Category: Health

Tennessee-Based Health Services Company Settles FCA Case Alleging Medicaid Fraud For $9.5 Million

The Department of Justice (“DOJ”) announced another False Claims Act (“FCA”) settlement centered around a health services company’s practice of providing unnecessary therapy services to patients in order to receive the maximum amount of reimbursement under Medicare.  The $9.5 million settlement is with Diversicare Health Services Inc, a Tennessee-based company that provides nursing and rehabilitation services at 74 locations throughout the country.  Diversicare’s alleged violations are similar to those in a medicaid fraud case settled by the DOJ for $15.4 million two weeks earlier concerning fraudulent Medicare reimbursements for unnecessary rehabilitation services.

The settlement resolves two separate qui tam FCA lawsuits filed by whistleblowers Mary Haggard and Bryant Fitzmorris, both former Diversicare employees.  Ms. Haggard will receive a whistleblower award of roughly $1.4 million, and Mr. Fitzmorris will receive $145,350.  The FCA allows private citizens who possess inside information of fraudulently billing against the United States Government to initiate a lawsuit on the Government’s behalf to recover those funds.  The citizens, known as qui tam relators, are then entitled to receive a share of any damages that the Government ultimately recovers from the litigation.

The settlement concerned Diversicare corporate policies, in use from the beginning of 2010 through the end of 2015, that specifically instructed its employees to provide patients rehabilitation treatments to receive the highest level of Medicare reimbursement, regardless of the need for, the efficacy of, or risks associated with such treatment.  Specific allegations include “instances of improper co-treatment in order to achieve minute thresholds, repetitive and unskilled exercises that did not match plan of care goals to obtain additional minutes, engaging patients in activities contraindicated by underlying medical conditions, [and] extending patient lengths of stay beyond what was medically indicated.”  In addition to the allegations of improper therapy, it was alleged that Diversicare billed Medicare for therapy services that were never in fact provided.

Additional allegations highlight the fraudulent attempts to maximize Medicare revenue, claiming that Diversicare threatened to undertake, and in some instances took, adverse employment actions against employees who failed to meet set budgetary goals and quotas. Finally, the settlement also resolves allegations of FCA violations regarding Diversicare’s Medicaid billing practices, including its submission of “forged, photocopied, or pre-signed physician signatures” on certifications necessary for Medicaid reimbursement.

Federal regulations governing the disbursement of taxpayer dollars for Medicare and Medicaid exist to both protect the patients receiving treatment, as well as the taxpayers whose dollars fund the programs.  When companies intentionally circumnavigate these regulations in search of higher revenue, they not only rip off the taxpayers but also put vulnerable populations of patients at risk with unnecessary and often dangerous treatments.  In the fiscal year 2019, the United States Government reported that using the FCA, it recovered $2.6 billion of taxpayer dollars fraudulently paid out under health care programs, including for violations such as those alleged against Diversicare.  FCA relators and the Government should continue to utilize this powerful tool to protect Medicare and Medicaid patients, as well as every United States taxpayer.

Copyright Kohn, Kohn & Colapinto, LLP 2020. All Rights Reserved.

For more Medicaid False Claims Act settlements, see the National Law Review Health Law & Managed Care section.

Preparing Your Workplace to Address Coronavirus Risks: FAQs for Employers

Employers in the United States should continue to prepare for a widespread outbreak of COVID-19, commonly referred to as the coronavirus, as new cases are confirmed daily. These preparations include assessing work-related travel (as well as employee personal travel) and implementing more expansive work-from-home policies.

Although COVID-19 is new, the steps employers should take are not unlike the approaches recommended to address the annual flu season as well as prior outbreaks such as H1N1 (the “Swine Flu”), Severe Acute Respiratory Syndrome (“SARs”) or Ebola.

Employers should carefully monitor recommendations from the U.S. Centers for Disease Control and Prevention (“CDC”) and other public health agencies in connection with the creation of workplace plans and strategies. As this is an evolving situation, best practices for the workplace will continue to develop as conditions change. Carefully tailoring an employer’s plan so as to act consistently with current public health guidance will help keep employees, patients, customers and clients safe as well as reduce an employer’s legal risks. If an employer has an on-site medical professional, partnering with such an expert regarding the implementation of such a plan is strongly advised.

What is the coronavirus and how does it spread?

The novel coronavirus causes coronavirus disease 2019 or COVID-19. Reported cases include respiratory illness with symptoms of fever, cough and shortness of breath. It is spread mainly from person to person either in close contact with each other or through the transmission of respiratory droplets when an infected person coughs or sneezes. The number of cases continues to grow, but for now, most cases continue to be mild.

What steps should employers take to reduce the risk of the coronavirus spreading in their workplaces?

There is no vaccine to prevent the coronavirus. The best way to prevent the spread of any respiratory illness in the workplace is to exercise commonsense measures. Health officials, including the CDC, recommend the following preventive measures:

  • Sick employees should stay home from work until they are free of fever, signs of a fever, or any other symptoms for at least 24 hours without the use of fever-reducing or symptom-altering medicine.
  • Wash hands vigorously with soap and water or an alcohol-based hand rub for at least 20 seconds.
  • Avoid touching one’s face, especially eyes, nose and mouth.
  • Exercise respiratory etiquette and cover one’s mouth when coughing or sneezing.
  • Clean frequently touched surfaces.
  • Maintain at least three feet of distance between oneself and others, including those who are coughing, sneezing or have a fever.

What steps should employers take to prepare for employee communications?

Employers should take steps to be prepared for communicating important health and safety information to all their employees whenever such information needs to be shared. Employers may need to reach employees while outside the workplace and outside regular working hours. Employers should ensure that they have up-to-date contact information for all employees in case health and safety updates need to be communicated. Messaging regarding the coronavirus should come from a dedicated workplace representative to avoid the sharing of conflicting information and to prevent employee confusion and undue alarm.

What employment laws should employers consider when making decisions regarding the coronavirus?

Employers should consider the Occupational Safety and Health Act (“OSH Act”), the Americans with Disabilities Act (“ADA”), Title VII of the Civil Rights Act (“Title VII”), the Pregnancy Discrimination Act (“PDA”), the Family and Medical Leave Act (“FMLA”), state workers’ compensation laws and any federal or state anti-discrimination or disability laws as employers develop plans regarding the coronavirus.

