In most states, insurance departments regulate “big dogs”, but in Florida, our insurance commissioner is forced by law to regulate only “pups”. It is a scam of monumental proportions permitted by Florida law and it is the citizens of our great state that pay for it.

What are “big dogs” and what are “pups”? For example, State Farm Mutual is a “big dog” and State Farm Florida is its “pup”; Allstate is a “big dog” and Allstate Floridian is its “pup”; you get the idea.

When I first moved to Florida 25 years ago, I heard the saying about folks down here not caring how “you do it up north” and, frankly, I mostly agree with that notion. In the case of insurance companies maintaining “pretend” insurance companies just for Florida business, we might take a lesson from our northern brethren. “Pup” carriers are simply a way for insurance companies to enhance profits and create basis for regularly asking for rate increases from Floridians.

But we have big, bad hurricanes here, right? So, State Farm’s exposure in Florida is probably more, right? Well, let’s look at it. The whole gulf coast, the whole southeastern coast and California are all exposed to hurricanes on a regular basis. I mean poor South Carolinians have largely been taking the brunt of most of our hurricanes of late. The Midwest records tornadoes like we record rainfall. The north has freezing roads that sometimes results in hundreds of vehicles in a single accident. Nearly every portion of the country is exposed to one exceptional disaster or another.

If the whole country has its share of disaster, how does each insurance company handle it? It is called the law of large numbers. If 100,000 cars are insured, the probability that more than 10,200 (or less than 9,800) will be stolen is only about 1%. This is an example of the operation of the ‘law of large numbers’. In other words, the more cars insured, the more accurately can be predicted the percentage of cars likely to be stolen. It is this aspect of probability theory that enables the insurer to cope with variations in the pattern of actual losses. Underwriters and actuaries may also consider various measures of dispersion; that is the difference between the actual losses and average losses, when setting premiums or assessing liabilities.

Now, magnify those numbers by millions of risks; both commercial and residential risks. Add to that the various other lines of insurance written by the “big dogs” and that, in a nutshell, is the law of large numbers. So, the more risks an insurance company insures, the better, right? Well, yes, that is the basis for the law of large numbers. That is not, however, the basis for the “pups”.

Pups are there so that the “big dogs” (think State Farm Mutual, Allstate, etc) can cook the books. The “big dogs” create a very limited microcosm to which they apply the law of large numbers (think Florida) and they base their rate increases on the experience in the microcosm rather than applying the math against the experience for the “big dog” in the whole country. So, even though the “big dog” may be rolling in profits nationally, the pup can be made to look underfed and a rate increase is requested based solely on the experience in the microcosm (again, think Florida).

What to do? Read—educate yourself! Read Randy Schultz’s editorial in Sunday’s Palm Beach Post. Read the St. Petersburg Times article about Judge Manby denying State Farm’s puppies’ request for a rate increase.

Write! Write to Governor Chiles (currently busy running for senator); write to Secretary of Finance, Alex Sink; write to your legislators.

Shout! Complain at the top of your lungs. If you are a Floridian you have every right to be mad. Some of the most powerful, wealthy companies in the country have been and continue to be permitted to victimize you.

On 6/17/09 the FDA issued a “warning” to the Zicam manufacturer Matrixx after receiving a number of reports through MedWatch of serious injury or illness. MedWatch is the FDA’s “new and improved” reporting mechanism, cited in the  three-page letter to Matrixx  they have received in excess of 130 reports of anosmia (loss of sense of smell) associated with Zicam. Prior to the New Rule (CGMP) governing dietary supplements which rolled out in 2008, Obama administration has promised that they will be taking “realtime” action against manufacturers who have a significant number of reports of serious injury or illness reported via MedWatch. Manufactures who directly receive such report are supposed to disclose those to the FDA however this honor system has drastically failed.  The F.D.A. admittedly does not have the manpower to formally recall or ban a product; however, merely writing one letter that is published on the Internet is enough to stir consumers to hit the manufacturer in the pocket.  Manufacturers such as Zicam have taken the offensive while issuing a message to consumers that their product is safe.  Zicam issued this message “Consumer safety is and has always been the company’s top priority. While Matrixx Initiatives believes that the FDA action today was unwarranted, it is voluntarily withdrawing Zicam Cold Remedy Swabs and Zicam Cold Remedy Gel from the market. Based on the FDA’s recommendation, consumers should discard any unused product or contact Zicam”. The company is offering a refund to consumers that the product purchase price, unlike as we saw in Hydroxycut, they are not pulling these products off the shelves.   However, the day is young The Zicam  controversy is nothing new.  In 2006 in Arizona they settled 340 cases for 12 million but not all “loss of smell cases”. A lot were for bottle design. Zicam stated that the nozzle was the problem and it delivered a “too forceful spray”, allegedly. One case went to trial and settled for an undisclosed amount. A recent article in the New York Times “Matrixx has received more than 800 reports of Zicam users losing their sense of smell but did not provide their reports to the F.D.A.”, said Deborah Autor, Director of Compliance in the Agency’s Drug Center.  The law requires producers of approved drugs to forward to the F.D.A. all reports of product related injuries, but Ms. Autor declined to say whether this requirement applied to Matrixx.”

