The National Law Forum

Your Presence Is Required: Employee Unable to Travel to Job Site Was Not “Qualified” Within the Meaning of the ADA

In recent years, particularly with technology making it easier for employees to work remotely, courts have struggled to determine whether onsite attendance is an essential job function under the Americans with Disabilities Act (“ADA”). This question is often dispositive because only qualified individuals—those who can perform a job’s essential functions with or without a reasonable accommodation—are protected by the ADA. A federal court in South Carolina recently ruled that an employee who could not get to his worksite for a six-month period could not perform the essential functions of his job and thus his employer did not run afoul of the ADA in terminating his employment. Dunn v. Faithful+Gould Inc., Case No. 6:15-cv-04382 (June 18, 2018).

Dunn worked as a chief scheduler for Faithful+Gould (“FG”) from 2011 until his termination in August 2014. For the first eighteen (18) months of his employment, Dunn worked remotely from his house because no local office had been established. In 2013, a local office was formed, and Dunn changed supervisors. Dunn’s new supervisor did not allow Dunn or other schedulers to work from home. In the summer of 2014, Dunn had two epileptic seizures. According to his doctor, Dunn had no restrictions and could return to work, but he could not drive for six months because South Carolina law prohibits someone from driving within six months of an epileptic seizure. Dunn requested that he be permitted to work from home until his driving privileges were restored. While FG was willing to allow Dunn to work from home one day a week for a four-week period while Dunn figured out a long-term transportation solution, FG refused to allow Dunn to work from home daily for an extended period. In September 2014, Dunn’s employment was terminated after he exhausted all leave available under the FMLA and company policy.

Despite the fact that Dunn’s job description made no reference to onsite attendance and despite the fact that he worked from home for the first eighteen months on the job, the court concluded that onsite attendance was an essential function of Dunn’s job. The court gave significant weight to the judgment of Dunn’s supervisor that onsite attendance was essential and Dunn’s statements to his doctor that he could not perform his job from home. The court also noted that Dunn’s job had changed, and while onsite attendance may not have been essential during his first eighteen months on the job, it was at the relevant time. The court rejected Dunn’s argument that FG should have granted him extended leave as a reasonable accommodation while he waited the six months to be able to legally drive again. The court ruled extended leave was not a reasonable accommodation because it would have required FG to reallocate Dunn’s essential job duties to other employees for an extended period of time.

Dunn illustrates well the case-by-case analysis required in determining whether a job function such as onsite attendance is essential and that the essential nature of a function can actually change over time. Thus, in considering potential accommodations, employers should always conduct an individualized assessment to determine whether any job function, including onsite attendance, is an essential function of a particular position.

Dunn is consistent with the Sixth Circuit’s en banc decision in EEOC v. Ford Motor Company, discussed in a previous blog.

This post was written by Jonathan A. Roth of Jackson Lewis P.C.

Are you Afraid of What Lurks in the Deep Water of your ERISA Plan?

Fear of creatures that lurk in deep water is pretty universal – for confirmation, look no further than the numerous summer movies featuring unexpected attacks by fierce underwater predators with sharp teeth. Inevitably, none of the victims seem to have any tools that will actually save them. One after another, their tools break, and their escape attempts fail pitifully. Unfortunately, such movies give the impression that the only protection from these predators is staying out of the water altogether.

If sponsoring and administering ERISA employee benefit plans seems as dangerous to you as swimming in deep water, be assured that there are tools and approaches that can be vital to risk management. Amending your ERISA plan document and summary plan description to include appropriate plan provisions, for instance, can minimize your exposure as a plan administrator. For example:

Does your plan reserve discretionary authority to the plan administrator? Explicitly reserving discretionary authority to the plan administrator can prevent a court from exercising its own discretion to your detriment. Almost thirty years ago, the Supreme Court of the United States recognized the effectiveness of such language; court opinions continue to highlight the importance of this provision, as was done in a recent opinion issued by the Sixth Circuit in Clemons v. Norton Healthcare Inc. Retirement Plan, 890 F.3d 254 (May 10, 2018). Because it is so important, you should not assume that it is automatically included in every plan document and summary plan description. Work with benefits counsel to have your documents reviewed to make sure this provision is included.
Does your plan invalidate assignments of claims? Sometimes, a doctor or hospital asks a participant to sign a document that assigns to the provider the participant’s claim for benefits, meaning that the provider can stand in the shoes of the participant in bringing suit against your plan for coverage of claims. An anti-assignment clause invalidates such an assignment. Your plan’s participants and beneficiaries can still bring claims (and suit, if necessary), but they cannot assign such claims to their providers. Such a clause was upheld recently by the Third Circuit in American Orthopedic & Sports Medicine v. Independence Blue Cross & Blue Shield, 2018 WL 2224394 (May 16, 2018).
Does your plan contain a plan-based statute of limitations? In ERISA cases, a question about which statute of limitations applies (which, as a practical matter, means how many years later a plaintiff can sue you) can be a complicated issue, involving both state and federal law. Short-circuit those disagreements by amending your plan and summary plan description to establish a reasonable plan-based statute of limitations. Make sure your claims and appeal provisions, and all claim or appeal denial notices, discuss the statute of limitations. For example, a properly drafted plan-based statute of limitations resulted in a dismissal of a lawsuit because a plaintiff failed to bring suit within 3 years of his claim – without that plan provision, the court would have applied Puerto Rico’s default statute of limitations for contract claims, which would have permitted suit within 15 years of the claim. Santaliz-Rioz v. Met. Life Ins. Co., 693 F.3d 57 (1^stCir. 2012), cert. denied., 569 U.S. 904 (2013).

