Top of Page
Greenspan, Rubin Differ on Banking
Filed at 12:39 p.m. EDT
By The Associated Press
WASHINGTON (AP) -- In a rare conflict, Federal Reserve Chairman
Alan Greenspan and Treasury Secretary Robert Rubin today squared off
in a contentious turf battle over how to modernize the
Depression-era laws governing the nation's banking system.
Appearing jointly before the Senate Banking Committee, the two took
opposite positions on legislation that squeaked through the House,
214-213, last month. It would allow banks, securities firms and
insurance companies to get more involved in each others' businesses
-- a goal both Greenspan and Rubin support.
The two men are at odds over how that should be accomplished.
Allowing banks into non-bank activities through a holding company
structure, as provided for in the House bill, would enhance the
Federal Reserve's role in regulating financial services industries.
The Clinton administration opposes the House bill. Instead, the
administration wants to permit banks to diversify through
subsidiaries of the bank itself, not just through affiliated
companies within the same holding company. That arrangement would
increase the power of the Treasury Department's Office of the
Comptroller of the Currency, regulator of nationally-chartered
banks.
Given the slim margin in the House, resolving the turf battle is
considered crucial to moving the bill, which would break apart
barriers between financial services businesses dating to the 1933
Glass-Steagall Act.
Rubin argued that the structure preferred by the Federal Reserve
could hurt consumers and poor neighborhoods because holding
companies are not subject to the same community lending standards as
banks.
``As we work to modernize the financial system, we need to make sure
it works for all communities,'' he said.
And, the holding company structure unneccessarily dictates how
financial services businesses should organize themselves. The House
bill ``would limit the ability of market participants to make their
own judgments about how best to lower costs, improve services and
provide benefits to customers,'' he said.
``Our final objection is that the elected administration is
accountable for economic policy -- and bank policy is a key
component of economic policy,'' he said. Under the House bill,
``banks would gravitate away from the national banking system, and
the elected administration would lose its nexus with the banking
system, thereby losing its capacity to affect bank policy.''
Greenspan, a strong supporter of the House bill, called it ``a sound
and much-needed framework for launching our financial services
industry into the 21st century.''
``It would be a disservice to the public and the nation if, in the
fruitless search for a bill that pleases everyone, the benefits of
this vital legislation are lost or delayed,'' he said.
The central bank chairman argued that the holding company structure
would better ensure taxpayers aren't called upon to bail out banks'
bad bets in either insurance or securities.
``It provides better protection for our banking and financial system
without ... limiting in any way the benefits of financial
modernization,'' he said. It ``also prevents the spread of the
safety net ... to the securities and insurance industries.''
The administration's preferred structure ``will, in our view, lead
to greater risk for the deposit insurance funds and the taxpayer,''
Greenspan said.
Senate Banking Committee Chairman Alfonse D'Amato, R-N.Y., who has
remained non-commital on whether he would move the legislation
through the Senate, urged the administration to compromise with the
Fed.
``We can do better. ... The administration has an obligation to come
forward in a constructive way to bridge those differences and do
what is right,'' he said.
Both Greenspan and Rubin took pains to stress that their turf battle
would not affect their cooperative relationship over economic
policy, at a time when world financial markets are on pins and
needles about the prospect of a tailspin in Asian economies.
``It is important to emphasize that Treasury and the Fed enjoy a
remarkably positive working relationship on a broad array of issues.
... We have agreed to put this issue aside and not allow it to
interfere with the very good cooperation ... on other issues,''
Rubin said.
Added Greenspan,''It's about the only thing of importance about
which we disagree about. It's been really a quite extraordinary
relationship that's been forged between this Treasury and this
Federal Reserve.''
Copyright 1998 The New York Times Company
The information contained in this AP Online news report
may not be republished or redistributed
without the prior written authority of The Associated Press.
_________________________________________________________________
June 19, 1998
Top of Page
House GOP Mulls Patient Protections
Filed at 2:20 a.m. EDT
By The Associated Press
WASHINGTON (AP) -- Consumers would get some protection from
restrictive health plans and perhaps even the chance to leave them
under legislation that a House Republican task force nearly has
finished.
