CAR_Public/991206.MBX                 C L A S S   A C T I O N   R E P O R T E R

                Monday, December 6, 1999, Vol. 1, No. 214

                                 Headlines

A&M: Lawyer Sues over Injuries from Bonfire Ritual in TX School
ACCELERATION LIFE: Settles New Orleans Suit Re Pricing of LTC Policies
ACTION PERFORMANCE: Cohen, Milstein Files Securities Suit in Arizona
AMERICAN FAMILY: Ch 11 Will Have No Impact on Sweepstakes & Settlement
CAREMATRIX CORP: Schiffrin & Barroway File Securities Suit in MA

CAROLE RYLANDER: TX May Owe Convicts Funds Collected for Judges’ Pay
CYRPTO OUTBREAK: General Chemical of N.J. & City Settle with Residents
FEN-PHEN: 1 Lawyer Says Settlement is Low Another Downplays Drug Effect
GST TELECOMMUNICATIONS: Alfred G. Files Securities Suit in Washington
HMO: Law Firm Appeals Penn Ct Dismissal of Suit Re Aetna's Advertising

HMO: Physician Health Sued for Denying Services to Medicaid Clients
HMOs: Fd Ct Denies Class to TX Suit V 2 Insurers over False Advertising
HOLOCAUST VICTIMS: Swiss Fund Makes Awards Separate from US Settlement
MICROSOFT CORP: Law Firms Tussle To Take Lead in Antitrust Suits in CA
MICROSOFT CORP: Talks May Offer Viable Middle Ground for Antitrust Suit

NAVIGANT CONSULTING: Bernstein Liebhard Announces Correction for Notice
NAVIGANT CONSULTING: Co. President Takes $10M Loan, Says Pomerantz
PLAINS ALL: Kaplan Kilsheimer Files Securities Suit in Texas
PLAINS ALL: Schiffrin & Barroway File Securities Suit in Texas
PLAINS ALL: Stull, Stull Files Securities Suit in Texas

RAYTHEON COMPANY: Finkelstein & Krinsk File Securities Suit in MA
REGISTRAR OF MORTGAGE: B.C. Ct Reserves Judgment in Eron Collapse Case
SAFETY COMPONENTS: Lionel Z. Glancy Says NJ Securities Suit Is Expanded
STARNET COMMUNICATIONS: Stull, Stull Files Securities Suit in Delaware
STYLING TECHNOLOGY: Cohen, Milstein Files Securities Suit in Arizona

STYLING TECHNOLOGY: Lockridge Grindal Files Securities Suit in Arizona
TARGET STORES: CA Suit Says Co. Doesn't Accommodate Deaf Job Applicants
TOBACCO LITIGATION: Smoker & Cancer Survivor Testifies on Ad Influence
TOBACCO LITIGATION: Some Justices Express Doubt about FDA Regulation
TOWNE SERVICES: Issues Statement Regarding Securities Suits in Georgia

Y2K LITIGATION: CNN Coverage - Millenium Celebration or Catastrophe?

* Indiana Latest to OK In-House Counsel to Defend Policyholders
* Medical Insurers Revise Rules & Cost Control in Face of Backlash
* Nationwide Insurance Suspends Specifying Aftermarket Crash Parts

                              *********

A&M: Lawyer Sues over Injuries from Bonfire Ritual in TX School
---------------------------------------------------------------
In the four years since a tree felled for the Aggie bonfire rolled onto
his head, former A&M student Josh Waeltz hasn't brooked any anti-Aggie
talk. That changed when the deaths of 12 bonfire workers jarred Mr.
Waeltz into the ranks of A&M loyalists who question the safety of a
ritual that over the years has produced injuries ranging from ant bites
to broken limbs - and worse. "I had convinced myself that it was my own
fault, or a freak accident," said Mr. Waeltz, of Round Rock. "I still
think A&M is a great school, but I can see now: The supervision on the
bonfire was mediocre."

A&M administrators said that student supervisors diligently train and
oversee younger bonfire workers to ensure safety, with the result that
the number of students needing medical attention for bonfire-related
injuries has declined in the last decade. They could not provide any
statistics.

In the late 1980s, between 55 and 85 students a year typically were
treated at the campus health center for injuries suffered while
constructing the pyre, William Kibler, A&M associate vice president for
student affairs, testified in a 1989 trial. He said the injuries ranged
from anything as minor as ant bites to the more severe. About 5,000
students participate each year in building the bonfire, A&M officials
estimated.

In 1995, the year Mr. Waeltz was hurt, the school's vice president for
student affairs hailed that year's effort as "one of the safest bonfires
on record." It's not clear whether the vice president was aware of the
injuries to Mr. Waeltz, whose head was pinned under a log as it was
loaded onto a truck by a crew from his freshmen dormitory. With a 2-inch
scar from a cut stapled in six places, Mr. Waeltz, then 19, lost most
vision in one eye and suffered nausea for nearly a year, he said. The
university classified him as disabled under federal law and provided him
with services such as seats at the front of classrooms, free audio
transcription of textbooks and extended time for taking tests.

                          Policy Applies

He also was eligible to file a claim under a university insurance policy
that offers up to $ 5,000 to students, which covered bonfire injuries
not covered by their families' insurance policies.

The so-called TAMU Aggie Bonfire Accident Medical Policy applies to
injuries, deaths and dismemberments stemming from the annual fall event.
A&M officials were unable to provide details about the cost or number
and type of claims filed under the policy.

After his accident, Mr. Waeltz, a former honor student at Round Rock
High School, performed poorly, losing his spot in a prestigious
engineering program and ultimately leaving school because of bad grades.
Now 22, he has lost about a year toward graduation and attends Texas A&M
at Kingsville.

The year that Mr. Waeltz was injured, a joint faculty student committee
studying the bonfire said in a report that, despite safety precautions,
"accidents continue to occur." A&M officials said recently that training
and safety have been improved, but they did not cite specific changes to
policies or procedures.

Mr. Waeltz rejected his parents' suggestion that he sue Texas A&M over
his injuries. If he had chosen to do so, he would have encountered the
school's "sovereign immunity," which protects A&M and other government
entities from lawsuits.

Under state law, governments can be sued only in a few circumstances,
including when death or injury results from the condition of government
property. Even then, there is a cap on how much plaintiffs can win.
Generally, an individual can receive up to $ 250,000. If there are
multiple plaintiffs, they can split no more than $ 500,000 among them
for any one incident.

One of the few lawyers to sue A&M over a bonfire-related injury was
James A. Morris Jr. of Beaumont. Like many plaintiffs' lawyers opposed
to sovereign immunity, Mr. Morris complained that the doctrine gives A&M
license to run a slipshod operation without fear of lawsuits - a notion
hotly disputed by school officials. Mr. Morris' client was Keith Van
Boskirk of Beaumont, a sophomore member of the A&M Corps of Cadets whose
hip was broken in 1985 when a tree that had been partially cut and left
standing fell on top of him.

At trial, Mr. Morris pointed out that A&M tree-cutting crews don't
comply with government safety standards that apply to the commercial
timber industry. Under his questioning, an A&M official testified that
the school's bonfire is the only one in the country that is built from
cut trees stacked on end, rather than from pallets and other scrap wood
lying flat.

Two juries failed to reach a verdict in the case. After that, the judge
dismissed it, ruling that, because A&M held only timber rights on the
private property where the accident occurred, Mr. Morris could not claim
he was injured as a result of the condition of state property.

                         Hoping for Change

Mr. Van Boskirk remained in the Corps through graduation and had two
younger siblings follow him to A&M. He declined to talk about his
lawsuit. But his parents said the family brought the case fully aware of
the limited financial rewards, out of hope that the university would
change safety practices or eliminate the bonfire. Mr. Van Boskirk's
father, Scott, is an engineer who specializes in workplace safety. He
said that if A&M officials were dealing with numerous minor injuries
over the years, they should have been mindful of a basic safety
principle taught at A&M. "Any sort of activity that generates a lot of
minor incidents, it's just a matter of time before there's a major
incident," said the elder Mr. Van Boskirk.

Today's typical college student, fresh from the suburbs, is ill-suited
for lumberjack duty, he said. "This [bonfire] tradition goes back many
years, when farm boys were coming in to A&M and building the fires," he
said. "They knew how to use axes and cut down trees."

The loyalty shown by his son and by Mr. Waeltz isn't unusual among
victims of bonfire accidents over the years, though. The sister of the
only person previously killed in a bonfire accident wouldn't lay blame
on the university. "He loved what he was doing, and he died doing what
he loved," Jeannie Hensley of Nacogdoches said of her brother's death in
1981. Sophomore Wiley Jopling was run over by a tractor during a timber
cut. "He would want the bonfire to go on," his sister said. "He was
Aggie to the bone." (The Dallas Morning News Nov-20-1999)


ACCELERATION LIFE: Settles New Orleans Suit Re Pricing of LTC Policies
----------------------------------------------------------------------
Consumers emerged victorious from the first class-action case against a
sleazy pricing practice. The lawsuit was settled just before trial, but
it went the public's way. Injured policyholders (and ex-policyholders)
will share a pot worth up to $8.2 million, after expenses. Some will
have their policy's premiums reduced.

This flagship case covers people who bought long-term care (LTC)
policies between 1984 and 1991 from Acceleration Life Insurance Co.,
National Standard Life Insurance Co. (Acceleration's Florida arm) and
Commonwealth Life Insurance Co. (which acquired most of Acceleration's
business and later merged with Monumental Life). The policies were sold
in 23 states, on policy forms 520, 521, 522 and 523.

LTC coverage provides a certain amount of custodial care -- help with
bathing, eating, dressing -- in your own home or in a nursing home. This
saves you from having to use your personal money to pay all the bills.
The policies carry "level premiums." The insurer can't raise your price
individually, if you get sick or make a claim. Consequently, many buyers
believe that the price of their policy won't go up. Unfortunately,
that's not so. Insurers can raise the price of your entire class of
policies--meaning all the policies like yours that it sold within your
state. This loophole has spawned a dirty game. The insurer (often a
small one) will tout a new policy at a bargain price. It will carry rich
benefits, and might accept people who are in poorer health. You think
you're getting a terrific deal. Two years later, however, your premiums
might jump by 15, 20 or 50 percent. After 10 years or so, you might have
to drop your coverage, because you can't afford to pay. At that point,
it's probably too late to find LTC insurance somewhere else.

Attorney Allan Kanner of New Orleans filed a class action, claiming,
among other things, that the policies were fraudulently priced.

Monumental Life is currently owned by Aegon. Spokesperson Jo Anne
Heppermann denied any wrongdoing. The company settled, she said, "to
reduce further litigation expense."

As many as 13,320 policies were sold. How much each person gets will
depend, in part, on how many claims are received. You're included even
if your coverage has lapsed. If the original purchaser died, the estate
has a claim. Anyone who's covered should have received a claim form from
the court. If you have questions, go to www.classadmin.com or call
toll-free (877) 720-5908.

The settlement also requires the insurer not to raise premiums again.
Some 330 people whose premiums jumped by more than 325 percent will have
those premiums rolled back.

Kanner intends to file against three other LTC insurers whose premiums
have soared: American Travellers Life (now Conseco Senior Health
Insurance Co.), Union Fidelity Life and United Equitable Life (now owned
by Standard Life). (Ventura County Star Dec-2-1999)


ACTION PERFORMANCE: Cohen, Milstein Files Securities Suit in Arizona
--------------------------------------------------------------------
The following notice is issued on December 1, 1999 by the law firm of
Cohen, Milstein, Hausfeld & Toll, P.L.L.C. on behalf of its client, who
filed a lawsuit in the United States District Court for the District of
Arizona on behalf of all persons who purchased the publicly traded
securities of Action Performance Companies, Inc. (Nasdaq:ACTN) between
July 27, 1999 and November 4, 1999 (the "Class Period").

The complaint charges Action Performance and certain of its officers and
directors with violations of Securities Exchange Act of 1934. The
complaint alleges that on 7/6/99, the Company's wholly owned subsidiary
goracing.com filed a registration statement with the SEC for an initial
public offering ("IPO") to raise $80 million. Because Action Performance
would own 80% of the stock of goracing.com subsequent to the IPO, the
top officers of Action Performance needed to make the IPO successful. To
this end, it was essential that Action Performance appear to be
successfully growing. Thus, defendants issued allegedly false statements
about the state of Action Performance's business and the shipment of
certain of its products to Home Depot. On 11/4/99, Action Performance
issued a press release announcing its preliminary 4thQ F99 results.
These preliminary results were worse than defendants represented,
principally due to the fact that an $8 million sale to Home Depot had
not occurred as of 9/30/99, which was contrary to defendants' prior
statements. On these disclosures, Action Performance's stock price
declined from $24-7/8 to $12-1/4 per share on enormous volume of 9.8
million shares, a 51% decline in one day. As a result of the defendants'
false statements, Action Performance's stock price traded at inflated
levels during the Class Period.