When it comes to health and welfare plans, note that, if you do not yet have a plan document and summary plan description, now is the time to get one. Benefit summaries provided by your insurer are helpful and important documents, but they may not contain all the elements required by ERISA. Moreover, by adopting a plan document and summary plan description, you will have a document to include provisions like those highlighted above.

Having an ERISA attorney review (or draft) your plan document and summary plan description can save you money and headaches down the line. After all, a lawsuit may not be quite as scary as staring into a 75-foot-long prehistoric shark’s open jaws – but do you really want to find out through personal experience?

ARTICLE BY: Jamie L. Leary

Steptoe & Johnson PLLC

SAS Indirectly Strengthens the Impact of Estoppel

The Supreme Court decision in SAS Institute v. Iancu^[i]will likely strengthen a patent owner’s ability to argue in favor of estoppel and keep a petitioner from getting multiple bites at the invalidity apple in parallel PTAB and district court proceedings. At first glance the Supreme Court’s recent decision appears to be another setback to patent owners. Instead of quickly defeating post grant challenges to at least some challenged claims pursuant to a denial of institution, patent owners will now have to fight petitions even if the Board finds merit with only a single ground challenging patentability. Upon closer examination, however, SAS’s implications for estoppel are favorable and may even resolve a split concerning the scope of estoppel.

The Supreme Court Directive in SAS

SAS addressed the PTAB’s “partial institution” policy, under which the PTAB claimed the power to institute an IPR with respect to only some of the claims challenged in a petition. In SAS, the Supreme Court rejected that policy. The Court explained that if the PTAB decides to institute an IPR, 35 U.S.C. § 318(a) provides that PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” Emphasizing the statute’s use of the phrase “any patent claim,” the Court held that PTAB cannot pick and choose which claims to address, but must instead take the petition as it finds it.^[ii] The Court found further support for its interpretation in the structure of the inter partes review process “in which it’s the petitioner, not the Director, who gets to define the contours of the proceeding.”^[iii]

The Split on Estoppel

The partial institution policy that SAS rejected has created a split in the interpretation of estoppel under 35 U.S.C. § 315(e). Section 315(e)(2) provides that “[t]he petitioner in an inter partes review . . . that results in a final written decision under section 318(a) . . . may not assert . . . in a civil action . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” Congress intended this provision to preclude the same party from re-litigating invalidity in the district court once it had chosen to do so through an IPR. As then-Director of the PTO David Kappos testified, the “estoppel provisions mean that your patent is largely unchallengeable by the same party.”[iv] Similarly, Senator Grassley stated that IPR review “will completely substitute for at least the patents-and-printed-publications portion of the civil litigation.”^[v]

Notwithstanding the apparently broad estoppel envisioned by Congress, some courts have interpreted § 315(e) more narrowly. For example, in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., the Federal Circuit explained that where PTAB partially instituted an IPR, the petitioner was not estopped from raising a ground in district court that it had included in its IPR petition but on which PTAB did not institute. The court reasoned that the non-instituted ground was not raised “during th[e] inter partes review.”^[vi]Similarly, in HP Inc. v. MPHJ Technology Investment, LLC, the Federal Circuit explained that “noninstituted grounds do not become a part of the IPR,” and “[a]ccordingly, the noninstituted grounds were not raised and, as review was denied, could not be raised in the IPR.” The court therefore held that “the estoppel provisions of § 315(e)(1) do not apply.”^[vii]Other courts have followed suit and even extended that holding.^[viii]

