Daily Archives: June 9, 2004

Judge Hittner goes nuclear on Mike DeGeurin

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U.S. District Judge David Hittner today took the unusual step of issuing a ten page order admonishing prominent Houston criminal defense attorney, Dick Degeurin, for sending a background report about DeGeurin’s client, Lea Fastow, to the Bureau of Prisons.
Mrs. Fastow, wife of ex-Enron Chief Financial Officer Andrew Fastow, was ordered this week to serve her term for a tax misdemeanor in the cell block-like downtown Houston Federal Detention facility starting in July. DeGeurin had been trying to arrange for her to serve the year in a more comfortable federal minimum security unit in Bryan. DeGeurin’s letter to the Bureau indicated he was sending the report so that the Bureau had all the possible information on Mrs. Fastow before assigning her to a facility to serve her one-year sentence.
Presentencing background reports are routinely sent to the Bureau and both the prosecution and the defense requested that one be sent in this case. However, Judge Hittner refused to send the report in this case, reasoning that the report was based on the felony charges that the government dropped when Mrs. Fastow pled to a misdemeanor tax evasion charge. Judge Hittner contended that the lawyers waived a new report, but DeGeurin and the prosecution apparently did so only because a report already existed and they thought it was fine to send to the Bureau.
Judge Hittner took the unusual step of distributing his order regarding DeGeurin to all the district judges in the Southern District of Texas saying DeGeurin “circumvent(ed) the rulings of the court, as well as the procedures of the United States Probation Office and Federal Bureau of Prisons.”
Judge Hittner previously refused to accept a 5-month prison plea bargain for Mrs. Fastow. Although this is speculation, I suspect that Judge Hittner has not been pleased with the way in which the Enron Task Force handled the case against Mrs. Fastow — i.e., prosecuting her until her husband cut a plea bargain and then agreeing to a minimum level plea with Mrs. Fastow that indicated that they really were not serious about the prosecution in the first place. However, I have no idea why the judge has gone off on DeGeurin, who appears to have done nothing other than vigorously represent his client.
One thing looks certain — I suspect that all parties in any future Enron criminal prosecutions that land in Judge Hittner’s court will file joint motions to recuse him from the case. It was somewhat surprising that Judge Hittner handled the case against Mrs. Fastow because he was a former Enron Corp. shareholder. Neither the prosecution nor the defense in Mrs. Fastow’s case raised that fact as grounds for the judge’s recusal.

Professor Porter tackles health care finance

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Michael E. Porter is one of 15 current University Professors at Harvard and one of America’s foremost business theorists. This Boston Globe article reports on Professor Porter’s latest research project — America’s dysfunctional health care finance system.

In a long essay in the June edition of Harvard Business Review, the 57-year-old Porter argues for redefining healthcare competition on the level of specific diseases and treatments, rather than on the level of health plans, networks, or hospital groups. ”The wrong kinds of competition have made a mess of the American healthcare system,” contend Porter and his coauthor, Elizabeth Olmsted Teisberg of the University of Virginia. ”The right kind of competition can straighten it out.”

The article notes that the health care finance problem is the type of particularly knarly issue that Professor Porter enjoys taking on:

What attracted Porter to the healthcare sector, in fact, was its standing as a competitive industry that seemed to defy the laws of competition. In properly functioning businesses, from personal computers to mobile phones, product and process improvements drive down prices and costs, quality rises, markets expand, and uncompetitive players go out of business. In healthcare, costs are forever climbing, services are restricted or rationed, many patients receive poor care, preventable medical errors persist, and there are wide discrepancies in costs and quality among providers and across geographic areas.

Professor Porter and his collegue, Elizabeth Olmsted Teisberg of the University of Virginia, note that the antidote to what ails the health care finance industry is simple:

Porter and Teisberg have a deceptively simple diagnosis: Healthcare competition today works on the wrong level. The players — health plans, payers, providers, and doctors — engage in what the authors call ”zero-sum competition,” dividing value rather than creating it. They seek to transfer costs onto one another, limit access to care, hoard information, and stifle innovation, all to the detriment of patients.

The right kind of competition should occur at the level of preventing, identifying, and treating patients’ conditions and diseases, Porter and Teisberg assert. They call for collecting and disseminating information about the outcome of medical procedures, so patients can make intelligent choices about physicians and hospitals. They also recommend transparency in billing and pricing to reduce cost shifting, discrimination, and other inefficiencies. And they propose increased specialization by healthcare providers, resulting in more centers of excellence in conditions and treatments that compete for patients.

”There’s only one kind of competition that’s directly connected to healthcare value,” Porter maintained in an interview. ”And that’s the competition about who can do the best job of your prostate surgery, with the least complications and the best recovery records. That’s where the competition needs to be. Yet that kind of competition has been all but eliminated in the system, in a misguided effort to save costs.”

Although the Porter-Teisberg model reduces the government’s role in the health care finance system, the government would nevertheless have an important policing role:

Government would have a role, not as a ”single payer” or an insurer of last resort, but by blocking network restrictions, hospital consolidation, and multiple hospitalization bills, and helping to set a framework for reform through its Medicare program. The role of health plans, meanwhile, would be more akin to that of coaches and advisers, helping their members navigate the system and find the best care.

And what does Professor Porter think about the current level of debate over health care finance reform in the Presidential campaign?:

”The debate now is totally about cost shifting and not value creation” in healthcare. Could his proposal influence that debate?
”I hope so,” Porter said. ”I would love to challenge both candidates to see what they’re going to do to engage these issues.”

