The National Law Forum

Responding to the Anthem Cyber Attack

Anthem Inc. (Anthem), the nation’s second-largest health insurer, revealed late on Wednesday, February 4 that it was the victim of a significant cyber attack. According to Anthem, the attack exposed personal information of approximately 80 million individuals, including those insured by related Anthem companies.Anthem has reported that the exposed information includes member names, member health ID and Social Security numbers, dates of birth, addresses, telephone numbers, email addresses and employment information. The investigation of the massive data breach is ongoing, and media outlets have reported that class action suits have already been filed against Anthem in California and Alabama, claiming that lax Anthem security measures contributed to this incident.

Employers, multiemployer health plans, and others responsible for employee health benefit programs should take note that theHealth Insurance Portability and Accountability Act (HIPAA) and state data breach notification laws may hold them responsible for ensuring that certain notifications are made related to the incident. The nature of these obligations will depend on whether the benefits offered through Anthem are provided under an insurance policy, and so are considered to be “fully insured,” or whether the Anthem benefits are provided under a “self-insured” arrangement, where Anthem does not insure the benefits, but instead administers the benefits. The most significant legal obligations on the part of employers, multiemployer health plans, and others responsible for employee health benefit programs will apply to Anthem benefits that are self-insured.

Where notifications must be made, the notifications may be due to former and present employees and their dependents, government agencies, and the media. Where HIPAA applies, the notifications will need to be made “without unreasonable delay” and in any event no later than 60 days after the employer or other responsible party becomes aware that the breach has affected its own health plan participants. Where state data breach laws apply, notifications generally must be made in the most expedient time possible and without unreasonable delay, subject to certain permitted delays. Some state laws impose outside timeframes as short as 30 days. Under the state laws, reporting obligations on the part of employers, multiemployer health plans, and others responsible for employee health benefit programs will generally turn on whether they, or Anthem, “own” the breached data. Since the state laws apply to breaches of data of their residents, regardless of the states in which the compromised entities and data owners are located, and since former employees and dependents could reside anywhere, a comprehensive state law analysis is required to determine the legal requirements arising from this data breach. Fortunately, depending on the circumstances, some (but not all) state data breach notification laws defer to HIPAA breach notification procedures, and do not require additional action where HIPAA applies and is followed.

As potentially affected parties wait for confirmation from Anthem as to whether any of their employees, former employees or their covered dependents has had their data compromised, we recommend that affected parties work with their legal counsel to determine what their responsibilities, if any, might be to respond to this incident. Among other things, for self-insured arrangements, HIPAA business associate agreements and other contracts with Anthem should be reviewed to assess how data breaches are addressed, whether data ownership has been addressed by contract, and whether indemnification provisions may apply. Consideration should also be given to promptly reaching out to Anthem to clarify the extent to which Anthem will be addressing notification responsibilities. Once parties are in a position to make required notifications, we also recommend that companies consult with legal counsel to review the notifications and the distribution plans for those notifications to assure that applicable legal requirements have been satisfied.

ARTICLE BY

From Federal Prosecutor to Law Firm Life: A Conversation with Grant Fondo on Business Development Strategies when transitioning from Public Service to Private Practice

The National Law Review recently had to the opportunity to attend Thomson Reuter’s Legal Executive Institute’s 22nd Annual Marketing Partner Forum in Rancho Palos Verdes, California where Grant Fondo, Partner at Goodwin Procter, LLP participated on the panel event: Coaching for Success: Collaboration between Marketing & Professional Development to Deliver Training that Drives Revenue. This Panel focused on the intersection between business and professional development, exploring the potential impact partnership efforts can have on business growth.

On this panel, Grant spoke from his experience concerning his transition from Federal Prosecutor and former Assistant US Attorney of the Northern District of California to his work at Goodwin Procter.

Post-conference, Grant was kind enough to answer our questions concerning his career trajectory and gave us some insight from his unique experiences in the legal world. Below are his answers to the questions posed by NLR.

1. What were the considerations you took into account when choosing a law firm to join?

I was looking for a firm that was a market leader in the technology and white collar practice areas, a firm that I thought was on an upward trajectory, a firm that understood Silicon Valley, and that was collegial and believed in a collaborative work place. I have been fortunate to work in collaborative places before, and that type of environment is the best fit for me.

