Category: Uncategorized

The Department of Homeland Security (“DHS”) released its cybersecurity strategy on May 15, 2018.  The 35-page document sets forth a plan for managing cybersecurity risks through public and private sector collaboration.  By 2023, DHS seeks to have “improved national cybersecurity risk management by increasing security and resilience across government networks and critical infrastructure; decreasing illicit cyber activity; improving responses to cyber incidents; and fostering a more secure and reliable cyber ecosystem through a unified departmental approach, strong leadership, and close partnership with other federal and nonfederal entities.”  The strategy document is broken into five pillars:  risk identification; vulnerability reduction; threat reduction; consequence mitigation; and enable cybersecurity outcomes.  DHS assures that it “will maintain a leadership role, collaborating with other federal agencies, the private sector, and other stakeholders, across all of its cybersecurity mission areas to ensure that cybersecurity risks are effectively managed, critical networks are protected, vulnerabilities are mitigated, cyber threats are reduced and countered, incidents are responded to in a timely way, and the cyber ecosystem is more secure and resilient.”

“It’s a New Dawn; It’s a New Day; It’s a New Life for Me; and I’m Feeling [not so] Good”

While Nina Simone’s song captures the power of “feeling good,” the effects of an employee’s disability do not feel good for the employee or employer. And if your organization offers employee benefits that require the plan administrator to determine whether a plan participant is disabled, you should confirm that your plans reflect updated claims and appeal procedures.  Regulations finalized back in 2016 are now in effect.

“This Old World is a New World for Me”

Under ERISA, a federal law that applies to most benefit plans that are offered by an employer to its employees, the plan administrator is required to adopt reasonable procedures to govern how participants file claims and appeals, when and how such claims and appeals will be reviewed, and how notification of denials will be provided. The requirements have changed over the years.  Most recently, in December 2016, the U.S. Department of Labor (“DOL”) published a final regulation that revises requirements that apply to disability benefits.  Although the new regulation was final in January 2017, with the change in presidential administration, the DOL delayed its effective date pending consideration of its effects.  Many wondered if this delay would eventually lead to its withdrawal.  However, the DOL announced in 2018 that no further delays would be adopted.  As a result, the final regulations apply to claims involving disability determinations that are filed in ERISA plans on or after April 1, 2018.

“And a Bold World for Me”

The final regulations specifically adopt procedural changes to make the rules for disability claims and appeals more similar to the rules for group health plan claims and appeals. The new rules require changes in operations as well as changes in plan communications.  For instance, if there is new evidence or a new rationale presented on appeal, the claimant may affirmatively respond to the new evidence or rationale before the determination on appeal is made.  If a determination is made that differs from the views of the Social Security Administration or the claimant’s experts, the denial notice should address the difference. And depending on where a claimant lives, the plan may be required to provide notices and disclosures in a culturally and linguistically appropriate manner.  This can include taglines that indicate how to access non-English language assistance; offering a telephone customer assistance hotline that answers questions and provides assistance in filing claims and appeals in a non-English language; and upon request, translating notices into a non-English language.

The stakes for noncompliance are high. Some errors may permit a claimant to request a court’s review without first being required to exhaust the plan’s claim and appeal procedures.  Typically, an ERISA plan is permitted to require a claimant to exhaust the plan’s claims and appeals procedures.  Doing so supports Congress’s desire to permit a plan administrator to exercise its discretion in interpreting and applying plan language.  The potential to shift decision-making power from a plan administrator to a reviewing court emphasizes how important it is for plan sponsors to have their plans reviewed by experienced benefits counsel to ensure compliance.

A high FCC priority is to streamline broadband deployment including the wireless infrastructure necessary to provide service to the public. One FCC proceeding directed to that objective was initiated in April 2017 with a Notice of Proposed Rulemaking (NPRM), Notice of Inquiry (NOI), and Request for Comment (RFC) regarding Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment.

