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INSIDE
MAY / JUNE 2013
A P U B L I C A T I O N O F T H E A M E R I C A N L E G I S L A T I V E E X C H A N G E C O U N C I L
legal issuesEDITIONHealth Exchanges: ComingSoon to a State Near You,ProbablyBy Sean Riley and Edward Walton
South Dakota ImplementsCriminal Justice Reform Basedon Data-Driven ApproachBy the Honorable Brian Gosch, SD (HD-32)
Playing with Fire:Manufacturers Fate ShowsReforms are Needed toSave Industry and JobsBy Amanda Emerson
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CONTENTS
Inside ALEC | May / June 2013 3
A PUBLICATION OF THE
AMERICAN LEGISLATIVE
EXCHANGE COUNCIL
LEADERSHIP
2013 Naonal ChairmanThe Honorable John Piscopo,
CT (HD-76)
Private Enterprise Advisor
Council Chair
C. Steven Seale, SAP America
Eecuve Director
Ron Scheberle
Senior Director
Polic and Strategic Iniaves
Michael Bowman
Senior DirectorFinance and Administraon
Lisa Bowen
Senior Director
Public Aairs
Bill Meierling
INSIDE ALEC
Editor in Chief
Bill Meierling
Eecuve Editor
Ashle Varner
Ehibing or adversing at an
Echange Council event is a great
wa to promote our compan to
members of both the private and
public sectors. If ou are interested
n ehibing or adversing at a
Council meeng, please contact Sarah
McManamon at:
(202) 742-8516.
American Legislave Echange
Council
2900 Crstal Drive
Arlington, VA 22202
Phone: (202) 466-3800
Fa: (202) 466-3801
www.alec.org
DESIGN / LAYOUT
Steven Andrews
The Council provides legislators
with viewpoints and discussions on
ssues important to them and their
constituents. Authors submitting
articles for Inside ALECdo not
necessaril reflect the views or
polic positions of the Council.
Leadership Proiles
Lets All Get Along...With Lawsuit Reormby Amy Kjose Anderson And john eicK
Playing With Fire: Manuacturers Fate Shows Reorms are Needed to SaveIndustry and Jobsby AmAndA emerson
Losing Good Legislation to the Quagmire o Politicsby miKe seney
South Dakota Implements Criminal Justice Reorm Based on Data-DrivenApproachby the honorAble briAn Gosch, sd (hd-32)
Five Solutions or Addressing Environmental Overcriminalizationby ViKrAnt P. reddy And mArc A. leVin
Provisional Occupational Licenses Provide a Path to Employment orEx-Oendersby cArA sulliVAn
Legislators Address the Growing Use o Contingent Fee Attorneys by StateOicialsby christoPher e. APPel
Barriers to Entry: State Licensing Laws Restricting Charityby edwArd wAlton
Health Exchanges: Coming Soon to a State Near You, Probablyby seAn r iley And edwArd wAlton
The Medicaid Expansion Landscapeby seAn r iley And edwArd wAlton
A Premium on Premiumsby seAn riley
Telemedicineby Alex rued
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JUSTICE PERFORMANCE PROJECTCIVIL JUSTICE AND JUSTICE PERFORMANCE PROJECT
INSIDE ALEC | MAY / JUNE 2013
HEALTH & HUMAN SERVICES
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Chaian Pofie:
The Honorable Lance Kinzer - Kansas (HD-30)
Chaian of the Conci Task Foce on Civi Jstice
The American Legislave Echange Council is pleased to announce Kansas Representave Lance Kinzer (HD-30) as the incoming chair of the
Council Task Force on Civil Jusce. Rep. Kinzer, the current Chair of the Kansas House Judiciar Commiee, will bring to the Task Force over nine
ears of eperience in the Kansas Legislature. Rep. Kinzer served four ears on acve dut in the U.S. Arm JAG Corps and is currentl a partnein the law rm Schlagel, Gordon & Kinzer, LLC in Olathe, KS. The Task Force on Civil Jusce will benet greatl from Rep. Kinzers man ears o
eperience, eperse and commitment to free market principles.
4 Inside ALEC | May / June 2013
leadership profiles
Chaian Pofie:
The Honorable Chris Shank - Maryland (SD-2)Chaian of the Jstice Pefoance Poject
The American Legislave Echange Council is pleased to announce Senator Chris Shank of Marland as the incoming chair of the Echange
Councils Jusce Performance Project. Aer serving in the Marland House of Delegates for 12 ears, Senator Shank was elected to the Marland
Senate in the 2010 elecons. Among his man leadership roles, he will bring si ears of eperience on the Judiciar Commiee as well as two
ears of eperience on the Judicial Proceedings Commiee to the Jusce Performance Project. Senator Shanks leadership on criminal jusce issues in Marland will provide valuable insights and knowledge to members of the Jusce Performance Project. Last session, he helped spearhead
reforms that concentrate resources on higher-risk oenders through earned compliance credits. In 2011, Senator Shank sponsored legislaon
that would provide swi, certain and proporonate sancons to individuals who violate the terms of their supervision. These reforms strengthen
probaon and parole and allow law enforcement to focus on individuals most likel to reoend. The Echange Council has alread beneted
from Senator Shanks role as a member of the Task Force on Civil Jusce and his hands-on eperience with criminal jusce reform will be a grea
resource for Project members as the discuss limited government, free-market soluons for our states criminal jusce sstems.
Chaian Pofie:
The Honorable Judson Hill - Georgia (SD-32)
Chaian of the Conci Task Foce on Heath and Han Sevices
The American Legislave Echange Council is pleased to announce the appointment of Georgia Senator Judson Hill (SD-32) as chairman of the
Council Task Force on Health and Human Services. A ve-term State Senator, Hill has served as the chair of the Georgia Finance Commiee and
as a member of the Government Oversight and Judiciar Commiees. As a member of the Georgia Health and Human Services Commiee, he
authored and successfull passed the naons rst paent-centered, prevenon-focused, free market reform legislaon, making health care and
insurance more aordable for Georgias working families. Having previousl served as an Eecuve Commiee member on the Task Force, Sena
tor Hills eperience within the Council will complement his etensive polic and legal eperse to the connued benet of the membership
Senator Hill served in the Reagan Administraon as an Assistant United States Aorne for the Northern District of Georgia and also in Washing
ton, D.C. as a White House appointee at the United States Department of State/Agenc for Internaonal Development. He is a graduate of Emor
Universit and the Walter F. George School of Law at Mercer Universit.
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JUSTICE
BY AmY KJOSE ANDErSON AND JOHN EICK
The current polical climate has le man people red of
parsanship and gridlock. For those looking for sound pol-
ic with broad appeal, the Echange Council Task Force on
Civil Jusce oers model polic for lawsuit abuse reforms.
A new naonal surve conducted b Luce Research and sponsored
b the American Tort Reform Associaon and the Sick of Lawsuits
campaign reveals there is wide-ranging appeal to curb lawsuit abuse.
The Luce poll suggests that 89 percent of Americans think lawsuit
abuse is a problem and 83 percent believe the liabilit lawsuit sstem
should be improved. The poll found this agreement spread across the
polical spectrum.
An overwhelming majorit of American voters (90 percent) believein the values and goals embodied b the Task Force on Civil Jusce;
namel, that lawsuits and legal selements should seek to compen-
sate people for their actual losses rather than provide unmerited -
nancial gain.
The task forces lawsuit reform resoluons are purposed to dimin-
ish the negave impact of frivolous ligaon, minimize the nancial
burden shouldered b the business econom to defend against such
lawsuits, treat plains and defendants fairl, and encourage proper
use of the legal sstem.
Is ever lawsuit ridiculous? No. Are a majorit of lawsuits unfound-
ed? No. However, those unmerited or quesonable lawsuits create
problems in the sstem and impose crippling insurance and legal de-
fense fees on small businesses. The Echange Council takes parcular
care to cra model polic designed to target problemac areas of li-
gaon while safeguarding the legal sstem as a deliverer of jusce and
a funconing check on the free market sstem.
Imagine our compan could be sued not because of a defect
in the product ou sell but because the customer used our prod -
uct for an unintended purpose, causing injur. Such lawsuits and
damages awarded result in product warning labels such as: do
not use while sleeping on a hair drer, remove child before fold-
ing on a bab stroller, or do not eat toner on a printer cartridge.
most Aeicans agee that
asit abse poses a seios
theat to bsiness podctivity
and copetiveness.
