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No Freebies

Bill forces some Chapter 7 filers to head over to Chapter 13 and pay up a little.
May 1, 2001
URL: http://www.entrepreneur.com/article/39758

Arguing that small businesses cannot afford the astronomical losses associated with abuse of the bankruptcy system, Bruce Josten, executive vice president of the U.S. Chamber of Commerce, threw the weight of his organization behind a new bankruptcy reform bill that has been passed in the House and the Senate.

H.R. 333 is the reincarnation of H.R. 2415, the bankruptcy reform bill that easily cleared the House and Senate at the end of 2000 but was pocket-vetoed by President Clinton. While President Bush has not committed to supporting or opposing H.R. 333, White House Press Secretary Ari Fleischer says Lawrence Lindsey, Bush's economic advisor, "has spoken favorably" about passing bankruptcy legislation.

H.R. 333 would prevent some well-off consumers from opting for Chapter 7 bankruptcy, where they are absolved of all their debts. Both the Chamber and financial industry companies point out that the number of personal bankruptcies has skyrocketed over the past few decades to 1.4 million in 1998. And Ernst & Young reports between 8 and 10 percent of Chapter 7 filers could repay some of their debt. Under H.R. 333, well-heeled abusers would be funneled into Chapter 13, the bankruptcy status requiring some repayment of debt.

Who cares? Small-business groups are none too happy with the managed-care reform bill introduced in February by Sens. Ted Kennedy (D-MA) and John McCain (R-AZ). Neil Trautwein, health-care lobbyist for the National Association of Manufacturers (NAM), calls the Bipartisan Patient Protection Act of 2001 a "public relations ploy masquerading as a compromise."

As in the last session of Congress, a key managed-care reform issue will be patients' ability to file lawsuits against insurance companies and employers in state and federal court. The McCain-Kennedy bill would allow patients to sue for civil assessments of up to $5 million or unlimited economic and nonecomomic damages based on allegations that an employer-sponsored medical plan denied the patient care he or she should have received. If the patient and his or her physician feel the patient was denied "medically necessary" treatment, the patient could also sue for punitive and other damages in state courts for as much as state law allows. "Patients deserve basic rights and need to be given the tools to enforce their rights without promoting frivolous lawsuits," says McCain.

Trautwein answers, "While sponsors claim they've given ground by capping federal punitive damages, that $5 million cap is still enormous and is cold comfort to employers who would face unlimited economic and non-economic damage in state and federal courts and unlimited punitive damages in state courts."

On the records: OSHA has made some fairly significant changes in its newly revised record-keeping rule, which goes into effect January 1, 2002. One item not changing, however, is the small-business exemption: OSHA had considered expanding the record-keeping exemption from companies with 10 or fewer employees to those with 19 or fewer, but, in the end, stuck with its original provision.

The OSHA 200 Log and Summary and 101 forms will be replaced by 300 Log, 300A Summary and 301 forms. The 300 Log, on which companies record injuries and illnesses, will be easier to use; ditto for the 300A Summary, which is posted annually in the workplace. The 301 form is used to record information about individual injuries. The idea behind the new forms is to simplify reporting and to alleviate the need for companies to report minor injuries. So, for example, where a company currently must report as work-related an employee who burns his lip while drinking coffee during lunch, that will no longer be required in 2002.


Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.