Category: Uncategorized

Antitrust Law Post Antonin Scalia

gavel scales of justice blueWith the untimely passing of Supreme Court Justice Antonin Scalia, perhaps the best known and most controversial Justice on the Court, commentators, including this one, have been called upon to assess his legacy – both immediate and long term – in various areas of the law.

Justice Scalia was not known primarily as an antitrust judge and scholar. Indeed, in his confirmation hearing for the Court, he joked about what he saw as the incoherent nature of much of antitrust analysis. What he was best known for, of course, is his method of analysis of statutes and the Constitution: a literal textualism with respect to statutes and a reliance on “originalism” with respect to the Constitution.

Probably his most influential antitrust opinion was the 2004 decision in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko LLP which limited antitrust plaintiffs’ ability to hold a company with monopoly power liable for failing to cooperate with rivals.

Taking a literalist view of the Sherman Act, Justice Scalia wrote that there was a good reason why Section 2 claims required a showing of anti-competitive conduct, not just a monopoly.

The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system,” he wrote. “The opportunity to charge monopoly prices — at least for a short period — is what attracts ‘business acumen’ in the first place; it induces risk-taking that produces innovation and economic growth.

Thus, Justice Scalia fashioned a majority in holding that the competitive conduct of a monopolist that had earned its hegemony was not inherently suspect. This has come to be a dominant view generally in the antitrust field, but critics have argued that the decision entrenches power and judicial liberals who might succeed Justice Scalia could take a more restrictive, less literal view of the law.

In 1991, Justice Scalia led a majority in Columbia v. Omni Outdoor Advertising Inc., a case in which a competitor had claimed that an advertising rival and a municipality had conspired in passing an ordinance favoring the incumbent. In ruling against the plaintiff, Justice Scalia wrote that there was no “conspiracy exception” to Parker v. Brown, the 1943 Supreme Court case that established antitrust immunity for anti-competitive restraints imposed by state governments. On the other hand, in the recent North Carolina Dentists litigation with the FTC, Justice Scalia joined a majority that held the state action exemption did not apply to certain guild behavior where there was no active supervision by the state – again, a literalist approach.

Justice Scalia was influential in limiting class actions, enforcing arbitration agreements and requiring strict rules of pleading plausible causes of action. Cases like the antitrust actions in AT&T v. Concepcion and American Express v. Italian Colors, backing enforcement of arbitration agreements that blocked class treatment of claims, and the now often-cited cases of Twombley and Iqbal with respect to pleading currently rule the entry gate for large-case litigation, particularly antitrust.

For all of his conservative rulings, Justice Scalia was not a results-oriented judge determined to put antitrust plaintiffs in their place, I think that he would have argued that he was strictly neutral on the merits and didn’t care whether business prevailed or whether the class action plaintiffs prevailed. Whether, the conservative majority that adopted his methods will continue to hold, or whether some of these methods will be superseded by a more-elastic interpretive mode of judging will be at the forefront of the confirmation hearing of the next Justice.

Article By Stuart M. Gerson of Epstein Becker & Green, P.C.

©2016 Epstein Becker & Green, P.C. All rights reserved.

Rosa Parks Name and Likeness Free for Use?

Rosa and Raymond Parks Institute for Self Development v. Target Corp.

Addressing the balance between privacy rights and matters of public interest, the U.S. Court of Appeals for the Eleventh Circuit affirmed the district court’s dismissal of the plaintiff’s complaint, holding that the defendant was shielded by the First Amendment from a lawsuit claiming the retailer violated the publicity rights of civil rights icon Rosa Parks by selling various products that included the plaintiff’s picture.Rosa and Raymond Parks Institute for Self Development v. Target Corp., Case No. 15-10880 (11th Cir., Jan. 4, 2016) (Rosenbaum, J.).

Target Corporation (the defendant), a national retail chain, sold books, a movie and a plaque that included pictures of Rosa Parks, an icon of the civil rights movement who, in 1955, refused to surrender her seat to a white passenger on a racially segregated Montgomery, Alabama bus. The Rosa and Raymond Parks Institute for Self Development (the plaintiff) owns the right and likeness of Rosa Parks. The plaintiff filed a complaint against the defendant, alleging unjust enrichment, right of publicity and misappropriation under Michigan common law for the defendant’s sales of all items using the name and likeness of Rosa Parks. The plaintiff complained that by selling the products, the defendant had unfairly and without the plaintiff’s prior knowledge, or consent, used Rosa Parks’ name, likeness and image as used on the products. The plaintiff further argued that the defendant promoted and sold the products using Rosa Parks’ name, likeness and image for the defendant’s own commercial advantage. After the defendant filed a motion for summary judgment, the district court dismissed the complaint. The plaintiff appealed.

