Top Whistleblower Settlements of 2013 – To Date

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The theme of the top whistleblower settlements to date in 2013 is, once again, health care fraud. Eight of the largest settlements involve fraud in the health care industry. This is indicative of the number of health care fraud cases being filed in recent years. According to the Department of Justice, since January 2009, over $10.3 billion has been recovered from health care fraud cases. This year, the focus seems to have particularly shifted to cases involving violations of the Anti-Kickback Statute and Stark law, which prohibit the giving of financial incentives for referrals or the use of particular pharmaceuticals or devices. Without further ado, here are the top whistleblower settlements of 2013 to date:

1. Ranbaxy USA Inc. ($500 Million)

Ranbaxy USA Inc., a subsidiary of Indian generic pharmaceutical manufacturer Ranbaxy Laboratories Limited, agreed to pay a total of $500 million to settle criminal and civil allegations filed against the company. Ranbaxy pleaded guilty and agreed to pay a criminal fine and forfeiture of $150 million. The civil settlement, which resolves False Claims Act violations, was for $350 million. Ranbaxy was accused of poor oversight and inadequate testing and maintenance of drugs manufactured at its facilities in Paonta Sahib and Dewas, India. This lead to false claims being submitted to numerous government agencies including the FDA, Medicaid, Medicare, TRICARE, the Federal Employees Health Benefits Program, the Department of Veterans Affairs, and USAID. The whistleblower in this case, former Ranbaxy executive Dinesh Thakur, will receive $48.6 million from the federal share of the civil settlement.

For more information about this settlement, read the DOJ press release.

2. C.R. Bard Inc. ($48.26 Million)

C.R. Bard Inc., a New Jersey-based corporation that develops, manufactures, and markets medical products, agreed to pay $48.26 million to resolve kickback allegations filed against the company. Bard was accused of submitting false claims to Medicare for brachytherapy seeds used to treat prostate cancer. According to the complaint filed in 2006, Bard paid illegal kickbacks in numerous forms to both physicians and customers who used the seeds to perform treatment for prostate cancer. The whistleblower in this case, Julie Darity, was a former Bard manager for brachytherapy contracts administration. She will receive $10,134,600 as her portion of the settlement.

For more information about this settlement, read the DOJ press release

3. Par Pharmaceutical Companies Inc. ($45 million)

Par Pharmaceutical Companies, Inc., one of the top five U.S. generic pharmaceutical companies, pleaded guilty to federal criminal charges and agreed to settle civil allegations involving the company’s promotion of the drug Megace ES. Par was fined $18 million and ordered to pay an additional $4.5 million in criminal forfeiture. The company will also pay $22.5 million to resolve the civil allegations. The civil suit accused Par of promoting Megace ES for non-FDA approved uses that were not covered by federal healthcare programs and of actively ignoring some of the negative side effects the drug has on various patient groups when promoting Megace ES. The settlement resolves three separate whistleblower lawsuits that were filed against the company. Two of the five whistleblowers in the cases, Mr. Michael McKeen and Ms. Courtney Combs will receive $4.4 million as their portion of the settlement. Any payments to the other whistleblowers, Ms. Christine Thomas, Mr. James Lundstrom, and Mr. Elliott, are unknown at this time.

For more information about this settlement, read our blog post.

4. Dr. Steven J. Wasserman ($26.1 Million)

This year, the Department of Justice announced one of the largest ever settlements with an individual under the False Claims Act. Florida dermatologist, Dr. Steven J. Wasserman agreed to settle allegations filed against him for $26.1 million. Dr. Wasserman was accused of performing medically unnecessary services and engaging in an illegal kickback scheme. Dr. Alan Freedman, the whistleblower in this case, was a pathologist at a company involved in the kickback operation. He filed his qui tam lawsuit in 2004 and will receive slightly over $4 million as his share in the settlement.  

For more information about this settlement, read our blog post. 

5. CH2M Hill Hanford Group Inc. ($18.5 Million)

CH2M Hill Hanford Group Inc. and its parent company CH2M Hill Companies Ltd. agreed to settle civil and criminal allegations relating to time card fraud for a total of $18.5 million. CH2M had a contract with the Department of Energy to manage and clean 177 large underground storage tanks that contained radioactive and hazardous waste at a nuclear site in Washington. CH2M employees allegedly regularly overstated the number of hours they worked on time cards submitted to the Department of Energy. As a result, CH2M was overpaid for more hours of work than were actually performed. The civil settlement was for $16.55 million. CH2M will also pay $1.95 million to resolve the criminal liabilities. To date, eight CH2M employees have pleaded guilty to engaging in the time card fraud. The whistleblower in this case, Carl Schroeder, was a former CH2M employee and one of the individuals who pleaded guilty to the scheme. The qui tam provisions of the False Claims Act bar whistleblowers from receiving a portion of the settlements if they are convicted for their role in the fraud scheme. Therefore, Mr. Schroeder will not receive a portion of this settlement.

For more information about this settlement, read the DOJ press release. 

