Author: National Law Forum

A group of in-house attorneys developed the National Law Review on-line edition to create an easy to use resource to capture legal trends and news as they first start to emerge. We were looking for a better way to organize, vet and easily retrieve all the updates that were being sent to us on a daily basis.In the process, we’ve become one of the highest volume business law websites in the U.S. Today, the National Law Review’s seasoned editors screen and classify breaking news and analysis authored by recognized legal professionals and our own journalists. There is no log in to access the database and new articles are added hourly. The National Law Review revolutionized legal publication in 1888 and this cutting-edge tradition continues today.

7th Drug & Medical Device Litigation Forum, 7-8 Mar 2012, Philadelphia

The National Law Review is pleased to inform you of the 7th Drug & Medical Device Litigation Forum: Implementing Appropriate Litigation Readiness and Costs Management Policies That Ensure An Effective Defense at Trial

Event Date: 7-8 Mar 2012

Location: Philadelphia, PA, United States

Key conference topics

  • Mitigate and maintain costs associated with litigation
  • Gain judical insight on drug and medical litigation and its recent developments
  • Build better relationships with outside counsel in order to reduce the miscommunciation factor
  • Understand the limitations of marketing and advertising as it relates to emerging social media issues
  • Learn the latest on medical device product liability

Conference focus

 Pharmaceutical and medical device manufacturers have faced a growing array of legal challenges this year. With the increase of mass tort litigation, as it relates to product liability, pharmaceutical and medical device manufacturers must be prepared to defend the increasingly sophisticated, well-funded and multi-jurisdictional product liability campaigns against their companies.

The 7th Drug and Medical Device Litigation Conference will be a two-day, industry focused event specific to those within Drug & Medical Device Litigation, Product Liability and Regulatory Affairs in the Medical Device, Biotech and Pharmaceutical industries.

By attending this event, industry leaders will share best practices, strategies and tools on incorporating litigation readiness, utilizing cost efficient litigation strategies and accurately managing policies to ensure an effective defense at trial.

Attending This Event Will Enable You to:
1. Review the current landscape of drug and medical device litigation
2. Learn strategies in settlements and mass tort issues
3. Manage litigation expenses in order to effectively manage costs
4. Review recent case rulings, including the Mensing and Levine cases
5. Take a view from the bench: explore drug and medical device litigation
from a judicial point of view
6. Tackle product liability issues and challenges
7. Uncover the risks for drug and medical device companies when leveraging social media for marketing and advertising campaigns

With a one-track focus, the 7th Drug and Medical Device Litigation Conference is a highly intensive, content-driven event that includes case studies, presentations and panel discussions over two full days.

This is not a trade show; our Drug and Medical Device Litigation conference series is targeted at a focused group of senior level leaders to maintain an intimate atmosphere for the delegates and speakers. Since we are not a vendor driven conference, the higher level focus allows delegates to network with their industry peers.

Testimonials:

“Great selection & breadth of speakers. Uniformly high quality of presentations. Intimate nature of meeting provided excellent opportunities for networking” – Abbott

“Great venue to learn and exchange best practices. More importantly how to leverage lesions learned from others.” – Baxter

“One of the best meetings I’ve attended. Excellent organization, topics and speakers. Overall extremely well done.” – Sanofi Aventis

marcusevans


Health Care Entities Using Social Media: Guidance from the Division of Quality Assurance

Recently posted in the National Law Review an article by Diane M. Welsh and Linda C. Emery of von Briesen & Roper, S.C. regarding  the use of social media and web-based email services:

Many articles have been written about the legal and business risks associated with the use of social media and web-based email services. However, the risk of using social media is heightened in the health care industry in light of a health care entity’s legal and regulatory obligations to protect the privacy and security of health care information. Health care entities need to be particularly familiar with the risks of using social media in the health care industry and methods for reducing those risks.

The DQA October 24, 2011 Memorandum

On October 24, 2011, the Wisconsin Division of Quality Assurance (“DQA”) issued numbered memorandum 11-026 entitled, “Using Social Media Platforms, such as Twitter, Facebook, MySpace and LinkedIn”. The Memo is available at www.dhs.wisconsin.gov/rl_DSL/Publications/11-026.htm.

The DQA definition of “Social Media” includes what one would normally consider social media, as well as “free and unencrypted web-based email services” such as Yahoo and Gmail, and web-based calendars. The purpose of the Memo is to “provide guidance to providers on the fast-changing landscape of the internet and the impact of using social networking and social media as a communications tool”.

DQA released the Memo to address concerns raised about (1) health care entities and their staff using web-based email accounts (e.g., Gmail) or web-based calendars (e.g., Yahoo Calendars) to convey patient or resident care information; and (2) health care entity staff members sharing protected health information on FaceBook.

The DQA notes that inappropriate use of Social Media or use of Social Media without adequate security protections may violate a patient’s or resident’s privacy rights. Moreover, DQA emphasizes that Social Media sites are now major targets of the hacker underground, creating further risk of a network security breach. DQA also warns health care entities of the potential for criminal and civil risks of using Social Media, (including criminal prosecution or civil actions under HIPAA) because it is the United States Department of Health and Human Services Office of Civil Rights—and not the Division of Quality Assurance—which has jurisdiction over such violations.

Risk Management Considerations With Regard to Entity Use of Social Media

DQA includes a number of recommendations for reducing the risks associated with the use of social media by health care entities.

First, the DQA recommends that each health care entity conduct a risk assessment to determine whether the entity or its staff members are utilizing Social Media in a manner that may violate patient or resident rights.

DQA also recommends that providers and staff members should be fully aware of the broad definition of “protected health information.” If a health care entity chooses to utilize a Social Media tool, it should insure that the information it discloses is “de-identified under HIPAA.” DQA points out that no health care provider should ever post any protected health information on-line without the appropriate written patient authorization. Merely omitting a patient’s name from a post does not make it a permissible disclosure. Posts that discuss the patient’s condition—even without disclosing the patient’s name—contain protected health information.

DQA emphasizes that “a covered entity should consider the need for a business associate agreement with a social media site, if the entity is uploading protected health information to the site. HIPAA makes it mandatory for all covered entities along with their business associates to ensure complete protection of patient health information, which they store, process and exchange between themselves.”

Finally, DQA recommends that health care entities should develop a social media policy that guides employees on the appropriate use of social media, and includes specific guidance (e.g., “Refrain from discussing patients, even in general terms.”). The organization should also provide staff with ongoing training on resident rights, privacy and security.

Marketing Uses of Social Media

DQA does not directly address the use by healthcare entities of social networking sites like FaceBook, Twitter or YouTube, or even the providers’ own websites, to promote their services or discuss advances they have made in healthcare. Many health care entities use videos, photos, and patient interviews to promote their services. If a health care entity posts a video, photograph, or patient interview of actual patients, that provider would be disclosing protected health information.

Any health care provider using protected health information in this manner should only do so with the express written authorization of the patient. Even with such authorization, the provider must be sure that the patient understands that when posting information online, the provider and the patient lose much control of the information. Although the provider could remove the materials if a patient withdraws authorization, the patient and the provider cannot get back any material that may have been downloaded by others.

