[Senate Hearing 113-361]
[From the U.S. Government Publishing Office]
S. Hrg. 113-361
JUSTICE DENIED: RULES DELAYED ON AUTO SAFETY AND MENTAL HEALTH
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HEARING
before the
SUBCOMMITTEE ON OVERSIGHT,
FEDERAL RIGHTS AND AGENCY ACTION
of the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 7, 2013
__________
Serial No. J-113-38
__________
Printed for the use of the Committee on the Judiciary
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COMMITTEE ON THE JUDICIARY
PATRICK J. LEAHY, Vermont, Chairman
DIANNE FEINSTEIN, California CHUCK GRASSLEY, Iowa, Ranking
CHUCK SCHUMER, New York Member
DICK DURBIN, Illinois ORRIN G. HATCH, Utah
SHELDON WHITEHOUSE, Rhode Island JEFF SESSIONS, Alabama
AMY KLOBUCHAR, Minnesota LINDSEY GRAHAM, South Carolina
AL FRANKEN, Minnesota JOHN CORNYN, Texas
CHRISTOPHER A. COONS, Delaware MICHAEL S. LEE, Utah
RICHARD BLUMENTHAL, Connecticut TED CRUZ, Texas
MAZIE HIRONO, Hawaii JEFF FLAKE, Arizona
Bruce A. Cohen, Chief Counsel and Staff Director
Kolan Davis, Republican Chief Counsel and Staff Director
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Subcommittee on Oversight, Federal Rights and Agency Action
RICHARD BLUMENTHAL, Connecticut Chairman
PATRICK J. LEAHY, Vermont ORRIN G. HATCH, Utah, Ranking
AMY KLOBUCHAR, Minnesota Member
JEFF FLAKE, Arizona
Samuel Simon, Senior Counsel
Thomas Jipping, Republican Chief Counsel
C O N T E N T S
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STATEMENTS OF COMMITTEE MEMBERS
Page
Blumenthal, Hon. Richard, a U.S. Senator from the State of
Connecticut.................................................... 1
prepared statement........................................... 34
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah...... 7
WITNESSES
Witness List..................................................... 33
Kennedy, Hon. Patrick J., a Former Representative in Congress
from the State of Rhode Island, and Founder, The Kennedy Forum,
Brigantine, New Jersey......................................... 4
prepared statement........................................... 38
Morelli, Cathy, Southington, Connecticut......................... 9
prepared statement........................................... 51
McGarity, Thomas O., Joe R. and Teresa Lozano Long Endowed Chair
in Administrative Law, University of Texas School of Law,
Austin, Texas.................................................. 20
prepared statement........................................... 53
Ditlow, Clarence M., Executive Director, Center for Auto Safety,
Washington, DC................................................. 22
prepared statement........................................... 67
Coglianese, Cary, Edward B. Shils Professor of Law, and Director,
Penn Program on Regulation, University of Pennsylvania,
Philadelphia, Pennsylvania..................................... 24
prepared statement........................................... 71
QUESTIONS
Questions submitted by Senator Whitehouse for Thomas McGarity.... 92
QUESTIONS AND ANSWERS
Responses of Thomas McGarity to questions submitted by Senator
Whitehouse..................................................... 93
MISCELLANEOUS SUBMISSIONS FOR THE RECORD
Cohen, Edward B., Vice President, Government & Industry
Relations, Honda North America, Inc., November 8, 2013, letter. 96
Ellig, Jerry, Senior Research Fellow, Mercatus Center at George
Mason University, ``Regulatory Rush Job Deprives Many of Health
Insurance Plans They Liked'', October 31, 2013, The Hill,
article........................................................ 97
Gillan, Jacqueline, President, Advocates for Highway and Auto
Safety; et al., November 6, 2013, letter....................... 99
ADDITIONAL SUBMISSIONS FOR THE RECORD
Submissions for the record not printed due to voluminous nature,
previously printed by an agency of the Federal Government or
other criteria determined by the Committee:
``NHTSA Vehicle Safety Priority Plan'' Available at: http://
www.nhtsa.gov/Research
JUSTICE DENIED: RULES DELAYED ON AUTO SAFETY AND MENTAL HEALTH
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THURSDAY, NOVEMBER 7, 2013
U.S. Senate,
Subcommittee on Oversight, Federal
Rights, and Agency Action,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 1:34 p.m., in
Room SD-226, Dirksen Senate Office Building, Hon. Richard
Blumenthal, Chairman of the Subcommittee, presiding.
Present: Senators Blumenthal, Whitehouse, Klobuchar,
Franken, and Hatch.
OPENING STATEMENT OF HON. RICHARD BLUMENTHAL, A U.S. SENATOR
FROM THE STATE OF CONNECTICUT
Chairman Blumenthal. We will be joined shortly, I am told,
by Senator Hatch, the Ranking Member, and as sometimes happens,
we are going to be interrupted by a vote at 1:45. That is what
has been scheduled. Then we will take a brief break and return
to this very, very important hearing, ``Justice Denied: Rules
Delayed in Auto Safety and Mental Health.'' And as some of you
may know, this hearing is a continuing effort to expose the
costs and damage done by regulations that are delayed and
thereby cause justice to be denied.
When elected officials talk about regulation, the stakes
can be tremendously high even if the public does not always
understand and even may not be aware of what the consequences
are. Regulatory agencies have authority to act through official
rulemaking and the notice and comment process created in 1946
through the Rules of Administrative Procedure, but they should
do so openly and transparently, and they should be held
accountable for meeting deadlines for those rules. Without the
rules, very often the law is simply dead letter. Regulations
are essential to making laws enforceable, and that is really
why we are here, because too many laws have been made
essentially less effective or even unenforceable as a result of
delays or non-issuance of such regulations.
In the case of mental health parity, the cost has been
clarity and certainty. Congress passed the Mental Health Parity
and Addiction Equity Act in 2008. Congressman Kennedy and
Senator Ted Kennedy were instrumental in its passage. They have
led the Nation in appreciating and acting on the importance of
treating as well as diagnosing mental health issues.
Nothing I say can really do justice to the work that they
have done, along with others, and I want to applaud the Ranking
Member, Senator Hatch, who was an original cosponsor of that
legislation and is a champion in this fight. And he knows
personally how grateful many people are to his leadership and
to others who have worked on this issue. I have done so as a
State official, as a State Attorney General, and very proudly
with a number of my colleagues who have been State officials.
The Act required that implementing agencies write a rule
within a year. Pretty simple. Two years later--2 years after
the Act, 1 year after the statutory deadline--the agencies
released an interim final rule. But the rule essentially left a
lot of questions unanswered. Even worse, it left the industry
wondering whether to change its policies or to wait until a
final rule brought certainty and a clear path forward. And the
regulators also hesitated to change rules, leaving the industry
essentially free to delay compliance with the law.
Five years after the Act was passed, this promise remains
unfulfilled. I am told that issuance of final rules is
imminent, 5 years after the Act was passed, 4 years after the
statutory deadline, but the costs have been tremendous.
In mental health, uncertainty kills. If an individual poses
a threat to himself or others, he cannot be told he will get
the care he needs as soon as his insurance company decides the
meaning of ``parity.'' He cannot win access to needed care only
after resorting to the courts or to a long administrative
process. In a very specific, concrete, practical way, justice
delayed is justice denied. And that fact is particularly true
of veterans who need mental health care. This issue is
particularly pertinent at this point in our history because of
the large number of veterans who will be coming from the wars
that they have fought, combat that has exacted a toll on their
mental health through post-traumatic stress and traumatic brain
injury. They need this treatment for their invisible wounds.
And as we approach Veterans Day, we should be especially
mindful about the searing, destructive impact of this delay on
our veterans.
In the auto safety realm, the National Highway Traffic
Safety Administration, known as NHTSA, struggled early in its
history to release rules in a timely fashion. The result was
twofold. On the one hand, important NHTSA rules have been
delayed even when Congress has expressly demanded them. One
good example is the rear visibility rule. We held a hearing
that dealt in part with it last time, and it was discussed at
that hearing as a prime example of rule delay meaning justice
and safety denied.
On the other hand, NHTSA has had to do by recall what it
should have been able to do by rule. Clarence Ditlow, one of
our witnesses, a very distinguished safety expert, will tell
the story of rules that were suggested to NHTSA by automobile
safety advocates but went nowhere, only to arise again when
defective automobiles have been removed from the road, not
because they were bad-looking or because they were the wrong
color, but because they were unsafe--in fact, defective.
These are tragic situations for people who are injured or
killed in a car that never should have been sold in the first
place. And they are also bad for the car companies. Quite
bluntly, their consumers, their customers, want to know exactly
what they are getting, and the companies want to know what the
law requires of them to give those customers.
When I talk to businessmen, they tell me they make money in
a heavily regulated industry. They need to know what the rules
are and have certainty about what those rules will be. The
great enemy is uncertainty. When the policy is made by
adjudication because rulemaking is too difficult, these
businessmen cannot get the certainty and clarity they need to
invest, grow jobs, and grow their companies.
Now, I said at the beginning the story we are telling here
should be common ground. Both industry and consumers want clear
rules. Everybody wants certainty. Anybody who has watched a
high school civics class, if you have not taken one lately,
knows that students learn the laws are made by the Congress,
they are executed by the President and the executive branch,
and adjudication takes place in the courts. But Congress cannot
make laws that are effective if those laws are not accompanied
by regulations necessary to enforce them. And representatives
of both private interests and the public interest should want
bad behavior to be prevented before it occurs as well as
punished afterward.
The problem that we face is to make sure the rules are
promulgated and enforced, and enforced effectively, and that is
why we are here today.
I want to again thank everyone, particularly Ranking Member
Hatch, who will join us shortly, if not before the vote, then
afterward. And I am now going to ask for the witnesses to be
sworn in so that we can proceed with your testimony.
If you would please stand, raise your right hand: Do you
affirm that the testimony you are about to give before the
Committee will be the truth, the whole truth, and nothing but
the truth, so help you God?
Mr. Kennedy. I do.
Ms. Morelli. I do.
Chairman Blumenthal. Thank you. Let me introduce the
witnesses to the Committee.
Representative Patrick Kennedy of Rhode Island is the co-
founder of One Mind for Research. He has been an active and
steadfast advocate of not only research but treatment of all
neurological and psychiatric disorders, and he has been an
advocate not only as a Member of Congress but afterward, and is
the winner of numerous awards for the work that he has done in
this area. And I know how busy you are. We thank you for being
here today, Congressman.
Cathy Morelli works full-time as a casualty claim adjuster.
Her 15-year-old daughter suffers from a mental illness, and she
advocates for her and others who have to fight for insurance
benefits for the treatment of mental illness. She likewise, in
Southington, Connecticut, where she lives, as well as the State
and the Nation, has been a very vigorous and effective advocate
for treatment of mental health issues and better understanding
of those issues.
