Other stories below: 3,000 rally for malpractice reform... Just compensation bill advances in House... Chief justice complains courts are 'severely underfunded'... Legislative Actions... Bills of Interest Introduced This Week... Growth in N.C. tourism outpaced the nation... Car insurance rates to decline 15 percent... Audit recommends merging Smart Start, More At Four... For first time in two years, N.C. jobless rate no worse than nation's... House elects eight to UNC Board of Governors... Washington Update.


House leaders whittle down governor’s
revenue package as work picks up on budget

There aren’t enough votes in the House to pass Gov. Easley’s plan to continue all $460 million in taxes set to expire June 30, Democratic Speaker Jim Black and Republican Speaker Richard Morgan said Wednesday, but they believe that can get at least 61 votes for a $380 million revenue package. After counting noses, Black and Morgan came out in favor of continuing the half-cent state sales tax and the higher income tax rates on wealthy individuals. They said they disagree with the governor about delaying enactment of two income-tax breaks -- elimination of the marriage penalty and increasing the child tax credit. Separately, they said they also planned to oppose Easley's proposal to withhold $23 million in aid to local governments.

With those strong signals from the House leaders, the House Appropriations Committee now knows it will have to cut $80 million from the governor’s $15 billion budget to keep it balanced, which will be hard to do considering Easley’s plan already anticipates $836 million in cuts. That also assumes there are enough votes in House Finance to support continuing the half-cent sales tax, which some observers doubt.

Members of the House Appropriations Committee on Tuesday proposed a 5 percent increase in UNC System tuition and a 3.2 percent increase in community college tuition. They also proposed an additional $50 million in cuts to education, health and human services and justice and public safety. That totals $78 million in spending cuts, almost exactly what the speakers need. The budget subcommittees completed their work Thursday, and the full House Appropriations Committee is scheduled to take up the budget bill on Monday at 1 p.m. Observers express surprise at how rapidly the House has moved on these tough budget issues. The chamber is on track to meet its goal of voting out a budget bill by April 18.

Easley’s proposal to freeze the state’s existing tax structure for two years, which NCCBI has said it won’t oppose, continues picking up support. The N.C. School Boards Association and the State Board of Community Colleges voted this week to support the governor’s budget reform proposals and his 2003-04 budget framework.


More on the Annual Meeting: Did we snap your picture at any of the festivities during the Annual Meeting? We’ve posted several of those at our web site for easy viewing, including pictures taken during the Chair’s Reception at the N.C. Museum of Art and the Annual Meeting Membership Reception.

3,000 doctors and healthcare professionals rally for malpractice reform
An estimated 3,000 doctors and other healthcare professionals swarmed around the Legislative Building on Tuesday, buttonholing members of the House and Senate in a massive demonstration of support for medical malpractice reform. They mainly asked for help with skyrocketing malpractice insurance rates, which they blamed on trial lawyers who persuade juries to award huge sums in pain and suffering cases.

The doctors urged legislators to pass H. 809 Ensure Health Care Access, a reform measure sponsored by a bipartisan majority of 72 House members. The legislation establishes a $250,000 cap on non-economic (“pain and suffering”) damages, allows periodic payments of future damages, places reasonable limits on trial lawyers’ contingency fees and bars the use of nursing-home inspection records in medical malpractice lawsuits.

The reform effort is being led by a coalition of the N.C. Medical Society, the N.C. Hospital Association and the N.C. Health Care Facilities Association. NCCBI threw its weight behind the effort Tuesday with a letter to all 170 legislators that endorsed H. 809. “The business community is severely affected when doctors, hospitals and skilled nursing facilities can’t provide healthcare to our employees because they can’t afford the processional liability insurance premiums,” the NCCBI letter said. The text of the letter is reprinted below.

The coalition says malpractice insurance rates now are so high that hospitals have scaled back some services, most doctors overprescribe tests and some specialists no longer offer high-risk procedures. Hospitals have experienced increases of 400 to 500 percent in three years in their professional liability insurance premiums. Doctors in key specialties, including those with no past claims history, had insurance premium increases of more than 50 percent last year. Many rural hospitals are losing money and some may be forced to close and some insurers have stopped writing coverage in North Carolina.

“Patients in Alleghany, New Hanover and other counties are already facing access issues because increasing professional liability insurance premiums are forcing their doctors to make hard decisions,” said Dr. Joseph Jenkins, chair of the N.C. Medical Society’s Professional Liability Task Force. “Without reasonable reforms, will they be able to continue to perform high-risk procedures, or even stay in practice?”

