Category: Labor & Employment

Better Late than Never, Just About – UK Government Issues Workplace Guidance on Living with COVID

So with Covid 19 now officially behind us for all purposes (except actual reality, obviously), we have now been graced by the Government’s new “Living with Covid” guidance.  This was due to come into force on 1 April and was released fashionably late in the afternoon on, well, 1st April.  You could say with some justification that this did not give employers much time to prepare, but that is OK because on close review of the guidance there is in fact very little to prepare for.  As a steer to businesses, this is little short of directionless.

First, it makes the obvious point that the abolition of the requirement to give covid express consideration in workplace risk assessments does not take away any of the employer’s obligations to continue to comply with its health & safety, employment and equality duties (in the latter two cases, although unsaid, presumably as they may be affected by the former).

From there, the Government moves to normalise covid through a long list of symptoms common to it, colds, flu and other respiratory diseases – fair enough so far – but also to other quite unrelated conditions such as hangovers, migraines, food poisoning, being unfit, malaria and frankly just getting old (“unexplained tiredness, lack of energy”).  The list is significantly expanded from the traditional trio of continuous cough, fever, loss of taste and smell and now also includes muscle pain, diarrhoea, headache, loss of appetite and “feeling sick” (what, really?). Some medical practitioners say that this is long overdue recognition of all the things covid can do to you. However, it is still a wincingly unhappy expansion for employers, since the published list now essentially includes something from pretty much every ailment known to man. The guidance notes that it will not usually be possible to tell whether you have covid or something else from the symptoms alone and of course the free testing by which that could have been determined in the past is now largely withdrawn.  Therefore the guidance to individuals is that “if you have symptoms of a respiratory infection such as covid and you have a high temperature or you do not feel well enough to go to work, you are advised to try to stay at home and avoid contact with other people” and then “Try to work from home if you can.  If you are unable to work from home you should talk to your employer about options available to you”.  Given the rich panoply of symptoms now available to the discerning malingerer, justifying taking yourself home for five days while you work out whether your headache is covid or just a headache has never been so easy.

As a result, the burden is shifted squarely to employers to keep up the anti-covid fight, and in particular to decide whether to maintain restrictions on entry to their premises for those who are unvaccinated and/or untested.  Both will be increasingly difficult to sustain in view of the obvious official indifference to the question evidenced by the guidance, which focuses instead on the traditional measures of ventilation, regular cleaning of high-touch surfaces, provision of sanitiser and hygiene advice, etc. The other big hole in the guidance is as to the employer’s rights (or is it obligation?) to send someone home if they have one or more of that long list of potentially relevant symptoms, and even if the employee himself feels able to work and/or cannot work from home.  Nor does it deal with the employees’ sick pay rights in those cases.

Taking a reasonably hawkish view of those two questions:-

  1. If you know that the employee has symptoms which could well indicate that he is suffering from covid, and even if it could equally be something less serious, are you complying with your Health & Safety at Work Act duty to take all reasonably practicable steps to maintain a safe system of work if you allow him in anyway?  If he works in a sparsely –occupied well-ventilated area, perhaps yes, but otherwise probably not.  Given the virulence of Omicron, it is unarguably foreseeable that allowing someone who may have it to breathe wantonly on other people may lead to their contracting it too.  It is also clearly foreseeable, if no longer as much so as with the earlier covid variants, that those other people may become properly ill or die as a result.  Put mathematically, breach of duty + foreseeable risk of injury + causation + actual injury = liability.

So in my view, despite the vacuum in the new guidance, an employer not just can, but really should send home immediately an employee with any material case of the symptoms listed, as a minimum until it becomes clear that the real issue is something else (though not malaria – best not let them in either).

A firm stance on this will also help combat reluctance to return to the office among those staff concerned about the health risk of doing so.  If they or their cohabitants are particularly vulnerable, the knowledge that basically no precautions are being taken to ensure that those present in the workplace are all covid-free will only feed those anxieties.

  1. If the employee is sent home on these grounds and cannot work there, will he be entitled to full salary (as it was not by his choice) or sick pay only?  In many cases he will be back within a week and the two may be the same.  Where they are not, however, I believe that it would strictly be sick pay only – though the employee may himself be physically able to work, he is practically unable to do so by reason of his own possible medical condition, the risk it may pose to others in the workplace and the duty of the employer to take reasonable steps to head off that risk.  That said, there are employment relations arguments both ways on this – on the one hand, that the symptoms listed are so varied and transient that they represent an easy avenue for abuse, and on the other that if reporting them means you get packed off home on reduced pay (perhaps none until SSP kicks in on day 4), you are much less likely to report them in the first place and will probably prefer to pass your day posing an undeclared but potentially quite serious risk to your colleagues.

Article By David Whincup of Squire Patton Boggs (US) LLP

For more coronavirus legal news, click here to visit the National Law Review.

© Copyright 2022 Squire Patton Boggs (US) LLP

The X Box: EEOC Announces Addition of Nonbinary Gender Option to Discrimination Charge

In recognition of Transgender Day of Visibility, today, the EEOC announced that it would be providing members of the LGBTQI+ community the option to select a nonbinary “X” gender marker when completing the voluntary self-identification questions that are traditionally part of the intake process for filing a charge of discrimination.

Specifically, in an effort to promote greater equity and inclusion, the EEOC will add an option to mark “X” during two stages of the intake and charge filing process. This addition will be reflected in the EEOC’s voluntary demographic questions relating to gender in the online public portal, which individuals use to submit inquires regarding the filing of a charge of discrimination, as well as related forms that are used in lieu of the online public portal. The nonbinary “X” gender marker will also be included in the EEOC’s modified charge of discrimination form, which will also include “Mx” in the list of prefix options.

Additionally, the EEOC will incorporate the CDC and NCHS’s proposed definition of “X,” which provides as follows: (1) “unspecified,” which promotes privacy for individuals who prefer not to disclose their gender identity; and (2) “another gender identity,” which promotes clarity and inclusion for those who wish to signify that they do not identify as male or female.

The EEOC’s announcement came shortly after the White House released a detailed Fact Sheet highlighting the steps the federal government has taken to address equality and visibility for Transgender Americans.

Article By Aretta K. Bernard and Stephanie Olivera Mittica of Roetzel & Andress LPA

For more labor and employment legal news, click here to visit the National Law Review.

©2022 Roetzel & Andress

USCIS Policies Lead to High Denial Rates for L-1B Petitions

The L-1B nonimmigrant visa program is regularly utilized by companies to transfer employees with specialized knowledge from foreign countries to the United States. According to a recent analysis, the program continues to experience significant denial rates, raising questions about the underlying causes of the phenomenon.

L1-B Visa Program

The L1-B Visa Program allows employers to transfer certain nonimmigrant employees from foreign offices to offices within the United States. Specifically, the employment-based nonimmigrant visa program allows the transfer of professional employees with specialized knowledge relating to the organization’s interests from foreign offices to the United States, sometimes even to establish a U.S. office. To qualify under the program, the employee must possess “specialized knowledge,” which, according to the U.S. Citizenship and Immigration Service (“USCIS”), requires knowledge of the petitioning employer’s product, service, research, equipment, techniques, management, or other interests. USCIS evaluates L-1B petitions on a case-by-case basis.

In practice, L-1B petitions are filed by employers on behalf of their employees seeking intracompany transfer. While an employer may file an L-1B petition for an individual employee, larger companies may have the option to file a “blanket petition” so long as the company meets certain criteria. When petitioning for individual employees, the petition must be approved and then taken to a U.S. consulate for approval. For blanket petitions that have been approved, the employer need only submit a Form 129S, Nonimmigrant Petition Based on Blanket L Petition, which then may be taken to a consulate for approval.

High Denial Rates of L-1B Petitions

A recent article by Forbes analyzed government data concerning L-1B petitions and detailed their trends over the last decade. During that period, the average denial rate for L1-B petitions was 28.2%, a significant number, especially considering the denial rate for H-1B petitions averages under 5%. While the denial rate declined to 21.3% in the third quarter of the fiscal year 2021 and 20.7% in the fourth quarter, the denial rates were 32.7% and 33.3% respectively for the first two fiscal quarters of 2021.

Given that L-1B petitions appear to receive greater scrutiny than other business nonimmigrant visas, one must wonder what causes the denial rate, and what steps can be taken to ensure approval of such a petition.

Explanations for High L-1B Denial Rates

The unusually high denial rate for L-1B petitions could be explained in part by the high bar set by USCIS in adjudicating the petitions. However, at least one attorney noted the case-by-case nature of the petitions do not easily lend itself to a simple adjudication process, noting that “USCIS applies [the standard] in a way that favors documentary evidence while discounting the company’s own assessments of the worker’s importance and knowledge […]” While the USCIS Policy Manual provides immigration officers with some guidance, more comprehensive guidance could certainly be helpful.

In response to the investigation conducted by Forbes, USCIS commented,

“USCIS officers review each L-1B petition on a case-by-case basis to determine if they meet all standards required under applicable laws, regulations, and policies. […] The agency will continue to solicit feedback from stakeholders to identify procedural efficiencies and promote policies that break down barriers in the lawful immigration system.”

Additionally, the denial rate can be attributed at least in part to the political implications of the executive branch. For the fiscal year 2021, the improvement that can be detected in the L-1B denial rate followed President Biden’s assumption of office. This shift may be attributed not to a more liberal implementation of policy, but rather to the reinstatement of the USCIS policy of giving deference to previous decisions. This deference does not extend to petitions or applications made by Customs and Border Protection (“CBP”) or Department of State (“DOS”) officials.

The high denial rate for L-1B petitions serves to frustrate employers, and even discourages foreign investment in the United States. While the petitions continue to receive increased scrutiny, it is advisable to take the utmost care in the preparation of applications and ensure that all are supported with sufficient evidence and documentation.

Article By Raymond G. Lahoud of Norris McLaughlin P.A.

For more immigration legal news, click here to visit the National Law Review.