So we thank you both for being here today, and, Congressman
Kennedy, if you could please begin.
STATEMENT OF THE HONORABLE PATRICK J. KENNEDY, A FORMER
REPRESENTATIVE IN CONGRESS FROM THE STATE OF RHODE ISLAND, AND
FOUNDER, THE KENNEDY FORUM, BRIGANTINE, NEW JERSEY
Mr. Kennedy. Thank you, Mr. Chairman, and it is an honor to
be here with Cathy. It is good to see you again, Cathy.
Thank you, Mr. Chairman, for your leadership on this issue
and for calling this hearing. As you pointed out, we have been
waiting 5 years for the final rule on a piece of legislation
that my late father, who sat just where you are sitting today,
who sat in this chamber of the Senate for nearly 50 years,
helped me pass. And it was the last major piece of legislation
that my father and I worked on together, and I recall President
George W. Bush signing it into law, again reaffirming the fact
that these are not Republican or Democratic issues. Pete
Domenici and Jim Ramstad were our able cosponsors on that piece
of legislation, and it is important for us to reflect on that
today in a very partisan environment that we live in.
I think it is also important to reflect, as you have stated
at the outset, that there are huge consequences to this lack of
clarification and implementation of the final rule--
specifically, as you mentioned, Mr. Chairman, our veterans. So
when most people think about the Mental Health Parity and
Addiction Equity Act, they do not often think about who those
people are that are going to be impacted. Particularly they do
not think about it when they think about our veterans, who, of
course, have suffered what is known as the signature wound of
the war: traumatic brain injury and post-traumatic stress
disorder.
Frankly, however, most of our veterans will never go to the
VA for their care. That is because most of our veterans are
State guard and reservists, like the Connecticut Guard, like
the Rhode Island Guard. And they will go back to their places
of employment. And if you cannot see the injury on the outside,
then it does not exist. But as they go back to work and they
are trying to deal with the confusion, with the emotional
swings, with the impact and the symptoms of their signature
wound of war, they need to be assured by all of us that they
are not going to be left behind.
This is not the job of just an insurance company. This is
not the job of just the Federal Government. This is not the job
of the mental health profession. It is the job of all of us.
And the subject of this hearing, which is this delay in
rulemaking and how that impacts the end result, well, as you
know, Mr. Chairman, having been a top cop in Connecticut as
Attorney General, you need clarity, you need rules in order for
those to know what they are going to be held accountable to.
Now, I will tell you that one of the reasons I believe we
have had a delayed rule is not an unhappy coincidence, and that
is, the passage of the ACA. Frankly, the Health Care
Affordability Act has done more to extend parity than we ever
were able to do in our parity bill. So I give the
administration great credit for taking that next step and
really taking parity and bringing it across our health care
system.
However, as you pointed out, Chairman, the notion that we
have had to wait this long for clarity means that people have
fallen through the cracks, and specifically we have seen them
fall through the cracks by those inscrutable insurance
companies who do not always follow the best of what the
intentions and what the spirit of the law says, but who wait
for clarification before they know to do the right thing.
Some insurance companies have gotten it right. Many have
gotten it wrong, and the reason is because they felt they could
because the Federal Government was not there to clarify where
their actions would be in violation.
I just want to conclude, because I know most of the good
work that this Committee does is in the questions and answers,
but let me conclude with this: We just had a case in New York
that was dismissed by a judge under the Mental Health Parity
and Addiction Equity Act for two reasons:
One, the judge said that the plaintiff had to be a
consumer, could not be someone suing on behalf of a consumer.
Now, that has got a whole set of implications with it,
particularly for our community of the mentally ill who have a
tough time fighting for their own survival and health, let
alone having to take a case to court, as Cathy did on behalf of
her daughter.
Number two, the court dismissed the case because they said
the defendant was not the insurance company, and, Mr. Chairman,
I would think that this would spark a lot of interest in
Washington, particularly amongst the Chamber of Commerce. They
said the defendant had to be the employer themselves; in other
words, if United or Anthem or any of the insurance companies
make a medical necessity determination, decide to impose higher
treatment limitations or financial limitations to those seeking
mental health/substance abuse disorder care, then they can do
so now with impunity, according to this judge and their ruling.
And the right of recourse now is for employees, not someone who
represents them, not a doctor or someone who can help them; it
is up to the employees to bring the case against their own
employer. Well, Cathy can speak about the role of stigma in
this whole issue. You can only imagine what it would be like
for someone to try to fight for recourse and to know that they
have to do it against the person that is giving them a job.
Mr. Chairman, all due respect, my message to this Committee
is that the final rule is not the final word on this issue. And
as you pointed out--and I think in large part due to your
scheduling this hearing--we are going to get a final rule, and
I understand it is going to be tomorrow. But this is not the
final rule. It is the first step, because it is going to be the
beginning whereby we begin to understand how we implement this
thing called the Mental Health Parity and Addiction Equity Act,
which, Mr. Chairman, you and I both know when we wrote the
law--and Senator Hatch, Chairman Hatch, was a big part of
this--we were crystal clear about what we meant. Parity,
equality. If you treat diabetes, whether it is inpatient,
outpatient, in-network, out-of-network, pharmacy benefits,
emergency room services, you must do the same for a diabetic as
you would an alcoholic as you would an asthmatic. If you treat
someone with a stroke and you give them, you know, inpatient
emergency room care and then you give them partial
hospitalization, you have got to do that for someone who has
had a psychotic break and has psychosis, you have got to treat
them the same. And the services must be the same.
And what we have not had in the final rule is a description
of what are the services. We have it in the law, Mr. Chairman.
The law is very clear: Across all six categories of services
there must be parity.
But without the rule, then we have this confusion, and when
there is a vacuum, Mr. Chairman, you know what happens in a
vacuum. People do not always behave the way we would like them
to behave because they do not know where the lines are drawn.
Hopefully tomorrow the administration will draw some pretty
bright lines outlawing discrimination, and I will conclude with
this.
Why? Not only for Cathy Morelli's daughter, not only for
people who are average Americans who suffer from a substance
abuse disorder like I do, or a mental illness like I do, but
most importantly, for our Nation's heroes, our veterans,
because through no fault of their own they came home from war,
signature wound was traumatic brain injury and post-traumatic
stress. And when they go to their insurance company, whether it
be Anthem Blue Cross or United Optimum, or whatever, guess
what? We need to make sure that that insurance company does not
impose any higher treatment limitations, does not impose any of
these ``non-quantitative treatment limit'' kind of barriers,
like fail first, as they are doing today on the rest of
America. I will tell you, Mr. Chairman, the day one of our
veterans gets denied treatment for their wounds of war, I will
tell you maybe that is going to be the day that our CEOs in
America realize that they have a responsibility for what
insurance company they hire to manage their benefits, and that
maybe personally they might be liable, and that is really the
decision of a judge this last week in New York. So if that is
the case, I would hope that they are telling their legal
counsels right now to get ready, because if Cathy has anything
to say about it, just like she has done so persuasively in your
State of Connecticut, Mr. Chairman, we are going to go around
the country, and we are going to show up in places where there
are consumers being denied. And just like in the rest of the
civil rights movement, we are going to stand with others so
that they do not have to do this alone and do not have to fight
for dignity and quality of insurance coverage just as if they
were to have any other physical health issue.
Thank you for letting me share.
[The prepared statement of Mr. Kennedy appears as a
submission for the record.]
Chairman Blumenthal. Thank you very much, Congressman, for
that very powerful and insightful testimony.
I am told that a vote has been called. I do not have anyone
who can take the gavel for me here, so I am going to be gone
for just a few minutes, and then rush back. Hopefully I will
have Senator Hatch with me, if I can grab him, but I just want
to thank you for focusing on veterans who are so often,
unfortunately and tragically, denied the treatment they
deserve. Even with the supposed availability of the VA as a
source of treatment, we had in Connecticut just within the past
week a marine who came back from Afghanistan and tragically
took his own life after seeking treatment for PTS, and with
better treatment maybe he could have been saved. Justin
Eldridge was, in fact, a brave hero, and I had occasion to know
him and to try to help him gain treatment. But, unfortunately,
that treatment was not as available as it should have been, and
as a result, the tragedy has consumed him and his family, and I
thank you for focusing on veterans. Many of them are getting
treatment, but parity is absolutely necessary.
Mr. Kennedy. Well, as you go, Mr. Chairman, let me point
out that 72 percent of all veterans will never go to the VA in
their lifetime. That is a fact most Americans do not realize.
They are going to get their care through their employer-
sponsored health plan. That is why this issue is more than just
a consumer rights issue. It is an issue for our patriots. It is
our veterans' issue.
Thank you, Mr. Chairman.
Chairman Blumenthal. That is a very, very important fact.
The other is that 30 percent of veterans leaving the military
today, or more, according to the armed forces themselves,
suffer from PTS or traumatic brain injury. So we are not
talking about a scattered few here and there. We are talking
about a major part of our veteran population.
So I am going to go. I apologize, Ms. Morelli, but our
fellow residents of Connecticut will hold me very responsible
if I miss this vote. Thank you. I will be right back.
[Recess 1:57 p.m. to 2:14 p.m.]
Chairman Blumenthal. Thank you very much for your patience.
We will now return, beginning with--Senator Hatch has an
opening statement that he would like to make, and I am very
glad that he does and that he is here. And so with your
indulgence, let us proceed with that. Thank you.
OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
THE STATE OF UTAH
Senator Hatch. Well, thank you, Mr. Chairman, and I
apologize for not being here initially. I certainly welcome our
witnesses here today, especially Patrick, whom I have known for
a long time, and we are friends.
I will just make a couple of points for the record so that
we can hear from the witnesses who have come here today.
The subject of the first panel is the regulatory delay
following enactment of mental health parity legislation in
2008. Now, I cosponsored legislation addressing the issue of
mental health parity in the 107th Congress, the 108th,
Congress, and the 110th Congress. Those bills were introduced
by my friend Pete Domenici of New Mexico in the Senate. The
Mental Health Parity Act passed the Senate by unanimous consent
in 2008. One of the witnesses today, former Representative
Patrick Kennedy, also a friend, introduced the legislation to
address this issue that was enacted into law in October 2008.
And so it concerns me greatly that the agencies required by
that law to issue final regulations have still not done so. The
best they could do was to issue interim final regulations, and
even that was nearly 4 years ago.
I want to make clear that I view the issue before us as
separate from how the Affordable Care Act addresses mental
health insurance coverage. The Mental Health Parity Act has
bipartisan support in 2008. The Affordable Care Act did not in
2010. I do not want the ongoing controversies about the
Affordable Care Act to confuse or distract attention from the
issue of mental health parity regulations that we are examining
here today.
