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.

ASHHRA 47th Annual Conference & Exposition Sept. 10-13, 2011, Phoenix, AZ

We are pleased to inform you the American Society for Healthcare Human Resources Administration’s 47th Conference & Exposition is taking place on September 10-13, 2011 in Phoenix, Arizona.

 

 

 

Why Should YOU Attend the ASHHRA Conference?  

Educational Programs

  • Enhance your health care business knowledge
  • Advance your leadership capabilities
  • Strengthen your role as a change agent
  • Gain knowledge of the hottest trends in health care HR
  • Network with your peers

Valuable Resources

  • A variety of take-away tools, best practices and policies
  • Networking opportunities with other HR practitioners nationally and regionally
  • Exposure to more than 150 suppliers helping to advance health care HR products and services

Hottest Products & Services

  • More than 150 exhibitors showcasing products that can help you solve problems within your organization
  • Networking and knowledge sharing on state-of-the-art services in health care HR

Smart Investment

  • Take-away tools and resources in health care HR
  • Focused learning on leadership and strategic business knowledge
  • Sessions designed around five leadership competencies
  • Partnership opportunities with top health care HR leaders

    18.5* Recertification Credit Hours

    Earn up to 18.5* Recertification Credit Hours, which includes 17.0 Strategic Business, and 1.5 California Specific Credit Hours.  Check out the “Schedule ” tab to see the learning sessions and secure your spot!

    *The 18.5 general recertification credits include the 6.0 hours of the Pre-conference Learning Tracks on Sept. 10, 2011 in addition to the 12.5 recertification credit hours for Full Conference attendance on Sept. 11-13, 2011. The 17.0 Strategic Business Credit Hours include 6.0 hours of the Pre-conference Learning Tracks on Sept. 10, 2011 in addition to the 11.0 strategic business credit hours for Full Conference attendance on Sept. 11-13, 2011.

    These recertification credit hours are pre-approved for PHR, SPHR and GPHR recertification through the HR Certification Institute. For more information about certification or recertification, please visit the HR Certification Institute website at www.hrci.org.

     Two NEW Learning Tracks at the

    ASHHRA 47th Annual Conference & Exposition

     

    NEW!
    Non-Hospital (NH)
    Learning Track

    NHThe Non-Hospital Track is a new learning track this year at the ASHHRA annual conference.  ASHHRA is seeking to fully understand the needs of HR practitioners who work in a non-hospital setting.  We realize that HR issues and concerns might differ from hospitals, and we want to become the primary source for information, tools, and resources to help members address the challenges faced in non-hospital facilities. 

    If you work at a non-hospital facility setting like:

    • Long-term Care facility
    • Acute Care facility
    • Clinic
    • Treatment center
    • Hospice center

    ASHHRA has created a special learning track that is designed to help address common issues that you may face in your organization.  The Non-Hospital sessions are offered during each learning session time and are indicated by “NH/NH.”

    NEW!
    Advisory Board Company Learning Track

    The Advisory BoardThis track is a continuation of an ongoing collaboration between the Advisory Board Company and ASHHRA, to educate heath care human resources (HR) executives and advance the health care HR field at-large. Two divisions of the Advisory Board Company are represented at the conference.  The HR Investment Center serves HR executives through best practice research and implementation support and has directly embedded a portion of their national member meeting into this year’s conference to help executives optimize their time and travel. The Talent Development division provides comprehensive leader development services and is presenting content from some of their most popular workshops.  This track will help to support the health care HR field with more substantive knowledge, expertise, and best practices for health care organizations.

    For more information about the HR Investment Center, Talent Development partnerships, or any other Advisory Board Company offering, please visitwww.advisory.com or contact Jordan English at englishj@advisory.com

    Click below for the learning sessions
    in this new track.

Wisconsin Supreme Court Delivers Win for Hospital Systems with Offsite Facilities

Posted on August 10, 2011 in the National Law Review an article by Craig J. Johnson, Kate L. Bechen, David J. Hanson and Robert L. Gordon   of Michael Best & Friedrich LLP regarding  a major victory for hospital systems with offsite outpatient facilities in Wisconsin.

Last month the Wisconsin Supreme Court provided a major victory for hospital systems with offsite outpatient facilities. Its decision in Covenant Health Care, Inc. v. City of Wauwatosa (2011 WI 80) reversed a Court of Appeals decision and held that an outpatient clinic owned by St. Joseph Hospital (the “Clinic”) constituted property used for the purposes of a hospital under Wis. Stat. § 70.11(4m)(a). As a result, Covenant Healthcare System, Inc., the sole member of St. Joseph Hospital and the owner of the real property on which the Clinic stands, was entitled to a refund of real property taxes paid on the Clinic’s property.

Background

Wisconsin. Stat. § 70.11(4m)(a) excludes from taxation real property used exclusively for the purposes of any nonprofit hospital. The statute specifies that the exemption does not extend to property that is used for commercial purposes or as a doctor’s office, or the earnings from which inure to the benefit of a member.

The Clinic is a five-story building located approximately five miles from St. Joseph Hospital.  Two of the Clinic’s floors are leased to medical providers as office space. The remaining three floors are used to provide outpatient services and include an Urgent Care Center that is open 24 hours a day, seven days a week and is capable of treating all levels of emergency room care, which generally limits its treatment of serious cases to the extent of stabilizing a patient for transport to a different medical facility.

The City of Wauwatosa took the position that the Clinic was in fact a doctor’s office and, therefore, assessed real property taxes on the Clinic. Covenant challenged this assessment as it applied to the Clinic’s three floors that were not used as office space for medical providers.  The Circuit Court ruled in favor of Covenant but the Court of Appeals reversed, holding that the Clinic was a doctor’s office. The Wisconsin Supreme Court reversed the Court of Appeals, ruling in favor of Covenant.

Ruling

The City of Wauwatosa maintained its position that the Clinic was a doctor’s office. The City also took the alternative positions that the Clinic was used for commercial purposes and that the property’s earnings inure to the benefit of Covenant. The Wisconsin Supreme Court held that Covenant had satisfied its burden of proving that each of the City’s assertions was incorrect.

