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              Monday, February 12, 2001, Vol. 3, No. 30


ALLSTATE CORP: Says US Drops Probe of '94 Northbridge Earthquake Claims
AUTO INSURANCE: Settlement Approved in Suit over Aftermarket Car Parts
COLORADO: State to Pay Those Cut from Medicaid $17.2 Million
COMDISCO INC: Milberg Weiss Corrects Announcement on Securities Suit
ECONOMY-CLASS SYNDROME: Experts Call For Definitive Study

FILM MAKERS: "Law & Order" Shows Subject of Lawsuit by Writers Guild
HOLOCAUST VICTIMS: Irked By German Delays, Poland Plans to Start Paying
NEW JERSEY: Ap Ct Takes up Suit Re Market Transition Fund Assessments
NEW JERSEY: Churches Sue Governor and Depts. over Chromium Contamination
NEW JERSEY: Districts Petitions for Appeal Re Early Childhood Programs

NEW JERSEY: Hospitals Challenge $10 Per Adjusted Admission Charges
NEW JERSEY: Hospitals Challenge Medicaid Reimbursements Since 1995
NEW JERSEY: Judge Denies Class Cert. in Case By Children’s Rights Inc.
NEW JERSEY: Lawsuit Challenges Constitutionality of Waste Licensure Fees
NEW JERSEY: Middle Income School Districts Appeal in Lawsuit Re Funding

NEW JERSEY: Rural School Districts Sue for Parity Funding
NEW JERSEY: Trial Ct OKs Lawsuit Re Police & Firemen Retirement System
NEW JERSEY: Wins Dismissal of Suit By Institutionalized Persons’ Spouses
OKLAHOMA HEALTHCARE: Suit Filed to Protect Mentally Ill Patients
OTTAWA: Fed Govt Accused of Foot Dragging As Diabled Veterans Languish

PRESIDENTIAL ELECTION: Report Accuses Democrats of Vote Fraud
RECORD COMPANIES: Judge Grants Stay on FL Music Suit in Face of MDL Suit
RITE AID: Former Top Executives Accused of Fraud
SOTHEBY'S, CHRISTIE'S: Taking Stock of Turmoil; Art Auction War Heats up
U.S INTERACTIVE: Schiffrin & Barroway Files Securities Lawsuit in PA

WADE: FL Sp Ct Poised to Hear Debate on Abortion Law on March 29

* Chief Judge of 3rd Cir Takes Closer Look at Lead Counsel Selection
* HCFA Published a Proposed Reg Outlining Medicare+Choice Appeals Rules
* UM Medical System Accuses Judge Nance of Bias in Malpractice Case


ALLSTATE CORP: Says US Drops Probe of '94 Northbridge Earthquake Claims
Allstate Corp. said last Thursday February 8 that the U.S. attorney's
office in Los Angeles has dropped a longstanding criminal probe of the
insurer's handling of claims from the 1994 Northridge earthquake.

The company said federal officials told its Allstate Insurance Co.
subsidiary that the government is closing the file on its investigation
"with no charges or action being taken against the company." Edward M.
Liddy, the parent company's chairman and chief executive officer, said
Allstate is "very pleased" to see the investigation terminated.

The review was launched in 1998, after an Allstate employee alleged that
the company had cheated some policyholders by having engineering reports
altered to minimize homeowners' damage claims. The federal probe became
public when FBI agents raided three Allstate offices, seizing thousands
of earthquake-related documents.

Allstate denied the allegations, and separately contended that the
company had been victimized in the quake's aftermath by certain
contractors in California.

The Northridge quake, which generated an estimated $12.5 billion in
damage claims for the insurance companies involved, was a heavy financial
blow to Allstate, which at the time was a Sears, Roebuck and Co. unit.

While the government has decided not to pursue criminal charges, the
quake spawned civil lawsuits over Allstate's claims-handling. In late
1998, Allstate settled class-action litigation by agreeing to reopen
claims from as many as 9,000 California homeowners for an independent
review by a court-approved engineer. To cover the potential costs of that
settlement, Allstate set aside $60 million, and it also agreed to pay $5
million in funding for a foundation that seeks to promote loss
prevention. (Chicago Tribune, February 9, 2001)

AUTO INSURANCE: Settlement Approved in Suit over Aftermarket Car Parts
Country Companies Insurance Group has agreed to pay $6.3 million to
settle a class-action lawsuit over its use of aftermarket auto-body
repair parts.

The settlement, approved last Thursday February 8 by Marion County
Circuit Judge David Sauer, equals the amount the company says it saved
since 1993 by paying for repairs that included parts not made by
vehicles' original manufacturers.

The lawsuit was filed in October 1999 by the same attorneys who, just
weeks earlier, won $1.2 billion in judgments against State Farm Insurance
over that company's use of aftermarket parts.

That case is being appealed, and a decision is expected later this

The lawsuit claimed the use of aftermarket parts failed to restore
customers' cars to their pre-accident condition.

Country Companies officials said in a written statement that they
admitted no wrongdoing by settling. "It is in the best interest of its
policyholders to settle the case and avoid further costs and uncertainty
associated with lengthy and complex litigation," the statement said.
Country Companies, the fourth-largest insurer of vehicles in Illinois and
36th largest in the United States, insures some 800,000 vehicles, company
spokeswoman Melinda Zehr said.

Policyholders whose vehicles were repaired with aftermarket parts since
July 1993 - about 76,000 claims were handled by the company since then -
and who don't take steps to exclude themselves from the lawsuit, will be
eligible for a one-time refund of at least $52, said Tom Thrash, one of
the attorneys representing policyholders.

Up to one-third of the settlement likely will go to attorneys
representing policyholders.

Critics say aftermarket parts - including hoods, doors, fenders, bumpers
and other parts - which are modeled on factory originals but made without
access to factory specifications, fail to provide the same level of fit,
finish, corrosion protection and, in some cases, safety, as the
originals. (The Associated Press State & Local Wire, February 9, 2001)

COLORADO: State to Pay Those Cut from Medicaid $17.2 Million
A federal judge approved a $17.2 million settlement in which Colorado
will reimburse 40,000 people whose Medicaid benefits were cut because of
a computer glitch.

U.S. District Judge Wiley Daniel last Thursday February 8 ruled on a deal
that will settle a class-action suit against state agencies including the
Colorado Department of Human Services.

The agreement requires the Colorado Health Care Policy and Financing
Department to launch a massive five-month campaign to find each person
who lost their benefits, re-evaluate their eligibility and reinstate
health care. The state will also reimburse people who can prove they
spent their own money for care that should have paid through Medicaid.

Health care providers who paid for treatment that should have been
covered by Medicaid or who still have outstanding bills will also be

Officials estimate it will cost $279,230 to reimburse clients for proven
out-of-pocket medical expenses and at least $1.2 million to pay back
health care providers for outstanding bills.

The settlement protects those "who have the fewest resources to fight and
who didn't even know that their Medicaid was cut, potentially illegally,"
said Tracy Ashmore, an attorney who helped represent the plaintiffs. "We
will do everything in our power to notify people affected by this," said
Vivianne Chaumont, an attorney representing the state.

The mistake in Medicaid benefits occurred after welfare reforms kicked
in. Most recipients who moved from welfare to work or school were
supposed to keep their health care coverage.

State officials have blamed computer problems for the mistakes between
July 1997 to last August.

Johanna Gerke, a Jefferson County mother of two who was not a plaintiff
but had her benefits cut, said she was pleased with the outcome. "They
cut me off everything just two months after I started going to school and
got my job," said Gerke, who attended the hearing. "But if they would
have just helped us out for at least six months with Medicaid or even
cash benefits, we could have gotten our feet on the ground."