The Affordable Care Act is, however, connected to this
overall topic in a different way. At this Subcommittee's
previous hearing on August 1, I said that rushing regulations
can also have serious costs. One of the witnesses of that
hearing was from the Mercatus Center at George Mason
University. Another of their scholars, Jerry Ellig, wrote an
op-ed published just last week in The Hill about how rushing
regulations contributed to the widespread and growing problem
of insurance companies canceling health insurance policies for
millions of Americans. I ask consent to put that op-ed into the
record, Mr. Chairman.
Chairman Blumenthal. Without objection.
[The op-ed appears as a submission for the record.]
Senator Hatch. The second panel today is on auto safety and
how the National Highway Traffic Safety Administration affects
traffic accidents or fatalities. I confess that I am not
entirely clear about how the substance of auto safety
regulation fits within the Judiciary Committee's purview. I
think we must resist the temptation to think that federal
regulators can account for and control everything around us.
It is my understanding, for example, that more than 90
percent of traffic crashes involve human error; more than
10,000 annual traffic deaths are caused by drunk drivers; and
more than half of all those killed in crashes are not wearing
seat belts.
At the same time, this particular agency has been very
active with what sounds to me like positive results. Just in
the last decade, NHTSA has issued hundreds of proposed and
final regulatory actions.
It is safe to say that automobiles are one of the most
highly regulated consumer products in America today, and while
the number of licensed drivers has more than doubled and the
number of miles they drive has more than quadrupled since 1960,
NHTSA's estimate of the rate of traffic deaths per miles driven
for the first half of this year happens to be the lowest in
history.
Mr. Chairman, we have before us distinguished experts on
this subject, and I really look forward to hearing what they
have to say, and I want to congratulate you for holding these
hearings.
Chairman Blumenthal. Thank you, Senator Hatch. And you were
not here, but I paid tribute to the leadership that you
demonstrated in gaining the mental health parity law at the
time working with Senator Ted Kennedy as well as with
Congressman Patrick Kennedy, who is a friend of both of us, and
we thank you for your leadership.
Senator Hatch. I thank you. Well, Ted got me into lots of
problems from time to time, but----
[Laughter.]
Senator Hatch. I think it was all worth it. I will put it
that way. We did some very, very important things together, and
we were and still are very dear friends.
Chairman Blumenthal. And I also want to welcome Senator
Franken, who has also been a real champion and leader on this
issue and with this rule.
I am informed, by the way, Senator Hatch, that the mental
health parity regulation will be issued tomorrow. Congressman
Kennedy mentioned it in his opening statement, as did I, and
this rule has been in the works for too long, but we are glad
that it will be issued shortly, and it may well be, as
Congressman Kennedy suggested, that the prospect of this
hearing, which was made known to the administration, helped to
expedite it. But whatever the cause, we are glad for the
result.
Ms. Morelli, you have been very, very patient and
understanding, and please go ahead. We welcome you here, and I
am particularly admiring and grateful for your courage and your
strength as a parent as well as an advocate. Thank you for
being here today.
STATEMENT OF CATHY MORELLI, SOUTHINGTON, CONNECTICUT
Ms. Morelli. Well, thank you for giving me this opportunity
to tell my story.
I am here today to talk about the difficult battle I had
with my health insurer, Anthem, in my attempt to get my teenage
daughter the treatment she needed for her mental illness. I was
completely blindsided by my health insurer's constant denials
for mental health treatment that my daughter so desperately
needed. It was a battle I had never previously experienced
whenever I sought coverage for treatment of medical conditions.
Unfortunately, I discovered in a very difficult way that
coverage for the treatment of a mental illness would not be as
easily accessible as it is for a medical condition.
Early in 2012, my then 13-year-old daughter was struggling
with an eating disorder and began engaging in self-harming
behaviors and suicidal attempts. Her first inpatient
hospitalization began in March 2012 due to a suicide attempt
and cutting herself. Within 6 days of this hospitalization, our
health insurer denied her continued stay in this hospital
advising that they felt she could be managed on an outpatient
basis and that the treatment was not medically necessary. The
hospital disagreed with my insurer and filed an expedited
appeal, but my insurer maintained their denial.
Within a day of being released from that first hospital,
she again attempted suicide and engaged in serious self-harming
behaviors that involved cutting so deeply into her thigh that
it required sutures to close the wound. She spent the next 14
days in the emergency department, and during her stay there she
began her aggression toward people and spent most of her days
in restraints and under heavy sedation. Within just 6 hours of
being released from the emergency department, she again
attempted suicide and struggled significantly with an eating
disorder and spent the next 8 days medically admitted to a
hospital on a feeding tube. Once she was stabilized, she was
transferred to Vermont to yet another psychiatric hospital.
Over the course of just 5 months, she was in and out of
numerous psychiatric hospitals with each stay being cut
prematurely short by my health insurer's refusal to pay for the
treatment that every doctor and therapist said she needed.
I had applied for voluntary services through the Department
of Children and Families through the State of Connecticut. I
did this very early on to get help in managing her illness
because it was very clear to me that my health insurer was not
going to pay for the treatment she really needed. Every denial
was based on my health insurer's contention that inpatient
treatment was not medically necessary and that she could be
managed on an outpatient basis. DCF provided us with intensive
in-home psychiatric services, known as IICAPS, in between these
hospital admissions. She was also being seen by an outpatient
provider.
But despite IICAPS' and the outpatient provider's best
efforts, my daughter's illness continued to spiral out of
control; but without health insurance to cover the necessary
inpatient treatment and the inability to pay out of my own
pocket, I had no choice but to rely on outpatient treatment.
Things really escalated in June 2012 when my daughter
brought a knife to school and revealed this along with
extensive fresh cuts on her body to the staff. She was taken to
the hospital and then was admitted to yet another psychiatric
hospital. This was the turning point for my daughter because,
despite my health insurer's denial, this hospital would not
release her as she was a danger not only to herself but to
others.
While inpatient and under the care of professionals who
treat mental illness, my daughter attempted and nearly
succeeded at suicide. She was then placed on what is called
``one-to-one supervision,'' meaning staff was within arm's
reach of her at all hours of the day and night. I fail to see
how my family could have provided this level of care that my
health insurer claimed was possible. I will read an excerpt
from a letter addressed personally to my 14-year-old daughter
for her inpatient stay where she attempted and nearly succeeded
at ending her life. This letter is dated July 16, 2012. I
quote: ``We cannot approve the request for hospital admission
as of July 16, 2012. The hospital gave us information about
you. This did not show that hospital care is medically
necessary. You have recently been in the psychiatric hospital
for about 1 month due to behavior problems and trying to hurt
yourself. You have had these problems for a long time. You had
to go into the medical hospital for a few days and now the
medical hospital wants you back in the psychiatric program. You
had not been getting better in any significant way for at least
the last 30 days. There is no plan to do anything different. It
does not seem likely that doing the same thing will help you
get better. You need treatment that will likely help you get
better . . .'' Interestingly, my insurer paid for only 1 day of
the 30 days they speak about in that letter. They acknowledge
she needs the treatment, but they make it very clear they are
not going to pay for it.
So along with DCF and the Office of the Healthcare
Advocate, who also became involved in my daughter's case, we
applied for Husky Health, which is the State-funded insurance
plan, and coverage began at some point during her last
admission. With the help from the State, my daughter was
finally able to get the long-term treatment that was necessary
to stabilize her condition and allow her to return home and be
managed on an outpatient basis.
With the help of the OHA, we began appealing the 13 denials
issued by my health insurer in just those 5 months. At first,
we went through the insurer's two-step internal appeal process,
but the denials were upheld. We then filed external appeals
through the insurance department, and every single denial
issued by my health insurer was overturned. But it never had to
get to the level it did considering the mental health parity
laws in place. With a lack of regulations, these health
insurers will not stop their discriminatory practices toward
the treatment of mental illness.
[The prepared statement of Ms. Morelli appears as a
submission for the record.]
Chairman Blumenthal. Thank you, Ms. Morelli. Thank you
very, very much for that really powerful example of the effect
of the denial of coverage resulting from the lack of
regulation. And you have been very objective and factual in
your presentation. Let me ask you what the effect of those
denials was on your family's emotional state and possibly also
on your daughter as she sought to recover from this life-
changing illness.
Ms. Morelli. It was a very rough time. I often look back
and wonder how we got through it. I am not really sure I can
tell you how we did it. Perseverance. We had a lot of support
from family, her school, the State, DCF, the Office of the
Healthcare Advocate especially. I think without the resources
that our State offers, I would never have gotten through it.
But there was clearly an emotional toll for me as well as my
husband and my other two daughters. At times, her sisters did
not want to sleep in their own bed at night for fear that their
sister would harm them. So it was pretty--it was a pretty rough
time.
Chairman Blumenthal. Thank you.
Congressman Kennedy, I guess this story is, again, an
example of why you fought so hard, along with your dad, for a
law which guarantees better parity, better insurance coverage.
And we are not here to embarrass any particular insurer. I know
the name of Ms. Morelli's insurer. But this kind of
intransigence and insensitivity seems all too common.
Mr. Kennedy. So the irony is this: This hearing is process
equals substance. The process you have calculates the answer
you are going to get. So if the process is not right, you are
not going to get the right answer. In her case, as in the case
with this rule, we do not have the right process, and that
means for insurance companies, we need public disclosure
requirements so that we know when someone like Cathy is facing
a situation of discrimination.
By the way, insurance companies need that. You know, for
them to know when they have crossed the line, they need the
same kinds of case law much like you would have with the IRS
given certain situations which describe what is legal, what is
illegal. Cathy paints the most glaring story of illegality,
but, frankly, the real rub for the next few years is that gray
area, and how do even insurance companies know when they are
crossing the line?
What we need from you is to help us bring transparency so
that we have a better idea--because Cathy mentioned one of the
things that helped her get through is the Office of Public
Advocacy. Well, guess what? Who is out there looking at all the
Cathy Morelli's in the country and making sure that ERISA-
insured plans are not, you know, subscribing to a pattern and
practice of discrimination across State lines--like we do not
know, but under the law the HHS Secretary has the authority to
require from insurance companies how they make medical
necessity decisions, and they also can de-identify that data
and make it clear who is in violation. I mean, this is a
process, Mr. Chairman, and I would just encourage you to not
look at this hearing as, like I said, the end of the final rule
but really the beginning of this long process. You thought the
process of getting a final rule was long. Wait until it takes
us the time--and the sooner we get at it, Mr. Chairman, is the
sooner we save lives, not only like Cathy Morelli's family's
life was saved but the veterans that we talked about earlier,
as I said, many of whom are going to get their insurance
through their employer-sponsored health insurance.