2. What role, if any, has your firm’s business development and marketing staff had in helping you grow a book of business?

I started from ground zero, so I needed help. I still need help, as this is a long-term process and I am still working toward my goals. The staff has had an important role from day one, both in the context of internal and external marketing. They helped me quickly integrate with many of my partners nationwide in my practice group, as well as outside of it, and helped me feel like part of the firm. Externally, they worked with me to train me to be better at marketing, focus on the marketing efforts I enjoyed, and presented me with opportunities. They also acted as a sounding board for different marketing events, provided guidance to improve my ideas, and helped me execute on those ideas.

3. What role, if any, has speaking engagements and / or thought leadership, played in helping you stay front of mind with existing or potential clients?

It has helped, but it is time consuming. You have to be thoughtful about what events you speak at, in that not all speaking opportunities and topics are created equal. When I returned to private practice, I wanted to focus on marketing I enjoyed, and pass on areas I disliked and was not good at. Thought leadership is an area that lends itself to that type of philosophy. My experience as a former federal prosecutor helps in certain areas of the law that intersect well with Silicon Valley clients. For example, there is a lot of concern here with privacy and government intrusion into and demands for company and customer data. This past year we teamed up with clients to file an amicus brief in the landmark smart-phone privacy and 4th Amendment case of Riley v. California. I enjoy spending time on areas that also hit home for clients. It also permits you to reach out to a client to let them know about the latest development, or after a meeting is over discuss a topic that is important to them but not necessarily the focus of today’s meeting. Sometimes they call back a few days later with something new or interesting.

4. How did you form and maintain relationships with potential and current clients?

My partners have been good about introducing me to clients that need my expertise, and letting me further develop those relationships. When you connect with a client, you want to foster that relationship in a way that is not intrusive or pandering. I am fortunate in that Goodwin has a really interesting client base doing pretty amazing things, so there is always something to talk about or learn from your client. Building relationships is also about focusing on what your client wants and trying to understand their perspective–if they want three quick bullet points on a topic so they are armed for their meeting with the CEO, you don’t give them a three page memo five minutes before that meeting. I also like to develop the relationship on a more personal level. I love to go fly fishing, and I have a client or two that share that passion. Simply swapping photos and stories once in a while is a lot of fun, and hopefully has the added benefit of keeping me top of mind.

5. Did you take any affirmative action to meet attorneys from other practice groups within the firm? Has this been an effective in generating referrals or helping you transition to private law practice?

I believe this is probably the most important thing a new partner can do. During my first year I took advantage of every opportunity to fly back to Goodwin’s East Coast offices to meet my partners from all practice groups, and I still try to do it. I also made similar efforts in California. Getting to know my partners and associates has helped me in a number of contexts. First, it made me feel more a part of the firm on a professional and social level. I want to enjoy going to work — I certainly spend a lot of time there, and this helps. Second, as my partners got to know me, it made me more top of mind if an issue came up. Goodwin genuinely strives to be collaborative, so by making the effort to get to know my other partners, it has paid dividends in getting phone calls about new matters or interesting cases. Third, it allowed me to respond to client inquiries when I was not the right person. Recently a client called me, and I was able to immediately direct him to my partner in another office with the needed expertise, because I had had gotten to know him during one of my trips back East.

6. Is there anything different you wish you had done earlier in your legal career to help you with practice today?

I wish I had become a federal prosecutor earlier. It was an honor doing public service; I learned so much about being a lawyer, particularly a trial lawyer, and working as a team for a common goal. I was fortunate in that I worked with a lot of really good prosecutors that were willing to share their time and knowledge. I also wished I had focused my marketing efforts, rather than haphazardly engaged in marketing activities. I look back and realize I wasted a lot of time doing things that I did not enjoy and were ineffective. I also wish I had made a better effort to keep in touch with people whom I genuinely enjoyed working with over the years.

7. What are the advantages / disadvantages of working in a prosecutor role vs. in a private practice defense attorney role?

