/raid1/www/Hosts/bankrupt/CAR_Public/000207.MBX                C L A S S   A C T I O N   R E P O R T E R

               Monday, February 7, 2000, Vol. 2, No. 26


ANALYTICAL SURVEYS: Bernstein Liebhard Files Securities Suit in IN
AOL: Girard & Green Files Suit in CA over Unfair Business Practices
ARENA FOOTBALL: Players File Antitrust Lawsuit in NJ against League AFL
ASHANTI GOLDFIELDS: Milberg Weiss Files Securities Lawsuit in N.Y.
AUTO INSURANCE: State Farm Settles Dispute Over UM/UIM Rejection Forms

BMC SOFTWARE: Milberg Weiss Files Securities Lawsuit in Texas
CENTURY BUSINESS: Bernard M Gross Announces Pendency of Securities Suit
CENTURY BUSINESS: Savett Frutkin Files Securities Complaint in Ohio
CHECK CASHERS: Cash-2-U Sued over Racketeering; All Suspected of Usury
COLUMBIA/HCA HEALTHCARE: Former Volunteer Sues in FL over Minimum Wages

HAVERSTICK-BORTHWICK: Scientific Evidence Ruled out for Toxin Exposure
HEMPSTEAD TOWN: Sp Ct OKs Suit over Bias Posed by At-Large Voting
HMO: CT Sues Physician Health for ERISA Violations & Breach of Fid Duty
INDUS INTERNATIONAL: Bernstein Litowitz Files Securities Lawsuit in CA
JOHN BERG: Borrowers Induced into Buying Homes Allowed to Replead in PA

MOBIL OIL: Combined Aussi Case over Fuel Crisis Adjourned by Ap Ct
MOVIE THEATERS: Deaf Group Sues for Devices for Closed-Captioned Films
NEW JERSEY: Casino Contractors Sue over Minority Set-Aside Rules
NY CITY: Ct Dismisses Bias Claims Filed with EEOC under Res Judicata
OXFORD HEALTH: Lead Plaintiff’s Lies Threaten Milberg’s Control of Case

PRISON REALTY: Kaplan, Kilsheimer Files Securities Suit in TN
UPS: Faces PA Consumer Antitrust Suit over Insurance for Heavy Packages

* HUD Clarifies Policy Statement Regarding Mortgage Broker Fees, YSPs
* MSPB Calls for DOJ to Take Steps to End Minority-Hiring Programs
* Should an Accounting Firm in a Bankruptcy Be Indemnified at Outset
* Studies Show Voters' Support For Patients' Rights Legislation


ANALYTICAL SURVEYS: Bernstein Liebhard Files Securities Suit in IN
Bernstein Liebhard & Lifshitz, LLP commenced a securities class action
lawsuit in the United States District Court for the District of Indiana
on behalf of purchasers of the common stock of Analytical Surveys, Inc.
between October 25, 1999 and January 31, 2000, inclusive.

The complaint charges Analytical Surveys and certain of its directors
and executive officers with violations of the Securities Exchange Act of
1934 and Rule 10b-5 promulgated thereunder. The complaint alleges that
the financial statements issued by Analytical Survey during the Class
Period were materially false and misleading and were not prepared in
conformance with Generally Accepted Accounting Principles. As a result,
the Company's revenues, income and earnings were materially overstated
and its financial statements may need to be restated.

For more details on the above-mentioned lawsuit, you may contact Mr.
Mark Punzalan, Director of Shareholder Relations at Bernstein Liebhard &
Lifshitz, LLP, 10 East 40th Street, New York, New York 10016, 800-
217-1522 or 212-779-1414 or e-mail at ANLT@bernlieb.com

AOL: Girard & Green Files Suit in CA over Unfair Business Practices
A class action lawsuit against America Online, Inc. ("AOL") was filed
February 3 in Alameda County Superior Court on behalf of Michael Muzio,
an Alameda resident.

The suit alleges that subscribers to America Online Inc. encounter
problems after installing Version 5.0 of AOL's internet software.
According to the suit, AOL's new software was deliberately designed to
interfere with use of non-AOL communications programs and with
connections to non-AOL internet services. In particular, if customers
click "yes" during installation to allow AOL to become their default
internet browser, AOL's software also replaces or modifies critical
windows files and communications settings, making it virtually
impossible to connect to rival internet service providers.

The suit alleges that in October 1999, AOL released America OnLine
Version 5.0 ("AOL 5.0" or "version 5.0"), and launched an advertizing
blitz designed to switch existing customers over to AOL 5.0 as quickly
as possible. AOL touted the supposed advantages of the new version,
including improved performance and functionality, and new features such
as its "You've Got Pictures" and "My Calendar" features. By the end of
October, AOL reported that the new version had been downloaded more than
4 million times, and that the new software already accounted for 30% of
the time customers spent online. At present, at least 8 million AOL
customers have attempted to install version 5.0.

The suit further alleges that in advertising version 5.0, however, AOL
did not disclose to new and existing customers that, during the
installation process, AOL 5.0 would unnecessarily "customize" the host
system's communications configuration and settings such as to interfere
with any non-AOL communications software and services the customer might
be using or might want to use in the future. After installing AOL 5.0,
many users report they can no longer connect to other ISPs, can no
longer run non-AOL e-mail programs, and, sometimes, cannot even connect
to local networks. Even users who have not yet experienced problems are
likely to do so when, in the future, they attempt to connect to a
non-AOL service.

The suit further alleges that many of the unnecessary and sweeping
changes to the user's system occur after the user clicks "yes" when
asked by AOL 5.0 during the installation process whether the user wants
AOL to be the default browser. The question is accompanied by no warning
that anything more is intended than establishing benign and
easy-to-change associations so that the AOL browser is automatically run
when the user double-clicks on ".html" files, or otherwise invokes a
browser. Instead, the suit alleges, if the customer clicks "yes," in
addition to installing AOL as the default browser, the AOL installer
program modifies or overwrites critical Windows communications files and
changes the TCP/IP and other communications settings.

The suit, Muzi v. America Online Inc., seeks injunctive relief and
damages on behalf of a class estimated at approximately 8 million
customers, and alleges claims for violation of California's unfair
business competition law and violation of the California Consumers Legal
Remedies Act. Muzio is represented by Girard & Green, LLP, partner
Daniel C. Girard and associates Eric H. Gibbs and Gordon M. Fauth, Jr.
Plaintiff's counsel in this Action -- Girard & Green, LLP -- has
significant experience in prosecuting class actions and actions
involving deceptive and unfair business practices. The firm's legal team
also includes attorneys with experience in computer programming and
hardware and software design and support. Girard & Green, LLP is based
in San Francisco and is active in litigation pending in federal and
state courts throughout the United States.

Contact: Girard & Green, LLP Daniel C. Girard, 415/981-4800

ARENA FOOTBALL: Players File Antitrust Lawsuit in NJ Against League AFL
Professional arena football players, fighting back against unfair
take-it-or-leave-it contracts that are the product of an antitrust
conspiracy, have filed a class action anti-trust lawsuit against the
Arena Football League (AFL) and its member teams in federal court.

The suit, filed in the Federal District Court of Newark, seeks to
redress unlawful practices by the arena football teams that prevent
free-market competition for players' services. The players are seeking a
court injunction to create free agency and triple damages for the
injuries they have suffered. The suit claims that the AFL teams, in
violation of federal anti trust laws, have joined together to eliminate
competition for players' services, to prohibit injury and other
contractual guarantees, to fix the terms of employment for each player
at unfair and uncompetitive levels, and to otherwise deprive players of
the same freedom to offer their services to competing employers that
other professional athletes enjoy.

James Guidry, the first of six named plaintiffs to the class-action
suit, said, "The AFL teams have conspired to push players down, push
salaries down and to deny us any injury protection/but we are fighting
back. The AFL teams force us to sign away all our rights while giving
players minimum job security. It's just not right." Guidry is also the
president of the newly formed Arena Football League Players Association
that, along with the United Food and Commercial Workers International
Union (UFCW) and the National Football League Players Association, is
supporting the player's class action suit. Jeffrey L. Kessler of Weil,
Gotshal & Manges, LLP, 212-310-8646, or Mark Levinstein of Williams and
Connolly, 202-434-5012

ASHANTI GOLDFIELDS: Milberg Weiss Files Securities Lawsuit in N.Y.
Milberg Weiss Bershad Hynes & Lerach LLP filed a securities class Action
lawsuit on February 3, 2000, in the United States District Court for the
Eastern District of New York on behalf of all persons who purchased the
common stock of Ashanti Goldfields Company Limited, Inc. between July
28, 1999, and October 5, 1999, inclusive.

The complaint charges Ashanti and certain of its senior officers with
violations of Sections 10(b) and 20(a) of the Securities Exchange Act of
1934 and Rule10b-5 promulgated thereunder. The complaint alleges that
defendants issued a series of materially false and misleading statements
concerning the Company's hedging strategy, ostensibly designed to
protect Ashanti against fluctuations in the price of gold. The complaint
further alleges that defendants' statements during the Class Period
misrepresented and concealed the true risks present in the Company's
hedge book and concealed the Company's exposure to the volatility in the
price of gold. On October 5, 1999, the complaint alleges, Ashanti
announced that its hedge book had turned "negative" by over $450 million
and that the Company would be required to meet massive margin calls
which it did not have the capital to meet. In response to the Company's
belated disclosures the price of Ashanti common stock fell over 56 % to
close at $4.125 per share on October 6, 1999.

For more details on the above-mentioned lawsuit, please contact at
Milberg Weiss Bershad Hynes & Lerach, Steven G. Schulman or Samuel H.
Rudman at One Pennsylvania Plaza, 49th Floor, New York, New York
10119-0165, by telephone 1-800-320-5081 or endfraud@mwbhlny.com via
e-mail or visit website at http://www.milberg.com

AUTO INSURANCE: State Farm Settles Dispute Over UM/UIM Rejection Forms
State Farm Mutual Automobile Insurance Co. has settled a Texas class
action alleging it misrepresented uninsured/underinsured coverage on
rejection forms between 1983 and 1995. Plaintiffs attorneys estimate
settling the claims will cost at least $ 60 million (Gary Gibson v.
State Farm Mutual Automobile Insurance Co., et al., No. 98-272, Texas
Dist., Rusk Co.).

