Common Law - The FindLaw Consumer Protection Law Blog

August 2008 Archives

Parents and child care providers should immediately stop using certain "Simplicity" brand baby bassinets due to the risk of accidental infant strangulation, a federal product safety agency announced on Wednesday. At least two infant deaths have been linked to a design problem with the bassinet, and CPSC has begun asking retailers to recall more than 900,000 of the affected products.

The warning from the U.S. Consumer Product Safety Commission (CPSC) applies to convertible 3-in-1 and 4-in-1 "close-sleeper/bedside sleeper" bassinets manufactured by Simplicity Inc., of Reading, Pa. CPSC reports that it has received two reports of infants dying from strangulation after becoming trapped between the bassinet's metal bars. (See the CPSC Warning for detailed information on the affected Simplicity bassinets, and instructions for parents and care providers.) The agency announced that "[d]ue to the serious hazard these bassinets pose to babies, CPSC urges all consumers to share this safety warning with day care centers, consignment stores, family and friends to ensure that no child is placed to sleep in a Simplicity convertible bassinet covered by this warning."

Reuters reports that CPSC is asking retailers to stop selling the Simplicity bassinets and recall the more than 900,000 that have already been sold -- and so far six major retailers have agreed. The Chicago Tribune calls the Simplicity bassinet "one of the most popular" in the country, and reports that a full recall of the affected bassinets is being pushed for by the family of a 6-month old baby who died on August 21, after becoming caught between a metal support and the bassinet mattress.

Bankruptcy Filings Up 29 Percent

The number of individuals and businesses filing for bankruptcy increased almost 29 percent based on a comparison of consecutive twelve-month periods, according to statistics released Wednesday by the Administrative Office of the U.S. Courts.

There were 967,831 bankruptcy filings in U.S. courts over a 12-month period ending on June 30, 2008, representing a 28.9% increase in filings compared with the previous 12-month period. Bankruptcy filings by individuals totaled 934,009 (up 28.4 percent), while bankruptcy filings by businesses totaled 33,822, up 41.6 percent from numbers reported at the end of June 2007. See Wednesday's News Release from the Administrative Office of the U.S. Courts for a detailed statistical breakdown of bankruptcy filings for the twelve-month period ending June 30, 2008.

Bankruptcy filings by older Americans are on the rise, according to a study by the Consumer Bankruptcy Project, as reported by the Associated Press. The study found that Americans 55 and older accounted for approximately 8 percent of bankruptcies filed in 2001, but by 2007 that group was responsible for 22 percent of bankruptcy filings.

Citigroup Settles Allegations of Credit Card Skimming

Citigroup Inc. has reached an agreement with California Attorney General Edmund G. Brown, Jr. to settle allegations that the company engaged in the illegal practice of "sweeping" positive balances from Citibank customers' credit card accounts. Under the settlement agreement, Citigroup will pay out more than $18 million in customer refunds and civil penalties.

A News Release from the California Office of the Attorney General states that Citigroup's practices netted the company more than $14 million from over 53,000 customers nationwide. Using a computerized "account sweeping" program, Citibank customers' positive credit card balances were allegedly funneled from customer accounts into the bank's general fund. Under terms of the settlement, Citibank will refund all "swept" funds to affected customers nationwide, and will pay $3.5M a civil penalty to the State of California.

According to CNNMoney.com, Citigroup Inc. "takes issue" with the California Attorney General's characterization of the company's conduct and the state's allegations of foul play.

Report Cites Errors in Medicare Claim Payments

A review of Medicare claims for medical and prosthetic equipment in 2006 found that improper or erroneous payments were almost four times more common than the federal government estimated.

The report on the Medicare claims error rate, released on August 22, found a 28.9 percent error rate in the review of paid Medicare claims for medical equipment, prosthetics, and orthotics in 2006, as opposed to the 7.5 percent rate reported by the Centers for Medicare & Medicaid Services. The report was issued by U.S. Department of Health and Human Services Inspector General Daniel Levinson, and is titled Medical Review of Claims for the Fiscal Year 2006 Comprehensive Error Rate Testing Program. The Washington Post reports that the improper Medicare payments discovered in the audit "include not only fraudulent claims, but also those without sufficient documentation and those for goods deemed not medically necessary."

According to the Miami Herald, the HHS Inspector General's report was issued a few weeks after the newspaper published a series on corruption in regional medical equipment suppliers and HIV drug clinics, which "underscored Medicare's failure to root out fraudulent claims submitted to the health insurance program."

Study Looks at Uninsured, Health Care Costs

A study released Monday examines health care costs for Americans who have no health insurance, and reports on financial trends related to health care spending on the uninsured in the U.S.