Continued on page 24
Lets All GetAlongWithLawsuit Reform
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INSIDE ALEC
BY AmANDA EmErSON, POrTABlE FuEl CONTAINEr
mANuFACTurErS ASSOCIATION
The American Dream does not mean everone is guaran-
teed success. It means America provides vast opportunies
for success to those who work hard.
Blitz U.S.A., a compan in eistence since WWII, was an
eample of the American dream. From its home base in the small
town of Miami, Oklahoma, this compan once commanded 75 per-
cent of the U.S. market for a niche, commodized product in constantdemand.
Toda, the once proud compan is histor the latest American
manufacturer to shut its doors.
Blitz was one of ve companies in the U.S. and Canada that pro -
duced the familiar red plasc gas cans found in nearl ever Ameri -
can household. First introduced in the earl 1980s, the product was a
signicant safet breakthrough. For the rst me, consumers had ac-
cess to non-metallic containers designed eclusivel for the transport
and storage of gasoline that were both safe and aordable.
Over the ears, safet standards and regulaons developed b
the American Societ for Tesng and Materials and the Environmen-
tal Protecon Agenc have furthered safet and environmental im-
provements, including child-resistant and spill-proof spouts. Gas can
manufacturers have voluntaril embraced all proven means of safet
and performance improvements. Unfortunatel, the primar causes
of accidents involving gas cans are individuals who choose to misuse
gasoline to start or accelerate a re.
Around the turn of the centur, Blitz U.S.A. became the target of
trial aornes who theorized that when gasoline is eposed to ame,its not the gasoline which causes injur, but the gas can. Plains
allege consumer gas cans are defecve because the do not contain
a device called a metallic ame arrestor, a device designed to pre-
vent ame progression. Blitz took the brunt of the ligaon, having
the industrs largest market share.
What began as a trickle, averaging between three to seven lawsuits
each ear over 10 ears, erupted into an avalanche of 26 lawsuits
led in the wake of one large selement in 2011 made b Blitzs in -
surer. Shortl aer the me of bankruptc ling, Blitz had 42 open
playing With fire:
Manuacturers Fate Shows
Reorms are Needed to Save
Industry and Jobs
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cases. Other manufacturers eperienced similar increases in ligaon
and connue to be at risk of a similar fate.
With 15-20 million cans sold in the U.S. annuall, an esmated 600
million instances of gas can usage occur each ear with ver few re -
sulng in accident or injur.
Data from the Naonal Electronic Injur Surveillance Sstem shows
the number of accidents involving gas cans has steadil declined. It
stands in stark contrast to the skrockeng number of lawsuits and
selements b liabilit carriers that brought a once-viable industr to
the brink of collapse.
While man businesses balk at regulaon, the members of the
Portable Fuel Container Manufacturers Associaon (PFCMA) acvel
seek regulator mandates that will stabilize the industr and allow
them to beer defend themselves in cases involving product misuse.
It is impossible to completel remove all risk for those who choose
to put themselves and others in danger. If the soluon was as simple
as plains allege, the manufacturers of consumer gas cans would
have done so long ago. It would be irresponsible to adopt design
changes to potenall reduce risks surrounding product misuse with-
out rst concluding that the proposed changes do not have unintend-ed consequences for the majorit of consumers who use the product
responsibl. At the end of the da, there is no device that will make it
safe to mi gasoline and re.
The Consumer Product Safet Commission (CPSC) has twice re-
jected requests to mandate standards for consumer gas cans. In its
original determinaon, CPSC stated that accident informaon did
not indicate that the design or performance of gas cans presents an
unreasonable risk of injur, and it was the Commissions belief that
the majorit of accidents occur because of the wa gasoline and con-
tainers are used around ignion sources. Onl the trial bar deems
the product itself as unsafe. As a result, the manufacturers remain
trapped in a vicious ccle of ligaon.
At the Federal level, PFCMA is working with legislators to mandaterelevant voluntar standards. A bill introduced b the Honorable Tom
Cole of Oklahoma (CD-4) amending the 2008 Childrens Gasoline Burn
Prevenon Act would mandate eisng voluntar standards, in eect
gaining CPSC oversight on product design. There is also opportunit
for state statutes providing limited immunit related to product mis-
use.
In Oklahoma, PFCMA members have supported the Raonal Prod-
uct Use Act, an American Legislave Echange Council model polic
that would restrict the abilit of consumers to recover in the event of
misuse. Addionall, the act claries the law to assure that the rea -
sonableness of the consumers act is taken into account. The mere
fact that a misuse might, in some wa, be foreseeable is insucient
for imposing liabilit when the misuse was unreasonable and, in the
case of gas cans, quite literall like pouring gasoline on a re.
It is too late to save Blitz. Without polic intervenon to stabilize
the business environment, the remaining manufacturers are at risk to
meet a similar fate.
AmAndA EmErson is a Government Affairs Specialist at the Portable
Fuel Container Manufactuers Association.
Losing Good Legislation to theQuagmire o Politics
Mike Sene is the Senior Vice President of
Polic Analsis & Strategic Planning at the State
Chamber of Oklahoma.
BY mIKE SENEY, STATE CHAmBEr OF OKlAHOmA
Senate Bill (SB) 754, based on the Echange Councils model R
onal Use of a Product Act, passed the Oklahoma Senate bvote of 33-9 and was sent to the House of Representaves a
a live round. In other words, if the House passed it with n
amendments it would go straight to the Governor for her signa
ture.
No problem, right? Wrong!
At the same me, the State Chamber of Oklahoma was push
ing for a bill to regulate lawsuit lending, a bill to provide for pe
sonal injur bankruptc trust transparenc (which also include
asbestos cases), and a complete restructuring of Oklahoma
workers compensaon court-based sstem (replacing it with a
administrave sstem).
Due to me constraints and other polical gamesmanship (i.e
strong pushback from the trial bar), the House decided not thear SB 754. SB 754 will hopefull be the rst piece of legisl
on heard net Februar in the House Judiciar Commieean
I believe it will pass.
Wh? Because SB 754 makes good sense. The State Chambe
of Oklahoma, in supporng SB 754, conducted a poll of likel vo
ers in late Februar.
Here is the queson and respondent results:
Within the last year, an Oklahoma manufacturer of gas cans closed
its business because it could not aord the lawsuits that had been
led by people who were injured when they poured gasoline on
res, even though the cans had a label on them warning against
doing so. Do you think consumers who misuse products should or
should not be able to sue the companies that make that product?
SHOULD BE ABLE TO SUE 7%
Should not be able to Sue 88%
UNDECIDED VOL. 5%
Its obvious that the common cizen has common sense. I
this case, common sense was trumped b polics. Unfortu
natel, it somemes also stands in the wa of returning a sens
of personal responsibilit to our societ.
We will be back net earand we will pass SB 754.
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South Dakota
Implements Criminal
Justice Reform Based
on Data-Driven
Approach
By THE HONORABLE BRIAN GOSCH, SD HD32
INSIDE ALEC
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iJUSTICE
Businesses are increasingl using data to beer meet cus-
tomer needs. State policmakers should do the same and
leverage available data to help cra public policies that
most ecientl allocate tapaer dollars.
South Dakota provides an eample of data-driven polic reforms
that reduce recidivismthe rate at which oenders return to pris -
on. The states reforms are likel to be successful because decisions
on what would work best for the criminal jusce sstem were not
based on emoon, insnct or whim. Rather, lawmakers based polic
changes on data that revealed what was actuall driving the prison
populaon in the state.
Over the past 20 ears, South Dakotas correcons spending tripled
as its prison populaon has swelled from a few hundred inmates in
the 1970s to over 3,600 toda.1 The increase in spending has not pro-
duced a commensurate return in public safet; nearl 45 percent of
oenders in the state return to prison within three ears of their re -
lease.2 Most importantl, South Dakotas crime rate has not kept pace
with the naonal crime rate decline.3
In earl spring 2012, state leaders gathered input from a variet of
stakeholders involved in all parts of the criminal jusce sstem. Three
dozen meengs with over 400 interested parcipants led to the for -
maon of the South Dakota Criminal Jusce Iniave Working Group.
Throughout the remainder of 2012, the Working Group conducted
an ehausve review of probaon, parole and incarceraon data and
produced a set of polic recommendaons for the state.
One of the Working Groups major ndings was that the number of
prison beds used for parole violators returning to prison had nearl
tripled between 2000 and 2012.4 Addionall, 40 percent of proba-
on violators were incarcerated due to a technical or minor violaon
of the terms of their supervision.