Although not referenced in the Memo, health care providers should institute a social media policy which identifies who is permitted to use social media for the business purposes of the organization and what information may be posted on the company’s website or a social media web page.

Considerations for Staff Member’s Personal Use

One of the greatest risks of social media sites is that a health entity staff member may post protected information on the staff member’s social media page. The internet is filled with stories of hospital employees being fired for providing their opinions about a patient on a Facebook account, albeit without identifying the patient’s name. Given that any information disclosed about a patient or resident would likely constitute a breach of protected health information, it is imperative that providers inform staff that they are not to share any confidential information whether at work, or outside of work—including on their FaceBook pages or through Twitter (or in actual conversation with their family or friends). Staff should understand that they are not to share any patient information online—even if they are not naming the individual patient.

Additional Resources

Additional information on this issue is available through the HIPAA Collaborative of Wisconsin website, at www.hipaacow.org.

©2011 von Briesen & Roper, s.c

IRS Extends Transition Relief for Puerto Rico Qualified Plans to Participate in U.S. Group Trusts and Deadline to Transfer Assets

Posted in the National Law Review an article by attorney Nancy S. Gerrie and Jeffrey M. Holdvogt of McDermott Will & Emery regarding  U.S. employers with qualified employee retirement plans that cover Puerto Rico:

On December 21, 2011, the U.S. Internal Revenue Service (IRS) issued Notice 2012-6, which provides welcome relief for U.S. employers with qualified employee retirement plans that cover Puerto Rico employees.  Notice 2012-6 provides that the IRS will extend the deadline for employers sponsoring plans that are tax-qualified only in Puerto Rico (ERISA Section 1022(i)(1) Plans) to continue to pool assets with U.S.-qualified plans in group and master trusts described in Revenue Ruling 81-100 (81-100 group trusts) until further notice, provided the plan was participating in the trust as of January 10, 2011, or holds assets that had been held by a qualified plan immediately prior to the transfer of those assets to an ERISA Section 1022(i)(1) Plan pursuant to a spin-off from a U.S.-qualified plan under Revenue Ruling 2008-40.

Notice 2012-6 also extends the deadline for sponsors of retirement plans qualified in both the United States and Puerto Rico (dual-qualified plans) to spin off and transfer assets attributable to Puerto Rico employees to ERISA Section 1022(i)(1) Plans, with the resulting plan assets considered Puerto Rico-source income and not subject to U.S. tax.

There are now two separate deadlines:

    • First, in recognition of the fact that Puerto Rico adopted a new tax code in 2011 with significant changes to the requirements for qualified retirement plans, the IRS has extended the general deadline to December 31, 2012, for dual-qualified plans to make transfers to Puerto Rico-only plans, in order to give plan sponsors time to consider the effect of the changes made by the new tax code.
    • Second, in recognition of the fact that the IRS has not yet issued definitive guidance on the ability of an ERISA Section 1022(i)(1) Plan to participate in 81-100 group trusts, the IRS has extended the deadline for dual-qualified plans that participate in an 81-100 group trust to some future deadline, presumably after the IRS reaches a conclusion on the ability of a dual-qualified plan to participate in an 81-100 group trust, as described in Revenue Ruling 2011-1.

For more information on the issues related to participation of ERISA Section 1022(i)(1) Plans in 80-100 group trusts, see “IRS Permits Puerto Rico-Qualified Plans to Participate in U.S. Group and Master Trusts for Transition Period, Extends Deadline for Puerto Rico Spin-Offs.”

For more information on the issues plan sponsors should consider with respect to a dual-qualified plan spin-off and transfer of assets attributable to Puerto Rico employees to ERISA section 1022(i)(1) plans, see “IRS Sets Deadline for Transfers from Dual-Qualified to Puerto Rico-Only Qualified Plans.”

© 2011 McDermott Will & Emery

New Facebook Cases – No Protected Concerted Activity, But Is It Surveillance??

Posted in the National Law Review an article by Adam L. Bartrom and Gerald F. Lutkus of Barnes & Thornburg LLP regarding Facebook cases continue to be examined by the NLRB

Facebook cases continue to be examined by the NLRB as a new technology cloaked in traditional case law.  The NLRB’s General Counsel has recently decided to dismiss three complaints brought by terminated employees who were fired for their Facebook posts.  In all three cases, the GC found the conduct not to be protected concerted activity under Section 7 of the NLRA.  That approach is consistent with the GC’s memo earlier this year which emphasized that content and context were key in analyzing whether disciplinary action brought as a result of social media chatter violated the NLRA.  A recent blog post on the topic appears here. To access the GC’s office memoranda on these cases, click here.  All three continue to show the NLRB’s focus on whether the Facebook chatter is merely an expression of individual gripes or is the chatter an effort to initiate group dialogue or group action.  Employers must continue to evaluate decisions to discipline for social media postings within that context.

 However, buried in one of the opinions, Intermountain Specialized Abuse Treatment Center, is a provocative and concerning analysis by the GC’s office regarding union surveillance.  The Advice Memorandum concludes that it agrees with the Regional Director that the Employer did not unlawfully create the impression that it was engaged in surveillance of protected union activity by having knowledge of the Facebook post.  What??  The memorandum states that employer surveillance or creation of an impression of surveillance constitutes unlawful interference with Section 7 rights.  Here, there was no such impression of surveillance because the employer received the Facebook information from another employee and the conduct at issue turned out not to be protected activity.  However, the memorandum certainly raises the question of whether an employer practice to examine Facebook posts on a regular or even on an as needed basis would violate Section 7 rights.  The jury is still out on that issue.  Stay tuned.

© 2011 BARNES & THORNBURG LLP

Fraud, Prescription Drugs, and the Elderly

Recently posted in the National Law Review, Winner of the  Winter 2011 Student Legal Writing Contest,  Nicole J. Ettinger, law student at SUNY Buffalo Law School wrote an article about the elderly population is often a target for those who seek their financial resources:

Buffalo Law

The elderly population is often a target for those who seek their financial resources—from identity theft, to telemarketing schemes, to health care fraud.[1] The elderly population is seen by many in society as a vulnerable group as a whole; this is often because some in the elderly population may be suffering from dementia or other ailments that may cloud those individuals’ memories. Knowledge about how dementia affects an elderly person’s abilities to recall events or fully orient himself can create predatory opportunities for those who wish to take advantage of this common illness.[2] Those who prey on the elderly likely believe the elder has a substantial amount of money and would easily fall for scams.[3] One area of concern involving fraud against and involving the elderly is fraud in prescription drugs, specifically Medicare Part D.[4]

I. Background of Medicare Part D

Medicare Part D, implemented in 2006, came into being under the Medicare Modernization Act of 2003 [hereinafter “MMA”].[5] The MMA provided assistance for paying for prescription drugs for some elderly persons as before Part D, Medicare only covered prescriptions issued from a hospital or doctor’s office.[6] As long as one is eligible for Medicare Parts A or Part B, he is eligible for the optional[7] prescription drug plan, Medicare Part D.[8]