6. American Sleep Medicine LLC ($15.3 Million)

The Department of Justice announced a $15.3 million False Claims Act settlement it reached with American Sleep Medicine LLC. American Sleep is a Florida-based company that owns and operates 19 diagnostic sleep testing centers across the country. Its primary business is to provide testing for patients who suffer from sleep disorders. American Sleep allegedly submitted false claims to Medicare, TRICARE, and the Railroad Retirement Medicare Program for tests that were performed by technicians who lacked the proper certification required by these agencies for reimbursement. The whistleblower in this case, Daniel Purnell, will receive about $2.6 million as his portion of the settlement.

For more information about this settlement, read the DOJ press release.  

7. Adventist Health System & White Memorial Medical Center
   ($14.1 Million)

This month, Adventist Health System and its affiliated hospital White Memorial Medical Center agreed to a $14.1 million settlement. The settlement was the result of a qui tam lawsuit filed against the companies accusing them of violating the Anti-Kickback Act and the Stark Statute. Of the $14.1 million, $11.5 million will go to the federal government and $2.6 million will go to California’s Department of Health Care Services. Adventist Health was allegedly improperly compensating physicians for patient referrals to White Memorial by transferring medical and non-medical supplies and other inventory to the physicians at less than fair market value. White Memorial was also accused of paying referring physicians at a rate above fair market value for teaching services at the family practice residency program. The whistleblowers in this case were Dr. Hector Luque and Dr. Alejandro Gonzalez, who were members and partners of White Memorial. They will collectively receive $2,389,219 as their portion of the settlement.

For more information about this settlement, read our blog post.

8. Cooper Health System ($12.6 Million)

Cooper Health System and Cooper University Hospital, a hospital and health care system in South New Jersey, agreed to a $12.6 million settlement that resolved allegations that Cooper engaged in an elaborate illegal kickback scheme. According to the complaint, Cooper created a sham advisory board to pay high-volume medical practices upwards of $18,500 each to attend four meetings over the course of a year with the true goal of encouraging medical practices to refer patients to Cooper. The whistleblower in this case, Dr. Nicholas L. DePace, is a prominent Delaware Valley cardiologist. Dr. DePace was invited to join the sham advisory board and, after attending one of the meetings, figured out Cooper’s true intentions. Dr. DePace’s whistleblower reward has not yet been determined.

For more information about this settlement, read our blog post.

9. Hospice of Arizona ($12 Million)

Three Arizona hospice companies, Hospice of Arizona LC, American Hospice Management LLC and American Hospice Management Holdings LLC, agreed to settle a False Claims Act lawsuit with the government for $12 million. In order for hospice care to be reimbursed by Medicare, patients are required to have a life expectancy of, at most, six months.The qui tam lawsuit, filed against the companies in 2010, accused the defendants of submitting false claims to Medicare for patients who did not need to be admitted to the Hospice of Arizona. Additionally, they were accused of submitting false claims by overbilling Medicare for some of the hospice’s services. Ellen Momeyer, the whistleblower in this action, was a former Hospice of Arizona employee. Momeyer will receive $1.8 million (approximately 15%) as her share of the settlement.

For more information about this settlement, read our blog post.

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Michigan Cardiology Settlement of Medicare and Medicaid Fraud Allegations

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On July 10, 2013, United States Attorney Barbara L. McQuade announced a $4 million settlement between Allegiance Health d/b/a W.A. Foote Memorial Hospital, Jackson Cardiology Associates, P.C., Jashu R. Patel, M.D. and the U.S. Government.  The U.S. Department of Justice collaborated with the Birmingham, Michigan law firm, Vezina Law, PLC, in pursuing this action against the Jackson, Michigan based defendants.

According to allegations brought against the defendants in 2008, Foote Memorial Hospital, Jackson Cardiology Associates, and Dr. Patel knowingly billed Medicare, Medicaid, and other federal health care programs for medically unnecessary cardiovascular procedures and tests, including, but not limited to, stress tests, cardiac catheterizations, cardiac stents, and peripheral angiography procedures.

The lawsuit was filed in the United States District Court for the Eastern District of Michigan under the qui tam provisions of the Federal and State False Claims Acts.  Both False Claims Acts allow private individuals with knowledge of fraud against a government program to file lawsuits on the Government’s behalf.  If the case is successful, the private plaintiffs, known as relators or whistleblowers, are entitled to a percentage of the Government’s recovery.  The state and federal False Claims Acts both provide for recovery of three times the single damages incurred by the government as a result of the fraud, as well as civil monetary penalties of between $5,500 and $11,000 per false claim submitted and statutory attorney fees.

The relator in this case is Dr. Julie Movach, an independent contractor with Medical Practice and a physician board certified in internal medicine, cardiology, and echocardiography.  Dr. Movach released a statement explaining how important it is for her to deliver the best care to her patients and ensure that they do not undergo any unnecessary procedures.  When she realized that certain health care providers were more concerned with their personal financial well-being rather than the welfare of their patients, to the point that they would commit fraud against federal health care programs, Dr. Movach knew she must expose this corruption.  She took it upon herself to file a lawsuit against the defendants on behalf of the U.S. government.  Dr. Movach deserves our thanks and applause for her willingness to risk her livelihood in order to ensure people with genuine need can continue to receive assistance from Medicare and Medicaid.