If you are a member of the Class who purchased ACTN securities during
the Class Period, you may move the Court, not later than sixty (60) days
from November 30, 1999, to serve as lead plaintiff for the Class. In
order to serve as lead plaintiff, you must meet certain legal standards.
If you have any questions about this Notice or the action, or with
regard to your rights, please contact the following attorneys: Steven J.
Toll, Matthew J. Ide or Tamara J. Driscoll, Cohen, Milstein, Hausfeld &
Toll, P.L.L.C. at 888/240-1238 or 206/521-0080, 999 Third Avenue,
Seattle, Washington 98104 or by e-mail at stoll@cmht.com or
mide@cmht.com or tdriscoll@cmht.com


AMERICAN FAMILY: Ch 11 Will Have No Impact on Sweepstakes & Settlement
----------------------------------------------------------------------
American Family Enterprises, one of the nation's leading magazine
subscription companies and the sponsor of the American Family Publishers
sweepstakes, said it filed Chapter 11 Oct. 29 in order to resolve its
pending litigation, to strategically restructure its finances and
operations, and to enable it to compete successfully over the long term.

"This Chapter 11 filing and restructuring will have no impact at all on
our ongoing sweepstakes," said President and CEO Susan Caughman. "All
monies for AFE's contests have been pre-funded and are held in trust by
federally-insured, independent financial institutions until the award
date. Consumers should be assured that their entries into AFE's
sweepstakes are valid and all prizes, including the upcoming 1 million
on November 24th and 10 million in January 31, 2000, will be awarded."

The debtor said it has reached an agreement in principle to settle its
class action lawsuits. Terms of the agreement are currently confidential
by court order, but the company expects to be able to report on them
shortly. Within the last year, AFE has reached voluntary agreements with
the Attorneys General of 40 states and the District of Columbia which
have defined new standards for the direct mail sweepstakes industry. The
filing will have no impact on these agreements.

In addition to its current sweepstakes business, the company's future
plans call for investment to diversify into new and different
distribution channels for the sale of both magazines and merchandise.
TAF Holdings Inc., a subsidiary of Time Inc., and a group of investors
own American Family. (BCD News and Comment Nov-24-1999)


CAREMATRIX CORP: Schiffrin & Barroway File Securities Suit in MA
----------------------------------------------------------------
The following statement was issued December 1, 1999 by the law firm of
Schiffrin & Barroway, LLP:

Notice is hereby given that a class action lawsuit was filed in the
United States District Court for the District of Massachusetts on behalf
of all purchasers of the common stock of CareMatrix Corp. (Nasdaq:CMDC)
from October 29, 1998 through October 7, 1999, inclusive (the "Class
Period").

If you wish to discuss this action or have any questions concerning this
notice or your rights or interests with respect to these matters, please
contact Schiffrin & Barroway, LLP (Stuart L. Berman, Esq.) toll free at
888299-7706 or 610/667-7706, or via e-mail at info@sbclasslaw.com.

The complaint charges CareMatrix and certain of its officers and
directors with issuing false and misleading statements concerning the
Company's business, financial condition, earnings and prospects.

If you are a member of the class described above, you may, not later
than January 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. Contact: Schiffrin & Barroway,
LLP Stuart L. Berman, Esq. 888/299-7706 (toll free) or 610/667-7706
e-mail: info@sbclasslaw.com


CAROLE RYLANDER: TX May Owe Convicts Funds Collected for Judges’ Pay
--------------------------------------------------------------------
The state of Texas may owe millions of dollars to thousands of people
convicted of misdemeanor offenses if a class action suit filed Nov. 8 in
Travis County District Court is successful. The lawsuit alleges that the
comptroller of public accounts illegally collected funds from 61
counties to help boost the pay of county court-at-law judges to a salary
more in line with district judges.

The case, Marcie Caldwell v. Carole Keeton Rylander, alleges that a 1991
law that permits counties voluntarily to collect $ 15 as a cost of
conviction to help boost judges' pay is unconstitutional. The problem is
that not all Texas counties collect the fee, says an attorney who filed
the case. The suit cites opinions from Texas Attorney General John
Cornyn and former Attorney General Dan Morales that essentially say the
law "is ineffective on both due process and equal protection grounds."

Joe Crews, a partner in Austin's Ivy, Crews & Elliott, says the problem
alleged in the suit only applies to county criminal courts. He says it's
wrong for a person convicted of a crime in one county to be required to
pay a fee if a person convicted of the same crime in another county is
exempt from paying the fee. "You've got a state law and they're applying
the state law differently in different counties depending on what county
you're in," Crews says. "And that's blatantly inappropriate."

                           On the Spot?

Inappropriate or not, a spokesman for the comptroller says those behind
the suit may be barking up the wrong tree. "It is not the comptroller's
office that decides whether or not these fees are collected. Individual
counties make their own decision about whether or not they collect these
fees," says Mark Sanders, a spokesman for Rylander. "And the fees are
simply remitted to the comptroller's office," Sanders says. "And we're
required by law to deposit the money into a judicial fund. We're just
the agency where they send the money," he says.

Sanders says the agency has asked the Texas Office of the Attorney
General to represent it in the matter - a standard request when a state
agency is sued.

Crews, a former assistant attorney general who headed the agency's
consumer protection division under Dan Morales, believes the AG will be
put on the spot in this case. "You've got two AGs saying it's
unconstitutional and you've got an [assistant] AG that will come in and
have to say that it is constitutional," says Crews. "I kind of like the
equities of that."

But Crews doubts that the case will be resolved anytime soon. He notes a
recent case in which Tim Kelley, a Dallas lawyer, spent almost 10 years
litigating an im proper fee collected by the Dallas County District
Clerk's Office. Kelley reached a class action settlement in the case
earlier this year. [See "Big Class, Small Cash," Texas Lawyer, Oct. 25,
1999, page 1.] "We're in for a long fight," Crews says. But he hopes his
case won't take that long. "I assure you this is not going to take 10
years."


CYRPTO OUTBREAK: General Chemical of N.J. & City Settle with Residents
----------------------------------------------------------------------
Area residents who were injured during the contamination of municipal
tap water by a barnyard microrganism six years ago are eligible for
damages, a judge decided. Milwaukee Circuit Court Judge Francis
Wasielewski gave preliminary approval November 30 to a $100,000
settlement in the lawsuit from the 1993 cryptosporidium outbreak.

Wasielewski certified a class of plaintiffs for settlement purposes.
That means anyone claiming injury can file a claim seeking a chunk of
the money, including those who did not file suit. Previous court rulings
had limited the number of people eligible in the case and established a
damage limit of $50,000. More than 1,400 people originally filed claims,
seeking damages of $25 million. A Circuit Court judge combined the
claims into a class-action lawsuit.

The city was left as the sole defendant in the suit after General
Chemical Corp. of Parsippany, N.J., and its insurer agreed to pay $1.5
million to the plaintiffs and their lawyers. The company was accused of
selling the city a defective chemical for use in the water treatment
process. The company has denied the chemical was defective.

More than 400,000 people developed flu-like symptoms from the outbreak.
The disease, cryptosporidiosis, was considered a factor in about 100
deaths, most of them people already suffering from other illness or old
age and with reduce immune systems.

Some people in court for Wasielewski's decision were unhappy about the
outcome. "I was appalled the city had the audacity," said Charles Bowen,
whose son died in the outbreak. "What dollar value would the Milwaukee
city officials place on the lives of their loved ones? "This is grossly
inadequate. I beg the court to reject this settlement."

Dennis Strohkrich told Wasielewski that his wife is still sick from the
outbreak. "She was in the hospital over six weeks. Her health has
declined substantially in the last six years," Strohkrich said. "I feel
that the City of Milwaukee has a cavalier attitude." The city would have
been liable for up to $10 million if the case were lost at trial. "The
city does take its responsibility in this case very seriously," said
Linda Hansen, attorney for the city.

Wasielewski said he believes the settlement passed the "test of
fairness." It's "not easy to put a dollar sign on pain or suffering or a
death," the judge said. The final settlement hearing is scheduled in
March. (The Associated Press Dec-1-1999)


FEN-PHEN: 1 Lawyer Says Settlement is Low Another Downplays Drug Effect
-----------------------------------------------------------------------
When lawyers for users of the diet drug fen-phen agreed to settle a
federal class-action suit against the manufacturer last month, it looked
as if the resolution was going to leave most parties satisfied.

People who used the drug before it was pulled off the market on
suspicion of causing heart malfunctions would be eligible for a free
round of diagnostic tests and possible payment of up to almost $1.5
million. American Home Products' stock price shot up once the threat of
suits had been diffused, even though the settlement could cost the drug
manufacturer up to $4.85 billion, including $449 million in plaintiffs'
attorneys' fees.

But in the week of negotiations preceding the Oct. 7 memorandum of
understanding between lead counsel and AHP, dissenters emerged from the
ranks of plaintiffs' counsel. And one of the loudest voices in
opposition, Marc Bern of New York City's Napoli, Kaiser & Bern, now says
that the settlement low-balls potential plaintiffs and that he plans to
take action against the attorneys most involved in the negotiations.

Under the proposed settlement former users who can show they had been
injured by the diet pills might receive a payment of $36,944 to $1.485
million. Those who want to pursue a claim for more can opt out of the
settlement and sue AHP individually. But they will not be able to sue
for punitive damages unless they opt out within 90 days of receiving
notice of the settlement. A total of 5.8 million people have used the
drugs, Pondimin (fenfluramine) and Redux (dexfenfluramine).

Bern says the negotiated cap of $1.485 million is far too low for cases
where the drug caused death or serious injury, especially because the
one fen-phen suit to go to trial, in Texas, resulted in a verdict of
more than $20 million. "I think that the medical monitoring program is
very good. The rest of it, I think, stinks," says Bern.

Bern is also furious about an Oct. 6 letter written by two Philadelphia
plaintiffs' lawyers, conceding that there was no scientific proof to
support the position that users might develop heart damage years after
they have stopped using fen-phen.

In the letter, Michael Fishbein, of Levin Fishbein Secran & Berman, and
Gene Locks, of Greitzer & Locks, state that "if valvular regurgitation
is not present at the time of cessation of drug use (or shortly
thereafter), it will not later occur as a consequence of drug use." The
letter was hand-delivered to Arnold & Porter, AHP's law firm in
Washington, D.C., to clarify the factual findings that plaintiffs'
counsel would propose at a hearing to determine whether the class-action
settlement was fair.

Locks, one of the leading counsel in the New Jersey class action over
the drug, insists that the letter is "true and harmless" and notes that
it reflects the current state of science. He says AHP agreed that
neither the letter nor any findings of fact made at the fairness hearing
would be admissible in other suits against the company.

Other lawyers who support the settlement agree that the letter is
innocuous. "I don't think the letter mischaracterizes what the science
was at the time or presently is," says Sol Weiss, one of the lead
counsel in the New Jersey case and a partner in Philadelphia's Anapol,
Schwartz, Weiss, Cohan, Feldman and Smalley.

Christopher Placitella, a partner with Woodbridge's Wilentz, Goldman &
Spitzer, who helped negotiate the settlement, likewise emphasizes that
nothing written in the letter can be used by AHP in future cases.

But Bern insists that the concession offered by Fishbein and Locks can
potentially hurt future claimants, even if it is not formally introduced
into evidence at a trial. Bern says he will ask the federal courts to
consider removing the entire plaintiffs' negotiating team, including
Fishbein and Locks, on the theory that they breached their fiduciary
duty to class members.

Bern says he is investigating other avenues of recourse. "I believe
there may have been serious ethical violations which may rise to the
level of very serious ethical breaches," says Bern. He adds that some of
the 5,000 former fen-phen users his firm represents "very likely will
bring a lawsuit against these people," such as Fishbein and Locks.

When the parties in the federal litigation came to an agreement in
October, state court class actions were pending in seven states:
Illinois, New Jersey, New York, Pennsylvania, Texas, Washington and West
Virginia. The New Jersey case, Vadino v. American Home Products,
MID-L-425-98MT, which began in August in front of Middlesex County
Superior Court Judge Marina Corodemus, was stayed once it looked like
there was going to be an agreement in federal court.

In the week before the Oct. 7 settlement, attorneys from six of the
other seven states -- West Virginia was the exception -- voted to sign
the settlement. In New Jersey, the plaintiffs' counsel were united in
the decision to support it.

However, it is possible that the dissenters could cause enough of an
uproar to throw a wrench into the resolution. Notices to all potential
class members are slated to go out in January; class members will then
have a 90-day opt-out period and AHP will have 120 days to decide
whether to pull out of the deal.

Assuming AHP continues with the settlement, U.S. District Judge Louis
Bechtle will conduct a fairness hearing on May 1 in Philadelphia. At
that time, lawyers who feel this is a bad deal might still try to
convince Bechtle not to approve the agreement. (New Jersey Law Journal,
158 N.J.L.J. 744, Nov-29-1999)


GST TELECOMMUNICATIONS: Alfred G. Files Securities Suit in Washington
---------------------------------------------------------------------
The following is an announcement by the Law Office of Attorney Alfred G.
Yates Jr:

Attention: GST Telecommunications, Inc. Shareholders (Nasdaq: GSTX)
You are hereby notified that a class action has been commenced in the
United States District Court for the Western District of Washington on
behalf of all purchases of GST Telecommunications, Inc. ("GST") (Nasdaq:
GSTX) common stock during the period Nov. 4, 1996 through Oct. 22, 1998
(the "Class Period").