On appeal, the 11th Circuit, sitting in diversity, applied Alabama’s choice-of-law rules, which holds that the procedural law of the forum state should be applied, while the law of the state in which the injury occurred governs the substantive rights of the case. Accordingly, the 11th Circuit applied the procedural rules of Alabama and the substantive law of Michigan.

In Michigan, the common-law right of privacy protects against four types of invasions of privacy: intrusion upon the plaintiff’s seclusion or solitude, or into his private affairs; public disclosure of embarrassing private facts about the plaintiff; publicity which places the plaintiff in a false light in the public eye; and appropriation for the defendant’s advantage, of the plaintiff’s name or likeness. The right of privacy is not absolute, and Michigan courts have long recognized that individual rights must yield to the qualified privilege to communicate on matters of public interest.

Applying Michigan law, the Court affirmed the district court’s dismissal of the plaintiff’s complaint, concluding that “the use of Rosa Parks’ name and likeness in the books, movie, and plaque is necessary to chronicling and discussing the history of the Civil Rights Movement” and that these matters therefore are protected by Michigan’s qualified privilege. As the 11th Circuit noted, “it is difficult to conceive if a discussion of the Civil Rights Movement without reference to Rosa Parks and her role in it.”

Article By Ulrika E. Mattsson of McDermott Will & Emery

© 2016 McDermott Will & Emery

Homeland Security Releases Cybersecurity Information Sharing Act Guidelines

The US Department of Homeland Security (DHS) issued guidance this week to assist nonfederal entities to share cyber threat indicators and defensive measures with federal entities under the Cybersecurity Information Sharing Act of 2015 (CISA). CISA was passed as part of the Cybersecurity Act of 2015 and directs the Attorney General and the Secretary of DHS to develop guidance that promotes sharing cyber threat indicators with federal entities. CISA also helps nonfederal entities identify defensive measures and share them with federal entities and describes the protections that nonfederal entities receive for sharing, including targeted liability protection.

Highlights of the guidance for nonfederal entities under CISA include the following:

  • Identifying information that qualifies as a cyber threat indicator but is likely to include personally identifiable information not directly related to a cybersecurity threat.

  • Identifying information that is unlikely to be directly related to a cybersecurity threat but is protected under otherwise applicable privacy laws.

  • Providing methods for sharing defensive measures.

  • Allowing nonfederal entities to share cyber threat indicators and defensive measures with any other entity—private, federal, state, local, territorial, or tribal—for a “cybersecurity purpose.”

    • “Cyber threat indicator” means information that is necessary to describe or identify

      • malicious reconnaissance or anomalous patterns of communications for the purpose of gathering technical information related to a cybersecurity threat or security vulnerability;

      • a method of defeating a security control or exploitation of a security vulnerability (or causing a user with legitimate access to do so) ;

      • a security vulnerability;

      •  malicious cyber command and control;

      • the actual or potential harm caused, including a description of the information exfiltrated as a result of a particular cybersecurity threat;

      • any other attribute of a cybersecurity threat, if such disclosure is not otherwise prohibited by law; and

      • any combination of the above.

    • “Defensive measure” means

      • an action, device, procedure, signature, technique, or other measure applied to an information system that detects, prevents, or mitigates a known or suspected cybersecurity threat or security vulnerability, and

      • the term does not include a measure that destroys, renders unusable, provides unauthorized access to, or substantially harms an information system not owned by the private entity operating the measure (or another entity that has given consent).

    • “Cybersecurity purpose” means the purpose of protecting an information system or information that is stored on, processed by, or transiting an information system from a cybersecurity threat or security vulnerability.

  • Allowing for the sharing of such information, “notwithstanding any other provision of law.” Nonfederal entities are required to remove any information from a cyber threat indicator or defensive measure known at the time of sharing to be personal identifiable information not directly related to a cybersecurity threat before sharing it with a federal entity. Such review may be conducted through either a manual or technical process.