``I think it's shaping up in a very positive way,'' said task force
member Rep. Harris Fawell, R-Ill.
Fawell offered no specifics, and Pete Jeffries, a spokesman for task
force chairman Dennis Hastert, R-Ill., said ``nothing's official.''
But sources familiar with the ongoing talks said Thursday there is
agreement on a general outline for GOP legislation scheduled to be
unveiled next week.
The Republican proposal could include parts of a ``Patient Bill of
Rights,'' which has been championed by President Clinton and adopted
as an election-year rallying cry by Democratic lawmakers.
But the GOP also plans to announce initiatives they say could also
increase Americans' access to and choice of health insurance.
One, promoted by House Commerce Committee chairman Tom Bliley,
R-Va., would allow small businesses to join purchasing pools, called
``healthmarts,'' that would offer employees a selection of insurance
plans.
Choices might include a health maintenance organization, with limits
on the choice of doctors but lower costs, and a less restrictive,
but more expensive, plan. Today, many workers have no choice of
health plans.
Participating businesses would save money because healthmarts would
escape some state health insurance laws, coming instead under the
federal umbrella that also exempts the health plans of some large
corporations.
Another GOP proposal would let members of national trade
associations -- like the U.S. Chamber of Commerce or the National
Restaurant Association -- purchase health insurance together under
the same federal shield.
``They can get the economies of scale to be able to do what the
large corporations do ... have the bargaining power with health care
networks to bring health care prices down,'' said Fawell, a chief
proponent of the idea.
But extending the federal shield law to healthmarts and trade
associations is sure to prove controversial, especially if it
continues to mean protection against lawsuits by patients who come
to harm.
Democrats, along with Republican lawmakers who support a bill
sponsored by Rep. Charlie Norwood, R-Ga., have called for repeal of
the lawsuit buffer. Norwood, a former dentist, planned to meet with
House Speaker Newt Gingrich late Thursday to discuss the matter,
which the GOP task force has so far been unable to resolve.
The Republican proposal reportedly will include consumer protections
that require health plans to:
--Cover emergency-room care even if reasonable fears of medical
crisis turn out to be unfounded.
--Give women the right to see a gynecologist and children a
pediatrician as their primary doctor. Some health plans now consider
these specialists, and require prior authorization for an
appointment.
--Provide for quick review when a patient disputes a denial of
urgently needed care. Plans could not prevent doctors from
discussing all treatment options, and patients would have the right
to appeal disputes to an outside authority.
--Clearly disclose information about their rules and decision-making
processes, and follow standards of patient confidentiality.
Copyright 1998 The New York Times Company
The information contained in this AP Online news report
may not be republished or redistributed
without the prior written authority of The Associated Press.
_________________________________________________________________
June 28, 1998
Top of Page
Insurers Tighten Rules and Reduce Fees for Doctors
By MILT FREUDENHEIM
NEW YORK -- Some big health insurers are putting a new squeeze on
doctors, sharply cutting the fees they pay and imposing strict new
rules that physicians say can undermine patient care. Angry doctors,
in turn, are fighting back with lawsuits and complaints to state
regulators.
Credit:California Medical Association Many traditional health plans
and physician networks have for several years been relatively
generous to doctors, giving them something close to the "usual and
customary fees" in a community. But payments are increasingly being
based on the lowest available fees, sometimes those found in
bargain-rate managed-care plans. And all-or-nothing contracts often
require doctors to accept patients in all of an insurer's plans, not
just the higher-paying ones.
If doctors balk at any restrictions, they can be blackballed from
plans, losing access to thousands of patients. And even though
insurers have the final say over whether a treatment is necessary,
many contracts now hold the doctors, not the health plans, liable in
malpractice suits over denial of care, which have soared lately. On
top of that, doctors must frequently give up the right to sue the
health plan if it refuses to pay for a service.
As a result, doctors say, care can suffer as physicians become more
reluctant to fight health plans on behalf of their patients. Also,
thousands of patients have had to find new doctors after their old
ones were dropped from plans or resigned.