A broader interpretation of estoppel tracks what many believe to be the statutory intent, however, as a party should not get two bites at the apple and be able to seek review at both the PTAB and in the district court. Adopting this view, the court in Biscotti Inc. v. Microsoft Corp. cabined Shaw and HP to their facts, holding that they “exempt an IPR petitioner from § 315(e)’s estoppel provision only if the PTAB precludes the petitioner from raising a ground during the IPR proceeding for purely procedural reasons.”[ix] Thus, the court held that § 315(e) estopped the petitioner from asserting any ground that (1) was included in PTAB’s final written decision, (2) was not instituted for non-procedural reasons, or (3) was not included in the petition.[x] Any other decision would result in needlessly protracted litigation as petitioners would re-litigate arguments similar to those that it had already lost or strategically chose not to include in a petition.[xi] The court in Douglas Dynamics, LLC v. Meyer Products LLCtook a similar view with respect to non-petitioned grounds, holding that estoppel applies “to grounds not asserted in the IPR petition, so long as they are based on prior art that could have been found by a skilled searcher’s diligent search.”[xii]

SAS Strengthens Patent Owners’ Estoppel Arguments Because a Petitioner is Deemed to be the “Master of its Complaint”

While SAS had nothing to do with estoppel on its face, much of the disagreement regarding the scope of estoppel arose out of the PTAB’s partial institution policy and the effect of estoppel on non-instituted claims. Because the PTAB no longer has discretion as to partial institution, courts will no longer have to struggle with whether a petitioner is estopped from raising non-instituted grounds for unpatentability in a subsequent or parallel district court proceeding. While a few open issues remain, the patent owner will still be able to argue that SAS supports the idea that petitioners should only get one opportunity to challenge patentability—either at the PTAB or before a jury. The Supreme Court directive from SAS, coupled with recent guidance from the PTAB, suggests that the divide between the broad (Biscotti and Douglas Dynamics) and narrow (Shaw and HP) interpretations of estoppel—at least with respect to pre-institution decisions from the PTAB—may be merging.

Moreover, while SAS does not explicitly resolve whether a petitioner is estopped from arguing non-petitionedclaims in a parallel district court case, the premise behind the Supreme Court’s decision—that the petitioner is the master of its own petition—suggests that estoppel should apply. Some commentators have predicted that because PTAB must now choose between full institution and full denial, “petitioners [will] have an incentive to focus their petitions even further—when choosing claims to challenge, grounds to assert, and prior art to cite—in order to ensure that the likelihood of full institution is greater than the likelihood of full denial.”^[xiii] But filing a targeted (and therefore stronger) petition may run the risk of estoppel on any non-petitioned claim. As Biscotti and Douglas Dynamics indicate, petitioners should not be permitted to hold arguments in reserve in case of an unfavorable result at the PTAB. Moreover, SAS supports Biscotti’s and Douglas Dynamic’s interpretation of the meaning of “during” the IPR. While Shaw characterized an IPR as not beginning until institution,^[xiv]SAS depicts post grant review as a single process that begins with petitioner defining the scope of the proceeding in its petition.^[xv]Applying estoppel to non-petitioned claims would not be inconsistent with a courts’ concern “that estoppel applies only to those arguments, or potential arguments, that received (or reasonably could have received) proper judicial attention^.”[xvi]

Further, SAS will still enable patent owners to rely on the same line of cases to argue for procedural estoppel. Before SAS, the PTAB frequently denied institution in view of procedural deficiencies.^[xvii]Now, however, the PTAB will be faced with either denying institution for failure to comply with PTAB rules or allowing institution on all grounds even where some of the challenges are procedurally improper. For example, petitioners could present a single procedurally proper argument to open the door to review and evade page limit requirements by packing the remainder of the petition with grounds that must also be instituted under SAS but that are supported only by improper incorporations by reference.^[xviii] While denying institution because of procedural failings could preclude the petitioner from filing another (procedurally proper) petition making the same arguments,[xix] the petitioner, as “master of its complaint,” could have drafted its petition correctly from the start.^[xx]In short, the petitioner’s failure to follow the rules should not justify a second bite at the validity apple.

Finally, pending petitions subject to partial institution could have the same consequences depending on the action of the petitioner post-SAS. PTAB guidance indicates that in such cases, “the panel may issue an order supplementing the institution decision to institute on all challenges raised in the petition.”^[xxi] If a petitioner fails to seek supplemental institution or fails to appeal the PTAB’s refusal to supplement, estoppel could apply. While some courts might continue following Shaw and HP by holding that non-instituted claims were not raised “during” the IPR, petitioner “could have raised” those claims and arguments “during” the IPR—even under Shaw’s interpretation—given SAS’s holding because the petitioner should have sought to remedy the non-institution.

The Takeaway

While not obvious at first glance, SAS follows recent decisions like General Plastics that tend to protect patent owners’ rights. While the focus of SAS was on institution and the scope of institution, the Court has armed patent owners with another weapon with which they can challenge serial review of the same patent on the same grounds in multiple petitions and district court proceedings.

