Report: Bush Administration Rulemaking Limits Consumer Lawsuits

May 15, 2008

Faced with an unfriendly Congress, the Bush administration has found another, quieter way to make it more difficult for consumers to sue businesses over faulty products. It’s rewriting the bureaucratic rulebook.

Lawsuit limits have been included in 51 rules proposed or adopted since 2005 by agency bureaucrats governing just about everything Americans use: drugs, cars, railroads, medical devices and food.

Decried by consumer advocates and embraced by industry, the agencies’ use of the government’s rule-making authority represents the administration’s final act in a long-standing drive to shield companies from lawsuits.

President Bush has campaigned for lawsuit reform since his days as Texas governor. As president, he has made little headway on the issue in Congress. He’s been thwarted by Democrats every time he’s tried to tackle the issue head-on.

Turns out there was another way, one little-noticed step at a time.

If the rulemaking at the various agencies had been a centralized effort in the White House or the Justice Department, “it would have failed because immediately everybody would have mobilized resistance,” said Michael Greve of the American Enterprise Institute, a conservative Washington think tank.

Limits on lawsuits have been ordered or proposed for drug labeling and packaging — one issue that got a big airing on Wednesday because of a case involving actor Dennis Quaid’s newborn twins — and for rules ranging from mattress flammability standards to school bus passenger seating to dietary sweeteners and roof-crush requirements in car rollovers.

Of the 51 regulations, 41 came from the Food and Drug Administration and the National Highway Traffic Safety Administration, or NHTSA.

Ten of 15 federal traffic safety regulations from last year have been finalized by NHTSA and are now in force or soon will be, a development that has gotten minimal public attention.

Underlying this bureaucratic version of lawsuit reform is the concept of federal preemption — a legal idea that is hard to build widespread public interest in.

Rooted in the Supremacy Clause of the Constitution, federal preemption refers to circumstances in which federal law and regulation trump state law, in this instance state laws that govern when one person may be held liable for another’s injury.

Frequently filed in state courts, where juries often are more receptive to plaintiffs’ claims against corporations, product liability lawsuits are often moved at the request of business defendants to more restrictive federal courts.

Regardless of where the suits end up, the issue is increasingly whether companies can use broad preemption language in regulatory preambles to get cases thrown out.

The preambles are the agencies’ interpretation of whether the federal regulatory law permits preemption of lawsuits. An expansive interpretation of preemption leaves little room for consumers to sue, and that is what the national trial lawyers group, the American Association for Justice, says is taking place.

Jon Haber, AAJ’s chief executive officer, says the agencies are engaging in “a brazen end run around Congress, the Constitution and the states in an effort to let negligent corporations off the hook and knowingly put consumers at risk.”

The real-world impact of preemption was on display Wednesday when a congressional committee heard from actor Dennis Quaid and his wife, who have sued a maker of the blood-thinner heparin in Illinois state court.

The Quaids sued after their newborn twins were given massive doses of the blood thinner at a hospital. The Quaids claim the manufacturer was negligent in packaging different doses of the product in similar vials with blue backgrounds.

The company — Baxter Healthcare Corp. — is seeking to use the doctrine of preemption to shield it from any civil liability, claiming that once FDA approved the labeling and packaging at issue in the case, the company is immune from civil suits for money damages.

Joan Claybrook, former head of NHTSA during the Carter administration, says her former agency is using regulatory preambles in a campaign against lawsuits.

“What the companies want is complete immunity and the regulators in the Bush administration are helping them,” says Claybrook, now head of the consumer advocacy group Public Citizen.

NHTSA denies that it has designed rules to undercut lawsuits.

“After considering both the purposes of each safety rulemaking and possible state actions that might arise, in most cases we have concluded that there are no presently identified factual situations that would create a conflict or frustrate federal objectives,” says the agency. “We cannot, however, rule out the possibility that such a factual situation might arise in the future.”

Georgetown University law professor David Vladeck calls NHTSA’s position “mumbo jumbo that understates considerably the language in the preambles.”

“The preambles say that, in the future, once the NHTSA rule takes effect, the agency believes that the rule should have the effect of displacing state tort law,” said Vladeck.

The FDA echoes NHTSA’s position.

“The preambles to these rules do not seek to preempt, but instead describe the scope of preemption under operation of federal law,” said FDA spokesman Rita Chappelle.

Later this year, the Supreme Court will wade into the issue of federal preemption as it relates to lawsuits and prescription drug labeling. The defendant drugmaker contends it should not be in the lawsuit because the FDA had approved the warning label on the drug.