Of the 40,000 who lost health care, 16,558 gradually got Medicaid back on
their own. The state will reinstate the remaining 23,442.

Five attorneys handled the class-action lawsuit, filed in December 1999,
at no cost. They and state officials spent 10 months forging a
settlement. (The Associated Press State & Local Wire, February 9, 2001)

COMDISCO INC: Milberg Weiss Corrects Announcement on Securities Suit
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announced, on
February 7, 2001, the filing of a securities class action lawsuit against
Comdisco Inc. That notice listed the date of April 8, 2001, as the
deadline by which class members must seek lead plaintiff appointment.
That date was incorrect. The correct date by which class members must
seek appointment as lead plaintiffs is April 9, 2001.

The corrected release follows:

     The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces
that a class action lawsuit was filed on February 7, 2001, on behalf of
purchasers of the securities of Comdisco, Inc. ("Comdisco" or the
"Company") (NYSE: CDO) between January 25, 2000 and October 3, 2000,
inclusive (the "Class Period'). A copy of the complaint filed in this
action is available from the Court, or can be viewed on Milberg Weiss'
website at: http://www.milberg.com/comdisco/

     The action, numbered 01-C-874, is pending in the United States
District Court for the Northern District of Illinois, Eastern Division,
located at the Dirksen Bldg., 219 S. Dearborn St., Chicago IL, 60604,
against defendants Comdisco, Nicholas K. Pontickes (CEO President and
Director throughout the Class Period), and John J. Vosicky (Chief
Financial Officer and Executive V.P.) The Honorable William J. Hibbler is
the Judge presiding over the case.

     The complaint charges that defendants violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between January 25, 2000 and October 3, 2000 concerning the
Company's operations and its Prism Communications Services ("Prism")
subsidiary. Specifically, the complaint alleges that defendants
repeatedly issued positive statements concerning Prism, Prism's expansion
into new markets and purported positive developments in Prism's existing
markets but failed to disclose that Prism was suffering from a host of
adverse factors including, but not limited to, that incumbent local
exchange carriers were slow to provide Prism access to their networks and
Prism was experiencing intense competition from entrenched
telecommunications companies who were lowering prices in an effort to
garner market share. Then, on October 3, 2000, Comdisco announced that it
would stop funding Prism and would write down its investment in Prism,
which amounted to $ 350 million. In response to this announcement,
Comdisco's stock price dropped by 23% in one day, from $17.5625 per share
to$13.37 per share (representing a 66% drop from the Class Period high of
$53 per share, reached on March 9, 2000). Prior to the disclosure of the
true facts about Prism, Comdisco insiders sold $ 10 million of their
personally-held Comdisco stock and the Company completed a $ 500 million
note offering on favorable terms.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP Steven G. Schulman or
Samuel H. Rudman 800/320-5081 comdiscocase@milbergNY.com

ECONOMY-CLASS SYNDROME: Experts Call For Definitive Study
Scientists called last Friday February 9 for a major study to establish
decisively if there is a link between flying and deadly blood clots at an
unprecedented summit between airlines and medical experts.

Representatives from several top international airlines held closed-door
talks with scientists and doctors amid mounting public concern that
long-distance flying is a major cause of potentially fatal blood clots.

Experts in Deep Vein Thrombosis (DVT), or ''economy class syndrome,'' say
airline passengers may be at special risk of contracting the problem.
Some 800 Australians who claim that they suffered DVT because of flying
are taking part in a class action against several major airlines.

Speaking after the meeting, experts from The Australasian Society of
Thrombosis and Haemostasis (ASTH) and the Griffith University Center for
Aviation Medicine said it was up to the general public, government and
business to find funding for the study to determine the link between
flying and blood clots.

Asked if airlines had agreed to help fund the study, organizers would
only say that responsibility for funding rested on everyone. The summit
February 9 was the biggest meeting yet on the issue.

To date, just two studies have been conducted on the relationship between
DVT and flying, offering conflicting opinions, said ASTH president Dr.
Ross Baker. ''Our aim now is to conduct a definitive study to answer the
questions remaining about the association between DVT and air travel,''
Baker told a press conference after the summit. ''This type of study
would enable informed choices by passengers and airlines and assist
doctors in advising their patients prior to travel.''

Qantas Airways, Australia's biggest airline, and Air New Zealand took
part in the summit. Other airlines attended, but organizers refused to
identify them.

Deep vein thrombosis involves the formation of blood clots in the legs,
sometimes caused by sitting in cramped conditions for long periods. A
clot can be deadly if it moves to the lungs. The condition is common,
with high-risk groups including the elderly, obese and those with a
family history of the disease. The intensive study would be the first of
its kind anywhere in the world and could take as much as three years,
Baker said.

''The study will involve people that are consecutively coming to
Australian hospitals in major cities (with DVT) and looking to see
whether there is an association (with) airline flight and what that risk
is over and above the background rate of veinous thrombosis in the
community,'' Baker said.

Qantas Airways said in a statement that the seminar proved there was a
need for ''an objective controlled study, conducted on a global scale.''
The airline did not say if it had agreed to provide funding for such a
study. Qantas said it will participate in a meeting on DVT to be convened
by the World Health Organization next month in Geneva. (AP Worldstream,
February 9, 2001)

FILM MAKERS: "Law & Order" Shows Subject of Lawsuit by Writers Guild
In the midst of early negotiations for a new movie and television
contract, the Writers Guild of America has filed a labor complaint
against the makers of the ''Law & Order'' TV shows. The guild accused
Wolf Films, the NBC network and related production companies of refusing
to disclose information about whether it has stockpiled scripts in an
effort to lessen the impact of a potential strike. Universal City Studios
Inc., Studios USA Television, USA Development and Studios USA Pictures
Development also are named in the complaint, which was filed on February
5 with the National Labor Relations Board.

''Within the last six months, the above-named employers failed and
refused to provide the charging party with information necessary and
relevant to its bargaining obligations,'' according to the complaint. The
complaint relates to both the show ''Law & Order'' and its spin-off ''Law
& Order: Special Victims Unit,'' WGA spokeswoman Cheryl Rhoden said.

A WGA strike in 1988 lasted 22 weeks and delayed that year's fall TV
season. (AP Worldstream, February 9, 2001)

HOLOCAUST VICTIMS: Irked By German Delays, Poland Plans to Start Paying
Worried that aging victims will die before they see any cash, a Polish
foundation said it would start paying Nazi-era slave labor survivors from
its own funds next month if a German compensation plan is delayed much
longer. ''This is a dramatic decision. This is our last resort,'' said
Bartosz Jalowiecki, head of the Polish-German Reconciliation Foundation.

The German government and German companies who used forced and slave
labor during the Nazi era set up the 10-billion-mark (dlrs 4.8 billion)
fund last year to compensate surviving victims and bring an end to U.S.
class-action lawsuits.

Payments have been held up, however, by the refusal of a New York judge
last month to dismiss a Holocaust suit against German banks. Lawyers were
given until Feb. 28 to explain how compensation will be disbursed and
answer other questions.

If the judge refuses to dismiss the case then, Jalowiecki said, the
Polish group will start making payments March 12 on the assumption it
eventually will recoup the money from the German fund.

The foundation decided it would begin with payments of 1,400 zlotys (dlrs
340) to the 77,000 oldest eligible Poles, those born before Jan. 31,
1921. The foundation was set up in the early 1990s under an earlier
German initiative to help needy victims of the Holocaust.