According to the National Association of Insurance Commissioners, the medical-loss ratio for North Carolina professional liability insurers increased from 58.77 in 1996 to 113.24 in 2001. This means that insurers are paying out $1.13 in claims for every dollar in premiums received. Medical Mutual, the largest professional liability insurer in the state, reports that in 2001 a record nine malpractice jury and settlement awards in North Carolina exceeded $3 million. The average award in these cases totaled $5.58 million, with the largest award reaching $15 million.

The U.S. Department of Health and Human Services has concluded that a leading cause of the national insurance crisis is the recent dramatic increase in jury awards and settlements. The federal agency cited North Carolina and Nevada as states with the most “mega” malpractice awards in recent years.

Other states have adopted similar laws and have seen far less dramatic increases in insurance rates. Professional liability insurance premiums have risen 167 percent in California since it adopted limits on pain and suffering awards in 1976. In that same time they have risen by 505 percent in the rest of the country. Twenty-six states impose some limit on non-economic damage awards or cap total damages in medical malpractice suits.

Just compensation bill advances in House
The House voted 93-18 on third-reading Thursday to pass legislation requiring local governments to pay fair market value for billboards and other structures that they force property owners to remove. The bill, H. 429 Just Compensation/Local Government Taking (=S. 534) now goes to the Senate. The measure is intended to stop the growing practice by local governments of enacting ordinances requiring billboards and other structures to be removed, without payment, over a period of several years. Rep. Bill Culpepper (D-Chowan) is the primary House sponsor. A final vote was expected Thursday. NCCBI has joined with 13 other statewide organizations in support of the bill. "This is eminently fair legislation," NCCBI President Phil Kirk said. "The U.S. Constitution and over 40 states require just compensation for the compelled taking by governments of legal non-conforming land uses." He pointed out that the legislation does not prevent cities and counties from enacting local ordinances that regulate the use of property within their jurisdictions or to require the removal of legal non-conforming property. Neither does it affect existing local government ordinances. Among the other statewide business groups endorsing the legislation are the N.C. Association of Realtors, N.C. Retail Merchants Association, N.C. Agribusiness Council, N.C. Outdoor Advertising Association, National Federation of Independent Businesses, N.C. Automobile Dealers Association, N.C. Petroleum Marketers Association, N.C. Glass Association, N.C. Independent Auto Body Association, and N.C. Service Station Association.





Chief justice complains courts are ‘severely underfunded’
Chief Justice I. Beverly Lake Jr. told the General Assembly on Tuesday that the courts system is not getting enough funding to do its job properly. "The citizens of North Carolina have a court system that is severely, I should say very severely, underfunded," Lake wrote in his 2003 report on the state of judiciary. "It is simply no longer possible to do more with less, as we have been doing over the past two years." Lake said state spending on the courts has dropped from $317 million two years ago to $304 million this year. Cuts proposed for next year would reduce the appropriation to $297 million, he said. The reductions come at a time when the courts’ caseload is rising 11 percent, Lake said. Lake asked that the General Assembly give the Administrative Office of the Courts the budget flexibility to spend its annual state appropriation as it sees fit. Now, the appropriation comes fixed for each line item. “This proposal will improve the management of the Judicial Branch budget in ways that have been recommended by blue-ribbon commissions since the 1950s,” Lake said. The chief justice’s appeal for more money likely will fall on deaf ears. Most Democrats in the General Assembly are still sore over the court’s intrusion into legislative redistricting. As a signal of its displeasure, the leadership didn’t invite the chief justice to deliver his annual report in person, as is customary. He sent over a typed copy.

Government efficiency bills filed in House
Last week we told you how pleased we were that Senate Majority Leader Tony Rand had introduced several pieces of legislation to implement recommendations of the Governor’s Efficiency Commission, which was chaired by NCCBI’s past chair, Jim Hyler. This week we’re happy to report that similar bills are popping up in the House, introduced by Reps. Bill Owens (D-Pasquotank) and Jerry Dockham (R-Davidson). The bills are listed below:

 H. 1052 Consolidate Administrative Functions - An act to provide for the consolidation of administrative functions within state government, as recommended by the Governor's Commission to Promote Government Efficiency and Savings on State Spending.
 H. 1053 Consider Sale or Lease of State Property - An act to directing the Departmental of Administration to review its inventory of state-owned property and recommend property that should be sold or leased to the private sector.
 H. 1067 A Joint Resolution Authorizing the Legislative Research Commission to Study the More Than Four Hundred Boards and Commissions in This State to Determine if There is a Need to Reduce the Size or Scope or Abolish Any of These Boards or Commissions.
 H. 1068 Statewide Benefit Committee Established - An act to establish a statewide State Employee Benefit Committee to evaluate and provide a menu of portable supplemental retirement benefits for all state employees, as recommended by the Governor's Commission to Promote Government Efficiency and Savings on State Spending.

