Plaintiff challenging healthcare law went bankrupt – with unpaid medical bills

Obama administration lawyers say her case is an example of why an
insurance mandate is needed to prevent 'uncompensated care that will
ultimately be paid by others.'

By David G. Savage, Los Angeles Times

Reporting from Washington— Mary Brown, a 56-year-old Florida woman who
owned a small auto repair shop but had no health insurance, became the
lead plaintiff challenging President Obama's healthcare law because
she was passionate about the issue.

Brown "doesn't have insurance. She doesn't want to pay for it. And she
doesn't want the government to tell her she has to have it," said
Karen Harned, a lawyer for the National Federation of Independent
Business. Brown is a plaintiff in the federation's case, which the
Supreme Court plans to hear later this month.

But court records reveal that Brown and her husband filed for
bankruptcy last fall with $4,500 in unpaid medical bills. Those bills
could change Brown from a symbol of proud independence into an example
of exactly the problem the healthcare law was intended to address.

The central issue before the Supreme Court is whether the government
can require people to buy health insurance. Under the law, those who
fail to buy insurance after 2014 could face a fine of up to $700.

The business federation, along with other critics of the law, calls
the insurance mandate a "threat to individual liberty" that violates
the Constitution.

Obama administration lawyers argue that the requirement is justified
because everyone, sooner or later, needs healthcare. Those who fail to
have insurance are at high risk of running up bills they cannot pay,
sticking the rest of society with the cost, they argue. Brown's
situation, they say, is a perfect example of exactly that kind of
"uncompensated care that will ultimately be paid by others."

"This is so ironic," Jane Perkins, a health law expert in North
Carolina, said of Brown's situation. "It just shows that all Americans
inevitably have a need for healthcare. Somebody has paid for her
healthcare costs. And she is now among the 62% whose personal
bankruptcy was attributable in part to medical bills."

Lawyers who represent Brown dispute the significance of her
bankruptcy. They say her unpaid medical bills were only a small part
of her debts and did not cause her bankruptcy. They say that she and
her husband owe $55,000 to others, including credit card companies.
And they say her financial troubles were caused by the failure of her
auto repair shop.

Brown, reached by telephone Thursday, said the medical bills were her
husband's. "I always paid my bills, as well as my medical bills," she
said angrily. "I never said medical insurance is not a necessity. It
should be anyone's right to what kind of health insurance they have.

"I believe that anyone has unforeseen things that happen to them that
are beyond their control," Brown said. "Who says I don't have
insurance right now?"

Brown's problems are not likely to affect the outcome in the high
court. In January, the business group told the court it had found two
new plaintiffs who could take Brown's place. But Brown played a
crucial role in the case reaching the Supreme Court.

"There was time pressure" to find a plaintiff for the case, Harned
said. "And candidly, it is not as easy as it sounds" to find someone.
She recalls that Brown was outspoken and stepped forward as a
volunteer. The lawyers found a second plaintiff in Kaj Ahlburg, a
retired New York investment banker living in Port Angeles, Wash.

But when U.S. District Judge Roger Vinson declared the mandate
unconstitutional in January 2011, he pointed to Mary Brown's
complaint. "She is a small-business owner" who "does not believe the
cost of health insurance is a wise or acceptable use of her
resources," he said.

In August, the U.S. 11th Circuit Court of Appeals in Atlanta agreed.
Florida and 25 other states were suing, but they needed an individual
to contest the mandate. "Mary Brown has standing to challenge the
individual mandate," the judges said, and "as long as at least one
plaintiff has standing to raise" the claim, the court can rule. The
Obama administration appealed, and the Supreme Court said in November
it would decide the constitutional challenge.

But by then, Brown's small auto repair shop near Panama City, Fla.,
had closed, and she and her husband had filed a Chapter 7 bankruptcy
petition. Brown said in the petition that her only income was $275 a
month in unemployment benefits.

Her bankruptcy came to light in December, when a Wall Street Journal
reporter interviewed her about her role in the historic case. In a
video interview, Brown said freedom from government was the issue.
"I'm not fighting just for me," she said. "It's my choice to have
healthcare, not theirs."

