Examiner Editorial: Buying off trial lawyers to grease the stimulus

Who knew that plaintiffs’ lawyers need to be stimulated? In a “recovery plan” that President Barack Obama said must be passed with “urgency,” why does the Senate weigh down its version of the economic stimulus bill with extraneous provisions having nothing remotely to do with invigorating the economy? Several sneaky parts of the bill are designed solely to make it easier and more profitable for class-action plaintiffs attorneys to file lawsuits against more businesses. Not only are the provisions unfair, they also are likely to be job killers in a bill supposedly aimed at job creation.

The provisions involve medical privacy rules enforced by federal agencies such as the Department of Health and Human Services. Everybody, of course, is in favor of keeping medical records private. That’s why federal regulators already enjoy broad enforcement powers. Yet in the midst of an urgent economic bill, congressional liberals saw fit to change the existing and effective regulatory scheme. First, it would impose penalties not just on the medical or pharmaceutical entities directly responsible for keeping the information private, but now (for the first time) to their “business associates.” So, if a pharmacist forgets to encrypt information like a patient’s name and ZIP code, information otherwise publicly available anyway, and it somehow ends up without permission in an insurer’s database, the insurer might also be liable for the “breach” of privacy.

Next, the bill expressly invites state attorneys general to bring civil cases to enforce the provisions. That’s a guarantee of confusion and bureaucratic rigmarole. Instead of a central federal agency interpreting and enforcing a host of complicated regulations, 51 different attorneys general would be using 51 different interpretations before courts inexpert in the subject. Businesses trying hard to comply with all the rules could never be sure when or why they might end up in court.

But the real kicker comes in the provision’s failure to forbid the attorneys general from hiring outside lawyers seeking jackpots to bring the suits for them. The AGs presumably would have no incentive other than the public interest; but the outside attorneys would have a profit motive and a clear reason to make campaign contributions to the AGs that hired them. This is an obvious recipe for shenanigans.

So many changes costly to so many businesses should have been considered on their merits, in the open, not stuck in a supposedly “must-pass” economic recovery act. Inclusion of those provisions in this bill is shameful. Congress should kill these provisions as the economic stimulus bill moves forward.