So I do not think employers will be very keen on knowing
that their insurance carrier is denying a legitimate American
hero from getting treatment for the signature wound of the war.
But that is going to be the implication, Mr. Chairman, of us
not doing what you are starting here with this hearing, and
that is, implement a rule protecting people from discrimination
against their brain illness.
Chairman Blumenthal. Thank you. I am going to defer to my
colleagues at this point. I really agree strongly that this
regulation will be a final rule but not the final word, and we
need to pursue that better word or rule even as we have this
one.
I am going to, with the permission of our Ranking Member,
go a little bit out of order just to ask Senator Whitehouse of
Rhode Island, since a former fellow colleague is here, to do
his welcome. And he would have been here earlier, but as I
mentioned to everyone here, we had a vote, and thank you for
being here.
Senator Whitehouse. Thank you, Chairman, and I also thank
the Ranking Member for his courtesy. I just want to take a
moment and welcome my colleague from Rhode Island,
Representative Patrick Kennedy. It is terrific to have him back
here, and it makes me very proud to see what a continuing good
effect he is having. I know this is a passion for him.
Patrick, we miss you around here, but clearly you are
flourishing and doing exemplary work. So thank you so much.
And, Mr. Chairman, let me just thank you and the Ranking
Member for this hearing. It has been said that the oversight
function of Congress is sometimes even to be preferred to its
legislating function, and I think that without the attention
that you both have brought to this issue with this hearing, we
would not have received the news we did today that the rule is
finally going to be announced. It was an exemplary effort in
legislative oversight by Senator Blumenthal and Senator Hatch,
and I am grateful to both of you.
Chairman Blumenthal. Thank you. Thank you, Senator
Whitehouse. And I thanked Senator Hatch earlier, but I thank
him again and now defer to him for his questions.
Senator Hatch. Well, I want to thank you, Mr. Chairman. I
think you have shown a great deal of interest in this subject
matter and are moving in an appropriate way--in appropriate
ways, I should say.
I also want to thank you, Ms. Morelli, for being here today
and for your article in the New York Times. You know, as a
parent of a child with mental illness, you add a very, very
important voice to these problems and to our understanding of
these issues and how they affect individuals and families. So
your being here today is very, very important, and I concur
with my dear friend and colleague from Rhode Island in his
comments, and also the Chairman as well.
Representative Kennedy--I am going to call you ``Patrick.''
I have known you since you were a little boy.
[Laughter.]
Senator Hatch. You have certainly grown much bigger than I
thought----
[Laughter.]
Senator Hatch. But I cannot thank you enough for the
leadership of you and your family and that you continue to
exercise and provide on this issue as well as other issues, and
I am very grateful to you.
In your written testimony, you described how the
administration's continuing failure to issue this final rule
creates uncertainty. In your experience, how does this delay
and the uncertainty it causes affect insurers and employers?
You have alluded to that already, but how is the private sector
responding to this lack of clarity?
Mr. Kennedy. Well, as was the case in other laws that were
passed, it is left to the court system to ultimately interpret
the federal law. Well, part of the problem, even with the
interpretation of the federal law, as we saw with this notable
case against an insurance carrier, dismissed last week in New
York, was that they did not even have the terms who is a
plaintiff, who is a defendant. Ironically, Mr. Chairman, they
say that insurance carriers are not the defendants, employers
are the defendants.
So, Mr. Chairman, let me just say that I think for the
Chamber of Commerce in Washington, D.C., who now represents not
only insurer CEOs but every other CEO, they are going to be
interested in this latest federal judge's decision, because it
now says they cannot just pass the buck and give the Heisman to
whoever their benefit manager is in an ERISA-sponsored health
plan, where an insurance company acts as the intermediary. They
are going to be the ultimate arbiter and final person with
responsibility.
So I mention that, Mr. Chairman, because I think these
decisions that are being made today, in lieu of a failed
clarity on a final rule, are going to create a lot of not only
confusion for families like Cathy Morelli's, but it is going to
create a lot of confusion for employers who may want to do the
right thing, Mr. Chairman, and need that guidance to know when
they have crossed the line and when they have not. And, you
know, I think that is the real challenge for us now, is the
oversight process.
So the process of issuing a final rule was not very pretty.
We understand what were some of the implications. Of course,
the administration had health care reform to add to this mix,
which is putting a lot on the table, so we give them that. But
the question now is: As Cathy mentioned, is her situation going
to be repeated in the future? We are going to get the rule
tomorrow. The question is: Are we going to have it in our
ability to ensure that, to the best of our ability--granted, it
is not going to be perfect--that this situation no longer
happens?
What I am saying to you, Mr. Chairman, what you just heard
echoed by my good friend and colleague from Rhode Island, is
that this is going to require constant oversight. And to the
extent that this Committee can help inform the administration
as to where within their existing authority they have that
oversight capacity, to require information by insurance
companies as to how they make medical necessity decisions, my
feeling, frankly, is--and I know this will be music to Chairman
Hatch's views as a conservative--we do not need to mandate new
rules on them. We just need them to be more transparent with
adhering to the rules that we have put before them, because I
think the light of day and the public at large is going to keep
them honest if they know that if they have a deliberate
discriminatory practice, they are going to be called out on it.
I do not begrudge them if they make bad decisions that were
within the margins, provided we have a way of expeditiously
correcting those bad decisions. Again, all this comes back to a
process, Mr. Chairman, and oversight is the key to that
process. And that oversight can only take place if there is
transparency of the situations that allowed for Ms. Morelli's
situation to take place.
Senator Hatch. In many cases, when Congress enacts a law, a
single agency or department is responsible for issuing the
rules or regulations to implement it. Now, this complex area of
insurance regulation involved multiple agencies and departments
at the same time. The Department of Health and Human Services,
Labor, and Treasury are all involved in the rulemaking that we
are looking forward to today.
In your opinion, has this involvement by multiple
departments affected the development of this final rule, or has
it contributed to its delay?
Mr. Kennedy. We have to think in some sense that that kind
of multiple jurisdiction would contribute to the level of
complexity. But here is another level of complexity. As I
understand, the rules can indicate that States have a big
responsibility in implementation, so now the question is: Where
do States take their call? It would be a lot easier, like in
civil rights, if we define the parameters on the federal level
and not leave it to be squishy amongst the 50 States as to
whether you are treated in one State versus another. That kind
of harkens back to a day where, you know, justice depended on
geography whether you had different colored skin or not.
Now, in this day and age, we cannot have it where people as
Americans, as our veterans from our country, are treated one
way where their signature wounds of war are covered in one
State but their signature wounds of war, TBI and post-traumatic
stress, are not covered in another State, Mr. Chairman.
So I think that for clarity we are going to need to make
sure that it exists on the federal level so that these States
are not having to kind of reinterpret what is meant by a rule
that delegates a lot of this to the States. So I think to
answer your question, there was complexity. I think there is
going to be even more complexity if we are not, you know, more
vigilant, if you will.
Senator Hatch. Well, thanks to both of you. I appreciate
your testimony.
Chairman Blumenthal. Thank you, Senator Hatch.
We are fortunate to be joined today by two of my colleagues
who have been real leaders in this area, as I mentioned
earlier, and I am going to call on them in the order of their
arrival. Senator Franken, if you would please proceed.
Senator Franken. Thank you, Mr. Chairman, for convening
this very important hearing. Paul Wellstone was a friend of
mine, and I hold the seat that Paul once held. David Wellstone
is not here today, but as Patrick well knows, David has been
coming to D.C. time and time again to fight for these regs to
be issued.
I have focused, been focused from day one, on the
implementation of the Mental Health Parity and Addiction Equity
Act, really from day one, and I have led six Senate letters to
the Obama administration since then requesting the timely
release of the final rules. It is a little too late now for a
timely release, but I am very happy that we----
Mr. Kennedy. We were glad you were on our side, Senator.
Senator Franken. Believe me, I was so glad to be on your
side on this one, and I am relieved that the final rules appear
to be coming out tomorrow.
Patrick--I am sorry--Congressman Kennedy, you know, we have
been through this together. The last time I saw you was at a
mental health policy conference at the White House. It was a
couple days after my grandson was born, and I told you that I
had held him in my arms after he was born and said, ``No one
expects you to know anything. There is no pressure on you.''
And you said, ``That is not how it goes in my family.''
[Laughter.]
Mr. Kennedy. That is right.
Senator Franken. And you said this, you said, ``They say,
`You are going to file for Congress, and then run for
President.' ''
[Laughter.]
Senator Franken. So I just have to say that of all the
accomplishments of all the members of the Kennedy family, you,
sir, have been a Profile in Courage.
Mr. Kennedy. Thank you.
Senator Franken. And I want to thank you for that.
Okay. So now we think these rules are going to be released
tomorrow. What do you want to see in them in terms of their
scope and transparency?
Mr. Kennedy. Well, the transparency is what we want to see
because we have the authority to require public disclosure of
the way an insurance company makes medical necessity
determinations, and we have a way of reporting how Patient X
with a mental illness, an eating disorder, and so forth is
treated versus Patient Y with cardiovascular disease, with a
stroke, with diabetes, with asthma. And if those patients with
asthma and diabetes are treated inpatient and outpatient and
in-network and out-of-network and in the pharmacy with coverage
and with the ER, then guess what? The other chronic illness
that happens to be above their neck needs to be covered, too,
and it needs to be covered equally so you have a total scope of
services. So we cover if diabetes means that you lose your
sight or your legs, but we do not wait until you have to lose
your legs to diabetes. We treat it in advance of that. But in
mental illness, we wait until you need your legs amputated. In
mental illness, if it were like cancer, we would wait until it
was State IV cancer before we would pay for it. So----
Senator Franken. So what you are looking for are the
transparency, the rules and regs regarding transparency.
Mr. Kennedy. Because I believe, Senator, that otherwise we
are going to constantly be trying to litigate this thing to get
disclosure about an insurance company as to why they made the
decision they did. They may have a good reason. They just need
to be up front about it and let the chips fall where they may,
because at the end of the day, we are all going to have to do
something in terms of keeping costs down. Frankly, mental
health, as most economists recognize, is the saver of health
care dollars because you think of someone with diabetes, if
they have untreated alcoholism, you are in a real pickle. If
you think of someone with heart disease with depression, guess
what? Your heart disease is going to be in real trouble, too.
You are four times more likely to have a heart attack.
The point is that we need integration and we need
transparency in the way we manage patients so that we can
understand whether there is an overt discrimination. Now, we
get it that the advancement of this science of mental health
still needs to go a great deal further in its advancement. But
we still know enough now to know, like in Cathy's situation,
where it is blatant discrimination, and we should at least be
able to tell that and enforce that.