©2022 Norris McLaughlin P.A., All Rights Reserved

DOJ Aggressively Targeting PPP Loan Recipients for Fraud: What Businesses Need to Know

More than five million businesses applied for emergency loans under the Paycheck Protection Program (PPP), and with a hurried implementation that prevented a full diligence process, it’s not surprising the program became a target for fraud. The government is now aggressively conducting investigations, employing both criminal and civil enforcement actions. On the civil lawsuit front, companies that received PPP loans should be aware of actions brought under the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). This advisory details some of the key points of these enforcement tools and what the government looks for when prosecuting fraudulent conduct.

How will PPP Loan Fraud Enforcement Under the FCA Work?

A company can be liable under the FCA if it knowingly presents a false or fraudulent claim for payment or approval to the government or uses a falsified record in the course of making a false claim. 31 U.S.C. § 3729(a)(1)(A), (B). The FCA allows the government to recover up to three times the amount of the damages caused by the false claims in addition to financial penalties of not less than (as adjusted for inflation) $12,537, and not more than $25,076 for each claim.

The FCA can be enforced by individuals through qui tam lawsuits. This means a private individual, known as a relator, can file a lawsuit on behalf of the government. When a qui tam case is filed, it remains confidential (under seal) while the government reviews the claim and decides whether to intervene in the case. If the lawsuit is successful, the relator is entitled to a portion of the reward.

The False Claims Act has been used to pursue fraud claims in connection with PPP loan applications. Any company that participated in the PPP by applying for a loan should retain documentation justifying all statements made on the loan application and evidencing how any funds obtained through the loans were utilized.

How will PPP Loan Fraud Enforcement Under FIRREA Work?

The government is also utilizing FIRREA in response to fraudulent conduct related to PPP loans. FIRREA is a “hybrid” statute, predicating civil liability on the government’s ability to prove criminal violations. The statute allows the government to recover penalties against a person who violates specifically enumerated criminal statutes such as bank fraud, making false statements to a bank, or mail or wire fraud “affecting a federally insured financial institution.” 12 U.S.C. §1833a.

To establish liability under FIRREA, the government does not have to prove any additional element beyond the violation of that offense and that the violation “affect[ed] a federally insured financial institution.” The government has invoked FIRREA in the context of PPP loan fraud by stating the fraud related to obtaining the loan falls under one or more of the predicate offenses set forth in the statute.

What Factors Determine PPP Loan Fraud Penalties Under FIRREA?

While the assessment of a penalty is mandatory under FIRREA, the amount of the penalty is left to the discretion of the court but may not exceed $1.1 million per offense. There is an exception to this maximum penalty, however, if the person against which the action is brought profited from the violation by more than $1.1 million. FIRREA then allows the government to collect the entire amount gained by the perpetrator through the fraud. The actual amount of the penalty is determined by the court after weighing several factors including:

  • The good or bad faith of the defendant and the degree of his/her knowledge of wrongdoing;
  • The injury to the public, and whether the defendant’s conduct created substantial loss or the risk of substantial loss to other persons;
  • The egregiousness of the violation;
  • The isolated or repeated nature of the violation;
  • The defendant’s financial condition and ability to pay;
  • The criminal fine that could be levied for this conduct;
  • The amount the defendant sought to profit through his fraud;
  • The penalty range available under FIRREA; and
  • The appropriateness of the amount considering the relevant factors.

The government favors utilizing FIRREA penalties to pursue fraud claims for several reasons. The statute of limitations provided in 12 U.S.C. §1833a(h) is 10 years, which is much longer than most civil statutes of limitations. The standard of proof required to impose penalties is preponderance of the evidence, rather than the higher “beyond a reasonable doubt” standard that must be met in a criminal prosecution.

Checklist for PPP Loan Recipients

A company that applied for COVID relief funds, such as PPP loans, should ensure they satisfy the eligibility requirements for obtaining the loan, confirm false statements were not made during the application, and review the rules set forth by the SBA for applying for PPP. The government has shown it is willing to pursue remedies under the FCA and FIRREA for fraudulent statements made regarding a PPP loan application.

Article By Ronald G. DeWaard, Gary J. Mouw, and Gage M. Selvius of Varnum LLP

For more white collar crime and business fraud legal news, click here to visit the National Law Review.

© 2022 Varnum LLP

Cartel Corner | March 2022

INTRODUCTION

The US Department of Justice’s (DOJ) Antitrust Division (Division) has continued to actively investigate and pursue alleged criminal violations of antitrust laws and collusive activity in government procurement. US Attorney General Merrick Garland noted in a March 2022 speech at the ABA Institute on White Collar Crime that the Division ended last fiscal year “with 146 open grand jury investigations—the most in 30years.”[1] As we near the end of the first quarter of 2022, the Division has a record number of criminal cases either in trial or awaiting trial.

In this installment of Cartel Corner, we examine and review recent and significant developments in antitrust criminal enforcement and profile what the Division has highlighted as its key priorities for enforcement. For 2022 and beyond, those priorities are—and likely will remain—identifying and aggressively pursuing alleged violations involving the labor markets, consumer products, government procurement and the generic pharmaceutical industry.

LABOR MARKETS

Criminal investigations and prosecutions in the labor markets continue to be a top priority for the Division. Such enforcement has been gaining momentum since the Division and the Federal Trade Commission (FTC) issued their joint Antitrust Guidance for Human Resources Professionals in 2016 which warned that the DOJ—for the first time— intended to proceed criminally against “naked wage-fixing or no-poach agreements” between horizontal employers. That momentum lifted off in December 2020 and continued throughout 2021, with the Division bringing 12 criminal cases against nine individuals and three companies. Alleged wage-fixing and no-poach agreements have historically been prosecuted in the civil context, meaning fines for companies and individuals.

Several recent developments are worth highlighting. First, in November 2021, a federal court determined for the first time ever that an alleged wage-fixing conspiracy could constitute a per se criminal violation of the Sherman Act. In U.S. v. Jindal, the Division alleged that two former executives of a physical therapist staffing company fixed the wages paid to physical therapists in the Dallas-Ft. Worth area. In denying the defendant’s motions to dismiss, a federal judge in the US District Court for the Eastern District of Texas determined that courts have not limited price-fixing conspiracies to the purchase and sale of goods but have also found them to cover the purchase and sale of services. The court continued, noting that buyers of services included employers in the labor market and that the alleged wage-fixing agreement was another form of price fixing.

Second, the DOJ’s aggressive posture in these cases continued in January 2022 when it charged four home healthcare staffing company owners with allegedly fixing workers’ wages and agreeing not to hire each other’s workers in 2020.

Third, until recently, each of the criminal charges brought by the DOJ have involved healthcare companies. The ability of the DOJ to criminally prosecute alleged non-solicit agreements is being challenged, where motions to dismiss are pending. However, in December 2021, the Division expanded its reach into the aerospace industry, charging a former government contractor and five employees of its suppliers for alleged allocation agreements relating to the hiring of engineers (U.S. v. Patel et al.). The DOJ’s indictment alleges that one of the defendants agreed with suppliers to allocate employees by restricting hiring and recruiting between the companies for almost a decade.

The increased focus and enforcement action relating to labor markets underscores the Biden administration’s stated priorities. For example, in July 2021, President Biden issued an Executive Order “Promoting Competition in the American Economy” which provided wide-ranging guidance and instructions to the federal government to promote and increase competition. One specific, identified initiative involved strengthening of guidance to prevent employers from collaborating to suppress wages, reduce benefits or engage in other anticompetitive practices. With the recent flurry of criminal labor market charges; repeated statements by the Division to the effect that protecting competition in the labor markets continues to be a top priority; the Division’s hosting of a joint workshop with the FTC in December 2021, titled “Making Competition Work: Promoting Competition in the Labor Markets”; and widespread support from the Biden administration, one can expect the Division’s focus on criminal enforcement in the labor markets to be an increasing refrain.

TAKEWAYS

The DOJ’s novel and aggressive stance on expanding Sherman Act criminal violations to include the ways in which companies engage with their workers may not ultimately be sustained by trial or appellate courts. For now, however, the DOJ remains determined to investigate and prosecute alleged “wage-fixing and no-poach” issues.

With the DOJ’s resolute approach changing the landscape of antitrust labor market cases, companies would be prudent to ensure that their compliance programs are up to date and include specific and appropriate guidance on these issues. When considering typical antitrust cartel investigations, the focus has traditionally been on alleged conspiracies relating to pricing, sales, and/or bidding of certain products or in certain geographic areas. The DOJ’s changing attitude toward labor market antitrust issues is a notable shift and may be directed at entirely different segments of a corporate business, including human resources and hiring, in any industry. To address the DOJ’s assertive approach, employers involved in hiring and compensation-related decisions would be well served to receive training addressing these potential antitrust issues.

CONSUMER PRODUCTS

Consumer products have recently been a hotbed of DOJ investigations for antitrust violations. The DOJ has several long-running investigations into a wide range of industries, including broiler chickens, commercial flooring and, most recently, DVDs and Blu-Rays in e-commerce. The latest developments in these investigations reflect the DOJ’s continued, and increasingly heightened, focus on prosecuting companies and high-ranking executives engaged in alleged anticompetitive conduct that directly affects American consumers.

BROILER CHICKENS

The DOJ’s first trial in its ongoing investigation into the $95 billion broiler chicken industry resulted in a hung jury. The lengthy trial began in October 2021, in Denver, against 10 current and former executives from major broiler chicken producers (and came on the heels of a guilty plea obtained by the DOJ earlier in 2021 in a price-fixing case against Pilgrim’s Pride Corp (Pilgrim’s Pride), which resulted in a $107 million criminal fine). The DOJ alleged that the defendants engaged in an overarching price-fixing and bid-rigging scheme for approximately a decade. But after seven weeks of trial, including four days of deliberation, the jurors remained deadlocked, resulting in the judge declaring a mistrial. The result highlights the challenge facing the DOJ in meeting its burden of proof on an alleged conspiracy based largely on documents and without cooperating witnesses.