The selection/rejection form, which was invalidated by the Texas Supreme
Court, stated that the UM/UIM coverage paid only when the at-fault
driver's liability limits were less than State Farm's policyholder's
UM/UIM limits.

The form represented coverage that was not the same as the actual
coverage, and policyholders rejected coverage without knowing what it
was, according to plaintiff counsel. After the Supreme Court decision,
State Farm paid claims in compliance with the ruling, but it continued
to send the improper form to policyholders, who often rejected the

State Farm has agreed to restore that coverage to policies and pay all
claims filed. State Farm also has agreed to pay $ 12 million in
attorneys' fees.

                          Class Members

The class, potentially millions of claimants, includes all present and
former State Farm Texas automobile liability insurance policyholders who
rejected UM/UIM coverage by executing the coverage selection/rejection
form containing that representation. Class members are policyholders who
were involved in an accident since Oct. 15, 1983, with an at-fault
driver who was uninsured or whose liability limits were less than the
covered person's actual damages and for whom UM/UIM benefits were not
paid based on the rejection form.

The class also includes policyholders who selected limits of UM/UIM
coverage less than their own liability limits by using the form and who
were involved in an accident since Oct. 15, 1983, with an at-fault
driver who was uninsured or underinsured and for which State Farm (1)
paid the stated limits per person or per occurrence of the policy's
UM/UIM benefits or (2) denied payment of UM/UIM benefits, in whole or in
part, based on the coverage selection form.

According to the settlement, the minimum settlement for personal injury
claims is $ 5,000 and $ 1,500 for property damage claims.

The class representative, Gary Gibson, sued State Farm after it rejected
a claim when his son was killed in a 1998 car accident with an
underinsured driver. Gibson had previously declined UM/UIM benefits
based on the rejection form deemed illegal by the Texas Supreme Court.

State Farm, which insures about 3.9 million vehicles in Texas, will
permit current policyholders who previously rejected UM/UIM coverage to
reconsider their decision. The additional coverage will be provided at
no additional premium until the next policy renewal date.

A hearing on the settlement is set for Feb. 25. Class counsel are
Stephen Woodfin of Kilgore, Texas, and James Holmes of Wellborn,
Houston, Adkison, Mann, Sadler & Hill in Henderson, Texas. Allen Butler
of Clark, West, Keller, Butler & Ellis in Dallas represents State Farm.
(Text of Proposed Settlement in Section L. Mealey's Document #
07-991207-115 website at:http://www.mealeys.com)(Mealey's Litigation
Report: Insurance Bad Faith, December 7, 1999)

BMC SOFTWARE: Milberg Weiss Files Securities Lawsuit in Texas
Milberg Weiss Bershad Hynes & Lerach LLP commenced a securities class
action suit in the United States District Court for the Southern
District of Texas on behalf of purchasers of BMC Software, Inc. common
stock during the period between July 29, 1999 and January 4, 2000.

The complaint charges BMC and certain of its officers and directors with
violations of the Securities Exchange Act of 1934. The complaint alleges
that defendants' false and misleading statements about strong sales of
BMC's existing software products, the successful integration of its
acquisitions of Boole & Babbage and New Dimension Software earlier in
1999, strong demand for its mainframe MIPS software, notwithstanding a
slowdown in sales of IBM mainframe computers, and the lack of customer
deferrals of orders or purchases due to Y2K concerns, which would result
in 25%-30% EPS growth for BMC during F00-F01 and 3rd and 4thQ F00 EPS of
$.52-$.55 and $.58-$.64, respectively, artificially inflated its stock
to a Class Period high of $86-5/8 on January 3, 2000. During the Class
Period, BMC insiders and controlling shareholders sold 1,085,015 shares
of their BMC stock at as high as $78.83 for $63.1 million in proceeds.

On January 5, 2000, just two days after BMC's stock hit its all-time
high, BMC revealed that, due to problems integrating the BMC, Boole &
Babbage and New Dimension sales forces, sales execution procedures in
Europe and the U.S., and weakness in demand for mainframe MIPS software
products, its 3rdQ F00 results would be much worse than earlier
forecast. BMC's stock fell from $85-1/8 on January 4, 2000 to $47, an
almost 50% drop in one day, and when BMC reported 3rdQ F00 EPS of just
$.41, a decline from its 2ndQ F00 EPS and its year-earlier 3rdQ F99 EPS,
its stock continued to fall to just $36.

For more information concerning this lawsuit, please contact plaintiff's
counsel, William Lerach or Darren Robbins of Milberg Weiss at
800/449-4900 or via e-mail at wsl@mwbhl.com

CENTURY BUSINESS: Bernard M Gross Announces Pendency of Securities Suit
Pursuant to Section 21(D)(A)(3)(a)(i) of the Securities Exchange Act of
1934, Notice is hereby given that on February 3, 2000, a class action
lawsuit was filed in the United States District Court of the Northern
District of Ohio on behalf of a class (the "Class") consisting of all
persons who purchased the common stock of Century Business Services Inc.
(NASDAQ: CBIZ) between November 9, 1999 through January 28, 2000,
inclusive (the "Class Period").

The Complaint charges certain of Century officers with violations of
Section 10b-5 of the Securities Exchange Act of 1934. According to the
Complaint, during the Class Period, defendants made false and misleading
statements regarding its internal financial reporting structure.

Prior to the Class Period, in 1997 and 1998, Century had engaged in an
aggressive acquisition campaign during which time Century acquired over
100 companies. As a result of these acquisitions, Century did not have
in place adequate internal controls and management reporting structures
to assure that it timely reported material changes in its operation

Century's Senior Executives and managers during the fourth quarter of
1999 were not reviewing, receiving and/or preparing timely reports and
thus recklessly disregarded significant increases in expenses and
significant decreases in revenues in Century's various business units.

In a conference call on January 31, 2000, DeGroote admitted that
Century's financial reporting system was so grossly deficient that
monthly financial results were not available to management until the
20th to 25th day of the succeeding month and that Century did not have
in place a centralized management group for reviewing whether the
businesses were varying from their plans and budgets.

The financial reporting deficiencies at Century hit a critical peak
during the fourth quarter 1999 when senior management was spending
significant amounts of time in furthering efforts to form strategic
alliances with other companies as well as coordinating the integration
of the new acquired companies.

Defendant, DeGroote on January 31, 2000, further admitted that "(t)he
fact is that the lack of focus by top management and perhaps any
business leaders let expenses get out to line, obviously off of budget
in terms of revenue as well." The mere diversion of attention of senior
management would not have been as devastating to Century if it had in
place timely and sufficient means of reporting and analyzing the
Company's financial results on a monthly basis. Finally, on January 31,
2000, in a press release, the truth was told. Century revealed the true
condition of its deficiencies in it's internal financial reporting

In reaction to this disclosure, Century's stock price plummeted over
45%, dropping from $6.92 on Friday January 28, 2000 to close at$3.71 on
Monday January 31, 2000.

Plaintiffs seek to recover damages on behalf of Class members and, are
represented by the law firm of Law Offices Bernard M. Gross, P.C. having
significant experience and expertise in prosecuting class actions.

If you are a member of the Class described above, you may, not later
than 60 days from February 3, 2000, move the Court to serve as lead
plaintiff of the Class, if you so choose. In order to serve as lead
plaintiff, however, you must meet certain legal requirements.

If you wish to discuss this action or have any questions concerning this
Notice or rights or interests with respect to these matters, PLEASE

Contact: Law Offices Bernard M. Gross, P.C. Susan Gross, Esq. Tina
Moukoulis, Esq. 800/849-3120 or 215/561-3600 E-mail:
susang@bernardmgross.com or tina@bernardmgross.com

CENTURY BUSINESS: Savett Frutkin Files Securities Complaint in Ohio
Savett Frutkin Podell & Ryan, P.C. filed a class action complaint in the
United States District Court for the Northern District of Ohio on behalf
of a class of persons who purchased the common stock of Century Business
Services Inc. at artificially inflated prices during the period November
9, 1999 through January 28, 2000 and who were damaged thereby.

The complaint charges certain of Century officers with violations of
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The
complaint alleges that during the Class Period defendants made false and
misleading statements regarding Century's internal financial reporting

For additional information concerning this lawsuit, you may contact
Robert P. Frutkin, Esquire, Barbara A. Podell, Esquire of Savett Frutkin
Podell & Ryan, P.C. 325 Chestnut Street, Suite 700 Philadelphia, PA
19106, telephone at 800/993-3233 or sfprpc@op.net via e-mail.

CHECK CASHERS: Cash-2-U Sued over Racketeering; All Suspected of Usury
The owners and operators of a defunct Stuart check cashing business were
fined $40,000 on February 3 for their part in a scheme that bilked
thousands of dollars in illegal interest from financially distressed
borrowers. One of the owner-employees of Treasure Coast Cash Co. also
faces related criminal charges. A state hearing officer found in favor
of the Department of Banking and Finance, agreeing that William Erling
Becker, his son Todd Becker, and daughter-in-law Cathy Becker, of
Treasure Coast Cash Co., operated a "money transmitter" or check cashing
store without a license, and charged customers up to 1,560 percent

The civil finding was the result of a Feb. 8 "sting" of Treasure Coast
Cash Co. and three other check cashing businesses, including Cash-2-U,
which had offices at 10766 S. U.S. 1, Port St. Lucie, and 1835 S. U.S.
1, Stuart; Quick Cash Title Loans, 8017 S. U.S. 1, Port St. Lucie; and
E-Z Cash, 2765 N.W. U.S. 1, Stuart.

All were suspected of operating unlicensed finance companies and
committing usury - charging illegal interest rates using unreasonable
collection practices, said investigator John Willard of the Department
of Banking and Finance.

Assistant State Attorney Ryan Butler said a Florida Department of Law
Enforcement agent and civilian posed as borrowers at all four check
cashing businesses before February 1999. Borrowers had alerted officials
to the businesses, which agreed to temporarily hold up to several
hundred dollars in "worthless" checks, in exchange for 10 percent
interest weekly and a $5 administrative charge.

"They would be required to repay the loan within seven days or 14 days.
The people would come back in, wouldn't have the money to repay the loan
... and would pay an additional interest fee to roll over the (loan)
amount," Butler said. "They would pay interest and never really anything
on the principal." Customers who eventually could not meet even their
interest fees were sued in small claims courts and had judgments
unfairly placed against their property, officials said.