The NPRM addressed Pole Attachments, Expediting Copper Retirement, and Streamlining the Section 214(a) Discontinuation of Service process. The NOI addressed possible prohibition of state and local laws inhibiting broadband deployment and pre-emption of state laws governing copper retirement. The RFC addressed common carrier discontinuation of service issues unrelated to wireless infrastructure and the environmental review process.

In November 2017 the FCC adopted a (first) Report and Order (R&O). It concluded that in specified circumstances “replacement of a pole that was constructed with a sole or primary purpose other than supporting communications antennas with a pole that will support such antennas would have no potential to affect historic properties.”  Accordingly, it excluded replacement utility poles from required review under Section 206 of the National Historic Preservation Act (NHPA) if specified conditions are met. Please see my December 5, 2017 blog entry “Is the Road to 5G Paved with Federal and State Pre-emptions of Local Authority?” for a summary of those conditions.

In March 2018, the FCC adopted a Second R&O. In it, the FCC excluded small wireless facilities from National Historic Preservation Act (NPHA) and National Environmental Policy Act (NEPA) review under specified circumstances and also streamlined NHPA and NEPA review for larger wireless facilities. The FCC stated that these actions will make a real difference in promoting U.S. leadership in 5G and can cut the costs of deployment by 80%, trim months off deployment timelines, and incentivize thousands of new wireless deployments thus expanding the reach of 5G and other advanced wireless technologies in the U.S.

The FCC concluded that deployment of small wireless facilities by non-Federal entities do not require historic preservation review under NHPA nor environmental review under NEPA because such deployments are neither an “undertaking” (NHPA) nor a “major Federal action” (NEPA). The Second R&O noted that the FCC last considered whether some wireless facilities could be exempt from these requirements in 2004 when virtually all wireless sites were “macro” sites, but that new small cell sites are materially different in size and in their likelihood of impact on surrounding areas. The FCC concluded that conducting such reviews for small wireless sites would result in costs far exceeding benefits and that the burden would grow exponentially as ever-increasing numbers of small wireless facilities are deployed.

Here is the newly amended FCC rule that specifies the conditions for exclusion from NHPA and NEPA review for small wireless facilities:

Section 1.1312(e): Paragraphs (a) through (d) of this section shall not apply:

1. to the construction of mobile stations; or

2. where the deployment of facilities meets the following conditions:

(i)  The facilities are mounted on structures 50 feet or less in height including their antennas as defined in § 1.1320(d), or the facilities are mounted on structures no more than 10 percent taller than other adjacent structures, or the facilities do not extend existing structures on which they are located to a height of more than 50 feet or by more than 10 percent, whichever is greater;

(ii) Each antenna associated with the deployment, excluding the associated equipment (as defined in the definition of antenna in § 1.1320(d)), is no more than three cubic feet in volume;

(iii) All other wireless equipment associated with the structure, including the wireless equipment associated with the antenna and any pre-existing associated equipment on the structure, is no more than 28 cubic feet in volume;

(iv) The facilities do not require antenna structure registration under Part 17 of this chapter;

(v) The facilities are not located on Tribal lands, as defined under 36 CFR § 800.16(x); and

(vi) The facilities do not result in human exposure to radiofrequency radiation in excess of the applicable safety standards specified in § 1.1307(b).

These changes were adopted by the FCC on a 3-2 vote. The changes go into effect on July 2, 2018.

Part 2 will address the actions of the FCC to streamline its environmental review process for larger wireless facilities.

Since 6 April 2018 companies have been unable to grant new EMI options, because the existing EU state aid approval expired without fresh approval having been received.

So there has been much excitement today at the news that the EU Commission has now given state aid approval, and companies can now grant new EMI options. For companies that granted EMI options since 6 April (e.g. as part of a commercial transaction which could not be delayed) the wait continues as the EU Commission’s press release does not state the date from which their approval applies. We expect this will be indicated in the EU Commission’s formal decision, which has not yet been published. For the majority though, it’s good news and a welcome return to “business as usual”.

The state aid approval will apply as long as the UK is an EU member state, and the EU Commission has indicated that long-term approval of the EMI scheme will need to be dealt with in the EU withdrawal agreement.