After the mistrial, the defendants asked the court for a judgment of acquittal. The judge denied that request, and a retrial in the case began in late February 2022. Additionally, the DOJ has other cases in the pipeline in the same long-running investigation, including against broiler-chicken producers Claxton Poultry Farms and Koch Foods, Inc., as well as criminal charges against four additional former Pilgrim’s Pride executives. Trials for those additional corporate and individual defendants are set for October 31, 2022, and July 18, 2022, respectively.

In a related civil action, a federal judge in Illinois gave final approval for a $181 million settlement between six poultry producers and end-user consumers who claimed the companies conspired to fix broiler chicken prices. The deal was reached between the consumer plaintiffs and Peco Foods, Fieldale Farms, George’s, Tyson Foods, Pilgrim’s Pride and Mar-Jac Poultry. Consumers are still pursuing claims against 12 additional poultry companies.

Going forward, the DOJ indicated it will prioritize and pursue more matters that impact competition in agriculture. In fact, the DOJ and the Department of Agriculture (USDA) recently issued a joint statement on their shared commitment to effectively enforcing federal competition laws that protect farmers, ranchers, and other agricultural producers and growers from unfair and anticompetitive practices. As part of their effort to step up enforcement in the agriculture sector, the agencies launched farmerfairness.gov, a new online tool that allows farmers and ranchers to anonymously report potentially unfair and anticompetitive practices in the livestock and poultry sectors. If, after a preliminary review, a complaint raises sufficient concern under antitrust laws, it will be selected for further investigation, and may lead to the opening of a formal investigation.

One area to watch is the cattle civil antitrust litigation. While the DOJ is still in the investigation stage, direct purchaser plaintiffs filed a civil lawsuit against the Big Four meatpacking companies, accusing them of conspiring to drive up the price of beef to make bigger profits by suppressing slaughter volumes and constraining the supply of meat. On February 1, 2022, the proposed class of direct buyers reached a $52.5 million deal with one of the Big Four defendants JBS USA (JBS), which provided both monetary relief to the class, and JBS’s “extensive cooperation” in the buyers’ ongoing litigation against the three remaining nonsettling defendants. The settlement is currently before the US District Court for the District of Minnesota awaiting preliminary approval. It will be interesting to see what next steps the DOJ will take considering the civil litigation, particularly the evidence that will be provided by JBS’s cooperation.

COMMERCIAL FLOORING

Another long-running bid-rigging investigation in the commercial flooring industry resulted in additional indictments last year, as well. To date, the DOJ has indicted three companies and six individuals, including Mr. David’s Flooring International LLC (Mr. David’s), a Chicago-based commercial flooring contractor that pleaded guilty in August 2021. Like the first two companies that the DOJ charged, Mr. David’s was charged for conspiring with other companies—for at least eight years, from 2009 to 2017—to rig bids for commercial flooring by agreeing which company would win the bid and which would submit a complementary, intentionally losing bid. The DOJ also charged Mr. David’s with money laundering for allegedly concealing kickback payments the company made, in exchange for unauthorized discounts, to an account executive for a large flooring manufacturer.

As part of its guilty plea, Mr. David’s agreed to pay at least a $1.2 million criminal fine for its role in the conspiracies. This follows guilty pleas that the DOJ obtained from PCI FlorTech, Inc., in 2019 and Vortex Commercial Flooring in 2020, which resulted in a $150,000 criminal fine and $1.4 million in fines and restitution, respectively.

DVDS AND BLU-RAYS

With the expansion of e-commerce, the DOJ has also been active in prosecuting price-fixing conspiracies for consumer goods in online marketplaces. In 2021, the DOJ charged four individuals, one in June and three in November, with conspiring to fix prices of DVDs and Blu-Ray discs sold through an online marketplace. According to the charges, between November 2017 and October 2019 the defendants agreed to raise and maintain the prices of DVDs and Blu-Ray discs sold in the marketplace’s storefronts, the business addresses of which were located in five different states. The affected sales to customers throughout the United States by the four defendants ranged between $360,000 to $1,100,000. Each of the defendants have pleaded guilty. While the affected sales pale in comparison to large-scale matters like broiler chickens, the DOJ has shown equal willingness to aggressively pursue alleged collusive conduct in smaller and emerging sectors, particularly in online marketplaces.

TAKEAWAYS

Given the long-running nature of the investigations involving broiler chickens and commercial flooring, the change in the US presidential administration seems to have only increased the DOJ’s scrutiny into industries affecting consumer goods. Looking ahead, consumer products will likely remain one of the DOJ’s top priorities. Indeed, while the Biden administration recognizes the strain the pandemic has put on supply chain issues, resulting in higher prices in consumer goods, the White House has also placed the blame on “another culprit”: “dominant corporations in uncompetitive markets taking advantage of their market power to  raise prices.”

The DOJ recently announced an initiative to deter, detect and prosecute those who would exploit supply chain disruptions to engage in collusive conduct. As part of that initiative, the DOJ is prioritizing any existing investigations where competitors may be exploiting supply chain disruptions for illicit profit and is undertaking measures to proactively investigate collusion in industries particularly affected by supply disruptions. The DOJ is also working with authorities in other countries to detect and combat global supply chain collusion.

Those who work in the consumer goods space can expect additional scrutiny and enforcement from the DOJ in the months and years to come, especially in industries that have experienced higher consumer price increases. It is therefore important to have robust compliance programs, including appropriate employee training, in place to address and provide guidance on these issues.

PROCUREMENT

The DOJ’s Procurement Collusion Strike Force (PCSF)—an interagency partnership established in November 2019 to combat antitrust crimes and related fraud involving government procurement and funding—remained a top priority for the Division in 2021. Since its inception in 2019, the PCSF has significantly expanded in scope. The strike force now has offices in 22 federal districts staffed with DOJ trial attorneys, assistant US attorneys and agents from seven national law enforcement partner agencies. The PCSF has trained more than 17,000 special agents, attorneys, prosecutors, investigators, analysts, auditors, data scientists and procurement officials. In addition, in the spring of 2021 the PCSF announced the creation of PCSF Global. The goal of PCSF Global is to build connections with enforcement counterparts around the world and to investigate and prosecute collusion in procurement relating to US government funds spent overseas. The PCSF currently has almost three dozen investigations open domestically and internationally.

Below are a few key highlights from 2021:

PCSF’S RECENT WORK

On October 13, 2021, PCSF Director Daniel Glad delivered a speech recapping the strike force’s recent work and highlighting enforcement priorities, including “set-aside fraud” and collusion targeting infrastructure spending. Set-aside fraud refers to collusion and fraud affecting government programs that are designed to provide opportunities for disadvantaged communities and individuals to participate more fully in public procurement. Glad highlighted the PCSF’s recent investigation into set-aside fraud involving construction contracts in San Antonio. The director also commented that infrastructure will continue to be a focus for the PCSF as federal spending for infrastructure increases. Glad added that while the Sherman Act is the PCSF’s “lodestar,” the strike force’s focus includes prosecuting other crimes that also corrupt the competitive process for obtaining government contracts and funding.

BELGIAN SECURITY SERVICES

On June 25, 2021, a Belgian security services company, G4S Secure Solutions NV (G4S), pled guilty for its role in a conspiracy to rig bids, allocate customers and fix prices for contracts with the US Department of Defense and with the NATO Communications and Information Agency (NCI Agency) to provide security services for military bases and installations in Belgium. The NCI Agency is funded in part by the United States. This was the first international resolution obtained by the PCSF, as well as the PCSF’s first charged matter.

The DOJ alleged that G4S participated in a conspiracy with two competitors to coordinate price increases, submit artificially determined, non-competitive bids and refrain from bidding for certain contracts from spring 2019 through summer 2020. The DOJ further alleged that the conspirators colluded during in-person meetings and via phone, text messages, encrypted messaging applications and email. G4S agreed to pay a $15 million criminal fine. In October 2021, two former employees of G4S also pled guilty to charges relating to the same conspiracy. Both individuals are Belgian nationals residing in Belgium.

The investigation demonstrates that the PCSF is focused on conspiracies that victimize the US government, whether the conspiracies or government activities are based in the United States or abroad. The PCSF remains committed to actively investigating and prosecuting companies and individuals based outside of the United States, such as the defendants here, who distort the competitive process for US government contracts.

NORTH CAROLINA ENGINEERING

In June 2021, a North Carolina engineering firm pled guilty to conspiring to rig bids and defraud the North Carolina Department of Transportation (NCDOT). Contech Engineered Solutions LLC and Brent Brewbaker, one of its former executives, had been indicted in October 2020. They were charged with six counts of bid rigging, conspiracy to commit fraud, mail fraud and wire fraud. The conspiracies, reaching back to at least 2009, involved water drainage systems projects. Contech agreed to pay a criminal fine of $7 million and approximately $1.5 million in restitution to the NCDOT. On February 1, 2022, Brewbaker was convicted by a jury of all six charged counts.

Contech argued that the conspiracy was not a per se violation because Contech and Pomona Pipe Products, its co-conspirator, competed vertically: Contech as the supplier, Pomona Pipe as the reseller. The district court disagreed, holding that Contech and Pomona held themselves out to NCDOT as competitors and, as such, this was bid-rigging subject to the per se analysis.

This matter is precisely the type of case the PCSF was designed to investigate. The PCSF trains law enforcement officers, procurement officials and others across the country “to better deter and detect antitrust crimes affecting government procurement, grant, and program funding.” With more government funding earmarked for infrastructure and an increased budget for the Antitrust Division, the PCSF is likely to increase its footprint at all levels of government.