These ndings allowed the Working Group to focus polic soluons
on the specic groups of oenders who were driving up the prison
populaon. The resulng reform package included several evidence-
based soluons that have been proven to reduce recidivism in other
states. South Dakota implemented earned compliance credits that
allow low-risk oenders to earn their wa o supervision b adher-
ing to specic goals and guidelines. This provides powerful incenves
for oenders to change their behavior and concentrates resources on
higher-risk oenders b allowing law enforcement to focus on the in-
dividuals most likel to reoend or to be a danger to the communit.
In addion, South Dakota enabled probaon and parole ocers
to emplo swi, certain and proporonate responses to violaons ofthe condions of their supervision. The immediate and inevitable re-
sponse helps prevent or erase the mentalit that oenders can break
the rules without consequences. Swi and certain sancons can
provide appropriate punishment and save tapaer dollars b help-
ing prevent long and costl prison stas for minor violaons. Posive
reinforcements such as good me credits or decreased reporng re-
quirements can incenvize oenders to sta on track.
Combined with other aspects of reform, these responses can have
an enormous eect on decreasing the rate of return to jail or prison.
In South Dakota, reforms are esmated to save approimatel $200
million through averted prison construcon and operang epenses.5
A data-driven approach allowed South Dakota to go beond rheto-
ric and eamine what was reall happening with South Dakotas cor-
reconal populaon. This will help the state beer protect its com-
munies, contain its correcons spending and hold both criminal
oenders and reentr programs more accountable for results.
1 South Dakota Criminal Justice Initiative, Final Report. November 2012.
2 Ibid.
3 Ibid.
4 Ibid.
5 Ibid.
spEAkEr BriAn Gosch served on the South Dakota Criminal
Justice Initiative Work Group and is a member of the Echange
Councils Task Force on Civil Justice. Rep. Gosch represents
South Dakotas 32nd House district.
t a f a k
f a
a k f
a
a , .
cage ovea ce rate cage iet rate
nate -19% 1.6%
s. data -9% 18%
p pat BA Te:
July 2000
2558 total offenders
Parole Violators 18%
New Commitments 79%
Other 3%
July 2010
3611 offenders
Parole Violators 25%
New Commitments 70%
Other 5%
Increasing Number Of Prison Beds Are Being Used For
Offenders Entering Through Parole Revocations
Crime Rate Decline In SD Has Not Kept Pace Wit h The AverageRate Of Decline
Source: http://www.pewstates.org/uploadedFiles/PCS_Assets/2013/CJI_re-
port_Nov_2012.pdf
Source: Department of Justice, Bureau of Justice Statistics, Prisoner Series.
Federal Bureau of Investigation, Uniform Crime Reports.
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INSIDE ALEC
Fv s f Ag evaovaza
BY VIKrANT P. rEDDY AND mArC A. lEVIN
In recent ears, advocates from across the polical spectrum
have increasingl cricized overcriminalizaon, the tendenc of
government to use criminal law to regulate behavior that is not
tradionall criminal.
In Januar, we authored a report for the Teas Public Polic Founda-
on that described the U.S. Gulf Coast as Ground Zero for state-level
overcriminalizaon. Indeed, between Teas, Louisiana, Mississippi,
Alabama and Florida nearl 1,000 laws have passed to criminalize ac-
vies involving the environment. Criminal sancons are of course
appropriatel applied to an individual who intenonall contaminates
another persons propert. Too oen, however, the acvit that is
governed b these mriad laws is non-blameworth, ordinar busi-
ness acvit.
In Louisiana alone, more than one hundred oenses that relate to
hunng, shing and wildlife could result in imprisonmentand virtu-
all none of these oenses carr the mens rea (or culpable state of
mind) requirement that has been a foundaon of American criminal
law for centuries. In Florida, it is a rst-degree misdemeanor to trans-
port b vessel over water both wild and aquaculture products of the
same species at the same me, but it is not clear wh it is necessar
to ban this pracce in all circumstances. In Mississippi, individuals can
face up to si months in prison for hunng deer from a boat. Teas has
11 felonies related to oster harvesng.
Overcriminalizaon along the Gulf Coast is inevitabl a signicant
burden to businesses. Ordinar business acvit that is vital for the
health of a stateshing, drilling, hunng, building, etc.is curtailed.
Businesses do not have clear rules under which to operate, and when
the do, the rules can be undul harsh. Ulmatel, it is the business
consumers who suer. In our report, we oered ve possible polic
es.
First and foremost, policmakers should review whether certain of-
fenses are properl characterized as crimes in the rst place. If not,
criminal penales for these oenses should be removed. The remain-
ing oenses, if the are aached to criminal penales, ought to ap -
pear in the states penal code.Secondl, states should strengthen their mens rea protecons. Civil
and criminal law have alwas been disnguished b the requirement
that a criminal must have a guilt state of mind, but an increasing
number of regulator oenses disregard the mens rea requirement
because it is inconvenient for a speed prosecuon. Similarl, some
statutes require mere criminal negligence rather than intenonal,
knowing, or reckless conduct for culpabilit. Negligence is a low stan-
dard, which is more appropriate in civil cases. In the criminal jusce
contet, mere negligence or the lack of a culpable mental state re-
quirement leads to the punishment of accidental conduct with poten
all the same consequences as if it had been knowing or intenonal
The American Legislave Echange Council has developed model poli
cies that would appl a strong mens rea element to all criminal laws
that are silent on this issue.
Third, states should codif the rule of lenit to environmental of
fenses, and not simpl trust the court will appl it. The rule of lenit
is a canon of statutor interpretaon instrucng a court to resolve
ambiguies about whether conduct is criminall prohibited in favor o
the defendant. The U.S. Supreme Court has eplained the rule using a
sports analog: the e must go to the defendant. This approach to
statutor interpretaon is almost universall unquesoned in criminaprosecuonsecept when it comes to regulator oenses. As Timo
th Lnch of the Cato Instute has wrien, [n]ot onl has the rule o
lenit been ignored in the contet of regulator oenses, it has also
been turned on its head. When an ordinar criminal statute is am
biguous, the courts give the benet of the doubt to the accused, but
when a regulator provision is ambiguous, the benet of the doubt is
given to the prosecutor. Just as the Echange Council has approved
model polic codifing a strong mens rea protecon, it has also ap
proved the rule of lenit as model polic.
Fourth, states should eliminate provisions that delegate to agenciethe power to create criminal oenses through rulemaking. Man pro
visions in state and federal statutes authorize regulator agencies to
designate an violaon of their rules as a criminal oense. Such provi
sions transfer the power to take awa an individuals libert from dul
elected ocials to unelected administrators. Moreover, as each da
brings new agenc rules and revisions of eisng rules, these broad
delegaon provisions make it virtuall impossible for businesses and
individuals to keep track of what constutes criminal conduct, under
mining the fair warning principle.
In Mississippi, individuals can
ace up to six months in prison
or hunting deer rom a boat.
Texas has 11 elonies related to
oyster harvesting.
Continued on page 24
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JUSTICE
The Gulf Coast ma be a known hotbed for the proliferaon of environmental laws, but the phenomenon of overcriminalizaon is not limited
to one area of the countr. In Oregon, Gar Harrington was sentenced to 30 das in jail and ned $1,500 for collecng rain and snow runo
on his propert.
Mr. Harrington was convicted of breaking a 1925 law b having three illegal reservoirs on his propert. Authories based their charges on the
claim that Harrington violated Oregons water use law because he diverted state water.
All water is publicall owned in Oregon. Before a person can store an tpe of water, the must rst appl for a permit. Harrington applied for and
received his permits, but the were withdrawn b the state when an Oregon court ruled the cit of Medford holds eclusive rights to core sources o
water in the Big Bue Creek watershed and its tributaries. Harrington argued that he was well within the connes of the law, as there was no menon
of rainwater or snow run-o. Aer a prolonged legal bale, Mr. Harrington reported to jail for his 30-da sentence.
Regardless of whether Harrington violated the 1925 law, regulaons such as collecng rainwater on ones propert should be enforced through
nes and market forces rather than criminal sancons. Mr. Harrington will now carr the sgma of a prior incarceraon and increased dicult nd
ing emploment.
Civil remedies can serve as consequences for behavior deemed undesirable b the government and achieve the governments regulator goals
et protect individuals and businesses from epensive prosecuons and length prison stas. Civil sancons for non-criminal violaons also preserve
prison space for dangerous, violent or habitual oenders who pose a threat to our communies.