The type of innovative approach that the Porter-Treisberg model advocates –along with such concepts as the Health Savings Accounts described in this earlier post — is what is necessary to overhaul the increasingly obsolescent American health care finance system. Inasmuch as that system already accounts for almost 20% of federal expenditures and those expenditures are increasing rapidly, my sense is that we all would be better advised to require our Presidential candidates to address these tough issues rather than the relatively unimportant but trendier business issues such as “outsourcing” and “energy independence.”
Hat tip to Tom Mayo’s HealthLawBlog for the link to the article on the Porter-Teisberg study.

William Buckley interviewed about Ronald Reagan

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In this interview, William Buckley reminisces about his old friend, Ronald Reagan. The entire interview is well worth reading, and includes the following anecdotes:

Q: How was it when there was disagreement?
A: It was sometimes vigorous, but never sundering. For instance, he was opposed to ratifying the Panama Canal treaty, and we debated the subject for two hours on television, each of us with illustrious assistants. We punched each other pretty hard. A couple of months later I was scheduled for dinner at his home in Bel Air. He got me on the telephone: “Drive slowly up the drive, real slow.” I did — and came upon, every 20 yards, huge hand-drawn signs: “WE BUILT IT.” “WE PAID FOR IT.” “IT’S OURS!”
Q: Did he offer you a job when he became president?
A: Yes/No. I had written him during the campaign that I didn’t want a job. He answered back that he was disappointed: “I’ve had it in mind to appoint you ambassador to Afghanistan.” Big joke, the Soviet Union having just taken over there. But in correspondence thereafter he always referred to me as “Mr. Ambassador,” and the week before leaving the White House he wrote to commend me on the Soviet withdrawal — “and you did it,” he wrote, “without leaving Kabul for a minute.” Good-humored fantasies played long with Ronald Reagan.

Reaganomics in context

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In this Tech Central Station op-ed, Arnold Kling places Ronald Reagan’s economic policies into the context of his presidency, and corrects several misconceptions regarding those policies. First, Mr. Kling puts the economic problems that confronted Reagen into the context from which they arose:

Richard Nixon, like Ronald Reagan, inherited an economy that needed a dose of tight money in order to bring inflation under control. However, Nixon took office at a time when liberal economists had been arguing for more than a decade that inflation could be contained without a recession by using “incomes policies,” a euphemism for government interference in wage and price setting. In the fall of 1971, over the objections of his conservative economic advisers, Nixon decided to give “incomes policies” a try. The result, over the next several years, was that the cure was worse than the disease: “incomes policies” made inflation and unemployment higher, not lower.
In addition, as part of his 1972 re-election campaign, President Nixon undertook a large expansion of Social Security. Along with wage-price controls, this enlargement of the welfare state makes Nixon’s economic policies worse than those of any subsequent President, . . .

Mr. Kling then points out the vagaries of attributing relative economic progress to a particular President when that success is primarily attibutable to policies that his predecessor implemented:

When Ronald Reagan defeated Carter’s re-election bid, “incomes policies” were a proven failure. . . . [B]y 1980 it took a lot less courage to stand by a monetary approach to disinflation than it did a decade earlier. I believe that Carter would also have stuck with Volcker through the recession, and if that is the case, then the behavior of the economy in the 1980s would have been about the same regardless of who had been President. Of course, I generally believe that the business cycle follows its own course, and that giving credit or blame to a President is an attribution error. Thus, Presidents who enjoy strong economic performance, like Clinton, are over-rated . . . , while Carter, who suffered from the policy errors of previous Administrations and had began to undo those errors, is under-rated on economics. (I have plenty of issues with Carter on foreign policy, but that is another subject.)
I believe that President Reagan made a positive difference for the economy. However, unlike most analysts, I do not focus on his tax cuts. Instead, I think that Reagan’s main contributions were on energy policy, tax reform, and resisting government expansion.

Mr. Kling concludes with an ominous observation regarding the Bush Administration’s economic policies:

Finally, the government’s size ultimately will depend not on the tax rates that we set today but on the role that we choose for government long term in education, health care, and retirement security. If we continue to give government a large role in these fast-growing sectors, then spending and taxes as a share of GDP will inevitably increase. I call this “The Great Race,” and so far under President Bush it is a race that we are losing.

Stros edge M’s

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The Rocket won his ninth game without a loss this season as the Stros made a Morgan Ensberg sac fly in the seventh hold up for a 1-0 win over the Mariners.
As usual, Clemens was brilliant and battled like a classic gamer. He did not have his best control as he walked five in six and two thirds innings, but he gave up only three hits and struck out seven. For the second straight night, the Stros languid hitters made another pedestrian Seattle pitcher — this time Joel Pineiro — look like a stopper as they scratched out only three hits. Astros manager Jimy Williams contributed to that offensive inefficiency by playing ineffectual Jose Vizcaino for the third straight game.
By the way, Lidge and Dotel made things interesting in the last two innings before nailing this one down. In the eighth, Lidge gave up a lead off triple when Bidg misplayed a fly ball (he was not given an error, but he really botched the play). Lidge proceeded to bail his teammate out by getting the next three batters on a pop up and two whiffs. Then, in the ninth, Dotel appeared to be dominant and got two quick outs before giving up back to back singles to put runners at first and second. Certainly fearing the prospect of having to face Clemens in the clubhouse after blowing another save, Dotel struck out the next batter to secure the victory.
Underachieving Wade Miller pitches for the Stros in the Wednesday night game against Mariner and former Astro farm hand, Freddy Garcia. The Stros get an off day on Thursday as they move on to Milwaukee for a weekend series with the Brew Crew on the last leg of this marathon two week, 12 game roadie.