Among the most aggressive in clamping down, some doctors say, is
Aetna U.S. Healthcare, one of the United States' biggest health
insurers, with 13.7 million customers. Blue Cross plans in at least
seven states and some local units of United Healthcare and Cigna
Healthcare have also reduced fees and in many cases imposed harsher
rules.
This is not, of course, the first time insurers have turned the
screws. Earlier rounds of cutting, as the nation moved to managed
care, involved limits on hospital stays and other treatments and
cuts in payments to doctors. In recent years, though, many insurers,
striving to persuade doctors to join their health networks, held
back on any further cuts and maintained fairly attractive fees and
generous terms for doctors and hospitals.
But insurers soon felt caught between big employers that resisted
rate increases and doctors and hospitals that joined forces to
strengthen their bargaining power. The latest cuts, along with
efforts to raise rates significantly for some employers, can be seen
as an effort to try to restore profits by regaining control.
Insurers also defend the fee cuts by saying their costs are being
forced up by new technologies, like surgery with tiny instruments;
by new drugs, like Viagra, and by aging patients with more needs.
And demands for treatment are growing, they say, based on
expectations inflated by advertising.
And in some places, insurers have more leverage against doctors
because mergers among plans have increased the pressure on doctors
to participate in the surviving ones.
The American Medical Association said it had reviewed 100 contracts
in the last year and increasingly found provisions that gave
insurers the right to dictate fees and lower them at will instead of
working them out with doctors.
Aetna Inc. started to insist on tougher restrictions last year,
doctors said, adopting the approach of U.S. Healthcare, which Aetna
bought in 1996. They said Blue Cross and Blue Shield plans in some
cities, including Philadelphia, Atlanta, San Francisco and
Providence, R.I., had also adopted many hard-hitting provisions,
departing from a long history of cooperation with doctors and
hospitals.
Dr. Michael Newton, an ophthalmologist in Manhattan said Aetna had
cut its payment for an initial eye exam last year to $78 from $150.
The payment for some follow-up exams dropped to $27 from $70.
Patients paid $10 a visit. He said the total did not even cover
overhead. Nevertheless, Aetna said it had contracts with 400
Manhattan ophthalmologists.
Dr. Laura Popper, a New York pediatrician, left Oxford Health Plans
after the HMO cut fees sharply last year. The fee for a well-baby
visit was set at $47; her regular fee is $90. Dr. Popper said she
showed the Oxford contract to her lawyer, who said, "Why would any
doctor sign this?" Oxford did not respond to a request for comment.
Patients are often unwitting victims, many doctors say. The
frustrations of doctors often come out, "like it or not, in negative
feelings about members of that plan," said Marla Durban Hirsch, a
health-care lawyer who is editor of a newsletter for managed-care
negotiators.
With new contracts that vastly increase the power of insurers,
"physicians are very reluctant to advocate on behalf of their
patients," said Dr. Lee McCormick, a family practitioner in
Pittsburgh, who is president of the Pennsylvania Medical Society.
They fear that "if they argue too much," he said, "they will get a
letter from the health plan that says, 'Dear Doctor, we don't need
you any more."'
Indeed, thousands of patients have been forced to find new doctors
after their old ones were dropped from their health plans or
resigned.
Moreover, mergers are vastly increasing the bargaining power of big
insurers. In Dallas, for example, recent mergers, plus one in the
works, will eliminate four of the nine biggest health plans, which
cover 80 percent of the patients. And after a merger in western
Pennsylvania, Highmark Blue Cross and Blue Shield provides coverage
for more than 60 percent of the population of Pittsburgh and 29
surrounding counties.
Many doctors say they cannot reject contract terms for fear of being
dropped by plans that control hundreds of their patients.
"Physicians tell me they cannot negotiate with the insurer," said
Dr. William Mahood, a gastroenterologist in Abington, Pa., and a
trustee of the American Medical Association. "Some have told me that
when they considered dropping out" of a low-paying Philadelphia Blue
Cross HMO, "they were afraid to do that because they would not be
able to participate in the other Blue Cross programs."
A few independent-minded groups, typically affiliated with a strong
local hospital system, have resigned from networks. They pulled out
of several Blue Cross plans and units of at least two big national
insurers, Aetna U.S. Healthcare and United Healthcare.