Employers have a legal obligation to provide a safe and healthy working environment free from serious recognized hazards under the OSH Act. Taking reasonable steps to prevent the spread of communicable diseases, like COVID-19, may fall under this requirement. Employers should consider potential discrimination claims that could arise under the ADA, Title VII or the PDA. The ADA protects individuals who are disabled or who are regarded as disabled. The Equal Employment Opportunity Commission (“EEOC”) has stated that while the ADA’s requirements continue to apply, they do not interfere with or prevent employers from following CDC guidelines and recommendations regarding the coronavirus. The EEOC also has indicated that its previously issued guidance regarding the H1N1 pandemic is applicable here. Similar to the EEOC’s approach during the H1N1 pandemic, employer actions that might be viewed as discriminatory under other circumstances (such as requiring an employee to remain at home for a period of time upon returning from travel to certain countries) would not run afoul of the ADA when taken to limit workplace exposure to the coronavirus. This is because either COVID-19 will not be considered a disability because the resulting illness is mild or, alternatively, if COVID-19 becomes more severe and/or widespread, an employer’s actions to limit the spread of the coronavirus will likely be deemed justified given the direct threat posed to other employees, customers, patients or the public at large.

Employers should also take care not to discriminate against employees based on their national origin. Accordingly, employers should establish consistently applied and clearly communicated practices with regard to self-quarantining of employees. For instance, consistent and science-based practices should be followed when employees return from travel to certain countries facing significant outbreaks, rather than singling out employees on an ad hoc basis who may have visited their countries of origin. Recent reports suggest a heightened concern regarding possible workplace discrimination against employees of Asian descent.

While pregnant women may be more susceptible to viral respiratory infections or severe illness, the CDC has released no guidance establishing that such individuals are more susceptible to COVID-19 than the general population. Employers should thus ensure they are not engaging in disparate treatment of pregnant employees.

In addition to discrimination concerns, employers should consider what reasonable accommodations they may need to provide employees under the ADA or the PDA.

Employers also should be prepared to grant FMLA leave to employees who test positive for (or display symptoms of) COVID-19 or who require leave to care for an individual with COVID-19.

Lastly, employees who contract COVID-19 in the scope of their employment may be entitled to make claims under their employers’ workers’ compensation policies.

Should employers cancel work-related travel?

As of March 6, 2020, the CDC recommends avoiding all nonessential travel to China, Iran, Italy and South Korea and has issued travel alerts recommending that travelers practice enhanced precautions in Japan. These travel advisories extend to layovers in the affected areas. Moreover, entries into the United States of foreign nationals who have been in China or Iran in the 14 days prior to entering the United States have been suspended in many circumstances.

Employers should consider these travel advisories when formulating their business travel plans. Many employers are suspending all business travel to the affected areas. Employers face potential risk when requiring employees to travel to areas where the CDC and other federal agencies have advised against non-essential travel. Other employers are limiting or suspending all non-essential travel or canceling in-person attendance at conferences or meetings in light of the potential spread of the coronavirus.

In assessing work-related travel plans, employers should ensure that they do not single out certain groups (e.g., limiting a pregnant employee’s travel due to the risk of exposure to the coronavirus, but allowing other employees to travel).

Should employers cancel large conferences or other community events?

Employers planning events should stay informed about local coronavirus risks. The CDC is recommending event organizers and staff review existing emergency operations plans and focus on prevention strategies, such as frequent handwashing and encouraging both staff and patrons who are sick to stay home. If events are proceeding, the implementation of flexible refund policies may help encourage sick individuals to stay home. And organizers should have supplies that help prevent the spread of viruses such as soap, hand sanitizer and facial tissue available to employees and attendees. Organizers should also establish criteria with the venue and local public health officials to determine under what specific circumstances events will be postponed or canceled.

What should employers do when they suspect an employee was exposed to the coronavirus and is symptomatic?

An employer should send such an employee home and advise him or her to seek immediate medical attention. The employee should be required to remain at home until he or she no longer displays symptoms and is not contagious. The decision to discontinue home isolation should be made on a case-by-case basis, in consultation with health care providers and state and local health departments.

Are employees sent home due to exposure to the coronavirus (self-quarantined) entitled to paid leave?

Employers typically are not legally obligated to provide paid leave to employees who are sent home due to suspected COVID-19 infection or exposure unless state or local paid sick leave laws apply. However, employers should consider allowing employees to utilize paid leave under any available employer leave policies. If the employee is able to perform his or her job remotely, and is physically able to work, employers should consider allowing remote work during such self-quarantine period, even if such remote work is not consistent with the employer’s regular practices. Employers should consult with counsel to determine whether and when to offer paid or unpaid leave to employees facing quarantine situations. And any modification of an employer’s routine policies and practices to address this unique circumstance should be implemented consistently.

What should employers do if employees travel to affected areas (currently China, Iran, Italy, South Korea and Japan ) but do not display any symptoms upon return?

Many employers are encouraging (but not requiring) self-quarantining regardless of whether the employee is symptomatic. Others are requiring employees to self-quarantine for up to 14 days (the commonly presumed incubation period for the coronavirus) after returning from these areas. As the list of affected countries continues to expand and risk levels continue to change, employers should carefully monitor and reevaluate their practices.

Requiring self-quarantining protects other employees. On the other hand, requiring self-quarantining for those who have traveled to affected areas may expose an employer to potential claims under the ADA, Title VII, or other anti-discrimination statutes, especially where a forced quarantine situation results in the employee’s loss of income or other benefits. Such legal risks may be reduced where an employee is able to work remotely and thus is compensated during the quarantine period.

When employees work from home, are they entitled to a reasonable accommodation under the ADA, the PDA or other equal employment opportunity laws?

Employees are entitled to reasonable accommodations that will enable them to perform the essential functions of their positions. For example, if an employee has been provided the accommodation of a low-vision screen reader on his or her work computer, that employee should have access to such a screen reader as a reasonable accommodation when required to work at home.

Can employers ask employees if they have traveled to one of the affected areas?

Yes. Given the ongoing travel advisories and the recommendations of the CDC and other federal agencies regarding travel to affected areas and self-quarantining to limit the spread of the coronavirus, there is likely low risk in requiring employees to disclose their recent travel destinations.

Can employers require a return to work or fitness for duty exam to allow employees to return to work?

Employees who have been diagnosed with COVID-19 should only discontinue isolation after consulting health care providers and state and local health departments. Employers may require the employee to provide proof that isolation can be discontinued before the employee returns to work.

But for employees who have not been diagnosed with COVID-19, it practically may be difficult to receive a return to work exam given that there has been a shortage of testing kits to test for COVID-19. The CDC has also recognized that health care offices may be busy and it may be difficult for an employee with acute respiratory illness to validate their illness or return to work. Employers must take care to treat employees with similar symptoms in a consistent manner.

What should an employer do if an employee fears coming to work due to possible exposure in the workplace?

