SCOTUS’s HOUSE CALL on Healthcare Industry: The Economic Impact of Mandatory Vaccination

The Supreme Court of the United States in a per curiam opinion on Jan. 13 ruled that the Secretary of HHS (United States Department of Health and Human Services) did not exceed his statutory authority in requiring that, in order to remain eligible for Medicare and Medicaid reimbursement, all healthcare providers except for physician offices not regulated by CMS (Centers for Medicare & Medicaid Services), organ procurement organizations, portable X-Ray suppliers and certain healthcare professionals solely engaged in fully remote telehealth, must insure that their employees be vaccinated against Covid-19. The Court in a 5-4 decision maintained that the Secretary had adequately examined alternatives to mandatory vaccination even though the Final Interim Rule went into effect immediately with no sunset provision nor any revisions or assessment of public comment which is usually required under 5 U.S.C. Sections 553(b), 553(c). Interestingly, the Court, both in its decision and its dissent, failed to consider the scientific data on natural immunity, the incident of Covid infection and recovery among healthcare workers, or the significant easing of both hospitalizations and mortality data from the most recent Covid mutation, which is now considered the dominant strain of infection, Omicron.[1] Of even greater concern coming from its decision is a possible grave consequence (unintended or not) of having nearly 3 million healthcare workers fired between the end of January and end of March 2022.

The decision will spur many healthcare providers to either consider downsizing its healthcare platform (eliminating elective surgeries, closing maternity wards, diverting critical patients to other facilities, moving patients into home care more rapidly, etc.) or seeking protection under the bankruptcy code to obtain some breathing room. According to the American Hospital Association (“AHA”), post-pandemic, and even before the Mandate decision, the collective turnover across ICU’s, nursing units and emergency departments has risen from 18% to 30%.[2] There is no doubt that when a nurse leaves a healthcare organization, the vacancy affects the cost of operation many more times the amount of salary paid to the nurse. According to Nursing Solutions, Inc., the average period of time it takes to fill a nursing position is 85 days — and more than three months for a specialized nursing position. While a replacement nurse is located, the healthcare organization must rely on “travelers” and direct care staffing agencies charging super competitive rates. Just in the last year the use of costly employment agencies to cover gaps in staffing is up by 250% over the last year, according to the Florida Health Care Association, Oct. 25, 2021. A turnover of a single nurse whose salary ranges from $28,800 to $51,700 can translate to an average of $3.6-$6.5 million cost to the healthcare organization, given such factors as the cost of reduced productivity of an employee in the weeks leading up to their departure, time between the departure and employee’s replacement, paid overtime to cover the replacement, hi-cost outside staffing agency fees, advertising for open positions, conducting background checks and credential verifications, training onboard new employees and climbing the learning curve on the new clinical culture.[3]

None of the above costs take into account additional expense burdens for healthcare organizations coming from the mounting labor shortage at the nursing assistant and home health aides level, which are considering leaving the healthcare setting in droves and making more money and less aggravation in the retail field. Bloomberg reports that there will be a shortfall of 3.2 million lower-wage workers among all the healthcare organizations by 2026.[4] What is the economic effect of the mandate on healthcare organizations? Well, it’s obvious that by early Spring of this year, there will be fewer healthcare workers and the costs of providing healthcare will go up in spite of an injection of an additional $10 billion of Phase 4 Provider Relief Funds under the CARES ACT. Will the economic stress create more interest in turning to bankruptcy alternatives to allow these organizations time to adjust to the new normal? Even before the mandate was issued, the AHA projected that hospitals would lose over $54 billion dollars in net income during 2021. That loss comes after accounting for the infusion of $176 billion in CARES ACT funding, which didn’t directly address the current dilemma of loss of manpower. It would be likely that the losses for 2022 will be even more dramatic. Additionally, what is not taken into account in these figures is the deepening insolvency affecting the Long Term Care Industry, where 86% of nursing homes and 77% of assisted living facilities have indicated that their workforce situation has gotten worse over the last three months.[5]

Certainly, the upcoming additional economic stress among heath care organizations from potential depletion of manpower will present several challenges within a bankruptcy setting. For one, practitioners will need to navigate how best to utilize post-petition cash between important manpower related objectives such as retention bonuses, paid time off, overtime payments, staffing agencies’ fees, recruiting, advertising, credentialling, and new employee policies, and equally demanding needs such as rent and other critical healthcare vendors. Particular attention will be given to carefully tailored DIP financing to insure the viability of the organization while in bankruptcy and through its exit. While private equity has taken larger and larger roles in healthcare, and its desire to utilize roll-ups and consolidations, specialists in healthcare financial advising will have to be employed to assist the economic constituencies in understanding the mechanism for exiting the bankruptcy, given the balancing act between workforce equilibrium and quality of continued care. Ultimately, more healthcare organizations will require strong healthcare insolvency professional guidance to find an appropriate refuge and fresh start in the trying months to come.

