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Rising caseload, fewer Labor Department judges triggers painful mix for suffering laborers

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DURHAM, N.C. — It’s been a trying year for James Sawyer, who had two ruined lungs replaced in the space of seven months. Mounting medical expenses only add to his stress.

Sawyer, a 53-year-old wisp of a man, underwent the transplants at Duke University Medical Center here because he had developed hard-metal disease, a rare lung ailment that came within six months of killing him. The disease, caused by the inhalation of microscopic particles of cobalt, is virtually always work-related.

In Sawyer’s case, the source of exposure is no mystery: He worked for more than 30 years at the nation’s largest shipyard, in Newport News, Va., building aircraft carriers and submarines and sucking in dust and fumes generated by grinding, cutting and welding. In 2011, when his labored breathing rendered him unable to work, he entered a federal benefits program designed to help people like him.

Created by the Longshore and Harbor Workers' Compensation Act and administered by the U.S. Department of Labor, the program for decades was regarded as one of the best of its kind, superior to state programs that are often hostile to sick or injured workers.

No more. Now, many claimants find themselves at a disadvantage in a system with a dwindling roster of Labor Department administrative law judges and a surge in workers’ compensation, immigration, whistleblower and other cases. It can take a year or more to get a hearing in a disputed Longshore Act case, and several more years to get a decision.

Nationwide, the number of Labor Department judges has fallen to 35, plus one part-timer, from 41 earlier this year and 53 a decade ago. Yet new cases filed with the department’s Office of Administrative Law Judges have risen by 68 percent in the past five years, with a 134-percent increase in pending cases.

As a result, the most desperate claimants — the very ill, those in financial straits — may feel compelled to accept meager settlements, lawyers say. In some instances, they say, employers or their insurers are moving to re-litigate cases with the aim of saving money.

“The claimant has to take what he or she can get,” said Joshua Gillelan, a retired Labor Department lawyer who runs the Longshore Claimants’ National Law Center in Washington. “They can’t hold out for another year or two or three; they’re going to starve.”

Sawyer settled his Longshore case with Newport News Shipbuilding last year for a lump-sum payment and, most important to him, future medical benefits. But the shipyard, which is self-insured, has refused to pay for his lung transplants and associated costs, he and his lawyer say.

While his personal health insurance covered most of the $1.5 million-plus bill for the transplants, Sawyer says, he and his wife, Linda, have been stuck with co-payments and other out-of-pocket costs totaling almost $50,000. Collection agencies have begun calling.

“They’re ignoring us, I guess, and hoping it’ll go away,” Sawyer said of the shipyard.

A spokeswoman for Newport News Shipbuilding said the company agreed to pay for “reasonable and necessary” treatment “directly associated with the original claim.” A lawyer for the shipyard has suggested that Sawyer’s lung ailment was related to something other than his three decades of work with materials known to cause hard-metal disease.

Gary DiMuzio, a lawyer in Newport News who represents Sawyer, replied: “They have put forward no evidence to suggest that they should not pay for this man’s medical treatment.”

Cases backlogged, claimants burdened

Enacted in 1927, the Longshore and Harbor Workers’ Compensation Act initially covered only injuries sustained or illnesses contracted on vessels. Congress amended the act in 1972, extending coverage to workers hurt or sickened in the course of onshore “maritime employment” — such as longshore and shipyard workers. Further amendments in 1984 excluded some classes of workers from coverage but made it easier for victims of occupational disease to win benefits.

Covered workers who prove their cases are entitled to a range of benefits, including compensation for medical expenses and “permanent total” or “permanent partial” disability. Expansions of the Longshore program created by the Defense Base Act of 1941 and the Outer Continental Shelf Lands Act of 1953 pulled in military contractors working abroad and offshore oil workers.

The concept underlying the workers’ compensation program is compromise: A sick or injured worker forfeits the right to sue his or her employer. In return, the worker is fairly compensated for a work-related injury or illness, neither getting rich nor going broke. The employer avoids a potentially large jury verdict.

At one time, lawyers who specialize in Longshore cases say, the federal program usually came close to striking this balance. “In 1984, this was probably the best-run workers’ comp system in the world,” said Eric Dupree, a lawyer in Coronado, Calif., who has represented claimants since 1979.

In recent years, however, the Labor Department has thinned the ranks of administrative law judges, the linchpins of the system, even as the caseload soars. The judges hear cases under more than 80 labor statutes; before them appear coal miners with black lung, whistleblowers with grievances against banks and airlines and claimants of many other stripes.

“We’re now seeing cases stretch on for two years or more,” said Stephen Embry, a lawyer in Groton, Conn., who represents Longshore claimants, most of them former shipyard workers with lung disease. “There’s no money coming in in the interim. People who made good money in terms of blue-collar workers are being tremendously burdened.”

The backlog affects a broad spectrum of claimants. Terry Dean Ratliff left his home in Arizona in 2009 to drive a truck in Iraq for Service Employees International Inc. (SEII). He did it for the money — close to $100,000 a year — said his friend and driving partner, Youssef Bouhout.

Ratliff worked long hours and often drove by pits and incinerators in which chemicals were being burned. “It took a toll on his lungs,” Bouhout said.

One day in April 2010, Ratliff fainted. “He couldn’t breathe,” Bouhout said. “They took him to the medic. They were surprised he survived.”

Ratliff was sent home and filed a Longshore claim in May 2010. SEII’s insurer, Chartis, a subsidiary of AIG, contested it, denying that the lung and heart problems Ratliff had developed were work-related.

Bouhout, who’d been driving a truck in Afghanistan, came back to Arizona in the summer of 2011. He and Ratliff worked together for about four months. Bouhout noticed a dramatic change in his once-fit friend, who was weak and deeply fatigued.

Ratliff ultimately had to quit. Bills piled up, and he was hit with a foreclosure notice. “He was really stressed,” Bouhout said. “Sometimes he said he couldn’t find money to buy food.”

Bouhout returned to Afghanistan in December 2011. Two months later, Ratliff was found dead in his home in Tonopah, Ariz. He’d succumbed to a heart attack at 57 before he could get a hearing. His claim was nearly two years old.

If it had been paid promptly, Ratliff could have gotten the medical care he needed, Bouhout believes. “He might be alive today.”

Lawyer Dupree, representing Ratliff’s estate, and Chartis — now known simply as AIG — settled the case for $75,000, which went to Bouhout, Ratliff’s named beneficiary.

In a report prepared for Chartis shortly before Ratliff’s death, a pulmonologist confirmed that Ratliff had chronic obstructive pulmonary disease (COPD) and deemed it “likely” that his exposure to emissions from the burn pits and incinerators had caused a decline in lung function.

Long-approved benefits get new scrutiny

For another Dupree client — Robert Durbin, a fiberglass technician for a San Diego yacht-building firm in the 1980s — the challenge isn’t winning a Longshore claim. It’s holding on to benefits he was awarded 21 years ago.

Durbin inhaled an array of chemicals in resins and epoxies while working for Knight & Carver Marine and developed a condition that made him constantly sleepy. When his case went before an administrative law judge in 1992, he prevailed. The judge found a “causal relationship” between Durbin’s chemical exposures and his hypersomnia, for which he received permanent total disability. The decision was affirmed two years later by the Labor Department’s Benefits Review Board.

Durbin never returned to work. He and his wife, Susan, moved from California to rural Kentucky. Under terms of the settlement, Robert receives semimonthly payments — now up to $1,180 — from his former employer’s insurer, AIG, which also must pay for doctor visits and medication.

In August, a lawyer for AIG filed a petition for modification with the Labor Department, saying a “mistake in fact” had been made by the judge 21 years earlier and seeking to reopen the case. A toxicologist hired by the insurer reviewed Durbin’s medical records and concluded his drowsiness was due to “obstructive sleep apnea, unrelated to employment,” the lawyer wrote. “The prior orders should be modified to deny claimant all compensation and medical services.”

The Durbins were shaken by the filing. Robert, 58, takes two drugs — Desoxyn, a powerful stimulant, and Hydergine, a memory aid — that collectively cost $3,400 a month. AIG has stopped paying for his prescriptions and medical treatment, he said.

“They’re trying to break us,” said Susan, who is on Social Security disability for a back injury. “I can afford to pay for Bob’s prescriptions for the next six or seven months and then I’m broke.”

Robert had a cancerous kidney removed two years ago, suffers from congestive heart failure and was recently diagnosed with prostate cancer. He believes the insurance giant is trying to pressure him into accepting a skimpier settlement.

“I’m costing them too much, basically,” he said. He finds this ironic, given that AIG received a $182 billion government bailout at the height of the financial crisis five years ago. (AIG eventually repaid all the funds, plus interest).

“They got the help they needed and gave all their executives these million-dollar bonuses, when they’re shorting me,” Robert said. “If they’re doing it to me, they must be doing it to other people, too.”

Dupree noted that AIG waited until Knight & Carver filed for bankruptcy, in 2012, to try to disassemble Durbin’s deal. “Basically, what they’re asking us to do is reprove the case,” Dupree said, no easy task decades after Durbin’s employment and chemical exposure ended.

An AIG spokesman would not comment on either the Ratliff or the Durbin cases. In a statement to the Center for Public Integrity, he wrote, "AIG is committed to handling every claim professionally, ethically and fairly, although we do not disclose information about individual claimants or cases. We provide the highest level of service to our customers, which includes the adjudication and payment of claims as promptly as possible within the rules and requirements of the Longshore Act."

By some measures the Longshore program has improved, said its director, Tony Rios. Employers have been quicker to file first reports of injury or illness with the Labor Department’s Office of Workers’ Compensation Programs, he said. They and their insurers have been making initial payments to claimants more promptly. Data supplied by the department support these statements.

Rios, who has run the program since March, said he meets regularly with lawyers for both claimants and employers. “Anecdotally speaking, what I’m hearing is there have been improvements” within his office, where claims are filed and undergo initial review, he said. Rios has no control, however, over the adjudication of cases, the point at which the logjam is occurring.

In a statement, the Labor Department said, “Proper adjudication of these claims is a cornerstone of the American legal system, and many workers rely on that process to resolve disputes. The Department will continue to work within the Administration and with Congress for the necessary resources as well as other potential reforms for maintaining sufficient due process for our programs.”

Dupree contends insurers in Longshore cases have become more combative over the past 10 years, a period that “largely parallels the underfunding” of the department’s Office of Administrative Law Judges.

When insurers don’t pay, claimants’ medical costs are transferred to government programs such as Medicare and Social Security, said Gillelan, the former Labor Department lawyer. “It’s cost-shifting from the outfits which were supposed to bear a significant part of the human-misery cost,” he said. “They don’t have to bear that cost anymore. It’s been shifted to the federal taxpayer.”

Deadly toll of lung disease

Work-related lung disease takes a heavy toll in America. The National Institute for Occupational Safety and Health — NIOSH, part of the Centers for Disease Control and Prevention — estimates that nearly 39,000 people die each year of COPD, lung cancer, pneumoconiosis (dust-induced lung disease), mesothelioma (an asbestos-linked malignancy usually found in the covering of the lung) and asthma related to on-the-job exposures. By comparison, 31,672 people were killed by guns in 2010, according to the CDC.

Millions more workers annually are thought to contract these diseases, though a doctor may not always make the connection between, say, a case of COPD and a patient’s dusty or fume-laden workplace.

In James Sawyer’s case, the tie was fairly easy to see. Hard-metal disease, a type of pneumoconiosis, is quite rare. Characterized by giant cells with multiple nuclei in the air sacs of the lung, it is found in workers exposed to cobalt through the production and processing of diamond-hard, tungsten carbide metal, or through the inhalation of dust or fumes given off by grinding or cutting.

“Pretty much anybody who gets hard-metal disease wouldn’t have gotten it unless they had a workplace exposure,” said Dr. David Weissman, director of NIOSH’s Division of Respiratory Disease Studies.

Sawyer started in the machine shop at the 550-acre Newport News shipyard — now known as Newport News Shipbuilding, a division of Huntington Ingalls Industries — in 1980. Twelve years later he became a pipefitter, a job he held until he left the shipyard in 2011.

Sawyer used a hand grinder with a 4-inch cutting wheel to cut pipe on aircraft carriers and tankers being built for the U.S. Navy. The cutting gave off dust and sparks. “You could see little flakes of metal floating in the air,” he said. The dust, a doctor at Duke wrote, included tungsten, nickel, copper, brass, carbide steel and galvanized steel.

Welders and painters working nearby contributed to the noxious fog, Sawyer said, and on many occasions he wasn’t provided a respirator. “Sometimes I would walk out of the work area, because you had to let the smoke go down,” he said.

Sawyer began having breathing difficulties in the early 1990s and was diagnosed with asthma late in the decade. By the early 2000s, he said, the attacks had become more frequent and severe. In 2008 he was transferred to his first submarine, the USS California. Ventilation in the tight quarters of the sub was poor, and his condition worsened. “I just got to the point where I couldn’t make it through a full day of work,” Sawyer said.

He was bent double by coughing spells. When he blew his nose, the discharge would come out black.

Sawyer was referred to a pulmonary specialist in mid-2010 but for six months resisted having a lung biopsy that could pinpoint the nature of his illness. “I didn’t want to miss work,” he said. His condition continued to deteriorate, however, and his last day at the shipyard was March 3, 2011.

He had the biopsy done about two weeks later. The pathologist found “marked granulomatous inflammation” in the tissue samples, which, he said, could be consistent with cigarette smoking (Sawyer didn’t smoke), pneumoconiosis or some sort of infection.

In April 2011, Sawyer found his way to a Newport News law firm, Patten, Wornom, Hatten & Diamonstein, which handles toxic torts. He weighed about 100 pounds. The receptionist rang lawyer Gary DiMuzio, who handled mostly asbestos-exposure cases and had seen his share of skeletal mesothelioma victims. Even by this standard, Sawyer stood out.

“He was wraithlike,” DiMuzio said. “He was thin as a rail and could barely breathe while speaking. I thought he might die within days.”

DiMuzio filed a Longshore claim with the Labor Department on Sawyer’s behalf in May 2011. Newport News Shipbuilding contested.

That June, a physician for the shipyard, Dr. Andrew Churg, reviewed the slides and records from Sawyer’s biopsy. The evidence “fits best for what is referred to as ‘hard metal disease,’ ” Churg concluded.

The strength of Sawyer’s claim was put to its first test at an informal Labor Department conference that September. It passed: The claims examiner found that Sawyer had established a prima facie case that his disease was work-related.

Sawyer gave a sworn deposition in his Longshore case in December 2011. Lawyer Christopher Hedrick, representing the shipyard, probed for evidence that Sawyer’s troubles originated elsewhere.

Did his wife smoke? “Yes, but she smokes outside,” Sawyer testified. Had he ever welded outside the plant gates? “Very, very little,” Sawyer said. The last time had been three years earlier, when he’d helped his son-in-law build a canoe rack for his truck.

In February 2012, Dr. Carrie Redlich, a professor at the Yale School of Medicine, reinforced Churg’s conclusion, writing in a report to DiMuzio, “There is no other more likely diagnosis than hard metal lung disease.” The ailment, she warned, “can progress away from exposure, and can lead to end stage pulmonary disease.” In short, Sawyer could die.

Three months later, Sawyer settled with the shipyard. He received a lump-sum payment of $170,219. The settlement papers included the following language: “Future medicals are to remain open.”

Sawyer, who was bracing for the first of two transplant operations at Duke, assumed that was the end of it. It wasn’t.

The shipyard refused to pay for his new right lung in January 2013. It refused to pay for his new left lung in August.

Before the transplants, “Jimmy looked like he was at death’s door,” Linda Sawyer said. “Personally, I think they agreed to all of this thinking he wasn’t going to live.”

Shipyard lawyer Hedrick suggested in a March 2013 letter to a Labor Department claims examiner that there might be a condition other than hard-metal disease “necessitating … the lung transplant.” In a letter to DiMuzio, the doctor who wrote the report accused Hedrick of cherry-picking from it and affirmed that Sawyer’s lung transplant “was due to his Hard Metal Pneumoconiosis.”

After an informal conference between the parties in April, claims examiner P.R. Hodgson sided with Sawyer, finding that “the claimant is entitled to authorization and payment of related medical treatment.” This was only a recommendation, however. The shipyard still wouldn’t pay.

