requires confirmation from an inspector         had been used as an illegal landfill for
at the plant who may not be readily             decades.
available. Also, because of weather, the           The 717 current and former residents       • Watch out for ads that make extrava-
smell may be gone by the time the               in the suit contend Ford’s failure to ade-      gant claims about seminar results or
inspector arrives.                              quately remove all the toxic material           promise easy ways to ‘maximize your
  Most people don’t realize it, but those       caused serious illnesses and diseases           tax flow’ or ‘pay less taxes’. Remem-
types of situations make it very difficult      among residents of the area such as             ber, if it sounds too good to be true, it
                                                cancers and skin diseases, and an               probably is.

50                                                   BeasleyAllen.com
• Don’t rely on a presenter’s reputation        mate. Make sure any products you            CHEERLEADING INJURIES MORE THAN DOUBLE
  as a ‘financial guru’. Because these          choose match up with your risk toler-
  seminars tend to push specific invest-        ance or your investment goals. Seek            Most parents probably don’t consider
  ment products or services as the              an independent opinion from a third         cheerleading to be real dangerous activ-
  ‘means’ to the promised tax break, it’s       party such as a professional financial      ity for their children. But, cheerleaders
  critical to investigate the presenter’s       planner or attorney with expertise in       catapult in the air, climb human pyra-
  background, qualifications, and profes-       tax law and estate planning.                mids, and catch their tumbling team-
  sional record. Is he/she registered to                                                    mates as they fall to the ground.
                                              • Remember to base your final invest-         Unfortunately, they also make lots of
  buy and sell investments? Any person
                                                ment decision on the research you           emergency room visits. Recent research
  or company selling securities or offer-
                                                have gathered from credible and             indicates cheerleading injuries more
  ing investment advice for a fee in
                                                diverse sources. You don’t need to          than doubled from 1990 through 2002,
  Alabama must be registered with the
                                                invest your hard earned money until         while participation grew just 18% over
  Alabama Securities Commission.
                                                you are absolutely sure an investment       the same period. A study published in
  Your first line of defense is to call (1-
                                                opportunity is real, you understand         the journal Pediatrics last month esti-
  800-222-1253) to check out the
                                                the risk, and the opportunity has an        mates 208,800 young people ages 5 to
  person offering a product or advice
                                                objective that best matches your            18 were treated at U.S. hospitals for
  for a fee and the product for registra-
                                                financial goals.                            cheerleading-related injuries during the
  tion. If a person or product is not
  properly registered—Don’t Invest!             Commissioner Borg, in issuing the           13-year period.
                                                warning, had this to say:                      Most of the injuries were suffered by
• Find out how the presenter and the                                                        12- to 17-year-olds. Nearly 40% were leg,
  organization holding the seminar are          Investing your hard earned                  ankle, and foot injuries. Almost all the
  compensated. Many of these seminars           dollars should take as much or              patients in the study were treated at
  are free to attend. In some cases,            more time and effort than buying            emergency rooms and released. But
  speakers may be paid a fee to push a          a home or a new car. The Com-               because researchers used only emer-
  certain product, and you may find that        mission is proud to offer anyone            gency room numbers, gathered by the
  the investment strategy they’re pro-          free materials or access to infor-          Consumer Product Safety Commission,
  moting is closely linked to a specific        mation about how to make                    the true number of those injured is even
  product the sponsor of the seminar            informed investment decisions. In           greater. This is because many children
  wants you to buy.                             2006 the Commission will offer              are treated at doctors’ offices or by team
                                                and display on its website addi-            trainers.The researchers concluded that
• Don’t invest your money at the time
                                                tional professionally produced              the rise in injuries is probably because
  of the seminar. A legitimate offer will
                                                materials that explain stocks,              the stunts are increasingly difficult.
  be just as good tomorrow as it is
                                                mutual funds, and wise invest-              Cheerleading has “evolved from a
  today. You need to invest your per-
                                                ment strategies.                            school-spirit activity into an activity
  sonal time and effort to understand
  the offer and determine whether this                                                      demanding high levels of gymnastics
                                                 Potential investors should thoroughly
  opportunity is for you.                                                                   skill and athleticism,” according to the
                                              check out any investment opportunity.
