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Archives for January 2004

U.S. Health Care Spending Reaches All-Time High: 15% of GDP

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by Robert Pear
Published by the New York Times, January 9, 2004

Health spending accounts for nearly 15 percent of the nation’s economy, the largest share on record, the Bush administration said on Thursday.

The Department of Health and Human Services said that health care spending shot up 9.3 percent in 2002, the largest increase in 11 years, to a total of $1.55 trillion. That represents an average of $5,440 for each person in the United States.

Hospital care and prescription drugs accounted for much of the overall increase, which outstripped the growth in the economy for the fourth year in a row, the report said.

Complete data on health care spending in 2003 are not yet available, and some experts say the rapid growth of the last few years may be slowing. Prof. Uwe E. Reinhardt, a health economist at Princeton, said: “The increase in health spending is no surprise whatsoever. This is what the American people asked for when they abolished managed care.”

Many consumers rebelled at limits on their choice of doctors and hospitals. The increase comes before baby boomers become heavy users of care. It does not reflect the increased demand for prescription drugs likely to result from the Medicare law signed last month by President Bush.

“We’ve had two successive years of rather dramatic increases in the share of gross domestic product going to health care,” said Katharine R. Levit, director of national health statistics at the department. “Everyone, from businesses to government to consumers, is affected.”

Projections put health spending at 17.7 percent of gross domestic product, or G.D.P., by 2012, the government said last February.

Health spending surged in recent years while the economy sputtered. As a result, health spending rose from 13.3 percent of the G.D.P. in 2000 to 14.1 percent in 2001 and 14.9 percent in 2002, the report said. From 1992 to 1999, the share was stable.

Ms. Levit said that factors driving the growth in health spending showed “signs of dissipating in 2003.” Typically, she said, it takes two or three years for changes in the economy, like the 2001 recession, to affect the health care sector.

Likewise, Kenneth L. Sperling, a health care consultant at Hewitt Associates, said there had been a tapering off of the sharp rise in the use and prices of hospital services and prescription drugs. He expected the trend to be reflected in a lower rate of growth in health spending in 2004.

Spending for hospital care reached $486.5 billion in 2002, a 9.5 increase over the prior year. It was the first time since 1991 that hospital spending had grown faster than health spending generally.

Ms. Levit said the increase reflected a growing demand for hospital services and rises in the number of admissions, the length of hospital stays, the cost of malpractice insurance and the wages and benefits of hospital employees. In addition, she said, hospitals have shown an increased ability to negotiate higher prices as the constraints of managed care have waned.

The new federal figures were published in the journal Health Affairs.

Even though more than 43 million Americans are uninsured, the United States devotes more of its economy to health care than other industrial countries. In 2001 — the last year for which comparative figures are available — health accounted for 10.9 percent of the gross domestic product in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development.

Public spending on health care accounts for 45 percent of all health spending in the United States, compared with a 72 percent average in O.E.C.D. countries. But health spending has outpaced economic growth in most of those countries, putting pressure on government budgets.

Prescription drugs accounted for 10.5 cents of every dollar spent on health care in the United States in 2002, and for about one-sixth of the increase in health spending.

Drug companies cite those figures in arguing that they have been unfairly vilified as a major source of rising health costs.

But another statistic helps explain why drug costs have become a potent political issue. They account for 23 percent of what Americans spent on health care out of their own pockets, and 51 percent of the increase in such spending, in 2002.

Total out-of-pocket spending on health care rose $12 billion, to $212.5 billion in 2002. Out-of-pocket spending on prescription drugs rose $6.1 billion, to $48.6 billion.

The experts from OrganicCBDNugs.com says that Insurance coverage of drugs has grown in the last 20 years, Ms. Levit said. But consumers’ out-of-pocket spending on medicines exceeded the amount of their own money that they spent on hospitals, doctors, dentists or nursing homes in 2002. Drug spending rose 15.9 percent in 2001, 16.4 percent in 2000 and 19.7 percent in 1999.

Cynthia Smith, an economist at the Department of Health and Human Services, said the increase “has arisen largely from increased use of new drugs, rather than from increasing prices of existing drugs.”

Mark V. Pauly, a professor at the University of Pennsylvania, said he saw no evidence that the increase in health spending had been “cosmically harmful to society.” Indeed, he said, “for middle-class people with health insurance,” the value of the health care they receive is often worth the additional cost.

