Current Events in October 2004

Be warned: Just because you put down cash and roll away from the dealership with a new vehicle doesn't mean you'll get to keep driving it. In fact, as the complaints to ConsumerAffairs.com vividly illustrate, leaving a dealership with the car - and keeping it - can sometimes be far more complex than you've bargained for.

Increasingly, buyers are signing purchase papers and driving happily away in their new cars, only to find out that the financing they agreed on didn't fall into place. At that point, they're usually told that they must either return the car or sign up for sub-par financing at extremely high rates, sometimes approaching 20 percent per year.

Often, the people squeezed by these spot delivery schemes are the most vulnerable, those with tarnished credit or low income who don't have a lot of alternatives. At other times, they're victims of dealer fraud or other bad faith dealings. Regardless, it's an ugly situation for the consumer.

Consider the experience of Michelle of San Jose, who put down $3K on a used Ford Explorer, signed a finance contract and took the car. The next day, she was told that the financing fell through, and that she had to get a co-signer or return the vehicle.

Michelle wasn't having it. "I told them that if my application didn't qualify with only my information, then I wasn't interested in keeping the car," she says. Despite her resolve, Michelle didn't get her money back, though she did get to keep the car.

Michelle was one of the luckier spot delivery customers. More typical is Brandon of Tarpon Springs, FL. He was aghast when his mother-in-law was pressured to get newer, much higher-rate financing and threatened with repossession when she balked.

According to Brandon, it all began when his mother-in-law decided to buy a Ford truck. She put down $3K and traded in a Dodge truck, then took her new truck home from the dealership, which, she believed, had approved her for financing. Instead, within a couple of days she was contacted by a lender, who asked for W-2s, tax returns and other financial documentation.

When that lender refused to finance her, she gave the dealership $12,000 more in cash, leaving a $13,000 balance, so far still unfinanced. The dealer continues to threaten, and the family still doesn't know if the mother-in-law will get her trade or cash back.

"The dealer has told her that the repossession department is already looking for her truck, and that she must sign new papers immediately," Brandon says.

A Rare Problem?

Dealer industry reps say that spot delivery problems are rare, and that the issues that do come up usually could have been avoided if consumers took the message of the conditional sales rider to heart.

"Unfortunately, some consumers pay more attention to the check they get for dinner than they do to the second-highest priced deal they're going to do in their lives," notes Alex Kurkin, a partner with the Miami law firm of Pathman Lewis LLP.

While there are few statistics available, Kurkin argues that spot delivery returns and refinancing conflicts couldn't be happening very often. After all, he says, a dealership doesn't benefit from letting consumers drive cars when the dealer hasn't been paid.

"A dealer can't afford to have that car out there for a month and a half and not get paid," says Kurkin, who represents the Florida Automotive Dealers Association. "They won't have enough to buy new inventory. The banks that finance them might even call in the inventory loan."

But Kurkin may be understating the problem. In fact, given the unclear legal status of conditional sales riders, it's not surprising that the issue will crop up from time to time. According to consumer attorneys and consultants familiar with spot delivery issues, state law is still unclear as to whether conditional sale riders will stick, leaving buyers in limbo.

In fact, observers say the law hasn't caught up to the intricacies of spot deliveries. For example, state law in New Hampshire is unclear on something as simple as whether you should put temporary tags on a vehicle that's been spot delivered but not financed, notes attorney Peter Wright, professor at Franklin Pierce Law Center in Concord, NH.

Even in transactions that flow smoothly, the papers get back-dated to the date of sale, rather than to the date the financing finally comes through. During those prior weeks, should the car have had temporary tags on it or not? According to Wright, no one's really sure.

Consumer Misery

How can car dealers get away with this? The answer, Wright says, is that many consumers end up signing their rights away. Spot buyers are typically asked to sign a contract addendum, known as a conditional sale rider, stating that the car sale doesn't close until the dealer gets financing approval from the bank.

Too often, many consumers don't understand what they're signing - or what it means for them if financing falls through.

Though the dealer may describe financing as a done deal, the finance contract is actually based on an educated guess as to what the banks the dealer works with will accept. In reality, banks usually take a few days or weeks to make their lending decision.

If the preferred bank bounces the contract, the dealer will attempt to place the loan with a different bank -- usually a "subprime" lender who charges extremely high interest -- and if the consumer balks, the dealership may attempt to yank back the car.

As if that wasn't painful enough, some consumers find that the rider they've signed forces them to accept whatever loan arrangements the dealer makes. Not surprisingly, the financing the consumer gets in that situation is seldom attractive.

Boosted by the dealer's finance commission, which usually piles a few points of interest on top of the bank's charges, a buyer's monthly payments can climb dramatically.

"We've seen evidence that when somebody is called back to sign new financing papers, the new rate is higher than what that financing company would have done [if the dealer wasn't involved,]" says Wright, who runs the consumer law clinic at Franklin Pierce. "Basically, people have to sign any deal that the dealer digs up."

That was certainly the case when Melissa of Wheaton, MD attempted to buy a Nissan Altima.

When Melissa first signed her contract, she agreed to pay $388 a month for the Altima. Accepting that, she took the car home. Three weeks later, the dealer called back -- and told her that she'd have to pay $477 a month if she couldn't get a co-signer. "I feel that I have been misled and I should not have to do [either one]," she says. "I would like to keep the car and pay what was the original agreement."

Fighting Back

Are these contract riders legal? At the moment, the courts are still sorting that out. While many dealers manage to push through these provisions and make them stick -- sometimes with the backing of state retail sales laws -- federal courts have raised some questions as to whether these conditional sales riders are fair or enforceable.

In at least one recent case, a federal court found that the deal is complete when a dealer signs the sales contract, rather than when the banks come through with a loan. "The court realized that the dealer has recourse," notes Duane Overholt, president of consumer advocacy firm Stop Auto Fraud. "For example, they have the ability to consummate the deal as agreed by simply signing the deal with the bank and accepting responsibility for the loan."

Bolstered by rulings like these, consumers like Julie and Carl are fighting back. When the Bullhead City, AZ couple bought their used car, they put $300 down and agreed to a 31-month repayment term. About two weeks after they drove the car off the lot, the dealer asked them to bring back the car or sign up for payments nearly double what they'd expected.

They didn't do either. Instead, they two contacted Overholt, who put them in touch with a lawyer.

Since then, the dealership's offer has gone from cutting the loan term in half and requiring an additional $1,000 down, to asking for $300 more down and cutting only one year off the financing period. Under the new terms, payments would actually drop slightly.

Still, Julie isn't satisfied. She plans to fight until the dealer abides by the deal she and Carl agreed to in the first place. "The dealer did this on a Monday afternoon, and they had time to communicate with the bank before we took the car," she says. "The way I see it, it's their problem now."

Selling energy on the open market was one of the bright ideas of the 1990s. The result was Enron. Another was using pharmacy benefit managers (PBM) to act as middlemen for governments and large employers, supplying prescription drugs at reduced prices to their clients' employees.