One thing we can be sure of the F.D.A. is on “step one “  of eight stages that are required by the government to formally ban a supplement product.  As the story unfolds with Zicam, there is no doubt that this will more likely set some sort of precedent in the future with regard to how the government is handling claims for MedWatch and the dietary supplement industry under the Obama Administration.

Finally, the State of Florida has enacted an equestrian helmet law that requires anyone under the age of 16 to wear a helmet while riding a horse on public roads.  Nicole Hornstein, a 12 year old Palm Beach County girl died in 2006 after her horse stumbled and fell causing her to strike her head on the pavement.  Nicole was not wearing a helmet.

New York has enacted a law requiring the wearing of approved helmets by riders under 14 years of age.  The City of Plantation, Florida and the Canadian Province of Ontario have also passed similar laws.  As important as this issue is you would think that all states would have this type of law to protect equestrian riders.  Wearing a helmet is like wearing a seat belt; it saves many lives and it only takes a few seconds to put it on to save a life or prevent devastating injuries.

If you are interested in having an equestrian helmet law passed in your city, state or county, contact your local senators, congressmen, and representatives to put the “wheels in motion” to protect equestrians and to prevent a tragedy such as the one that the Hornstein family suffered.

For further information on existing equestrian helmet laws you can search Equestrian Helmet Laws on the Internet.

The news spread like wildfire of the voluntary recall by Iovate of Hydroxycut due to reported cases of serious illness, death, or liver failure . The confusing part for consumers is that Iovate voluntarily recalled a number of their products and that the FDA did not institute a ban as they did with Ephedra in 2004.  Many questions have been asked and unanswered.  Why did Iovate voluntarily recall Hydroxycut and several other of its other products?  They are all viable questions with no definitive answers. 

In December, 2007, the new final rule on good manufacturing proc ess  (CGMP) began to roll out for larger companies and will completely roll out over the dietary supplement industry at the end of 2010.  Part of the new rule for the FDA is now tracking through MedWatch serious injury, illness and death associated with dietary supplement products in attempts to relate safety and efficacy of dietary supplement products with 150 million Americans who use dietary supplements.

According to the Nutrition Business Journal, “the dietary supplement industry is growing and total sales were about $23.7 billion in 2007.  Top selling supplements in 2007 included multivitamins, sports nutrition powders and formulas and calcium.  In addition, one of the areas of greatest growth and supplements within the United States in 2007 was among weight loss products.  Projections through 2011 show that growth in the industry is expected to continue.”  According to the January 2009 GAO report “since mandatory reporting went into effect, FDA has received 596 mandatory reports of adverse events including cardiac, respiratory, gastrointestinal disorders as of October 21, 2008.  Among other results, these events included nine deaths, 64 life-threatening illnesses and 234 patient hospitalizations.”  In spite of adverse report events skyrocketing, the FDA and the GAO have admitted that the reporting as one of the areas of concern and limitations in the Agency’s ability to remove products from the market.

As with the herbal supplement Kava, which contained warnings as to liver failure, the FDA never banned Kava.