Typical General Assembly candidate spent six figures campaigning
Candidates for the General Assembly spent $22.4 million on their campaigns last year, an average cost of $101,384 for each of the 170 seats in the legislature, according to Democracy North Carolina, an advocacy group in Carrboro. The think tank said the biggest spender won nearly 90 percent of all races. The average cost of winning a House seat was $61,060 and a Senate seat cost $198,150. Those numbers are more than three times what they were in 1992.

Legislative Actions
 The House on Tuesday gave second-reading approval to S. 51 (Clodfelter) Close Franchise Tax Loophole. Third reading on the bill was postponed until April 15.

 The House on Wednesday gave second- and third-reading approval to H. 462 (Alexander and G. Wilson) Health Insurance/Marriage & Family Therapists.

 The House on Thursday gave second- and third-reading approval to S. 338 (Queen and Tillman) Remove Sunset/Municipal Electric Service, and the Senate-passed bill was enrolled.

 The House on Thursday favorably reported H. 740 (C. Wilson) Job Growth Accountability Act, a measure strengthening the state Economic Development Board and making it more accountable as the entity responsible for all economic development efforts in the state.

 
Bills of Interest Introduced This Week

Note: This list was quite long last week because senators filed a flurry of bills to beat the Senate’s deadline for filing all but appropriation bills. The list is long again this week because House members are rushing to file bills to beat that chamber’s filing deadline.

