Newsletter0412 12/23/04 8:46 AM Page 2

January 2005 TheAn Justice update from the Foundation Report for Taxpayer and Consumer Rights

Rx Express # # # # President’s Message Americans Take to Rails to November’s election has led FTCR to some important lessons. Protest High Cost We live in a defining moment for our social mores and cultural values. If we don’t Prescription Drugs state our case for justice plainly, repeatedly and in identifiable terms, then the n the summer and fall of 2004, the Foundation struggles of the last two hundred years for the rule of law and social progress could for Taxpayer and Consumer Rights sponsored be lost. Itwo chartered train trips, dubbed the “Rx Basic health care will become more expensive and less available. FTCR’s role in Express,” that took seniors and other patients to advocating for affordable prescription drugs, health insurance premium regulation Canada to purchase prescription drugs at 60% and greater health coverage will become increasingly more important for the public. discounts. Holding press conferences along the route, the Rx Express riders raised public awareness The assault on the legal rights of consumers on Capitol Hill, in Sacramento and about the failure of U.S. health care policy to at the ballot box will only escalate until pro-active proposals put the attackers on the effectively address the high cost of prescription defense. drugs. In California, there’s a greater need than ever to educate the public about the gap The first Rx Express took seniors and other between Governor Schwarzenegger’s promises and his actions. ArnoldWatch.org will patients from San Diego, California up the West have an increasingly vital role. Coast to Vancouver, British Columbia. The Rx New methods of “e-advocacy” over the Internet can provide cost-effective ways to Express-East Coast traveled from Miami to organize and activate millions of people. This is an investment FTCR must make. Toronto. Below are just a few of the headlines our staff will be working to create in 2005. “I’m going to Canada to get the word out that we If you believe in our cause, please help by using the enclosed envelope to make a have to change the system,” said 76-year old tax-deductible contribution. Mildred Fruhling of Trenton, New Jersey. Best wishes, Rx Express rider June Marie Hicks of Philadelphia “would like our government to become aware of the plight of the people, not to work with the drug companies.” Jamie Court (continued on page 4) Headlines FTCR is Working to Create in 2005 Health Care Giant Blue Cross Repays $500 Million Under Taxpayer Lawsuit Bush Attack on Consumers’ Rights and Safety Defeated California Reduces Rx Drug Costs 60% ArnoldWatch.org Blamed by Schwarzenegger for Ruining His ‘Fantastic’ Image Insurers Forced to Lower Workers’ Comp Premiums Momentum Building to Repeal 30 Year Old Cap on Medical Malpractice Damages in California Voters Asked to Dock Politicians’ Jerry Flanagan and the Rx Express arrive in Canada to purchase lower cost Pay When They Refuse to Vote prescription drugs.

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Rage for Justice ‘05 Schwarzenegger’s Electricity Deregulation Plans Blocked Mark your calendar for TCR kept the heat on the Governor and Sacramento politicians and squelched FTCR’s Annual Rage for Justice Flegislation that would have sent Awards dinner on California back to the days of energy deregulation, rolling blackouts and market March 11, 2005 in . manipulation. These plans to revive deregulation were defeated, and Californians FTCR will be honoring longtime avoided the multi-billion dollar price tag that would have come with putting our energy actor/activist and recent Kennedy future back in the hands of unregulated Center awardee Warren Beatty, energy companies. In addition to blocking the dangerous and legal crusader Bruce Broillet, deregulation plan, FTCR pushed among others. policymakers to increase regulatory oversight of the state’s energy system. Legislation to For more information about the reregulate the state’s energy system was passed by the legislature. However, Governor event, email: Schwarzenegger, who has received huge support from the energy companies, including [email protected] a power company-funded ad campaign touting Schwarzenegger and opposing the reform bill, vetoed that proposal.

