Current Events in March 2003

A federal judge has fined Boston Scientific Corporation (BSC) more than $7 million for violating a A Federal Trade Commission (FTC) order that was designed to preserve competition in a vital area of medical technology. It's the largest civil penalty ever imposed for violation of an FTC order.

U.S. District Judge Patti B. Saris held that Boston Scientific acted in "bad faith" and "harmed" people with heart disease when it reneged on its obligation to license its intravascular ultrasound technology to a competitor, Hewlett-Packard Company (HP).

The judge ordered BSC, headquartered in Natick, Massachusetts, to pay $7,040,000 in civil penalties to the United States. The largest previous civil penalty for violation of an FTC antitrust consent order was $4 million.

"BSCs goal was to drive HP out of the catheter market," Judge Saris wrote in her opinion. "BSC violated not only the letter but also the spirit of the consent order, the very purpose of which was to create an independent competitor. The FTCs authority must be vindicated; otherwise, parties to anticompetitive mergers will have every incentive to sign a consent decree to induce the FTC to withdraw its injunction, and then breach the promises made in the order."

Intravascular ultrasound (IVUS) catheters are tiny medical devices that, when inserted into a persons coronary arteries, reflect images from inside the coronary arteries to an attached console so that cardiologists can observe the location and amount of damage to the arteries from cholesterol buildup and other diseases. Cardiologists need this information for diagnostic and treatment purposes. The precision of the measurements also are vital to gauging the effectiveness of new drugs that are being tested to combat coronary artery disease, the leading cause of death in the United States.

Prior to 1995, about 50 percent of the IVUS consoles used with catheters in hospitals were manufactured by Hewlett-Packard Company and about 40 percent were manufactured by a company called CVIS. BSC and CVIS were two of just three companies that made IVUS catheters. When BSC made plans to purchase CVIS and SCIMED Life Systems, Inc., a company that planned to enter the IVUS market, the FTC moved to block the acquisitions as anticompetitive because it would have put BSC in the position of controlling 90 percent of the IVUS market.

The FTC subsequently agreed to allow the merger to proceed on the condition that BSC comply with an agreement to share its IVUS catheter technology, licenses, and know-how with HP. The FTCs order sought to permit HP to acquire IVUS catheters from BSC for use with its consoles and to develop catheters of its own to compete with BSC.

Judge Saris ruled that BSC was "a substantial contributing cause" to Hewlett-Packards decision to leave the field in 1998. In a decision released on Friday, March 28, the judge said that BSC "acted in bad faith," took an "obstreperous approach" to the FTCs order, refused to provide its latest catheters to HP, withheld intellectual property for an important "automatic pullback device" that improves the accuracy of the catheters measurements, and interfered with HPs efforts to develop its own technology.

Judge Saris held that one of the casualties of HPs departure was the loss of its new catheter, the Scout, which was substantially superior to BSCs catheters. The court held that BSCs virtual monopoly resulted in a decline in its research and development funding and in innovation. "The most poignant concern is that people with heart disease were harmed. . . . [A]fter HPs exit, patients with heart disease were left with technology inferior to that available in 1995."

Although BSC claimed that it had a genuine difference of opinion with HP over what the FTC required BSC to share, the court held that BSC had tried to "hide the ball" from the FTC. If BSC "was uncertain of the reach of the order, it had an obligation to do more than see how close to the sun it could fly with impunity." The court also noted that "there is a compelling interest in vindicating the authority of the FTC in enforcing its consent decrees, and in deterring parties from flouting the terms of consent decrees."

In calculating civil penalties for its refusal to license the automatic pullback device, Judge Saris determined that BSC violated the order until at least March 1998 and must pay approximately 50 percent of the maximum provided for by statute for the period prior to July 9, 1997, when the FTC warned BSC that it was violating the order. For its continued refusal to comply after that date, however, Judge Saris determined that BSC "chose to take the risk of ignoring the FTCs staff interpretation" and must pay in excess of 90 percent of the maximum for the remaining period.

I thought ConsumerAffairs.com would like to know that the claims the AVMA now makes will have severe adverse impact on consumers and their cats. Even though the revised AVMA statement is an improvement over the old one, they jeopardize American property by denying the declaw/litter box connection.

(Mr. Koretz introduced bill AB 395 which would make declawing illegal in California. But my belief is that declawing is ALREADY illegal under the Animal Welfare Act and under most state animal cruelty laws.)

I sent the letter below to many people - this is my response to the new AVMA statement on declawing.

March 25, 2003
Assemblyman Paul Koretz
State Capitol, Room 2176
Sacramento, CA 95814-0042

Subject: New AVMA declawing statement risks property, security deposits, cats

Dear Assemblyman Koretz,

The AVMA recently announced a new statement regarding declawed cats. The revised guidelines are an improvement, however, they are incorrect regarding behavior. The AVMA claims:

There is no scientific evidence that declawing leads to behavioral abnormalities when the behavior of declawed cats is compared with that of cats in control groups.

But there is evidence which indicates that declawed cats pee outside the box, bite people and are re-homed/relinquished at higher rates than clawed cats.

This AVMA statement contradicts its own 'expert peer reviewed' study on declawed and tendonectomized cats published 1/1/01 in the JAVMA. Cornell veterinarians revealed 28-33% cats suffered one or more post-op behavioral changes (house soiling, cat biting, prolonged lameness, etc.) Also, published 2/1/03 on CourierPostOnline.com, "Eighty percent of the cats that are surrendered that are declawed are euthanized because they have a behavioral problem.... Declawed cats frequently become biters and also stop using litter boxes... One or the other...," said William Lombardi shelter director, Gloucester County, New Jersey.