Doctor’s Office

The Wisconsin Supreme Court considered seven factors that were previously laid out by the Wisconsin Court of Appeals in 1997 in St. Clare Hospital v. City of Monroe, which also considered whether a health care facility constituted a doctor’s office. The Supreme Court concluded that five of those factors weighed against the Clinic being considered a doctor’s office, and the remaining two were not determinative.

The five factors which persuaded the Supreme Court that the Clinic was not a doctor’s office were: (1) physicians practicing at the Clinic do not receive variable compensation related to the extent of their services; (2) Clinic physicians do not receive extra compensation for overseeing non-physician staff; (3) the Clinic’s bills are generated on the same software system as those of St. Joseph Hospital; (4) Clinic physicians do not have their own offices at the Clinic but instead have access to communal cubicle space; and (5) Clinic physicians do not own or lease the building or any equipment at the Clinic.

The two remaining St. Clare factors that weighed in favor of the Clinic being a doctor’s office were (1) the Clinic does not provide inpatient services and (2) most patients are seen at the Clinic by appointment and during regular business hours. However, the Court pointed out that advances in technology have allowed for more procedures to be performed on an outpatient basis than when St. Clare was decided. In addition, St. Joseph Hospital (as well as several other large area hospitals) has an outpatient clinic on its hospital grounds.  This hospital-based outpatient center has never jeopardized the tax exemption of St. Joseph Hospital despite only seeing patients by appointment during regular business hours. Therefore, the Court did not weigh either of these factors as significant in reaching its conclusion that the Clinic is not a doctor’s office.

Commercial Purposes

The Court interpreted the statutory prohibition against commercial purposes as being a prohibition against a facility having profit as its primary aim. In determining that the Clinic did not have profit as its primary aim, the Court cited the Clinic’s business plan as listing several goals beyond increasing profit margin, including promoting a greater faith-based health care presence. Further, the Court found that the Clinic serves a greater portion of Medicare and Medicaid patients than other Milwaukee and Wisconsin hospitals, indicating to the Court a focus other than profit.

Private Inurement

Finally, the Court determined that the language of the statutory prohibition against private inurement to any member does not contemplate a not-for-profit member of a nonprofit corporation. According to the Court, interpreting the statute to penalize Covenant’s corporate structure would be an unreasonable construction, and would end up requiring a nonprofit corporation to distribute its assets upon dissolution to unrelated nonprofit entities, rather than its actual member(s), in order to qualify for property tax exemption.

Conclusion

The earlier Court of Appeals decision in this case called into question the property tax exemptions of nonprofit hospital systems with offsite facilities. The reversal by the Wisconsin Supreme Court has provided some reassurance to Wisconsin’s hospital systems. Although the decision was based on facts unique to the Clinic and did not set bright line standards going forward, the Court confirmed that offsite hospital facilities can qualify as exempt under Wis. Stat. § 70.11(4m)(a), and provided guidance on what types of facts and organizational structures will be considered to qualify an offsite facility for exemption.

© MICHAEL BEST & FRIEDRICH LLP

Proposed HIPAA Reporting Requirement May Lead to Increased Compliance Costs and Enforcement Action

Recently posted in the National Law Review an article by Nancy C. Brower and Elizabeth H. Johnson of  Poyner Spruill LLP about HHS’ notice of proposed rulemaking (NPRM) that would allow individuals to obtain an “access report” from HIPAA .  

 

 

On May 31, 2011, the Office of Civil Rights (OCR) of the U.S. Department of Health and Human Services (HHS) issued a notice of proposed rulemaking (NPRM) that would allow individuals to obtain an “access report” from HIPAA covered entities reporting virtually every instance of access to their electronic protected health information (ePHI), including all access by individual employees. The proposed access report must reflect the full name of every person or entity that accessed an individual’s ePHI (if maintained in a designated record set) in the prior three years.

An express purpose of this proposal is to allow individuals to identify situations in which a member of a covered entity’s workforce inappropriately accessed their ePHI. Individuals can then file a complaint with the OCR claiming improper employee access to ePHI.

In a recent case, the OCR entered into a $865,000 settlement with the University of California at Los Angeles Health Systems (UCLAHS) after investigating celebrity complaints of potential inappropriate ePHI access by UCLAHS employees. The investigation led to OCR allegations that UCLAHS employees repeatedly accessed ePHI of many patients, including several celebrity patients, when they did not have any job-related need to access the data, and that UCLAHS failed to implement security controls to reduce the risk of impermissible access, failed to provide Security Rule training, and failed to apply appropriate sanctions against workforce members who violated UCLAHS policies and procedures.

In the NPRM, OCR stated that it believes the degree of access logging required in the new access report is currently being captured and stored by covered entities’ electronic information systems because OCR interprets HIPAA’s audit controls standard (45 C.F.R. § 164.312(b)) and information system activity review implementation specification (45 C.F.R. § 164.308(a)(1)(ii)(D)) to require that all such access be logged, including “view” or “read only” access. However, this interpretation of the Security Rule is much broader than many had believed, and the NPRM has already fallen under criticism as a result. If the new rule is implemented as proposed, many covered entities will incur significant unexpected costs related to systems modifications, data storage (access logs must be retained for three years), training, privacy notice revision and redistribution and response to individual requests.

Business associates will have to undertake a similar degree of implementation to provide covered entities with access logs relevant to the access report, and covered entities will need to consider updating their business associate agreements to reflect this requirement. Individual privacy complaints filed with covered entities and OCR may well increase if this new rule is adopted, either because covered entities will fail to completely or timely provide the access report, or because individuals reviewing their access report will find real or (more likely) perceived cases of inappropriate access to their records.
© 2011 Poyner Spruill LLP. All rights reserved.

Wisconsin Supreme Court Addresses Issues Concerning the Default Judgment Statute, the Direct Action Statute, and Personal Liability for Corporate Officers

Recently posted  posted in the National Law Review an article by Heidi L. Vogt and Jessica M. Swietlik of von Briesen & Roper, S.C. regarding the Wisconsin Supreme Court issued a decision in Casper, et al. v. American International South Ins. Co.