Like Medicare Parts A and B, Part D is administered through the federal government, but unlike A and B, the actual prescription services are delivered through various approved private insurers.[9] There are two types of Medicare Part D Plans: Prescription Drug Plans (PDP) and Medicare Advantage Plans (MA-PD).[10]  PDPs only provide prescription coverage while MA-PDs also provide the medical services that Medicare Part A and B provide, but through a private company.[11]

For Medicare eligible elders with a more limited income, the Low or Limited Income Subsidy, or Extra Help, is available to assist with some or all of Part D prescription costs.[12] A major benefit of the Extra Help program is that these recipients do not have to face the coverage gap, or “doughnut hole,” that comes with most Part D plans.[13] For an elderly individual or couple who do not apply for the Extra Help subsidy, the “doughnut hole” is a certain spending point, $3,6100.00 in 2010 and $2,480.00 in 2011,[14] after which the elderly individual is responsible for paying for the full costs[15] of his prescription medications. After the individual reaches a second spending benchmark—$4,550.00 in prescription drug costs for 2011—catastrophic coverage will be triggered.[16] During catastrophic coverage, the individual will pay for only 5% of drug costs.[17]

To assist with these difficult costs to the elderly, the Patient and Affordable Care Act [hereinafter PPACA] implements a plan for the hole to “close” in 2020.[18] The closure of the doughnut hole means that the individual will be responsible for paying for only 25% of his prescription costs for brand-name drugs, as 50% will be covered by the pharmaceutical company and 25% by a federal subsidy[19] and 25% for name brands.[20] The program starts the closure of the hole gradually, as it began in 2011 with a 50% discount for brand-name prescription medications and a 7% discount for generic prescription medications.[21] Despite the discount programs and forthcoming changes to the Medicare system,[22] the costs of prescription drugs are still a concern and a major financial burden for many elderly people.

Medicare Fraud

With the coming of the Part D program in 2006, some were concerned about the new and extended avenue for fraud—particularly against the elderly. When Part D first began, many predicted a dreary future for Part D, fraught with fraud, a plan some predicted to cause more trouble than it was worth.[23] Along with fraud related to billing, predictions included “enrollment based frauds, improper inducements to enroll, formulary manipulations, acceptance by plans or pharmacy benefit managers (PBMs) of improper inducements from manufacturers to have their drugs on formulary, improper reporting to the government of rebates received from manufacturers, and plan marketing programs.”[24]

Similarly, telemarketers and internet scammers may target the elderly who may not be as wary or meticulous in protecting their information and checking the legitimacy of the programs.[25] Elderly persons may find themselves enrolled in a Part D program with a premium that is too high for their income or one that excludes the prescription drugs they need from coverage.[26] While Medicare Part D was implemented five years ago, these concerns have not diminished.[27] While it is clear that such concerns have materialized, it is less clear how pervasive the fraud has become.[28]

The MMA requires Part D providers to implement a program to protect against fraud and other abuses of Medicare Part D.[29] While the Center for Medicaid & Medicare Services has its own lengthy suggestions, for the most part, each Part D plan is supposed to implement its fraud and abuse prevention through use of its own guidelines.[30] Some opine that flexibility for insurers to choose how to set up and implement their fraud, waste, and abuse monitoring programs provides a structure that “remains ripe for abuse” by these Part D insurers.[31]

One part of the Center for Medicare & Medicaid Services goals to reduce fraud in Part D is the implementation of the Medicare Drug Integrity Contractors program, or MEDICs, which “identif[y] and investigat[e] potential Part D fraud and abuse, develo[p] potential Part D fraud or abuse cases for referral to law enforcement agencies, ac[t] as a liaison to law enforcement, and serv[e] as an auditor of Sponsor and subcontractor Part D operations.”[32] MEDICs collect and investigate the kind of internal fraud that the Part D beneficiary may never be made aware of—such as submission of false claims for services not provided.[33]

The MEDICs rely heavily on reporting of potential fraud and abuse to their agency through complaints.[34] These complaints may come from the elderly individual himself or they can be reported by family members, healthcare providers, and other Medicare plans.[35] MEDICs are also supposed to complete their own internal analysis of potential fraud through “fulfilling requests for information from law enforcement agencies. . .; identifying program vulnerabilities; auditing the fraud, waste, and abuse programs that are part of plan sponsors’ compliance plans.”[36]

MEDICS are also supposed to apply internal methods of fraud and abuse analysis through “analyzing claims data, conducting Internet searches to identify leads, and analyzing complaint data for trends”[37] but this internal investigation has been limited.[38] Out of the 4,194 reports of potential fraud or abuse in 2008, 87% of these were reported from outside, non-MEDIC, sources.[39] For the cases identified through internal research, 93%, or 553 cases, were discovered through analyzing data trends.[40] Once MEDICs determine that the report of fraud and abuse may have legitimacy, they open an investigation. Out of the 4,194 reports in 2008, 1,320 of these cases were investigated.[41] For the cases that the MEDICs chose to investigate, the MEDICs referred sixty-five cases to the Office of the Inspector General and sent thirty-four “immediate advisements” to the Office of the Inspector General as well.[42] For the remaining cases, 257 were referred to state insurance commissioners and the final 39 were sent to CMS for review.[43]

While all of cases that come before the MEDICs are reviewed, not all are investigated. The MEDICs decide to complete an investigation where they find that the subject of their investigation[44] “engaged in a pattern of improper prescription writing or billing, submitted improper claims with actual knowledge of their falsity, or submitted improper claims with reckless disregard or deliberate ignorance of their truth or falsity.”[45]  The way that the investigations are completed is through a case review.[46] If after the MEDICs’ investigatory efforts, they determine potential fraud or abuse, the MEDICs are supposed to seek the assistance of the Office of the Inspector General to decide what should be done.[47] However, regardless of whether cases are referred for further investigation, the MEDICs are required to update CMS monthly with all referrals to outside agencies and their status.[48]

Out of the 1,320 cases investigated in 2008, 40% of identified fraud involved marketing schemes.[49] The marketing schemes involved behaviors ranging from unsolicited door-to-door marketing to individuals[50] to enrolling an elderly individual in a plan without his permission.[51] While the MEDICs report does not specify its definition of “permission,” it is likely that such tactics would include enrolling an individual who may say he agrees, but who does not have the capacity to enroll himself in a Plan without permission of that individual’s guardian or health care proxy.[52] Twenty-one percent of cases involved “drug diversion by beneficiaries”[53]and 15% involved inappropriate prescriptions, or billing for drugs not medically needed.[54]

While the MEDIC program appears to be organized and comprehensive from the outside, the MEDICs are limited in their ability to track and prevent Part D fraud.[55]The three national MEDICs programs reported that the limitations on their authority to access data as well as audit Plan sponsors limited their ability to enforce their mission of identifying and monitoring potential fraud and abuse.[56] For instance, as of 2008, the MEDICs could not gain access to much of the information they needed to complete their reports, as they were required to request information from the plan sponsors and could not receive this data from CMS directly.[57]