But Mr. Pauly said the increase in health costs and spending tended to hurt the uninsured.

Since 1985, the report said, per capita health spending has grown more slowly under Medicare than under private insurance. Liberals say that shows Medicare is more efficient. But conservatives trace much of the difference to the fact that private insurers have provided more generous benefits.

© 2004 New York Times

Editors’ note: Obviously, we found this article contained useful and credible information worth sharing, so it was disappointing to see the lazy reporting of the closing paragraph, the sort that unfortunately is typical today in large news outlets that have no excuse for lack of thoroughness.

There are two major problems with the “liberals said this, conservatives said that” bit. First, why are we forced to accept the writer’s judgment of who is liberal or conservative? Tell us who said what, and if they are not widely known sources, provide objective information to let readers evaluate the source (such as who funds them).

Next, the claims made by “liberals” and “conservatives” may not be obviously true or false, but it would not be too difficult to research and evaluate the credibility of these points. The expectation of “balanced” reporting is regularly used as an excuse for such laziness. But while “he said, she said” reporting is fine on matters of pure opinion, it is irresponsible when the sources claim to provide factual information. Quality reporters makes judgments and tell readers whether or not claims are credible.

Related feature on US protectionism of the drug industry and its public costs

Democratize Energy Production

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by Winona LaDuke 
First published by Indian Country Today, January 2004

The U.S. is the wealthiest and most dominant country in the world, and we can’t keep the lights on in New York City nor can we provide continuous power in a “liberated” Baghdad. Centralized power production based on fossil fuel and nuclear resources has served to centralize political power, to disconnect communities from responsibility and control over energy, and to create a vast wasteful system. We need to recover democracy. And one key element is democratizing power production.

Let’s face it, we are energy junkies. The U.S. is the largest energy market in the world, and we consume one third of the world’s energy resources with 5 percent of the population. We are undeniably addicted – whether to an economy based on burning of fossil fuels and wasteful production systems, or to oil. Ninety-seven percent of the total world oil consumption has been in the past 70 years. We even slather oil-based fertilizers and herbicides on our food crops.

We have allowed our addictions to overtake our common sense and a good portion of our decency. We live in a country with the largest disparity of wealth between rich and poor of any industrialized country in the world. And, we live where economic power is clearly translated into political power. As Lee Raymond, chairman and CEO of ExxonMobil, remarks, “Energy is the biggest business in the world, there just isn’t any other industry that begins to compare.” Energy companies have immense influence in public policy and often flaunt their violations of the law and of modesty. (Just take a look at the closed-door meetings with Cheney if you need a refresher course).

It’s 14 years after the Exxon Valdez Oil spill, and only two of 28 species almost obliterated by the accident are recovering. That’s about it. ExxonMobil has thus far wiggled out of paying the $5 billion fine levied against the corporation for its negligence, and seeks to reduce the fine to $25 million, or $17.5 million less than Lee Raymond made in 2002. Haliburton, Dick Cheney’s old corporate alma mater is the happy recipient of a $1.7 billion no-bid contract in addition to hundreds of millions in other no-bid contracts to keep Iraqi oil flowing. And, while Enron’s Kenneth Lay, who along with his colleagues was able to loot $2.1 billion from the 401K pension funds of thousands of Enron employees, might get a slap on the wrist, Martha Stewart is skewered. And then there is the Saudi Arabia example – one of our favorite oil suppliers. Although a dozen of the 9/11 hijackers held Saudi passports, we have made few comments, and, instead, invaded two countries with only marginal, at best, relationships with the 9/11 incident. Saudi Arabian officials remain welcome guests at the White House, and any Saudi human rights violations, or (their) absence of democracy, are ignored in our foreign policy.