Willard said Treasure Coast Cash Co. and other firms misled judges into
thinking the cases were about "bad check" writing, and won "treble
damages against the victims, which is really gall." "If you take a check
and know it's worthless, you have no remedies under the law," Willard
said. "There is no case."

Butler said the business owners claimed they were not making loans, but
rather "payday advances." However, the accused firms required borrowers
to fill out typical Florida loan applications, which cited state
borrowing statutes. "Payday advance' is a loan. The interest rate is
subject to what's allowed by any consumer loan," Butler said.

The Martin County Commission in November passed a cap on interest rates
of 2.5 percent per 30-day period, fearing an influx of loan sharks after
Miami-Dade, Broward and Palm Beach counties adopted restrictions on
vehicle title loan companies.

Neither the Beckers nor a legal representative of Treasure Coast Cash
Co., appeared before hearing officer Tobi C. Pam on Jan. 19. The hearing
officer supported the Department of Banking and Finance's allegations
that the firm issued unlicensed loans and charged interest of at least
520 percent a year.

"We've had people who have paid double to triple what they received, and
still owed the principal (of the loans)," Willard said.

Treasure Coast Cash Co., which was at 1308 N.W. U.S. 1, closed after
officials obtained a temporary cease and desist order last year.

Willard said the Department of Banking and Finance plans to sue other
firms for similar offenses, although evidence seized in February 1999
has not yet been fully analyzed. "We're still assisting the (criminal)
prosecutor," Willard said.

The department saw to it that Cash-2-U was closed by denying its
applications for branch offices and pulling its money transmitter
license, he said. "We're in the process of drafting an administrative
complaint against the principal, Kevin Walker," Willard said. "He
surrendered his money transmitter license to cash checks. "As far as
we're aware, he is not operating anywhere under the name Cash-2-U."

The Beckers are equally responsible for the $40,000 civil fine, due by
March 3. If they don't pay, "We put a judgment on them personally,"
Willard said.

But the family, which could not be reached for comment, has bigger
problems. Butler, of the state attorney's Major Crimes Division, said
William Becker, 60, of 2393 S.E. Beechwood Terrace., Port St. Lucie,
faces charges of usury, a felony, and check cashing without a license, a
misdemeanor. Also related to the 1999 sting, Rosa Carol Barton, of 2457
S.W. Summit St., Port St. Lucie, a former store manager of Cash-2-U,
faces usury and unlicensed consumer lending charges.  Both were released
on bail. Neither case is close to coming to trial, he said.
Barton was arrested in December and was granted an arraignment
continuance in January. William Becker was arrested in May, but his case
was put on hold when he was held in another state on a probation
violation charge, said Butler, who had no further details. "We couldn't
get him back for a couple of months."

Class-action lawsuits have been filed by Fort Pierce attorney Clay Yates
on behalf of customers of Cash-2-U and other firms. Yates' suits allege
the companies violated state racketeering laws. (The Stuart News/Port
St. Lucie News (Stuart,FL), February 4, 2000)

COLUMBIA/HCA HEALTHCARE: Former Volunteer Sues in FL over Minimum Wages
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announced that
a lawsuit has been filed against for-profit hospital chain. The lawsuit
has been filed in Federal District Court in Fort Lauderdale, Florida by
a former hospital volunteer, Alexander Eltman, against Columbia/HCA
Healthcare Corporation under the federal Fair Labor Standards Act. The
civil action filed by Eltman on behalf of himself and all other
volunteers who worked at Columbia-owned hospitals in Florida and
elsewhere, seeks payment of minimum wages under federal labor laws.

Eltman was a volunteer at Columbia-owned University Medical Center in
Broward County, Florida. Columbia, a for-profit public corporation that
specializes in hospital management, allegedly used large numbers of
hospital volunteers, like Eltman, to perform routine manual labor for
which Columbia would otherwise have had to pay regular wages to an
employee to perform.

The complaint, which seeks "collective action status," alleges that
Eltman and numerous others in Florida and other states, volunteered for
the purpose of giving comfort and solace to patients. Instead, Columbia
employed Eltman and other volunteers to photocopy insurance cards, work
in hospital gift shops, and perform other unskilled manual labor having
little or nothing to do with patient care. The complaint alleges that
employment of such labor on a so-called "volunteer" basis, runs afoul of
the federal minimum wage laws, and seeks compensation for anyone who
volunteered at a Columbia-owned hospital in Florida and any other state
in the past three years.

Kenneth J. Vianale, the attorney handling the case at the Boca Raton
office of Milberg Weiss Bershad Hynes & Lerach LLP, said the firm is
considering similar actions against other hospital management
corporations that operate in Florida, as well.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP Kenneth J. Vianale,
Esq. or Jack Reise 561/361-5000

HAVERSTICK-BORTHWICK: Scientific Evidence Ruled out for Toxin Exposure
Plaintiffs who claim they suffered health problems as a result of their
exposure to chemicals used during renovation work at Bryn Mawr College
will have a tough time proving their case, now that the trial judge has
ruled their expert is not permitted to testify.

The plaintiffs complained of numerous cognitive deficits which they
related to exposure to toxic chemicals during the renovation of the
Great Hall in Thomas Library on the Bryn Mawr campus in 1991 and 1992.
Some of their claimed symptoms included decreased attention, memory
problems, slower computational speed and dizziness. They also complained
of an inability to withstand exposure to everyday substances, such as
soaps and perfumes. The plaintiffs sued Haverstick-Borthwick Co., the
general contractor, among other defendants, seeking more than $ 2
million in damages. The plaintiffs' expert, Dr. Michael LeWitt, was
prepared to testify at trial that the plaintiffs suffered from "toxic
chemical encephalopathy" as a result of the exposure.

TCE refers to a pathologic or abnormal condition in the central nervous
system that is associated with exposure to chemicals at toxic levels.
But the condition is the subject of debate by medical experts "who
question whether it is even a bona fide disease," Montgomery County
Common Pleas Judge Samuel Salus wrote in Skoogfors v.

Haverstick Borthwick, represented by attorney Mike O'Hayer of the Wayne
office of Duane Morris & Hecksher, moved to preclude LeWitt's testimony,
claiming his diagnoses and the methodology used in rendering his
diagnoses are not generally accepted in the medical community. Salus
agreed, ruling that LeWitt's "diagnoses of TCE and any testimony or
evidence based on these diagnoses are not admissible at trial."

The court first noted in its analysis that while it is normally the role
of the jury to determine the credibility of a witness and the weight of
his testimony, "scientific methodology and conclusions must be evaluated
by the court to ensure that what might appear to be science is not in
fact speculation in disguise." Quoting the Superior Court's decision in
Blum v. Merrell Dow, which is currently pending before the state Supreme
Court, the judge said, "the judge as gatekeeper decides whether the
expert is offering sufficiently reliable, solid, trustworthy science."
Salus concluded the testimony proposed by the plaintiffs was the type
that needed to be reviewed by a judge before it could go to the jury.
"The condition known as TCE, and the methodology involved in making its
diagnosis, are subject to debate by allergists, immunologists,
toxicologists, neurologists, psychiatrists and occupational physicians,"
the judge said. Medical professionals disagree as to whether the basis
of TCE is immunological, neurological or psychological, the judge wrote.
They also debate which professionals are qualified to make the diagnosis
and what is the proper method for rendering a diagnosis. "Based on the
foregoing, the court cannot agree with the plaintiffs that the
credibility and weight of Dr. LeWitt's diagnoses of TCE should be within
the sole province of the jury," the court said.

Salus then concluded that the causation evidence provided by the
plaintiffs' expert would not satisfy the test set forth in Blum for
scientific evidence. "In Blum, the Superior Court established a
two-prong analysis for determining scientific evidence of causation is
admissible under Pennsylvania law.

First, the proponent must show that the causal relationship is generally
accepted in the medical community," Salus said. "Second, the proponent
must show that the methodology used to reach the expert's conclusions is
accepted by the medical community as good science." Neither criterion
was met in this case, the judge found. The plaintiffs didn't provide any
evidence that the medical community accepts the existence of a causal
relationship between their symptoms and the type of chemical exposure
alleged, the judge said. "First, there is no consensus in the medical
community as to whether TCE is even a disease, or a disease related to
chemical exposure," Salus said.

"Second, even if TCE is generally accepted as a disease related to
chemical exposure, existing research on TCE does not support a causal
relationship in this case." While "some studies" link chemical exposure
to TCE, the court said "the implications of these studies are limited in
scope they do not imply that TCE may be caused by exposure to every
known chemical or combination of chemicals." "There is no literature
before this court that shows a generally accepted causal relationship
linking exposure to the combination of chemicals used at Bryn Mawr
College with the plaintiffs' symptoms," the judge wrote. "It is not
enough that the plaintiffs cite studies linking adverse health effects
with human exposure to chemicals without any attempt to contrast the
conditions in those studies with the facts in the instant case."

With regard to the methodology used by the plaintiffs' expert in
rendering his diagnoses, the second prong of the Blum test, the court
concluded it too was not generally accepted by the medical community as
"good science."

The court said LeWitt made his diagnoses without any of the three
necessary elements: objective evidence of toxic exposure, objective
physiological evidence of a disability or disease and a differential
diagnosis to eliminate possible alternative causes of the symptoms.
LeWitt did not have information on chemical dosage, meaning that he
could not even determine whether the plaintiffs were exposed to toxic
levels of chemicals, the court noted. Also, LeWitt did not observe any
physiological evidence of a disability or disease, and neurological
exams found no objective indications of neurologic injury in any of the
plaintiffs. Finally, the court said, while there were "many facts ...
available to him that suggest alternative causes for the plaintiffs'
symptoms," including pre-existing psychiatric problems, LeWitt never
completed differential diagnoses that ruled out the alternative causes.