 Casper, et al. v. American International South Ins. Co., et al., 2011 WL 81

On July 19, 2011, the Wisconsin Supreme Court issued a decision in Casper, et al. v. American International South Ins. Co., et al., 2011 WI 81 (“Casper”) in which it addressed three issues: 1) the excusable neglect standard relative to default judgments; 2) whether an insurance policy must be delivered or issued in the State of Wisconsin in order to subject the insurer to a direct action under Wis. Stat. §§ 632.24 and 803.04(2); and 3) whether a corporate officer may be held personally liable for non-intentional torts that occur within the scope of employment.

The Casper case arises from a motor vehicle accident. Mark Wearing, a co-employee of Bestway Systems, Inc. (“Bestway”) and Transport Leasing/Contract Inc. (“TLC”), struck the Caspers’ minivan from behind, seriously injuring all five passengers in the Caspers’ vehicle.

Investigators learned that Wearing was under the influence of oxycodone, diazepam, and nordiazepam when the collision occurred. At the time of the accident, Wearing was en route to make a delivery for a Bestway customer. Jeffrey Wenham, the CEO of Bestway, had allegedly approved a driving route for Wearing on this particular delivery that required him to drive 536 miles through several states overnight. Wearing claimed he was told he would be fired if he did not complete the route as planned. However, Wenham had never met Wearing and the route that Wenham apparently approved was designed a year and a half prior to the accident. An expert hired by the Caspers opined that the route violated the hours of service requirements of the Federal Motor Carrier Safety Regulations (“FMCSR”) and was unsafe.

The Caspers brought suit against fourteen named defendants, including: Mark Wearing, his co-employers Bestway and TLC, Bestway’s CEO Jeffrey Wenham, and TLC’s excess insurer, National Union Fire Insurance Company of Pittsburgh PA (“National Union”). The appeals in this case stem from three orders issued by the trial court, all of which were affirmed by the court of appeals: 1) its order granting National Union’s request for a 7-day extension to file its answer and denying the Caspers’ motion for default judgment against National Union on the grounds that National Union had demonstrated excusable neglect; 2) its order granting summary judgment to National Union on the grounds that under Kenison v. Wellington Ins. Co., 218 Wis. 2d 700, 582 N.W.2d 69 (Ct. App. 1998) the Caspers could not maintain a direct action against National Union because its insurance policy was not issued or delivered in Wisconsin; and 3) its order denying Wenham’s motion for summary judgment on the Caspers’ claims for negligent training and supervision. The Wisconsin Supreme Court considered each of these issues separately, and affirmed in part, reversed in part, and remanded with instructions consistent with its decision.

The court affirmed on the first issue, holding that the trial court did not erroneously abuse its discretion by finding that National Union’s “lost in the mail” excuse amounted to excusable neglect such that granting an extension and denying the motion for default judgment was appropriate. The court noted that “although courts should be skeptical of glib claims that attribute fault to the United States Postal Service,” it was satisfied that a reasonably prudent person could neglect a deadline when correspondence gets lost, as was the case with National Union here.

Second, the court reversed on the direct action issue and thereby explicitly overruled Kenison. In doing so, the court acknowledged that the court of appeals properly applied Kenison as it lacked authority to ignore it. In Kenison, the court of appeals concluded that Wis. Stat. § 631.01 limited the application of the direct action statute, § 632.24, to insurance policies issued or delivered in Wisconsin. The Casper court disagreed. After carefully examining the plain language and the legislative history of Wis. Stat. §§ 631.01, 632.24, and 803.04(2), the court concluded that “Section 803.04(2) explicitly and § 632.24 by necessary implication are intended to apply to liability insurance policies delivered or issued for delivery outside Wisconsin, so long as the ‘accident, injury or negligence occurred in this state.’” Accordingly, the Caspers should have been allowed to maintain a direct action against National Union even though its policy was neither issued nor delivered in Wisconsin because the accident occurred in Wisconsin.

With regard to the third issue, the Wisconsin Supreme Court agreed with the lower courts that there are some instances where corporate officers like Wenham can be held personally liable for non-intentional torts committed in the course of employment. Both the trial court and the court of appeals had ended their inquiries there, finding that issues of fact existed regarding Wenham’s alleged negligent supervision and training of Wearing such that summary judgment was not appropriate on those claims. However, the Wisconsin Supreme Court considered and ultimately reversed on public policy grounds, holding that even if Wenham’s approval of the route that allegedly violated the FMCSR was a cause of the accident, “the results are so unusual, remote, or unexpected that, in justice, liability ought not be imposed.”

Justice Bradley issued an opinion concurring in part and dissenting in part, and Chief Justice Abrahamson joined in Justice Bradley’s concurrence/dissent.

©2011 von Briesen & Roper, s.c

Unclaimed Property Audits: No Laughing Matter

Posted on August 8, 2011 in the  National Law Review an article about several  states’ increased focus on unclaimed property and companies needing to be proactive in monitoring and improving their unclaimed property compliance practices.   This article was written by Marc J. Musyl, Micah Schwalb and Sarah Niemiec Seedig of Greenberg Traurig, LLP

Failure to Comply with Unclaimed Property Laws Can Cost a Company Millions in Interest and Penalties Alone

Many states continue to turn to unclaimed property as a source of revenue in the face of budget shortfalls. During the last two years, some state regulators have pursued non-traditional types of unclaimed property and state legislatures have revised their unclaimed property statutes to reduce dormancy periods, effectively causing companies to remit more unclaimed property in a shorter time frame. In New York, for example, the legislature lowered dormancy periods from five to three years for a number of different asset classes typically held by financial institutions.

Acting upon provisions in the Dodd-Frank Act, the SEC recently proposed to expand rules that would require brokers and dealers to escheat sums payable to security holders. Failure to comply with these laws can mean millions of dollars in interest and penalties for a company, which can negatively impact a company’s bottom line. For example, a growing number of life insurers are being audited by multiple states to assess their compliance with unclaimed property laws. One state regulator estimated that these life insurer audits could transfer “north of $1 billion” from the audited life insurers into the pockets of consumers, in the form of benefit payments, and revenue to the states, in the form of unclaimed property, interest and fines.