FOOTNOTES

[1]  Of note concerning the timing of its decision and its rationale based on the science, one of the Justices in oral argument believed that in January 2022, there were over 100,000 children in the US currently in the ICUs when the actual total was far less.  Additionally, though the Wall Street Journal reported on January 26, 2022 that the Centers for Disease Control and Prevention (“CDC”) stated that Covid-19 deaths in the U.S. topped 2,100 a day, the highest in nearly a year, the article quotes Robert Anderson, chief of mortality statistics, who says, “You can have a disease that is for any particular person less deadly than another, like Omicron, but if it is more infectious and reaches more people, then you’re more likely to have a lot of deaths.”  As this article is going to print, see, also, Dr. Martin Makary, “The High Cost of Disparaging Natural Immunity to Covid,” Wall Street Journal, Jan. 26, 2022, concluding that “the superiority of natural immunity over vaccinated immunity is clear”.

[2]  Dave Muoio, Pandemic-Era overtime, agency staffing costs U.S. hospitals an extra $24B per year, Fierce Healthcare, Oct. 8, 2021.

[3] See 2021 NSI National Health Care Retention & RN Staffing Report, published by NSI Nursing Solutions, Inc., March 2021.

[4]  Lauren Coleman Lochner, US Hospitals Pushed to Financial Ruin as Nurses Quit During Pandemic, Bloomberg, Dec. 21, 2021.

[5] See FTI Healthcare Industry Sector Outlook, FTI Consulting, December 2021.

This article was written by Frank P. Terzo of Nelson Mullins law firm. For more information about vaccine mandates, please click here.

Organizational Use of Social Media: Boon or Burden?

Organizational use of social media has evolved precipitously from the early days when social media was viewed as little more than a novel marketing concept on the fringe of broader traditional advertising campaigns.

However, with the increase in innovation comes concern over the extent to which increased organizational activities on social media may expose the organization to potential civil liability. Indeed, organizational use of social media has been described by some as a “virtual Pandora’s Box,” which is at once an exciting boon for business but filled to the brim with the potential for legal exposure.1 This article explores some of the most common insurance coverage issues organizations are likely to experience as their use of social media continues to expand and evolve. Although the article focuses on organizational issues, many of the principles described are equally applicable to coverage issues which may arise from an individual’s use of social media under consumer-focused policies.

As social media has become increasingly ingrained in the average consumer’s life, organizations and commercial entities have developed innovative ways to leverage their own social media presence as a marketing tool and as a means by which they can communicate directly with the consumer. For many organizations, this evolution means nothing more than using social media as an analogue to traditional advertising concepts, such as banner and sidebar ads, audio and video spots, product placement, and endorsement deals. For others, social media is at the core of the organization’s operations. Indeed, it is not uncommon for the world’s leading corporations to devote entire teams to the development and use of social media. Organizations running the gamut from national governments and major religious institutions, to startup social activist groups and mom-and-pop shops have found creative ways to use social media for endeavors ranging from disaster and emergency response, security at major events, breaking news coverage, broadscale organizational efforts, get out the word efforts, and customer service response centers.2

But as is all too often the case with innovation, the increase in organizational use of social media has been accompanied by litigation presenting novel legal questions on a variety of social media-related issues. And with the increase in litigation have come questions over the degree to which Commercial General Liability (“CGL”) insurance—the principles of which were developed decades before pioneering social media platforms such as MySpace and Friendster emerged—can keep up with ever evolving trends in the social media landscape. Fortunately, the legal theories under which social media-related lawsuits most typically arise are quite familiar. Libel, slander, copyright infringement, use of another’s advertising idea, and invasion of privacy all remain the stalwarts of the industry.3 Though courts throughout the nation have struggled at times to apply CGL’s pre-internet principles to modern day realities, traditional common law principles remain at the core of resolving these seemingly novel issues. Accordingly, and because courts have seemed inclined to require CGL carriers to provide coverage where the issues involved resemble otherwise traditional common law principles, organizations seeking to navigate the ever-evolving scope and substance of social-media related claims must keep traditional common law concepts in mind.

As a preliminary matter, social media comes with certain fundamental characteristics about which organizations must remain cognizant when developing their social media strategies. Indeed, the very feature of social media to which organizations are drawn most—the potential for cheap and instant access to 73% of the country4—necessarily implies that when a potentially problematic tweet or post catches steam, it stands to be shared far and wide and memorialized for all to see. Given the inherently “viral” nature of social media, plaintiffs are often well positioned to establish special damages by virtue of the far-reaching consequences of social media exposure alone. This is particularly problematic in libel-based defamation claims, which require proof of special damages as an element of the claim.5 Predictably, lawsuits alleging libel have grown in popularity as organizational use of social media has evolved,6 and given the wide array of theories under which such claims have been successful, they are perhaps the most problematic.7 Indeed, libel claims arising from organizational use of social media have become so common that that the phrase “Twibel”—a portmanteau of “Twitter” and “libel”—has emerged as a new favorite in the legal lexicon.

