Contact
William H Sorrell
Assistant Attorney General
Phone: 802-828-3173

Vermont Attorney General William Sorrell, along with the Attorneys General of New York, California, and eight other states, joined a friend-of-the-court brief in the U.S. Supreme Court arguing that U.S. immigration policy may be set only by the federal government and that Arizona’s illegal immigration legislation is inconsistent with, and preempted by, federal law.

Arizona’s law requires its State law enforcement officials to engage in enforcement activities to detain and arrest individuals who appear to be undocumented immigrants, without regard to federal immigration priorities. The Arizona law also criminalizes any work, effort to work, or failure to comply with federal registration requirements by undocumented immigrants.

“When I issued the Bias-Free Policing Model Policy for adoption by Vermont Law Enforcement, I said that ‘Vermont is not Arizona’”, said Attorney General Sorrell. “I remain supportive of law enforcement efforts on federal immigration issues, but only if consistent with federal priorities.”

The states’ brief argues that Congress has made clear that the federal government has the exclusive authority for setting a nationwide immigration policy with specific enforcement priorities. The brief also argues that allowing states to set individual state priorities would result in diversion of federal resources from the priority areas set by the federal government, such as enforcement against dangerous criminals.

Connecticut, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Oregon, and Rhode Island joined Vermont, New York, and California on the brief.

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Contact
Wally Roberts
Phone: 802-262-6105
Email: wroberts@commoncause.org

Voters at least 57 town meetings this year showed great common sense in approving resolutions urging Congress to pass a Constitutional amendment to reverse a U.S. Supreme Court ruling of two years ago that permits corporations to make unlimited independent expenditures in election campaigns, Wally Roberts, Executive Director of Common Cause of Vermont, said today.

“This is the beginning of a movement to take back our democracy from the pernicious influence of Big Money,” Roberts said. “The people of Vermont are showing the way to a better democracy.

“Even if unlimited expenditures and large campaign contributions don’t actually result in corrupt acts by elected officials, the fact that 80 percent of Americans believe the system is corrupted by Big Money could sound the death knell for our democracy unless we change things,” he said.

“We have a long way to go, 67 Senators and 37 state legislatures, but thousands of ordinary Americans forced the change that gave women the right to vote, so it can be done again.”

As of noon, only two towns had voted against passing the resolution and results from five other towns were still outstanding.

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Vermont AG William Sorrell, right, said his office lacked the evidence needed to bring criminal charges against Vermont Yankee Officials. At left is Asst. Attorney Gen. John Treadwell. VTD/Josh Larkin

Entergy Corp. filed a motion with the U.S. District Court on Friday to recover $4.6 million in legal fees for its lawsuit against the state.

The Louisiana company prevailed in federal court on Jan. 20 when Judge J. Garvan Murtha struck down two state laws that required Entergy to seek approval from the Legislature to continue operating Vermont Yankee Nuclear Power Plant past its 40-year anniversary and to store high level nuclear waste at the plant site.

The state has 30 days to appeal the decision.

Entergy says it is entitled to an award of attorneys’ fees because it also prevailed on its claim under the Commerce Clause.

Chanel Lagarde, spokesman for Entergy, said in a written statement that “the law allows for the prevailing party to seek recovery of attorney’s fees.”

“We believe this is the appropriate next step for our company in this case where we were compelled to challenge several Vermont state laws that we believed were unconstitutional and were in fact found to be unconstitutional,” Lagarde said.

Download the motion Entergy Attorney Claims 2-3-12.

Vermont Attorney General Bill Sorrell said he expected Entergy to request attorneys’ fees.

“I was certain it would be all of seven figures, I just didn’t know how far into seven figures it would be,” Sorrell said. “It’s a little higher than I thought.”

Sorrell said “they threw a lot of legal horsepower at us, they went into the record extensively and they charged New York City rates.”