The complaint charges GST and certain of its former officers and
directors with violations of the federal securities laws. Specifically,
plaintiffs have brought claims under sections 10(b) and 20 of the
Securities Exchange Act of 1934.

The complaint alleges that GST and certain of its former officers and
directors participated in a fraudulent scheme by failing to disclose
that these officers and directors had improperly diverted more than $200
million in assets belonging to GST to another corporation owned in large
part by these former officers and directors.

Defendants' scheme enabled them to enrich themselves personally at the
expense of GST's shareholders. Before the truth about this
misappropriation of GST's assets was disclosed to the market, GST shares
traded as high as $16-5/8 per share.

After GST was finally forced to publicly acknowledge the extent of the
looting of GST's assets - and the fact that the company had filed a
lawsuit against the former officers and directors alleging fraud related
to the misappropriation of these assets - GST's shares traded at less
then $7.00 per share. Plaintiffs seek to recover damages on behalf of
all purchasers of GST common stock during the Class Period (the
"Class").

This class action lawsuit is available to all individual and
institutional investors who purchased GST common stock during the period
Nov. 4, 1996 through Oct. 22, 1998 (the "Class Period"). If you are a
member of the class, you may, not later than 60 days from October 21,
1999, move the court to serve as a lead plaintiff of the class, if you
so choose. In order to serve as a lead plaintiff, however, you must meet
certain legal requirements. If you wish to discuss this action, or have
any questions concerning this notice or your rights or interests, please
contact: Alfred G. Yates Jr, Esq., 519 Allegheny Building, 429 Forbes
Avenue, Pittsburgh, Pennsylvania 15219, Telephone: 800-391-5164 or
412-391-5164, e-mail: yateslaw@aol.com


HMO: Law Firm Appeals Penn Ct Dismissal of Suit Re Aetna’s Advertising
----------------------------------------------------------------------
The legal assault on the managed health care industry continues despite
the September ruling of the U.S. District Court for the Eastern District
of Pennsylvania tossing out the RICO complaint in Maio v. Aetna Inc.
(see Civil RICO Report, Oct. 27, 1999, p.1). A new class action RICO
complaint has been filed against Aetna in Mississippi, led by Scruggs,
Millette, Lawson, Bozeman & Dent, one of the law firms that successfully
sued the tobacco industry. And another class action lawsuit has been
initiated in Miami against Humana Inc. (see below).

Jeffrey Kodroff of Spector and Roseman in Philadelphia told Civil RICO
Report his law firm has filed a notice of appeal in Maio v. Aetna. The
appeal will directly challenge Judge Fullam's finding the plaintiffs did
not prove any injury as a result of Aetna's alleged fraudulent
advertising.

According to Kodroff, Aetna advertised that it was "increasing the
quality of healthcare," when it was actually making medical decisions
based on cost-containment criteria. "What is the single biggest element
anyone is interested in?" asked Kodroff. "What health care will be
provided," he answered. "People rely on it." He likened this case to
"buying a Cadillac and finding out the car has a Hyundai engine." This,
he maintained, is the injury the class of plaintiffs has suffered.

Judge Fullam found the plaintiffs had disclaimed any injury due to
reduction or denial of benefits, inferior care, malpractice, negligence
or breach of contract. That having been done, Fullam ruled that any
remaining injury would be "purely hypothetical and at best indirect."
Kodroff said the disclaimer was intended to avoid preemption of the
complaint by the Employee Retirement Income Security Act. A 3rd Circuit
decision, continued Kodroff, says that any claim related to the quantity
of medical services comes under ERISA. Claims related to the quality of
services are non-ERISA. This consideration is what prompted the
disclaimer.

Judge Fullam's statement that Aetna's claims of providing high quality
care were "mere puffery" and could not form the basis of a RICO
predicate act was characterized by Kodroff as dictum. Therefore, that
pronouncement would probably not be appealed directly.

Kodroff said the appeal would also challenge the finding the complaint
had not properly alleged a RICO enterprise. He believes the complaint
meets 3rd Circuit requirements.

Kodroff asserted that actions such as this prompted United Health Care
to recently change its rules to allow physicians to make the final
decisions on medical treatment. He praised United's action as an
important first step in allowing consumers to regain control of their
health care. However, he did not believe it went far enough. "Managed
care controls decisions front and back," he said. "Authorization of
medical procedures is the front-end control. But there is also a
year-end review, and a physician will receive less compensation if his
utilization of services is too high. This is the reason United's action
(which addresses only the front end controls) is a good step, but not a
panacea."  (Civil RICO Report, Fraud; Vol. 15, No. 13, Nov-24-1999)


HMO: Physician Health Sued for Denying Services to Medicaid Clients
-------------------------------------------------------------------
Foundation Health System, Inc; subsidiary Physician Health Services,
Inc. was slapped with a lawsuit from the New Haven Legal Assistance
Assn. on behalf of 74,000 Medicaid clients.

The suit was brought against Physician Health Services because consumers
are not being informed about why certain services are denied, the suit
alleges. PHS's Medicaid members say that the HMO refuses to pay for
certain treatments and services for recipients, and then does not give
an explanation for the refusal. Currently, the suit is seeking
class-action status. For more information, call Sheldon Toubman with the
New Haven Legal Assistance Assn. at (203) 946-4811. (Managed Medicare &
Medicaid, No. 42, Vol. 5; Pg. NA ; 1085-0317, IAC-ACC-NO: 57777870,
November 1999)


HMOs: Fd Ct Denies Class to TX Suit V 2 Insurers over False Advertising
-----------------------------------------------------------------------
A federal judge denied a doctor's request to grant class-action status
to his false-advertising lawsuit against Aetna Inc. and United
HealthCare Corp. U.S. District Judge David Hittner rejected Dr. Kenneth
Ford's request to allow him to bring his lawsuit on behalf of specialist
doctors who have contracted with Aetna and United HealthCare, the
nation's two largest health insurers. The ruling could severely limit
any court award in the case, which the judge estimated at potentially
more than $ 100,000 for Ford alone should he win the case.

The Texas ruling does not say the allegations in the 1996 lawsuit are
false, Ford's attorney, Kenneth Wynne said. He said the lawsuit will go
to trial even without class-action status. "It's important to remember
that Dr. Ford's individual claim has survived the defendants' motions to
dismiss and has been ruled by the court to be a viable complaint," he
said. Ford's complaint, which names the Aetna unit NYLCARE Health Plans
of the Gulf Coast as the lead defendant, says the health insurers deny
needed services to boost their profits while advertising that they offer
high-quality care. (Los Angeles Times Dec-3-1999)


HOLOCAUST VICTIMS: Swiss Fund Makes Awards Separate from US Settlement
----------------------------------------------------------------------
The Swiss fund for needy Holocaust survivors approved on November 30
payments of $1.27 million to Jewish and Gypsy applicants and political
opponents of the Nazis. More than 1,600 people will benefit from the
latest payment _ Jewish survivors in the Netherlands and Sweden; Roma
and Sinti in Germany, Poland and the Czech Republic; and former
concentration camp prisoners who were politically persecuted and now
live in Spain.

The fund has now distributed more than $160 million to over 300,000
survivors of the Nazis. That leaves $13 million to be awarded. The
remaining awards ''should be decided upon within the next few months,''
the fund said in a statement.

The fund was set up by Swiss banks and industry in 1997 following
allegations that they provided support to the Nazi war machine. Its
board of governors includes representatives of international Jewish
organizations.

Around 88 percent of the money is intended to help destitute Jewish
survivors of the Nazis, while the rest is for non-Jewish survivors,
including Gypsies, homosexuals, the disabled, Jehovah's Witnesses,
Christians persecuted as Jews and political opponents of the Nazis.

It is separate from a $1.25 billion fund set up by Switzerland's two big
banks in August last year in an out-of-court settlement with lawyers in
a class-action suit in the United States. (AP Online Nov-30-1999)


MICROSOFT CORP: Law Firms Tussle To Take Lead in Antitrust Suits in CA
----------------------------------------------------------------------
Two leading law firms with antitrust class actions against Microsoft
Corp. are seeking to make San Francisco the venue for the handful of
such cases pending in California courts, and may soon duke it out to
determine which firm will serve as lead counsel.

San Francisco class action plaintiffs firm Lieff, Cabraser, Heimann &
Bernstein jumped into the Microsoft fray late November with a suit --
Nanette Fisher v. Microsoft Corp., 308120 -- on behalf of consumers who
purchased Microsoft Windows upgrades. The firm has filed a motion to
coordinate Microsoft class actions in San Francisco. So has S.F.'s
Townsend and Townsend and Crew, whose Lingo v. Microsoft Corp., 301357,
was filed in February, long before U.S. District Judge Thomas Penfield
Jackson's findings of facts shook the company. A handful of other firms,
including San Diego's Milberg Weiss Bershad Hynes & Lerach, have filed
similar class actions. San Francisco class action specialist Francis
Scarpulla is also co-counsel in an action against Microsoft.

The move was not unexpected by local lawyers, who predict Townsend and
Townsend is the most likely to take the lead in the dispute because its
case is furthest along. Townsend was the first firm to bring a
consumer-focused class action antitrust suit against Microsoft.
California, like a handful of other states, allows consumers who did not
directly purchase products to sue the manufacturer.
But Lieff, Cabraser is not likely to take second chair without a fight.
Partner Joseph Saveri said the firm has a stellar track record in such
matters and will seek a leadership role.

Whatever firm assumes the lead role stands to gain millions in legal
fees if they prevail. In addition, the main players will bask in an
international spotlight in what is sure to be a much-celebrated class
action.

Bringing the cases to San Francisco will likely enhance their odds of
winning lead counsel status, say local lawyers.

The Townsend case is already well on its way to a trial. Townsend filed
a motion for class certification for its pending suit on December 1. A
hearing has been scheduled for Jan. 21 before San Francisco Superior
Court Judge Stuart Pollak.
"Most, if not all, seek to define similar classes," said Townsend
partner Daniel Furniss. "The fact that our case is first is a plus, but
we have a track record of being able to handle these kinds of cases."

Across the country, a handful of other suits -- at least six in
California alone -- have been filed since Jackson issued findings of
fact in the federal antitrust suit that identified Microsoft as a
monopoly. The suits primarily seek damages on behalf of consumers who
bought a personal computer with a Microsoft operating system or a
Windows upgrade in the prior four years.

"We didn't bring the case because there was a decision in a court back
east against Microsoft," said Townsend partner Eugene Crew. "We brought
it because we had become aware of evidence of what appeared to be
violations of antitrust law." Crew added, "There's been a lot of
progress and I think we're well on our way to trial."

Lieff, Cabraser lawyers are actually using Townsend's Lingo case to
their advantage, but that doesn't mean the firm intends to take a
passive role if their motion to move the cases to San Francisco
succeeds. "The litigation on file the longest and the level of
sophistication with complex class actions is here; we think San
Francisco is the best place for this," said Leiff, Cabraser's Saveri.
"Based on our track record, whatever leadership structure there is
should include us, but that's a question for another day." (The Recorder
Nov-30-1999)


MICROSOFT CORP: Talks May Offer Viable Middle Ground for Antitrust Suit
-----------------------------------------------------------------------
There already is a proposed out-of-court settlement that could serve the
interests of both the government and Microsoft, and talks in Chicago
offer the best chance to date of reaching a viable middle ground. That's
because the man mediating the talks, U.S. District Judge Richard Posner,
is uniquely versed on both sides.

A leader of a conservative school of jurisprudence associated with the
University of Chicago, Posner sympathizes with Microsoft's opposition to
government meddling with successful businesses. His writings have shown
how government-imposed breakups of business monopolies can backfire. At
the same time, Posner has also promised to uphold the antitrust laws
that Microsoft has clearly violated. He now will have to show both sides
why a settlement is clearly and increasingly in their self-interests.

For Microsoft, a settlement would prevent Jackson from ruling, as he is
expected to do after resuming hearings Feb. 22, that Microsoft had
violated specific antitrust laws. That ruling would expose Microsoft to
further liability from class-action suits like the one filed late
November in San Francisco alleging that Microsoft had overcharged
consumers for its Windows operating system.

A settlement is also in the government's best interest, for it would
preclude the U.S. Court of Appeals and the U.S. Supreme Court, which
have historically interpreted antitrust laws more narrowly than Jackson,
from overturning his ruling against Microsoft.

George Washington University Law School professor William Kovacic and
other scholars say that only two remedies now on the table can meet the
self-interests of both sides.

The first remedy, "conduct controls" that would outline how Microsoft
should behave toward its competitors, is highly impractical because it
would require the kind of intrusive and labor-intensive government
supervision that Posner opposes and the Justice Department can't afford.

