Henry Hyde

Mr. HYDE

Mr. HYDE. Yes, Mr. Speaker, it is our intent the commission would be free to study the public safety cost that gambling operations, including those operations on Indian reservations, impose on local law enforcement agencies. I believe that is implicit in subparagraphs A, D, G, H, and M of subsection 4(a)(2).

Mr. HYDE. Mr. Speaker, National Gambling Impact and Policy Commission Act (H.R. 497) would create a national commission to study the economic and social impact of gambling in our country. The legislation is the concept of our colleague, and my good friend, Congressman Frank Wolf of Virginia. This measure is on the floor of the House largely because of his articulate advocacy and persistence. A study of the impact of gambling on our society--focusing on both its positive and negative aspects--will be a helpful tool for policymakers at the Federal, State, and local government levels. Frank Wolf has identified a very important public policy issue and he deserves high praise for his efforts. On September 29, 1995, the full Judiciary Committee held a hearing on H.R. 497. At that time, we heard from 15 witnesses, including 8 Members of Congress. Also, subsequent to our hearing, the committee received 15 additional statements for the record from other interested organizations and individuals. During our hearing, we heard virtually every point of view on gambling and its effects. For example, we had testimony on the problem of compulsive gambling. We also heard from a university professor focusing on the economic aspects of gambling--that is, job creation, impact on tourism, State and local government revenue, et cetera. We also heard testimony from the chairman of the National Indian Gaming Association, documenting how the emergence of an Indian gambling industry in recent years has had a positive impact on employment, economic development, and overall self-sufficiency for Indian tribes. Still others testified regarding the relationship between gambling and crime, including organized crime. Based upon this extensive committee record and personal study, I concluded that a study commission on gambling in the United States is a good idea. As the Washington Post proclaimed in its headline for an editorial endorsing the bill: ``For Once, a Useful Commission!'' The Post went on to observe that ``commissions can * * * play the useful role of bringing to national attention issues that were previously submerged or debated in fragmentary ways.'' In my view, it is particularly timely for us to have a balanced, impartial, and comprehensive look at whether or not the spread of gambling is good for this country. Over the last two decades, legalized gambling has expanded extensively throughout our country. Currently, 48 States allow some form of legalized gambling. We have State-conducted lotteries, riverboat gambling, Indian gambling, and casino gambling. For better or worse, gambling has become a commonplace part of the American culture. Just this week, the Washington Post illustrated the explosive growth of gambling: What had been a mob-infested vice has become state-approved fun--a new national pastime. While 70 million people attend professional baseball games each year, 125 million go to government-sanctioned casinos. Adults now spend more money gambling than they spend on children's durable toys. Three times more pilgrims from around the world visit the pyramid- shaped Luxor Hotel in Las Vegas than visit Egypt. Casinos rake in more profits than movie houses and theaters and all live concerts combined. The Washington Post, March 3, 1996 at A1. Many believe that this widespread expansion of legalized gambling has had numerous negative effects. In some instances, this conclusion is undoubtedly true. For example, many opportunities to gamble are now available to minors who are not ready to make a mature judgment about the nature of this kind of activity. Furthermore, compulsive gamblers frequently have a negative, sometimes tragic, impact on their families. The traditional linkage between gambling and crime is also an obvious concern. To give just one example, a GAO report issued in January concluded that ``the proliferation of casinos, together with the rapid growth of the amounts wagered, may make these operations highly vulnerable to money laundering.'' General Accounting Office, ``Money Laundering--Rapid Growth of Casinos Makes Them Vulnerable,'' GAO/GGD- 96-28, B-259791 (January 1996) at 2. As gambling continues to spread, these negative effects and others spread with it. In addition, the proponents of H.R. 497 have pointed out the lack of reliable information about the actual effects of gambling. We simply need better and more accurate scientific and behavioral data concerning gambling. Because of this lack of information, State and local policymakers, who are considering the legalization of gambling in various forms, are often vulnerable to exaggerated claims about the positive effects of gambling and the prospects for painless revenue generation. Just 3 months ago, a Maryland State study commission concluded: The Maryland Congressional delegation should support the immediate creation of a national commission to study issues related to commercial gaming and should recommend that the commission complete its work within one year. States are unable to confidently make decisions about casino gaming because of competitive concerns about the decisions of their neighbors and because of the inadequate data and analysis available to them. The Task Force believes that the proposed national commission on gambling, currently being considered by Congress, could make a significant contribution to public policy development. Final Report of the Joint Executive-Legislative