The AVMA states it will now provide "complete education" to clients regarding declawing. But in order to fully educate clients, veterinarians must acknowledge and disclose all foreseeable dangers: declawed cats cost more to own, bite people, pee all over the house, can't walk, etc. Full disclosure is necessary to help humans and to save cats.

The truth about declawed cats is:

* Declawed cats cost more time and money: Declawed cats are more likely to urinate outside the litter box, bite people, use drugs/insulin, require special litters, urine tests, clean litter boxes, veterinarian and behaviorist visits. Declawed cats ruin property, loose floorboards, drywall, sofas, beds and security deposits due to peeing problems. (HIV/AIDS victims or bleeders especially, should not own declawed cats. Housing a cat who pees a lot could lose the patient his/her apartment. And risk of infection and need for antibiotics is higher when bitten by a cat.)

* Declawing is permanent disablement and disfigurement of an animal.

* Cats scratch trees to strengthen muscles. All cats scratch, declawed or not, because that's how cats exercise. Not by running. It's really hard to get any cat to "run around"-let alone, run around on damaged feet. Cat trees adds living space for clawed cats kept indoors only.

* Declawing endangers the cat's physical and emotional health: toes may become infected and require subsequent operations; cat may not be able to walk after surgery and must be destroyed; diabetic cats should watch their toes; declawed cats fall off of furniture more easily; declawed cats cannot escape dog attacks as readily as clawed cats; phantom limb pain; depression (some declawed cats' personalities change and are never the same again); easily stressed; etc.

* Declawing is NOT the "last" resort. Declawing does NOT save cats. Declawed cats are more often put outside or isolated, re-homed, abandoned and surrendered.

Dictating that the declawed cat must be kept "indoors only" is unreasonable. Outside is the most frequently chosen "last" resort because going outside often avoids/reduces/stops behavior problems. (Peeing-declawed cats lives get extended when allowed outside.)

The AVMA's justifies declawing because they claim it save lives. But when an owner still demands declawing after being 'completely educated,' then the AVMA should wonder whether this kind of owner can provide a good home. A harder-to-own cat is being given to someone who already made it very clear that death is the next and only option. All cats deserve good homes-not homes who demand a cat be only one step away from death.

Besides the pain, homelessness and abuse declawed cats are forced to endure-declawed cats are not safe or inexpensive for people to own. In my opinion declawing constitutes fraud, negligence and animal cruelty. Therefore, it is in the best interest for all Americans and cats for the AVMA to revise it's statement and to never recommend declawing. Annie Bruce
author of Cat Be Good, cat owner consultant

March 21, 2003
Georgia has fined UnumProvident, the nation's largest disability insurer, $1 million and put the company on two years probation after an 18-month investigation into its claims practices.

''They were systematically looking for any possible shred of data or excuse to deny a policy,'' Georgia Insurance Commissioner John Oxendine said. ''They are going to be required to maintain a certain level of fundamental fairness.''

The fine comes as Unum faces investigations in California and Florida and as it appeals two multimillion-dollar jury verdicts in cases that allege Unum wrongly targets policies for cancellation. The company also faces at least 2,500 lawsuits filed by individual policyholders accusing it of fraud and breach of contract.

The Georgia order says Unum must not allow lesser-trained claims processors to overrule decisions made by more highly trained professionals including doctors, must do a better job of telling policyholders of their appeal rights when a claim is denied, and must improve its record keeping.

Unum denies that it has a policy of targeting certain types of claims for cancellation.

Unum says it agreed to the settlement and is working cooperatively with Oxendine's office. In a statement Tuesday, Unum said it expects the changes required by Oxendine will make it a ''more service-oriented company.''

A.M. Best Co. has lowered UnumProvident's debt ratings of UnumProvident and is reviewing the financial strength ratings of of its insurance subsidiaries.

"The lowering of the debt ratings reflects A.M. Best's concerns regarding UnumProvident's ability to raise a significant amount of capital in the approaching weeks on terms which would not be overly onerous to the organization, thus reducing its financial flexibility," A.M. Best said in a statement.

"Besides the need for capital infusion into three of its insurance subsidiaries, A.M. Best is very concerned about the earnings outlook for the entire organization, given UnumProvident's concentrated focus in the disability income market and the continuing deterioration in its core long-term group disability segment," the statement added.

UnumProvident's stock plunged 37 percent earlier this month after Moody's Investors Service said it may lower the company's credit ratings. Moody's cited the insurer's continuing discussions with the Securities and Exchange Commission over how to account for unrealized losses in its junk bond portfolio for the possible downgrade.

The junk-bond losses totaled about $870 million as of Dec. 31.

A federal judge has thrown out five class action lawsuits that claimed cell phone manufacturers were negligent in not providing headsets to protect users from the radio-frequency radiation emitted by cell phones.

In Baltimore, U.S. District Judge Catherine Blake dismissed the suits on the grounds that federal standards regulating cell phones pre-empt the state laws under which the suits were filed. Her ruling did not address the question of whether cell phone emissions represent a health hazard.

The judge said that the Federal Communications Commission and the Food and Drug Administration have the authority to regulate cell phones and their decisions are not subject to state review.

The suits, filed in New York, Pennsylvania, Maryland, Georgia and Louisiana, claimed that Nokia and Motorola had failed to advise users of their cell phones that headsets could reduce the risk of brain tumors.

Last September, Judge Blake dismissed an $800 million lawsuit filed by a Baltimore neurologist who claimed his cell phone gave him brain cancer. That suit had been filed by Peter Angelos, a prominent Baltimore attorney who was also involved in the five suits dismissed this week.

Several studies have found no adverse health effects from cell phones and most scientists say the frequencies used by cell phones are not dangerous, even when used in close proximity to the brain. However, both the FDA and FCC say they support additional research.