Professional Documents
Culture Documents
The Jere Beasley Report, Apr. 2008
The Jere Beasley Report, Apr. 2008
I.
CAPITOL
OBSERVATIONS
DRUG COMPANIES SETTLE AWP LAWSUIT
FOR $125 MILLION
www.BeasleyAllen.com
I N TH I S I S S U E
I.
Capitol Observations . . . . . . . . . . . . 2
II.
Legislative Happenings . . . . . . . . . . 5
III.
Court Watch . . . . . . . . . . . . . . . . . . 6
IV.
V.
VI.
Congressional Update . . . . . . . . . . 12
Source: Bloomberg
Business Litigation . . . . . . . . . . . . 24
X.
XI.
Predatory Lending. . . . . . . . . . . . . 26
Healthcare Issues . . . . . . . . . . . . . 36
Special Recognitions . . . . . . . . . . . 45
www.BeasleyAllen.com
www.BeasleyAllen.com
II.
LEGISLATIVE
HAPPENINGS
A SNAILS PACE IN THE ALABAMA
LEGISLATURE
So far during the session, the Alabama
Legislature has been traveling at a
snails pace when it comes to the
actual passage of bills. However, the legislative committees appear to have
been hard at work. The real problems
will come when the budgets come up
for consideration. Most Alabama citizens dont realize how serious the
money crisis facing this legislative
session really is. Funding for educational needs and for the operation of
the agencies that live out of the general
fund is going to be very difficult. Both
budgets are in serious jeopardy. Politicians have been saying no new taxes
for years and its catching up to those
who are now having to face the music.
The current group will have to
decide whether to drastically cut a
number of deserving programs and the
services they provide or increase the
amount of revenues that fund the state
budgets. If anybody really believes we
can get through this session without
new revenues, they havent kept up
with what is going on in Montgomery.
Even though Alabama hasnt been hit as
hard by the economic downturn affecting this country as some states, we can
no longer take the band-aid approach to
funding state budgets. Revenues are not
coming in as projected and it appears
the short fall will be significantly
greater than expected. Eventually, our
elected officials will have to get our
house in order. As they say where I
come from,its time to fish or cut bait!
www.BeasleyAllen.com
III.
COURT WATCH
www.BeasleyAllen.com
www.BeasleyAllen.com
www.BeasleyAllen.com
IV.
THE NATIONAL
SCENE
www.BeasleyAllen.com
10
www.BeasleyAllen.com
V.
THE CORPORATE
WORLD
EC MAY HAVE FINALLY GOTTEN
MICROSOFTS ATTENTION
It almost went unnoticed in the
media reports, but the European Commission fined Microsoft a record $1.3
billion last month.This fine is in addition to the $357 million fine it handed
down in 2006.The fines resulted from
Microsofts delay in complying with
sanctions in an antitrust case that
www.BeasleyAllen.com
11
elsewhere are independent contractors hired directly by the federal government and therefore are not
company employees. As we all know,
under federal law, companies must pay
Social Security and other federal taxes
on employees. The IRS has warned
Blackwater that the companys classification of a security guard as an independent contractor is without merit.
The IRSs finding is the result of an
inquiry filed by a Blackwater guard.The
company has appealed the IRS ruling.
The primary factor in determining
whether a worker is an employee or
independent contractor is the degree
of control the business has over its
worker. Incorrectly classifying a worker
could mean steep penalties for the
company, including a $25,000 penalty
if the IRS determines an appeal is frivolous or groundless. In its March letter to
Blackwater, the IRS noted the company
paid all of the guards travel expenses
and signed a written agreement detailing the type of work required.The IRS
stated in the letter that a worker who
is required to comply with another
persons instructions about when,
where and how he or she is to work is
ordinarily an employee. Interestingly,
in defending itself against last years
shootings involving its security guards,
Blackwater officials asserted that they
retained tight control of their guards
and even fired some 122 guards in
Iraq for improper conduct. Interestingly, Blackwater now contends it does
not have enough control over its
guards to classify them as company
employees, which seems rather odd
and certainly inconsistent.
Source: Associated Press
12
www.BeasleyAllen.com
VI.
CONGRESSIONAL
UPDATE
U.S. SENATE PASSES IMPORTANT CONSUMER
PROTECTIONS
The U.S. Senate passed the Consumer Product Safety Commission
(CPSC) Reform Act last month. If this
significant bill survives, it will bring
much-needed improvements to an
agency that has too long been ignored
and under-resourced. The senators
who voted for this bill should be commended for taking meaningful steps
toward improving the safety of American consumers. In spite of intense
opposition from industry and the
White House, those senators who
stood tall produced a good bill for
American consumers, but its provisions will have to survive a conference
committees report to become law.As
you may know, a separate bill that
www.BeasleyAllen.com
13
VII.