Unclaimed Property and State Audits

Unclaimed property laws require the remittance of certain types of property to the state for safekeeping if a business is unable to contact the owner of that property after a specified period, known as the dormancy period. Each state has its own set of laws that set forth the types of property subject to escheat, the dormancy period for each category of property, and reporting rules. Examples of items that can constitute unclaimed property include unused gift cards, uncashed payroll checks, uncashed stock dividend checks, abandoned corporate stock, and abandoned trust funds.

States have the ability to audit companies to determine their compliance with the unclaimed property laws. If an audit reveals improperly held or abandoned assets, states can seize the property, hold it in trust for a rightful owner, and impose costs, fines, and interest against the offending entity. In severe cases, the interest and fines can exceed the amount of unclaimed property at issue. These audits are often conducted by third-party auditors paid on a contingency basis, thus creating an incentive for them to maximize the unclaimed property uncovered. What’s more, the lack of a statute of limitations on escheat in most jurisdictions can lead to decades of accumulated unclaimed property liabilities.

35 States: How Does an Audit Get So Large?

Typically, an audit begins when a state engages a third-party auditor and provides a company with notice that it is under audit. The third-party auditor, being paid on a contingency basis, can expand its compensation by adding additional states to the audit. If only one state has authorized an unclaimed property audit, the thirdparty auditor only receives a percentage of the unclaimed property that was required to be reported to that state. However, if 20 states have authorized the audit, the third-party auditor now receives a percentage of the unclaimed property that should have been reported to 20 states, significantly increasing the auditor’s overall compensation.

This snowball effect is exactly what happened to some life insurers, and what could happen to any company. For example, the State of California initiated anaudit of John Hancock in 2008. This audit was undertaken by Verus Financial L.L.C. Fast forward three years to 2011, and Verus has now been authorized by 35 states and the District of Columbia to investigate and audit numerous insurance companies. These audits center around life insurers’ claims handling processes. The Social Security Administration publishes a Death Master File, updated weekly, which can be used to verify deaths. Insurers have been using the Death Master File to find dead annuity holders in order to stop payments. On the flip side, the insurers have not been using the Death Master File to find deceased policy insureds in order to pay the policy beneficiaries. The states and Verus have seized upon this disparate use of the Death Master File in their investigation of whether the funds should have been paid out to beneficiaries, in the form of benefit payments, or the states, in the form of unclaimed property.

Why Should I Be Concerned?: John Hancock as an Example

As a result of the Verus audit discussed above, John Hancock reportedly negotiated a global resolution agreement with 29 states which took effect June 1. As part of John Hancock’s settlement with the State of Florida, John Hancock will pay over $2.4 million in investigative costs and legal fees to Florida, and will establish a $10 million fund to pay death benefits and interest owed to beneficiaries. The amounts owed to beneficiaries that cannot be located will be turned over to Florida’s unclaimed property division. In addition, John Hancock has agreed to change its claims-handling procedures. Throughout the process, John Hancock has maintained that it has not violated the law. Given the number of insurance companies currently under audit, news of further settlements should be expected in the future.

In light of success with life insurers, recent legislative changes and continued state budget crunches, it is reasonable to expect an expansion of audits to other industries. It is widely estimated that a significant percentage of companies are not in full compliance with unclaimed property laws. There is no statute of limitations in most jurisdictions, as mentioned above, so the look-back period can be fairly lengthy and cover periods for which the company no longer has adequate records. The auditor may estimate the unclaimed property liability for such periods, which can lead to a company paying more than it would have otherwise owed. Further, interest and penalties can be severe. For example, in California interest is calculated by state statute at 12% per annum from the date the property should have been reported.

Taking Control of Unclaimed Property Compliance

As a result of the states’ increased focus on unclaimed property, companies need to be proactive in monitoring and, if necessary, improving their unclaimed property compliance practices. As a preliminary step, companies should determine whether or not they are currently in compliance with the unclaimed property laws. Many states have voluntary compliance programs for companies that are out of compliance. Oftentimes, by entering into a voluntary disclosure agreement with the appropriate authorities, a company can retain control of the process, limit the look-back period (remember, there is often no statute of limitations!), and limit the penalties and/or interest that may be owed for non-compliance. Typically, these voluntary programs are not available to companies once they have been selected for audit. Analyzing a target’s unclaimed property liability exposure should also be part of the due diligence process in a potential acquisition. Attention to unclaimed property compliance now can save valuable company resources later.

 

Myriad Federal Circuit Decision Affirms Patentability of Claims to “Isolated” DNA but Methods Involving Only “Comparing” or “Analyzing” DNA Sequences Unpatentable and No Declaratory Judgment for Those Who Simply Disagree With Patent

Posted on Thursday, August 4, 2011 in the National Law Review an article by Thomas J. Kowalski and Deborah L. Lu of Vedder Price P.C.  about  long-awaited decision in the Association for Molecular Pathology v. Myriad Genetics, Inc. (“Myriad”).

On July 29, 2011, the Federal Circuit issued its long-awaited decision in the Association for Molecular Pathology v. Myriad Genetics, Inc. (“Myriad”).  The plaintiffs in Myriad are an assortment of medical organizations, researchers, genetic counselors, and patients who challenged Myriad’s patents under the Declaratory Judgment Act. The Federal Circuit Decision held that those parties who simply disagree with the existence of a patent or who suffer an attenuated, non proximate effect from the existence of a patent, do not meet the requirement for a legal controversy of sufficient immediacy and reality to warrant the issuance of a declaratory judgment and, thus, do not have standing to be a plaintiff. The Court could not see how “the inability to afford a patented invention could establish an invasion of a legally protected interest for purposes of standing.” However, with at least one plaintiff having standing, the Federal Circuit turned to the merits; namely, whether claims to “isolated” DNA and methods using that “isolated” DNA are eligible to be patented under Section 101 of the Patent Statute (35 U.S.C. § 101).