Sawyer’s personal health carrier, Blue Cross/Blue Shield, absorbed the bulk of the transplant costs. But he and his wife have been stuck with prescription and doctor-visit co-pays that cost thousands each month. To date, they say, their out-of-pocket expenses, including rent on a small apartment near the medical center in Durham — a necessity because James is still in recovery — exceed $48,000.

“We almost lost our house” in Newport News, Linda said. “If it wasn’t for his uncle, it would have been taken away.”

In a written statement, a spokeswoman for Newport News Shipbuilding, Christine Miller, said the shipyard “agreed to pay for Mr. Sawyer’s future medical treatment provided such treatment was reasonable and necessary and directly associated with the original claim. The shipyard did not, however, agree to pay lifetime medical benefits to Mr. Sawyer for any and all claims he might present.”

Miller declined to elaborate, saying the dispute was working its way through the Labor Department.

“While we cannot speak to any further specifics of this case, we are very concerned about the health and safety of our employees and take many precautions to protect them and to comply with all applicable health and safety regulations,” she wrote. “Those precautions include a respiratory protection program that minimizes employee exposure to potential health hazards from airborne contaminants.”

Rios, head of the Longshore program, said he could not comment on any individual case. In general, however, a district director with the Office of Workers’ Compensation Programs can issue a default order against an employer, enforceable in court, only if the employer has failed to pay benefits that are “very clearly articulated” in a compensation order.

Otherwise, the only remedy for the claimant is to request another hearing before an administrative law judge and get back into the ever-lengthening queue.

DiMuzio, who is seeking such a hearing, said all the doctors who have examined Sawyer agree he is suffering from occupationally induced hard metal disease and that the transplants were necessary to save Jim's life.

“We are not asking the shipyard to pay for a broken leg or any other sort of unrelated health condition,” DiMuzio said. “We just want them to do what they agreed to do.”

Former shipyard worker James Sawyer had both lungs transplanted this year after developing hard-metal disease, an ailment that is virtually always work-related. Sawyer says the shipyard has refused to pay his medical expenses in violation of a Labor Department settlement. Jim Morrishttp://www.publicintegrity.org/authors/jim-morrishttp://www.publicintegrity.org/2013/12/19/14035/rising-caseload-fewer-labor-department-judges-triggers-painful-mix-suffering

Dwindling number of judges burdens workers

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Russell Pulver insists he wasn’t ready to retire.

Pulver, until recently a San Francisco-based administrative law judge for the U.S. Department of Labor, says he relished his role as an arbiter of wage disputes, benefits claims and other matters that go to the core of working people’s lives.

“I had no intention of retiring for at least three or four more years,” Pulver, 63, said in a telephone interview. Then, last March, the Labor Department’s already-weakened Office of Administrative Law Judges (OALJ) took a 5-percent hit from congressionally mandated budget cuts known as sequestration. Judges were told to expect furloughs.

For Pulver, that was it. He decided to leave when the fiscal year ended Sept. 30.

“Each year I seemed to hear more cases and be given less help,” said Pulver, who now runs a mediation service near San Diego. “I said, ‘I’m getting no love. I’m not staying around for this.’ ”

His departure pared the number of judges in the OALJ’s San Francisco office to four. In 1999 there were nine, not to mention two in a satellite office in Long Beach, Calif., which then closed in 2000.

Nationwide, the number of judges continues to plummet while filings escalate. New and pending immigration cases, involving employers seeking to hire foreign workers on a permanent basis, are more than seven and 23 times, respectively, what they were in 2009.

Claims brought under the Longshore and Harbor Workers’ Compensation Act and the Black Lung Benefits Act are up more modestly. But claims filed under the Defense Base Act, a part of the Longshore program applying to military contract workers, are mounting steadily due to the wars in Iraq and Afghanistan.

In a memorandum to Deputy Secretary of Labor Seth Harris last April, Chief Judge Stephen Purcell wrote that staff cuts — not only judges but also law clerks who conduct legal research and summarize evidence — had had a “devastating” effect on the OALJ’s ability to hear cases and deliver timely decisions.

The office “has been, and remains, inadequately staffed to handle our mission-critical responsibilities,” Purcell wrote. “We are fast reaching a point where the productivity of this Office will sustain a significant downturn from which we will likely not recover for years to come.”

Harris declined interview requests from the Center for Public Integrity. In a written statement, the Labor Department said it is “very concerned with the budget situation for all its programs including the ALJs. We continue to work within the Administration to provide sufficient resources for this important activity; however, the situation in Congress has made it difficult to obtain any new resources.”

The department said it has asked for more than $1 million in additional funding for the judges in the president’s 2014 budget. But there’s no guarantee the money will come.

Paul Mapes, a retired administrative law judge in Walnut Creek, Calif., accuses the department of “bad management. … It’s kind of a bipartisan neglect. The adjudication function is one of those routine things that seldom get good publicity. It’s just ignored.”

The results: long, possibly life-threatening, waits for sick or injured claimants and subpar settlements. “The longer the average time to get a decision, the more pressure there is on the claimant to settle,” Mapes said (settlements aren’t allowed in black lung cases).

Claimants with inexperienced counsel are taking “a dime on the dollar,” said Steven Birnbaum, a lawyer in San Rafael, Calif., who specializes in Longshore cases. “The alternative is to wait and wither on the vine for a hearing and a decision.”

Claimants aren’t the only ones put off by the backlog.

Robert Babcock, a lawyer near Portland, Ore., who represents employers and insurers, said, “I haven’t heard anyone from my side of the table express delight with the delays that have been developing over the last few years.”

The maximum benefit for permanent total or temporary total disability in a Longshore case is $1,347 per week, Babcock said. An employer that contests such a claim and loses before an administrative law judge may wait three years for an appeal to run its course, especially on the West Coast. In the meantime, it has to pay the ordered benefit. The three-year total: $210,000.

“Even if the employer succeeds on appeal, the money’s gone,” Babcock said. “You don’t get it back.”

Mapes, who stepped down in 2007 after hearing cases out of San Francisco for 16 years, has become an advocate for his former colleagues, representing them in an appeal before the Merit Systems Protection Board challenging the legality of 5½-day furloughs imposed on the judges this year as a result of sequestration.

The Labor Department, Mapes argues, could have found better targets for budget-cutting than the beleaguered OALJ. One candidate, he said, is the International Labor Affairs Bureau, whose main purpose is to award grants and contracts designed to improve labor relations abroad. While some of the awards go toward regulation of child labor — “certainly a good cause” — others pay for research papers on “vague topics that could stand to wait” until the federal budget situation improves, Mapes said.

In his April memo to deputy secretary Harris, chief judge Purcell noted that the Labor Department planned to boost spending on enforcement of whistleblower and wage-and-hour statutes. “While increased enforcement … is certainly a laudable goal, any gains to workers that result from such enforcement are greatly diminished if their cases languish at OALJ,” Purcell wrote.

At one time, the department’s administrative law judges heard mostly Longshore and black lung cases. “Over the last 20 years that’s changed tremendously because Congress has kept adding whistleblower statutes,” Mapes said. Today there are 18 of them.

Such cases command large chunks of judges’ time. The decisions “tend to be quite long and take a long time to write,” Mapes said. “I’ve spent over a month writing a single decision in a whistleblower case.”

Ailing workers suffer most from OALJ delays.

“My father was a coal miner, and I grew up in a coal-mining community,” said John Vittone, a Labor Department judge in Washington, D.C., from 1987 to 2010. “The black lung program made a huge difference in lifestyle for those disabled miners. It’s the same thing with Longshore. Guys get injured building and repairing ships, and [the federal workers’ compensation system] is all they have other than, probably, Social Security.”

Birnbaum, the lawyer, said that when the Longshore program is “administered correctly there is no better workers’ comp program in the country.”

Now, he said, “It’s an abomination. The sad part about it is the Department of Labor probably could solve this problem pretty easily by addressing its programs with a little bit different priority.”

 

 

Negative ads make Peterson 'more inclined' to run

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A secretive, conservative nonprofit tied to billionaire brothers Charles and David Koch has commenced a media attack against Rep. Collin Peterson, the 12-term Minnesota Democrat already been marked by national Republicans for defeat in 2014.

But Peterson, perhaps one of the nation’s more vulnerable Democratic congressmen, told the Center for Public Integrity that the ads’ stinging indictment of his dedication to constituents is “ridiculous.”

“I don’t know who these guys are or what they’re up to,” he said. “If I’d only been in office a couple terms, it might have a bigger impact, but people know me.”

And as for the new ads’ effect on whether he will run for re-election, something on which he plans to decide next year?

“What they are doing is making me more inclined to not hang up my hat,” Peterson said.

“Right now we’re trying to get the farm bill done. That’s what I’m focused on,” he continued. “Once that’s over with, then I’ll figure out what I’m going to do.”

The ranking Democratic member of the House Agriculture Committee, Peterson represents a Republican-leaning portion of western Minnesota.

In 2012, he was one of only nine House Democrats who prevailed on Election Day in districts carried by GOP presidential candidate Mitt Romney. Peterson defeated his Republican opponent by about 25 percentage points.

The new ads from the Iowa-based American Future Fund accuse Peterson of losing his “Minnesota nice” and being unresponsive — although the spot itself cites no specific issues on which Peterson has failed to provide answers. The group has so far spent about $81,000 on the attack.

So far this year, Peterson’s campaign has posted lower fundraising totals compared to previous cycles, leading some to wonder if he may be on his way out the door.

He had raised less than $364,000 as of Sept. 30, according to his most recent filing with the Federal Election Commission. And at that time, he had just $227,000 cash on hand.

During his 2012 re-election fight, his campaign spent nearly $1.5 million.

Earlier this month, Republican state Sen. Torrey Westrom launched a campaign to challenge Peterson, and businessman Scott Van Binsbergen is also considering getting in the race.

For its part, the American Future Fund ranks as one of the most active nonprofits in the electoral arena, and it has long earned the ire of liberals and campaign finance reform groups.

Earlier this year, the American Future Fund was entangled in a case that officials at California’s Fair Political Practices Commission said highlighted the “the nationwide scourge of dark money nonprofit networks hiding the identities of their contributors.”

According to the commission, a Virginia-based nonprofit called Americans for Jobs Security was used as a conduit for more than $15 million that was steered through other nonprofits to keep donors’ identities secret and then used to advocate against two ballot measures in the state.

That included more than $4 million that passed from Americans for Job Security through the American Future Fund to a now-defunct nonprofit called the California Future Fund for Free Markets, which supported an anti-union ballot initiative.

Organized under Sec. 501(c)(4) of the U.S. tax code, the American Future Fund is not required to publicly identify its donors. Public records and media reports have, however, illuminated some of its ties.

According to the New York Times, the American Future Fund was founded in 2007 with “seed money” from Iowa businessman Bruce Rastetter, who has been active in the ethanol and meat production industries.

“I don’t get it,” Peterson said. “Nobody’s been a better friend of agriculture and ethanol than I have.”

Last year, when the American Future Fund raised a staggering $68 million, two Koch-connected nonprofits accounted for more than 92 percent of its funding, according to a Center for Responsive Politics analysis of filings with the Internal Revenue Service.

The American Future Fund has also received cash infusions from the American Justice Partnership— a Michigan-based group that is often at odds with trial lawyers — as well as several Republican leadership PACs.

Officials with the American Future Fund did not respond to requests for comment. 

Peterson himself noted that the political action committee of Koch Industries “regularly” contributes to his campaign.

In fact, the Koch Industries PAC has given Peterson $43,500 since the 2006 election cycle, according to the Center for Responsive Politics, including $2,000 in August.

 

 

Rep. Collin Peterson, D-Minn.Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/12/19/14047/negative-ads-make-peterson-more-inclined-run

Lauded public health researcher also worked for industry, revealing entanglements of science

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BERKELEY, Calif. — At a memorial service held last month in her favorite classroom, Patricia Buffler was hailed as a champion of children.

While dean of the School of Public Health at the University of California, Berkeley, Buffler started the nation’s largest program researching the causes of childhood leukemia. She expanded her study of this rare disease after stepping down as dean in 1998, continuing the work until she died unexpectedly in late September at the age of 75.

Buffler’s research, backed by more than $35 million in federal grants, could save lives. Her team concluded that sending your child to daycare might reduce the risk of getting leukemia, perhaps by bolstering the immune system. It found strong evidence suggesting that preschoolers should stay away from wet paint. One of her graduate students at the memorial was struck by something Buffler once said: “Children are fragile, so it is our role to protect them.”

Yet now some of her peers are torn to learn that, in the past three years, Buffler was paid more than $360,000 to work as an expert witness on behalf of companies that used to sell lead-based paint. Ten California communities, including the county where Buffler lived, this week won a $1.1 billion judgment against the companies. The money will be used to remove lead paint from older homes. Even minute amounts of lead in a child's blood can cause permanent brain damage.

According to a court filing, Buffler concluded — to the astonishment of other experts — that lead-based paint in older homes poses little risk to children. The judge rejected that argument in his written decision.

“She may be an expert in some areas but lead poisoning in children is definitely not one of them,” said Dr. Bruce Lanphear, a professor at Simon Fraser University in Canada and lead author of widely cited studies on the effects of lead poisoning on children.

Lanphear, who testified against the paint companies, considered Buffler’s views so indefensible that, days before she died, he talked to fellow directors of the International Society for Children’s Health and the Environment about removing her from the group, of which she was a founding member.

Buffler was one of the nation’s most revered and influential public health scientists. But researchers familiar with her chemical industry consulting question whether she bent to the wishes of her corporate sponsors — a criticism she denied when questioned in lawsuits.

Her dual career arc — as public health researcher and consultant for private industry — opens a window into the deeply entrenched influence of the chemical industry on academics.

College campuses have embraced collaborating with industry for research as a way to produce innovative products and cure disease. But in public health, influential academics are often sought instead to defend potentially toxic chemicals.

While the Food and Drug Administration treats new drugs as unsafe until clinical trials prove otherwise, the Environmental Protection Agency does just the opposite with chemicals: By law, it presumes a chemical is safe unless scientific evidence shows otherwise. The burden of determining whether a chemical is harmful or deadly falls largely on academic scientists such as Buffler.

Working for industry can be lucrative for researchers, but can also pose conflicts. Even as Buffler led research into whether pesticides and herbicides may cause leukemia, she served for 17 years on the board of directors of a $3 billion pesticide and herbicide company, FMC Corp.

In 2010, FMC paid Buffler nearly $200,000 in cash and stock. Securities and Exchange Commission records show that when she sold the stock the company gave her, mostly in 2010, Buffler made more than $2 million.

A review of public records shows that in publishing her results in scientific journals or in applying for government funding from the National Institutes of Health, Buffler did not disclose that she owned stock in FMC or served as one of its directors.

UC Berkeley officials knew that Buffler served on FMC's board, said Graham Fleming, the school's vice chancellor for research. But he said that until federal rules changed recently, it was up to researchers to decide whether their financial ties posed a conflict. The university limited its own review to potential conflicts the researchers disclosed before forwarding the grant application to the NIH.

Fleming wasn't willing to say whether Buffler serving on the board of FMC posed a conflict.

“We have no way to know,” he said. “She herself must have determined that there was none. And given her record of integrity throughout her career, I would say that the default would be to accept that as the appropriate judgment.”

Since 1995, the NIH has approved more than $28 million for Buffler's research, money that went directly to UC Berkeley. The NIH wouldn't comment on whether Buffler violated its rules.

Yet Hugh Tilson, the executive editor of NIH's Environmental Health Perspectives, which published some of Buffler's pesticide research, said the journal is now reviewing whether she violated its disclosure rules.

Sheldon Krimsky, a Tufts University professor and an expert in conflicts of interest in scientific research, said after reviewing Buffler's case, “This is the worst case of conflict of interest I’ve seen in years.”

Sen. Charles Grassley, R-Iowa, pushed for recent changes at NIH, requiring more financial disclosure and lowering the standard for a conflict of interest. But after recently reviewing documents on Buffler, he said more changes are needed.

“It appears NIH doesn’t have a means of auditing or enforcing the rules,” Grassley said. “Research institutions that look the other way on conflicts of interest appear free to do so knowing NIH will take them at their word.”

The recent changes in the NIH rules stemmed from concerns about the integrity of taxpayer-funded science. Studies show, for example, that researchers making money from drug companies publish scientific articles more favorable to those companies than do independent researchers. In 2007, more than half of life sciences faculty at the top 50 research universities reported financial connections to industry.