Alternative energy represents an amazing social and political reconstruction opportunity and one that has the potential for peace, justice, equity and some recovery of our national dignity. The Great Plains is the Saudi Arabia of Wind power, representing this continent’s greatest wind potential. Twenty-three Indian tribes have over 250 gigawatts of wind generating potential; add to that, a host of farmers and ranchers. That represents over half of present U.S. installed electrical capacity. Those tribes live in some of the poorest counties in the country and yet they are putting up wind turbines that could power America – if they had more contracts and access to power lines. The Rosebud Sioux Tribe’s 750-kilowatt wind turbine is the first commercial turbine, with 30 megawatt projects planned for the Northern Cheyenne reservation (Montana), Makah reservation (Washington), and Rosebud in South Dakota. As well, the Assiniboine and Sioux tribes of Fort Peck (Montana) hope to bring a 660-kilowatt turbine on-line. That turbine alone will reduce the tribal electric bill by $134,000 annually, and help establish a senior citizen’s kitchen to feed elders daily and to finance other programs through savings. And this is just a beginning. Solar power has similar potential. Each year, as Dennis Hayes (founder of Earth Day) notes, the sun pours more power onto America’s highways than all fossil fuels used in the world.

Renewable energy makes economic sense. The Apollo Project, representing a host of environmental groups and l2 labor unions, points out that America has lost 2.7 million high paying manufacturing jobs since 2000. Investing in alternative energy is investing in jobs since the fuel supply is from the Creator, there is no middle man. The European Union estimates 2.77 jobs in wind for every megawatt produced, 7.24 jobs/megawatt in solar, and 5.67 jobs/megawatt in geothermal. Or, in short, l,000 megawatts of alternative energy power averages 6,000 jobs, or 60 times more high-paying jobs than in fossil fuels and nuclear power. It is our choice. We can either create jobs and economic stability in Indian country or we can continue to line the pockets of utilities and energy companies.

Conservation and limited applications of alternative energy make huge economic sense. The Starwood Hotel group, (which includes the Sheraton and, for instance, the Gila River Wild Horse Pass Resort), recently invested in energy-smart solutions for 748 properties. The investments saved the corporation $6.l million in one year or the equivalent of 9,400 hotels room bookings. And, these energy savings represented the equivalent of taking l,800 automobiles off our roads, or planting 2,400 trees, or disconnecting 1,200 homes from the electric grid. The Mohegan Sun, the Mohegan Tribe’s casino in Connecticut, is also looking at alternative energy, having purchased two PC25TM fuel cell systems. Each cell produces 200 killowatt-hours of electricity and 900,000 BTUs, which will be used for space heating and hot water. While traditional generating systems create as much as 25 pounds of pollutants to generate l,000 kilowatt-hours of power, the same produced by fuel cells equates to less than one ounce of pollutants.

Right now, we are missing the canoe. While renewable energy is the fastest growing market in the world, the U.S. is dropping way back. The Rosebud Sioux had to import turbine parts from Denmark, and that’s a long way away.

Some of us believe that instead of nuclear waste going to Newe Segobia (at Yucca Mountain), there should be solar panels. And we know that the wind blows endlessly on Pine Ridge, where we believe that, in the poorest county in the country, there should be wind turbines. We must be about democracy and about justice. We must put the power back into the hands of the people.

Winona LaDuke, an Ojibwe from the White Earth reservation, is program director of Honor the Earth, a national Native American environmental justice program. She served as the Green Party vice presidential candidate in the 1996 and 2000 elections. She can be reached at wlhonorearth @ earthlink.net.

© 2004 Indian Country Today

 

Wal-Mart Stores Locked In Night Shift Workers with No Key

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First published by the New York Times, January 18, 2004

Looking back to that night, Michael Rodriguez still has trouble believing the situation he faced when he was stocking shelves on the overnight shift at the Sam’s Club in Corpus Christi, Texas.

It was 3 a.m., Mr. Rodriguez recalled, some heavy machinery had just smashed into his ankle, and he had no idea how he would get to the hospital.

The Sam’s Club, a Wal-Mart subsidiary, had locked its overnight workers in, as it always did, to keep robbers out and, as some managers say, to prevent employee theft. As usual, there was no manager with a key to let Mr. Rodriguez out. The fire exit, he said, was hardly an option – management had drummed into the overnight workers that if they ever used that exit for anything but a fire, they would lose their jobs.

“My ankle was crushed,” Mr. Rodriguez said, explaining he had been struck by an electronic cart driven by an employee moving stacks of merchandise. “I was yelling and running around like a hurt dog that had been hit by a car. Another worker made some phone calls to reach a manager, and it took an hour for someone to get there and unlock the door.”