  • Providing for the sharing of cyber threat indicators and defensive measures with the federal government, which requires the Secretary of DHS to develop a capability and process within DHS to accept cyber threat indicators and defensive measures in real time from any nonfederal entity, including private entities. DHS will in turn relay that information to federal entities in an automated manner, consistent with the operational and privacy and civil liberties policies including through submission via: Automated Indicator Sharing (AIS), web form, email, and Information Sharing and Analysis Centers or Information Sharing and Analysis Organizations.

  • Providing for the following protections in addition to liability protection:

    • Antitrust exemption

    • Exemption from federal and state disclosure laws

    • Exemption from certain state and federal regulatory uses

    • No waiver of privilege for shared material

    • Treatment of commercial, financial, and proprietary information (to offer protection from the expected further sharing)

    • Ex parte communications waiver (the sharing shall not be subject to the rules of any federal agency, department, or judicial doctrine regarding ex parte communications with a decision making official)

Guidance was also released for Sharing of Cyber Threat Indicators and Defensive Measures by the Federal Government, Interim Procedures Related to the Receipt of Cyber Threat Indicators and Defensive Measures by the Federal Government, and Privacy and Civil Liberties Interim Guidelines.

ARTICLE BY Emily R. Lowe & Susan Milyavsky of Morgan, Lewis & Bockius LLP
Copyright © 2016 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

USCIS Releases Processing Information for March 2016 Visa Bulletin

USCIS has released another updated Visa Bulletin chart listing the dates to file adjustment of status applications. As we previously reported, USCIS and the DOS revised the procedures for determining visa availability for individuals looking to file adjustment of status applications.  The DOS Visa Bulletin now has two categories of cut-off dates:

  • Application Final Action Dates (dates when visas may finally be issued); and

  • Dates for Filing Applications (earliest dates when applicants are eligible to apply).

Under USCIS’s recent guidance, prospective adjustment of status applicants should use the Application Final Action Dates chart to determine whether they are eligible to file their applications.  Therefore, contrary to previously-issued DOS guidance, EB-2 Chinese nationals whose priority dates fall after June 1, 2013, currently are not eligible for file their adjustment of status applications with USCIS.

APPLICATION FINAL ACTION DATES FOR EMPLOYMENT-BASED PREFERENCE CASES

March Visa Bulletin

The DOS and USCIS websites should be monitored each month to determine adjustment of status filing dates, as we expect to see similar discrepancies between DOS and USCIS policy arise in the future.

Article By Kristin Aquino-Pham of Greenberg Traurig, LLP

©2016 Greenberg Traurig, LLP. All rights reserved.

Ransomware Strikes California Hospital – Could You Be Next?

digitallife03-111715In a chain of events that should be a wake-up call to any entity using and storing critical health information (and indeed, ANY kind of critical information), Hollywood Presbyterian Medical Center (“HPMC”) has announced that it paid hackers $17,000 to end a ransomware attack on the hospital’s computer systems. On February 5, HPMC fell victim to an attack that locked access to the medical center’s electronic medical record (“EMR”) system and blocked the electronic exchange of patient information. Earlier reports indicated that the hackers had originally demanded $3,400,000.Such “ransomware” attacks are caused by computer viruses that wall off or encrypt data to prevent user access. Hackers hold the data ransom, demanding payment for the decryption key necessary to unlock the data. The attacks are often caused by email phishing scams. The scams may be random or target particular businesses or entities. In the case of HPMC, the medical center’s president and CEO indicated to media outlets that the attack was random, though Brian Barrett, writing for Wired, questioned that assertion. The medical center’s announcement of the resolution of the incident indicates that there is no evidence that patient or employee information was accessed by the hackers as part of the attack. Even if the data was not compromised, the attack led to enormous hassles at the hospital, returning it to a pre-electronic record-keeping system.

We have seen many variations of the ransomware attacks on the increase lately.   Cryptolocker and Cryptowall are the two most prevalent threats, but a Forbes article about the HPMC attack revealed that HPMC was victimized by a variant called “Locky,” which, according to the Forbes article, is infecting about 90,000 machines a day.