Task Force to Study Commercial Gaming Activities in Maryland, December 1995, at xiv (emphasis added). I also want to stress that I have listened to the critics of H.R. 497 as introduced, and they too have some valid points to make. In particular, they said that they do not fear the outcome of an objective study. However, they did express concern that the Commission as proposed in the original version of H.R. 497 might be biased against gambling per se and that it was only charged with looking at the negative effects of gambling. I believe that this Commission can do the most good if its study is as neutral, objective, and comprehensive as possible--considering the views of all sides of this issue. In that spirit, I proposed a committee amendment in the nature of a substitute to H.R. 497, which the Judiciary Committee adopted on a voice vote. My substitute included the vast majority of the provisions contained in H.R. 497 as originally introduced, but it added language so as to assure that all points of view would be represented on the Commission. Specifically, the bill now requires that the appointing authorities consult together to ensure that the overall makeup of the Commission fairly and equitably represent various points of view. It also drops the requirement that one seat on the Commission go to a State Governor. I want to avoid going down the difficult road of specifying which group gets what seat on the Commission because I believe that is a decision better left to the collective wisdom of the appointing authorities--the President, the Speaker, and the majority leader of the other body. In addition, the amendments add language that would require the Commission to study both the positive and negative aspects of the economic impact of gambling. I believe that the opponents of H.R. 497 will agree that these changes are a good-faith effort to address their concerns about the fairness and balance of the Commission. At the Judiciary Committee hearing, I heard members of the committee express particular concern about the issue of advertising concerning gambling activities. Because of that concern, the amendment adds language that would require the Commission to study that issue. At the suggestion of our colleague, Congressman Hoke, we added even further specificity to the advertising language, and I appreciate his contribution and his willingness to work with us on this issue. Senator Dick Lugar, as well as the Governor of my own State of Illinois, Gov. Jim Edgar, raised the issue of gambling through the Internet and other interactive technologies. The amendment adds language directing the Commission to look at this aspect of the issue. We have also added language that will require the Commission to study the impact of revenue from State-sponsored gambling on State budgets. With respect to all of these changes, my thinking is that the more comprehensive the Commission's study is, the more useful it will be. Another major change the amendment would make is to shorten the time period for the study commission from 3 to 2 years. The Maryland study commission urged that we make the time period even shorter. This will reduce the costs involved with this effort. The amendment also made changes of a technical and conforming nature. During committee consideration of this bill, Congressman Bono, Congressman Schiff, and Congressman Gallegly expressed concerns about whether the proposed Commission would end up being overly biased against gambling operations in general, and Indian gambling operations, in particular. I worked with these members to craft language to amend H.R. 497 to address these concerns. These changes include: First, language to clarify that the Commission is to study all forms of commercial gambling include State lotteries, casino gambling, pari- mutuel betting, and sports betting; second, language that clarifies that the study of political contributions should include all political contributions that influence public policy on gambling, not just those of gambling operators; and third, language originally suggested by Congressman Frank that would require the Commission to study the extend to which casino gambling has provided economic opportunity for Indians and residents of economically depressed areas. I also agreed to add language to the report that further addresses their concerns about the fairness of the makeup of the Commission. Subsequent to our consideration of the bill, the Resources Committee sought and received sequential referral of the bill to review specifically its effect on Indian gambling. After its consideration, that committee made a suggestion of one amendment that would clarify the bill's description of the gambling regulatory policies to be studied so that it now includes tribal regulatory policy. I have accepted that amendment, and it is part of the substitute text we consider today. I want to thank Chairman Don Young for his cooperation in this matter. I also want to note that by cooperating with the Resources Committee, the Judiciary Committee does not waive any of its traditional jurisdiction over Federal gambling statutes and gambling issues generally. I think all of these changes make the bill more balanced and comprehensive, and I appreciate the contributions of all of these members in working with us to make this a better bill. I have discussed the various changes contained in my substitute amendment, as well as the Resources Committee amendment, with Congressman Wolf, and he has indicated his full support for all of these changes. I urge my colleagues to adopt the improvements embodied in the committee amendment and to pass H.R. 497 as amended. Mr. Speaker, I yield 3 minutes to the gentlewoman from Nevada [Mrs. Vucanovich].