The reason for Mr. Rodriguez’s delayed trip to the hospital was a little-known Wal–Mart policy: the lock-in. For more than 15 years, Wal–Mart Stores Inc., the world’s largest retailer, has locked in overnight employees at some of its Wal–Mart and Sam’s Club stores. It is a policy that many employees say has created disconcerting situations, such as when a worker in Indiana suffered a heart attack, when hurricanes hit in Florida and when workers’ wives have gone into labor.

“You could be bleeding to death, and they’ll have you locked in,” Mr. Rodriguez said. “Being locked in in an emergency like that, that’s not right.”

Mona Williams, Wal–Mart’s vice president for communications, said the company used lock-ins to protect stores and employees in high-crime areas. She said Wal · Mart locked in workers – the company calls them associates – at 10 percent of its stores, a percentage that has declined as Wal · Mart has opened more 24-hour stores.

Ms. Williams said Wal–Mart, with 1.2 million employees in its 3,500 stores nationwide, had recently altered its policy to ensure that every overnight shift at every store has a night manager with a key to let workers out in emergencies.

“Wal–Mart secures these stores just as any other business does that has employees working overnight,” Ms. Williams said. “Doors are locked to protect associates and the store from intruders. Fire doors are always accessible for safety, and there will always be at least one manager in the store with a set of keys to unlock the doors.”

Ms. Williams said individual store managers, rather than headquarters, decided whether to lock workers in, depending on the crime rate in their area.

Retailing experts and Wal–Mart’s competitors said the company’s lock-in policy was highly unusual. Officials at Kmart, Sears, Toys “R” Us, Home Depot and Costco, said they did not lock in workers.

Even some retail industry experts questioned the policy. “It’s clearly cause for concern,” said Burt Flickinger, who runs a retail consulting concern. “Locking in workers, that’s more of a 19th-century practice than a 20th-century one.”

Several Wal–Mart employees said that as recently as a few months ago they had been locked in on some nights without a manager who had a key. Robert Schuster said that until last October, when he left his job at a Sam’s Club in Colorado Springs, workers were locked in every night, and on Friday and Saturday nights there was no one there with a key. One night, he recalled, a worker had been throwing up violently, and no one had a store key to let him out.

“They told us it’s a big fine for the company if we go out the fire door and there’s no fire,” Mr. Schuster said. “They gave us a big lecture that if we go out that door, you better make sure it’s an emergency like the place going up on fire.”

Augustine Herrera, who worked at the Colorado Springs store for nine years, disputed the company’s assertion that it locked workers in stores in only high-crime areas, largely to protect employees.

“The store is in a perfectly safe area,” Mr. Herrera said.

Several employees said Wal–Mart began making sure that there was someone with a key seven nights a week at the Colorado Springs store and other stores starting Jan. 1, shortly after The New York Times began making inquiries about employees’ being locked in.

The main reason that Wal–Mart and Sam’s stores lock in workers, several former store managers said, was not to protect employees but to stop “shrinkage” – theft by employees and outsiders.

Tom Lewis, who managed four Sam’s Clubs in Texas and Tennessee, said: “It’s to prevent shrinkage. Wal–Mart is like any other company. They’re concerned about the bottom line, and the bottom line is affected by shrinkage in the store.”

Another reason for lock-ins, he said, was to increase efficiency – workers could not sneak outside to smoke a cigarette, get high or make a quick trip home.

Mr. Rodriguez acknowledged that the seemingly obvious thing to have done after breaking his ankle was to leave by the fire door, but he and two dozen other Wal–Mart and Sam’s Club workers said they had repeatedly been warned never to do that unless there was a fire. Leaving for any other reason, they said, could jeopardize the jobs of the offending employee and the night supervisor.

Regarding Mr. Rodriguez, Ms. Williams said, “He was clearly capable of walking out a fire door anytime during the night.”

She added: “We tell associates that common sense has to prevail. Fire doors are for emergencies, and by all means use them if you have emergencies. We have no way of knowing what any individual manager said to an associate.”

None of the Wal–Mart workers interviewed said they knew anyone who had been fired for violating the fire-exit policy in an emergency, but several said they knew workers who had received official reprimands, the first step toward firing. Several said managers had told them of firing workers for such an offense.

“They let us know they’d fire people for going out the fire door, unless there was a fire.” said Farris Cobb, who was a night supervisor at several Sam’s Clubs in Florida. “They instilled in us they had done it before and they would do it again.”