Three large companies have staked out most of the PBM market since then -- Medco, Caremark and Express Scripts. Together they control the prescriptions dispensed -- and sometimes not dispensed -- to an estimated 200 million Americans.

All are coming under increasing scrutiny by prosecutors and consumer advocates, particularly in light of New York Attorney General Eliot Spitzer's broad assault on fraud in the insurance industry.

• Medco Associate U.S. Attorney Jim Sheehan has accused Medco of defrauding federal customers by only partially filling, switching and even destroying their prescriptions.

• Express Scripts Spitzer has charged that Express Scripts "Lorraine" by inflating the costs of prescription drugs to New York State's largest employee health plan.

• Caremark In a Florida case, Caremark is accused of reselling returned drugs and in Tennessee, a class action suit charges that Caremark violated the Tennessee Consumer Protection Act with its mail order service policy.

The Concept

The hope was that PBMs would hold down drug prices by negotiating discounts from drug manufacturers but drug prices have soared for individuals and corporate clients alike, causing many to question whether the PBMs are really producing the savings they claim.

One advocacy group, Taxpayers Against Fraud, predicts the PBMs will collapse in disgrace, just as Enron did, once their inner workings are brought to light.

"What happens in these situations is that the public gets a long, hard look inside a very ugly industry and decides to simply do away with it altogether or to regulate it so severely that the game board no longer looks the same," Taxpayers Against Fraud communications director Patrick Burns said in an interview published by TheStreet.com.

The companies claim they have lived up to their promise and cite a recent study which estimated PBMs save their customers as much as 25% off their prescription bill. The PBMs are eagerly awaiting the 2006 Medicare drug benefit, expected to manage hundreds of millions of dollars worth of prescriptions for retirees.

But despite their glowing self-reviews, the companies all face regulatory and litigation challenges, with Medco perhaps most seriously threatened.

Medco

Medco faces a whistleblower lawsuit that threatens to lay bare some of the more unattractive aspects of the firm's inner workings. It follows a number of state probes that mostly ended badly for the company.

Associate U.S. Attorney Sheehan is accusing Medco of "active and constructive fraud." He alleges the company violated the False Claims Act by billing for services it did not provide and improperly dodging penalties. Fines under the Act can reach hundreds of millions of dollars.

In a recent hearing, U.S. District Judge Clarence Newcomer described as "well-pleaded" the government's allegation that the company has shorted its customers.

Medco settled an earlier case by agreeing to pay $29 million and adhere to new standards for switching patients' prescriptions. The company agreed to tell patients and doctors if it had financial incentives for suggesting a switch.

In complaints to ConsumerAffairs.com, consumers have complained of lengthy -- sometimes life-threatening -- delays in filling their prescriptions, substituting one drug for another and arbitrarily canceling prescriptions without notifying the patient.

The most frequent complaint, however, is that Medco deceives customers into paying for a 90-day supply of drugs, claiming they will save money, and then delivering only a 30-day supply for the price of 90.

"My plan says that if I go thru Medco, I can get 90 days worth of this drug for $30. So, I tried to save money and do exactly that," said Chris of El Segundo, CA. "But Medco sent me only 15 days of the medication for $30 -- the same price as the 90 day supply."

Caremark

Caremark has been accused of re-selling prescription drugs that were returned by previous customers and never tested for possible damage or contamination.

Much of the information in the Caremark case has not been made public but the judge has ordered that Caremark CEO Mac Crawford be made available for a deposition no later than Dec. 15. It's highly unusual to require testimony from CEOs and the company says allegations against Crawford are "third-hand hearsay."

The Tennessee suit accuses Caremark of unfairly and deceptively representing to consumers that they must use the companys mail order pharmacy system rather than retail pharmacies.

Attorneys general from 23 states and the District of Columbia have asked for information about the company's business practices.

Consumers complain that Caremark refuses to fill prescriptions, shorts prescriptions and makes unauthorized changes.

Sara, a retired nurse in Pasco, Washington complains that the company routinely refuses to fill her prescription for a powerful pain killer needed to keep her Reflex Sympathetic Dystrophy under control.

"They stated (the doctor) is giving me too many doses," Sara said. "One giant, rich company calls the shots as to whether I will be a bit eased of pain or not."

"It all lies in Caremark's hands and there is noting I can do about it. Once again the little man loses," she said. "I only know that I can't and won't tolerate this pain much longer."

Express Scripts

As usual, New York's Spitzer minced no words in describing his case against Express Scripts. The company "engaged in a series of deceptive schemes," he said.

"It improperly lined its pockets at the expense of health plans and consumers, driving up the very drug costs it is supposed to lower," Spitzer charged.

Spitzer said the company inflated the cost of generic drugs, diverted millions of dollars in rebates to itself, induced doctors to switch patients' prescriptions to favor manufacturers who paid kickbacks and sold confidential data belonging to the state health plan.

"Express Scripts is successfully expanding its revenue base by adding new clients, striking new alliances, and acquiring selected businesses," according to Fitch Ratings, which has assigned a "stable" rating to the company, which reported $442 million in free cash flow during the twelve months ending June 30, 2004.

Consumers' evaluations are less glowing.

"My 6-year-old diabetic daughter was denied coverage of a potentially life saving medication, Glucose Gel," said Lorraine of Long Island, NY, in a complaint to ConsumerAffairs.com.

"I am an insulin dependant diabetic using a Metronic Insulin Pump," said Kevin of Lancaster, PA. "I have been trying (for 19 days) to get supplies" from Express Scripts, he wrote.

Consumers Happy, PBMs Claim

All the bad news and complaints are news to the pharmacy benefit managers' public relations teams.

"Consumers relying upon the mail-service pharmacy option are overwhelmingly satisfied -- with Medicare beneficiaries reporting the highest levels of satisfaction - and would recommend this option to family and friends," according to a study released earlier this week at the Pharmaceutical Care Management Association's (PCMA) annual meeting in Phoenix.

"Numerous data have shown that mail-service pharmacy is a proven avenue to providing consumers and purchasers with lower prescription drug costs, improved safety, more privacy, and greater drug therapy compliance," said PCMA President Mark Merritt. "With these findings, we now know that mail-service pharmacy consumers are also overwhelmingly satisfied on a wide range of indicators - timeliness of drug delivery, condition and accuracy of drugs received, and ease of reaching a pharmacist.

Transparency

If the industry's critics agree on one thing, it is that PBMs need more "transparency" -- meaning that consumers and doctors should be able to know when the companies are making decisions because of kickbacks or other incentives offered by drug makers instead of basing them on concerns about their clients' safety and health.

The companies contend that transparency would not necessarily be helpful and might even hinder their ability to get customers the best possible prices on drugs, a stance the Federal Trade Commission (FTC) has endorsed.

The 2005 Subaru Outback sport utility vehicle was the top-rated vehicle in the government's latest frontal and side impact crash tests while the Chrysler 300 topped the passenger car ratings. Ford vehicles got the lowest ratings in two categories.

