Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - August 06, 2009)

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By Mr. WHITEHOUSE (for himself, Mr. DURBIN, and Mr. SESSIONS):

S. 1606. A bill to require foreign manufacturers of products imported into the United States to establish registered agents in the United States who are authorized to accept service of process against such manufacturers, and for other purposes; to the Committee on Finance.

Mr. WHITEHOUSE. I rise to speak in support of the Foreign Manufacturers Legal Accountability Act of 2009, which I am introducing today with the ranking member of the Judiciary Committee, Senator Sessions, and Senator Durbin. This bipartisan bill is an important step in protecting American consumers and businesses from injuries caused by defective products manufactured outside the United States. Those products hurt American consumers--they lead to serious injuries, and even death--and they hurt the American businesses that must deal with angry customers, product recalls, and unusable inventory.

The list of recent examples of Americans injured by defective foreign products is shocking. Last year, a contaminated blood thinner from a foreign manufacturer caused severe medical reactions and contributed to numerous deaths. In 2006, a foreign-made, lead-tainted charm bracelet claimed the life of a 4-year-old. The autopsy demonstrated that the charm was 99 percent lead, 1,650 times more than the 0.06 percent lead limit specified in enforcement guidelines for children's jewelry. Imported food products from seafood to honey have been contaminated with unthinkable chemicals, including veterinary drugs banned in domestic production, potentially harmful antibiotics, and unapproved food additives. Sixty million packages of pet food contaminated with tainted wheat gluten have been recalled in the last two years. Substandard tires have failed, leading to fatalities. Most recently, defective drywall imported from China has been found to contain excessively high levels of sulfur, causing houses to smell like rotten eggs, corroding copper wiring, and making expensive appliances fail. Thousands of homes may be affected.

At a hearing that I chaired in May, the Subcommittee on Administrative Oversight and the Courts explored the legal hurdles facing consumers who are injured by defective foreign products and by businesses that find that their foreign partners refuse to honor their contracts. These hurdles allow foreign manufacturers to continue to injure American businesses and consumers, and also put American manufacturers at a competitive disadvantage since they allow foreign manufacturers to offer cheaper products that do not comply with American safety requirements. Two major hurdles to proper accountability are the inability to serve process on the foreign manufacturer and the ability of that foreign manufacturer, even if served, to evade the jurisdiction of American courts. As the witnesses testified at the hearing, legislation that addresses these issues is necessary and appropriate. The Foreign Manufacturers Legal Accountability Act addresses both concerns.

The first problem, the inability to serve process on a manufacturer, essentially means that it is difficult for an American to give a foreign manufacturer the documents necessary to give it the legally required notice that it is the subject of a lawsuit. This sounds like a simple step, and it should be. Unfortunately, however, it is very hard to serve process on foreign companies abroad. As witnesses explained at the hearing in May, service abroad is complicated by the Hague Convention on the Service Abroad of Judicial and Extra Judicial Documents in Civil and Commercial Matters, to which the United States is a signatory. Under that convention, a complaint must be translated into the foreign language, transmitted to the Central Authority in the foreign country, and then delivered according to the rules of service in the home country of the defendant. This can cause months and even years of delay, not to mention great expense for Americans.

The Foreign Manufacturers Legal Accountability Act will allow Americans to overcome that procedural hurdle by serving legal papers inside the United States on registered agents of foreign manufacturers. The bill requires the heads of federal government agencies such as the Food and Drug Administration to pass regulations requiring that foreign manufacturers of products regulated by their agencies register an agent who will accept service of process. It allows regulators to exclude manufacturers who only import a minimal amount of products into the United States. It imposes a minimal burden on foreign manufacturers, since they would only have to appoint one agent to accept service of process for all state and federal regulatory and civil actions anywhere in the United States. The bill allows the manufacturer to choose any location for that agent with a ``substantial connection to the importation, distribution, or sale of the products of such foreign manufacturer or producer.'' This clear and straightforward system will allow Americans to commence their lawsuits fairly and promptly, and ensure that foreign manufacturers have proper and fair notice of the proceedings brought against them. It will not conflict with American obligations under the Hague convention, since that convention applies to service of process on foreign manufacturers in their home countries, not in the United States.

The second hurdle, the inability to establish personal jurisdiction over foreign manufacturers, can end a lawsuit against a foreign manufacturer before it even begins. Think about how unfair this is. A foreign manufacturer sells its defective products in the United States, injures American consumers and businesses, and then argues that it is not subject to the courts in the state where the American was injured--in legal parlance, that the courts do not have personal jurisdiction over it. As witnesses explained at the hearing, foreign manufacturers raise this technical legal defense to avoid liability even when serious injuries or even death have been caused by their products--their defective tires, fireworks, exercise equipment, bikes, and toys.

The Foreign Manufacturers Legal Accountability Act will enable injured Americans to surmount this hurdle. It will make clear to foreign manufacturers that by importing their products into the United States and by registering an agent in the United States, they are consenting to the jurisdiction of the courts in the state where their agent is located. By consenting to jurisdiction, the manufacturers will avert unnecessary and expensive legislation about technical legal issues and allow courts to settle the merits of disputes. This approach is fair to foreign manufacturers since all American manufacturers are subject to the jurisdiction of the courts of at least one state. This bill therefore complies with the trade principle that we should not subject foreign manufacturers to burdens not already imposed on domestic manufacturers.

