WANADA Bulletin # 39-03 September 29, 2003 REGULATORY UPDATE: “Do-Not-Call” Registry in Legal Limbo But WANADA Issues Guidelines for Oct. 1 Telemarketing Rules s we went to press, the create the “do-not-call” list. The They got little sympathy in A Federal Trade ruling involved a lawsuit Congress, however. In a rare Commission’s national “do-not- brought by telemarketers who display of speed and call” list against telemarketers estimated the “do-not-call” list bipartisanship last Thursday, the was facing its second 11th-hour – which has already registered House voted 412-8 and the legal challenge, and it was more than 50 million people – Senate 95-0 to pass a bill making unclear if Congress could act and could cut its business in half clear that the FTC has the cause the Oct. 1, 2003 effective and cost the telemarketing authority to enforce the “do-not- date for the “do-not-call” registry industry $50 billion in sales call” list. to kick in on time. each year. (Continued on page 3) However, since the legal DEALERS IN THE SPOTLIGHT challenge only affects the “do- not-call” registry, WANADA Congressman Meets With as Part of senior staff and legal counsel, AIADA’s Driving Change Grassroots Campaign Hamilton and Hamilton, working with NADA lawyers, prepared a memorandum summarizing all the new telemarketing requirements, many of which do become effective this week. The memorandum was mailed to all dealer members last week. The first legal challenge came on Sept. 24, when U.S. District Judge Lee R. West in Oklahoma ruled that Congress had not given Rep. Jim Moran, second from right, visits with, from left, Don Beyer, the FTC specific authority to Warren Harper and Larry Smith during a recent visit to Don Beyer Volvo in Falls Church, VA. Inside… ATAE Law Conference...…...... p.2 ep. Jim Moran (D-VA) met recently with Don Beyer of Don Change at Helm of MD MVA .…p.3 R Beyer Volvo in Falls Church and his employees to discuss Auto Industry Supports current legislative issues affecting his business and the auto industry. 13.3 Million Jobs.………. …..p.3 The meeting was organized through “Driving Change,” a national Anti-lock Brakes Fall grassroots program launched by AIADA last July. Out of Favor……... “Visiting Don Beyer Volvo…has given me a better idea of how ………….p.3 to serve my constituents, because people who work in auto MAMSI Excludes OTC Drug — dealerships have the pulse of the community,” said Moran. Solution: WANADA’s Flexible Spending Account.. (Continued on page 2) Page 2 WANADA Bulletin #39-03 September 29, 2003 ATAE Law Conference Highlights Regulatory Issues New telemarketing rules • Off-Shore Reinsurance Tanks. EPA’s new rule designed topped the list of priority issues Companies. NADA has to prevent oil spills from entering at the recent ATAE (Automotive discussed with IRS waterways impacts dealerships Trade Association Executives) representatives the agency’s required to have Spill Prevention, Automotive Law Conference, Notice 2002-70 concerning Control and Countermeasure held in conjunction with transactions involving off-shore (SPCC) plans. At NADA’s NADA’s reinsurance arrangements that urging, EPA has eliminated the Conference. However, several often result in claims of federal single storage tank trigger, thus other issues that could have a tax benefits that the IRS reducing the number of dealers significant impact on dealers contends are not allowed, and categorically required to create were also discussed: transactions that are used to and maintain SPCC plan for • HIPPA. A new HHS rule divert income to companies tanks of 660 gallons or more or a issued under the Health Insurance subject to little or no federal combined above ground capacity Portability and Accountability income tax. NADA asked the of greater than 1,320 gallons. Act requires some dealerships to IRS to clarify what divides put procedures in place to protect legitimate transactions from the privacy of patient medical those which have raised information, in particular, concerns. dealerships or dealership chains • Aboveground Storage that partially or fully fund a health plan for employees. Small Congressman Meets Beyer(From page 1) health plans — those with $5 million or less in annual receipts “Few workforces are more tours have taken place with more — have until April 14, 2004 to interested in what’s good for the than 100 dealers in 33 states comply. economy than those who work planning to participate in the • TILA Disclosures. The U.S. in auto dealerships.” program before the end of District Court of issued Beyer said his employees, September. an opinion that could expose many of whom are new U.S. “AIADA members serve as an dealers to liability under the citizens or hoping to become integral part of their local federal Truth In Lending Act. citizens, were “very gratified communities. We believe these The court held that a dealership that a congressman would come meetings will allow for a free violated TILA for disclosing an and spend the better part of an exchange of ideas on the issues inaccurate APR based on the date hour with them. Moran didn’t facing our dealer members and of its original sales agreement give a speech, but rather asked