In fact, the Outback was the only vehicle in the latest group to earn the National Highway Traffic Safety Administration's (NHTSA) top rating of five-stars for all seating positions.

The 2005 Chrysler 300 and its corporate twin, the Dodge Magnum, received the highest scores for a passenger car - five-stars for frontal crash in both seating positions and four-stars and five-stars, respectively, for side impact crash in the driver and rear seating positions.

In rollover testing, the highest rated pickup trucks were the 2005 Dodge Ram 4x2, the Chevrolet Colorado 4x4, and its corporate twin, the GMC Canyon 4x4, each receiving four-stars, a 17.9 percent chance of rollover, if involved in a single-vehicle crash. NHTSA uses both a five-star scale and a percent chance of rollover to rate a vehicle on its likelihood of rollover in a single-vehicle crash.

The two-door Ford Focus and the Ford Ranger 4x4 pickup were the worst performers. NHTSA gave the Focus three out of five stars for driver's side protection and four out of five stars for rear passenger protection. The Ranger 4x4 got two stars in the rollover ratings.

NHTSA's consumer information program uses a one-to-five star rating system, with five being the highest. Star ratings reflect a vehicle's ability to protect the driver and passenger in a crash.

All NHTSA ratings can be found at www.safercar.gov.

A Chicago woman and her company are charged with advertising a work-at-home job opportunity that promised big payoffs but allegedly ended up costing consumers money when start-up fees they paid upfront failed to generate profits.

The complaint filed by Illinois Attorney General Lisa Madigan accuses Paris Hill, doing business as Hill & Associates Consulting Center, of multiple violations of the Illinois Consumer Fraud and Deceptive Business Practices Act.

Hill allegedly advertised openings for employees to prepare bankruptcy petitions as a work-at-home job that required employees to purchase computer software for $139 to prepare the documents.

According to Madigan's complaint, Hill has placed help-wanted ads in the Chicago Tribune since at least July 2004, claiming consumers could earn "$52K/yr with medical & dental benefits after 30 days."

However, consumer complaints received by Madigan's office state otherwise, alleging consumers paid start-up expenses to Hill and then didn't receive the work, or pay, they were promised.

"When Illinoisans look through a newspaper's help-wanted ads, they should expect to find legitimate paying jobs, not consumer fraud," Madigan said. "This case is another reminder that work-at-home opportunities are appealing, but they must be carefully evaluated before any consumer becomes involved."

Madigan's complaint says Hill falsely represented that individuals could earn $52,000 a year, would prepare as many as 50 bankruptcy petitions a month, would be able to work full-time as bankruptcy petition preparers and would be eligible for medical and dental benefits. None of these claims proved to be true.

Hill is also accused of leading individuals to believe they would be employees of her company when in fact they were being hired as independent contractors, and that a call center would generate calls for the petition preparers when in fact they received very few or no calls.

As independent contractors, the individuals allegedly were told they would be paid commissions based on the number of bankruptcy petitions they prepared, earning $20 for one to 25 petitions, and $30 for 25 to 50 petitions and $40 for more than 50 petitions.

According to Madigan's complaint, the work never materialized and the independent contractors prepared few, if any, bankruptcy petitions.

Madigan's complaint seeks to prohibit Hill from committing future acts in violation of Illinois' consumer protection laws and asks the court to assess civil penalties of $50,000 per violation and an additional $50,000 for each violation found to have been committed with the intent to defraud. Madigan's complaint also seeks restitution for the defrauded consumers.

Madigan's Consumer Fraud Bureau warns consumers that many work-at-home schemes are fraudulent and offers consumers tips on how to protect themselves. Before consumers spend money on a work-at-home offer, they should ask the company representative the following questions to determine the truthfulness of the advertisements or literature:

• What does the job involve? What steps will I have to go through? What tasks will I have to complete?
• How and when will I be paid? Who will pay me?
• How much will I have to pay for the work-at-home program, including costs for supplies, equipment, training and other fees?
• What specific standards must my work meet?

GE Medical Protective's finding was made in a regulatory filing with the Texas Department of Insurance (TDI),in a document submitted by GE to explain why the insurer planned to raise physicians' premiums 19% a mere six months after Texas enacted caps on medical malpractice awards.

In 2003, Texas lawmakers passed a $250,000 cap on non-economic damage compensation to victims of medical malpractice caps after Medical Protective and other insurers lobbied for the change.

According to the Medical Protective filing: "Non-economic damages are a small percentage of total losses paid. Capping non-economic damages will show loss savings of 1.0%."

The company also notes that a provision in the Texas law allowing for periodic payments of awards would provide a savings of only 1.1%. The insurer did not even provide its doctors that relief and eventually imposed a rate hike on its physician policyholders.

"When the largest malpractice insurer in the nation tells a regulator that caps on damages don't work, every legislator, regulator and voter in the nation should listen," said Douglas Heller, executive director of the Foundation for Taxpayers and Consumer Rights (FTCR).

"Medical Protective's rate increase and this smoking gun document prove that the insurance industry cannot be trusted on the issue of malpractice caps."

Medical Protective and other supporters of medical malpractice caps have repeatedly argued that damage awards are the primary reason for skyrocketing medical malpractice premiums. For example, in a March 2004 report. GE Medical Protective stated that capping non-economic damages is a "critical element [of reform] because in recent years we have seen non-economic damages spiraling out of control."

The Texas rate increase and the actuarial data submitted by the company contradicting the oft-stated importance of caps should lead policymakers to look to insurance regulation, rather than malpractice caps, as a solution to high premiums, according to FTCR.

"While medical malpractice caps limit the rights of injured patients, they do not lower doctors' premiums. If lawmakers and physicians want to reduce costs, they should start fighting to reform insurance companies rather than restrict patients' rights," said Heller.

About one of every 25 previously damaged vehicles have phony or dummy airbags, but only a handful of states have laws regulating airbag system replacements.

"Airbag systems are expensive to replace so to keep costs down and profits up, scam artists may cut corners," said Larry Gamache, communications director at Carfax, which is offering free airbagchecks in November.

"Victims of airbag fraud have found their airbags stuffed with everything from rags to old shoes or nothing at all. However, most victims of airbag fraud may never know until it's too late."

Airbag fraud is virtually undetectable unless you check the car's computer system.

"If these airbags have been tampered with by improper repair the consumer is buying a vehicle that is not going to offer them any safety at all," said Bruce Strain, an expert in airbag replacement.

Carfax and its affiliated dealers are offering consumers free airbag checks and Carfax Vehicle History Reports during the month of November. To locate a Carfax Dealer, consumers can log on to www.carfax.com click on "find a dealer" and enter their zip code.

"An airbag unit is there to save lives whenever they are needed," said Gamache. "We want to ensure that drivers are made aware of this potentially fatal scam and hopefully help those who may be affected."

With the blessing of the U.S. Justice Department and the Federal Communications Commission, Cingular today completed its acquisition of AT&T Wireless, creating the nation's largest cellular telephone company.