PRODUCT
LIABILITY UPDATE
OCCUPANT PROTECTION IN ROLLOVER
EVENTS
As we have mentioned in previous
issues, its undisputed that rollover
events are foreseeable crashes. Auto
manufacturers have made billions of
dollars over the last two decades selling
large- and medium-sized sport utility
vehicles to the traveling public. The
National Highway Traffic Safety Administration (NHTSA), along with auto manufacturers, have recognized since the
early 70s that vehicles like SUVs, with
high centers of gravity, are more susceptible to rollover events than other types
of passenger cars. The federal government even compiles statistics regarding
the types of accidents that occur on an
annual basis in this country.The statistics show that rollover events are
common and usually result in severe
injuries or death. Despite this evidence,
auto manufacturers have failed to
provide vehicle designs that incorporate adequate occupant safety features
to prevent or mitigate injuries in
rollover events.
During a rollover event a number of
factors can contribute to serious
injuries or deaths for occupants.These
factors include roof strength, seat belt
design, and airbag systems, as well as
glazing or glass. Often, occupants are
injured by significant roof crush during
a rollover event. Manufacturers are
required to meet Federal Motor Vehicle
Safety Standard (FMVSS) 216 for roof
strength in order to sell vehicles to the
public. However, the standard is inadequate.This standard does not require a
manufacturer to perform a dynamic
rollover test to see how a roof performs in an actual rollover event. As a
result, most vehicles have inadequate
14
www.BeasleyAllen.com
www.BeasleyAllen.com
Citizen has led the attacks on automakers about the issue and has long urged
NHTSA to upgrade its 37-year-old standard.
NHTSA first proposed upgrading its
roof strength rule in 2005. After pressure from safety advocates and victims
families, NHTSA requested comments
on a tougher plan. It would involve
testing both sides of a vehicles roof.
The government has required since
1971 that roofs on cars be able to hold
more than 1.5 times the vehicles
weight.The standard was extended to
cover SUVs and pickups in 1991. In
2005, NHTSA proposed raising that
figure to two times the cars weight.
Now, it is considering up to three times
the cars weight, something safety advocates have urged.
Robert Shull, deputy director for auto
safety at Public Citizen, says NHTSA
under-estimates the effects stronger
roofs would have. For example, he
notes, the agency doesnt attribute
fatalities to roof crush if the deaths
occur after a door opens or a window
smashes during a rollover and the passenger is totally or partially ejected.
Shull argues, though, that a weak roof
can also lead indirectly to rollover
deaths and injuries. When a vehicle
rolls, it causes the whole system to be
compromised, Shull says. When a roof
cant handle the weight of a car, he
notes, the side pillars alongside the
windshields and between the doors
must bear the cars weight and can
begin to crumble. Lund, of the IIHS,
agrees and says: Stronger roofs keep
doors and windows from opening.As a
result, he disputes the NHTSAs suggestion that people not using seatbelts are
not likely to be helped much by
stronger roofs.
Still unclear is the role of seatbelt use
in rollover accidents. Two-thirds of
those killed in rollover crashes arent
belted.Automakers contend that crushing roofs arent the cause of injuries to
unbelted occupants.Victims and advocates reject that assertion.They argue
that the issue is simple: No matter how
a motorist comes into contact with a
car roof, everyone would be safer if the
roofs were less likely to crush. Paula
15
16
www.BeasleyAllen.com
While the Rhino has been a reliable and versatile vehicle, some
operators have engaged in aggressive driving (such as sliding, skidding, fishtailing, or doing donuts)
or made abrupt maneuvers (such
as turning the steering wheel too
far or too fast) that have resulted
in side rolloverseven on flat,
open areas. Unfortunately, some
occupants have been seriously
injured during such rollovers
when they put their arms or legs
outside the vehicle, resulting in
crushing or other injuries.
Yet, without admitting that the
Rhinos design is defective, Yamaha
recently developed doors and passenger handholds for the Rhino and is
offering them to owners of the 20042007 ATV models free of charge. The
company claims that these features will
help people keep their limbs inside the
vehicle during a rollover. While these
features may indeed offer extra protection in the case of a rollover, the
rollovers should not be happening in
the first place. Yamaha is making the
offer of these features sound as though
they are a special offer, rather than the
installation of safety features that
should have been present from the
beginning. Furthermore,Yamaha should
admit that the core design of the Rhino
is defective. Instead, the company has
dealt with the safety problems by doing
things such as pasting a sticker to the
dashboard of the Rhino encouraging
responsible use of the vehicle. The
sticker contains statements that admit
the vehicles propensity to roll over,
such as:
If you think or feel the Rhino
may tip or roll:
Brace yourself by pressing your
feet firmly on the floorboards and
keep a firm grip on the steering
wheel or handholds.
Do not put your hands or feet
outside of the vehicle for any
reason.
These warnings put the blame for
defective design of the Rhino on the
VIII.
MASS TORTS
UPDATE
We are constantly being asked about
what is going on in our firms Mass
Torts Section. Lawyers in the Section
are currently investigating a number of
drugs and medical devices, and are
involved in litigation with a number of
them. I will give a brief summary of
what the Section is doing at present.
AVANDIA
Avandia, which is widely used to
treat patients with Type II diabetes mellitus, has been associated with a significant increase in the risk of myocardial
infarction and an increase in the risk of
death from cardiovascular causes.