The Federal Circuit held that method claims directed to only “comparing” or “analyzing” DNA sequences are patent ineligible under Section 101 because they have no transformative steps and cover only patent-ineligible abstract, mental steps. However, the claim that recites a method that comprises the steps of (1) “growing” host cells transformed with an altered gene in the presence or absence of a potential therapeutic, (2) “determining” the growth rate of the host cells with or without the potential therapeutic and (3) “comparing” the growth rate of the host cells includes more than the abstract mental step of looking at two numbers and “comparing” two host cells’ growth rates and is eligible for patent protection. The steps of “growing” transformed cells in the presence or absence of a potential therapeutic, and “determining” the cells’ growth rates, are transformative and necessarily involve physical manipulation of the cells.

The Federal Circuit also held that isolated cDNA—DNA that has had introns removed, contains only coding nucleotides, and can be used to express a protein in a cell that does not normally produce it—while inspired by nature, does not occur in nature, and is likewise eligible to be patented under Section 101.

Most significantly, the Myriad Majority and Concurring Opinions concluded that isolated DNA molecules are patent-eligible under 35 U.S.C. § 101, and the Court reversed the previous holding by Judge Sweet of the Southern District of New York. Both the Myriad Majority and Concurring Opinions rely on U.S. Supreme Court precedent, and the Myriad Concurring Opinion states that claims to isolated DNA had previously been held to be valid and infringed by the Federal Circuit.

The distinction between a product of nature and a human made invention for purposes of Section 101 turns on a change in the claimed composition’s identity compared with what exists in nature. According to the Federal Circuit in Myriad, the US Supreme Court has drawn a line between compositions that, even if combined or altered in a manner not found in nature, have similar characteristics as in nature and compositions that human intervention has given “markedly different,” or “distinctive,” characteristics.

In reaching the conclusion that isolated DNA molecules are eligible to be patented under Section 101, the Myriad Majority Opinion focused on the fact that isolated DNA was cleaved or synthesized to consist of a fraction of a naturally occurring DNA molecule and therefore does not exist in nature. The Court stressed that isolated DNA is not the same as purified DNA. Isolated DNA is not only removed from nature, but it is chemically manipulated from what is in nature—in the human body in this case. Accordingly, isolated DNA is a distinct chemical entity from that which is in nature. The Myriad Concurring Opinion views isolated DNA as truncations that are not naturally produced without the intervention of man and can serve as primers or probes in diagnostics; a utility that cannot be served by naturally occurring DNA.

The Myriad Majority and Concurring Opinions reject the Solicitor General’s “child-like simpl[e]” suggestion that for determining patent-eligible subject matter the Court use a “magic microscope” test, under which, if one can observe the claimed substance in nature, for example, by zooming in the optical field of view to see just a sequence of fifteen nucleotides within the chromosome, then the claimed subject matter falls into the “laws of nature” exception and is unpatentable subject matter—including because an isolated DNA molecule has different chemical bonds as compared to the “unisolated” sequence in the chromosome (because the ends are different). Simply, according to the Myriad Majority and Concurring Opinions, isolated DNA is a different molecule from DNA in the chromosome.

The Myriad Majority and Concurring Opinions also give great deference to the grant by the United States Patent & Trademark Office (“USPTO”) of numerous patents to isolated DNA over approximately the past thirty years, as well as that in 2001 the USPTO issued Utility Examination Guidelines, which reaffirmed the agency’s position that isolated DNA molecules are patent-eligible, and that Congress has not indicated that the USPTO’s position is inconsistent with Section 101. The Federal Circuit thus held that if the law is to be changed, and DNA inventions are to be excluded from the broad scope of Section 101, contrary to the settled expectation of the inventing community, the decision must come not from the courts, but from Congress.

In contrast, the Myriad Dissenting Opinion sought to hold isolated DNA as unpatentable and compared isolated DNA with a leaf snapped from a tree. TheMyriad Majority Opinion addresses the Dissent’s analogy by making clear that a leaf snapped from a tree is a physical separation that does not create a new chemical entity, whereas isolated DNA is a new chemical entity as compared with DNA in nature.

Myriad provides the biotechnology community with an immediate sigh of relief. However, it is expected that parties to Myriad will likely ask the Federal Circuit to review its divided Decision en banc and that whatever the result from that request, appeal to the US Supreme Court will also be inevitable. We expect there is more to come and that the July 29, 2011 Myriad Federal Circuit Decision may be only one step toward an ultimate Court decision finally concluding that isolated DNA is indeed patent-eligible subject matter.

© 2011 Vedder Price P.C.

 

The Illinois Civil Union Law and Its Impact on Estate Planning

Recently posted in the National Law Review an article by Gregg M. Simon of Much Shelist Denenberg Ament & Rubenstein P.C. on Civil Unions and Estate Planning:

On June 1, 2011, the Illinois Religious Freedom Protection and Civil Union Act went into effect. The new law provides a legal procedure for the certification and recognition of civil unions between same-sex and opposite-sex individuals. This new Illinois law has numerous real and potential effects on many areas of the law, including estate planning—effects that may not be limited to the parties in a civil union. Much Shelist spoke to Gregg M. Simon, Chair of the firm’s Wealth Transfer & Succession Planning practice, about some of the estate planning issues being raised by the new law.

Much Shelist: Can you give us a brief overview of the Illinois civil union law?

Gregg Simon: For a number of years, advocates of the legal recognition of same-sex couples in Illinois had been working with the state legislature to pass some form of civil union or marriage law. On the other side, certain religious and other groups had expressed concerns about the scope of such legislation and how it might be applied or enforced. Eventually, compromise language was worked out that, while not fully addressing all concerns of all parties, contained provisions that enabled passage of the legislation in the Illinois House and Senate on December 1, 2010. In February 2011, Governor Pat Quinn signed the law, which went into effect on June 1, 2011.

As written, the law is fairly short and direct. It provides procedures for the certification, registration and dissolution of a civil union and entitles parties entering into a civil union the same legal obligations, responsibilities, protections and benefits that are afforded to married spouses. In essence, where “spouse” appears in existing and future Illinois statutes, administrative rules, common law, or other sources of civil or criminal law, the word now also refers to a party in a civil union. These “default” rights and obligations can include the right to make health care decisions (unless, as with married couples, a guardian for the disabled partner has been appointed or an agent under a health care power of attorney has been named), the right to dispose of the remains of a deceased partner, various inheritance and property rights, creditor protections, and so on.