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BY EDwArD wAlTON
Improving medical access for the poor has remained a long -
standing issue of concern for state governments. The 1986
Emergenc Medical Treatment and Acve Labor Act instuted
a requirement on hospitals that accept Medicare and Medicaid
to provide emergenc services to anone in need, regardless of abilit
to pa. A stud b the Kaiser Famil Foundaon found that uncompen-
sated care costs reached $57 billion naonwide in 2008, $42 billion
of which was paid for b tapaers through federal and state govern-
ments.1,2 These costs are largel driven b people who, unable to af-
ford health coverage, rel on hospitals and emergenc rooms for care.
While man states are considering Medicaid epansion under the
Aordable Care Act as a potenal soluon to these challenges, creat-
ing an environment where private charies and free clinics can thrive
represents an immediate, cost-free alternave. Largel run b volun-
teers, free clinics can oer a wide range of services, including medi-
cal, dental, pharmaceucal and behavioral care. In 2005, free clinics
provided charit care to an esmated 1.8 million people, valued at
roughl $1 billion.3
Despite the success of and demand for free clinics, man charit
care organizaons face operaonal limitaons due to eisng state
laws prohibing professionals licensed in other states from providing
free care.
One such charit care group is Remote Area Medical (RAM), a vol-
unteer organizaon specializing in temporar free clinics. RAM travels
around the countr providing a variet of health services to those in
need, regardless of abilit to pa. RAM services include denstr, ee
care, general health checkups, mammograms, and more. In the Unit-
ed States, over 75,000 volunteers have aided RAMs eorts, delivering
$61 million in care to over 300,000 paents.
As a mobile organizaon, however, RAMs volunteer health care
professionals face state licensure restricons, prohibing them from
providing free care to those in need in the vast majorit of states.
RAM founder, Stan Brock, described the problem in a 2009 inter-
view:
The greatest impediment to what we do is the fact that for some
etraordinar reason in this countr, a doctor or denst or nurse
or veterinarian licensed in one state, taking essenall the same
eams and having the same qualicaons, is not allowed to cross
state lines to provide free care There is a huge reservoir of thou-
sands and thousands of willing medical people willing to cross the
countr at their epense to provide free care for the underserved.4
The majorit of statessave Tennessee, Illinois and Conneccut
block out-of-state healthcare professionals from providing free carewithin their borders, which prevent organizaons like RAM from
reaching their full potenal. While the merits of licensure for profes
sional pracce can be debated, restricng capable, licensed health
care professionals from providing free services to the poor neithe
epands access nor reduces costs.
Several states are considering measures that would remove road
blocks for volunteer health professionals and charitable organiza
ons, potenall epanding access to qualit care for those in need
while reducing the burden on state budgets and tapaers. With so
man states considering the impacts of uncompensated care and ac
cess in the Medicaid epansion contet, there is real opportunit to
reevaluate eisng policies that restrict care for those in need.
INSIDE ALEC
12 Inside ALEC | May / June 2013
1 Kaiser Commission on Ke Facts, Covering the Uninsured in 2008: Ke Facts about Current Costs, Sources of Pament,
and Incremental Costs, Kaiser Famil Foundation, August 2008, http://www.kff.org/uninsured/upload/7810.pdf.
2 Jack Hadle, John Holahan, Teresa Coughlin and Dawn Miller, Covering The Uninsured In 2008: Current Costs, Sources
Of Pament, And Incremental Costs, Health Affairs, August 2008, http://content.healthaffairs.org/content/27/5/
w399.full.pdf.
3 Julie Darnell, Free Clinics in the United States, Arch Intern Med Vol. 170 No. 11, June 14, 2010, http://www.
wafreeclinics.org/admin/mod-cms/viewattachment.php?id=498.
4 Uninsured Travel from Across US for Free Healthcare from Relief Group Remote Area Medical, Democrac Now, Jul
22, 2009, http://www.democracnow.org/2009/7/22/uninsured_travel_from_across_us_for.
ba e:sa lg la
rg ca
EdwArd wAlTon is the
Legislative Analst for the Task
Forces on Health and Human
Services and Education.
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The Aordable Care Act (ACA) requires full operaonal health insurance echanges in ever state b Januar 1, 2014,
with open enrollment beginning in October of this ear. The ACA also provides that the federal government will step in
for states that decide against voluntar implementaon. Currentl, onl 16 states plan to operate an individual market
health insurance echange for plan ear 2014. Utah will split the dues and default to a federal echange in the indi-
vidual market but use its eisng echange to oer plans to small businesses through what are known as small business health
opon program (SHOP) echanges. Recent guidance from the Department of Health and Human Services (HHS), however, has
delaed that SHOP program unl 2015.
Two-thirds of the states will default to a federal echange in various capacies, including several serving as partners or silent
partners. For purposes of the ACA, partnership and silent partnership echanges are sll federall-facilitated, rather than state,
echanges. The consequence, logiscall, is that the federal government will shoulder a much larger burden than originall anci-
patedthe White Houses most recent budget request asks Congress for an addional $1.5 billion to run these federal echanges.
Health insurance echanges, oen billed as websites for consumers to shop for health insurance plans, are integral to several
provisions of the health law. These echanges are essenall the vehicle through which much of the health law is carried out, from
the imposion of federal insurance regulaons, to the distribuon of ta subsidies eceeding $1 trillion, which then triggers the
individual and emploer mandates to bu insurance. Man states, therefore, queson wh the would support such echanges.
Resistance to state echanges comes in various forms, chief among them are unanswered quesons as to how echanges will
operate, whether the will be nanciall viable, whether the federal government will be able to handle the task of establishing
them in states that refuse to do so, and whether the will actuall foster compeon and reduce healthcare related costs.
Like Medicaid epansion, the establishment of a state echange is voluntar, and states can default to a federal echange in
the absence of taking armave steps. Also similar to Medicaid epansion, states can choose to implement echange provisions
at a later me. Specicall, provisions in the law allow states defaulng to a federal echange in the short term to take control offederal echanges moving forward.
While the actual tet of the law provides onl that states either implement or default to the federal government, HHS has since
released guidance creang partnership echanges in an aempt to move states toward state echanges. In Februar, HHS began
contacng state insurance departments urging states that did not seek partnership arrangements to connue to conduct certain
administrave funcons in federal echanges as silent partners through marketplace plan management.
For the 33 states defaulng (not including Utah), seven will be partners and an addional seven will be silent partners.
While these arrangements do not eempt states from federal regulaons or oer states control beond administrave funcons,
the will lighten the task before HHS and, to that etent, support implementaon of the law.
Connuing uncertaint as to how echanges will funcon will turn an intense focus to state implementaon as open enrollment
approaches in October of this ear. HHS stressed that echanges will be up and running on me, though the recent dela of SHOP
echanges and remarks from federal ocials tasked with implemenng the law have raised concerns. [T]he me for debang
about the size of tet on the screen, or the color, or is it a world-class user eperiencethats what we used to talk about two
ears ago, said Henr Chao, who oversees echange technolog, [now the philosoph is]: lets just make sure its not a ThirdWorld eperience.
AuThor bio
HEALTH
HealtH excHanges: coming soon toa state near You, ProbablYBY SEAN r IlEY AND EDwArD wAlTON
EdwArd wAlTon is the Legislative Analst for the Task
Forces on Health and Human Services and Education.
sEAn rilEy is Director of the Task
Force on Health and Human Services.
Inside ALEC | May / June 2013 13
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INSIDE ALEC
HealtH insurance excHanges b
NV
CA
OR
WA
MN
ND
SD
IA
WI
IL
NE
KS
TX
OK
MO
AR
LA
MS
NMAZ
UT
CO
ID
MT
WY
AK
All inormation accurate as o 4/22/2013.
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sTATE sTATus
ALABAMA NO
ALASKA LEANS NO
ARIZONA GOV/LEG SPLIT
ARKANSAS NEGOTIATING W/ HHS
CALIFORNIA YES
COLORADO YES
CONNECTICUT YES
DELAWARE YES
FLORIDA GOV/LEG SPLIT
GEORGIA NO
HAWAII YES
IDAHO NO
ILLINOIS YES
INDIANA LEANS NO
IOWA LEANS NOKANSAS LEANS NO
KENTUCKy UNDECIDED
LOUISIANA NO
MAINE LEANS NO
MARYLAND YES
MASSACHUSETTS YES
MICHIGA N GOV/LEG SPLIT
MINNESOTA YES
MISSISSIPPI NO
MISSOURI GOV/LEG SPLIT
MONTANA GOV/LEG SPLIT
NEBRASKA GOV/LEG SPLITNEVADA YES
NEW HAMPSHIRE LEANS YES
NEW JERSEy YES
NEW MExICO YES
NEW yORK YES
NORTH CAROLINA NO
NORTH D AKOTA YES
OHIO GOV/LEG SPLIT
OKLAHOMA NO
OREGON LEANS YES
PENNSYLVANIA LEANS NO
RHODE ISLAND YES
SOUTH CAROLINA NO
SOUTH DAKOTA NO
TENNESSEE NEGOTIATING W/ HHS
TEXAS NO
UTAH UNDECIDED
VERMONT YES
VIRGINIA UNDECIDED
WASHINGTON YES
WEST VIRGINIA LEANS YES
WISCONSIN NO
WyOMING NO
MEDICAID EXPANSION
state
FL
GA
SC
NC
VA
WV
OH
PA
NY
MD
DE
NJ
ME
CT
RI
MA
VTNH
to-date inormation, please contact Edward Walton at [email protected].