_{[i] No. 16-969 (Apr. 24, 2018).}

_{[ii] Id., slip op. at 1, 4-5.}

_{[iii] Id., slip op. at 12.}

_{[iv] Hr’g on H.R. 1249 Before the Subcomm. on Intell. Prop., Competition and the Internet of the H. Comm. on the Judiciary, 112th Cong. (2011) (statement of David Kappos, Dir., USPTO) (“Those estoppel provisions mean that your patent is largely unchallengeable by the same party.”)}

_{[v] 157 Cong. Rec. S1360-94 (daily ed. Mar. 8, 2011) (statement of Sen. Grassley) (claiming that the estoppel provision “ensures that if aninter partes review is instituted while litigation is pending, that review will completely substitute for at least the patents-and-printed-publications portion of the civil litigation”).}

_{[vi] 817 F.3d 1293, 1300 (Fed. Cir. 2016) (quoting 35 U.S.C. § 315(e)(2)).}

_{[vii] 817 F.3d 1339, 1347 (Fed. Cir. 2016).}

_{[ See, e.g., Verinata Health, Inc. v. Ariosa Diagnostics, Inc., 2017 U.S. Dist. LEXIS 7728, at *8-10 (N.D. Cal. Jan. 19, 2017); Illumina, Inc. v. Qiagen N.V., 207 F. Supp. 3d 1081, 1089 (N.D. Cal. 2016).viii]}

_{[ix] 2017 U.S. Dist. LEXIS 144164, at *21-22 (E.D. Tex. May 11, 2017).}

_{[x] Id. at *22.}

_{[xi] Id. at *17-18, *20-21.}

_{[xii] 2017 U.S. Dist. LEXIS 58773, at *15.}

_{[xiii] Saurabh Vishnubhakat, First Steps After SAS Institute, Patently-O (Apr. 27, 2018), https://patentlyo.com/patent/2018/04/first-steps-institute.html}

_{[xiv] 817 F.3d at 1300.}

_{[xv] Slip op. at 6, 9.}

_{[xvi] Verinata, 2017 U.S. Dist. LEXIS 7728, at *10.}

_{[xvii] See, e.g., Shenzhen Huiding Technology Co., Ltd. v. Synaptics Incorporated, IPR2015-01741, Paper 8 at 29-31 (PTAB Aug. 7, 2015) (partially denying institution due to improper incorporation by reference); Bomtech Elec., Co. Ltd. v. Medium-Tech Medizingeräte GmbH, Case No. IPR2014-00138, Paper No. 8 at 32-33 (PTAB Apr. 22, 2014) (same).}

_{[xviii] See 37 C.F.R. § 42.6(a)(3).}

_{[xix] General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 (PTAB Sept. 6, 2017).}

_[xx] Id.

_{[xxi] Guidance on the Impact of SAS on AIA Trial Proceedings (Apr. 26, 2018) (emphasis added).}

This post was written by Scott W. Hejny and Chelsea Priest of McKool Smith.

Fake Apps Find Their Way to Google Play!

Over the last two months a string of fake banking apps have hit the Google Play store, leaving many customers wondering whether they have been affected by the scam. A report by security firm ESET found users of three Indian banks were targeted by the apps which all claimed to increase credit card limits, only to convince customers to divulge their personal data, including credit card and internet banking details. The impact of this scam was heightened as the data stolen from unsuspecting customers was then leaked online by way of an exposed server.

The report claims these apps all utilise the same process:

Once the app is downloaded and launched a form appears which asks the user to fill in credit card details (including credit card number, expiry date, CVV and login credentials)
Once the form is completed and submitted a pop up customer service box is displayed
The pop up box thanks users for their interest in the bank and indicates a ‘Customer Service Executive’ will be in contact shortly
In the meantime, no representative makes contact with the customer and the data entered into the form is sent back to the attacker’s server – IN PLAIN TEXT.

The ESET report alarming revealed that the listing of stolen data on the attacker’s server is accessible to anyone with the link to the data, this means sensitive stolen personal data was available to absolutely anyone who happens to comes across it.

Whilst, the reality is any app on your personal smartphone may place your phone and personal data at risk, (as discussed here ‘Research Reports say risks to smartphone security aren’t phoney‘)

Customers can mitigate risk by:

only using their financial institutions official banking apps, these are downloadable from the relevant institution’s official website;

paying attention to the ratings, customer reviews when downloading from Google Play;

implementing security controls on your smartphone device from a reputable mobile security provider; and

contracting their financial institution directly to seek further guidance on the particular banking apps in use.

It cannot be overlooked, whilst Google Play moved quickly to remove the apps we query how it was so easy for cyber criminals to launch fake apps on Google Play in the first place.