In this case, the combined settlement was $4,150,988.31. The Foote Memorial Hospital settled the allegations with the federal government for $1,824.927.98 and with the State of Michigan for $126,060.33.  At the same time, Dr. Patel and Jackson Cardiology settled the allegations with the federal government for $2,200,000.00.  As the whistleblower, Dr. Movach will receive a 19% share of the overall settlement, which amounts to approximately $760,000 of the proceeds.

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Countdown to HITECH Compliance: How to Redistribute Your Notice of Privacy Practices

Poyner SpruillSeptember 23, 2013 is the fast-approaching compliance deadline for the final omnibus HIPAA/HITECH rules.  Many provisions required revisions to Notices of Privacy Practices (NPPs) maintained and distributed by covered entities.  The U.S. Department of Health and Human Services (HHS) has made clear that these changes are material.  As a result, covered entities must redistribute their NPPs shortly in order to meet HITECH’s requirements.  This alert describes the manner of redistribution dictated by HIPAA.

General Requirements

When revising NPPs, keep in mind that whether paper or web-based, HHS requires them to be accessible to all individuals, including those with disabilities.  Covered providers required to comply with Section 504 of the Rehabilitation Act or the Americans with Disabilities Act must also take steps to ensure effective communication with individuals with disabilities, including making the revised NPP available in Braille, large print, or audio.  HIPAA also requires NPPs to be written in plain language.

Changes to the NPP may not be implemented prior to the NPP’s new effective date, unless otherwise required by law.  Typically, any change to the practices described within the revised NPP may only be applied to PHI created or received after the effective date of the change.  All previous versions of the NPP and any acknowledgments of its receipt must be maintained for six years from the last effective date.

If You Are a Health Care Provider

For existing patients, you must make the revised NPP available upon request on or after the effective date of the changes (for most, this date will be September 23, 2013).  If you have a physical service delivery site (such as a clinic or hospital), you must have copies of the NPP available at the site for individuals to take with them upon request.  You also must post a copy of the NPP or summary of the revisions in a clear and prominent location, where it is reasonable to expect individuals to be able to read the posting.  You must ensure all new patients receive the revised NPP at the time of first service after the effective date of the changes.  The revised NPP must be made available on your website if you have one.  If patients have agreed to receive electronic notice of the NPP, you may e-mail the revised NPP to those patients.  You do not need to obtain acknowledgment of receipt from individuals, except for the initial distribution of the NPP provided at the first time of service.

If You Are a Health Plan

You must distribute the revised NPP to current plan participants.  If you post your NPP on a website, then you must post the revised NPP, or a description of the material changes, prominently on that website by the effective date of the changes.  You also must provide in your next annual mailing to participants either the revised NPP or information regarding material changes and how to obtain a copy of the NPP.  If you do not post your NPP on a website, then you must provide participants with the revised NPP or information about the material changes and how to obtain the revised NPP within 60 days of the material changes.  Note that all health plans also must continue to notify participants of the availability of the NPP and how to obtain a copy at least once every three years.

HHS has stated that if covered entities or health plans amended and redistributed NPPs prior to issuance of the final omnibus rule then they are not required to repeat the process, so long as the current NPP that was redistributed meets all the requirements in the final rule.  For all other covered entities, the NPP must be revised and effective by September 23, 2013, and redistributed as appropriate.

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Healthcare Fraud Case Results in $491 Million Settlement

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On July 30, 2013, Pfizer Inc., one of the world’s largest pharmaceutical companies, announced its finalized agreement to pay $491 million to the U.S. government in order to resolve accusations that the company and one of its subsidiaries defrauded the U.S. healthcare system.  Under the settlement, Pfizer will pay $257 million in order to resolve civil allegations that Wyeth Pharmaceuticals Inc., owned by Pfizer, engaged in illegal marketing that led to false claims being brought to Medicare and similar healthcare programs.  Pfizer will pay the other $234 million of the settlement in order to cover criminal fines and penalties.

According to allegations in the lawsuit, Wyeth Pharmaceuticals had illegally marketed a transplant drug named Rapamune for uses that had not been approved by the U.S. Food & Drug Administration (FDA).  Patients use Rapamune in combination with other drugs following kidney transplants.  However, Wyeth’s advertising campaigns advocated the drug for unapproved applications, such as use after liver, lung, heart, pancreas, and islet transplants.  According to a U.S. attorney, this type of off-label marketing endangers patients and erodes the population’s confidence in the FDA.  In 2002, the FDA required Wyeth to place a “black box warning,” the most stringent type of warning required by the agency, on the Rapamune product label.  This warning would advise people of the risks inherent in using Rapamune after liver transplants.  One year later, the FDA required a similar type of warning with regard to the use of Rapamune after lung transplants.  Nevertheless, claims up to 90% of Wyeth’s Rapamune sales were allegedly for “off-label” uses.