Entergy hired Kathleen Sullivan, the dean of Stanford Law School, to litigate the case. Sullivan was on the short list of candidates for Obama’s recent Supreme Court appointment, and she has been described as “one of the most trusted advocates before the United States Supreme Court.” Sullivan unearthed a detailed record in which she said lawmakers made references to safety as justification for a decision to deny Entergy a permit to continue operating the 40-year-old nuclear plant for an additional 20 years. States can’t regulate the safety of a plant under federal law; safety is the purview of the Nuclear Regulatory Commission.

The state can challenge the amount of the fee, Sorrell said. “This is a long way from over,” he said.

Sorrell said his office can question whether the lawyers’ hourly rates and the amount of time they spent on the case was reasonable. Entergy can’t claim relief for any legal work related to the questions about the reliability of the nuclear plant, he said.

It’s not unusual for litigants to go through a mediation process and retain experts to review attorneys’ fees, according to Sorrell.

“It’s not that they get to say this is what you give us,” Sorrell said. “There’s a lot of lawyering to be done on a request of this magnitude.”

Sorrell pointed to the prescription datamining case as an example of how the state has negotiated with other litigants. The state lost the case against IMS, a drug datamining company last summer in proceedings before the U.S. Supreme Court. The attorney general said he couldn’t reveal how much IMS is requesting for attorneys’ fees, but he said the state is negotiating with the company to reach a settlement. The state has already settled with one of the litigants in the case, Pharma, an advocacy group affiliated with IMS for about $1.75 million.

Will Entergy’s $4.6 million request affect Sorrell’s decision to appeal? “Not really,” he said.

“Some have speculated that we would be intimidated by the amount not to go further with an appeal,” Sorrell said. “Others have said it reinforces the reasonableness of an appeal because if the decision is overturned we don’t pay a dime. We’ll look at the appeal on its own merits.”

Cheryl Hanna, a professor at Vermont Law School and an expert on constitutional law and the U.S. Supreme Court, said the judge ruled that the state of Vermont violated Entergy’s constitutional rights and that entitles Entergy to legal fees.

“As a general rule, we allow that,” Hanna said. “We want to give incentives to enforce constitutional rights even when there is no money involved.”

Vermont doesn’t have to pay damages, she said, but “we allow for requests for attorneys’ fees so that lawyers will take these (constitutional rights) cases.” Hanna said fees are requested for a wide range of cases whether the litigants are inmates or multi-million dollar corporations.

Hanna says it will be up to court to decide how much to award.

“Unless the state prevails on all counts, we will probably end up paying for Entergy’s lawyers,” she said. “We don’t get a discount rate because we’re in Vermont. The court will force us to pay New York rates.”

Last year, the Shumlin administration pushed for a “billback” provision that requires Entergy to pay the state’s legal fees. Sorrell advised the Legislature to move ahead with the change in statute, which would make Entergy Corp. liable for the state’s legal expenses, including responses to public records requests and the preparation of litigation in the case.

Whether the court would honor this provision, in light of the judge’s dismissal of the state’s authority in matters of pre-emption, is an open question.

Editor’s note: This story was updated 5:40 a.m. and again at 6:25 a.m. Feb. 4.

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“Vermont has a very real interest in seeing the Affordable Care Act upheld by the Supreme Court. Although some perceive the Act as an example of the federal government imposing its will on the States, it actually gives the States much flexibility in the provision of quality health care for all. The Act is a prime example of federalism at work,” said Attorney General Sorrell.

In August 2011, a divided United States Court of Appeals for the Eleventh Circuit ruled that the Patient Protection and Affordable Care Act’s minimum coverage provision, which requires that individuals maintain adequate health insurance, is unconstitutional. The United States government appealed that decision to the U.S. Supreme Court, which will hear oral arguments in the matter in March 2012.

This past Friday, Vermont joined several other states in filing a brief that urges the Supreme Court to uphold the Act. The brief stresses that health care is a major part of the national economy, and that the federal government already plays a critical role in paying for and providing health care. The Act is both a constitutional exercise of Congress’s broad powers to regulate interstate commerce and an indispensable aid to the states in their own efforts to tackle the health care problems their residents face.
Also joining Vermont in this brief are California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maryland, New Mexico, New York, Oregon, the District of Columbia, and the Virgin Islands.