Civil unions in Illinois are not just for same-sex couples. Opposite-sex couples can also enter into a civil union, although they should carefully weigh the known and potential advantages and disadvantages of a civil union versus marriage. Likewise, the rules prohibiting certain civil unions are generally similar to those that prohibit marriage between specific individuals. For example, an individual is not allowed to enter into a civil union if he or she is in an existing civil union or marriage, and closely related individuals cannot enter into a civil union.

MS: From an estate planning perspective, what should couples be aware of?

GS: With respect to the Illinois civil union law, there are three broad concepts relating to estate planning that people should keep in mind. First, it should be understood that the law could affect almost anyone, not just the parties in a civil union. For example, let’s assume that a parent has drawn up a will prior to the effective date of the Illinois civil union law that designates his or her child and that child’s “spouse” as beneficiaries. Now let’s imagine that at some point in time the child enters into a civil union with his or her same-sex partner. Under a strict reading of the law, that same-sex partner would be treated as a spouse and would therefore qualify for the beneficial interest designated in the will. That might be the intent of the parent whose assets are to be distributed—or it might not.

Second, the civil union law raises almost as many issues as it resolves, many of which will be the subject of legal disputes until a clear body of case law and precedent has been established. Using the same example, let’s imagine that the parent was perfectly happy with his or her child’s same-sex partner receiving a beneficial interest, but failed to clarify in the will that its terms applied equally to a spouse and a party to a civil union (particularly if the parent died before the civil union legislation was enacted). Let’s now imagine that the child’s siblings do not want the same-sex partner to receive a portion of the assets. Since the will only used the word “spouse,” the siblings could take legal action to try to deny the same-sex partner his or her portion of the beneficial interest, claiming that the use of the word “spouse” (and failure to change the language of the will after June 1, 2011) meant that the parent intended only for an opposite-sex, married partner of the child to be eligible to receive any assets.

These examples are not so farfetched. After Illinois law was changed in the early 20th century so that adopted children were treated the same as natural-born children, almost 100 years of related litigation ensued. These cases focused on whether an adopted child was included when a testator used the terms “children” or “issue,” particularly when the document was executed before the law was changed (i.e., at a time when an adopted child would not have been included within those terms).

The takeaway is that clarity is paramount when it comes to estate planning. In order to ensure that your wishes are carried out as you intend, you should review all applicable documents with experienced legal counsel and ensure that any potentially ambiguous language or terms are clarified and reflect current legal realities.

A third important concept is that the federal Defense of Marriage Act (DOMA) and federal tax laws do not recognize same-sex civil unions or marriages, even those that are recognized by the various states. This raises a whole host of issues regarding estate and gift taxation, Social Security benefits and other federal-level treatment of individuals in civil unions. Many of these issues are being litigated right now.

MS: What are some of the key conflicts between state and federal marriage and tax laws?

GS: DOMA defines “marriage” as a legal union between one man and one woman, and defines “spouse” as a person of the opposite sex who is a husband or wife in a marriage. DOMA further says that no state can be required to honor the law of another state regarding legal relationships that are treated as a marriage between persons of the same sex. In essence, DOMA denies same-sex couples all of the federal benefits of marriage, even if the couple was married or entered into a civil union in a state that recognizes such relationships.

From the perspective of estate and tax planning, this means that same-sex couples are denied the following, among other benefits: the estate tax marital deduction for assets passing outright to a spouse, or to certain qualifying marital deduction trusts and qualified domestic trusts; portability of exemption amounts; the gift tax marital deduction; gift splitting, or the right to treat gifts made by either spouse as made equally by both spouses; and, for the generation-skipping transfer tax, treatment of the same-sex parties as being in the same generation. Opposite-sex couples in a civil union may also face some, if not all, of these issues, particularly in states that do not recognize common-law marriage.

On the other hand, there are some transfer rules that apply to married, opposite-sex couples that, by not applying to same-sex couples, might produce favorable results. These include (1) the option of setting up a grantor retained income trust, which typically does not work for married couples, and (2) adding certain provisions to a qualified personal residence trust that are not permissible for married same-sex couples. Sales of remainder interests can similarly work for domestic partners.

Additional issues arise when a same-sex couple moves to another state. How will that jurisdiction interpret the civil union law of Illinois, particularly in those states with laws that specifically recognize legal relationships only between one man and one woman?

MS: Will legal challenges to DOMA and other laws help clarify this picture?

GS: In the long run, the answer is yes. There are a number of court cases, perhaps the best known of which is Edith Schlain Windsor v. United States, that are challenging the legality of DOMA and its application on a variety of issues. The Obama administration and the Office of the U.S. Attorney General, which are charged with enforcing the law, have stated that they do not believe DOMA is constitutional as applied to the cases that have challenged its constitutionality and have declined to defend it in these cases. Whether or not DOMA or any of its component parts are upheld as constitutional, the decisions in these cases are bound to add clarity to the situation.

However, “clear” does not always mean less complex. Whether or not DOMA is overturned, the decisions made by the courts will add new twists in the area of estate planning. For example, an older, opposite-sex couple in Illinois may choose to enter into a civil union rather than a marriage, in order to continue receiving Social Security benefits that derive from prior marriages. If DOMA falls, and their civil union is then treated as a federally recognized marriage, they could stand to lose a significant portion of their Social Security benefits.

Given all of the uncertainties, individuals who are considering a civil union should work closely with their attorneys to review their current estate planning documentation. Ambiguous language should be revised and clarified, and new or different tools (trusts, etc.) may be advisable in light of the new legal and tax landscape. Estate plans are “living” things, if you will; as the environment changes, they should be reviewed regularly and adjusted accordingly.

© 2011 Much Shelist Denenberg Ament & Rubenstein, P.C.