The $491 million settlement resulted from two qui tam lawsuits filed against Wyeth Pharmaceuticals Inc.  Under provisions of the False Claims Act, private citizens with knowledge of fraud committed against the government can file a qui tam lawsuit on behalf of the United States.  The individual filing the lawsuit is known as the relator or whistleblower.  Healthcare whistleblowers, such as the persons who brought the lawsuits against Wyeth, serve an important role in exposing and eradicating healthcare fraud.  Many whistleblowers have personal knowledge of deceptive practices because they work for the companies that submit false claims to the Government.  By relating their knowledge to the appropriate authorities, these individuals can assure that healthcare programs can achieve their intended benefits to Americans with the greatest need of federal assistance.

In the first case, the False Claims Act whistleblowers were Marlene Sandler and Scott Paris.  They jointly filed a lawsuit in Pennsylvania that alleged aspects of off-label marketing.  At the time, the Government declined to intervene and the relators commenced to litigate the case on their own.  Two years later, a second qui tam whistleblower, Mark Campbell, came forward.  Mr. Campbell is a former Wyeth sales representative who worked for the company for twenty years.  Throughout the tenure of his employment, he became aware of Wyeth’s off-label marketing practices.  After he filed his lawsuit against Wyeth in the U.S. District Court for the Western District of Oklahoma, the Department of Justice intervened in the Sandler and Paris action.  The Government then transferred the matter to the Oklahoma court and consolidated the two cases.  The three Medicare fraud whistleblowers have aligned their interests and cooperated to help the investigation into Wyeth’s actions.

Because the whistleblowers took on a personal risk in bringing allegations against their employer and they devoted their time in relaying information vital to the case, they will obtain a significant proportion of the settlement.  False Claims Act whistleblowers typically receive 15% to 25% of settlements.  That means that Ms. Sandler, Mr. Paris, and Mr. Campbell will all potentially receive millions of dollars from Pfizer Inc.

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What Does The Word “Natural” Mean, Anyway?

Mintz Logot’s 2 o’clock in the afternoon, you need a snack – maybe a granola bar, but which one? Does the package that boasts it is “100% Natural” win out over the one that is only “All Natural”?  Would you even consider one that is merely “Natural”? Well, don’t expect the U.S. Food and Drug Administration to help you decide anytime soon – they have left it up to the courts to grapple with.

Lawsuits against food companies alleging consumer fraud based on deceptive labeling have increased in the last few years.  Many of these lawsuits have been brought in the U.S. District Court in the Northern District of California, causing that court to be known as the “Food Court” (no, not the one at the mall).  One common bone of contention is the use of the word “natural” in food labeling.  “Natural” remains undefined by the U.S. Food and Drug Administration after a failed attempt to do so in 1991.  It reaffirmed its informal policy for use of the word “natural” on food labeling claims:

The agency will maintain its current policy . . . not to restrict the use of the term “natural” except for added color, synthetic substances, and flavors as provided in [21 CFR] §101.22.  Additionally, the agency will maintain its policy . . . regarding the use of “natural,” as meaning that nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in the food.  Further, at this time the agency will continue to distinguish between natural and artificial flavors as outlined in §101.22. See more here.

A typical claim in a lawsuit will contend that the use of the word “natural,” whether as “100% Natural,” “All Natural,” or something similar, is misleading if the product contains or was processed with a compound perceived by plaintiffs to be artificial or synthetic.  The problem in these lawsuits is that the term is undefined, and even FDA says that it is difficult to define a food product that is natural because it has likely been processed and is no longer a “product of the earth.”  This leaves fertile ground for plaintiff’s class action attorneys to bring claims against food companies for any use of the word.

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Health Care Reform Update – Week of August 26th , 2013

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CMS Announces Matching Agreements for Data Hubs

On August 21st, the Centers for Medicare and Medicaid Services (CMS) announced its most recent agreement with state entities for exchange data hubs. States are now required to report any suspected or confirmed loss of personally identifiable information within an hour of discovery to their designated Center for Consumer Information and Insurance Oversight (CCIIO) State Officer, who will then notify the relevant Federal agency. CMS has posted a draft of the reporting form and has asked for public comments to be submitted by September 20th.

Lawmakers Defend Critical Access Hospitals

On August 22nd, a bipartisan group of 20 Senators, led by Senator Tammy Baldwin (D-WI), sent a letter to Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) of the Senate Finance Committee defending critical access hospitals and challenging a report released last week by the Department of Health and Human Services (HHS) Inspector General which criticized hospitals participating in the Medicare Critical Access Hospital program.

Implementation of the Affordable Care Act

On August 16th, the Small Business Administration (SBA) and the Small Business Majority announced a new series of weekly webinars to help small business owners learn how the ACA will affect their businesses and their employees.

On August 19th, HHS announced that it will be partnering with the Young Invincibles for the Healthy Young America video contest.

On August 21st, seventy nine Republicans in the House of Representatives signed a letter to Speaker John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA) urging them to de-fund the implementation and enforcement of the ACA in any relevant appropriations bill.