Shortly afterward, lawyers for the National Federation of Independent
Business informed the court of Brown's troubles, and sent along a copy
of her bankruptcy filing.

The couple owed $2,140 to Bay Medical Center in Panama City, $610 to
Bay Medical Physicians, $835 to an eye doctor in Alabama and $900 to a
specialist in Mississippi.

"This is a very common problem. We cover $30 million in charity and
uncompensated care every year," said Christa Hild, a spokeswoman for
the hospital center. "If it's a bad debt, we have to absorb it."

The business group's lawyers say they weren't backing away from their
bankrupt plaintiff. "She wants to continue in the case. And as long as
she doesn't want healthcare, she qualifies as a plaintiff in our
mind," Harned said.

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Mary Brown, 'Obamacare' foe -- and broke

Mary Brown, whose case against the 2010 healthcare reform law is
pending before the Supreme Court, argues that the government shouldn't
be able to force her to carry health insurance. Joined by three other
individuals and a small-business trade association, she's asking the
justices to rule that the law's insurance mandate is unconstitutional
and that the rest of the act should be thrown out with it. But new
revelations about her own situation make the case for the other side.

As The Times' David Savage reported, Brown and her husband have fallen
on hard times since filing the lawsuit, largely because their auto
repair business in Florida failed. The couple have filed for
bankruptcy protection, asking a federal court to wipe out close to
$60,000 in consumer debts. Significantly, their unpaid bills include
$2,750 owed to a local hospital and physicians group and $1,735 to
out-of-state medical specialists.

The disclosures are political gold for the Obama administration,
transforming Brown from a champion of individual liberty into an
exemplar of a problem the new law was designed to address. Uninsured
and underinsured Americans rack up about $60 billion in medical bills
every year that they cannot afford, forcing doctors and hospitals to
pass those costs on to federal taxpayers and those patients who can
pay their bills. It's not impinging on personal freedom to ask people
to cover their own medical tabs. The mechanism Congress created to do
that is the individual mandate.

The insurance mandate and premium subsidies in the healthcare law are
expected to significantly reduce the amount of uncompensated care and
cost shifting. The mandate also helps balance the law's insurance
reforms, which bar companies from denying coverage to people with
preexisting conditions and from making their policies prohibitively
expensive. To prevent people from signing up for coverage when they
need treatment, then dropping it when they're healthy, Congress
required all adult Americans to maintain health insurance coverage or
pay a tax penalty.

Brown and her allies contend that the law wouldn't work as Congress
intended if the mandate were removed, so the entire act must be
scrapped if the mandate is found unconstitutional. But her own
complaints about the cost illustrate the flaw in that reasoning. Much
of the law is aimed at slowing the growth of healthcare expenses and
improving the quality of care. Those provisions are still valuable
regardless of what happens to the mandate. Nor do the insurance
reforms fail if the mandate is eliminated. Lawmakers would simply have
to find another mechanism to discourage people who can afford
insurance from gaming the system. Republicans in Congress have
proposed several ways to do so, including financial penalties and
waiting periods for people who seek insurance only when they need
treatment.

Although Brown is wrong about the mandate, her concerns about cost are
valid. In their zeal to make sure insurance policies were
comprehensive, lawmakers didn't give people enough flexibility to save
money by insuring themselves against only the largest risks. Nor have
they done enough to rein in the escalating price of medical care. But
those are reasons to keep building on the 2010 law, not to repeal it.

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Obama tells business leaders the nation needs changes in tax laws to help the economy

By Associated Press

WASHINGTON — President Barack Obama told business leaders Tuesday that
the nation needs to reform its tax system to help boost the economy,
saying the American people "instinctually understand" that the U.S.
needs a more balanced approach to solve its economic problems.

"The economy is getting stronger and the recovery is speeding up. The
question now is how do we make sure it keeps going," Obama said to the
Business Roundtable, an association of chief executive officers of top
U.S. corporations.