An immediate advertising blitz is expected as Cingular seeks to bond with AT&T Wireless customers who are being frantically courted by rivals.

In approving the $41 billion deal, the Justice Department said that Cingular and AT&T Wireless must sell airwave licenses, customer contracts and other assets in 11 states to ensure that rivals can provide competing service.

"Without these divestitures, wireless customers in these markets would have had fewer choices for their wireless telephone service and faced the risk of higher prices, lower-quality service, and fewer choices for the newest high-speed mobile wireless data services," said Hewitt Pate, assistant attorney general in the department's antitrust division.

The government approval permits Cingular and AT&T Wireless to begin merging operations, which include about 47 million subscribers and licenses to provide service in the top 100 metropolitan areas.

The combined company will replace  as the leader in the nation's $95 billion wireless industry.

Consumerists Dissent

Absent from the celebrations were Consumers Union, the Consumer Federation of America and other consumer organizations, who said the merger could lead to higher prices in some markets. They contended that Cingular has no incentive to compete with its parents, BellSouth and SBC, and thus would be less likely to offer cheaper calling plans in the South.

Cingular says that's absurd. Competition among wireless carriers is "intense" and will remain that way, the company said in a statement.

AT&T Wireless has been practically giving service away lately, trying to hold onto defecting customers. The company has long had the highest customer defection rate of the major wireless carriers.

A Mixed Dowry

Amidst the popping of champagne corks, much remains to be sorted out. Customers of AT&T Wireless, which has had its rocky moments, should see more reliable service and customers of Cingular may expect improved high-speed wireless Web access. AT&T Wireless customers who switch to Cingular's billing plans could enjoy Cingular's rollover minutes, which moves unused minutes to the next month.

But as in any new union, something has to give. While AT&T Wireless customers can stay on their old plans as long as they like, if they want to move to Cingular's plans they'll have to get -- your guessed it -- a new phone.

Cingular's network is largely GSM -- Global System for Mobile Communications -- while AT&T's is mostly TDMA, Time Division Multiple Access. Phones that work on one system won't work on the other and, because of frequency differences, some AT&T Wireless customers with GSM phones will still have to get new phones.

On the other hand, some AT&T Wireless customers have been on both networks for the past several months -- seeing "AT&T" on their phone screens sometimes, "Cingular" at others. In the short term, this will occur in more cities as Cingular allows "home-on-home" roaming as the two networks are reconfigured.

In California and New York City, Cingular service could deteriorate. GSM customers there will be served by the AT&T Wireless network instead of T-Mobile, which has been providing service under contract to AT&T Wireless.

AT&T Wireless customers in parts of Connecticut, Kentucky, Texas and Oklahoma will be sold down the river. As part of the agreement with the Justice Department, subscribers in those areas will be handed off to other carriers. Customers will get a flier in the mail telling them who their new carrier is.

Advice for Consumers

As the happy couple sped off, consumer advisors had a word of caution for customers: pay close attention to your bill until the rice settles and the honeymoon is over. Telephone company billing systems are astonishingly complex and the rough spots in most mergers occur in the attempt to wed two very different systems.

The marketers of the Balance Bracelet, a supposed pain relief product, have agreed to pay $400,000 to settle charges that they made deceptive claims about the bracelet.

In May 2004, the Federal Trade Commission filed a complaint in federal district court in Los Angeles against Media Maverick, Inc., alleging that it violated the FTC Act by deceptively claiming that the Balance Bracelet is a fast-acting, effective treatment for many types of pain.

A class action based on similar allegations was pending in California state court at the time. The settlement announced today is part of a global settlement among the FTC, the defendants, and the class action plaintiffs. The settlement requires the company and its officers to pay $400,000 in monetary relief to a global settlement fund, a significant portion of which will be used by the FTC for consumer redress.

The Balance Bracelet is a C-shaped metal bracelet that allegedly is electro-polarized by an undisclosed process. The defendants marketed the Balance Bracelet through nationally disseminated infomercials and over the Internet with advertising claims that the Balance Bracelet relieves arthritis pain, joint pain, back pain, and injury-related pain, among other things.

Their advertisements also claimed that pain is caused by excess static electricity in the body, which comes from an imbalance of positive and negative energy, and that the Balance Bracelet returns the body to its natural ionic balance. The Commission alleged that the defendants did not have scientific evidence to support their claims.

The FTCs order contains an avalanche clause that requires the defendants to pay $14 million, if the court finds that the defendants misrepresented their financial condition.

The FTCs order prohibits the defendants from misrepresenting that the Balance Bracelet, or any other pain-relief product, relieves pain and from misrepresenting any such products absolute or comparative health benefits, performance, or efficacy. The order also requires the defendants to possess substantiation to support future claims about the absolute or comparative health benefits, performance, or efficacy of any product.

In addition, the defendants must recall all packaging and labeling of the Balance Bracelet that includes the prohibited pain-relief claims.

The order also bars the defendants from selling their customer lists and imposes compliance reporting and record-keeping requirements on the defendants to assist the FTC in monitoring the defendants compliance.

Besides the San Luis Obispo-based Media Maverick, Inc., the actions name the company's officers, Mark Jones and Charles Cody.

When I suddenly had to become a full-time caregiver for my elderly parents, both with health problems and starting to develop dementia (namely Alzheimer's), I had never even heard of Long-Term Care Insurance.

After we burned through their life savings, and then started chipping away at mine, I was advised to apply for financial assistance for them through the government's Medicaid system -- a program for those at the poverty level. It was quite a long process with mounds of paperwork and numerous investigations, but finally my parents were approved.

I was so happy that monetary help would finally be on the way, until I found out that the financial assistance would only pay to put my parents in a nursing home, not even in assisted living, and with very little help to keep them in their own home.

Since their levels of care were so different (my mother needed everything done for her), there weren't any facilities that would allow them to be together. They'd be across the street from each other in different wings of the home.

After sixty years of marriage, my parents were adamant about staying together in their own home, in their own bed, where they could continue to cuddle and kiss -- as they so frequently did. And, since my father was so "challenging" with quite a long record of manipulative disruptive behaviors, facilities didn't want him anyway.

It was hard, but I committed to keeping my parents together in their own home and attending Adult Day Health Care five days a week. Then, with the help of two marvelous caregivers, after five more years of loving each other, they passed, just a few months apart. Even though caring for every aspect of my parents' last years was the hardest thing I have ever done -- I am proud to say I gave them the best end-of-life I possibly could.

Had I only known to insist that we buy Long-Term Care Insurance for them prior to their illnesses, their in-home care could have been paid for, and I could have saved myself so much misery, not to mention a small fortune. I encourage you to learn from my mistake and look into LTC insurance long before you need it -- for your loved ones as well as yourself. Like fire insurance, hopefully, you'll never have to use it.

Also, call your local Area Agency on Aging, or your Department of Aging, and ask if there are any financial programs, waivers or grants available in your area that you can apply for.

Startling Statistics

The following was compiled from the National Family Caregiving Association and the National Alzheimer's Association, Benjamin B. Green-Field Library and Resource Center.