Uninsured Americans will spend about $30 billion on health care in 2008, and the cost to provide health care to all uninsured Americans would amount to more than $200 billion, according to the study Covering the Uninsured in 2008: Current Costs, Sources of Payment, and Incremental Costs, authored by researchers at George Mason University and the Urban Institute. The Wall Street Journal says the study, published Monday on the Health Affairs journal website, is likely to trigger dialogue on rising health care costs and prospects for reforming the health care system. An abstract of the study reads in part: "People uninsured for any part of 2008 spend about $30 billion out of pocket and receive approximately $56 billion in uncompensated care while uninsured. Government programs finance about 75 percent of uncompensated care. If all uninsured people were fully covered, their medical spending would increase by $122.6 billion." (View the full text of the study on the Health Affairs website).

Reuters reports that "47 million Americans lack any health insurance, and 28 million have gone without for some part of the year."

Airborne Reaches $30M Settlement for Ad Claims

The makers of Airborne have reached an agreement with the Federal Trade Commission (FTC) to pay a total of $30M into a settlement fund, as resolution of a class action lawsuit and related FTC charges of deceptive advertising and product labeling.

Airborne Health Inc., manufacturer of the Airborne dietary supplement -- which is marketed as a cold prevention remedy -- will pay $6.5M to settle FTC charges that its advertising claims were unsubstantiated. The FTC charges relate to an earlier class action lawsuit in which the company agreed to pay $23.5M in consumer refunds and attorneys fees. "There is no credible evidence that Airborne products, taken as directed, will reduce the severity or duration of colds, or provide any tangible benefit for people who are exposed to germs in crowded places," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection, in an FTC news release. In a company press release, Airborne, Inc. declared that it "has denied wrongdoing or illegal conduct in both the class action and before the Federal Trade Commission."

The Washington Post reports that, under the settlement agreement "consumers who bought Airborne products between 2001 and 2008 have until Sept. 15 to apply for a refund for as many as six purchases."

FDA Reports 2 Deaths Linked to Byetta Diabetes Drug

The U.S. Food and Drug Administration (FDA) announced on Monday that it has received six reports of life-threatening pancreas swelling in patients taking the diabetes medication Byetta, including two deaths. The agency is working with Byetta manufacturer Amylin Pharmaceuticals, Inc. to strengthen the drug's warning label.

Byetta is an injectable medicine used to improve blood sugar control in adults with type 2 diabetes, along with metformin and/or another type of antidiabetic medicine called sulfonylureas, according to an FDA Patient Information Sheet. The six diabetes patients referenced in Monday's FDA announcement experienced "hemorrhagic or necrotizing pancreatitis," and all six required immediate hospitalization. Two patients died, while four appear to be recovering. While the FDA and Amylin will work to revise Byetta's labeling information, Reuters reports that it is unclear whether those revisions wil include a "black-box" label, the agency's strongest type of warning for medications.

Religious freedom guarantees do not give California medical care providers the right to refuse to treat gay and lesbian patients, even if that treatment goes against the caregivers' religious beliefs, the California Supreme Court ruled on Monday.

The case arose when Guadalupe Benitez, a lesbian, sought treatment for fertility and pregnancy assistance at a California medical facility. Two physicians at the facility expressed their reluctance to perform a common artificial insemination technique on Benitez, based on the physicians' religious views. According to the Washington Post, Benitez asserts that what violated one physician's religious beliefs was Benitez's sexual orientation, while the physician claims that it was Benitez's unmarried status. In a unanimous decision, the California Supreme Court held that federal and California Constitution guarantees of free exercise of religion "do not exempt a medical clinic's physicians from complying with the California Unruh Civil Rights Act's prohibition against discrimination based on a person's sexual orientation."

FDA: Chemical in Plastic Bottles Poses No Risk

A chemical used in the manufacture of baby bottles, plastic water containers, and other products does not pose a risk to consumers, the U.S. Food and Drug Administration (FDA) announced on Friday.

People are usually exposed to Bisphenol A (also called BPA) through the diet -- including through leaching from the protective lining of plastic bottles and canned foods, according to the Centers for Disease Control and Prevention (CDC). After examining the relevant data in a Draft Assessment of Bisphenol A, the FDA concluded that "an adequate margin of safety exists" for Bisphenol A in current levels of exposure through bottles and other "food contact" uses. The New York Times reports that "Canada has announced its intention to ban the use of [BPA] in baby bottles, and lawmakers in the United States have introduced legislation to ban bisphenol in children's products," while at least 12 states are pondering passage of restrictions on the chemical's use.

In addition to food and beverage containers, BPA can also be found in products like compact discs, plastic eating utensils, and sports safety equipment. The FDA plans to hear additional testimony on BPA's safety in September.

A federal appeals court on Thursday held that the owner of "open source" computer programming code -- software that is made available to the public via free download but subject to certain terms of use -- is entitled to federal copyright law protections when users violate the terms of the open source license.