This post was written by Cameron Abbott and Jessica McIntosh of K & L Gates.

Read more stories like this on the National Law Review’s Cybersecurity legal news page.

You’ve Got Mail: NLRB Requests Briefing on Standard for Employee Use of Employer Owned Electronic Communication Systems

In what could signify the beginning of the end for Purple Communications, Inc., 361 NLRB 1050 (2014) and guaranteed employee access to Employer computer systems for union organizing purposes, the NLRB issued a notice on August 1 inviting the filing of briefs on whether the Board should uphold, modify or overrule the decision. Under Purple Communications (which we previously covered here), employees have a presumptive right to use their employer’s e-mail system to engage in protected activity under Section 7 of the NLRA on nonworking time, unless the employer can demonstrate circumstances allowing it to restrict such use. Overturning Purple Communications could return the Board to the standard under Register Guard, 351 NLRB 1110 (2007), which permitted employers to impose Section 7-neutral restrictions on an employee’s non-work use of their e-mail systems, even if those restrictions ultimately limited the employee’s use of the employer’s e-mail for communications involving protected activity.

The NLRB issued the notice in response to a 2016 ALJ decision finding that an employer’s computer usage policy did not comply with Purple Communications standard, because it prohibited employees from using their work e-mail for any nonbusiness purpose. Board Members Pearce (who was in the Purple Communicationsmajority) and McFerran dissented from the decision to solicit briefs. Both dissenting Members contended that issuing the notice was inappropriate in light of the pending appeal of Purple Communications before the Ninth Circuit and their view that there has been no change in workplace trends or evidence showing that Purple Communications has created significant challenges for employers, employees, unions or the Board.

Perhaps in recognition that workplace communication technology has clearly expanded beyond e-mail, the notice welcomes briefing on what standard the Board should apply to other methods of employee communication on employer-owned equipment (e.g., instant messages, text messages, and social media postings). While the Board has limited its holdings in the area of computer usage to employer e-mail systems, this notice may indicate a move by the Board to apply a consistent standard to all forms of workplace communication platforms.

This post was written by Michael J Lebowich and Jordan Simon of Proskauer Rose LLP.

For more labor and employment news, check out the National Law Review’s Labor and Employment Page.

Battery Companies Drive Innovation in Energy Efficiency Storage Technology

A hot new area for the development of energy efficiency storage technology is refrigeration. Last month, this blog covered the recent success of Mintz Levin client Axiom Exergy. Axiom’s focus on lowering the costs of refrigeration through their Refrigeration Battery has caught the attention of major investors such as Shell Investors, and has led to deals with major chains, including Wal-Mart and Whole Foods. The battery, which is described in more detail in the June 12^th post, generates and stores excess refrigeration by freezing tanks of salt water during off-peak hours and releasing the refrigeration during peak hours to avoid high peak energy costs. The Refrigeration Battery is especially useful for supermarkets, which dedicate nearly 60% of their energy consumption towards refrigeration, and can help reduce peak energy consumption by up to 40%.

Of course, energy efficiency storage technology holds promise for more than just supermarkets. Ice Energy’s Ice Bear battery creates and stores ice during off-peak hours. It can then use that stored ice during peak hours to cool the building in which it is installed. The battery, which makes air conditioning more efficient in commercial, industrial, and residential buildings, has received significant attention in the efficient energy storage space. In fact, the Southern California Power Public Authority (SCPPA) announced its plan to purchase up to 100 Ice Bear battery units. As a result, Ice Energy could add nearly one Megawatt of energy for residential cooling systems back into the SCPPA network.

In the opposite direction of water-based technologies, lie companies like Ambri and VionX. Ambri uses liquid metals in its batteries, which can each supply one day’s worth of electricity to 30 average Massachusetts homes. The current passing between the electrodes during the charge-discharge cycle generates enough heat to keep the battery at temperature. Because the battery operates at an elevated temperature, which is maintained through the normal cycle of the battery, the battery does not require a cooling system, resulting in low-cost and efficient storage technology. VionX, another Mintz Levin client, developed a Vanadium Redox Flow Battery. Their battery does not suffer from degradation through the charge-discharge cycle like traditional lithium ion batteries do. This unique design allows the battery to run through its cycle indefinitely. As a result, VionX batteries increase their storage efficiency over the course of their life cycle, and they pass this benefit on to clients in the form of reliability and cost effectiveness.