Details of the HPMC Incident

On February 2, 2016, three days before the HPMC attack, the Department of Health & Human Services Office for Civil Rights (“OCR”) announced the launch of its new Cyber-Awareness Initiative. That announcement included information on ransomware attacks and prevention strategies. Suggested prevention strategies from OCR included:

  1. Backing up data onto segmented networks or external devices and making sure backups are current.  That protects you from data loss of any kind, whether caused by ransomware, flood, fire, loss, etc.  If your system is adequately backed up, you may not need to pay ransom to get your data unlocked.

  2. Don’t be the low-hanging fruit:  Ensuring software patches and anti-virus are current and updated will certainly help.   Many attacks rely on exploiting security bugs that already have available fixes.

  3. Installing pop-up blockers and ad-blocking software.

  4. Implementing browser filters and smart email practices.

Most of these prevention strategies are HIPAA security and overall general business security measures that ought to be in place for companies across the board. As OCR and the FBI (see below) both indicate, smart email practices and training the workforce on them are key elements to preventing phishing scams.

FBI on Ransomware

One of the big questions arising out of the HPMC and other ransomware cases is:  do we pay?   If your business is about to grind to a halt, you likely have no choice.    However, the incident should first be reported to the FBI and discussed with forensics and legal experts who have experience with ransomware in particular. The FBI’s Ransomware information page provides some tips.  Ransomware attacks should be part of your incident response plan and the “what do we do” should be discussed at the highest levels of the company.

When in Doubt, Don’t Be a Click Monkey!

Before clicking on a link in an email or opening an attachment, consider contextual clues in the email. The following types of messages should be considered suspicious:

  • A shipping confirmation that does not appear to be related to a package you have actually sent or expect to receive.

  • A message about a sensitive topic (e.g., taxes, bank accounts, other websites with log-in information) that has multiple parties in the To: or cc: line.

  • A bank with whom you do not do business asking you to reset your password.CodeMonkey-68762_960x3601

  • A message with an attachment but no text in the body.

All businesses in any sector need to take notice of the HPMC attack and take steps to ensure that they are not the next hostages in a ransomware scheme.

Article By Cynthia J. Larose & Kate F. Stewart of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

The UK Psychoactive Substances Act 2016: An Example of Poor Drafting and Unintended Consequences for Food?

The UK has enacted new legislation to address the issue of so-called ‘legal highs’ following a number of cases of paranoia, seizures, hospitalisation and even death after consumption of certain psychoactive substances.  The Psychoactive Substances Act 2016 (the “Act”) was granted Royal Assent on 28 January 2016.  It is expected to come into force on 6 April 2016.  The Act makes it an offence to produce, supply, offer to supply, possess with intent to supply, possess in a custodial institution, import or export psychoactive substances.

A psychoactive substance is defined very broadly to cover “any substance which is capable of producing a psychoactive effect in a person who consumes it”.  A substance produces a psychoactive effect in a person if it affects the person’s mental functioning or emotional state  by stimulating or depressing the person’s central nervous system.  There are a number of specific exemptions, including controlled drugs, medicinal products, alcohol, nicotine and tobacco products, caffeine and food.  However, the definition of food has left a number of questions since it does not align with the legal definition of food set out in EU Regulation 178/2002.  Rather, the Act defines food as:

Any substance which—

            (a) is ordinarily consumed as food, and

            (b) does not contain a prohibited ingredient (emphasis added).

In this paragraph—

  • “food” includes drink;

  • “prohibited ingredient”, in relation to a substance, means any

psychoactive substance—

            (a) which is not naturally occurring in the substance, and

            (b) the use of which in or on food is not authorised by an EU instrument.

The authorities have stated that the Act is not intended to capture foods with a “negligible” psychoactive effect, such as chocolate and nutmeg, but concerns were raised during the legislative debates that the Act could capture inadvertently a much broader range of food substances, including energy drinks and certain botanical ingredients used in foods and dietary supplements.  It is hoped that guidance from the enforcement authorities will make clear exactly which foods and drinks are exempted.

Article By Brian Kelly of Covington & Burling LLP

Lucie Klabackova, paralegal, also contributed to this article.

© 2016 Covington & Burling LLP

February 2016 – gTLD Sunrise Periods Now Open

As first reported in our December 2013 newsletter, the first new generic top-level domains (gTLDs, the group of letters after the “dot” in a domain name) have launched their “Sunrise” registration periods.