The second remedy--requiring Microsoft to lease to competitors its
"source code," the programming on which its software is based--is far
better. Licensing the code would allow computer manufacturers to
customize Microsoft's Windows software to meet their customers' needs,
precisely the kind of innovation that any effective settlement must
ensure. (Los Angeles Times Nov-30-1999)


NAVIGANT CONSULTING: Bernstein Liebhard Announces Correction for Notice
-----------------------------------------------------------------------
In NYW066, Class Action Lawsuit Commenced Against Navigant Consulting,
Inc. (NAV) by Bernstein Liebhard & Lifshitz, LLP, moved Wednesday, Nov.
24, we are advised by the company that the headline should read "Class
Action Lawsuit Commenced Against Navigant Consulting, Inc. (NCI) by
Bernstein Liebhard & Lifshitz, LLP" rather than "Navigant Consulting,
Inc. (NAV)" as originally issued. The ticker symbol should be (NYSE:
NCI) rather than (NYSE: NAV) as originally issued. The complete,
corrected release follows:

Class Action Lawsuit Commenced Against Navigant Consulting, Inc. (NCI)
by Bernstein Liebhard & Lifshitz, LLP

NEW YORK, Nov. 24 /PRNewswire/ -- A securities class action lawsuit was
commenced on behalf of purchasers of the common stock of Navigant
Consulting, Inc.(NYSE: NCI) ("Navigant" or the "Company"), formerly
known as Metzler Group, Inc. (Nasdaq: METZ), between February 22, 1999
and November 21, 1999, inclusive, (the "Class Period"), in the United
States District Court for the Northern District of Illinois.

The complaint charges Navigant 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 defendants issued materially false and misleading statements about
the nature of the Company's financial results and business prospects
throughout the Class Period in the Company's public filings and public
statements. As a result of these misrepresentations and omissions, the
price of Navigant's common stock was artificially inflated throughout
the Class Period.

If you purchased or otherwise acquired Navigant securities during the
Class Period, and either lost money on the transaction or still hold the
stock, you may wish to join in the action to serve as lead plaintiff. In
order to do so, you must meet certain requirements set forth in the
applicable law and file appropriate papers no later than 60 days from
November 23, 1999.

If you would like to discuss this action or if you have any questions
concerning this Notice or your rights as a potential class member or
lead plaintiff, 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
by e-mail at navigant@bernlieb.com


NAVIGANT CONSULTING: Co. President Takes $10M Loan, Says Pomerantz
------------------------------------------------------------------
The following is announcement by the law firm of Pomerantz Haudek Block
Grossman & Gross LLP on December 1, 1999:

The former Chairman, President and CEO of Navigant Consulting, Inc.
("Navigant" or the "Company") (NYSE:NCI), Robert P. Maher resigned from
Navigant after it was disclosed that he had borrowed $10 million from
the Company allegedly for personal reasons, but later disclosed it was
actually used to purchase company stock prior to the announcement of the
Company's purported merger discussions. In addition, it is alleged that
aside from Mr. Maher, several of the company's high ranking officers
were involved in $17 million of improper loans in furtherance of
defendant's alleged insider trading scheme and improper accounting
manipulations, according to allegations in a complaint filed by
Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com).

According to the complaint filed on behalf of all those who purchased
the common stock of Navigant during the period between May 6, 1999 and
November 19, 1999, inclusive (the "Class Period"), Navigant issued a
series of false and misleading statements and partook in actions which
sought to give the impression that the company was growing at a faster
rate than it actually was. As a result of defendants false and
misleading statements and actions, the price of Navigant's common stock
was artificially inflated during the Class Period. When the market
finally learned of Navigant's scheme, the price of Navigant common stock
fell dramatically.

If you purchased Navigant common stock during the Class Period, you have
until January 24, 2000 to ask the Court to appoint you as one of the
lead plaintiffs for the Class. In order to serve as lead plaintiff, you
must meet certain legal requirements. If you wish to discuss this action
or have any questions, please contact Andrew G. Tolan, Esq. of the
Pomerantz firm at 888-476-6529 (or (888) 4-POMLAW), toll free, or at
agtolan@pomlaw.com by e-mail. Those who inquire by e-mail are encouraged
to include their mailing address and telephone number.
Contact: Pomerantz Haudek Block Grossman & Gross LLP Andrew G. Tolan,
Esq. 888-476-6529 ((888) 4-POMLAW) agtolan@pomlaw.com


PLAINS ALL: Kaplan Kilsheimer Files Securities Suit in Texas
------------------------------------------------------------
Kaplan, Kilsheimer & Fox LLP announced on December 3 that it has filed a
Class Action lawsuit against Plains All American Pipeline ("PAA'" or the
"Company") (NYSE: PAA) and certain of its officers and directors in the
United States District Court for the Northern District of Texas. The
suit is brought on behalf of all persons or entities who purchased the
common stock of PAA between November 23, 1998 and November 29, 1999,
inclusive (the "Class Period").

The Complaint charges PAA and certain officers and directors with
violations of the securities laws and regulations of the United States.
The complaint alleges, among other things, that during the Class Period,
the defendants knowingly or recklessly made misrepresentations and/or
omissions of material facts. Specifically, during the Class Period,
defendants made a series of false and misleading statements concerning
material facts relating to significant trading losses, in violation of
generally accepted accounting principles, (AGAAPs). Following
defendants' disclosure on November 29, 1999 relating to PAA's $160
million trading loss, PAA's common stock closed at $10.375 per share, a
48.1% decline from the high during the Class Period.

If you are a member of the Class, you may move the court, no later than
60 days to serve as a lead plaintiff for the class. In order to serve as
a lead plaintiff, you must meet certain legal requirements. To ensure
that your name will be included in a list of class members or, if you
have any questions concerning this Notice, the action, or your rights,
please visit our website at http://www.kkf-law.comor e-mail us at
mail@kkf-law.com or call us toll free at 800-290-1952 contact:
Frederic S. Fox, Esq.
Adrienne L. Valencia, Esq.
Donald R. Hall, Esq
Kaplan, Kilsheimer & Fox LLP
800-290-1952
212-687-1980
e-mail address: mail@kkf-law.com
fax: 212-687-7714
805 Third Avenue -- 22nd Floor New York, NY 10022


PLAINS ALL: Kaplan Kilsheimer Files Securities Suit in Texas
------------------------------------------------------------
The following is an announcement by the law firm of Kaplan, Kilsheimer &
Fox LLP on December 1, 1999:

Kaplan, Kilsheimer & Fox LLP has filed a Class Action lawsuit against
Plains All American Pipeline ("PAA'" or the "Company") (NYSE: PAA) and
certain of its officers and directors in the United States District
Court for the Northern District of Texas. The suit is brought on behalf
of all persons or entities who purchased the common stock of PAA between
November 23, 1998 and November 29, 1999, inclusive (the "Class Period").

The Complaint charges PAA and certain officers and directors with
violations of the securities laws and regulations of the United States.
The complaint alleges, among other things, that during the Class Period,
the defendants knowingly or recklessly made misrepresentations and/or
omissions of material facts. Specifically, during the Class Period,
defendants made a series of false and misleading statements concerning
material facts relating to significant trading losses, in violation of
generally accepted accounting principles, ("GAAP"). Following
defendants' disclosure on November 29, 1999 relating to PAA's $160
million trading loss, PAA's common stock closed at $10.375 per share, a
48.1% decline from the high during the Class Period.

If you are a member of the Class, you may move the court, no later than
60 days to serve as a lead plaintiff for the class. In order to serve as
a lead plaintiff, you must meet certain legal requirements.

To ensure that your name will be included in a list of class members or,
if you have any questions concerning this Notice, the action, or your
rights, please visit our website at www.kkf-law.com or e-mail us at
mail@kkf-law.com or call us toll free at 800-290-1952 contact: Frederic
S. Fox, Esq. Adrienne L. Valencia, Esq. Donald R. Hall, Esq. Kaplan,
Kilsheimer & Fox LLP (800) 290-1952, (212) 687-1980 e-mail address:
mail@kkf-law.com, fax: (212) 687-7714, 805 Third Avenue -- 22nd Floor,
New York, NY 10022.


PLAINS ALL: Schiffrin & Barroway File Securities Suit in Texas
--------------------------------------------------------------
The following statement was issued on November 29 by the law firm of
Schiffrin & Barroway, LLP:

Notice is hereby given that a class action lawsuit was filed in the
United States District Court for the Southern District of Texas on
behalf of all purchasers of the limited partnership units of Plains All
American Pipeline, LP (NYSE:PAA) from November 17, 1998 through November
29, 1999, inclusive, including all persons who purchased units in or
traceable to the Company's initial offering on or about November 17,
1998 (the "Class Period").

If you wish to discuss this action or have any questions concerning this
notice or your rights or interests with respect to these matters, please
contact Schiffrin & Barroway, LLP (Stuart L. Berman, Esq.) toll free at
1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com.

The complaint charges Plains All American Pipeline and certain of its
officers and directors with issuing misleading financial statements that
falsely inflated the Company's earnings.

If you are a member of the class described above, you may, not later
than January 28, 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. Contact: Schiffrin & Barroway,
LLP Stuart L. Berman, Esq. 888/299-7706 (toll free) or 610/667-7706
e-mail: info@sbclasslaw.com


PLAINS ALL: Stull, Stull Files Securities Suit in Texas
-------------------------------------------------------
The following was released on December 1, 1999 by Stull, Stull & Brody:

Notice is hereby given that a securities class action lawsuit was filed
on December 1, 1999 in the United States District Court for the Southern
District of Texas against Plains All American Pipeline, LP ("PAAP" or
the "Company") (NYSE:PAA) and certain of its officers and directors on
behalf of all purchasers of the limited partnership units of PAAP from
November 17, 1998 through November 29, 1999, inclusive, including all
persons who purchased units in or traceable to the Company's initial
offering on or about November 17, 1998 (the "Class Period").

The lawsuit charges PAAP and certain of its officers and directors with
issuing misleading financial statements that falsely inflated the
Company's earnings.

If you wish to discuss this action or have any questions concerning this
notice or your rights or interests with respect to this matter, please
contact Tzivia Brody, Esq. at Stull, Stull & Brody by calling toll-free
1-800-337-4983, or by e-mail at SSBNY@aol.com, or by fax at
212-490-2022, or by writing to Stull, Stull & Brody, 6 East 45th Street,
New York, NY 10017.


RAYTHEON COMPANY: Finkelstein & Krinsk File Securities Suit in MA
-----------------------------------------------------------------
Raytheon Company - (NYSE:RTN) is accused in a class action lawsuit of
misleading investors by misrepresenting the financial condition and
business prospects of the Company in order to inflate the price of the
stock. When Raytheon finally revealed its true financial predicament on
October 12, 1999, the shares (both Class A & B) plummeted to by
approximately 45 percent and wiped out almost $4.5 billion of
stockholder value.

According to the Complaint filed by Finkelstein & Krinsk, executives of
Raytheon falsely painted a positive picture of the Company and
deliberately withheld facts from the public concerning trends of its
business and the difficulty it was experiencing integrating acquisitions
that would eventually impact tens of millions of dollars of Company
assets. The acquisition difficulties included Hughes Electronics and
known adverse business difficulties including extensive cost overruns on
fixed price contracts.

The Complaint particularizes allegations of how Raytheon management
violated the securities laws and specifies the Company's false
statements and omitted material facts. The Complaint was filed in United
States District Court for the District of Massachusetts and represents a
class comprised of all security holders including institutional
investors for the pertinent time period.

"Raytheon executives knew their business was in trouble and that the
only way to maintain their lavish compensation and other emoluments was
to deliberately conceal the truth from investors," stated Jeffrey R.
Krinsk, Esq., of Finkelstein and Krinsk. "We are very pleased that
institutional investors are contacting us as the recognized resource of
choice for large institutional investors who appreciate the quality of
our investigation and welcome our flexible approach to include unique
incentives to large investors seeking greater lucrative involvement in
the lawsuit."

If you purchased or otherwise acquired Raytheon securities during the
Class Period, you can join in the action on favorable terms and without
cost or expense to you. Those wishing to participate must act not later
than December 13, 1999. Contact: Jeffrey R. Krinsk at Finkelstein &
Krinsk, the Koll Center, 501 West Broadway, Suite 1250, San Diego, CA
92101. Call toll free 1-877-493-5366 or E Mail - fk@class-action-law.com
or fax 619-238-5425.


REGISTRAR OF MORTGAGE: B.C. Ct Reserves Judgment for Eron Collapse Case
-----------------------------------------------------------------------
The British Columbia Court of Appeal has reserved judgment on the
government's attempt to throw out a $170-million class action lawsuit
that investors of failed Eron Mortgage Corp. have brought against the
province's registrar of mortgage brokers. The government has asked the
court to decertify the class action, arguing the mortgage registrar
bears no legal responsibility for Eron's financial collapse.

On December 2, David Church, a lawyer for the investors, argued the
registrar can indeed be sued. He said provincial regulators should be
immune from lawsuits only if the province passes legislation that
specifically exempts them from liability.

Mary Southin, one of the three appeal judges hearing the case, said the
court is reserving its decision to give the investors a chance to
consider pursuing a single test case instead of a class action. If the
investors and the province can't agree on the test case option, the
court will issue a written decision.

A test case would involve sending a single investor's case to trial on
the understanding the results of that trial would establish a precedent.
Lawyers for the B.C. government said Victoria would prefer a test case
to the class action, and promised in court not to seek legal costs
should the investors lose.

