| BIG BOARD
OVERHAUL – The New York Times says to expect an announcement from the
NYSE announcing a "radical plan to let large investors trade big blocks
of shares electronically on the exchange's floor." The plan, known
as Direct Plus, would represent a big challenge to the current "open outcry
model" where floor traders use their knowledge and capital to help investors
get the best prices for stocks.
FAKE INSURANCE – The
National Association of Insurance Commissioners warns that fake insurance
policies are on the rise in every line of insurance, with consumers footing
the bills in unpaid claims. Just like counterfeit money, fake insurance
may appear to be legitimate, but it is actually illegal and worthless.
The NAIC has launched a nationwide awareness campaign that encourages consumers
to "Stop. Call. Confirm." before buying insurance. Frank W. Abagnale, the
retired master forger whose story was told in the movie "Catch Me If You
Can," serves as national spokesperson for the campaign and appears in television
and radio public service announcements. For more information, click
here.
P&C INSURERS EARN
$32.3 BILLION - Weiss Ratings reports that P&C insurers more than
doubled their profits during 2003, earning $32.3 billion compared to $13.5
billion in 2002. Continued improvement in underwriting was responsible
for property and casualty insurers' extraordinary performance as the industry
dramatically reduced its underwriting loss to $2.9 billion in 2003, compared
to the $28.2 billion loss reported a year ago.
RECORD BUDGET DEFICIT
- This year's federal budget deficit is forecast to be a record $445 billion,
about 20% higher than last year's record shortfall.
MORE LAWSUITS FOR NONPROFIT
HOSPITALS – Three major nonprofit hospitals are now facing class action
lawsuits brought by uninsured patient plaintiffs. Each of the lawsuits
charges the respective defendant nonprofit hospital system and hospital
with victimizing the uninsured plaintiff patients by failing to fulfill
their obligations to provide government required charity care in return
for tax exemptions. With the filings of today's litigations, 31 uninsured
patient class action lawsuits have been brought against about 300 nonprofit
hospitals. If you want to see one reason why we are paying ever-increasing
health insurance premiums, check out www.nfplitigation.com.
AMERICAN HOSPITAL ASSOCIATION
SUED - The American Hospital Association (AHA), the hospital industry's
trade association, has been charged as a defendant in class action lawsuits
brought by uninsured patients against nonprofit hospital systems and hospitals
in seven states. As above, the lawsuits charge that the defendant nonprofit
hospital systems and hospitals, working with the AHA, have failed to provide
government required charity care to uninsured patients.
WHAT SCANDAL?
- Reuters reports that for some former board members of scandal-hit companies
such as Enron and WorldCom, who once seemed destined to become corporate
pariahs, viewed as inept or worse, the reality has been quite different.
Rather than being shunned, some have retained board memberships at other
publicly traded companies and, in some cases, even added to them, according
to The Corporate Library,
a corporate governance analysis firm. Go figure.
DRUG DEALS? - The
FDA report that some drugs purchased online are fake, contaminated or substandard
versions of the real things. Biggest problems found were in generic versions
of the very popular Viagra, Lipitor (a cholesterol-fighter) and Ambien
(a sleeping pill).
FPA SUES SEC – Now
this is not your everyday occurrence. The Financial Planning Association
has sued the SEC over the so-called "Merrill Lynch" rule. Apparently the
FPA had lobbied unsuccessfully with the SEC for four years before deciding
that legal action was needed. The "Merrill Lynch" rule exempts stockbrokers
from investment adviser regulation, affording brokerage representatives
a competitive advantage and blurring the distinction between commission-based
brokers and fee-based advisers, according to the FPA suit.
HEALTH CARE FRAUD SET
AT $85 BILLION - The Blue Cross and Blue Shield Association estimates
that nearly 5% of the $1.7 trillion spent on health care last year was
lost to health insurance fraud. That is twice the $45 billion estimated
to cover all of the nation's uninsured!