Creating and implementing consistent plans for preventing and addressing potential workplace exposure and communicating such measures clearly and effectively will go a long way to reducing employee fears of workplace exposure. Employers should assess the specific risk in the workplace on a case-by-case basis. Currently, federal guidance is focused on encouraging those who are sick (or may have been exposed to the coronavirus) to stay home. In the event of a more particularized risk, such as an actual case of exposure to the coronavirus in the workplace, employers may wish to encourage (or require) working from home or offer more lenient work from home options to its employees.

Should employers inform employees if there is an identified case of COVID-19 in the workplace?

Yes. Employees should be informed of confirmed cases in the workplace. But employers must ensure that employee confidentiality is maintained as required under the ADA, the Health Insurance Portability and Accountability Act (“HIPAA”) and any other state or federal law.

Should employees be encouraged to wear face masks?

The CDC has not recommended that healthy persons wear face masks. Face masks are reported to have no benefit for a healthy person in preventing their exposure to the coronavirus, although masks may provide some benefit if worn by sick persons in limiting their spread of the virus to others. The CDC has urged people to stop buying masks because such consumer behavior is depleting necessary resources from health care professionals who need them.

What about specific guidance for health care employers?

The CDC has issued specific guidance to try to prevent the spread of the coronavirus into, among, and between health care facilities, including monitoring patients and employees for fever or respiratory systems, encouraging employees to stay home if they have symptoms of respiratory infection and identifying which employees will care for patients with COVID-19. It is critical for health care facilities to have a plan in place to respond to any outbreak. There are potentially severe risks to patients facing health challenges if they are being cared for by employees who have been exposed to the coronavirus.

Is there a special risk for employees who handle packages or products shipped from an affected area?

The CDC has issued guidance that it is unlikely that the coronavirus can spread vis-à-vis products or packaging. Some employers may nevertheless decide to offer specific personal protective equipment (“PPE”) to those employees handling packages or products from affected areas, simply in an effort to mitigate employee fear or concern. In such cases, employees should be properly trained on the use and disposal of the PPE.

What other issues may employees working abroad face?

Consular offices may be closed due to the coronavirus outbreak. Currently, field offices in Beijing and Guangzhou are closed. Such closures may delay any communications with immigration officials

© 2020 Vedder Price

For more on the coronavirus, see the National Law Review’s New Coronavirus News section.

FCA Issues Coronavirus Statement

On March 4, the UK’s Financial Conduct Authority (FCA) issued a statement on Covid-19, the novel coronavirus that originated in China in December 2019 and recently spread to Italy and Iran, among many other countries globally (the Statement).

In the Statement, the FCA explained that they are working with the Bank of England and HM Treasury to engage with firms, trade associations and industry bodies to understand the pressures they are facing. This work includes actively reviewing the contingency plans of a wide range of firms.

The FCA noted that all firms are already expected to have contingency plans in place to deal with major events such as this and that firms should be taking all reasonable steps to meet their regulatory obligations. While the FCA has no objection in principle to staff working from home or from alternative sites, firms still need to be able to, for example, use recorded lines when trading and give staff access to any compliance support they may need.

The Statement is available here.

©2020 Katten Muchin Rosenman LLP

Coronavirus – Further Updates on Travel Impact

As the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO) continue to monitor the current and potential impact of the coronavirus (COVID-19) in the United States and worldwide, the CDC and the Department of State (DOS) have updated their travel guidance by issuing warnings about new countries and raising the threat levels of previously named countries. Further, President Trump has issued a proclamation that temporarily suspends entry to the United States for foreign nationals who have been physically present in Iran within the last 14 days. We outline below the current travel advisories and will continue to provide updates as new information becomes available.

Iran:

The CDC issued a Travel Advisory alert on Iran at the Warning—Level 3 category, recommending that travelers avoid all nonessential travel.

On February 29, 2020, through a Presidential Proclamation, the U.S. government announced that effective today, March 2, 2020, at 5:00 p.m. eastern time, that it was suspending entry of foreign nationals, both immigrants and nonimmigrants, who were physically present in Iran within the last 14 days preceding their entry into the United States.

Italy:

The CDC issued a Travel Advisory alert on Italy at the Warning—Level 3 category, recommending that travelers avoid all nonessential travel. DOS maintains a Level 3 Advisory for Italy as well.

The most affected regions are Lombardy and Veneto (North Italy, Milan consular district). On February 23, 2020, the U.S. Embassy in Rome issued a Health Alert, stating that the U.S. Consulate General in Milan has suspended routine visa services until March 2, 2020. Given the continued health concerns, we expect an updated advisory shortly. However, at this time, full consular services are available at the U.S. Embassy in Rome and the U.S. Consulates General in Florence and Naples.

China:

The CDC has raised the Travel Advisory level for China to a Warning—Level 3 category, recommending that travelers avoid all nonessential travel. DOS has raised the Travel Advisory to Level 4 advising that individuals not travel to China, and to be prepared for the possibility of travel restrictions with little to no advanced notice.

The previous warnings related to China under the Presidential Proclamation, effective February 2, 2020, remain in effect. Foreign nationals who have visited China in the last 14 days may not enter the United States, and American citizens and lawful permanent residents who have been to China in the past 14 days will undergo health screenings at a prescribed list of airports. Depending on their history, individuals may receive additional travel prescriptions.

South Korea:

The CDC has raised the Travel Advisory level for South Korea to a Warning—Level 3 category, recommending that travelers avoid all nonessential travel. DOS maintains a Level 3 Advisory for South Korea as well.

Japan:

The CDC added Japan to the Travel Advisory alerts at Alert—Level 2. The CDC recommends that high-risk travelers practice enhanced precautions. As of February 21, 2020, the U.S. Embassy in Tokyo continues to provide all consular services.

Hong Kong:

The CDC has maintained a Travel Advisory level of Watch—Level 1 (Practice Usual Precautions) for Hong Kong. DOS increased the Hong Kong Travel Advisory to Level 2 (Exercise Increased Caution). Further, the U.S. Consulates in Hong Kong and Macau recommend that anyone with a pending consular appointment who resides in China, has traveled to China recently, or intends to travel to China prior to their planned trip to the United States, postpone their visa interview appointment until 14 days subsequent to their departure from China.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

ARTICLE BY Danielle A. Porter of Mintz.
For more on coronavirus developments see the National Law Review Health Law & Managed Care section.

EPA Registers New Uses for Existing Products to Help Reduce the Spread of Candida auris

On February 12, 2020, the U.S. Environmental Protection Agency (EPA) announced the availability of 11 products that have been approved for use to disinfect surfaces against the emerging multidrug-resistant fungus Candida auris (C. auris).  C. auris can cause severe infections and spreads easily among hospitalized patients and nursing home residents.  The 11 products are approved for use against C. auris to disinfect surfaces in hospitals, nursing homes, and other healthcare facilities, to help reduce patient infections.  There were no antimicrobial pesticide products registered specifically for use against C. auris prior these new use registrations.