That would represent only a small part payments that Poland estimates
will be about dlrs 7,000 for people forced to work in Nazi death camps
and about dlrs 5,000 for people forced to work in Nazi industries or

''For many people it will be the only sign that their suffering has been
noticed,'' said a member of the foundation's governing council, Jerzy
Widzyk, who was the Warsaw government's chief negotiator in compensation

Various estimates put the number of people eligible for payments at 1
million to 2 million, mostly non-Jews in Eastern Europe and the former
Soviet Union. Warsaw estimates that 500,000 Poles are eligible.

The compensation plan has been fraught with delays, and some critics
accuse German companies of hiding behind legal arguments to put off

The Polish foundation, which will oversee distribution of Poland's share
of the fund, has frequently pressed for faster payments before many more
victims die.

Polish Foreign Minister Wladyslaw Bartoszewski, a survivor of the
Auschwitz Nazi death camp, also sharply criticized Germany for the

German politicians and industry leaders whose companies have already paid
into the fund are increasingly exasperated with the reluctance of many
firms to contribute.

The chief executive of sportscar maker Porsche condemned what he called
the ''blocking tactics'' of some companies.

German industry must understand its ''moral obligation'' to make the
payments, also in the light of how much it earns from exports, Wendelin
Wiedeking was quoted as saying in the Stuttgarter Zeitung newspaper. (AP
Worldstream, February 9, 2001)

NEW JERSEY: Ap Ct Takes up Suit Re Market Transition Fund Assessments
Affiliated FM Insurance Company v. State of New Jersey et al., an action
by certain members of the New Jersey Property-Liability Insurance
Guaranty Association challenging the constitutionality of assessments
used for the Market Transition Fund and seeking repayment of assessments
paid since 1990. New Jersey is vigorously defending this action which on
August 7, 1998 was transferred to the Appellate Division as an appeal
from final agency action.

NEW JERSEY: Churches Sue Governor and Depts. over Chromium Contamination
Interfaith Community Organization v. Shinn et al., a suit filed by a
coalition of churches and church leaders in Hudson County against the
Governor, the Commissioners of the New Jersey Department of Environmental
Protection (the "DEP") and the Department of Health, concerning chromium
contamination in Liberty State Park in Jersey City. On March 2, 1999 the
federal district court entered an order for a preliminary injunction
which requires the DEP to fence in certain areas of Liberty State Park,
requires no mitigation work beyond that which the DEP has nearly
completed as part of the Green Park development in that area and denies
the plaintiff's motion for preliminary injunctive relief in other areas
of Liberty State Park.

NEW JERSEY: Districts Petitions for Appeal Re Early Childhood Programs
Thirteen Abbot District's have filed petitions of appeal with the
Commissioner concerning the Department of Education's letters regarding
such District's early childhood programs developed in response to the
Court's decision in Abbot v. Burke. The matters were transmitted to the
Office of Administrative Law for further proceedings. To date, eleven of
the original districts that filed petitions remain active (two withdrew
their petitions).

Additionally, the Education Law Center has filed petitions on behalf of
the students in the state-operated schools of Newark, Jersey City and
Paterson as well as the students of West New York. Six districts filed
appeals with the Commissioner of Education which were transferred to the
Office of Administrative Law regarding supplemental programs. Of the six
districts, four districts have settled and/or withdrawn their petitions
for the 1999/2000 school year. Five districts filed petitions of appeal
of the Department of Education's decision on the district's early
childhood programs for the 2000/2001 school year. Also, seven districts
have filed petitions of appeal of the amount of additional Abbot New
Jersey aid that each district was awarded. Out of seven districts, one
district has withdrawn its petition.

NEW JERSEY: Hospitals Challenge $10 Per Adjusted Admission Charges
Zurbrugg Hospital et al v. Fishman; Rancocas Hospital et al. v. Fishman;
St. Francis Medical Center et al. v. Fishman and Solaris Health System v.
Fishman. These cases represent challenges by various hospitals to the $10
per adjusted hospital admission charges imposed by N.J.S.A. 26:2H-18.57.
Most of the fees in controversy have been paid by hospitals pending the
outcome of the appeal pursuant to agreements with the Department of
Health and Senior Service. The Appellate Division upheld the $10 per
adjusted admission charges and affirmed the payment demand and rejected
the hospitals' claims that the assessment constituted a special law
relating to taxation or a violation of the hospitals' equal protection
rights. The New Jersey Supreme Court denied the hospitals' petition for

NEW JERSEY: Hospitals Challenge Medicaid Reimbursements Since 1995
United Hospitals v. State of New Jersey and William Waldman, 19 New
Jersey hospitals are challenging the Medicaid reimbursements made since
February 1995 claiming that New Jersey failed to comply with certain
federal requirements, the reimbursement regulations are arbitrary,
capricious and unreasonable, rates were incorrectly calculated, the
hospitals were denied due process, the Medicaid reimbursement provisions
violate the New Jersey Constitution, and Medicaid State Plan was violated
by the New Jersey Department of Human Services implementation of hospital
rates since 1995.

NEW JERSEY: Judge Denies Class Cert. in Case By Children’s Rights Inc.
Charlie and Nadine H. v. Christine Todd Whitman, a class action suit
filed by Children's Rights Inc. against the Governor, the Commissioner of
the Department of Human Services and Charles Venti, Director of the
Division of Youth and Family Services alleging their systemic failures to
protect the plaintiff class and furnish legally required services to the
children and their families and that the alleged failures violate the
United States Constitution, federal statutes and federal common law. The
state has filed a motion to dismiss, which was decided on January 27,
2000. Most of the causes of action were dismissed. The trial judge denied
plaintiffs' motion seeking to appeal the decision. Plaintiffs' motion for
class certification was dismissed without prejudice and plaintiffs were
ordered to file an amended complaint.

NEW JERSEY: Lawsuit Challenges Constitutionality of Waste Licensure Fees
American Trucking Associations, Inc. and Tri-State Motor Transit Co. v.
State of New Jersey, challenging the constitutionality of annual
hazardous and solid waste licensure renewal fees collected by the
Department of Environmental Protection, seeking permanent injunction
enjoining future collection of fees and refund of all renewal fees, fines
and penalties collected. On October 2, 1997 oral argument was conducted
on the parties' cross-motions for summary judgement in the Tax Court. No
decision on the Cross-motions has been rendered to date.

NEW JERSEY: Middle Income School Districts Appeal in Lawsuit Re Funding
Verner Stabaus, et al. v. State of New Jersey, et al. Plaintiffs, 25
middle income school districts, have filed a complaint alleging that New
Jersey's system of funding for their schools is violative of the
constitutional rights of equal protection and a thorough and efficient
education. One June 23, 1998, plaintiffs filed an amended complaint
removing one and adding eighteen school district plaintiffs. On January
31, 2000 an order was entered granting the defendants' motion to dismiss.
On March 8, 2000, the districts filed a notice of appeal.

NEW JERSEY: Rural School Districts Sue for Parity Funding
Buena Regional Commercial Township et al. v. New Jersey Department of
Education et al. This lawsuit was filed on behalf of 17 rural school
districts seeking the same type of relief as has been mandated to be
provided to the poor urban school districts in Abbot v. Burke, which
included, without limitation, sufficient funds to allow the school
districts to spend at the average of wealthy suburban school districts,
to implement additional programs and to upgrade school facilities. The
Buena school districts are seeking to be treated as special needs
districts and to receive parity funding the with Abbot school districts
as a remedial measure. They also are seeking additional funding as may be
necessary to provide an educational equivalent to that being provided in
the Abbot districts. Similar complaints have been filed individually by
the school districts of Dover and Pennsville and are presently pending
before the Commissioner of Education. On February 24, 2000, the matter
was transferred to the Office of Administrative Law for a hearing limited
to whether each petitioning district has fully effectuated the provisions
of the Comprehensive Educational Improvement and Financing Act.
Administrative hearings are ongoing.