As of December 31, Sunrise periods are open for the following new gTLDs:

  • .YACHTS
  • .BOATS
  • .xn--tckwe (.コム – Japanese for “.com”)
  • .HOTELES
  • .BET
  • .BIBLE
  • .barcelona
  • .PET
  • .istanbul
  • .ist

ICANN maintains an up-to-date list of all open Sunrise periods here. This list also provides the closing date of the Sunrise period. We will endeavor to provide information regarding new gTLD launches via this monthly newsletter, but please refer to the list on ICANN’s website for the most up-to-date information – as the list of approved/launched domains can change daily.

Because new gTLD options will be coming on the market over the next year, brand owners should review the list of new gTLDs to identify those that are of interest.

Article By Monica Riva Talley, Tracy-Gene G. Durkin & Ivy Clarice Estoesta of Sterne, Kessler, Goldstein & Fox P.L.L.C.
© 2016 Sterne Kessler

U.S. President Announces Upcoming Trips to Cuba, Argentina, Vietnam and Laos

Congress Returns to Washington, Faces a Busy Week of Oversight Hearings, Including Testimony from the Secretaries of State and Defense

Early last week, President Barack Obama hosted the Association of Southeast Asian Nations (ASEAN) Leaders in California and announced he will travel in May to Vietnam and Laos.  Back in Washington on Wednesday, the President announced another trip in March to Cuba and Argentina.  Congress was in recess last week, in observance of the Presidents’ Day holiday.  Both chambers will reconvene in Washington this week, and a number of congressional hearings are scheduled to examine various Department and Agencies budgets, with Obama Administration officials testifying.

Secretary of State Heads to Capitol Hill

Secretary of State John Kerry is scheduled to testify before select Senate and House committees next week, where he will likely field questions from Members of Congress on Iran’s violations of U.N. Security Resolutions restricting intercontinental ballistic missile tests and the implementation of the Joint Comprehensive Plan of Action.  He is also expected to field questions related to other U.S. sanction programs, such as those related to Ukraine and North Korea.

  • On Tuesday, 23 February, the Senate Foreign Relations Committee is scheduled to hold a hearing titled, “Review of the Fiscal Year (FY) 2017 State Department Budget Request.”

  • On Wednesday, 24 February, the House Appropriations Subcommittee on State-Foreign Operations is scheduled to hold a hearing titled, “Budget Hearing – Department of State and Foreign Assistance.”

  • On Wednesday, 24 February, the Senate Appropriations Subcommittee on State-Foreign Operations is scheduled to hold a hearing titled, “Hearing to review the Fiscal Year 2017 budget request and funding justification for the U.S. Department of State.”

  • On Thursday, 25 February, the House Foreign Affairs Committee is scheduled to hold a hearing titled, “Strengthening U.S. Leadership in a Turbulent World: The FY 2017 Foreign Affairs Budget.”

U.S.-ASEAN Summit

The ASEAN Leaders released a joint statement at the conclusion of the two-day Summit.  Before returning to Washington on Tuesday, President Obama held a press briefing, recapping some of the topics discussed at the Summit.  He announced his intention to travel to Vietnam and Laos in May and two new initiatives for the region:  (1) U.S.-ASEAN Connect, a network of hubs across the region to better coordinate economic engagement and to connect entrepreneurs, investors and businesses with each other; and (2) a new competition – an innovation challenge to encourage students across ASEAN to develop new solutions to boost agriculture.

Presidential Trip to Cuba and Argentina on the Horizon

In March, President Obama is scheduled to hold a bilateral meeting with Cuban President Raul Castro to build on the progress toward normalization of relations.  Preisident Obama also plans to engage with members of civil society, entrepreneurs and Cubans.  This historic visit will be the first by a sitting U.S. President in nearly 90 years.  After his trip to Cuba, the President will travel to Argentina to meet with the new President, Mauricio Macri, to discuss President Macri’s reform agenda.

Zika Virus – House Appropriators Favor Repurposing of Ebola Funds

In a letter to the Office of Management and Budget Director Shaun Donovan, top House Republican appropriators urged the Obama Administration last Thursday to release unobligated Ebola funds to meet immediate needs related to the Zika Virus.  Secretary of Homeland Security Jeh Johnson announced on Thursday that enhanced screening of travelers for Ebola has come to an end.

  • On Wednesday, 27 February, the Senate Health, Education, Labor & Pensions Committee is scheduled to hold a hearing titled, “Zika Virus: Addressing the Growing Public Health Threat.”