EPA worked in collaboration with the Centers for Disease Control and Prevention (CDC) and other federal partners to ensure that the products would be effective against C. auris.  Previously, on October 16, 2019, EPA had granted public health exemptions under the provisions of section 18 of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) as amended, to the CDC, for uses of antimicrobial products, on hard, nonporous surfaces in healthcare settings for disinfection from C. auris.

The 11 products that are now registered for use against C. auris are:

  •  Avert Sporicidal Disinfectant Cleaner (EPA Reg. No. 70627-72);
  •  Blondie (EPA Reg. No. 67619-24);
  •  Dagwood (EPA Reg. No. 67619-25);
  •  Micro-Kill Bleach Germicidal Bleach Wipes (EPA Reg. No. 37549-1);
  •  Oxivir 1 (EPA Reg. No. 70627-74);
  •  Oxivir 1 Wipes (EPA Reg. No. 70627-77);
  •  Oxivir Wipes (EPA Reg. No. 70627-60);
  •  Oxycide™ Daily Disinfectant Cleaner (EPA Reg. No. 1677-237);
  •  Virasept (EPA Reg. No. 1677-226);
  • Wonder Woman Formula B Germicidal Wipes (EPA Reg. No. 9480-12); and
  •  Wonder Woman Formula B Spray (EPA Reg. No. 9480-10).

Because there are few products with C. auris claims at this time, CDC and EPA have identified additional products that are effective against C. auris. Although these products do not yet have formal EPA-registered claims for C. auris, testing at CDC has confirmed they are effective against C. auris.  The label on the product will not include instructions for C. auris.  CDC guidance states to “follow the instructions provided for C. albicans, if included, or else follow those for fungicidal activity.” These products include:

  •  Oxivir TB Spray (EPA Reg. No. 70627-56); and
  •  PDI Super Sani-Cloth (EPA Reg. No. 9480-4).

The CDC Guidance further states that, if none of the above-listed products are available, or any of the EPA-registered products that are newly approved for the specific claims against C. auris, CDC recommends use of an EPA-registered hospital-grade disinfectant effective against Clostridioides difficile spores, because CDC believes these products have been used effectively against C. auris (List K).

Additional information on C. auris is available on EPA’s website and CDC’s website.

©2020 Bergeson & Campbell, P.C.

For more on EPA disinfectant registrations, see the National Law Review Environmental, Energy & Resources section.

JUUL Faces New Lawsuit Over Marketing Tactics

Marketing to youth has long been part of the tobacco industry’s strategy to keep a steady influx of customers. However, since the Joe Camel lawsuit in 1997, tobacco companies have increasingly been under fire for targeting underage consumers. Most disavow these intentions, but from time to time, a company will draw attention to these kinds of tactics. Most recently, the vaping pioneer, JUUL, has been pinpointed.

Despite assertions that they had never marketed their products to children or teenagers, a recent New York Times article reports that JUUL purchased ad space on youth-centered websites like Nickelodeon, the Cartoon Network, Seventeen magazine, and educational sites for students as young as middle school.

This report highlights a new lawsuit filed by the Massachusetts attorney general, Maura Haley, on February 12, 2020. The suit indicates that JUUL was targeting underage demographics during its early launch period between June 2015 and early 2016.

Efforts to target this demographic were deliberate according to the lawsuit. JUUL rejected an initial marketing proposal that aimed to attract adult smokers by using vintage 1980s technology. Instead, they produced a campaign featuring youthful models and sought to enlist millennials, Gen Z celebrities, and Instagram influencers to increase appeal to younger consumers.

“This is the first real window into JUUL’s original marketing plan, and what it did to target our kids — target our kids. That’s what we’re talking about,” Healey said at a press conference. “JUUL’s own documents show that the company intentionally chose fashionable models and images that appeal to young people for its ads. They tried to recruit celebrities and social media influencers like Miley Cyrus and Kristen Stewart to promote its products. It purchased ad space and websites for kids, such as Nickelodeon, Seventeen, and Cartoon Network. It’s sold and shipped e-cigarettes to underage kids in Massachusetts through its website. And it worked.”

Equally – if not more – troubling are charges that these ads were placed in paid advertising positions across a wide range of websites intended for underage audiences. Sites include:

Educational sites: basic-mathematics.com, mathplayground.com, mathway.com, onlinemathlearning.com, and purplemath.com, socialstudiesforkids.com, and schcollegeconfidential.com

Gaming sites for young girls: dailydressupgames.com, didigames.com, forhergames.com, games2girls.com, girlgames.com, and girlsgogames.com

General game and craft sites for young children: allfreekidscrafts.com, hellokids.com, and kidsgameheroes.com

The report also alleges that JUUL had given e-cigarettes to consumers who provided high school students’ email addresses.

Campaign for Tobacco-Free Kids, among other national anti-smoking organizations applauded the lawsuit. Matthew Myers, president of the organization, commented that “What is remarkable is the extent to which a single company, drove this train and the extent to which the decisions of that company were knowing, conscious and intentional with disregard for the health and safety of our kids.”

JUUL executives have yet to address the specific charges in the complaint. Company spokesperson Austin Finan has only commented that, “While we have not yet reviewed the complaint, we remain focused on resetting the vapor category in the U.S. and earning the trust of society by working cooperatively with attorneys general, regulators, public health officials, and other stakeholders to combat underage use and transition adult smokers from combustible cigarettes.”

Public sentiment has turned against JUUL as more information comes to light about the dangers of vaping and concern over what has been called “an epidemic” of underage vaping by the federal government. According to a 2019 CDC study, e-cigarette use was reported at 27.5% among high school students and 10.5% among middle school students. The company has strongly rejected claims that it has focused its marketing on youth and maintains its position that its sole goal is to help adult smokers transition to a safer option.

 

COPYRIGHT © 2020, STARK & STARK

For more on tobacco/vape product regulation, see the National Law Review Biotech, Food & Drug Law section.

Coronavirus and the Workplace: What Employers Need To Know

News that multiple cases of the newly-identified 2019 Novel Coronavirus have reached the United States have prompted employers to think about employee safety and ways to address disease prevention in the workplace. Although, according to the Occupational Safety and Health Administration (OSHA), “most American workers are not at significant risk of infection” at this time, the situation is evolving, and it is never too early for employers to consider how they can address employee concerns, help prevent an outbreak, or address one if it occurs. Employers should also be aware of legal pitfalls that they may encounter when attempting to protect their employees from the virus.

The following addresses some of the key questions employers may have regarding the Coronavirus threat.

What is the Coronavirus and How Is It Transmitted?