                                                                                            study. Cheerleading now uses gymnas-
                                              You can contact ASC at www.asc.
• As with any type of investment                                                            tics, with some stunts being certainly
                                              state.al.us for inquiries regarding securi-
  opportunity, question anything that                                                       more dangerous than others.The study’s
                                              ties broker-dealers, agents, investment
  guarantees high returns with a low                                                        lead author, Brenda Shields, an injury
                                              advisors, investment advisor representa-
  risk. If an investment promises a high                                                    researcher at Columbus Children’s
                                              tives, financial planners, or the registra-
  return, usually the risk of losing your                                                   Research Institute in Ohio, observed:
                                              tion status of securities; to report
  money is higher.
                                              suspected fraud; or obtain consumer             Cheerleading is not considered a
• Don’t get involved in any investment        information.                                    sanctioned sport by some state
  opportunity unless you fully under-         Source: Alabama Securities Commission News      high school athletic associations.
  stand it. Fraud artists are known to                                                        As a result, coaches are not always
  develop new product names that are                                                          trained, and some schools lack the
  really slight variations of mainstream                                                      proper facilities and equipment.
  investments just to convince
  investors the opportunities are legiti-

                                                   BeasleyAllen.com                                                                51
  The study recommends that coaches          very young child.When it was realized       Saabs built in Finland. NHTSA indicates
get professional safety training, and high   by the family that there was something      that over time the fuel lines can loosen
schools and cheerleading associations        wrong, the bottle was opened. Found         from the pump, causing the fuel leak
adopt uniform safety procedures and          inside were maggots crawling around in      and fire potential.
also develop a national database for         the bottle that the child was drinking
injuries.That is something the Memphis,      out of.The child became sick, developed
                                                                                         COMPANY RECALLS PET FOOD
Tennessee-based American Association         a severe fever, couldn’t stop vomiting,
of Cheerleading Coaches and Advisors         and had to be hospitalized for food poi-       Diamond Pet Foods is voluntarily
has been advocating for several years.       soning. The family called Gerber, with      recalling many of its products produced
The association publishes a safety           disappointing results. According to         at its Gaston, South Carolina facility.
manual for cheerleaders and offers           media reports, the company told the         Tests have shown high levels of a toxic
safety courses for coaches around the        family that it wasn’t a big deal—that       chemical known as aflatoxin, which
country.The group’s executive director,      maggots couldn’t hurt the baby.             comes from a fungus that affects corn
Jim Lord, says that several factors,            Upon learning about the family’s         and other crops. Diamond, Country
including the popularity of televised        problem, a local television reporter        Value, and Professional dog food brands
cheerleading       competitions,     have    went to the same store, where store         have been linked to at least 100 dog
encouraged more cheerleaders and             employees let her open up another box       deaths. The aflatoxin affects the liver
coaches to mimic difficult tumbling          of Gerber Oatmeal. It was reported by       and causes a number of symptoms.