Although reports of liver failure were a small number, they still account for 10% of drug-induced liver failure in the United States.  It must have come on someone’s radar because shortly thereafter liability insurance carriers began excluding Kava, along with other supplements such as Ephedra  under liability insurance policies Some large chain supplement stores voluntarily took some of these products off their shelves due to insurability issues, as well as consumer confidence. One thing is for sure is that the actions are late and voluntary.
Ironically, a lot of the products that we are seeing now that are being voluntarily recalled by their manufacturers have had a dark history.  A lot of the weight loss supplements contained the prior FDA-banned ingredient Ephedra and reformulated.  Hydroxycut was one of them.   The current formulation of Hydroxycut includes no banned substances.  The FDA Health Hazard Evaluation Board acknowledged in its report “it does not know what ingredients of Hydroxycut are responsible for producing liver toxicity.  In addition, there is sufficient information to determine whether there is a dose response effect between Hydroxycut ingestion and liver disease and whether its effects are cumulative over time.”  The Board concluded, “three lines of evidence derived from multiple disparate sources suggested is very likely that exposure to Hydroxycut can cause idiosyncratic hepatoxicity.”  The study published by Nature Review’s Drug Discovery, May 2005, “Idiosyncractic hepatoxicities are currently the main cause for Food and Drug Administration mandated warnings, restrictions of use or even withdrawals of drugs from the market.”  Although the intentions of the Obama Administration is to clean up the supplement industry, skepticism among consumers should remain high and due diligence performed.

For a consumer, a press release of a recall or ban of a product is thought to be in real time, when in fact some perceived “recalls” or “bans” have been years in the making.  Another not well known fact is that a perceived recall or ban may be neither.  Most of the dietary supplement industry stated in the January 09 GAO Report “the FDA must demonstrate that the dietary supplement presents a significant or unreasonable risk, or is otherwise adulterated before it can be removed from the market.”  As we have seen in the recent past, “while the FDA was successful in 2004 in banning Ephedra alkaloids, a dietary ingredient used for weight loss and bodybuilding, among other things, the ban became effective only after the FDA received thousands of reports of adverse events including a number of deaths and 10 years after the Agency issued its first advisory.”   In the past, the FDA has cited insufficient data and underreporting of adverse events, however, under the new CGMP (current good manufacturing Rule, serious illness and deaths must be reported through MedWatch, however, as with everything, it is only as good as it the information received.

Some of the requirements for dietary supplement companies or manufactures are to report the identity of the company, types of products currently available in the marketplace and any adverse events reported associated with these products, however, the FDA has no way of determining as to whether or not these companies made any unsupported or incorrect determinations as to whether or not any new dietary ingredient has been added or whether or not it is generally recognized as safe (GRAS).    These companies are not required to notify the FDA of their self-determinations.  The majority of bans or recalls that are published are usually voluntary on the part of the manufacturer, however, it is questionable as to whether or not it is done to instill consumer confidence or that they are in fact investigating their own product to establish any adulteration, significant or any reasonable risk.  FDA lacks the mandatory recall authority admittedly as understaffed and under budgeted when it comes to enforcing rules and regulations in a timely fashion as it relates to the dietary supplement industry.  Usually when the consumer hears of a “banned” or “recalled” product, it is presumed that the products that are not banned or recalled are safe.  This is a misnomer.  Stages for FDA to enforce a real ban follows the following protocol:  1)  hold regulatory meeting with the firm; 2) issue a firm warning; 3) issue consumer alerts; 4) issue advisory to industry; 5) work with company on voluntary product recall; 6) detain/refuse the product if imported; 7) pursue legal action against the firm; and, 8) ban the ingredient.  Historically, the last real FDA ban was with Ephedra in 2004, almost 10 years after issuing its first advisory.

In March 2009, President Barack Obama appointed long-time public health expert Dr. Margaret A. Hamburg, who will succeed Dr. Andrew von Eschenvach, who has led the highly criticized agency since 2005.  In a statement by Steve Mister, President of the Counsel for Responsible Nutrition (“CRN”), “the more than 150 million Americans who use dietary supplements each year need to have confidence not only in the companies that make dietary supplements, but also in the Agency that enforces the regulations and laws by which these products are made.”  Although Dr. Hamburg admittedly during one of the Senate Confirmation Hearings stated she had not been “deeply involved with dietary supplement issues in the past,” she has the confidence of President Obama to fulfill his promise to overhaul the $2 billion agency.  Let’s hope so.

According to the January 2009 report from the Government Accountability Office (“GAO”), “sales of dietary supplements alone reached approximately 23.7 billion in 2007 and have been estimated at 75,000 dietary supplement products available to consumers.”