A copy of the brief may be found at the Attorney General’s website: www.atg.state.vt.us. ###

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Supreme Court Justice Sonia Sotomayor, the first woman Latino to serve on the high court, spoke at Vermont Technical College in Randpolph Dec. 10, 2011. VTD/Anne Galloway

RANDOLPH CENTER – The 111th Supreme Court Justice of the United States paid a whirlwind visit to Vermont this weekend, and judging from the smiles all around, she made quite an impression.

Justice Sonia Sotomayor dined in a quiet back corner of Sarducci’s Italian restaurant in Montpelier Friday with Sen. Patrick Leahy, his wife Marcelle, his sister Mary Leahy and others. She bunked for a restful night at the Inn at Montpelier, and then early Saturday morning, wowed a crowd of several hundred people for nearly 80 minutes at the 15th Annual Women’s Economic Opportunity Conference at Vermont Technical College.

By 10 a.m., accompanied by two watchful secret service agents, she was out a back door of Judd Auditorium and on her way to the airport, leaving behind a standing ovation, a serious buzz and the image of a very eloquent, thoughtful, funny and warm person.

In a question-and-answer session with journalist Fran Stoddard, Sotomayor eschewed the lectern and told stories that captured her tough upbringing in the South Bronx, her education at Princeton and Yale Law School, her ambitions, experience in the law and the bias she felt as a woman and Latino.

“I think stories sort of explain your life and what you are thinking,” she said.

She also spoke her mind, though not about judicial matters or issues before the court.

Sotomayor, 57, told the gathering that she felt the “American dream” – which she gained by becoming a federal judge and then in 2009 a Supreme Court Justice – is harder to achieve today and that gender bias remains a subtle but persistent problem.

Sotomayor, only the third female supreme court justice and the first Latino, credited “the real pathmakers” such as Supreme Court Justice Sandra Day O’Connor, who came before her for overcoming overt gender bias. She has had a different experience as part of the “second wave” of women taking up careers as judges, she said, but bias still exists today.

“It is more subtle and more searing in many ways,” she said, saying the problem comes from “expectations of what the perfect employee should be,” a decision that is usually made in the workplace by men.

“That’s a more difficult structural problem. It takes a proactive employer” to deal with, she said.

Citing as an example the different ways an “aggressive” man or woman is viewed in the workplace, she said society still has work to do to change perceptions. She also urged women to be politically active and “let politicians know what priorities are important to you.”

Asked about the quality of the justice system, Sotomayor said, “It’s a problem when it costs more to incarcerate a prisoner than to send a kid to college.”

America was “not going to have a system of justice you’re proud of” when resources for early education, nutrition, access to defense attorneys and rehabilitation programs are being cut back. She decried the fact the justice system has “given up altogether” on the value of rehabilitating and educating prisoners, because of a few highly publicized errors in releasing prisoners.

Relating her own experiences with racial bias, which she said “happen more often than you could imagine,” Sotomayor said bias against women may be harder to address in society because it is so structurally endemic.

“In the end, I do believe that getting past racial and ethnic bias may be easier than getting round gender bias,” she said.

Sotomayor cited hard work, luck and having someone “who has uncritically loved you” as keys to her success. Her mother and grandmother provided the love that gave her confidence to believe she could be a judge.

“My grandmother was the center of the universe,” she said. “I was gifted with extraordinarily strong women.”

Women today face more barriers in the workplace and “there’s no question it’s harder today” to succeed, she said, noting the high cost of a college education and difficulties in the current economy in finding a job.

Sotomayor also said society has created expectations of success that “are so unreal that you are almost doomed to failure.”

She urged women to keep their focus on the values of work and family. “The American dream is possible if you have a dream that’s based in values that are important,” she said.

Asked about her education, she said when she was urged to apply to an “Ivy League” school, she didn’t know what that was. When she got in to Princeton, having been raised in the projects where she spoke mostly Spanish, she struggled, she said.

“I didn’t know what I was getting into,” she said, describing herself as “an alien in a strange land” compared to peers who had gone to private schools and traveled on spring break. After her first year, she spent the summer reading all the “classics” that everyone else had read in high school.