• An estimated 4.5 to 5 million Americans have Alzheimer's disease. In a Gallup poll, 1 in 10 Americans said that they had a family member with Alzheimer's, and 1 in 3 knew someone with the disease.
• Increasing age is the greatest risk factor for Alzheimer's. One in 10 individuals over 65 and nearly half over 85 are affected. Rare, inherited forms of Alzheimer's can even strike individuals in their 30's and 40's.
• A person with Alzheimer's disease will live an average of eight years and as many as 20 years or more from the first onset of symptoms.
• More than 7 out of 10 people with Alzheimer's disease live at home, where family and friends provide 80 percent of their care. The estimated value of this informal care is $257 billion annually.
• One half of the U.S. population has a chronic condition. More than one quarter (26.6%) of the adult population provide care for a chronically ill, disabled or aged family member or friend, which translates to more than 50 million people involved with caregiving.
• 37% of caregivers are living in the same household as the person they care for. 54% are between 35 and 64 years of age. 59% of the adult population either is or expects to be a family caregiver, and 2 million more caregivers will be needed in the next twenty years.
• An estimated 43% of Americans age 65 or older will spend time in a nursing home. By 2012, 75% of Americans over age 65 will require long-term care. Long-term care costs are rising at 6% annually.
• The annual cost of Alzheimer's care in the U.S. is at least $100 billion, and it will soar to at least $375 billion by mid-century, overwhelming our health care system and bankrupting Medicare and Medicaid.
• Alzheimer's disease costs American business $61 billion a year, which is equivalent to the net profits of the top 10 Fortune 500 companies. $24.6 billion covers Alzheimer health care, and $36.5 billion covers costs related to caregivers of individuals with Alzheimer's, including lost productivity, absenteeism and worker replacement.

Three Ways to Pay for Long-Term Care

1. Pay for in-home caregivers and assisted living/nursing homes out of pocket. This is expensive and can often deplete a family's life savings.

2. Meet a very specific poverty level and qualify for government assistance through the Medicaid program. Unfortunately, options are limited, only paying for nursing homes that accept Medicaid.

3. Buy a Comprehensive Long-Term Care Insurance policy. This protects your family's assets from the rising costs of caring for someone who needs full time care. An employer might even pay the tax-deductible premiums. Consider buying it at a younger age, when it is more affordable and accessible. It must be bought before a major chronic illness strikes.

This policy pays for care in the patient's home, assisted living, board & care, and in nursing/dementia care facilities. Medicare and regular health insurance does not pay for long-term care. The average cost for a person who needs long-term care is $40,000 to $70,000 annually, depending on where you live, plus the cost to the family caregiver who may have to leave their job.

Questions to Ask Your Insurance Agent

• Is the coverage comprehensive--meaning it includes all levels of care: in the home, assisted living, board & care, and nursing/dementia facilities?
• What is the daily benefit?
• Is there 5% annually compounded inflation protection?
• What is the elimination period?
• Is it a lifetime benefit period or a limited time benefit policy?
• Is there a spousal discount?
• Can you hire caregivers privately as well as from an agency?
• Is the home care benefit based on a daily, weekly or monthly maximum, and if the benefit is not used, can it be used in the future?
• Does it cover home care coordination of services?
• How many ADL's (Activities of Daily Living) does it take to trigger a claim?
• Is there a time limit for filing a claim?
• Does it cover the cost of Adult Day Care & Adult Day Health Care, hospice and respite programs?
• Is it a tax-qualified plan?
• Is the company highly rated and have they ever raised premiums?
• Can you see the company's published annual audit to check their track record for paying claims?

Long-term care insurance may not be for everyone. But it would have saved our family's entire life savings as well as a fortune in Kleenex. I eventually had to sell my home to provide 24-hour (in their home) care, for 5 years, for 2 parents, both with (misdiagnosed) early stage Alzheimer's disease.

In the beginning, my once-adoring father turned verbally and physically abusive towards me and I was heart-broken to have lost his love. But then, I just couldn't believe it when I'd take him to the doctor -- where he could act completely normal when he needed to. It was an unbelievable nightmare, but with sheer determination I finally solved the endless crisis -- medically and behaviorally.

Once I figured it all out, I was so infuriated that I hadn't gotten the medical help I needed for my father sooner and compelled by the experience that I wrote my first book, Elder Rage, to help the 77 million baby boomers from making the mistakes I made while caring for their aging parents.

Actually written with some laugh-out-loud humor to make a tough subject palatable, Elder Rage has become a guidebook for a generation beginning this difficult phase of their lives. Now an advocate for eldercare awareness and reform, my biggest missions are: funding for, and the importance of, early diagnosis of Alzheimer's; prevention of elder abuse, neglect and exploitation; and funding for Adult Day Cares, which saved my parents' lives as well as my own. More than 5,000 new adult day centers are needed just to cover the current need.

Jacqueline Marcell is an author, publisher, radio host, national speaker, and advocate for eldercare awareness and reform. Her best-selling book, Elder Rage, is a Book-of-the-Month Club selection and being considered for a feature film. Jacqueline hosts an Internet radio program heard worldwide on www.wsRadio.com/CopingWithCaregiving. Jacqueline is also a recent breast cancer survivor who encourages caregivers to reduce stress and get mammograms for early detection.

ATA Airlines yesterday filed for bankruptcy, beset by a familiar litany of problems -- high fuel prices, intense competition and costly lease payments on its aircraft.

The Indianapolis-based carrier also said it has agreed to sell its hub at Chicago's Midway Airport to AirTran, one of its major competitors, for $87.5 million. That would give Orlando-based AirTran a second hub and strengthen its position against Southwest Airlines.

Like other airlines operating in bankruptcy, AirTran said it will maintain its full flight schedule and honor its frequent-flier commitments. The tenth-largest U.S. airline by traffic, ATA joins United, US Airways and Hawaiian Airlines in bankruptcy. Delta Air Lines is trying to avoid a bankruptcy filing.

ATA is the first major low-cost airline to seek bankruptcy protection. It has long been hobbled by its costly leases, estimated to be about $100 million per year over prevailing market rates. That's one of the things the carrier hopes to fix during its stay in bankruptcy court.

Besides its Midway assets, ATA will turn over its slots at New York's LaGuardia and Washington's Reagan National Airport to AirTran and will fly 15 of its aircraft on AirTran's behalf for six months. ATA and AirTran also say they intend to create a marketing and code-share alliance.

ATA has not arranged financing during bankruptcy but chairman J. George Mikelsons said the AirTran deal would provide an immediate cash infusion while he lines up financing elsewhere.

Taxpayers will be footing some of the bill. Like US Airways, ATA was one of the airlines to receive loan backing from the Air Transportation Stabilization Board after the 9/11 attacks. The board guaranteed a $168 million loan ATA took out in 2002 and will allow ATA to use some of that cash while it works on new financing.

ATA lost $90 million in the first half of this year on revenue of $778 million.