After the Supreme Court’s TC Heartland^[1] decision reaffirmed 28 U.S.C. § 1400(b) to be “the sole and exclusive provision controlling venue in patent infringement actions,” one important question remained as to whether foreign defendants (especially foreign corporations) in a patent case may invoke that provision to challenge venue.  On May 9, 2018, the Federal Circuit denied HTC Corporation’s attempt to defeat venue based on § 1400(b), and held that provision does not provide an exception to the “long-established rule that suits against aliens are wholly outside the operation of all federal venue law, general and special.”  In re HTC Corp., No. 2018-130, slip op. at 7 (Fed. Cir. May 9, 2018).

In In re HTC Corp., HTC Corporation, a Taiwanese corporation with its principal place of business in Taiwan, petitioned the Federal Circuit for a writ of mandamus seeking dismissal for improper venue pursuant to 28 U.S.C. § 1406(a) of a patent infringement action pending against HTC Corporation in the District of Delaware.  Id. at 2.  The Federal Circuit denied the mandamus petition after finding that HTC Corporation failed to meet each of the three conditions necessary for obtaining such a drastic remedy.  Id. at 3-20.

First, the Federal Circuit found that HTC Corporation failed to demonstrate that it had “no other adequate means to attain the relief [it] desires.”  Id. at 3-7.  The Court noted that “unlike a defendant challenging the denial of a [28 U.S.C.] § 1404(a) transfer motion, a defendant aggrieved by the denial of an improper-venue motion has an adequate remedy on appeal from a final judgment,” namely, by obtaining an appellate “order vacating the judgment . . . and directing the remand of the action to the [appropriate venue].”^[2]  Id. at 4-5 (citations omitted).

Next, the Federal Circuit held that HTC Corporation failed to show a clear and indisputable right to the issuance of the writ.  Id. at 7.  The Court examined two Supreme Court decisions directly addressing whether the venue laws protect alien defendants.  In In re Hohorst, the Supreme Court established what the Federal Circuit referred to as the “alien-venue rule.”  150 U.S. 653, 662 (1893) (holding that the venue restriction was “inapplicable to an alien or a foreign corporation sued here, . . . and that, consequently, such a person or corporation may be sued by a citizen of a state of the Union in any district in which valid service can be made upon the defendant”); In re HTC Corp., No. 2018-130, slip op. at 8.  Later in Brunette Machine Works, Ltd. v. Kockum Industries, Inc., the Supreme Court upheld the alien-venue rule, despite the existence of § 1400(b).  406 U.S. 706, 714 (1972) (concluding that the “broad and overriding” principle stated in then-§ 1391(d)^[3] “cannot be confined in its application to cases that would otherwise fall under the general venue statutes,” as the statute merely reflected the “long-established rule that suits against aliens are wholly outside the operation of all the federal venue laws, general and special”); In re HTC Corp., No. 2018-130, slip op. at 9-10.

The Federal Circuit further rejected HTC Corporation’s contention that “§ 1400(b) should apply to it because Congress abrogated Brunette—and the alien-venue rule—through the Federal Courts Jurisdiction and Venue Clarification Act of 2011 (‘the 2011 amendments’).”  In re HTC Corp., No. 2018-130, slip op. at 10-11.  The Court noted that § 1400(b) “was not intended to supplant the longstanding rule that the venue laws do not protect alien defendants.”  In re HTC Corp., No. 2018-130, slip op. at 11; see also Brunette, 406 U.S. at 713-14 (“Since the general venue statutes did not reach suits against alien defendants, there is no reason to suppose the new substitute in patent cases was intended to do so”).  The Court then held that the recent “TC Heartland [decision] d[id] not alter this conclusion” because “while § 1400(b) governs venue in patent cases, it governs only to displace otherwise-applicable venue standards, not where there are no such standards due to the alien-venue rule.”  In re HTC Corp., No. 2018-130, slip op. at 12-13.  The Court also found no indication that Congress intended to either “modify the alien-venue rule specifically for patent cases” or “discard the well-established alien-venue rule in favor of generally bringing alien defendants, including foreign corporations . . ., within the protection of the venue laws.”^[4]  Id. at 14-15.  Although abiding by the alien-venue rule may create a loophole for a plaintiff to forum shop, the Court emphasized that HTC Corporation’s argument would “create[] a far more unsatisfactory loophole—a complete inability for a patent owner to bring its infringement claims against alien defendants that fall outside the non-residence-based clause of § 1400(b).”  Id. at 19.