Sotomayor said she survived by grounding herself with activities and people she knew and emerged Phi Beta Kappa at the top of her class.

Sotomayor was sworn in on Aug. 8, 2009, and became the 111th justice on the court, a number attached to her name that tickles her still. “I smile internally, because my grandmother loved playing the numbers,” she said, drawing a big laugh.

Few people gave her a chance to become a judge, let alone a Supreme Court justice. She told about an interview with a public interest law firm after graduating from Yale Law School in 1979. When they asked her where she wanted to be in 20 years, she said, “I want to be a federal district court judge.”

She later learned the lawyer who interviewed her had reported “she’s very smart but a little naive.” But also persistent. She was nominated to the federal bench by President George H.W. Bush in 1991.

Ironically, she said as a child growing up in the South Bronx, she was an avid fan of the Nancy Drew novels and wanted to be a detective when she grew up, but she was told because she had juvenile diabetes, she would not be able to work in law enforcement.

“I, like every nine and a half year old, was devastated. What am I going to do with the rest of my life,” she said.

“Just about that time I found Perry Mason,” she said to laughter. The fictional defense attorney played by actor Raymond Burr on TV in the 1950s and 60s, turned her life in another direction.

“That was my first attraction to the law,” she said, but it was one episode in which there was a female judge that launched her dreams.

“I realized at that moment the most important person in that room was the judge. And I wanted to be the judge,” she said to laughter and applause.

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VERMONTERS LEAD CHARGE FOR CORPORATE PERSONHOOD CONSTITUTIONAL AMENDMENT?
Ben & Jerry join Noted Attorneys to Challenge Corporations-as-Persons at Montpelier Public Forum

Montpelier- Nov. 17 As corporate influence in politics grows, opposing forces are mounting as well. If Occupy Wall Street is one manifestation, another is an upcoming local event that will offer responses to Citizens United v. F.E.C, last year’s U.S. Supreme Court decision that has opened the floodgates for corporate money in electoral politics.

Corporations are Persons? Get Real! How real people are reclaiming democracy after Citizens United will be held on Tuesday, November 29, at Christ Episcopal Church, 64 State St., Montpelier. This free and open-to-the public event seeks to kick-start a statewide conversation about avenues Vermont citizens and officials can pursue to overturn the U.S. Supreme Court’s controversial and flawed ruling. It starts at 7:00 pm.

In Citizens United, the Supreme Court found that corporations are persons with the First Amendment right to freedom of speech, including a wide range of rights to contribute financially to political campaigns.

Ben Cohen and Jerry Greenfield, the activist co-founders of Ben & Jerry’s Homemade, are bringing their business perspective to oppose the decision. Other panelists include Jennifer Taub, an associate professor of law at Vt. Law School, and David Cobb, an attorney and spokesperson for Move To Amend, a national organization dedicated to undoing corporate personhood through a constitutional amendment. Cheryl Hanna, a Vt. Law School professor, will moderate the forum. Hanna is familiar to Vermonters as a frequent media commentator on current legal issues.

Ben and Jerry are bringing their signature treat for free refreshments available to all who attend.

The forum is co-sponsored by Clean Yield Asset Management, a 25–year-old firm serving social investors with offices in Norwich and Greensboro, and the Vermont Public Interest Research Group (VPIRG), the 25,000-member citizens’ advocacy organization based in Montpelier.

CONTACTS: Rick Hausman, Dir. of Research and Advocacy, Clean Yield Asset Management, Norwich, (802) 526-7178;
-or-
Paul Burns, Executive Director, VPIRG, Montpelier, (802) 223-8421.

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We Told You So!
Vermont Loses $1.8 Million on Rx Lawsuit, More To Come . . .

Montpelier, VT . . . Vermont taxpayers are on the hook for $1.8 in legal fees – with more to come – for waging a futile defense of a prescription drug “data mining” law that was passed in 2007.

