Columbia University School of Law
Foundations of the Regulatory State
Law 6110, Section 5
Professor Avery Wiener Katz
Final Examination
May 13, 2005
Instructions:
- This exam consists of 7 pages, including this cover sheet. Please check now to ensure your copy is complete.
- Your exam is due 8 hours after you pick it up, or at 6 pm on Friday, May 13, whichever is earlier. You must return your exam in person, and must return your copy of the exam questions at the same time. If during the exam you have any questions regarding its administration, you should contact the office of Academic Services and they will contact me if necessary.
- The exam is open book; you are free to consult any written or electronic materials and are expected to have all assigned course materials available. Additional research is discouraged, however, and is more likely to detract from your exam performance than improve it. To the extent you rely on the course materials, formal references are not necessary; to the extent you rely on outside materials, they are required.
- Please follow the instructions for each question carefully. If you feel that any of your answers depend on facts not provided in the question, you should say so and state clearly any additional assumptions you are making.
- There are two questions on the exam, each with a separate 1000-word limit. You may not use any leftover space from one question in answering the other; and any attempt to use shorthand or nonstandard abbreviations will be counted as if full words were used.
To ensure compliance with the word limit, you must provide a word count for each question. Answers exceeding the word limit will be penalized by reducing their score in proportion to the excess.
- To ensure that you receive full credit for your answer, please: (a) write or print your exam ticket number on all pages of your exam; (b) begin your answer to each question on a new sheet of paper; (c) use double spacing and 1-inch margins, so that I have enough room to make notations on your exam; (d) if you write your exam by hand, write legibly.
- I recommend that you spend about 2 hours reading the exam, thinking about your answer, and outlining your response. Writing the exam should take no more than 4 hours. This leaves 1 hour to edit and proofread your answer and 1 hour for eating, traveling, etc.
- I will notify you when grades are ready and will post a feedback memo on the class website as soon as possible after that. Good luck on the exam, congratulations on completing your first year of law school, and have a good summer.
Question 1 (50% of exam, 1000 word limit)
In American Car Rental, Inc. v. Commissioner of Consumer Protection, 273 Conn. 296, 869 A.2d 1198 (2005), the Connecticut Supreme Court held that a $150 fee, imposed by a car rental agency on customers each time they drove at a speed continously exceeding 79 miles per hour for two or more minutes, violates the Connecticut Unfair Trade Practices Act (CUTPA).
The rental agency had enforced this policy using global positioning system (GPS) devices that it installed in its vehicles to track each vehicle's speed and location. Whenever a vehicle's installed GPS device calculated that the vehicle had been exceeding seventy-nine miles per hour for two minutes or longer, the device, using wireless technology, transmitted the vehicle's location and speed to the rental agency, which then charged the speeding fee to the customer's credit or debit card.
The court’s holding that the speeding fee violated CUTPA was based on two major factors: first, that the rental agency had failed adequately to disclose to its customers the existence and operation of its fee and monitoring systems, and second, that the fee was an illegal penalty because it vastly exceeded any plausible measure of the extra wear and tear suffered by a vehicle being driven at excessive speed. These factors, the court held, were sufficient to satisfy one of three established doctrinal criteria for determining when a practice is unfair under CUTPA — namely, whether the practice offends public policy. (The court indicated in dicta that because this criterion was satisfied, it was not necessary to inquire whether the practice violated the two other established criteria under the statute: whether it is “immoral, unethical, oppressive, or unscrupulous,” or whether it causes substantial injury to consumers, competitors or other businesses.)
You are counsel and head of policy analysis for the Connecticut state insurance commissioner. Your office has been contacted by the plaintiff car rental company and by their automobile insurance carrier, who plan to move for a rehearing and reconsideration of the decision in this case. They have asked whether your office would be interested in filing an amicus brief that would allow car rental agencies more leeway in imposing such fines or penalties for speeding or otherwise unsafe driving, albeit with somewhat more notice to consumers than was provided on the facts of this particular case. The views of your office would be particularly helpful to the court in reconsidering its decision, the plaintiffs suggest, both because of your office’s expertise in issues of consumer protection with regard to the language of insurance policies, and because of your longstanding record of concern with highway safety and the costs of automobile accidents. In this regard, the plaintiffs also suggest that private GPS systems could provide a potentially important regulatory tool to promote highway safety.
Your assignment is to write a memo of no more than 1000 words that outlines the main issues your office might wish to raise in an amicus brief that addressing public policy issues surrounding monitoring and fee systems of the sort employed by the plaintiff car rental agency. In your memo, in addition to indicating the positions that you think your office should take, you should also identify the strongest counterarguments to your positions and how best to respond to them.