NEW JERSEY: Trial Ct OKs Lawsuit Re Police & Firemen Retirement System
Brown v. State, Dept. of Treasury, Div. of Pensions & Benefits, Plaintiff
seeks to represent a class of persons who received retirement benefits
under the Police & Firemen Retirement System. Plaintiff seeks to
challenge on statutory and constitutional grounds their omission from
legislation that provided enhanced retirement benefits only to these
people who retired after April 1, 1991. The trial court denied New
Jersey's motion to dismiss and transferred the counts seeking a
declaration regarding the tax statutes to the New Jersey Tax Court.

NEW JERSEY: Wins Dismissal of Suit By Institutionalized Persons’ Spouses
Cleary v. Waldman, the plaintiffs claim that the Medicare Catastrophic
Coverage Act, providing funds to spouses of institutionalized individuals
sufficient funds to live in the community, requires that a certain system
be used to provide the funds and another system is being used instead.
Plaintiffs’ motion for a preliminary injunction was denied and is being
appealed. Subsequently, plaintiffs filed for class certification which
was granted. On February 8, 1999, the Third Circuit court of Appeals
affirmed the District court's decision, concluding the federal statute
allowed States discretion to employ either methodology. Plaintiffs'
petition for certiorari to the United States Supreme Court was denied. On
August 21, 2000, the district court denied plaintiffs' motion for summary
judgement, granted New Jersey's cross motion for summary judgment, and
granted defendant-intervenors' cross motion to dismiss.

OKLAHOMA HEALTHCARE: Suit Filed to Protect Mentally Ill Patients
A class action lawsuit on behalf of 740 mentally ill patients has been
filed against the Oklahoma Healthcare Authority by Southeastern Oklahoma
Family Services (SOFS) and Milton Evans, a consultant to SOFS.

Steve Holden, lead attorney for Holden, Glendening and McKenna, said the
suit requests immediate assistance in reinstating Medicaid benefits to
the patients which, he said, the Authority terminated "without cause."
"As much as I hate to say it, it appears that we are witnessing a
vendetta against Milton Evans by the Healthcare Authority (HCA) with a
lot of innocent people caught in the middle," Holden said.

Holden described Evans as an outspoken advocate of services for the
mentally ill in Southeastern Oklahoma who has often found himself at odds
with the Authority and its directors. "There is undeniably some friction
between Mr. Evans and some of the directors of the Healthcare Authority,"
he noted. "But Federal law is very clear when it comes to rendering and
paying for Medicaid services and in this case, the law is seeking relief
on behalf of themselves and a total of 740 mentally ill individuals who
will be denied reasonable access to Medicaid services.

The suit names high ranking HCA members Mike Fogarty, Terrie Fritz, Dr.
Lynn Mitchell and Dana Brown, both individually and in their official
capacity for "violations of various federally protected statutory and
constitutional rights" afforded to each of the plaintiffs.

Source: Holden, Glendening and McKenna

Contact: Peggy Striegel, 918-258-3536, or 800-663-1136, for Holden,
Glendening and McKenna

OTTAWA: Fed Govt Accused of Foot Dragging As Diabled Veterans Languish
The federal government could save hundreds of millions of dollars by
reaching a quick settlement on a class-action lawsuit on behalf of
disabled veterans and their heirs, the London Free Press cites a London
lawyer. Peter Sengbusch said a settlement would save the government
additional court costs and higher damages in the case, but the government
shows no signs of being ready to settle, according to the Press.

Sengbusch is the lawyer for Joseph Authorson, an 86-year-old veteran who
lives at Parkwood Hospital in London. Authorson and other veterans went
to court seeking interest on money held by the government on their behalf
in trust funds, the London Press says.

The veterans won an initial court victory in October when Superior Court
Justice John Brockenshire ruled the government had mismanaged the
finances of thousands of veterans for decades while they were patients in
hospitals and psychiatric institutions.

According to the London Press, it's estimated the Department of Veterans
Affairs took over the assets of about 10,000 veterans judged incompetent
to handle their own affairs. A report commissioned by the veterans
estimates that, had the government properly managed the money, it would
now have totalled $ 1.6 billion.

The federal government is appealing the October decision. Sengbusch said
the appeal is expected to be heard in the latter half of April.

In Ottawa on February 8, Saskatchewan MP Roy Bailey, the Canadian
Alliance's Veterans Affairs critic, decried the government's delay in
settling the suit.

The veterans are getting older and may not survive the government's delay
in settling, Bailey said. "I can't believe the government's callousness
in this matter," the MP said. "What the government did was illegal and
morally wrong . . . What kind of government would rob from its own war
veterans?" the London Press cites.

Authorson, meanwhile, remains in Parkwood, unaware of the lawsuit and the
media attention it has attracted, the report goes on. He has been
institutionalized since returning shell-shocked from the Second World War
in 1943. He was diagnosed with schizophrenia and later lobotomized. (The
London Free Press, February 9, 2001)

According to the Toronto Star, another lawyer acting for disabled
veterans in a lawsuit against the government charged on February 8 that
Ottawa "seems intent on waiting until every widow and every veteran is
dead" to avoid paying compensation. David Greenaway accused the
government of foot dragging for its decision to fight a court's finding
it mishandled veterans' trust accounts.

The move could leave taxpayers on the hook for interest piling up at a
rate of $1.5 million a week, said Greenaway, one of the lawyers acting
for thousands of disabled veterans in a class action suit, the Toronto
Star says. "We have time and time again gone to the government and said,
'Let's sit down and talk about this,' and the government has continually
rebuffed us," Greenaway told a Parliament Hill news conference.

The government is appealing last fall's Superior Court decision that
Ottawa knowingly withheld interest payments on money it administered for
an estimated 10,000 disabled vets from both world wars.

Veterans unable to manage their own finances, generally because they were
mentally incompetent, had their affairs taken over by the government.

An economist hired by the veterans' lawyers has estimated they're owed at
least $1.6 billion. A hearing into how much the government will have to
pay is scheduled for spring.

Federal officials denied the lawyer's claim that there's a planned effort
to drag out the process. "The government is appealing, that's not
delaying," said Janice Summerby, a Veterans Affairs spokesperson.

Ottawa argues the court has intruded on Parliament's jurisdiction to pass
legislation. A 1990 bill provided for interest payments on veterans'
accounts the government administers, but it specifically ruled out
retroactive interest payments.

Cliff Chadderton, chair of the National Council of Veteran Associations
in Canada, said the government will be "saving, not wasting" money if it
wins its appeal. He fears a large compensation payout will mean funds are
taken from other veterans' programs, and suggested most of those affected
have already died. (The Toronto Star, February 9, 2001)

PRESIDENTIAL ELECTION: Report Accuses Democrats of Vote Fraud
Sen. Christopher "Kit" Bond, R-Mo., has forwarded to the U.S. attorney's
office here a report -- compiled by a group of local lawyers -- that
accuses Democrats of "an organized effort to commit vote fraud" in the
city of St. Louis last Nov. 7.

A spokesman for the state Democratic Party in turn accuses Bond of
instigating "a Joe McCarthy witch hunt" aimed at intimidating city
voters. McCarthy was a senator who accused various people in the 1950s of
being communists.