When I was a federal prosecutor, people immediately returned my calls. There is no shortage of criminals, so I always knew I would have a new case next month. Another benefit is you have the luxury of spending as much time as you want on a case, without worrying about bills. In private practice, you are always thinking about your next case, and constantly balancing quality legal work with efficiency. Also, when you represent a company or individual, government inquiries and prosecutions are immensely personal and unsettling, so there is more of a human element that factors into your representation. I do think it helps to have been a prosecutor, because you can provide your client insight into how the process works, and the likely viewpoint of the prosecutor or regulator. One disadvantage is the level of interest in what I do. When I was a prosecutor, my friends and colleagues always asked what type of case I was working on, and what the criminals were up to—Ponzi schemes and drug cases are inherently interesting to most people. Similarly, my kids thought I was pretty cool because I worked with federal agents with guns, met the President, and put bad guys away. Now, my friends and kids rarely ask me what type of case I am working on.

ARTICLE BY

Eilene Spear

The National Law Review / The National Law Forum LLC

January 2015 State Tax Credit and Incentive Update–SALT

Horwood Marcus & Berk Chartered Law Firm

This is the first in a monthly series outlining updates in state tax credits and incentives, including but not limited to legislative, gubernatorial and case law updates as well as recent announcements of credit/incentives packages. While we recognize that tax credits and incentives are often frowned upon by tax policy experts, they are seen as necessary by state and local governments. Why? The reason is simple — state and local governments are focused on creating jobs and encouraging investment within their borders, and they must compete with surrounding states for those jobs and investment, most of which also offer tax credits and incentives. The good news for both corporate taxpayers and non-profit entities is that state tax credits and incentives are available and can benefit a business in many ways.

Recent Announcements of Credit/Incentives Packages

A review of recent package announcements shows the breadth of the potential packages available to a large variety of companies for investing in the state, creating new jobs and in some cases, simply retaining jobs.

California: On January 15, 2015, the California Governor’s Office of Business and Economic Development (GO-Biz) announced that pursuant to its new California Competes Tax Credit Program it approved approximately $31 million in tax credits for 56 companies projected to create roughly 4,900 jobs and generate over $900 million in investment in the state. One company involved is Neustar, Inc. which provides cloud-based information and data information services. Over the course of 5 years, the company is expected to create 264 full-time jobs and invest $2.5M in the state. The total tax credits allocated over the course of 5 years is $1.5M.

Connecticut: Connecticut announced in December 2014 that local municipal and tax-exempt organizations will collect more than $5.8 million for community projects as a result of the state’s Neighborhood Assistance Act Tax Credit Program. Each year, up to $5 million in corporate income tax credits are available to businesses that make donations to community agencies and programs identified by municipalities. Businesses can apply for the credit after pledging donations for endeavors that include community service, food banks, energy assistance, literacy, and programs for people with special needs.

Kentucky: Gov. Steve Beshear on January 12, 2015, announced the opening of the global headquarters of food processing developer Avure Technologies Inc. in northern Kentucky. The company was approved for tax incentives of up to $300,000 through the state’s business investment program and is expected to create 16 jobs and invest $3 million in the state.

Maryland: Gov. Martin O’Malley announced in December 2014 that $10 million in state tax credits will fund 9 historic restoration projects across the state, leveraging private investment of nearly $76.7 million as part of the Sustainable Communities Tax Credit program administered by the state planning department’s Maryland Historical Trust. One such project involves Taylor’s Furniture Store which will rehabilitate a retail and residential building for use as restaurant and office space. The credit amount is $150,000 and the estimated project cost is $750,000.

Massachusetts: In December 2014, the Massachusetts Economic Assistance Coordinating Council announced the approval of 18 business projects for the state’s Economic Development Investment Program, the state’s investment tax credit program for businesses. The projects are expected to create nearly 1,700 new jobs, retain about 4,500 existing jobs, and leverage over $342 million in private investment and supporting construction projects. One credit award winner is Golden Fleece Manufacturing Group LLC, doing business as Southwick/Brooks Brothers Group Inc., which plans to expand its site, boost the number of suits it produces, retain 468 full-time jobs, and create 70 new full-time jobs. The business will invest $16 million in renovation and other costs; and the city of Haverhill will provide a 20-year tax increment financing and personal property tax exemption agreement valued at about $4.4 million.

Michigan: In a January 14, 2015, press release, the Michigan Economic Development Corporation announced the expansion of Android Industries in Detroit; the company was approved by the city council for an industrial facilities tax exemption valued at $620,000 and is projected to generate $16.5 million in new private investment and to create 131 jobs.