The U.S. Supreme Court struck down the law 6-3 in June 2011, and this week the State was ordered to pay $1.7 in legal fees to the winning side. That bill will almost certainly climb higher as there are still other plaintiffs that Vermont will have to reimburse and court costs that will have to be paid.

The doomed data mining law was passed in 2007 with the support of then-Senator Peter Shumlin. At the time, Republicans in the Vermont House raised concerns that the law would almost certainly result in Vermont taxpayers being on the hook for unnecessary litigation costs:

“I oppose the practice of data mining, but I also oppose our frequent commitment of taxpayer dollars to court proceedings, be they ultimately successful or unsuccessful.”
- Representative Tom Koch, R-Barre

“This bill is so full of legal holes as to represent another “full employment act” for lawyers.”
- Representative Duncan Kilmartin, R-Newport (source: House Journal, 5/4/07)

Representative Tom Koch also repeated his concerns in 2008, when the Legislature debated repeal of the 2007 law after legal challenges had been filed:

“To stick our necks out at this point, when the red flags are being waved in front of us, is foolish and irresponsible.”
- Representative Tom Koch, R-Barre (source: BFP 7/21/11)

Republican State Auditor Tom Salmon has also raised repeated concerns about Vermont’s unfortunate (and expensive) habit of passing constitutionally questionable laws and then losing in Court:

“We are at risk every time we pass a law that is a feel-good or ideological-based law.”
- Auditor Tom Salmon (source: WCAX 11/17/11)

Republican House Minority Leader Don Turner (R-Milton) said, “With so many great needs in our state right now, it hurts to see us having to pay a penalty for passing laws that everyone knew were constitutionally questionable. This is just another example of the super-majority passing laws with no regard to the constitution. Our government was designed to have checks and balances, today in Vermont that does not exist. Worse, this pay-out probably pales in comparison to the costs Vermont may incur with the Vermont Yankee proceedings. Vermonters deserve better.”

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Anna Nicole Smith seems to be haunting Vermont Attorney General Bill Sorrell.

Today, the U.S. Supreme Court issued its opinion in Sorrell v. IMS Health, striking down Vermont’s prescription confidentiality law as a violation of the First Amendment. The Court also issued its opinion in Stern v. Marshall, holding that the estate of the late Anna Nicole Smith does not get $88 million from her now deceased husband’s estate. Back in 2006, when the Court heard arguments in Randall v. Sorrell, the case striking down Vermont’s campaign finance law, the Court also heard an earlier version of Smith’s financial battle. The troubled celebrity model was in the audience that day and no one paid much attention to Sorrell.

But today’s Sorrell opinion should warrant great attention as its implications for the First Amendment and corporate speech could be sweeping. The Court, in a 6-3 opinion by Justice Kennedy, held that Vermont’s law, which restricted pharmaceutical companies from purchasing information about doctor prescription patterns, a practice called “detailing,” violated the First Amendment. In a strongly worded opinion, the Court criticized both Vermont’s Attorney General for changing his position on the scope of the statute during the course of the litigation, and the Vermont Legislature for passing such a broad prohibition on speech.

The law, the Court said, lacked coherence and careful crafting. The tone of the opinion suggests the state was unsophisticated and inattentive to the demands of the Constitution in both its drafting and its interpretation and intent of its own law.

But the Court’s decision doesn’t just strike down Vermont’s law. Rather, because the law itself so blatantly targeted pharmaceutical companies while allowing just about anyone else to access physician data, it gave the Court an opportunity to expand the rights of companies to engage in targeted marketing, particularly when medicine and public health are at issue.

When Vermont restricted the use of “detailing,” it was essentially restricting speech by an industry it didn’t like. The consequence of that, the Court held, is to withhold otherwise true and accurate information from consumers. If state tries to do so, it must have, in plain English, a really, really good reason. But Vermont couldn’t come up with a really, really good reason. The law didn’t protect physician privacy, it didn’t lower the cost of medical services, and it didn’t promote public health.

What the law did, the Court said, was suppress speech that was “too persuasive” and contrary to the state’s own policy goals of promoting generic drug use. In essence, the Court said Vermont had engaged in censorship for political reasons. The state may not like pharmaceutical companies, but it doesn’t have the right to keep them quiet.