Syria

Secretary Kerry announced last week that the United States and Russia reached a “provisional agreement” for a ceasefire in Syria.  However, the Syrian regime and Russia continued their bombing campaign in northern Syria.  ISIL also carried out a series of bomb attacks in Syria that killed nearly 130 people on Sunday.

Russia/Ukraine – Reforms in Ukraine Praised

Vice President Joe Biden welcomed the passage by the Rada last week of anti-corruption legislation sought by the International Monetary Fund (IMF) and EU, and he commended Ukraine President Poroshenko and the Government of Ukraine for the hard work that went into ensuring passage.  He further commended President Poroshenko’s decision to replace Prosecutor General Shokin, saying this paves the way for needed reform of the prosecutorial service.

Vice President Biden condemned the increasing violence in eastern Ukraine and “the continued failure by combined Russian-separatist forces to allow the OSCE full access to the areas under their de facto control.”  He reiterated full implementation of the Minsk agreements, by all sides, remains the best way forward for resolving the conflict.

  • On Wednesday, 24 February, the House Appropriations Subcommittee on Defense is scheduled to hold a closed hearing titled, “United States European Command.”

North Korea Sanctions Bill – Signed into Law

President Obama signed into law the new North Korea sanctions bill (H.R. 757) last week.  Senator Bob Corker (R-Tennessee), Chairman of the Senate Foreign Relations Committee, welcomed the President’s action, noting the legislation “provides a robust set of tools for the U.S. to deter North Korea’s illicit behavior in a more effective manner and promote human rights for the North Korean people.”

TPP – Congressman Levin Says “No”

Michigan Representative Sander Levin, who is the top ranking Democratic on the House Ways and Means Committee, formally announced his opposition last Thursday to the TPP deal, saying:  “[T]he TPP as negotiated is short of an acceptable outcome, and I do not support it.”  He cited shortcomings on:  (1) worker rights, (2) automotive rules of origin, (3) currency manipulation, and (4) investor-state dispute settlement.  Congressman Levin’s opposition to the deal is expected to make it more difficult for the White House to secure congressional approval of TPP before President Obama leaves office.

TTIP Developments

The 12th round of the Transatlantic Trade and Investment Partnership (TTIP) will be held this week in Brussels.  U.S. TTIP Chief Negotiator Dan Mullaney will participate in a joint U.S.-EU press conference at the conclusion of the discussions on Friday.

Cybersecurity Updates

Last Thursday, the Department of Homeland Security published a Federal Registernotice, announcing the availability of interim guidance documents in accordance with the Cybersecurity Information Sharing Act (CISA) of 2015.  CISA authorizes the voluntary sharing and receiving of cyber threat indicators and defensive measures for cybersecurity purposes, consistent with certain protections, including privacy and civil liberty protections.  The CISA guidance documents may be found online here.

Last Wednesday, President Obama appointed former National Security Advisor Tom Donilon and former IBM CEO Sam Palmisano as the Chair and Vice Chair, respectively, of the new Commission on Enhancing National Cybersecurity, established under an Executive Order executed on 9 February.

Mexico High-Level Summit Ahead

Vice President Biden, accompanied by Secretary of Commerce Penny Pritzker, will travel to Mexico City for the third annual U.S.-Mexico High-Level Economic Dialogue on Wednesday and Thursday to discuss issues related to borders, regulatory cooperation, energy, workforce development, partnership for regional and global leadership, and stakeholder engagement.

Congressional Hearings This Week

  • On Tuesday, 23 February:

    • The Senate Armed Services Committee is scheduled to hold a hearing titled, “Senate Armed Services Committee.”

    • The Senate Armed Services Subcommittee on Personnel is scheduled to hold a hearing titled, “Defense Health Care Reform.”

    • The Senate Armed Services Subcommittee on Strategic Forces is scheduled to hold a hearing titled, “Department of Energy Atomic Energy Defense Activities and Programs.”

  • On Wednesday, 24 February:

    • Three House Foreign Affairs Subcommittees are scheduled to hold a joint hearing titled, “Establishing Accountability at the World Intellectual Property Organization: Illicit Technology Transfers, Whistleblowing, and Reform.”

    • The House Ways and Means Committee is scheduled to hold a hearing titled, “The Global Tax Environment in 2016 and Implications for International Tax Reform.”