In a January 27, 2015, news release, the Michigan Economic Development Corporation announced the Michigan Strategic Fund approved a local hotel development project and expansions of Forest River Manufacturing and Toyota in the state; the projects are expected to generate investment of $90.1 million and will receive grants and property tax abatements.

Ohio: On January 26, 2015, Governor John R. Kasich announced the approval of assistance for 14 economic development projects set to create 662 jobs and retain 1,739 jobs statewide. Collectively, the projects are expected to result in $32,570,620 in new payroll, and spur approximately $81.8 million in investment across Ohio. One company that was approved for assistance is Metcut Research Associates Inc. and Cincinnati Testing Laboratories, Inc. who is expected to create 15 full-time positions, generating $875,000 in additional annual payroll and retaining $10 million in existing payroll as a result of the companies’ expansion projects in the cities of Cincinnati and Forest Park. Metcut Research Inc. and its subsidiary Cincinnati Testing Laboratories conduct independent materials engineering and testing. Ohio approved a 35% five-year Job Creation Tax Credit for this project.

States’ Evaluation and Review of Credit and Incentive Programs

Multiple Jurisdictions: According to research published on January 21, 2015, by Pew Charitable Trusts, ten states and the District of Columbia have in the last 2 years enacted or strengthened laws requiring them to evaluate the effectiveness of their tax incentives. The ten states identified by Pew Charitable Trusts are Alaska, Florida, Indiana, Louisiana, Maryland, Mississippi, New Hampshire, Oregon, Rhode Island, and Washington.

Continuing the trend from the last 2 years, in recent months, several different states proposed or announced plans to review their credit and incentive programs:

California: SB 1335 (approved by the Governor in September 2014 and chaptered “845”) requires that any legislation proposing an income tax credit detail the goals of such a credit and provide performance indicators with which to measure its success.

Georgia: On January 26, 2015, a dozen Georgia Democratic senators introduced SR 65 that would create a tax exemption study committee to examine the effectiveness of economic development tax credits in the state.

Nebraska: In a report issued on December 11, 2014, a Nebraska legislative committee (Unicameral Legislature’s Tax Incentive Evaluation Committee) recommended that the state overhaul its system for evaluating its tax incentive programs, specifically recommending that the Legislative Audit Office, assisted by the Legislative Fiscal Office, evaluate the state’s incentive programs every three years. Currently, Nebraska has no formalized process for evaluating tax incentives.

New Mexico: On January 14, 2015, the New Mexico state auditor announced his plan for a new government accountability office that will evaluate how equitably and effectively the state uses its tax dollars, including assessing the value of the state’s tax incentive programs.

Washington: HB 1239, introduced on January 15, 2015, in the Washington Legislature, would require more accountability for tax expenditures by requiring that they be reviewed for renewal or sunset as part of the biennial omnibus appropriations bill.

Legislative and Gubernatorial Update

Iowa: Gov. Terry Branstad, in his January 16, 2015, inaugural address, called for an angel investor tax credit to foster innovation and the growth of start-up companies.

Maryland: On January 22, 2015, Gov. Larry Hogan announced his $16.4 billion budget for fiscal 2016, including $12 million in biotechnology tax credits, $9.4 million to stem cell technology, and $2.5 million in investments and tax credits to promote cyber security research.

New Mexico: In her January 20 State of the State address, New Mexico Gov. Susana Martinez proposed targeted tax relief to reduce the personal income tax burden on small business owners who are just starting out and hiring new employees, incentives for moving headquarters to the state, and a $50 million closing fund for economic development projects.

Rhode Island: Rep. Joseph Shekarchi reintroduced on January 15, 2015, a bipartisan bill (H 5116) that would offer businesses that create new jobs in the state a reduction in their income tax rates. The Rhode Island New Qualified Jobs Incentive Act would offer tax incentives to companies that hire new full-time employees to work a minimum of 30 hours per week, with an annual salary between $35,100 and $46,800. Larger companies would be eligible for a 0.25% reduction in their net income tax rate for every 50 new hires. Smaller companies, defined as those with fewer than 100 employees, would receive a 0.25% reduction in their personal income tax rate for every 10 new hires.

Virginia: On January 23, 2015, SB 1447 was introduced in the Virginia Senate aimed to attract investments from companies that used inversions to reduce their federal tax liabilities. Specifically the bill would amend the state’s corporate income tax statute to permit a $5 million exemption for companies that used an inversion transaction to lower their U.S. tax liability. The exemption would be available beginning in tax year 2016 for qualifying companies that make a $5 million capital investment in Virginia to open a facility or other business operation, and it would be valid for the first five years of the facility’s or business’s operation.