The dissent, authored by Justice Breyer, is primarily concerned that the Court’s decision opens the floodgates for private information to be used by private industries to enhance their bottom lines. The decision has two significant implications: First, states will now likely have a much harder time restricting the use of data, which is much more easily garnered in the digital age, for targeted marketing. This leaves little room for states to regulate all sorts of personal information. Second, Vermont’s unapologetic targeting of pharmaceutical companies simply did not play well in the Court.

This state-versus-industry political dynamic is also at issue in Vermont’s dispute with Entergy over the future of the Vermont Yankee nuclear plant. While that case involves different constitutional questions, the Court’s ruling today shows it doesn’t like Vermont using its regulatory power to “shut down” companies that engage in practices that are contrary to its own political values.

In both the 2006 Randall campaign finance case and today’s Sorrell decision, Vermont compromised constitutional precision in favor of political popularity, positioning the state as David and financially powerful voices as Goliath. In both cases, the Court saw it the other way around. That doesn’t bode well for Vermont if, as expected, the Vermont Yankee legal dispute ends up before the Supreme Court. If it does, not even another Anna Nicole Smith case will likely distract the justices from their concern over Vermont’s 0-2 record on these key constitutional matters.

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Prescription drugs. Photo by Alissa Walker

The media relations director for the association, Robert Mills, wrote in an email that the AMA’s “contractual requirements prohibit the use of DEA identifying numbers from the AMA’s Physician Masterfile to be used for matching purposes.” He said, “Health Information Organizations actually purchase DEA identifying numbers directly from the U.S. Department of
Commerce, National Technical Information Service.”

Dr. John Hearst could be forgiven for feeling like someone is looking over his shoulder when he’s writing prescriptions at Bennington Family Practice.

Although Hearst tries to avoid contact with drug-company sales representatives, he bumps into them in the halls of his practice as they visit another doctor, and they always seem to know just what drug to pitch.

One of the sales reps drops the names of drugs whenever she sees him, as if trying to implant their names into his brain.

“When she sees me, she’d say, ‘Don’t forget,’ and she says the names of the drugs,” Hearst said. “It’s sort of like a Big Brother feeling.”

It isn’t his imagination. Drug companies probably know Hearst’s prescribing patterns because data collection companies bought his prescription records from pharmacies, online sources and insurance companies through a process known as data mining.

Often these prescription records don’t contain a doctor’s name but will contain his or her Drug Enforcement Agency identifying number. The data companies then sell the records to drug companies, who cross-reference the information with a database of doctors from the American Medical Association – a database that includes DEA identifying numbers.

Drug-company representatives then target each doctor with pitches tailored to his or her prescribing history.

Vermont passed a law in 2009 banning the use of prescription data for marketing unless a doctor gives permission. The law is part of a broader effort by legislators to curb drug-company practices they contend are driving up health care costs. Critics of these practices say pharmaceutical firms use direct marketing, free meals and gifts to nudge doctors into prescribing more expensive brand-name drugs over cheaper generics.

But legal scholars believe the law might soon be overturned after the in Supreme Court held oral arguments on the case in late April. Supreme Court Justices were openly skeptical of the law, and had Vermont Assistant Attorney General Bridget Asay backpedaling throughout the oral arguments. Chief Justice John Roberts summed up that skepticism most forcefully when he argued that Vermont enacted the law to drive down drug prices at the expense of free speech.

“You want to lower your health care costs, not by direct regulation, but by restricting the flow of information to the doctors, by, to use a pejorative word, but by censoring what they can hear to make sure they don’t have full information, so they will do what you want them to do when it comes to prescribing drugs,” Roberts told Asay.

Asay and Deputy Solicitor General Edwin S. Kneedler tried to argue that the law merely protects the doctor’s right to privacy by restricting public access to a doctor’s prescribing patterns, making it no different than a measure that would restrict access to the doctor’s tax records.

But the justices seemed to disagree. Justice Antonin Scalia and others disliked that the same information being restricted by the law can be used by drug companies to help guide clinical trials and could be used by university researchers. Thus, it was implied, the state was singling out this one use of the data to drive down costs.