 H. 913 (Brubaker and Saunders) Universal Telephone Service Provider - An act authorizing the North Carolina Utilities Commission to determine a time in which final rules concerning the designation of a universal service provider for telephone service shall be adopted.
 H. 914 (Brubaker and Saunders) Broadband Deployment Act - An act to provide a tax credit for placing into service broadband Internet access equipment.
 H. 915 (Brubaker) Manufactured Home Leasehold Estate Financing - An act to clarify that manufactured homes set up on leased property may be financed as a real property leasehold to allow the owners to obtain better interest rates
 H. 917 (Brubaker, Church and Hall) Conform Mortgage Lending Laws - An act to conform the laws related to permissible interest rates for home loans secured by second and subsequent mortgages to the laws governing permissible interest rates for home loans secured by first mortgages.
 H. 919 (Goodwin) Workplace Safety Tax Credits - An act to allow income tax credits for voluntary workplace safety efforts by employers.
 H. 920 (Sutton) ABC Availability In North Carolina - An act to provide that the availability of alcoholic beverages should be uniform throughout North Carolina.
 H. 921 (Frye and Rapp) Expedite Certain Highway Corridors - An act to require the Department of Transportation to expedite the completion within sic years the Goldsboro Bypass along U.S. Highway 70, U.S. Highway 17 that runs through Bertie County from south of Windsor to west of the Chowan River, and the segment of U.S. Highway 19E corridor that will give Madison, Mitchell, Yancey, and Avery Counties access to Tennessee markets.
 H. 923 (Luebke) Exempt Alternative Medicine/Practice Of Medicine - An act to exempt the practice of complementary or alternative forms of health care from the practice of medicine.
 H. 924 (Luebke) State Government EEO - An act amending the state personnel act to include sexual orientation, gender identity, and gender expression to the list of classifications covered by the state's Equal Employment Opportunity Law.
 H. 929 (Brubaker) Lemon Law for Commercial Vehicles - An act to expand the new Motor Vehicles Warranties Act ("Lemon Law") to vehicles of ten thousand pounds or more.
 H. 930 (Brubaker) Small and Medium Animal Operations Permits - An act to study the use of general permits for animal waste management systems for small and medium dairy, poultry, and animal operations and recommend any additional permit requirements that are needed to protect water quality.
 H. 931 (Brubaker) Farm Futures Pilot Program - An act to establish a farm futures pilot program that promotes collaborative efforts among federal and state agencies, universities, nongovernmental organizations, private enterprises, and landowners to protect and enhance working farms for purposes of supporting rural communities, producing safe and healthy food and fiber, protecting habitat for endangered and other wildlife and plant species, preserving open space, improving water quality and groundwater recharge, and increasing economic opportunities for existing and new farm families.
 H. 953 (Weiss and Hackney) Sedimentation Act Amendments - An act to strengthen the Sedimentation Pollution Control Act of 1973 and raise inspection fees.
 H. 955 (Blust) Line-Item Veto - An act to amend the North Carolina Constitution to grant the governor a line-item veto of appropriations items.
 H. 957 (Glazier) Paralegal Profession Act - An act to regulate persons who engage in practice as paralegals.
 H. 964 (Warner) Furniture Requirements Contracts - An act eliminating the requirement that the state purchasing officer determine whether three qualified vendors are available in furniture requirements contracts and clarifying the term qualified vendor in such contracts.
 H. 979 (Cole) Constitution On Transportation Funding - An act to amend the North Carolina Constitution, subject to approval of the voters of the state, limiting the governor from reducing or diverting funds appropriated by the General Assembly for transportation purposes.
 H. 985 (Ross, Munford, Miner and B. Allen) Sale Of Blount Street Property - An act regarding the sale of state-owned property in the Blount Street Historic District.
 H. 999 (Hackney and Sauls) Toner/Inkjet Cartridges - An act making void and unenforceable as a matter of public policy any provision or contract that prohibits the reusing, remanufacturing, or refilling of a toner or inkjet cartridge.
 H. 1002 (Setzer) Apply Lemon Law to Recreational Vehicles - An act to amend the New Motor Vehicle Warranties Act to apply to recreational vehicles.
 H. 1006 (Hunter) Manufactured Housing - An act to grant greater consumer protection to residents of manufactured housing in North Carolina.
 H. 1008 (Gibson) New ABC Permits Based on Existing Permits - An act to provide equity in the issuance of ABC permits by allowing permits to be issued based on existing permits.
 H. 1010 (Blust) Two-Thirds Vote to Levy Taxes - An act to amend the construction on North Carolina to require a two-thirds vote for the general assembly to levy state taxes.
 H. 1011 (Blust) Taxpayer Bill of Rights - An act to provide for reimbursement of expenses to a prevailing taxpayer in an administrative appeal or a lawsuit if the state was not substantially justified in maintaining its position against the taxpayer.
 H. 1013 (Blust) Lower Taxes By Cutting Waste And Incentives
 H. 1027 (Carney, Earle, Bordsen and Dickson) A House Resolution Requesting the Speakers of the House Of Representatives to Appoint a Blue Ribbon Task Force to Study Issues Related to Medical Malpractice.
 H. 1040 (Sauls and Gibson) Toner/Inkjet Cartridges - An act making void and unenforceable as a matter of public policy any provision in any agreement or contract that prohibits the reusing, remanufacturing, or refilling or a toner or inkjet cartridge.