But outside court, James Tingle, a representative of the Eron investors,
said he would prefer to see the case continue as a class action, saying
the circumstances that led people to invest in Eron varied greatly from
individual to individual. A test case would not capture those
differences in circumstances, he said.

In their suit, the investors say the registrar, which regulates the
province's mortgage industry, was negligent because it did not keep a
close enough watch over Eron's business affairs. (National Post
(formerly The Financial Post) Dec-3-1999)


SAFETY COMPONENTS: Lionel Z. Glancy Says NJ Securities Suit Is Expanded
-----------------------------------------------------------------------
The following was released December 3 by The Law Offices of Lionel Z.
Glancy:

Notice is hereby given that a Class Action has been commenced in the
United States District Court for the District of New Jersey on behalf of
a class (the "Class") consisting of all persons who purchased the common
stock of Safety Components International, Inc. ("Safety") (Nasdaq:
ABAGE) between November 20, 1997 and November 9, 1999, inclusive (the
"Class Period").

The Complaint charges Safety and certain of its officers with violations
of federal securities laws. Among other things, plaintiff claims that
defendants' material omissions and the dissemination of materially false
and misleading statements regarding the nature of Safety's operations
and financial statements drove Safety's stock price to a Class Period
high of $18.8125 per share. Safety's common stock fell to a class period
low of $2.5938 per share, and is currently halted from trading,
inflicting enormous damages on investors.

If you are a member of the Class described above, you may move the
Court, not later than 60 days from November 12, 1999, 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 your rights or interests with respect to these matters, please
contact Lionel Z. Glancy, Esquire, or Michael Goldberg, Esquire of the
Law Offices of Lionel Z. Glancy, 1801 Avenue of the Stars, Suite 311,
Los Angeles, California 90067, by telephone at (310) 201-9150 or
toll-free (888) 773-9224 by e-mail to info@glancylaw.com


STARNET COMMUNICATIONS: Stull, Stull Files Securities Suit in Delaware
----------------------------------------------------------------------
The following was released on November 29 by Stull, Stull, & Brody:

Notice is hereby given that a securities class action lawsuit was filed
November 29, 1999 in the United States District Court for the District
of Delaware against Starnet Communication International, Inc. ("Starnet"
or the "Company")(OTCBB:SNMM) and certain of its officers and directors
on behalf of all persons who purchased Starnet common stock between
March 11, 1999 and August 20, 1999, inclusive (the "Class Period").

The lawsuit charges that Starnet and certain of its officers and
directors violated Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934. The complaint further alleges that the defendants issued
materially false and misleading statements about the nature of the
Company's business and failed to disclose potential liabilities
throughout the Class Period in the Company's public filings and public
statements.

Specifically, the complaint alleges that Starnet routinely violates
Canadian gambling laws, and that the Company accepts wagers from North
Americans, contrary to public representations made throughout the Class
Period.

As a result of these misrepresentations and omissions, the price of
Starnet's common stock was artificially inflated throughout the Class
Period, enabling defendants to sell thousands of shares and reap
millions of dollars in illicit insider trading profits. On August 20,
1999, after a massive police raid, the truth was finally revealed and
the stock price plummeted by approximately 60% of its market price.

If you wish to discuss this action or have any questions concerning this
notice or your rights or interests with respect to this matter, please
contact Tzivia Brody, Esq. at Stull, Stull, & Brody by calling toll-free
1-800-337-4983, or by e-mail at SSBNY@aol.com, or by fax at 212/490-2022
or by writing to Stull, Stull & Brody, 6 East 45th Street, New York, NY,
10017. Contact: Stull, Stull & Brody, New York Tzivia Brody, Esq.
1-800-337-4983 Fax: 212/490-2022 E-mail: SSBNY@aol.com


STYLING TECHNOLOGY: Cohen, Milstein Files Securities Suit in Arizona
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The following Notice is issued on December 1, 1999 by the law firm of
Cohen, Milstein, Hausfeld & Toll, P.L.L.C. on behalf of its client, who
filed a lawsuit in the United States District Court for the District of
Arizona on behalf of all persons who purchased the publicly traded
securities of Styling Technology Corporation (Nasdaq:STYLE) between May
5, 1998 through November 29, 1999 inclusive, (the "Class Period").

The complaint charges Styling Technology and certain of its officers and
directors with violations of Securities Exchange Act of 1934. The
Complaint, charges that the Company and certain of its officers and
directors violated federal securities laws by causing STYLE to make
materially false and misleading statements during the Class Period. In
particular, the complaint alleges that each of the financial statements
STYLE issued during the Class Period was materially false and misleading
requiring restatement. On November 29, 1999, STYLE announced, among
other things, that:

* as a result of various revenue recognition issues relating to the
  first and second quarters of the current fiscal year as well as the
  prior fiscal year, STYLE has been unable to file its third quarter
  1999 report on Form 10-Q with the Securities and Exchange Commission;
* STYLE will restate its financial results for fiscal year 1998 and for
  the first and second fiscal quarters of 1999;
* the Company's auditors have withdrawn their audit report with respect
  to the fiscal 1998 financial statements; and
* the Company's operating results during the third quarter ended
  September 30, 1999, have resulted in a default under certain
  provisions of its senior secured credit facility.

If you are a member of the Class who owned Styling Technology
Corporation common stock during the Class Period, you may move the
Court, not later than sixty (60) days from November 30, 1999, to serve
as lead plaintiff for the Class. In order to serve as lead plaintiff,
you must meet certain legal standards.

If you have any questions about this Notice or the action, or with
regard to your rights, please contact the following attorneys: Steven J.
Toll or Tamara J. Driscoll at 888/240-1238 or 206/521-0080, 999 Third
Avenue, Seattle, Washington 98104 or by e-mail at stoll@cmht.com or
tdriscoll@cmht.com


STYLING TECHNOLOGY: Lockridge Grindal Files Securities Suit in Arizona
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Pursuant to Section 21D(a)(3)(A)(i) of the Securities Exchange Act of
1934, Lockridge Grindal Nauen P.L.L.P. hereby gives notice that a class
action complaint has been filed against Styling Technology Corporation
(Nasdaq:STYLE) in the United States District Court for the District of
Arizona. The lawsuit was filed on behalf of all persons who purchased
Styling Technology Corporation securities from May 5, 1998 through
November 29, 1999.

The Complaint charges that the Company and certain of its officers and
directors issued materially false and misleading statements in violation
of the federal securities laws during the Class period specified above.
Specifically, the Complaint alleges that each of the financial
statements issued by the Company during the period May 5, 1998 through
November 29, 1999 was materially false and misleading requiring
restatement. On November 29, 1999, the Company announced that it would
restate its financial results for fiscal year 1998 and for the first and
second fiscal quarters of 1999, and that it has been unable to file its
third quarter 1999 report on Form 10-Q with the Securities and Exchange
Commission due to revenue recognition issues relating to the first and
second quarters of the current fiscal year and last fiscal year. The
Company also announced that its auditors have withdrawn their audit
report for the Company's fiscal 1998 financial statements and that the
Company's operating results during the third quarter ended September 30,
1999, have resulted in a default under certain provisions of its senior
secured credit facility.

Any member of the proposed Class who desires to be appointed lead
plaintiff in this action must file a motion with the Court no later than
sixty (60) days from November 30, 1999. If you have questions or
information regarding this action, or if you are interested in serving
as a lead plaintiff in this action, you may call or write: Karen M.
Hanson Lockridge Grindal Nauen P.L.L.P. 100 Washington Avenue South
Suite 2200 Minneapolis, MN 55401, (612) 339-6900 or e-mail
kmhanson@locklaw.com


TARGET STORES: CA Suit Says Co. Doesn’t Accommodate Deaf Job Applicants
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A relatively small number of ADA employment claims have involved
allegations of discrimination during the hiring process. But a new suit
filed in California reminds employers and attorneys alike that the
statute's prohibition of employment discrimination is intended to
encompass all facets of the employment relationship - including the job
application process.

Disability Rights Advocates of Oakland, Calif., and the San Francisco
firm Schneider & McCormac filed the class action suit against Target
Stores on behalf of named plaintiff Gary Lundstrom, who is deaf, and all
others similarly situated. The plaintiffs say that a nationwide
investigation of Target stores showed that the retailer regularly denied
deaf job applicants' requests for interpreters during interviews. The
suit also faults Target's alleged failure to provide interpreters for
written job examinations. "Target didn't even give me a chance," said
Lundstrom. "I told Target that I needed an interpreter, but they
insisted that I should just interview without one."

Rowena Gargalicana, one of the attorneys for Lundstrom, had strong words
of criticism for Target. "It is ironic that Target's web page boasts
about the company's commitment to diversity and about the company's
Diversity Task Force," she said. "However, Target's practice of
routinely denying deaf job applicants sign language interpreters during
job interviews is proof that Target does not want to hire deaf people."

According to the complaint, Lundstrom applied for a job as a stock
person with Target in October 1998. He asked for an interpreter for his
pre-employment interview, the suit alleges, but was forced to
communicate with the interviewer by writing notes. Lundstrom was unable
to understand some of the interviewer's questions due to the absence of
an interpreter, the suit adds, and he needed to ask the interviewer to
repeat questions several times.

In addition, the suit claims, Target failed to provide Lundstrom with an
interpreter for a lengthy written examination that he was required to
complete. Due to this failure, it continues, Lundstrom was "forced to
leave large portions of the examination unanswered." Moreover, it
claims, the examination asked questions that were not job-related, and
it screens out job applicants who have hearing disabilities. (Disability
Compliance Bulletin, Vol. 16, No. 4, Nov-22-1999)


TOBACCO LITIGATION: Smoker & Cancer Survivor Testifies on Ad Influence
----------------------------------------------------------------------
Movie stars, singers and athletes endorsed cigarettes, so smoking them
couldn't be unhealthy, an Orlando man testified, telling a jury how
tobacco ads influenced him to smoke for 34 years. "It would have to make
you think, and it did make me think, that smoking was safe," Frank
Amodeo said as he looked at more than a dozen magazine advertisements
from the 1950s and 1960s that showed sports icons endorsing cigarettes.
"These guys were above-average athletes and they smoke, so how could it
be bad for you?"

Amodeo, 60, is one of two cancer survivors who represent as many as
500,000 ailing Florida smokers who could be involved in the nation's
first statewide class action trial against Big Tobacco. Mary Farnan, a
nurse who developed lung and brain cancer, also has testified.

In July, a Miami-Dade County Circuit Court jury found that smoking
causes cancer and that their manufacturers use deceptive marketing to
sell them. Jurors must next determine if smoking and the tobacco
companies' actions led to Farnan's and Amodeo's cancers. If the panel
finds that was the case, they could award the pair monetary damages and
then punish Big Tobacco with an award in the billions of dollars. In
1987 Amodeo, a pack-and-a-half-per-day smoker, was diagnosed with throat
cancer. He lost the ability to eat or drink and receives nourishment
through a tube in his stomach.

"Pall Malls, let your throat enjoy smooth smoking," read one of the
advertisements that Stanley Rosenblatt, the lawyer representing the
smokers, showed Amodeo. "What do these ads convey to you as a consumer
and a smoker?" Rosenblatt asked him. "To me they made smoking happy,
safe and clean," Amodeo said.

Dan Webb, a lawyer representing defendant Philip Morris Cos. Inc., tried
to zero in on when Amodeo began to link his cancer to smoking,
insinuating that it was when he was diagnosed with cancer in 1987. That
would put Amodeo's current claim against the tobacco companies outside
the statute of limitations, which requires plaintiffs to sue within four
years of learning who hurt them. Amodeo joined the tobacco suit in 1996.
He testified that he did not make the link between his illness and his
smoking habit until about 1994. Webb asked him how, then, he could file
a malpractice lawsuit against a doctor in 1988 charging him with failing
to diagnose the throat cancer, even though he had knowledge of Amodeo's
cigarette addiction. Amodeo said his smoking was only one of the things
he suspected of causing his cancer. He also said he was sick when the
lawsuit was filed, so his wife and lawyer handled it.

Webb also asked why he tried to quit smoking in 1966, if he did not have
any health concerns. "I never liked the way cigarettes had an odor. I
never liked the way cigarettes stained my hands and my teeth. I never
liked the way it made my clothes smell," Amodeo said.

Cross-examination of Amodeo is expected to continue when the trial
resumes on December 6. (Sun-Sentinel (Fort Lauderdale, FL) Dec-3-1999)


TOBACCO LITIGATION: Some Justices Express Doubt About FDA Regulation
--------------------------------------------------------------------
Several Supreme Court justices expressed doubts about whether the Food
and Drug Administration can regulate tobacco as a drug and crack down on
cigarette sales to minors.

Solicitor General Seth Waxman asked the court to let the FDA regulate
tobacco because the nicotine it contains is a "highly addictive"
substance that acts as a stimulant, a sedative, an appetite suppressant
and is used to feed smokers' addictions. But tobacco industry lawyer
Richard M. Cooper insisted the government's 1996 decision to regulate
tobacco was "lawless" because cigarettes are not promoted as having
effects on health. Justice Sandra Day O'Connor noted that federal law
says drugs and devices have to be safe and effective. "Is it the
position of the government that the use of tobacco is safe and
effective?" she asked Waxman. "If not, you know, it just doesn't fit." A
lower court threw out the government rules, saying Congress, not the
FDA, had authority to make the "major policy decision" of whether to
regulate tobacco.