PARTNERSHIP MODEL
FeDeral excHange
PLAN MANAGEMENT MODEL
state excHange
DEFAULT MODEL
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INSIDE ALEC
The Aordable Care Acts Medicaid epansion provisions would etend Medicaid benets to nearl all Americans below
138 percent of the federal povert level$15,856 for an individual in 2013. 1 Reacons from states have been decid-
edl mied, spanning the range between support and opposion, including splits between state legislatures and their
governors. Several states embracing Medicaid epansion take the posion that it will reduce uncompensated care
while serving as another round of smulus. Other states are concerned, however, that because Medicaid is alread the largest
component of total state spending, epanding the program will onl further encourage dependence on the federal government
while straining state budgets.
In roughl half of the states, it is clear which path policmakers will take: 14 are currentl poised to epand the Medicaid pro-
grams while 11 states seem read to oppose. The remainder of states are either split, delaing the decision or connuing to studthe laws impact. Quesons surrounding proposals from states like Arkansas to move the epansion populaon into private plans
via health echanges fuel uncertaint as to where remaining states will ulmatel land. Nonetheless, with no statutor deadline
to pursue epansion, much of the debate is focused on the federal governments temporar 100 percent funding for epansion
through 2016. That rate falls graduall to 90 percent in 2020 and subsequent ears, assuming the law remains unchanged.
The broader uncertaint facing states, however, stems from the Supreme Court s June 2012 ruling making epansion oponal.
Twent-si states joined the mulstate lawsuit against the federal government challenging the Medicaid epansion provisions as
unconstuonall coercivethat is, because the law as wrien allowed the federal government to withhold eisng Medicaid
funding in states that did not epand, and since states were alread largel dependent on federal funds, the were le without
a choice.
The Supreme Court agreed, but, rather than upholding or rejecng the provisions in total, it essenall rewrote the law b leav-
ing all Medicaid epansion provisions intact, ecept for the abilit of the federal government to withhold eisng funds.2 States
then found themselves in a posion of determining whether epansion made sense absent coercion. While states like Arkansas
have since pursued premium assistance for the epansion populaon using new federal funds, 3 states such as Wisconsin have
sought to etend Medicaid without reling on the health law.4 The majorit of states, however, have taken a binar view of either
outright support or opposion.
The Arkansas model has received the most aenon of the Medicaid epansion alternaves. Some previous supporters of
the concept have taken pause, however, as details regarding the premium assistance strateg have et to be full arculated. 5
Meanwhile, further guidance from the Department of Health and Human Services (HHS) has made clear that an proposals from
states regarding Medicaid epansion must provide the same services at the same cost as the otherwise would, dampening the
prospect of state eibilit.6
While details regarding some state plans and the lat-
itude HHS will provide is unclear, the Medicaid debate
will connue with an increased focus on eibilit and
closer aenon paid to federal budget talks.
1 Federal Financial Participation in State Assistance Ependitures, Health and Human Services Department, November 30, 2011, https://www.
federalregister.gov/articles/2011/11/30/2011-30860/federal-financial-participation-in-state-assistance-ependitures-federal-matching-shares-for.
2 NFIB v. Sebelius, 132 S. Ct. 2566 (2012), http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf.
3 Michael Stratford, Arkansas House OKs Medicaid 'Private Option' 62-37, The Associated Press, April 11, 2013, http://www.arkansasbusiness.
com/article/91940/arkansas-house-oks-medicaid-private-option-62-37.
4 Governor Scott Walker Announces Additional Entitlement Reform, Wisconsin Office of the Governor, Februar 13, 2013, http://walker.wi.gov/
Default.asp?Page=891c1886-b72b-49a5-8505-c1d622886931.
5 Avik Ro, The Arkansas-Obamacare Medicaid Deal: Far Less Than It First Appeared, Forbes Online, April 1, 2013, http://www.forbes.com/sites/
aro/2013/04/01/the-arkansas-obamacare-medicaid-deal-far-less-than-it-first-appeared/.
6 Medicaid.gov, Medicaid and the Affordable Care Act: Premium Assistance, Centers for Medicare & Medicaid, March 2013, http://medicaid.gov/
Federal-Polic-Guidance/Downloads/FAQ-03-29-13-Premium-Assistance.pdf.
tHe meDicaiD exPansion lanDscaPeBY SEAN rIlEY AND EDwArD wAlTON
sEAn rilEy is Director of the Task Force on
Health and Human Services.
EdwArd wAlTon is the Legislative Analst
for the Task Forces on Health and Human
Services and Education.
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INSIDE AlEC
Provisional Occupational Licenses Provide aPath to Employment for Ex-Offenders
BY CArA SullIVAN
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iJUSTICE
In the classic movie scene of an individuals discharge from pris-
on, the released oender emerges from a single door to cross
a dust courtard and pass through a vast, chain-link fence. On
the other side of that fence, a friend or loved one is waing to
pick up the prisoner and drive o into the future.
In realit, the reentr process is much dierent. Ninet-ve percentof all state prisoners will eventuall be released into our communies,
so it is in the interest of public safet to provide e-oenders with the
tools and resources the need to successfull reintegrate into societ.1
Provisional occupaonal licenses can help reduce recidivism, protect
our communies and contain correcons budgets b providing a path
to emploment for certain e-oenders.
Obtaining and maintaining a job is an integral part of an eecve
reentr process because released oenders oen lack nancial re-
sources and must rel on friends or famil for support. Beond pro-
viding an e-oender with an income, a job provides a sense of stabil-
it, responsibilit and structure. However, a criminal background, no
maer how minor, can make it tremendousl dicult to nd emplo-
ment.
A provisional, or probaonar, occupaonal license is given to an
otherwise qualied e-oender with the understanding that the li-
censing authorit will revoke the license if the provisional license
holder commits a new crime, has their communit supervision or
parole revoked or violates the rules governing the pracce of the oc-
cupaon for which the provisional license was issued. The possibilit
of having the license revoked provides incenves for e-oenders to
follow the law and maintain emploment.
Provisional licenses will help protect our communies and reduce
recidivism because gainful emploment can reduce the likelihood of
criminal behavior. In Januar 2012, the Center for Emploment Op-
portunies conducted an analsis of their transional jobs program.
The surve found that among the subgroup who were enrolled in
the program, within three months of release, individuals were lesslikel to be arrested, convicted of a new crime and reincarcerated.2 In
Indiana, among oenders with a high school diploma or equivalent,
the recidivism rate was 23.3 percent for those with a job aer release
and 38.4 percent for those without a job aer release.3 Lowering the
rate at which oenders return to prison will reduce the number of
necessar prison beds and, more importantl, protect our communi-
es b decreasing the incidents of crime.
Provisional occupaonal licenses do not remove an oenders crim-
inal histor or prevent an emploer from accessing that informaon.
Understandabl, emploers want to know of a potenal emploees
criminal past, and the would oen rather hire an individual without
a criminal record due to the fear that the e-oender ma reoend.
However, aer approimatel seven ears without another oense,
an e-oender is no more likel to commit a crime than an individual
without a criminal record.4
Protecons can be put in place when giving an e-oender a pro-
visionar occupaonal license. The occupaon should not be directl
related to the crime for which the individual was convicted. Clearl
a se oender should not be licensed to operate a dacare and an
individual convicted of residenal burglar should not be installing
residenal HVAC sstems. However, nonviolent oenders should have
the opportunit to obtain a provisional license for an occupaon un-
related to their crime. For eample, individuals convicted of insurance
fraud should be able to obtain a provisional license to be a barber if
the are otherwise qualied.