MINNESOTA CONCRETE 

In September 2021, Minnesota concrete contractor Clarence Olson pled guilty to a bid-rigging charge. Olson and his co-conspirators conspired to rig bids on concrete repair and construction contracts submitted to at least four municipalities in Minnesota, including local governments and school districts in the Minneapolis-St. Paul area. The conspiracy began as early as September 2012 and continued through at least June 2017. Minnesota law required that municipalities obtain two or more quotations from independent bidders before awarding contracts above a certain threshold. According to the plea agreement, at a competitor’s request Olson submitted bid quotes with prices higher than that of the competitor to ensure that Olson would lose the bid.

RISKS BEYOND PRISON AND FINES 

Charges of bid rigging and procurement fraud can have collateral consequences beyond criminal liability. Companies and individuals are subject to state and federal suspension and debarment procedures. A suspension temporarily prevents a company from government contracting and typically lasts until the investigation or subsequent legal proceedings have terminated. If a company pleads guilty or is convicted, it may be debarred—a permanent ban from doing business with a government for a specified time period. The duration of the debarment typically correlates to the severity of the offense. Under federal law, a contractor may be debarred without a conviction if the evidence shows a knowing failure to disclose credible evidence of a criminal violation of federal antitrust law (48 CFR § 9.406-2(b)(vi)(A)).

Moreover, charges filed against affiliated individuals may impute the company when that individual was acting as an agent of the company. Although suspensions and debarments may last for shorter periods of time, the reputational damage may last far longer. If made public, the debarment could also impact a company’s or individual’s ability to do business in the private sector. Suspension and debarment are collateral consequences that the DOJ may consider in the process of investigating and prosecuting a criminal antitrust violation.

THE FUTURE OF THE PCSF 

The first year of the PCSF was dedicated to outreach, education and partnership implementation. The PCSF has now established partnerships with many law enforcement agencies across the country. Beyond domestic interagency investigations, the PCSF has launched initiatives that will expand its reach and target acute problems in government procurement. Investigations initiated by the PCSF have taken time to be investigated (particularly with a global pandemic making certain investigative steps more challenging), but in some instances these investigations have reached the recommendation and/or charging stage. We expect to see additional PCSF cases in the coming year.

PCSF Global: The PCSF has launched PCSF Global, an initiative aimed at fostering partnerships with international enforcement authorities. The US government spends considerable funds abroad, particularly for military contracts. International partners lend their expertise with foreign markets and give the PCSF eyes and ears on the ground abroad.

Set-Aside Fraud: One of the PCSF enforcement priorities is combating fraud in government set-aside programs. Such programs set aside government contracting opportunities for special interest groups such as disabled veterans, small businesses and minority-owned businesses. In January 2021, President Biden signed “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,” an executive order aimed at increasing equal access to government contracting and procurement opportunities. While the PCSF mandate to combat fraud on set-aside programs existed before the executive order, it is strengthened by the Biden administration’s directive.

Data Analytics Project: The PCSF has hosted webinars attended by data scientists, analysts and auditors focused on using data analytics to detect procurement fraud. Data Analytics Project attorneys have engaged analytics shops to build tools for detecting collusion using bid data. Currently, the Data Analytics Project is focused on US procurement. In light of the PCSF Global initiative, it is possible that international partners will engage with the PCSF to develop cross-border tools.

Criminal Antitrust Anti-Retaliation Act (CAARA): CAARA, the first antitrust-specific whistleblower protection legislation, became law in December 2020. It prohibits employers from retaliating against employees, contractors, subcontractors and agents of employers for reporting antitrust violations or participating in antitrust government proceedings. The Securities and Exchange Commission (SEC), Internal Revenue Service (IRS) and other government agencies saw increased reporting since implementing similar whistleblower protections. CAARA is a tool that can be used to encourage early reporting and cooperation because of the legal protection it offers to whistleblowers, furthering the PCSF’s goals to deter and detect fraud.

GENERICS

For more than seven years, the generic pharmaceutical industry has been caught up in investigations and litigation asking whether the industry has engaged in a conspiracy to violate the antitrust laws.[2] In 2014 the Connecticut attorney general opened a civil investigation into whether manufacturers of generic pharmaceuticals had fixed prices and allocated markets. Shortly thereafter, the DOJ joined the mix, first opening a criminal investigation into these issues and then, a few years later, opening a civil False Claims Act (FCA) investigation into the same conduct. And by 2016, the plaintiffs’ bar had joined the fray, filing the first complaints of what soon became a massive and unwieldy multidistrict litigation (MDL), ultimately consolidated in the United States District Court for the Eastern District of Pennsylvania.

Below, we provide a brief update on this massive MDL and the DOJ investigation that started it.

MULTIDISTRICT LITIGATION: IN RE: GENERICS PHARMACEUTICALS PRICING ANTITRUST LITIGATION, NO. 16-MD-2724 (E. D. PA. 2016)

In re: Generics, the broad and long-running MDL, remains at the center of the pharmaceutical cases this past year. In addition to the governments of 49 states, the District of Columbia, American Samoa, Guam, Puerto Rico, Northern Mariana Island and the US Virgin Islands, the MDL also includes three putative plaintiff classes (direct purchaser, end-payer and indirect reseller plaintiffs), and more than a dozen individual entities (including major retailers, healthcare insurers and even some local governments) that filed opt-out complaints (e.g., The Kroger Co. et al, Humana Inc., and United Healthcare Services, Inc.). At present, the MDL involves at least 85 complaints alleging misconduct regarding more than 285 drugs, 38 manufacturers and 25 individual defendants.

The first civil complaints were filed in 2016, initially encompassing claims concerning just two drugs, digoxin and doxycycline. The Judicial Panel on Multidistrict Litigation later consolidated claims involving other drugs into the MDL. As the litigation has evolved, private plaintiffs and state attorneys general have since filed complaints involving numerous drugs, focusing on an alleged overarching conspiracy to fix prices, rig bids and allocate customers across the generic pharmaceutical industry. The state attorneys general, which have led the expansion of the MDL, have filed three such overarching conspiracy complaints: (1) a June 2018 complaint focused on Heritage Pharmaceuticals; (2) a May 2019 complaint focused on Teva Pharmaceuticals; and (3) a May 2020 complaint focused on dermatology products.  Many plaintiffs are seeking joint and several liability for the alleged overarching conspiracy—the scope of which is unprecedent and untested in antitrust litigation.

In May 2021, US District Judge Cynthia M. Rufe selected the state attorneys general overarching conspiracy complaint centered on over 80 dermatology products to serve as a bellwether case in the MDL. Two drug-specific complaints filed by the direct purchaser and end payer plaintiffs will also proceed as bellwethers. The court originally selected the state attorneys general May 2019 Teva-centric overarching conspiracy complaint as the bellwether. A coalition of 44 state attorneys general led by Connecticut filed the Teva-centric case in May 2019. However, following the DOJ’s August 2020 grand jury indictment of Teva on criminal price-fixing charges (see below), Teva petitioned to have the selection of its case as bellwether overturned. The pharmaceutical companies then sought to have the states’ first filed case, which centered around Heritage Pharmaceuticals, chosen as a replacement bellwether because the case involved a smaller scope and was more manageable to litigate. The states advocated for the May 2020 dermatology action as the bellwether. Despite involving over 80 drugs, the states contended this complaint was more indicative of the alleged conspiracy and their investigation had evolved in the years since the Heritage complaint was filed. Judge Rufe found that “the dermatology action [wa]s more typical of the overarching conspiracy cases than the Heritage-centric action and w[ould] provide overall a more comprehensive view of the positions of more parties in the MDL.”[3]

The bellwether selection was just the first step in what will continue to be a long series of cases. At present, class certification briefing in the drug-specific bellwether cases is scheduled to be completed by mid-October 2023. The district court will schedule hearings on class certification for dates to be determined in November 2023.[4] All motions for summary judgment regarding the states’ bellwether case must be filed by October 16, 2023, and motions for summary judgment regarding the drug-specific bellwether cases must be filed no later than November 16, 2023.[5] Pretrial conferences are not yet scheduled.

CRIMINAL LITIGATION: UNITED STATES V. TEVA PHARMACEUTICALS USA, INC. AND GLENMARK PHARMACEUTICALS, USA (E.D. PA. 2020)

While the MDL has proceeded, the DOJ has continued with its separate criminal investigation. In June 2020, the DOJ indicted Glenmark Pharmaceuticals, USA, alleging that it engaged in a conspiracy to fix prices for pravastatin and other undisclosed drugs from around May 2013 through December 2015. In August 2020, the DOJ filed a superseding indictment naming Teva as an alleged co-conspirator.[6] Glenmark sought to sever the cases to proceed with separate trials, but US District Judge R. Barclay Surrick recently denied that motion and ruled that a joint trial could proceed.[7] In June 2021, the Antitrust Division filed a scheduling order motion seeking a trial date of January 18, 2022; however, counsel for Glenmark and Teva found this date “unrealistic in light of the enormous volume of complex discovery in this case (more than 22 million documents and counting), as well as the backlog of trials in this District due to the pandemic.”[8] To date, no schedule has been set.

GENERIC DRUG COMPANY PENALTIES AND SETTLEMENTS

DOJ Investigations

Nonetheless, the DOJ has already obtained several settlements in both the criminal and civil FCA investigations, including securing several deferred prosecution agreements (DPAs) from the targets of its investigations.[9] In fact, the DOJ’s Antitrust Division and Civil Division have already collected more than $1 billion in penalties as a result of their investigations into the generic drug industry, as detailed below.

Most recently, in October 2021, Taro Pharmaceuticals USA, Inc., Sandoz Inc., and Apotex Corporation agreed to pay $213.2 million, $185 million and $49 million, respectively, to settle alleged False Claims Act violations stemming from conspiracies to fix prices of multiple generic drugs.[10] The Civil Division alleges that the three companies illegally paid and received compensation between 2013 and 2015 resulting from alleged agreements on price, supply and allocation of customers with other generic pharmaceutical manufacturers for 20 generic drugs, including etodolac, nystatin-triamcinolone cream and ointment, benazepril HCTZ and pravastatin. In addition, the companies entered into five-year corporate integrity agreements with the Health and Human Services Office of the Inspector General, which provides oversight for federal healthcare programs like Medicare and Medicaid. These agreements require internal monitoring and price transparency.

