By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – Courts finally come to the rescue of the Texas consumer, while it looks like the global small investor will have to bite the bullet. I'm Maxine Shapiro with KERA Marketplace Midday.
So your HMO told you they would not pay for the doctor recommended-you-better-get-or-else procedure because, well, probably it was just too expensive? Maybe you should get cheaper treatment or none at all. For a while there, you had no recourse. Sure, in 1997, the Texas Legislature passed a law that patients could seek an independent review over such denials. But Aetna sued to overturn the law, and wouldn't you know it, they won. A Federal Judge in Houston struck down the review board. The state of Texas actually appealed and the Fifth U.S. Circuit Court of appeals said nah, no review board. Then along comes the U.S. Supreme Court, on its shiny white horse, and struck down a similar case in Louisiana. So surprise, surprise, the Fifth Circuit ruled Monday to uphold the 1997 law, and patients now have a right to challenge the HMO's decisions.
I wish I had cheerier news for the small investor. With about $11 trillion lost in the market since the March 2000 downturn, the average investor has had little recourse. It's not just that the market went down; no one has control over that.
Investing in equities is a risk. But what about the analysts who knew a company was not worth its value, yet publicly praised the stock with positive recommendations? In May, Merrill Lynch paid a $100 million fine to settle a charge that it had issued misleading research reports. Where did the money go? To the individual states - not the investor. Oh, and they had to publicly apologize. Now Citigroup might be settling with a fine of $300 million plus, accompanied by a public apology. Don't you feel better?
But the global settlement, which would include 11 top Wall Street firms, seems to be stalling. And the longer it takes, I fear the weaker the settlement. I enthusiastically agree with House Financial Services Committee Chairman Michael Oxley, who said yesterday the money "should not be a Christmas gift for state treasuries," but should be returned to the investor. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m. To contact Maxine Shapiro, please send emails to mshapiro@kera.org.