Vested Interest - News and Notes - March 2004 Issue

Healthcare Spending Rose 9.3% to $1.6 Trillion in 2002

For the second straight year, healthcare spending in 2002 outpaced the rest of the nation’s economy, despite a slowdown in the growth rate of prescription-drug spending. Overall, the nation spent $1.6 trillion in 2002 on healthcare, or $5,440 per person, according to a new Medicare study released. That represents an overall increase of 9.3%, twice the growth rate of the gross domestic product, the annual study said. (ATLA Law News Digest – January 15, 2004)

Wal-Mart Rejects 2000 Labor Audit

Wal-Mart Stores disavowed an internal audit of labor law compliance in 2000 that tallied violations involving minors and employees who worked through break and meal periods. Results of the audit, provided to lawyers in several court cases but kept under seal, were reported by The New York Times. The newspaper said a Wal-Mart critic provided a copy. The audit of the USA’s largest retailer covered the time-clock records of more than 25,000 employees at 128 stores. It found more than 1,000 instances when records indicated minors either worked later than allowed by law or worked too many hours in the day. Also, the findings showed about 60,000 instanceswhen workers weren’t given breaks and 15,000 instances when employees worked through mealtimes. (ATLA Law News Digest – January 15, 2004)

Study Disputes View of Costly Surge in Class-Action Suits

A new study has concluded that both the average price of settling class-action lawsuits and the average fee paid to lawyers who bring them have held steady for a decade, even though companies have said the suits are driving up the cost of doing business, hurting the economy and lining lawyers’ pockets. The two law school professors who conducted the study, which was not financed by corporations or by trial lawyers, expressed surprise themselves over the results. "We started out writing an article about fees," said Theodore Eisenberg, a law professor at Cornell and one author of the study, "but the shocking thing was that recoveries weren’t up." It covers the biggest sample to date of class-action cases, ranging from civil rights violations to securities fraud. Its results, published in a new law publication, the Journal of Empirical Legal Studies, and already circulating, will certainly be used by lawyers trying to head off such legislation. (ATLA Law News Digest – January 15, 2004)

How Texas Blew Ephedra Chance

Five years ago, the staff of the Texas Department of Health proposed requiring a doctor’s prescription for ephedra-based products. Eight Texans had apparently died from use of these products. Leading the department was Houston native Dr. Reyn Archer, son of former U.S. Rep. Bill Archer. One of the largest manufacturers of such supplements, Metabolife, hired a powerful Republican lobbying law firm. One of its lawyers, state Sen. Jeff Wentworth of San Antonio, arranged a meeting between Metabolife President Michael Ellis and Commissioner of Health Archer. Meanwhile, another member of the firm met with a key aide to then-Gov. Bush. Within days, Archer brought in an outside mediator. By the time negotiations between Archer’s staff and industry representatives concluded, all that was required was a warning label and an "800" number on the bottle to report any negative effects to the FDA. (ATLA Law News Digest – January 15, 2004)

Boardroom Insurance Cost Up

Corporate scandals continue to take their toll on boardrooms in the form of increased liability insurance costs. Coverage for 2003 saw a record increase of 33 percent for directors and officers. The coverage protects directors and officers from lawsuits for issues such as securities fraud. It pays their litigation costs and often settlement costs or damage awards. The highest median premiums were reported by utility companies for the ninth year in a row. (Chicago Tribune – January 23, 2004)

Ouch! Internal Bleeding Exposes Medical Errors

The title of two California physicians’ new book is a gripper by itself: Internal Bleeding: The Truth Behind America’s Terrifying Epidemic of Medical Mistakes. Then there is the stomach-catching cover art: an X-ray image of a patient’s abdomen with a left-behind pair of forceps in plain sight. Co-author Robert Wachter, in an interview with Modern Physician, said the IOM report and the many discussions on medical errors in its wake will have inoculated his peers to the harshness of this newest exposure of medical fallibility. At its heart, Internal Bleeding examines about 20 case studies involving serious medical errors with an emphasis not on affixing individual blame, but rather on highlighting systemic error. (ATLA Law News Digest – February 5, 2004)

Decision to Allow Gasoline Additive Helped Bush Donors

The Bush administration quietly shelved a proposal to ban a gasoline additive that contaminates drinking water in many communities, helping an industry that has donated more than $1 million to Republicans. The Environmental Protection Agency’s decision originated in the early days of President Bush’s tenure when his administration decided not to move ahead with a Clinton-era regulatory effort to ban the clean-air additive MTBE. Its largest producers are Texas-based Lyondell Chemical and Valero Energy, and the Huntsman companies of Salt Lake City. (ATLA Law News Digest – February 19, 2004)

Bar Codes in Hospitals to Reduce Drug Errors

Patients in hospitals will soon wear an identity bracelet with a bar code containing information designed to make sure they do not receive the wrong drug or dosage by mistake. Federal officials said the additional information, which makes it possible to match individuals to their prescribed medications by computerized scanners, has the potential to cut in half the 7,000 hospital deaths attributed to medication error every year. Health and Human Services Secretary Tommy G. Thompson announced a regulation that requires drugmakers and blood suppliers to add bar codes to most of their products within two years. Depending on the size of the hospital, a full system costs between $200,000 and $1 million. (The Washington Post – February 26, 2004)