One other troubling finding from the MEDIC analysis is that plan sponsors are notrequired to refer identified cases of potential fraud to the MEDICs.[58] Thus, the information that the MEDICs received is what the Part D plans voluntarily provided and so the breadth of the MEDICs investigations were limited by the amount of data they could collect.[59] Perhaps “encouragement” is not sufficient to convince Part D plans to report concerns of fraud and abuse; the Office of the Inspector General suggests mandatory reporting to MEDICs, rather than recommended reporting so that the MEDICs will be made privy to a greater amount of incidents and will subsequently be able to provide greater protection against such fraud.[60]

Beyond the legal or budgetary limitations of the MEDIC programs, some still do not feel that Medicare’s plan for protecting the elderly population against fraud and abuse in Part D programs is sufficient.[61] In one instance of Part D fraud, seventy-four-year-old Mr. Aldridge’s Medicare Part D plan was switched to a Medicare Advantage plan after a Part D plan employee forged Mr. Aldrige’s signature to enroll him.[62] Mr. Aldrige’s doctors did not accept this new healthcare plan.[63] The unapproved switch cost Mr. Aldrige hundreds of thousands of dollars in out –of-pocket prescription drug costs before the problem was straightened out—while the salesman who allegedly committed the forgery that devastated Mr. Aldrige received a $300.00 commission for Mr. Aldrige’s enrollment.[64] Unfortunately, Mr. Aldrige’s story is not unique, there exist horror stories of people and plans who will enroll elderly individuals who lack capacity to contract,[65] who were not proficient in English,[66] those whose life-sustaining medications are not actually covered by the plan,[67] or by garnering enrollment by marketing in a way that  the elderly may wrongfully believe that Plans are government entities.[68]

One writer suggests that Medicare fraud, including Part D fraud, is still so rampant because federal enforcement measures are lacking.[69] CMS has not taken as strong hand on enforcement as needed.[70] In one situation, insurance companies suspended their marketing practices voluntarily after there were reports of fraud against the elderly in their plan, but these companies were permitted to continue their marketing plan just three months later.[71] Reflective of these sentiments is a 2008 survey by the National Association of Insurance Commissioners Senior Issues Task Force, which noted that out of the thirty-six states that participated in the survey, all but two of them had received complaints on the marketing of private Medicare plans within their state.[72]

i.  Medicare Part D Fraud and the Courts

One reason noted for the limited success in monitoring and preventing Medicare fraud and abuse is that the Medicare Modernization Act of 2003[73] preempts state legislation preventing fraud in the marketing and practice of Part D plans.[74]Therefore, if a state wishes to enforce its own stricter regulations against fraud, these efforts may be preempted by federal law.[75] In Uhm v. Humana Inc., a group of elderly individuals brought a class action suit against a PDP with whom they had all enrolled for their Medicare Part D coverage.[76] The elderly plaintiffs argued that due to this PDP plans’ advertising methods, they thought that their prescription drugs would be covered by the plan once Part D began in 2006.[77] However, when the plaintiffs requested information about their plan and requested copies of the forms needed to order their prescriptions, they did not get a response and had to purchase their prescriptions out of pocket—a great expense.[78]

The PDP argued that the plaintiffs’ state claims[79] were preempted by the MMA—the court agreed, reasoning that “the language of the MMA preemption clause is clear: if Part D establishes standards that cover plaintiffs’ claims, then those standards supersede state law, and plaintiffs’ state law claims are preempted.”[80] While the elderly plaintiffs called such a result “absurd,” the court defended by stating that all PDP plans still must report to CMS according to federal regulations and such grievances could result in large fines to the PDP plans.[81] This, however, is likely little consolation to elderly individuals who had to pay for their medication costs out of pocket, especially where it is possible that the MEDICs, who may receive such grievances, may have limited access to other complaints relating to the PDP plan and so may not be aware about the extent of fraud.[82]

Some fraud may seriously risk an elderly individual’s health. In one heinous case, a sole physician at a small clinic, in exchange for $1000 weekly, allowed the two operators of the clinic to use his provider number to order rare medications, which were not medically necessary for the clinic’s patients, but allowed the highest payment from Medicare.[83] The clinic dispensed some medication to their largely poor and elderly patients –despite that the medication was risky.[84] While it was discovered that the clinic was not legitimate, the clinic managed to receive nearly $650,000.00 from Medicare before detection.[85] Such scenarios result in many writers and activists suggesting plans for solutions.[86]

II.  Possible Solutions or improvements to Part D Fraud

One solution scholars have suggested for curbing fraud is to limit the number of plans available.[87] Second, scholars suggest that state laws should not be preempted, to allow for more stringent regulation of Part D plans by the state.[88]

The proposal to reduce the number of PDP and MA-PD plans available is premised on the notion that fewer plans will lead to less confusion, more efficient regulation, and greater standardization amongst the plans.[89] The proposal is worth consideration due to the many choices that are available out there, which may confuse and overwhelm any person seeking to find an appropriate  Part D plan. Further, fewer plans may limit the aggressive marketing tactics some Plans may feel they need to take to stand out from the many others.

The risk that comes with placing federal restrictions on the amount of plans available to Medicare Part D recipients—thus, the elderly and disabled—is that there is an unavoidable hint of paternalism.[90] The proponents of this proposal seek to combat this assumption by claiming that the government limiting the number of Part D plans is comparable to employers acting as a broker while choosing their employee health plans.[91] While this analogy may be disjointed, the proposal still has merit, despite the recognizable shroud of paternalism and possible concerns regarding restrictions on free markets.[92] A system with limited providers may not be a limit on freedom of choice, as the proposal explains that there should still be a sufficient number of options.[93] Some studies show that many elders report confusion and frustration surrounding Medicare Part D.[94] If this is the case, limitations would be helpful in easing the choosing process.[95] As the federal government would be responsible for narrowing the number of insurers issuing Part D, the government would also be responsible for evaluating the Plans’ quality.[96]

Such a system may be beneficial in reducing fraud, if it could be shown that part of the reason that fraud occurs is because there are so many plans in place. A system with limited choice of Part D providers may not directly reduce fraud, but appears that its side effects may lead to such a result. It may be the case that if fewer plans are offered, government oversight could be greater because there would be fewer plans to monitor and audit; further, the quality of plans may improve.[97] Further, beyond concerns of fraud, the other benefit that may come with such a plan would be “simplicity” for the elder in choosing a Part D plan.[98] If limited plans are available, the first time an elderly individual enrolls, he may feel less overwhelmed and more willing to research plans that fit his needs best where the amount to research does not seem so vast and frustrating.[99] While the true effect on providers is uncertain, another benefit of limited Plans may be that Part D plans marketing tactics may become less aggressive if the amount of Plans that are accepted to operate in each state are limited and enforced, so that there are not many plans jumping for a bite at the “apple” all at once. The theory is based on the idea that the plans providers will know that they have been accepted by the government as one of only a few providers in that state and thus, that their competition is limited to far fewer companies. Further, if that Plan attempts aggressive or suspicious marketing, due to the smaller “community” of plans, it is possible the other plans may be more likely to report them, providing for internal enforcement.