Frank Woodson and Roger Smith are
the primary lawyers who are handling
Avandia cases for the section.
FOSAMAX
Fosamax (alendronate sodium), manufactured by Merck, is in a class of drugs
called bisphosphonates. Fosamax is
commonly used in tablet form to
prevent and treat osteoporosis in postmenopausal women. Recently the
Journal of Oral and Maxillofacial Surgeons reported a link between bisphosphonates and a serious bone disease
called Osteonecrosis of the Jaw (ONJ).
Osteonecrosis is a disfiguring and disabling condition of the jaw bone that
causes infection and rotting of the jaw
bone.Typical presentation of Osteonecrosis is pain, soft-tissue swelling and
infection, loosening of teeth, drainage,
and exposed bone. Symptoms may
occur spontaneously, or at the site of
previous tooth extraction. Leigh ODell
and Chad Cook are the primary
lawyers in the section who are handling Fosamax cases.
GADOLINIUM
The U.S. Food and Drug Administra-
www.BeasleyAllen.com
17
18
www.BeasleyAllen.com
ORTHOEVRA
OrthoEvra is a hormone contraceptive available in a transdermal patch.
OrthoEvra is manufactured by Ortho
McNeil (a subsidiary of Johnson &
Johnson). Recently the FDA disclosed
that excessive levels of estrogen delivered by the birth control patch can
cause serious injuries and even death.
According to the FDA women who use
the patch are exposed to 60% more
estrogen than those who are taking the
pill, therefore increasing their risk of a
serious adverse event. Injuries or
death claims involving OrthoEvra
would likely be based on the following
criteria: Documented use of OrthoEvra
at the time of injury and significant
adverse event(s) including blood clots,
pulmonary embolism, heart attack,
stroke, deep vein thrombosis, and/or
death. Chad Cook is the primary lawyer
handling OrthoEvra cases for the
Section.
PAXIL
Paxil (paroxetine) is an anti-depressant manufactured by GlaxoSmithKline. Recently Public Health Advisories
have been issued for Paxil regarding
an increased risk of heart birth defects,
persistent pulmonary hypertension
(PPHN), omphalocele (an abnormality
in newborns in which the infants intestine or other abdominal organs protrude from the navel) or craniosynostosis
(connections between sutures-skull
bones, prematurely close during the
first year of life, which causes an abnormally shaped skull) in children born to
mothers exposed to Paxil. We are
handling cases on behalf of children
born with birth defects to a mother
who has documented use of Paxil
during pregnancy. Chad Cook is the
primary lawyer who is handling Paxil
cases for the Section.
RENU MOISTURELOC
ReNu MoistureLoc, manufactured by
Bausch & Lomb, is a solution used to
clean contact lens. Bausch & Lomb
announced on April 10, 2006, that it was
suspending shipments of this contact
solution and retailers were urged to
remove the solution from their shelves.
Reports of fungal keratitis infections in
users of this have been reported in
contact lens wearers who use ReNu
with MoistureLoc. Chad Cook is the
primary lawyer handling ReNu MoistureLoc cases for the section.
PAIN PUMPS
www.BeasleyAllen.com
19
RICE LITIGATION
Genetically modified riceLL601
and LL604has been discovered in the
U.S. rice crop, causing significant loss
of revenue to U.S. farmers and threatening the success of U.S.-grown rice on
the world market. LL601 and LL604
are types of genetically-modified rice
developed, manufactured, and tested by
Bayer CropScience. Bayer allowed the
unapproved rice to contaminate
conventional rice varieties. At the time
neither LL601nor LL604 were approved
for human consumption. Rice from
farms in a five-state regionArkansas,
Mississippi, Missouri, Louisiana, and
Texashas tested positive for LL601
and LL604. Rice farmers have suffered
losses due to crop contamination, lost
revenue, and additional costs associated with complying with state and
federal efforts to eradicate the contaminated rice. We are currently investigating potential claims of farmers
from Arkansas, Mississippi, Missouri,
Louisiana, and Texas who produced or
sold rice at any point from 2003 to the
present. Frank Woodson and Leigh
ODell are the primary lawyers who are
handling these cases.
VIAGRA
Viagra is a drug manufactured by
Pfizer used to treat erectile dysfunction. We are currently investigating
cases involving partial or complete
blindness caused by non-arteritic
ischemic optic neuropathy (NAION).
This is a condition in which blood
supply is reduced to the optic nerve
causing permanent nerve damage.
Chad Cook is the primary lawyer in the
Section handling Viagra cases.
STEVENS-JOHNSON SYNDROME
Stevens-Johnson syndrome is an allergic reaction that can be caused from an
infection or immune response to drugs.
It is a severe expression of a simple
rash known as erythema multiforme. It
affects all ages and genders including
pediatric populations.The most severe
form of SJS is toxic epidermal necrolysis (TENS). SJS occurs twice as often in
men as in women. Most cases of SJS
appear in children and young adults
under age 30. Females with SJS are
twice as likely as males to develop
TENS. Frank Woodson is the primary
lawyer handling SJS cases for the
Section.