Senator Franken. And, Ms. Morelli, I just want to thank you
for your testimony today. You and I know that one in five
children and one in four adults faces mental illness, but for
families that are going through this, they can feel pretty
alone, as I imagine you did. And your willingness to speak out
about your daughter's experience and your experience is just
very courageous, and I want to thank you.
You know firsthand, obviously, why it is so important that
behavioral health services be covered to the same extent as
medical and surgical services by insurers. Can you just tell us
how you think your life would have been different and how your
daughter's life would have been different if these regs had
been issued and that you had gotten the proper treatment then?
Ms. Morelli. I can tell you that in between hospital
admissions, when she was home and we were not able to manage
her, and she did the extreme cutting and the behavior was so
extreme, I can tell you my daughter will have less scars--would
have less scars had she gotten the treatment initially and not
done this back and forth to the hospital routine that we seemed
to do, because that is where the significant cutting was
happening, was at home, unfortunately, because I do not have
the ability to childproof my house to a 14-year-old child who
will even use her braces to cut herself. So----
Senator Franken. And what was the effect of that on your
other children, on your two other daughters?
Ms. Morelli. They were absolutely terrified of their
sister, afraid to go to bed at night for fear that she would
harm them, because at one point she had threatened to harm us.
So they no longer trusted her because they saw what she was
capable of.
Senator Franken. And this has an ongoing toll for your
family.
Ms. Morelli. It does.
Senator Franken. I see that I am out of time here, but I
again want to thank you for your courageous testimony and,
Congressman, thank you for yours.
Mr. Kennedy. Thank you, Senator Franken, for carrying on
your late colleague's work. Senator Paul Wellstone was a hero
to all of us.
Senator Franken. And I want to recognize Jim Ramstad, too,
from Minnesota, who worked with you.
Mr. Kennedy. Yes. Thank you.
Chairman Blumenthal. Thanks, Senator Franken.
Senator Klobuchar.
Senator Klobuchar. Thank you very much, and thank you,
Congressman Kennedy, for being here and for all your work, as
Senator Franken mentioned. I know you were in Minnesota
recently.
Mr. Kennedy. Yes.
Senator Klobuchar. And thank you for that. And I know any
friend of Jim Ramstad's is a friend of ours, so thank you, and
you have an incredibly special friendship, that means a lot to
everyone in our State, so thank you.
Al already mentioned the work that Paul did on this bill,
which was incredible, and thank you for helping carry on his
torch over in the House and getting this done. I was there when
that happened, and it took a lot of work on all sides.
So my questions are more about what has been happening in
terms of the big picture. You talked in your testimony about
the problems of the delayed regulatory process, how it goes
beyond the Mental Health Parity Act, and that it has stalled
efforts to end discrimination in multiple other settings. Could
you elaborate on that and what that means?
Mr. Kennedy. Well, if we had had a final rule earlier, we
would have begun the process of really crystallizing the spirit
of the law, which is that we do not want unequal treatment.
But, of course, as you know, we have unequal treatment in a lot
of other areas of federal insurance: in the VA, in the
Department of Defense, in Medicare, and in Medicaid.
So I just say that to give some insurers a little pause
that I am not just beating up on them today, because, frankly,
we are not setting a very good example as a Federal Government,
because we do not treat mental illness equally to other
physical illnesses within our own Federal Government. So
Medicare does not reimburse it the same way. Medicaid does not.
There are many, many examples of disparity in the availability
of treatment and the extent of treatment available to people
that is reimbursable by the Federal Government.
So I would have said that with the final rule, there is a
lot more work to be done. For Jim Ramstad's work that he
started and Paul Wellstone's, that can continue, but we need to
take that next step. You cannot literally jump ahead when you
do not have the biggest step of all, which is laying the
framework for equality. Because once we do that, now we can do
the other things so that the Cathy Morelli's who are senior
citizens in Minnesota who are getting denied geriatric
psychiatry because it is not treated the same as some other
specialty service with Medicare, that they are not denied.
But we cannot even do that until we first get this. So what
I am saying is this kind of held up everything until now. What
I am saying is the dam is going to break tomorrow. I am glad
you two are here carrying on the great Minnesota tradition,
because there is going to be a lot of work to really make this
a reality in the future.
Senator Klobuchar. The New York Times article many have
talked about here quotes an insurance representative suggesting
that the industry would welcome final rules. I think sometimes
people do not think about it, but when there is no guidance or
unclear guidance, it affects everyone, businesses and health
insurers as well. Do you want to comment about that?
Mr. Kennedy. I think insurance would welcome it. Why?
Because they would have clarity that they are playing on the
same level playing field as everyone else. Even the problem of
insurance for all was that community rating. It is so that
everybody is not competing on who can be denied care but is
competing on who can most effectively treat the illnesses at
the most cost-effective way.
This should not be a game of who can cherry-pick and who
can deny. And all I would say is that is the real challenge for
us going forward. And I think insurance companies like that
clarity. They are in the business of clarity. They need clarity
to know how they are going to make their decisions, and the
clearer that we can be with them, I think the more they will
welcome it, because now they are not going to be at a
competitive disadvantage.
Let us say one insurance company decides, well, we are just
going to knock it out for Cathy and her family from here on
out. They cannot be at a competitive disadvantage with their
thinking that, well, but if my competitor does not do that,
maybe I might be at a financial loss.
We need to make it clear that, no, you are all in this
together, we are all in this together, and it is important for
you to do that, to get this final rule, be very clear, and the
implementation of it be very clear.
I would point to the many reviews that Cathy had to go
through to get her claim addressed--internal review and
external review. So, Mr. Chairman, I would also commend to you
that you should take this up, because this is within your
jurisdiction, to oversee how, much like the Banking Committee
dealt with whether banks could self-deal. Right? We had 2008--
the irony is that parity passed on the banking reform, the TARP
legislation.
Senator Klobuchar. Right.
Mr. Kennedy. So what did we put in place to try to fix this
problem of these shady investments? Well, we said you cannot
behave in this way, you cannot self-deal; you know, you cannot
have these rating agencies be the ones you hired tell you that
you are okay. Right? So they are all saying, oh, keep doing it,
keep doing it, keep doing it. Well, of course, everybody knew
that it was suspect, but why didn't the rating agencies say,
hey, fellows, this is not kosher, you have got to stop this?
Why? Because they were being paid by the banks to tell them
what they wanted to hear.
So here is the point: The insurance industry hires
reviewers to tell them how they are doing. Now, what reviewer
is going to tell their employer, hey, fellows, you are really
not acting too well, and you better scale back that whole
process of medical management overtly for and oppressively
against the mentally ill because it is just not according to
law? They are going to say, good-bye, we will get someone else
who can come in and tell us that we are not doing such a bad
job.
I would just say, again, Mr. Chairman, it is process equals
substance. If you get a good process, you are going to have a
better chance of getting a better outcome.
Senator Klobuchar. Ms. Morelli, have you thought through,
if this law was properly implemented, the rules were in place,
how that would have made you and your daughter's life
different?
Ms. Morelli. Yes, perhaps the first hospital I brought her
to would have been the only hospital she had to go to and get
the long-term treatment she needed to stabilize. It would have
been a huge difference. I mean, it got to the point where I had
to send my daughter from Connecticut--I had to send her down to
Virginia. She had been to all the psychiatric hospitals, and I
do not know why they turned her away, but I am guessing, you
know, they were not able to help her the first time with Anthem
denials, and we ended up having to send her down to Virginia
for long-term treatment. And, fortunately, the State of
Connecticut paid for it.
Senator Klobuchar. Thank you.
Chairman Blumenthal. Thank you, Senator Klobuchar.
I want to again thank both of you for being here today.
Congressman Kennedy, I assure you that these regulations will
not be the last word. We are going to continue to be vigilant,
as you have suggested we must be, and make sure that the
promise of this landmark historic legislation is fulfilled. I
will tell you I join in thanking you for your leadership, but
also I can tell you the voice and spirit of your father is very
much with us----
Mr. Kennedy. Thank you.
Chairman Blumenthal [continuing]. On this issue, as so many
others. In this hearing room, in the halls of the Senate, on
the floor, I continue to hear his voice, and I think that his
warrior fighting spirit for justice is one of the principles
and the reasons that I and so many others feel so strongly
about this issue. So thank you, and thank you, Ms. Morelli,
again for your being here, but also your insistence as a parent
that your child and your family be given what it is due. This
story really is about justice, fundamentally. parity is about
justice. And I very much admire your bravery and your strength.
So thank you very much for being here, and we will proceed to
our next panel.
If I could ask the next panel to please stand so I can
administer the oath. That is, as you may know, our practice
here in the Committee. We are not singling you out for special
treatment. Do you affirm that the testimony that you are about
to give to this Committee is the truth, the whole truth, and
nothing but the truth, so help you God?
Mr. McGarity. I do.
Mr. Ditlow. I do.
Mr. Coglianese. I do.
Chairman Blumenthal. Let me introduce each of the witnesses
to the Committee.
Professor McGarity holds the Joe R. and Teresa Lozano Long
Endowed Chair in Administrative Law at the University of Texas
Law School. He has taught environmental law, administrative
law, and torts at the law school since 1980. Prior to then,
prior to this job, he taught at the University of Kansas School
of Law. Professor McGarity has written widely in the areas of
environmental law and administrative law. He is the immediate
past president and member of the Board of Directors of the
Center for Progressive Reform, and we are very, very privileged
to have you here today given your extensive knowledge of the
administrative law issues that so concern us in this hearing.
Clarence Ditlow, well known and renowned as executive
director of the Center for Auto Safety, a consumer group
founded by Consumers Union. He directs the Center for Auto
Safety to improve auto safety, reliability, and he has played a
major role in initiating major reforms and recalls, and he has
testified more than 50 times before congressional committees on
auto safety, warranties, air pollution, consumer protection,
fuel economy, emergency conservation, patents, and inventions.
I could go on about your abundant expertise, sir, but we
appreciate your being here today as well.
And Professor Cary Coglianese is the Edward B. Shils
Professor of Law and Political Science at the University of
Pennsylvania, where he currently also serves at the Penn
Program on Regulation, and he served as the law school's Deputy
Dean for Academic Affairs. He specializes in the study of
regulation and regulatory processes with an emphasis on the
empirical evaluation of alternative regulation and regulatory
strategies. I know that you bring a very, very valuable
perspective to these hearings today, Professor, and I really
thank you for being here today.
I thank all of our witnesses for your patience and
indulgence in waiting for us to begin this panel. We are a
little bit behind, partly because of the vote and other
factors, but I very much appreciate your being here today.
If we could start with you, Professor McGarity.