The second proposal to for reducing fraud is that federal laws and regulations shouldnot preempt stronger state laws protecting against fraud in Part D plans.[100]Currently the MMA explicitly preempts state laws and regulations relating to enforcement of state fraud and abuse plans because of the fact that Medicare is a federally operated program so, beyond state licensing or solvency laws, state laws are not applicable.[101] The reason that some argue that state laws should not be preempted is that state laws and regulations to monitor and enforce marketing requirements and limitations “offer faster and more responsive remedies” than federal programs.[102]

Such a plan to allow for state enforcement may be a very helpful solution where Medicare’s guidelines on some aspects of Medicare fraud, waste, and abuse programs are merely suggestions, rather than requirements. As discussed above, Part D plans are not mandated to report claims of fraud, waste, and abuse and additionally, the structure for implementing such plans are largely left to the Part D insurer.[103] This is corroborated by evidence presented that the federal government and Medicare do not always take strong efforts to enforce marketing standards. While the news shows recent “crackdowns” on Medicare fraud operations by health care providers,[104] it is not clear how strong the enforcement is for marketing, despite the federal regulations putting forth such standards.[105] At least when Medicare Part D first began, “CMS issued only ‘warning notices’ to plans violating marketing standards.”[106]

States’ ability to enforce their own stronger laws and regulations against Part D providers may be an  effective option for fraud reduction. If Plans, especially those only offered in one state, are held responsible to the states, active state boards such as within Attorney General’s Offices and bureaus of Consumer Fraud could serve as additional pairs of eyes on the providers.[107]

Part III: Conclusion

Proper information about Part D Plans’ abuse and fraud programs along with consumer protection education for the elderly and their caretakers can serve as important methods of protection.[108] For the former, this may include that Part D providers must provide their current and potential enrollees with clear, plain-English information regarding the Plan’s fraud and abuse programs and detailed information on how an enrollee could file a complaint or grievance.

Second, Medicare should fund consumer fraud education programs to be taught at nursing homes and assisted living facilities; for those who may be living alone, this information may provided from Medicare and distributed to the elderly individual’s doctors, families, or the elders themselves.  Additionally, the elderly individual should be taught basic fraud prevention strategies such as to never give out his personal information—especially to someone who calls over the phone or who stops by the individual’s home to enroll them in a plan.[109] Elderly individuals should also be advised not to give their Medicare card or information to anyone they may meet, especially if the person offers free equipment, medication, or prizes in exchange for private information.[110] While such suggestions may seem simplified when contrasted with the fraud reduction suggestions earlier in this paper and in many scholars’ writings, proper consumer protection education may be a first and important step in preventing against fraud until such programs might be implemented to target and monitor fraud from the inside, out.

[1] Fraud Target: Senior Citizens, Federal Bureau of Investigation,http://www.fbi.gov/scams-safety/fraud/seniors (last visited Apr. 28, 2011).

[2] Id. (“Con artists know the effects of age on memory, and they are counting on elderly victims not being able to supply enough detailed information to investigators. In addition, the victims’ realization that they have been swindled may take weeks—or more likely, months—after contact with the fraudster.”)

[3] Supra n.1.

[4] Alice G. Gosfield, Medicare and Medicaid Fraud and Abuse ,§ 1:2 (2010). “’[Defining] fraud and abuse,’ as it is customarily used, to cover misconduct in the delivery and financing of health care.”

[5] Public Law 108-173. See also, Centers for Medicare & Medicare Services, Medicare Prescription Drug Benefit Manual, Chapter 1 at 3. (2008), available athttps://www.cms.gov/PrescriptionDrugCovContra/Downloads/Chapter1.pdf (last visited Apr. 24, 2011).

[6] 42 USCA § 1395y (2002) See also, Medicare Part D: Prescription Drug Program, Evelyn Frank Legal Resources Program (updated Nov. 7, 2010), available athttp://wnylc.com/health/download/6/.

[7] Part D is mandatory for those who receive Medicare and Medicaid benefits, known as “dual eligibles.” See 42 C.F.R. § 423.34(a) (2005).

[8] 42 C.F.R. § 423.30(i)-(ii).

[9] Medicare Part D: Prescription Drug Program, Evelyn Frank Legal Resources Program, 5 (updated Nov. 7, 2010), available at http://wnylc.com/health/download/6/.

[10] See Centers for Medicare & Medicare Services, Medicare Prescription Drug Benefit Manual, Chapter 1 at 3. (2008), available athttps://www.cms.gov/PrescriptionDrugCovContra/Downloads/Chapter1.pdf (last visited Apr. 24, 2011).

[11] Id. at 7.

[12] See 42 CFR § 423.780. To receive Extra Help, the individual must be either eligible for Supplemental Security Income (SSI), Medicaid, Medicare Savings Program, or whose income and resources fall below certain benchmarks. See generally, POMS, 00815.023 Medicare Savings Programs Income Limits, available athttps://secure.ssa.gov/apps10/poms.nsf/lnx/0600815023. See also See 42 CFR §§  423.773, 423.780, POMS HI 03030.025 Resource Limits for Subsidy Eligibility,available at https://secure.ssa.gov/apps10/poms.nsf/lnx/0603030025.

[13] Eighty percent of Part D plans have a gap and do not offer any gap coverage. See Richard L. Kaplan, Analyzing the Impact of New Health Care Reform Legislation on Older Americans, 19 Elder L. J. 213, n. 13, (citing  Jack Hoadley, et. al, Medicare Part D 2010 Coverage Spotlight: The Coverage Gap, Exhibit 1, (2009))(citing Georgetown University/NORC at the University of Chicago’s analysis of CMS PDP Landscape Source Files, 2006-2010, for the Kaiser Family Foundation).

[14] The elderly individual first pays a $310.00 premium and then pays 25% of prescription costs up to $2480.00. POMS HI 03001.005, available at https://secure.ssa.gov/apps10/poms.nsf/lnx/0603001005, See also Pub. L. 118-148.

[15] Referred to as TrOOP, True Out of Pocket Costs. See Centers for Medicare and Medicaid Services, Prescription Drug Benefit Manual. Chapter 9, Part D Program to Control Fraud, Waste and Abuse.

[16] POMS HI 03001.005, available athttps://secure.ssa.gov/apps10/poms.nsf/lnx/0603001005; Announcement of Calendar Year (CY) 2011 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter, Center for Medicaid & Medicare Services (Apr, 5, 2010) available athttp://www.cms.gov/MedicareAdvtgSpecRateStats/Downloads/Announcement2011.pdf at 34.

[17] Id.

[18] See 42 USCA § 1395w-114a , Public Law 111-148.

[19] See 75 FR 29556 (2010)(“For purposes of sections 1860D-14A and 1860D-43 of the Social Security Act (the Act), as set forth in the Patient Protection and Affordable Care Act of 2010, Public Law 111-148 § 3301, and the Health Care and Education Reconciliation Act of 2010, Public Law 111-152, collectively known as the Affordable Care Act), see also, Social Security Act § 1860D-14A(b)(1)(B).

[20] See 75 FR 29556 (2010)

[21]  Patient Protection and Affordable Care Act, 42 USCA § 1395w-114a ; SSA-POMS, HI: 03001.001, available athttps://secure.ssa.gov/apps10/poms.nsf/lnx/0603001001.