Multidistrict Litigation

In connection with the In re: Generics MDL, the first civil settlements with certain plaintiffs were announced in 2021. In June 2021, Teva announced it settled, for $925,000, all claims brought by the state of Mississippi. In November 2021, two US subsidiaries of Sun Pharma—Taro Pharmaceuticals U.S.A., Inc., and Sun Pharmaceutical Industries, Inc.—agreed to pay a total of $85 million to a proposed class of direct purchaser plaintiffs (DPPs) in the MDL. The settlement can be reduced, however, by $10 million if the direct purchasers that opt out of the putative class collectively account for 20% or more of Taro’s and Sun Pharmaceutical Industries, Inc.’s aggregate dollar sales of the generic drugs at issue in the direct purchaser action.

Entity/Individual Date Charges/Resolution Settlement Amount
Jeffrey Glazer and Jason Malek (former Heritage Pharmaceuticals executives) Dec. 2016 Pleaded guilty to conspiring to fix prices, rig bids, and allocate customers for doxycycline hyclate and glyburide. Both awaiting sentencing. TBD
Heritage Pharmaceuticals May 2019 Entered into a DPA with the Antitrust Division to resolve the DOJ’s charges relating to glyburide, a drug used to treat diabetes, agreeing to pay a criminal penalty and cooperate fully with the ongoing criminal investigation. In a separate civil resolution with the Civil Division, Heritage agreed to pay to resolve allegations under the FCA related to the alleged price-fixing conspiracy. $225K criminal penalty and $7.1M civil settlement
Rising Pharmaceuticals Dec. 2019 Entered into a DPA with the Antitrust Division to resolve the DOJ’s charges regarding an alleged conspiracy to fix prices for a hypertension medication. $3.5M criminal fine and civil penalty combined
H. Armando Kellum (former Sandoz executive) Feb. 2020 Pleaded guilty to fixing prices, rigging bids and allocating customers for several drugs, including clobetasol and nystatin triamcinolone cream. Kellum is awaiting sentencing. TBD
Sandoz Inc. Mar. 2020 and Oct. 2021 Agreed to pay a criminal penalty for allegedly conspiring to fix prices on several generic drugs, including, but not limited to, drugs used to treat brain cancer, cystic fibrosis, arthritis and hypertension. Agreed to pay a civil penalty for aiding and receiving compensation prohibited by the Anti-Kickback Statute through arrangements on price, supply, and allocation of customers for drugs such as benazepril HCTZ and clobetasol. $195M criminal penalty and $185M civil settlement
Apotex Corporation May 2020 and Oct. 2021 Agreed to pay a criminal penalty to resolve allegations that it conspired to fix prices for pravastatin. $24.1M criminal penalty and $49M civil settlement
Taro Pharmaceutical USA, Inc. July 2020 and Oct. 2021 Entered into a DPA with the Antitrust Division to resolve the DOJ’s charges regarding an alleged conspiracy related to several drugs with affected sales of over $500 million. $205.6M criminal fine and $213.2M civil penalty

TAKEAWAYS

Although the district court has allowed several cases to proceed past the motion to dismiss stage, it remains unclear if the plaintiffs’ expansive allegations will survive summary judgment and later proceedings. In the months to come, there will continue to be interplay between the criminal trial proceeding against Teva and Glenmark and the civil cases proceeding in the MDL. For example, the MDL court is currently considering whether the DOJ should be allowed to extend a continued stay of depositions in the civil cases of specific individuals it views as “key” to its criminal investigation.

This investigation and litigation has brought significant attention to the generic drug and pharmaceutical industry at large, including increased scrutiny and calls for action by Congress (such as the US House of Representatives Committee on Oversight and Reform’s three-year Drug Pricing Investigation, which culminated in a majority staff report released in December 2021). Several pieces of legislation aimed at reigning in pharmaceutical prices have also been introduced. In all, these investigations and litigation, coupled with the increases in oversight and willingness to investigate by state and federal governments, suggest that the pharmaceutical industry will remain subject to heightened scrutiny of its business practices for many years to come.

CONCLUSION

As we move into the second quarter of 2022, one thing is abundantly clear: The DOJ’s aggressive criminal antitrust enforcement will only continue to increase. The Division ended the last fiscal year with 146 open grand jury investigations—the most in 30 years.[11] President Biden has made competition a priority for his administration.[12] Attorney General Garland has specifically identified “reinvigorating antitrust enforcement” as at the center of the DOJ’s mission.[13] In its FY 2022 budget request, the DOJ requested a 9% increase in spending, amounting to an additional $200 million.[14]

At the same time, there seems to be a shift in tone and approach at the Division. The Division has started to push the boundaries of criminal antitrust enforcement. As noted above, it has pursued naked no-poach agreements criminally, something that it had never done prior to 2020. In recent remarks to the ABA Institute on White Collar Crime, Richard Powers, the US Deputy Assistant Attorney General for Criminal Enforcement in the Division, noted that the Division is also prepared to criminally charge individual executives for violations of Section 2 of the Sherman Act, the provision that prohibits market monopolization—another exceedingly aggressive and controversial approach and something that the Division has not done in decades. To cap it off, the Division has shown a tendency, of late, to take cases to trial, rather than negotiate resolutions. And, it has hired a number of prominent Criminal Division alumni, several with significant trial experience, to help with this effort. All of this suggests that the Division is prepared to stretch the law in places and go the distance to pursue what it views as criminal violations of the antitrust laws.

 

 

ENDNOTES

[1] Attorney General Merrick B. Garland Remarks to the ABA Institute on White Collar Crime, Thursday, March 3, 2022, https://www.justice.gov/opa/speech/attorney-general-merrick-b-garland-delivers-remarks-aba-institute-white-collar-crime

[2] Christopher Rowland, Investigation of generic ‘cartel’ expands to 300 drugs, THE WASHINGTON POST (Dec. 9, 2018), https://www.washingtonpost.com/business/economy/investigation-of-generic-cartel-expands-to-300-drugs/2018/12/09/fb900e80-f708-11e8-863c-9e2f864d47e7_story.html

[3] Pretrial Order No. 171 (Revised Bellwether Selection; Stay of Certain Discovery), MDL 2724 Dkt. 1769 (E.D. Pa. May 7, 2021), at p. 3.

[4] In re: Generics, Pretrial Order No. 188 (Schedule of Further Proceedings in Bellwether Cases), available at https://www.paed.uscourts.gov/documents/MDL/MDL2724/16md2724%20PTO188.pdf

[5] Id.

[6] U.S. v. Teva Pharmaceuticals USA, Inc. and Glenmark Pharmaceuticals, USA, U.S. DEP’T OF JUSTICE (Aug. 25, 2020), https://www.justice.gov/atr/case/us-v-teva-pharmaceuticals-usa-inc

[7] US v. Teva Pharmaceuticals USA, Inc. and Glenmark Pharmaceuticals, USA, No. 20-200 Dkt. 146 (E. D. Pa. Jan. 14, 2022).

[8] Letter from D. Axelrod and K. Stojilkovic to Judge Surrick re: United States v. Glenmark Pharmaceuticals Inc., USA et al., 20-cr-200 (RBS), No. 2:20-cr-00200-RBS Dkt. 94 (June 10, 2021).

[9] Normally, in a cartel investigation, guilty pleas would be used; however, because a guilty plea would bar these companies from participating in certain government healthcare programs, which would effectively terminate business for some of the companies involved and deprive millions of Americans of important, often life-saving medication, the DOJ used DPAs in these settlements.

[10] Pharmaceutical Companies Pay Over $400 Million to Resolve Alleged False Claims Act Liability for Price-Fixing of Generic Drugs, U.S. DEP’T OF JUSTICE
(Oct. 1, 2021), https://www.justice.gov/opa/pr/pharmaceutical-companies-pay-over-400-million-resolve-alleged-false-claims-act-liability

[11] Id.

[12] https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/07/09/remarks-by-president-biden-at-signing-of-an-executive-orderpromoting-competition-in-the-american-economy/

[13] https://www.appropriations.senate.gov/imo/media/doc/Statement%20of%20Attorney%20General%20Merrick%20Garland%20-%20June%209,%2020213.pdf

[14] Id.

© 2022 McDermott Will & Emery

Article By Justin P. Murphy, Paul M. Thompson, Han Cui, Joshua W. Eastby, Anthony S. Ferrara and Alexandra Lewis and Marisa E. Poncia of McDermott Will & Emery

Many New Jersey Employers Must Soon Offer Employee Retirement Savings Plans

The New Jersey Secure Choice Savings Program Act (the “Act”) is set to take effect on March 28, 2022 and will require many employers to offer their own retirement plan or provide access to a State-sponsored program.

This Act impacts all New Jersey businesses that:

  1. have employed at least 25 employees in the State during the previous calendar year;
  2. have been in business at least two years; and
  3. do not already offer a qualified retirement plan.

The Act mandates employers to offer their full and part-time employees a retirement savings in either the form of either a qualified retirement plan (e.g., a 401(k) or 403(b)), or through the New Jersey Secure Choice Savings Program (the “Program”). The State-sponsored Program is an individual retirement account (IRA) where employees contribute a portion of their pretax earnings via automatic payroll deductions.

Employers must first decide whether they want to sponsor a qualified retirement plan or opt for the State-sponsored Program. Those who fail to comply will be subject to penalties ranging from a written warning to a $500 fine per employee. Employers have nine months from the implementation date to comply with the Act. While the anticipated implementation date is March 28, 2022, the Treasury Department website dedicated to the program notes that implementation is not yet operational.

We suggest intermittently checking in on the website.

© 2022 Giordano, Halleran & Ciesla, P.C. All Rights Reserved
For more articles about employment law, visit the NLR Labor & Employment section.