Scalia wondered why the free speech of the companies needs to be restricted when doctors simply could refuse to see drug company sales representatives. Even Justice Sonia Sotomayor, considered by legal observers to be the one justice who was sympathetic to the state’s case, didn’t understand why the state couldn’t just create an opt-out mechanism for doctors to use to shield their prescribing information from data mining, much like what is done with telemarketers.

Targeted marketing

Data mining has become popular as a way for drug companies to raise profits by fine-tuning their marketing. A document co-authored by IMS Health, a data-mining company in Norwalk, Conn., put it like this: “Research has shown that winning just one more prescription per week from each prescriber yields an annual gain of $52 million in sales. So, if you’re not targeting with the utmost precision, you could be throwing away a fortune.”

Although drug companies have a right to conduct marketing campaigns in general, that right shouldn’t extend to using prescription information for marketing, said Marcia Hams, director of Community Catalyst, a Boston-based nonprofit group that aims to give consumers a bigger voice in health-care policy.

“That level of information is really inappropriate to be using on a physician,” Hams said. “It interferes in the physician-patient relationship.”

But drug companies contend that data mining represents a quick and efficient way to help them get the most useful drug information to busy physicians. They also contend that prescription data mining helps quicken response time for drug recalls and gives valuable information to drug researchers.

The American Medical Association largely has backed this argument and opposed laws restricting prescription data mining.

Critics contend the AMA backs data mining because it is dependent on money generated from sales of its database – sales that totaled $44.5 million in 2005.

The issue is being debated in state capitals around the country. In addition to Vermont and New Hampshire, Maine also has passed a bill banning data mining. Similar bills are pending in Massachusetts, New York and Hawaii, though their prospects for enactment are unclear. Data-mining restrictions have been rejected in eight other states.

Curbing free speech?

Data-mining and drug companies challenged the Vermont and New Hampshire laws in two separate cases, arguing in court that they jeopardized free speech and did little to help public health.

PhRMA, a trade group representing pharmaceutical and biotechnology companies, filed the court challenge to the Vermont law, while IMS Health challenged the New Hampshire law.

Diane Bieri, the general counsel for PhRMA, said in an interview that the new Vermont law “actually impedes the free speech rights for not only the data companies, but also the pharmaceutical companies.”

But in refusing PhRMA’s request to keep the law from taking effect while its appeal is pending, judges on the federal Second Circuit Court of Appeals wrote in late June that the drug companies “have not demonstrated a clear and/or substantial likelihood of success on the merits.”

A few days earlier, the U.S. Supreme Court declined to hear a similar appeal from IMS Health against the New Hampshire law. That law had previously been upheld by the First Circuit Court of Appeals in Boston, which held that information gathered through data mining is not protected as free speech but instead amounts to “exchanges undertaken to increase one party’s bargaining power in negotiations.”

Although the appeals court ruling was unanimous, one judge disagreed with the court majority, saying the information could be considered speech, but still held that New Hampshire was in its right to regulate the practice to protect the health of its citizens.

Now the state will wait for the Supreme Court decision. Many legal observers believe the question is not whether the Court will strike down the law, but whether the finding against the law will be so broad that it will strike down all data mining laws.

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A lawyer is only as good as the law that the Legislature hands her, and it was clear after Tuesday’s U.S. Supreme Court argument in Sorrell v. IMS Health Inc. that Vermont Assistant Attorney General Bridget Asay had a not-so-good law to defend. The state is fortunate to have an assistant attorney general as skilled as Asay. But nothing she could have said or done would likely have saved Vermont’s physician data mining law from a near certain death.

At issue was whether a Vermont law that seeks to ban the sale of physician prescription data to drug companies—which use the information to target their marketing to individual doctors in a practice called “detailing”—violates the First Amendment.

Asay was barely a few minutes into her argument when Chief Justice John Roberts challenged the state’s motives in passing the law; he later accused Vermont of censorship of commercial speech. His skepticism was followed by Justice Antonin Scalia’s downright hostility. He insisted the law was intended to impede drug companies from providing information to doctors, not protecting doctors who could simply refuse to see pharmaceutical representatives.

