Bill Pryor is the attorney general of Alabama. His state was incorrectly identified in an article in Tuesday's Business section. (Published 12/16/99)
With uncanny regularity, Connecticut Attorney General Richard Blumenthal seems to pop up wherever major lawsuits are fought or filed. The joke making the rounds here in the capital is that if he and his wife have another daughter, they've already got a name picked out: Sue.
Now, this dapper and camera-ready enforcer is about to open fire again. Today, Blumenthal is set to become the first state attorney general to file suit against a health maintenance organization, suing Physicians Health Services, the third-largest health plan in the Northeast. The lawsuit will allege that the company has injured consumers and blocked their access to certain drugs based on cost rather than medical necessity.
"We will hold companies accountable for providing coverage that it has promised its policyholders," Blumenthal said in an interview last week. "We are going to use as a sword the same federal law that HMOs have long used as a shield."
If other attorneys general follow Connecticut's lead--something several are reportedly considering--Blumenthal's action could help turn HMOs into next year's version of the tobacco industry. And it would multiply the already plentiful problems of health insurers, which were hit by Congress this fall with new restrictions and have been targeted by trial lawyers in a spate of recent class-action suits.
But Blumenthal is just as sure to reignite a debate about the tactics of a newly activist band of attorneys general.
Emboldened by the $260 billion tobacco settlement of 1998, some AGs have been making common cause with trial lawyers. Some states, including Connecticut, have threatened to sue gunmakers. Makers of lead paint are another target.
At the same time, a shifting coalition of AGs has emerged as a force in antitrust law and a threatening cloud over the parade of corporate mergers. The Microsoft Corp. case--which was joined by 19 states--is only the most public of the lawsuits filed by AGs over alleged corporate misconduct.
All of this has corporate America howling. Business lobbyists and even some conservative AGs have argued that by working in tandem with trial lawyers, the attorneys general are lending prestige to a rapacious crowd and usurping a legislative role that doesn't belong to them.
"What's going on here is a clear and present danger to the rule of law," said Bill Pryor, the Republican AG of Arkansas. "These are instances where the government is going through the courts to sue entire industries and trying to achieve regulation and taxation which for decades has been rejected by the elected representatives of the people."
Meanwhile, corporate antitrust lawyers fume that the AGs are pandering for votes and needlessly duplicating a job that federal agencies can handle on their own.
Some are even decrying the AGs as legal shakedown artists because states typically bill corporations for the cost of the state investigations. "I did one investigation [brought by] three states and my client had to hand over $500,000," said one Washington lawyer, who like all who criticized the AGs spoke on the condition of anonymity. "There's an appearance of impropriety here."
Blumenthal and his colleagues are undeterred. Antitrust ought to have a local component to it, they say, because nobody cares more about the impact of, say, a supermarket merger than local consumers.
His office isn't colluding with plaintiffs' lawyers, he said, though it has received advice from David Boies, the government's lead Microsoft attorney and a player in HMO litigation. Nor will Connecticut seek financial damages in the HMO case, Blumenthal added, let alone split them with them private lawyers. The goal of his suit is simply to reform a system that has failed many consumers.
"There is a perception that we're working with the plaintiff's bar [on HMOs and guns] or that we're somehow anti-business, which is equally mistaken," Blumenthal said. "There is this wave of falsehoods which various interest groups are spreading to undermine the attorneys general."
These controversies aside, this is a moment of unprecedented power and prominence for Blumenthal and other AGs. By working closely together in the past year, they have built what amounts to a national law firm, with partners elected by the public. And by joining the recent groundswell of class-action suits, a group of mostly Democratic enforcers are seizing a role in shaping policy on fundamental questions about safety and health.
Blumenthal has become the ubiquitous face of this collective. The third-term Democrat and Yale Law School graduate boasts the sort of popularity ratings that make him a perennial odds-on choice for the governor's job or a Senate seat. He has frenetic energy as well as media savvy, a skill he might have honed decades ago as an intern at The Washington Post.
In recent weeks, he's played a role in the Microsoft mediation talks, sued a long-distance phone company for "slamming" and noisily registered objections to the Exxon-Mobil merger. The pace of all this talking and suing has raised inevitable snickers: that Blumenthal is as interested in self-promotion as justice, and that he is already running for another office. He demurs from comments about his future plans.
"I'm not thinking about anything else now," he said. "President Clinton said that being AG [in Arkansas] was the best job he ever had, and I think he's right."
In the suit against Physicians Health Services, Blumenthal is expected to accuse the company of violating its obligations to enrollees by requiring them to use drugs it has approved. The lawsuit will allege that PHS, the largest HMO in Connecticut, selects drugs for its pre-approved list based on discounts it negotiates with some drug manufacturers. This prevents some patients from receiving potentially beneficial drugs that are not on the approved list, the lawsuit will argue.
Karen Ignagni, president of the American Association of Health Plans, an HMO lobbying group, said that any AG-led litigation is likely to be politically motivated. "We're concerned that the environment has created a strong incentive for political grandstanding," she said.
It's unclear whether litigation will make headway with judges or juries, but if the AGs get involved it is likely to add legitimacy to the case against HMOs and it's sure to increase pressure on insurers to overhaul their business practices.
The intervention by AGs has its roots in the early 1980s, when states began stepping up their consumer-protection staffs after the Reagan administration dramatically scaled back funding for national antitrust enforcement.
Today, the pace is so feverish that it's complicating life for federal trustbusters. They must contend with AGs possessed with the clout to second-guess settlement decrees and the legal standing to scuttle deals that federal authorities are willing to bless. Former antitrust lawyers say it's like trying to play poker with someone looking over your shoulder on every hand.
But as Blumenthal's popularity suggests, the merger wave of the 1990s has turned antitrust into a political winner. Moreover, the windfall from the tobacco settlement, in terms of both dollars and enhanced prestige, has convinced some AGs that consumers are frustrated enough with inaction by legislatures to give litigation a chance.
"As I've said to my colleagues, we can't be intimidated by special interests that say we're working hand in glove with the trial lawyers," Blumenthal said. "We won't preserve the independence of our offices if we permit ourselves to be cowed by that argument."
IN PROFILE; Richard Blumenthal
Education: Bachelor's degree, Harvard University, 1967; law degree, Yale Law School, 1973; was editor in chief of Yale Law Journal
Work highlights: Assistant to President Richard Nixon, 1968-70; law clerk to Supreme Court Justice Harry Blackmun, 1974-75; member, Connecticut House of representatives, 1984-87; member, Connecticut state Senate, 1987-90; Connecticut attorney general, 1991- present.
Personal: Lives in Greenwich, Conn., with his wife, Cynthia, and their four children.
SOURCE: Who's Who in American Politics, Connecticut Attorney General's Office Web site
CAPTION: Richard Blumenthal, left, with David Boies, lead Justice Department attorney in the Microsoft case, center, and Iowa Attorney General Tom Miller.