At this point, relatively little is known about the 2019 Novel Coronavirus, more commonly known as the “Coronavirus.” According to the CDC, the initial reports of the illness originated in Wuhan, China, where people likely contracted the virus from animals at a seafood and animal market. Experts now believe that the virus is spreading from human-to-human when an infected person coughs or sneezes, similar to the spread of a cold or flu. However, it is still too early to know how easily the virus is transmitted between people.

What Are the Primary Symptoms of the Coronavirus?

In the confirmed cases of Coronavirus thus far, affected individuals have reported mild to severe respiratory symptoms, fever, cough, shortness of breath, and breathing difficulties. In severe cases, the virus has led to pneumonia, kidney failure, and, in at least 100 deaths (presently, all in China), as of the time of this writing.  The CDC believes at this time that symptoms may appear within two to fourteen days after exposure.  However, some infected individuals have shown little to no symptoms.

How Can Spread of the Coronavirus Be Prevented?

Because there is presently no Coronavirus vaccine available, the CDC is recommending standard precautions to avoid the spread of respiratory viruses, such as washing hands with soap and water for at least 20 seconds, or, if soap is not available, using hand sanitizer; avoiding close contact with people who are sick; staying at home when you are sick; and disinfecting frequently touched objects and surfaces.

What If My Employees Travel to China For Business?

As of January 27, 2020, the CDC has issued a level 3 health travel notice (the highest threat level) recommending that people avoid all nonessential travel to China.

Employers whose employees travel to and from China should keep in mind the following:

  • Consider whether to limit business travel to affected areas. While the current CDC travel notice does not specifically define “nonessential travel,” the General Duty Clause of the Occupational Safety and Health Act (OSHA) requires employers to furnish “employment and a place of employment which are free from recognized hazards that are causing or likely to cause the death or serious physical harm to … employees.”  Although the Occupational Safety and Health Administration (also referred to as OSHA) has not promulgated specific standards covering the Coronavirus, requiring employees to engage in nonessential business travel to China (or any other areas in which the risk of contagion is heightened) could create risk under the General Duty Clause, particularly in light of the CDC warning against nonessential travel.  For that reason, employers whose business may involve travel to China (or other areas that become subject to travel restrictions or otherwise experience an increase in the spread of the virus) should consider other available options for employees for the duration of the threat, such as videoconferencing.

By the same token, employers should also be prepared to respond to employees who may express concerns about traveling to affected areas due to the virus.  While an employer generally has broad discretion to decide the duties and requirements of a job and to discipline employees who fail to fulfill those requirements, as a practical matter employers may wish to consider offering employees reasonable alternatives to such travel.

Finally, while employers may implement restrictions on work-related travel to affected areas, employers should tread more carefully when attempting to police personal, non-work-related travel. That said, recent decisions in the Seventh, Eighth, and Eleventh Circuits have held that the disability discrimination protections of the ADA do not apply where an employer takes an employment action based on the potential for an employee to become ill and disabled in the future.  Specifically, the Eleventh Circuit found no liability under the ADA where an employer terminated an employee who requested time off to travel to Ghana to visit family because of the perceived risk that the employee would contract the Ebola virus, due to recent outbreaks of the disease in neighboring countries.  While courts have tended to take this view, it is worth noting that the EEOC has argued on at least one occasion that an employer acting on a potential future health condition may be viewed as “regarding” an employee as disabled as long as the condition otherwise qualifies as a disability under the law.  For this reason, employers should consider the risks with imposing a ban on personal, non-work-related travel to affected areas.

  • Provide relevant safety information to employees. Employers whose employees travel to affected areas should provide information to their employees about how the Coronavirus is transmitted, its symptoms, and how to avoid exposure – utilizing trusted and reputable sources such as the CDC. Employers would be well advised to also provide these employees with resources and contact information for local health departments and the CDC.
  • Understand that employee travel may be interrupted. The Chinese government has closed transit within and out of Wuhan and certain other areas of the Hubei Province. Hong Kong has also imposed certain restrictions on travel to and from the Chinese mainland. The United States is also re-routing passengers from Wuhan, China to certain designated airports (including Chicago O’Hare, Atlanta, New York JFK, Los Angeles, and San Francisco) for enhanced screening. While screening for common viruses usually takes several hours, officials have indicated that those suspected of having the Coronavirus could be delayed for up to a day if additional screening is needed.

What Should I Do if an Employee Has Recently Traveled to China or Otherwise May Have Been Exposed to the Coronavirus?

Employers should remember that the Americans with Disabilities Act (ADA) places certain restrictions on the kinds of inquiries that can be made into an employee’s medical status. Specifically, the ADA prohibits employers from making disability-related inquiries and requiring medical examinations, unless (1) the employer can show that the inquiry or exam is job-related and consistent with business necessity, or (2) where the employer has a reasonable belief that the employee poses a direct threat to the health or safety of the individual or others that cannot otherwise be eliminated or reduced by reasonable accommodation.

According to Pandemic Preparedness Guidance published in 2009 by the Equal Employment Opportunity Commission (EEOC) in the midst of the H1N1 influenza outbreak, whether a particular outbreak rises to the level of a “direct threat” depends on the severity of the illness.  Employers should look to the most up-to-date assessments being made by the CDC or other public health authorities, as they relate to the employer’s location, to determine the severity level of an illness and, in turn, whether an employee who potentially has been exposed to the illness may constitute a “direct threat.”  Employers should not rely on speculation or unofficial information when making determinations about whether there is a direct threat.  At the moment, the CDC is not classifying the Coronavirus as a pandemic and has not issued a heightened threat level for the United States.  However, the situation continues to rapidly evolve and we will provide updates should additional guidance be released by the CDC or other public health officials on this important issue.

All this being said, employers should keep in mind the following when it comes to employees who have traveled to affected areas:

  • Employers need not wait until an employee returning from travel develops symptoms to inquire about exposure to the Coronavirus. Inquiring about whether an employee has traveled to an affected area or about possible exposure to a contagious illness during such travel would not constitute a disability-related inquiry.  However, as discussed below, the extent to which an employer may act on the information received will depend on the most recent information available from the CDC or other public health officials.  Further, employers inquiring into whether employees have traveled to affected areas should do so of all employees known or believed to have recently traveled, rather than directing such inquiries only to employees of certain races, ethnicities, or national origins. Finally, employers should be mindful to keep confidential all medical-related information received from an employee, in accordance with the ADA.
  • Under certain circumstances, employers may require employees who have traveled to areas affected by serious health threats to stay home. If the CDC or other local public health officials recommend that people who visit specified locations remain at home for several days until it is clear they do not have illness symptoms, an employer may require an employee who traveled to an affected area to remain out of work for the suggested period of time.  While presently the CDC states that individuals who may have been in close contact with someone with the Coronavirus may continue with their daily activities so long as they are not showing any symptoms, employers should continue to monitor the CDC website for further developments. In the absence of a CDC directive that employees who have traveled to affected areas stay at home, an employer who is considering requiring such employees to remain home, they should consult with counsel.