LeWitt said that in making his diagnoses he relied on "temporality" the
relationship between the time of the alleged exposure and the time when
the symptoms occurred and "biological plausibility" a reasonable theory
or hypothesis that an exposure to something might cause a particular
effect. LeWitt said he also used results from neuropsychological testing
to make his diagnoses. "This court is persuaded by the defendants'
experts that Dr. LeWitt's methodology is not generally accepted as good
science," the judge said. Dr. Jack W. Snyder testified that temporality
and biological plausibility, without more, cannot serve as a basis for
concluding causation, the court noted. Since LeWitt had no objective
evidence of a toxic exposure and no physiological evidence of a
neurologic disorder, the judge said, "the only way Dr. LeWitt could
hypothesize any causal relationship would be through complete

Finally, neuropsychological testing is not generally accepted in the
scientific community as a reliable method for diagnosing encephalopathy
when there is no other objective evidence of the condition, the judge
said. Accordingly, the court ruled, "any evidence of Dr. LeWitt's
diagnoses of TCE and any causation evidence that is based on his
diagnoses, must be precluded." (Copies of the 11-page opinion in
Skoogfors v. Haverstick-Borthwick, PICS NO. 00-0065, are available from
The Legal Intelligencer. Please refer to the Pennsylvania Instant Case
Service order form on Page 9.) (The Legal Intelligencer, January 20,

HEMPSTEAD TOWN: Sp Ct OKs Suit over Bias Posed by At-Large Voting
The U.S. Supreme Court has denied an appeal by the Town of Hempstead in
a class action voting rights lawsuit, which charged that the Town's
at-large voting system discriminated against black residents. Denying
certiorari in Goosby v. Town Board of the Town of Hempstead, 99-886, the
High Court let stand a ruling by the U.S. Court of Appeals for the
Second Circuit, which called for the election of town board by voting
districts rather than at-large voting.

"It's the first time that people in my area will have someone elected
who they truly know," said Dorothy Goosby, plaintiff and an African
American town councilwoman elected in November 1999 by the at-large

Plaintiffs, under the Voting Rights Act @ 2, argued that at-large voting
diluted black residents' voting power because elections were held in the
entire town.

Attorney for the plaintiffs, Frederick Brewington, who characterizes Ms.
Goosby's election by the at-large system a "fluke," said the U.S.
Supreme Court's denial sets a precedent for other townships with
at-large voting, such as Islip and Babylon. Mr. Brewington also said the
decision paves the way for the formation of council districts in the
Town of Hempstead, the largest township in the United States.

Town of Hempstead Supervisor Richard Guardino, in a prepared statement,
said Hempstead has started to implement "steps to assure the town's
compliance with the order." He added, however, "I continue to believe
that the residents of the Town of Hempstead are not voting on the basis
of race but on the issues, and that the November 1999 election clearly
proved this."

The Court of Appeals decision, 3-0, affirmed U.S. District Court Judge
John Gleeson's decision in February 1997 that the Town's system violated
the Voting Rights Act.

The Town of Hempstead has about 785,000 residents in six districts, with
about 120,000 per district. Among those residents, about 87,000 are
African American. Filing the writ of certiorari for the Town was Michael
Carvin, of Cooper Carvin & Rosenthal in Washington, D.C. (New York Law
Journal, January 25, 2000)

HMO: CT Sues Physician Health for ERISA Violations & Breach of Fid Duty
Connecticut Attorney General Richard Blumenthal has filed a class action
on behalf of state residents enrolled in Physicians Health Services'
health benefit plans, saying the insurer's prescription drug policy
violates ERISA disclosure and notice obligations and that the company
has breached its fiduciary duty to its enrollees (State of Connecticut
v. Physicians Health Services of Connecticut Inc., No. n/a, D. Conn.).

Connecticut seeks an order enjoining PHS of Connecticut from using a
"restrictive drug formulary" in a way that prevents consumers from
receiving the medically necessary prescription drugs ordered for them by
their doctors.

The state alleges that PHS's prescription drug benefit is "violating its
obligation to enrollees by using a drug formulary to obstruct enrollees
access to the medications their doctors believe are most safe and

According to the complaint, filed Dec. 14 in the U.S. District Court for
the District of Connecticut, PHS uses a "prior approval" process which
requires doctors and patients to use "preferred" medications. If the
drugs were not "preferred," PHS would not cover the medicine unless the
doctor submitted and PHS approved a prior approval request. PHS's
approval, the state contends, is not based on medical necessity, rather
it is based upon low cost.

                        Cost, Not Effectiveness

Specifically, the state alleges that PHS lists its preferred drugs by
their low costs and not their effectiveness, and that the drugs are low
in cost because of agreements, discounts and rebates from pharmaceutical

"Doctors and enrollees are pressured to accept the preferred drug even
when it is not the drug originally prescribed by the physician," the
state said, "and even when the preferred drug is less safe and less
effective than the drug originally prescribed." The complaint alleges
that PHS intimidates doctors with threats to terminate them from plan

The state also alleges that PHS has failed to disclose the nature of its
formulary system to it enrollees and that the insurer has failed to
provide written notice of benefit denial with information on how to

Connecticut asserts three claims for equitable relief under ERISA
Section 502(a)(3). The state seeks an order from the court requiring:

PHS to provide medication ordered by doctors unless the company submits
to the court a plan for substituting the preferred medications for those
originally prescribed while insuring that the substitution is approved
by the attending physician and the enrollee experiences no unreasonable

PHS to comply with ERISA and disclose information about its prescription
drug plan, including the preferred drug policy.

That whenever an enrollee requests coverage of a prescription drug by
presenting a completed prescription form to a participating pharmacy and
coverage is denied, the defendant shall give the enrollee written denial
notice with the specific reason and steps to file an appeal.

The complaint was filed by Attorney General Blumenthal and Assistant
Attorneys General Charles C. Hulin, Arnold I. Menchel and Thomas P.
Ryan, all in Hartford. (Text of Complaint in Section B. Mealey's
Document # 31-991222-103.) (Mealey's Managed Care Liability Report,
December 22, 1999)

INDUS INTERNATIONAL: Bernstein Litowitz Files Securities Lawsuit in CA
Bernstein Litowitz Berger & Grossmann LLP filed on February 3, 2000 a
class action lawsuit against Indus International, Inc. and certain of
its former officers and directors in the United States District Court
for the Northern District of California on behalf of all purchasers of
Indus common stock (NASDAQ:IINT) from October 29, 1999, through January
27, 2000, inclusive.

The Complaint alleges that, during the Class Period, Indus issued
materially false and misleading financial statements for its quarter
ended September 30, 1999, and included these false and misleading
statements in various press releases and filings with the Securities and
Exchange Commission. Plaintiff further alleges that these false
statements, which overstated the Company's quarterly net income by at
least $3.1 million, or approximately 89%, caused the price of Indus
common stock to be artificially inflated, trading as high as $13 per
share. On the final day of the Class Period, the Company announced that
it would restate its previously disseminated third quarter 1999
financial results based upon an overstatement of its revenues and net
income, reducing revenues from $50.9 million to $45.9 million, and net
income from $3.5 million to $0.4 million. Following this announcement,
the price of Indus common stock closed at $7.625 per share, reflecting a
decline of 42% from its Class Period high, and 23% below the prior day's
closing price.

Contact: Bernstein Litowitz Berger & Grossmann LLP, New York Ava C.
Thorin, 212/554-1429. You may contact Robert S. Gans or Blair A.
Nicholas of Bernstein Litowitz at 800-380-8496 or 212-554-1400, or by
E-mail: Robert@blbglaw.com

JOHN BERG: Borrowers Induced into Buying Homes Allowed to Replead in PA
A federal judge in Philadelphia has allowed the plaintiffs in a putative
class action suit to replead their Racketeer Influenced and Corrupt
Organizations Act (RICO) claims arising from allegedly fraudulent and
deceptive practices committed during the sale, financing, and settlement
of residential developments. Smith et al. v. Berg et al., No. 99-2133
(ED PA, Dec. 1, 1999).

The complaint alleged that between 1994 and 1997, John Berg acted
through two corporate entities to use misleading and fraudulent
financial incentives, such as tax abatements and mortgage credit
certificates, to induce the plaintiffs to buy homes they otherwise could
not afford. Those incentives were allegedly promoted through mailings,
phone calls, faxes, radio ads, and television commercials.

The complaint in the Eastern District of Pennsylvania also alleged that
several lenders and title insurance companies conspired with Berg to
defraud borrowers. They also were accused of truth-in-lending violations
and granting mortgages they know the buyers were unqualified for.

In addition to the RICO(c) and RICO(d) conspiracy counts, the complaint
sought damages for common law fraud, breach of fiduciary duty,
negligence, and violation of the state unfair trade practices statute.

Judge Thomas N. O'Neill dismissed the complaint without prejudice,
holding that the plaintiffs failed to adequately plead a pattern of
racketeering activity. However, he granted leave to amend.

He found that, at best, only one of the 99 predicate acts listed in the
RICO case statement was pleaded with sufficient particularity.
Eighty-nine of those acts apply to members of the putative class who are
not named plaintiffs and are therefore irrelevant to the sufficiency of
the complaint since no class has yet been certified, he said.

Predicate acts that allegedly occurred after the named plaintiffs bought
their houses also do not apply since any misrepresentations Berg made
after the sales could not have induced the purchases or caused the
claimed racketeering injuries, the judge said.

As for the alleged predicate acts related to Berg's advertising
activities, Judge O'Neill said the descriptions of such
misrepresentations are inadequate and fail to identify which named
plaintiffs actually heard the advertisements.

Of the remaining three predicate acts listed, two that pertain to
settlement sheets also lack the required specificity and do not tell the
content of the purported misrepresentations, he said.

The only allegation that might pass scrutiny involves a letter to one of
the named plaintiffs, he said, but a single pattern act does not show a
pattern of racketeering activity.

James N. Gross of Philadelphia appeared for the plaintiffs.

Defense counsel were Joseph A. Cullen Jr. of Mellon, Webster & Mellon in
Doylestown, PA; Robert A. DiFilippo of Silberman & DiFilippo in Bala
Cynwyd, PA; Natalie Finkelman of Liebenberg & White in Jenkintown, PA;
Burt M. Rublin of Ballard Spahr Andrews & Ingersoll in Philadelphia: and
Edward J. Hayes of Fox, Rothschild, O'Brien & Frankel in Philadelphia.
(Civil RICO Litigation Reporter, December 1999)

MOBIL OIL: Combined Aussi Case over Fuel Crisis Adjourned by Ap Ct
Two class actions against Mobil over the contaminated fuel crisis were
combined into a single action on February 4 in the Victorian Supreme
Court, a report on AAP Newsfeed of that day says. Solicitor Bernard
Murphy said the two law firms involved, Slater & Gordon and Maurice
Blackman Cashman, had combined their resources to battle Mobil more
effectively in its fight against the claims. "Mobil seems determined to
avoid giving proper compensation to businesses hurt in the fuel crisis,"
Mr Murphy said.