Therefore, the Federal Circuit determined that “[w]ith the Supreme Court having spoken on this issue twice [in In re Hohorst and Brunette], this court—without clear guidance from Congress—will not broadly upend the well-established rule that suits against alien defendants are outside the operation of the federal venue laws.”  Id.

Finally, as to the third condition of obtaining the mandamus relief, the Federal Circuit was not convinced that a writ would be warranted in this case “even if [HTC Corporation] had satisfied the first two mandamus requirements,” because HTC Corporation cited no case adopting its interpretation while “characterize[ing] this legal issue as ‘unsettled’ and resulting in ‘inconsistent’ holdings.”  Id. at 20.

Implications

• In patent infringement actions, venue is now proper in any judicial district for foreign defendants, including foreign corporations.  The foreign defendants cannot rely on § 1400(b) or even the general venue statutes to dismiss or transfer a case pursuant to § 1406(a).
• Depending on the particular facts in a case, foreign defendants may still seek to transfer the patent infringement action pursuant to § 1404(a).
• In patent infringement actions against foreign defendants, plaintiffs’ ability to force foreign defendants into an unfavorable forum can give the plaintiffs additional leverage in settlement negations.

_{[1] TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017).}

_{[2] The Court did recognize that “while an appeal will usually provide an adequate remedy for a defendant challenging the denial of an improper-venue motion, there may be circumstances in which it is inadequate.”  But the Court determined that it was unnecessary to articulate such
circumstances in this case, because HTC Corporation’s “only argument is that it should be able to avoid the inconvenience of litigation by having this issue decided at the outset of its case,” which was rejected by the Supreme Court in Bankers Life & Cas. Co. v. Holland, 346 U.S. 379, 383 (1953) (“[T]he extraordinary writs cannot be used as substitutes for appeals, even though hardship may result from delay and perhaps unnecessary trial.”).  In re HTC Corp., No. 2018-130, slip op. at 6-7.} 

_{[3] Section 1391(d), at the time, stated that “[a]n alien may be sued in any district.” 28 U.S.C. § 1391(d) (1970).}

_{[4] The Court noted that “Congress made only one clear change to the alien-venue rule in 2011” by “grant[ing] venue protection to alien natural persons having permanent resident status” but implemented “no comparable change with respect to foreign corporations.”  In re HTC Corp., No. 2018-130, slip op. at 13-17.} 

In Ionetz v. Menard, Inc., the Wisconsin Labor and Industry Review Commission overruled its previous and highly controversial decision Xu v. Epic Systems, Inc..

In Xu, the commission held that an employee cannot waive his or her right to file a discrimination complaint against his or her employer under the Wisconsin Fair Employment Act (WFEA). It further held that an employee may prosecute his or her WFEA claims on the merits against his or her former employer and that he or she can potentially receive a judgment against the former employer before the Wisconsin Equal Rights Division (ERD), even if he or she waived and released all such claims against his or her employer in a valid severance agreement. The commission based its decision on the conclusion that the ERD is an agency comparable to the Equal Employment Opportunity Commission (EEOC) and that the “language used in the severance agreement . . . was intended to preserve the complainant’s right to file a complaint with the ERD.” Also, the commission incorrectly concluded that, as with federal agencies such as the EEOC, “the complainant cannot be prohibited from . . . filing a complaint with the ERD.”