Mr. HYDE. Mr. Speaker, will the gentleman yield?

Mr. HYDE. Mr. Speaker, I hesitate to quote Shakespeare, and probably inartfully, but me thinks ``thou doth protest too much'' seems to hang over this Chamber today. I have never heard so many Members defending States rights. This is virgin territory for them, and I welcome them to the ranks of States rights defenders, but I almost began to imagine the Stars and Bars were being waved over there with some vigor because, God forbid, the Federal Government cross into a State to examine its gaming industry. First of all, there is no proposal to regulate here. There is no proposal to tax. The only proposal is to recommend changes. We do that every day in the thousands. We are great change recommenders. But that would be based on a study made of an industry that is indeed an interstate industry. It is a national phenomenon, and it deals with big, big money. It has an impact on commerce. Money that is spent in a casino is not money that is spent in a local store or retail outlet, and that is fine. Let people spend the money the way they want. Let them gamble up a storm. I once heard about a slot machine that took wristwatches when you ran out of money. That is all right. Let it happen. But let us know about it. Let us study it. Let us find out what the impact is on our society, on our commerce, and on the people engaged in this activity. It is a legitimate activity. I would never want to declare it illegal. But what is wrong with learning something about it? I do not think there is anything wrong with it. All this bill does is set up a commission. We assume and hope and expect that it will be fairly constituted by people of intelligence and integrity, and at the end of the 2 years we will know something about a major industry dealing with important money in this country. I do not see anything wrong with that.

Mr. HYDE. Mr. Speaker, I yield 1 minute to the distinguished gentleman from California [Mr. Riggs]. (Mr. RIGGS asked and was given permission to revise and extend his remarks.)

Mr. HYDE

Mr. HYDE. Mr. Speaker, will the gentleman yield?

Mr. HYDE. Mr. Speaker, I have no more speakers. Whatever the gentleman would like to do, I am at his disposal.

Mr. HYDE. Just one, yourself?

Mr. HYDE. I yield to the gentleman from North Carolina.

Mr. HYDE. Mr. Speaker, I yield myself such time as I may consume. I want to say to my friend from North Carolina, I agree that we should aim toward due process for everybody. The gentleman has stipulated in his hypothetical that the product is shoddy. We have to have a trial to determine who is at fault. The plaintiff in the United States has a recourse, has a remedy, if that plaintiff is injured. He can sue the seller of the product because the seller is treated as the manufacturer in the United States if service cannot be had on the manufacturer.

Mr. HYDE. Mr. Speaker, I yield myself such time as I may consume. This is a very confused situation and it really should not be. We are talking about manufacturers from Prague, Czechoslovakia, for example, former Czechoslovakia, now the Czech Republic, who do not do business here. They do not have an agency here. They do not have anything here. They are in Prague and they manufacture a product. Somebody buys it and takes it over here, brings it over to the United States, and it goes from Bangor, ME, to Tallahassee, FL, to Omaha, NE. And then something happens, somebody gets hurt, and they have got jurisdiction over this Czech Republic company in Omaha, NE. And they file a lawsuit. They, under this bill, they have got jurisdiction. They make demands for discovery, which if they are unanswered, are conceded as admitted and a judgment occurs. Now, that cuts both ways. That can cut against American companies overseas. There is no need for this process. There is a process whereby due process can be accomplished through the Hague Convention. But here we are conferring jurisdiction, not service of summons, jurisdiction on a court where a manufacturer nowhere near the United States knew or should have known that their product might end up in California or Seattle or somewhere. Now, that is not treating foreign corporations or stinky little corporations, to use the words of the next Secretary of State, but what it is is conferring jurisdiction where there really should be no jurisdiction and contrary to due process. So that is why this is objectionable. If the gentleman is so convinced that it is a sound law, it has been passed. It is in the conference. I dare say, the gentleman from the other body will find it very attractive. I do not.

Mr. HYDE. Mr. Speaker, would the Chair advise how much time remains?