Case Law Update

Illinois: On January 9, 2015, the Illinois Policy Institute filed a lawsuit in Sangamon County Circuit Court alleging that businesses should receive tax credits under the Edge Development for a Growing Economy (EDGE) program only if they create new jobs in the state, not if they retain them (Docket No. 2015-MR-000016).

The EDGE program (35 ILCS 10/5-1 et seq) offers incentives to encourage companies to locate or expand their operations in the state when there is active consideration of a competing location in another state. If the business is eligible, the program provides tax credits equal to the amount of state income taxes withheld from the salaries of newly hired employees. In addition to locating or expanding in the state, businesses must agree to make an investment of $5 million in capital improvements and to create a minimum of 25 new full-time jobs. Small businesses, defined as those with 100 or fewer employees, must agree to make a capital investment of $1 million and create at least five new full-time jobs in the state.

The Illinois Department of Commerce and Economic Opportunity (DECO) adopted a regulation, 14 Ill. Admin. Code § 527.20, which awards tax credits when businesses retain jobs, not create them. The Chicago Tribune reported that since 1999, the state has awarded nearly $1 billion in tax incentives to businesses under the EDGE program, the bulk of which was for jobs retained.

New York: In a decision dated January 15, 2015, a New York Division of Tax Appeals administrative law judge (ALJ) determined that the tax department properly denied qualified empire zone enterprise refundable tax credits to two limited liability companies because the companies, by shifting employees from one LLC to another, failed to meet the employment requirement. DTA Nos. 824986; 824987; 824988; 824989; Matter of Leeds.

In this case, one of the entities was certified as a qualified empire zone enterprise (QEZE) in 2000, but did not seek benefits until 2006 and 2007. In 2002, the statute was amended to include an employment test which restricted the use of individuals from related persons in calculating the employment numbers in taxable years or base period. For both 2006 and 2007, the parties do not dispute that one of the entities used an employee who had been previously employed by a related party.

The petitioners argued that since QEZE certification was granted for a period of 15 years, they had the right to rely on the statutory language in effect as of date of certification as a QEZE and continuing until that certification expired.

The ALJ found that one of the entity’s QEZE eligibility merely made it eligible to receive the tax benefits, including real property tax credits. The entity’s entitlement to benefits had nothing to do with the administration of the Empire Zone program or the Legislature’s prerogative to modify the requirements for obtaining those benefits on a prospective basis.

Interesting Update

Finally, you can thank the Seth Rogen and James Franco controversial movie, The Interview, for these interesting tidbits. The recent hacking of Sony Pictures Entertainment resulted in the public release of large amounts of data about the company’s tax practices which show that studio executives at the highest levels are constantly tracking changes in the availability and use of film incentives. For instance, the materials show that the developers of a project often feel compelled to explain how the project can be located in a jurisdiction with favorable incentives, sometimes even before it is considered for production.

For instance, when producers wanted to revive a Vatican-themed television series that was rejected the year before, they recommended shooting at a location in London where a “highly favorable tax credit” could help bring the project’s budget into an acceptable range.

In addition, (1) in a series of e-mails, studio executives push for changes to a James Bond script that would maximize their eligibility for tax credits from Mexico; (2) an e-mail about an upcoming Steve Jobs biopic shows how tax-driven location decisions can be affected by casting decisions; and (3) a film about former National Security Agency contractor Edward Snowden was rejected after the French, German, and New York City incentives recommended by its developers failed to bring its budget down far enough.

ARTICLE BY

Jennifer Zimmerman

Horwood Marcus & Berk Chartered

FDA Requests Comments on WHO Recommendation to Classify Two Common Industrial Solvents as Psychotropic Substances

Beveridge & Diamond PC environmental and energy law firm

On January 27, 2015, the Food and Drug Administration (“FDA”) requested comments on a recommendation by the World Health Organization (“WHO”) to classify two common industrial solvents – gamma-butyrolactone (“GBL”) and 1,4-butanediol (“BDO”) – as psychotropic substances under Schedule I of the 1971 Convention on Psychotropic Substances (“Psychotropic Convention”). See 80 Fed. Reg. 4283. The comments will be used by the Secretary of Health and Human Services (“HHS”) to prepare a recommendation on the WHO proposal to the Secretary of State, which will be binding on the U.S. representative to the upcoming 58th Session of the UN Commission on Narcotic Drugs (“CND”) in Vienna, Austria, on March 9-17, 2015. At the Vienna meeting, CND may accept the WHO recommendations, reject the recommendations, or decide to control the chemicals in another way (i.e., under a different Schedule of the Convention).