In North Carolina, the Healthsource unit of Cigna Healthcare gave
physicians six days' notice of cuts that averaged about 20 percent,
said Dr. Robert Bilbro, a Raleigh internist. He said that since
Cigna bought Healthsource last year, it has become "the
lowest-paying HMO in the state."
Blue Cross companies in California, Georgia, Illinois, New Jersey
and Pennsylvania, among others, have lowered physician fees in the
last year. Rhode Island doctors are fighting a Blue Cross demand for
an arrangement that would lower fees to match the lowest paid by any
insurer in the state.
In California, Blue Cross cut fees in four of the last five years.
Payment for a hip replacement, for example, dropped nearly 50
percent since 1994, to $2,380 from $4,602. The state medical
association filed a class action arguing that the reductions were
unfair and violated contracts. One big California hospital and
doctor group, Sutter Health, withdrew from the Blue Cross network
until the company reversed its latest rate reductions.
Cynthia Coulter, a spokeswoman for California Blue Cross, made no
bones about the fee cuts. "Of course we are pushing harder for
profit margins," she said. "We have to have reserves to pay the
claims."
Doctors also complained that some insurers had changed payment
systems and refused to give them new lists of payments. The Georgia
Medical Association argued in a complaint filed in state court that
Blue Cross and Blue Shield had violated Georgia contract law by
unilaterally changing the basis for calculating payments.
Instead of a discount from "usual and customary fees," the complaint
said, payments are now based on what doctors actually receive --
including low managed-care fees.
Georgia Blue Cross denied the contention and said the medical
association could not sue, because only individual doctors were
parties to the contract.
Earlier this month, the New York state Legislature approved a
measure requiring insurers to disclose payment terms and the basis
on which they were developed.
Medical associations in Florida and Texas complained to state
insurance officials when Aetna tried to impose its restrictive
contract.
When doctors in Florida, Ohio and other states asked professional
societies for help, Aetna canceled meetings with state and local
medical associations, arguing that the groups were barred by
antitrust laws from even discussing the complaints.
The American Medical Association seized the issue and publicized the
Aetna case, urging doctors to rebuff insurance-company demands.
Aetna's chief executive, Richard Huber, responded with a letter to
the association's president, Dr. Thomas Reardon. Huber said the
company's limits on coverage were "determined by the employers who
purchase our products." He added, "Without these limitations, our
products would be unaffordable."
Gary Brock, a senior vice president of the Baylor University Medical
System, said 1,100 doctors affiliated with Baylor had declined to
sign with Aetna. He said they objected to a requirement that Baylor
doctors join all Aetna plans and accept the same fees in both HMOs
and more loosely managed networks.
Baylor, oddly enough, sits on both sides of the table. The
hospital-and-doctor system supports the doctors' revolt even though
it owns a minority slice of Aetna's Texas business. Aetna will have
more than 1.2 million subscribers in northern Texas after it
completes a purchase of NYLCare health plans from New York Life
Insurance Co.
Dr. Arthur Leibowitz, Aetna's chief medical officer, said the
doctors' complaints were just part of "business discussions" on the
way to "successful" contracts with 200,000 physicians.
"If we unilaterally change a provision of a contract," Leibowitz
said, "if you don't like them, you can quit, or, better, negotiate
with us."
In Chicago, several doctor groups in the Advocate Health System
broke off with United Healthcare in the last year, said Dr. Lee
Sacks, executive vice president of Advocate.
Even after Illinois Blue Cross and Blue Shield cut fees
"significantly" this spring in its preferred-provider networks,
Sacks said, the plans "were still paying 15 percent to 20 percent
more than United."
Dr. Kaveh Safavi, a United Healthcare vice president in Chicago,
said United ran on "a fixed total budget," which is linked to what
employers pay. That means that the fee "has to go down," he said.
"It's not just a United Healthcare issue," he added. "That's the
medical system."