The president told more than 90 executives that the nation would "have
to deal with revenue and that's something that I think the American
people instinctually understand, that if we do this in a balanced way,
we can solve our problems." He said the nation was not in a similar
situation as debt-laden Greece, saying "we don't have to cut by 25
percent and raise taxes by 25 percent."

"These are relatively modest adjustments that can stabilize our
economy, give you the kind of business confidence that you need to
invest and make sure America wins for the future," Obama said, adding
the business community would be an "important voice" in the debate.

Obama outlined his administration's efforts to jumpstart
manufacturing, noting that the U.S. auto industry had rebounded
following the economic downturn, and noted the passage of trade
agreements with South Korea, Panama and Colombia, and the
administration's work to bring Russia into the World Trade
Organization.

Obama recently outlined a corporate tax overhaul that would lower
rates but eliminate loopholes and subsidies supported by the business
world. The plan is unlikely to pass in an election year but sets up a
debate with Obama's Republican opponents on taxes.

Republicans noted that a former chairman of the Business Roundtable,
Ivan Seidenberg of Verizon, accused Obama in 2010 of creating an
"increasingly hostile environment for investment and job creation" and
the organization had expressed disappointment over Obama's rejection
of the Keystone XL pipeline in January.

The president's plan would lower the corporate tax rate to 28 percent,
and Obama has called for Bush era tax cuts to end on individuals
making more than $200,000, thus increasing their taxes, and for a 30
percent minimum tax on taxpayers who make $1 million or more. The plan
has been assailed by Republicans, who contend it will curb business
development.

Republican Mitt Romney, for example, has called for a 25 percent
corporate tax rate, in line with what some congressional Republicans
have sought. He has proposed lowering the top personal income tax rate
to 28 percent from the current 35 percent.

Obama said it was important to reform taxes to reward "companies that
are investing here in the United States, making sure we are able to
cut our tax rates here but also broaden the base. That is going to be
a difficult task. Anybody who has been in tax discussions in any
legislation, but especially Congress, knows it's like pulling teeth
but it's the right thing to do for us to become more competitive."

Attendees included James McNerney of Boeing, Jamie Dimon of JP Morgan
Chase, Brian Moynihan of Bank of America, and Ursula M. Burns of Xerox
Corp. The organization is led by former Michigan Gov. John Engler, a
Republican.

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548 5020, option 1.

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Adviser to Businesses Laments Changes to Bankruptcy Law

By IAN MOUNT

For the past 23 years, Chuck Benjamin has been working as a turnaround
consultant, primarily for troubled private companies with annual
revenues of $25 million to $250 million. During that time, his company
— Benjamin Capital Advisors of Rye Brook, N.Y., and Boca Raton, Fla. —
has handled some 70 cases. "My endgame is to save companies," said Mr.
Benjamin, 71, "hopefully for their owners."

That has become much more difficult in recent years, he says, as
changes in bankruptcy law have given unsecured creditors more power
and made bankruptcy more expensive. These legal changes and increased
costs have in turn pushed troubled companies to liquidate their assets
instead of reorganizing, Mr. Benjamin said, which ends up eliminating
the original owners — and many jobs — in the process. The following is
a condensed version of a recent conversation.

Q. You say the bankruptcy process is broken. How so?

A. When bankruptcy evolved, it was to protect debtors, the owners. The
whole concept was forgiving debts or restructuring so the business
would survive in the hands of the owners. But the rules have changed
over the years. Today, if they have to go into Chapter 11, the odds of
the owners keeping the business are much lower. So there's no
incentive for the owners to enter Chapter 11 and reorganize. Why save
a company for somebody else?

Q. What changed?

A. First, the Supreme Court's 1999 LaSalle decision basically meant
that any company that entered bankruptcy was on the market and could
be bought either whole or piecemeal. And then in 2005, Congress passed
the Bankruptcy Abuse Prevention and Consumer Protection Act, and that
changed the face of Chapter 11 for privately held businesses. No. 1,
B.A.P.C.P.A. changed the landlord's position. It limits the time to
just seven months for debtors to decide whether to accept or reject
the lease in bankruptcy. It used to be you could get extended almost
forever the time you could accept or reject a lease. Now they have
seven months. That's not a long time to decide which locations to
close while you're in trouble and you're trying to work through all
kinds of other issues.