RX LA Born At FTCR Town Hall n 2004, FTCR’s California Health A Few of FTCR’s 2004 Headlines IConsensus Project organized three televised town halls as part of an ongoing project to forge a consensus on health care policies providing greater access to affordable health care. More than 200 people—including patients, small business owners, nurses and physicians—attended an event co-hosted by Councilman Antonio Villaraigosa at Los Angeles City Hall. Based on the consensus reached at that meeting, Councilman Villaraigosa pledged to work with FTCR to design a Los Angeles County program to negotiate prescription drug discounts on behalf of all residents. This program, named L.A. Rx, will be the first county-based drug bulk purchasing program in the country.

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FTCR Reveals Insurance Industry Smoking Guns in Fight Shell Prevented From Over Legal Rights Manipulating US Senate Blocks rights to full compensation in the case of Gasoline Supply, Medical Malpractice Caps medical negligence. Closing Profitable n insurance industry document Throughout the year, FTCR helped Refinery uncovered by FTCR revealed that expose the failure and injustice of ith the help of Athe nation's largest medical arbitrary limits on injured patients’ right whistleblowers, FTCR malpractice insurer, GE Medical to recover full and fair compensation. Whas exposed a series of Protective, believes that caps on FTCR’s successful challenges to medical internal documents from Shell Oil. malpractice damage verdicts and other malpractice insurance companies’ rating The documents show the company limitations on compensation for injured practices under California’s Proposition was closing its highly profitable patients do not lower physicians’ 103—saving California doctors nearly refinery in Bakersfield in order to insurance premiums. This smoking gun $50 million in two years – illustrate that artificially reduce the gasoline contradicts the public lobbying campaign the most efficient way to address high supply and drive up pump prices. by insurers to pass such caps in DC and insurance premiums for doctors is to cap The company had no plans to sell around the country on the grounds that insurance rates, not patients’ rights. the refinery, but rather intended to caps are necessary to lower premiums. FTCR’s work and information was crucial demolish the plant October 1st. The insurer was planning a 19% rate as Senators took on and defeated President Bush’s bill to limit injured FTCR’s disclosures led to media hike on Texas doctors just six months patients’ rights. scrutiny and political pressure on after the state enacted caps on medical Shell to put the facility up for sale. malpractice compensation; the company 2005 will see another push for caps In August, Shell agreed to keep claimed the caps law would have an from insurers and the Bush open the Bakersfield refinery until insignificant impact on insurance costs. administration, and FTCR will be there March 2005 to find a buyer. As of The revelations garnered national to fight it and draw attention to the need December, negotiations had not attention and helped patient rights for real insurance reform and real yielded a buyer; FTCR has urged groups in Oregon and Wyoming defeat solutions to the national epidemic of the Attorney General to police the initiatives from the medical-insurance medical negligence and malpractice. process. lobby that would have limited patients’