Emploment allows e-oenders to make their vicm restuon
paments, pa court fees and support themselves. Oering provision-
al licenses to e-oenders will not solve the various problems prison-
ers have tring to nd emploment aer the are released, but it is
a step in the right direcon to providing resources to help released
oenders get back on their feet.
1 Hughes, Timoth and Doris James Wilson. Reentr Trends in the United States. Bureau of Justice Statistics. U.S. Department of Justice. Available at: http://bjs.
gov/content/pub/pdf/reentr.pdf.
2 Office of Planning, Research and Evaluation (OPRE) Administration for Children and Families and the Office of the Assistant Secretar for Planning and Evaluation.
More than a Job: Final Results from the Evaluation of the Center for Emploment Opportunities (CEO) Transitional Jobs Program. Department of Health and Hu -
man Services. Januar 2012. Available at: http://www.mdrc.org/sites/default/files/full_451.pdf.
3 Nall, John, Susan Lockwood, and Taiping Ho. The Impact of Education and Emploment on Recidivism. Available at: http://www.in.gov/idoc/files/Impact_of_Ed -
ucation_and_Emploment_on_Recidivism.pdf.
4 Kurlchek, Megan C., Robert Brame, and Shawn D. Bushwa. Enduring Risk? Old Criminal Records and Short-Term Predictions of Criminal Involvement. March
2006.
cArA sulliVAn is the Director of the American Legislative
Echange Council Task Force on Commerce, Insurance and
Economic Development.
Beyond poviding an e-
offende ith an incoe,
a job povides a sense
of y, py
d .
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INSIDE ALEC
Legislators Address the Growing Use oContingent Fee Attorneys by State Ofcials
BY CHrISTOPHEr E. APPEl
As the pracce of states hiring private lawers has epand-
ed to virtuall ever area of government enforcement,
concerns have mounted as to whether such arrange-
ments serve the public interest or are driven b private
prot. Legislators have responded b adopng safeguards on the hir-
ing, oversight, and pament of private aornes b state ocials. Fol-
lowing Floridas lead,1 si addional states have adopted reform over
the past three ears.
These reforms have their genesis in the American Legislave E-
change Councils Private Aorne Retenon Sunshine Act (PARSA) ad-
opted in 1998. Soon thereaer, Colorado, Conneccut (via eecuve
order), Kansas, Minnesota, North Dakota, Teas and Virginia adopted
legislaon based on the model polic. The most recent wave of states
taking acon includes Arizona, Indiana and Missouri in 2011,2 and
Iowa, Mississippi and Georgia (via administrave order) in 2012.3
Momentum connues to grow. Recentl, West Virginia voters re-
placed long-serving West Virginia Aorne General Warren McGraw,
Jr., who faced signicant controvers due to his roune no-bid hir-
ing of private lawers, with
Patrick Morrise, who was
elected on an ethics plat-
form. Among the newAorne Generals rst
acts was to propose new
procedures and guidelines
outlining when and how
the Oce of the Aorne
General should hire out-
side counsel to represent
the State and its agencies
in legal proceedings.4
THE EXPANDING USE OF THE PRACTICEUse of private conngenc fee agreements rst rose to prominence
during the landmark state aorne general tobacco ligaon of the1990s. The Manhaan Instute has esmated that approimatel 300
lawers from 86 rms are projected to earn up to $30 billion from the
selement of this ligaon.5 In most cases, the selecon of outside
counsel to pursue this ligaon was not the product of an open or
compeve bidding process, but rather occurred behind the scenes
and went to polical allies and large campaign contributors of the
state aorne general.6 The eecve rates for the work performed on
behalf of the state b some plains aornes has been calculated at
tens of thousands of dollar per hour.
Although observers once viewed such arrangements as unique to
tobacco ligaon, plains lawers and some state aornes genera
are now appling this model to virtuall ever area of ligaon agains
numerous industries. Pharmaceucal manufacturers, nancial ins
tuons and insurers are among the most frequent targets.7 Govern
ment ocials in at least 21 states have hired plains lawers on a
conngent fee basis to enforce state laws in recent ears.
A NEED FOR SAFEGUARDSThe histor of conngent fee contracts between state aornes gen
eral and private aornes is replete with eamples of unfavorable
deals from the publics perspecve and pa-to-pla ancs. Although
state laws tpicall require use of an open and compeve process
when contracng for goods and services, such good government pro
cedures are not tpicall used when the state hires outside counsel
Eperience has shown that plains law rms oen develop the the
or for the ligaon, then shop it around to state aornes genera
to nd an interested client, not the other wa around. State ocials
have frequentl hired law rms that contribute or are epected to
contribute to their campaigns or have other polical or personal con
necons to the hiring ocial. There is no assurance that the state is
hiring the most qualied counsel and geng the best deal. In some
instances, government lawers ma be perfectl capable of handling
the ligaon without outside assistance, which would avoid siphoning o a signicant poron of the recover, potenall millions of dol
lars that could reduce the ta burden or fund projects or programs, b
a conngent fee.
Enforcement of state law through a conngent fee also raises seri
ous ethical and constuonal concerns.8 There is an inherent conic
of interest between the prot maimizing objecve of a private at
torne, whose compensaon is based on the amount of damages o
nes imposed on a compan, and the states most fundamental role
of ensuring that the law is enforced in a fair and reasonable manner
The effective ates fo the ok pefoed on behaf
of the state by soe paintiffs attoneys has been
cacated at f hd f d p h.
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JUSTICE
In some cases, the public interest ma be best served through a rem-
ed that is not nancial in nature or the evidence ma suggest thatthe government should disconnue ligaon. Unlike cases brought
for private plains, public enforcement acons involve a balancing
of interests and a delicate weighing of values that demands the
representave of the government to be absolutel neutral.9 This is
simpl not the case where a private lawers compensaon depends
upon the dollar amount of a judgment or selement.
In eamining this pracce, the state supreme courts of Rhode Is -
land and California have found that conngent fee agreements be-
tween government ocials and private aornes ma be permissible
in some circumstances but onl where the governments aornes
maintain full and complete control over the ligaon.10 A state ma
not abrogate its law enforcement powers to private lawers.
In addion, b shiing ligaon risks to outside counsel, states mabe enced to bring novel or speculave lawsuits (oen at the invita-
on of the retained private counsel) that seek to epand the liabilit
as opposed to enforce eisng law.11 The pracce invites regulaon
through ligaon.
ADOPTION OF REFORMAlthough the legislaon adopted varies signicantl from state-to-
state, the recent wave of state laws generall includes the following
elements:
The aorne general must analze certain factors and make a
wrien determinaon that conngent fee representaon will beboth cost-eecve and in the public interest, prior to entering
into a contract;
The aorne general is required to request proposals from pri-
vate aornes, or make a wrien determinaon that such a re-
quest is not feasible under the circumstances;
Conngent fees are subject to ered limits and an aggregate cap
of $50 million, eclusive of reasonable costs and epenses;
Conngent fees ma not be based on imposion of nes;
Certain requirements must be met throughout the contract to
ensure government aornes retain complete control over the
ligaon;
Conngent fee contracts must include certain standard provi-
sions reecng what is epected of the government aornesand conngent fee counsel;
The conngent fee contract, paments made under the contract,
and the aorne generals wrien determinaon about the need
for conngent fee representaon are to be posted on the aor-
ne generals website. Other records relang to the contract are
to be subject to the states open records laws. The private aor-
nes and paralegals are to maintain detailed contemporaneous
me records for presentaon to the aorne general on request;
and
Continued on page 25
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INSIDE ALEC
TelemedicineBY AlEx ruED
Health Informaon Technolog (IT) has dramacall im-
proved since S. Eric Wachtel of MedPhone Compan rst
diagnosed paents needing debrillaon over telephone
lines, which the 1989 House Chronicle arcle described
as a [h]eart aack vicm revived via telephone.1 Toda, paents
are able to seamlessl communicate with phsicians using remote
health monitoring tools, including laptops, smartphones and tablets.
These technologies eploit Americas tech-focused societ and result
in qualit, paent-centered care for more Americans at a lower cost.
In order to cope with future regulator and demographic challenges,
policmakers must embrace technological advancements as a catalst
for reworking the healthcare sstem.
Health IT is a broad term that refers to a variet of technolog-
related healthcare funcons, including Electronic Healthcare Records
(EHRs), Mobile Health or mHealth and telemedicine. These health-
related technologies allow phsicians to access digized healthcare
records, diagnose paents, or prescribe medicineall via the Inter-
net. Paents also benet from mobile applicaons as the monitor
their own health and provide phsicians with real-me feedback on
their progress.