Justice Kennedy, often the swing vote in close cases, then accused the state of regulating the use of speech. He asked whether the law would allow the sale of the data for research purposes. Justice Ruth Bader Ginsburg at first seemed open to the state’s ability regulate the sale of the information if that was the only commercial use of the data, but she was then frustrated when it appeared that other commercial sales would be permitted.

Even Justice Sonia Sotomayor, who was more sympathetic to Vermont’s position that doctors should have some control over the dissemination of their prescription drug patterns, was troubled by the law’s provision that allowed doctors to opt-in to the sale of their records. She instead suggested a scheme that mirrored the Do Not Call policy, which allows consumers to opt-out of telemarketing calls, would be more in line with the First Amendment.

Justice Samuel Alito then suggested the Vermont law may have misled the lower court on what transactions could be regulated by the statute. This clearly signaled skepticism not only about the law itself but with the state’s representation of what exactly the statute regulated.

The U.S. government, through the Office of the Solicitor General, weighed in on the case in favor of Vermont. Yet Deputy Solicitor General Edwin S. Kneedler had no better luck than Asay in convincing the Court that all the law did was level the playing field between pharmacies and physicians, and that the state was within its power to restrict this information given that prescription drugs are a highly regulated industry.

Thomas Goldstein, a highly regarded attorney who is a frequent advocate before the Court, represented the data mining and drug companies. Goldstein seemed to command the Court, more like a professor steering his students than a lawyer pandering to the justices. He opened by having the justices turn to the red brief, which contained the statute. (All briefs before the Court are color-coded to identify the parties.) Even Justice Clarence Thomas, who often merely sits back and listens to the arguments, followed Goldstein’s command, perking up, opening the brief and privately bantering with Justice Stephen Breyer over the law’s language. Goldstein had to be content with the predictable “what-if” hypothetical questions posed by Justice Breyer. To Goldstein’s credit, his argument was not radical, but he urged the justices to seek some balance between free speech and state regulation. The justices took seriously Goldstein’s contention that the law, as written, did not protect doctor privacy, but rather discriminated against the speech of clients who were providing FDA-approved true and accurate information about their drugs to physicians.

Perhaps the most compelling part of his argument was when he directed the Court to read the finding made by the Vermont legislature when passing the law. “My favorite,” Goldstein quipped, was the finding that Vermont intended to impact the “marketplace of ideas” because drug companies had more money. (How such a finding ever made it into any legislative record baffles the mind of this constitutional law professor.) This, Goldstein insisted, the state cannot do under the First Amendment.

While it’s risky to make conclusive predictions based on oral argument, it is likely that a majority of the Court will vote to strike down Vermont’s law. Less clear is whether the holding will be narrow, focusing only on the defects of the Vermont statute or whether the Court will announce a more sweeping decision that could hinder the states from regulating data mining when it truly implicates consumer privacy. Clearly, some justices, including Sotomayor, Breyer and Ginsburg, seemed to appreciate that restricting the use of private, personal information might be appropriate, but disagreement among the justices over whether to draw that line might likely produce a fractured decision.

While the Court could leave room for the Legislature to go back and draw a more narrowly tailored statute that does not impinge upon the free speech rights of corporations, it can’t save it from having to pay for its mistakes. If the state loses this case, it is on the hook for attorney’s fees paid by the data mining and pharmaceutical companies who brought the case. When the state violates a constitutional right of a litigant, even if that litigant is a corporation, the state has to pay the costs that litigant incurred defending its rights. Given the number of attorneys involved in the case, the extremely high caliber of both local and national counsel and the hours involved in preparing a case for the Supreme Court, a loss will likely cost Vermont taxpayers more than $1 million. But that is the price Vermonters have to pay when the legislature goes out on a limb and passes a law that is intended to be progressive but crosses a constitutional line.

A decision on the merits of this case is expected by the end of June.

Read a transcript of the argument.

VTDigger