Comment.

A Lawyer By Any Other Name

In "Safety Measures," (Best's Review, August 2000), your subhead on page 42 used that old saw "trial lawyers" to describe plaintiff's lawyers. The term is inaccurate, and your writers and editors should avoid it. Any doctor, hospital or other health-care provider who has been sued can attest that they need a "trial lawyer" too! As an attorney who tries lawsuits on behalf of defendants in personal-injury litigation, I hate to be lumped in with the "other side" in the popular press. When people ask what I do, I tell them that I defend against those types of cases. It usually takes a few seconds for what I said to sink in, because people are conditioned to think that a "trial lawyer" is an "ambulance chasing" plaintiff's lawyer. Don't forget that we on the defense side take just as much pride in our ability to go to war for our clients as any plaintiff's lawyer.

Richard R. Harden

Thomas, Mamer & Haughey

Champaign, Ill.

Ergonomically Incorrect

An amendment to a Labor Department appropriations bill [H.R. 4577], now in conference committee, would eliminate funding for the Occupational Safety and Health Administration's ergonomics proposal. The National Association of Independent Insurers supports elimination of the funding for the OSHA ergonomics proposal, because it would negatively affect state workers' compensation systems around the country.

NAII's primary objection with OSHA's ergonomics proposal is the Worker Removal Protection provision that erroneously provides benefits beyond those already available through the state workers' compensation system. The provision violates the Occupational Safety and Health Act, which clearly says that OSHA should not "affect" state workers' compensation systems.

In the last year, OSHA held public hearings around the country on its expansive ergonomics proposal. Representatives from the insurance industry, business community and labor all testified. Many entities agreed that although the original goal of protecting the worker through preventive programs is a good one, the OSHA approach goes beyond what is prudent and reasonable.

The OSHA ergonomics proposal makes public policy decisions that involve compensating workers for work-related illness and injury that affect the level, duration and compensation standards of workers' compensation.

Congress never gave this authority to OSHA and, in fact, intended to leave it to the state legislatures, as clearly outlined in language adopted in 1970, when the push to federalize the workers' compensation system was the strongest. The OSHA ergonomics proposal essentially duplicates benefit provisions in existing state workers' compensation systems, but at different levels of benefits and with different causation criteria that will negatively "affect" state workers' compensation systems.

In addition to the concerns outlined above, NAII believes that OSHA's proposal could open the door to an increase in fraudulent claims. The ergonomics proposal, because of the level of benefits and lack of requirements to show causation, creates an incentive for workers to commit fraud.

Finally, NAII believes early reporting of injuries by claimants and employers is a wise practice. However, NAII does not believe that the Worker Removal Protection provision is the way to encourage early reporting. NAII has asked OSHA to sit down with employers, the insurance industry and state workers' compensation administrators to find less intrusive means to achieve the goals of early reporting for reasonable and responsible medical management. With so much at stake, NAII hopes that OSHA will respond to our offer so all interested parties can participate in a solution that protects the state workers' compensation system for another 75 years.

Arlene Ryndak

Workers' Compensation Specialist

National Association of Independent Insurers

A Taxing Decision

So, President Clinton has vetoed H.R. 8, the Death Tax Elimination Act of 2000, just as he promised he would. Republicans in Congress last month failed to override the President's veto.

Those of us who shoulder the tax-paying burden have every right to expect that the manner in which we are taxed will be both fair and predictable.

Many feel the current estate tax is unfair, yet it is generally predictable. Conversely, the phase-out of the death tax may have been a step toward fairness, but the period over which it was proposed to take place--10 years--made the estate-tax obligation far less predictable. This forces the question: Can a tax that is unpredictable be called fair?

Under the current estate-tax system, a benefactor working with a knowledgeable adviser can protect an estate against significant depletion in value due to taxation. This is because the predictability of the estate tax permits the owner of the estate to fund the future tax bill with life insurance. A phased-out tax would not permit accurate planning because of the absence of one essential bit of advance information--the date that death will occur. While we would know the tax rates that would be in force during a phase-out period, even though they would differ from year to year, we would not know what rate would apply to an estate because we cannot predict the date of death.

In a curious twist, the elimination of the federal death tax would trigger a different type of tax, a capital gains tax, on estates, almost regardless of the size of the estates.

What many people also do not realize is that, under the current estate-tax law, the cost basis of inherited assets is "stepped up" to the fair market value on the day of the benefactor's death. This means that the capital gain, which is subject to tax, is only the appreciation of the inherited asset that occurred since the benefactor's death.

If the estate tax is finally phased Out, the cost basis of inherited assets will "carry over" to the next generation. When these assets are sold by the heirs, the capital gains tax will be assessed, not on the gain since the benefactor's death, but on the gain in value from the date of the benefactor's original acquisition of the asset. Where now only the wealthiest 2% to 5% of Americans pay an estate tax, under H.R. 8 virtually all Americans with almost any type of inheritance will pay a capital gains tax when they sell an inherited asset, although we may reasonably assume that some will find relief in the form of a deduction. In addition, tracking down the original cost basis of assets will pose a serious challenge both to taxpayers and to the Internal Revenue Service.

Is the current estate tax unfair? No more than any other tax. The defenders of the current estate tax do a great injustice when they resort to justifying it as a tax on the rich or a necessary inducement to charitable giving. Repeal advocates, in their rush to judgment without a thorough examination of the ramifications of phase-out and repeal, would create an alternate unpredictable tax burden that would affect more Americans than the current estate tax does.

Clark B. McCleary

President

Society of Financial Service Professionals

Bryn Mawr, Pa.

Quote/Unauote

"One of the great bidden stories in our business is that everybody's been concentrating on why it's so wonderful to demutualize and have forgotten what the impact on the prospective buyers of those products and those companies looks like."

Joseph D. Sargent, president and chief executive officer of Guardian Life Insurance Company of America, which is pursuing a merger with Berkshire Life Insurance Co.

"They have not given us a fair offer."

Piedmont HealthCare Chief Executive Lloyd Matson, who claims Blue Cross & Blue Shield of North Carolina has refused to guarantee the group wouldn't be paid rates lower than those any other provider in the state with a similar contract would receive.

"We made a decision to stick with some of our Medicare contracts until we see what Congress will do with payment equalization. With the big federal surplus, you would think they would provide some relief."

Blue Cross & Blue Shield United of Wisconsin Chief Executive Tom Hefty, after the company's surplus dropped in the second quarter as a result of losses on a Medicare-risk contract.

"By having adequate rates...you then lessen the possibility that 90% of the population is subsidizing the other 10%."

Florida Windstorm Underwriting Association spokesman Ron Natherson, regarding proposed legislation to create a better standard for setting rates.