Yet scant data exist on the influence of industry money on public health.

“There are lots of people who are working as academics who are making lots of money from industry,” said Jennifer Sass, a senior scientist at the Natural Resources Defense Council, an environmental group. “A lot of the research that the industry funds is made to muddy the waters. It’s designed specifically to create uncertainties.”

Stanford University historian Robert Proctor draws parallels between chemical manufacturers today and the tobacco industry in years past, which he says quietly paid thousands of academics to influence the science.

“There’s a long history of academic corruption, of people becoming very heavily involved with industry: testifying, writing expert reports and becoming directors and not disclosing this. Their colleagues don’t know about it, and they are able to zoom under the radar,” Proctor said. “It's not just a conflict of interest. It's worse than that.”

An activist at Berkeley

Buffler earned her master's degree in public health at UC Berkeley and became a teaching assistant there during the 1960s, an era when the school became an icon of liberal activism.

Some of that activist spirit may have rubbed off on her. Her son, Martyn Buffler, recalled at her memorial service that when he was a child, his mother fought successfully to stop construction of an oil terminal in their hometown of Galveston, Texas, because it endangered shrimp in the Gulf of Mexico.

In 2004, Buffler published an article with colleague Paul Brennan reporting that nonsmokers can get cancer from secondhand smoke. One night, Brennan recalled, Buffler dragged him to a Berkeley theater to pass out leaflets because it was accepting money from the tobacco industry. Buffler wanted people to know this.

Buffler is remembered by many for criticizing the FDA for delays in requiring warning labels on aspirin bottles. Giving aspirin to children is linked to Reye's syndrome, a disease that can be deadly.

In 1992, Buffler coauthored an article calculating that 1,470 children died because, at industry's urging, the FDA delayed the warning-label rule. Drug companies argued that the science linking aspirin to Reye's syndrome was weak.

Buffler rejected that argument, telling the New York Times, “The Reagan administration and the Bush administration have been marked by a commitment to deregulation. When it occurs in an area where it has a health impact, the consequences are profound — profoundly adverse.”

Devra Lee Davis, who coauthored the article while working at the National Academy of Sciences, called Buffler's stance “courageous.”

Davis and Buffler were friends as well as colleagues. It wasn't until after Buffler died of a stroke that Davis realized how much work her friend had done for industry. She didn't know that by the time they worked together in 1992, Buffler already had a long history of consulting for companies, including Dow Chemical, DuPont, Union Carbide, Shell Oil, Goodyear and Atlantic Richfield.

Leukemia focus, and industry work, in Woburn, Mass.

Buffler said her interest in leukemia stemmed in part from her work in 1984 in Woburn, Mass., site of a toxic tort case made famous by the best-selling book and hit film, A Civil Action.

Twenty children in this Boston suburb of 37,000 were diagnosed with leukemia between 1964 and 1983 — twice the normal rate. Six of the children lived within a few blocks of one another, a cancer cluster highly unlikely to be a coincidence.

Tests showed that two of the wells supplying water for the town were heavily polluted with several chemicals, including trichloroethylene, commonly known as TCE. Eight families sued, alleging that industry contaminated the wells. In 1986, a jury cleared Beatrice Foods of wrongdoing. W.R. Grace later settled with the families for $8 million. A third company, UniFirst, had settled out of court for slightly over $1 million.

Years later, Buffler reminisced about her work in Woburn, saying that there was never proof that the chemicals caused the cancers. “The people of Woburn won eventually; yet, we could not answer their questions,” she said.

Her remarks intrigued Harvard statistician Marvin Zelen, who had conducted a study, with two colleagues, showing a statistical association between the polluted water and leukemia.

Buffler never participated in the Woburn study. Instead, she and three other academics were hired by the chemical industry to critique the findings of Harvard researchers Zelen, Barbara Wessen and Stephen Lagakos.

Buffler's work was sponsored by the American Industrial Health Council, whose board was composed of chemical company executives, including a senior executive of W.R. Grace. Her committee concluded that while the Harvard study was “sophisticated,” its results couldn't be trusted because the people who volunteered to help collect information for a telephone survey were biased.

About half of the 235 unpaid volunteers lived in Woburn, where there had been ample news coverage of the lawsuit. The volunteers called Woburn residents to collect medical information about fetal deaths, birth defects and childhood diseases. Ultimately, they got information from nearly 60 percent of the town's homes.

Figuring out how much polluted water each household drank became a complicated task for the researchers. Water from the polluted wells was blended with other well water and piped into houses throughout Woburn, but not in equal amounts. The Harvard researchers were able to calculate the amount each household consumed and compare it to the medical data.

The numbers were striking. They showed significantly higher rates of some types of birth defects as well as deaths of fetuses and newborns. There was also a statistical link between children with leukemia and the polluted water.

The industry panel led by Buffler, then a professor at the University of Texas Health Science Center at Houston, cast doubt on the medical data collected, given that Woburn residents might be tempted to blame their diseases on industrial pollution. The “potential for reporting biases is alarmingly high,” the review committee said.

Zelen didn't know about Buffler's report until a year later, with an interviewer from a PBS show shared it with him. Zelen said it was full of factual errors.

For example, the review speculated that the volunteers might know who they were calling. But Zelen said they were assigned random phone numbers and trained not to ask for names. The review also speculated that the volunteers could guess where people lived from the telephone number. Zelen said that was impossible.

The data collected on birth defects was verified with doctors’ records, Zelen said. What's more, the data showed that once the two wells were shut down, the higher rates of birth defects disappeared.

The Harvard researchers sent a letter to Buffler and other panelists, but said they never got a response. They did hear back from the journalist at PBS. He said that after Buffler received their letter, she changed her mind about being interviewed for the program.

Since then, similar studies in Toms River, N.J., and Camp Lejeune, N.C., have found links between water polluted with TCE and leukemia.

From Clinton Superfund panel to pesticide board member

A few years later, Buffler left Houston to become dean at the UC Berkeley School of Public Health, one of the most prominent jobs in her field. Within her first two years, she was elected president of two professional associations as well as a member of the National Academy of Sciences and the Institute of Medicine.

She was also selected to serve on a panel during the Clinton administration to recommend reforms to the Superfund law. The law was intended to require businesses to clean up old industrial waste sites, but big businesses complained it went after deep pockets unfairly, and environmentalists complained it was too ponderous.

It was on this panel, in December 1992, that Buffler met Robert Burt, the chairman and chief executive officer of FMC. Burt and Buffler represented opposing interests on the panel. Burt was also a director of the Chemical Manufacturers Association, the chemical industry’s chief lobby group. He asked Buffler to serve on his company’s board.

“Mr. Burt convinced me that the company really was committed to doing the very best — doing the right thing in terms of the environment and occupational health and safety and needed that kind of independent voice on their board of directors,” Buffler explained in a court deposition in 2007.

“I was very outspoken during the deliberations of the Superfund commission, and apparently that did not alarm him as a CEO of a specialty chemical company. … After quite a prolonged due diligence, I became very comfortable with the — what was being requested,” Buffler said.

In 1994, Buffler joined a board with several political heavyweights, including former Gov. James Thompson of Illinois, Clayton Yeutter, former chairman of the Republican National Committee, and Jean A. Francois-Poncet, former Minister of Foreign Affairs in France. All four were appointed to a committee to review FMC’s dealings with government as well as its environmental efforts. Buffler would eventually chair that committee.

Buffler’s objectivity is beyond question, FMC said in a statement to the Center for Public Integrity.

“Dr. Buffler was nominated to the FMC Board of Directors due to her expertise in health and environmental issues,” the company said. “She served as chairperson of our board’s Public Policy Committee and supported the eventual evolution of that committee to a new Sustainability Committee that focuses primarily on sustainability and health, safety and environmental matters.”

In 1996, Buffler was appointed to an EPA panel to advise the agency of scientific matters related to pesticides.

FMC at the time was facing scrutiny from the EPA and the Justice Department. In 1993, the EPA inspected FMC’s phosphorus plant in Pocatello, Idaho, and found the company was illegally dumping phosphorus residue into an open pond.

When exposed to air, phosphorus spontaneously ignites. The plant had a history of fires along the banks of its pond. Phosphine gas is also poisonous, which authorities reported may have caused the deaths of migratory birds attracted to the pond. In 1998, the Justice Department reached a settlement with FMC to cap the pond and fined FMC almost $11.9 million, which at the time was the largest penalty ever imposed under the Resource Conservation and Recovery Act. Since then, FMC has been named as potentially liable for 28 other Superfund sites.

A year after joining the board, Buffler launched her leukemia research program at Berkeley, a collaboration with five institutions focused on leukemia cases in the Bay Area. “These projects cover a wide range of Superfund related areas and chemicals,” the grant application begins. In 1999, she expanded to other parts of California and strengthened the focus on children’s exposure to household chemicals and pesticides.

In 2002, Buffler co-authored an article in Environmental Health Perspectives showing a link between household pesticides and leukemia. The article explicitly reported no link to agricultural pesticides or herbicides, the products sold by FMC. At the time, Buffler was on the editorial board of the journal.

The lead author of that study, Xiaomei Ma, now an associate professor at Yale University, said she doesn't believe Buffler's ties to FMC had an impact on the study's findings. Ma said she had high regard for Buffler's integrity and was offended anyone would question it.

A later study, published by Buffler and her team in 2009, showed a possible link between some pesticides used on farms and childhood leukemia, including a class of pesticides known as organophosphates. FMC's Web site shows that two of its 15 brands of pesticides fall into this class.

The article said, however, that children exposed to the highest levels of organophosphates did not show higher rates of leukemia.

A year earlier, Buffler co-authored a review funded by Dow AgroSciences that was favorable to organophosphates. Several studies, including some done by Buffler's colleagues at the UC Berkeley School of Public Health, had already linked exposure of organophosphates in fetuses to problems with mental development. But in her review, Buffler challenged those findings.

FMC said organophosphates account for “a very minor part of our crop protection portfolio.  … These two premix products, while important to help farmers combat crop destroying insects, account for less than 1 percent of our Agricultural Solutions sales in the United States.”

During her career, Buffler co-authored 15 articles in scientific journals paid for by companies or industry groups that asked her to evaluate chemical and other risks. In one article, her findings were unfavorable to her sponsor. In 1990, she and others found an unusually high number of colon cancers among workers at General Motors who made early vehicle prototypes. In three articles, the results were mixed. And in 11 articles, her findings were favorable to her sponsors, a Center for Public Integrity analysis found.

The favorable findings included studies on the herbicides paraquat and Agent Orange.

Buffler also served as an expert witness in toxic tort lawsuits. When asked in depositions, she could not recall ever testifying against industry.

Buffler was criticized in a 2004 law review article for views the article equated with giving chemicals the same presumption as criminal defendants: nontoxic unless proven toxic beyond a reasonable doubt. “The expert’s assertions represent a view of the scientific method which came under strenuous attack long ago, and a view of statistical testing that was rejected even earlier,” wrote Sander Greenland, a former professor at UCLA, and co-author of a textbook on epidemiology.

For her legal work, Buffler charged $600 an hour.

She and her husband split time between homes in Berkeley and a house they built in the mountains of Santa Fe, N.M. Property records show they also owned a house in Austin, Texas, where a relative lived, and four timeshares. She routinely used a limousine service to get around, according to her deposition testimony in the lead-paint lawsuit.

She was also one of UC Berkeley’s largest donors, giving the school $245,000.

Buffler volunteered to help industry groups challenging scientists who published studies unfavorable to the chemical industry or who testified against chemical companies. She served as an advisor to the industry-funded American Council on Science and Health. And she put her name on legal briefs generated by the Atlantic Legal Foundation.

Some of Buffler’s pro-industry testimony came in cases in which plaintiffs said toxins were sickening or killing them.

An asbestos case in Maryland

Struggling to catch her breath, Joan Dixon drove 35 miles to a Morgantown, W.Va., emergency room. There, in March 2008, she learned that her left lung was soaked in fluid. The doctor revealed that she had a rare form of lung cancer, one Dixon had never heard of: mesothelioma.

There is no cure. The doctor said there was only one known cause — exposure to asbestos.

Starting in the late 1960s, Dixon’s husband Bernard spent three or four nights a week in a friend’s garage fixing brakes for neighbors. The Dixons lived in Friendsville, Md., a speck of a town of 142 families a few miles from the borders of Pennsylvania and West Virginia. Dixon charged $10 or $20 for his brake jobs. Sometimes he accepted a six-pack of beer instead.

The job was dirty. Dixon would spray the exposed brake with an air gun, sending clouds of dust particles into the air and onto his clothes. The dust was full of asbestos. Sometimes Joan would help. Other times she was the one who threw her husband’s dirty clothes into the wash.

Joan was adamant about suing Ford Motor Co. for warning employees and dealers — but not others — about the dangers of asbestos in its brakes. She died in February 2009, before her case went to trial. Her husband said he was against taking action at first, thinking it futile and mostly for the benefit of attorneys. But he promised his wife he would carry out her wish.

At the end of a trial in April 2010, a Baltimore jury sided with the Dixons with a $15 million verdict. The court reduced it to $6 million.

Buffler became involved on appeal. She and 12 other scientists, including two Nobel laureates, signed a “friend of the court” brief. It was filed by the Atlantic Legal Foundation, a nonprofit whose board includes current and former executives of companies grappling with their own asbestos lawsuits.

The foundation said in one report that it has a “deep commitment to redressing the bias against business which manifests itself in favor of narrow consumer or environmental concerns.” When asked during the 2007 deposition if she agreed with that goal, Buffler said, “My understanding in the role that I play is — trying to find the right way to express it. Best way I can express it in terms of my understanding and the role that I play is advancing the role of science in litigation.”

Buffler said she would receive briefs from the Atlantic Legal Foundation, review them, edit them and, if she agreed, sign them. She did this in several asbestos cases as well as others, but said she didn’t get paid. FMC, on whose board she served, has over the years faced nearly 100,000 asbestos claims, the company reports in recent financial statements.

In the Dixon case, the "friend of the court" brief signed by Buffler argued that the testimony of the family’s scientific expert, Dr. Laura Welch, shouldn’t have been allowed because it was “unacceptable” science. Welch is the medical director of the Center to Protect Workers’ Rights in Silver Spring, Md.

There are no studies proving that people get mesothelioma from doing brake work, let alone that wives of brake mechanics are at risk, the brief said. It added that Welch “ignored the overwhelming evidence that chrysotile asbestos, the type used in automobile brakes and that Mr. Dixon and Mrs. Dixon were exposed to, has far less, and maybe nil, potential to cause mesothelioma than other types of asbestos.”

In June 2012, the Maryland Court of Special Appeals threw out the jury’s verdict. Citing the brief’s argument that Welch never quantified how much asbestos Dixon was exposed to, the court said Welch couldn’t know if it was enough to cause the cancer.

In an earlier lawsuit, Welch filed her own “friend of the court” brief responding to Buffler’s arguments, signed by 51 scientists. She quoted a U.S. Public Health Service report citing “general agreement among scientists and health agencies” that chrysotile asbestos can cause mesothelioma. In addition, “there is sufficient evidence in humans for the carcinogenicity of all forms of asbestos,” says the latest report of the World Health Organization’s International Agency for Research on Cancer.

In July, Maryland’s highest court reversed the appeals court ruling, saying it has been established in previous cases that chrysotile asbestos can cause cancer. The court also ruled that Welch had quantified Dixon’s exposure.

Bernard Dixon said he never understood why Buffler got involved in the case.

Expert witness in lead-paint lawsuit

Several of Buffler’s friends and acquaintances say they were most surprised by her work as an expert witness in the lead-paint lawsuit.

Ten miles south of the Berkeley campus, Tamara Moore lives with her three children on the second floor of a cramped three-room duplex more than a century old. A single mother, she can barely afford the $1,700-a-month rent.

When they moved in, the dull teal paint outside on the windows and stairs was peeling badly, especially in the backyard. It’s a common problem in Alameda County, where 80 percent of homes still have lead paint.

When she applied for welfare, Moore was required to get blood tests for her children. The results for her two-year-old daughter were disturbing: Erica had lead in her blood, a level so high it nearly required emergency medical treatment.

Now eight, Erica struggles with a learning disability and takes special-education classes.

Lead can cause permanent brain damage. Studies have shown that even tiny amounts are linked to lower IQ test scores and may trigger attention-deficit/hyperactivity disorder and learning disabilities.