The Supreme Court is expected to decide by July whether that ruling was
correct. The government has called the initiative the FDA's most
important public health and safety effort in the last 50 years.

Chief Justice William H. Rehnquist questioned why the FDA decided to
regulate tobacco in 1996 when the surgeon general's office determined
during the 1960s that smoking was dangerous to people's health. Waxman
noted that executives of seven major tobacco companies testified to
Congress in 1994 that nicotine was not addictive and that cigarette
makers did not manipulate their products' nicotine content." As far as
the former is concerned, nobody believed them," Justice Antonin Scalia
responded, and Rehnquist quickly added, "Nobody believed them." Even if
the 1938 Food, Drug and Cosmetic Act gave the administration the
authority to regulate tobacco, Scalia said, "There's a lot of water over
the dam since then" during which the government said it could not
regulate the industry. However, Justice Stephen G. Breyer noted that
"nobody can kid themselves any more" about the effects of smoking. "Is
the word 'safety' in this statute supposed to stop the FDA from looking
at the real world?" Waxman called tobacco "the only finished product
ingested in the body that is regulated and inspected by no agency and
yet is so dangerous."

Forty states are backing the government at a time when the tobacco
industry has been under increasing attack. All 50 states have reached
settlements in which tobacco companies will pay them $ 246 billion for
the cost of treating smoking-related illnesses. Cigarette billboards
around the country were taken down last spring as part of those
agreements.

The Justice Department sued the industry in September, alleging that
cigarette makers placed profits above public health and seeking
additional billions of dollars to repay federal health-insurance costs.
And in July, a Florida jury ruled in a class-action lawsuit that the
five largest cigarette makers produced a defective and deadly product.
The jury is considering damages that industry lawyers say could exceed $
300 billion.

For decades, the FDA said it lacked authority to regulate tobacco so
long as cigarette makers did not claim that smoking provided health
benefits. The government said its 1996 policy switch was prompted by new
evidence that the industry intended its products to feed consumers'
nicotine habits.

All 50 states already ban tobacco sales to anyone under 18. In addition
to adopting that rule, the FDA required stores to demand photo I.D. from
all tobacco purchasers under age 27 and limited vending-machine
cigarette sales to adults-only locations, such as bars. Tobacco
companies challenged the rules. In 1997, a federal judge affirmed the
FDA's authority to regulate tobacco and upheld the crackdown on minors
but threw out its restrictions on tobacco advertising. The 4th U.S.
Circuit Court of Appeals ruled last year that the FDA could not regulate
tobacco at all. "Congress never intended to give the FDA jurisdiction
over tobacco products,"  the appeals court said. The case is Food and
Drug Administration v. Brown and Williamson. (The Legal Intelligencer
Dec-2-1999)


TOWNE SERVICES: Issues Statement Regarding Securities Suits in Georgia
----------------------------------------------------------------------
Towne Services, Inc. (Nasdaq: TWNE), a leading provider of
transaction-based online services and products for small and mid-sized
businesses and community banks, announced on December 3 that the Company
has learned that at least two lawsuits have been filed as purported
class actions against the Company and three of its present or former
executive officers in the United States District Court for the Northern
District of Georgia.

These lawsuits involve securities claims by individual shareholders, who
purport to be acting on behalf of themselves and other similarly
situated shareholders. However, no plaintiff's class has been certified.
The complaints allege, among other things, that the Company should have
disclosed earlier this year that it allegedly experienced serious
problems with its network infrastructure and processing facilities
during the move of its corporate headquarters in June, and that these
problems allegedly led to a significant number of customers terminating
their contracts with the Company. Towne believes these claims are
without merit, has referred the litigation to its counsel and intends to
vigorously defend the allegations.

Commenting on the announcement, Henry Baroco, chief executive officer
and president of Towne, said "It is unfortunate that these lawsuits have
arisen; however, we intend to take the appropriate steps to protect the
Company's interests. At this point, we do not expect that the lawsuits
will greatly distract us from implementing our business plans and hope
that they will not be a concern for our shareholders, customers or
employees."


Y2K LITIGATION: CNN Coverage – Millennium Celebration or Catastrophe?
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Broadcast on the Cable News Network on November 29, 1999

One month before the dawn of a new millennium, a look at whether
Americans are planning for the celebration of a century or a computer
catastrophe.

    GUESTS: Bruce W. McConnell, Scott Levitt, Howard Nations

    ROGER COSSACK, CO-HOST: Today on BURDEN OF PROOF: One month before
the dawn of a new millennium, are Americans planning for the celebration
of a century or a computer catastrophe?

    ANNOUNCER: This is Burden of Proof with Roger Cossack and Greta Van
Susteren.

    COSSACK: Hello and welcome to Burden of Proof. Greta is on vacation.

As America enters the holiday season, the cheer may be overshadowed by
predictions of a looming crisis. Computer experts began warning of a Y2K
problem more than two years ago. But as we approach the year 2000, have
businesses and governments heeded that call or will commerce and civil
services grind to a halt?

Joining us today from Houston, Texas is Howard Nations with the
Association of Trial Lawyers of America. Here in Washington, Bruce
McConnell of the International Y2K Cooperation Center; Scott Levitt, an
attorney for the Y2K Task Force; and Brian Jones (ph). And in the back,
Donna Wren (ph) and Rishma Govani (ph).

Bruce, let's go right to you: It's December 31st at midnight. Let me
give you a little hypothetical. I'm driving down the streets of
Washington on my way to visit a sick friend in the hospital when
suddenly the clock strikes 12:00, the signal lights go out. What's going
on in the hospital? do I have things to worry about?

    BRUCE W. MCCONNELL, INTERNATIONAL Y2K COOPERATION CENTER: We don't
expect major disruptions like that, particularly in the wealthy
countries. And even in the poorer countries where their -- haven't had
the resources to do as much work, they're not as dependent on computers.
So we see things breaking down in business systems over a period of days
and weeks afterwards when there's -- you get the wrong bill and that
kind of thing. But as far as life threatening, we're not predicting that
kind of incident.

    COSSACK: All right, let's talk about the business systems. You said
that perhaps I get the wrong bill. Well, that's not going to worry me
too much. But what's going to worry me is, perhaps, if I go to the ATM
and try and get some money out, that might worry me if I can't do that.
Or perhaps if I want to do call some people and have some banking taken
care of or pay some bills or a credit card, you know, that's going to
worry me, and I think most Americans, a lot. Do I have much to worry
about there?

    MCCONNELL: Well, the banks are the most ready of anyone in the whole
country, so -- and around the world, in fact, the financial system is
ready. So we're not worried about the banks not being ready or the ATMs
not working. On any given day, two percent of the ATMs are out in the
United States. So I'm sure there'll be some ATMs out on that day and, no
doubt, they'll be blamed on Y2K, but we're not expecting that. We say
people should have copies of -- paper copies of their bank records, you
should maybe have a little extra cash. But, on the whole, we expect
really kinds of things -- if you're a small business and haven't done
the work you need to do, then you may run into problems with your
billing system.

    COSSACK: All right, now I want to call my son and wish him happy New
Year's. I pick up the phone. Is the phone going to be working?

    MCCONNELL: Well, we're advising, asking people not to all pick up
the phone right at the stroke of midnight just to not overload the
system.

    COSSACK: This is the millennium, you know. A lot of people going to
pick up that phone?

    MCCONNELL: That's right, and the telephone companies are ready for
that. They're -- they thought of that, so we expect the phones to work
around the world pretty much as well as they do on a normal day.

    COSSACK: All right, now let me see what other parade of horribles I
can give you. What should I be worried about? If I bring up all these
terrible things and you tell me not to be worried about it, I seem to be
reading and hearing things that I should be well- prepared for Y2K;
perhaps even have some water in the house, have flashlight batteries,
candles, extra food. Should I?

    MCCONNELL: Well, it's always good to have extra supplies on-hand in
a winter storm, you know, for the winter weekend. But my view is that,
in fact, the kinds of things we'll see from Y2K will be affecting
businesses and people who work for businesses, but that they'll be a
slow kind of effect over the days and weeks that follow as some of these
business systems produce -- make mistakes, and then people have to spend
time correcting them.

    COSSACK: Bruce, I have to ask you this: Are you going to prepare in
any way for Y2K? What are you going to do?

    MCCONNELL: I'm planning on working during Y2K, of course, but I'll
have, you know, two or three days of food in the house like I would
hopefully have on a normal long weekend.

    COSSACK: But nothing special.

    MCCONNELL: Nothing special.

    COSSACK: All right, let -- what -- how did we get here? You know,
this is something, obviously, the fact that it was going to become 2000
sometime -- long ago, we had computers. Why aren't we better prepared?
Why are we having to talk about this?

    MCCONNELL: Well, that's a good question. I think the computer
programmers figured that the systems they were building would be
obsolete by now so they wouldn't have to deal with this problem. It was
a convenience, it was used to save space in memory when memory was
short. But it's been now proven to be a useful exercise because now
everybody knows where all their computers are, they've gotten rid of
some of the older ones. So on that, it's a pain, but it's probably going
to end up having been a benefit in some ways.

    COSSACK: All right, what about elevators and subways? Should people
particularly stay off of those kinds of conveyances when the Y2K comes
around?

    MCCONNELL: Well, a lot of these mechanical machines, airplanes, that
kind of thing, don't really depend on computers. Certainly the safety
systems don't depend on computers. But a lot of train companies
worldwide are going to stop the trains for 10 minutes or 20 minutes
during the rollover just in an abundance of caution. So I think people
are taking a lot of cautionary measures that are probably not going to
be needed, but you never can be too careful.

    COSSACK: Does stopping the trains for 10 or 20 minutes -- is that
really going to do anything? I mean, if there's a problem, the trains
are going to be stopped for a lot longer than that, is there?

    MCCONNELL: I suppose that's right, but that avoids any problem that
would occur right as the clock changes.

    COSSACK. I see.

All right, let's talk to Scott.

Scott, what about the government? Is the government as far along as it
should be? We've heard reports that perhaps there's going to be trouble
with Social Security, with Medicare, food stamps. What about that?

    SCOTT LEVITT, YEAR 2000 TASK FORCE ATTORNEY: Well, I think the
government's made significant progress. One of the congressman who's
been tracking it, Stephen Hornsman (ph), following 40-some-odd agencies
for about two years. And, originally, the government got a failing
grade, and it's been tracked and now the government stands about at a
B-plus. There are some parts of the government that are more worrisome
than others; like you mentioned the Justice Department and the
Department of Defense.

    COSSACK: Well, what about the Department of Defense? I mean, that
seems to be a particularly scary thing to be involved in with a computer
glitch. After all, all these weapons and things that the Defense
Department has jurisdiction over, should we be concerned about a nuclear
bomb going off?

    LEVITT: I don't think so. I think the most important, mission
critical systems have been fixed. I think it's some of the lesser
systems that still need some work, and we still have some time. But I
think the big stuff, the nuclear weapons going off, that's not going to
happen. They have people standing by, and humans will be overriding any
mistakes that the computers...

    COSSACK: What about the Justice Department, Bruce? Are the jail
doors going to swing open at midnight?

    MCCONNELL: I don't think so. The people are aware that, you know,
this could be an area and a time for more legal activity, people trying
to take advantage of the celebration and the confusion. So I think a lot
of people will be watching out and worrying and working that night and
in the days following it to be sure there aren't any problems.

    COSSACK: All right, let's take a break.

Up next, what are the legal liabilities for companies or governments who
fail to prepare for Y2K. Stay with us.

(BEGIN LEGAL BRIEF)

Due to Y2K computer worries, more than 400 Philadelphia citizens
received summons to appear for jury duty in the year 1900.

    COSSACK: President Clinton signing the $390 billion budget bill.
This is a bill that includes money for 100,000 new school teachers,
50,000 community police officers, as well as money to pay the United
Nations -- the dues that the United States pays the United Nations. So,
obviously, this is a happy and jubilant President Clinton.

All right, let's go back now because -- to BURDEN OF PROOF -- in one
month, the world will hold its breath as the clock strikes 12:00 and
computer calendars roll over to 2000. Or will they? And what are the
legal repercussions for those who don't know their Y2K -- don't have
their Y2K acts together?

Well, let's first go to Howard Nations.

Howard, with the Trial Lawyers Association, I know there's been some new
legislation that the trial lawyers are against that limits, or at least
the trial lawyers believe, limits the right of individuals and small
businesses to recover. Tell us why the trial lawyers are against this?

    HOWARD NATIONS, ASSOCIATION OF TRIAL LAWYERS OF AMERICA: Well, the
federal legislation that was passed in the last Congress was passed
primarily at the behest of the chamber of commerce. And the purpose of
the legislation was to protect the large business while basically
sacrificing the small businesses and consumers at the altar of large
business.

    COSSACK: And how will this legislation do that?