One action had been in the Federal Court and the other in the Supreme
Court, but the firms had decided to proceed in the Supreme Court as the
case seemed to be moving faster, he said.

However Mobil had signalled plans to challenge new Supreme Court rules
that allow class actions to be heard there, he said. If that challenge
became bogged down, the firms would reconsider where the case would be
proceeded with, he said.

Mr Murphy said the combined class action currently represented more than
500 businesses, out of an estimated 6,000 affected businesses that may
eventually join the action.

Another AAP Newsfeed article of February 4 says that the case has been
held up for more than a month by a legal hitch. Lawyers for Mobil
contend that Supreme Court rules governing the hearing of class actions
are invalid and the case was referred to the Court of Appeal on February
4. Justice John Hedigan granted an application by Jeff Sher, QC, for
Mobil, to have the matter referred to the Victorian Court of Appeal.

The judge adjourned the case until March 17.

The owners and operators are seeking a speedy hearing of the case in
which it is alleged Mobil breached its supply contracts and its duty of

Damages claimed by the group include loss of income and profits, the
cost of inspecting and cleaning aviation fuel from aircraft and the cost
of replacing components. The plaintiffs have not put a figure on the
claim but it is expected to run into tens of millions of dollars. They
claim that Mobil's $15 million compensation package deal did not include
many of the categories of claimed losses.

Mobil has offered to separate compensation packages - a $15 million
hardship package and a separate package for businesses losses. But it
has warned owners, operators and pilots that legal action could prohibit
them claiming compensation. (AAP Newsfeed, February 4, 2000)

MOVIE THEATERS: Deaf Group Sues for Devices for Closed-Captioned Films
Eight people with hearing impairments are suing to force movie theaters
to install devices that would allow deaf people to see closed-captioned

The lawsuit, which cites the American with Disabilities Act, names three
large national movie theater chains: Regal Cinemas, which is Oregon's
biggest; Century Theatres; and Carmike Cinemas. Combined, the three
chains operate more than 7,700 movie screens across the country. The
nation's largest chain, Cinemark, is likely to to be added to the suit
soon, attorney Dennis Steinman said.

''Not to be able to go to movies is socially isolating for deaf
people,'' said Steinman, who filed the federal class-action lawsuit on
February 3. ''Not only are they kept from that aspect of culture and
society, they miss out on social interaction; they can't go out to
dinner and a movie with their hearing friends.''

The lawsuit seeks to force movie theaters to install a technology called
rear-window captioning, in which a transparent adjustable reflector fits
into a seat's cupholder and picks up captions from a screen at the back
of the theater. The person in the seat can read the captions, but the
rest of the audience doesn't see them.

Rear-window captioning is part of a technology called MoPix, already in
use in several theaters, that also provides blind customers with a
headset through which they can hear descriptions of a film's characters
and scenes.

Steinman estimated it would cost about $15,000 per screen to install
MoPix and he would be open to a plan that would let theaters gradually
add the service. (AP Online, February 4, 2000)

NEW JERSEY: Casino Contractors Sue over Minority Set-Aside Rules
A group of casino industry contractors who are challenging minority
set-asides went to court on February 3 in a bid to have the
anti-discrimination measures stricken as unconstitutional.

U.S. District Judge Stephen Orlofsky reserved decision on a request by
the Association for Fairness in Business Inc. for a preliminary
injunction banning state regulators from enforcing the set-aside
program. He was expected to rule on February 4.

The state Casino Control Commission requires that Atlantic City casinos
set aside up to 15 percent of the $ 4 billion a year they spend on goods
and services for contracts with businesses owned by women or minorities.

The group, which is made up of an undetermined number of companies that
do business with the casinos, filed a federal lawsuit in December in
which it said the set-aside program discriminates against businesses not
owned by minorities or women.

The program is improper because federal courts have held that such
anti-discrimination measures cannot be instituted legally unless there
is proof that discrimination has occurred in that field before, the
group says.

In a four-page affidavit submitted with the lawsuit, Fabi Construction
Inc. president Allen Zappone 1 NEW3 said his company had bid on two
casino contracts in the last six months and lost out to a women-owned
business in one of them. "Zappone's companies represent a microcosm of
the universe of thousands of companies doing business with casinos on a
daily basis," the group's attorney, Salvatore Perillo, said in a brief
filed in conjunction with the lawsuit.

In a 30-minute session on February 3, Orlofsky entertained arguments
from Perillo, Deputy Attorney General Mark Holmes, and commission
attorney David Missimer. Holmes did not refute Perillo's assertions but
said the request for an injunction was premature because Perillo had not
proved that Zappone and the other association members would suffer
irreparable harm if the program weren't stopped immediately.

Missimer said commission officials expect only that casinos make a
good-faith effort to meet the 15 percent standard, but that reaching it
is not mandatory.

However, Perillo said casinos could lose their licenses to operate, "the
ultimate sanction, the death penalty" he called it, if they do not
strive for the 15 percent.

The court case marks the latest in a series of challenges to affirmative
action in the Atlantic City casino industry. In November, a state
Superior Court judge said the state Casino Reinvestment Development
Authority's minority business set-aside policies were unconstitutional.
Later that month, the 3rd U.S. Circuit Court of Appeals said the
affirmative action plan of Resorts Atlantic City was discriminatory. The
ruling came in a lawsuit filed by a white former stage technician who
lost out to a black man for a job in 1994. Last month, a former pit
manager sued Tropicana Casino and Resort for what he said is
discrimination against white men. John D. Rudolph, an 18-year employee
fired a year ago, filed a class-action lawsuit in U.S. District Court
saying the casino's affirmative action plan was not established to
remedy discrimination and was therefore legally insufficient.

The casinos are keeping a close eye on the proceedings in the federal
court case because of its potential ramifications. "We're caught in the
middle,"said Tropicana attorney Jerry Tanenbaum, who sat in on February
3's 1 NEW3 hearing as an observer. (The Record (Bergen County, NJ),
February 4, 2000)

NY CITY: Ct Dismisses Bias Claims Filed with EEOC under Res Judicata
Defendants moved to dismiss this putative class action brought by pro se
plaintiff. Plaintiff had filed two earlier claims with the Equal
Employment Opportunity Commission alleging various forms of
discrimination and, following receipt of right-to-sue letters, had
commenced actions in the court that were later consolidated. Those
claims were thus adjudicated. In this complaint, plaintiff broadened her
charges to include additional categories of discrimination that were not
previously charged. Nevertheless, the court found that the material acts
of defendants and their employees complained of in the EEOC charges were
the same as the material acts of defendants charged in this complaint.
The court held that those acts of defendants had been litigated and,
consequently, plaintiff was barred from relitigating them, under the
principles of res judicata.

Judge Patterson

RICHARDS v. CITY OF NEW YORK QDS:02762016 - Defendants City of New York
Department of Police and Mayor Giuliani move to dismiss this putative
class action brought by pro se plaintiff, Velma Richards, on behalf of
herself and on behalf of all others similarly situated. By order entered
December 8, 1999, the Court denied plaintiff's motion for class
certification and the appointment of a "private master."

Defendants' motion to dismiss the complaint is based on assertions that
the majority of plaintiff's claims are barred by principles of res
judicata and collateral estoppel or barred by the 300 - day time
constraints applicable to Charge No. 160 - 99 - 0158 filed with the
Equal Employment Opportunity Commission ("EEOC") on October 16, 1998;
that the complaint fails to meet the requirements of Rule 8 of the
Federal Rules of Civil Procedure; and that the remaining paragraphs of
the complaint fail to state a claim upon which relief might be granted.

Plaintiff filed two earlier claims with the EEOC alleging various forms
of discrimination and, following receipt of right to sue letters,
commenced actions in this Court, 97 Civ. 0179 (RPP) and 97 Civ. 5828
(RPP), which were consolidated by order of the Court entered January 6,
1998. By opinion and order dated January 22, 1999 ("1/22/99 Op."), the
Court partially granted defendants' motion for summary judgment and
dismissed the majority of plaintiff's claims in the consolidated
proceeding as time-barred and for other various reasons. The remaining
claims were tried to a jury which reached a verdict for the defendants
on May 14, 1999.

On February 18, 1999, over three weeks after the Court's January 22,
1999 opinion, the instant putative class action complaint was received
by the Pro Se Office but was not filed with the Clerk's Office until May
12, 1999. In general, it seeks to convert the plaintiff's prior actions
into a class action and broaden those claims to assert every kind of
discrimination available under the law. It alleges adverse and
non-adverse actions by a large number of employees of the Police
Department against plaintiff, from 1983 to present, involving claims of
termination of her employment, failure to promote, failure to
accommodate a disability, unequal terms and conditions of employment,
retaliation and other acts based on plaintiff's race, gender/sex,
national origin, age, disability, color and religion.

On learning of the imminence of this motion, plaintiff stated in open
Court she would not file responsive papers and was advised of the
possibility of the dismissal of this action if she did not file a proper
response to defendants' motion. She was also advised to use the good
offices of the Pro Se Office of this Court. On December 13, 1999,
plaintiff filed a bound Memorandum of Law in Opposition of Motion to
Dismiss containing a series of disjointed statements and precepts of law
with attached appendices. Defendants have elected not to file reply


This action is based on a right to sue letter issued to plaintiff by the
EEOC on December 1, 1998 in connection with plaintiff's EEOC charge
filed on October 16, 1998 against the New York City Police Department,
EEOC Charge No. 660 - 99 - Accordingly, all actions of defendants which
occurred before December 20, 1997, 300 days before October 16, 1998, are
time-barred, absent evidence of a continuing violation. See Butts v.
City of New York Dep't of Housing, 990 F.2d 1397, 1401 (2d Cir. 1993).