    • The House Armed Services Committee is scheduled to hold a hearing titled, “The Challenge of Conventional and Hybrid Warfare in the Asia-Pacific Region: The Changing the Nature of the Security Environment and its Effect on Military Planning.”

    • The House Foreign Affairs Committee is scheduled to hold a markup on three legislative measures.

    • The Senate Appropriations Subcommittee on Defense is scheduled to hold a hearing titled, “Hearing to review the Fiscal Year 2017 budget request and funding justification for the U.S. Army.”

    • The House Foreign Affairs Subcommittee on Terrorism is scheduled to hold a hearing titled, “Boko Haram: The Islamist Insurgency in West Africa.”

    • The House Armed Services Subcommittee on Emerging Threats and Capabilities is scheduled to hold a hearing titled, “Department of Defense Fiscal Year 2017 Science and Technology Programs: Defense Innovation to Create the Future Military Force.”

    • The Senate Armed Services Subcommittee on Emerging Threats is scheduled to hold a closed hearing titled, “Iran’s Intelligence and Unconventional Military Capabilities.”

    • The House Armed Services Subcommittee on Strategic Forces is scheduled to hold a hearing titled, “U.S. Strategic Forces Posture.”

    • The House Armed Services Subcommittee on Military Personnel is scheduled to hold a hearing titled, “Defense Health Agency: Budgeting and Structure.”

    • The Senate Armed Services Committee is scheduled to hold a confirmation hearing for: (1) Brad Carson, to be Under Secretary Of Defense for Personnel and Readiness; (2) Jennifer O’Connor, to be General Counsel of the Department Of Defense; and (3) Todd Weiler, to be Assistant Secretary of Defense for Manpower and Reserve Affairs.

  • On Thursday, 25 February:

    • The House Armed Services Committee is scheduled to hold a hearing titled, “Full Spectrum Security Challenges in Europe and their Effects on Deterrence and Defense.”

    • The House Appropriations Subcommittee on Defense is scheduled to hold a hearing titled, “Budget Hearing – Department of Defense.”   Secretary of Defense Ashton Carter is scheduled to testify.

    • The House Armed Services Subcommittee on Seapower and Projection Forces is scheduled to hold a hearing titled, “Department of the Navy 2017 Budget Request and Seapower and Projection Forces.”

  • On Friday, 26 February:

    • The House Armed Services Subcommittee on Readiness is scheduled to hold a hearing titled, “Department of the Army 2017 Budget Request and Readiness Posture.”

    • The House Armed Services Subcommittee on Military Personnel is scheduled to hold a hearing titled, “Ensuring Medical Readiness in the Future.”

Looking Ahead

Washington is expected to focus on the following upcoming events:

  • 22-26 February: 12th Round of TTIP Negotiations in Brussels

  • 10 March:  President Obama hosts Canadian Prime Minister Justin Trudeau

  • 21-22 March: President Obama travels to Cuba

  • 23-24 March: President Obama travels to Argentina

  • 31 March – 1 April: Nuclear Security Summit in Washington

  • Late April: President Obama attends the Hannover Messe in Germany

  • [TBA] May: President Obama travels to Vietnam and Laos

  • 8-9 July: NATO Summit in Warsaw, Poland

3 Takeaways from the Recent Ruling on Statistical Extrapolations in CMS Audits

On Jan. 20, 2016, a federal district court in the Western District of Texas affirmed a decision of the Medical Appeals Council (Appeals Council) affirming a CMS contractor’s extrapolation methodology used to assess an overpayment of more than $773,000 from a home health provider, Maxmed. Three key takeaways from the Court’s decision that may help health care providers avoid a similar situation include:

  1. Providers should be keenly aware of the rules limiting CMS’s participation as a party to an appeal when devising their appeal strategies, and its subsequent ability to appeal the ALJ decision on its own. Similarly, they should be aware of the Medicare Appeals Council’s ability to review any ALJ decision or dismissal on its own motion, or with referral from CMS.

  2. When disputing a statistical sample and/or extrapolation, submit an expert’s opinion as soon in the appeals process as practicable, preferably at the redetermination stage. When a statistical extrapolation is disputed, the Qualified Independent Contractor relies on its own statistical expert (often times an outside accounting firm). If you can overturn the extrapolation in the first two levels of appeal, and you don’t seek ALJ review, CMS cannot overturn the determination.