 H. 1041 (C. Wilson) Administrative Procedure Act Rules/Small Business Economic Impact - An act to require agencies proposing permanent rules to consider the adverse economic impact of the proposed rule on small business; to require agency review of existing rules prior to amendment to determine the impact on small business; and to provide that agencies may not adopt rules that are more restrictive than applicable federal law governing the same subject matter.
 H. 1047 (Hackney) Abolish Alienation of Affection/Criminal Conversation - An act to abolish the civil actions of alienation of affectation and criminal conversation.
 H. 1054 (Glazier and Dickson) - Limit Medical Malpractice Insurance Premiums - An act to limit medical malpractice liability insurance premiums.
 H. 1088 (Barnhart and Miller) Consumers' Right-to-Know Act - An act to require credit reporting agencies to notify consumers when the agencies receive, within a twelve-month period pertaining to a consumer, three credit inquiries or a report that would add negative information to the consumer's credit file.
 H. 1090 (Blust) Independent Redistricting Commission/Constitutional - An act to amend the constitution to establish and independent redistricting commission.
 H. 1095 (Ross) Public Safety Officers' Right to Organize - An act amending the labor laws of North Carolina to allow public safety officers employed by the state or its political subdivisions to organize for the purpose of collective bargaining.
 H. 1096 (Moore) Medical Malpractice Witnesses/Discovery - An act to reduce the costs of medical malpractice actions by limiting the number of expert witnesses and by limiting discovery.
 H. 1101 (Bowie and Nesbitt) Restrict UNC Ownership of Certain Properties - An act to prohibit institutions of the University of North Carolina from financing, developing, owning and operating lodging facilities, conference centers and golf courses, except under certain circumstances.
 H. 1104 (Sexton) Unfair Trade Practices/Motor Vehicle Repairs - An act to provide that certain practices of insurance companies with regard to motor vehicle repairs are unfair methods of competition and unfair or deceptive trade practices.
 H. 1107 (C. Wilson) Utilize Review & Grievance Amendments - An act to amend the law governing managed care utilization review and grievance procedures to make them conform with the United States Department of Labor rule claims.
 H. 1109 (Gibson) Prohibit Workers' Compensation - An act to restore equity in workers' compensation recoveries by prohibiting waivers of subrogation in workers' compensation insurance.
 H. 1116 (Jeffus) Teacher Tax Credit - An act to create a credit against the income tax of public school teachers.
 H. 1121 (Alexander, Earle, Insko and Moore) Health Care Provider Professional Liability Insurance Changes - An act to require certain professional liability insurers to use experience and schedule rating plans and to establish premium stabilization accounts to mollify severe market cycle changes caused by decreases in investment outcome.
 H. 1145 (Nesbitt) Closure of Industrial Lagoons - An act to authorize the Environmental Management Commission to adopt temporary and permanent rules governing closure of industrial lagoons.
 H. 1148 (Nesbitt) No Secret Medical Malpractice Settlements - An act to provide that confidential settlements of medical malpractice actions are void.
 H. 1151 (Nesbitt, C. Wilson and Culpepper) Improve Rule-Making Process - An act to amend the Administrative Procedure Act to revise the procedure for adopting permanent and temporary rules, to create a procedure for the adoption of emergency rules, and to clarify the role of the Rules Review Commission.
 H. 1167 (McComas and Brubaker) Session Limits - An act to limit session length by limiting the number of days of per diem paid to members.
 H. 1172 (Nesbitt) Medical Malpractice Witnesses/Discovery - An act to reduce the costs of medical malpractice actions by limiting the number of expert medical witnesses and by limiting discovery.
 H. 1179 (McComas) Groundwater Protection Act - An act to protect groundwater as a current and future water resource and to encourage redevelopment of brownfields sites.
 H. 1180 (McComas) Groundwater Protection Act - An act to protect groundwater as a current and future water resource and to encourage redevelopment of brownfields sites.
 H. 1181 (Goodwin) Workplace Safety/Multiple Violations - An act amending the labor laws of North Carolina to provide for verification of full compliance with mandated corrective measures when there are ten or more serious workplace safety violations during an inspection at a single site.
 H. 1182 (Goodwin) Increase Civil Penalty for Workplace Death - An act amending the labor laws of North Carolina to increase the range of civil penalties that may be imposed when a workplace death occurs due to employer negligence.
 H. 1183 (Wood) Community Colleges Offer 4-Year Degrees - An act authorizing the State Board of Community Colleges to approve the establishment of bachelors degree programs at community colleges.
 H. 1192 (Owens, Clary and Baker) Leaking UST Cleanups - An act to require environmental service firms to secure performance bonds for leaking petroleum underground storage tanks cleanups.
 H. 1194 (Tolson) Establish E-NC Authority - An act to create the "E-NC" Authority to continue the work of the Rural Internet Access Authority.
 H. 1205 (McComas, Gibson, Sherrill and Haire) Franchise Not Required Smokestacks Landfills - An act to facilitate the implementation of the "Clean Smokestacks Act" by exempting sanitary landfills used for the disposal of waste generated by investor-owned public utility coal-fired generating units that are subject to the "Clean Smokestacks Act" from the requirement that franchises be obtained for the operation of those landfills.