TRASYLOL
Trasylol is used to reduce blood loss
and the need for blood transfusion in
20
www.BeasleyAllen.com
ZITHROMAX
Zithromax (azithromycin), manufactured by Pfizer, is a popular antibiotic
used most often to treat respiratory
infections, while also used to treat skin
infections and some sexually transmitted diseases. Zithromax is taken once
daily, usually two to five days under
normal dosage. The most serious types
of health problems that have been
attributed to Zithromax include liver
damage resulting in death or liver transplant surgery. The symptoms for liver
damage may include yellow eyes,
abdominal pain, nausea, clay colored
stools, and dark urine. Recent warnings
have been added to the label regarding
abnormal liver function, jaundice, necrosis, hepatic (liver) failure and death,
which have been reported by persons
taking this drug. Chad Cook and Frank
Woodson are the primary lawyers in the
Section handling these cases.
Hopefully, the above information will
answer some of the questions we have
been getting concerning the Mass Torts
Sections activities. In addition to the
primary lawyers mentioned for a drug
or medical device, once a case is taken,
a trial team is put together at an early
stage so that preparation for trial can
get started. Its been very busy in this
www.BeasleyAllen.com
21
22
www.BeasleyAllen.com
www.BeasleyAllen.com
23
24
IX.
BUSINESS
LITIGATION
A DISPUTE IS SETTLED ON ENRON
PAYMENTS
Former Enron employees will now
get the remainder of lawsuit settlement
payments that had been delayed for a
long time because of a dispute. The
Department of Labor announced
recently that The Enron Creditors
Recovery Corp. and the Illinois-based
human resources company Hewitt
Associates will restore $11.2 million to
the settlement fund. As has been
reported, Hewitt had made a serious
error in the first wave of payments in
2006. The settlement resolves a contempt motion filed against Hewitt for
having misallocated the 2006 disbursement and refusing to make up the difference.The settlement will ensure that
all pension plan participants will
receive all the funds to which they are
entitled. U.S. District Judge Melinda
Harmon is overseeing the settlement
and fund disbursement.
The lawsuit in question was filed on
behalf of employees who were in
Enron retirement plans when the
energy company collapsed in 2001.The
entire case was settled for $218
million. In 2006, Hewitt erred when it
made the first wave of payments. In a
disbursement of $89 million, it misallocated $22 million in paymentsoverpaying 7,700 ex-employees and
underpaying 12,600.
The problem could have been
resolved in part by altering the second
set of payments, but that would have
left the settlement fund with a $9
million shortfall.The $11.2 million settlement includes interest on that
money. The rest of the $218 million
remained in limbo until the $11.2
million was restored. Hewitt took the
position that, because it was hired by
Enron, Enron was ultimately responsible for Hewitts errors. That really
made no sense and was impossible to
justify. The good thing now is that
www.BeasleyAllen.com
X.
INSURANCE AND
FINANCE UPDATE
AIG TO PAY RECORD $9.1 MILLION
SETTLEMENT TO PENNSYLVANIA REGULATORS
American International Group Inc.
will pay $13.5 millionincluding a
record $9.1 million in penalties and
investigative coststo settle allegations of bid-rigging and financial misreporting brought by the state of
Pennsylvania. The settlement requires
the company to provide annual reinsurance reports, maintain compensation
disclosure rules for producers and
make further compliance initiatives.
Acting Pennsylvania Insurance Commissioner Joel Ario made this statement
relating to the settlement:
Financial reporting must be accurate for us to protect insurance
consumers and be certain that
www.BeasleyAllen.com
25
having direct impact on others, according to the report. For the new study,
Ernst & Young and Oxford Analytica
interviewed more than 70 industry analysts from around the world to identify
the emerging trends and uncertainties
driving the performance of the global
insurance sector over the next five
years.The study identified risks in three
broad areasmacro, sector-specific,
and operational threats. It identified the
top ten risks and five emerging threats.
The analysts told Ernst & Young these
are the strategic risks that industry
leaders must manage if they are to
maintain dominant competitive positions, raising questions about how
these risks will change what companies offer customers, the way they offer
services, and where.
The analysts also identified five
emerging risks, just outside the top ten,
which have the potential to become as
significant during the next five years.
These are: over-reliance on modelbased risk management; threats to
industry reputation; losing the war for
talent; increasing exposure to global
regulatory heterogeneity; and the possible emergence of entirely new risks.
Peter Porrino, global director of Insurance Services at Ernst & Young, made
these comments:
As the insurance environment
becomes more complex, companies need to shift from traditional
risk management approaches to
integrated processes that add
greater value. Understanding how
to respond to current trends is
paramount for insurers as they
seek to manage risk, optimize
performance, and increase operational effectiveness. The top three
risksclimate change and demographic shifts in core markets,
and catastrophic eventsare far
reaching social and environmental trends with complex long term
ramifications for the industry as
a whole.