This explosion in innovation demonstrates the potential for energy efficiency storage technology to expand into different areas. One opportunity for such expansion is the electric grid. Advances in battery technology have the potential to significantly impact the grid’s storage capacity. Scaling energy efficiency storage technology to meet the demands of the United States’ electric grid would pave the way for connecting more clean energy sources to the grid. Efficient batteries with high storage capacities allow energy from clean sources–which often fluctuate seasonally and hourly in level of output–to be stored during times of high output. This increased storage capacity would provide the missing link between clean energy sources and energy output from the grid. The energy stored from clean energy sources during peak hours of energy output would be able to provide those connected to the grid with constant energy during times of low-production with advances in efficient storage technology.

Investors have taken notice of these opportunities for innovation. Ambri has secured a combined $50 million from Bill Gates and other investors, while VionX recently raised $26 million in financing to add to the $79 million in venture capital financing that it had already raised. Ice Energy entered into a long-term agreement in June 2018 for $40 million in funding after securing series C funding in 2010. Mercom Capital Group found that venture capital funding for battery storage, smart grid, and efficiency companies was 12 percent higher in the first half of 2018 than in the first half of 2017, rising from $480 million to $539 million. The recent increase in innovation and investment may indicate that there are new opportunities in store for efficient storage technologies and cleantech as a whole.

This post was written by Thomas R. Burton, III of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Treasury Releases Report on Nonbank Institutions, Fintech, and Innovation

On July 31, 2018, the U.S. Department of the Treasury released a reportidentifying numerous recommendations intended to promote constructive activities by nonbank financial institutions, embrace financial technology (“fintech”), and encourage innovation.

This is the fourth and final report issued by Treasury pursuant to Executive Order 13772, which established certain Core Principles designed to inform the manner in which the Trump Administration regulates the U.S. financial system. Among other things, the Core Principles include: (i) empower Americans to make independent financial decisions and informed choices; (ii) prevent taxpayer-funded bailouts; (iii) foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis; (iv) make regulation efficient, effective, and appropriately tailored; and (v) restore public accountability within federal financial regulatory agencies and rationalize the federal financial regulatory framework.

Treasury’s lengthy report contains over 80 recommendations, which are summarized in an appendix to the report. The recommendations generally fall into four categories: (i) adapting regulatory approaches to promote the efficient and responsible aggregation, sharing, and use of consumer financial data and the development of key competitive technologies; (ii) aligning the regulatory environment to combat unnecessary regulatory fragmentation and account for new fintech business models; (iii) updating a range of activity-specific regulations to accommodate technological advances and products and services offered by nonbank firms; and (iv) facilitating experimentation in the financial sector.

Some notable recommendations include:

Embracing Digitization, Data, and Technology

TCPA Revisions: Recommending that Congress and the Federal Communications Commission amend or provide guidance on the Telephone Consumer Protection Act to address unwanted calls and revocation of consent.
Consumer Access to Financial Data: Recommending that the Bureau of Consumer Financial Protection (“BCFP”) develop best practices or principles-based rules to promote consumer access to financial data through data aggregators and other third parties.
Data Aggregation: Recommending that various agencies eliminate legal and regulatory uncertainties so that data aggregators can move away from screen scraping to more secure and efficient methods of access.
Data Security and Breach Notification: Recommending that Congress enact a federal data security and breach notification law to protect consumer financial data and notify consumers of a breach in a timely manner, with uniform national standards that preempt state laws.
Digital Legal Identity: Recommending efforts by financial regulators and the Office of Management and Budget to enhance public-private partnerships that facilitate the adoption of trustworthy digital legal identity products and services and support full implementation of a U.S. government federated digital identity system.
Cloud Technologies, Artificial Intelligence, and Financial Services: Recommending that regulators modernize regulations and guidance to avoid imposing obstacles on the use of cloud computing, artificial intelligence, and machine learning technologies in financial services, and to provide greater regulatory clarity that would enable further testing and responsible deployment of these technologies by financial services firms as these technologies evolve.

Aligning the Regulatory Framework to Promote Innovation

Harmonization of State Licensing Laws: Encouraging efforts by state regulators to develop a more unified licensing regime, particularly for money transmission and lending, and to coordinate supervisory processes across the states, and recommending Congressional action if meaningful harmonization is not achieved within three years.
OCC Fintech Charter: Recommending that the Office of the Comptroller of the Currency move forward with a special purpose national bank charter for fintech companies.
Bank-Nonbank Partnerships: Recommending banking regulators tailor and clarify regulatory guidance regarding bank partnerships with nonbank firms.