Healthcare Alert: U.S. Announces Process for $3.8B in CO-OP Funds

Recently posted in the National Law Review an article by Mark E. Rust of Barnes & Thornburg LLP about the announcement that Medicare and Medicaid Services (CMS) will begin accepting applications for Consumer Oriented and Operated Plan (CO-OP) Start-Up Loans and Solvency Loans on Oct. 17, 2011 :

According to a recently released Federal Opportunity Announcement (FOA), TheCenter for Medicare and Medicaid Services (CMS) will begin accepting applications for Consumer Oriented and Operated Plan (CO-OP) Start-Up Loans and Solvency Loans on Oct. 17, 2011. Section 1322 of the Patient Protection and Affordable Care Act (PPACA) establishes the CO-OP program to foster the creation of nonprofit health insurance issuers. The CO-OP program will dispense $3.8 billion in Start-Up Loans and Solvency Loans to providers and buyers who sponsor new insurers regionally.

The FOA is subject to change pending the CO-OP final rule. Comments on the proposed CO-OP rule are due on Sept. 16, 2011.

The CO-OP program is designed to foster the creation of new consumer-governed, private, nonprofit health insurance issuers, known as CO-OPs. CO-OPs will offer plans under the Affordable Insurance Exchanges (Exchanges) by Jan. 1, 2014. Generally, CMS will provide Start-Up Loans for all costs associated with developing the CO-OP, and Solvency Loans for all state registered reserves (Loans) to CO-OP applicants in each state. The loans are awarded for the purpose of CO OP development and meeting state solvency requirements. The FOA provides general detail regarding the basis upon which loans are awarded.

FOA Application Timeline

Under the FOA, CO-OP applicants must immediately submit a Letter of Intent indicating intent to apply for joint Start-Up Loans and/or Solvency Loans. The CMS underscores the time urgency of application because the agency expects to provide notice of loan awards by Jan. 12, 2012 so that CO OP applicants can be prepared to accept contracts in late 2013. Because of this deadline, the first round of applications are due by Oct. 17, 2011.

Successful CO-OP applications receive a Notice of Award and a Loan Agreement. CO-OP applicants may request reconsideration of loan application to CMS within 30 days of receiving determination notice. CMS notes that redetermination results in a final decision that is not subject to further administrative review or appeal.

FOA CO-OP Loan Application Criteria

Generally, CMS will look for efficiencies and evaluate whether the business plan and budget is sufficient, reasonable, and cost effective to support activities proposed in the CO-OP application. CMS will review applications on a base total of 100 points weighted from five general criteria including: (1) statutory preferences (16 points); (2) project narrative (4 points); (3) business plan (62 points); (4) government and licensure (10 points); and (5) feasibility study (8 points). The feasibility study must be supported by an actuarial analysis.

FOA Loan Details

Both Loans are non-recourse and provided at a low interest rates. Start-Up Loans will be prepaid five years from startup and charged an interest rate equal to the average interest rate on marketable Treasury securities of similar maturity minus one (1%) percentage point (provided that interest shall not be less than 0 percent) on the amount of the drawdown. Solvency Loans will be repaid in 15 years and charged an interest rate equal to the average interest rate on marketable Treasury securities of similar maturity minus two (2%) percentage points (provided that the interest shall not be less than 0 percent) on the amount of the drawdown.

© 2011 BARNES & THORNBURG LLP

 

 

 

 

 

 

 

Facebook & Extramarital Affairs: Beware!

Posted on Wednesday, August 3, 2011 in the National Law Review an  article by Rebecca L. Palmer  Timothy C. Haughee of Lowndes, Drosdick, Doster, Kantor & Reed, P.A. regarding a growing number of married people are using Facebook to reunite with old flames or to connect with those with whom they seek a romantic relationship.

With the advent of social networking sites such as Facebook, people are now able to reconnect with long-lost friends with just the click of a mouse. While many take advantage of Facebook’s added convenience to make innocent connections with others, a growing number of people are using Facebook to reunite with old flames or to connect with those with whom they seek a romantic relationship. For a married person, this can be a real marriage disaster.

According to a 2008 report by the Pew Internet and American Life Project, one in five adults, many of whom are married, use Facebook for flirting. A British divorce website, Divorce-Online, recently reported that the term “Facebook” appeared in nearly 20% of the petitions it was handling last year, out of a case load of 7,000. Indeed, in one recent survey conducted by the American Academy of Matrimonial Lawyers, two-thirds of lawyers said Facebook was the “primary source” of evidence in divorce proceedings.

So, does Facebook cause extramarital affairs? While the statistics referenced above may lead one to conclude that Facebook can cause extramarital affairs, there has yet to be evidence of such a causal link. In fact, the divorce rate has generally been stable during the last decade, and infidelity’s role as the primary cause of around 25% of divorces has also remained stable, despite advances in the digital age. However, while there may not be a direct causal link between Facebook and extramarital affairs, it is abundantly clear that Facebook enables married individuals to cheat on their spouses in a manner that is easier than previous methods. No longer do you have to write a letter to your old flame, or obtain their phone number and place a call, hoping that an irritated spouse does not answer. Instead, an online Facebook account allows easy connectivity, fast replies, mail accounts that can be easily deleted, advanced privacy settings, and the seamless sharing of pictures and other information, at any hour of the day or night. Simply stated, Facebook can tempt a married individual to pursue an extramarital relationship that they otherwise would not have pursued. If that temptation is acted upon, the married individual can maintain the extramarital relationship online and delete the evidence at their convenience, all without the knowledge of their spouse.

Facebook’s prevalence in extramarital affairs has, in turn, also led it to become a favorite evidence tool for divorce attorneys. The American Academy of Matrimonial Lawyers recently reported that 81% of its members have used or faced evidence taken from Facebook or other social networking sites over the last five years. Such evidence can have dramatic consequences for a party in a divorce case. For instance, a mother’s alienation of affliction claim may be bolstered by evidence of the father forcing the couple’s son to “de-friend” his mother on Facebook. A parent going through a divorce may have their request for additional timesharing with their child denied if the court is presented with pictures from Facebook depicting the parent drinking or doing drugs when the child is in their care. A divorcing spouse seeking alimony based on a lack of earning capacity may have their request denied by the court if the requesting spouse’s Facebook account is littered with pictures of the spouse spending their free time and money at restaurants and bars.