The Centers for Disease Control and Prevention now says there’s no safe level of lead in a child’s blood. But to focus resources on children with the highest exposures, the CDC defines a “level of concern” at five micrograms of lead per deciliter of blood. For a typical two-year-old girl, that’s just 1.4 millionths of an ounce of lead in her whole body.

Friction from opening a window can create lead dust, according to the National Safety Council. The dust sticks to the fingers and can end up in a child’s mouth.

The CDC estimates that during an eight-year period that ended in 2010, there were 535,000 children under the age of six with this much lead or more in their blood.

The Healthy Homes Department in Alameda County is notified whenever a child has a blood test with a level of concern. Erica’s test reading was eight times that level. In her case, the agency was able to remove some of the old lead paint and paint over the rest. That was five years ago. But on a recent visit, some of the paint on the front and back stairs was peeling again, exposing the underlying lead.

Julie Twichell, a spokesperson for the county agency, said there’s little money available to remove lead paint from homes. While driving through Moore’s neighborhood in Alameda, she pointed out house after house with peeling lead paint.

Alameda County is among 10 communities in California that just won a $1.1 billion judgment against the lead-paint companies Buffler defended.

Buffler was not called as a witness during the trial, but revealed her opinions on lead in a disclosure form filed in the lawsuit.

“There are many indicators that the risk of injury to children living in homes with lead-based paint is low, and that the risk to children from lead-based paint in homes is not probable or imminent,” according to the document.

Yet in his ruling, Superior Court Judge James P. Kleinberg rejected that claim. “Leading experts in the field of lead poisoning are virtually unanimous in concluding that lead paint is the primary cause of lead poisoning in young children,” he wrote.

Buffler said the average likelihood of a child under the age of three being harmed by lead is 1 in 58,400, citing a report from the U.S. Department of Housing and Urban Development. But Warren Friedman, a senior advisor for the HUD division that published the report, said this number is not accurate for the United States. Friedman said the real risk is 1 in 40.

Kim Dietrich, a professor of environmental health at the University of Cincinnati who specializes in lead research, said the statistic is an obvious error that any epidemiologist should have challenged.

After reading Buffler’s opinions on lead, Dietrich said, “The doctor reveals a stunning and perhaps deliberate ignorance of the problem, but typical of those the lead industry pays very well to give this kind of testimony.”

Drawing the line on corporate interference

Buffler once spoke candidly about her views on financial ties and attempts by funders to interfere with research. While testifying in the 2007 deposition, Buffler cited cases where she objected to a sponsor’s intrusion on her work. Without offering details, she recalled one situation where a sponsor objected to her analysis. “That’s not appropriate,” Buffler said she told them.

Without elaborating, she added, “I mean, there are many instances.”

Buffler said UC Berkeley adopted guidelines to assure the independence of research, and she followed them. “Research involves a great deal of public trust. The research enterprise is such that if we don't have those kinds of [guidelines], then how could the public trust the work that we do? I feel very strongly about that.”

But now, fully understanding her ties to industry, some close friends are torn by questions.

“I admired and loved her,” said one, Devra Davis. “I had never dreamed, never imagined that she would have put her expert opinion up for sale .... It sends me into a tailspin of reflection as I try to fathom what the hell she could have been thinking.”

Jim Morris and Sam Pearson contributed to this report.

David Heathhttp://www.publicintegrity.org/authors/david-heathhttp://www.publicintegrity.org/2013/12/20/14039/lauded-public-health-researcher-also-worked-industry-revealing-entanglements

Berkeley training helps researchers 'work around' potential conflicts

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BERKELEY, Calif. — A faculty member at the University of California, Berkeley, wanted to secure a National Institutes of Health grant to benefit his startup company.

That might be a problem, university officials in charge of complying with NIH’s conflict-of-interest rules said. Their solution? Resubmit the application and list another faculty member as the researcher. The academic withdrew the application instead.

This real example was presented in a September 2011 training video, posted on YouTube, showing how university officials help researchers avoid having to disclose possible financial conflicts of interest to the federal agency funding their research.

Records detail another case this year in which a professor said it was “highly likely” his company would license any technology produced from his NIH-funded research. Berkeley officials saw no conflict.

To some, such cases raise questions about how stringently UC Berkeley enforces NIH’s conflict-of-interest rules. Sen. Charles Grassley, R-Iowa, said they also raise questions about whether the NIH should leave enforcement to universities.

Concerns that financial entanglements can taint research prompted the NIH in August 2011 to strengthen its rules requiring disclosure of financial conflicts. The new rules expanded the definition of such conflicts and required more reporting to NIH.

“NIH can continue to rewrite conflict of interest rules, but the rules won’t do any good unless there’s a way to make them stick,” Grassley told the Center for Public Integrity. “Research institutions that look the other way on conflicts of interest appear free to do so knowing NIH will take them at their word.”

The NIH declined to comment on UC Berkeley’s practices or to respond to Grassley’s comments. In a written statement, a spokesperson said, “NIH strengthened the key provisions of the regulations and added accountability and transparency to send a clear message that NIH is committed to promoting objectivity in the research it funds.”

The issue of conflicts of interest in research is complex. Congress passed the Bayh-Dole Act in 1980, allowing nonprofit organizations and small businesses with federal research grants to own the patents on their discoveries. Yet studies suggest financial conflicts can bias research findings.

The theory in the scientific community is that you can manage conflicts to reduce bias, and a common way to do that is to require public disclosure. NIH requires schools to investigate and manage possible conflicts; under the new rules, it directs schools to explain how it is managing the conflicts.

Graham Fleming, UC Berkeley’s vice chancellor for research, said the very nature of research is to make discoveries that aid the public.

“Conflict of interest is something we take very seriously. We don’t aim to eliminate it. In fact that would be counterproductive. What we aim to do is to manage the conflict of interest,” he said.

A standard way to manage a conflict is to name another professor without a financial stake as the lead researcher, something that the school would disclose to NIH, Fleming said. By naming a new researcher, he said, the conflict is eliminated.

In the UC Berkeley training video, Jyl Baldwin, coordinator of the university’s conflict-of-interest committee, says situations like this are "rare." The committee's goal, she says, is to help researchers so “the research can go on the way it’s proposed without causing any headlines in the San Francisco Chronicle."

Baldwin also said, “For certain programs, [the Department of Energy] also has a financial disclosure requirement. We’ve found a way to work around that — I shouldn’t say that; it sounds negative, or sounds manipulative. We found a way to handle the DOE disclosure requirements.”

The school’s website and the training video suggest that in some cases the university determines there is no conflict of interest even when the professor has a financial stake in the research.

“Is a financial interest automatically a conflict of interest? Not necessarily,” says UC Berkeley’s website. “This may be a matter of semantics. Some argue that any financial interest in a company automatically puts the individual into a situation where there is a conflict with his or her research responsibilities.”

NIH rules say a researcher has a significant conflict of interest if the researcher is paid more than $5,000 or owns stock in a private company with interest in the research. Sometimes, that standard is put to the test.

In April, genetics professor Andrew Dillin disclosed to UC Berkeley officials that he gets paid $90,000 a year and owns 2 million shares – valued at $200,000 – of Proteostasis Therapeutics, a company he co-founded to develop new drugs for people with cystic fibrosis and Alzheimer’s disease. Dillin said it was “highly likely” the company would license any technology arising from the $387,000 research grant he was seeking from NIH.

The school’s conflict-of-interest committee concluded there was no conflict and that no disclosure needed to be made to NIH. The research was not within the current “focus” of the company, the head of the committee wrote.

Even so, the committee said it would be “prudent” for Dillin to disclose his company ties to students in his laboratory and when presenting his research in talks or publications.

Asked why the committee suggested Dillin disclose ties to his students but not to the NIH, Fleming referred the question to university spokesman Dan Mogulof. Because the committee found no conflict of interest, Mogulof explained in an email, there was no requirement for Dillin to disclose his company ties to anyone.

“In other words, the Committee recommended that Prof. Dillin take steps beyond those required by federal regulations,” Mogulof wrote. Dillin did not respond to an interview request.

NIH rules say that even in cases where the university has more stringent conflict of interest rules than NIH, it must still disclose how it will manage the conflict.

The NIH had initially proposed that schools post all financial disclosures from researchers on university websites. But in the final rules, that proposal was changed to releasing the records, when requested, within five business days.

It took UC Berkeley more than two months to release Dillin’s disclosures following a Center for Public Integrity public records request. The school’s public-records officer said NIH’s five-day rule didn’t apply because the school determined there was no conflict.

Universities have their own conflict in trying to police researchers because they get a cut of research dollars, said Paul Thacker, a fellow at Harvard University and a former investigator for Grassley specializing in conflicts of interest in research.

School officials don’t fear retaliation from the NIH, Thacker believes, because the agency doesn’t have a history of cracking down.

The Center requested interviews with conflict-of-interest officials at NIH for weeks, but the agency declined. The NIH would not talk about its history of enforcing conflict-of-interest rules and said it had no data on how many times it had taken action against researchers or universities for failing to disclose conflicts.

Grassley said that despite the recent changes in NIH rules, more needs to be done.

“An effective enforcement mechanism might require legislation," he said, "since NIH either can’t or won’t get tough enough on its own.”

 

Sen. Charles Grassley, R-Iowa speaks on Capitol Hill in Washington in May 2013.David Heathhttp://www.publicintegrity.org/authors/david-heathhttp://www.publicintegrity.org/2013/12/20/14040/berkeley-training-helps-researchers-work-around-potential-conflicts

Obamacare: yes, there's plenty in it for you

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The White House did not receive much holiday cheer about Obamacare last week from public opinion pollsters, even though millions of Americans already are benefiting from the law. The numbers show just how big the disconnect is between the reality of what’s occurred in health care since Congress passed the Affordable Care Act in 2010 and the perception that people have of the law resulting from the relentless campaign of misinformation from the president’s opponents.

According to an Associated Press online survey, more people had unfavorable opinions of the law than favorable ones, with many people who have insurance through their employers blaming the law for the hike in premiums and deductibles they’ve been told to expect for next year.

The one thing that was clear from the survey is that most Americans have not yet heard about how the law already is helping them. Many of the respondents also appear to have short-term memory problems. They seem to have forgotten that  premiums and deductibles have been going up, often by double digits, every year for at least a couple of decades.  The reality is that the rate of premium increases since Obama signed the Affordable Care Act has been lower than in many previous years.

The Kaiser Family Foundation reported a couple of years ago, for example, that between 2001 and 2011, average premiums for family coverage increased 113 percent. Not only did premiums increase steadily in the years before the law was passed, but employers also shifted more of the cost of the premiums to their workers and increased deductibles every year.

The average annual increase for employer-sponsored family coverage last year was just four percent, the foundation said, much lower than the average increase in the decade before ACA became law.

“We are in a prolonged period of moderation in premiums, which should create some breathing room for the private sector to try to reduce costs without cutting back benefits for workers,” Kaiser President and CEO Drew Altman said in August when his organization released the most recent health insurance numbers.

Chances are you missed that news. Here are some other numbers you might also have missed:

  • An estimated 3.1 million young adults have been added to the insurance rolls since the provision of the law allowing young people to stay on their parent’s policy until age 26 went into effect in 2010.
  • Policyholders received $1.2 billion in rebates in 2011 and $2.1 billion in 2012 as a result of a provision in the law that requires insurers to spend at least 80 percent of our premium dollars on actual medical care, rather than overhead. If they don’t, they have to issue rebate checks.
  • Medicare beneficiaries have saved an estimated $7 billion on prescription drugs as a result of the provision of the law that closes the gap — known as the “doughnut hole” — in the Medicare Part D drug program. That number will increase substantially in years to come as the doughnut hole closes a bit more. It will be closed completely in 2020.
  • More than 25.4 million people covered by the original Medicare program received at least one preventive service at no cost to them during just the first eleven months of 2013, according to the Centers for Medicare and Medicaid Services. Before the Affordable Care Act was passed, people in the original Medicare program had to pay for preventive services. As a consequence, many did not get the care they needed.
  • Millions of Americans who have not been able to afford coverage will finally have it in just a few days. Although signup for health coverage was slow during October and much of November because of problems associated with the federally operated health insurance market place (www.Healthcare.gov), enrollment has surged since most of the problems were fixed.

By the end of November, an estimated 1.2 million people had enrolled in new health plans. The numbers increased dramatically this month as the Dec. 23 deadline for signing up for coverage approached. In California, for example, 53,510 enrolled in coverage during the first three days of last week, including 20,000 in one day. And President Obama said Friday that another 1 million had signed up for coverage nationwide during the first three weeks of December.

Many of the newly insured have not been able to purchase insurance at any price in the past because insurers refused to sell coverage to millions of Americans with preexisting conditions. Insurers can no longer do that, nor can they charge people more than others simply because of a current or previous illness.

To learn more about how the reform law is affecting us, check out my new eBook, Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care ActIt’s available now — just in time for the holidays — on Amazon.com. It will be available on iBooks and other places soon.

Caroline Ramirez, center, and Sam Martinez, right, join a group using computers at a public library to access the Affordable Health Care Act website in San Antonio, December 2013.Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2013/12/23/14051/obamacare-yes-theres-plenty-it-you

Highlights of Offshore Leaks so far

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ICIJ’s “Offshore Leaks” probe has ignited reactions around the globe – sparking official investigations, sweeping policy changes and high-profile resignations.

Since the series of stories – based on a leak of 2.5 million secret offshore records – began rolling out in April, responses have come rapidly, from India, Mongolia, France and dozens of other nations. The European Union’s top tax official has called Offshore Leaks “the most significant trigger” behind Europe’s newfound resolve to crack down on offshore hideaways and global tax dodging.

“We're in a completely different context today” because of the Offshore Leaks revelations, Belgium’s secretary of state said. “It’s a new world.”

Among the latest impacts and responses:

  • The Deputy Prime Minister of Russia, Igor Shuvalov, has repatriated his and his wife’s offshore assets to comply with a Russian law prohibiting state officials from holding their wealth abroad. An offshore company belonging to Shuvalov’s wife, Olga Shuvalov, was revealed in April by ICIJ. Shuvalov, a close ally of President Vladimir Putin, had pledged to return the assets to Russia soon after they were exposed.The move comes during a broad crackdown on offshore tax avoidance by Putin. Last week, Putin announced that Russian-owned companies registered in offshore jurisdictions would be forced to pay Russian taxes, and that companies registered abroad would be barred from getting funding from the budget or from state banks.  

  • The European Parliament voted last week to strengthen its requirements for automatic exchange of tax data between EU member nations. The new rules, approved by 360 votes to 59, will require nations to collect and share data by 2017 on additional types of income such as employment, property and capital gains. In endorsing the measure, the Parliament voted to reject the “availability principle,” which would limit nations’ data sharing obligations to information that they decided independently to collect. “This important measure… responds to the challenges raised by [ICIJ's] Offshore Leaks and the staggering €1 trillion annual losses of tax revenues in the EU,” stated a summary of the reform that was prepared by the European Parliament’s Green Party.

  • The Danish Tax Minister announced a plan to crack down on offshore tax havens on the day after the last of a four-part series of documentaries about tax havens was aired by ICIJ's Danish partner, DR Documentary at Danish Broadcasting Corporation. Danish tax authorities will devote $7.3 million to pursue both individuals who hide money offshore and their professional advisers. The plan is expected to result in "a substantial number of new cases about illegal use of tax havens," said Holger K. Nielsen, the Danish Tax Minister. The documentaries exposed reliance on offshore havens by a leading Danish bank as well as a major law firm. One film used a hidden camera to reveal Jyske Bank, Denmark's third largest bank, advising an undercover journalist posing as a wealthy client to stash his money offshore in a plan that experts described as immoral and in some parts illegal. Others revealed the offshore tax advice given by Bech-Bruun, one of Denmark's leading law firms, and by the massive accounting firm EY.

  • Authorities in Ireland have recovered 4.3 million euros in settlements after receiving offshore tax data shared by French authorities, and are expecting “a very significant amount of data” on offshore holdings from the governments of U.S., Britain and Australia. The French data was obtained from Herve Falciani, a whistleblower and former employee of HSBC. Much of the data from the U.S., Britain and Australia was initially unveiled in Offshore Leaks.
     