However, just months later in Ionetz, the commission overruled Xu and held that the law is just the opposite for WFEA claims before the ERD. As declared in Ionetz, “[u]nlike the broad investigative, enforcement and prosecutorial authority granted to EEOC . . . ERD’s statutory authority is limited to that of an adjudicative body charged with deciding particular disputes that are filed with it.” Also, “’unlike the EEOC . . . [ERD] has no independent ability to prosecute claims for violations of the WFEA.” Rather, according to the commission in Ionetz, the ERD’s “only statutory role in enforcing the WFEA is to adjudicate claims between employers and their employees.” (Emphasis in original)

“Consequently, where an employee has agreed to waive his or her discrimination claim against an employer, or to have it adjudicated in another forum [e.g., in arbitration], there remains no ancillary ERD authority that requires protection.” Also, “parties cannot by contract impose obligations on ERD that are inconsistent with the authority granted to it under the WFEA.” Ultimately, “the parties’ agreement to preserve the employee’s right to file a claim with the agency cannot require—or even empower—ERD to investigate or adjudicate claims that have been waived or committed to an alternate forum for resolution.”  The commission then held that ERD was without authority to advance such claims and overruled Xu.

As a result, a valid arbitration agreement or a waiver of claims in a settlement or severance agreement bars prosecution of WFEA claims before the ERD. “[O]nce the individual claim is waived (or . . . required to be submitted to another forum for resolution) there remains no additional investigative, enforcement or other function for ERD to perform.”

On April 24, 2018, the Centers for Medicare & Medicaid Services (“CMS”) announced a new proposed rule (CMS-1694-P) (“Proposed Rule”). In an attempt to “empower patients through better access to hospital price information,” CMS plans to alter the requirements previously established by Section 2718(e) of the Affordable Care Act.^[1]

Under Section 2718(e), “each hospital operating within the United States shall for each year establish (and update) and make public…a list of the hospital’s standard charges for items and services provided by the hospital.” CMS has previously interpreted Section 2718(e) to require hospitals to either make public a list of standard charges or implement policies for allowing the public to view a list of the standard charges by individual request. It was originally believed by CMS that patients could use such information to compare charges for similar services across hospitals, just as someone “shops around” for the best price in plumbing services. However, CMS contends that Section 2718(e), as is currently written, is insufficient to establish the necessary hospital price transparency.

The Proposed Rule takes Section 2718(e) a step further, and provides that beginning January 1, 2019, CMS will update the guidelines to require hospitals to make available a list of their current standard charges via the Internet in a machine readable format, which requirement a hospital may satisfy by publishing its chargemaster (i.e., a hospital’s comprehensive list of services and charges billable to a hospital patient). In addition to the publication requirement, the Proposed Rule further requires hospitals to update the standard charges they publicize at least annually.

Recently, some states, such as California and Colorado, have also taken steps to promote hospital price transparency. Under California’s “Payers’ Bill of Rights,”^[2] California hospitals are required to either post an electronic copy of the charges for its services on the hospital’s website, or make a written or electronic copy available at the hospital’s location. Under Colorado law,^[3] a healthcare provider must make available to the public, either electronically or by posting on the provider’s website, the healthcare prices of at least the 15 most common services rendered by the provider. Nevertheless, despite the move toward transparency at the state level, many states still lack extensive hospital price transparency statutes.

In addition to the Proposed Rule’s push toward price transparency, CMS has asked for public comments on a series of questions regarding price transparency, including the following:

• Should “standard charges” be defined as the average rates for the items on the chargemaster; average rates for groups of services commonly billed together; or the average discount off the chargemaster amount across all payers?
• What types of information would be most beneficial to patients; how can hospitals best enable patients to use charge information in their decision-making; and how can CMS and providers help third parties create patient-friendly interfaces with these data?
• Should healthcare providers be required to inform patients how much their out-of-pocket costs for a service will be before those patients are furnished that service?
• What is the most appropriate mechanism for CMS to enforce price transparency requirements? Should CMS impose civil monetary penalties on hospitals that fail to comply with the publication requirement?

Comments on the Proposed Rule are due by June 25, 2018.

_{[1] 42 U.S. Code § 300gg-18.}

_{[2] California Health and Safety Code Sections 1339.50-1339.59.}

_{[3] Colorado Revised Statutes Section 25-49-103(I).}