26
www.BeasleyAllen.com
XI.
PREDATORY
LENDING
MORGAN KEEGANS SUBPRIME MORTGAGE
GAMBLE
As we have seen in recent weeks, the
stock market can be a volatile place,
especially for the investment firms who
decide to gamble in the subprime securities market. For the past several
months, the nation has watched as the
housing market has continued its
plunge to levels not seen since the
Great Depression. At the center of
attention are the investment firms who
invested so heavily in the subprime
securities market and the investors
who entrusted their money to these
firms with the belief their investments
were secure. Our law firm has recently
taken a very hard look at one such
investment firm, Morgan Keegan.
Morgan Keegan is a Tennessee-based
investment firm that advertised their
Select Intermediate and High Income
Mutual Funds as investments that
would provide high yields without
excessive risks. However, the investments were actually made in illiquid
securities that are rarely traded and do
not have active price quotes that are
maintained.When the subprime mortgage crash occurred, these investments
suffered substantial losses.
www.BeasleyAllen.com
the mortgage crisis, government officials with knowledge of the case said
on Saturday. The Justice Department
and the Federal Bureau of Investigation
(FBI) are looking at whether officials at
Countrywide, the nations largest mortgage lender, misrepresented its financial condition and the soundness of its
loans in security filings.The investigationfirst reported last month in the
Wall Street Journalwas at an early
stage at press time. It was unclear
whether anyone will ultimately be
charged with a crime.
As you know, the FBI is investigating
14 companies as part of a wide-ranging
review of business practices in the
mortgage industry. In that broader
investigation, the FBI is looking into
possible accounting fraud, insider
trading, or other violations in connection with loans made to borrowers
with weak, or subprime, credit. The
inquiry into the companies began last
spring and it involves companies across
the financial industry, including mortgage lenders, loan brokers, and Wall
Street banks that packaged home loans
into securities.
As part of that investigation, the FBI is
cooperating with the Securities and
Exchange Commission, which is conducting about three dozen civil investigations into how subprime loans were
made and packaged and how securities
backed by those loans were valued.
Several state prosecutors are also investigating mortgage industry practices. For
the 2006 fiscal year, there were 35,600
documented reports of suspected mortgage fraud, up from 22,000 the year
before and 7,000 in 2003. State officials
have also been active in bringing mortgage cases. I am not certain how all of
the investigations will turn out or what
the ramifications will be. I am certain,
however, that a failure to adequately regulate the mortgage lenders and those
other groups that were a part of the
whole package is largely to blame for
the massive problems that are most
apparent. I also believe strongly that the
Bush Administrations efforts to protect
corporate wrongdoers have contributed
to the overall problem.
Source: New York Times
27
28
www.BeasleyAllen.com
XII.
PREMISES
LIABILITY UPDATE
SOUTH CAROLINA COMPANY ASKS JURY
FOR $420 MILLION
A South Carolina textile company
that closed as a result of a train wreck
and toxic chemical spill in 2005 wants
the railroad to pay $420 million in
damages.The Norfolk Southern wreck
ruptured a car carrying chlorine and
released a poisonous cloud over the
mill town of Graniteville, South Carolina, killing nine people and injuring
250. Some 5,400 people were evacuated. Equipment at Avondale Mills
Graniteville facilities was covered with
corrosive chemicals after the crash, and
the companys flagship canvas plant
was locked down for safety reasons for
eight days. Avondale chief executive
Steven Felker Jr. closed the company
for good in May 2006 after experts
determined it would have cost more
than the business was worth to clean
the buildings and replace the machinery.The railroad has accepted blame for
the crash but is contesting damages.
Norfolk Southerns insurance company
is also part of the lawsuit.The company,
Factory Mutual, says that Norfolk Southern should repay the company the
$215 million to cover what it paid out
to Avondale Mills.The civil trial is projected to last for three months. The
crash occurred when a Norfolk Southern train veered off the main track onto
a spur, rear-ending a parked train
whose crew had failed to switch the
tracks back to the main rail. Norfolk
Southern should be held accountable
because the railroad knew that
members of the crew operating the
www.BeasleyAllen.com
29
www.BeasleyAllen.com
XIII.
WORKPLACE
HAZARDS
OSHA UNCOVERS A NUMBER OF REFINERY
VIOLATIONS
A national audit conducted by the
Occupational Safety and Health Administration (OSHA) inspectors of U.S.
refineries has found 146 violations
many described as potentially lifethreateningafter reviewing just 17
refineries in a dozen states. Even
though only 17 of 81 targeted refineries in this country have been reviewed
so far, those preliminary results have to
be most disturbing. OSHA wants to
expand the audit to include chemical
plants. The nationwide audit was
launched last year in response to
decades of U.S. refinery deaths, including the massive explosion that killed 15
people and injured 170 others at BPs
Texas City refinery in March 2005. It
has been reported that at least 29
people have died in U.S. refinery accidents from 2005 to 2008.The National
Emphasis Program aims to cover 64
more refineries in the next two years.
www.BeasleyAllen.com
Interestingly, BPs new chief executive,Tony Hayward, has received a dramatic increase in his 2007 bonus,
which was much higher than the
award granted to his predecessor in
2006.The U.K. oil giants oil new CEO,
who took over in May of 2007, was
awarded a bonus of 1.26 million ($2.5
million) for 2007, according to BPs
annual report. The number compares
with a 250,000 bonus for Mr. Hayward
for 2006 and 900,000 the same year
for his predecessor John Browne. In
October, Mr. Hayward launched a wideranging restructuring at the company,
following a difficult 2006, which
included a well publicized, part-shutdown at a BP Alaska oil field. Its pretty
obvious that the bonuses for these corporate bosses werent awarded for
excellence in safety!