STATEMENT OF THOMAS O. McGARITY, JOE R. AND TERESA LOZANO LONG
ENDOWED CHAIR IN ADMINISTRATIVE LAW, UNIVERSITY OF TEXAS SCHOOL
OF LAW, AUSTIN, TEXAS
Mr. McGarity. Thank you, Chairman Blumenthal, Ranking
Member Hatch. I am very pleased to be here to testify on----
Chairman Blumenthal. Are you sure your microphone is on?
Mr. McGarity. Sorry. I am very pleased to be here to
testify on a broken rulemaking system.
The authors of the original Administrative Procedure Act
envisioned rulemaking as a relatively straightforward process
for making agency policy through open procedures that relied
heavily on agency expertise and invited the public to
participate in the policymaking process.
The APA also provided for judicial review under a lenient
arbitrary and capricious test. Informal rulemaking has not,
however, evolved into the flexible and efficient policymaking
tool that its supporters envisioned.
During the 1980s and 1990s, the rulemaking process became
increasingly rigid and burdensome as Presidents, courts, and
Congress added an assortment of analytical requirements to the
simple rulemaking model and as evolving judicial doctrines
obliged agencies to take great pains to ensure that the
technical bases for their rules were capable of withstanding
judicial scrutiny under what is now called the ``hard look''
doctrine of judicial review. Professor Don Elliott referred to
this phenomenon in the late 1980s as the ``ossification'' of
the rulemaking process.
It is fair to say that the problem has become even worse
during the 21st century, at least in the case--and I want to
limit myself perhaps to the case of ``high stakes'' rulemaking
where the outcome really matters to the stakeholders, not just
to everyday rulemaking process of relatively non-consequential
rules.
Along with many other scholars, I am convinced that the
rulemaking process is not merely ossified. It is broken. In my
written testimony, I describe several of the causes of the
broken rulemaking model, including the business community's
deregulatory agenda, burdensome procedural and analytical
requirements imposed by courts and various executive orders,
centralized White House review, and overly aggressive judicial
review. This has had unfortunate side effects, including
inefficiency in implementation, reduced incentives to revise
existing rules, reduced incentives to innovate, and an overall
inability of agencies to attain their statutory goals.
The ossification of the rulemaking process has also yielded
perverse unintended consequences. Agencies committed to
fulfilling their statutory missions have sought out
policymaking vehicles outside of the broken informal rulemaking
process. These alternative rulemaking tools, however, often
lack transparency, provide regulated industries and the public
with little notice of the agency's position on critical issues,
and offer few, if any, opportunities for the public to
participate in the rulemaking process.
Some agencies have become so frustrated with the hurdles
that informal rulemaking must overcome that they have attempted
to make policy on a case-by-case basis through adjudications,
directives, and recalls, that sort of thing.
More troublesome from the standpoint of open government is
the increasing tendency of agencies to engage in ``nonrule
rulemaking'' through less formal policymaking tools. Informal
guidance from technical manuals, guidance documents, guidelines
in general are a necessary part of a complex administrative
process. But these are typically promulgated without the
benefit of comments by an interested public. These less formal
policymaking vehicles render regulatory agencies much less
accountable to the public and pave the way to arbitrary
decisionmaking. They may also lack sufficient gravitas and
permanence to allow companies to rely on them in making
important investment decisions.
The increase in agency use of ``interim final'' rules is
especially worrisome. The agencies typically agree to accept
public comment on interim final rules and prepare statements of
basis and purpose for the final rules that are supposed to
follow. One serious problem with this tool, though, is the fact
that the agency need never promulgate a final rule. And when
they do promulgate them, they are often greatly delayed, as we
have seen earlier this afternoon. Interim final rules have a
tendency to achieve a permanence that belies the agency's
expressed willingness to consider public comments.
I mention in my testimony several possible solutions, and
all directed toward taking away the incentive to use rulemaking
avoidance devices by relieving the agencies of many of the
burdensome aspects of the existing informal rulemaking process.
Among these are greater oversight by Congress, which we have
talked about this afternoon as well; eliminating procedural and
analytical mandates in statutes; requiring agencies to finalize
interim final rules within a set period of time, say 3 years;
cutting back on White House oversight; a softer judicial look
at the substance of rules.
This Committee is in an ideal position to begin the lengthy
process of repairing this broken but extremely valuable
rulemaking tool. I applaud the members of the Committee for
holding these hearings, and I welcome your questions.
[The prepared statement of Mr. McGarity appears as a
submission for the record.]
Chairman Blumenthal. Thank you very much, Professor.
Mr. Ditlow.
STATEMENT OF CLARENCE M. DITLOW, EXECUTIVE DIRECTOR, CENTER FOR
AUTO SAFETY, WASHINGTON, DC
Mr. Ditlow. Mr. Chairman and members of the Subcommittee,
thank you for the opportunity to testify on delays in
rulemaking at NHTSA. The Center for Auto Safety has followed
NHTSA for over 40 years, and I would like to put a little flesh
to some of the arguments that have been expressed from
academia.
NHTSA is a wonderful agency. It has a vital mission. If we
had not had a NHTSA, traffic deaths in this country today would
be 200,000 versus 50,000 when the Safety Act was passed. But,
unfortunately, it is woefully underfunded; it does not even
have a laboratory to do its own research for rulemaking and
enforcement actions. Instead, it has to rent space from Honda,
a company that it regulates.
During the first 5 years after its creation, NHTSA issued
almost 50 standards, and in the 40 years since then, it has
issued very few standards. And with rare exception, the
revision of the original standards came from congressional
mandates. So Congress told NHTSA to upgrade the fuel tanks
integrity standard, to upgrade the airbag standard, to set a
standard for head injury, for tire standards, for roof crush,
for pole tests. And I have put the bills in my written
testimony where this has been done.
But when you take a look at the defects and the lack of
rules, whether it is the Pinto, whether it is Firestone tires,
whether it is Jeeps today, whether it is sudden acceleration,
there is a lack of a rule. And because of the lack of a rule,
we have defects in the real world which lead to recalls. And
recalls cost the auto companies a lot of money. They cost
consumers a lot of lives. And we would have been much better
off if we had an effective rule in place, and I have a number
of examples in my full testimony, and I will just go into a
couple of them.
Take a look at tires. The original tire standard was issued
in 1970. It became quickly out of date as we had higher speed
travel, as we had heavier vehicles. Congress in 1978, after the
first Firestone recall, told NHTSA we ought to upgrade the
standard. NHTSA did not do it, so in 2000, we had the Ford
Firestone series of recalls, and this time Congress passed the
TREAD Act, and it mandated that the tire standard be upgraded,
and today we have a good tire standard.
Another real simple example is fused circuits. Two of the
largest recalls ever are ignition switches in Fords and cruise
control deactivation switches in Fords, both of which would
short out and start fires in a vehicle, even if the vehicle was
parked, turned off, and in the garage at night. And in some
instances, a house burned down and people died.
We at the Center for--the Public Interest Research Group
had petitioned NHTSA to fuse electrical circuits, but they
never issued that standard. There was a lot of industry
opposition. It cost money. Well, how much did these recalls
cost Ford? How many lives were lost?
Another instance which we take a look at is electronics. In
1975, NHTSA commissioned the Department of Commerce to do some
evaluation of electronics in cars, and Commerce said
electronics are coming, you need to set standards for
electronics in cars. Instead, what happened, NHTSA did not
issue standards. We had acceleration with Toyota, we had
acceleration in other vehicles. Today we have dozens of
software recalls in vehicles. And what we need is a system
validity check for software and electronics in cars. This is
not setting a standard for what kind of electronics you used,
but make sure that whatever you use goes through a verification
test, a validity test that shows you have been putting good
software and good electronics in the vehicles.
Another, you know, just airbags, the standard--everyone
likes this cite about NHTSA. There is one single standard that
there have been 91 final rules in that standard, tweaking this,
tweaking that, changing course. And today we have airbags that
really work well, but it took us 40 years to get there, and if
we had been there in 10 years instead of 40 years, we would
have saved a lot more lives.
What I would like to do is suggest that this hearing really
provides a unique opportunity to examine the failings of the
Motor Vehicle Safety Program at NHTSA in the rulemaking area.
And if we have a better program, we will have fewer deaths. And
we can do it, but we just have to decide how to do it, and I
will leave the Committee with one final example.
Maybe we need a performance standard with a deadline. When
I started out in government regulation, I worked on two major
rules: one was the Clean Air Act, which required catalysts; one
was the Safety Act, which was going to require airbags. We got
catalysts on cars in 5 years to reduce emissions and clean the
air. Why did we do it? Because Congress set a statutory
deadline to reduce emissions by 95 percent by 1975. The Safety
Act has no performance standard. It just said go out and set
standards and consider passive restraints. But nothing
specific, and we had 30 years of additional delay, which cost
us thousands of lives, and if we had had a better rulemaking
process, we would not have had that delay, and we would have
saved the lives.
Thank you.
[The prepared statement of Mr. Ditlow appears as a
submission for the record.]
Chairman Blumenthal. Thank you, Mr. Ditlow.
Professor.
STATEMENT OF CARY COGLIANESE, EDWARD B. SHILS PROFESSOR OF LAW,
AND DIRECTOR, PENN PROGRAM ON REGULATION, UNIVERSITY OF
PENNSYLVANIA, PHILADELPHIA, PENNSYLVANIA
Mr. Coglianese. Chairman Blumenthal, Ranking Member Hatch,
I very much appreciate the invitation to testify today, and I
want to thank you both for your valuable public service to our
Nation.
The idea that our regulatory system is broken is perhaps
one of the few ideas that almost everyone agrees with today. Of
course, that agreement runs out fairly quickly. The ways that
different people perceive the regulatory system to be broken
vary considerably. Some think the system is out of control.
Others believe it provides too little control of harmful
business conduct. And disagreement obviously also exists over
what to do to fix the broken system.
My testimony today focuses on one widely perceived problem
with the regulatory system: the ossification of rulemaking.
Administrative law scholars point to the National Highway
Traffic Safety Administration as evidence for ossification, as
well as to support their belief that its source lies with
judicial review.
Now, my testimony is that the evidentiary basis for this
widespread belief disappears on closer scrutiny. This is not to
say that every rule is adopted as swiftly as everyone would
like. Today's hearing obviously shows that that does not
happen. Nor is my testimony that rulemaking is always easy to
do. I take note of Representative Kennedy's statement that
developing a final rule is ``not pretty,'' in his words.
But if we are to look at the general policy about the
structure of our regulatory process and think about creating or
modifying rules with respect to judicial review or other
general standards of administrative law, then it is a general
account of the rulemaking process that we need to focus on. And
the conventional story about that general account is that NHTSA
enjoyed no more than about 10 good years from the standpoint of
using regulations to improve the safety of automobiles, and
that after the mid-1970s, the agency, in the face of some
losses in the courts, retreated from rulemaking and shifted its
efforts instead to issuing recalls on defective cars, which is
thought to be a weaker strategy for protecting the driving
public rather than issuing more proactive regulations.