their employees,” said Buzz and not the date of a subsequent them questions and gave them Rodland, AIADA chairman- elect agreement with different credit the best insights he could.” and chair of AIADA’s Dealer terms. Beyer was also impressed at Involvement Committee. “By • USA Patriot Act. NADA how well informed his employ- having Members of Congress lawyers reviewed three ees were on local and national visit dealerships and experience provisions of the act that apply to issues. “They asked some tough everything from showrooms to businesses “engaged in vehicle questions. He was very open services bays, they will have a sales” — cash reporting, and did his best to answer all better perspective of a information sharing and the anti- questions.” dealership’s inner workings and money laundering program Driving Change is designed have a better understanding about requirements. All requirements to increase the involvement of their concerns directly.” are covered in detail in NADA’s AIADA dealer members in its management guides available to lobbying and advocacy efforts. members through nada.org. To date, over a dozen dealership WANADA Bulletin #39-03 September 29, 2003 Page 3 “Do-Not-Call” List In NEWS NOTES Legal Limbo Hugel Replaces Ferro at Helm of MD MVA The head of the Maryland Motor Vehicle Agency has resigned to (Continued from page 1) work for a trade group, the Associated Press reports. Anne S. Ferro But before the bill could go to says she will work for the Maryland Motor Truck Association, which President Bush, who said he represents the trucking industry. looked forward to signing it, U.S. The announcement marks the second time this year that the state District Judge Edward W. has said she will be leaving. Ferro was among dozens of state work- Nottingham in Denver again ers who received letters of dismissal after the Ehrlich administration blocked the list, ruling in another took office in January. Ferro kept her job, but now is gone. Gov. suit brought by telemarketers that Robert L. Ehrlich Jr. (R) appointed David H. Hugel, who has been the “do-not-call” list was deputy administrator since April, to succeed her. unconstitutional under the First Amendment because it does not Auto Industry Supports 13.3 Million Jobs apply equally to all kinds of Even with job cuts looming at Detroit's Big Three automakers, speech, blocking commercial the auto industry continues to be the biggest job producer in the telemarketing calls but not calls United States, generating economic activity that employs more than from charities. “The FTC has 13 million people, according to a study by The Center for Automo- chosen to entangle itself too tive Research in Ann Arbor conducted for the Alliance of Automo- much in the consumer's decision bile Manufacturers. The study shows that the auto industry provides by manipulating consumer one out of every 10 jobs in the United States and generates jobs in choice,” Nottingham wrote. each of the 50 states, The Detroit News reported. As of this writing, The study accounts for the direct economic impact beyond tradi- Congress and the FTC were tional auto-related jobs, such as factory workers, white-collar engi- planning their next move. In the neers and managers, dealers and mechanics. It tracks the activity meantime, dealers are strongly generated by motor vehicles throughout American life. Overall, the advised to review the WANADA study concluded, 13.3 million U.S. jobs are related to motor vehicles. memorandum sent last week. The job total includes 621,000 people working directly for auto- For complete information makers, 1.8 million employees at parts suppliers and support-service on the restrictions imposed by companies, and 2.4 million in spin-off industries. New and used car both the FTC and FCC, including dealers account for another 1.9 million jobs. compliance dates and other responsibilities, dealers should Anti-lock Brakes Fall Out of Favor consult NADA’s Management With Some Automakers, Regulators Guide L.44, A Dealer Guide to Anti-lock braking systems, on 80% of new vehicles sold last Federal Telemarketing year, are losing the support of regulators and some automakers, ac- Restrictions, which can be cording to a report in USA Today. The latest government and insur- ordered by calling 800-252-6232, ance industry data show ABS doesn't appear to be increasing the ext. 2 or 703-821-7227. Cost to number of crash deaths, a concern five years ago. But the research NADA members is $25.00, also doesn't show any overall lifesaving benefits from the devices. $50.00 for non-members, plus Many safety experts who have seen ABS' skid-reducing benefits shipping. Or, order an electronic on test tracks — or benefited from the systems personally — still version online at www.nada.org/ swear by it. But the lack of proof that it saves lives is influencing mecatalog. regulators. When it argued against ABS for the tire rule, the agency cited its own research and a 2002 insurance industry study of claims data that said ABS didn't reduce the overall risk of fatal crashes. Page 4 WANADA Bulletin #39-03 September 29, 2003 HEALTHCARE UPDATES: MAMSI Follows Growing Trend, Excludes Coverage of Heartburn Drug