Please note, however, that you should not spend any time in your memo addressing the issue of whether the plaintiff’s fee should be regarded as a penalty under the law of contracts, as that issue is being covered in other briefs to be submitted by other parties. Your memo should be focused solely on issues of public policy.
Question 2 (50% of exam, 1000 word limit)
You are deputy director of legislative affairs for the National Conference of State Legislatures (NCSL), a bipartisan organization that serves as advocate for the interests of state governments before Congress and federal agencies. According to its mission statement, NCSL’s main purposes are "to improve the quality and effectiveness of state legislatures; to promote policy innovation and communication among state legislatures; and to ensure state legislatures a strong, cohesive voice in the federal system."
NCSL is currently in the process of making final revisions on a policy report, to be entitled "Medicaid Reform: A Comprehensive Approach" and to be issued jointly with the National Governors Association (NGA), another advocacy organization with which NCSL often cooperates. This report will set out the main positions and arguments that NCSL and NGA will put forward as they embark on an upcoming major lobbying campaign for reforming Medicaid, the federal government’s major program for offering health insurance to low income persons.
A recent article in the New York Times (attached to this exam as associated reading) suggests that this campaign will include proposals to (1) allow individual states the leeway to impose higher co-payments and deductibles on some Medicaid recipients with higher incomes; (2) allow individual states to offer different benefit packages for different populations or different geographic areas within their boundaries; of the state; (3) expand federal tax credits to help individuals and small businesses buy insurance; (4) extract additional savings from drug manufacturers by requiring them to provide increased discounts and rebates state Medicaid programs, and by encouraging the formation of multistate purchasing pools that will be able to take advantage of increased market power; (5) limit the ability of elderly people to qualify for Medicaid coverage of nursing home care by transferring assets to their children; (6) provide states with a fixed amount of federal money for long-term medical care, under which state officials would have broad discretion to use the money for nursing homes and home health care, but individuals would not have any entitlement to such services; (7) relax states’ obligation to provide treatment of any health problems discovered in periodic examinations of children under the age of 21.
Because of the large number of proposals involved in NCSL’s policy initiative, and because the arguments in favor of them need to be developed in some detail, the forthcoming policy report will primarily be used as a general reference document, and will not be suitable for use in individual advocacy settings. Accordingly, it is necessary to draft a shorter and more focused list of talking points, with supporting arguments, that NCSL and NGA representatives will rely on in preparing for discussions with individual legislators and legislative staff.
Your assignment is to choose three (3) of the above proposals and to draft a list of talking points relating to such proposals. This list should not exceed 1000 words. In addition, you should know that while the current lobbying campaign relates solely to Medicaid reform and your talking points should relate to that campaign, most observers expect that reform of Medicare — the program through which the government provides the bulk of its support for health insurance for older Americans, and which is forecast to incur deficits over the next several decades that are far in excess of those projected for Social Security — will also soon be on the public agenda. Thus, the Medicare issue will likely be on the minds of your audience as you make your arguments with regard to Medicaid.
"States Propose Sweeping Changes to Trim Medicaid by Billions," New York Times, May 9, 2005, p. 1
By ROBERT PEAR
WASHINGTON, May 8 - Governors and state legislators have devised proposals for sweeping changes in Medicaid to curb its rapid growth and save billions of dollars. Under the proposals, some beneficiaries would have to pay more for care, and states would have more latitude to limit the scope of services.
The proposals, drafted by separate working groups of governors and state legislators, provide guidance to Congress, which 10 days ago endorsed a budget blueprint that would cut projected Medicaid spending by $10 billion over the next five years.
Many of the proposals resemble ideas advanced by President Bush as part of his 2006 budget. In some cases, the governors embrace Mr. Bush's proposals but go further. At the same time, they also reject some of the president's recommendations that they believe would shift costs to the states.
John Adams Hurson, a member of the Maryland House of Delegates who is president of the National Conference of State Legislatures, said: "I am a Democrat, a liberal Democrat, but we can't sustain the current Medicaid program. It's fiscal madness. It doesn't guarantee good care, and it's a budget buster. We need to instill a greater sense of personal responsibility so people understand that this care is not free."
A coalition of beneficiary advocates, labor unions and health care providers is already gearing up to fight any significant cutbacks in Medicaid. The coalition includes AARP, Families USA, pediatricians, hospitals and nursing homes.
State officials say their goal is not just to save money, but also to avoid wholesale cuts in coverage like those in Tennessee, which is dropping more than 300,000 people from its Medicaid rolls, and in Missouri, which is dropping 90,000. Medicaid, the nation's largest health insurance program, covers more than 50 million low-income people. Though originally intended for the poor, it now covers people with incomes well above the poverty level in some states.
The National Governors Association and the National Conference of State Legislatures are still refining their proposals, with the aim of getting their recommendations to Congress for action this year. States, they say, should be allowed to impose higher co-payments and deductibles on Medicaid recipients with higher incomes.