But claims arising from organizational use of social media are not limited to defamation alone. In jurisdictions that recognize the tort of invasion of privacy, courts have required CGL carriers to provide coverage in causes of action resulting from an insured’s role in the release of a third-party’s confidential information online.8 However, where the invasion of privacy has resulted from intentional conduct on the part of a third-party—such as a data breach—courts are divided on the issue of whether any potential negligence on the part of the insured satisfies the “publication” requirement of the invasion of privacy claim.9

Courts have also found that CGL coverage for so-called “advertising ideas” extends to social media-related claims.10 While these issues commonly resemble traditional trademark and trade dress infringement claims,11 some courts have interpreted Coverage B to encompass claims arising from organizations’ alleged infringement on another’s advertising strategy more broadly.12 Further, courts have used advertising ideas coverage to address publicity rights cases13 and, under certain circumstances, to encompass claims arising from patents related to internet and website functionality.14 Claims alleging intellectual property infringement have also commonly been held to apply to social media conduct under Coverage B’s express coverage for copyright, trade dress, and slogan infringement.15 Such claims are particularly likely to arise where an organization adopts content created by its social media followers without permission to do so.16

Importantly, recent revisions to CGL forms expressly contemplate certain social media conduct as “advertisement” for the purpose of coverage arising from advertising idea and infringement-related claims. Because these forms often set forth specific definitions of what constitutes an advertisement in the context of social media, organizations must pay close attention to what types of social media activity are and are not covered when developing their social media strategies.17

One interesting evolution in advertising in which such definitions have played an important role is the advent of an “influencer” industry, which has raised novel questions as to the degree to which a paid influencer’s representations of a product or infringement upon another’s intellectual property may constitute an advertisement for Coverage B purposes.18

Finally, it is worth noting that while Coverage B has been interpreted to cover a broad variety of claims arising from an organization’s use of social media, evolutions in policy exclusions and coverage limits may in some cases defeat coverage for social media-related claims.19 In particular, exclusions applicable to prior publication, intellectual property, media and internet, electronic chatrooms and bulletin boards, and unauthorized use of another’s name exclusions all stand to be implicated. However, because exclusions vary from policy to policy and are ever-evolving, a detailed examination of their potential broad applicability to social media-related claims generally is outside the scope of this article.

As this article demonstrates, organizational use of social media has emerged as a lucrative means by which organizations can market themselves and connect individually with their market base. However, as the means by which organizations use social media continues to evolve, so too have the legal theories under which social media-related claims are raised. However, with careful planning and an eye toward trends in the industry and the availability of increasingly diverse coverage options, organizations can make the most of the social media boon without falling prey to its potential pitfalls.

  1. Susan Evans Jennings, Justin R. Blount, & M. Gail Weatherly, Social Media—A Virtual Pandora’s Box: Prevalence, Possible  Legal Liabilities, and Policies, 77(1) Business & Professional Communication Quarterly, 96 (2014).

  2. See generally Matteo Tonello, Corporate Use of Social Media, Harvard Law School Forum on Corporate Governance, May 17, 2016.

  3. Although outside the scope of this article, organizational use of social media can under certain circumstances implicate federal regulatory issues. See Lord & Taylor Settles FTC Charges It Deceived Consumers Through Paid Article in an Online Fashion Magazine and Paid Instagram Posts by 50 “Fashion Influencers”, Federal Trade Commission (Mar. 15, 2016) https://www.ftc. gov/news-events/press-releases/2016/03/lord-taylor-settles-ftc-charges-it-deceived-consumers-through.

  4. See Social Media Fact Sheet, Pew Research, https://www.pewresearch.org/internet/fact-sheet/social-media/.

  5. See Restatement (Second) of Torts § 558 (describing the elements of defamation as “(1) a false factual statement concerning the plaintiff (2) published to a third-party (3) that is made either negligently or with malice, and (4) results in special damages”).

  6. See Raymond Placid, Judy Wynekoop, & Roger W. Feicht, Twibel: The Intersection of Twitter & Libel, 90 Fl. Bar J. 8, 32 (Sep./ Oct. 2016).

  7. See, e.g., AIX Specialty Ins. Co. v. Big Limo, Inc., Case No. 3:21-cv-08, 2021 WL 2708902, at *4–5 (S.D. Ohio July 1, 2021) (holding that an insurer had a duty to defend its insured nightclub under a theory of defamation where the nightclub had allegedly used a model’s picture in a Facebook post to promote a cabaret); Jar Labs. v. Great Am. E&S Ins. Co., 945 F. Supp. 2d 937 (N.D. Ill. 2013) (holding that an insurer had a duty to defend its insured under a theory of implied disparagement where the insured had published a Facebook post implicitly representing a competitor’s products in a false and misleading way).

  8. See State Farm Gen Ins. Co. v. JR’s Frames, Inc., 181 Cal. App. 4th 429, 448 (2010); Travelers Indem. Co. of Am. v. Portal Healthcare Sols., LLC, 644 F. App’x 245 (4th Cir. (Va.) 2016).

  9. See, e.g., St. Paul Fire & Marine Ins. Co. v. Rosen Millennium, Inc., 2018 WL 4732718, at *3 (M.D. Fla. Sept. 28, 2018); Innovak Int’l v. Hanover Ins. Co., 280 F. Supp. 3d 1340 (M.D. Fla. 2017); Zurich Am. Ins. Co. v. Sony Corp. of Am., 2014 WL 8382554 (N.Y. Sup. Ct. Feb. 21, 2014) (denying claims for invasion of privacy where the publication at issue arose from intentional third-party conduct); but see Landry’s Inc. v. Ins. Co. of the State of Penn., 4 4th 366, 270 (5th Cir. (Tex.) 2021) (requiring an insurer to defend against publication of personally identifiable information resulting from a data breach).