  • The Colombian government announced new regulations that will slap a 33-percent tax on financial transactions between Colombian companies or individuals and third parties in 44 countries identified as tax havens. “The party is over for those who were taking advantage of tax havens,” Mauricio Cárdenas, the country´s economics minister, told local journalists. Colombia’s top tax official, Juan Ricardo Ortega, said ICIJ’s Offshore Leaks stories “without doubt helped the government push forward regulations” that had been blocked for nearly a decade. The secret offshore files obtained by ICIJ revealed that the sons of former Colombian president Álvaro Uribe were shareholders in a British Virgin Islands company.  
     
  • Tax authorities in India say they have sent notices to more than 500 individuals whose offshore holdings were revealed earlier this year by ICIJ and The Indian Express. These individuals included two members of Parliament and several prominent industrialists, and the inquiries from the income tax department seek details and transactions of their offshore companies and trusts. A new list of individuals with offshore holdings found in the Offshore Leaks database was also published earlier this week, and included a decorated former civil service officer and the wife of Delhi’s energy secretary.  

  • South Korean authorities announced they had uncovered evidence that the family of former dictator Chun Doo-Hwan had engaged in illegal offshore transactions. Earlier this year, ICIJ and the Korea Center for Investigative Reporting revealed that Chun’s son, Chun Jae-kook, had a secret offshore company in the British Virgin Islands. On October 8  the Korea Customs Service announced that it had found that offshore companies held by Chun’s family, including those belonging to Chun Jae-Kook, were involved in illegal foreign currency transactions. The Korea Customs Service said the transactions were intended to evade taxes and that it had informed Korean state prosecutors of its findings. The developments are the latest in a series of responses to ICIJ and the Korea Center for Investigative Journalism’s reporting, which have also included raids by Korean prosecutors on both men’s homes and an agreement by Chun’s family to pay $154 million in fines.
     
  • The Anti-Corruption Commission in Bangladesh decided on September 30 to open an investigation into the offshore activities of Kazi Zafarullah, a leading member of Bangladesh’s governing Awami League political party. In July, ICIJ and its reporting partners at the Bangladeshi daily New Age revealed that Zafarullah and his wife, Nilufer Zafar, were directors and shareholders of two offshore companies.  The couple had also opened a joint account at the Singaporean branch of the Swiss bank UBS AG. The Anti-Corruption Commission decided to investigate Zafarullah’s activities after a two-month assessment of ICIJ and New Age’s findings, an official with the commission said.

  • The son of disgraced former South Korean president Chun Doo-hwan issued a public apology and vowed that his family would pay the government $154 million in fines related to corruption during Chun’s rule. Prior to the announcement, the former dictator’s family had claimed for years that Chun was bankrupt and unable to pay the fines. But earlier this year, ICIJ and the Korea Center for Investigative Journalism revealed that Chun’s son, Chun Jae-kook, had a secret offshore companyin the British Virgin Islands. Chun Jae-kook denied any connection between his offshore holdings and his father, but South Korean prosecutors recently raided both men’s homes in a search for hidden assets.

  • Members of the G20 announced new measures to combat offshore tax evasion, including a plan toautomatically share tax data among G20 nations by the end of 2015. Today’s G20 Leaders Declaration, released from a summit in St. Petersburg, Russia, also pledged the G20’s assistance to developing countries seeking to establish automatic tax information sharing, but stopped short of providing a timeline for doing so.  According to the advocacy group Global Financial Integrity, illicit financial flows cost developing countries nearly $6 trillion between 2001 and 2010.

  • South Korea has ordered 11 individuals named in the Offshore Leaks investigation to pay a total of $64.6 million for using offshore paper companies to evade taxes. According to Yonhap News Agency, South Korea’s state news service, the country’s National Tax Service reviewed a list of Koreanssuspected of running paper companies in offshore locales that was published by ICIJ and the Korea Center for Investigative Journalism. Thirty-nine of those individuals were chosen for further investigation, and today’s news marks the completion of 11 of those cases.  

  • The Premier of the British Virgin Islands, Orlando Smith, said his government has entered into talks with the US Treasury about compliance with a US law designed to crack down on offshore tax evasion. The British Virgin Islands is one of the world's biggest offshore trust jurisdictions, with 30,000 people and more than 500,000 registered companies. Thousands of the secret offshore documents revealed by ICIJ related to dealings that were conducted under the laws of the British Virgin Islands.

  • India's Minister of State for Finance, Shri J.D. Seelam, in charge of the revenue, confirmed in a written response to Parliament that income tax authorities are investigating the information published by ICIJ on Indian citizens with connections to offshore companies, including two members of Parliament. One of them denied any relationship with the entity in ICIJ’s Offshore Leaks Database. The finance minister had previously said that "not a single case" would go unpursued.
     
  • The OECD has proposed what Bloomberg News describes as “a blueprint” for cracking down on tax-dodging strategies used by international companies such as Google, Apple and Yahoo. The new report by the Organization for Economic Cooperation and Development was released during a meeting in Moscow of the Group of 20 government finance and banking authorities. AFP reports the move, in part, follows widespread public anger over the “Offshore Leaks” revelations. 
     
  • South Korean authorities have raided the home of former President Chun Doo-hwan along with businesses connected to his eldest son. Some 90 prosecutors, tax collectors and investigators ransacked the former president’s home in Seoul, carrying away paintings and other big-ticket items,The New York Timesreported. The raids come in the wake of an investigation by ICIJ and its “Offshore Leaks” reporting partner, the Korea Center for Investigative Journalism, into the offshore activities of the older son, Chun Jae-kook.
     
  • Australian tax authorities said they are stepping up efforts to crack down on corporate tax dodgingand taking a hard look at wealthy Australians and small companies with offshore holdings following “Offshore Leaks”. The Australian Tax Office’s plan includes 680 reviews and 115 audits of individuals and small businesses suspected of using offshore hideaways help them avoid taxes.
     
  • India’s Finance Minister said government probes into the offshore holdings of hundreds of Indians have made significant headway. “I am reviewing the progress every fortnight and can say that not a single case will go unpursued,” Finance Minister P Chidambaram said. The government’s effort was sparked by a joint investigation by ICIJ and The Indian Express.

  • In the wake of ICIJ’s reporting about large numbers of Israelis using tax havens, a top tax official says Israel is stepping up efforts to crack down on offshore tax dodgingIsrael Tax Authority chief Moshe Asher urged citizens with money hidden offshore to voluntary declare these funds. “If you have black money abroad now is the time to report it,” he said. Asher noted that the authority is setting up a unit of analysts who will focus on tracking down black capital overseas. 
     
  • A joint declaration by the G8 leaders at their Northern Ireland summit has agreed to an automatic exchange of tax information and to share ownership information of offshore companies and trusts with tax authorities, but these registers will not be made public. The declaration also says the use of bearer shares and nominee shareholders and directors "should be prevented." 
     
  • Leaders of Britain’s overseas territories – long known as key cogs in the global tax haven system – have agreed to begin sharing tax information with other countries.  UK Prime Minister David Cameron said officials from Britain’s network of territories and dependencies have pledged to sign on to an international convention that provides for automatic exchange of information among tax authorities. “I commend their leadership and I look to other international partners to work with their own territories to reach similar agreements,” Cameron said.  He called the agreement a “very positive step forward” in the fight to ensure that “those who want to evade taxes have nowhere to hide.” The British Virgin Islands, Bermuda and other UK overseas territories and dependencies also agreed to begin working to remove the veil of secrecy that often hides who owns offshore companies, Cameron said.
     
  • Philippine authorities said the launch of ICIJ’s Offshore Leaks Database will prompt them toreview the tax records of Philippine residents whose names appear in the data. Kim Jacinto-Henares, commissioner of the country’s Bureau of Internal Revenue said she welcomes the public release of the database, saying it can aid the agency’s efforts to gather information that could lead to tax investigations and cases. “We will look into it and match (the information on Philippine residents in the database) with income tax returns,” Henares told the Philippine Center for Investigative Journalism, an ICIJ reporting partner.

  • EU Commissioner Algirdas Semeta says the Offshore Leaks investigation by ICIJ and its partners has transformed tax politics and amplified political will to tackle the problem of tax evasion. "I personally think Offshore Leaks could be identified as the most significant trigger behind these developments ... It has created visibility of the issue and it has triggered political recognition of the amplitude of the problem", he told EU Observer. He added that tax transparency overrides the principle of data privacy.
     
  • South Korean financial regulators have opened an investigation into possible illicit fund transfers by hundreds of Koreans whose names are included in ICIJ’s “Offshore Leaks” database.  “We will investigate every one of them,” a top regulator said. “When doing capital transactions, they’re required to report to the authorities prior to the trades, so now we are investigating whether they violated the law.” ICIJ’s investigative partner, the Korea Center for Investigative Journalism, revealed that it had identified at least 245 Koreans who established companies in the British Virgin Islands, Cook Islands and other offshore havens.
     
  • Canadian Senator Vern White has called for a probe into a fellow legislator’s role in her husband’s use of an offshore hideaway in the South Pacific.  The conservative Senator said he has asked the Senate's ethics officer to look into Liberal Senator Pana Merchant's role in the matter, saying there are "serious questions" to be dealt with.  The Senate ethics office said in a statement that will give Merchant a chance to respond before deciding whether to launch a formal investigation. CBC News and ICIJ revealed last month that Merchant's husband, famed class-action lawyer Tony Merchant, had shifted some CA$1.7 million (US$1.1 million) into a Cook Islands trust while he was locked in battle with Canadian tax authorities. 
     
  • The International Consortium of Investigative Journalists on June 14 released the Offshore Leaks interactive database that allows the public to search through more than 100,000 secret companies, trusts and funds created in offshore locales such as the British Virgin Islands, Cayman Islands, Cook Islands and Singapore. Thanks in part to the ICIJ "Offshore Leaks" investigation, tax evasion and offshore secrecy will be a central theme of next week’s meeting of G8 industrialized nations. The chair of that meeting, the British Prime Minister David Cameron, has gone on the record saying the time has come “to knock down the walls of company secrecy” that make the offshore system attractive to money launderers, fraudsters and other criminals. The Offshore Leaks Database helps remove a small part of this secrecy, opening up records that may help bring accountability to an industry that has long operated in the shadows.
     
  • ‘Offshore Leaks’ records show the oldest son of South Korea’s former strongman president Chun Doo-hwan obtained a British Virgin Islands company in 2004 amid a tax evasion probe into his younger brother’s alleged involvement with their father’s bribery-fed slush fund. Prosecutors are aggressively seeking the ex-president’s hidden assets in the face of an approaching statute of limitations deadline for his unpaid fine of 167.2 billion won ($149.3 million).
     
  • One of Europe’s top bankers offered his resignation one day after news broke that he secretly owned secrecy-cloaked offshore companies in the Caribbean and Asia. Raiffeisen Bank International chief executive Herbert Stepic said he was stepping aside to save the Vienna-headquartered bank from fallout over the latest revelations in the “Offshore Leaks” probe. Stepic denies wrongdoing, but said at a quickly arranged news conference in Vienna that he wanted to spare the bank from media reports that “threatened to do massive harm to my company.”
     
  • British tax authorities said they were working with the United States and Australian tax administrations on analyzing a 400GB data cache "showing the use of companies and trusts in a number of territories around the world including Singapore, the British Virgin Islands, the Cayman Islands and the Cook Islands,” the British tax office statement said. The data cache is believed to be the same one obtained by ICIJ and used as a basis for the Offshore Leaks investigation. British authorities say they have so far identified "over 100 people who benefit from these structures  … and are under investigation for offshore tax evasion,” as well as more than 200 UK accountants, lawyers and other middlemen who helped set up the offshore structures.
  • A Canadian man who vanished a decade ago in a possible underworld killing set up offshore companies and bank accounts before he went missing, documents contained in the ICIJ data cache show.

  • Bankrupt real estate mogul Hans Thulin had as much as $17 million sheltered offshore at a time when the Swedish government was pursuing him in court for millions of dollars in unpaid debts.
     
  • Despite Finnish government promises to lead the fight against tax evasion, it turns out the state-owned postal service, Itella, has subsidiaries in offshore tax havens. Jutta Urpilainen, the Finnish finance minister, said she found the Itella revelation "repulsive".
     
  • Five directors of Banco Amambay, owned by Paraguay's leading candidate in this month's presidential election, Horacio Manuel Cartescreated a secret bank in the Cook Islands with no building and no staff.
     
  • Crocodile Dundee star Paul Hogan is accusing his once-trusted tax adviser of absconding with $34 million he helped Hogan hide offshore in Switzerland.
     
  • Clariden Bank, part of Credit Suisse, sought highly-secretive structures and pushed offshore service providers to bypass anti-money laundering checks for its wealthy clients.
     
  • Baron Elie de Rothschild, the late guardian of the French banking dynasty, built an elaborate offshore empire in the Cook Islands involving at least 20 trusts and 10 holding companies, while managing to keep all assets and beneficiaries secret. One of the entities was named, appropriately, Anon Trust.
     
  • Two members of India’s Parliament, the world’s largest producer of cut roses and other major business owners are among hundreds from the subcontinent revealed to have links to the offshore world, prompting a government investigation.
     
  • Shares of an offshore company were held in trust for the daughters of one of Africa's most popular pastors, televangelist Rev. Chris Oyakhilome.
     
  • Dutch banking giants ING and ABN Amro helped set up offshore companies in faraway island states for their clients.
     
  • Billionaires with ties to former dictator Suharto, two sons of former president B. J. Habibie andnine of the Indonesia's richest 11 families, appear in the secret records of offshore trust and company owners. 
     
  • Fabio Ghioni, the former head of information security at Telecom Italia who was later convicted of hacking the data of 4,000 people, had an offshore company called Constant Surge Investments Limited. Internal documents reveal he was advised by the Singapore branch of Deutsche Bank to do business with Portcullis TrustNet. When interviewed by L’Espresso, he denied being the beneficial owner of CSIL: “I don’t know anything of this. I don’t even know where the Virgin Islands  are located.”
     
  • Zurich-based law firm Lenz & Staehlin has aided some of Europe's richest families park their wealth offshore. “People don’t set up this kind of structure out of altruism, but to gain a profit,” says Christian Wanner, one of Switzerland’s leading authorities on tax collection.
     
  • Scandal-buffeted Pakistani politician Moonis Elahi, whose father Chaudhry Pervez Elahi has just stepped down as deputy prime minister, owned a secret company in the British Virgin Islands. The company's existence wasn't unearthed during a recent government probe into Moonis Elahi involving illegal payments in an alleged land scam. 
  • Top Malaysian politicians and their families, including former prime minister Dr Mahathir Mohamad's son Mirzan and current cabinet minister Raja Nong Chik Zainal Abidin, are among prominent Malaysians with secretive offshore companies housed in Singapore and the British Virgin Islands. 
     
  • "You’re certainly going to be using a nominee director if you’re doing anything bad," says university professor Jason Sharman. The CIA, Iraqi dictator Saddam Hussein, the company which shipped arms to Rwanda during the 1994 genocide, the former Kazakhstan banking head Mukhtar Ablyazov, and alleged spy Paul William Hampel are some of the clients who have used nominee directors and offshore entities to conceal their activities and identities.
     
  • Among the 4,000 U.S. individuals listed in the records, at least 30 are American citizens accused in lawsuits or criminal cases of fraud, money laundering or other serious financial misconduct, an analysis by the Washington Post and ICIJ found. Offshore trusts and companies set up in the South Pacific and Caribbean are the common factor in several prominent financial scandals in the U.S.
     
  • Offshore companies are ridiculously easy to establish, and effective at concealing your identityWatch our animated video explaining the process.
     

 

  • Two major French banks, BNP Paribas and Crédit Agricole oversaw the creation of a large number of totally opaque offshore companies in the British Virgin Islands, Samoa and Singapore from the late 1990s until the end of the 2000s for clients in search of secrecy and lower tax rates.
     
  • Nicky Hager provides an in-depth look at the offshore service provider Portcullis TrustNet. Roughly 45,000 of about 77,000 of the client list come from China, Taiwan, Singapore and other East and Southeast Asian nations. The firm is used by many of the world’s major banks, such as UBS, Deutsche Bank and Credit Suisse subsidiary Clariden, and by the world’s biggest auditing firms, such as PricewaterhouseCoopers, Deloitte and KPMG, to provide secrecy for their wealthy clients, and was implicated in New Zealand’s "winebox affair" scandal of the decade.
     