With respect to the possibility that plaintiff could be granted relief
for adverse actions which occurred prior to December 20, 1997 under the
continuing violation doctrine, each of plaintiff's claims, up to and
including her termination on December 23, 1997, involving Mayor
Giuliani, Captain White, Lt. McCarthy, Captain Falco, Lt. Stein,
Sergeant Hickson, Sergeant Ilchert, and the N.Y.P.D. Medical Division
were disposed of by the Court in the prior consolidated actions brought
by plaintiff, based on a complete absence of any showing that plaintiff
had been retaliated against or discriminated against on the grounds
alleged in her EEOC charges, or by a jury after hearing plaintiff's
testimony and a number of those officers called as witnesses. n1

To the extent this complaint contains a reiteration of those claims of
discrimination, plaintiff is barred from relitigating them on principles
of estoppel. See Flaherty v. Lang, et al. (2d Cir. 12/21/1999). In this
complaint, plaintiff has also broadened her complaint to charge
additional categories of discrimination that were not previously
charged. Nevertheless, the material acts of defendants and their
employees complained of in those EEOC charges and Court complaints are
the same as the material acts of defendants charged in this complaint.

Those acts of defendants have been litigated. Consequently, plaintiff is
barred from relitigating those same actions in this proceeding by
principles of res judicata. See Woods v. Dunlap Tire Corp., 972 F.2d 36,
38 (2d Cir. 1992) ( claims arising from identical facts surrounding the
occurrence are barred by prior determination regardless of different
underlying theories). The remaining factual allegations in the complaint
are discursive and fail to state a claim upon which relief might be

n1 In its January 22, 1999 opinion and order partially granting
defendants' motion for summary judgment, the Court dealt with
plaintiff's claim of retaliatory discharge on December 23, 1997 for
filing EEOC claims of discrimination on November 2, 1994 and August 21,
1995. 1/22/99 Op. at 28 - 29. Plaintiff did not object to or move for
reconsideration of that determination. Furthermore, since the claims
relating to plaintiff's discharge are not alleged to have involved Mayor
Giuliani and he is not a named defendant in the EEOC charge number 160 -
99 - 0158, the complaint is dismissed against him.

n2 The claim by plaintiff that her discharge on December 23, 1997 was in
retaliation for her testimony during her deposition on December 22, 1997
(Compl. PP 106) would not receive credence by a rational jury. The Court
found in its January 22, 1999 opinion that, on December 23, 1997, the
Police Commissioner signed the final document terminating plaintiff
based on recommendations of dismissal of May 29, 1997, September 15,
1997, and December 10, 1997 forwarded up the chain of command based on
Richards' "continuing refusal to perform her duties while on dismissal
probation," 1/22/99 Op. at 28 - 29, and that a rational jury would not
find that her termination was caused by her earlier EEOC filings of
November 2, 1994 or August 21, 1995.

For the foregoing reasons, the defendants' motion to dismiss is granted.
(New York Law Journal, January 20, 2000)

OXFORD HEALTH: Lead Plaintiff’s Lies Threaten Milberg’s Control of Case
With his white hair and walrus mustache, U.S. District Judge Charles L.
Brieant looked the part of the wizened, practical jurist. "We certainly
have a large turnout," the judge announced cheerfully, assessing the
30-odd lawyers in his White Plains, N.Y., courtroom at the outset of a
Jan. 18 hearing on massive securities fraud class actions against Oxford
Health Plans Inc.

Among the lawyers was Melvyn I. Weiss, the reigning king of securities
class action lawyers. He watched from the otherwise-vacant jury box. Mr.
Weiss is not counsel of record. His colleague Patricia Hynes is handling
it. Still, he's very interested.

The Oxford case presents Mr. Weiss' firm with its latest and perhaps
nastiest mess under the Private Securities Litigation Reform Act, a 1995
law passed to curb class action abuses and, some say, to shut down
Milberg Weiss Bershad Hynes & Lerach.

When the firm horned its way into the Oxford case in June 1998, it
offered three investors with about $ 10 million in losses as a "lead
plaintiff" under the 1995 law. One was Gary Weber. Sadly, during the
case, Mr. Weber "chose to lie" about his education, criminal record,
history as a defendant in a civil case and his trading in Oxford
securities, according to a Jan. 14 letter to the judge from Gandolfo V.
DiBlasi, of New York's Sullivan & Cromwell, Oxford's counsel.

Perhaps the strangest thing about Mr. DiBlasi's letter is that he says
Oxford would have been content to remain silent about Mr. Weber's
alleged perjury, had the plaintiffs' lawyers not accused Sullivan &
Cromwell of "gamesmanship" and of being "disingenuous" in their papers
opposing Oxford's claims that a class action cannot be certified under
Rule 23 of the Federal Rules of Civil Procedure. Rule 23 requires that
the proposed "class representative" will "fairly and adequately protect
the interests of the class."

Oxford's Dec. 10, 1999, brief doesn't mention Mr. Weber's alleged
perjury. It merely notes his notice of withdrawal as a class
representative and lead plaintiff. Ms. Hynes' Dec. 8 letter to the court
states that she was prepared to meet with Judge Brieant in his chambers
"to discuss the reasons for his withdrawal."

S&C might have left it at that. But Ms. Hynes and her fellow plaintiffs'
lawyers called Oxford's Rule 23 motion "a cynical and transparent effort
to derail this litigation." The brief claims that two other investors in
Milberg Weiss' group have been "ready, willing and able to serve as
class representatives."

In his Jan. 14 letter to the judge, Mr. DiBlasi asserts that Milberg
Weiss refused to make these investors available for a deposition before
the cutoff date for discovery on proposed class representatives. He adds
that Milberg Weiss insisted "that Mr. Weber be deposed on the very last
day" of the discovery period.

"After Mr. Weber's deposition, with his lies spread over the transcript,
defense counsel met with Mr. Weber's counsel to explain the problem and
provide documentation," Mr. DiBlasi's letter explains. "Thereafter, Mr.
Weber withdrew, and defendants graciously agreed not to advert to the
specifics of Mr. Weber's deplorable conduct."

In the context of the events leading up to the Jan. 18 hearing, the
focus of the arguments was surreal. Class certification ostensibly was
the issue on the agenda, but it was the subtext that brought a
mini-convention of the plaintiffs' class action bar to White Plains. By
then, the lawyers in the room knew why Milberg Weiss had withdrawn Mr.
Weber as a lead plaintiff. Without a real "client" in the case, Milberg
Weiss faces losing its role as lead counsel, and the staggering legal
fee the case may ultimately produce.

Several firms that lost out when Judge Brieant gave a lead plaintiff
role to the Milberg Weiss group stood ready and able, with proposed lead
plaintiffs of their own, to step into Milberg Weiss' shoes. Among them
was Arthur N. Abbey, of New York's Abbey, Gardy & Squitieri L.L.P., who
represents North River Trading Co. L.L.C., which had about $ 1 million
in losses. His argument to the court shows that Milberg Weiss' purported
competitors still show deference to the most powerful law firm in their
circle. His client was "not seeking to kick Ms. Hynes out," he told
Judge Brieant.

Mr. Abbey, among others, reminded Judge Brieant that he must revisit the
July 15, 1998, ruling that put Milberg Weiss in place, over objections
from a Colorado pension fund with an estimated $ 25 million in losses.
In that decision, considered among the wackiest interpretations of the
1995 law, Judge Brieant formed a triumvirate of lead plaintiffs to
litigate the case. He rejected arguments from the Securities and
Exchange Commission, which filed an amicus brief supporting the Colorado
fund's argument that the 1995 law envisioned a sole lead plaintiff.

"The judge got it wrong originally," says Professor John C. Coffee Jr.,
of Columbia University School of Law. His goal, Prof. Coffee surmises,
was practical: He wanted to move the case as quickly as possible toward
settlement. "Firms like Sullivan & Cromwell and Milberg Weiss have
negotiated class action settlements once a week for decades," he says.
"He knows that repeat players are more likely to get to settlement
faster than strangers. However, that's not the congressional goal."

Sullivan & Cromwell is also challenging the third member of Judge
Brieant's lead-plaintiff triumvirate, PBHG, a mutual fund company that
originally put forward six of its funds, with purported losses of more
than $ 4.3 million, as lead plaintiffs. At a Nov. 29, 1999, hearing,
PBHG dropped one fund, which earned a $ 9 million profit by investing in
Oxford. After that, PBHG dropped four of the five remaining funds it
proposed as Rule 23 class representatives. The one remaining fund had
losses of only $ 65,000. S&C's Dec. 10 brief asserts that PBHG's "Shell
Game Tactics" prevent it from being a class representative. It suggests
that the company dropped four funds from the plaintiff group to prevent
the deposition of a fund executive from going forward.

Oxford had also challenged the adequacy of the Colorado fund. But Mr.
DiBlasi dropped those complaints. That left fund counsel Jay Eisenhofer,
of Wilmington, Del.'s Grant & Eisenhofer, in a bizarre spot. Milberg
Weiss chided his lack of experience when it sought a lead plaintiff
role. He appealed Judge Brieant's triumvirate idea and failed. He wound
up joining Ms. Hynes in urging the judge to keep the lead plaintiff
structure because the group is working so well together. "That's a
tribute to the professionalism of the lawyers involved," the judge said.

Whatever Judge Brieant's decision, several recent rulings in other cases
indicate judges are interpreting the 1995 law to forbid the lumping
together of individual losses to create a lead plaintiff spot. (The
National Law Journal, January 31, 2000)

PRISON REALTY: Kaplan, Kilsheimer Files Securities Suit in TN
Kaplan, Kilsheimer & Fox LLP filed a class action lawsuit in the United
States District Court for the Middle District of Tennessee on behalf of
all persons who purchased the common stock of Prison Realty Trust, Inc.
between June 10, 1999 and December 27, 1999, inclusive.

The lawsuit alleges that during the Class Period defendants violated
certain provisions of the Securities and Exchange Act of 1934 by falsely
representing that the Company would pay certain dividends to its
stockholders and maintain its status as a real estate investment trust
(``REIT''). On December 27, 1999, the Company announced that it would
not pay previously announced dividends and would not operate as a REIT.

Please contact Joel B. Strauss, Esq. or Hae Sung Nam, Esq. of Kaplan,
Kilsheimer & Fox LLP at 805 Third Avenue 22nd Floor New York, NY 10022;
Telephone 800-290- 1952 or 212-687-1980; Fax: 212-687-7714 or at
mail@kkf-law.com via e-mail.