State Government

Growth in N.C. tourism outpaced the nation
North Carolina remained the sixth most-visited state in the country in 2002, posting an increase in expenditures and visitor volume ahead of national averages, Gov. Mike Easley announced Monday at Governor's Conference on Tourism. ''Few industries in the nation have faced greater obstacles than the tourism industry and yet North Carolina's remains strong, attracting over 44.4 million visitors in 2002,'' said Easley. ''Tourism in North Carolina generated almost $12 billion dollars in revenue last year, and contributed over $1 billion in state and local taxes when we need it most.'' North Carolina trailed California, Florida, Texas, Pennsylvania and New York in travel and tourism in 2002. While states on average saw an increase in tourism volume of just 0.3 percent, North Carolina saw in a increase of more than 3 percent, from 43 million to more than 44.4 million. The tourism industry generated more than $2.2 billion in tax revenues, with $1.1 billion in federal taxes and $1.1 billion in state and local tax revenues.

Car insurance rates to decline by average 15 percent
The N.C. Department of Insurance and the N.C. Rate Bureau, which represents insurance companies, reached a settlement in the 2003 auto insurance rate case that Insurance Commissioner Jim Long said could save consumers nearly $500 million in premiums over current rates. The agreement represents only the third time in Long's 18 years as commissioner that the two entities have settled without going to court. Insurance companies in January submitted a rate file requesting a 10 percent reduction in rates but Long asked for a larger reduction. The two sides agreed on a 15 percent rate reduction, which will go into effect on July 1. Rates fell 17.8 percent last year. 

Audit recommends merging Smart Start and More at Four
A 15-month study of North Carolina’s Smart Start program released Wednesday by State Auditor Ralph Campbell recommends an independent review of the program’s evaluation procedures, that Smart Start and the More at Four programs be combined, and that Smart Start partnerships be required to follow state rules on purchasing, contracting and other functions.  “While Smart Start is recognized as a major early childhood initiative, after 10 years and $1.1 billion spent by the state, it is appropriate that we look to see where it can be adjusted to meet the outcomes that are expected,” Campbell said. Auditors found that Smart Start does not keep records on individual children that would allow their educational progress to be tracked. The lack of child-specific records and input from local school superintendents limits the effectiveness of any assessments. The report also recommended that the evaluation program conducted by the University of North Carolina’s Frank Porter Graham Child Development Institute be independently reviewed and validated since the Institute has been involved in the Smart Start program since its beginning.

For first time in two years, N.C. jobless rate no worse than nation’s
North Carolina’s unemployment rate fell to 5.8 percent in February from 6.0 percent in January, according to the Employment Security Commission. The U.S. unemployment rate also was 5.8 percent in February, up slightly from 5.7 percent in January. It was the first time since September 2000 that North Carolina’s unemployment rate was no worse than the national average. North Carolina’s total labor force was 4,147,363 in February, compared to 4,169,930 in January. Total unemployment decreased by 12,399, and total employment decreased by 10,168 over the month. Manufacturing continued a downward trend as the seasonally adjusted employment at 615,000 lost 7,300 jobs over the month and 41,700 over the year. Although the computer and electronic product industry showed slight gains, most manufacturing industries remained sluggish. Manufacturing’s average work-week increased only slightly from 39.3 hours in January to 39.5 in February, while the average weekly earnings increased approximately 75 cents. Workers in durable goods saw an increase in average weekly earnings of $5.75; however those in non-durable goods saw their weekly earnings drop $2.89 over the month. Manufacturing industries continued to suffer the largest job losses in February, shedding 7,300 jobs.

Briefly Noted: The North Carolina Supreme Court has denied a petition for discretionary review filed by NCCBI, the N.C. Home Builders Association and other groups over the state Environmental Management Commission’s powers over wetlands. The action upholds the state’s power to define as wetlands even small and only occasionally wet acreage and to regulate them as it does other bodies of water.
 

Names in the News

House elects eight to UNC Board of Governors
The House reappointed five and elected three new members of the UNC Board of Governors Thursday. By a vote of 99 to 16, the chamber reappointed Addison Bell, a Charlotte businessman; Patsy Perry, a retired educator from Durham; Gladys Robinson, an executive from Greensboro; Priscilla Taylor, a foundation executive from Chapel Hill; and Peter Keber, a Charlotte banker. The new members are Cary Owen of Asheville, who served on the board from 1995 to 1999; Leroy Lail, a businessman from Hickory; and Brent Barringer, a Cary attorney. This was the first time the House has elected members of the UNC Board of Governors since the repeal of a quota system that required representation by African-Americans, women and members of the minority political party. But like the Senate did when it recently chose board members (see April 4 Bulletin), the House selected candidates who generally fit that pattern. The eight winners include four Democrats and four Republicans; two are African-American and four are women.

 C. Richard Vaughn of Mount Airy, chairman and CEO of the John S. Clark Co. Inc., was reappointed by Gov. Mike Easley to the N.C. State University Board of Trustees. Vaughn has served on the State board of trustees since 1999. He received his bachelor’s of science in nuclear engineering from N.C. State in 1961.