  • Gunter Sachs, the late millionaire playboy, businessman and former husband of Bridgette Bardot is revealed to have had an intricate offshore scheme to manage his vast fortune, a scheme that remained inscrutable to the fiscal authorities until the end.
     
  • Two Americans and one South African are revealed to have reaped $2.5 million dollars from the aborted sales of surplus military helicopters to President Lissouba during the civil war in the Republic of Congo.
     
  • François Hollande’s treasurer during the 2012 presidential campaign, businessman Jean-Jacques Augier, is revealed to have investments in the Cayman Islands.
  •  Philippine government officials said Friday that they will look into the disclosure that Maria Imelda Marcos Manotoc, the eldest daughter of the late dictator Ferdinand Marcos was a beneficiary of a secret offshore trust in the British Virgin Islands. “We are duty bound to investigate and, depending upon informed preliminary findings, decide whether to pursue the matter,” said Andres Bautista, the chairman of the Presidential Commission on Good Government, tasked with recovering the Marcos family’s alleged ill-gotten wealth.
     
  •  Germany’s largest financial institution, Deutsche Bank, helped its customers maintain more than 300 secretive offshore companies and trusts through its Singapore branch.
     
  • New light is shed on a half-billion-dollar Ponzi scheme  in Venezuela that shuffled investor money among a maze of offshore companies, hedge funds and bank accounts stretching from the Cayman Islands to Switzerland and Panama, smoothing the way by funneling bribes to officials in Venezuela.
     
  • Commonwealth Trust Limited, a BVI-based firm, is revealed to have set up companies involved in the Magnitsky affair, a case that’s strained U.S.-Russian relations and blocked American adoptions of Russian orphans
  • One of Mongolia’s most senior politicians says he is considering resigning from office after being confronted with evidence that he has an offshore company and a secret Swiss bank account.
     
  • Newly uncovered documents link Maria Imelda Marcos Manotoc, the eldest child of the late Philippine dictator Ferdinand Marcos and now a senior political figure in her own right, to two secretive offshore trusts and an offshore company.
     
  • prominent Canadian lawyer, husband to a Liberal senator, moved CA$1.7 million (US$1.1 million) to secretive financial havens while he was locked in battle with the Canada Revenue Agency over his taxes, according to documents in a massive leak of offshore financial data.
     
  • A corporate mogul whose business empire has won building contracts worth billions of dollars amid Azerbaijani President Ilham Aliyev’s massive construction spree is tied to the president’s family through secretive offshore companies.
     
  • The prominent Thais listed in secret documents as owners of offshore holdings includes the former wife of ousted Prime Minister Thaksin Shinawatra, a sitting senator, a former high-ranking defense ministry official, Forbes-listed tycoons, and a former government minister whose assets in the United States are frozen because of her alleged links to Zimbabwean dictator Robert Mugabe.  
     
  • Greek citizens who own or direct offshore companies in the British Virgin Islands and other tax havens rarely declare them to Greek tax officials, a review of more than 100 companies shows. Just four out of 107 offshore companies investigated by ICIJ are registered with tax authorities as the law usually requires, particularly when the firms hold assets or conduct business in Greece. Officials apparently have no record of the other 103 firms — or whether the owners declared any assets held by these entities or paid taxes on them.
     
  • A list containing examples of some of the most high-profile names uncovered in this investigation, along with records of their offshore companies. Those named come in the form of politicians, businessmen, army generals, tycoons, relatives of dictators, and are scattered across 29 different countries.
     
  • Finally, for those interested in how ICIJ managed to tackle records cache, the data manager of the project, Duncan Campbell, writes an in-depth explanation of how our journalists were able make sense of the 260 gigabytes of information obtained. Four large databases, half a million text, PDF, spreadsheet, image and web files were dissected to reveal over 130,000 records on the people and agents who run, own, benefit from or hide behind offshore companies. 
  • How one Zurich-based law firm, Lenz & Staehlin, has aided some of Europe's richest families park their wealth offshore. “People don’t set up this kind of structure out of altruism, but to gain a profit,” says Christian Wanner, one of Switzerland’s leading authorities on tax collection.

We hope you enjoy these stories; there will be more to follow daily for the next couple of weeks.

If you have story tips, documents or other information about this issue, contact us at investigations@icij.org.

 

 

Kimberley Porteoushttp://www.publicintegrity.org/authors/kimberley-porteousEmily Menkeshttp://www.publicintegrity.org/authors/emily-menkeshttp://www.publicintegrity.org/2013/12/23/12458/highlights-offshore-leaks-so-far

‘Nonpartisan’ gun rights group boosted by Democratic-aligned America Votes

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Amid Capitol Hill’s gun control debates this year, the Denver-based Bull Moose Sportsmen ranked among the few advocacy groups to chart a centrist course when working with lawmakers and the White House to craft firearm laws.

Its funding, however, is anything but middle of the road.

The Democratic-aligned nonprofit America Votes provided the self-described “nonpartisan” Bull Moose Sportsmen with the overwhelming majority of its funding in 2012, according to a Center for Public Integrity review of documents recently filed with the Internal Revenue Service.

In all, contributions from America Votes represent at least 95 percent of the $963,000 raised by the Bull Moose Sportsmen from its launch in 2010 through the end 2012, IRS records show.

Washington, D.C.-based America Votes — which has spent millions of dollars promoting Democrats and attempting to defeat Republicans such as Wisconsin Gov. Scott Walker — was created in 2004 by a group of liberal political operatives.

Among them: EMILY’s List founder Ellen Malcolm, former Sierra Club executive director Carl Pope and Harold Ickes, a longtime adviser to Bill and Hillary Clinton.

In explaining America Votes' support for Bull Moose Sportsman, spokesman John Neurohr said the gun group brings "an expertise on issues of growing importance” to the America Votes coalition, which “benefits everyone at the table.”

The Bull Moose Sportsmen was established by Gaspar Perricone and Tim Mauck, both former staffers of Colorado Democrat Mark Udall, now the state’s senior U.S. senator.

It touts a membership of 5,000 hunters, anglers and trappers, and its name is a nod to Republican President Theodore Roosevelt, whose passion for hunting fueled an interest in conservation.

In January, Perricone served as a member of the gun safety roundtable that Vice President Joe Biden convened in Washington, D.C. He also met with President Barack Obama in April to discuss the White House’s gun control push following the elementary school shooting in Newtown, Conn.

Perricone said his presence at the meetings gave the hunter and angler community “a seat at the table” in the national gun conversation.

“We’re historically a group that gets overlooked in the gun debate,” Perricone said.

Ultimately, the Bull Moose Sportsmen supported a Senate provision to expand background checks on all firearm purchases, but it opposed a semi-automatic weapon ban, which was backed by Obama and a number of other liberal Democrats.

The group also came out against a national registry of gun owners. This policy was never formally proposed, but some gun advocates on the right argued expanding background checks would lead to a federal registry.

The background check measure — crafted by Sens. Joe Manchin, D-W.Va., and Pat Toomey, R-Pa. — failed to overcome a GOP-led filibuster in April, when 54 senators voted to advance the bill, six shy of the 60 needed.

More recently, Perricone has touted the Bull Moose Sportsmen’s role in helping to craft new legislation introduced by Sen. Kay Hagan, D-N.C., known as the Sportsmen’s and Public Outdoor Recreation Traditions Act. Additionally, the group has been pushing for the passage of a farm bill with “strong conservation programs.”

Beyond the policy-making process, the Bull Moose Sportsmen has also been active in the electoral arena.

The outfit spent $117,540 on mailers and radio advertisements in support of Sen. Michael Bennet, D-Colo., in 2010, federal records show.

And in 2012, the Bull Moose Sportsmen spent $17,000 on mailers backing then-Rep. Martin Heinrich, D-N.M., who won a seat in the U.S. Senate.

Additionally, the organization endorsed Sen. Jon Tester, D-Mont., Reps. Ron Kind, D-Wis., Rob Wittman, R-Va., and Mike Simpson, R-Idaho, and Montana Democratic gubernatorial candidate Steve Bullock during the 2012 election. All won their respective races.

Perricone declined to identify any candidates the group may support in 2014.

For its part, America Votes contributed $417,500 Bull Moose Sportsmen sometime between July 2011 and June 2012, IRS records show. That payment came on top of the $495,000 America Votes contributed to the Bull Moose Sportsmen during its previous fiscal year.

Perricone told the Center for Public Integrity that wildlife conservation motivated its desire to join forces with America Votes.

“We’re a unique member [of the American Votes coalition] because our members are both Democrats and Republicans, and our issues are driven by the hunting and angling community, not partisan politics,” Perricone said.

Sportsmen really “sit on this political fence,” added co-founder Mauck. “Our sport depends very heavily on the right to use firearms.”

“We work well with Democrats on conservation, and we work well with Republicans on the right to bear arms,” Mauck continued.

The investment from America Votes ranked as one of the largest grants that group made during its 2011-2012 fiscal year, as the Center for Public Integrity previously reported.

Neurohr, the America Votes spokesman, declined to say whether additional funds have been awarded since.

Both America Votes and the Bull Moose Sportsmen are organized under Sec. 501(c)(4) of the U.S. tax code as nonprofits designed to “promote social welfare."

Such nonprofits are not required to publicly disclose the names of their donors, but they must reveal how much money they raise each year and how funds are spent, including grants and contributions made to other nonprofits.

America Votes’ liberal credentials are numerous.

In 2011 and 2012, it pumped nearly $1 million into groups supporting recall efforts against Walker, Wisconsin’s governor, and other Republican lawmakers.

More recently, the group turned its sights on Colorado, where it backed the two Democratic lawmakers who faced recalls in September over their support of gun control legislation. Both were defeated.

The Bull Moose Sportsmen itself wasn’t involved in the state’s recall fight.

 

 

Adam Wollnerhttp://www.publicintegrity.org/authors/adam-wollnerMichael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/12/23/14054/nonpartisan-gun-rights-group-boosted-democratic-aligned-america-votes

White House stays mum on troubles with election regulator

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A Center for Public Integrity investigation that last week unearthed numerous problems at the Federal Election Commission sparked a waveofnewsarticles, various blogitemsandopinionpieces and coverage on CNN, Fox News, MSNBC and C-SPAN about the troubled agency.

FEC commissioners had plenty to say, too. So who isn’t talking? The White House.

Since the investigation’s publication, the Center tried a half-dozen times to obtain comment from 1600 Pennsylvania Ave. Phone messages weren’t returned.

White House Deputy Press Secretary Eric Schultz, who declined to comment on the Center’s alarming findings regarding the FEC prior to publication of its investigation, did not reply to several emails sent on different days.

His press office colleagues did not respond, nor did they explain why the White House is remaining mum on FEC-related issues.

The Center sought answers to several basic questions regarding the dire situation at the FEC, which the government has tasked to “prevent corruption in the federal campaign process by administering, enforcing and formulating policy”:

  • How concerned is the White House that Chinese hackers were able to infiltrate the FEC’s information technology systems as the government began to shut down on Oct. 1?
  • Should the FEC receive additional funding and/or resources to address the IT problems reported in the Center’s investigation?
  • Does the White House intend to support any or all of the legislative recommendations that the FEC unanimously approved at a meeting last week?
  • When does the president intend to nominate new FEC commissioners to fill the slots now occupied by four commissioners whose terms have expired?

The Center is also curious what the White House thinks of a Partnership for Public Service survey out last week that ranked the FEC No. 28 out of 29 small government agencies — its lowest score ever — in terms of employee satisfaction and commitment.

The FEC earned bottom-of-the-barrel marks for “effective leadership,” “strategic management,” “support for diversity” and whether employees feel their skills are being properly used by managers.

Although the White House press office couldn’t find time to answer the Center’s questions about the FEC, it has been busy today.

For example, it notified reporters that the president is designating Curaçao as the beneficiary nation of aid through the Caribbean Basin Economic Recovery Act and Caribbean Basin Trade Partnership Act.

It passed along an executive order in which the president announced pay rate adjustments for some federal workers.

It further provided reporters a list of 102 recipients of the Presidential Early Career Awards for Scientists and Engineers, the “highest honor bestowed by the United States Government on science and engineering professionals in the early stages of their independent research careers.”

Schultz, who handles most questions about campaign finance and elections matters for the White House, has been active on Twitter lately. He’s even tweeted about hacking threats, although it had nothing to do with Chinese hackers attacking the FEC’s computer systems.

The president himself is on Christmas break in Hawaii, where according to a White House press pool report this afternoon, he has spent much of the day golfing.

 

 

 

The White HouseThe Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2013/12/23/14059/white-house-stays-mum-troubles-election-regulator

Obama administration understated nuclear weapons costs

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The Obama administration's plan for maintaining and upgrading the U.S. nuclear arsenal will likely cost around 66 percent more over the next decade than senior Pentagon officials have predicted, according to a new assessment by the independent Congressional Budget Office.

Under the administration’s plan, operating, maintaining and upgrading the nuclear stockpile will cost a total of $355 billion from 2014 through 2023, said the CBO report, published just before the holidays and shortly after Congress finished action on a 2014 budget bill that restored some planned Pentagon spending cuts.

James Miller, the Pentagon’s outgoing policy chief, had said in 2011 congressional testimony that the 10-year tab would be around $214 billion, or an average of $21 billion a year, an amount he pegged at around 3 percent of the Pentagon’s likely overall budget for that period.

His boss at the time, Deputy Secretary of Defense Ashton Carter, cited an even lower yearly total when he told a security conference in Colorado last summer that nuclear weapons are “just not that expensive.”

Carter’s remarks ignited substantial controversy, including criticism from anti-nuclear activists as well as challenges from military budget experts. The squabble stemmed in part from the fact that the federal budget has no consolidated nuclear weapons spending category, and instead lists discrete tallies for related programs in the energy and defense departments.

Congress requested the budget office report to help settle the squabble, and the office’s analysts began by hunting down all the discrete listings. They also projected spending into the future, using Pentagon estimates wherever possible, and studied historical cost growth data to predict how much the total spending might grow beyond current estimates.

The $355 billion estimate is thus based not only on a higher calculation of what the government is spending now but also on a projection that unforeseen technical problems or mismanagement will cause costs to grow by an extra $59 billion.

The $355 billion tally, moreover, still does not reflect the full panoply of costs associated with having a robust nuclear arsenal, according to the CBO. It projected that “other nuclear-related costs” — a category not mentioned by Pentagon officials that includes environmental cleanup efforts, arms control-related work, and a system of defenses against nuclear attack — will likely cost the government an additional $215 billion over the next decade.

That makes a grand total of $570 billion. All of these programs are meant to persist for more than 10 years, of course, which means that nuclear weapons-related spending during the next 30 years or so could easily approach $1 trillion.

“Nuclear weapons aren’t cheap as some high-ranking Pentagon officials have suggested,” said Kingston Reif, Director of Nuclear Non-Proliferation at the Center for Arms Control and Non-Proliferation, an advocacy group in Washington. He said that unless the Obama administration scales back its plans in line with current budget realities, the result will be “nuclear disarmament by financial default” instead of a more careful reshaping of the U.S. nuclear posture.
   
Of the $241 billion needed solely for nuclear delivery systems — such as missiles and bombers — and warheads, the CBO said that $152 billion will be spent to maintain existing systems. Under the administration’s ambitious modernization plans, another $89 billion will be needed to replace them.

Although the overall federal budget is shrinking, these plans would require annual nuclear weapons-related spending to increase by as much as 60 percent over the period, the report said.

The lion’s share of the costs over the next decade — $82 billion — will be borne by the U.S. ballistic missile submarine program, which is about to undergo a costly modernization. Strategic bombers, which also are slated for an upgrade, will cost $40 billion.

Keeping the Energy Department’s nuclear weapons-related laboratories humming over this period will cost $77 billion. Programs related to nuclear weapons command and early warning will cost $56 billion. None of these individual tallies includes the cost growth that CBO analysts projected.

The CBO report cautioned that eliminating some of the programs, or even a category of nuclear weapons, would not produce savings equivalent to what’s now being spent, since compensatory measures would likely have to be taken. It made no specific recommendations, but noted that simply deferring some of the nuclear weapons modernization efforts — to fit current budget limits — instead of cancelling them outright will likely make them more costly in the long run.

When Miller, who is slated to retire in January, was asked at the Nov. 2011 House Armed Services committee hearing about claims that nuclear weapons-related spending over the next decade could be as high as $600 billion, he said, “suffice it to say there was double counting and some rather curious arithmetic involved.”

