March 16, 1999
Dear Ms. XXXXXXX:
I am writing concerning your opinion on several issues
as they pertain to hearing aid dispensers in the State
of XXXXX, particularly the so-called “Lemon Law”, S.B.
401, which came into effect during the 1997 legislative
session. Herein, I will attempt to offer what represents
a fair consensus of the hearing health professions and
hearing instrument industry; and from this will suggest
remedies, which may be advantageous to both hearing
impaired consumers and professionals.
It may also be pertinent here to mention my interest and
relevance to these issues. Although I am currently
employed as vice president of marketing and professional
education at the only national hearing aid manufacturer
in the State of XXXXX, for more than two decades I’ve
served as a professional educator, published author, and
hearing health researcher. I’ve published 13 books and
manuals, numerous chapters and more than 650 articles.
My work often takes me across interdisciplinary lines
from hearing aids, audiology, and otolaryngology to
cochlear implants, consumer advocacy, and regulatory
agencies. I am often called upon to provide research and
opinion for a number of attorneys general, state
licensing boards, legislative committees, and the media.
In 1993, Dr. David Kessler, former FDA commissioner,
formally invited me to advise the FDA Advisory Panels on
matters of federal regulation in hearing aids. As the
lead writer on the international committee, which
produces licensing exams I am intimately familiar with
standards of competency and scopes of practice issues. I
am also profoundly deaf and utilize a cochlear implant,
hearing aid, and assistive devices to communicate. That
makes me a consumer, also, adding to the perspective in
which I view the pertinent issues. Forgive the listing
of the above, but I felt it important that you know of
the broad perspective from which I am addressing these
matters.
An historical backdrop
In the aftermath of the FDA hearings----deemed by some
as a failure due to apparent inaction, but actually was
a reaffirmation of the efficacy of current
consumer-sensitive regulations---- came a number of
voluntary initiatives by the industry to do an even
better job at assuring the public delivery of product
and services, including more uniform standards of
training and professionalism. In the spirit of these
advancements, however, some states went a bit overboard
and actually raised consumer costs while simultaneously
limiting access and competition. Nevada, undoubtedly,
was one of those states. As a result, this State has: 1)
misclassified hearing instruments as if they were merely
unrestricted retail product by taxing them and attendant
diagnostic and rehabilitative services at the
prohibitive rate of 7%, costing hearing impaired
consumers hundreds of extra dollars in every hearing aid
fitting, 2) added onerous regulation and costs to
hearing instruments by inclusion in its open-ended
“lemon law”, and 3) ignored the threat to the public
health by allowing mail order hearing aid sales, which
potentially accounts for as much as 50% of all hearing
aids sold in this State. Suffice it to say, these all
add up to significantly increased costs for consumers
and professionals alike.
Lemon law and medical prosthesis
Prominent in the mix of the above developments---but of
which has yet to be fully exposed as the unfair consumer
protection it is---is the so-called “lemon law” (S.B.
401). Somehow, in the midst of the ADA-inspired fervor,
hearing instruments appear to be the only restricted
medical devices to be singled out and lumped together
with unrestricted, mass-produced devices such as
motorized wheelchairs et al, as if they share an
appropriate commonality in law. Admittedly, there needed
to be more consumer protections for some of the items
the law covers. But adding hearing instruments in the
mix obviously poses a number of paradoxical challenges
beyond the sophisticated understanding of the authors of
the bill. Hearing aids should never have been included
in the law for a number of reasons, to wit:
1) Hearing aids under FDA federal regulation are
classified as Class I Medical Devices, much like
dentures, contact lenses, and limb prostheses. They are
made to order, under variable individualized parameters,
and are exposed to vagaries of care unlike the other
items in the law. There is no set “outcome” or level of
functionality that can be defined in fixed terms. They
are meant to enhance the communicative ability of their
users under physical limitations as varied as the
outcomes of medical care in general, but with few of the
inherent risk factors.
2) Depending on who’s survey you use, less than 10% of
all hearing aid “repairs” sent to the factory are
actually “repairs”. The vast majority are simply
maintenance problems (wax in the receiver, for
instance), electroacoustic changes due to unpredictable
loudness growth, cochlear artifacts, signal-to-noise
anomalies, and/or feedback because of weight/physical
changes of the user. Some consumers may erroneously
consider these as repair problems, but they are a result
of what naturally happens when electronics, dental-grade
acrylics, sensitive epithelium, and cerumenous
secretions co-exist. Add to the mix, patients dropping,
stepping on, forcing controls, breaking battery doors,
plugging with hairspray, oils, shaving cream and
cosmetics, and attempting to remove same with needles,
straight pins, and toothpicks. The fact is, only a very
tiny proportion of trips to the factory are a result of
factory defects. Already, in other states, we have
numerous examples of consumer abuse of lemon laws, where
they are used as litigious clubs over the heads of
dispensers and manufacturers alike. It is only a matter
of time before it becomes such in Nevada.
3) Particularly sticky is the application of the law to
extended warranties. These coverages were primarily
designed to provide a low-cost, carefree way in which
consumers could be assured long-term peace of mind.