On August 21st, Republican members of the House Energy and Commerce Committee sent a letter to Treasury Secretary Jack Lew stating that they have not yet received a response to questions submitted for the record to Mark Iwry on August 2nd regarding the delay of the employer mandate.

On August 23rd, the IRS released proposed rules on the ACA’s small business tax credit, which will be available to employers with no more than 25 full time employees purchasing health insurance through the Small Business Health Options Program (SHOP) exchange.

Other HHS and Federal Regulatory Initiatives

On August 19th, an Oklahoma judge granted a temporary injunction against a state law that placed additional restrictions on access to Plan B One-Step pending the outcome of a lawsuit challenging the law. The new restrictions contradict FDA approval for unrestricted, over the counter sale of Plan B One-Step.

On August 19th, the Agency for Healthcare Research and Quality (AHRQ) announced Richard Kronick will replace Carolyn Clancy as the director of the agency. He is currently the Deputy Assistant Secretary for Planning and Evaluation in the Office of Health Policy.

On August 20th, the Centers for Disease Control (CDC) announced an award of approximately $75.8 million to all 50 states through the Epidemiology and Laboratory Capacity for Infectious Diseases Cooperative Agreement.

On August 22nd, the HHS Office of the Assistant Secretary for Planning and Evaluation released an issue brief which found that the percentage of office-based physicians who are accepting new Medicare patients has not changed significantly between 2005 and 2012, and is slightly higher than the percentage accepting new privately insured patients.

On August 23rd, Iowa Governor Terry Branstad (D) submitted a Medicaid expansion waiver to CMS, which will formally replace the previous Medicaid waiver for the Iowa Care program with the Iowa Health and Wellness Plan.

Other Congressional and State Initiatives

On August 19th, Congressman Charles Rangel (D-NY) and Senator Kirsten Gillibrand (D-NY) announced they will be introducing the Communities United with Religious Leaders for the Elimination of HIV/AIDS (CURE) Act of 2013.

Other Health Care News

On August 19th, the RAND Corporation released a report stating that the one year delay of the employer mandate will not substantially impact the ACA.

On August 20th, the Kaiser Family Foundation released its annual Employer Health Benefits survey, which found that premiums increased at modest levels, consistent with the last several years.

On August 21st, the Commonwealth Fund released their findings from their Health Insurance Tracking Survey, conducted from 2011 to 2013, which indicated that only 27% of 19 to 29 year olds are aware of the new health insurance marketplaces instituted by the ACA.

On August 22nd, Gallup released a poll which showed that while the number of Americans who approved or disapproved of the ACA remained steady, the number of people who had no opinion of the law increased from 4% in June to 11%.

Hearings and Mark-Ups Scheduled

The Senate and the House of Representatives are in recess until the week of September 9th.

Alyssa Franke also contributed to this article.

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Argentina Legal Highlights (Volume II, 2013)

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Latin American Region Enviromental Report, Second Quarter, 2013

Packaging Waste Management Bill Introduced in Chamber of Deputies

On April 11, 2013, a bill (No. 1859-D-2013; the “Bill”) was introduced in the Chamber of Deputies that would create a national, comprehensive packaging-waste management system. The Bill would apply to most packaging and packaging waste, and would regulate most entities that are involved with the packaging of products, the marketing of packaged goods, or the recycling or recovery of packaging waste. (Arts. 2, 7) A covered entity could comply with its responsibilities through one of two methods. (Art. 9) One option would allow it to pay a fee and participate in a provincially or municipally administered Packaging-Waste Management Program (Programa de Gestión de Residuos de Envases), which would set requirements for collection, transportation, temporary storage, processing, and recovery of packaging waste. (Arts. 10-23) Alternatively, a covered entity could administer its own government-approved Deposit and Return System (Sistema de Depósito, Devolución y Retorno). (Arts. 24-26) The Bill was referred to the committees on Industry, Natural Resources and Conservation of the Human Environment, and Budget and Finance.

Reference Sources (in Spanish):

Battery Waste Bill Introduced in Chamber of Deputies

On April 25, 2013, a battery waste management bill (No. 1859-D-2013; the “Bill”) was introduced in the Chamber of Deputies. The Bill would cover nearly all batteries, with the exception of industrial and car batteries. (Art. 2) Most of the obligations established by the Bill would fall on battery producers: i.e., manufacturers, importers, brand owners, and resellers. These companies would be responsible for collection and management of battery waste and required to implement one of the following waste-management options: (a) establishing their own Individual Battery Waste Management System (Sistema de Gestión Individual de Residuos de Pilas y Acumuladores ); (b) participate in an Integrated Battery Waste Management System (Sistema Integrado de Gestión de Residuos de Pilas y Acumuladores); or (c) establish a deposit-and-return system. (Art. 5) Regardless of the option chosen, approval of the Secretariat of Environment and Sustainable Development (Secretaría de Ambiente y Desarrollo Sustentable) would be required. (Arts. 6-8) The Bill would also set standards for battery collection, treatment, recycling, and disposal (Arts. 9-10), impose labeling requirements (Art. 15), and require equipment manufacturers to make battery removal easy (Art. 16). Under the Bill, as under current Argentine law, used batteries would be deemed hazardous by definition, and thereby subject to Argentina’s extensive restrictions on transport, storage and handling of hazardous wastes. (Art. 3)