 John G. B. Ellison Jr. of Greensboro and Robert W. Winston of Raleigh were appointed to the UNC-Chapel Hill Board of Trustees by Gov. Mike Easley. Ellison is the president and CEO of The Ellison Co. Inc. Ellison received his bachelor’s degree in history in 1969 and his master’s in business administration from Carolina in 1972. Winston is the CEO of Winston Hotels Inc. He graduated from Carolina in 1984 with a bachelor’s degree in economics and political science.

 Bob Hensley, the six-term Democratic legislator who did not seek re-election to his House seat last fall, has begun working as a registered lobbyist for Blue Cross Blue Shield of North Carolina.

 Employees of Mount Olive Pickle Co. will receive a Carolina Star flag from Labor Commissioner Cherie Berry during ceremonies at the plant on April 22. To receive the Carolina Star, companies must meet all relevant OSHA standards and have ongoing safety and health programs. They must also achieve injury and illness incidence rates and lost workday case rates at 50 percent below the state average for their type of business. Mt. Olive’s three-year accident and injury rate is 2.3, compared to the North Carolina industry average of 5.3. Only about 50 companies statewide have achieved Carolina Star status.

 Michael Bonfoey of Waynesville was appointed by Gov. Mike Easley as district attorney for the seven western counties that comprise the 30^th Judicial District. Bonfoey, a 1976 graduate of the UNC Chapel Hill law school, is a partner in the Brown, Ward and Haynes law firm. He fills the vacancy created by the recent death of Charles Hipps, who has served as the area’s district attorney since 1990.

 George W. Little, a Southern Pines businessman and civic leader, announced Thursday that he will seek the Republican nomination for governor. Little, 61, has never held elective office but has been a major fundraiser for President Ronald Reagan and former governors Jim Holshouser and Jim Martin. Little, who has long supported the community colleges, is a member of the NCCBI Executive Committee.

Washington Update
A briefing on federal issues supplied by the National Association of Manufacturers

Strategy for Growth & Manufacturing Renewal: The NAM has launched a multi-year campaign for economic growth and manufacturing renewal that seeks to make every policymaker aware of the historic challenges facing manufacturers. Central as ever to the strength of our economy, its prospects for future growth and our national security, American manufacturing is nonetheless challenged by the most intense global competition in world history. This makes it impossible to raise prices. Yet, costs continue to rise -- often because of what government does or fails to do. When costs rise but prices can’t, something’s got to give -- and in the past two years, more than two million people who make things in America had to give too much, as that many manufacturing jobs were lost. We wish to work with you for the adoption of pro-growth policies that benefit not only manufacturers, but our entire nation and working families everywhere. Go to www.nam.org  for more information.

Economic Growth & Tax Relief: Memorial Day remains the goal for enactment of President Bush’s economic-growth package. The House seems inclined to keep the package near the $726 billion in tax relief that the President requested, but the Senate is more supportive of a smaller tax cut. With expedited individual and S-corporation rate cuts and expanded Sec. 179 expensing for small businesses, the sensible measure would help stimulate the economy and encourage durable growth. The elimination of the double tax on dividends has come under political fire.

Medicare Reform: The Bush Administration’s proposal for $400 billion to reform Medicare and provide a prescription drug benefit survived the budget resolution process. But there is still concern that lawmakers might pass a generous drug benefit without comprehensive reform of the fiscally troubled program. Program trustees recently issued a report that confirms the program’s unsettling financial footing. That would be a disaster for employer-based retiree health coverage.

Medical Liability: The House 3/13 adopted NAM-backed medical liability legislation (H.R. 5) that would help make health coverage more affordable for millions of Americans. The vote also represents NAM members’ initial victory in 2003 on the legal-reform front. Despite a full-court press from the trial lawyers’ lobby, the House approved the bill 229-196. Action now turns to the Senate, where legal-reform opponents will try to block action on medical liability reform.

Energy: Manufacturers, who use about one-third of the nation’s energy (including 40 percent of our natural gas and 30 percent of our electricity), are urging Congress to move quickly on a comprehensive, long-term energy policy. The House and Senate are expected to approve energy bills this spring, with final action possible this summer. The NAM is calling for legislation that will provide adequate and reliable supplies of energy at affordable prices by increasing supply, improving infrastructure and incentivizing energy efficiency.

Class-Action Reform: A recent $10 billion class-action decision by an Illinois state court against Philip Morris may be the most recent example of state courts running roughshod over the Constitution’s Interstate Commerce Clause and trying to impose national regulation. The case further justifies the need for federal legislation to close massive loopholes in laws regarding class-action litigation. Industry supports S. 274 and H.R. 1115, legislation that would curb trial lawyer forum shopping by shifting major class action litigation to federal courts, which are better equipped to deal with complex cases fairly and efficiently. The bills also contain a Consumer Bill of Rights to ensure that all claimants are able to collect their share of the settlement. Senate and House debate on the bills could occur this spring.