  10. See Atlantic Mut. Ins. Co. v. Badger Medical Supply Co., 528 N.W.2d 486, 490 (Wis. App. 1995) (defining “advertising idea” as “an idea for calling public attention to a product or business, especially by proclaiming desirable qualities so as to increase sales or patronage”).

  11. See Cat Internet Servs., Inc. v. Providence Washington Ins. Co., 333 F.3d 138, 142 (3rd Cir. (Penn.) 2003).

  12. See Great American Inc. Co. v. Beyond Gravity Media, Inc., Case No. 3:20-cv-53, 2021 WL 4192738 (S.D. Tex. Sept. 15, 2021) (finding that an insured’s use of the claimant’s martial arts-themed advertising strategy was subject to CGL coverage); See also Native Am. Arts, Inc. v. Hartford Cas. Ins. Co., 435 F.3d 729 (7th Cir. 2006); Gustafson v. Am. Family Mut. Ins. Co., 901 F. Supp. 2d 1289 (D. Colo. 2012).

  13. See Air Eng., Inc. v. Industrial Air Power, LLC, 828 N.W.2d 565 (Wis. App. 2013); Hyundai Motor Am. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA., 600 F.3d 1092 (9th Cir. (Cal.) 2010); but see Holyoke Mut’l Ins. Co. in Salem v. Vibram USA Inc., 106 N.E.3d 572 (Mass. 2018) (rejecting claim that Coverage B provides coverage for traditional patent infringement claim).

  14. See Gencor Indus, Inc. v. Wausau Underwriters Ins. Co., 857 F. Supp. 1560 (M.D. Fla. 1994).

  15. See generally Daniel I. Graham Jr. & Thomas W. Arvanitis, Social Media Risks & “Personal & Advertising Injury” Coverage Issues, DRI Insurance Coverage & Practice Symposium, December 9–10, 2021. A special thanks to the authors for their extensive research, from which this article benefits considerably.

  16. See Stross v. Redfin Corp., 730 Fed. App’x 198 (5th Cir. 2018).

  17. See Graham & Arvanitis, supra, at 10–11.

  18. Michael B. Rush, Social Media Advertising Under CGL Coverage B, The National Law Review, May 21, 2019.

  19. See Graham & Arvanitis, supra, at 11.

This article was written by Christopher S. Etheredge of Steptoe & Johnson law firm. For more articles about social media use, please click here.

From Adele to the NFL, Large-Scale Event Disruptions Show the Need for Policyholders to Have a Strategy to Recover in the Event of a Loss

The ongoing Covid-19 pandemic and supply chain issues have caused several major event organizers to cancel or postpone concerts, sporting events, and awards shows, among many other large-scale events. For example, this week, Elton John postponed tour concerts after testing positive for Covid-19; last week, Adele put on hold her much-anticipated Las Vegas residency over “delivery delays” and Covid-19 diagnoses among her team; last month, the NHL, NBA, and the NFL rescheduled major games, with the NHL citing concerns about “the fluid nature of federal travel restrictions,” and the NFL citing “medical advice” after “seeing a new, highly transmissible form of the virus;” and the Grammys postponed its January 31 awards show in Los Angeles—to now take place on April 3 in Las Vegas. The cancellations and postponements of these types of events often have major financial effects on its organizers and producers. Given the risk of substantial losses following the cancellation of big-ticket events, businesses should be aware that they can tap into event cancellation insurance to mitigate and protect against these risks.

“Specialty” Event Cancellation Coverage

Contrary to general liability insurance coverage—which protects against third-party bodily injury or property damage claims—event cancellation insurance is an elective, specialty-type insurance coverage designed to protect a policyholder’s loss of revenue and expenses following the cancellation, postponement, curtailment, relocation, or abandonment of an event for reasons outside the policyholder’s control.

As a threshold matter, for there to be coverage under an event cancellation policy, there must first be a triggering cause covered under the policy. Some event cancellation policies are written as “all cause”/“all-risk” policies. These policies provide coverage for any cause that is not specifically excluded by the policy. Other event cancellation policies, however, provide more limited coverage and are written to insure event cancellations or postponements following a narrow set of causes, which are typically listed within the policy.

Potential Coverage Issues

Although event cancellation policies typically provide broad coverage, businesses must be wary of certain obstacles insurers may raise in trying to avoid paying claims. Insurers might seek to disclaim or limit coverage for various purported reasons, including alleged non-disclosure at the policy-application stage, failure to satisfy certain conditions after the loss, application of policy exclusions, timely notice, and questions about whether an event was cancelled for a covered cause of loss. By way of example, insurance companies have denied coverage for event cancellations during the Covid-19 pandemic arguing, in part, that the “proximate cause” of the policyholder’s loss was the Covid-19 pandemic (a “communicable disease” excluded by the policies) and not the government orders prohibiting large gatherings (a covered cause of loss under the policies).