And the villain in the story, the conventional story, is
principally the judiciary. A 1972 decision by the Sixth Circuit
is often thought to be the case that led to the shock to the
system and led NHTSA to retreat and, in the words of some
administrative law scholars, to abandon the process of
rulemaking.
My testimony in detail is in my written comments, but let
me briefly summarize the findings of my research.
First, NHTSA has not abandoned rulemaking. The 2013 draft
report to Congress from the Office of Information and
Regulatory Affairs estimates that over the last 10 years
NHTSA's rules have imposed as much as $10 billion in annual
costs on the economy as well as delivered about $22 billion in
annual benefits, or at least as much as that.
Now, it may be that there is still not enough regulation
from a normative standpoint, but it certainly is not the case
that there is no rulemaking. Nor should one be misled to think
that the number of rules issued in NHTSA's first decade were
all that substantial. In fact, a 2004 study by NHTSA showed
that during the agency's first decade, NHTSA's rules imposed
about $250 in costs on automobiles; whereas, in the 1990s, the
rules adopted then imposed even greater costs, up to about $760
per car.
Second point, NHTSA did not shift in the mid-1970s to a
strategy of recalls. The conventional wisdom is based upon
looking at data on total recalls, and if one looks at just the
recalls initiated by NHTSA, you get a much different pattern.
A third point is that the impact of judicial review in
explaining the pattern of NHTSA's rulemaking and recalls has
been overstated. First of all, most of NHTSA's rules are not
resulting in litigated court decisions. The agency does win a
substantial majority of its cases that do reach a decision. And
the pattern of rules did not drop immediately after the Sixth
Circuit decision in 1972. The pattern of recalls did not
suddenly pick up either, as you would expect from the
conventional story.
Fourth, and finally, other explanations I think offer more
plausible alternative accounts of the historical patterns in
NHTSA's rules, one being if you look at the overall budget that
NHTSA has had for operations and research, you find that the
pattern in its budget tracks fairly closely the pattern in its
number of rules.
Let me just conclude by saying that even though many
thoughtful scholars, many of whom are my colleagues and friends
who I respect, even though they hold fervently to the belief
that, as a general matter, the threat of judicial review has
ossified rulemaking, the well-cited account that we read in the
literature is not very well supported on further examination.
Other studies are beginning to show this with respect to other
agencies as well.
In the end, there may be many problems that lead people to
conclude the U.S. regulatory system is broken. There is just no
systematic evidence that the ossifying impact of judicial
review is one of those.
Thank you.
[The prepared statement of Mr. Coglianese appears as a
submission for the record.]
Chairman Blumenthal. Thank you. I want to thank all of our
witnesses, and if there is no objection, I am going to make
sure that all of your written testimony and the previous
panel's as well be included in the record. But thank you for
keeping your remarks within the 5-minute time limit.
I am going to defer to Senator Hatch for his questions at
this point.
Senator Hatch. Well, thank you, Mr. Chairman. This has been
a very interesting hearing on what many would think would be a
boring set of subjects. But they are not to me.
Dr. Coglianese, let me just start with you and start out
with a very basic question whether the National Highway Traffic
Safety Administration, NHTSA, is in the regulatory game at all.
In his testimony, Professor McGarity says that NHTSA has given
up on rulemaking and focuses instead on recalls. Do you agree
with that?
Mr. Coglianese. No, Senator, I would not agree with that.
The evidence in the Federal Register is that there are rules
still coming out of NHTSA, and one sees that both from looking
at the regulatory impact analyses that are filed in these
rules, that these rules deliver substantial benefits to
society, and they also impose substantial costs to society.
NHTSA itself did an ex post evaluation of its regulations
in 2004 and found that these regulations that NHTSA is adopting
are saving a lot of lives. So there is no evidence of a
systematic abandonment of rulemaking at NHTSA.
Senator Hatch. Some scholars have written that judicial
decisions in the 1970s have led NHTSA to effectively abandon
rulemaking. If that were even partially true decades ago, do
you think that this still has a paralyzing effect on NHTSA
today?
Mr. Coglianese. Well, when it comes to judicial review,
first of all, with a closer look at the evidence, you do not
see the dramatic shift away from rulemaking that is consistent
with a conventional account.
Second, the standard for judicial review, arbitrary and
capricious standard that was enunciated in that Sixth Circuit
decision in 1972, was basically adopted by the U.S. Supreme
Court in the case of State Farm in the early 1980s and has been
continuing to this day. So if it were judicial review that was
really ossifying the rulemaking process, it would be striking
that NHTSA has been adopting additional rules even though it is
doing so under the existing standard.
Senator Hatch. Well, in my opening statement, I noted that
NHTSA has issued literally hundreds of regulatory actions in
just the past decade. On its face, does that not seem
consistent with the accusations that there is so-called
ossification, as you have mentioned, in NHTSA rulemaking? Do
you agree with that or----
Mr. Coglianese. Right, I think the evidence is that NHTSA
is engaging in rulemaking. It is doing so even in the face of
the arbitrary capricious test and the prospect of judicial
review.
Senator Hatch. Okay. Professor McGarity, I appreciate all
you folks testifying here today. It is very important to us.
Your written testimony states that those being regulated are
``no longer put on notice of the standards of conduct that the
agency is applying to them . . .'' Now, this makes it sound
like actual rulemaking is the only way that an agency like
NHTSA communicates such standards or regulations. But as I
understand it, NHTSA issues what it calls a ``Rulemaking and
Research Priority Plan,'' if I have that right.
Now, this document, which appears in the Federal Register,
addresses its anticipated rulemaking and research activities
based on current science and data.
Now, Mr. Chairman, I ask consent that NHTSA's Rulemaking
and Research Priority Plan for 2011-13 be made part of this
record.
Chairman Blumenthal. Without objection.
[The information referred to appears as a submission for
the record, however, due to the voluminous nature will not be
included in the printed version of this hearing.]
Senator Hatch. Now, I do not know how many agencies have a
regulatory road map like this, but it seems to me this
supplements the actual rulemaking. Now, doesn't this prove that
NHTSA is, in fact, communicating standards of conduct for those
being regulated?
Mr. McGarity. My thought on that is that, yes, other
agencies do the same, maybe not as extensively as NHTSA does,
but what this--if I am thinking about the document that you are
mentioning correctly, it puts the regulatees on notice of what
rules NHTSA plans in the future. What I was alluding to in my
testimony is when agencies engage in alternatives to
rulemaking, they do not do this sort of plan when they issue
just a guidance document or, for that matter, when NHTSA issues
a recall, it is not pursuant to some preannounced criteria that
it applies to this particular thing. It's done on a case-by-
case basis.
NHTSA does not use as many of the informal policy guidance,
interpretative rules and that sort of thing as other agencies,
and I would say that my testimony was aimed more at those sorts
of things. That it is not something that NHTSA does.
If I could have a moment, I could respond to Professor
Coglianese's point.
Senator Hatch. Sure.
Mr. McGarity. NHTSA does promulgate lots of rules, but most
of these, I think, are not the major rules that stakeholders
really care about. There are lots of minor modifications, as
Mr. Ditlow pointed out, and I think that sometimes Professor
Coglianese and I and other scholars talk across each other a
little bit, because those scholars that talk about the
ossification of the rulemaking process, we are talking about
major important rules, not just day-to-day rules that get
promulgated, like pesticide tolerances which come out by the
hundreds. So that studies that focus on just total output are
kind of missing the important impact of judicial review--and I
do not limit myself just to judicial review--and Presidential
review and all these regulatory analysis requirements are
having on the agencies as they try to implement important rules
like the ones we heard about earlier today.
Senator Hatch. Okay. If I could ask one more question, in
your testimony you say that NHTSA prefers recalls to
rulemaking. Now, I noted in my opening statement that NHTSA
has, in fact, issued hundreds of regulatory actions in the last
decade; but it also seems to me that the increase in recalls
over the last decade is at least as much due to Congress as it
is to NHTSA. The so-called TREAD Act, which was enacted in
2000, requires that companies identify potential problems and
promptly notify NHTSA. As a result, virtually all recalls are
voluntary rather than initiated by NHTSA, so I am a little
confused by your testimony that NHTSA has given up on
rulemaking in favor of recalls.
Could you just explain that a little bit more?
Mr. McGarity. Sure. In fact, I think that you are exactly
right that in recent years a lot of the recalls have been
spawned by the reports that are made by the companies. In fact,
I think that has been the case for most of NHTSA's history, and
here we have to look a little bit behind the scenes.
A company does not want to have NHTSA declare a recall and
tell the world that this automobile is bad. And what they will
do is when NHTSA has a problem with a car, they go and they
talk to the company about it and they negotiate about it, and
very often that results in a negotiated recall initiated by the
company but, really, if you go beneath the surface of it,
initiated by NHTSA who came to the company with the problem.
In more recent years, after the TREAD Act, I think it is
true that the companies have been coming to NHTSA and
initiating the negotiations about what is going to happen to
protect the public. But I do not exclude those company-
initiated recalls from the basic pattern of NHTSA working
through recalls as much as or more so then through rules. It
has not promulgated that many important rules that have not
been required by Congress.
So, once again, one of the solutions I suggest is that
Congress require more of these rules, as they have, with
respect to NHTSA.
Senator Hatch. Both of you gentlemen have been great. Mr.
Ditlow, I appreciate personally the work that you do, and I
just want to compliment you for hanging in there and doing what
you do.
Mr. Chairman, I am grateful you have had this hearing. I
have got to be excused, but I appreciate all three of you being
here as well as the prior panel. This has been a good hearing.
Chairman Blumenthal. Thank you, Senator Hatch.
Senator Hatch. Thank you so much.
Chairman Blumenthal. Thank you.
I have some questions, not lengthy, but I want to express
my appreciation to you for being here.
Mr. Ditlow, perhaps you could comment on the comments made
by Professor Coglianese. I noted in your testimony toward the
end you cited an oil industry executive telling you at one
point that he once asked his counterparts in the automobile
industry why they opposed virtually every NHTSA rule or
regulation, no matter how big or small, and he told you that
their strategy was to focus on the little things so they never
got to the big things. And I suspect that these numbers about
rules and regulations or the numbers of pages in the Federal
Register perhaps are not fully reflective of what is happening
with rulemaking. And maybe you could just comment.
Mr. Ditlow. That is certainly true and----
Chairman Blumenthal. And if you could turn on your
microphone.