What Other Things Should Employers Be Thinking About When it Comes to the Coronavirus?

  • Employers may – and should – send employees home if they exhibit potential symptoms of contagious illnesses at work. The EEOC has said that sending an employee home who displays symptoms of contagious illness would not run afoul of the ADA’s restrictions on disability-related actions because: (i) if the illness ultimately turns out to be relatively mild or “run of the mill” (such as seasonal influenza), then it would not have constituted a covered disability in the first place; and (ii) if the illness does turn out to be severe (such that it may constitute a disability under the law), then the actions would be warranted under a direct threat analysis. In either case, an employer can send an employee home who is displaying symptoms of contagious illness, even if this is against the employee’s wishes.  Employers should also consider making clear in their policies that employees who have symptoms of a potential contagious illness must not report to work while they are sick.
  • Determine whether the FMLA or other leave laws may apply. An employee who is experiencing a serious health condition or who requires time to care for a family member with such a condition may be entitled to take unpaid leave under the federal Family and Medical Leave Act (FMLA) or state-law analogues.  Employees may also be eligible for leave as a reasonable accommodation under the ADA or related state or local law, if the underlying condition constitutes a qualifying disability.  However, employees generally are not entitled to take FMLA or reasonable accommodation leave to stay at home to avoid getting sick (though an exception may exist where a preexisting medical condition is likely to be worsened by exposure to a contagious disease). Furthermore, employees in certain jurisdictions may be entitled to paid sick leave if needed to care for themselves or a sick family member in the event of an illness, or if their workplace or a child’s school or day care is closed due to a public health emergency.
  • Consider whether OSHA requirements may apply. While, as noted above, OSHA has not promulgated specific standards covering the Coronavirus, it has issued a notice indicating that employers should be aware of the following general standards to which employers may be subject under OSHA:
    • General Duty Clause: As discussed above, the OSHA General Duty Clause requires employers to furnish “a place of employment which [is] free from recognized hazards that are causing or likely to cause the death or serious physical harm to … employees.” To that end, there are some readily achievable steps that employers can take to prevent the spread of the Coronavirus (and other contagious illnesses) within the workplace, such as: providing hand sanitizer to employees, ensuring that surfaces and eating areas are disinfected regularly, and encouraging employees who are sick to stay home. Employers also may start to consider certain policy changes they may wish to implement in response to the Coronavirus should the situation become more severe in the U.S., such as allowing employees to work from home.
    • Personal Protective Equipment: OSHA requires that protective equipment, clothing, and barriers be provided whenever it is necessary to prevent employees from being exposed to environmental hazards. Employers are required to assess the workplace, determine if hazards are present, and if so, select and have employees use protective equipment. Employers whose employees may encounter individuals infected with the Coronavirus, such as those in the healthcare and travel industries, should begin to consider what protective equipment would be necessary to protect its workforce should the virus begin to spread within the United States.
    • Recordkeeping and Reporting Requirements: OSHA requires that certain employers keep a record of certain work-related illness and injuries (often referred to as an OSHA Form 300 log). While there is a regulatory exemption for recording instances of the standard cold and flu, OSHA has deemed the 2019 Novel Coronavirus a recordable illness when a worker is infected on the job. In addition, certain employers may be subject to reporting requirements under state and local law if they have a reasonable belief that a significant disease is present in the workplace.
    • Employers in Higher-Risk Industries: While, again, OSHA has yet to issue any standards or controls specific to Coronavirus, employers operating in industries where employees may be at a potential increased risk of exposure should prepare for the possibility that heightened requirements may be put in place. In the past, OSHA has issued such guidance for employers in industries such as healthcare, airlines, and mortuary services, such as during the MERS outbreak in 2015.

*          *          *

Information about the Coronavirus is constantly developing, so employers also should continue to refer to the CDC, WHO, and OSHA websites for the latest on appropriate precautions, including changes to travel notices.  Of course, we will continue to monitor this situation and report on any updates as they develop.

© 2020 Proskauer Rose LLP.

The Shell Game Played with Your DNA, or 23 and Screwing Me

So you want to know how much Neanderthal is in your genes.

You are curious about the percentage of Serbo-Croatian, Hmong, Sephardim or Ashanti blood that runs through your veins. Or maybe you hope to find a rich great-aunt near death, seeking an heir.

How much is this worth to you?  Two hundred bucks? That makes sense.

But what about other costs:

– like sending your cousin to prison for life (and discovering that you grew up with a serial killer)?

– like all major companies refusing to insure you due to your genetic make-up?

— like ruining your family holidays when you find that your grandfather is not really genetically linked to you and grandma had been playing the field?

– like pharma companies making millions using your genetic code to create new drugs and not crediting you at all (not even with discounts on the drugs created by testing your cells)?

– like finding that your “de-identified” genetic code has been re-identified on the internet, exposing genetic propensity for alcoholism or birth defects that turn your fiancé’s parents against you?

How much are these costs worth to you?

According to former FDA commissioner Peter Pitts, writing in Forbes, “The [private DNA testing] industry’s rapid growth rests on a dangerous delusion that genetic data is kept private. Most people assume this sensitive information simply sits in a secure database, protected from hacks and misuse. Far from it. Genetic-testing companies cannot guarantee privacy. And many are actively selling user data to outside parties.” Including law enforcement.

Nothing in US Federal health law protects the privacy of DNA test subjects at “non-therapeutic” labs like Ancestry or 23andMe. Information gleaned from the DNA can be used for almost anything.  As Pitts said, “Imagine a political campaign exposing a rival’s elevated risk of Alzheimer’s. Or an employer refusing to hire someone because autism runs in her family. Imagine a world where people can have their genomic building blocks held against them. Such abuses represent a profound violation of privacy. That’s an inherent risk in current genetic-testing practices.”

Genetic testing companies quietly, and some would argue without adequate explanation of facts and harms which are lost in a thousand words of fine print that most data subjects won’t read, push their customers to allow genetic testing on the customer samples provided. Up to 80% of 23andMe customers consent to this activity, likely not knowing that the company plans to make money off the drugs developed from customer DNA. Federal laws require labs like those used by 23andMe for drug development to keep information for more than 10 years, so once they have it, despite rights to erasure provided by California and the EU, 23andMe can refuse to drop your data from its tests.