Steps to Secure Coverage

If an event is cancelled or postponed that might be covered by event cancellation coverage, policyholders must know that they might have a claim for coverage to protect against the resultant losses and extra costs. To secure coverage, policyholders are well-advised to:

  1. review the event cancellation policy at issue for potential coverages (as well as all other insurance policies that might provide coverage);
  2. provide immediate notice of the potential event cancellation claim to all applicable insurers; and
  3. keep detailed, up-to-date accounting records of all losses and costs at issue, including lost revenue and profits, as well as extra expenses.

Article By Jorge R. Aviles and Andrea DeField of Hunton Andrews Kurth

For more insurance and reinsurance legal news, click here to visit the National Law Review. 

Copyright © 2022, Hunton Andrews Kurth LLP. All Rights Reserved.

New Poll Underscores Growing Support for National Data Privacy Legislation

Over half of all Americans would support a federal data privacy law, according to a recent poll from Politico and Morning Consult. The poll found that 56 percent of registered voters would either strongly or somewhat support a proposal to “make it illegal for social media companies to use personal data to recommend content via algorithms.” Democrats were most likely to support the proposal at 62 percent, compared to 54 percent of Republicans and 50 percent of Independents. Still, the numbers may show that bipartisan action is possible.

The poll is indicative of American’s increasing data privacy awareness and concerns. Colorado, Virginia, and California all passed or updated data privacy laws within the last year, and nearly every state is considering similar legislation. Additionally, Congress held several high-profile hearings last year soliciting testimony from several tech industry leaders and whistleblower Frances Haugen. In the private sector, Meta CEO Mark Zuckerberg has come out in favor of a national data privacy standard similar to the EU’s General Data Protection Regulation (GDPR).

Politico and Morning Consult released the poll results days after Senator Ron Wyden (D-OR) accepted a 24,000-signature petition calling for Congress to pass a federal data protection law. Senator Wyden, who recently introduced his own data privacy proposal called the “Mind Your Own Business Act,” said it was “past time” for Congress to act.

He may be right: U.S./EU data flows have been on borrowed time since 2020. The GDPR prohibits data flows from the EU to countries with inadequate data protection laws, including the United States. The U.S. Privacy Shield regulations allowed the United States to circumvent the rule, but an EU court invalidated the agreement in 2020, and data flows between the US and the EU have been in legal limbo ever since. Eventually, Congress and the EU will need to address the situation and a federal data protection law would be a long-term solution.

This post was authored by C. Blair Robinson, legal intern at Robinson+Cole. Blair is not yet admitted to practice law. Click here to read more about the Data Privacy and Cybersecurity practice at Robinson & Cole LLP.

For more data privacy and cybersecurity news, click here to visit the National Law Review.

Copyright © 2022 Robinson & Cole LLP. All rights reserved.

New Tools in the Fight Against Counterfeit Pharmaceuticals

The explosive growth of internet pharmacies and direct-to-consumer shipment of pharmaceuticals has provided increased access to, and reduced the cost of, important medications. Unfortunately, these same forces have increased the risks that counterfeit medicines will make their way to consumers, endangering patient safety and affecting manufacturers’ reputation in the public eye.

While the Food and Drug Administration attempts to police such misconduct through enforcement of the Food, Drug, and Cosmetics Act (FDCA), the resources devoted to enforcement are simply no match for the size and scope of the counterfeiting threat. Fortunately, pharmaceutical manufacturers are not without recourse, as several well-established tools may be used in the right circumstances to stop counterfeiters from profiting from the sale of knock-offs.

Experienced litigators can use the Lanham Act and the Racketeer Influenced Corrupt Organizations (RICO) Act to stop unscrupulous individuals and organizations from deceiving customers with counterfeit versions of trademarked drugs. Until recently, these legal weapons – including search warrants, seizures, forfeitures, and significant penalties – were typically wielded only by the government and only in criminal prosecutions.

As one recent case demonstrates, however, many of the tools that law enforcement has used for years to combat counterfeiters are also available to pharmaceutical manufacturers. In Gilead Sciences, Inc. v. Safe Chain Solutions, LLC, et al., the manufacturer of several trademarked HIV medications filed a civil complaint, under seal, alleging violations of the Lanham Act and RICO against scores of individuals and companies that were allegedly selling counterfeit versions of these drugs to patients across the country.

By deploying private investigators and techniques typically used by law enforcement, Gilead was able to gather a substantial amount of evidence before even filing the case. The company then used this evidence to secure ex parte seizure warrants and asset freezes, allowing it to locate and seize thousands of counterfeit pills and packaging before they could be shipped to unsuspecting consumers. Through the seizure of the financial proceeds of the alleged counterfeiting, Gilead prevented the dissipation of assets. If the company can successfully prove its RICO case, it stands to recover treble damages and attorneys’ fees as well.

Manufacturers of trademarked pharmaceuticals may consider using these and other tools to tackle the threat posed by counterfeiters. By drawing upon the experience and skills of trained litigators – particularly counsel who previously deployed these tools on behalf of the government while serving as federal prosecutors – companies can proactively protect their intellectual property and the consumers who depend on their products.