The company is trying to overturn a $6.8 million award given a woman whose arm had to be amputated after anti-nausea medication was inadvertently injected into an artery.

In some instances, judges seem as exercised as consumer advocates about the FDA’s undermining of lawsuits under state tort law.

In a recent decision, a federal appeals court judge wrote that the FDA has for over three-quarters of a century viewed state tort law as complementary to the agency’s safety warnings on prescription drug packages and “only for the last two years has it claimed otherwise.”

The judge, Thomas Ambro, was dissenting from a ruling by two of his colleagues throwing out lawsuits in New Jersey and Pennsylvania. The allegations in the suits against pharmaceutical companies linked two suicides to antidepressants.

Judges have cited FDA’s regulatory preamble in its prescription drug rule in more than a dozen favorable rulings for pharmaceutical companies. Despite the FDA frequently showing up on the side of industry, judges have ruled for consumers’ right to sue about as often as they have ruled against them in cases touching on the regulatory preamble for prescription drug labels.

One expert in the field says the trend may be shifting to industry’s favor, in part due to the FDA’s regulatory preamble.

“The last four or five cases, industry has been on a roll,” says Chicago attorney Mark Herrmann, who defends pharmaceutical companies in liability cases.

Federal regulations limit consumer lawsuits
A list by agency of 51 federal health and safety regulations proposed or adopted since 2005 that could make it more difficult for consumers to sue businesses for faulty products:

National Highway Traffic Safety Administration
June 22: proposed, designated seating positions and seat belt anchorage.
Aug. 19: proposed, roof crush strength.
Sept. 12: proposed, rearview mirror.

Feb. 6: adopted, door locks & door retention.
April 6: adopted, electronic stability control.
May 4: adopted, head restraints.
July 12: final, tire pressure monitoring.
July 24: adopted, test procedures for installing child restraints to a child restraint anchorage system.
Sept. 5: adopted, occupant head protection in interior impact.
Sept. 11: adopted, side impact.
Sept. 25: proposed, occupant crash protection.
Oct. 9: proposed, electric-powered vehicles.
Oct. 9: proposed, brake hoses.
Nov. 2: adopted, occupant crash protection, fuel system integrity.
Nov. 21: proposed, school bus passenger seating.
Dec. 4: adopted, cargo carrying capacity.
Dec. 4: adopted, lamps, reflective devices.
Dec. 20: proposed, platform lifts for motor vehicles.

Jan. 23: supplemental proposed, child restraint systems.
April 30: adopted, changes in vehicle identification number requirements.

Consumer Product Safety Commission 2006

March 15, adopted, mattress flammability standards.

Federal Railroad Administration
Oct. 11: adopted, continuous welded rail.
Oct. 12: proposed, railroad operating standards.
Oct. 27: adopted, occupational noise exposure.

Aug. 1: proposed, passenger equipment safety standards.
Sept. 4: proposed, electronically controlled pneumatic brake systems.

Federal Railroad Administration/Pipeline and Hazardous Materials Safety Administration
April 1: proposed, improving safety of railroad tank cars.
April 16: interim, enhancing rail transportation safety.

Food and Drug Administration
Drug regulation:
Jan. 24: adopted, prescription drug labeling.
Aug. 1: adopted, over-the-counter allergy medicine.
Aug. 29: proposed, skin bleaching drug products.
Dec. 12: proposed, over-the-counter drug labeling.
Dec. 26: proposed, over-the-counter analgesics.

March 6: adopted, over-the-counter dandruff products.
March 29: adopted, over-the-counter laxatives.
Aug. 27: proposed, sunscreen labels.
Dec. 19: adopted, over-the-counter contraceptives.

Feb. 1: adopted, lip protectant over-the-counter drug products.
Jan. 16: proposed, labeling changes for approved drugs, biologics and medical devices.

Food regulation:

March 29: adopted, dietary sweeteners.
May 22: adopted, soluble fiber.
July 25: adopted, raw fruits and vegetables.
Dec. 13: adopted, dietary supplements.

Jan. 5: proposed, calcium content claims.
Jan. 12: adopted, lean meat claims.
Feb. 6: proposed, soluble fiber, expand the use of health claims.
Sept. 17: interim, dietary sweeteners, adds a noncarcinogenic sugar.
Nov. 27: proposed, fatty acids.

Feb. 25: interim, soluble fiber, additions to list of eligible sources.

Department of Homeland Security
Dec. 21: proposed, rail transportation security.
April 9: interim, chemical facilities.

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