Updating Activity-Specific Regulations

Codification of “Valid When Made” and True Lender Doctrines: Recommending that Congress codify the “valid when made” doctrine and the legal status of a bank as the “true lender” of loans it originates but then places with a nonbank partner, and that federal banking regulators use their authorities to affirm these doctrines.
Encouraging Small-Dollar Lending: Recommending that the BCFP rescind its Small-Dollar Lending Rule and that federal and state financial regulators encourage sustainable and responsible short-term, small-dollar installment lending by banks.
Adoption of Debt Collection Rules: Recommending that the BCFP promulgate regulations under the Fair Debt Collection Practices Act to establish federal standards governing third-party debt collection, including standards that address the reasonable use of digital communications in debt collection activities.
Promote Experimentation with New Credit Models and Data: Recommending that regulators support and provide clarity to enable the testing and experimentation of newer credit models and data sources by banks and nonbank financial firms.
Regulation of Credit Bureaus: Recommending that the Federal Trade Commission and other relevant regulators take necessary actions to protect consumer data held by credit reporting agencies and that Congress assess whether further authority is needed in this area.
Regulation of Payments: Recommending that the Federal Reserve act to facilitate a faster payments system, as well as changes to the BCFP’s remittance transfer rule.

Enabling the Policy Environment

Regulatory Sandboxes: Recommending that federal and state regulators design a unified system to provide expedited regulatory relief and permit meaningful experimentation for innovative financial products, services, and processes, essentially creating a “regulatory sandbox.”
Technology Research Projects: Recommending that Congress authorize financial regulators to undertake research and development and proof-of-concept technology partnerships with the private sector.
Cybersecurity and Operational Risks: Recommending that financial regulators consider cybersecurity and other operational risks as new technologies are implemented, firms become increasingly interconnected, and consumer data are shared among a growing number of third parties.

Weiss Nusraty

David A. Stein

Covington & Burling LLP

What You Should Know About Special Focus Facility Nursing Homes

The Center for Medicare Advocacy (CMA) recently issued a Special Report focusing on progressively ineffective enforcement actions against nursing-home facilities that have demonstrated a pattern of serious noncompliance with federal nursing-home care standards meant to ensure quality care and resident safety.

The report concludes that in addition to a noncompliant nursing home’s ability to mislead consumers about its quality of care by masking staffing levels and self-reporting quality-care measures to the federal government, penalties in the form of monetary fines—imposed on the most unsafe nursing homes—are declining, and thus, are likely ineffective in improving the care provided to residents.

In cooperation with state surveyors, the Centers for Medicare & Medicaid (CMS) regularly visits nursing homes to determine whether they are ensuring resident safety by complying with federal nursing-home care standards: The standards also determine whether nursing homes may participate in Medicare and Medicaid reimbursement programs. And while most nursing homes have some deficiencies, most of them correct those problems within a reasonable period of time. But for nursing homes with (1) a history of having twice the average number of deficiencies, (2) deficiencies resulting in serious quality and safety issues, and (3) those issues persisting over a long period of time, CMS identifies them as Special Focus Facilities (SFF) and subjects them to additional surveys and fines.

CMS attempts to notify the public about identified SFF’s by publishing a monthly report providing the status of SFF’s by grouping them into categories separated by the following Tables:

Table	Category
A	Newly Added
B	Not Improved
C	Improving
D	Recently Graduated
E	No Longer in Medicare and Medicaid

The report also contains the number months the nursing home has operated as SFF.

As of the most recent SFF Update, July 19, 2018, CMS identified or had identified the following New Jersey Nursing Homes as Special Focus Facilities:

Nursing Home	Location	Status	Months as SFF
New Grove Manor	East Orange	Newly Added	4 months
Cooper River West	Pennsauken	Improving	12 months
Meadowview Nursing & Respiratory Care	Williamstown	Recently Graduated	15 months

CMS also attempts to notify the public about the quality of care provided by all Medicare- and Medicaid-certified nursing homes in the country through its Nursing Home Compare Five-Star Rating website. The star-rating system gives each nursing home a rating from 1 to 5 stars in three categories: (1) health inspections, (2) staffing, and (3) quality of resident care measures (collected on each patient). Based on those ratings, CMS also calculates an overall rating.

However, while all three categories help provide a snapshot of a nursing home’s quality, a New York Times article faulted the five-star rating system for being susceptible to manipulation, and thus capable of misleading the public. That is because CMS allowed nursing homes to self-report data for two of the three categories: staffing and quality of resident care measures. Only the health inspections category provided an independent window into the quality of a nursing home, because CMS conducts the inspections onsite and reports the results of the inspections.

Healthcare professionals have traditionally viewed the level of staffing as indicative of the nursing home’s ability to provide quality care and ensure patient safety. But even after the 2015 revision to the 5-Star Rating System to, in part, improve the accuracy of reporting staffing levels, nursing homes have continued mask the erratic levels of individuals working from day to day.

So while an unsafe nursing home may report a high-quality star rating (4 or 5 stars) in staffing and quality care measures, the health inspections category provides a more accurate assessment of how well the nursing home protects residents from harm.