[22] One study notes that after the 2006 implementation of Part D, in 2006, the mean yearly out of pocket costs for prescription medications decreased by 32% one year after Part D was put into effect. However, the study notes that this decrease in expenditures is for those who did not have any prescription coverage before Part D (decrease from an average of $963 to $517 between 2005 and 2006), while those who had some prescription coverage or were dual eligible people with Medicaid, Part D did not vary their out of pocket costs for medication very much (from $600 to $582 in 2006). See Christopher Millett, et. al, Impact of Medicare Part D on Seniors’ Out –of-pocket Expenditures on Medications, 170 Arch. Intern. Med. 16 (2010).

[23] See, e.g., Alice G. Gosfield, Medicaid and Medicare Fraud and Abuse, § 1.18- Medicare Part D (2010).

[24] Id.

[25] Fraud Target: Senior Citizens, Federal Bureau of Investigation,http://www.fbi.gov/scams-safety/fraud/seniors (last visited May 5, 2011).

[26] Infra n.103. But see, 42. C.F.R. § 423.38(c)(8)(i) (allowing for disenrollment if there was material representation of the benefits of the plan while marketing the plan to the individual).

[27] See, e.g., In February, 2011, police arrested one hundred and eleven health care professionals across nine different U.S. cities for Medicare fraud.  http://blog.lawinfo.com/2011/02/18/medicare-fraud-111-us-doctors-nurses-arrested/ (last visited Apr. 30, 2011).

[28] See  Rita Isnar, A Glimpse of the Future of Compliance Oversight by CMS: Part D Plans Case Study, Journal of Health Care Compliance, 13 No. 1 JHTHCC 51, (Jan-Feb. 2011), “Despite the requirements and emphasis placed on protecting the Part D benefit, few PDPs have met CMS’s requirements for addressing fraud detection, correction, and prevention by developing an effective compliance program.”

[29] See 42 C.F.R. § 423.504(b)(4)(vi)(H).

[30] 42 U.S.C. § 1395w-104; 42 C.F.R. § 423.505(b)(4)(vi)(H), CMS Manual, Part D Program to Control Fraud, Waste and Abuse, ch. 13, at 3-4.

[31] Supra n.4 at 1189.

[32] CMS Manual, Part D Program to Control Fraud, Waste and Abuse, ch. 13, at 10,

[33] Department of Health and Human Services, Office of the Inspector General,Medicare Drug Integrity Contractors’ Identification of Potential Part D Fraud and Abuse at 5 (Oct. 2009) (all data analyzed in this 2009 report is from 2008).

[34] External complaints are the primary source of fraud reports to the MEDICS. Id. at 3.

[35] Id.

[36] Id. at 2.

[37] Id.

[38] Id. at 8.

[39] Id.

[40] Id.

[41] Id. at ii.

[42] Id. at ii.

[43] Id.

[44] Id. at 5. MEDICs do not only investigate plan providers, but also investigate pharmacies, providers, and even the Medicare enrollee.

[45] Id.

[46] Id. at 4.

[47] Id. (citing Center for Medicare Services, MEDIC Statement of Work, § 6.2 (2d. Ed., Sept. 28, 2007).

[48] Id. at 5.

[49] Id. at 19, Table A-1: Top Five Types of Potential Fraud and Abuse Investigated and Referred to the Office of the Inspector General in Fiscal Year 2008.

[50] See 42 CFR § 422.2268(d). As this paper will soon discuss, Part D plans are prohibited from unsolicited marketing of their plans. See,Federal Trade Commission,Medicare Part D Solicitations: Word to the Wise about Fraud (Apr. 1, 2006)(“Providers may come to your home only if you have invited them to do so.”).

[51] Id.

[52] See, Bloomberg News, Insurers Suspend the Marketing of Some Medicare Plans, printed in New York Times (Jun. 16, 2007) available athttp://www.nytimes.com/2007/06/16/business/16health.html?ref=coventryhealthcareinc (last visited Apr. 22, 2011) (“ Agents also forged signatures, signed up the dead and enrolled mentally disabled people without consulting their guardians.”).

[53] Drug Diversion included visiting multiple physicians to receive more than one prescription for medication, transferring prescription medication to an individual other than the person to whom the medication was prescribed, illegally selling prescription drugs, and forging a prescription. Id. at 19, Table A-1: Top Five Types of Potential Fraud and Abuse Investigated and Referred to the Office of the Inspector General in Fiscal Year 2008.

[54] Id. at 9.

[55] Id. at ii (Executive Summary), supra n.

[56] Id. at i.

[57] Id.

[58]CFR 42 § 423.504(b)(4)(vi)(G)(3) (2010); Medicare Drug Integrity Contractors’ Identification of Potential Part D Fraud and Abuse at iii.

[59] Id. at iii (“One MEDIC office stated it received relatively few referrals compared to the number of plan sponsors in its jurisdiction. The two other MEDICs indicated that while some plans referred incidents of potential fraud and abuse, other plans had never referred any such incidents.”).

[60] Id. at iv.

[61] See Borer, supra n.6.

[62] Id. at 1.

[63] Id.

[64] Id.

[65] Supra n. 80.

[66] Borer, 92 Minn. L. Rev 1165 at 1.

[67] See, e.g., Masey v. Humana, Inc., 2007 WL 2363077 (M.D. Fla.) (Part D plan allegedly characterized their advertisements so that woman believed that her chemotherapy drugs and then had to pay out of pocket when the Plan denied coverage for these prescriptions).

[68] See, Commonwealth of Pennsylvania v. Peoples Benefit Services, Inc., 923 A.2d 1230 (2007)( Non-government approved Part D plan marketed to elderly using symbols and names that the Commonwealth claimed would induce the elderly to enroll because they may believe that this plan was associated with—and approved by— the government).

[69] Supra n.94.

[70] Id.

[71] Id. at 4; supra n.81.

[72] See National Association of Insurance Commissioners Senior Issues Task Force, Second State Survey on Medicare Marketing Issues (Feb. 5, 2008), available athttp://www.naic.org/documents/committees_b_senior_issues_medpp_survey_2n….

[73] 42 U.S.C. § 1395w-26(b)(3) (2003) .

[74] Id. (“The standards established under this part shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to MA plans which are offered by MA organizations under this part.”).

[75] 42 U.S.C. § 1395w-26(b)(3) (2003), CMS Prescription Drug Benefit Manual, ch. 9, Program to Control Waste, Fraud, and Abuse at 15.

[76] 2006 WL 1587443.

[77] Id.

[78] Id.

[79] Plaintiffs’ causes of action included “claim breach of contract, violation of state consumer protection statutes, unjust enrichment, fraud, and fraud in the inducement.”Id.

[80] Id.

[81]Id.

[82] Supra part II, see also Department of Health and Human Services, Officer of Inspector General, Medicare Drug Integrity Contractor’s Identification of Potential Part D Fraud and Abuse (Oct. 2009).

[83] See United States v. Silber, 2010 WL 5174588.

[84] Id.

[85] Id. at *1.

[86] See section III of this paper.