Copyright 1998 The New York Times Company
_________________________________________________________________
June 21, 1998
Top of Page
Bill to Cap Damage Awards May Finally Survive Senate
By NEIL A. LEWIS
WASHINGTON -- The Senate is poised to try yet again in July to
enact legislation that has been around in one form or another for
more than a decade -- a bill setting nationwide standards to limit
damage awards to people harmed by faulty products as diverse as
heart valves and tractors.
Although its supporters have come tantalizingly close on several
occasions only to see legislative agreements fall to pieces at the
last moment, they are unusually optimistic this time around. The
main reason is that there is now apparent agreement among the
principals: the White House; Sen. Slade Gorton of Washington, the
chief Republican spokesman on the issue, and Sen. Jay Rockefeller,
D-W.Va., who has made product liability almost a personal crusade.
"I believe it looks like it will happen this time, but it seems you
can never be sure on this issue," Rockefeller said in an interview.
"In theory it should pass. The problem is to bring it up as soon as
possible."
In fact, Senate Majority Leader Trent Lott has told senators and
reporters that he now believes the measure has sufficient support
and that he expects to bring it to the floor for a vote around July
14. The principal obstacle to the legislation has always been in the
Senate, and not the House, supporters of the bill agree.
The issue pits an array of business interests who favor limits on
court-approved damage awards against a coalition of consumer groups
and trial lawyers and their influential trade organization. The
nation's largest manufacturers have said that the bill to be voted
on next month does not go far enough and that they will oppose it.
Whether to regulate damages in court cases is among the most complex
and often abstract of issues. How should the United States structure
its civil litigation system to achieve maximum fairness and
accessibility?
Supporters of the measure contend that the legislation is needed to
put a cap on multimillion-dollar jury awards that are out of control
and inhibit manufacturers and add to consumer costs.
Opponents, like Joan Claybrook, president of Public Citizen, a
consumer group in Washington, argue that by limiting awards for
punitive damages, which are typically given to express anger at
reckless or outrageously negligent actions, there is little
incentive for manufacturers to stop making unsafe products.
In addition to battles over the merits of the argument, the debate
is being fought with millions of dollars in campaign donations and
lobbying fees. The trial lawyers are traditional benefactors of the
Democrats, while the manufacturers are among the most generous
sources of political donations for the Republicans.
A measure to limit damages in product liability cases passed both
houses last year but was vetoed by President Clinton, who asserted
that it "tilted the field against consumers." The measure to be
voted on in July is largely tailored to the objections raised by
Clinton.
It would for the first time set national standards for product
liability lawsuits, including preventing litigation against
retailers and wholesalers unless they had altered the product.
It would prevent damages if the product was misused or altered by
the consumer or if the user was drunk or influenced by drugs. It
would allow punitive damages only where there was evidence of
"conscious, flagrant disregard" for safety on the part of the
manufacturer.
It would also prohibit lawsuits for damages caused by durable goods
like machine tools or tractors that were more than 18 years old.
The bill's limits on punitive damages have been narrowed from the
original bill vetoed by Clinton, in which all companies would have
benefited. Under the current version, limits on punitive damages
would apply only to companies with fewer than 25 employees or with
annual revenues of less than $5 million. The limit on what an
injured person could collect would be $250,000 or twice the actual
damages a person suffers, that is, lost wages and medical expenses.
The business community had been united in support of the original
bill. But when the punitive damages restriction was limited to small
businesses, the Civil Justice Reform Group, composed of such
companies as Du Pont, General Motors and Exxon, recently wrote to
Senator Lott saying it would not support the legislation.
Rockefeller said that with the majority of the Senate's 55
Republicans supporting the bill along with about a dozen Democrats,
he is hopeful that there would be at least the 60 votes needed to
cut off any filibuster or extended debate.
Copyright 1998 The New York Times Company
_________________________________________________________________
NEWS ANALYSIS
June 27, 1998
Top of Page
Does House Republican Health Plan Treat Political or Patient Concerns?
By LIZETTE ALVAREZ
WASHINGTON -- They gritted their teeth, but on Wednesday, with
their health-care gurus lined up shoulder to shoulder, House
Republicans unveiled their plan to patch up managed care with such
measures as expanding a patient's ability to choose a doctor and to
receive emergency care.