Although in the GAO report, “the FDA dedicates relativity few resources to dietary supplement oversight activities, including conducting inspections and developing guidance for industry on key safety issues related to aspects of DSHEA (Dietary Supplement Health Education Act).  In this report, the GAO acknowledges “DSHEA authorized FDA to establish CGMP (current good manufacturing practice) specific to dietary supplements in 1994, however, the Agency did not publish a proposed rule until 2003 and did not finalize the rule until 2007.”  “Because these current good manufacturing practices are phased in over time, they will not fully be in effect until 2010 – 16 years after the FDA was authorized to establish them.”  Similarly, FDA officials have admitted “the difficulty of banning of a dietary supplement because FDA must establish adulteration under the significant or an unreasonable risk standard.  For example, it took the FDA almost 10 years after issuing its first advisory about Ephedra to gather sufficient data to meet the statutory version of proof for banning Ephedra from the market.”

The FDA has collaborated with the National Institute of Health Office of Dietary Supplement to provide information to the public with regard to carefully using dietary supplements, however, because of the lack of data and only recent mandatory reporting for serious and adverse events, the dietary supplement industry from a consumer standpoint will remain a minefield for consumers  and a goldmine for manufacturers.

To the level we see them today; perhaps not. What the Founding Fathers did recognize is to have a civilized society, there must exist some avenue for the redress by citizens of wrongs; whether perceived or real. Judicial economy dictates that some control must be given over to the Courts to regulate the elimination of obviously meritless cases, but that regulation must be carefully applied.

I often have discussion with friends about the criminal justice system and their complaint that “too many crooks and thugs seem to go free”. I explain to them a philosophy that many of them have trouble buying into. That philosophy is: the courts were not designed to punish the guilty, the courts and the justice system must, at all costs, protect the innocent. It is sometimes a tough philosophy. To watch a guilty person go free because of a legal technicality is simply not something that anyone accepts easily. Those legal safeguards, though, are not there to assure the punishment of the guilty person who may be able to take advantage of them, rather they are in place to protect the innocent person from being wrongfully punished.

Similarly, in the civil arena, lawsuits are not primarily intended to punish the defendant for wrongful or negligent conduct; with the exception, of course, of punitive damages. The civil justice system is in place to protect the rights of the injured victim; to allow an injured victim the right to be heard and to explain why the defendant’s conduct was at fault for his injuries. So, permitting lawsuits must be favored over extinguishing the rights of truly injured people.

Will there be abuse of the civil justice system at times by allowing a more liberal view toward favoring the rights of the victim? Absolutely; it is simply unavoidable. Much like allowing the guilty to go free in favor of a system that protects the innocent; the civil system must allow some abuse in order to carefully preserve the rights of the truly injured.

It is a trade off that is both worthy and just.

The Justice Department and 16 states joined two whistleblower lawsuits alleging that Wyeth defrauded the government by offering discounts to hospitals on two of its drugs that it did not offer to Medicaid.

 Once again, one of the big Drug Manufacturers, WYETH, has failed to play by the Rules.  The lawsuits that have been filed in Federal District Court in Massachusetts claim that Wyeth avoided paying hundreds of millions of dollars in rebates to state Medicaid programs for its Protonix Oral and Protonix IV acid-reflux drugs.  Medicaid, the health insurance program for the poor, is entitled to the lowest price on prescription drugs and drug makers are required to pay states rebates based on any discounts offered to other parties.  Wyeth sold $394 million of the drugs in 2008 but they brought in close to $2 billion a year in revenue before generic competition threatened them.  Medicaid is financed half by the Federal Government and half by the States which administer the program.

 The LAWSUITS ALLEGE THAT Wyeth failed to pay Medicaid hundreds of millions of dollars because it didn’t pass along these discounts to the government.  By offering massive discounts to hospitals but then hiding that information from the Medicaid program, it’s believed Wyeth caused Medicaid programs throughout the country to pay much more for these drugs than they should have. 

 Not only to the big drug companies/manufacturers need to be monitored and regulated by the Food and Drug Administration as to their products’ safety they also need to be monitored and held accountable for offering discounts on some of its drugs to hospitals and not being up-front with Medicaid and the Federal Government and States that administer the Medicaid Program.

You can also search online for Wyeth Lawsuits and read additional information on this issue.