Foreign Sales Corporation/Extraterritorial Income (FSC/ETI): EU-member states have finalized a list of U.S. exports for more than $4 billion in retaliatory sanctions authorized last year by the WTO. This list targets 1,700 products in the textile, agriculture, machinery, electronics and chemical sectors, among others. The European Commission must first approve the list, which will then be presented to the WTO for final authorization. Meanwhile, Congress is about to begin debating alternative tax regimes to replace the FSC/ETI regime.

Superfund Taxes: Superfund tax amendments were defeated in the Senate on 3/25 and 4/2. The first vote came during floor action on the Senate budget resolution; the second during the Finance Committee markup of an energy tax incentives bill.  Superfund taxes are not a “polluter pays” tax. More than 40 percent of Superfund taxes are levied on nearly all businesses (except for the very smallest) via the Corporate Environmental Income Tax. There is never a good time to raise taxes, particularly not now with 32 straight months of manufacturing job losses.


Supreme Court ruling limits punitive damage awards
The United States Chamber of Commerce hailed Monday’s ruling by the U.S. Supreme Court that threw-out an excessively large punitive damage award and determined punitive damages must be reasonably in-line with actual damages. “This is a serious set back for class action trial lawyers seeking large damage awards,” said Thomas Donohue, U.S. Chamber president and CEO. “The Supreme Court has sent a strong signal that punitive damages that are out-of-whack in relation to actual damages are unconstitutional.”

The case before the Supreme Court arose after a jury sided with Curtis and Inez Campbell against State Farm, the Campbell’s auto insurer. The $145 million in punitive damages awarded by the jury was 145 times greater than the $1 million in actual damages assessed by a lower court judge. The Chamber filed an amicus brief with the Supreme Court, citing previous court rulings that limited punitive damages to a single-digit multiplier, usually not exceeding 4 times actual damages. And, the chamber argued that a state should not impose punitive damages for conduct that occurred outside that state. In making its decision, a 6–3 majority of the court agreed.

On behalf of the majority, Justice Anthony Kennedy wrote, “a jury may not use evidence of out-of-state conduct to punish a defendant for action that was lawful in the jurisdiction where it occurred.” He also held that the Constitution’s guarantee of due process would not uphold a large disparity between actual and punitive damages, writing, “we have no doubt that there is a presumption against an award that has a 145-1 ratio.”

“This decision shows the court has come down squarely behind reason and fairness – punitive damages must be in-line with actual damages,” Donohue said.  “Disproportionate punitive awards, like the one in the State Farm case, threaten the ability of businesses to operate and excessive awards serve only to enrich a few, while undermining the public good.”



Text of NCCBI letter to legislators supporting medical malpractice reform

Date:    April 9, 2003
To:        Members of the North Carolina General Assembly
From:    Phillip J. Kirk, Jr., President; Leslie H. Bevacqua, Vice President of Governmental Affairs

One of the most important issues to North Carolina’s business community is healthcare – that of our employees and all North Carolinians.

North Carolina Citizens for Business and Industry endorses House Bill 809, Ensure Access to Healthcare. This is a bi-partisan bill signed by a majority of House members, that makes good changes to laws that will help ensure that all North Carolinians, especially those in rural areas of our state, continue to have obstetricians to deliver babies, and other critical services such as cardiac, orthopedic, neurosurgical and primary care.

In recent months, both the U.S. Department of Health and Human Services and the American Medical Association have identified North Carolina as a “state in crisis” due to the dramatic increase in professional liability insurance premiums.

The business community is severely affected when doctors, hospitals and skilled nursing facilities can’t provide healthcare to our employees because they can’t afford the professional liability insurance premiums.

We hope you will look carefully at the need to ensure that all North Carolinians have access to quality healthcare, and will support House Bill 809, or a similar bill that may come from the Senate.

North Carolina simply cannot be in the business of denying our citizens in any part of our state access to health care. To ensure access to health care, NCCBI believes that the contents of House Bill 809, especially a limit on non-economic damages and ending the collateral source rule, are important first steps toward bringing common sense and balance back to our civil justice system.

Thank you for your concern and your action to ensure access to quality healthcare.

END OF NEWSLETTER