FTCR Launches Arnoldwatch.org Keeps Eye On “Unfair Competition Schwarzenegger Administration Watch” To Chart Impact n the day of Governor of Prop 64 Schwarzenegger’s inauguration in he passage of Prop 64 November 2003, FTCR launched means that illegal O Home | Subscribe | Donate | Get Involved | Contact Us ArnoldWatch.org to hold the Governor to his activity by polluters, ArnoldWatch Web Log: - Dec 16, 2004 - 01:45 PM T promises of sweeping the special interests /i mur jen see/ false advertisers and by: Carmen Balber companies that threaten the out of power in Sacramento. As it turns out, Sign up to receive free web logs via email Schwarzenegger has a far different definition public health, consumers and e.mer.gen.cy /i mur jen see/ n. An of “special interests” than most Californians. unexpected and sudden event that must be the environment can no longer dealt with urgently. be stopped in court by average He excludes big corporations which have Arnold really needs to work on his definitions. For the past year he has defined special citizens under California’s contributed most of the more than $30 interests as anybody that criticizes Arnold. Now he can't figure out the meaning of the word Unfair Competition Law. million the Governor has raised during his "emergency." On Friday, the Gov submitted an "emergency" regulation to change enforcement FTCR’s attorneys are working first year—that’s $72,000 per day, twice the of California's mandatory meal and break rules. The regulation would severely weaken workers' through the court system to amount raised by former Governor Gray legal right to a lunch hour. Who benefits when it's harder to enforce labor laws? Big hourly prevent big companies from Davis. employers, like Arnold-backers Target ($240,000 donor to the Gov), the Gap misapplying the initiative. Our ($197,400) and Wal-Mart ($210,000). With every fundraiser, each unsavory veto, advocates are chronicling the California law allows a governor to implement impact of the measure and and each appointment of special interest regulations on an emergency basis -- with no Arnold wants to exclude his donors from the definition of public hearing or input -- only when "a educatingspecial interests. So we turned to Merriamthe Webster. media, leaders to government jobs, Arnoldwatch.org regulation is necessary for the immediate Read and see pictures/video on our Capitol Billboard. preservation of public peace, health and safety, legislators and the public has chronicled the hidden hand of the real or general welfare." What sudden public health threat was so urgent that Arnold was forced to about unfair business practices call an immediate halt to lunch hours? Too special interests behind Schwarzenegger and many workers falling asleep at heavy that are not being prosecuted machinery in after-lunch-lethargy? Oops! I Appointed a Special his administration. ArnoldWatch.org is read Interest: due to PropWhich corporate 64. interestsThe has goal Arnold is to Actually, Wal-Mart broke the lunch time rules appointed and what do they want? regularly not just by journalists and citizens and is facing a lawsuit. For Arnold, that's an ultimately restore and extend emergency. in California, but throughout the country, the protections that have been Contributors like Wal-Mart would be off the Fundraiser Watch and by reporters across the globe. hook if the regulation takes effect. For Arnold, lost. ForKeeping more an eye on Arnold’sinformation calling the lunch break issue an emergency Fundraising calendar avoids the unpleasantly public regulatory about Prop 64: You can read every weblog at: process where California employees might toss up their lunch if they heard that Arnold wants www.electionwatchdog.org. http://www.arnoldwatch.org/blogs/index.php. to toss out lunch breaks on behalf of the Schhhhhwarzenegger Tip special interests. So he throws out the Line dictionary and calls it an emergency, like he If you have information about special interest influence in government let did last month when he tossed out the nurse- us know. to-patient ratios. We will protect your identity.

www.consumerwatchdog.org ##########Can someone get Arnold that book from 3 Merriam-Webster? Arnold and Enron Read more at: http://www.ArnoldWatch.org How might Arnold’s meeting with Ken Lay affect California?

ArnoldWatch Web Log: - Dec 07, 2004 - 01:10 PM Kicking Women's Butts by: Carmen Balber and Douglas Heller The Gray Davis Files: California’s Last Cash Register Governor The special interests will happily open their Newsletter0412 12/23/04 8:46 AM Page 6