The changing healthcare landscape requires both policmakers
and industr representaves to think cricall about innovaon and
idenf creave soluons to challenges. Under the Aordable Care
Act (ACA), the federal-state health insurance program for low-income
individuals known as Medicaid will epand eligibilit to an esmated
16 million Americans. This regulator change, coupled with Americas
shi towards an older and less health populaon, will likel cause
a phsician shortage. The Associaon of American Medical Colleges
esmates the U.S. will face a shortage of over 90,000 phsicians b
2020.2
Telemedicine enables healthcare providers to reach paents acros
distances and has eecvel connected paents in underserved, ru
ral areas with phsicians. Telemedicine could be similarl eecve
in helping the U.S. cope with the predicted lack of phsicians. Othe
naons eperimenng with telemedicine have eperienced progress
in this arena. One such eample is Dr. Sunita Maheshwaris compan
Teleradiology Soluons, which addressed Indias phsician shortage
b receiving paents scans and connecng them with medical e
perts from around the world.3
A great benet to implemenng mHealth and telemedicine is tha
the technolog is alread in the hands of most paents and phsicians. The Pew Research Center recentl announced that 87 percen
of Americans own cell phones4 and more than half of people with
mobile phones are smartphone users.5 Fortunatel, adopon of these
devices is on the rise, for smartphone adopon has increased 38 per
cent in the past three ears6 and Gartner, a leading IT research and
advisor compan, esmates 2013 will bring the sale of nearl 1.2 bil
lion smartphones and tablets.7 Not onl do people own the devices
that make mHealth possible, but the are also acvel engaging them
for health purposes; 80 percent of phsicians have an iPhone and 30
percent of phsicians use an iPad for clinical acvies.8 As for paents
the U.S. House Energ Subcommiee on Communicaons and Tech
nolog recentl reported that 500 million people will use the 97,000
available mobile health applicaons b 2015.9,10
As states look to decrease the overall burden on the U.S. health
care sstem, mHealth is a means to streamline healthcare processes
around common diseases, such as diabetes, and decrease readmis
sion rates. For eample, the American Diabetes Associaon calculated
the cost of treang diabetes in 2012 reached $245 billion. 11 The in
troducon of DiabetesManager and similar mobile apps empowers
paents to manage their health and allows phsicians to ensure ad
herence and idenf problems before paents are re-hospitalized
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iHEALTH
Since $100 billion is spent annuall to hospitalize paents who did not
adhere to medicaon requirements, Diabetes Manager or a simple
app like MediSafe, which alerts emergenc contacts if paents forget
to take their medicine, has huge potenal to cut unnecessar costs.
Although Health IT soluons lower costs and improve paent care,
these technolog-related devices are oen subject to regulator over-
sight well before there are signs regulaon is needed. Currentl, in
both Medicaid and Medicare, phsicians, hospitals and various health-
care providers are eecvel using mHealth technologies cered b
accredited private enes. Meanwhileears aer the invenon of
these mobile health devicesthe Federal Drug Administraon is slldetermining how best to regulate them.12 As the federal government
generates regulator uncertaint, there is opportunit for the states
to take the lead in fostering an environment that encourages innova-
on in and the ulizaon of medical-related technologies.
One major impediment to telemedicine are state pracce-licensing
issues that arise when healthcare providers aempt interstate care.
Prior to the advent of the Internet and accompaning technologies
like smartphones, Faceme and Skpe, seeing a phsician across state
lines was an impossibilit. Paents seeking healthcare outside their
state confuses medical licensing laws wrien for a bgone era. In
order to pracce telemedicine, a quarter of doctors have obtained
licenses in more than one state, which adds up to $300 million in li -
censing costs from doctors alone. While the state barrier is important
to the state medical associaon, it is meaningless to paents. In the
future, establishing standards that make sense to paents, healthcare
providers and regulators will be important to reducing uncertaint
with regards to telemedicine.
As Bret Swanson points out in The App-licaon of Medicine, given
that healthcare is one-sith of the Gross Domesc Product, reducing
barriers to technologies that improve our healthcare sstem will raise
the producvit of the sector and have posive implicaons for the
overall U.S. econom.13 Although states do not alwas have primar
jurisdicon over policies related to Health IT, their role as regulators
in terms of pharmacies, hospitals and clinics, insurance, and phsi -
cians and nurses grant them the authorit to encourage a paent-
centered, market-driven approach to healthcare. Given the looming
doctor shortage and general economic malaise, the U.S. healthcare
sstemand paents naonwidecannot risk missing out on the
benets of Health IT.
As the fedea govenent
geneates egatoy ncetainty,
thee is oppotnity fo the states
to take the ead in f
v h
v d h z f
d-d h.
1 Russell, Nina. "Using telemedicine to address doctor shortages." yale Journal of Medicine & Law Ix, no. 1 (Februar 16, 2013).
2 "Fiing the Doctor Shortage." Association of American Medical Colleges. Last modified 2013. Accessed April 12, 2013 https://www.aamc.org/initiatives/fidoc -
shortage/.
3 "Telemedicine is answer to doctor shortage." The Times of India. Last modified March 29, 2013. Accessed April 12, 2013. http://articles.timesofindia.indiatimes.
com/2013-03-29/goa/38125242_1_telemedicine-doctor-bangalore.
4 Brenner, Joanna. "Pew Internet: Mobile." Pew Internet & American Life Project. Last modified Januar 31, 2013. Accessed April 12, 2013. http://pewinternet.org/
Commentar/2012/Februar/Pew-Internet-Mobile.asp.
5 Schmerler, Jessica. "mHealth: Healthcare Goes Mobile." yale Journal of Medicine & Law Ix, no. 1 (Februar 22, 2013).
6 Boucher, Rick. "The net generation of American talk." Reuters (blog). Entr posted April 1, 2013. Accessed April 12, 2013. http://blogs.reuters.com/great-de-
bate/2013/04/01/the-net-generation-of-american-talk/.
7 Swanson, Bret. The App-lification of Medicine. Washington, DC: Business Horizon Quarterl, 2013.
8 Schmerler, Jessica. "mHealth: Healthcare Goes Mobile." yale Journal of Medicine & Law Ix, no. 1 (Februar 22, 2013).9 "On Da Two of Three-Da Hearing Series, Eperts Warn FDA Regulation of Health Information Technolog Could Stifle Innovation, Barring Patients Access to
Apps." News release. March 20, 2013.
10 Jahns, Ralf-Gordon. "The market for mHealth app services will reach $26 billion b 2017." Research2guidance. Last modified March 7, 2013. Accessed April 12,
2013. http://www.research2guidance.com/the-market-for-mhealth-app-services-will-reach-26-billion-b-2017/.
11 "American Diabetes Association Releases New Research Estimating Annual Cost of Diabetes at $245 billion." American Diabetes Association. Last modified March
6, 2013. Accessed April 12, 2013. http://www.diabetes.org/for-media/2013/annual-costs-of-diabetes-2013.html.
12 White, Joel. "New regulations needed for growth of mobile medical technologies." United Press International. Last modified April 1, 2013. http://www.upi.com/
Science_News/Technolog/2013/04/01/Outside-View-New-regulations-needed-for-growth-of-mobile-medical-technologies/UPI-43091364789520/.
13 Swanson, Bret. The App-lification of Medicine. Washington, DC: Business Horizon Quarterl, 2013.
AlEx ruEd is the Legislative Analst for the Task Force on
Communications and Technolog.
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INSIDE ALEC
Finall, states should implement safe harbor provisions. A safe har-
bor provision is an element in a statute or regulaon that aords pro-
tecon from liabilit or penalt if certain condions are met. Oen
these condions require that no harm has occurred as a result of theviolaon and that the oender take prompt steps to come into com-
pliance with the statute or regulaon that has been violated. In the
bzanne world of environmental regulaon in which it is nearl im-
possible to be in total compliance at all mes, safe harbor provisions
are parcularl sensible.
For a business owner along the Gulf Coast of Teas, Louisiana,
Mississippi, Alabama and Florida, dozensand in some cases, hun-
dredsof acvies that one could not possibl know to be criminal
put business owners at signicant risk. The risk is not just of monetar
loss, but of actual prison me. The ve Gulf Coast states menoned
in this report can seize a signicant opportunit for leadership b re -
forming their laws to conform beer to tradional legal norms. The
ma also set an eample that can be followed b the federal govern
ment, which has made notorious overcriminalizaon headlines such
as imprisoning a lobster sherman for si ears for improperl har
vesng lobster tails.Fundamentall, governments are instuted to secure libert, and
although our report focused primaril on the economic ramicaons
of overcriminalizaon, the most important reason for reform is simpl
that overcriminalizaon is a derelicon of the governments respon
sibilit to secure individual libert. A few modest reforms would do a
great deal to address this problem.