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GROWING RICH-POOR GAP
– While Federal Reserve Chairman Alan Greenspan is upbeat about the economy,
he is concerned about the growing gap between rich and poor. Although the
economy is recovering, lesser-skilled workers are not seeing wage increases
that even match inflation. Add this to a recent IRS report that Americans
have reported less income for the last two years, while public corporation
CEO compensation grew 15% last year, and we all have something to be concerned
about.
WELLPOINT-ANTHEM MERGER
FACES OPPOSITION - California's insurance commissioner is opposing
the merger of WellPoint Anthem Inc., a move that could stall the $16.5
billion deal set to create the largest U.S. health insurer. Expect the
companies to challenge the decision in court.
SO DO OXFORD & UNITED
HEALTHCARE - The Medical Society of New Jersey is urging the Commissioner
of the New Jersey Department of Banking & Insurance to reject the proposed
$37 billion merger of Oxford and United Healthcare, believing that the
merger will impair the delivery of health care services for more than 1.4
million New Jerseyans currently insured by these companies. "Their merger
would intensify their power over patients and providers, leading to even
more one-sided contracts and medical decisions made by clerks – not physicians.
These corporate giants make money by delaying needed services, not by readily
paying for care."
DWINDLING OB/GYNS
- Out of 115 graduates of the Johns Hopkins Medical School in 2004, only
three students chose obstetrics/gynecology residencies. At the University
of Maryland School of Medicine, one student out of a class of 150 entered
an ob/gyn program this year. None did last year. Maryland's associate dean
of students explained: "People don't want to be in the delivery room--that's
where the malpractice is. Any time a baby comes out bad, the gynecologist
gets sued."
SPECIAL HEALTH COURT
- Senate Majority Leader William H. Frist, M.D. has endorsed the creation
of a special health court as part of a patient-centered health care system.
"The practice of medicine is about providing the best possible care for
patients," Frist said. "We can't achieve that by making doctors and
nurses the enemy...and paralyzing them with frivolous lawsuits. Ultimately,
[we must] set up an expert medical court system with transparent decisions,
limits on punitive damages, and scheduled compensatory damages to provide
rapid relief to truly injured patients (instead of trial lawyers) and hold
negligent doctors accountable." A special health court is the centerpiece
of the bipartisan group for legal reform, Common
Good.
MIB REPORTS STABLE LIFE
SALES - Year-to-date, application activity for the first half of 2004
was off slightly at - 1.2% compared to 2003 levels.
BANK INSURANCE AGENCY
FEE INCOME - According to Michael White Associates, bank holding companies
(BHCs) earned a record $8.36 billion in insurance agency commissions and
fee income in 2003. That is up 42.5% from $5.86 billion in 2002. In 2003,
the top ten leaders nationally in insurance agency income were MetLife,
Citigroup, Wells Fargo, BB&T, Bank One, Wachovia, MBNA, J.P. Morgan
Chase, Greater Bay Bancorp, and FleetBoston.
MILITARY BASE INSURANCE
FLAP – Many people feel that financially unsophisticated soldiers at
military bases are being misled about their insurance purchases by "base
approved" insurance agents. The Pentagon is concerned but Congress has
asked that no action be taken as yet. There is, however, a call for Congressional
hearings on the matter. In a related development, the NASD is looking
into the sale of mutual funds to military personnel to determine suitability
and adequate explanation of fees.
BOND FINES – The NASD
handed out a total of $20 million in fines to Citigroup, Goldman Sachs,
Deutsche Bank and Miller Tabak Roberts for overcharging clients for high-yield
corporate bonds. According to the NASD, the four companies marked up bonds
by as much as 32% when the legal limit is about 5%. Read more here.
MULTI-MILLION-POUND SUIT
- Equitable Life policyholders have filed suit alleging that the UK insurer
failed to inform them of the risks involved when they bought its pensions.
The pensioners are seeking compensation for loss of income after the world's
oldest life insurer cut payments to keep itself solvent.
GENETIC DISCRIMINATION
FEAR – As science continues to make great progress in detecting and
hopefully preventing genetic abnormalities, the public is growing more
concerned about other uses of such research. Many fear that their genetic
information might be used to discriminate against them for health insurance
and employment.
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