New law encourages discussion of Y2K readiness information

Exceptions, other disincentives may limit its effectiveness

Legislators hope that a new law signed by President Clinton on Oct. 19 will encourage communication about year 2000 (Y2K) readiness among manufacturers and organizations. Exceptions in the Year 2000 Information and Readiness Disclosure Act and other disincentives to communicate, though, threaten the bill’s effectiveness.

The law, also know as the Good Samaritan Act or the Amnesty Bill, is designed to limit the liability of companies that share the compliance status of their products. The law protects only certain statements of compliance; it does not shield the manufacturer from the liability associated with the actual failure of the product.

"Although the Department of Justice has already indicated that competitors in an industry who merely share information on Y2K solutions would not be in violation of the antitrust laws, this act creates a specific exemption from the antitrust laws for these activities," Clinton said when he signed the bill. The law applies to statements made between July 14, 1998, through July 14, 2001. The law also extends protections to some previously made disclosures if proper notice is given within 45 days after the date of enactment of the law.

The law also directs the administrator of General Services to create, maintain, and promote a national Y2K Web site to assist customers, small businesses, and local governments in obtaining information about Y2K processing of computers, systems, products, and services.

Not only is the law supposed to encourage manufacturers to talk about their own products, it also encourages hospitals’ staff to talk to each other about what they know or think they know about Y2K readiness, says Joel Ackerman, executive director of Rx2000 Solutions Institute in Minneapolis. Rx2000 Solutions Institute is a member-supported organization helping the U.S. health care system prepare for year 2000.

"The whole purpose of this readiness act is to have something where the manufacturers can say, Here’s what we think we are doing,’ and for the users to say, That means we need to test this or maybe we don’t need to test this so much,’" says Diane J.P. McKenzie, a partner in charge of health care technology law at Gordon & Glickson, a Chicago information technology law firm.

"The act is structured in a way that doesn’t allow the user to say, I’m going to sue you because you were wrong.’ That’s the intention," McKenzie says. "I have a whole team of litigators, though, who say there are a number of ways that they can probably get around that, in the way it’s been enacted through some of the fraud provisions." For example, the court can determine that the maker’s use of the year 2000 readiness disclosure amounts to bad faith or fraud, or is otherwise beyond what is reasonable to achieve the purposes of the law. "I’m not sure necessarily that Congress and Clinton have accomplished their goals because the exceptions may engulf the rule," he adds.

Other reasons to keep your mouth shut

Manufacturers are put in a bind with the Y2K issue, McKenzie says. "If they say This is what we think right now’ and it turns out that the statement is wrong, and there’s some probability that whatever they think can be wrong because they are still testing — then they have exposed themselves to legal liability, much greater than if they had kept their mouths shut."

Ackerman also finds that many hospitals are keeping quiet about Y2K compliance issues."When we try to get hospitals to open up and talk about what they are doing to get ready for year 2000, we are finding everyone clamping down on communications," he says. "Some hospitals are instituting gag orders on their employees, prohibiting them from talking outside the hospital about their year 2000 projects."

One reason for using a gag order is the fear of being sued because someone didn’t like what you said about a product. "This law will help alleviate that, although I am told that the law contains loopholes, and it’s not a total protection," Ackerman says. "There is still some risk, but it is reduced."

The new law, however, addresses only one piece of the problem, Ackerman says. Other problems include:

o Fear of the impact on customers or other clients or partners.

"If I’m a major East Coast metropolitan medical center, and I find that my intensive care monitoring system will go down and stay down on Jan. 1, 2000, I don’t want to talk about that for several reasons," Ackerman says. "I don’t want my customers or patients to lose confidence in the hospital because they think we are having all kinds of problems, when in fact we are finding and fixing them." Also, for-profit organizations don’t want to lose investor confidence.

o Fear of regulatory interference.

"If I say that I found a problem with a certain product, it’s possible that the regulatory agencies may want to spend time in my hospital understanding the extent of the problem, studying it, and distracting my people at a time when I need to move ahead with fixing year 2000 problems," Ackerman says.

o Fear of losing key resources.

"If [administrators from] the hospital down the street wake up today and decide to get moving on year 2000 [projects], they will need to find skilled, knowledgeable resources that they can hire quickly," he says. The most visible Y2K problem: Solvers may become targets for headhunters or recruiters.

Because of all these kinds of problems, the new law will probably not open the "information floodgates," Ackerman says. "I’m hoping that it will help to improve the information flow, but my expectations are not that high."