[87] See, e.g., Thomas Rice, 35 J. Health Pol. Pol’y & L. 961 (2011).

[88] See, e.g., Borer, 92 Minn. L. Rev. 1165.

[89] Id.

[90]Id. at 963-64. Rice, however, discusses Schwartz’s piece which explains that too many choices in any market may lead to people making poor choices because the plethora of options is “so cognitively burdensome.” Rice also cites studies that have shown that “when more choices are available, the likelihood of investing in retirement vehicles such as 401(k) plans decline, and the quality of choices made among investors is worse.”

[91] Id. at 962.

[92] While such a program may be somewhat paternalistic, it is necessary to note that the entire system of fraud protection could be said to fall within the paternalistic category as well by arguing that the elderly and disabled are a more vulnerable class which may need added protections, as opposed to private, non-Medicare plans.

[93] Id. at 970. Rice suggests between six and fifteen plans, but that the number depends on the state.

[94] Rice, Reducing the Number of Drug Plans for Seniors at 966.

[95] Id.

[96]Id.

[97] This was noted in a comparable program involving competitive bidding for Medicaid providers in Arizona. See Id. at 977.

[98] Id. at 987.

[99] Id. at 989. Individuals frustration with choosing a Medicare program may be the reason why many elders will remain in their Part D program, rather than switching, even when their plan changes the medications it covers or increases its premium.See, Id. at 965.

[100] Borer, 92 Minn. L. Rev. 1165 (2008).

[101] See, 42 U.S.C. § 1395w-112(g); Borer, Modernizing Medicare at 1179. Note, CMS agrees that state laws on marketing of Part D plans are preempted by federal law. See Borer, n. 124 (citing CMS, Questiins and Answers on Preemption, available at http://www.ins.state.ny.us/orgo2008/rg70720.htm.).

[102] Id. at 1185.

[103] See supra, section II, see also¸ Id. at 1188, “Depending on plans to self-police themselves is a dangerous strategy on its face and does not work in practice.”

[104] Supra n.56.

[105] See generally, 42 CFR § § 423.2262.

[106]Borer, 92 Minn. L. Rev. at 1188.

[107] Id. at 1199. Borer points out that the fact that Attorney Generals are elected positions, they will respond to individuals  complaints about problematic Plans or marketing tactics.

[108] Fraud Target: Senior Citizens, Federal Bureau of Investigation,http://www.fbi.gov/scams-safety/fraud/seniors (last visited May 5, 2011.)

[109] Department of Health and Human Services, Information Partners Can Use on: Preventing Fraud (Oct. 6, 2006).

[110] Federal Trade Commission, FTC Consumer Alert: Medicare Part D Solicitations: Words to the Wise About Fraud.

© Copyright 2011

 

 

Washington Supreme Court Affirms Class Certification and Post-Accident Diminution in Value Award to Automobile Insureds

Recently posted in the National Law Review an article by Dana Ferestien of Williams Kastner regarding Moeller v. Farmers Ins. Co, of Washington wherein the Washington Supreme Court affirmed lower court rulings in favor of a plaintiff class of automobile insureds:

On December 22, 2011, in Moeller v. Farmers Ins. Co, of Washington, a 5-3 majority of the Washington Supreme Court affirmed lower court rulings in favor of a plaintiff class of automobile insureds seeking breach of contract damages against their insurer for failure to compensate them for the diminished value of a postaccident, repaired car.

The Supreme Court acknowledged that a majority of other jurisdictions have previously denied coverage for diminished value because an automobile policy’s reference to “repair or replace” unambiguously encompasses only a concept of tangible, physical value. But the Court disagreed with this view, emphasizing that Washington law imposes “presumptions in favor of the insurance consumer that are inherent in the rules of construction regarding insurance contracts.” The Court explained that, it “must read an insurance contract as an average person would read it” and that, from the point of view of the consumer, “the reasonable expectation is that, following repairs, the insured will be in the same position he or she enjoyed before teh accidenten enjoyed before the accident.”
© 2002-2011 by Williams Kastner ALL RIGHTS RESERVED

 

Divided NLRB Issues Controversial Expedited Election Rules

Posted in the National Law Review an article by attorneys Thomas E. Obenberger and Scott C. Beightol of Michael Best & Friedrich LLP regaring  the National Labor Relations Board recent vote which reversed decades of precedent and practice:

 

On December 22, 2011, the National Labor Relations Board (the “NLRB” or “Board”) published final rules (76 Fed. Reg. 80138) adopted by the Board on a split 2-1 vote which reversed decades of precedent and practice as to how the Board will process representation proceedings. While the final rules place into effect only about one-half of the amendments proposed in its June 22, 2011, Notice of Proposed Rulemaking (76 Fed. Reg. 36812), leaving the others for “further deliberation,” the amendments adopted by the Board dramatically change the substance, timing and procedures involved in union organizing campaigns and representation proceedings, and substantially alter the rights of the parties involved. The amendments adopt many of the “reforms” sought by organized labor through its previously unsuccessful efforts to secure passage of the Employee Free Choice Act. The following comments highlight some of the major changes made by the Board to representation case processing.

While the rules, scheduled to become effective April 30, 2012, have already been challenged in court, it is important for employers to evaluate where they are in terms of their labor relations and union free policies, how well prepared they are to respond to union organizing activities which conceivably could result in a representation election being conducted between 10 to 20 days after the filing of a petition, and how best to communicate with employees on an ongoing and expedited basis.

Among the more significant changes are those relating to initial stages of processing of a representation petition. Changes impact the all-important determination of the scope and composition of an appropriate bargaining unit; inclusions in or exclusions from the voting unit of various individuals or classifications of employees; and, rights to have decisions of an NLRB Hearing Officer or Regional Director reviewed and determined prior to the conduct of an NLRB election.

Significantly, the rules narrow the scope of initial hearings conducted before a Regional Office Hearing Officer following the filing of a petition. The rules generally prevent litigation and pre-election determination of the nature and scope of the appropriate bargaining unit, and inclusions or exclusions of individuals or classifications of employees from that unit, leaving such issues for a post-election hearing, with questioned voters being permitted to vote subject to challenge.  Eligibility issues would be combined in a single post-election hearing also encompassing post-election challenges and objections. Based on the amendments, the only issues generally resolved at a pre-election hearing are to be whether a question of representation exits, and whether there exists any bar to the conduct of the election.

This presents a significant issue for employers, many of whom currently employ numerous individuals who may or may not be supervisors as defined by the National Labor Relations Act, or who may work in classifications which may or may not share a community of interest with a petitioned for unit.  Inclusion or exclusion of such individuals or groups from the voting unit can present serious ramifications. For example, an employer who employs a number of lead persons or working foremen would be found to have committed an unfair labor practice and interfered with the representation election, resulting in a set aside, if those individuals, subsequently found to be statutory supervisors, would have been permitted to participate in the election as eligible employees. Likewise, an employer who prohibits the participation of such individuals, thinking that they may be statutory supervisors, would be guilty of interfering with the protected rights of those individuals if they were found to be eligible and not supervisory employees.