For example, as of July 30, 2018, the Nursing Home Compare website reports the following quality star ratings for New Grove Manor nursing home, listed above:

The CMS website shows that despite CMS (1) assigning a Much Below Averagerating (1 star) for health inspections, (2) assigning a Below Average rating (2 stars) for overall quality, and (3) identifying New Grove Manor as a Special Focus Facility—CMS permits New Grove Manor to report an Above Average rating (4 stars) for staffing levels and to self-report an Above Average rating (4 stars) for quality measures..

Moreover, the CMA Special Report suggests that despite the poor performance of the 18 Newly Added nursing homes in the SFF Update, July 19, 2018, enforcement actions against those nursing homes are relatively minor. The Special Report notes that when attributing the total amount fines ($992,325) to all 18 Newly Added facilities, covering the prior 3-years, the average fine per year for each SFF is $18,375. However, as the Special Report notes, CMS imposed fines on only 12 of the 18 nursing homes over the prior three years. Thus, for those 12 nursing homes, the average fine per year was merely $27,562.

This post was written by Eric D. Dakhari of Stark & Stark Law Firm.

National Aging and Law Conference

Save The Date for NALC 2018!

Save the date for the National Aging and Law Conference in historic Old Town Alexandria, Virginia. NALC 2018 will be held at the Crowne Plaza Old Town Alexandria, on October 24-26, 2018.

For the fifth year, the ABA Commission on Law and Aging is proud to host the National Aging and Law Conference. The 2018 National Aging and Law Conference will focus on a theme of Advocating for Aging with Dignity.

Registration Brochure

Online Registration Now Open

Mail Order Form Registration

Register by Phone

800-285-2221
Monday – Friday
9:00 AM – 6:00 PM Eastern

Pre-Conference Information and Registration

This year’s conference will be at the Crowne Plaza Old TownAlexandria, about 3 miles directly south of Reagan National Airport (the hotel offers shuttle service to and from DCA.)

Crowne Plaza Old Town

901 N. Fairfax Street

Alexandria, VA 22314

(703) 683-6000

The group rate is $165 plus tax, reservations can be made by calling 877-666-3243. The group rate code is G6U.

Ground Transportation

The Crowne Plaza Old Town Alexandria offers FREE shuttle service to and from Ronald Reagan Washington National Airport. The shuttle runs about every 30 minutes, picking up at the airport at 15 and 45 minutes after the hour, and at the hotel on the hour and half-hour. The airport terminal is being expanded, the pickup location for airport shuttles will change as work progresses, it is best to ask at the information desk for the pickup location for hotel shuttles.

This nearest Metro (subway) station to the hotel is Braddock Road. The distance from the Braddock road station to the hotel is 8/10ths of a mile, about a 20-minute walk. You can avoid this walk by exiting the Metro at Washington National Airport, and taking the hotel shuttle.

A taxi from the airport to the hotel will cost between $15 and $20 each way.

Puerto Rico Law Authorizes Pay Deductions as Repayment for Employer-Provided Emergency Aid

Puerto Rico is still reeling from the aftermath of Hurricane Maria. Recently, the governor of Puerto Rico signed into law Act No. 115 of June 20, 2018, to promote recovery efforts and provide much-needed aid to affected non-exempt employees in situations of emergency. Ordinarily, Puerto Rico law does not allow deductions from a non-exempt employee’s salary, except for specific purposes defined in Act No. 17 of April 17, 1931, as amended. Act No. 115 amends Article 5 of Act No. 17 to lengthen the list of authorized payroll deductions. Consequently, employers in Puerto Rico are now able to prospectively recoup, via salary deductions, any loan, salary advance, or the cost of any equipment, materials, or goods provided to their non-exempt employees to help them in situations where there has been an emergency declaration by the president of the United States, the Federal Emergency Management Agency (FEMA), or the governor of Puerto Rico.

Act No. 115 added section (q) to Article 5 of Act No. 17 to provide that a non-exempt employee and his or her employer may agree, in writing, that the employer will deduct a fixed amount from the employee’s salary, in each of the employee’s regular pay cycles, until the employee has fully repaid the employer, without interest, for any “loan, salary advance, or [the cost] of any equipment, materials, or goods provided by the employer, whose benefit, use, or enjoyment is directly related to situations in which a state of emergency has been officially declared”, as provided by Act No. 115.

The deduction may not be greater than 20 percent of the net amount of the non-exempt employee’s pay after all other legal deductions and/or employee-authorized withholdings have been made. Further, the written authorization must include a breakdown of the repayment and a provision on how the debt will be repaid in the event the employment relationship is terminated.

This article was written by:

Diana J. Nehro

Enrique A. Del Cueto-Perez

Ryan J. Correia

Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

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