moves before they have the right train-      the local CBS affiliate that this box was   Warning signs include: loss of appetite,
ing. Mr. Lord says:                          filled with maggots. I hope this was an     yellowing of the eyes, gums, or on the
                                             isolated incident. As you may know, it      belly; and fever. Early signs would be
  It’s not that the sport is dangerous,
                                             takes a considerable length of time for     not eating and vomiting.You will see a
  but it’s people trying skills they
                                             maggots to form and develop. As most        yellowing of the eyes and the mucus
  shouldn’t. Basket tosses are the
                                             folks from this coutnry—like me—            membranes of their mouth. Recalled
  most difficult skill you can do, but
                                             know, eventually maggots become             products include Diamond, Country
  that doesn’t mean you should do
                                             blow-flies. The last place you would        Value, and Professional Dog and Cat
                                             expect to find these creatures is in a      Foods. Recalled products can be identi-
  Parents should insist that schools         box of baby food on a store shelf.          fied by the Date Code and the “Best By”
provide the necessary training for           Source: Associated Press
                                                                                         date.A Capital “G” will be in the 11th or
cheerleading coaches and spouses.They                                                    12th position of the date code on 18 to
should also make sure that the facilities                                                55 pound bags and in the 9th position
used for practice sessions are as safe as    XIX.                                        on smaller bags.The “Best Buy” dates are
possible. Schools that do not take steps     RECALLS UPDATE                              between March 1, 2007, and June 10,
that are available to make cheerleading                                                  2007. If your dogs have eaten any of
safer are taking a very big risk.                                                        these products, take them to a vet
                                             SAAB RECALLS 9-3 MODELS TO FIX
                                             POSSIBLE FUEL LEAK                          immediately. It can be fatal, depending
                                                                                         on how much or how long the animal
                                               General Motors Corp. has recalled the     has been eating the food. For more
  In the United States, all of us expect     2001 and 2002 Saab 9-3 because the fuel     information on the recall, go to
our food supply to be safe and fit for       pump may leak where the gasoline line       www.diamondpet.com or call the
consumption. There are certain things        attaches.Approximately 17,400 Saab 9-3      Customer Information Center at 1-866-
we don’t expect to find in our food          passenger vehicles, both hard top and       214-6945.
supply. The following account of a           convertible, built in Uusikaupunki,
family’s experience is just about as gross   Finland, are included in the recall. The
as it gets. It has been reported that a      Saab 9-3s were built between May 2000
south Florida family recently found          and July 2002. According to National
maggots in their baby’s oatmeal. In          Highway Traffic Safety Administration
mid-January, Gerber brand oatmeal was        documents accompanying the recall, the
purchased at a local store, taken home,      plastic fuel pump retaining tabs holding
and mixed with formula in a baby             the fuel lines were damaged during the
bottle. The mixture was then fed to a        manufacturing process for some of the

52                                                BeasleyAllen.com
XX.                                           her clients and respected by opposing        Public Safety during his tenure with the
FIRM ACTIVITIES                               lawyers and judges.We are very glad to       state and was one of the best to ever
                                              have Julia on our side.                      serve in that job. Sherry has two broth-
                                                                                           ers, Marc and Jason, who are currently
EMPLOYEE SPOTLIGHTS                                                                        state troopers and who are carrying on
                                              Julie Grimes
                                                                                           in their father’s tradition. She helped
                                                 Julie Grimes, who started with the        implement the Commercial Drivers
Julia Anne Beasley                            firm in March of 1994, serves as our         License Program for the State of
                                              Accounting Manager. Basically, Julie         Alabama. Sherry is a very good
   Julia Anne Beasley, a graduate of Cum-
                                              oversees all the receipts and expendi-       employee, who is dedicated to her work.
berland School of Law, joined the firm in
                                              tures of the firm and manages the distri-    We are pleased to have her with us.
1992. Julia handles motor vehicle acci-
                                              bution of all the client settlements. She
dent litigation and other types of per-
                                              oversees a staff of five employees. Julie
sonal injury and wrongful death cases.                                                     Josh Bartgis
                                              is married to Keith Grimes. They have
Some of her other cases have included
                                              two sons, Chris and Casey; and Keith            Josh Bartgis, who has been with the
fallen merchandise in large retail stores
                                              has two daughters, Celeste and Katie.        firm for almost two years, serves as a
and misfilled prescriptions against
                                              They are the proud grandparents of five      staff assistant. He currently works for
major drug chains. Julia has obtained
                                              grandchildren, who all just happen to        Lance Gould in the Fraud Section and
numerous multi-million dollar recover-
                                              be boys. Julie’s son Chris, and grandson     stays very busy. Josh grew up in Mont-
ies from logging companies and truck
                                              Chael, are both currently serving in the     gomery. His dad is a District Vice-Presi-
companies for her injured clients and
                                              United States Marine Corps. Julie, who       dent for Regions Bank, and his mother
for families who had loved ones killed
                                              graduated from Troy State University         owns Allin & Associates, a small business
in highway collisions.