The second change is exclusivity, that is, the debtor's exclusive
right to file a plan of reorganization. It used to be you had all
kinds of extensions. Sometimes bankruptcies used to take two, three,
four, five years. I had one that was in Chapter 11 for seven years.
But it survived. Now you have 18 months where the owner has the
exclusive right to file plans for reorganization. Unsecured creditors
know that after 18 months they can file a plan excluding the debtor.
After you're in Chapter 11 for eight or 10 months, creditors say, "I'm
just going to hang on. I'll file my own plan and take over the
company. Or after 18 months we'll just liquidate it."

Q. It's hard to see anything positive about a bankruptcy that takes seven years.

A. Sometimes staying in bankruptcy a longer time was better, because
it gave a debtor time to catch its breath.

Q. Who wins from this change?

A. The LaSalle decision and B.A.P.C.P.A. have given unsecured
creditors a huge advantage, and the result is the cost of bankruptcy
has gotten so high — because of professional and other costs — that
the ability to continue the company under current ownership has
reached almost zero. I understand the plight of unsecured creditors,
but everyone who sells on unsecured account understands the risk.
Every businessman understands this when he sells and makes a credit
decision.

Q. Really? Small-business owners offer credit like this routinely. You
don't think they expect to get paid?

A. You know that old saying, "Let the buyer beware"? I think it's
every businessman's responsibility to know to whom he sells and offers
credit. If I sell to you and you begin to pay very slowly — which
often happens before a bankruptcy — I should stop selling to you on
credit. But if I continue to sell to you to make a buck, it's not your
fault, it's mine.

Q. So what happens instead of reorganization these days?

A. Companies are liquidated. Back in 1983, the Lionel case allowed
companies the freedom to sell off assets as opposed to filing a plan
of reorganization. It expanded what could be sold in a "363 sale." The
363 component was originally designed to allow companies to sell off
spoilable product, like fruit. If you were in the grocery business and
you filed bankruptcy, it allowed you to sell off assets. The Lionel
case expanded that so you could sell major assets, virtually including
the whole company. That's a quick way to avoid a plan of
reorganization.

Q. How does a 363 sale work?

A. The 363 sale requires nothing more than saying, "I'm going to sell
you my equipment," and I publish that, and for 30 or 40 days people
have a right to object to it and the judge can decide, O.K., sell it,
or if there's a higher or better bid, it goes to the highest or best
bidder. That happened in the Brunschwig & Fils bankruptcy where I was
the chief restructuring officer. I sold the company's assets for $10
million, very successful, but the original owners lost control and 116
employees lost their jobs. In the old days we would have been able to
reorganize the company.

Q. How do these changes affect a troubled company's ability to get
financing during reorganization?

A. All of these changes say to the world that the chance of a company
surviving bankruptcy is much lower. And if it's much lower, the banks
aren't going to give debtor-in-possession financing — and rightfully
so. The D.I.P. financer gets a priority lien. Last in, first out. But
the company has to survive to have the money to pay that
super-priority lien.

Q. Does this change how troubled companies act?

A. Debtors are delaying seeking help longer and longer and longer.
They're very frustrated. They're walking in molasses. They figure if
they wait another week the economy is going to turn.

Q. What should business owners do instead of filing for Chapter 11?

A. People need to seek help quicker, change their business plan
quicker, and avoid Chapter 11. It's just an absolute last resort. It's
virtually nonsurvivable. One of the things we do as consultants is
take two weak companies that are facing annihilation and we merge them
and we get one survivable company — without a bankruptcy. We also try
to make out-of-court settlements with creditors, as opposed to Chapter
11 proceedings. In Chapter 11, the debtor pays for attorneys,
accountants and consultants of the creditors' committee. They even pay
for the investment bankers. The owner is paying the other side to
oppose him. It's tilted to the unsecured creditor side.