Florida Attorney General Charlie Crist has filed a civil complaint against 12 leasing companies, accusing them of violating Florida's deceptive and unfair trade practices statute. The leasing companies demanded payments from consumers for services despite knowing that services were not being provided, Crist charged.

The leasing companies purchased contracts from NorVergence beginning in 2003 after NorVergence had entered into agreements with approximately 700 small Florida businesses to provide local telephone, mobile phone and high-speed Internet services at reduced rates.

NorVergence allegedly used high-pressure sales tactics, including claims that the offer was for a limited duration and available only to a few select companies, in order to finalize contracts that cost consumers as much as $1,000 per month.

"Small businesses were hurt by the false, deceptive, misleading and unfair sales tactics used by NorVergence," said Crist. "The leasing companies knew the scheme and compounded the harm by making intolerable demands to be paid for services that were unconscionably priced and never provided."

NorVergence targeted small businesses that had good credit ratings and that were owned by persons who were age 60 or older but lacked in-house legal and technology personnel to protect them. The small business owners agreed to sign contracts with NorVergence with an understanding of the following terms:

• They were obtaining telephone services directly from NorVergence;
• NorVergence would provide the consumers with unlimited long distance, cell phone and high-speed Internet at greatly reduced rates; and
• In order to use the NorVergence services, customers would have to rent a "Matrix" box.

These business terms were later found to be inaccurate. Many consumers never received telecommunication service, and in any event NorVergence terminated service when it went into bankruptcy. The company failed to install the Matrix box for consumers who had entered the agreement and thus failed to deliver the promised reduced rates.

Additionally, it was found that the Matrix was nothing more than a commercial router that sells for $500 to $1,200, creating an unconscionably large disparity between the value of the box and the $1,000-per-month lease payments due under the rental agreement.

In further violation of the agreement, the leasing companies then began demanding payments for services that were never provided. When customers missed their monthly bills, the leasing companies accelerated payments and demanded payment in full, in sums ranging from $10,000 to more than $90,000.

After receiving subpoenas from the Attorney General, three leasing companies CIT Technology Financial Services, Inc., Northland Capital Financial Services and BB&T; Leasing Company agreed to a moratorium of the payment demands and are not currently facing charges.

The 12 leasing companies that the Attorney General is suing are: Wells Fargo, Commerce Commercial Leasing, LLC, Court Square Leasing Corporation, Dolphin Capital Corporation, IFC Credit Corporation, National City Commercial Capital Corporation (formerly known as Information Leasing Corporation), Irwin Business Finance, Liberty Bank Leasing, Patriot Leasing Co. Inc., Popular Leasing U.S.A., Inc., Preferred Leasing, LLC and Sterling National Bank.

Each is charged with two counts of violating Florida's unfair and deceptive trade practices statute. If convicted of the charges, the companies face a $10,000 fine for each violation of the statute and a $15,000 fine for each violation involving a senior citizen, as well as consumer restitution and attorney fees and costs.

The Attorney General is also seeking an injunction to prevent the leasing companies from making further efforts to collect on these unconscionable agreements.

Colorado Investigates

Colorado Attorney General Ken Salazar is urging Colorado business customers of NorVergence to file a written complaint with supporting documents with his office, after businesses complained that the state was not helping them in their struggle with the leasing companies.

The NorVergence bankruptcy has created significant financial problems for several thousands of businesses nationally, Salazar said. Because NorVergence entered into telecom leases with Colorado companies, most of which did not receive the promised equipment or services, my office has been working with other state and federal law enforcement agencies on investigative and legal options to assist them.

One major issue in this matter concerns the legal enforceability of the equipment leases signed by NorVergence customers. The equipment leases in question obligate the business customers to pay the leasing companies regardless of whether the equipment and services were ever provided by NorVergence. The leases also require the customers to waive all rights, claims and warranties.

The leases also stipulate that any legal disputes must be litigated in the home state of the leasing or finance company holding the assigned lease contract. The leasing and finance companies that purchased the leases from NorVergence are now seeking payment under the lease terms, and in some cases have filed collection lawsuits against the business customers for full payment.

Salazars office has also been in contact with the Federal Trade Commission regarding possible combined or separate legal action by the federal government, Salazar said.

October 21, 2004
Nexgrill Industries is recalling the Beefmaster Explorer Outdoor Gas Grill model number 720-0001 because of a problem with the gas valve.

As consumers adjust the gas pressure regulator (on/off gauge) leading to the propane cylinder, the label on the valve can become positioned in such a manner that it is difficult to read. This can cause consumers to inadvertently leave the gas valve on, posing a fire hazard.

Nexgrill has received two reports of consumers leaving the gas valve on. No injuries or property damage has been reported.

This recall involves the Beefmaster Explorer Outdoor Gas Grill Model Number 720-0001. The table top grill is made of stainless steel and is used with a disposable propane cylinder, which is purchased separately. Each grill has one main burner and a cooking grid that sits over the burner. Model numbers are located on the back panel of the grill. The brand name Nexgrill is on a plate on the grill lid.

The grills were sold at Academy, Bar-B-Que Galore, Crate & Barrel, Home Town and discount department stores nationwide. Crate & Barrel also sold the grills through their catalog and at www.crateandbarrel.com. The grills were sold from January 2002 through June 2003 for about $100.

Consumers should contact Nexgrill to obtain a free replacement gauge. Consumers can also return the product to the company for installation of the replacement gauge at no charge. In addition, Crate & Barrel customers should contact Crate & Barrel to obtain a free replacement gauge or to make arrangements to return the product to the company for installation of the replacement gauge at no charge.

Consumer Contact: Contact Nexgrill toll-free at (800) 913-8999 between 9 a.m. and 5 p.m. PT Monday through Friday or email to info@nexgrill.com. Crate & Barrel customers should contact Crate & Barrel toll-free at (800) 451-8217 between 7 a.m. and 9 p.m. CT daily or at www.crateandbarrel.com.

The recall is being conducted in cooperation with the U.S. Consumer Product Safety Commission (CPSC).

October 20, 2004
A jury in Harris County, Texas rejected a woman's claim that a vaginal delivery caused nerve damage to her newborn daughter.

In November 1998, Lisa Holm received prenatal care from Dr. Alexander Reiter and delivered Vencenza Robles on Jan. 17, 1999. Holm had previously had a large baby and her newborn weighed almost nine pounds.

Holm and Vencenza's father sued Dr. Reiter for negligence and medical malpractice, claiming that he promised to deliver the baby by cesarean section, but then chose not to do so. Dr. Reiter argued that he followed Holm's development closely and concluded that the fetus would not be dangerously large. He also argued that he employed all necessary procedures during vaginal delivery to ensure the safety of the child.

In the presentation of his case, David Carey, a sales manager, told the court that on Sept. 2, 1997, he visited Rockland Ear, Nose & Throat Associates in Bardonia, N.Y., complaining of a persistent sore throat, and bleeding from the back of his throat.