Instead, under current law, it simply makes risk
exposure untenable for manufacturers and dispensers
alike. I can safely predict, in the absences of
substantially clarifying opinion from your office, that
we will see either an end to extended warranties in
Nevada or their close-cousin, an escalation of consumer
cost to absorb the adverse risk exposure.
4) Without exception, warranties of hearing instruments
are limited warranties and actually cover only defects
of manufacture. However, by tradition, factories have
typically covered virtually every aspect of failure or
maintenance during the warranty period. The lemon law
does not differentiate between “repair” and
“maintenance”, which leaves open the question of what
constitutes “incidence” and what constitutes
“non-conformity”. By leaving these questions open to
abuse, the consumer will ultimately lose, because
factories will have no choice but to stop honoring at no
charge a vast number of non-defect services---in fear of
them counting as repairs, and hence numbering their days
as viable retail products. The same goes for dispensers
and the myriad of free services they customarily offer.
5) Only a portion of the price of hearing instruments is
for the instrument itself. As in all fields of
prosthetics, whether it is one requiring surgery (such
as the cochlear implant), or a non-mechanical prostheses
(such as dentures), or those requiring laborious
diagnostics and counseling (such as hearing
instruments), the retail price does not reflect the
stand-alone value of the product. This means that when a
refund is given, many hours of investment in mandated
services are refunded as well---at a complete loss to
professionals. Of course, future patients pay for that
loss in higher prices, or, worse, lose convenient access
to care, quality of technology, or all three. There is
no other health profession that is required to follow
such unsound financial policies. What makes it fair to
single out those who serve a demographically poorer
population?
6) Strangely, neither the law nor its application makes
any attempt to cover the hundreds or thousands of
hearing aids sold by mail order in the State. Consuemrs
open their monthly power bill and out pops a full-color
brochure on a product that completely bypasses the
regulated delivery system, which can potentially pose
damage to the ear of the user. We’ve seen no effort in
the State to protect consumers of these more dangerous
products, or to challenge the fraudulent language of its
advertising claims, as has been done by many other AG
offices throughout the U.S.
Therefore, I request your opinion on the following
issues that are important to professionals and hearing
impaired consumers in the State:
1) To reclassify hearing instruments in line with
federal regulation---which treats them as restricted
medical prosthetic, not “assistive devices”---and render
them untaxable at the retail level. This will
immediately lower the cost of hearing instruments to
hearing impaired Nevadans by 7%. If handled in this way
we may avoid the enormously high cost to the state in
trying to remove the sales taxes by legislative and
balloting procedures.
2) To either modify the current lemon law to exclude
hearing instruments OR modify the law to conform to the
changes recommended by the American Academy of Audiology
(AAA), the International Hearing Society (IHS), and the
Hearing Industries Association (HIA). (See exhibit B for
a copy of the HIA talking points).
3) To address the mail order issue by contacting other
AG offices which currently have actions and/or claims
against mail order hearing aid firms. (Florida is
prominent among those)
Now, you may be wondering where I feel the Attorney
General’s Office fits into all of this. We respect the
intent of the legislature when putting together
regulatory law over such a diverse array of issues and
professions. Legislators and their staff are often at
the mercy of lobbyists and special interests to gain an
understanding of the issues of a given field, especially
one as relatively obscure and paradoxical as hearing aid
practice. But, as you know, much is left to chance in
the research arena. I would venture to say that it is a
rare legislator that knows the difference between an
audiologist, a hearing instrument specialist, or even an
otolaryngologist---yet they passed a law regulating
various segments of those professions. State legislators
are rarely versed in the finer points of FDA and FTC
regulation of medical devices, especially that which is
applicable to hearing instruments, or the innumerable
lesions, causes and outcomes of hearing loss, or what
truly impacts cost of care for hearing impaired
consumers. They are probably unaware, for instance, that
hearing impaired individuals---as a demographic
population---suffer the lowest productivity and income
levels, are less insured, and make many more visits to
healthcare professionals than the normal hearing
population.
That is why, over the years, we’ve had to rely upon
Attorney General opinions in many states to help smooth
out some of the unintended consequences of legislative
law. Too often a politically-charged state legislature
oversteps reason and inadvertently sets into motion that
which harms the ones they are attempting to help. A good
example of that are the more than 800 state and federal
regulations surrounding private health insurance, which
only drive up the cost to consumers by more than 35%,
according to a Rand Corporation study. The same has
happened to this state’s legislature treatment of
hearing aids regarding lemon law and retail taxation, as
if they are ordinary consumer products. In this way, AG
offices tend to straighten out that which was made
crooked through unintended consequences of law.
So, I ask for your opinion on the above-stated concerns,
and offer my services where I may be helpful. Please, do
not hesitate to call upon me to assist in these or other
issues. I’ll be happy to avail myself for a face-to-face
meeting if you’d like, as I am acutely aware of the
limitations of going through TDD Relay to communicate.
I thank you kindly in advance for your time and
attention to these matters.
Respectfully Yours,
Max Stanley Chartrand, Ph.D.,
Health & Human Services/Research in Communicative
Disorders
CC: D. Woodbury, T. Rainford, S. Lloyd
|
|
|
|