But that’s pretty much where the CBO came out.

A Trident II, D-5 missile is launched from the submerged submarine USS Tennessee in the Atlantic Ocean off the coast of Florida. R. Jeffrey Smithhttp://www.publicintegrity.org/authors/r-jeffrey-smithhttp://www.publicintegrity.org/2013/12/24/14060/obama-administration-understated-nuclear-weapons-costs

Top politics investigations from 2013

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Editors note: As the year winds down, we wanted to revisit some of the best accountability journalism from each of our coverage sections. We'll be posting a new list daily for the rest of the year.

In this election off-year, our Consider the Source team made a point of covering money-in-politics issues that don't often get attention from mainstream media, like state-level super PAC and nonprofit spending, and potential conflicts of interest within state justice systems. Here's a look at the work we're most proud of.

(If you aren't signed up for our Watchdog email newsletter, what are you waiting for? It's totally free, and you can receive customized updates from us on a daily, bi-weekly or weekly basis. Sign-up using the form below.)

Nonprofit group Donors Trust lets donors fly 'totally under the radar'


Ever heard of the Franklin Center for Government and Public Integrity? In 2011, 95 percent of the Franklin Center's revenue came from a charity called Donors Trust, a donor advised fund that has become a major vehicle for tax-exempt giving from wealthy conservatives such as billionaire industrialist Charles Koch. Keep reading


Corporations and conservative foundations are top sponsors of judicial junkets


Judges across the country were paid to attend seminars on topics such as “The Moral Foundations of Capitalism,” and “Corporations and the Limits of Criminal Law.” Who picked up the tab? Charles G. Koch Charitable Foundation, ExxonMobil, Dow Chemical and the U.S. Chamber of Commerce. Keep reading


Nearly $12 million spent by super PACs and nonprofits in state supreme court races


We looked at 10 state supreme court races from 2012 and 2013, nearly 40 percent of spending came from out-of-state groups. This outside influence was especially potent in North Carolina, Mississippi and Iowa judicial races.Keep reading


Meet William Koch, the other Koch brother


Despite a nasty falling-out between William and his more well-known brothers, Charles and David, William is also a businessman and a billionaire who isn't shy about using his fortune to influence politics. While Charles and David seem to prefer giving through nonprofits, William donates both personally and through his corporations. Keep reading


See the ambassadorships big money can bring


So far in his second term, President Obama has nominated 23 elite fundraisers, or bundlers, to top diplomatic posts. See where the bundlers were sent, in comparison to where career diplomats were sent. Keep reading


Puppet states: outside groups spent at least $209 million in 38 states in the 2012 election cycle


We all know the 'Citizens United' ruling made it easier than ever for outside groups to raise and spend cash, but the ruling also threw out spending rules in 24 states. More than one out of every two dollars spent originated from groups funded primarily or entirely by out-of-state donors. Keep reading


Forty-two states (plus D.C.) fail our review of financial disclosure requirements for supreme court judges


Very few states require meaningful for judges' financial holdings. Based on the rules that do exist, however, we found 35 cases of questionable gifts or investments overlapping with caseloads. As one might be able to expect, this report drew ire from a number of judges around the country. Keep reading

Sarah Whitmirehttp://www.publicintegrity.org/authors/sarah-whitmirehttp://www.publicintegrity.org/2013/12/26/14057/top-politics-investigations-2013

By the numbers: a 2013 money-in-politics index

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Number of bills passed by Congress this year that have been signed into law: 58

Number of bills passed in 1948, the year President Harry Truman* assailed the “Do-Nothing Congress”: 511

Number of minutes Sen. Ted Cruz, R-Texas, spent readingDr. Seuss's "Green Eggs and Ham" during a 21-hour talk-a-thon in September: 5 ½

Number of hours per day the Democratic Congressional Campaign Committeerecommends embattled freshmen spend fundraising: 4

Amount of campaign cash all members of Congress have reported raising so far in 2013: $403,952,012

Number of seats Republicans need to pick up next year to win control of the U.S. Senate: 6

Number of currently Democratic-controlled Senate seats up in states carried in 2012 by Mitt Romney: 7

Minimum number of super PACs and hybrid super PACs that registered with the Federal Election Commission since January: 210

Number that explicitly mention Hillary Clinton in their own names: 8

Rank of New Yorkers and Californians, respectively, among donors who gave at least $200 to the main pro-Clinton super PAC between January and June: 1, 2

Amount a previously little-known California vintner poured into a pro-GOP super PAC ahead of the special Massachusetts U.S. Senate race in June: $1,700,000

Number of federal candidates to whom you may currently donate the per-cycle legal maximum of $5,200 without violating the law: 9

Number of U.S. Supreme Court justices it would take to throw out this aggregate contribution limit in a case before them: 5

Amount by which Democratic mega-donor Fred Eychanerexceeded the aggregate giving limit in 2012 after an “inadvertent error”: $1,000

Number of Fortune 100 companies that list on their websites a politician’s leadership role or committee assignments as reason to provide them financial support: 34

Number that mention a candidate's "integrity," “ethics” or “character”: 10

Estimated cost of the special U.S. Senate race in New Jersey conducted three weeks before the scheduled general election: $24,000,000

New Jersey GOP Gov. Chris Christie's margin of victory in November over his Democratic challenger: 22 percentage points

Number of days the federal government was partially shutdown in October: 16

Number of seats Democrats need to pick up next year to win control of the U.S. House of Representatives: 17

Ratio by which Democratic-aligned super PACs out-raised their Republican counterparts from January through June: 2:1

Amount of money donated by hamburger chain White Castle to a super PAC aligned with Speaker of the House John Boehner, R-Ohio: $25,000

Amount of money doled out to conservative groups by the Koch brothers-connected Center to Protect Patient Rights in 2012: $112,158,149

Date on which California campaign finance regulators announced an unusually large $1 million fine against two conservative groups in the state that failed to fully reveal their funders: Oct. 24

Date on which Internal Revenue Service official Lois Lerner resigned amid allegations that the agency had improperly targeted conservative nonprofits for scrutiny: Sept. 23

Date on which President Barack Obama’s two new nominees for the Federal Election Commissionwere confirmed: Sept. 23

Number of FEC commissioners who are still serving on the six-member commission despite their terms having expired: 4

Number of campaign bundlers Obama has nominated to serve as ambassadors since January: 23

Chance the U.S. ambassador to Ireland since 1960 has been a political appointee and not a career diplomat: 100 percent

Minimum number of incumbent GOP senators facing primary challenges next year: 7

Number of Senate and House candidates the anti-tax Club for Growth has already endorsed: 5

Number of votes Rep. Justin Amash, R-Mich., received to be House Speaker in January: 1

Percentage of House Republicans who voted for Amash’s amendment to limit the National Security Agency's surveillance ability: 40

Percentage of House Democrats who did the same: 56

Ratio of senators that voluntarily e-file their campaign finance reports: 1/6

Number of Twitter followers of Sen. Cory Booker, D-N.J.: 1,445,268

Number of campaign finance reports Booker has e-filed this year: 0

* Correction Dec. 26, 2013, 10:45 a.m.: This post originally misidentified the U.S. president who assailed the "Do-Nothing Congress." The Center regrets the error.

Michael Beckelhttp://www.publicintegrity.org/authors/michael-beckelhttp://www.publicintegrity.org/2013/12/26/14053/numbers-2013-money-politics-index

Top national security investigations from 2013

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Editors note: As the year winds down, we wanted to revisit some of the best accountability journalism from each of our coverage sections.

This year's investigative work from our national security team focused on wasteful, inefficient programs and lack of oversight within the Department of Defense — with emphasis on the nation's nuclear security.

(If you aren't signed up for our Watchdog email newsletter, what are you waiting for? It's totally free, and you can receive customized updates from us on a daily, bi-weekly or weekly basis. Sign-up using the form below.)

Obama officials OK-ed nuclear weapons cut


Early in 2013, we reported that Senior Obama administration officials agreed that the number of nuclear warheads the U.S. military deploys could be cut by at least a third without harming national security — opening the door to billions of dollars in military savings. Keep reading


Missile test targets fail at alarming rate


Nuclear intercepting is a feat often likened to hitting a speeding bullet with a bullet. More than $90 billion has been spent since 2002 to develop the means to target incoming missile threats and intercept them, but without much demonstrated success. Keep reading


Billions for a concrete shed?


A multi-billion dollar nuclear fuel plant being built by the Energy Department in South Carolina has become an embarrassing symbol of government mismanagement, plagued by long delays, wasteful spending, and construction snafus. Keep reading


A $7 billion jobs program


Lawmakers known for being “deficit hawks” shed their fiscal conservatism to appease local politics and keep the troubled South Carolina nuclear plant alive at Washington’s expense. Keep reading


How to defeat the Air Force


A major defense contractor used campaign donations and insider access on Capitol Hill to defy the Air Force and keep a troubled drone "Global Hawk" aloft at a cost of $2.5 billion in taxpayer funds. Keep reading


Speed ahead of quality?


Profits and politics, plus a sudden growth in secrecy-obsessed institutions, played key roles in misguided security clearance decisions. Keep reading


Hunting rogue asteroids … with nukes?


A persistent campaign by weapons designers to develop a nuclear defense against extraterrestrial rocks slowly (and surprisingly) wins government support. Keep reading


Firing a nuclear whistleblower


A scientific dispute over cleanup of one of the most polluted sites in the country threatens to ensnare the Energy Department’s leaders. Keep reading

http://www.publicintegrity.org/2013/12/27/14062/top-national-security-investigations-2013

Top finance investigations from 2013

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Editors note: As the year winds down, we wanted to revisit some of the best accountability journalism from each of our coverage sections. We'll be posting a new list daily for the rest of the year.

We were excited to bring our finance coverage back this year, particularly the 'After the Meltdown' investigation that followed-up on our 2009 look at the financial crisis.

(If you aren't signed up for our Watchdog email newsletter, what are you waiting for? It's totally free, and you can receive customized updates from us on a daily, bi-weekly or weekly basis. Sign-up using the form below.)

Poor hurt by benefits changes


A government initiative aimed at saving money by eliminating paper checks is hurting some recipients of federal benefits while earning the bank that operates the program millions in fees charged to consumers. Keep reading


Would Yellen-led Fed be tougher on banks?


Janet Yellen's confirmation as Fed chair is expected early in 2014, we spoke with her earlier this summer about Alan Greenspan, and the dangers of risky mortgages. Keep reading


Wall Street's revolving door


Executives from the mortgage finance division that helped sink Bear Stearns have similar jobs at major Wall Street banks. Keep reading


"Theirs was a big miss, not a stumble”


Five years after the near-collapse of the nation’s financial system, we looked at what happened to five former Wall Street kingpins to see what they are up to these days. None are in jail, nor are any criminal charges expected to be filed — certainly none are hurting for money. Keep reading


Subprime mortgage deja vu?


Top executives from the biggest subprime lenders are back in the game. Many are developing new loans that target borrowers with low credit scores and small down payments, pushing the limits of tighter lending standards that have prevailed since the crisis. Some experts fear they won’t know where to stop. Keep reading


Credit unions' new BFF?


Minutes after Rick Metsger took the oath of office to become the newest overseer of the nation’s credit union industry, he walked a few blocks up the street to break bread with executives and lobbyists for the firms he now regulates. Keep reading

The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2013/12/28/14063/top-finance-investigations-2013

Top GOP donor Harold Simmons dead at 82

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Harold Simmons, one of the nation's wealthiest men who contributed tens of millions of dollars to Republican and conservative causes, died Saturday, the Dallas Morning Newsis reporting today.

He was 82.

Simmons ranked as the No. 2 overall political donor during the 2011-12 election cycle, according to a Center for Public Integrityranking.

Bob Perry, another Texas businessman and top GOP donor, died earlier this year.

During the last election cycle, Simmons, like Perry, spread his contributions — nearly $31 million in all — to numerous candidates and super PACs. Among them:

  • $23.5 million to American Crossroads (pro-Republican), including $3 million from Contran Corp.
  • $2.3 million to Restore Our Future (pro-Mitt Romney)
  • $1.2 million to Red White and Blue Fund (pro-Rick Santorum), all from his wife, Annette Simmons
  • $1.1 million to Winning Our Future (pro-Newt Gingrich)
  • $1.1 million to the Texas Conservatives Fund (pro-David Dewhurst)
  • $1 million to Make Us Great Again (pro-Rick Perry), all from Contran Corp.
  • $500,000 to Conservative Renewal (pro-Dewhurst)
  • $100,000 to Restoring Prosperity Fund (pro-Perry, formerly Americans for Rick Perry)
  • $50,000 to Strong Utah (pro-Orrin Hatch)
  • $25,000 to Women Speak Out PAC (pro-Republican)
  • $10,000 to Conservatives Acting Together (pro-conservative)
  • $5,000 to Freedom PAC (pro-Connie Mack; pro-Allen West)

From the Center's biography of Simmons:

For a man worth more than $9 billion, Harold Simmons has had his share of problems. The owner of Contran Corp. nearly lost his fortune when his daughters sued him for control of the family’s wealth, and he has had to pay nearly $20,000 in fines for violating federal campaign contribution limits.

Simmons was born in 1931 in Golden, Texas, and graduated Phi Beta Kappa from the University of Texas at Austin. His first venture was the purchase of the University Pharmacy in Dallas. After 12 years, Simmons had turned one store into more than 100 and sold the chain to Eckerd for $50 million. Simmons was an early practitioner of the “leveraged buyout” — when an investor borrows heavily and takes an undervalued public company private and sells it for profit. He grew his fortune by buying and selling shares in a number of companies, including Amalgamated Sugar and Lockheed Corp.

In the mid-1990s, Simmons put all his wealth into trusts — ostensibly as a way to pass the wealth on to his children — but made himself the sole trustee, a decision criticized by legal experts interviewed by The New York Times. Simmons seemed to use the trust assets as his own and eventually ran into trouble with the Internal Revenue Service. As a result, his daughters, Andrea and Scheryle, filed a lawsuit against him in 1996. That lawsuit nearly cost him the fortune, according to the Times.

Simmons also ran into trouble with the Federal Election Commission in 1993 for violating the then-federal campaign contribution limit of $25,000 per year per individual, which resulted in him having to pay a $19,800 fine, according to FEC documents.

In addition to his super PAC giving, Simmons is a major contributor to conservatives’ campaigns, donating to Sen. Jon Kyl, R-Ariz.; Rep. Jeb Hensarling, R-Texas; Rep. Michele Bachmann, R-Minn.; and Sen. John McCain, R-Ariz., among others. He also gave $3 million to Swift Boat Veterans for Truth, the group whose ads helped sink Massachusetts Democratic Sen. John Kerry’s 2004 presidential campaign.

Most recently, Contran subsidiary NL Industries, a producer of the paint enhancer titanium dioxide, has been the subject of numerous lawsuits as a result of its environmental practices, according to D Magazine, a Dallas publication.

According to Forbes, the Texas House of Representatives approved a bill in 2011 that allowed Simmons’ Waste Control Specialists to transport low-level radioactive waste from other states and dispose of the material at its facility in Andrews County, Texas — an area that sits atop four aquifers. The review process that preceded the signing of the bill was lengthy and complicated, and D Magazine suggests it was influenced by Simmons’ donations to groups that supported Gov. Rick Perry.

Although Simmons' has given tens of millions of dollars to conservative political causes, the Dallas-based billionaire’s recent philanthropic giving has been anything but right-leaning, a Center for Public Integrity review of Internal Revenue Service documents indicates.

The Harold Simmons Foundation in 2011 most notably contributed a combined $600,000 to an arch political foe of Republicans, Planned Parenthood, and its North Texas affiliate, IRS records show.

It also donated to Public Campaign, a Washington, D.C.-based organization with a stated mission of working to “dramatically reduce the role of big special interest money in American politics.”

 

 

Harold Simmons, owner of Contran Corp. and Valhi, Inc.Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2013/12/29/14072/top-gop-donor-harold-simmons-dead-82

Top environment investigations from 2013

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Editors note: As the year winds down, we wanted to revisit some of the best accountability journalism from each of our coverage sections. We'll be posting a new list daily for the rest of the year.

It was a banner year for our environment and workers rights team: they were honored with the White House Correspondents Association's Edgar A. Poe Award, documented the largely unknown influence of the chemical industry, and revealed how sick miners' efforts to receive benefits for black lung disease are defeated by doctors and lawyers.