Source: Wall Street Journal
31
32
www.BeasleyAllen.com
www.BeasleyAllen.com
XIV.
TRANSPORTATION
FAA LEVELS RECORD $10.2 MILLION FINE
AGAINST SOUTHWEST
The Federal Aviation Administration
(FAA) issued a $10.2 million finethe
largest in its historyagainst Southwest Airlines last month.The fine is for
Southwest flying 46 jets during nine
months in 2006 and 2007 without performing required inspections for cracks
in the fuselage. Cracks eventually were
found on six of the planes.The Boeing
737 jets made 59,791 flights before the
airline realized in March 2007 that the
inspections had not been completed.
The FAA said that the airline deliber-
33
ately made 1,451 more flights after discovering the lapse. The agency transferred an FAA supervisor who had
been overseeing Southwest to another
job and has taken appropriate action
against an unnamed employee, according to a spokeswoman for the FAA.The
inspections were ordered after undetected cracks in an Aloha Airlines 737
allowed a portion of the skin to peel
away in flight in 1988, killing a flight
attendant.
After having discounted the problems for several days, and claiming that
safety was never compromised, on
March 12th Southwest grounded 41
planes, which is about 8% of its fleet.
The company had 520 Boeing 737 jets
at the end of last year. Nearly 200 of
them are older models, the Boeing
737-300, that were supposed to
undergo extra inspections for cracks
in the fuselage.
Southwest, the low-fare carrier that
has more domestic flights than any
other airline, disclosed the missed
inspections to the FAA in March 2007.
The FAA has a program that encourages
airlines to disclose safety problems
without fear of being punished. Linda
Goodrich, vice president of the Professional Airways Systems Specialists, the
union that represents FAA inspectors,
said many union members have come
forward to complain that the agency
abuses the program. They claim that
the agency has allowed (airlines) to
use this system to get around enforcement actions and that airlines have
been allowed to disclose safety problems and escape fines even though
inspectors initially discovered the problems. It should be noted that FAA regulations prohibit that practice.
Whistle-blowers working with the
House Transportation Committee had
produced detailed documentation
about the problems at Southwest,
according to a February 11th letter
from the Inspector General for the
Department of Transportation. Committee Chairman Jim Oberstar (D-MN), had
asked the agency to investigate the
claims.The previous high FAA fine was
levied last year against TAG Aviation.
That fine, $10 million, was for operat-
34
www.BeasleyAllen.com
www.BeasleyAllen.com
35
36
XV.
HEALTHCARE
ISSUES
PROBE BY THE ASSOCIATED PRESS FINDS
DRUGS IN DRINKING WATER
A vast array of pharmaceuticals
including antibiotics, anti-convulsants,
mood stabilizers, and sex hormones
have been found in the drinking water
supplies of at least 41 million Americans. This shocking news comes as a
result of the findings by an Associated
Press investigation.The concentrations
of these pharmaceuticals are very
small, measured in quantities of parts
per billion or trillion, far below the
levels of a medical dose. Utilities insist
their water is safe. But the presence of
so many prescription drugsand overthe-counter medicines like acetaminophen and ibuprofenin so much of
our nations drinking water is not good
news by any stretch of the imagination.
It has increased concerns among scientists of long-term consequences to
human health.
It was reported that members of the
Associated Press National Investigative
Team reviewed hundreds of scientific
reports, analyzed federal drinking water
databases, visited environmental study
sites and treatment plants, and interviewed more than 230 officials, academics, and scientists. They also
surveyed the nations 50 largest cities
www.BeasleyAllen.com
and even post-traumatic stress disorder if the patient regains consciousness, according to the Joint
Commission on Accreditation of
Healthcare Organizations.Aspects Bispectral Index or BIS system assesses
brainwaves to help doctors accurately
gauge unconsciousness and adjust
anesthesia. It is used in about 60% of
U.S. operating rooms and is the only
system of its kind approved by the
U.S. Food and Drug Administration.
Apparently, there has been only a
single large randomized study suggesting it worked, and yet it was enjoying
widespread adoption throughout operating rooms in the U.S. and throughout
the world. The research team looked
for evidence of anesthesia awareness in
967 patients monitored by the BIS
system and 974 people in a control
group that used a long-established
monitoring methodstandard in new
anesthesia machinesthat measures
the concentration of anesthesia gas
exhaled by the patient.