A spokeswoman for Audrey Fleissig, the U.S. attorney for Eastern
Missouri, has confirmed that she had received the report. Sources gave
the Post-Dispatch a copy, but the names of the lawyers are blacked out --
as were several passages and pages. Sources say the lawyers fear
reprisals if their identities become public, and that many of the excised
portions raise questions about what judges did.

The 250-page report cites various incidents but zeroes in on the Election
Day lawsuit filed by the state Democratic Party and the Gore-Lieberman
campaign, among others, to keep city polls open for three hours beyond
the 7 p.m. closing time. Judge Evelyn Baker granted the request; a state
appeals court overturned it and shut down the polls at 7:45.

The report contends that the lawsuit contained false statements
identifying specific people as being denied the right to vote, when they
really had voted.

Among them was the lead plaintiff, identified in the suit as Robert D.
Odom, although Democratic officials say the middle initial was in error.
That plaintiff, Democrats say, actually was Robert M. Odom, known as Mark
Odom, an aide to former Rep. William L. Clay Sr. and now an aide to Rep.
William Lacy Clay Jr.

Odom had been listed as a plaintiff in the suit, which stated that he
"has not been able to vote and fears he will not be able to vote" because
of long lines and "machine breakdowns" at polling places "that have
lasted for several hours."

The lawyer handling the case, Douglas Dowd, said that Lacy Clay had given
him the wrong initial and that he didn't know that Odom was Clay's aide.
Dowd said he gave the judge wrong information about Odom's voting status
because he had gotten incorrect information from Democratic officials.

During the Election Day hearing, Dowd said another lawyer alerted him in
a note that Odom already had voted. Odom told Dowd that he thought he was
to testify about what he'd witnessed at polls, Dowd said.

Because of the confusion about his voting status, Odom didn't testify.
Instead, Dowd added Mahina Nightsage as a plaintiff. She testified that
she had been blocked from voting because she had been improperly purged
from the rolls.

Dowd said he failed to correct the suit or tell the judge that Odom had
in fact voted. Legally, "I didn't have to," Dowd said. "My job is to
prove my case," he said. "My allegation was that people were being denied
a right to vote. I didn't prove Mr. Odom was being denied the right to
vote (but that Mahina Nightsage) was denied the right to vote. That's the
key." He said he left Odom as a plaintiff in the case because at that
point he was in the same category as one of the other plaintiffs, Lacy
Clay. Both had voted, Dowd said, but had seen other voters experiencing

Dowd called those who assembled the report "a bunch of cowards" for not
identifying themselves. State Democratic Party spokesman Jim Grebing, who
made the McCarthy barb, accused Bond of "overblowing the Odom thing"
while overlooking legitimate issues.

Grebing had been the spokesman for former Secretary of State Bekki Cook,
who issued a report last month on the Election Day troubles in St. Lo
uis. State and city election officials said in the report that at least
143 people were improperly allowed to vote, and an undetermined number of
legitimate voters were improperly barred from voting.

Meanwhile, several prominent African-Americans are seeking a meeting with
the city Election Board to prevent a replay in the March 6 Democratic
mayoral primary. "We want to find out what mechanisms have been put in
place so we don't have a fiasco (like the one) we had on election night
in November," said the Rev. Earl Nance Jr., a member of the group. Other
members include James Buford, chief executive of the Urban League of
Metropolitan St. Louis; the Rev. Sammie Jones; and insurance executive
Richard Gaines. (St. Louis Post-Dispatch, February 9, 2001)

RECORD COMPANIES: Judge Grants Stay on FL Music Suit in Face of MDL Suit
Noting that their efforts would only be duplicative, Miami-Dade Circuit
Judge Margarita Esquiroz dealt a blow to a lawsuit filed by Florida music
lovers against the nations major record companies.

The suit, which alleges the companies conspired to overcharge consumers
for compact discs, is similar to dozens of others that have been filed
around the country, the judge noted in a Feb. 6 order. Those actions have
been consolidated and transferred by the Judicial Panel on Multidistrict
Litigation to a federal judge in Maine. Because of that, Esquiroz granted
a defense motion to stay all proceedings for now. Esquiroz did, however,
allow for further discovery by the plaintiffs attorneys that might
convince her to change her mind.

The suit, which seeks class-action status, was filed by five Floridians
against Sony Music Entertainment Inc., Time Warner Inc., Universal Music
& Video Distribution Corp., UMG Recordings Inc., Capitol Records Inc. and
BMG Music.

The suits in the multidistrict litigation were filed in California, New
York, Connecticut, New Mexico and Florida. They were filed after the
companies signed a settlement agreement with the Federal Trade

But the arrangement did not require the companies to rebate money to
consumers. It only required the companies to stop pressuring retailers to
advertise CDs at or above a minimum price set by the distributors, or
else the retailers would lose out on cooperative advertising funds from
the distributors. The FTC called the practice a violation of antitrust
laws. (Broward Daily Business Review, February 9, 2001)

RITE AID: Former Top Executives Accused of Fraud
Former top executives at Rite Aid Corp. improperly pledged corporate
assets to secure a bank loan and tried to pay a subordinate to manipulate
earnings figures, a class-action lawsuit alleges.

The new charges are part of an amended complaint accusing the drugstore
chain of releasing misleading information that artificially inflated
share value. Rite Aid has settled claims against it, and agreed to
provide plaintiffs with details to bolster their suit against the
company's former executives and auditing firm.

"The extent of defendant's accounting manipulations was extraordinary,
touching nearly every significant aspect of the company's income
statements and balance sheets for fiscal years 1997, 1998 and 1999,"
stated the complaint, filed recently in U.S. District Court in

It alleges that three former Rite Aid officials, CEO Martin Grass, chief
financial officer Frank Bergonzi and president Timothy Noonan,
collaborated to manipulate earnings figures as early as 1997 and until
Grass was ousted by the Rite Aid board in October 1999.

The complaint also accuses the company's former auditing firm, KPMG LLP,
of being aware that the accounting was "deficient." But auditors
continued to sign off on the statements as "clean" because Camp
Hill-based Rite Aid was a big client which paid "millions of dollars in
annual consulting fees."

Bob Zeitlinger, a spokesman for KPMG, denied the allegations. "We will
vigorously defend our work," he said, explaining that national accounting
publications recognize that "even a well-planned and executed audit may
not detect management fraud."

Rite Aid, the nation's third largest drugstore chain which operates
stores in West Virginia, declined to comment about the lawsuit. But the
complaint is noteworthy for offering fresh details provided by the
company about the accounting debacle that forced it to revise earnings
downward last year by more than $1 billion for fiscal years 1998 and

Meanwhile, a criminal investigation into the accounting troubles is
continuing, with prosecutors reportedly calling witnesses before a grand
jury in recent weeks.

According to the complaint, accounting problems at Rite Aid began to
unfold in 1997, when the company sold 189 stores to a unit of J.C.
Penney. Instead of logging the one-time gain of $82.6 million, the
company improperly put it into an internal reserve account to "inflate"
future operating income. Later in early 1999, Bergonzi continually sought
the help of then-corporate controller Steven Kindler to find ways to make
the earnings figures look better on the books. The complaint states that
Bergonzi offered Kindler $20,000, telling him, "We're going to have to
get dirty here."

And the complaint reveals that Grass was ousted by the Rite Aid board in
1999 because he improperly pledged corporate assets to secure a bank loan
for the company and then falsified board minutes.

An attorney for Grass called the allegations "totally false and indeed,
scandalous." The Washington attorney, who declined to give his name, said
telephone records would help show that the pledging of assets to J.P.
Morgan was made with full knowledge of the board's finance committee.