                                              with a degree in Education, was a high       that builds custom homes. Josh will
   In her spare time, Julia competes in
                                              school teacher for 5 years. She taught       earn an undergraduate degree from
cutting horse shows on the local and
                                              music and mathematics before chang-          AUM this spring.We are pleased to have
national level with her 14-year-old
                                              ing studies and careers and focusing on      Josh with us. He is a very good
gelding, Peppy Snicker Bar; her 6-year-
                                              business and accounting. Besides             employee and is a credit to the firm.
old mare, Docs Dual Jae; and her 5-year
                                              working at the firm, Julie and her
old gelding, Peponitas Top Gun. Her 8-
                                              husband have a farm and raise Black
year-old mare, Our Little Dually, will be                                                  Patrick Cagle
                                              Angus Cattle. She and Keith love to
competing in the World Finals Cutting                                                         Patrick Cagle, who serves as a runner,
                                              travel and try to go somewhere new
Show to be held in Texas this month.                                                       has been with the firm since August of
                                              every year. Julie does a tremendous job
Julia also is an active partner in Double                                                  2005. Patrick is one of the employees
                                              for our firm, and we are most fortunate
B Ranch, where she currently keeps six                                                     responsible for making hand-deliveries
                                              to have her with us.
other horses.                                                                              for the firm. Numerous courthouse runs
   Julia is also very active in her church,                                                are made in several Alabama counties on
Fresh Anointing International Church,         Sherry McHenry                               a daily basis. This requires going occa-
located in Montgomery. She wants to             Sherry McHenry, who came to the firm       sionally in surrounding states. Patrick
help spread the love of Jesus to others       in March of 2001, currently works as a       also helps to serve subpoenas for trial
through Christian music, mission trips,       Clerical Assistant. In this position, she    witnesses on a regular basis. In addition
and other ministries that she helps           assists lawyers and legal assistants with    to his other duties, he assists lawyers and
promote. One of these days, Julia plans       personal injury cases. Sherry does valu-     legal assistants in getting everything
to use her new barn and her horses to         able work in assisting to get cases ready    ready for trials and makes sure that all
minister to children, allowing them to        for trial. She has two children, Jennifer,   equipment, trial boxes and supplies are
experience God’s love through real            22, who attends South University, and        in place when a trial starts. Patrick, who
ranch life.                                   Phillip, 19, who works for the Alabama       is pursuing a finance degree at AUM,
   Julia enjoys her work and gets satis-      Department of Public Safety. Phillip will    plans to attend law school upon gradua-
faction from knowing that the cases she       attend AUM this spring and is anxiously      tion. He enjoys hunting and the out-
has handled have helped her clients put       awaiting his 21st birthday so he can         doors generally. Patrick does a very good
their lives back together in a meaningful     enter the Trooper Academy. His grandfa-      job for the firm in a most important and
way to the extent possible. She is an         ther Ned McHenry (Sherry’s father)           demanding position.We are glad to have
outstanding lawyer who is well liked by       served as Director of the Department of      him with us.

                                                  BeasleyAllen.com                                                                 53
XXI.                                          THE HEART OF DIXIE CUTTING HORSE              Georgia, Mississippi, Tennessee, and
                                              ASSOCIATION                                   Louisiana. Locally, the HDCHA holds cut-
                                                                                            tings at the W.O. Crawford Arena on the
RECOGNITION                                      The Heart of Dixie Cutting Horse
                                                                                            Garrett Coliseum grounds on week-
                                              Association (HDCHA), based in Mont-
                                                                                            ends, as scheduled. Lots of folks come to
                                              gomery,Alabama, is one of the oldest—if
A RECOMMENDED HISTORICAL CALENDAR                                                           town for these events. The State of
                                              not the oldest—affiliates of the National
                                                                                            Alabama badly needs to upgrade the
   Once We Walked is a distinctive 50th       Cutting Horse Association, based in Ft.
                                                                                            facility, which is not up to par with
Anniversary walk calendar covering the        Worth, Texas. The HDCHA has been in
                                                                                            other facilities.When compared to what
14 months of the historic Montgomery          operation for approximately 40 years.