Mr. HYDE. Mr. Speaker, I yield such time as he may consume to the distinguished gentleman from California [Mr. Dreier]. (Mr. DREIER asked and was given permission to revise and extend his remarks.)

Mr. HYDE. In fact, they have so much money they could almost be Democratic Senators.

Mr. HYDE. I can only express the found hope that when we do get to debating immigration this hostility toward foreigners is somewhat diminished. I do not mean on the part of the gentleman from North Carolina, but others, who shall be nameless. Mr. Speaker, I reserve the balance of my time.

Mr. HYDE. He is running for President, by the way.

Mr. HYDE. Who happens to be a multimillionaire in my hypothetical.

Mr. HYDE. I forever yield to the gentleman from North Carolina.

Mr. HYDE. Mr. Speaker, I hope the gentleman in Prague can find an attorney in Omaha to run in and defend himself before he has defaulted and the default judgment is entered so that due process gets at least a pass at being respected.

Mr. HYDE. I yield to the gentleman from North Carolina.

Mr. HYDE. Mr. Speaker, reclaiming my time, I disagree. The gentleman is looking for protection and recourse for the injured plaintiff, and the injured plaintiff can have it against the seller. Now you wish to have a multimillionaire manufacturer in Prague. They still are entitled to due process, and it is not due process by requiring some clairvoyance on the part of the manufacturer to know where that product may end up in the United States.

Mr. HYDE. Mr. Speaker, I yield myself 30 seconds, simply to comment how enjoyable it is to be instructed on questions of jurisdiction and service of process from Mr. Justice Dingell. He just short-circuited the real issue, which is jurisdiction, not where you serve process. Jurisdiction under the amendment under discussion is bad, it states, The Federal court in which such action is brought shall have jurisdiction over such manufacture if the manufacturer knew or reasonably should have known that the product would be imported for sale or use in the United States. That does not apply to any domestic corporation, and it is not boilerplate. It is something radically different. Mr. Speaker, I yield such time as he may consume to the gentleman from Ohio [Mr. Oxley]. (Mr. OXLEY asked and was given permission to revise and extend his remarks.)

Mr. HYDE. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, the motion to instruct conferees is an attempt by opponents of product liability reform to discourage or preclude agreement between the House and Senate on this important legislation. If you favor excessive litigation related expenses, inflated settlement offers, increased liability insurance rates, and higher prices for goods and services, you may want to tie the hand of the conferees. On the other hand, if you want to foster U.S. competitiveness in international markets, preserve and expand employment opportunities here at home, and protect the American consumer, you will oppose this motion to instruct. A vote for this motion to instruct is a vote to potentially kill product liability reform in this Congress. I am very skeptical that the Senate is willing and able to pass a conference report which includes the Conyers amendment. Adoption of this motion would interfere with our ability to arrive at a final agreement with the Senate on this most important bill. The motion to instruct does not end special treatment for foreign companies, in fact it would require that special rules be applied in product liability litigation involving foreign manufacturers. Foreign manufacturers would be subject to suit in any Federal court; foreign manufactures would be subject to service of process anywhere in the country; and discovery omissions by foreign manufacturers would be deemed admissions of the facts sought to be discovered. The best way to provide a level playing field for American businesses is not to legislate different discovery standards for foreign businesses, but to rein in the costs of product liability cases and change our legal system from a game of Russian roulette to one which provides fairness and certainty to all litigants. Far from creating a level playing field, the Conyers amendment discriminates against foreign companies by requiring them to subject themselves to service of process to a degree not required of any other litigant. American corporations are not required to make themselves available to suit anywhere in the United States, merely because they knew or reasonably should have known that their product would be in the stream of commerce in that jurisdiction. A person injured by a product manufactured by a foreign corporation will be able to sue and recover damages even if the foreign manufacturer is not subject to suit in the United States. The conference report will include a provision making product sellers liable as manufacturers when the manufacturer is not subject to service of process under the laws of the State where the action is brought. This new rule is unnecessary. There is no evidence that foreign manufacturers routinely refuse to appear in American courts, and the Hague Convention already establishes procedures for service of process on foreign corporations. The motion raises significant constitutional and international law concerns, represents a serious potential irritant in our bilateral relations with other countries, and raises the specter of foreign retaliation against American firms. As a signatory to the Hague Convention, the United States is bound to follow its procedural rules. The Conyers amendment, if adopted, would require the United States to renege on its international obligations in this regard. The Commission of the European Communities and its member states have expressed strong opposition to the Conyers provision, because it ignores the rights of defendants in countries outside the jurisdiction of the country of litigation, and ignores the sovereign rights of countries which have different procedural rules than that of the United States. If the Conyers provision is enacted, it is likely that other countries will also ignore the provisions of the Hague Convention, and begin applying their own procedural rules to American companies whose products enter the stream of commerce abroad. American businesses stand to lose, not gain, from this provision. The special rules for foreign manufacturers are not supported by American businesses. Many domestic companies have international affiliates that would be adversely affected by the special rules; many use component products manufactured abroad. The special rules will disadvantage American businesses when both foreign and domestic manufacturers are defendants in the same litigation. They will encourage plaintiff's lawyers to join foreign companies so as to expand the venues in which suit can be brought. This will raise the cost of litigation for American companies. I strongly urge the House to defeat the motion to instruct. We must not create a stumbling block to product liability reform. Mr. Speaker, I reserve the balance of my time.