Go see the HBO movie starring Oprah Winfrey about medical exploitation of the cell lines of Henrietta Lacks, or better yet, read the bestselling book it was based on. Observe that an engaging, vivacious woman who couldn’t afford health insurance was farmed for a line of her cancer cells that assisted medical science for decades and made millions of dollars for pharma companies without any permission from or benefit to the woman whose cells were taken.  Or any benefit to her family once cancer killed her. Companies secured over 11,000 patents using her cell lines. This is the business model now adopted by 23andMe. Take your valuable data under the guise of providing information to you, but quietly turning that data into profitable products for their shareholders’ and executives’ benefit. Not to mention that 23andMe can change its policies at any time.

As part of selling your genetic secrets to the highest bidder, 23andMe is constantly pushing surveys out to its customers. According to an article in Wired, 23andMe Founder Ann Wojcicki said, “We specialize in capturing phenotypic data on people longitudinally—on average 300 data points on each customer. That’s the most valuable by far.” Which means they are selling not only your DNA information, but all the other data you give them about your family and lifestyle.

This deep ethical compromise by 23andMe is personal for me, and not because I have sent them any DNA samples – I haven’t and I never would. But because, when questioned publicly about their trustworthiness by me and others close to me, 23andMe has not tried to explain its policies, but has simply attacked the questioners in public. Methinks the amoral vultures doth protest too much.

For example, a couple of years ago, my friend, co-author and privacy expert Theresa Payton noted on a Fox News segment that people who provide DNA information to 23andMe do not know how such data will be used because the industry is not regulated and the company could change its policies any time. 23andMe was prompt and nasty in its response, attacking Ms. Payton on Twitter and probably elsewhere, claiming that the 23andMe privacy policy, as it existed at the time, was proof that no surprises could ever be in store for naïve consumers who gave their most intimate secrets to this company.

[BTW, for the inevitable attacks coming from 23andMe and their army of online protectors, the FTC endorsement guidelines require that if there is a material connection between you and 23andMe, paid or otherwise, you need to clearly and conspicuously disclose it.]

Clearly Ms. Payton was correct and 23andMe’s attacks on her were simply wrong.

Guess what? According to the Wall Street Journal, 23andMe sold a $300 MM stake in itself to GlaxoSmithKline recently and, “For 23andMe, using genetic data for drug research ‘was always part of the vision,’ according to Emily Drabant Conley, vice president and head of business development.” So this sneaky path is not even a new tactic. According to the same WSJ story, “23andMe has long wanted to use genetic data for drug development. Initially, it shared its data with drug makers including Pfizer Inc. and Roche Holding AG ’s Genentech but wasn’t involved in subsequent drug discovery. It later set up its own research unit but found it lacked the scale required to build a pipeline of medicines. Its partnership with Glaxo is now accelerating those efforts.”

And now 23andMe has licensed an antibody it developed to treat inflammatory diseases to Spanish drug maker Almirall SA. “This is a seminal moment for 23andMe,” said Conley. “We’ve now gone from database to discovery to developing a drug.” In the WSJ, Arthur Caplan, a professor of bioethics at NYU School of Medicine said “You get this gigantic valuable treasure chest, and people are going to wind up paying for it twice. All the people who sent in DNA will be paying the same price for any drugs that are developed as anybody else.”

So this adds another ironic dimension to the old television adage, “You aren’t the customer, you are the product.” You pay to provide your DNA – the code to your entire physical existence – to a private company. Why? Possibly because you want information that may affect your healthcare, but in all likelihood you simply intend to use the information for general entertainment and information purposes.

You likely send a swab to the DNA company because you want to learn your ethnic heritage and/or see what interesting things they can tell you about why you have a photic sneeze reflex, if you are genetically inclined to react strongly to caffeine, or if you are carrier of a loathsome disease (which you could learn for an additional fee). But the company uses the physical cells from your body not only to build databases of commercially valuable information, but to develop drugs and sell them to the pharmaceutical industry. So who is the DNA company’s customer? 23andMe and its competitors take physical specimens from you and sell products made from those specimens to their real customers, the drug companies and the data aggregators.

These DNA processing firms may be the tip of the spear, because huge data companies are coming for your health information. According to the Wall Street Journal,

“Google has struck partnerships with some of the country’s largest hospital systems and most-renowned health-care providers, many of them vast in scope and few of their details previously reported. In just a few years, the company has achieved the ability to view or analyze tens of millions of patient health records in at least three-quarters of U.S. states, according to a Wall Street Journal analysis of contractual agreements. In certain instances, the deals allow Google to access personally identifiable health information without the knowledge of patients or doctors. The company can review complete health records, including names, dates of birth, medications and other ailments, according to people familiar with the deals.”

And medical companies are now tracking patient information with wearables like smartwatches, so that personally captured daily health data is now making its way into these databases.

And, of course, other risk issues affect the people who provide data to such services.  We know through reporting following the capture of the Golden State Killer that certain genetic testing labs (like GEDMatch) have been more free than others with sharing customer DNA with law enforcement without asking for warrants, subpoenas or court orders, and that such data can not only implicate the DNA contributors but their entire families as well. In addition, while DNA testing companies claim to only sell anonymized data, the information may not remain that way.

Linda Avey, co-founder of 23andMe, concedes that nothing is foolproof. She told an online magazine, “It’s a fallacy to think that genomic data can be fully anonymized.” This articles showed that researchers have already re-identified people from their publicly available genomic data. For example, one 2013 study matched Y-chromosome data with names posted in places such as genealogy sites. In another study that same year, Harvard Professor Latanya Sweeney re-identified 84 to 97 percent of a sample of Personal Genome Project volunteers by comparing gender, postal code and date of birth with public records.

A 2015 study re-identified nearly a quarter of a sample of users sequenced by 23andMe who had posted their information to the sharing site openSNP. “The matching risk will continuously increase with the progress of genomic knowledge, which raises serious questions about the genomic privacy of participants in genomic datasets,” concludes the paper in Proceedings on Privacy Enhancing Technologies. “We should also recall that, once an individual’s genomic data is identified, the genomic privacy of all his close family members is also potentially threatened.” DNA data is the ultimate genie, that once released from the bottle, can’t be changed, shielded or stuffed back inside, and that threatens both the data subject and her entire family for generations.

And let us not forget the most basic risk involved in gathering important data. This article has focused on how 23andMe and other private DNA companies have chosen to use the data – probably in ways that their DNA contributing customers did not truly understand – to turn a profit for investors.  But collecting such data could have unintended consequences.  It can be lost to hackers, spies or others who might steal it for their own purposes.  It can be exposed in government investigations through subpoenas or court orders that a company is incapable of resisting.

So people planning to plaster their deepest internal and family secrets into private company databases should consider the risks that the private DNA mills don’t want you to think about.

Copyright © 2020 Womble Bond Dickinson (US) LLP All Rights Reserved.

For more in health data privacy, see the National Law Review Health Law & Managed Care section.