Other than observing that a Regional Director or Hearing Officer might choose, in their discretion, to consider such issues in a pre-election hearing, the Board offers little comfort to employers faced with this dilemma. In fact, in its published comments accompanying the amended rules (76 Fed. Reg at p. 80165), the Board acknowledges that it has previously held in Barre-National, Inc., (1995), 316 NLRB 887, that a Hearing Officer erred by preventing an employer from presenting evidence at a pre-election hearing regarding the eligibility of 24 group leaders (just under 10% of the total unit) to vote in an election directed in a unit of production, maintenance and warehouse employees. The Board brushed off this issue, stating “The Board will no longer follow Barre-National under the amended rules.” (76 Fed. Reg. at p. 80165).  Employers are apparently left, under the amended rules, with trying to persuade a Hearing Officer or Regional Director to take discretionary evidence as to eligibility or exclusion of employees even if the number of employees involved might significantly change the size or character of the voting unit.

Just as importantly, the amended rules severely restrict the rights of an employer to appeal adverse Regional Director or Hearing Officer decisions to the full Board for review. In the past, post-election regional determinations as to challenges and election objections were appealable, as a matter of right, to the NLRB. Such determinations, now including pre-election determinations, as to which no separate right of appeal exists, will only be considered by the Board on appeal in its discretion, and then only if they present an issue of first impression or if there exists a conflict in the law.

Among other noteworthy amendments, the Board has now eliminated the previous 25 day waiting period for an election to be scheduled following a direction of election by a Regional Director, and, in a major change, the terms of a “stipulation” agreement for an election can no longer provide for final resolution of post-election challenges and objections by the NLRB, leaving such final determination to a Regional Director – the same as if the parties were to have entered into a “consent” election agreement, rather than the previously more widely favored “stipulation” form of agreement.

The effect of the amendments was well stated in the dissenting comments of Board Member Hayes upon publication of the then proposed rule changes (76 Fed. Reg. at 36831):

What is certain is that the proposed rules will (1) substantially shorten the time between the filing the petition and the election date, and (2) substantially limit the opportunity for full evidentiary hearing or Board review on contested issues involving, among other things, appropriate unit, voter eligibility, and election misconduct. Thus, by administrative fiat in lieu of Congressional action, the Board will impose organized labor’s much sought after “quickie election” option, a procedure under which elections will be held in 10 to 21 days from the filing of the petition. Make no mistake, the principal purpose for this radical manipulation of our election process is to minimize, or rather, to effectively eviscerate an employer’s legitimate opportunity to express its views about collective bargaining.

© MICHAEL BEST & FRIEDRICH LLP 

Imminent Withholding of Medicare Physician Payments Appears Likely

Recently posted in the National Law Review an article by attorney Frank R. Ciesla of Giordano, Halleran & Ciesla, P.C. regarding the Medicare payment rate which are scheduled to go into effect January 1, 2012:

 

 

As of today, there still has not been a resolution of the threatened reductions to the Medicare payment rate which are scheduled to go into effect ten (10) days from now .  As you are aware, the Medicare Sustainable Growth Rate will require reducing payments by over 27% as of January 1, 2012.

While the news seems to be focused on the deadlock in regard to the payroll tax cut and extension of unemployment benefits, the issue regarding physician compensation is as vital, not only to the physicians, but to the Medicare population, as either of the other two issues.  The pending Republican proposal for resolving the physician payment issue is focused on reducing payment to other healthcare providers.  This appears to be unacceptable to the Democratic contingent in both the House and the Senate.

As of this point in time, Medicare will withhold all Medicare physician payments for services rendered during the first ten (10) days of 2012, until there is either:  (1) a resolution of the issue; or (2) implementation of the reduction because the Sustainable Growth Rate issue has  not been resolved.  Clearly, the providers of healthcare to the Medicare population are being held hostage in this crisis.

See our prior blog as to steps you can take regarding your continued provision of services to Medicare patients.

© 2011 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

Los Angeles County Bar Association 2012 Entertainment Labor Law Symposium

The National Law Review would like to remind you to mark your calendars for the upcoming Los Angeles County Bar Association 2012 Entertainment Labor Law Symposium.   On Feb. 9, 2012, the Los Angeles County Bar Association will hold its bi-annual Entertainment Labor Law Symposium. Barnes & Thornburg Partner, Scott J. Witlin, is scheduled to speak at the event. The topic of Scott’s presentation is entitled, “New Media’s Impact on Production, Residuals, and How Cast and Crew are Engaged.”

Other sessions slated to take place during the event include: “Social Media in the Entertainment Workplace,” “The State of the Plans: Dealing with the Economy and Health Care Reform,” and “Anti-Trust Issues in the Labor-Entertainment Arena.” 

 For registration and other information please see the Los Angeles County Bar Association’s website or click here.


Congress Reconsiders Independent Contractor Classification

Posted in the National Law Review an article by Robert B. Meyer and David L. Woodard of  Poyner Spruill LLP regarding Employee MisClassification Prevention Act (EMPA):

 

 

It appears that Congress has again turned its attention to the issue of employee/independent contractor classification.  On October 13, 2011, Rep. Lynn Woolsey (D-CA) reintroduced legislation titled the “Employee Misclassification Prevention Act” (EMPA).  This bill, if enacted, would amend the Fair Labor Standards Act to impose new obligations on employers which utilize independent contractors, and also penalties for employers which misclassify employees as contractors.  Similar legislation was also introduced in the Senate last April, further suggesting that this issue of contractor classification is gaining traction in Congress.  The EMPA, as it is presently drafted, proposes the following:

  • Require employers to keep records of wages and hours worked by independent contractors.  The failure to do so would result in a presumption that the worker is an employee.
  • Require employers to provide written notice to every worker of his/her classification as either an employee or contractor.  The notice must also direct the worker to a Department of Labor website for information regarding worker rights under the EMPA, and encourage workers to contact the DOL if they have questions about classification.
  • Prohibit employers from discriminating or retaliating against workers who exercise their rights under the EMPA.
  • Amend the FLSA to make misclassification a prohibited act, and impose double liquidated damages for violations of the minimum wage and overtime pay provisions of the FLSA resulting from the misclassification.
  • Impose civil penalties upon employers for violating the EMPA (up to $1,100 for first violation, and up to $5,000 for repeat or willful violations).
  • Authorize the DOL to conduct targeted audits of employers in “certain industries with frequent incidence of misclassifying employees as non-employees….”
  • Permit the DOL to share information with the Internal Revenue Service regarding employers found to have misclassified workers.
  • Amend the Social Security Act to establish “administrative penalties for misclassifying employees, or paying unreported wages to employees without proper recordkeeping, for unemployment compensation purposes.”
  • Require state unemployment benefits agencies to conduct worker classification audits of employers.

The potential impact of this proposed legislation is far-reaching.  It is apparent that the EMPA would create a new federal offense for both intentional and unintentional contractor misclassifications.  In addition, the law would create a federal source of new employee rights, and would empower the DOL to seek expanded monetary damages on behalf of workers.  Therefore, employers should not only remain watchful of this legislation as it works its way through Congress, but also cautious about their use and classification of independent contractors.

© 2011 Poyner Spruill LLP. All rights reserved.