Mr. Ditlow. That is certainly true, and what is happening
is the industry knows that NHTSA has limited resources, and
they only have so many lawyers to work on so many rules. So if
they oppose every single rule, no matter how big or how small,
then that is one less lawyer, one less rulemaking that they may
be able to do that is important. And taking a look at what has
happened recently, there have been two really good standards to
come out of NHTSA in the last 5 years: one is electronic
stability control, and one is side curtain airbags. And both of
those were performance standards, but they resulted in these
systems, and they are saving a lot of lives. But it was
Congress that mandated that NHTSA do this.
And so what I would suggest is that the premise that NHTSA
is not issuing rules is correct. I mean, what is happening is
Congress is dictating to NHTSA to issue rules in the face of
NHTSA's inaction. And NHTSA's inaction is in large part due to
the amount of resistance that comes from the auto industry.
And we can look at rules getting tied up at OMB. Well, the
industry lobbyists are over at OMB opposing that and submitting
information on the costs of a new regulation, and it gets
delayed. And if there was one failing on backup cameras, it was
not setting a hard and fast deadline. You know, give the
industry--give NHTSA the ability to make one, maybe two
extensions, but not a perpetual extension where all they have
to do is come to the Congress and say we need another year.
Chairman Blumenthal. I noted particularly your reference to
the absence of any safety standard for electronic controls and
computer processing units in cars, which now have become so
reliant on electronic devices and controls, and yet there is no
safety standard. Perhaps you could talk about the implications.
Mr. Ditlow. Yes, well, modern cars have 50 to 100
electronic processors in them, and there is no standard for
these electronic processors. And organizations like IEEE have
standards where you can validate the computer software, the
electronic devices themselves, that you can determine how
complex they are, what is the likelihood that the code will be
wrong in them. And NHTSA has not set any standard whatsoever in
that area. And to the extent that they have standards, what
they are trying to do is apply mechanical concepts to
electronic systems so that if you have a key fob that starts a
car, their standard says inserting the code into the ignition
via the key fob is the same as inserting a key into the dash.
Well, it is not the same, and the code can be flawed, and there
is no test of the code. And that is what NHTSA needs to focus
on, and we have an agency that is under--required to do a study
for Congress as a result of the legislation that was passed in
MAP-21. But there is no standard that is forthcoming. We have
not seen the study yet, and I am afraid that we are headed into
something like was discussed in the first panel: Where is the
regulation? Is the regulation going to be coming? No. We are
going to get a study. And what is the study going to say? It is
going to say we need more time. And it is going to be a long
time coming before we see an electronic standard from this
agency.
Chairman Blumenthal. And the absence of these regulations
has real-world consequences in imperiling lives and perhaps
causing crashes and imperiling people.
Mr. Ditlow. Absolutely. What we are seeing with the
unintended acceleration and the litigation that is arising is
that the electronics and software experts are coming in, they
are examining the source code in the Toyotas, and they are
finding bugs and glitches in it that can cause and did cause
sudden acceleration, and these cases are now being upheld by a
jury. And it is just tragic. We should not have--one of our
objectives at the Center for Auto Safety is to eliminate these
causative accidents and eliminate the product liability cases,
because they are failures in society. You have a victim who has
been injured, and we need to have fewer victims and better
regulations.
Chairman Blumenthal. Let me ask you, Professor Coglianese,
I am sure you are familiar with this area: What do you think
about the need for standards relating to electronic controls
and computer devices in cars?
Mr. Coglianese. I am not an auto safety engineer so I am
not--you know, I am not going to opine on that. So I really
would like to, if I may, just take one moment to reply to
Professor McGarity's point earlier, if that would be permitted.
Chairman Blumenthal. Sure.
Mr. Coglianese. Thank you very much.
I just wanted to note that the rulemaking that I am talking
about, that I observe at NHTSA, are not all these little
technical amendments. Every year the Office of Information and
Regulatory Affairs files a report to Congress on regulations,
and there is a table in it, and OIRA puts the agencies that
have the most significant rules in it. And out of hundreds and
hundreds of agencies for the last 20 years, NHTSA has appeared
in that report, and the dollar amounts for the benefits are
incredible from NHTSA rules. And, of course, the costs are very
high, too. So there is significant rulemaking that is taking
place at NHTSA.
Thank you.
Chairman Blumenthal. I am going to give Professor McGarity
an opportunity to respond, but you would not dispute that, at
least on its face, there seems to be a need for some regulatory
effort in regard to the electronic devices and computers that
are now more and more present in cars.
Mr. Coglianese. Certainly to the extent that those systems
are part of cars and they could pose safety hazard, a
responsible regulator definitely should be looking at them.
Chairman Blumenthal. And is there any dispute--I would ask
this of all the panelists--that NHTSA presently has authority
to issue such regulations or rules?
Mr. Coglianese. I do not have a dispute with that.
Chairman Blumenthal. Professor McGarity, do you wish to
respond?
Mr. McGarity. Just briefly, I would simply say that those
huge benefits, although I have not looked at it in detail, my
guess would be are coming from rules that Congress mandated by
a deadline so as to avoid the ossification problem. So I would
make that point, that my guess is that most of those, the
benefits are attributable to major rules that Congress
required, which is one of the solutions I suggest.
Chairman Blumenthal. Let me ask all three of you, you have
been here for the earlier testimony. You heard about this delay
in the issuance of mental health parity regulations. You have
experienced with respect to NHTSA and more generally in terms
of the regulatory governance area delays and so forth. What is
the best way to prevent such delays? And who would have
standing to challenge an agency that simply fails to comply
with a deadline for issuance of regulation? We are not talking
about disagreements with the regulations, challenges to their
substantive merit, which could be, in effect, questioned by
someone aggrieved by them, someone subject to the regulations
if they were harmed, but simply the delay, who has standing to
challenge?
Mr. McGarity. Well, to the extent that there is a statutory
deadline--I think Professor Coglianese will agree with me--the
beneficiaries of the regulation, the erstwhile beneficiaries of
the regulation or groups representing those beneficiaries,
should be able to challenge agency action not taken under the
Administrative Procedure Act or sometimes under the individual
statutes, to the extent that they have standing, which still
the test is that they are aggrieved and are arguably within the
zone of interest protected by the statute.
Chairman Blumenthal. But the statute in question may or may
not apply to them, depending on what the regulations provide.
And since the regulations are not final, it is kind of a Catch-
22. I would argue that there is standing under a correct and I
think legal interpretation of the standing doctrines. But I
wonder how common those challenges are. Maybe, Professor
Coglianese, you have some----
Mr. Coglianese. Well, in areas such as environmental law,
where many statutes contain very specific deadlines, the
deadlines are quite frequently not met. But they are not always
subjected to any judicial challenge. Those who might bring the
lawsuits have--you know, have resource constraints as well. But
the remedy is there.
Of course, once one gets into court after an agency has
missed a statutory deadline, the ultimate remedy is for the
court then to impose its own schedule or timetable. You know,
obviously the court will not be able to grant the remedy of
meeting a deadline that has already passed.
I think, though, from the standpoint of overall public
policy, the question is: Are we getting ultimately enough
benefits from delay to justify the lost opportunities that we
would gain from acting sooner? There may be many cases in which
delay is valuable and needed if it means creating a regulation
that will be more effective or that could avoid a very
counterproductive result. And in the case of automobile safety,
it seems at least, just as much as a responsible regulator
needs to look into some of the problems, a responsible
regulator also needs to make sure that their regulations do no
harm and that they are not going to put in place something that
in the complex engineering of an automobile creates an
additional hazard that had not been anticipated.
Mr. Ditlow. Senator Blumenthal, standing is something that
really concerns public interest organizations. The Center for
Auto Safety won a lawsuit against the Department of
Transportation on fuel economy standards, but we lost it on a
rehearing en banc on standing. So we won on the merits, but we
lost on the issue of standing.
And even in the area of safety, the way the courts have
looked at standing in recent years gives us qualms about
whether or not they will restrict the access to the courts for
the citizens' groups trying to even enforce a deadline.
So we would like to see a citizen suit provision put into
the Safety Act, just like we have in the Clean Water Act. I
mean, that would help.
Chairman Blumenthal. Excellent idea. Let me ask, then,
perhaps all of you: How common are challenges based on delays
in rulemaking? And do they succeed ever? Do you know of any?
Mr. Coglianese. Oh, sure. I mean, there was a major one
under the Clean Water Act that led--often these lead to
settlements because the factual issue is pretty clear. One
looks at the calendar and one looks at the Federal Register,
and there is no need for a lot of depositions or such. So they
settle out of court. Most of the toxic water pollutant
regulations were adopted, for example, under a decree that was
issued as a settlement of a deadline suit.
Mr. Ditlow. Consumers Union and Public Citizen and some
parents are in a challenge in the Second Circuit over the
backup camera, failure to issue the backup camera rule. But
there is no firm deadline, and so they waited 2 years to file
that lawsuit.
I would like to point out one thing in terms of recalls and
standards. Some standards, like the backup camera standard,
there is no--you will not see a recall for failure to install a
backup camera. But you will see a recall for things like a
defective cruise control circuit, the lack of a fuse. So I
would take what Professor McGarity does and refine it just a
little bit and say that recalls do, in fact, become a
substitute for good rules in certain areas, but in other areas
it is a totally ineffective tool.
Chairman Blumenthal. Did you have anything to add,
Professor McGarity?
Mr. McGarity. Only just a slight thing, and that is that
Professor Coglianese is right that we have many suits in the
environmental area that have resulted in settlements in which
the agency has established its own deadline. Sometimes it goes
back to court and asks for an extension of it, but there are
many of these.
There is, however, in the other House a movement afoot to
stop these settlements from happening, so one needs to be aware
of those as well.
Chairman Blumenthal. Thank you. Well, again, I really
express my gratitude to all of you. You have greatly informed
the Committee, and I hope that perhaps we will take some of
your ideas and implement them in ways that will be helpful to
agencies meeting the deadlines that are established by this
Congress, but also enabling better compliance, swifter
promulgation of these rules so that the public can benefit from
the laws that we make. So I thank you very much and adjourn
this hearing.
[Whereupon, at 3:47 p.m., the Subcommittee was adjourned.]
[Questions and answers and submissions for the record
follow.]
A P P E N D I X
Additional Material Submitted for the Record
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Prepared Statement of Hon. Richard Blumenthal
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Prepared Statement of Hon. Patrick J. Kennedy
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Prepared Statement of Cathy Morelli
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Prepared Statement of Thomas O. McGarity
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Prepared Statement of Clarence M. Ditlow
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Prepared Statement of Cary Coglianese
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Questions submitted by Senator Whitehouse for Thomas O. McGarity
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Responses of Thomas O. McGarity to questions submitted by Senator
Whitehouse
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Miscellaneous Submissions for the Record
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