FDA notes that if either chemical – or any of the other chemicals that are also recommended for listing, but are not addressed here because they have few, if any, legitimate industrial uses – are added by CND to Schedule I of the Psychotropic Convention, the U.S. will have to impose additional controls on the chemical(s) under the Controlled Substances Act (“CSA”) administered by the Drug Enforcement Administration (“DEA”). Although FDA does not elaborate on what those controls might consist of, they would likely include additional restrictions on manufacture, distribution, import, and export of the chemicals, as well as enhanced recordkeeping and reporting requirements. For example, Article 2(7)(a)(i) of the Psychotropic Convention states that parties shall require licenses for manufacture, trade, and distribution of Schedule I substances. Moreover, Article 7(a) provides that parties must “[p]rohibit all use [of Schedule I substances] except for scientific and very limited medical purposes by duly authorized persons,” although Article 2(7)(a) allows individual parties to notify the UN that they cannot do so as a result of “exceptional circumstances,” in which case the party need only “take into account” the prohibition “as far as possible.”

It is worth noting that GBL is already regulated under the CSA as a precursor to gamma-hydroxybutyric acid (“GHB”), which is a commonly abused central nervous system depressant drug that is currently regulated under Schedule II of the Psychotropic Convention and Schedule I of the CSA. In particular, GBL is classified under the CSA as a “List I” precursor (not to be confused with a CSA Schedule I or other controlled substance), and thus is already subject to significant DEA controls. In addition, some U.S. states and authorities in some other countries already regulate GBL directly as a controlled substance or its equivalent. Nevertheless, the addition of GBL to Schedule I of the Convention would likely require new and more stringent controls in most jurisdictions. Additional information on the basis for the WHO recommendation for GBL (including the chemistry of the chemical, abuse potential, legitimate uses, and current regulation around the world) can be found in the 2014 GBL Critical Review Report of the WHO Expert Committee on Drug Dependence.

BDO is also a precursor to GHB, but is not currently regulated under the CSA. It is regulated in several U.S. states and other countries as a precursor or controlled substance equivalent. Once again, however, if it is added to Schedule I of the Psychotropic Convention, it will likely become subject to substantial additional restrictions. Additional information on the basis for the WHO recommendation for BDO can be found in 2014 BDO Critical Review Report of the WHO Expert Committee on Drug Dependence.

FDA will accept written comments on the WHO recommendations until February 26, 2015. Requests for a public meeting will be accepted until February 6, 2015.

ARTICLE BY

Aaron H. Goldberg

Beveridge & Diamond PC

Paid Sick Leave: Coming Soon to a City Near You?

President Obama reincarnated paid sick leave as a possible federal law right in his recent State of the Union address. “Send me a bill that gives every worker in America the opportunity to earn seven days of paid sick leave,” Obama said. “It’s the right thing to do.” Under the Family and Medical Leave Act, employees of covered employers currently have rights to as much as twelve weeks of unpaid medical leave per year. In addition, thousands of employers of every size voluntarily provide some form of paid sick leave in their employee benefits, such as a limited number of sick days or personal days. Three states (California, Connecticut and Massachusetts) presently mandate some form of paid sick leave for employees of private companies.

Although the President’s prospects for achieving a federal form of paid sick leave seem dim in the current Republican majority Congress, paid sick leave benefits are steadily rolling out at the municipal level.

The growing roster of cities with paid sick leave ordinances now includes: New York City; San Francisco; Seattle and Tacoma, Washington; Portland and Eugene, Oregon; and eight municipalities in New Jersey. This is a recent trend. In 2014, two states (Massachusetts and California) and five cities adopted paid sick leave laws for the first time. While more state-level paid sick leave laws do not appear to be on the near horizon, the steady growth of municipal-level paid sick leave requirements for private employers may indicate an important trend.