Article By Eric J. Beste, Anthony J. Burba and Heather F. Delgado of Barnes & Thornburg LLP

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

© 2022 BARNES & THORNBURG LLP

OSHA’s Next Steps with the Vaccine or Test Rule

On Tuesday, January 25, the U.S. Occupational Safety and Health Administration (OSHA) announced the withdrawal of the “Emergency Temporary Standard” (ETS) that would have required large private employers of 100 or more employees to implement a vaccine or test policy. This announcement came after the U.S. Supreme Court stayed enforcement of the ETS on January 13, 2022 pending a decision from the Sixth Circuit on the underlying proceedings challenging the ETS. The withdrawal of the ETS is effective as of January 26, 2022.

The announcement from OSHA made it clear that the withdrawal is not complete, stating:

“Although OSHA is withdrawing the Vaccination and Testing ETS as an enforceable emergency temporary standard, OSHA is not withdrawing the ETS to the extent that it serves as a proposed rule under section 6(c)(3) of the Act, and this action does not affect the ETS’s status as a proposal under section 6(b) of the Act or otherwise affect the status of the notice-and-comment rulemaking commenced by the Vaccination and Testing ETS.” OSHA’s complete withdrawal can be found here.

OSHA intends to keep the ETS as a proposed rule under OSHA’s rulemaking authority. This means that OSHA may choose to modify the previously published ETS and may rely on the Supreme Court’s opinion in doing so. OSHA may choose to implement ideas from the Supreme Court justices such as an industry or workplace-specific analysis.  Additionally, OSHA is also likely to review the comments submitted during the notice and comment period for direction with respect to a potential final ETS.

While Tuesday’s announcement does not necessitate action by employers, it does leave the door open for future directives.

© 2022 Varnum LLP
For more on OSHA, visit the NLR Labor & Employment section.

Life in The Fast Lane: How Urban Car Ads Depicting ‘Street Art’ Can Backfire

Vehicle manufacturers and their ad agencies really love to show off their driving machines in action. Television commercials depict sturdy, reliable trucks hauling tons of cargo; four-wheel-drive SUVs navigating perilous terrain in extreme weather conditions; and sleek sedans cruising through cityscapes of gleaming skyscrapers and funky urban streets.

It is on the funky urban streets where car manufacturers can sometimes steer in the wrong direction. Their commercials often feature street scenes that may include recognizable landmarks, historic buildings, public art installations like sculptures and wall murals, and even distinctive graffiti. Carmakers aren’t the only retailers entranced by “street art.” Makers of athletic shoes and apparel like to incorporate graffiti-like designs into their fashions and ads, as well. Filming other people’s art, even when in public view, can result in copyright claims, litigation and attorneys’ fees, not to mention potential damages. This article offers a brief roadmap for avoiding such claims.

Over the last decade, at least four automobile manufacturers have found themselves embroiled in copyright litigation as a result of having incorporated public art into their advertisements. (A word of caution to other retailers: American Eagle Outfitters, Coach, H&M, Marriott International, McDonald’s, Moschino, North Face and Roberto Cavali, among others, also have found themselves navigating lawsuits over the alleged appropriation of street art.)

In 2011, Fiat released a television commercial featuring Jennifer Lopez, seemingly driving through her old Bronx neighborhood, where she grew up. “Here, this is my world,” she says in voice over, as stereotypical Bronx scenes pass by. One of those scenes included an intersection splashed with murals created by the group that calls itself “TATS Cru,” which then asserted a claim of copyright infringement. Soon after the car company became aware of the issue, the claim was quickly settled out of court. (Incidentally, the commercial was also controversial for reasons unrelated to the infringed-upon mural: JLo wasn’t actually driving the car around her old neighborhood; rather, it was driven by a double, and JLo did the voice over from Los Angeles.)

In 2018, General Motors launched an advertising campaign for its Cadillac line. Labeled “The Art of the Drive,” the campaign featured images of Cadillac vehicles with scenes from Detroit in the background. One of those images included a large mural by a Swiss graffiti artist professionally known as “Smash 137,” who had been commissioned by a Detroit art gallery to create an outdoor mural on the outdoor elevator shed of a 10-story parking garage. He sued G.M. for copyright infringement.

The company argued that the lawsuit should be dismissed on the grounds that the parking garage was an “architectural work,” the mural was incorporated into that structure and, therefore, it was permissible to use a photograph of the structure in its ads. After the court rejected this argument and it was clear the lawsuit was headed for a jury trial, the lawsuit settled.

And in 2019, Mercedes-Benz USA, LLC was threatened with lawsuits by several artists who claimed that Instagram photos posted by Mercedes-Benz of its G 500 luxury truck in the foreground of colorful Detroit murals infringed upon their copyright rights. Rather than wait to be sued, the automobile company took the initiative and filed federal lawsuits in which it asked the court for a determination of non-infringement. As G.M. had done, Mercedes-Benz argued that the 1990 federal law that extended copyright protection to architectural designs (the Architectural Works Copyright Protection Act, or AWCPA) allowed the company to post photographs of the exteriors of buildings visible from public spaces, notwithstanding the artwork painted on them.

