Recent congressional testimony by the Legislative Director of the Consumer Federation of America (CFA) catalogued several major trends in the insurance industry over the past two decades. Most of these trends are extremely adverse to consumers including small businesses. The first trend is the “hollowing out” of the benefits provided in many insurance policies through more restrictive coverage provisions and expanding exclusions that are poorly understood by the insureds who purchase these legally complex documents. The second trend is that many major insurance companies have turned their “claims operations into ‘profit centers’ by using computer programs and other techniques designed to routinely underpay policy holder claims.” As a result, the percentage of each premium dollar that goes to pay claims has fallen dramatically over the past 20 years, producing “unprecedented profits” for insurance company shareholders and insurance company executives at the expense of the insureds. The full report can be found at:
Testimony of Travis V. Plunkett, Legislative Director, Consumer Federation of America, 7/29/08.
Alaska Personal Injury Law Group’s Law Firm Ranked #1
Best Lawyers in America has now released its law firm rankings for 2009, and has ranked Atkinson, Conway & Gagnon #1 in the Products Liability category in both the Alaska and Anchorage surveys. The Alaska Personal Injury Law Group is the practice group within the firm of Atkinson, Conway & Gagnon handling claims in the specialty areas of law such as products liability, negligence, wrongful death, catastrophic injury, and insurance bad faith claims.
Benchmark: Litigation has released its 2009 rankings, as well. Reprising its 2008 listing by the organization, Atkinson, Conway & Gagnon was again listed as one of five law firms in Alaska selected for its premier “highly recommended” listing.
Both organizations utilize peer review surveys of practicing lawyers as an independent and objective means of determining which law firms are regarded by their peers as performing exceptional legal work.
Alaska Personal Injury Law Group Attorney Selected As “Lawyer of the Year”
Richard E. Vollertsen, one of the Alaska Personal Injury Law Group’s attorneys, has just been selected as “Lawyer Of The Year” by Best Lawyers In America. Mr. Vollertsen is one of three lawyers to be recognized from Alaska, and the only lawyer recognized in the specialty practice of Personal Injury Litigation. Another lawyer from his firm, Bruce E. Gagnon, was also selected by Best Lawyers as “Lawyer of the Year” in the specialty practice of Corporate Law.
Best Lawyers in America is one of the oldest publications rating lawyers in the United States, and is the gold standard for accuracy and integrity. Best Lawyers in American compiles its lists of outstanding attorneys by conducting exhaustive peer-review surveys in which thousands of leading lawyers confidentially evaluate their professional peers. The lawyers being honored as “Lawyers of the Year” received particularly high ratings in their surveys by earning a high level of respect among their peers for their abilities, professionalism, and integrity. Steven Naifeh, Managing Editor of Best Lawyers, says, “We continue to believe ā as we have believed for more than 25 years ā that recognition by one’s peers is the most meaningful form of praise in the legal profession. We would like to congratulate Richard E. Vollertsen on being selected as the ‘Alaska Best Lawyers Personal Injury Litigator of the Year’ for 2009.”
Is The FDA Getting It…Or Just Getting Around To It?
The bright spot in today’s news is that the FDA has announced its initiative against “contaminated weight loss products.” One has to applaud the agency’s efforts because diet supplements, in general, and weight loss products, in particular, have been “spiked” with pharmaceutical drugs for some time. The reason diet supplement marketers do this is because: 1.) drugs work, whereas diet supplements rarely do; and 2.) they can get away with it. The agency has been manacled in its enforcement efforts by the restrictions imposed by DSHEA, but it has also been substantially impaired in its efforts because of a lack of political will to regulate this wayward industry where it can. Thus, these kinds of initiatives are a breath of fresh air.
Imagine for a moment that it has been discovered that Pfizer had “spiked” its new blockbuster drug with a different, undisclosed drug, (or for that matter a diet supplement!). The FDA and the industry would be embroiled in immediate inquiries, and heads would roll. On the other hand, the FDA has known for decades about the illegal “spiking” of diet supplements with pharmaceuticals and has simply let the matter fester.