UPS: Faces PA Consumer Antitrust Suit over Insurance for Heavy Packages
The United Parcel Service has been hit with a consumer class action
antitrust suit that accuses the shipping giant of abusing its monopoly
power by charging inflated prices for insurance on packages up to 150
pounds. Attorneys in the New York office of Milberg Weiss Bershad Hynes
& Lerach filed the case, along with other lawyers in Pennsylvania and
New York.

The suit, filed in U.S. district court in Philadelphia, alleges that UPS
entered into a "sham arrangement" with the National Union Fire Insurance
Co. " to enable UPS to charge shippers unconscionable prices for excess
value insurance which were nearly three times the competitive market

The suit says UPS "leveraged its power in the package transportation
market to foreclose competition or unfairly obtain a competitive
advantage in the package insurance market by steering shippers to
purchase excess value insurance from UPS at supracompetitive prices." As
a result, the suit alleges, "UPS has gained an unfair competitive
advantage" that allows it to deprive its customers of any competitive
choice when seeking excess value insurance.

According to the suit, UPS limits the value of uninsured packages to
$100 and then directs customers to declare the value for any package
worth more than that. UPS then charges shippers 35 cents for each
additional $100 of declared value in what is commonly referred to as the
"excess value charge," the suit says.

The suit alleges that UPS "capitalized on its monopoly in the package
transportation market by steering shippers to accept UPS excess value
insurance without offering shippers other competitors' excess value
insurance rates or otherwise disclosing that excess value insurance
could be obtained from other entities at substantially more competitive

Unbeknownst to most shippers, the suit says, excess value insurance is
available at a fraction of the cost from other insurers, such as
Fireman's Fund, which offers policies at 13 cents for every $1,000 of
declared value.

Between 1984 and 1989, the suit says, UPS raked in $845 million in
premiums while the losses paid during that period were just $281
million. In 1998 alone, the suit says, UPS collected more than $131
million worth of excess value insurance charges.

Those profits, the suit says, were not retained by the insurer but
instead were funneled back to a corporation controlled by UPS.

The suit claims three counts -- monopoly leveraging under 2 of the
Sherman Act, deceptive acts and unlawful trade practices under the
Pennsylvania Unfair Trade Practices and Consumer Protection Law and
unjust enrichment.

The case, Farina v. United Parcel Service Inc., 00-0586, has been
assigned to Chief U.S. District Judge James Giles. (The Recorder,
February 4, 2000)

* HUD Clarifies Policy Statement Regarding Mortgage Broker Fees, YSPs
On Dec. 17, 1999, Department of Housing and Urban Development General
Counsel Gail W. Laster wrote a letter to Rep. Bruce F. Vento, D-Minn.,
regarding HUD's March 1, 1999, Statement of Policy 1999-1. Plaintiff's
attorneys believe the letter refutes recent District Courts'
interpretations of the policy statement.

                            The Letter

Laster's letter reads that in issuing the policy statement "HUD did not
intend for the Policy Statement to create a new legal standard or to
change existing law." Secondly, Laster's letter also reviews the
two-part test HUD proposed to determine the legality of lenders' yield
spread premium payments and other payments to mortgage brokers under the
Real Estate Settlement Procedures Act.

The first part of HUD's test provides that a lender's payment to a
mortgage broker is permissible under RESPA so long as goods or
facilities were furnished or services were performed. The second part of
HUD's test requires that a broker's compensation be reasonably related
to the value of the goods provided or the services performed by the

In regards to the first part of the policy statement's two-part test,
Laster explains that the policy statement "sets out the minimum types
and extent of services that a mortgage broker must perform in order to
justify compensation to the broker." Laster then states that although
the policy statement says a broker can be compensated for goods actually
furnished or services actually performed, "the mere performance of any
service by a mortgage broker is not in itself sufficient to establish
that the payment to the broker was made in exchange for those services."

According to Laster, the next step of the two-part test requires that
the total compensation from the lender and the borrower be "scrutinized"
to ensure that the YSP is "reasonably related to the goods, facilities,
or services furnished or performed." Moreover, Laster explains that the
policy statement "makes clear that in analyzing whether any transaction
under RESPA and its regulations involves compensation for 'goods,' a
mortgage loan is not a 'good,' and that the referral of a loan is not a
compensable service."

Finally, the letter to Vento states that HUD "never intended for its
Policy Statement to weaken the prohibitions contained in Section 8 of
RESPA and indeed, in elucidating the tests for when fees could be legal,
sought to establish a brighter line defining illegal conduct."

                 Plaintiff Attorney's Interpretation

David Donaldson of Donaldson, Guin & Slate LLC in Birmingham, Ala.,
represents the class in Culpepper, et al. v. Inland Mortgage Corp., 132
F.3d 692 (11th Cir.), rehearing denied, 144 F.3d 717 (11th Cir. 1998).
He believes Laster's letter "is a significant development in consumers'
fight against the mortgage industry because it refutes the mortgage
industry's two principal arguments against certification of RESPA class
actions." Donaldson says since HUD issued its policy statement, the
mortgage industry has argued the provision of any random services by a
broker in connection with a loan satisfies the first prong of HUD's
two-part test, regardless of whether those services are related in any
manner to the YSP paid by the lender. He added, the industry argues that
inquiry as to the reasonableness of the YSP must always be made, thereby
requiring a "purported predominance of individual issues." Donaldson
reports "a line of Minnesota District Court opinions ... have adopted
this argument, finding that with its Policy Statement, HUD intended to
create a new test that is less stringent than the test set out" by the
11th U.S. Circuit Court of Appeals in Culpepper.

According to Donaldson, the mortgage industry has cited those District
Court "opinions for the proposition that, whereas Culpepper requires
yield spread premiums to be paid 'in exchange for services actually
performed,' the first prong of HUD's Policy Statement merely requires
that the mortgage broker has provided some goods or services in
connection with the loan transaction." He refers to Schmitz v. Aegis
Mortgage Corp., 48 F. Supp. 2d 877, 882 (D. Minn. 1999).

The fact that Laster's letter also provides that in order to satisfy the
first step of HUD's two-part test the broker's services must have been
performed "in exchange for" the YSP was important to Donaldson. He also
believes Laster's statement "the mere performance of any service by a
mortgage broker is not in itself sufficient to establish that the
payment to the broker was made in exchange for those services," is
significant because, like the 11th Circuit held in Culpepper, "there
must be evidence that the yield spread premium was 'in exchange for'
services" prior to assessing its reasonableness.

                       Culpepper Test Stands

Donaldson concludes Laster's letter reaffirms that "Culpepper remains
good law after HUD's Policy Statement." It refutes "the mortgage
industry's erroneous interpretation of the Policy Statement and the
rulings of the Minnesota Court," he says. According to Donaldson,
Laster's letter clarifies that "there is no valid reason not to certify
RESPA cases." (Consumer Financial Services Law Report, January 25, 2000)

* MSPB Calls for DOJ to Take Steps to End Minority-Hiring Programs
A new study finds the government has misused two hiring programs
intended to increase representation of minorities and calls for the
Justice Department to take steps to abolish them.

The programs, which allow candidates to be selected non-competitively,
offer managers "speed, ease of use and control over the hiring process,"
according to the Merit Systems Protection Board. However, the "vast
majority" of people hired through one program - the outstanding scholar
hiring authority - have been nonminorities.

"Based on interviews and focus group sessions, it appears that the key
argument in favor of keeping the [program] is that it provides agencies
control over a quick and relatively easy way to hire," the report says.

In 1997, more than 75 percent of outstanding scholar appointees were
white, most of them women.

The MSPB said that while there are concerns about the overall
representation of women in the federal work force, the OSP was
originally intended for blacks and Hispanics.

The report calls on the attorney general to take steps to end the
Outstanding Scholar Program and the Bilingual/Bicultural Program by
submitting a petition to district court. But the Justice Department and
the Office of Personnel Management have been trying to work with
agencies to improve the programs instead.

"I strongly disagree with [the MSPB's] conclusion that these programs
are not needed," said Director Janice Lachance. "These programs are
important tools to help agencies recruit and achieve a diverse work

The programs were created 18 years ago by a class action settlement
known as the Luevano consent decree. A group of minorities filed a
lawsuit against the government, claiming its national competitive exam
was biased.

Through the OSP, the government can hire college students with GPAs of
3.5 or better. The Bilingual/Bicultural Program allows agencies to
select candidates who meet minimum qualification requirements if they
have Spanish language ability or knowledge of Hispanic culture.

According to the MSPB, both programs provide managers an easy way to
obtain new hires, avoiding the normal competitive process.

The MSPB found that many human resource specialists, agency recruiters
and managers who use the OSP are "not even aware of the consent decree
and its intent."

The MSPB also found that until recent years, there has been only
"sporadic" attention paid to how agencies use the OSP.

In a memo dated July 13, 1998, OPM informed agencies that they were
using the OSP "more heavily" than competitive examining to fill
entry-level administrative and professional jobs.

"Over the years, OPM has been monitoring this situation with growing
concern," wrote Carol Okin, OPM assistant director of merit systems
oversight and effectiveness.

Okin's memo directed agencies to reexamine their use of the OSP. She
explained it was established "as a supplement to competitive examining
in situations where underrepresentation of blacks and Hispanics

But the program "was not intended to replace competitive examining, nor
to become the primary method of hiring into the specified occupations at
these grades."

The MSPB was skeptical about the usefulness of advising agencies on the
proper use of the OSP. "Suggestions and expressions of concern are open
to interpretation by those to whom they're offered and it remains to be
seen whether agencies will heed them," the MSPB study says.

Even if used correctly, the Luevano programs are outdated and contrary
to the government's merit principles, according to the MSPB.

The agency found that minorities are "now well represented in hiring for
federal professional and administrative jobs, but not because of the
Luevano consent decree. Competitive hiring through exams "has proven a
better vehicle" for hiring blacks and Hispanics.

Of 8,000 border patrol agents selected to work for the Immigration and
Naturalization Service based on a competitive exam, 40 percent were

Ben Erdreich, MSPB chairman, praised the report, saying it was "good
news" for the merit system. "The study shows that merit-based hiring and
work force diversity are not mutually exclusive," Erdreich said.

Lachance said the Luevano programs "certainly do not undermine the merit
system - a system that OPM has been given the responsibility to
protect." (Federal Human Resources Week, January 25, 2000)

* Should an Accounting Firm in a Bankruptcy Be Indemnified at Outset
Should an accounting firm in a bankruptcy be indemnified at the
beginning of a case for its work - even if it is later found guilty of
gross negligence? Or, to put it another way, should an accounting firm
in a bankruptcy be able to limit the damages a client recovers to the
amount of money it received from that client?