Mr. Cobb and several other workers interviewed about lock-ins were plaintiffs in lawsuits accusing Wal · Mart of forcing them to work off the clock, for example working several hours without pay after their shifts ended. Wal–Mart says it tells managers never to let employees work off the clock.

Janet Anderson, who was a night supervisor at a Sam’s Club in Colorado from 1996 to 2002, said that many of her employees were also airmen stationed at a nearby Air Force base. Their commanders sometimes called the store to order them to report to duty immediately, but she said they often had to wait until a manager arrived around 6 a.m. She said one airman received a reprimand from management for leaving by the fire door to report for duty.

Ms. Anderson also told of a worker who had broken his foot one night while using a cardboard box baler and had to wait four hours for someone to open the door. She said the store’s managers had lied to her and the overnight crew, telling them the fire doors could not be physically opened by the workers and that the doors would open automatically when the fire alarm was triggered.

Only after several years as night supervisor did she learn that she could open the fire door from inside, she said, but she was told she faced dismissal if she opened it when there was no fire. One night, she said, she cut her finger badly with a box cutter but dared not go out the fire exit – waiting until morning to get 13 stitches at a hospital.

The federal government and almost all states do not bar locking in workers so long as they have access to an emergency exit. But several longtime Wal–Mart workers recalled that in the late 1980’s and early 1990’s, the fire doors of some Wal–Marts were chained shut.

Wal–Mart officials said they cracked down on that practice after an overnight stocker at a store in Savannah, Ga., collapsed and died in 1988. Paramedics could not get into the store soon enough because the employees inside could not open the fire door or front door, and there was no manager with a key.

“We certainly do not do that now,” Ms. Williams said. “It’s not been that way for a long time.”

Explaining the policy, she said, “Only about 10 percent of our stores do not allow associates to come and go at will, and these are generally in higher crime areas where the associates’ safety is considered an issue.”

Mr. Lewis, the former store manager, said he had been willing to get out of bed at any hour to drive back to his store to unlock the door in an emergency. But he said many Sam’s Club managers were not as responsive. “Sometimes you couldn’t get hold of a manager,” he said. “The tendency of managers was to sleep through the nights. They let the answering machine pick up.”

Mr. Cobb, the overnight supervisor in Florida, said he remembered once when a stocker was deathly sick, throwing up repeatedly. He said he called the store manager at home and told him, ” `You need to come let this person out.’ He said: `Find one of the mattresses. Have him lay down on the floor.’

“I went into certain situations like that, and I called store managers, and they pretty much told me that they wouldn’t come in to unlock the door. So I would call another manager, and a lot of times they would tell you that they were on their way, when they weren’t.”

Mr. Cobb said the Wal–Mart rule that generally prohibits employees from working more than 40 hours a week to avoid paying overtime played out in strange ways for night-shift employees. Mr. Cobb said that on many workers’ fifth work day of the week, they would approach the 40-hour mark and then clock out, usually around 1 a.m. They would then have to sit around, napping, playing cards or watching television, until a manager arrived at 6 a.m.

Roy Ellsworth Jr., who was a cashier at a Wal–Mart in Pueblo, Colo., said he was normally scheduled to work until the store closed at 10 p.m., but most nights management locked the front door, at closing time, and did not let workers leave until everyone had straightened up the store.

“They would keep us there for however long they wanted,” Mr. Ellsworth said. “It was often for half an hour, and it could be two hours or longer during Christmas season.”

One night, shortly after closing time, Mr. Ellsworth had an asthma attack. “My inhaler hardly helped,” he said. “I couldn’t breathe. I felt I was going to pass out. I got fuzzy vision. I told the assistant manager I really needed to go to the hospital. He pretty much got in my face and told me not to leave or I’d get fired. I was having trouble standing. When I finally told him I was going to call a lawyer, he finally let me out.”

One top Wal–Mart official said: “If those things happened five or six years ago, we’re a very large company with more that 3,000 stores, and individual instances like that could happen. That’s certainly not something Wal–Mart would condone.”

©2004 New York Times

Mainstream Marketing Services, et al. v. Federal Trade Commission: Resources and Legal Analysis

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by Susan Bee
Last updated January 20, 2004

On November 10, 2003, the Tenth Circuit U.S. Appeals Court in Tulsa, OK heard oral arguments in Mainstream Marketing Services, et al. v. Federal Trade Commission. In this case, two telemarketing firms (Mainstream Marketing Services, Inc. TMG Marketing, Inc.) and a trade group (American Teleservices Association) challenged the constitutionality of the FTC’s Do Not Call Registry (DNCR). The judges are David M. Ebel, Stephanie K. Seymour and Robert H. Henry.