Source: Reuters
XVI.
ENVIRONMENTAL
CONCERNS
A LOOK AT HOW THE EPA COMES UP WITH
POLLUTION STANDARDS
I would be highly suspicious of anything the Bush Administration does on
any front between now and when the
President leaves office in January of
2009. In this regard, its being reported
that the Environmental Protection
Agency is asking Congress to rewrite
the Clean Air Act.The EPA has limited
the allowable amount of pollutionforming ozone in the air to 75 parts per
billion, a level significantly higher than
what the agencys scientific advisers
had urged for this key component of
unhealthy air pollution. EPA Administrator Stephen L. Johnson is pushing for
the rewrite of the nearly 37-year-old
Clean Air Act. He wants to allow regulators to take into consideration the cost
www.BeasleyAllen.com
37
38
www.BeasleyAllen.com
www.BeasleyAllen.com
pumps and drains and cleanup equipment that may be in place for another
decade. Its said that the underground
leak has fouled parts of three city
blocks with enough gasoline to fill two
tankers. Its reported that a number of
homes are now completely uninhabitable and may never be usable again.
The fumes contain cancer-causing
benzene, which may not emerge for
decades as a health issue in the people
who have been exposed.
Source: The Salt Lake Tribune
39
XVII.
THE CONSUMER
CORNER
THE WORST CARS OF 2008 ACCORDING TO
CONSUMER REPORTS
Consumer Reports has released its
annual list of the worst cars of 2008.
Over 260 vehicles were compared in
this years evaluation. Once again,American SUVs dominated the field,
although there were a number of
Toyota models, usually the strong
players, at the bottom of the field as
well. The worst cars are as follows:
Jeep Wrangler UnlimitedThe
Wrangler Unlimited was characterized by its poor ride and handling, as
well as its subpar fuel economy, fit,
and finish.
Hummer H3 five-cylinderPoor
performance and fuel economy as
well as a low rating for handling and
reliability ensured the Hummer H3
was at the bottom.
Jeep Liberty SportRated poorly
for fuel economy, NVH levels and fit
and finish.
Chevrolet Aveo5The Aveo5 only
suffered from poor acceleration and
handling but compared to its rivals
the South Korean hatch was the
worst performer.
Dodge Nitro SLTOne of the
worst cars in the field, the Dodge
Nitro SLT was rated as having poor
ride, handling, braking, NVH levels
and fuel economy.
Toyota FJ CruiserA work horse
SUV that requires premium fuel and
suffers from poor fit and finish and
subpar ride and handling.
Toyota YarisThe Yaris is one of the
most popular subcompacts in the
world but its poor acceleration and
vague steering meant it was one of the
worst cars in this years comparison.
Suzuki
ForenzaThe Suzuki
Forenza was rated poorly because of
40
www.BeasleyAllen.com
scams people should be aware of. Officials say people also shouldnt fall for
predators posing as IRS agents asking
for information needed for their rebate.
The payment will be sent out automatically to anyone filing a return. Acting
IRS Commissioner Linda Stiff told Congress last month that people have forwarded thousands of e-mails to the
agency, reflecting more than 1,500 different schemes. Thieves use information to empty victims bank accounts,
run up credit card charges or apply for
loans in the victims names.A taxpayers
advocate is urging the IRS to take a
coordinated approach on identity theft.
Source: Associated Press
www.BeasleyAllen.com
their vehicles. Consumers must understand that most body shops view the
insurance company as the customer
because it has the checkbook. There
have been instances where body shops
performed repairs, but covered up
hidden damage. There have also been
reports of vehicles not being repaired
in a satisfactory or safe method. Consumers have been conditioned to let
the body shops and insurance companies negotiate the repair transaction,
leaving the consumer pretty much out
of the loop. The following are some
questions vehicle owners may want to
ask the body shop or their insurance
agent prior to having repairs done:
Have any oral or written agreements
been made to use discount parts
and/or labor with any outside entity
for the repairs to the vehicle?
Have any oral or written agreements
been made with any outside entity
that may alter professional recommendations concerning the needed
repairs to the vehicle?
Will the body shop provide a copy of
any written agreement that they have
with the insurance company handling the claim?
Should only original equipment manufacturer (OEM) parts be used?
Are after market, non-OEM, and
used parts the same as the parts on
the damaged vehicle?
Will the body shop provide a written
opinion concerning the use of OEM
parts to repair the vehicle?
Does the body shop install used or
salvaged suspension parts to repair
vehicles?
Does the body shop install used air
bags, seat belts, or other safety equipment when repairing vehicles?
Does the body shop install any used
or salvaged frame and structural
parts?
Does the body shop install any used
or salvaged weld-on structural sections or body panels?
41
42
www.BeasleyAllen.com
XVIII.