Several bankruptcy judges recently have balked at broadly indemnifying
an accounting firm at the outset of a case. What these indemnification
provisions are really meant to do is to keep the suit out of state court
and a potentially devastating jury trial. But are they consistent with
the principles embodied in the Bankruptcy Code? A number of bankruptcy
judges say no.

But having been checked in bankruptcy court, one accounting firm has
moved the fight to Congress, where an amendment was added in November to
the Senate's version of the Bankruptcy Reform Act. That amendment would
keep litigation against professional firms in federal court - and out of
state court.

                           What's Happening

In early 1998, Chapter 7 trustee Deborah H. Devan charged that
accounting firm Ernst & Young was responsible for Merry-Go-Round
Enterprises Inc.'s failure to reorganize. She said that it committed
fraud by not revealing its professional relationship with MGRE's law
firm, that the firm did not staff the restructuring with senior-level
turnaround professionals, and that it did not act "with a sense of
urgency" during the restructuring (see BCD, Vol. 31, Iss. 24, p. A1).

While the firm vigorously denied the charges, it reportedly ended up
settling for more than 180 million. Why?

"The plaintiff's firm brought suit in Baltimore County Court," said a
source familiar with the case. "E&Y was worried about a billion dollar
judgment. That's why they settled."

Until this point, some say that accounting firms thought the worst they
could face in bankruptcy court was a fee dispute or possible sanctions.
"Nobody thought they could [find themselves] in front of a jury facing
the possibility of a billion dollar verdict."

Obviously, this case changed things - or so E&Y apparently thought.
Shortly after the MGRE settlement, the firm was asked to become
accountant to the debtor in Dailey International Inc., a Houston-based
international oil field service company with many affiliates that filed
Chapter 11 on May 28, 1999.

"They proposed a very onerous engagement letter, which exculpated them
from liability, capped their damages, required jurisdiction to be in
U.S. District Court in New York - and it had an arbitration clause,"
said Robert D. Albergotti of Haynes and Boone LLP in Dallas, who
represented the debtor. "Judge [Peter J.] Walsh (Bankr. D. Del.), on his
own initiative, said, 'Of all the first day orders, the only one I have
an issue with is the E&Y engagement letter. Before I can approve this, I
need some additional briefing.'"

The U.S. Trustee and creditor's committee counsel Stephen R. Gross of
Debevoise & Plimpton filed briefs against the terms of the engagement.
E&Y and the debtor supported the engagement. In a seven-page opinion
letter that Albergotti terms "quite critical," Judge Walsh refused to
approve the engagement.

"I told [E&Y's counsel] Bob [Rosenberg of Latham and Watkins) that this
wasn't going to fly," Albergotti said. "He said, 'We think this is the
new standard.' Judge Walsh's opinion is interesting. Rosenberg pointed
out one or two other cases where the judge had approved some of the same
elements [that appeared in E&Y's engagement letter]. The judge said, 'If
I did [approve those elements in the past], counsel wasn't candid with
me about what was in there.'"

To get the engagement in Dailey, E&Y assured the parties that the firm
would finish the job - even if the terms in its engagement letter
weren't approved. To its credit, Albergotti said the firm lived up to
that agreement - performing 360,000 worth of work for nothing.

The firm also tried to get a similar agreement approved in the United
Companies Financial Corp. case pending before Judge Mary Walrath (Bankr.
D. Del.), but Albergotti said she adopted her colleague's opinion in

In Gulf State Steel Inc., a case filed in the Northern District of
Alabama, the firm again attempted to include a similar indemnification
agreement, according to Eric Henzy of Reid & Riege in Hartford, Conn.

"My client raised objections to that," Henzy said. "Based on that
[objection and other objections regarding fees, etc.], Ernst & Young
and/or the company decided to withdraw the application. Whether they saw
the handwriting on the wall or they didn't want to fight the fight, I
don't know. As a practitioner outside of Manhattan and Wilmington, I'm
in front of a lot of smaller market judges. If it's not getting approved
in Manhattan and Wilmington, I can tell you, it's not going to get
approved anywhere."

A number of bankruptcy professionals agreed. "Judges aren't buying it,"
said one. "IF E&Y won't render services [without such an agreement],
give the work to PricewaterhouseCoopers and Arthur Andersen. My guess is
that's what the judges are thinking."

"Lots of bankruptcy judges will balk at the idea that they should set
damages ahead of time for something they know nothing about," said

"The judges shouldn't buy this," Albergotti said. "It's very
heavy-handed. Investment bankers have always gotten special treatment.
Accounting firms have always played by the same rules as attorneys. This
whole E&Y thing has put that into question."

One attorney had some sympathy for the accountants. He said it's
probably not fair to apply high standards to the type of "emergency
room" work they do. On the other hand, he said, just because the trustee
or the estate sues a professional doesn't mean they're going to win.
There is such a thing as due process. And his sympathy only extends so

"If I were a judge and professional came in and said, 'I want in my
retention order, carte blanche, that I will be indemnified if I make a
mistake, I'm not sure, as a judge, I would agree to that. That's like
saying to a patient: 'You have to agree that if I commit malpractice,
you're not going to sue me.' Is that a violation of public policy?"

Of course, E&Y later told the judge that it would "not seek
indemnification for claims or causes of action arising from gross
negligence or willful misconduct and [would] agree to a modification of
the engagement letter to so specify." But Judge Walsh still thought the
engagement letter went too far (see page A5 for details).

After all the rebuffs E&Y received from the bankruptcy judges, you might
think that they would be tempted to give up. In fact, one bankruptcy
professional said he can't understand why E&Y would still want to play
in this arena. "They can't be making that much money in bankruptcy
compared to their audit business - especially after the Merry-Go-Round
settlement. Maybe they need to rethink why they're in this business."
But the firm obviously doesn't see things this way. They reportedly
formed a subsidiary called Ernst & Young Restructuring Advisory Services
LLP. "That is the person with whom you have an engagement letter when
you are in bankruptcy now with E&Y," Albergotti said.

And they have joined a fight in Congress that would insure that they
don't face another problem like Merry-Go-Round.

The highly regarded Gerald Smith of Lewis & Roca in Phoenix was an
expert witness for E&Y in Merry-Go-Round. He knows nothing about E&Y's
current policy on indemnification agreements. He just thought it was
wrong for the Merry-Go-Round suit to be litigated in state court.

As a result, Smith said he decided on his own to ask Congress to change
the law. E&Y joined the lobbying effort. In November, the Senate
unanimously approved Amendment No. 2478, which would provide for
"exclusive jurisdiction in federal court for matters involving
bankruptcy professional persons."

How would this help? "If you look at derivative suits, trial lawyers
have most success in state courts," said one bankruptcy professional.
"In Merry-Go-Round, E&Y was sued in state court. It wasn't sued in
bankruptcy court. State courts are more unforgiving. Federal courts are
more leavening."

For now, the focus remains in bankruptcy court, where judges
increasingly must decide what they are going to do about these
indemnification agreements - many of which are hidden in pile of first
day orders.

"Have you seen these agreements?" Henzy asked. "You need a magnifying
glass to read them. I don't think judges are getting out their glasses
and reading these things. Judges have a list of questions for DIPs.
Maybe if this starts coming before judges more frequently, they will
start saying: "Is there an indemnification provision in there? If so,
what does it say?" (BCD News and Comment, January 31, 2000)

* Studies Show Voters' Support For Patients' Rights Legislation
Two new studies indicate support for patients' rights legislation now
pending before Congress in the next legislative session, due to start
Jan. 24. But that support withers away if premiums were to increase or
employers could be held responsible for health plan malpractice.

Republicans are reportedly pushing for a fairly quick timetable on
patients' rights legislation. House Majority Leader Dick Armey (R-Texas)
promised to send a bill to President Clinton by Easter.

But with an ideological divide between House and Senate versions of the
bill, fast-tracking the legislation means one side or the other must

Over 70% of registered voters support patients' rights legislation that
would give enrollees more information from insurers, improve access to
specialists, and expand the rights to appeal coverage decisions and sue
health plans (see chart below).

But that support drops to just over half of voters if premiums increased
$ 20 per month, or over $ 200 per year, according to a study by the
Kaiser Family Foundation and the Harvard School of Public Health. The
threat of increased premiums is a prime weapon in the Republican arsenal
against right-to-sue legislation.

Even so, half of voters believe they would be better off if patient
protection legislation were enacted.

The Kaiser study also found little consensus on efforts to cover the
uninsured. Two-fifths of voters support a limited reform effort with no
tax hike. But the same number of voters supported a major initiative to
cover nearly all Americans with increased taxes.

Increased prescription drug coverage under Medicare got more support.
Voters favor initiatives to expand prescription benefits to low-income
seniors, even if a tax increase was required.

Still, respondents were evenly split on whether the Medicare program
needs minor tinkering or a major overhaul.

Employers fearful of liability: A Hewitt Associates study found that if
patients' rights legislation allowed health plan enrollees to sue
employers for malpractice, 36% of surveyed employers would terminate
health coverage altogether. Class-action lawsuits and headline jury
verdicts that have plagued health plans over the past year have likely
made employers even more determined to avoid that liability.

Even so, employers don't support one popular option that would get them
out of the insurance business.

Two-thirds of company executives said they would not support individual
tax credits that would allow people to buy health insurance themselves,
according to the Hewitt study.

It also found increased demand among employees for choice. Employers are
working to increase the number of health plans available to employees,
and are benchmarking against competitors to ensure that offered benefits
are on par with others. Still, this is likely a function of the tight
labor market; an economic downturn may make a single health plan with
more highly controlled access more attractive.

The Kaiser Family Foundation survey, conducted in December 1999, polled
1,500 adults, including 1,200 registered voters. Hewitt Associates
surveyed 600 company executives and administrators in fall 1999.
(Managed Care Week, January 24, 2000)


S U B S C R I P T I O N  I N F O R M A T I O N

Class Action Reporter is a daily newsletter, co-published by Bankruptcy
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Washington, DC.   Romeo John D. Piansay, Jr., editor, Theresa Cheuk,
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Copyright 1999.  All rights reserved.  ISSN 1525-2272.

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