                                                                                            other states have done with their facili-
Bus Boycott. Each calendar page fea-          Our firm has supported the HDCHA
                                                                                            ties, we have lots of catching up to do. I
tures photographs and summaries of            over the past two years. Cutting, which
                                                                                            encourage you to go out and enjoy the
key events and trends that developed          is one of the world’s fastest growing
                                                                                            cutting competition. Show dates for this
during the boycott.As we all know, the        equine sports, offers tremendous excite-
                                                                                            year in Montgomery are: February 11th
boycott began with the December 1,            ment and drama for horse, rider, and
                                                                                            and 12th;April 1st and 2nd; May 6th and 7th;
1955, arrest of Mrs. Rosa Parks. It contin-   spectators alike. For those of you who
                                                                                            July 22nd and 23rd; August 12th and 13th;
ued through the outbreak of segrega-          are not familiar with cutting, I will give
                                                                                            October 28th and 29th; and November
tion and violence in January of 1957.         you a brief account. The challenge for
                                                                                            11th and 12th.
Events and facts from the 14 months are       the rider is to select a single calf from
                                                                                               Not only does the HDCHA strive to
listed in the calendar under each date.       the herd, gently guide it into the center
                                                                                            make the events family-friendly atmos-
There is a running count from Decem-          of the arena, and then, with lightning-
                                                                                            phere, they also have Cowboy Church
ber 5, 1955 to December 21, 1956 cov-         fast starts and turns, prevent the calf
                                                                                            services on Sunday morning. Presently,
ering the 382 days of the boycott.            from ducking past the horse and escap-
                                                                                            over 50 people attend these services.
Interestingly, the days on the calendar       ing back to the herd. In the contest
                                                                                            The members of HDCHA have a real
are 2005-2007 days, with the current          arena, the art of the cutting horse
                                                                                            love of horses and that’s why they
holidays listed.Therefore, the calendar is    comes alive in a classic test of intelli-
                                                                                            compete.These horses are magnificent,
not only a historical reference, but is       gence, training, breeding, and skill.
                                                                                            and they give 100% every time they
also functional for current use.              Many factors play a part in the making
                                                                                            compete.There is nothing more beauti-
   Authorized by the Board of Directors       of a cutting champion. If you have
                                                                                            ful or impressive to watch than a good
of the Montgomery Improvement Asso-           never attended a cutting competition, I
                                                                                            rider and a great cutting horse work.We
ciation, the calendar serves as a tribute     believe you would be highly impressed
                                                                                            believe supporting the HDCHA is very
to the MIA’s rich history and unique          with the performance if you will find
                                                                                            important. Their members are dedi-
achievements. I have received one from        time to take in a show.
                                                                                            cated, and the organization needs dona-
my friend Mark Sabel and I have really           In competition, the cutting horse and
                                                                                            tions from interested businesses. The
enjoyed reading all of the information. It    rider must work together as a team in
                                                                                            members tell me that they have been
makes me realize how far we have              demonstrating their cattle-handling skills.
                                                                                            blessed to continue to improve their
come, but more importantly, it reminds        The contest begins as the horse and
                                                                                            cuttings and the association. Inciden-
me of why. I understand that copies of        rider survey the herd. Quietly—deliber-
                                                                                            tally, one of the benefits of attending a
the calendar are limited, so if you are       ately—without hesitation, the horse
                                                                                            HDCHA cutting show is the great food
interested in ordering one, you may do        approaches the herd. It is a tense time for
                                                                                            served. Their chief cook is a beautiful
so by calling NewSouth Books at (334)         all concerned. In competition, the horse
                                                                                            lady, Bodie Bohn, who not only is a great
834-3556 or the MIA 50th Anniversary          and rider have two and one-half minutes
                                                                                            cook, but is an even greater person.You
office at (334) 265-6262. I understand        to complete their work. That means
                                                                                            should come out and see what cutting
that the calendars will also be available     there is no time for mistakes.