FTCR Leads Fight to End Discriminatory Insurance Pricing Practice his year, FTCR organized a coalition of consumer, civil 103, the most sweeping and effective insurance reform in rights, public interest and community groups and American history. As part of Prop 103, Californians decided Timpacted citizens to explain the devastating impact of auto insurance premiums should be based primarily on how ZIP code-based auto insurance rates at hearings around you drive rather than where you live. This key provision California. From San Diego to Los Angeles and Fresno to addressed the historic inequities in the insurance Chico, FTCR put the facts, figures and faces of industry marketplace, in which insurers intentionally overcharged discrimination in front of the Insurance Commissioner and good drivers in urban and poor communities by targeting news media. certain ZIP codes with particularly high rates. But this The hearings were held by California Insurance provision remains unenforced. Commissioner Garamendi in response to a petition by FTCR Not surprisingly, the insurance industry revved up a and our coalition partners to fix a loophole in California deceptive public relations campaign, complete with phony regulations (put in place by disgraced former Commissioner consumer groups Chuck Quackenbush) that allows insurance companies to and bogus studies, (from page 1) base premiums on where a driver lives and other factors not in an all-out effort Rx Express related to driving safety such as marital status and gender. to keep their Prices are lower in Canada because FTCR has identified many ZIP code boundaries throughout discrimination Canada negotiates bulk discounts for the state where a good driver will pay as much as $500 more loophole. Despite prescription drugs on behalf of all for auto insurance depending upon which side of the street the industry residents. In the those they live. attack, FTCR types of negotiations were blocked by Sixteen years ago, California voters passed Proposition believes that new the 2004 federal Medicare law. FTCR rules will be put in has advocated that a U.S. bulk place in 2005. purchasing pool that negotiates big discounts from drug makers should be open to all Americans. The media frenzy around the Rx Virginia Neill of Bradenton Beach, Florida, saved more Express resulted in more than 300 than $2,500 on a three- television appearances, 60 news month supply of articles and over 100 radio prescriptions in Canada. She interviews. Each Rx Express is in danger of losing her passenger had a chance to tell their home and is considering story. A video about the riders and moving out of the country because she cannot afford their journey can be watched at her monthly medical costs. “I Rx Express rider Steffy Barstow pushes husband Carl through www.rxexpresscanada.org love my country…I don’t customs in Canada en route to lower cost medications. want to leave, but I have to keep a roof over my head.” Study Shows Non-Voting by California “I never conceived of being in this type of situation,” said retired social Legislators Plays Decisive Role worker Stephanie Barstow of Sherman in Defeat of Bills Oaks, California. TCR has released a study politicians deciding to abstain because conducted by graduate students they were less visible to the media and Despite a train tunnel fire in Oregon at the University of Southern public. and Amtrak’s attempts to limit press F access to the riders throughout New California about the practice of "non- In response to the study, editorials in York, the Rx Express made it to Canada voting" in the California State House— the and San when a politician intentionally leaves successfully—bringing an average Francisco Chronicle embraced FTCR’s annual savings of $2,000 each to the the room or simply stays silent when call for reform. FTCR has drafted a called upon to vote. The study found riders, and promoting the benefits of ballot initiative to stop “not voting” bulk purchasing Rx drugs to lower that politicians’ “not voting” played a and withhold pay from politicians role in the outcome of more than two prices for all patients. FTCR believes when they show up but don’t vote; Americans should not have to travel to thirds of bills defeated in the FTCR is currently seeking funding for 2001–2002 legislative session and was Canada to get the affordable such a campaign. To read the study, prescriptions they need to survive. The the deciding factor in the defeat of visit: more than a third. On average, when next step is to begin drafting a ballot bills failed, 34% of California Assembly http://www.consumerwatchdog.org/ measure in California that would force members did not vote on the corporate/pr/pr004605.php3 the state to establish a bulk purchasing pool for prescription drugs. measure—despite rules requiring To donate, contact FTCR president voting. Committee decisions were more Jamie Court at: For more information, visit likely than floor votes to result in [email protected] www.RxExpressCanada.org.

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FTCR Litigation Update # # # # #