    NATIONS: Well, there's a -- the first provision particularly that's
going to be devastating to small business, is a 90-day waiting period
before anything can be done. And if you take a small business, for
example, that has its cash flow cut off as a result of a failure on
January 1st, very few small businesses in this country who operate on
any level of cash flow at all, will not be able to withstand a 90- day
starvation period, is what we referred to it as we were testifying in
Congress. It gives the big business absolutely the upper hand in
negotiation, because the legislation requires not one single act be done
by big business or by the -- whoever causes the problem during that
first 90 days. That puts small business into a starvation mode, that
they have to wait 90 days before they can even file suit, and that can
be rather devastating.

I think the big victims of Y2K will be consumers and small business.

    COSSACK: Scott, Howard points out an interesting point, that there's
a 90-day waiting period. I can't think of any other legislation,
although there may be some, in which the person who claims to be
aggrieved, or the plaintiff, in this case, who claims that they've been
hurt, would have to notify the other side and wait 90 days before they
can do anything. Does the other side just -- can they just wait 90 days
or don't they have to be doing something during those 90 days?

    LEVITT: Well, they have to come up with a response, they have to
address the business' or the consumers' concerns, and they also have to
say whether they're willing to submit to alternative dispute resolution.

And I think the point about the 90 days really hurting the businesses
because they can't file suit, I think you have to really think about
that. If you filed a lawsuit that really nothing would happen in the
first 90 days that it would take much longer time to get some relief to
the business. So, I don't think having to wait 90 days is really going
to affect businesses. I think the aim of the provision is to prevent
lawsuits from reaching the courts that could be settled without
litigation, and I think that's what that 90-day period is for.

    COSSACK: Howard, how do you respond to this -- to that answer, which
is to say, look, we're going to give the other side 90 days, and in the
90 days we expect them this do something to come in and cure this
problem. If they don't cure this problem, then we're going to go ahead
and do something or we're going to be able to file suit. Isn't it a
better policy to be able to give the other side a chance to come in and
fix the problem and avoid litigation?

    NATIONS: They would have the same chance without a 90-day starvation
period. If you -- without that legislation, anyone who causes a problem
and they receive notice from the small business or consumer that they've
caused a problem, they could immediately come in and say, OK, here's how
we're going to solve the problem, here's how we're going to address the
problem, and if they can't get it solved, then they can agree to go to
alternative dispute resolution. You can do that without the 90 day. We
do that all the time in every other type of litigation. We go to
mediation in every other type of litigation frequently without a 90-day
waiting period.

During the 90 days, the important thing is, while the scriveners of the
legislation may say that they expect big business to come in during the
90 days, there's absolutely nothing in the legislation that requires
them to do anything during the 90 days. So, basically what they've
created is a cash flow starvation period that gives the people who
caused the problem the definite upper hand in negotiation.

    COSSACK: Scott, how do you respond to this criticism? Why should we
be protecting the big companies, why should we be protecting the
Microsoft's or the big computer companies? In fact, that's what this
legislation does. I mean, shouldn't they have figured out the solution
to these problems a long time ago, and why should we give them any
special protection, if these bill do give them special protection as
Howard claims?

    LEVITT: Well, I hope that it's in everyone's interest that the
Microsofts of the world succeed and are not crippled by the Y2K problem.
I think the legislation, the whole 90-day period, as it's referred to as
a starvation period I don't necessarily read that as a starvation
period. It think it's an opportunity for businesses and consumers to sit
down at the table and really decide whether a lawsuit is necessary. For
instance, one of the aims of the legislation, if there's a problem, we
don't want the person just going out and suing the business without even
contacting them. Maybe there's an easy fix, maybe something can be done
right now without having to clog up the court system. And I think the
90-day waiting period is a compromise between trying to reduce the
clogging of our courts' dockets versus businesses' rights and consumers'
rights to be -- have their controversy heard in court.

    COSSACK: You know, Howard brings up an interesting point, though.
Oftentimes major businesses, major, large corporation, one of the
advantages they have over the small person is they've got time and money
on their side.

    LEVITT: Sure.

    COSSACK: And oftentimes you would see a lawsuit filed where the
other side is just so much more powerful than the person bringing the
lawsuit that, you know, almost by definition they can stall and move
things along, and whether it's right or wrong, they can almost win the
lawsuit by muscle. Isn't that a perfect setup for what we're describing,
here, if we build in a 90-day waiting period to begin with?

    LEVITT: Well, I don't know if the 90-day waiting period is really
going to, you know, flip the tables over. I think businesses, large
businesses are always going to have more money and more access to
attorneys, and I don't think any bill can change that. I think consumers
have class-actions if there is a problem. If it's a minor thing, they
can ban together with other consumers and file class- action lawsuits. I
don't think the 90-day waiting period is really going to -- is so
one-sided that it only affects the large company. It can affect the
consumers, that they don't have to go out and hire attorneys to write a
complaint. They can sit down with a company and maybe get a resolution
without resorting to legal process.

    COSSACK: Assuming that the company wants to sit down and talk with
them before the 89th day.

    LEVITT: Well, it would be -- it would be in most company's interests
to sit down with a consumer and avoid a lawsuit where it's possible.

    COSSACK: Howard, what about punitive damages, a subject that causes
a lot of stir among lawyers? That's the idea that companies can be
punished for their activities without any relation to what the damage is
that they incurred. Is there any limit on these punitive damages in this
bill?

    NATIONS: Well, punitive damages is a nice catch phrase, it's a flash
point, especially at Congress. The fact of the matter is that this is
going to be primarily business litigation, it's going to be primarily
breach of warranty, breach of contract, and we do not have punitive
damages as a general rule in your breach of contract cases.

The situation with respect to breach of contract is that it is in the
situations of fraud. There is a lot of fraud going on right now, there's
a lot of profiteering going on right now, and the punitive damages would
kick in only in the event of fraud.

However, under this legislation, the barrier has been set so high for
the plaintiff, and the barrier has been set so low for the defendant,
that punitive damages are really a non-issue with respect...

    COSSACK: What about -- Howard, what about negligence? What about if
somebody brought a lawsuit and said, this company should have -- was
negligent in not fixing this a long time ago or designing this or
figuring it out? Would punitive damages apply there?

    NATIONS: No. Well, the punitive damages is going to be taken out,
basically, by the legislation. I mean, the barrier is so high for the
punitive damages. I mean, they did that by design. But you could have --
this is not a gross negligence situation. Primarily it's going to be
fraud. That's where the -- that's where the punitive damages will come
in. And it -- the interesting part about the legislation is, the more
fraudulent you are, the more protection you get from the legislation.

    COSSACK: All right, let's find out more about that when we come
back.

January 1st will mark the beginning of a new age, but will the next
millennium be ushered in by computer chaos? Stay with us.

(BEGIN Q&A)

Q: Despite public assurances about Y2K readiness, where are the Colorado
agency heads in charge of keeping prisons locked, streets safe and roads
open spending New Year's Eve?

A: In the underground bunker at Camp George West in Golden, Colorado.
Officials will be able to contact Gov. Bill Owens in case there is an
emergency.

(END Q&A)

    COSSACK: In just 33 days, the 1900s will be a thing of the past, as
we enter the 21st century. Is it too late to prepare for the Y2K bug?

Howard, before we find out if it's too late to prepare, you said
something at the end of the -- of our last block that intrigued me. You
said, the more fraud that someone commits, the greater protection they
get under this legislation. Tell me why you believe that?

    NATIONS: Well, because they have raised the barriers, they have
raised the burden of proof. As you know, we've had, appropriately for
this show, we have had the burden of proof has been established for a
couple of centuries with respect to how to establish liability for
punitive damages or how to establish liability for any negligence. And
the burden of proof with respect to the fraud that's committed or for
any recovery of punitive damages and Y2K has been raised in -- in a
rather quantum leap actually.

And the barriers have been raised to the point where there simply won't
be any recovery of punitive damages under Y2K. It's just too high a
barrier, and the relief available to the people who caused this problem
is too great.

    COSSACK: Scott, is it -- is the legislation fixed up to protect
those who may have caused the problem?

    LEVITT: I don't think so. I think it tries for a uniform standard. I
think with fraud we have 50 different standards among the states and I
think the legislation is trying to create a uniform standard. Whether
that may be higher than the burden of proof in certain states that is a
possibility. But I think it's too -- with respect to Y2K, it's probably
a good thing to have a national standard.

    COSSACK: All right, Bruce, I am going to tell you something. You
know, Greta, always -- she's on vacation -- but she always comes into my
office and shows me some new thing she can do on the computer that I can
barely figure out how to turn it on. So she is not here, I want you to
give me some information. I have a personal computer, what can I do to
prepare for Y2K?

    MCCONNELL: You should check with manufacturers' Web sites. You
should go on the Web sites of manufacturer of your computer and of the
major software to make sure you get the patches that you need. You need
to update some of your software probably. You should do that now before
the end of the year. COSSACK: OK, so be more specific for me. I know
what you said, so I should call up the person who made my computer, and
say: Listen, I'm a little worried that...

    MCCONNELL: You can call them up or you can just go on the Web site
of the company, and find the Y2K button, it will be on the first page,
and then read what it says about whether your computer is compliant, you
know, or whether your software is compliant, and what you need to do to
make it compliant. So you should spend some time, it's boring, but you
probably should do this between now and the end of the year.

    COSSACK: Is this a real problem for those people who have personal
computers? I mean, is this something that if they don't do, there is
going to be a major problem?

    MCCONNELL: Some of their -- It is unpredictable what will happen
with some of the software, some of the accounting and other software
may, you know, produce erroneous data or do unpredictable things. So it
is worth checking.

    COSSACK: Is it possible that someone might lose all of the
information that they have stored on their computer?

    MCCONNELL: It is unpredictable what will happen.

    COSSACK: All right, now, if there is one particular area that you
would say that people should be concerned about on Y2K at 12:00, what is
that area?

    MCCONNELL: I think the main thing that I am concerned about is that
people don't overreact to the situation. I think the computers are going
to be ready, and the ones that aren't ready, the companies and the
governments are ready to deal with making sure that essential services
continue to be delivered.

So, on the other hand, if everybody runs out and panics, then that could
be a problem that's worse than the technical side. So I think people
should remain calm, and we'll get through this. There is a lot of people
working on it. And you know, we'll see some glitches in the weeks
following, but nothing major.

    COSSACK: There you have it. Everything is going to be OK.


* Indiana Latest to OK In-House Counsel to Defend Policyholders
---------------------------------------------------------------
Insurance companies are likely to increase their reliance on in-house
counsel, following another state court ruling allowing insurers to use
their own salaried attorneys to represent policyholders.

But some attorneys fear that the Indiana Supreme Court ruling could
deprive policyholders of a vigorous defense when the defendant's
interests collide with the insurer's. Outside attorneys are immune from
this dual loyalty, they argue.

"My concern is that our profession is going to suffer from some of the
same complaints we're seeing in the medical profession, in which health
maintenance organizations are accused of controlling the independent
judgment of physicians," says John Trimble, a partner at Indianapolis'
Lewis & Wagner and president of the Defense Trial Counsel of Indiana,
which filed a brief opposing the industry's claims.

"We've just lost a little of our independence," says William Hurst, a
partner at Indianapolis' Mitchell, Hurst, Jacobs & Dick, who fought and
lost to the insurance industry in the Indiana case. "We're going to be
controlled somewhat by bean counters."

The insurance industry dismisses the criticism as sour grapes from
attorneys in private firms who resent losing their client base. "The
notion that an outside firm is any more objective or capable of
dispassionate analysis than staff counsel is a bias which is
unsupportable," says Craig Berrington, general counsel for the American
Insurance Association, a trade association for major insurance
companies, which filed a brief in the Indiana case.

For too long, firms have been oblivious to the insurance industry's
financial constraints, often typified by the padding of legal bills,
says Mr. Berrington. Now many of the firms are getting the message and
have begun to keep their fees under control. Even after the Indiana
ruling, most insurance companies will continue to rely on both in-house
and outside counsel, Mr. Berrington adds.

The Indiana case, Cincinnati Insurance Co. v. Wills, No.
79S00-9808-CV-458, stems from a personal injury case that David and
Marcia Wills brought against Robert and Betty Suter after a car crash.
Mr. and Mrs. Wills sought to disqualify the Suters' attorney, arguing
that because he was counsel for the Celina Insurance Group, the Celina,
Ohio, company was engaged in the unauthorized practice of law. On June
9, Montgomery County, Ind., trial judge Thomas Milligan agreed.

But the Indiana Supreme Court, in a 4-1 decision on Oct. 6, overturned
the ruling. Writing for the majority, Judge Theodore Boehm said there
was no "inherent conflict" in having in-house counsel represent a
policyholder because the policyholder's interests are "essentially
aligned with the insurer's." Cincinnati Insurance intervened in the case
in order to defend its practice of having its own lawyers represent
Indiana policyholders. "It was a great decision," says Judy Woods, who
represented Cincinnati and is of counsel to Indianapolis' Bose, McKinney
& Evans. "The actual opinion was very close to our brief."

                          Firm Name

In a small victory for the plaintiffs, Judge Boehm said it was
misleading for Cincinnati to name its "captive law firm" Berlon & Timmel
because it gave the appearance that the insurance carrier was
unaffiliated with the firm. The firm has since changed its name to Law
Offices of the Cincinnati Insurance Cos.