Reference Sources (in Spanish):

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Family and Medical Leave Act (FMLA) Protected Leave Now Available To Same-Sex Spouses

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United States Secretary of Labor, Thomas Perez, recently issued an internal memorandum to department staff outlining the Department of Labor’s plan to issue guidance documents which will, among other things,  make protected leave available to same-sex couples under Family and Medical Leave Act (“FMLA”).  This action comes as the Department prepares to implement the Supreme Court’s recent decision in U.S. v. Windsor, which struck down the provisions of the Defense of Marriage Act (“DOMA”) that denied federal benefits to legally married same-sex spouses.  Calling it a “historic step toward equality for all American families,” Secretary Perez noted that the Department of Labor will coordinate with other federal agencies to make these changes “as swiftly and smoothly as possible.”

Secretary Perez stated that guidance documents would be updated to remove references to DOMA and to “affirm the availability of spousal leave based on same-sex marriages under the FMLA.  This change is of great consequence to same-sex spouses who previously were unable to access the job-protected leave provided under the FMLA.  Now, eligible same-sex spouses will be able to take FMLA leave for certain specified family and medical reasons, including caring for a spouse with a serious health condition, and generally will be returned to their original position or another position with equivalent pay, benefits and status.  The new interpretation reflected in the Department’s updated guidance documents will be effective immediately.

In the Department’s official blog, Modern Families and Worker Protections, Laura Fortman, the principal deputy administrator of the Wage and Hour Division, announced on August 13, 2013 that revisions had already been made to various FMLA guidance documents to reflect the changes necessitated by U.S. v. Windsor.  Fortman clarified that the “changes are not regulatory, and they do not fundamentally change the FMLA.”  They merely expand the universe of employees who are eligible for FMLA benefits by including legally married same- sex couples.  The updated documents can be viewed at these links:

Although Secretary Perez did not specifically address the question, the updated guidance documents indicate that the Department only intends to expand FMLA benefits to same-sex spouses in the 13 states and the District of Columbia that have recognized same-sex marriage.  As an example, Fact Sheet#28F,Qualifying Reasons for Leave Under the Family and Medical Leave Act, defines “spouse” for purposes of FMLA leave as  “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including “common law” marriage and same-sex marriage.”   In contrast, the Office of Personnel Management announced on its website that benefits will be extended to Federal employees and annuitants who have “legally married a spouse of the same sex, regardless of the employee’s or annuitant’s state of residency.”

As initial steps to implementing these changes, employers should inform or train human resources personnel regarding the availability of FMLA leave to eligible employees under the specified definition of spouse; review internal procedures and leave documentation to ensure compliance, and finally, review employee handbooks and policies to include provisions for same-sex couples where appropriate.

Mexico Legal Highlights (Volume II, 2013)

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Latin American Region Enviromental Report, Second Quarter, 2013

Mexico Enacts Landmark Environmental Liability Law

On June 7, 2013, Mexico published its long-awaited Federal Environmental Liability Law (Ley Federal de Responsabilidad Ambiental; the “Law”), establishing the types of harms that incur liability and specifying which parties have standing to sue for environmental restoration.  The scope of occurrences that create liability under the Law is broad: “Any person or entity who by act or omission directly or indirectly occasions a harm to the environment, will be liable and will be obligated for the reparation of the harm or, when reparation is not possible, to environmental compensation.”  (Art. 10)  The Law provides important exceptions, stating that “environmental harm” is not deemed to have occurred if: (1) the activity that caused it was previously authorized through an environmental impact assessment process; or (2) the limits (i.e., of emissions, etc.) established by the relevant laws or regulations were not exceeded.  (Art. 6)  Where there is a qualifying activity and harm, the Law grants standing to the following: (1) the inhabitant of the community adjacent to the environmental harm; (2) Mexican environmental non-profit organizations; (3) the federal government through its environmental prosecution office (Procuraduría Federal de Protección al Ambiente; commonly known as “PROFEPA”); and (4) the state governments through their prosecutorial offices or institutions that exercise environmental protection functions.  (Art. 28)

The Law enumerates the factors that judges must observe in the issuance of judgments, both in determining the appropriate measure of liability (Art. 39) and in the elements that a judicial decision must contain (Art. 37).  Rather than money damages, the principal restoration due under the Law is either remediation of the harm or “compensatory” investment in other environmental improvements.  For cases of intentional causation of environmental harm, in addition to requiring restoration, courts may assess “economic sanctions” (apparently a counterpart to punitive damages) ranging from 300 to 50,000 (for individuals) or 1,000 to 600,000 (for companies) times the daily minimum wage in Mexico City.  (Art. 19)  The Law provides for two forums in addition to the existing court system: first, the Law envisions the creation of District courts specialized in environmental issues to be established within two years (Art. 30; Third Transitory Art.); second, the Law encourages the use of alternative dispute resolution in parallel with formal judicial proceedings (Arts. 47-51).   The statute of limitations for bringing actions under the Law is twelve years from the date on which the environmental harm and its effects were caused.  (Art. 29)