The plaintiff, Robert Jacobsen, is the holder of a copyright for a model train software program that he makes available for free public download under the terms of an "open source" copyright license. Jacobsen brought a copyright infringement action against a defendant who allegedly used the code without following the terms of the license. Overruling a decision by the federal district court, the U.S. Court of Appeals for the Federal Circuit allowed Jacobsen's copyright infringement claims to proceed, declaring that "copyright holders who engage in open source licensing have the right to control the modification and distribution of copyrighted material." The court found that the defendants modified and distributed Jacobsen's code "without copyright notices and a tracking of modifications from the original computer files," violating license terms that are enforceable as copyright conditions.

According to Reuters, "[o]pen-source software makers share the source code of their computer programs, allowing users to help change or improve their software and redistribute it. It is a collaborative approach to software development, unlike the proprietary approach by companies like Microsoft Corp, which generally keep software code secret."

BMW Recalls 200K Vehicles Over Air Bags

BMW is recalling 200,000 vehicles because a possible defect in the front passenger seat air bag sensor could prevent the safety device from properly deploying during an accident. The German car company is offering to replace the sensor device and extend warranty coverage on the affected parts for owners of all affected vehicles.

The recall, announced on Wednesday, affects BMW's model year 2006 3-series, model year 2004-2006 5-series, and model year 2004-2006 X3 vehicles. Affected vehicle owners should begin receiving recall notices from BMW in September, and will be entitled to have their vehicles serviced free of charge. In a statement released on Thursday, BMW of North America said that in the meantime, affected vehicles could still be driven, but advised owners to have their vehicles serviced immediately "if the air bag warning lamp and the passenger air bag 'on-off' lamp are illuminated simultaneously." The Associated Press reports that the problem was identified after BMW customers "alerted the company when they noticed that the air bag light indicated a deactivated air bag even when a passenger sat in the seat."

Feds Take Action to Ensure Bus Safety

The tour group responsible for a fatal bus crash in Texas on August 8th has been shut down by the Federal Motor Carrier Safety Administration (FMCSA), and the agency has temporarily stopped issuing licenses to new bus companies, until it can ensure that entities ordered to cease operations aren't merely forming new transportation companies under different business names.

On August 10, the FMCSA issued an "Operations Out-of-Service Order" to Angel Tours, Inc. and Iguala BusMex, two days after an Iguala BusMex bus crashed in Sherman, Texas, killing 17 passengers. The order called the companies an "imminent hazard to public safety. . .based upon their present state of unacceptable safety compliance and their failure to adequately establish safety management systems and ensure their vehicles are properly maintained." According to the Associated Press, the FMCSA has stopped issuing licenses to all new bus companies until the agency can properly cross-reference license applicants, in part to ensure that the companies "don't simply set up shop under a new name" after being ordered to cease operations. The Houston Chronicle reports that Iguala Busmex was established by the operator of Angel Tours, after a June FMCSA order that required Angel Tours to shut down.

California Court Lifts Home-Schooling Restrictions

A California appeals court has ruled that home-school instruction in the state does not require a teaching credential, reversing a February 2008 ruling which effectively prevented most California parents from home-schooling their children.

In Friday's decision, the court of appeal for California's Second Appellate District ruled that "California statutes permit home schooling as a species of private school education," although the state may restrict home education rights if the environment becomes harmful to the child. As the Los Angeles Times reports, the controversy arose in part because, unlike at least 30 other states, California's laws on compulsory education do not specifically address home schooling. According to the San Francisco Chronicle, had the court not reversed its earlier position, most of the estimated 166,000 children being home-schooled in the state could have been classified as truants.

Beef Recalled Due to E. Coli Link

1.2 million pounds of beef produced by a Nebraska processing firm is being recalled, due to possible contamination from e. Coli bacteria, federal health officials announced on Friday. A number of grocery chains -- including Whole Foods Markets and Fred Meyer stores -- have announced that they are pulling affected ground beef products from their shelves.

The affected beef was produced between June 17 and July 8 at Nebraska Beef Ltd. in Omaha, and was sent to establishments and retail stores nationwide for further processing. The recall has been deemed a "Class 1" recall by the U.S. Department of Agriculture's Food Safety Inspection Service (FSIS) -- the agency's highest risk classification -- meaning there is a reasonable probability that eating the affected food will cause health problems or death. Reuters reports that the recalled beef consists of "primal and subprimal cuts that are larger sections of cows, such as chuck and rib, that can be cut down for individual or family-sized packaging." An investigation by state health officials, FSIS, and the Centers for Disease Control has linked 31 cases of e. Coli sickness (in 12 states and Canada) to the recalled beef. FSIS is advising consumers to contact Nebraska Beef Ltd. Vice President of Administration James Timmerman at 402-733-0456, with any questions or concerns about the recall.