Mr. HYDE

Mr. HYDE. Mr. Speaker, today I am introducing legislation designed to ensure that the antitrust laws permit full utilization of private cooperative initiatives which can help make the Nation's health care system more efficient. H.R. 2925, the Antitrust Health Care Advancement Act of 1996, provides that when doctors, nurses, and hospitals form integrated joint ventures to offer health are services, their conduct will be reviewed on the basis of its reasonabless--rule of reason--for purposes of the antitrust laws. The end result of this case-by-case analysis will be to increase consumer choice while ensuring full competition in the marketplace. Health care provider networks, or HCPN's--those composed of doctors, hospitals, and other entities who actually deliver health care services--are potentially vigorous competitors in the health care market. Their formation will lead to lower health care costs and higher quality of care. Costs will be lower because contracting directly with health care providers would eliminate an intermediate layer of overhead and profit. Quality will be higher because providers, and particularly physicians, would have direct control over medical decisionmaking. Physicians and other health care professionals are better qualified than insurers to strike the proper balance between conserving costs and meeting the needs of the patient. Currently, however, there are obstacles to the formation of HCPN's. One of the most serious is the application of the antitrust laws to such groups in a manner which does not allow the network to engage in joint pricing agreements, regardless of whether its effect on competition is positive rather than negative. It is this obstacle, that H.R. 2925 will eliminate, by conforming agency enforcement practices to the manner in which courts have interpreted the law. Antitrust law prohibits agreements among competitors that fix prices or allocate markets. Such agreements are per se illegal. Where competitors economically integrate in a joint venture, however, agreements on prices or other terms of competition that are reasonably necessary to accomplish to procompetitive benefits of the integration are not unlawful. Price setting conduct by these joint ventures should be evaluated under the rule of reason, that is, on the basis of its reasonableness, taking into account all relevant factors affecting competition. The antitrust laws treat individual physicians as separate competitors. Thus, networks composed of groups of physicians which set prices for their services as a group will be considered per se illegal under the antitrust laws if they are not economically integrated joint ventures. In the typical provider network, competing physicians relinquish some of their independence to permit the venture to win the business of health care purchasers, such as large employers. These networks promise to provide services to plan subscribers at reduced rates. The ventures also achieve another central goal of health care reform: careful, common sense controls on the provision of unnecessary care. However, agreements among physicians who retain a great deal of independence but set fees for their services as part of a network bear a striking resemblance to horizontal price fixing agreements. These are the most disfavored and most quickly condemned restraints in antitrust jurisprudence. The key factual question which distinguishes an arrangement that is per se unlawful from one which, upon consideration of the circumstances, is acceptable because it is not anticompetitive in nature, is the degree of integration of the individuals who form the network. While the antitrust laws provide substantial latitude in the context of collaboration among health care professionals, there is an understandable degree of uncertainty associated with their enforcement. Because each network involves unique facts--differences not only in the structure of the network, but also in the market in which it will compete--the ability of providers to prospectively determine whether their arrangement will be considered legal is limited. In order to eliminate this uncertainty, and to encourage procompetitive behavior that would otherwise be chilled, the Department of Justice and Federal Trade Commission have established a mechanism for prospective review of proposed HCPN's. In 1993, the antitrust enforcement agencies jointly issued ``Statements of Enforcement Policy and Analytical Principles Relating to Health Care and Antitrust.'' These guidelines, which were amended in 1994, contain safety zones which describe providers network joint ventures that will not be challenged by the agencies under the antitrust laws, along with principles for analysis of joint ventures that fall