The minutes were drafted by Rite Aid's general counsel and never
falsified by Grass, he said. "With regard to the supposed scheme to
inflate the company's stock, there is no basis for contending that Mr.
Grass had any motivation to do that or anything like that," the attorney
said, pointing to the auditors KPMG as the culprit. "He relied on people
who knew about accounting issues to make accounting decisions. He didn't
pressure them to do anything other than what was within ordinary
accounting principles," Grass' attorney said.

In trading last Thursday February 8, Rite Aid shares were down 14 cents
to $4.36 on the New York Stock Exchange. (The Associated Press State &
Local Wire, February 9, 2001)

SOTHEBY'S, CHRISTIE'S: Taking Stock of Turmoil; Art Auction War Heats up
Phillips, a London-based auction house owned by French interests, is
making its boldest bid to date to become a major player in a global
business long dominated by Sotheby's and Christie's.

Since Phillips, the No. 3 international auction house was purchased in
1999 by the LVMH Moet Hennessy Louis Vuitton conglomerate controlled by
French billionaire Bernard Arnault, it has been aggressive in paying top
dollar for artworks, even if it loses money selling them. But that may
change beginning with an important auction of impressionist and modern
art May 7.

The house, known since last month as Phillips, de Pury & Luxembourg,
announced Thursday, Feb. 8 that it has purchased seven museum-quality
paintings and drawings by Paul Cezanne and Vincent Van Gogh, valued at
$80 million, for the sale. The seller was Heinz Berggruen, an 87-year-old
Berlin-based dealer who recently sold 87 Picassos to the German

"This is a fabulous collection and we're very excited," Phillips new
chairman, Simon de Pury, told UPI. "Everything is of outstanding

De Pury also disclosed that it is moving from small quarters on
Manhattan's upper east side to a 12-story building at a prime location on
57th Street, just off Fifth Avenue. It has leased the former bank
building for three years and is currently remodeling it to be ready for
the May auction.

These announcements come at a time when both Sotheby's and Christie's are
staggering from fall-out of a two-year scandal, the worst in world
auction history.

Both houses have admitted guilt in a price-fixing conspiracy involving
commission rates paid by many customers through the 1990s. De Pury, a
former chairman of Sotheby Europe, was not involved in the criminal case,
which has been prosecuted by the U.S. Justice Department.

The two houses, both headquartered in London since the 18th century, have
agreed to a $512 million settlement of the antitrust case in the form of
restitution to 130,000 customers represented by a class action suit.
Rather than pay entirely in cash, Sotheby's and Christie's have offered
to pay $125 million in certificates that buyers could use toward future
commission fees and other charges.

Christie's cooperated with the government in the investigation of the
conspiracy and received conditional amnesty, but Sotheby's pleaded

Sotheby USA's resigned president, Diana D. Brooks, a prominent financial
and social figure in New York, pleaded guilty last October to one count
of conspiracy and faces a prison term when she is sentenced May 23. She
also has forfeited $11 million in stock options.

Sotheby USA's chairman, Detroit shopping malls tycoon A. Alfred Taubman,
who also resigned, has denied any wrongdoing but agreed to pay $156
million of Sotheby's share of the settlement and $30 million more to
settle a shareholders' lawsuit. But he is still under investigation, and
Brooks has agreed to become a witness against him if the government
presses charges.

Both houses also face paying additional millions of dollars in
restitution to foreign buyers and sellers who have sued them.

As a result of the financial drain represented by the settlements,
Sotheby's has just announced an eight percent cut in its worldwide staff,
about 150 employees, costing $14 million in severance pay. Christie's,
owned by French investor Francois Pinault, has not yet announced any
downsizing measures.

This turmoil in the auction world provides a splendid opportunity for
Phillips, which was founded in 1796, to move in on Sotheby's and
Christie's. It already is well represented globally with offices in New
York and St. Louis as well as several European cities and Australia and
has a highly respected British chairman, Lord Charles Powell of
Bayswater, former key advisor to Prime Ministers Margaret Thatcher and
John Major.

Last fall, Phillips rented the American Crafts Museum in midtown
Manhattan for its first major sales in New York of Impressionist, modern
and contemporary art. Most of the consigned works had been financed by
Phillips, either through outright purchase or guarantees to sellers of a
minimum sale price even if bidding fell below it.

Its Impressionist-modern sale was disappointing, totaling only $32.6
million, far below the $54.1 million pres-sale estimate, but the
contemporary art fetched $10.6 million, just above the estimate of $10.4
million. Auction experts said too high reserve prices, below which a
seller will not sell, had been placed on the Impressionist and modern
works, whereas unusually low reserves had been placed on the contemporary

De Pury said the Berggruen acquisitions consisted of five paintings by
Cezanne, including one of his famous views of France's Mount
Sainte-Victoire, valued at $35 to $45 million, and a painting and drawing
done by Van Gogh in Arles, France, two years before his suicide.

After his departure from Sotheby Europe some years ago, de Pury became an
art dealer in Geneva with Daniella Luxembourg. Their firm merged with
Phillips in Janurary and de Pury was named chairman to guide the auction
house on its quest for a larger slice of the annual $2.5 billion auction
pie enjoyed by Sotheby's and Christie's.

De Pury also is renowned as an auctioneer and conducted Phillips' sales
last fall. (United Press International, February 9, 2001)

U.S INTERACTIVE: Schiffrin & Barroway Files Securities Lawsuit in PA
The law firm of Schiffrin & Barroway, LLP announced on February 8 that a
class action lawsuit was filed in the United States District Court for
the Eastern District of Pennsylvania on behalf of all purchasers of the
common stock of U.S. Interactive, Inc. (Nasdaq: USITQ) from February 10,
2000 through November 8, 2000, inclusive (the "Class Period").

The complaint charges certain officers and directors of U.S. Interactive
with issuing false and misleading statements concerning its business and
financial condition. [U.S. Interactive was not named as a defendant
because it filed for bankruptcy protection under Chapter 11 of the
Bankruptcy Code.] Specifically, the complaint alleges that during the
Class Period, defendants were aware that at least two of the Company's
dot-com clients, which were owned in part by certain of the defendants,
would not be able to pay the Company for services rendered.
Notwithstanding this adverse information, defendants reassured the public
that U.S. Interactive's dot-com risk exposure was minimal because the
Company only did business with dot-com organizations that had proper
funding levels. In addition, defendants failed to disclose that the
Company was unable to pay-off even part of an $80 million debt and would
not achieve profitability by the end of 2000 as previously represented.

On September 20, 2000, the Company pre-announced that its third quarter
financial results would be lower than expected due to rapid changes in
the Internet professional services market, including lengthening sales
cycles, re-evaluation of e-business initiatives by clients and
prospective clients, and reduced funding available to its dot-com
clients. Following this partial disclosure, the Company's stock dropped
over 33% from the day before to close at $12.937. On November 8, 2000,
when the Company announced its third quarter financial results, it
disclosed that not only were its results worse than pre- announced on
September 20, 2000, but that the Company was forced to write-off $ 8.8
million of uncollectible accounts receivable during the third quarter,
which amounts were primarily related to services performed for dot-com
organizations. Following this full disclosure, U.S. Interactive's stock
dropped to $0.81 per share.