In MMS v. FTC, the Tenth Circuit consolidated four cases for an expedited hearing. The first two are appeals of rulings by two different District Courts: Mainstream Mktg. Servs. v. FTC,2003 WL 22213517 (D. Colo. Sept. 25,) and U.S. Security v. FTC, 2003 WL 22203719 (W.D. Okla. Sept. 23, 2003). The other two are separate reviews of the same FCC order: Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014 (2003). The Tenth Circuit is expected to issue a ruling any time between January and May of 2004.

The primary disputes in the MMS case are whether the FTC crafted the DNCR narrowly enough to adequately protect corporate telemarketers’ “commercial speech” and whether the FTC’s failure to include non-commercial charitable organizations in the DNCR amounted to an unconstitutional “content-based” restriction on speech.

The term ‘commercial speech” describes speech used primarily by corporations to disseminate information about goods and services. Courts have held that commercial expression is valued because it helps consumers and furthers social interests by allowing the fullest possible dissemination of information regarding goods and services. Central Hudson Gas v. Public Service Commission of NY (1980). The courts have found that consumer interest in commercial information may be more keen than it is in the day’s most urgent political debate. Rubin v. Coors Brewing Co. (1976).

Evaluating the Constitutionality of Commercial Speech Restrictions

The prevailing standard used to determine whether a commercial speech restriction is constitutional was established by the U.S. Supreme Court in Central Hudson. The Court identified a three-step test to determine whether restrictions applied to lawful and non-misleading commercial speech are constitutional. Under the “Hudson test,” regulation of commercial speech is constitutional if, and only if:

  1. the government asserts a substantial interest to be achieved by the restrictions;
  2. the restriction directly advances that governmental interest; and
  3. the restriction is narrowly tailored to meet that interest.

Neither Judge Nottingham (Colorado District Court) nor the Tenth Circuit panel had trouble finding that the FTC has a legitimate and substantial interest in protecting citizens’ privacy, or the right to be left alone in their own homes. Both Courts ruled that the government’s interest in protecting in-home privacy is sufficient to justify a restriction on speech. The Courts seemed to virtually ignore one of the most egregious arguments the telemarketers made: that the DNCR is unconstitutional because it regulates speech based on the speech’s unpopularity. Brief for MMS, p. 22. This is an apparent attempt to ride the coattails of constitutional protections on political speech, which can be particularly important when unpopular. But the FTC clearly is not basing its regulation on the unpopularity of the speech, but rather on its invasion of in-home privacy, which makes the speech unpopular.

Both Courts made this ruling despite the telemarketers arguments that citizens should be left to protect themselves from unwanted telemarketing calls by using technological alternatives, such those offered by local telephone providers or caller ID. The FTC countered, arguing it is justified in creating the DNCR because these technological measures are too costly to citizens and do not approach the degree of protection the DNCR can provide. The FTC argued that far from being obvious alternatives to commercial speech regulation, these technologies demonstrate the magnitude of the problem. (Consolidated Opening Brief of Appellants, page. 43-44)

Turning to the rest of the second two prongs of the Hudson analysis, together, the final two factors require there be a “fit between the legislature’s ends and the means chosen to accomplish those ends.” (United States v. Edge Broad, 1993). The government bears the burden of demonstrating both a substantial interest and the fit between that interest and the challenged restriction. Utah Licensed Beverage Ass’n v. Leavitt (10th Cir. 2001). The Hudson test does not require that the regulation be the least restrictive means of achieving the interest asserted, but only that it be narrowly tailored to meet the desired objective. Board of Trustees of State University of NY v. Fox (1989).

The telemarketers advance several theories about why the registry does not directly advance the government’s interest in protecting privacy and is not narrowly tailored. The first reason is that it is numerically under-inclusive; it only affects unwanted commercial calls, even though charitable contribution calls are equally invasive and may be equally unwanted by many people. In the District Court, Judge Nottingham ruled that numeric under-inclusiveness is not constitutionally fatal. Governments are not required to fix all the problems before they can fix any problem.