outside the safety zones. A group of providers wishing to embark on a joint venture may request an advisory opinion from the agencies. The agencies, after reviewing the particulars of the proposed venture, then determine whether the network would fall within a safety zone, or otherwise not be challenged under the antitrust laws. The problem is that these enforcement guidelines articulate standards that are more restrictive than the realities of the agencies' enforcement practices and the current state of the law. They treat as per se illegal many more networks than the antitrust laws would require. The guidelines promise rule of reason treatment to ventures where the competitors involved are ``sufficiently integrated through the network.'' This is consistent with judicial interpretations of the law. See, e.g., Broadcast Music, Inc. v. Columbia Broadcasting Sys., 441 U.S. 1, 19-20 (1979). Where the guidelines diverge significantly from current law, however, is in defining integration solely as the sharing of ``substantial financial risk.'' A network which integrates in any other way--regardless of the extent of that integration, or whether a court interpreting the antitrust laws would find it to be integrated-- cannot qualify as a legitimate joint venture. This means that the agencies would not proceed to examine the specific facts of these joint ventures to determine their likely impact on competition; the arrangement would be deemed per se illegal. This restrictive notion of what constitutes a legitimate joint venture discourages procompetitive ventures from entering the health care marketplace, under the guise of antitrust enforcement. It excludes potential provider networks which would mean an expanded set of consumer choices and increased competition, and thereby, lower costs, for health care services. H.R. 2925 overcomes this barrier by requiring that the conduct of an organization meeting the criteria of a health care provider network be judged under the rule of reason. The result will be to permit a case- by-case determination as to whether the conduct of that HCPN would be procompetitive, and thus permissible under the antitrust laws. It is important to understand, however, that this is not an exemption from the antitrust laws. In no event would providers be allowed to set prices or control markets if, in doing so, they have an anticompetitive effect on the market. The normal principles of antitrust law will continue to apply. Only an organization meeting specified criteria would qualify for the more liberal, rule of reason consideration. The network must have in place written programs for quality assurance, utilization review, coordination of care and resolution of patient grievances and complaints. It must contract as a group, and mandate that all providers forming part of the group be accountable for provision of the services for which the organization has contracted. If these criteria are not met, the entity could still be considered per se illegal. Rule of reason consideration would be extended not only to the actual performance of a contract to provide health care services, but also to the exchange of information necessary to establish a HCPN. An important limitation on the exchange of information is that it must be reasonably required in order to create a HCPN. Further, information obtained in that context may not be used for any other purpose. H.R. 2925 delegates to the Department of Justice and the Federal Trade Commission authority to specify how rule of reason consideration would be implemented under these circumstances. Mr. Speaker, the Antitrust Health Care Advancement Act of 1996 means greater choice for consumers regarding health care services and the delivery of quality health care at lower price. Later this month, on February 27 and 28, the full Judiciary Committee will be holding hearings on health care reform initiatives, both in the antitrust area and in the liability area. H.R. 2925 will be one of the proposals considered in those hearings.

Mr. HYDE

Mr. HYDE. Mr. Speaker, I would like to pay homage to the gentleman from Virginia [Mr. Bliley], the gentleman from Texas [Mr. Fields], the gentleman from Michigan and ranking member [Mr. Conyers], the gentleman from Michigan and ranking member [Mr. Dingell], Senator Pressler, and all of the staffs who have done enormously important work in bringing this to fruition. This legislation represents the most sweeping communications reform legislation to be considered in this House in over 60 years. It will establish the ground rules for our national telecommunications policy as we enter the 21st century. Mr. Speaker, I am happy to yield to the gentlewoman from New York [Mrs. Lowey] for the purpose of engaging in a colloquy.