Q. But doesn't this law fix some biases toward debtors that allowed
them to drag out the process, hurting their creditors as they did so?

A. The law probably does fix some problems, but you have to look at
the nuances. There are some cases with the tighter rules where the
creditors get a little more but the company fails. The other option is
the bankruptcy lingers and the creditors get a little less but the
company survives, and that way the creditors continue to have a
customer.

Q. You're a small-business owner yourself. How is your business doing?

A. Business right now is kind of quiet. I think this is the calm
before the storm.

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iPad legal fight highlights China's trademark minefield

By Katie Hunt

Apple is locked in a high-stakes legal fight over the rights to its
iPad brand in China, but the technology giant is just one of many
multinational companies to have come unstuck while trying to navigate
the country's complex trademark system.

Drug company Pfizer, auctioneer Sotheby's, luxury fashion house Hermes
and coffee chain Starbucks, along with many others, have fought court
battles over trademarks and logos in China - with mixed results.

Legal experts describe a situation where the law favours opportunistic
"trademark squatters", who register trademarks - often by the hundred
- in the hope of turning a quick profit, rather than the companies who
actually use them to do business.

"It's a first-to-file jurisdiction, so foreign companies with
well-known brands are advised to come in here as soon as possible and
register their trademarks," says Stan Abrams, a US lawyer, who teaches
intellectual property law at Beijing's Central University of Finance
and Economics.

By contrast, the US operates a "first-to-use" system meaning that the
party that files for a trademark has to show that is has used, or
intends to use, the trademark for business purposes.

Infringements
Reports suggest that Facebook is working hard to solve trademark
infringements in China as it prepares for its massive share listing.
Individuals can also encounter problems.

Apple is locked in a high-stakes legal fight over the rights to its
iPad brand in China, but the technology giant is just one of many
multinational companies to have come unstuck while trying to navigate
the country's complex trademark system.

Drug company Pfizer, auctioneer Sotheby's, luxury fashion house Hermes
and coffee chain Starbucks, along with many others, have fought court
battles over trademarks and logos in China - with mixed results.

Legal experts describe a situation where the law favours opportunistic
"trademark squatters", who register trademarks - often by the hundred
- in the hope of turning a quick profit, rather than the companies who
actually use them to do business.

"It's a first-to-file jurisdiction, so foreign companies with
well-known brands are advised to come in here as soon as possible and
register their trademarks," says Stan Abrams, a US lawyer, who teaches
intellectual property law at Beijing's Central University of Finance
and Economics.

By contrast, the US operates a "first-to-use" system meaning that the
party that files for a trademark has to show that is has used, or
intends to use, the trademark for business purposes.

Infringements
Reports suggest that Facebook is working hard to solve trademark
infringements in China as it prepares for its massive share listing.
Individuals can also encounter problems.

The technology giant says it bought the rights to the iPad name in
China and nine other countries from the Taiwan unit of a now
struggling Hong Kong electronics company called Proview International
for £35,000 in 2009.

Proview International had registered the name back in 2001 and used it
to develop its own device, which was not a big success.

However, a Chinese court in Shenzhen ruled in November that the
trademark belonged to Shenzhen Proview, a mainland Chinese unit of
Proview International. Apple's appeal in that case begins on
Wednesday.

Apple maintains that the 2009 contract gave it worldwide rights to the
iPad name and Proview "refuses to honour their agreement with Apple in
China" while Shenzhen Proview has claimed to be unaware that the
Taiwan unit signed away the trademarks.

Apple declined to comment further given that their case is still
pending in China, while Roger Xie, a Chinese lawyer representing
Shenzhen Proview contacted by BBC News, said he was too busy to answer
questions about the case.

Time pressure?
Experts say that Apple's problems most likely stem from a lack of due
diligence on the 2009 trademark deal.

"My personal guess is that they were under immense time pressure,"
says Eugene Low, a trademark lawyer at Mayer Brown JSM in Hong Kong.

"It's very surprising that they overlooked this problem. Anyone can go
to the PRC trademark office's online database and do a simple search
that would reveal the owner."