Reference Sources (in Spanish):

Mexico Regulates Vehicle Greenhouse Gas Emissions

A new Official Mexican Standard (Norma Oficial Mexicana; “NOM”), NOM-163-SEMARNAT-ENER-SCFI-2013, limits the emissions of greenhouse gases allowed from passenger vehicles and light trucks sold in Mexico.  The emission limits are mandatory for new vehicles up to 3, 857 kilograms, and apply to the fleets of vehicles sold by a given company in model-years 2014-2016; however, companies that sell less than 500 vehicles per model-year are exempt.  (Art. 2)  The bulk of NOM-163 sets forth the parameters and methodology used to calculate corporate targets and actual averages of carbon dioxide emissions (reported in grams of carbon dioxide per kilometer) and its equivalent in terms of fuel efficiency (reported in kilometers per liter).  Companies that registered sales of between 501 and 2,500 vehicles in 2012 may opt for an alternative, potentially less stringent program that requires emissions reductions of approximately 25% from 2012 levels.  (Art. 6)  A credit system will be established in order to incentivize the use and development of high-efficiency vehicles.  (Art. 5.5.2)

Reference Sources (in Spanish):

Mexico Issues Product Stewardship Requirements for Plastics

Through a May 21, 2013, decree (the “Decree”) amending the General Law for the Prevention and Integral Management of Wastes (Ley General para la Prevención y Gestión Integral de los Residuos; the “Waste Law”), Mexico has enacted product stewardship requirements for plastics at both the beginning and end of their life.  The Decree provides for the issuance of Official Mexican Standards (Normas Oficiales Mexicanas; “NOMs”) that establish environmental and technical criteria for the plastic and expanded polystyrene materials used in products and packaging and which becomes wastes.  (Art. 7(VI))  The NOMs must consider the principles of reduction, recycling and reuse.  Unlike the technical standards of most countries, most NOMs stand as binding law (i.e., without being incorporated by legal provisions), so criteria developed in Mexico can potentially have a direct impact on materials used internationally.  At the end of life, the Decree subjects plastics and expanded polystyrene to the producer take-back requirements that apply to special management wastes.  (Art. 28)  For certain circumstances, plastics and expanded polystyrene had already been included in the regulation on special management waste take-back plans, NOM-161-SEMARNAT-2011, issued in February 2013.  Their inclusion in the Waste Law may be intended to backfill a legal gap, and could also be used as authority to expand take-back requirements for these materials.

Reference Sources (in Spanish):

Mexico Will Establish Voluntary Sustainability Certification for Goods and Services

On May 24, 2013, Mexico amended its General Law of Ecological Balance and Environmental Protection (Ley General del Equilibrio Ecológico y la Protección del Ambiente; “LGEEPA”) to provide for the establishment of a certification and labeling program for environmentally sustainable goods and services.  Specifically, LGEEPA now directs the Secretariat of Environment and Natural Resources (Secretaría del Medio Ambiente y Recursos Naturales; “SEMARNAT”) “to promote the identification of those products, goods, inputs and services with lesser environmental impact.”  (Art. 37 bis)  Such identification would be through a voluntary marking or certificate, and would have to be based on environmental criteria taking into account the life cycle of the product or service to be certified.  The new LGEEPA text also includes a broadly worded directive for SEMARNAT to issue regulations on the “requirements, specifications, conditions, procedures, goals, parameters and permissible limits that must be observed . . . in the use of natural resources, in the development of economic activities, in the production, use and disposition of goods, in inputs and in processes.”  (Art. 36)

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Watt’s New? Michigan Energy Law News – August 2013

Varnum LLP

Natural Gas Power Plant Approval Case Gets Started

The first hearing at the Michigan Public Service Commission (MPSC) regarding the application of Consumers Energy to build a 700 MW natural gas-fired power plant (Case U-17429) occurred August 19. Twelve intervenors were granted party status: the Michigan Energy Innovation Business Council; Energy Michigan; Attorney General for the State of Michigan; Association of Businesses Advocating Tariff Equity (ABATE); Midland Cogeneration Venture Limited Partnership; Renaissance Power LLC; New Covert Generating Company LLC; Interstate Gas Supply, Inc.; First Energy Solutions Corp.; Michigan State Utility Workers Council; Sierra Club; National Resources Defense Fund; and Michigan of Environmental Council.  Potential issues to be raised by the interveners include the assumptions in the filed Integrated Resource Plan on:

  • alternative and renewable energy generation availability and costs;
  • the limitations of the customer choice program;
  • the closure of seven coal plants with a total capacity of 950 MW; and
  • the impact of energy optimization and conservation on future load demand.