Contact: Marc A. Topaz, Esq., or Robert B. Weiser, Esq. of Schiffrin &
Barroway, 1-888-299-7706, (toll free), or 1-610-667-7706, or

WADE: FL Sp Ct Poised to Hear Debate on Abortion Law on March 29
While abortion-rights activists around the country fear their landmark
1973 victory in Roe v. Wade could be toppled, Floridas Supreme Court is
poised to hear debate on whether the state will eliminate Medicaid
regulations that deny state-funded abortions to poor women.

In a class-action suit scheduled for oral arguments March 29, lawyers
from the Center for Reproductive Law & Policy in New York and the
American Civil Liberties Union of Florida will argue that the states
abortion funding ban violates the state constitution by denying
state-funded abortions to women whose pregnancy poses a threat to their
physical or emotional health but is not life-threatening or the result of
rape or incest.

The federal government, which reimburses the states for a portion of its
Medicaid costs, has restricted the use of federal funds for abortions
since 1977, with those exceptions. Many states have adopted identical
restrictions, and at least 18 have had to defend them against similar
constitutional challenges. In 13 cases, including six decided by state
supreme courts, abortion rights advocates prevailed.

Still, many courts remain unconvinced that the governments refusal to
fund a constitutionally protected choice is the equivalent of denying a
constitutional right.

The governments argument is simple, and one that four state supreme
courts and the U.S. Supreme Court have found compelling: There is no
constitutional right to an abortion -- only a constitutional right to
choose abortion. Therefore, the states failure to pay for such a choice
is not the same as infringing on it.

By protecting the right to choice, the Constitution does not also
guarantee that the woman choosing to have an abortion will be able to
obtain one, attorney William Roberts, general counsel to the state Agency
for Health Care Administration, argues in his brief defending the states

But Bonnie Scott Jones, a lawyer with the Center for Reproductive Law &
Policy, who represents the plaintiffs, says Florida constitutional law
strongly favors the case for expanding abortion funding to include women
whose abortions are deemed medically necessary.

Among the plaintiffs Jones represents are women who sought abortions
because of health conditions that include cancer, HIV, heart disease and

In each case, the brief argues, doctors determined that an abortion was
necessary to preserve the physical or emotional health of the woman but
Medicaid coverage was denied. As a result, Jones says, the women were
forced to delay abortion until they could manage to pay for it, driving
up the cost and exacerbating the health risk.

By paying for all other medically necessary health care associated with
reproduction, Jones argues the state is essentially coercing women to
give up their constitutional rights.

Though the constitution does not directly obligate the state to pay for
abortions once the state has chosen to fund necessary medical care for
its indigent citizens, the Florida Constitution requires it to do so in a
manner neutral with the respect to fundamental rights, the plaintiffs

To do otherwise violates Floridas equal protection and privacy
guarantees, Jones says. And in Florida, privacy is a particularly
powerful argument. The Florida Constitution gives its citizens greater
protection than that guaranteed under the federal constitution.

We should have a strong chance in Florida because it has very strong
privacy protections, Jones says.

Among other things, the Florida Supreme Court has invoked the privacy
amendment to overturn abortion laws requiring minors to get a parents
permission and requiring women to undergo counseling prior to having an

And since 1998, when voters agreed to add the words male and female alike
to the state constitutions equal protection provision, Florida residents
also have enjoyed explicit protection against gender-based

The state, however, argues that the Medicaid regulations do not affect
any such fundamental rights. In contrast to overturned laws that required
parental notification and counseling, the Medicaid regulations do not put
any additional hurdles between a woman and her right to choose abortion,
Roberts argues in his brief.

To the extent their choice may be hindered, it is not hindered by these
funding regulations, but by the womens poverty, which was not created by
the state.

Rene B.; Barbara S. Hunter; Tahara D. Wilson; Presidential Womens Center
Inc.; Florida Womens Medical Clinic Inc. doing business as Womens Clinic;
Aware Woman Medical Center doing business as Manhattan Magnolia Corp.;
Aware Woman Health Center doing business as Magnolia Management and
Marketing Group Inc.; Aware Woman Center For Choice Inc.; Feminist Womens
Health Center in Tallahassee Inc.; Central Florida Womens Organization
Inc.; Randall Brooks Whiteny, M.D.; Michael Benjamin, M.D.; Emergency
Medical Assistance, Inc. v. State of Florida, Agency for Health Care
Administration. Case No. SC00-989 (Miami Daily Business Review, February
9, 2001)

* Chief Judge of 3rd Cir Takes Closer Look at Lead Counsel Selection
As federal judges increasingly require law firms to bid for the right to
serve as lead counsel in class-action lawsuits, the chief judge of the
federal appeals court in Philadelphia has decided to take a closer look
at the practice.

It's believed to be the first time the federal courts have examined the
issue, which has gained prominence nationwide. At its conclusion, the
effort is designed to yield guidance that judges across the country can
use when handling such cases.

Chief Judge Edward R. Becker of the 3d U.S. Circuit Court of Appeals has
called together a task force to help judges determine when, if ever, to
use a bidding process to select lead counsel.

In announcing the formation of the committee, Becker noted that there
have been no empirical studies on the effect of the bidding process or
even a comprehensive look at the benefits and drawbacks of the approach.

Despite the apparent success of such a process in terms of lowering
transaction costs with seemingly greater benefit for the class, many
respected judges and lawyers have opined that the bidding process is
flawed in concept and practice, and that it presents professional
responsibility problems," Becker noted in a press release.

Deciding how to assign the leadership role in class actions could be
especially intimidating to a newly appointed district judge, he observed.

The working group includes federal judges, attorneys who have
successfully bid for lead counsel positions, attorneys who have lost out
in the bidding process and other lawyers who have not been involved in
cases that used bidding.

Chicago attorney Ronald L. Marmer, a member of Jenner & Block's
management committee who is one of the authors of the Class Actions"
volume of Moore's treatise on federal practice, will be one of the
members of the committee.

Marmer said he expects that the commission will draft a document laying
out the pros and cons of using bidding to award lead counsel status, but
he was unsure whether the task force would recommend whether to use the

Noting that the document would be a guide for judges, not a prescription,
Marmer said, They're all Article III judges. We will only be as
persuasive as the reasoning in our report."

Marmer, who usually defends against class-action suits, has not
participated in a case where there has been bidding for lead counsel. But
he has watched the issue closely, he said, because he figures he will be
party to one eventually.

The named party in a class action usually brings an attorney to the case,
but often it is the attorney, not the party, who is driving the
litigation, Marmer said. The judges who have used bidding have reasoned
that a sophisticated party, like a corporate client, would shop around
for the best deal before hiring an attorney, and that by extension
plaintiffs in a large class should have that same option.

The task force will also seek to determine whether bidding presents more
problems in certain areas of the law than others.

For example, the group will determine whether bidding is appropriate in
securities cases, where the largest shareholder is usually the lead
plaintiff, said Marmer, who has served as chair of Jenner & Block's
securities practice group.

The bidding approach first gained widespread attention when a San
Francisco jurist, U.S. District Judge Vaughn R. Walker, ordered law firms
representing plaintiffs in a case against Oracle Corp. to bid for lead
counsel status. Milberg, Weiss, Bershad, Hynes & Lerach LLP won the bid.

Melvyn I. Weiss, of Milberg, Weiss, will sit on the task force
commissioned by Becker.

In New York last year, David Boies of Microsoft antitrust case and
Florida recount fame, won a similar bid for his firm to represent a class
of collectors who sued Sotheby's and Christie's for price-fixing. Boies
and Ricard B. Drubel of Boies, Schiller & Flexner LLP served as lead
counsel in the case.