On June 29, the Federal Drug Administration (FDA) approved the sale of Prilosec, a widely prescribed medication for frequent heartburn, as an over-the-counter (OTC) drug. On September 15, 2003, Prilosec became available without a prescription – at the exact same strength and dosage. Since MAMSI pharmacy products, like most health insurance carriers, exclude coverage for OTC medications, Prilosec and its generic equivalent, Omeprazole, are no longer covered for new prescriptions by MAMSI health plans. Existing prescriptions (prescriptions written and filled prior to September 15, 2003) will continue to be filled until January 1, 2004. Prescriptions for therapeutic equivalents, such as Prevacid, Nexxium, Protonix and Aciphiex, will require prior authorization in order to be covered under the member's prescription drug policy. All WANADA’s health plans under MAMSI will approve coverage for Prilosec's therapeutic equivalents if the member: (1) tried and failed OTC Prilosec; or (2) filled a prescription within the last 90 days for any of Prilosec's therapeutic equivalents. MAMSI is informing all participating physicians of these changes and is sending correspondence, including a coupon for the new OTC Prilosec, to all members who have filled a prescription for a heartburn medication.

The Solution: WANADA’s Flexible Spending Accounts In what appears to be a growing trend in healthcare markets across the U.S., more medications are moving from prescription to OTC. AETNA has also announced policy adjustments similar to MAMSI and we expect other health insurance carriers to follow suit. This is not good news to consumers who will end up paying more for OTC drugs than prescriptions drugs covered by their health insurance. However, one solution available to dealers is to set up tax exempt Flexible Spending Accounts (FSA) for their employees through WANADA. The IRS recently made new adjustments to “Section 125, FSAs that are likely to include the cost of some, but not all, OTC medications. The tax exempt FSAs are a great way to offset at least part of the cost of OTC drugs. For more information on WANADA’s FSA plans, contact John O’Donnell, (202) 237-7200.

WANADA Insurance Trust Announces “Premium Holiday” Dealer principals, if you’re receiving your life and disability insurance through WANADA keep your eyes open for a nice check within a month. Thanks to an efficient, well-run WANADA Insurance Trust which has resulted in a healthy surplus of funds, the association’s Employee Benefits Committee approved a one-month-a-year “premium holiday” for participants in our life/AD&D and short-term disability plans. If you are not currently taking advantage of this extraordinary member benefit, call today for more information! Contact John O’Donnell at WANADA, (202) 237-7200.

Thought for the Week…

When it comes to passing legislation, Congress can be a real slow beast, but when 50 million Americans are mad, it can be a real fast rabbit.

—Rep. Billy Tauzin (R-LA), chairman of the House Energy and Commerce Committee.