Dr. Leacroft Green, who examined Mr. Carey, could not detect the source of his bleeding, but he determined that Mr. Carey was suffering from a deviated septum. Dr. Green recommended and nine days later performed two procedures that do not require surgical incisions. They are usually done together: a submucosal septal resection - also known as a septoplasty -- in which portions of the septum are trimmed, reshaped and repositioned, and bilateral inferior-turbinate resection, which reduces the size of the structure that fills the lower portion of the nasal airway.

The procedures were performed at Nyack Hospital. Mr. Carey began experiencing headaches after the first part of the procedure -- the septoplasty. Mr. Carey subsequently was found to have a fracture of his cribriform plate, a portion of the spongy bone that forms the roof of the nasal fossae and part of the floor of the skull's anterior fossa.

On Oct. 9, he underwent repair surgery. He continues to experience headaches. Mr. Carey claimed that he had no nose-related problems, and thus, that the surgeries were unnecessary.

Mr. Carey also alleged that Dr. Green departed from accepted standards of practice. He contended that Dr. Green grabbed his cribriform plate rather than snipping at his nasal cartilage, and thus, that Dr. Green caused the cribriform-plate fracture. He also contended that Dr. Green should have consulted with his primary-care physician. Mr. Carey's wife, Marina Carey, presented a loss-of-services claim.

The defendents contended Mr. Carey's cribriform plate had been weakened by a sinus disease, and, as such, the damage was a risk of the surgery. They also contended the cribriform-plate damage occurred during the second half of the procedure. Thus, the defendants contended, Mr. Carey's headaches were unrelated to his cribriform-plate damage.

The defendants contended that Mr. Carey's injuries stemmed from a quiescent immune disease that became manifest months after the surgery. They contended the immune disease resulted in sinus infections, which damaged Mr. Carey's sinus tissue, and "empty nose syndrome," which contributed to his headaches.

When Internet search engine company Google introduced a new desktop search engine for computers October 14, it was seen as just the latest audacious move by this technological David, going up against the Goliath of Microsoft.

But in recent days the Internet buzz, from chat rooms to expert forums, has been less about Google's bold move and more about the potential loss of privacy associated with this new tool.

Experts say the new search engine, which is downloaded and installed on individual computers, could expose users' private information if they use shared computers. If, for example, you check your email on a computer at the library or at an Internet caf - and that computer has the desktop search engine, whoever uses the computer after you could pull out private information from emails you sent or received or Web sites you visited.

That becomes a real problem, for example, if you just accessed a site that requires a password, experts say.

The desktop search engine automatically records email that downloaded and read through Microsoft Outlook products and pages pulled up in Microsoft's Internet Explorer browser. It can also track files stored in Word, Excel and PowerPoint.

Google points out that the initial release was a beta test, and that refinements are being made. One of those refinements may be advanced features like password protection and multiuser support, a company official said.

Google says users of shared computers can look for an indicator in the system tray at the lower fight corner of the computer screen. If there is a multicolored swirl visible, it means the software is loaded and running. The company said its software can be disabled to prevent the user's movements from being tracked.

Help is on the way, says Health and Human Services Secretary Tommy G. Thompson, who says that about 60 million doses of influenza vaccine combined with an ample supply of antiviral medicines -- potentially enough for more than 40 million people during the flu season -- puts America in a strong position during the upcoming flu season.

Thompson said the nation's cache of vaccine and medicines includes an additional 2.6 million doses of influenza vaccine that Aventis will make available in January.

The Centers for Disease Control and Prevention (CDC),meanwhile, issued interim guidance on the use of antiviral medicines for preventing and treating the flu. In addition, the formalization of a federal government task force will help ensure an ongoing coordinated effort to manage the supply of medicine and prevent price gouging.

"In addition to the 60 million doses of influenza vaccine, we have healthy supplies of antiviral medicines to help keep you safe from the flu," Thompson said. "While we don't have as much flu vaccine as we planned for, the combination of existing vaccine and antiviral medicines gives us the ability to stave off any harsh effects of the flu."

Thompson said the combined supply of influenza vaccine and antiviral medications precludes the need for seniors and others to stand in long lines waiting for vaccine. In addition, about 24 million doses of this influenza vaccine supply has yet to be distributed and will be steered toward the people and places who need it the most. He advised seniors seeking vaccine to be patient and persistent, keeping in contact with their doctors and public health departments.

"We are still in the early stages of the flu season, and millions more doses of the vaccine will be shipped in coming weeks, so there is still time to get vaccinated," Secretary Thompson said. "We understand the public's concerns about the loss of the Chiron flu vaccine, but they should know we have a healthy supply of vaccines and medicines to cope with flu season."

Thompson said the government is exploring every option to replace some of the lost vaccine from other sources, and said the Bush administration has made unprecedented investments to protect against the flu.

Federal Task Force

Thompson also announced the formalization of a federal task force that will coordinate our nation's efforts to ensure that the flu vaccine and treatment medication goes to those who need it most and without any price gouging.

Thompson said marshalling all the resources of the federal government -- including the health agencies, Department of Justice, Federal Trade Commission, Homeland Security and Veterans Affairs -- will help ensure that all aspects of flu season are being addressed for the American public.

The Flu Action Task Force will also continue ongoing partnerships with the private sector in addressing challenges of the flu season, including the public health community, physicians, law enforcement and prosecutors, trade associations and advocacy groups.

"From the time we learned about our loss of the Chiron vaccine, a strong partnership between federal agencies, the private sector and the public health and law enforcement communities has helped us rapidly and effectively address the challenges before us," Secretary Thompson said. "It's important that we keep these partnerships strong during flu season, this year and beyond."

The problem

In 1994, there were five injectable influenza vaccine manufacturers: Wyeth, Evans (now part of Chiron), Connaught (now part of Aventis), Parke Davis and Lederle; today there are two - Aventis and Chiron.

The high risks of complex vaccine production, unpredictable consumer demand and low profit margins, coupled with the lack of liability protection from costly lawsuits, drove many manufacturers out of the flu vaccine business during the 1990s.

Getting manufacturers back into the marketplace is further complicated by the length of time for a new manufacturing facility to come on-line - five years or more. The FDA has high standards for flu vaccine production, including good manufacturing processes, which ensure the safety and efficacy of vaccines. These high standards helped keep 46 million doses of contaminated vaccine produced by Chiron from making it into the arms of Americans this year.

Stockpiles

This administration is the first to create stockpiles of both influenza vaccine and antiviral medications, Thompson said. The department invested $40 million in 2004, and seeks another $40 million in 2005, to stockpile influenza vaccine through the Vaccines for Children Program. It invested $87.1 million to stockpile 2.3 million doses of Tamiflu. And it invested $34 million on Rimantadine capsules to treat 4.25 million adults and Rimantadine syrup to treat 750,000 kids.

These stockpiles give the government new ability to protect the most vulnerable, and respond effectively when there is a shortage of vaccine.

Pandemic Flu

In August, Thompson unveiled the department's draft Pandemic Influenza Response and Preparedness Plan. This plan outlines a coordinated national strategy to prepare for and respond to a flu pandemic. One of the first internal committees the Secretary created when he came to HHS was on the pandemic flu.