(If you aren't signed up for our Watchdog email newsletter, what are you waiting for? It's totally free, and you can receive customized updates from us on a daily, bi-weekly or weekly basis. Sign-up using the form below.)

EPA in the dark


An EPA panel appointed to study hexavalent chromium included scientists who had consulted for industry in lawsuits. Keep reading


Delay and denial on chromium


Tens of millions of Americans drink tap water tainted with chromium. But industry pushback has made it hard for the EPA to regulate. Keep reading


"Trees were sinking into it and not coming back"


What’s happening in Belle Rose has played out in dozens of communities threatened by environmental hazards so dire residents feel compelled to demand that industry or government move them out. But as Bayou Corne’s experience shows, winning buyouts is never easy, and leaving is often painful. The community’s travails reveal the human cost of pollution. Keep reading


'Upset' emissions: Flares in the air, worry on the ground


Residents living along the chemical corridor of Texas and Louisiana often encounter 'upset' emissions — triggering pollution, health fears. Keep reading


Climate plan, coal pushback


President Obama's climate plan, vital to his green agenda, is drawing close scrutiny — and sharp critiques — from powerful coal forces. Keep reading


Chemical lobby in the states


The fight between industry and activists over regulation of toxic chemicals has shifted from Washington, D.C., to state venues. Keep reading


Lethal fibers, industry denial


Facing 60,000 asbestos claims over a product it once sold, Georgia-Pacific responded with a legal pushback — and secretive science. Keep reading


Breathless and Burdened


Prominent law firm Jackson Kelly has withheld evidence of black lung in cases over the years, helping to defeat the benefits claims of sick miners. Keep reading


Coal's doctors of choice


A surprising force has helped industry defeat black lung benefits claims for ailing miners: Johns Hopkins University. Keep reading


The cancer factory


A decades-long spate of bladder cancer at a Goodyear plant in Niagara Falls, N.Y. spotlights limits of regulation over dangerous chemicals. Keep reading

The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2013/12/30/14068/top-environment-investigations-2013

Audit: FEC still in 'significant' danger of hacking

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The Federal Election Commission's computer and IT security continues to suffer from "significant deficiencies," and the agency remains at "high risk," according to a new audit of the agency's operations.

"FEC’s information and information systems have serious internal control vulnerabilities and have been penetrated at the highest levels of the agency, while FEC continues to remain at high risk for future network intrusions," independent auditor Leon Snead & Company of Rockville, Md., writes.

The audit, released today, comes less than two weeks after a Center for Public Integrity investigation that revealed Chinese hackers infiltrated the FEC's IT systems during the initial days of October's government shutdown — an incursion that the agency's new leadership has vowed to swiftly address.

The Chinese hacking attack is believed by FEC leaders and Department of Homeland Security officials to be the most serious act of sabotage in the agency's 38-year history.

Leon Snead & Company's new 34-page audit further reveals separate security breaches it discovered this year while auditing the FEC, which has in recent years endured shrinking budgets and staffing levels and historically high levels of gridlock.

The most notable security breach came in May 2012, when an unspecified "advanced persistent threat" broke into an unnamed FEC commissioner's computer user account.

For eight months, the report states, the commissioner's computer contained malware that gave hackers "potential" access to a variety of sensitive documents, including subpoenas, unpublicized investigations into political groups and "sensitive personal identifiable information."

Auditors acknowledge that they were unable to determine whether such material "was actually accessed by the intrusion," but "the opportunity did exist," they wrote.

In another incident, an FEC employee gained "unauthorized access to personnel-related files, labor management files and administrative law files," auditors write.

The new audit generally criticizes the FEC for not implementing various government IT security standards, from which FEC officials have maintained the agency is exempt.

Auditors also admonish the FEC for not heeding its IT security recommendations from a separate audit conducted in 2012, stating they were "advised by FEC officials that the agency had not yet implemented any significant portion" of that earlier audit's forewarning.

"Our analysis indicates that if FEC had implemented government-wide minimum best practice IT security controls, these intrusions and breaches may have prevented and/or more timely detected," auditors write.

Among its latest recommendations, auditors are asking the FEC to "provide sufficient budgetary and personnel resources ... to ensure that actions are properly accomplished." They further recommend that the FEC change all of its computer account passwords within the next 60 days.

In its official response to the audit's security-related recommendations, the FEC states that it is "moving as quickly as possible on the recommendations" and that "several of the recommendations have been implemented."

In an interview earlier this month about the Chinese hacking incident, incoming FEC Chairman Lee Goodman, a Republican, and incoming Vice Chairwoman Ann Ravel, a Democrat, both described the fixing of the agency's IT woes as a "top priority."

The FEC is in the process of hiring new IT security specialists and diverting resources to reinforce systems, Goodman added.

The new Leon Snead & Company audit covered the FEC's 2013 fiscal year, which ended Sept. 30, meaning it did not materially address the October's Chinese hacking incident.

But the report did acknowledge that an "intrusion was detected on the agency’s website in early fiscal year 2014" following a less severe hacking incident in August, which forced the FEC to temporarily disable portions of FEC.gov. The agency's website contains millions of records that provide the public with information about federal elections and the finances of candidates, committees and parties participating in them.

An FEC spokeswoman referred questions about the new audit to the agency's commissioners, who couldn't immediately be reached for comment.

White House officials, who have this month refused comment on the FEC's problems, also could not immediately be reached.

 

 

The Federal Election Commission is located at 999 E St. in downtown Washington, D.C. — a nondescript building situated across from FBI headquarters and next to a Hard Rock Cafe. Its entrance features a quotation attributed to Supreme Court Justice Louis Brandeis: “Sunlight is said to be the best of disinfectants." But funding and staffing woes, along with political infighting, have rendered it a weakened watchdog. Dave Levinthalhttp://www.publicintegrity.org/authors/dave-levinthalhttp://www.publicintegrity.org/2013/12/30/14073/audit-fec-still-significant-danger-hacking

Top ICIJ investigations from 2013

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Editors note: As the year winds down, we wanted to revisit some of the best accountability journalism from our global partners from the International Consortium of Investigative Journalists. 

Secret files expose offshore’s global impact


Dozens of journalists sifted through millions of leaked records and thousands of names to produce ICIJ’s investigation into offshore secrecy. Keep reading


Paradise of untouchable assets


Trusts held in the Cook Islands can put money beyond the reach of American justice. Keep reading


Who uses the offshore world


Secret records obtained by the International Consortium of Investigative Journalists reveal tens of thousands of people in more than 170 countries and territories linked to offshore companies and trusts. Keep reading


How ICIJ’s project team analyzed the offshore files


ICIJ's exploration of the secretive world of offshore companies and trusts began after a computer hard drive packed with corporate data and personal information and e-mails arrived in the mail. Keep reading


Offshore tax havens became traps for investors


Internal records of offshore trusts and companies in the South Pacific and the Caribbean reveal sanctuaries for secrecy-seekers. Keep reading


Caribbean go-between provided shelter for far-away frauds


British Virgin Islands firm kept doing business with shady characters even as regulators prodded it to obey anti-money-laundering laws. Keep reading


Politicians talk tough on tax haven reform, but activists say talk is cheap


Big players are taking unprecedented steps to stop offshore abuses, but financial crime fighters worry reforms don’t go far enough. Keep reading


From Island of the Widows: Countries target pesticides as suspected link to rare kidney disease


On opposite ends of the world, governments are cracking down on pesticides as a potential cause of a mysterious form of kidney disease killing agricultural workers. Keep reading

The Center for Public Integrityhttp://www.publicintegrity.org/authors/center-public-integrityhttp://www.publicintegrity.org/2013/12/31/14070/top-icij-investigations-2013

Federal appeals court sides with law firm in black lung case, but finds actions 'hardly admirable'

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A federal appeals court ruled Friday that the withholding of evidence by a prominent coal industry law firm in a black lung benefits case, while “hardly admirable,” did not reach the extraordinary level of “fraud on the court.”

In its decision, the U.S. Court of Appeals for the Fourth Circuit agreed with an administrative appeals board that the actions of the law firm Jackson Kelly PLLC didn’t amount to a carefully orchestrated scheme that undermined the integrity of the entire judicial process — a standard, the court said, that wouldn’t be met even by perjury or fabricated evidence.

The court, however, did not address whether the conduct constituted basic fraud — a key question to be resolved in an ongoing civil suit in West Virginia state court.

The case involved the claim of miner Gary Fox for federal black lung benefits, which was featured in the Center for Public Integrity series Breathless and Burdened. Fox lost a claim in 2001 after lawyers at Jackson Kelly withheld two reports from pathologists of their own choosing that found a sample of Fox’s lung tissue consistent with the most severe form of black lung, known as complicated coal workers’ pneumoconiosis. The firm instead allowed its consulting physicians to rely on a report from a hospital pathologist who had made a vague diagnosis after a procedure meant to rule out cancer, apparently unaware that Fox was a miner.

Fox was unable to find a lawyer and had no idea the other reports, written by prominent experts whose opinions commonly aided coal companies, existed. He had little choice but to return to work, his health steadily deteriorating until he had to retire in 2006.

In his second claim, he was able to find a lawyer, who pressed for discovery and obtained the withheld documents in 2008. An administrative law judge ruled that Jackson Kelly’s actions amounted to “fraud on the court” — the only way that Fox’s previous denial could be reopened and benefits awarded retroactively. Fox died in 2009, and an autopsy confirmed he had complicated black lung. His widow, Mary, is pursuing the case on his behalf.

The Center’s investigation found that Fox’s case was part of a longstanding pattern of withholding evidence by Jackson Kelly — an approach that has led to the defeat of miners’ claims, as well as condemnation from judges, an ongoing investigation by West Virginia disciplinary officials, a call for a federal investigation by two congressmen and a push in the U.S. Senate to reform the benefits system.

In a statement, a spokesperson for Jackson Kelly said the firm was pleased with the ruling. "We have always believed that the actions of our attorneys were lawful," the statement said. "For nearly 200 years, Jackson Kelly has represented clients across West Virginia and the nation, and we have always been known as strong and able advocates and we believe our conduct in this case was consistent with our duty to represent our client."

In its decision Friday, the appeals court focused on the interest in finality of legal decisions, expressing concern that siding with Fox would unleash a torrent of attempts to reopen other cases.

Fox’s lawyers, Al Karlin and John Cline, had sought to show that federal black lung cases are, in many respects, different from typical civil cases. Indeed, the system is a worker’s compensation program from which most claimants’ lawyers have fled in recent decades because of the low probability of victory and the meager payout in the rare event of a win.

The appeals court, however, wrote that the adversarial system is supposed to function as a “self-policing mechanism,” allowing one side to expose weaknesses in the other’s case. The court laid much of the blame with Fox, who had spent more than 25 years underground and had never set foot in a courtroom before his 2000 hearing.

Fox could have cross-examined witnesses, questioned the lack of other pathology evidence and hired experts of his own, the court wrote. The Center’s investigation found, however, that miners — especially those unable to find lawyers — almost never have the resources or wherewithal to do any of this.

“We are surprised that the Court failed to appreciate the difficulty that Mr. Fox and so many other miners have in getting competent counsel in federal black lung claims to protect them from litigation tactics that undermine the pursuit of the truth,” Karlin said after Friday’s decision.

The battleground now shifts to state court in West Virginia, where Karlin and Cline have sued Jackson Kelly on behalf of Fox and the families of two other miners whose cases involved withheld evidence by the law firm. That case has been on hold, awaiting the federal appeals court’s decision. The allegations in the state lawsuit, however, involve basic fraud — a different standard than the one evaluated in federal court.

It is unclear what effect the federal court’s decision will have on the state case. Though the court didn’t directly address whether Jackson Kelly had committed fraud in its decision Friday, it wrote, “We bestow no blessing and place no imprimatur on the company’s conduct,” which it said “warrants nothing approaching judicial approbation.”

U.S. 4th Circuit Court of Appeals in Richmond, VirginiaChris Hambyhttp://www.publicintegrity.org/authors/chris-hambyhttp://www.publicintegrity.org/2014/01/03/14074/federal-appeals-court-sides-law-firm-black-lung-case-finds-actions-hardly-admirable

Obamacare and emergency rooms: a bit of perspective needed

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Headlines based on a study of emergency room visits by a few thousand Oregon Medicaid beneficiaries undoubtedly gave the Obama administration heartburn last week. Although the study predated the Medicaid expansion authorized by the Affordable Care Act — which began in some states on January 1 — many who wrote about the Oregon study jumped to the conclusion that the millions of newly enrolled Medicaid beneficiaries would make greater — not less — use of the ER for routine care.

I may be going out on a limb, but I for one don’t buy the idea that the Oregon study means emergency rooms are going to get even more crowded. And that’s because more Americans will finally have insurance. 

Reform advocates have long suggested that getting folks out of the ranks of the uninsured should cut down on visits to the ER for noncritical medical care. Many people who lack coverage don’t have a primary care physician and all too often make trips to the ER when their illness or injury could have been treated more appropriately and inexpensively in a clinic or doctor’s office.  

The Oregon study, which was published in the journal Science, would seem to disprove that theory.

In 2008, two years before the ACA was enacted, Oregon increased the number of Medicare beneficiaries in a novel way: by lottery. Many Oregonians who had been on a waiting list for the state’s Medicaid program got lucky when their names were drawn and they were added to the rolls.

The researchers who wrote the Science article studied the emergency room use of about 25,000 of the successful and unsuccessful lottery participants and found that those who won coverage actually made more trips to the ER over 18 months than those whose names were not drawn.

Headline writers were quick to draw their conclusions: Obamacare would not reduce unnecessary ER visits.

“Emergency Visits Seen Increasing with Health Law,” read the headline above the New York Times story last Thursday.

“Obamacare Medicaid Expansion to Worsen Hospital ER Burden,” said Bloomberg.

And Forbes gave us this: “New Oregon Data: Expanding Medicaid Increases Usage of Emergency Rooms, Undermining Central Rational for Obamacare.”

“For years,” wrote Forbes columnist Avik Roy, “it has been the number one talking point of Obamacare supporters. People who are uninsured end up getting costly care from hospitals’ emergency rooms. ‘Those of us with health insurance are also paying a hidden and growing tax for those without it — about $1,000 per year that pays for [the uninsureds’] emergency room and charitable care,’ said President Obama in 2009. Obamacare, the President told us, would solve that problem by covering the uninsured, thereby driving premiums down. A new study, published in the journal Science, definitively reaches the opposite conclusion.”

There is more than a bit of twisted logic in that paragraph. It is true that those of us with insurance pay considerably more for it because those who don’t have it often can’t pay for their ER care. That’s because the hospital shifts the cost of that “uncompensated care” to its insured customers. Researchers have estimated that people with insurance pay $1,000 more a year for it than they would if this cost shifting didn’t have to occur.

Bringing uninsured people into coverage eliminates much of that cost shifting. And that’s a good thing, considering that the vast majority of Americans with health coverage — even after the Medicaid expansion — get it through private insurance companies, either at work or on their own.

The actual increase in the number of visits per person among the newly insured in Oregon via the Medicaid lottery was 0.41. In other words, each new enrollee made 0.41 visits more on average during the 18 months than the 1.02 ER visits made by those who remained uninsured.

When you look at it from the perspective of those numbers, and the actual amount Oregon spent per person, as University of Chicago health policy expert Harold Pollack did in a healthinsurance.org post, this is far from a “sky is falling” disaster in the making. And it s actually reducing the cost shifting.

Also, as Pollack pointed out, “the emergency departments will be reliably paid for care they provide ... (With coverage expansion) providers don’t have to fear the burdens or uncompensated care, and…they don’t need to cruelly pursue low-income patients over bad debts.

It’s also important to keep in mind that private insurers now manage most of the states’ Medicaid populations, and they will be vigilant in their efforts to steer their new Medicaid enrollees away from the ERs and to more appropriate and cost-effective settings. WellPoint subsidiary Amerigroup described in a recent policy brief, for example, how its efforts to reduce primary care-treatable ER visits among Medicaid beneficiaries resulted in a savings of more than 50 percent.

Rather than rushing to conclusions, let’s see how the Medicaid expansion under Obamacare actually plays out in the years ahead. 

Wendell Potterhttp://www.publicintegrity.org/authors/wendell-potterhttp://www.publicintegrity.org/2014/01/06/14076/obamacare-and-emergency-rooms-bit-perspective-needed
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