In a related argument, the telemarketing industry honed in on a First Amendment principle that the government is not supposed to regulate communications based on the content of the communication. Drawing from this principle that content-based restrictions on speech are intolerable, telemarketers argued that the DNCR is unconstitutional because it restricts commercial telemarketing but not charitable telemarketing. Judge Nottingham agreed. He wrote that while governments may not be required to regulate on all fronts (fix all problems before they can fix any), the FTC may not base its failure to regulate on some fronts and not others on the content of the speech–commercial versus non-commercial.

In ruling against the FTC on this issue, Judge Nottingham refused to accept any of the FTC’s reasons for distinguishing between commercial versus charitable telemarketing, which included: 1. charities are less likely to engage in abusive telemarketing practices. 2. the FTC is not really restricting any speech; the citizens are doing it by signing the registry. Nottingham disagreed, writing that because the DNCR does not give citizens the opportunity to ban all telemarketing calls–commercial and charitable-the FTC has entangled itself in the decision of which speech is blocked, thereby regulating based on content.

The Tenth Circuit Appeals Court does not seem to agree with Nottingham’s analysis. On October 7, the three judge panel granted the FTC’s request to stay the Colorado District Court’s injunction, stating the “FTC shows substantial likelihood of success on the merits.” The Tenth Circuit judges do not seem to believe that the DNCR is content based. Sticking more closely to the Hudson test, they wrote that to show a reasonable fit between the FTC’s goal of the DNCR, the FTC must only “demonstrate that the harms it recites are real and that its restriction will in fact alleviate them to a material degree.” Citing Rubin v. Coors Brewing Co. (1995). While the fit must be reasonable and in proportion to the interest served, it need not be a perfect fit or the best fit. Citing Fox, 492 U.S. at 480. “Within the bounds of the general protection provided by the Constitution to commercial speech, we allow room for legislative judgments.” Citing Edge Broad. Co. p. 434. The Courts do not require “that the Government make progress on every front before it can make progress on any front.” Id.

In its preliminary order, the Tenth Circuit found the FTC’s means of regulating commercial, versus charitable, telemarketing seems justified based on both Congressional and FTC findings. Congress expressly made factual findings in the 1991 Telephone Consumer Protection Act TCPA that telemarketing calls “conducted to induce purchases of goods or services” have subjected consumers to substantial fraud, deception, and abuse. Pub. L. 103-297 at ** 2,7. Consequently, in enacting a national do-not-call registry, the FTC “decided to limit coverage of the national registry to telemarketing calls made by or on behalf of sellers of goods or services.” 68 Fed. Reg. 4629

Furthermore, the FTC’s revised Telemarketing Sales Rule states that the agency relied on TCPA and FCC authority when it initially endorsed the distinction between commercial and non-commercial calls. Id. at 4591. The legislative history accompanying the TCPA, citing complaint statistics, found that commercial telemarketing intrudes upon personal privacy more than noncommercial telemarketing. Also, the FTC’s case was aided by its collection of evidence that commercial telemarketers ignored consumers’ requests to be put on the company-specific lists, or even hampered consumers’ efforts to be placed on such lists by hanging up on them. (Consolidated Opening Brief of Appellant, p. 37, citing 68 Fed. Reg. 4628-29; 18 FCC Rcd. 14030, Sec. 19)

The FTC’s case was also aided by the fact that, while it did not require charitable telemarketers to comply with the national DNCR, it still makes them comply with company-specific do-not-call lists. As the FTC found that charitable telemarketers do not try to thwart peoples’ ability to place themselves on do-not-call lists, the FTC and the Tenth Circuit apparently believe that citizens can still protect themselves from charitable telemarketing through company-specific lists.

Neither Judge Nottingham or the Tenth Circuit directly addressed one additional important argument made by the telemarketing industry–that the DNCR is not narrowly enough tailored because it was implemented without (1) consideration of its financial impact to the telemarketing industry, (2) considering less restrictive alternatives like educating consumers about the preexisting company-specific do-not-call lists, and (3) consider technological market-based solution, which incidentally are costly to citizens (MMS brief p. 20). These arguments are an attempt by the telemarketing industry to insert economic ramifications on corporations that result from governmental regulation into the analysis of whether the regulation on speech is sufficiently narrow.

Tenth Circuit Briefs and Legal Documents
Principal briefs

Our simplified introduction to the Do Not Call List dispute