Coronavirus Spreads from China, Increasing Risks

Originating in the Chinese city of Wuhan, a coronavirus known as 2019-nCoV has spread quickly this month, migrating to multiple other countries as international health officials rush to contain its spread and calm fears. But the spread of the virus—and China’s response—is already having major impacts on businesses both within the country and around the world.

A member of the same family as SARS and MERS, the virus presents similar symptoms as flu or pneumonia. So far, the coronavirus outbreak has killed 17 people and has sickened at least 600 people across China alone. This week, a man in Washington State returning from a visit to Wuhan became the first identified case in the United States. He is reportedly in stable condition and in isolation. Other cases have been reported in Hong Kong, Macao, Japan, South Korea, Thailand, Singapore and Vietnam.

On Tuesday, the Chinese government upgraded the classification of the virus to a Class B infectious disease, giving the government the power to take more serious steps to limit its spread. These include imposing travel restrictions in and out of Wuhan and several nearby cities, with more restrictions pending, which could effectively impose a quarantine over 25 million people. Wuhan’s railway stations, buses and subway were shut down this week, as were several highways out of the city, and hundreds of flights from the city’s international airport were reportedly cancelled.

Additionally, China has begun banning all large gatherings and cancelling public events in major cities, including Beijing. As the country prepares to celebrate the Lunar New Year—when millions travel home out of major cities and/or attend large public celebrations for the holiday—this will likely cause major disruptions for people and businesses. China’s largest investment bank, CITIC Securities, even told its employees in the Hubei province (of which Wuhan is the capital) not to travel home for the holiday, and if they did, that they would be forced to work remotely for two weeks before they could return to the office. Macao—which has one documented case of the coronavirus thus far—has cancelled a public New Year’s festival, and is considering shutting down its casinos (a huge part of the region’s economy) if more cases are discovered.

When outbreaks like the coronavirus occur, companies can protect their business and employees by reviewing existing policies and looking into additional coverage to fill gaps. As Risk Management previously wrote, even limited disease outbreaks can have major impacts on businesses, especially those in the health care industry or operating overseas. Companies may have particular cause for concern about the risks of business interruption and supply chain issues stemming from quarantines, travel disruptions and major event cancellations. For example, many U.S. pharmaceutical companies have moved their drug and medical supply manufacturing to China, and these operations can be affected by health crises.

As the disease has spread internationally, staff operating in areas with documented cases and traveling employees may also face risk of infection. In addition to the travel restrictions China has instituted in various regions, airports around the world have started instituting special screening for passengers from China, possibly further complicating travel. In fulfilling their duty of care to traveling employees, companies have a number of insurance options including foreign voluntary workers compensation or business travel accidental death and dismemberment coverage, and should take the opportunity to review existing coverage and assess any potential gaps moving forward. Pre-trip preparation and training can also help. Ensuring that employees have the resources and knowledge to find in-country medical care or a concrete evacuation plan prior to traveling can also help protect them in a crisis.

Risk Management Magazine and Risk Management Monitor. Copyright 2020 Risk and Insurance Management Society, Inc. All rights reserved.

For more global health issues, see the National Law Review Health Law & Managed Care section.

Pennsylvania Liquor Control Board Tackles Wine Slushie Sales by Restaurant Licensees

Ever since beer distributors in Pennsylvania were permitted to sell growlers for off-premises consumption, which is loosely interpreted as a closed container by the Pa.L.C.B., there has been an influx of beer distributors installing slushie machines and selling malt beverage slushies. Now, are wine slushies fair game?

In a recent Legal Advisory Opinion from the Pa.L.C.B., a question was presented as to whether Pennsylvania restaurant licensees that hold an additional Wine Expanded Permit (“WEP”) can sell wine to go in a container with a sealed lid.

Specifically, the question related to whether a WEP permits the sale of wine slushies to go in a sealed container.

As a bit of background, a WEP can be obtained by any restaurant licensee in Pennsylvania and permits the sale of wine, or wine-based drinks, for off-premises consumption. The sales of wine cannot exceed 3,000 milliliters in a single transaction (typically 4 bottles of wine), similar to the 192-fluid ounce (two six-packs) limitation for off-premises beer sales by a restaurant licensee. The sale of wine and beer can occur during the same transaction so long as the respective volume limitations are met for each product. Interestingly, the statute authorizing the issuance of the WEP to restaurant licensees does not have any limitations on the sale of wine to go, other than that the sale prices must not be less than what the licensee paid for the product from the Pa.L.C.B.

Now that we have covered the law related to a WEP, what was the Pa.L.C.B.’s response to the question in the Legal Advisory Opinion?

The Pa.L.C.B. stated that, because there are no other limitations for a WEP other than selling 3,000 milliliters or less in a single transaction, a WEP holder can sell wine slushies to go in any container, and are not limited to sales of wine in the container it was purchased by the WEP holder. This would permit wine, or any other wine-based drinks without any other alcohol mixed in, to be poured in a cup with or without a lid and sold for off-premises consumption as long as the volume does not surpass 3,000 milliliters in a single transaction.

It is important to note, however, that your local municipality may have open container rules that the licensee or its consumers must follow. With the proliferation of malt beverage slushie sales at beer distributors, I have to imagine this is something the municipalities have dealt with and are aware of. As far as Pennsylvania state law, this legal opinion clearly permits WEP holders to serve wine or wine cocktails (without liquor) in “to go” containers.

Additionally, the Pennsylvania Liquor Code generally prohibits the fortification or adulteration of any liquor, which includes wine.

The Pa.L.C.B. will permit the mixing or infusing of liquor or wine, but such mixtures or infusions, which are mixed in large volumes, must be discarded at the end of the business day. The Pa.L.C.B. has issued numerous advisory opinions stating that adding ice or water to create malt beverage slushies in the slushie machine would be adulterating the original product, but it appears this Legal Advisory Opinion permits WEP holders to serve wine-based drinks for off-premises consumption. In fact, there have been previous opinions that Distributor licensees were not permitted to mix because they are not permitted to have on-premises sales, which restaurant licensees are permitted to do. Therefore, if a WEP holder must add ice or water to the slushie machine to freeze the wine to make wine slushies, it must be discarded daily at the end of the business day (11 p.m. for WEP sales). To the extent that the slushie, or wine cocktail, is a single-serve preparation, those products can be sold in any container for off-premises consumption to the extent permitted by local ordinance.

Finally, because slushie machines have been determined to be “dispensing systems” (like a malt beverage draft system) they must be cleaned in conformance with the Pennsylvania Liquor Code, which requires weekly cleaning depending on the system you are operating.

©2020 Norris McLaughlin P.A., All Rights Reserved

For more liquor licensing updates, see the National Law Review Biotech, Food & Drug law page.