While man people ma nd such labels humorous, these seemingl
unnecessar warning labels are an unfortunate side eect of eces-
sive ligaon.
A compan out of Massachuses was sued for millions of dollars for
eercise equipment that was used incorrectl and resulted in injur.
Gas can manufacturers have been sued aer customers poured gaso-line onto a live re and were surprised when the gas can eploded.
The Council develops model polic to inject common sense and ac-
countabilit into the legal sstem and monetar awards. Sit percent
of those polled believe lawsuits led against businesses hurt the U.S.
econom. The Councils common sense lawsuit reform policies reduce
the harm unmerited lawsuits can have on the U.S. econom.
According to the surve, most Americans agree that lawsuit abuse
poses a serious threat to business producvit and compeveness.
Sevent-two percent agree that the eisng liabilit lawsuit sstem
makes it harder for emploees to do business and 88 percent sup-
port creang safeguards to protect small businesses from groundless
lawsuits that could put them out of business. The Councils Private
Enforcement of Consumer Protecon Statutes Act would protectsmall businesses against lawsuit abuse brought under the guise of
consumer protecon while sll allowing injured consumers to recover
their due.
Sevent-eight percent of the polls respondents believe there are
too man lawsuits, while a mere eight percent believe there are too
few. The Council developed a Resoluon on the Lawsuit Abuse Re
ducon Act to temper the incenve to le frivolous lawsuits. The
model polic is designed to dissuade complaints groundless in fact
or legal standing. Specicall, the model resoluon would encourage
courts to lev sancons and award aornes fees to an aorne opart who brings a lawsuit deemed frivolous b a judge. Such a safe
guard would provide reasonable protecon for defendants who ma
not have done anthing wrong, et are sll forced to pa the oen
signicant costs of ligaon under the current tort sstem.
The polling data nds that 78 percent of people agree to the posed
statement that enacng lawsuit reform is an important part of im
proving the U.S. business environment and aracng and keeping
jobs. Lawsuit reform is widel-appreciated polic that can improve
the business environment for companies large and small. The Coun
cils Task Force on Civil Jusce works to develop fair reforms that help
the free enterprise sstem funcon more fairl and eecvel.
Small businesses will not be the onl ones eected, however. A
2012 report from actuarial consulng rm Milliman, Inc. esmated
that state governments would pa over $13 billion over ten ears in
new taes as a result of the health insurance ta.4 Ironicall, this will
aect states with larger Medicaid programs that ulize managed care:
that is, Medicaid programs that contract with private plans in the full
insured market.
The general consensus that premiums will rise is consistent with
what man predicted based on eamples in several states; es
senall, guaranteed issue and communit rang come at a cost
VikrAnT p. rEddy is a polic analst and
mArc A. lEVin is director of the Center for
Effective Justice at the Teas Public Polic
Foundation.
Amy kJosE AndErson is the Director of
the Task Force on Civil Justice.
John Eick is the Polic Analst for the Task
Force on Civil Justice.
Lawsuit Reform, continued from page 5
Five Solutions, continued from page 10
Premiums, continued from page 17
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7/28/2019 Inside ALEC May/June 2013
25/28
The aorne general must submit an annual report to the leg-
islature that describes the states use of outside counsel in the
preceding calendar ear.
Each of these laws, and earlier legislaon adopted based on PAR-
SA, shares the common goals of promong transparenc, curbing
unseeml liaisons between public enforcement ocials and private,
prot-movated lawers, and protecng the public funds. Such re-
forms provide legislators with an eecve means of safeguarding the
public interest when the state enforces the law through use of private
aornes.
1 Louise Radnofsk, Sebelius: Some Could See Insurance Premiums Rise, Wall Street Journal Online, March 26, 2013, http://blogs.wsj.com/washwire/2013/03/26/
sebelius-some-could-see-insurance-premiums-rise/.
2 Congressional Budget Office, An Analsis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act, November 30, 2009 http://www.
cbo.gov/sites/default/files/cbofiles/ftpdocs/107/doc10781/11-30-premiums.pdf.
3 Michael J. Chow, Effects of the PPACA Health Insurance Premium Ta on Small Businesses and Their Emploees: An Update, NFIB, March 19, 2013, http://www.
nfib.com/Portals/0/PDF/AllUsers/research/studies/ppaca/health-insurance-ta-stud-nfib-2013-03.pdf.
4 John D. Meerschaert and Matieu Doucet, PPACA Health Insurer Fee Estimated Impact on State Medicaid Programs and Medicaid Health Plans, Milliman, Januar
31, 2012, http://capsules.kaiserhealthnews.org/wp-content/uploads/2012/02/PPACA-Health-Insurer-Fee-Estimated-Impact-on-Medicaid.pdf.
5 Elise Viebeck, Premiums could rise under healthcare law, Sebelius concedes, The Hill, March 27, 2013, http://thehill.com/blogs/healthwatch/health-reform-
implementation/290523-sebelius-sas-some-could-see-insurance-premiums-go-up.
sEAn rilEy is Director of the Task Force on Health and
Human Services.
The mechanism of the law that claims these higher premiums will be
aordable comes in the form of ta subsidies paid for b raising taes
elsewhere. These taes, however, will be passed down to consumers
and, ironicall, the federal government will indirectl ta itself and the
states for the honor. On the other hand, Secretar Sebelius stated that
the mechanism the law relies on to make insurance aordable comesfrom the market when insurers compete for customers.5
chrisTophEr E. AppEl is an Associate in the Public Polic
Group in the Washington, D.C. office of Shook Hard & Bacon
L.L.P., and serves as an advisor to the Task Force on Civil
Justice.
Legislators, continued from page 20
1 Fla. Stat. Ann. 16.0155.
2 Ariz. Rev. Stat. 41-4801; Ind. Code Ann. 4-6-3-2; Mo. Rev. Stat. 34.376, 34.378, and 34.380.
3 Iowa Code 13.7, 23B.1 et seq.; Miss. Code Ann. 7-5-1 to -8, 7-5-21, 7-5-39; Admin. Order, Attorne General Samuel L. Olens, Ma 29, 2012.
4 See Office of West Virginia Attorne General Patrick Morrise, Outside Counsel, at http://www.wvago.gov/outsidecounsel.cfm.
5 See Manhattan Inst., Center for Legal Pol, Trial Lawers, Inc.: A Report on the Lawsuit Industr in America 2003 6 (2003), available at http://www.manhattan-
institute.org/pdf/triallawersinc.pdf; see also Leah Godesk, State Attornes General and Contingenc Fee Arrangements: An Affront to the Neutralit Doctrine?,
42 Colum. J.L. & Soc. Probs. 587, 588-89 (2009) (estimating that approimatel $14 billion of the settlement has gone to private attornes).
6 See, e.g., Stuart Talor, How a Few Rich Lawers Ta the Rest of Us, Natl J., June 26, 1999; Robert A. Lev, The Great Tobacco Robber: Hired Guns Corral Contin -
gent Fee Bonanza, Legal Times, Feb. 1, 1999, at 27.
7 See, e.g., Manhattan Inst., Trial Lawers Inc.: Attornes General: A Report on the Alliance Between State AGs and the Plaintiffs Bar 2011 (2011), available at
http://www.triallawersinc.com/TLI-ag.pdf; Pa-to-Pla Eamples, U.S. Chamber Institute for Legal Reform, at http://www.instituteforlegalreform.com/featured -
tool/pa-to-pla-eamples-0.
8 See Martin H. Redish, Private Contingent Fee Lawers and Public Power: Constitutional and Political Implications, 18 Sup. Ct. Econ. Rev. 77 (2010).
9 People e rel. Clanc v. Superior Ct., 705 P.2d 347, 352 (Cal. 1985).
10 See Rhode Island v. Lead Indus. Assn, 951 A.2d 428 (R.I. 2008); Count of Santa Clara v. Atlantic Richfield Co., 235 P.3d 21 (Cal. 2010).
11 See, e.g., Adam Liptak, A Deal for the Public: If you Win, you Lose, N.y. Times, Jul 9, 2007, at A10; Editorial, The Pa-to-Sue Business, Wall St. J., Apr. 16, 2009, at
A15.
HEALTH
Inside ALEC | May / June 2013 25
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