Other insurance companies defending themselves against suits challenging
their use of in-house counsel are looking to the Indiana decision to
help sway judges to their side in pending litigation.

In Texas, a state bar committee charged Allstate Insurance Co. with the
unauthorized practice of law, Unauthorized Practice of Law Committee v.
Collins, No. 98-8269.

A class action in Illinois is seeking to enjoin more than 16 insurance
companies from using staff counsel and auditors, and from demanding that
lawyers provide legal services at fixed fees. Nocita v. Allstate
Insurance Co., No. 98 L 13475.

Most states' courts have favored insurance companies on this issue.
Courts in Florida, Tennessee, Illinois, Texas, Ohio, Connecticut,
Georgia and Missouri, and a federal circuit court, have held that a
lawyer employed by an insurance company can represent the company's
insureds. Only North Carolina and Kentucky have barred the practice.

Recently, many state bar associations have begun formulating policies on
the issue after receiving complaints from lawyers about ethical
transgressions by insurance attorneys.

The West Virginia State Bar Lawyer Disciplinary Board in July sanctioned
the practice but cautioned that the policyholder's interests are
paramount. Company attorneys must be vigilant about keeping
policyholders' files confidential and must guard against efforts by the
insurance carrier to meddle in the attorney-client relationship.

The Florida and Alaska bar associations are looking at the issue. In
addition, the Florida bar is looking at insurance companies' use of
outside auditors to check outside counsel's legal bills and at whether
nonlawyers in insurance companies are dictating to lawyers how to
practice law. The Florida bar's ethics committee this month held a
public hearing on the issue and expects to make a recommendation to the
bar's board of governors in December. At the hearing, George Vaka, a
partner at Tampa, Fla.'s, Vaka, Larson & Johnson, said that he felt so
controlled by major insurance carriers at his previous job at Tampa's
Fowler, White, Gillen, Boggs, Villareal & Banker P.A. that he quit his
defense practice in January to become a plaintiffs' attorney.

Attorneys are particularly upset by insurers' requests to send bills to
outside auditors, citing concerns that client confidences would be
betrayed, said Mr. Vaka, former president of the Florida Defense Lawyers
Association. Katherine Giddings, of the American Insurance Association,
defended the industry at the Florida hearing: "If we do not have the
ability to control skyrocketing legal costs, then it's going to be
passed on to somebody, and who's going to pay that?"

                        Who's the Client?

Defense attorneys provide examples of how insurance company attorneys
can be torn between the interests of the employer and those of the
policyholder. Sometimes a policyholder is sued under alternative
theories of negligence and intentional injury. If the court decides that
the policyholder is negligent, then his or her insurance company foots
the bill. But if the court decides that it was intentional injury, then
the defendant's policy does not cover the costs. The policyholder's
attorney should push for a negligence theory, but that would not serve
his or her employer well, Mr. Trimble says.

In another example, an insurance company attorney may feel compelled by
the company to take his or her client's case to trial rather than settle
the case within the limits of the client's policy. It's often in the
defendant's interest to settle the case because he or she risks a
judgment that exceeds the policy limit. But insurers may anticipate
paying out even less if the defendant prevails at trial. Mr. Trimble
also suspects another motive behind insurance carriers' efforts to push
cases to trial. "The larger companies feel that if they do this for a
while it will have a chilling effect on the plaintiffs' bar, and fewer
of these cases will get filed," he says.

Because of these potential conflicts and others, defense attorney
Gregory Miller, a partner at the Crawfordsville, Ind., firm Wernle,
Ristine & Ayers L.P.C., says he was surprised that Judge Boehm failed to
provide ethical guidelines to assist insurance attorneys in their
defense of policyholders. "The lack of guidelines will probably result
in additional litigation to hash those areas out," he predicts. (The
Corporate Counsellor, Vol. 14; No. 6; Pg. 4, November 1999)


* Medical Insurers Revise Rules & Cost Control in Face of Backlash
------------------------------------------------------------------
Some of the nation's biggest insurance companies say they are changing
their tactics as they face a surging backlash against managed care.
Hoping to blunt the attack in Congress and the states, which has upset
investors and depressed stocks of managed care companies, some insurers
have eliminated or cut back on unpopular rules. They no longer require
prior approvals for diagnostic tests or admission to a hospital, or
referrals by a gatekeeper doctor for consultations with specialists.

Employers and economists worry that relaxing these mainstays of cost
restraint may unleash a new round of inflation; cost increases are
already climbing into double-digits.

But the insurance companies still have powerful cost-control weapons,
both old and new, including some that are resented by doctors, hospitals
and patients. Among the most important is more pressure than ever on
hospitals to send patients home as soon as possible. Insurers like
Humana and Kaiser Permanente are paying doctors to take over patients'
cases in hospitals with an eye toward speeding up care and blocking
unnecessary tests. Empire Blue Cross and many other companies are also
monitoring patients with serious illnesses more closely to avert the
need for hospitalization or emergency room care.

The insurers are also trying to persuade doctors to practice the way the
most effective doctors do. Companies like Aetna U.S. Healthcare and
UnitedHealthcare provide computerized records that show doctors how they
compare with peers around the country on everything from timely cancer
screenings to flu shots. Insurers like Aetna and Empire are also
prodding doctors by sending them lists of patients due for a reminder
that it is time for a test.

The insurers have not forgotten, of course, how to negotiate lower fees
for doctors and hospitals, argue over and delay payments, or refuse to
pay for certain treatments. And they continue to shift more costs to
patients. For instance, most health plans have sharply raised the
patient's share of drug costs to as much as 30 percent or 40 percent for
some expensive drugs, from as little as no charge at all or $5 to $15
per prescription.

The companies have not jettisoned all their "mechanisms" for pressuring
doctors and hospitals, said Woody Grossman, a health care expert in
Dallas with the PricewaterhouseCoopers consulting firm. For example, he
said, they may make public doctors' and medical groups' track records.

But insurers are emphasizing most that they are softening or eliminating
several unpopular practices ushered in by managed care. The
UnitedHealthcare Corporation, the second-largest health insurance
company after Aetna Inc., announced last month that it was virtually
ending the prior reviews of medical decisions, which physicians
denounced as second-guessing. United said it had been approving 99
percent of the decisions anyway.

Health insurers around the country rushed out "me, too" statements. Most
companies said they were already offering employers a choice of less
restrictive plans while retaining the restrictions in other plans.

United said it was retraining 1,200 nurses who used to hold sway over
approvals for most requests by physicians. To save on hospital costs and
improve care, the nurses will track seriously ill patients, pressing
hospitals to treat and discharge them promptly, and arranging follow-up
care at home.

Many of the 49 state and regional Blue Cross and Blue Shield plans are
making other changes that are intended to appeal to customers. "We will
have all new products next year," said Bob Greczyn, president of Blue
Cross and Blue Shield of North Carolina, the state's largest health
insurance company.

To reduce the expense and annoyance of cumbersome paperwork, it is
consolidating and shortening forms. One new program offers Blue Cross
members 25 percent discounts on services like personal trainers, massage
therapists and acupuncturists, with no insurance paperwork at all.

The North Carolina plan, like a number of big insurance companies, will
routinely steer members with serious or chronic diseases into programs
that remind them to take their medicines, eat and exercise appropriately
and have checkups, again in an effort to keep them out of emergency
rooms.

A number of big national managed care companies, including United, Aetna
and Humana Inc., and Blue Cross plans in New York and California, are
using advanced electronic software to track doctors and patients, based
on information from claims for reimbursement.

Aetna and United, for example, give doctors periodic reports comparing
them with similar doctors in their region. A United report in October on
members treated by the Eagle Physicians group in Greensboro, N.C.,
showed 87 percent received a recommended blood pressure drug after
congestive heart failure, up from 76 percent in January. That compared
with 70 percent, on average, for similar primary care patients in North
Carolina.

"It's a step in the right direction," said Dr. Jim Osborne, an internist
who is treasurer of the Eagle group, which includes 50 doctors. Eagle
posted the United results on its Internet site.

At Aetna, Richard Huber, the chief executive, said quarterly reports
would be sent next year to 44,000 primary care groups, describing in
detail how they compare with peers in dealing with heart, asthma and
diabetes problems.

For heart patients, Aetna reports on 21 items like flu and pneumonia
vaccinations, taking drugs that reduce cholesterol and blood pressure
levels, visits to doctors and emergency rooms and feedback on whether
patients were satisfied with the care. "Giving physicians data showing
the best practices is clearly superior to giving them a couple of extra
dollars" in bonus money if they meet certain standards, said Dr. Dennis
Tafflin, a family physician in Doylestown, Pa., whose four-doctor group
has 3,300 Aetna patients.

For pressing problems like asthma, when an Aetna member buys an oral
steroid, indicating a flareup, a nurse telephones the next morning to
check on the person's condition. There may be a home visit and
suggestions for care to make sure that the member does not end up in the
hospital, said Dr. Carol Diamond, president of USQA, an Aetna unit.

Besides making greater use of data bases and information technology, the
companies can still draw on older methods to get their way. "I don't
believe you are going to lose cost control," said Joe Thompson, a vice
president of the Minnesota Mining and Manufacturing Company, which has
36,000 United States employees.

The insurance companies can still brandish their bargaining power, based
on millions of members, to keep down payments to doctors and hospitals.
And they still retain, although rarely use, the threat of rejecting
doctors or institutions that object. Although some states restrict
financial rewards for skimping on care, some companies still offer
bonuses as rewards for desired behavior. In New York and a number of
other states, some insurers reject hospital charges for days when
patients had no treatments.

"We still have some companies that are fairly intrusive," who make it
difficult to get a test done, said Dr. Hal Stoneking, an internist with
Eagle Physicians in Greensboro. "Others have been user-friendly from the
get-go."

Most companies still require prior approvals for expensive procedures
like M.R.I. scans. Aetna requires approvals for about 20 procedures.
Even United still requires approval for treatment of mental health
conditions and alcohol and drug abuse.

Even when they drop prior approval, health plans still must be notified
before expensive treatments. The plans hope that notification will have
"a sentinel effect," reminding doctors of company guidelines. And, of
course, they still review each case after the fact and refuse payment
for procedures like cosmetic surgery that they do not cover.

Using another tactic, some insurers contract with doctors called
hospitalists, who take over from a patient's primary physician while the
patient is hospitalized. Managed care hospitalists work closely with
company nurses to shorten hospital stays.

The hospitalist typically is in full charge of the patient, and some
primary care doctors contend that the practice could jeopardize
patients' long-term relationships with their doctors. But Humana says
its hospitalists keep the primary doctors informed. Experts who have
monitored the process say that any doubts about a hospitalist's medical
decisions can be taken to the hospital's own reviewers by other doctors
and nurses on the case.

Analysts said that by distancing themselves from medical decision
making, the insurers may insulate themselves against medical malpractice
lawsuits. But the backlash intensified last month as lawyers for health
plan members filed the latest of at least 12 class-action lawsuits since
early October. The suits essentially seek to force seven companies --
Aetna, the Cigna Corporation, Foundation Health Systems, United, Humana,
Pacificare Health Systems and the Prudential unit of Aetna -- to
eliminate financial incentives for restricting care.

Congress is also working on measures to rein in managed care companies,
like a bill passed by the House this year that would allow patients to
sue such companies. The issue will stay alive in the pre-election
session next year. Without waiting, California and Georgia recently
authorized lawsuits against the companies, following the example of
Texas.

"The backlash against managed care is hard to reverse," said Katherine
Swartz, an associate professor at the Harvard School of Public Health.
She argued that the companies had lost the trust of consumers because
they failed to keep "basic promises" to "deliver better quality medical
care at lower prices."

Under the heading "The Death of Managed Care as We Know It," in a
special issue of The Journal of Health Politics, Policy and Law,
Professor Swartz said it might be that managed care organizations
"inherently contain structural problems that make it impossible for
consumers to trust physicians in managed care." (The New York Times
December 3, 1999)


* Nationwide Insurance Suspends Specifying Aftermarket Crash Parts
------------------------------------------------------------------
Reacting to a spate of lawsuits over the use of aftermarket crash parts,
Nationwide Insurance announced that it has suspended specifying
replacement crash parts made by other than the original equipment
manufacturer, effective Nov. 8. "Given the current environment
surrounding non-OEM crash parts, the company feels that it is
appropriate to temporarily suspend the specification of such parts," the
company said.

Nationwide is the nation's fourth largest auto insurer, and the policy
applies to affiliates Allied and Farmland insurance companies, based in
Des Moines, Iowa, and Scottsdale Insurance, based in Scottsdale, AZ.
State Farm, the largest auto insurer, has suspended specifying
aftermarket parts pending appeal of a $ 1.2 billion verdict against it
in a class action brought in Illinois. Similar litigation is pending
against other companies.  (Federal & State Insurance Week, No. 44, Vol.
13; Pg. NA, IAC-ACC-NO: 57825085, Nov-15-1999)


                               *********


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
Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc.,
Washington, DC.  Theresa Cheuk and Peter A. Chapman, editors.

Copyright 1999.  All rights reserved.  ISSN 1525-2272.

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