U.S. District Judge Lewis A. Kaplan proposed the auction after arguments
among the five -- and later six -- law firms that initially had sought to
share lead counsel status in the case. Kaplan added a twist in the
bidding process by requiring the firms to submit a threshold recovery
amount that the class would receive before the firms took their share.

In explaining his decision, Kaplan wrote that traditional methods for
paying for the plaintiffs' attorney's fees do not necessarily promote the
best interests of the plaintiffs.

The lodestar" method of calculating appropriate fees (multiplying
billable hours by a risk factor) can prolong the trial process and
encourage the attorneys to settle, even if it's not in the best interest
of the plaintiffs, Kaplan wrote.

The percentage-of-recovery method can present similar problems, he wrote.
Early settlement allows counsel to collect a large fee after investing
relatively little time in the case, rather than continuing the litigation
in order to maximize plaintiffs' recovery but receiving a lower marginal
rate of return on his or her work. Again, from the plaintiffs'
perspective, this outcome is suboptimal," Kaplan argued. In re Auction
Houses, No. 00 CV 00648 (Sept 22., 2000).

Becker's task force will accept public comment in about two weeks, when
it decides which questions it wants feedback on. Those questions will be
posted on the 3d Circuit's Web page at pacer.ca3.uscourts.gov.

Public hearings will be held on March 16, May 5 and June 1. The task
force hopes to have a draft ready in October, so the 3d Circuit Judicial
Conference will be able to discuss it at its meeting Nov. 13. (Chicago
Daily Law Bulletin, February 8, 2001)

* HCFA Published a Proposed Reg Outlining Medicare+Choice Appeals Rules
HCFA published a proposed reg in the Federal Register outlining
Medicare+Choice appeals rules. Publication was required under a
settlement agreement of the Grijalva Medicare class-action lawsuit (MCW
8/21/00, p. 8). The rules require health plans to give prior notice when
benefits are terminated and provide an expedited appeals process to
contest such decisions. Call (202) 690-6145. (Managed Care Week, January
29, 2001)

* UM Medical System Accuses Judge Nance of Bias in Malpractice Case
The agency that polices conduct of state judges has opened another
investigation into Baltimore Circuit Judge Alfred Nance, after one of the
state's top hospital systems accused the judge of bias.

It is the second investigation into Nance in recent months by the
Commission on Judicial Disabilities, which began an investigation in the
fall into allegations that Nance behaved inappropriately with female
prosecutors by touching their faces and making remarks about their

As a result of the complaint lodged by the University of Maryland Medical
System, Nance was temporarily barred in December from hearing malpractice
cases involving the system, the second such action taken against him that
month. He was temporarily removed from the criminal docket after the
city's top prosecutor accused him of bias against her office when he
wrote her a letter lambasting her lawyers.

University officials formally filed the complaint against Nance on Dec.
20, after he presided over a malpractice trial last year in which the
system was being sued in the death of a 2-year-old boy. In that trial,
Nance said he found the case "horrifying," implied that nurses had
modified records and suggested that hospital officials might have treated
a boy in the hospital differently if he had not been from one of
Baltimore's poor neighborhoods, court records show.

"We felt strongly that (Nance's remarks) were inappropriate and
unfounded," said Kathleen Gast Smith, director of claims and risk
management for the medical system.

Nance, 52, did not respond to a list of questions hand-delivered to his
office. A former public defender and Legal Aid lawyer, he was appointed
to the bench three years ago.

The decision to file the complaint was approved by top officials,
including the president of the University of Maryland Medical System, Dr.
Morton I. Rapoport, and the dean of the medical school, Dr. Donald E.
Wilson. Smith said the system had never filed a complaint against a judge

In an interview, Del. Howard P. Rawlings, a Baltimore Democrat and a
system board member, said he did not know about the complaint but said of
Nance: "This judge has been known to be very undisciplined with regard to
his remarks."

The disabilities commission declined to comment about the complaint.
Investigative counsel Steven P. Lemmey said all investigations are
confidential. Possible punishment ranges from a reprimand to removal from
the bench.

Hospital officials contend that Nance treated witnesses for the hospital
in a "substantially different manner" from the way he treated those for
the opposing side and poisoned the jury against the hospital by sharply
questioning their witnesses and making comments about their testimony.

"We believe that this difference in treatment indicated a bias against
the medical system," said Joan Shnipper, spokeswoman for the system.

The hospital system lost the case and is appealing it to the state's
higher courts, asking that a $ 717,000 judgment be vacated, and that a
new trial be granted because of judicial bias.

In his three years on the bench, Nance's behavior has been challenged on
a number of fronts. In another incident, he had to agree with the
disabilities commission to take "corrective action" after the commission
investigated his jailing of a lawyer who left the courtroom for six
minutes because his client was not there. Commission officials would not
provide details of the corrective action.

He has also drawn criticism from legal experts for practices such as
asking potential jurors to stand up and announce their marital status in
open court.

He has been barred from the criminal docket until September and removed
from hearing malpractice cases against the hospital system until the
disabilities investigation is complete.

In the malpractice case, Nance told lawyers for the hospital system and
the plaintiffs last February that he felt the doctors and nurses might
have acted differently if the 2-year-old boy who was the subject of the
lawsuit had not been from a poor city neighborhood.

Attorneys representing the mother of the boy contended that the hospital
misdiagnosed the gravity of a boy's respiratory condition, and that he
died as a result. The defense maintained that the boy could have died
from ingesting poison.

On Feb. 24, Nance told the lawyers outside the presence of the jury that
he had "a great deal of concern as to how a human being was viewed" the
night the boy, who lived in the 1700 block of W. Lanvale St., was brought
to the emergency room.

His concern, Nance said, was "whether or not this child, because of his
location and where he lives ... whether or not if we had driven him in
from Timonium where he lived in a house with a mother and father and a
dog and a cat and two cars in the garage ... whether or not (nurses and
doctors) would have jumped to the (same) conclusions."

Four days later, the jury awarded the plaintiffs $3.5 million, which was
later reduced to $717,000 because of a state ceiling on damages.

At a hearing before Nance on May 19, hospital system lawyer Donald L.
Devries Jr. asked the judge for a new trial, alleging that Nance had
treated the defense differently from the plaintiffs because of his bias
against the hospital as shown by his comments about the boy's economic

He argued that Nance had a "look of disgust" on his face in front of the
jury after one defense witness answered a question. He said Nance asked
questions of witnesses and made comments during their testimony in a
"critical," "derogatory" and "detrimental" tone.

"The combination of those episodes and numerous others ... I submit did
communicate to the jury the court's dislike of the defense's case (and))
unfairly influenced the jury," Devries argued.

Nance responded that he was disturbed by some defense witnesses who
testified with "glee on their faces as if they were joking around the
coffeepot or the water fountain."

"This court should not allow such levity or actions to happen during the
course of a trial, especially when a wrongful death and injury as to
negligence is questioned," he said. He added that he did not feel the
jury was influenced, because he had instructed its members that anything
he did should not figure in their deliberations.

Devries challenged him, saying Nance had made a defense witness laugh
after he told a joke in front of the jury.

Nance began another salvo. He suggested that nurses might have modified
their accounts of the boy's care on records after they found out he had
died, perhaps to protect themselves from lawsuits.

"The manner in which the reports were made ... is one that cries out for
review," Nance said. "It is curious to this court of the identicalness,
specifically in certain areas, of the actual writing of the reports to
fill in the blanks after the nurses were told that the child had died."

He ended the hearing with an admonition for the system.

"The court's comments are more of such not for the purpose of just this
case, but overall," Nance said. "I do hope it becomes a matter of
discussion internally." (The Baltimore Sun, February 9, 2001)


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