The muralists filed a motion seeking the summary dismissal of the car company’s lawsuits on several grounds, including that the AWCPA did not permit the company’s copying of their artwork. Soon after the court denied that motion, the parties reached a settlement and the lawsuits were dropped.

Most recently, Volkswagen Group of America, Inc. finds itself in the litigation fast lane. On November 11, another artist who is supposedly known for her work in a variety of media, including murals and street art, sued the car manufacturer, as well as Marvel Entertainment, over a 2018 cross-promotional commercial for Audi vehicles and the motion picture Avengers: Endgame. (Korsen v. Volkswagen Group of America, Inc., Case No. 21-cv-08893 (C.D.Cal. 2021).) The plaintiff alleges that her works have been displayed in Los Angeles-area galleries and public spaces and that she has worked with major clients like Red Bull, Whole Foods and the City of Los Angeles. According to her complaint, Korsen created an original mural on 7th and Mateo Streets in downtown Los Angeles (i.e. one of those gritty urban landscapes mentioned at the start of this article). The mural can be seen prominently in the Audi/Marvel commercial, which apparently was featured widely on Audi’s official YouTube channel, Facebook Live and at the Los Angeles Auto Show, among other places.

To be sure, this plaintiff’s claim may be subject to numerous challenges and defenses. For one thing, the advertisement ran in 2018, and the plaintiff’s claim is subject to a three-year statute of limitations. So even if the commercial continued to air within three years of the filing date of the complaint, a substantial portion of any profits that might be attributed to the marketing campaign could well be out of the plaintiff’s reach. In addition, it appears that the plaintiff did not actually register her work with the US Copyright Office until November 2019, long after the alleged infringement commenced in 2018. This would mean that the plaintiff may be ineligible for an award of statutory damages (which plaintiffs often elect when their actual damages or the defendant’s profits are difficult to establish) and, importantly, the recovery of attorneys’ fees. And, even if the plaintiff still might be eligible for statutory damages, she would not be entitled to an award of up to $150,000 for each allegedly infringing photograph of her mural, as she demands. The Copyright Act makes clear that a copyright plaintiff may seek only one award of statutory damages for each infringed work, regardless of the number of infringing works.

Whether Volkswagen wins, loses or settles this dispute, one thing is certain: It will have to spend time, effort and attorneys’ fees to achieve a resolution of this plaintiff’s claims. It may also find itself the subject of negative publicity. Automobile manufacturers and other retailers would be prudent to follow some basic steps before releasing this type of advertisement to the public, thereby potentially sparing themselves such costs.

First, a proposed advertisement should be reviewed at the concept and/or script stage for potential third party intellectual property issues. Second, all of the proposed locations for photography or filming should be vetted properly for the presence of copyright-protected artwork, third-party trademarks and the like. Third, the creators of the marketing campaign should discuss with qualified counsel the risks associated with filming or photographing publicly-viewable art and business signage, including: (1) how visible the artwork/signage will be and for what duration; (2) whether the artwork/signage can or should be covered over and/or replaced with approved content prior to filming, or blurred in post-production; (3) whether there is any conceivable fair use or other defense to a potential claim of infringement; and (4) whether it would be prudent to contact the content/signage owner and obtain permission for the proposed use.

©2022 Katten Muchin Rosenman LLP
Article by David Halberstadter with Katten.
For more articles about copyright litigation, visit the NLR Intellectual Property Law section.

Labor Shortage: Will Additional Seasonal Visas Help?

The United States is in the midst of a significant labor shortage. In response to the growing demand for labor, the U.S. government recently announced it will expand the number of H-2B visas available for seasonal workers this winter. Although the announcement is hailed by some as necessary, critics suggest the response may be insufficient to meet growing demand.

The Modern Labor Shortage

Following the economic turmoil spawned by the COVID-19 pandemic, the U.S. economy faces an unusual set of circumstances: instead of a lack of jobs, there is a lack of workers to fill available positions. Experts attribute the labor shortage to a number of potential causes, but some suggest a lack of immigrant labor is at least partially to blame. Due to lengthy processing times for immigration applications, foreign born workers hoping to enter the United States face unprecedented challenges obtaining the necessary paperwork to work here legally.

Biden Administration Expands Seasonal Visas

In response to the growing challenges of the labor shortage, the Department of Homeland Security (“DHS”) and the Department of Labor (“DOL”) recently announced they will issue a joint temporary final rule to make available an additional 20,000 H-2B temporary nonagricultural worker visas. These visas will be set aside for U.S. employers seeking to employ additional workers on or before March 31, 2022.

The visas are in addition to 33,000 visas already set aside for seasonal employers, marking a substantial 60% increase from the previous limit.

What is the H-2B Program?

The H-2B visa program allows U.S. employers who meet specific regulatory requirements to bring foreign nationals to the United States to fill temporary nonagricultural jobs. The industries most reliant on the H-2B program vary, but include landscapers, hotels, and ski resorts. By providing foreign workers to meet labor shortages in the United States, the program is meant to support the fluctuating needs of the U.S. economy.

The program has restrictions, however. The employment must be for a limited period, including seasonal or intermittent needs. To hire H-2B workers, employers must, among other things, certify to a lack of U.S. workers available to fill the position. Additionally, employers must certify that using the program will not adversely affect wages for similarly-employed U.S. workers.