ABATE has indicated it will be filing a Motion for Summary Judgment seeking the dismissal of the application, asserting that Consumers Energy has not properly shown a need for a new power plant. Assuming the case is not dismissed, a schedule has been set calling for cross examination of witnesses the second week of December, and a decision by the MPSC on or before the 8th of April, the statutory deadline for a decision on the Certificate of Necessity request. See www.tinyurl.com/mpsc-conDeep Water Offshore Floating Wind Turbines Showcased On August 15 Detroit-based Charles Nordstrom, P.E. of Glosten Associates Inc. (naval architects and marine engineers out of Seattle) presented the latest design and deployment plans for the Pelastar floating wind turbine system at the Michigan Alternative and Renewable Energy Center in Muskegon.

Emphasizing the opportunity to locate near load demand, Nordstrom explained the system avoids the difficulties of offshore construction and assembly by allowing the floating platform to be build dockside, with tower, nacelle and blades attached by a land-based crane. The entire assembly is then floated to its location and tethered to the lake or sea bed. The first 6 MW demonstration project, supported by Alstom Wind, NREL, BP, Rolls-Royce, Shell, Caterpillar, and others is targeted for offshore at Cornwall, England, in late 2015. Cost of energy estimates for first generation offshore wind farms is $0.170 per kWh, and below $0.13 in the second generation design for 10 MW wind turbines. The floating platform must be in at least 50m of water depth, and can be deployed at up to 500m depth.

Cellulosic Ethanol Plant Loses Partner

Mascoma Corporation has lost a major funding source in its efforts to build a 20 million gallon ethanol plant in Kinross. Valero Energy Crop has pulled its $50 million investment in the project. An IPO for Mascoma that would have raised $100 million has been placed on hold. The company has stated it will not proceed with the project until all funding is secured.  The total cost for the facility, which has $120 million in public funding pledged, is $232 million.

Anaerobic Digester Opens at MSU

Michigan State University has commissioned an anaerobic digester to create energy for its East Lansing campus. The digester will utilize about 17,000 tons of organic waste to generate 2.8 million kilowatt hours of electricity per year. The organic material used by the system includes cow manure, food waste from several campus dining halls; fruit and vegetable waste from the Meijer Distribution Center in Lansing; and fat, oils and grease from local restaurants. It will take 20 to 30 days to digest the material in the 450,000 gallon tanks. Total cost of the project was about $5 million, and is expected to pay for itself in less than 15 years. MSU is also involved in a similar project in Costa Rica. that will provide power to a local village.

MIchigan Shorts

Orisol Energy US, Inc. of Ann Arbor has been named as one of eight wind developers eligible to participate in the upcoming lease sale of 112,8000 acres of offshore Virginia for commercial wind energy leasing  Ω  DTE Energy plans to construct a 502 kw ground-mounted solar installation in Sigel Township on farm acreage as part of its 15 MW utility-owned solar initiative  NextEnergy has its MATch (Michigan Accelerating Technologies) Energy Grant program to provide matching funds for federal gudning of advanced energy research, development, and demonstration programs

University of Michigan has received a National Science Foundation four-year, $2 Million grant to determine what combinations of algae make the most efficient fuel source Lights Out at Detroit’s Municipal Utility? The Detroit Public Lighting Department (PLD) currently serves 115 customers, including: Detroit Public Schools; Joe Louis Arena; Cobo Hall; the Detroit Institute of Arts; Wayne State University; McNamara Building Federal Building; and the city’s traffic signal system (almost 1300 intersections).

The Detroit Emergency Manager recently notified DTE Energy Company that PLD will be winding down its electricity distribution and transmission services and requested that DTE provide service to PLD’s customers. The switchover will take five to seven years, as DTE will replace the PLD grid over time. How DTE will recover the costs of the transfer and upgrades has become an issue to be decided by the MPSC in Case No. U-17427. See www.tinyurl.com/mpsc-pld

The Incredible Shrinking Renewable Energy Surcharge

Consumers Energy is asking to eliminate its authorized renewable energy surcharge beginning in July 2014. The residential charge under PA 295, was initially pegged at $2.50/month, then lowered twice to its current $0.52/month charge. Meanwhile DTE Energy has asked the Michigan Public Service Commission to lower its monthly residential renewable energy surcharge from $3/month to $0.43/month. Commercial and industrial surcharge reductions are also being requested by both utilities.

Made in Michigan Microgrid Under Development

In 2006, NextEnergy in Detroit was contracted by TARDEC and the Defense Logistics Agency to develop equipment to provide US-grid quality power in remote locations using renewable and conventional power sources. Although the project was successfully tested, it was too large and too heavy to be deployed in the field, as it required a 20-foot long container for shipping. But the concept of an intelligent management for remote power systems had been proven and the Tactical Modular Mobile Microgrid was born. TM3 Systems of Royal Oak is now working to reduce the size and commercialize the concept. The building blocks for its system are four-foot cubes capable of managing up to 360 kW of generation. By metering and controlling both inputs (generators, solar panels, and battery banks), and outputs (downstream loads), this “microgrid,” is more reliable, efficient, configurable, and controllable than a typical remote power system. It can use dissimilar power sources (fossil fuel generators, solar arrays, and batteries) to reduce fuel consumption while supplying uninterrupted power to critical assets in remote location.

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