                                                                                            is all about and be a part of the associa-
in selected local stores in Montgomery.          HDCHA affiliates produce weekend
                                                                                            tion.You might even decide that cutting
Copies are available for only $9.95. I        events all during the year, with the
                                                                                            is the sport for you. Believe me, if you
believe these calendars will become col-      money earned and points accumulated
                                                                                            try it one time, you might just get
lectors’ items.                               tallied at the end of the year. The top
                                                                                            hooked—just ask Julia Beasley.
                                              riders compete in the World Finals.
                                              HDCHA has approximately 150
                                              members from Alabama, Florida,

54                                                BeasleyAllen.com
XXII.                                          the courts and preserve rights is lost,         To be a leader of men, Franklin
SOME PARTING                                   people who are badly hurt or have a             realized, it was best to be one of
                                               family member killed due to the wrong-          the guys: generous in praise,
                                               doing of a large corporate will have            respectful of divergent opinions,
                                               little hope left.That’s why we all have a       quick to give credit to others, and
                                               duty to stand up and fight.                     slow to take it himself.
   The relentless attacks by Corporate
                                                  Over the years I have been asked on
America on our judicial system haven’t                                                         Credit:Tom Ferrick Jr.
                                               many occasions what it takes to be a
let up one bit. In fact, the attacks have                                                      Philadelphia Inquirer
                                               good leader. I have tried to give sound
probably intensified in recent weeks.
                                               advice when asked and hope that my               Having reflected on my life, and on
The recent action by the FDA is just
                                               advice was the right thing and may have       the lives of others I have observed, I
another example of how powerful and
                                               helped. I really believe leadership           would take leadership a step further. I
ruthless the giant pharmaceutical indus-
                                               depends on a number of factors and I          sincerely believe that when a person,
try is. Unfortunately, that industry is not
                                               know that people can lead effectively in      who is in a position that requires leader-
alone in its influence over government.
                                               varying ways.As you know, there are all       ship of others, allows God to take over
The following industries—automobile
                                               sorts of leaders in our society. Some are     his or her life, effective leadership
manufacturers, insurance, tobacco, and
                                               in government—some in military—               becomes much easier. When God is in
chemical—have joined forces with the
                                               some in business—some in education—           charge of a person’s life, he or she will
drug industry in a concerted effort to
                                               some in sports—and some in our                lead others in the right way. You will
completely destroy the civil jury
                                               churches.Aspiring to be leaders, folks go     find that the Golden Rule becomes your
system. This coalition is well-financed,
                                               to all sorts of seminars and motivational     guideline for leadership and that makes
highly-organized, and totally dedicated
                                               meeting in an effort to learn more about      things better for all concerned. I know
to their task. I believe that the current
                                               how to be a good leader. A friend of          from experience that when you won’t
scandal in Washington is directly related
                                               mine sent me a statement referring to         allow God to take over and direct your
to the campaign to take the right to a
                                               Ben Franklin, one of our nation’s found-      life’s activities, you in turn won’t be a
jury trial away from ordinary citizens
                                               ing fathers, and certainly a tremendous       very good leader. Most of us have to
and to virtually restrict their rights to
                                               leader. Nobody would question that this       learn that lesson the hard way. I know
relief when they become victims of cor-
                                               gentleman, who was said not to be a           that I did. Finally, I will leave you with
porate abuse or wrongdoing.The lobby-
                                               great orator, was a real leader at a criti-   these words of wisdom, which reflects
ing efforts of the Abramoff types in
                                               cal time in our nation’s history. History     the source of my strength and hopefully
Washington are for the benefit of Cor-
                                               tells us that he was a genius with a first    yours:
porate America and certainly not for
                                               class disposition, spending his adult life
ordinary folks. Taking a valuable right                                                        I can do all things through Christ
                                               as a printer, postmaster, diplomat, states-
from ordinary folks just gives a lobbyist                                                      who strengthens me.
                                               man, and inventor.The following is how
like Abramoff just another notch in his                                                        Philippians 4:13
                                               Ben Franklin is said to have described
belt and a pay raise. If this battle to save
                                               real leadership:

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