Indeed, the Foreign Manufacturers Legal Accountability Act is ultimately about fairness. We all know American manufacturers comply with regulations that ensure the safety of American consumers and businesses. When they fail to do so, they must answer to regulators and are held accountable through the American tort system. Unfortunately, however, foreign manufacturers are not being held to the same standards--injuring American consumers and businesses, and putting American manufacturers at a competitive disadvantage. We must level the playing field for all manufacturers and provide justice for American consumers and businesses. The Foreign Manufacturers Legal Accountability Act will allow us to make a major step in that direction. It covers major product categories including consumer goods, drugs, cosmetics, and chemicals, and it requires relevant agencies to study workable approaches to ensure that foreign food producers also are brought within the ambit of the American legal system.

Protecting Americans and holding foreign manufacturers accountable when their products harm American consumers and businesses is a bipartisan issue. Everyone agrees that we should do what we can to keep Americans safe from defective products. So too, I think, do we all agree that American companies should not be at a competitive disadvantage to their foreign counterparts. The Foreign Manufacturers Legal Accountability Act builds on those fundamental agreements. I am grateful to my colleagues Senator SESSIONS and Senator DURBIN for their hard work on this bill and look forward to working with my colleagues on both sides of the aisle to see it passed into law.

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By Mr. WHITEHOUSE:

S. 1624. A bill to amend title 11 of the United States Code, to provide protection for medical debt homeowners, to restore bankruptcy protections for individuals experiencing economic distress as caregivers to ill, injured, or disabled family members, and to exempt from means testing debtors whose financial problems were caused by serious medical problems, and for other purposes; to the Committee on the Judiciary.

Mr. WHITEHOUSE. Mr. President, I rise today to introduce legislation that would help families struggling with medical debts overcome hurdles that under current law make it difficult for them to find relief in the bankruptcy system. With medical costs at an all-time high and the unemployment rate hovering near 10 percent nationwide--and 12.4 percent in my home State of Rhode Island--too many individuals and families struck with injury and illness have no other option but to file for bankruptcy. According to a recent Harvard University study, health care-related costs have been a primary driver of personal bankruptcy filings, contributing to over 62 percent of filings in 2007.

The statistics are as shocking as the personal stories are heartbreaking. Countless Rhode Islanders have written to me during my time in office asking for help with crippling medical costs, and I want to share just two of their stories with you today.

Adam, a 23-year-old from Bristol, recently underwent surgery for cancer. Adam's treatment plan requires him to undergo a CT scan every 2 months. While his insurance initially paid for his health costs, he received word not long after his surgery that his policy was ``maxed out'' and that he would have to pay $6,700 out of pocket for an upcoming CT scan. As of today, Adam, a young man just starting his adult life, has $20,000 in medical debt and reports that he ``cannot see any light at the end of the tunnel.''

Robert, a veteran and retiree also from Warwick, suffered a major heart attack in November of 2004. Although he had health insurance, Robert was responsible for paying a $2,000 deductible plus 20 percent of the cost of his care. After 40 years of working and saving, these medical costs wiped him out, and he had to sell his home.

Adam and Robert have both suffered unexpected medical costs that have turned their lives upside down. These Rhode Islanders, like millions of others nationwide, may be forced to file for bankruptcy to get a clean start--but when they do, they will learn that the bankruptcy process can be time consuming and costly and ultimately may not allow them to stay in their homes.

The legislation that I am introducing today, the Medical Bankruptcy Fairness Act of 2009, would help people who because of medical costs have no other choice but to file for bankruptcy. The bill would waive procedural hurdles so that Adam and Robert would have the option of a speedier, less expensive, and more efficient bankruptcy. To begin with, it would waive credit counseling requirements for these debtors. Such requirements have little relevance to people whose debt stems not from poor budgeting but, rather, from uncontrollable medical expenses. The bill would also waive the so-called ``means test,'' making the filing process quicker and less costly and making sure that people have the ability to file to have their debts discharged in chapter 7, as opposed to a chapter 13 plan under which they would have made debt payments for 3 to 5 years.

In addition to removing these procedural hurdles, the Medical Bankruptcy Fairness Act would give people with high levels of medical debt the ability to retain at least $250,000 in home value through the bankruptcy process. The ``homestead exemption'' is one of many aspects of bankruptcy law that looks to the laws of the individual States. While filers in some States already have the ability to preserve home equity at this level, a number of States offer homestead exemptions of $5,000 or less. With the average home price nationwide around $200,000, the $250,000 exemption included in this bill will allow the majority of individuals and families crushed by medical debt to keep their homes.

Finally, the bill would eliminate an obstacle that prevents many bankruptcy filers from accessing the chapter 7 bankruptcy system, which as I mentioned earlier is the simplest and most efficient form of bankruptcy. Because attorneys' fees are ``discharged'' at the end of a chapter 7 bankruptcy, attorneys generally require the upfront payment of fees in chapter 7 proceedings. Many debtors who would be better off filing for a quicker and less costly bankruptcy in chapter 7 are forced to file in chapter 13 because they don't have enough cash to pay the attorney. The Medical Bankruptcy Fairness Act would make attorneys' fees nondischargeable in chapter 7 bankruptcies, as in chapter 13 bankruptcies, making it easier for debtors to elect the more efficient chapter 7 proceeding.

Before I conclude, I want to acknowledge the hard work of my colleague from Massachusetts, Senator Kennedy, on the issue of medical debt. Senator Kennedy offered amendments during the consideration of the 2005 bankruptcy reforms that would have given people struggling with medical debts treatment similar to that which they would get under the Medical Bankruptcy Fairness Act. Unfortunately, those amendments were voted down. I look forward to working with Senator Kennedy to make sure that we don't miss another opportunity to help Americans struggling with medical debt.

There are people in every State suffering from medical hardship and related debts who would benefit from this legislation. I urge my colleagues to work with me to pass it to Adam and Robert and the millions like them nationwide a clean start in bankruptcy.

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