Be that as it may, the FDA has now released warnings as to a number of supplements, and has indicated that it will be seeking recalls of some of them. The supplements were found to contain sibutramine (a controlled substance), rimonabant (a drug not approved for marketing in the United States), phenytoin (an anti-seizure medication), phenolphthalein (a solution used in chemical experiments and a suspected cancer causing agent) or bumetanide (a diuretic). These substances all have pharmaceutical properties that include the laundry list of adverse effects one would expect. We have previously written about the deadly consequences of this type of adulteration here, and here, and we commend the agency for its efforts. Regardless whether the FDA is getting it or just getting around to it, this heightened scrutiny is long overdue.
Diet Supplement Execs: Another One’s In The Clink
Judge Jack T. Camp, of the U.S. District Court, has sentenced the CEO of Hi-Tech Phamaceuticals, Jared Wheat, to 50 months in prison for illegally selling knock-off prescription drugs over the internet. He was also fined $50,000, and was required, along with the company and other defendants, to forfeit $3 million in proceeds received in the scheme. In the proceeding, the defendants admitted to operating a facility in Belize that manufactured generic versions of pharmaceutical drugs, such as Xanax, Valium, Ambien, Vioxx, Ambien, Zoloft, Viagra and Cialis, and selling the drugs over the internet without requiring a prescription.
A co-defendant, Sergio Oliveira, a sales associate, was sentenced to 20 months in prison and fined $20,000. The judge had previously sentenced two other Hi-Tech officials, Stephen D. Smith and Tomasz Holda, to 27 months and 16 1/2 months respectively.
Hi-Tech’s supplements include Stamina-Rx, which it claims to be a “maximum sexual stimulant,” Lipodrene, supposedly capable of “advanced appetite control and metabolic stimulation,” and Metanabol, marketed as a “revolutionary catalyst for increasing lean mass and strength.”
Hey, Is That Nanotech In Your Vitamins?
The diet supplement industry has used innumerable methods of staying ahead of the posse (the FDA, the FTC, State AGs, and the courts). They have simply outrun regulation, and outfoxed the regulators. The industry has outlobbied the regulators, as well. Despite decades of scientific data and media disclosures, the industry is virtually unregulated, and the consumer still cannot trust that a diet supplement purchased on the open market is safe, effective, or unadulterated. “Caveat emptor, baby, caveat emptor” was also the chant of the Bush Administration in its approach to these issues.
A new report by the FDA asks the simple question whether the FDA is up to the challenge of regulating engineered nanoparticles in diet supplements. Without reading the report, we know the answer to be “no.” The FDA is not set up to litigate, it has not been given a true mandate to regulate this industry, it is underfunded, and its scientists are squelched. But let’s see what they say. “It is not clear that the supplement industry is conducting the rigorous testing needed either to understand the effects of nanoscale ingredients in its products or to back up product claims.” We had to pay for a study to get to this conclusion? The industry doesn’t do “rigorous testing”. It doesn’t on anything it sells, because it isn’t legally required to do so. Instead, the industry does “rigorous marketing”.
As for whether the agency is “up to the challenge,” the report concludes: “The short answer is no.” Three reasons are given: 1.) the agency doesn’t have the capacity to identify nano-based supplements; 2.) the agency has little regulatory authority over such supplements; and 3.) the agency lacks the scientific expertise and resources to effectively regulate these supplements. The report recommends what has been obvious for decades now–increase the agency’s regulatory authority, and increase its resources.
The FDA: Is It “Fundamentally Broken”?
Nine scientists at the FDA sent a letter to President Obama on Wednesday to plead for major reform at the agency. Their central concern is with the agency’s scientific review process for medical devices, which they characterize as having beeen “corrupted and distorted by current FDA managers, thereby placing the American people at risk”. The letter detailed their allegations, such as threats of disciplinary action against scientists who dissented from management. It described the atmosphere at the agency as being one where “the honest employee fears the dishonest employee,” and where scientists cannot do their jobs without fear of reprisal. Ultimately, the agency was described as “fundamentally broken”.
The scientists further detailed their efforts to take their concerns to agency leaders, such as Commissioner Andrew Von Eschenbach, and the assistant commissioner for accountability and integrity, attorney Bill McConagha, but no changes have occurred. Worse yet, the problematic managers were not held accountable, but were promoted and rewarded.
