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A Watchdog, Not a Lapdog
AG Blumenthal takes his consumer-protection role seriously.
But is there anyone he won't sue?
Richard Blumenthal became Connecticut's 23rd attorney general in 1991. Before that he served two terms each in the state House and Senate. From 1977 to 1981 he was U.S. Attorney for the state. Educated at Harvard College and Yale Law School, Blumenthal and his family reside in Greenwich.
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Business New Haven
2/22/1999
By: BNH
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When SBC Communications purchased SNET, they made a number of promises to the state regarding rates, employment levels, etc. Who made that deal with SBC - your office or the Department of Public Utility Control (DPUC) - and how is it now supposed to be enforced?
The deal that they struck was essentially framed by the DPUC. [The AG's office] had additional, more stringent, demands they we thought should be made - for example, specific rate reductions. The DPUC rejected our proposals and instead set forth their own. SBC made various promises - although I'm not sure if they're legally binding - but they added enough qualifications and caveats that I'm not sure they can be held to [their promises].
Is your office out of it now, or are you still involved in monitoring and enforcement?
We are continuing to be involved in overseeing, for instance, the issue of cable TV. That's an issue on which we and the DPUC have common ground to seek to ensure competition. We wanted SBC to continue to provide cable; there is still some question as to whether they will. But we're continuing to scrutinize what [SBC] does. But now we're working with the DPUC conditions, not ours, so we're much more limited in what we can do.
As an informed observer, at the very least, has the Telecommunications Act of 1996 done what it was supposed to for consumers? It seems mainly to have concentrated ownership both here and elsewhere. And is this something that is reviewed or monitored on the state level?
Well, we do [monitor the telecommunications industry], and we're involved nationally as well. We joined the litigation involving SBC on a number of these issues. It's enormously complex, but it gives the federal government a predominant role - nearly an exclusive role - in some of these areas. But [the Telecom Act] certainly has not fulfilled the hopes that many had for it in terms of increasing competition or providing more choices for consumers. Many regard it as a sobering experience in terms of the drawbacks of deregulation.
By 'drawbacks,' you refer to...
Increasing ownership concentration, not always more choices - and when there are choices, many of them are extraordinarily confusing, complex, sometimes misleading, and accompanied by many abuses such as 'slamming' and all the rest of it.
Some of the state's cities are suing gun manufacturers. What do you think of the merits of this type of action? Comparing it with the tobacco lawsuits, it was state attorneys general, not municipalities, which initiated the litigation.
Connecticut cities, and all our citizens, have been directly and disastrously affected by gun violence. It's a problem that affects everyone in our state, and I welcome the focus on gun safety resulting from this kind of legal action. If the gun manufacturers have irresponsibly fostered illegal trafficking - which was the contention in the New York private lawsuit, and is the contention in Chicago's lawsuit - or if they have failed to develop feasible safety technology - which has been New Orleans' theory - the industry ought to be held accountable. There are parallels, no doubt, between these lawsuits and our lawsuit against the tobacco industry. But there also are distinct differences between the industries, and they take different legal approaches. The bottom line is that we're exploring the issue and considering whether state action is appropriate.
Your office took legal action against a Philadelphia-based HMO, HealthRight Inc., alleging Medicaid abuses that cost the state millions. Do the problems with HealthRight point to the need for greater regulation and scrutiny of HMOs, rather than trying to deal with abuses after they take place?
They underscore the need for scrutiny over the whole industry. Health-care fraud is literally a billion-dollar problem in Connecticut alone, a multi-billion-dollar problem in the nation. There was a piece in the [February 10] New York Times about the latest audits that the U.S. government has done, saying there's been a reduction in improper payments to health-care providers over the last year, but still cost the government $12.6 billion. That's Medicare alone. So that gives you some idea of the extent of health-care fraud. The estimate is that about ten percent of all health-care dollars involve fraud - they go to fraudulent claims, over-billing, mis-billing. It's particularly pervasive in the managed-care system we have now. HealthRight is only one example of it.
Back to the tobacco settlement: How much money does Connecticut stand to yield?
Connecticut will get $3.6 billion over 25 years. If you factor into that number the mandatory inflation adjustment of a minimum of three percent, it comes out to $5.5 billion. The payments go on in perpetuity.
What do you think ought to be done with that money?
We put out a detailed proposal that called for 45 percent of this money each year to go toward anti-tobacco education, outreach, community programs, advertising, treatment for people who are addicted - in other words, reaching kids before they are addicted, and treating people who are already hooked to break the addiction. Also, better enforcement of laws prohibiting sales [of tobacco products] to minors. Another 45 percent should go to public health in general. It could be health insurance, it could be hospitals, it could be education - and it doesn't necessarily have to be linked to tobacco. And then ten percent should go into an endowment fund which would not be spent until it reached $100 million, and then the interest should be spent on community-type programs [relating to tobacco]. The main point is: We want to use tobacco's money against tobacco. It shouldn't simply be amalgamated into the General Fund.
You're the lead attorney general into the investigation by state attorneys general from across the country into the Exxon-Mobil merger. What is the status of that investigation?
We're very actively helping to lead an ongoing investigation. We're receiving literally hundreds of thousands of documents and other materials from the two companies. A number of other states and the FTC [Federal Trade Commission] have been active on this.
The state has laws against sending unsolicited faxes. Is there any legislation in the works concerning unsolicited e-mails? And if not, should there be?
Literally yesterday [February 11] I testified before the General Law Committee on a bill that I had introduced to prohibit unsolicited e-mails. It would extend the same prohibitions - [a penalty of] $1,000 per violation - to unsolicited e-mail as we now have for unsolicited faxes. As part of the same bill - and business people may or may not like it - I've also introduced legislation that would require anyone who collects private financial information - credit-card companies, supermarkets - to notify the individual consumer when the company is going to sell that information, and give the consumer the right to object in writing. In other words, the company would not sell your information without first obtaining written permission. The theme of both parts of that bill is the right to privacy.
In issues pertaining to Internet commerce, is the battleground likely to be state law or federal law?
Eventually there should and will be national legislation, because no field is more appropriate to federal protection than electronic technology and communications. [It renders] state borders meaningless. But the federal government hasn't succeeded in fashioning a policy, let alone protective measures, and we need these consumer protections at the state level. Also, typically many protective measures - consumer safety, toy warnings, automotive-safety measures - begin at the state level. Justice [Louis] Brandeis once said that, 'The states are the laboratory for the nation.' [States] tend to experiment, to see what works and what doesn't - and then Congress can learn from it. But to answer your original question, eventually [protections against electronic intrusion] ought to be, and I hope will be, federal in scope.
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