UAE Employment Law Update

2 February 2022 saw the introduction of a new UAE Labour Law in the form of UAE Federal Law No. 33 of 2021, Regulating Labour Relations (“New Law”), repealing the existing UAE Labour Law, UAE Federal Law No. 8 of 1980 as amended (“Previous Law”).  In addition to the introduction of the New Law, a set of companion Executive Regulations were issued on 3 February 2022, fleshing out certain provisions of the New Law.

The following is a non-exhaustive overview of the principal provisions of the New Law and the Executive Regulations.

Whilst the New Law makes several significant introductions, it equally maintains the status quo in others, as such what we see here is more evolution rather than revolution in terms of the regulation of employment relations governed by the New Law.

As with the Previous Law, the New Law does not apply to employees in the Dubai International Financial Centre or the Abu Dhabi Global Market which both have their own standalone employment laws and regulations.  In addition, employees of federal and local government agencies, members of the armed forces, police and security employees and domestic service workers (Article 3(2) of the New Law) are not subject to the New Law.

  1. Employment Arrangements

The New Law and Executive Regulations (Article 5) introduces the following models of work:

  1. Full time – working for a single employer full time;
  2. Part time – working for a single employer part time;
  3. Temporary work – work carried out for a specified time and for a specific task;
  4. Flexible work – work that allows changing work hours to take into account operational needs of an employer;
  5. Remote work – work that is performed outside of the workplace and which may be either full time or part time; and
  6. Job sharing – work is divided between one or more employees on a part time basis.

Furthermore, the Executive Regulations provide that additional employment arrangements can be introduced based on labour market demands.

  1. Work Permits

The Executive Regulations (Article 6) stipulates the types of work permits available and the corresponding processes for obtaining, renewing and cancelling the same are as set in Article 7 of the Executive Regulations:

  1. Work permits for recruitment for employee’s outside of the UAE;
  2. Transfer work permit allowing a non-UAE national’s employment to be transferred between establishments registered with the Ministry of Human Resources and Emiratisation (“MOHRE”/“Ministry”);
  3. Relative work permit allowing a person who is on the residence visa of a family member to work for an employer registered with the MOHRE;
  4. A temporary work permit for where an employer is employed for a job whose performance or completion requires a specified period;
  5. A task work / mission permit allowing for an employer to bring an employee from outside of the country in order to perform temporary work or a specific project for a definite term;
  6. A part time work permit;
  7. A juvenile work permit allowing for an employer to employ a juvenile between the age of 15 and 18;
  8. A student training and employment permit allowing for an employer to train or employ a student over the age of 15;
  9. GCC national work permit allowing employers to employ nationals of other GCC states;
  10. Golden visa work permit allowing the employment of an employee in the UAE who holds a golden visa;
  11. National trainee work permit; and
  12. Self-employment permit allowing individuals to engage in freelance work (under self residence for foreign nationals).

Additional types of work permits may be introduced in accordance with the provisions of the New Law.

  1. Equality and Non-Discrimination

The New Law introduces the prohibition of discrimination on the basis of: race, ethnicity, sex, religion, national origin, or on the grounds of disability (Article 4 of the New Law).

Women are entitled to identical wages for the same work (Article 4(4) of the New Law).

  1. Employment Contracts

Article 10(1) of the Executive Regulations provides the minimum requirements necessary for the purpose of a valid employment contract.

Article 10(2) of the Executive Regulations specifically permits an employer (with the consent of an employee) to add additional provisions (over those stipulated under Article 10(1) of the Executive Regulations) provided that the same are not in contradiction with the provisions of the New Law and the Executive Regulations.

The Ministry shall prepare (pursuant to Article 10(4) of the Executive Regulations) contract forms for:

  1. Full time employment;
  2. Part time employment;
  3. Flexible work employment;
  4. Remote work employment; and
  5. Job sharing employment.

The Ministry may as required introduce further standard form contracts.  It will be interesting to see if free zones (e.g.: JAFZA, DAFZA, DMCC and DDA) which are subject to the New Law follow suite.  At the date of this client alert not all free zones have introduced new standard form contracts in compliance with the New Law and Executive Regulations.

  1. Salary

All employers registered with the Ministry are required to pay employees under the Wage Protection System (“WPS”) (Article 16(1)(b) Executive Regulations).  All wages are to be paid in AED unless agreed otherwise by the contracting parties.  How this will work in practice given WPS has previously provided for payment only AED remains to be seen.

Article 25 of the New Law sets out permitted deductions from an employee’s salary.  Notably Article 25(1)(b) of the New Law puts a limit on the percentage of salary that can be deducted at 20%, it is unclear if this is a given month or during a year.  Consideration will need to be given to circumstances where housing loans or the like are advanced and then repaid.

Article 26 of the New Law provides that a minimum wage may be set in the future.

  1. Contract Term

One fundamental change under the New Law is the abolition of unlimited term contracts.  The New Law introduces a maximum fixed term of 3 years (Article 8(3) of the New Law), albeit it is our understanding that employers which are Dubai onshore entities will continue to be granted only 2 year work permits and as such fixed term contracts in such instances will be granted on the basis of 2 year renewable terms.

Fixed term contracts may be extended for up to a 3 year period (noting comments above regarding visa terms) or shorter periods one or more times and a renewal does not necessarily have to involve express written notice and consent, instead it can be extended implicitly (Article 8(5) of the New Law).

  1. Probationary Period

As with the Previous Law, probationary periods can run for a period not to exceed 6 months (Article 9(1) of the New Law)).  An employer wishing to terminate during a probationary period must provide at least 14 days’ notice to terminate.  In the event that an employee wishes to terminate (Article 9(1) of the New Law during the probationary period, the employee must: provide at least 30 days’ notice where they wish to take on employment with another employer in the UAE (Article 9(2) of the New Law); or provide at least 14 days’ notice where the employee wishes to leave the UAE (Article 9(3) of the New Law).

  1. Employer Obligations

An employer may not assign work to an employee that is “fundamentally different” to the work agreed in the employment contract (Article 12 of the New Law).

An employer is obliged amongst other things to: keep employee files in accordance with the provisions of Article 13(1) of the New Law; invest in the development of skills of employees (Article 13(5) of the New Law); bear the costs of private healthcare in accordance with corresponding legislation (Article 13(8) of the New Law); and provide its employees (upon the employee’s request) at termination with a confirmatory notice setting out date of joining, date of expiry, total service, last wage, job title and the reason for termination, even if the contents of that letter reduces the ability of the exiting employee to gain employment (Article 13(11) of the New Law).

  1. Employee Obligations

The employee is under various obligations pursuant to Article 16 of the New Law, these include but are not limited to obligations of: confidentiality (Article 16(4) of the New Law); developing functional and professional skills (Article 16(8) of the New Law); and honesty and professionalism in the performance of work (Article 16(2) of the New Law).

  1. Working Hours / Overtime

Subject to exceptions under the Executive Regulations, the maximum working hours for an employee is 8 hours a day or 48 hours per week, with an emphasis on the word “or” (Article 17(10) of the New Law).

Article 15(1) of the Executive Regulations stipulates specific circumstances where time spent by an employee travelling to their workplace will count towards their working hours.  As a general rule such travel time does not apply (Article 17(3) of the New Law).

Overtime payment mechanisms are set out under Article 19 of the New Law.  A maximum of 2 hours overtime a day is permitted (Article 19(1) of the New Law).  Overtime is paid at a 25% uplift of basic salary save where the hours of overtime take place between 10pm and 4am when overtime is paid at a 50% uplift of basic salary (Article 19(3) of the New Law).

If work is required on a rest day the overtime payment is paid at a 50% uplift of basic salary (Article 19(4) of the New Law).

Overtime entitlement does not extend to those categories of employees set out in Article 15(4) of the Executive Regulations. Furthermore such categories of worker are also exempt from the maximum work hours.  Employees who are exempt include directors and board Chairman and persons holding supervisory positions, it remains to be seen how this will work in practice.

  1. End of Service Gratuity

The rules regarding the payment of end of service gratuity under the New Law introduce two key changes: 1) the concept of deductions to gratuity entitlement where an employee terminates their employment (prior to the completion of 5 years’ service) is removed; and 2) the law is now specific in terms of UAE nationals employed in the private sector having no rights to end of service gratuity.  All other gratuity provisions remain as per the Previous Law i.e. gratuity is payable after 1 years’ continuous service, calculated only against base salary, capped at 2 years’ salary and calculated on the basis of 21 days base salary for the first 5 years of service and 30 days base salary for service over 5 years.  Entitlement to gratuity for part years served after the conclusion of the first year of continuous service remain.

It is worth noting that the New Law does (under Article 51(8)) leaves the possibility that end of service may be replaced by an alternative pensions system likely to be similar to the DEWS system operational in the Dubai International Financial Centre.

Article 53 of the New Law provides that all employee entitlements are to be paid within 14 days from the date of contract expiration.

Article 29 of the Executive Regulations places controls on what deductions an employer can make against end of service gratuity.  This does include the repayment of loans (Article 29(1)(a) of the Executive Regulations).

Article 30 of the Executive Regulations regulates how end of service will be paid to employees who are not full time employees.

  1. Labour Claims

Article 55(1) of the New Law provides that where an employee has a claim against their employer and the claim does not exceed AED 100,000, then any court fees which would be normally payable by the employee are waived.

  1. Holiday Entitlement

The New Law provides for a minimum holiday entitlement of 30 days (typically this is reflected in employment contracts as 25 working days) (Article 29(1) of the New Law).  For new employees holiday entitlement accrues at 2 days per month for the first 6 months of service.

Part time workers are entitled to holiday pursuant to the requirements of Article 18 of the Executive Regulations.

Article 19 of the Executive Regulations provides that where an employer has allowed for the carry over of balance of unused holiday entitlement (Article 29(5) of the New Law).  Article 19(1) of the Executive Regulations provides that an employee may carry forward no more than half of their annual leave into the following year.