Court Tosses Out Anti-Consumer Legislation A Los Angeles Superior Court sided with FTCR and invalidated legislation which would have # # # # # # allowed insurance companies to charge drivers without prior auto insurance, or with lapses in The Foundation for Taxpayer and coverage, hundreds of dollars more. The court held that the legislation violated insurance Consumer Rights reform Proposition 103. The bill, SB 841 (Perata, D-Oakland), was backed by big campaign 1750# Ocean # Park # Blvd., #Suite 200# contributor Mercury Insurance. While it is rare for a court to invalidate legislation, this is the Santa Monica, CA 90405 third time FTCR has successfully knocked out laws enacted by Sacramento politicians to help 310.392.0522 insurance companies evade voter-approved Proposition 103. # # 3 10.392.8874 # # Fax # # Consumers Can Sue Insurers that Violate Proposition 103 www.consumerwatchdog.org In another major victory for California insurance consumers, a California appeals court ruled , Founder that consumers can sue insurance companies in court for overcharges and other violations of # # # # # insurance reform Proposition 103. FTCR filed extensive “friend of the court” briefs in two related cases and has also sued a number of insurers found to have been illegally surcharging J a m i e C o u r t their customers. # # President# # # # FTCR Goes After Cell Phone Industry Abuse FTCR is challenging practices at a series of cell phone companies to make sure consumers are not cheated by unfair billing and sales practices. With cases against Nextel, Cingular, AT&T and #D o u#g l a s# H e l#l e r # T-Mobile, FTCR is taking on cell phone company abuses to get consumers refunds for Executive Director unwarranted charges and protections from anti-competitive schemes that reduce customers’ power in the marketplace. # # # # # # Do You Have a Complaint? P a m P r e s s l e y If you have been overcharged, misbilled or you think a company has broken the law, tell us Litigation Director about it at www.consumerwatchdog.org/ftcr/complaints.php3 # # # # # Nation’s Strongest Conflict of Interest Ordinance J e r r y F l a n a g a n On Track for Implementation n October, a California appeals court issued a tentative ruling in FTCR’s favor that # #Healthcare # Advocate# # # would bring the anti-kickback measure passed in Pasadena and Santa Monica by IFTCR’s Oaks Project volunteers close to implementation after a four year legal battle with politicians trying to block the reforms. The initiatives prohibit politicians from C a r m e n B a l b e r taking campaign cash, gifts or a job from companies that do business with their city— # Consumer # # Advocate # # addressing the kind of conflict-of-interest allegations that have recently dominated headlines in the city of Los Angeles and other communities throughout the state. #L a w #r e n c #e M a#r k e y#, J r #. Challenge To Wellpoint/Anthem Executive Payout Staff Attorney Leads To $300 Million for Poor Taxpayer Lawsuit To Recover income patients and communities as a # # # # # Half Billion Dollar Debt condition of approving the sale. M a r k R e b a c k TCR waged a corporate campaign Research by FTCR also uncovered Advocate & Office Manager against the largest health that Blue Cross of California has failed # # # # # # insurance merger in the nation’s for a decade to pay a constitutionally Fhistory—the buyout of Blue Cross of required gross premiums tax that is D a v i d F i n k California’s parent company Wellpoint paid by every other for-profit insurer in Oaks Project Organizer by Anthem. Through Public Records the state. The erroneous exemption # # # # # Act requests, a demand for hearings claimed by Blue Cross amounts to a and turning public attention to the taxpayer loss of about $60 million per P a t r i c k W i r z sale, FTCR uncovered a potential year. Since regulators have failed to act # # # # # # executive payout of up to $600 million on the information, FTCR has filed a Webmaster in the $16 billion deal that was not taxpayer lawsuit seeking about $500 disclosed to shareholders. Seizing on million in back taxes from Blue Cross #M a r g#a r e t# S t r #u b e l # this information, insurance regulators and its parent companies. Read more in California and Georgia secured about the lawsuit at Newsletter Designer pledges from the company to spend http://www.consumerwatchdog.org/heal hundreds of millions of dollars on low- thcare/pr/pr004736.php3 # # # #

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contribution so we can continue this David vs. Goliath battle against unrestrained corporations and the the and corporations unrestrained against battle Goliath vs. David this continue can we so contribution

To succeed in this work we depend upon the support of regular citizens like you. Please make a generous generous a make Please you. like citizens regular of support the upon depend we work this in succeed To

our opponents and staying true to the cause of justice. of cause the to true staying and opponents our

every step of the way. But we win in the courts and on the streets and in the Capitol by working harder than harder working by Capitol the in and streets the on and courts the in win we But way. the of step every

oncerned individuals. Our advocates, organizers and public interest lawyers are outnumbered and outgunned and outnumbered are lawyers interest public and organizers advocates, Our individuals. oncerned c

obbyists and lawyers, while the Foundation for Taxpayer and Consumer Rights depends upon the generosity of generosity the upon depends Rights Consumer and Taxpayer for Foundation the while lawyers, and obbyists l

The insurance industry, HMOs, energy companies and special interests have unlimited money to spend on on spend to money unlimited have interests special and companies energy HMOs, industry, insurance The

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