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How Many Side Effects Do You Need?
The potential for injury from the antibiotic flouroquinolone (Cipro, Levaquin) has been known for over 20 years, yet it was only recently that the FDA told the drug’s manufacturers to add a black box warning about the increased risk of tendinitis and tendon rupture. The FDA stopped short of requiring the manufacturers to send out a warning letter to doctors.
To date, the FDA has received 2,250 reports of tendon disorders and 775 reports of tendon ruptures. The problems have arisen in the Achilles’ tendon, as well as shoulder, hand, and other tendons. These numbers are only a small percentage of the adverse events that have likely occurred because adverse events are routinely underreported. The risk is higher in patients older than 60, and in those taking corticosteriods.
One concern about the increase in this complication is the increased use of this class of antibiotic, one some refer to as “Vitamin L”. It is apparently widely prescribed because it addresses a wide spectrum of bacteria, but the marketing of the drug characteristically underinforms doctors about this type of complication.
A Reason For Hope
We at the Alaska Personal Injury Law Group have been closely following preemption litigation because the results are so central to consumer-based litigation. Today, we find hope in the news that the United States Supreme Court has rejected the claims by Philip Morris that federal regulation of tobacco companies preempted any state claims from being asserted against the company.
The case arose in Maine and asserted that the company had fraudulently misrepresented that its “light” cigarettes were safer. Essentially, today’s ruling refuses to immunize fraudulent statements by corporations and has reaffirmed the presumption in the law against preemption of state laws: “When addressing questions of express or implied preemption, we begin our analysis with the assumption that the historic police powers of the States are not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” “Thus,” it continues, “when the text of a pre-emption clause is susceptible of more than one plausible reading, courts ordinarily accept the reading that disfavors preemption.”
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Injured Alaskans Need to Read New Report on Bad Faith Tricks of Insurance Companies
The Alaska Personal Injury Law Group has frequently warned injured Alaska consumers about various bad faith tactics used by insurance companies. A new study just released by the American Association for Justice documents many of the bad faith and fraudulent tricks and tactics insurance companies use to evade paying valid claims. Tricks of The Trade: How Insurance Companies Deny, Delay, Confuse and Refuse. All Alaskan consumers, but especially injured Alaskans making claims against an insurance company, need to read this revealing study.
The study details the bad faith tricks and tactics insurance companies use to delay and deny claims the policy requires the insurer to pay. It illustrates its findings with examples of tricks the insurers used against real people to deny their valid claims. These true stories involve outrageous conduct by insurance companies, reminiscent of John Grisham’s novel The Rainmaker. Unfortunately for the poor victims of this insurance company bad faith, the stories are not fiction. They illustrate well the depths to which insurers will stoop to enhance profits at the expense of the insured victims.
These sinister tactics are not limited to liability claims or automobile insurance. The horror stories include insureds who had their health insurance policies revoked in the middle of cancer treatment. The wrongful cancellations resulted in suspension of the critical treatment, delay in resuming crucial treatment, and the burden of unpaid bills totaling hundreds of thousands of dollars. Other true stories involve insureds who had their long term care policies revoked when they finally needed care, after paying premiums for the insurance for many years. In one instance, the family business had to be sold to cover the unpaid bills the insurance company wrongly refused to pay.
These horror stories are not isolated occurrences. Investigating whether an insurer engaged in wrongful post-claim underwriting to cancel health policies, California insurance regulators randomly selected 90 cases where Anthem Blue Cross cancelled policyholders who made a claim. In every single one of those 90 randomly selected cases, the regulators found that Blue Cross had violated state law in cancelling the policy. Study at p. 13.
Insurance companies use these same bad faith tactics to deny claims for damage for many different kinds of insurance. They are used on claims under homeowners’ policies, health insurance policies, long term disability policies, and others. The study names companies that engage in these bad faith schemes and gives specific examples of the bad faith, fraud, and the internal insurance company programs used to implement these tactics. Some of the companies discussed are Farmers Insurance Company, Allstate Insurance Company, State Farm Insurance Company, and AIG Insurance Company.
For example, Farmers Insurance Company had an employee incentive plan called “Quest for Gold” used to reward employees who met goals for low payments.
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