Citi and UBS AG, two of the world's largest banks, have agreed to buy back billions of dollars worth of auction-rate securities sold to their customers -- and to pay hundreds of million dollars in penalties -- in two separate deals reached to settle charges that the financial giants made fraudulent misrepresentations in their marketing of auction-rate securities.

According to Reuters, "auction-rate debt has interest rates that reset through periodic auctions, typically held every seven, 28 or 35 days." The Securities and Exchange Commission (SEC) reports that Citi will "give individual investors, small businesses, and charities all $7.5 billion of their money back from auction rate securities (ARS) they purchased from the firm." The charges against Citi stem from the company's marketing of auction-rate securities as highly liquid investments, when in fact that liquidity was premised on Citi's provision of support bids in auctions for which there was insufficient customer demand. And in February 2008, when Citi stopped supporting auctions, widespread auction failures resulted, and thousands of the bank's customers were "left holding illiquid securities," according to the SEC.

New York Attorney General Andrew Cuomo called Thursday's agreement with Citi "a turning point for investors nationwide seeking relief from the collapse of the auction rate securities market."

On Friday, Switzerland's largest bank (UBS AG) reached an agreement over allegations of fraudulent sales of auction-rate securities, in which the company agreed to buy back $19.4 billion worth of the failed bonds and pay a $150 million fine, according to Bloomberg.com.

Anthrax Investigation Documents Unsealed

A federal court has unsealed documents related to the Federal Bureau of Investigation (FBI) probe of the 2001 anthrax attacks, less than a week after the apparent suicide of Bruce E. Ivins, a U.S. Army scientist identified by the FBI as the person solely responsible for the string of anthrax-laced mailings.

Search warrant applications, sworn affidavits, and court-issued warrants released Wednesday provide a paper trail detailing the federal government's investigation into the anthrax attacks, which killed five people and sickened at least 17 others beginning in September 2001. Also on Wednesday, U.S. Department of Justice and FBI officials briefed victims and family members on the FBI's evidence from the investigation -- code-named "Amerithrax" -- which included more than 9,100 interviews, executed more than 70 searches, and followed leads across six continents. According to the Washington Post, the federal government has determined that Ivins acted alone in carrying out the attacks, a conclusion "centered on a near-perfect match of anthrax spores in his custody and a record of his late-night laboratory work just before the toxic letters were mailed."

11 people have been indicted in an identity theft scheme involving the illegal sale of more than 40 million credit and debit card numbers that were stolen from the computer networks of several major U.S. retailers. The U.S. Department of Justice (DOJ) is calling the case the largest hacking and identity theft prosecution ever charged by the federal government.

According to a DOJ Press Release, the scammers hacked into the computer networks of major retailers -- including TJX Companies (owner of TJ Maxx and Marshalls stores), BJ's Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority, Forever 21 and DSW -- and installed "sniffer" programs to gather card numbers, passwords, and account information. That information was then sold to criminals in the U.S. and Eastern Europe. Reuters reports that "the charges target three people from the United States, three from the Ukraine, two from China, one from Estonia and one from Belarus."

U.S. Attorney General Michael B. Mukasey calls the indictments "the single largest and most complex identity theft case ever charged in this country," stressing that "computer networks and the Internet are an indispensable part of the world economy. But even as they provide extraordinary opportunities for legitimate commerce and communication, they also provide extraordinary opportunities for criminals."

Crash Tests: How Safe are Small Pickups?

In side-impact crashes, small pickup trucks offer less protection than many cars and sport-utility vehicles -- with some models receiving 'dismal' safety ratings -- according to a recent Insurance Institute for Highway Safety study of side-impact tests involving small pickups.

Of the 2008 model small pickups tested by the IIHS, only the Toyota Tacoma received a rating of "good" for occupant protection in side-impact crashes, which the IIHS calls the "second most common type of fatal motor vehicle crash." In a news release announcing the test results, IIHS President Adrian Lund stated that, while "more people may be looking at small pickups because of rising gas prices . . . , they won't find many that afford state-of-the-art crash protection."

View/Download the Small Pickup Side-Impact Test Results from the IIHS.

August Spotlight: Foreclosure

Last week, President Bush signed into law the Housing and Economic Recovery Act of 2008, a sweeping housing rescue package that promises help for homeowners facing foreclosure, and provides temporary assistance to struggling mortgage finance companies Freddie Mac and Fannie Mae. In light of this landmark legislation -- and recent trends in the national housing market -- FindLaw's monthly spotlight is on Foreclosure. Visit FindLaw's August Spotlight page for tips on avoiding foreclosure, links to state-specific foreclosure information and assistance, foreclosure-related news, and more.