Will Additional Seasonal Visas Be Enough?

Expansion of the H-2B program is being praised as necessary relief by some. However, others suggest it may not be sufficient to answer the growing labor demand in the country.

Business owners from Cape Cod, Massachusetts, hailed the news, citing the strained vacation industry that relies so heavily on seasonal workers to meet the high demand. Additional workers will provide necessary relief on many strained industries.

Steve Yale-Loehr, a professor of immigration law practice at Cornell, recently noted that if employers get past these hurdles, the visas could help the labor shortage, but only a little bit. After all, the labor shortage in the United States exceeds the additional 20,000 seasonal visas being offered. Recent estimates suggest 10.4 million jobs are available here. Moreover, applications under the H-2B program can be costly, forcing employers to weigh the financial implications of sponsoring workers under the program.

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

CFPB to Examine College Lending Practices

On January 20, the CFPB announced that it would begin examining the operations of post-secondary schools that offer private loans directly to students and update its exam procedures to include a new section on institutional student loans.  The CFPB highlights its concern about the student borrower experience in light of alleged past abuses at schools that were previously sued by the CFPB for unfair and abusive practices in connection with their in-house private loan programs.

When examining institutions offering private education loans, in addition to looking at general lending issues, CFPB examiners will be looking at the following areas:

  • Placing enrollment or attendance restrictions on students with loan delinquencies;
  • Withholding transcripts;
  • Accelerating payments;
  • Failing to issue refunds; and
  • Maintaining improper lending relationships

This announcement was accompanied by a brief remark from CFPB Director Chopra:  “Schools that offer students loans to attend their classes have a lot of power over their students’ education and financial future.  It’s time to open up the books on institutional student lending to ensure all students with private student loans are not harmed by illegal practices.”

Putting it Into Practice:  The CFPB’s concern with the experience of student borrowers is in line with a number of enforcement actions pursued by the Bureau against post-secondary schools.  The education loan exam procedures manual is intended for use by Bureau examiners, and is available as a resource to those subject to its exams. These procedures will be incorporated into the Bureau’s general supervision and examination manual.

Article By Moorari Shah, A.J. S. Dhaliwal, and Pouneh Almasi of Sheppard, Mullin, Richter & Hampton LLP

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

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.

Phantom Participants with Real-World Ramifications: Clinical Drug Trial Data Falsification

As if medical-related disinformation was not pernicious enough, unscrupulous actors seek to enrich themselves from falsifying clinical drug trial data. A Florida-based clinical research firm project manager was sentenced to 30 months in prison because of his involvement in a conspiracy to falsify clinical drug trial data. Previously, the primary investigator, clinic owner, and another senior employee at Miami-based Tellus Clinical Research were charged with various counts of mail and wire fraud, money laundering, as well as making false statements to Food and Drug Administration (FDA) inspectors. A researcher or other employee of the medical clinic could have reported this conspiracy to the government and shared in 15-25% of the government’s recovery.

Pharmaceutical companies sponsor clinical research trials to gather data on the safety and efficacy of the drugs they manufacture. Prior to commencing research trials, pharmaceutical companies or “sponsors” must submit to the FDA their “study protocol,” which identifies who can participate, drug dosages and timing, and how the study’s performance will be measured. Sponsors engage contract research organizations (CROs) to perform the clinical trials, and the CRO must ensure compliance with the study protocol and FDA regulations. In this case, a clinical research firm contracted with pharmaceutical manufacturers to conduct trials related to an opioid dependency treatment, an irritable bowel syndrome drug, and diabetic nephropathy or kidney disease medication. The sponsors would reimburse the CRO a set amount per study participant and for some fees and Tellus would pay participants in accordance with the study protocol.

How the research firm gamed the system involved the eligibility requirements for the studies: each of these clinical trials required patients to meet certain requirements for participation. Instead of honestly recruiting patients with the diagnoses needed to participate in the program, the defendants enrolled people without applicable diagnoses and falsely claimed that study participants completed all the requirements in the study protocol, to garner more payments from the clinical trial sponsors. Several of the defendants enrolled friends and family members to bump up the research firm’s participation numbers, and other research firm employees went so far as to misappropriate personal information from third parties without their knowledge or consent. The co-conspirators also falsified clinical notes and medical records of these unwitting participants, claiming to have performed medical exams, drawn blood for testing, and made payments to participants. This elaborate conspiracy served to wrongfully enrich the research firm owner and senior management at the expense of pharmaceutical companies and ultimately patients.

Clinical research fraud is harmful to consumers. As the Assistant Commissioner for the FDA Office of Criminal Investigations (OCI) stated, “Compromised clinical trial data could impact the agency’s decisions about the safety and effectiveness of the drug under review.” Consumers could end up with unsafe medications due to fraudsters’ schemes.

A whistleblower could have reported this fraud to the FDA and ensured only drugs which perform well in clinical trials on real human beings make it to market. The Department of Justice needs whistleblowers to report fraud involving clinical drug trials.

© 2022 by Tycko & Zavareei LLP
For more content about the FDA and drug trials, visit the NLR Biotech, Food & Drug section.

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