The law is currently unsettled regarding the use of information obtained from Facebook during a family law proceeding. However, recent case law should leave Facebook users, and their family law attorneys, wary. For instance, a judge in Pennsylvania recently found that the husband in a divorce case had to provide his wife’s attorneys with his Facebook username and password, despite the husband’s objection that his Facebook information was private and thus deserving of an evidentiary privilege. The judge rejected the husband’s arguments, noting that the husband had no expectation of privacy because Facebook’s End User License Agreement (“EULA”) notes that all user accounts are subject to, and are at any time accessible by, third party administrators. Since the husband accepted Facebook’s EULA when he signed up for Facebook, the court found an implicit waiver of confidentiality regarding the information contained on his Facebook page. While the Pennsylvania decision is not binding on Florida courts, it is most assuredly instructive.

Accordingly, a person should be extremely cautious with their Facebook account when going through a divorce. Among other things, a divorcing individual should refrain from denigrating their spouse on Facebook, and should generally avoid posting comments on their Facebook accounts that they would not want a judge to read in open court. Additionally, a divorcing spouse should abstain from posting pictures or videos that may be damaging to their divorce case, including pictures or videos that are sexually explicit or show the divorcing spouse binge drinking or doing drugs and exposing their children to the same. Similarly, a divorcing spouse should take note of the information posted by their Facebook “friends,” such as pictures or videos that “tag” the divorcing spouse, and should ask such “friends” to remove the damaging information from their Facebook page. Finally, a divorcing spouse should consider changing their Facebook privacy settings so that they can limit the information that they share, and if that is not enough, a divorcing spouse should consider deleting their Facebook account during their family law case.

We continue to find technology changing human relationships. From readily accessible pornography to explicit social networking websites (including at least one aimed at assisting married individuals to enter into extramarital affairs) to Facebook, family life is no longer made up of the innocence of Ward and June Cleaver. Consequently, using good judgment and carefully monitoring your Facebook account during a family law proceeding can have a significant impact on your case.

© Lowndes, Drosdick, Doster, Kantor & Reed, PA, 2011. All rights reserved.

The 2011 Global Congress on Legal, Safety, and Security Solutions in Travel Conference

The National Law Review is pleased to announce The 2011 Global Congress on Legal, Safety, and Security Solutions in Travel will take place on August 25 – 28, 2011 at the George R. Brown Convention Center, Houston, Texas.

HospitalityLawyer.com, in coordination with the Greater Houston Convention & Visitors Bureau, is hosting the Global Congress on Legal, Safety, and Security Solutions in Travel to facilitate the delivery of safe, secure and uninterrupted travel via an all-encompassing public-private dialogue dedicated to the sharing of best practices for issues faced by the global travel, tourism, and hospitality industries.

What is the Global Congress?

The Global Congress is a unique opportunity for all aspects of the travel equation to share their legal, safety, and security experiences and best practices. It is all-encompassing public-private dialogue to enhance the global travel industry’s ability to avoid interruptions and to provide a safe secure and seamless travel experience.

What Topics Will the Global Congress Address?

General Sessions will address topics, issues and solutions that impact all components of travel, such as:

  • Common Issues and Solutions for Travel Safety and Security: The Industry Perspective
  • The Debate: Screening vs. Personal Privacy
  • Contagious Outbreaks: Appropriate Responses in all Sectors of Public Accommodation
  • The US Travel Association’s Blue Ribbon Panel on Aviation Security: Findings and Recommendations
  • What Have We Learned from Recent Travel Disruptions?
  • Profiling: Is it Effective and What are the Privacy Implications?
  • Human Trafficking: Is the Travel Industry Enabling It?
  • Best Practices in Global Data Privacy Issues
  • The Media’s Role in Creating and Sustaining a Travel Crisis

The second day features a full day of sessions in each travel component:

  • Transportation, including Airlines, Cruise, Ground, and Terminal
  • Lodging
  • Venues & Events
  • Public Support of Travel, including Embassies, Health, Entry/Exit, Airports, Terminals, and Seaports
  • Leisure Travel & Tourism
  • Corporate & Government Travel
  • Global Legal Issues.

Who Should Attend?

Travel Buyers Travel Suppliers Public Travel Supporters
  • Risk, Safety, Security, Health and Environmental Officers
  • In-house Counsel
  • Travel Managers
  • Human Resource Executives
  • Procurement/CFO
  • Meeting Planners
  • Risk, Safety, Security, Health and Environmental Officers
  • In-house Counsel
  • C-level Executives
  • Wholesalers, Distributors, and Manufacturers of Safety and Security Solutions
  • Procurement
  • Attorneys & Consultants focusing on Travel & Hospitality
  • Risk, Safety, Security, Health and Environmental Officers for Air, Sea and Public Transportation Systems & Terminals
  • Domestic Security and Other Law Enforcement Officials
  • Government Attorneys
  • Immigration and Customs Officials
  • Health Policy Directors
  • Travel and Tourism Ministers and Administrators
  • Consulate and Foreign Trade Officials
  • Researchers and Thought Leaders in the Hospitality, Travel, and Tourism Arenas
  • Embassy Personnel

Justifying Your Attendance

The Global Congress on Legal, Safety, and Security Solutions in Travel is the only conference in the world dedicated to legal, safety, and security best practices in the global travel, tourism, and hospitality industries. We have identified the value proposition for attending the Global Congress in custom pieces below. Please select the link that corresponds to your area of interest:

For your convenience, we have also put together a helpful customizable letter (.doc) to help justify your investment to attend the conference.

The first Global Congress, presented in coordination with the Greater Houston Convention & Visitors Bureau, will be held August 25-28, 2011, in Houston, Texas. Houston, situated centrally in the United States, is an international gateway city with 92 consulates and the headquarters for major travel-related businesses and associations. It is also the home of the renowned Conrad N. Hilton College of Hotel and Restaurant Management at the University of Houston, whose namesake strongly championed the philosophy that global travel could bring about world peace.

Arthur J. Gallagher and iJet are Foundation Sponsors of the Global Congress.