Article 19(2) of the Executive Regulations provides that where an employee’s service is terminated, a cash allowance for accrued but unused holiday at the date of termination is payable based on basic salary.

  1. Maternity Leave

Article 30 of the New Law provides 60 days of maternity leave, 45 days at full pay and 15 days at half pay.  Additional unpaid leave is available in certain medical circumstances.

For employees returning from their maternity leave, and for a period not exceeding 6 months from the date of delivery shall be entitled to 2 daily rest periods for breastfeeding not to exceed an hour each day of entitlement.

  1. Sick Leave

Following the completion of a probation period, an employee is entitled (under Article 31 of the New Law) to sick leave of no more than 90 consecutive or intermittent days each year based on: a) 15 days full pay; b) 30 days with half pay; and c) the period thereafter unpaid.

An employer may terminate the service of an employee after sick leave has been exhausted (Article 31(5) of the New Law).

Article 20(1) of the Executive Regulations recognises that no sick leave will be paid where illness relates to abuse of drugs or alcohol or a violation of an employer’s safety instructions.

  1. Various Leaves

The New Law (Article 32 and Article 21 of the Executive Regulations) introduces a number of additional leave entitlements including parental leave, study leave, mourning leave, sabbatical leave for UAE nationals performing national or reserve service.  Unpaid leave entitlement is covered under Article 33 of the New Law.

  1. Wrongful Termination

The arbitrary dismissal provisions under the Previous Law have been abolished and replaced by Article 47 of the New Law, which provides that an employee’s termination is unlawful if the termination relates to: a) filing a serious complaint with the Ministry; or b) filing a case against the employer which has proven to be correct.

Any successful wrongful termination claim compensation is capped at 3 months of salary- subject to the court’s discretion.

  1. Non-Competes

Article 10 of the New Law allows non-compete provisions to be applied to protect legitimate business interests.  Such non-competes are not to exceed 2 years.

Article 12 of the Executive Regulations provides that in order for a non-competition clause to apply then the following must be specified: a) geographical scope; b) term not to exceed 2 years; and c) nature of work that is being prohibited.

Any non-compete provision will have no standing where the employer has terminated the employee’s employment.  Article 12(2) provides that the enforcement of any non-compete requires the employer to demonstrate damage arising from the breach.

Article 12(c) of the Executive Regulations provides that certain categories of employee may not be subject to non competes.

  1. Suspension

An employer may suspend an employee for a period of 30 days for the purposes of conducting a disciplinary investigation (Article 40(1) of the New Law).  During that suspension period an employer is entitled to suspend half of the suspended employee’s salary.  Insofar as the employee is not terminated following their suspension, the employee’s suspended salary shall be repaid.

Further suspension rights exist where an employee has been accused of assault or criminal behaviour involving fraud or dishonesty.

  1. Disciplinary Rules

Article 39 of the New Law together with Article 24 of the Executive Regulations regulate disciplinary rules and sanctions, which broadly speaking run from written notices, wage deductions and suspensions.

  1. Termination of Employment

Article 42 of the New Law provides that a contract of employment can be terminated as follows: a) mutual agreement; b) expiry of a contract term unless renewed; c) death of the employee or permanent incapacity; d) final judgment involving a prison sentence of greater than 3 months; e) closure of the employer; f) insolvency of the employer; or g) failure of the employee to renew their work permit.

Under Article 43 of the New Law, either party is entitled to terminate the contract of employment for any legitimate reason, provided that notice is given.  Minimum notice is 30 days and maximum notice is 90 days.

Article 44 of the New Law is in effect the new Article 120 from the Previous Law.  Article 44 sets out circumstances in which termination without notice can occur.

Article 46 of the New Law provides that an employee’s service cannot be terminated by an employer before exhausting all sick leave.

  1. Compliance

Employers are required to ensure that unlimited term employment contracts are converted to fixed term arrangements in accordance with the New Law and Executive Regulations within 1 year of the adoption of the New Law, i.e., 2 February 2023.

The provisions of the New Law and Executive Regulations apply to all unlimited term contracts governed pursuant to the Previous Law.

© 2022 Bracewell LLP
For more articles on UAE legal updates, visit the NLR United Arab Emirates section.

Five U.S. Immigration Law Trends to Watch in 2022

A series of significant developments in U.S. immigration law has already marked the beginning of 2022 and more can be expected.

In January, the Biden Administration unveiled a series of policies aimed at attracting and retaining international talent in STEM (science, technology, engineering, and math) fields. U.S. Citizenship and Immigration Services (USCIS) and Customs and Border Protection (CBP) have made strides in rolling out work authorization for dependent spouses of holders of visas in the E (Treaty Trader or Treaty Investor) and L (Intra-company Transfer) categories, thereby eliminating the need for a separate application for work authorization. Meanwhile, the Department of Justice (DOJ) has remained active in enforcement of the Immigration and Nationality Act (INA) immigration anti-discrimination provisions, with several settlements in 2021 involving allegations of discrimination preventing discrimination against U.S. workers and a renewed focus on investigating claims of document abuse in Form I-9 completion, maintenance, and reverification. This overlaps with the continued I-9 flexibility in response to the COVID-19 pandemic granted by Immigration and Customs Enforcement (ICE), which remains in effect until April 2022. All of this follows on the heels of ongoing discussion in Congress of possible immigration reform (as most recently reflected in the Build Back Better bill).

Below are five areas to keep an eye on in the year ahead.

STEM-Related Policy Changes

New policies rolled out by the Biden Administration seek to provide greater predictability and clarity for pathways for international STEM talent, by way of the F-1 student, J-1 exchange visitor, O-1 extraordinary ability, and EB-2 National Interest Waiver Immigrant visa categories:

  • F-1 STEM OPT: The Department of Homeland Security (DHS) announced 22 new fields of study added to the STEM Optional Practical Training (OPT) program to enhance the contributions of nonimmigrant students studying in STEM fields. These new fields, listed in a Federal Register notice, include Bioenergy, Forestry, Human-Centered Technology Design, Cloud Computing, Climate Science, Earth Systems science, Economics, Computer Science, Geobiology, Data Science, and Business Analytics. DHS is also creating a process for the public to request a degree be added or removed from the designated degree list.
  • J-1 Exchange Visitors: The Department of State will allow J-1 Exchange Visitors enrolled in a pre-doctoral STEM program to qualify for an extension of up to 36 months for purposes of practical training in 2022 and 2023. This expansion of the J-1 program was rolled out in response to a Joint Statement of Principals in Support of International Education and pressure from Department-designated sponsors to increase STEM opportunities for international students.
  • O-1 Visas: USCIS released detailed guidance describing how entrepreneurs can qualify for O-1 (Individuals with Extraordinary Ability or Achievement) classification, including references to specific sources of evidence in STEM-related fields. The new guidance also expands on what constitutes a “field” of endeavor to include accomplishments in different but related occupations. In addition, it clarifies the use of comparable evidence to satisfy the regulatory criteria (see O-1 Visas Abound: USCIS Provides Detailed Guidance on O-1 Visa Eligibility).
  • EB-2 NIW Expansion: USCIS announced updated guidance on adjudicating requests for National Interest Waivers (NIW) regarding job offers and labor certification requirements for advanced degree professionals and individuals with exceptional ability, specifically in STEM-related fields. The new guidance grants certain evidentiary considerations to persons with advanced degrees in STEM fields, especially in focused critical and emerging technologies as determined by the National Science and Technology Council or the National Security Council. Under the new guidance, USCIS also considers an advanced degree in a STEM field tied to a proposed endeavor as an “especially positive factor” to show the individual is well-positioned to advance an endeavor of national importance.

E and L Spousal Work Authorization

USCIS announced new guidance in November 2021 clarifying that L-2 and certain E-2 spouses will no longer need employment authorization documents (EADs) to work. The guidance resulted from a court-approved settlement of ongoing litigation in response to extraordinarily long delays to obtaining EADs. As of January 31, 2022, spouses entering the United States in L-2 or E-2 status may obtain work authorization at the border by asking CBP to give them a “spousal” designation in their I-94 record that can be used for Form I-9 Employment Eligibility Verification purposes.

Department of Justice Immigration Anti-Discrimination Enforcement

While the DOJ and its Immigrant and Employee Rights Section have begun diversifying the scope of investigations, their enforcement of anti-discrimination provisions of the INA remains focused on protecting U.S. citizen workers. Several settlements in 2021 involved allegations of discrimination against U.S. citizen workers. The settlements resolved reasonable cause findings of discrimination against U.S. workers in Program Electronic Review Management (PERM) recruitment methods and H-2B (temporary non-agricultural) visa worker sponsorship programs, respectively. They reflect an ongoing trend following settlements that resolved allegations of discrimination in several companies’ PERM recruitment methods, despite adherence to the Department of Labor’s Labor Certification regulations.

ICE I-9 Flexibility Continues

On March 20, 2020, DHS announced that it would exercise prosecutorial discretion to defer the physical presence requirements associated with the Form I-9 Employment Eligibility Verification. This policy has been periodically extended, most recently to April 30, 2022. Under the guidance, employers can complete the Form I-9 verification process remotely for employees who work exclusively in a remote setting due to COVID-19-related precautions. However, employers must conduct in-person verification of identity and employment eligibility of such employees within three days of returning to the work location.

Immigration Reform

More business immigrant visas would become available under the most recent iteration of the Build Back Better reconciliation bill. If approved by the Parliamentarian and passed as it stands, the bill would make more immigrant visas available by:

  • Recapturing unused visa numbers from 1992 to 2021;
  • Retaining the availability of Diversity Visas from fiscal years 2017 to 2021; and
  • Making it possible for individuals with approved employment-based immigrant visas and priority dates more than two years away to file applications for adjustment of status by paying an additional $1,500 fee.