But as they did, they raised an important question: Did Republican
leaders offer the plan simply to provide political cover for the
November elections, or are they genuinely trying to pass a law to
address patients' concerns?
The answer, close associates of Speaker Newt Gingrich said, is both.
The first goal is easier. Even though no bill has been written and
no hearings have been held, the House rules should enable the
Speaker to bring a measure to a vote this year. That would allow
Republican incumbents to trumpet their support for patients' rights
and permit Republican challengers to run advertisements attacking
Democrats for abandoning the cause.
The second goal is dicier.
There is the Senate to contend with. Two weeks ago, it looked as
though Senate Republican leaders were still squeezing their eyes
shut, hoping the whole idea would just blow past them. Now that
House Republicans are promoting their own plan, that wishful
thinking has ended.
Senator Trent Lott, the majority leader, who warned the insurance
industry last year to "get off their backsides, open up their
wallets" and lead the fight against an overhaul, said on Tuesday
"the bill will come before the Senate sometime this summer."
But there is a catch.
House and Senate Republicans have not really worked in tandem to
come up with a bill. And with only 35 working days left, according
to Congress's leisurely view of the period between now and Oct. 9,
its target adjournment date, they are cutting it close.
Moreover, Senators made clear that they were working at their own
pace.
"There is no rushing," said Senator Bill Frist of Tennessee, a
doctor who is on the task force on the issue,
but "something is going to pass this year."
"It will involve the rights of patients," Dr. Frist said. "But we
are not going to have a knee-jerk response to the calls for
managed-care bashing."
On Thursday, Senator Don Nickles of Oklahoma, the Republican leader
who is heading the group, said the Senate version would have "some
comparable provisions" to the House proposal.
Like the House plan, it will not grant patients the right to sue
their health maintenance organizations. Nickles reviles that idea, a
central issue for Democrats.
But in the Senate, small minorities can stall legislation especially
as adjournment nears, so if Senate Republicans want to get a bill
passed, they will have to meet Democrats at least partway.
House Republicans were careful not to make their proposal too
palatable to Democrats. "Liberals" will not like this bill, Gingrich
said on Thursday. "It's not a liberal bill." So he scattered a few
Republican hand grenades, like limiting medical malpractice damages
and expanding the kinds of health plans that would be exempt from
state laws.
No one believes that the proposal, as is, will make it out of
Congress. Representative Charlie Norwood, Republican of Georgia, the
renegade who ignored his leaders' opposition to a bill to overhaul
managed care months ago and drummed up support for the issue, is the
first to say so.
"Why aggravate Democrats when we can get a good bipartisan law out
of this?" Norwood said. "Everything that is in there in terms of
that other stuff won't be in there later on."
That "stuff" is most likely there for bartering, not that
Republicans would not choose to revisit those issues.
Limits on medical malpractice awards have passed the House four
times.
Gingrich knows he will have to get President Clinton on board to try
to corral Democrats, but he expects the President to be willing to
compromise to get something done. If that willingness pits Clinton
against Representative Richard A. Gephardt, the House Democratic
leader, and Democrats who would rather see the Republican Congress
accomplish nothing, all the better.
Democrats are already working furiously to attack the House
Republican plan.
Gephardt stood next to a potted fig tree, with the image of Joe
Camel as a kind of theme-unifying prop behind it, and fired a
barrage of adjectives, "We are going to try to prevent a fig-leaf,
fraudulent, counterfeit bill from going through," he said.
In the Senate, Democrats have threatened to attach their own
patients' rights bill to other legislation after the recess.
"The Republicans have now concluded that this is an issue that they
can't ignore," Senator Tom Daschle, Democrat of South Dakota, said.
"Now the question is, How good will it be?"
But the Clinton Administration did not hesitate to pat Republicans
on the back for coming around on the issue, at least part of the
way.
Even so, Vice President Al Gore quickly said that the proposal, as
is, was "nothing more than a bill of goods." Meanwhile, the
insurance industry, which opposes the proposal, is ready to fight.
One insurance industry group is planning a new television
advertising campaign against patient protections.
But Norwood, the Republican whose revolt put pressure on his party's
leaders to face the issue, remained confident.