While Proview still claims ownership of the iPad brand and is asking
commercial authorities to ban iPad sales in some Chinese cities, Mr
Low says ultimately it is in the interests of the company and its
creditors to settle the case.

"It's not in their interest for Apple to stop selling iPads in China.
They want to realise whatever assets Proview has."

Mr Abrams says the sticking point is likely to be the amount Proview
is prepared to settle for.

"I have a feeling what they (Proview) can live with and what Apple can
live with are very far apart. It's the only asset left for this
company essentially... and there are rumours that Proview is being
manipulated by its creditors."

According to a report by Bloomberg news agency, Shenzhen Proview is
controlled by its creditors, including two of China biggest banks -
Bank of China and China Minsheng Banking Corp.

Politics?

Mr Abrams says that Apple and its contractors employ millions of
workers in China and this will work in the technology giant's favour
should the case "turn political", as he puts it.

"Who is more important as a company to this country?" he asks. "Apple
is a big employer, the products are popular, it's a big multinational,
it pays taxes. Proview is a non-entity"

"If politics are involved at all, then Apple looks pretty good."

Many foreign companies have weathered disputes over their intellectual
property in China.

Earlier this week Hermes lost a Shanghai court case over a translation
of its name and Pfizer fought and lost a long court battle over the
Chinese name of its Viagra brand, which was registered first by a
Chinese company.

Starbucks and Sotheby's, however, both won their cases against Chinese
companies using translations of their names.

While the Proview case is embarrassing and could ultimately prove
costly for Apple, it is unlikely to deal a devastating blow to its
business in China, where fights have broken out as customers scrambled
to purchase new Apple products.

"Worst-case scenario is rebranding in China but even with that people
are still going to buy their products. It's not going to kill them,"
says Mr Abrams.

"If there's any lessons to be learned it's due diligence and making
sure your lawyer doesn't screw up when you sign your contract."

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Assessing the Global Business Outlook for Data Privacy

By, Catherine Dunn

According to a new White House report on consumer data privacy
protection, trust is worth a lot of money to U.S. businesses—users
have to know their data will be protected if the economic engine of
digital innovation is to keep roaring. Ergo, the U.S. needs a privacy
framework that's "flexible" enough to accommodate industry innovation,
and comprehensive enough that consumers will feel safe—and keep
clicking.

But trust between consumers and companies in the U.S. is only part of
the equation. There's another important element, too: how compatible
U.S. safeguards are with those of the rest of the world, and
particularly Europe. This new proposal arrives a month ahead of a
conference on data protection between E.U. and U.S. officials in
Washington, D.C., leading to questions about whether Europe and the
U.S. are any closer to getting on the same page when it comes to data
privacy.

The answer not only depends on who you ask, but also what section of
the White House's report you're looking at. The white paper lists
seven principles and stresses that these principles should form the
basis of voluntary codes of conduct adopted by industry. Once adopted,
the Federal Trade Commission would have the power to enforce
compliance to those codes. The paper also includes a call for Congress
to pass legislation based on these principles, and devotes a section
to "international interoperability"—which considers how data can be
sent across international borders without violating laws on either
side of the transaction.

Let's start with the Consumer Privacy Bill of Rights. As Joseph
Turrow, a professor at the Annenberg School for Communication at the
University of Pennsylvania, told NPR's Fresh Air, even the wording of
the report's title is a noteworthy choice:

[Europeans] believe in privacy as [a] human right. And that's the
interesting thing about how [the upcoming] Commerce Department report
is positioned: as a right. There are some advocates who don't like
what they see in the policy because they think it's too loose. But the
very fact that it's called a right is interesting rhetorically. Some
people would say they're moving in the right direction.

Privacy expert Lisa Sotto says that while the seven rights derive from
the Fair Information Practice Principles—which were issued by the U.S
Department of Education, Health, and Welfare in the 1970s—this updated
version also reflects contemporary European ideals: "A number of the
principles would seek to import European data protection standards to
the U.S., such as the right to access and correct data," says Sotto,
head of the global privacy and data security Practice at Hunton &
Williams in New York.