The bill also would substantially increase many filing fees. Rather than depositing those fees into the USCIS account, the supplemental fees would be deposited into the U.S. Treasury’s general funds. Another attempt at immigration reform has been introduced by House Republicans, the Dignity Act. The Dignity Act proposes paths to permanent residence and citizenship for certain undocumented individuals in exchange for more border security and mandating E-Verify. The fate of immigration reform remains in flux and should be a point of contention in the upcoming elections.

Jackson Lewis P.C. © 2022

Article By Otieno B. Ombok of Jackson Lewis P.C.

For more articles on immigration, visit the NLR Immigration section.

New York To Require Licensure of Pharmacy Benefit Managers

In an effort to counteract rising prescription drug costs and health insurance premiums, New York Governor Hochul signed S3762/A1396 (the Act) on December 31, 2021.  This legislation specifies the registration, licensure, and reporting requirements of pharmacy benefit managers (PBMs) operating in New York. The Superintendent of the Department of Financial Services (Superintendent) will oversee the implementation of this legislation and the ongoing registration and licensure of PBMs in New York. Notably, this legislation establishes a duty of accountability and transparency that PBMs owe in the performance of pharmacy benefit management services.

Though the Governor only recently signed the Act, on January 13, 2022, an additional piece of legislation, S7837/A8388, was introduced in the New York Legislature.  If passed, this legislation would amend and repeal certain provisions proposed in the Act.  As of the date of this blog post, both the Senate and Assembly have passed S7837/A8388, and it has been delivered to the Governor for signature. Anticipating that Governor Hochul will sign S7837/A8388 into law, we have provided an overview of the Act, taking into account the impact that S7837/A8388 will have, and the changes that both make to the New York State Insurance, Public Health, and Finance Laws.

New York State Insurance Law: Article 29 – Pharmacy Benefit Managers

The Act adds Article 29 to the Insurance Law.  The Section includes, among other provisions, definitions applicable to PBMs, as well as licensure, registration, and reporting requirements, as detailed below.

Definitions

Section 2901 incorporates the definitions of “pharmacy benefit manager” and “pharmacy benefit management services” of Section 280-a of the Public Health Law.  “Pharmacy benefit management services” is defined as “the management or administration of prescription drug benefits for a health plan.”  This definition applies regardless of whether the PBM conducts the administration or management directly or indirectly and regardless of whether the PBM and health plan are associated or related. “Pharmacy benefit management services” also includes the procurement of prescription drugs to be dispensed to patients, or the administration or management of prescription drug benefits, including but not limited to:

  • Mail service pharmacy;
  • Claims processing, retail network management, or payment of claims to pharmacies for dispensing prescription drugs;
  • Clinical or other formulary or preferred drug  list  development or management;
  • Negotiation  or  administration  of  rebates, discounts, payment differentials, or other incentives,  for  the  inclusion  of  particular prescription  drugs  in a particular category or to promote the purchase of particular prescription drugs;
  • Patient compliance, therapeutic intervention, or  generic  substitution programs;
  • Disease management;
  • Drug utilization review or prior authorization;
  • Adjudication  of appeals or grievances related to prescription drug coverage;
  • Contracting with network pharmacies; and
  • Controlling the cost of covered prescription drugs.

A “pharmacy benefit manager” is defined as any entity that performs the above listed management services for a health plan.  Finally, the term “health plan” is amended to encompass entities that a PBM either provides management services for and is a health benefit plan or reimburses, in whole or in part, at least prescription drugs, for a “substantial number of beneficiaries” that work in New York.  The Superintendent has the discretion to interpret the phrase “substantial number of beneficiaries.”

Registration Requirements

PBMs currently providing pharmacy benefit management services must register and submit an annual registration fee of $4,000 to the Department of Financial Services (DFS) on or before June 1, 2022 if the PBM intends to continue providing management services after that date. After June 1, 2022, every PBM seeking to engage in management services must register and submit the annual registration fee to DFS prior to engaging in management services. Regardless of when a PBM registers, every PBM registration will expire on December 31, 2023.

Reporting Requirements

On or before July 1 of each year, each PBM must report and affirm the following to the Superintendent, which includes, but is not limited to:

  • Any pricing discounts, rebates of any kind, inflationary payments, credits, clawbacks, fees, grants, chargebacks, reimbursement, other financial or other reimbursements, inducements, refunds or other benefits received by the PBM; and
  • The terms and conditions of any contract or arrangement, including other financial or other reimbursement incentives, inducements, or refunds between the PBM and any other party relating to management services provided to a health plan including, but not limited to, dispending fees paid to pharmacies.

The Superintendent may request additional information from PBMs and their respective officers and directors. Notably, the above documentation and information are confidential and not subject to public disclosure, unless a court order compels it or if the Superintendent determines disclosure is in the public’s best interest.

Licensing Requirements

The Superintendent is also responsible for establishing standards related to PBM licensure.  The Superintendent must consult with the Commissioner of Health while developing the standards.  The standards must address prerequisites for the issuance of a PBM license and detail how a PBM license must be maintained.  The standards will cover, at a minimum, the following topics:

  • Conflicts of interest between PBMs and health plans or insurers;
  • Deceptive practices in connection with the performance of management services;
  • Anti-competitive practices connected to the performance of management services;
  • Unfair claims practices in connection with the performance of pharmacy benefit managements services;
  • Pricing models that PBMs use both for their services and for payment of services;
  • Consumer protection; and
  • Standards and practices used while creating pharmacy networks and while contracting with network pharmacies and other providers and in contracting with network pharmacies and other providers.  This will also cover the promotion of patient access, the use of independent and community pharmacies, and the minimization of excessive concentration and vertical integration of markets.

To obtain a license, PBMs must file an application and pay a licensing fee of $8,000 to the Superintendent for each year that the license will be valid.  The license will expire 36 months after its issuance, and a PBM can renew their license for another 36-month period by refiling an application with the Superintendent.

New York State Public Health Law: Amendments to Section 280-a

Duty, Accountability, and Transparency of PBMs

As briefly mentioned above, the Act also amends Public Health Law 280-a.  Notably, this legislation imposes imposes new duty, accountability, and transparency requirements on PBMs.  Under the new law, PBMs interacting with a covered individual have the same duty to a covered individual as the PBM has to the health plan for which the PBM is performing management services. PBMs are also compelled to act with a duty of good faith and fair dealing towards all parties, including, but not limited to, covered individuals and pharmacies. In addition, PBMs are required to hold all funds received from providing management services in trust.  The PBMs can only utilize the funds in accordance with its contract with their respective health plan.

To promote transparency, PBMs shall account to their health plan any pricing discounts, rebates, clawbacks, fees, or other benefits it has received. The health plan must have access to all of the PBMs’ financial information related to the management services the PBM provides it.  The PBMs are also required to disclose in writing any conflicts of interest PBMs shall disclose in writing any conflicts of interests, as well as disclose the terms and conditions of any contract related to the PBM’s provision of management services to the health plan, including, but not limited to, the dispensing fees paid to pharmacies.

New York State Finance Law: Addition of Section § 99-oo

If enacted, S7837/A8388 will add Section 99-oo to the Finance Law.  This law would create a special fund called the Pharmacy Benefit Manager Regulatory Fund (Fund).  The New York State Comptroller (Comptroller) and Commissioner of Tax and Finance will establish the Fund and hold joint custody over it. The Fund will primarily consist of money collected through fees and penalties imposed under the Insurance Law.  The Comptroller must keep Fund monies separate from other funds, and the money shall remain in the Fund unless a statute or appropriation directs its release.

Looking Forward: PBM Regulation in New York and Beyond

In a January 2, 2022, press release, Governor Hochul touted the Act as “the most comprehensive [PBM] regulatory framework” in the United States.  The Governor has made clear her intent to regulate PBMs, and New York lawmakers appear to just be getting started.  PBMs in New York and throughout the United States should anticipate their state’s legislatures introducing and enacting more laws and regulations.

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.
For more about pharmacies, visit the NLR Healthcare section.

New, Immigration-Friendly Mission Statement for USCIS

USCIS has changed its mission statement again – this time to adopt a more immigration-friendly stance.

In 2018, USCIS, under the Trump Administration, changed its mission statement to align with President Donald Trump’s focus on enforcement, strict scrutiny, and extreme vetting. The statement did not emphasize customer satisfaction, i.e., the satisfaction of petitioners, applicants, and beneficiaries. The change in emphasis was stark and did not go unnoticed. Instead, the mission statement focused on protecting and serving the American people and ensuring that benefits were not provided to those who did not qualify or those who “would do us harm ….” The 2018 statement did not speak of the United States as a “nation of migrants” and it focused on efficiency while “protecting Americans, securing the homeland, and honoring our values.”

The new 2022 USCIS mission statement reflects President Joe Biden’s belief that “new Americans fuel our economy as innovators and job creators, working in every American industry, and contributing to our arts, culture, and government.” Accordingly, he has issued executive orders directing the various immigration agencies to reduce unnecessary barriers to immigration. The 2022 mission statement also reflects President Biden’s directions and USCIS Director Ur M. Jaddou’s “vision for an inclusive and accessible agency.” Director Jaddou “is committed to ensuring that the immigration system . . . is accessible and humane . . . [serving] the public with respect and fairness, and lead with integrity to reflect America’s promise as a nation of welcome and possibility today and for generations to come.”

According to Director Jaddou, USCIS will strive to achieve the core values of treating applicants with integrity, dignity, and respect and using innovation to provide world-class service while vigilantly strengthening and enhancing security. On February 3, 2022, Director Jaddou, along with her deputies, briefed the nation on the agency’s efforts to improve service at USCIS. The leaders of the agency made clear that USCIS knows it must continue to eliminate backlogs, cut processing times, reduce unneeded Requests for Evidence and interviews, eliminate inequities in processing times across service centers and improve the contact center, among other things, to achieve its goals. Using streamlining and technological innovation, USCIS hopes to make itself much more consumer-oriented.

Article By Forrest G. Read IV of Jackson Lewis P.C.

For more immigration legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2022