"It will take a brave Republican to vote against this bill," he
said. "And it will take a brave Democrat to vote against this bill."
Copyright 1998 The New York Times Company
_________________________________________________________________
July 10, 1998
Top of Page
Filibuster Kills Bill to Limit Damages in Product Liability Cases
______________________________________________________________
Related Articles (New York Times)
Gun-Control Advocates Threatening to Derail Damage-Cap
Legislation (July 7)
Damage-Awards Bill Has New Backer (June 11)
______________________________________________________________
By NEIL A. LEWIS
WASHINGTON -- Supporters of a measure to set nationwide standards
for court-awarded damages for injuries caused by faulty products
failed Thursday to win a crucial vote, leaving the issue consigned
once again to the legislative wilderness, perhaps for years.
The 51-47 vote to proceed on the bill was nine short of the 60
votes needed to end a filibuster by its opponents.
"I think it's finished for the year," said Sen. Don Nickles,
R-Okla.
The development was a deep disappointment for Sen. Jay Rockefeller,
D-W.Va., and Sen. Slade Gorton, R-Wash., who had worked over the
last two years to forge a compromise that would win enough votes.
In 1996, President Clinton vetoed an earlier version of the bill,
saying it tilted the playing field too much in favor of business
interests against consumers. But Rockefeller and Gorton thought
they were finally within sight of victory when the White House
recently agreed to the latest version of the legislation provided
there were no significant changes.
But the events of the last few days showed just how fragile the
situation was for the bill's supporters as they tried to navigate
against strong political head winds.
Many Democrats were searching for a way to have the Senate consider
a variety of other issues like health care along with the products
bill. They were angered that Senate Majority Leader Trent Lott,
R-Miss., blocked them from amending the products liability bill to
include legislation providing a so-called patients' bill of rights.
Sen. Tom Daschle of South Dakota, the Democratic leader in the
Senate, said the final blow to the bill's chances came with the
disclosure that Lott, the Republican leader, had quietly inserted
an amendment to benefit a company in his home state.
"The problem is that nobody saw it," Daschle said about the Lott
amendment. Democrats were already upset at Lott's efforts to
prevent them from introducing their amendments when they learned of
his special provision for Baxter Healthcare Corp., one of
Mississippi's largest employers. Daschle said that the Lott action
upset "a very delicate compromise worked out over many, many
weeks."
Even Rockefeller felt obliged to vote with fellow Democrats against
moving ahead with the bill.
Lott protested that Democrats were using the issue of his amendment
for Baxter as an excuse to scuttle the legislation.
"The duplicity that is going on here is staggering," he fumed to
reporters. He said that he hoped to reintroduce similar legislation
in the next Congress, an acknowledgment that with a dwindling
number of days remaining in this short congressional session it
would be virtually impossible to resurrect the issue this year.
As the roll call in the Senate dealt a slow end to the measure,
lobbyists for the consumer groups and trial lawyers who had opposed
it held an impromptu celebration in the east reception room off the
Senate floor. They cheered loudly when Sen. Ernest Hollings,
D-S.C., who was the bill's chief opponent, walked into their midst.
In the end, the bill extended its greatest protections only to
small businesses, those with fewer than 25 employees or with less
than $5 million in annual sales. As a result, trade organizations
representing the nation's largest corporations no longer supported
the bill, leaving groups representing small businesses to carry the
burden.
Whether the nation should regulate damages in court cases has been
hotly debated for years.
Supporters of the measure argued that legislation is needed to put
a cap on multimillion-dollar jury awards that are out of control
and inhibit manufacturers and add to consumer costs.
Opponents, like Joan Claybrook, president of Public Citizen, a
consumer group in Washington, have argued that by limiting awards
for punitive damages, which are typically given to express anger at
reckless or outrageously negligent actions, there is little
incentive for manufacturers to stop making unsafe products.
In addition to the merits of the argument, the debate was fought
with millions of dollars in campaign donations and lobbying fees.
It involved two of the most generous sources of political
donations, the Association of American Trial Lawyers, who generally
support Democrats, and manufacturers and businesses, who generally
support Republicans.
Copyright 1998 The New York Times Company
_________________________________________________________________