Consumers of the heartburn medication Nexium are suing the drug's distributor, AstraZeneca, alleging the pharmaceutical company sought to preserve market share and profits as the patent on their blockbuster drug, Prilosec, was set to expire, by initiating a massive and misleading advertising and promotional campaign to deceive consumers into purchasing Nexium, a nearly identical new drug.

Filed in U.S. Superior Court in Los Angeles, the suit contends that the core of AstraZeneca's scheme was to use misleading information to convince consumers that Nexium was a significantly better drug than Prilosec.

The pharmaceutical planned to redirect consumer loyalty from the flagship drug Prilosec to Nexium before the expiration of Prilosec's U.S. patent and the onslaught of competition from generic manufacturers that would deprive AstraZeneca of significant profits, the suit charges.

"AstraZeneca knew that with the expiration of their Prilosec patent, they would lose market share and profits. We intend to show that they initiated a plan to deceive consumers and recoup those lost revenues," said Steve Berman, lead attorney for the plaintiffs. "This suit is a response to their deception and is a message to AstraZeneca and all pharmaceutical companies that they will be accountable to consumers for their actions."

The suit is brought by the AFL-CIO, the Congress of California Seniors, and the California Alliance for Retired Americans and seeks to be classified as a class action on behalf of consumers nationwide who purchased Nexium. All three of the organizations are members of the Prescription Access Litigation Project (PAL), a national coalition of 100 consumer organizations dedicated to fighting illegal pharmaceutical price inflation through class-action litigation.

"More and more workers cannot get the healthcare they need, and out-of-control drug prices are a huge factor," said Gerry Shea, AFL-CIO's director of governmental affairs. "The AFL-CIO is joining the Prescription Access Litigation Project and the suit against AstraZeneca because it's high time that drug companies were held accountable for deceiving American consumers into buying 'new' drugs they don't need at prices they can't afford."

Prilosec (also known as Losec) is a proton-pump inhibitor (PPI) used to treat heartburn and was AstraZeneca's most profitable drug. By 2000, Prilosec was the most prescribed drug in the world, with global sales reaching $6 billion. But with Prilosec's patent set to expire in 2001, its loss of brand name protection and assured competition from generic drug manufacturers posed a financial vulnerability to the pharmaceutical company.

According to the suit, AstraZeneca responded to this financial threat by launching a massive advertising campaign to overshadow the perceived effectiveness of Prilosec, and persuade consumers that Nexium was a new and improved PPI.

"AstraZeneca pulled a massive 'bait and switch' on the American public," said Nan Brasmer, President of the California Alliance for Retired Americans. "Rather than looking for new drugs that would be real improvements for patients, they poured millions of dollars into promoting a drug that was far more expensive but no better than equally effective generic drugs."

The ads claimed that Nexium was proven more effective at acid inhibition than comparable drugs, the suit states. However, the clinical trials alluded to in these ads only compared Nexium at dosage levels twice those of Prilosec (40 mg to 20 mg respectively). No tests were done to compare 40 mg of Nexium to 40 mg of Prilosec.

The American Medical Association warns that million-dollar jury awards and a flood of frivolous lawsuits are increasing the cost of doctors' insurance and creating a "full-blown liability crisis."

But not everyone agrees that there are too many malpractice lawsuits and few studies support the arguments used by the damage caps' proponents. In fact, Amitai Etzioni, who teaches sociology at George Washington University, says flatly there are too few lawsuits.

For every patient who sues, there are several who should but don't, says Etzioni.

Etzioni quotes a 1990 Harvard University study which found that only one out of eight patients who had a valid medical malpractice claim actually filed a suit. The study examined the records of more than 30,000 patients in New York -- one of the nation's most litigious states -- and discovered that in 1984 nearly 13,000 cases supported by "strong or certain evidence of negligence" were never pursued in court.

The Harvard study found that 3.7% of all patients suffered from complications caused by doctors. Later studies have found that number to be as high as 17.7%. Among the complications cited: the surgical removal of the wrong leg or kidney, brain damage to newborns and transplant procedures that didn't properly match donor and recipient.

In 2000, the National Academy of Sciences' Institute of Medicine found that between 44,000 and 98,000 patients died every year because of mistakes made by doctors and other healthcare personnel.

Why so few suits? As Etzioni sees it, many patients didn't know that it was negligence that caused their new problem. Others refuse to sue because they consider it human to err, or are grateful to a physician of many years for past care, or are fearful that they will be refused treatment if they file suit.

But even if there aren't too many malpractice suits, aren't the high jury awards associated with those that are filed wreaking havoc?

As it turns out, says Etzioni, more than two-thirds of malpractice lawsuits are either dismissed or dropped before they can be settled or brought to trial, so no massive awards result. And when plaintiffs do prevail in malpractice, really large jury awards are rare and are often scaled back on appeal, Etzioni said.

Frivolous suits can be dealt with without punishing those who deserve compensation, Etzioni argued. Louisiana, for instance, has malpractice review panels made up of three doctors and an attorney who are responsible for ruling on the merit of claims. Patients who wish to file a suit first have to submit their cases to these panels. If a panel rules that the case is without merit, a plaintiff still may bring his or her suit, but the panel's report can be filed with the court.

Lawyers reject claims that they are too quick to accept malpractice cases.

"As attorneys, our job is to protect the injured whose lives are ruined by physicians who don't appear to care enough about the patient to exercise reasonable care, or who have not kept up with their studies," said Chicago attorney Clifford Horwitz. "Thanks to malpractice suits, many of these physicians have lost their surgical privileges because they have butchered and ruined so many people."

Horwitz also argues that the $250,000 cap for pain and suffering damages is a red herring.

"If $250,000.00 is the cap on damages, will insurance carriers pay $250,000.00? Ever? No, they won't. Why should they? Since that is their maximum payout on their case, they will instruct their attorney to get the plaintiff to accept less or to try the case," Horwitz said.

No Cure-All

In many states, supporters of damage caps have argued that malpractice suits drive doctors out of state, limitiing access to medical care by the state's residents. But a 2003 report from the General Accounting Office (GAO) found that malpractice suits do not appear to significantly limit access to health care.

GAO examined the experiences in five states with reported malpractice-related problems (Florida, Nevada, Pennsylvania, Mississippi, and West Virginia) and four states without reported problems (California, Colorado, Minnesota, and Montana) and analyzed growth in malpractice premiums and claims payments across all states and the District of Columbia.

But the GAO said that, although some physicians reported reducing certain services they consider to be high risk in terms of potential litigation, such as spinal surgeries and mammograms, GAO did not find access to these services widely affected, based on a review of Medicare data and contacts with providers that have reportedly been affected.

Nor is it a certainty that damage caps reduce doctors' insurance costs, a recent Texas survey found.

Texas enacted damage caps last year and the number of lawsuits filed has been declining. But more than half the state's doctors have yet to see a decrease in their liability insurance premiums, the Dallas Morning News reported.