  3. CMS’s rules for statistical extrapolation balance its competing interests in reaching an accurate estimate of the overpayment: limited resources vs. accuracy. CMS admits in its manuals that it does not require the most accurate estimate, and will compromise on reaching the most accurate estimate by accepting a lower bound estimation. Therefore, CMS will trade a more imprecise statistical extrapolation for a lower overpayment estimate. Knowing this can help you and your statistical expert craft a more effective argument to try and get the statistical sampling thrown out.

Background

The case arose out of a post-pay investigation by the Zone Program Integrity Contractor (ZPIC) Health Integrity, which denied 39 of 40 sampled Maxmed claims in a post-payment audit. Health Integrity then used a statistical extrapolation to calculate an estimated overpayment of $773,967.00.

Appeals

After the Medicare Administrative Contractor Palmetto GBA and Qualified Independent Contractor confirmed Health Integrity’s findings, Maxmed appealed to an Administrative Law Judge (ALJ). The ALJ found one denied claim in favor of Maxmed, and also concluded that Health Integrity’s extrapolation methodology was not valid because it did not conform to the Medicare Program Integrity Manual (MPIM).

Parties’ Arguments

In the appeal, Maxmed argued that Health Integrity’s sampling and extrapolation methodology was invalid because Health Integrity failed to record the random numbers it relied upon in forming the sample, its choice of sampling units based upon clusters of claim-lines resulted in a skewed distribution, and its precision level of 8 percent resulted in an unacceptably imprecise extrapolation.

Court’s Decision

The court agreed with the Appeals Council, and granted summary judgment to HHS, finding that, “substantial evidence supported the Appeals Council’s overall determination that the ALJ erred by invalidating the statistical sampling and overpayment extrapolation.”

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Hollywood Presbyterian Concedes to Hacker’s Demands in Ransomware Attack

In a chain of events that should be a wake-up call to any entity using and storing critical health information, Hollywood Presbyterian Medical Center (“HPMC”) has announced that it paid hackers $17,000 to end a malware attack on the hospital’s computer systems. On February 5, HPMC fell victim to an attack that locked access to the medical center’s electronic medical record (“EMR”) system and blocked the electronic exchange of patient information. Earlier reports indicated that the hackers had originally demanded $3,400,000.

Such “ransomware” attacks are caused by computer viruses that wall off or encrypt data to prevent user access. Hackers hold the data ransom, demanding payment for the decryption key necessary to unlock the data. The attacks are often caused by email phishing scams. The scams may be random or target particular businesses or entities. In the case of HPMC, the medical center’s president and CEO indicated to media outlets that the attack was random, though Brian Barrett, writing for Wired,questioned that assertion.

The medical center’s announcement of the resolution of the incident indicates that there is no evidence that patient or employee information was accessed by the hackers as part of the attack. Even if the data was not compromised, the attack led to enormous hassles at the hospital, returning it to a pre-electronic record-keeping system.

On February 2, 2016, three days before the HPMC attack, the Department of Health & Human Services Office for Civil Rights (“OCR”) announced the launch of its new Cyber-Awareness Initiative. That announcement included information on ransomware attacks and prevention strategies. Suggested prevention strategies from OCR included:

  1. Backing up data onto segmented networks or external devices and making sure backups are current.

  2. Ensuring software patches and anti-virus are current and updated.

  3. Installing pop-up blockers and ad-blocking software.

  4. Implementing browser filters and smart email practices.

Most of these prevention strategies are HIPAA security measures that ought to be in place generally. As OCR indicates, smart email practices and training the workforce on them are key elements to preventing phishing scams. Before clicking on a link in an email or opening an attachment, consider contextual clues in the email. The following types of messages should be considered suspicious:

  • A shipping confirmation that does not appear to be related to a package you have actually sent or expect to receive.

  • A message about a sensitive topic (e.g., taxes, bank accounts, other websites with log-in information) that has multiple parties in the To: or cc: line.

  • A bank with whom you do not do business asking you to reset your password.

  • A message with an attachment but no text in the body.

All health care providers, payors, and their business associates need to take notice of the HPMC attack and take steps to ensure that they are not the next hostages in a ransomware scheme.

Article By Kate F. Stewart  of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

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