RECALLS UPDATE
GM RECALLS AUTOMOBILES
REEBOK TO PAY RECORD FINE FOR TOXIC
BRACELETS
Athletic shoe and apparel maker
Reebok has agreed to pay a $1 million
fine for importing and distributing
charm bracelets that contained toxic
levels of lead and resulted in the death
of a four-year-old boy.The civil penalty
is the largest ever for a violation of the
Federal Hazardous Substances Act and
follows a 2006 recall of 300,000 of the
Chinese made bracelets.The previous
record fine of $600,000 was paid by
Winco Fireworks in 2005 for importing dangerous fireworks from China.
The bracelets were provided as free
gifts by Reebok International Ltd. with
the purchase of various styles of childrens footwear. In March 2006, the
company learned that a four-year-old
boy from Minneapolis died after swallowing the bracelets heart-shaped
pendant. There were no other deaths
or injuries reported, according to the
CPSC. Acting CPSC Chairman Nancy
Nord said in a release: This civil
penalty sends a clear message that the
CPSC will not allow companies to put
childrens safety at risk.
The Canton, Massachusetts-based
company issued a notice in April 2006
that said it was recalling about 510,000
pendants that were distributed worldwide beginning in May 2004.While the
Reebok recall was announced two
years ago, problems with Chinese
exports continued in 2007.There were
a number of high-profile recalls of
potentially deadly products made in
China last year including toothpaste,
other toys tainted with lead, and pet
food that contained a toxic chemical.
Adidas AG acquired Reebok in 2006 in
a $3.8 billion deal that helped the
German company expand in the U.S. to
better compete with Nike Inc. and
Puma AG.
Source: MSNBC
www.BeasleyAllen.com
43
44
www.BeasleyAllen.com
November 2007 for about $200. Consumers can contact Progress Lighting
at 866-418-5543 to schedule a free
repair.
XIX.
FIRM ACTIVITIES
EMPLOYEE SPOTLIGHTS
TOM METHVIN
Tom Methvin, a native of Eufaula,
Alabama, graduated from the University
of Alabama with a degree in Corporate
Finance in 1985. He then earned his law
degree from Cumberland School of Law
in 1988.Toms family has been involved
in the practice of law in Alabama for
www.BeasleyAllen.com
XX.
SPECIAL
RECOGNITIONS
FCA GETS THE JOB DONE
The Fellowship of Christian Athletes
does a tremendous job of getting the
Gospel message out to athletes and
coaches nationwide. The saving
message of Jesus Christ reaches young
45
folks who might never have the opportunity to hear it except for the efforts
of the FCA.The FCA is hard at work in
Alabama. Throughout the state, FCA
Huddles at colleges, high schools, and
junior high schools are in place, with
more in the process of being added.
Since January, the FCA has shared the
gospel with over 20,000 students in
school assemblies and FCA events
throughout the state.As a result, there
have been over 500 professions of faith
so far this year. Its vitally important to
keep the FCA on the battlefield for the
souls of our young folks. Accepting
Jesus Christ as his personal savior is
much more important to a five-star
running back in Alabama than his
scoring 1,000 touchdowns.That profession of faith is the key to eternal life
and thats a fact. What they do has
made me a faithful supporter of the
FCA. If you arent aware of the work
done by the FCA, you can go to their
Web site, www.fca.org, for more information.
46
XXI.
SOME CLOSING
OBSERVATIONS
Since we have just celebrated what I
consider to be the most important time
of the year for my family, I asked Leigh
ODell to write a special report on
Easter for this issue. Fortunately, she
agreed to do so and I am including it
for your edification.
We just celebrated Easter. For
many, Easter can be about the
Easter bunny, Easter egg hunts, or
Sunday lunch with family. But
Easter is so much more than
those things. Easter is the celebration of the sacrificial death and
triumphant Resurrection of the
Lord Jesus Christ.There is no more
important day in human history.
There is no more important day
we celebrate each year.
Why is Easter so important? All of
us, no matter how well-intentioned, fall short of Gods standard
of how we should live our lives.We
are sinners, and our sin separates
us from God. Because God desires
for us to be forgiven of our sins, to
enjoy a right relationship with
Him, and to have the hope of
heaven with Him for eternity
because of His great love for us,
God sent His Son, Jesus, to be the
sacrifice for our sins.Jesus endured
the cross, paid the penalty for our
sins, so that anyone who believes
in Him might not perish but have
everlasting life.(John 3:16) There is
no other way, no other name, by
which we can be saved. (Acts 4:12)
This free gift is available for
anyone who would receive it. A
person does not need to do more
good works than bad works. It is
by Gods grace that we can be
saved through faith in Jesus. (Eph.
2:8). It also doesnt matter what
we have done in our past. No sin
is too big to be forgiven. The
penalty for our sins was paid in
full by the blood of Jesus shed at
www.BeasleyAllen.com
XXII.
SOME PARTING
WORDS
With all of the problems facing Americans today, its real easy to become
uneasy about our countrys future.
www.BeasleyAllen.com
47
www.BeasleyAllen.com
No representation is made that the quality of legal services to be performed is
greater than the quality of legal services performed by other lawyers.
PRESORTED
STANDARD
U.S. POSTAGE
PAID
MONTGOMERY,AL
PERMIT NO. 275