Next up: FTC enforcement and voluntary codes of conduct, which might
be a harder sell to Europeans. In fact, argues Jeffrey Chester, head
of the Center for Digital Democracy, the whole notion of
self-regulation by industry undercuts the basic tenants of the
European regulatory regime. "The Europeans are building a
comprehensive online privacy framework that places the interests of
citizens first," he says, while the U.S. self-regulatory approach
advances the interests of U.S. data mining companies. "This is digital
apples and oranges."

The section on interoperability, says Stuart Levi, a partner at
Skadden, Arps, Slate, Meagher & Flom in New York, can be read as a
signal to Europe: "We want you to recognize what we do here, and
accept what we do here."

"The U.S. is hedging its bets," adds Levi, co-head of the firm's
intellectual property and technology group. In other words, even if
the U.S. doesn't get a comprehensive data privacy and protection
policy passed into law, the Obama administration at least wants the
E.U. to recognize that a self-regulatory regime is valid and worthy of
respect.

The topic of global privacy regulations is now at a new pivot point.
Are the new E.U. framework and White House "Bill of Rights" the
beginning of a more global approach to data privacy, or are both sides
far enough down the digital road that it will be nearly impossible to
reconcile the legal and philosophical differences? For multinational
companies and web brands that rely on global access to data and
customers, the answer will be crucial to their success in a
21st-century marketplace.

For more information on these matters, please call our office at 305
548 5020, option 1.

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Jefferson County sets public hearing on sexually oriented business law

PORT TOWNSEND — An ordinance regulating sexually oriented businesses
in Jefferson County appears to be headed for approval next month after
nearly seven years of delays.

Jefferson County commissioners have been considering the ordinance
that would cover such businesses as strip clubs and sex novelty shops
since March 2005, when nine moratoriums on such establishments going
into business until county regulations were approved.

What could be a final public hearing on the final draft of the
ordinance was scheduled on Monday for 10:15 a.m. March 12 when the
three commissioners will consider final approval of the proposal.

That hearing is to be conducted before the commissioners in their
chambers at the county courthouse, 1820 Jefferson St., in Port
Townsend.

"I would dearly love to see these moratoriums come to an end," said
county Commissioner Phil Johnson who pointed out that the ordinance
would allow such businesses in more than one place in the county.

County Associate Planner David Wayne Johnson, who has taken the lead
on the developing the ordinance for the county Department of Community
Development, said such businesses would be allowed in areas zoned for
rural village centers, convenience centers, crossroad centers and
light industrial zones.

Both Quilcene and Brinnon are zoned as rural village centers and Glen
Cove Industrial Park south of Port Townsend is a light industrial
zone.

All are areas where sexually-oriented businesses could be established
under the law.

Commissioner Johnson said it "seemed odd" that such businesses would
be allowed to be "scattered" around the county.

Planner Johnson said the county had to zone sexually-oriented
businesses in more than one location because otherwise, the action
could be interpreted as creating a "red light district" and construed
as unconstitutional.

County Administrator Philip Morley said if all goes well there will be
no need to extend the moratorium once again.

"I am pleased to see we are getting to this point, quite frankly,"
said county Commissioner David Sullivan.

Some of the ordinance borrows from the city of Port Townsend law that
was adopted seven years ago and allows such businesses in the downtown
historic district.

As proposed, the ordinance requires that adult businesses be 1,000
feet away from churches and schools.

The county sheriff would administer licensing and the county hearing
examiner would hear any appeals of license denials, Morley said.

Johnson said the sheriff's office must take a role in review of
applications for adult-oriented because of the fear that such
businesses could be fronts for organized crime, including money
laundering and prostitution.

The county first discussed an adult business ordinance in early May
2005, but the matter fell by the wayside, with other issues taking
priority.

There is no county adult business law now in place.

"We think that this is a good final cut for the code for the
licensing," planner Johnson said.

"I think we can get this all done and have the public hearing" before
the moratorium expires.

The latest moratorium expires April 24.

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