Moreover, they say, states should not have to offer the same comprehensive set of benefits to all Medicaid recipients, but should be allowed to provide some people with more limited benefits, like those offered by commercial insurers and the Children's Health Insurance Program.
States should be able to establish "different benefit packages for different populations, or in different parts of the state," the governors say in a draft of their new policy. The proposals developed over the last month by governors and state legislators have a substantial chance of becoming law. Congressional leaders have expressed a desire to rein in Medicaid costs, appear ready to act and are just waiting for advice from state officials. "We want to invite the governors to the table," said Representative Jim Nussle, Republican of Iowa, who is chairman of the House Budget Committee and a potential candidate for governor next year.
With Medicaid, as with welfare, states have an influential voice because they help finance the program. Federal and state spending on Medicaid has grown an average of 10 percent a year over the last five years - much faster than federal or state revenues - and now totals more than $300 billion annually. Drug prices and hospital costs have risen at a brisk pace, but the increase in enrollment is a more important factor.
From 2000 to 2004, according to the Congressional Budget Office, the number of Medicaid recipients grew by one-third. This growth coincides with the erosion of employer-sponsored health benefits. As employers have cut back coverage and raised premiums, private insurance has become less available and less affordable to low-wage workers.
In recent months, the governors have drafted at least three versions of a paper titled "Medicaid Reform: A Comprehensive Approach." The documents, obtained by The New York Times, offer a vision of "Medicaid plus health care reform," including "incentives and penalties for individuals to take more responsibility for their health care."
The governors endorse the idea of tax credits to help individuals and small businesses buy insurance. Such credits, they say, could slow the increase in the number of people becoming eligible for Medicaid.
In their draft proposal, marked "for comment only - not for distribution," the governors say they believe that "Medicaid overpays for prescription drugs." Mr. Bush wants to reduce Medicaid payments to pharmacies, but the governors say Medicaid must also extract savings from drug manufacturers.
To achieve this goal, the governors say, Congress should increase the discounts and rebates that drug companies are required to provide state Medicaid programs - a change opposed by drug makers. In addition, the governors say, Congress should encourage the formation of multistate purchasing pools to buy drugs at lower prices for Medicaid recipients, state employees and others in public programs.
State officials generally support Mr. Bush's proposal to limit the ability of elderly people to qualify for Medicaid coverage of nursing home care by transferring assets to their children. The governors say such restrictions "should be encouraged," because "Medicaid can no longer be the financing mechanism for the nation's long-term-care costs." Medicaid now pays for about two-thirds of nursing home residents.
Mr. Hurson, the president of the conference of state legislatures, who is also chairman of the health committee in the Maryland House, said, "Medicaid was never intended to be a middle-class entitlement program for nursing home care."
State legislators have discussed a proposal to give states a fixed amount of federal money for long-term care, a sort of block grant that would automatically be increased each year to keep pace with medical costs and demographic changes. State officials would have broad discretion to use the money for nursing homes and home health care, but individuals would not have an entitlement to such services.
State legislators are still weighing this proposal, which they know would be contentious because the legal entitlement to benefits is a bedrock of the Medicaid program. Under current law, Medicaid officials cannot charge co-payments to pregnant women and cannot charge for specific services like family planning and emergency care. For other services, the maximum co-payment is generally $3.
"These rules, which have not been updated since 1982, prevent Medicaid from utilizing market forces and personal responsibility to improve health care delivery," the governors say in the latest version of their policy statement.
Governors seek "broad discretion" to set premiums, co-payments and deductibles, subject to certain limits. Congress, they say, could establish "financial protections to ensure that beneficiaries would not be required to pay more than 5 percent of total family income."
A more modest proposal, the governors say, is to charge higher co-payments to families with incomes above certain levels, say $22,000 a year for a family of three. Or, they say, states could charge co-payments to deter the overuse of specific services, including inappropriate use of hospital emergency rooms.
Advocates for Medicaid beneficiaries said such charges would discourage people from seeking care, so their ailments would worsen and treatment would cost more.
State officials also want to change what they see as one of the most onerous requirements of the Medicaid law. Under this provision, states must treat any health problems discovered in periodic examinations of children under the age of 21. About half of the states have been successfully sued under this provision. The National Conference of State Legislatures says Congress should "provide more flexibility for states" to limit this benefit.
Jane Perkins, who has represented Medicaid recipients as a lawyer at the National Health Law Program, said "it would be a tragedy" if such changes were made. "These children need the full range of services because they are likely to have greater needs, more chronic illnesses and disabling conditions," she said.
Governors also want Congress to make it easier for them to persuade federal courts to set aside orders relating to their Medicaid programs.
END OF EXAM