Local paid sick leave ordinances create serious complications for employers with widespread operations, resulting in a patchwork of employee benefits and medical leave issues on top of current FMLA compliance headaches.

ARTICLE BY

Peter R. Spanos

Barnes & Thornburg LLP

Federal Government to Receive a $75 Million Settlement from CHSPSC in Alleged Medicaid Fraud Scheme: Community Health Systems Professional Services Corp.

On February 2, 2015, the Department of Justice (DOJ) announced that Community Health Systems Professional Services Corporation (CHSPSC) and three of its CHS affiliated hospitals in New Mexico, agreed to pay the government $75 million to settle allegations that it violated the False Claims Act (FCA) when it manipulated the Medicaid funding program by making illegal donations to New Mexico county governments in order to receive higher federally funded Medicaid payments. The alleged improper donations from CHS were made to Chaves, Luna and San Miguel counties in the state of New Mexico.

The Sole Community Provider Program (SCP) is a federal and state funded program that is specifically designed to reimburse SCP hospitals for medical expenses incurred by uninsured and indigent patients. Payments received by SCP hospitals are processed under New Mexico’s federal and state Medicaid Plan. Under the SCP, the federal government will share 75 percent of patient claims incurred by SCP hospitals contingent on New Mexico’s state and local government’s ability to pay the remaining 25 percent under the matching share of the SCP. One of the stipulations for receiving the funds is that the state and county government’s 25 percent share has to consist of state or county funds, and not impermissible “donations” from private hospitals.

According to the qui tam lawsuit filed by Robert Baker, a former CHSPSC revenue manager, on behalf of the government, between 2001 and 2010, CHS hospitals in the state of New Mexico filed claims to recover uninsured or indigent medical expenses under the SCP program. However, the funds used to pay the state and local counties 25 percent share were donated by CHS. This ongoing alleged illegal practice by CHS violated the FCA, and caused the state of New Mexico to present false claims to the United States for payments made to CHS under the SCP program. In addition, the government also alleged that CHS concealed the true nature of these donations to avoid detection by federal and state authorities, and as a result of its scheme, received SCP payments which were funded by the United States in the amount of three times CHS’ “donations.” The whistleblower, Mr. Baker, will receive approximately $18.6 million as his reward for having disclosed the fraud to the government under the False Claims Act.

ARTICLE BY

Whistleblower Practice Group

Tycko & Zavareei LLP

Positive Media Exposure: Elevate Your Practice and Your Firm

Legal Marketing Association Southeastern Chapter

Your business is on the rise yet every time you scroll through your news feeds, read the newspaper, or watch a news show, you find your competitors highlighted everywhere instead of you and your business. You want this kind of coverage, but you are short on time due to your demanding work schedule, board activities, community involvement and family engagements. Dealing with the media also feels uncomfortable and you fear that reporters will not tell the story correctly. Sound familiar? This is what we discovered when we asked our clients (i.e. very smart lawyers we love to work with!)

To be fair, media interviews can be a daunting experience for almost anyone. These feelings are compounded by the notion that subject matter experts may believe that reporters and interviewers are out to get them. The truth is, the media should be treated just like a client. A great majority of reporters are cordial people who are assigned to cover a story on a topic. It is their job to talk with various sources, research the topic, and educate the public. Yet, almost always, reporters are on deadline while juggling other priorities assigned to them on any given day. Their challenge is to collect a depth of accurate information in order to inform the public and meet a tight deadline. Does that sound like a client? Have you ever received a call or an email from a client who needs to know the latest on a particular issue and has questions they need answered right away? It’s not that either is out to get you, rather each need to be educated so that they can succinctly and accurately inform their audience, be that a reader or a senior executive.

What you must realize is that the interviewee is often more knowledgeable on a subject than the interviewer, therefore you should approach the interview with full confidence and take advantage of the opportunity to provide useful and practical information. After all, this is your opportunity to shine and help educate the public. Here are some tips to ensure a successful media interview:

Similar to preparing for a case, successful media messages depend on preparation. Pick a story angle ahead of time and stick to it thought the interview. This bolsters your ability to serve as a subject matter expert.
Consider all of the difficult questions that may be asked and prepare answers. This critical step will help you from being caught off guard.
If you are asked a challenging question that you did not consider or are asked to talk about something that you simply can’t discuss, you can maintain control of the interview by using bridging techniques with phrases like: “before we leave the subject, let me add that …” “And the one thing that is important to remember is …” “While this is important, it is also important to remember that…”
Reporters love to use research and statistics in their stories as much as lawyers do. Feel free to prepare some stats and takeaways for reporters to help emphasize the story angle you are trying to promote.
Reporters are trained to listen. Just because a reporter puts away a notebook, a microphone or turns off a tape recorder doesn’t mean the interview is over and you can say anything without it being used.
Reporters hate when someone misleads or lies to them. They don’t like it when their stories have to be corrected through no fault of their own and because of inaccurate information provided to them. Accuracy is a gold standard for reporters. Help them achieve it and you can bet they will come back to you with another interview opportunity.
Instead of using industry jargon, speak in simple terms to appeal to the general public and potential clients. The reporter will most likely use those comments word-for-word which earns more thought leadership clout.
Body language can be just as important as words. Keep your arms loose and gesture naturally. This will help you appear calm and confident. Don’t cross your arms, your legs or put your hands in your pockets. Strive for a relaxed and happy face. Again, you are the expert who has the opportunity to share your knowledge.
Some reporters will ask you to spell your name on camera or tape so the editors can include it in the caption. If they don’t, be sure to spell your name and your firm’s name so they can include it in their story correctly.
Whether your story appears online, in print, radio or on television, don’t forget to engage in the digital space. Update your social media channels, website and blogs before and after the interview to continue the growth and expansion of your online brand.

Representing your business and knowledge base to the public is extremely important for you and your practice. Keeping these general media tips in mind puts you at a greater advantage to deliver a successful message and stay in front of your clients. With this said, remember to stay positive and have fun! And of course, call the Marketing Department or your public relations representative to work on a customized approach for each story.

ARTICLE BY

Ioana Good

Ryan King

Legal Marketing Association Southeastern Chapter

Filthy Pharma – Whistleblowers and Current Good Manufacturing Practices

Mahany Law Firm

Last year a federal appeals court in Richmond, Virginia upheld the dismissal of a whistleblower suit alleging violations of current good manufacturing practices, known in the industry as “cGMP.” Filed under the federal False Claims Act, the whistleblower claimed that his former employer, Omnicare, violated a series of cGMP safety regulations requiring that penicillin and non-penicillin drugs be manufactured in complete isolation from one another. The regulations are designed to prevent cross contamination.

Because Omnicare’s drugs were not manufactured in isolation, the whistleblower claimed that they were not eligible for reimbursement under Medicare and Medicaid programs. A judge in Baltimore dismissed the suit saying that this particular alleged cGMP was not one that could be prosecuted privately by a whistleblower.

The case was appealed and ultimately upheld by a three judge appeals panel last year. (United States ex. rel Barry Rostholder vs. Omnicare) Is this the end for “filthy pharma” cases under cGMP and the False Claims Act? No!

The Justice Department and Food and Drug Administration (FDA) support whistleblower filings for cGMP violations. In the aftermath of the Omnicare decision, however, it is prudent to have more than a mere allegation that products were not manufactured in properly segregated facilities.

In April 2013, the Justice Department announced that it would be taking “an especially hard look” at cGMP violations. Jeffrey Steger, deputy director of the Justice Department’s consumer protection unit, said the agency’s priority was to “identify and prosecute the most serious instances of food, drug and medical device violations… and in general [protect] consumers from adulterated or misbranded products…”

Notwithstanding the big loss for whistleblowers in Omnicare, the court did not slam shut the door on all cGMP violations. The court appears to have left the door open for cGMP violations that are significant and substantial and give rise to actual discrepancies in the functioning of the product.

What does this mean in practical terms? Merely claiming that a drug wasn’t manufactured properly may no longer be enough. To qualify for a whistleblower award, one should show both bad practices and that the product is tainted, adulterated, mislabeled, diluted or contaminated.

People with inside knowledge of adulterated drugs and cGMP violations may qualify for cash awards under state and federal False Claims Acts. Last year the federal government alone paid out $635 million to whistleblowers. Under the federal law, companies can be assessed triple damages and fined up to $11,000 per violation. Whistleblowers can receive up to 30% of whatever the government collects. (The average award is closer to 20%.)

ARTICLE BY

Brian Mahany

Mahany Law

Letters of Intent in Construction Project Negotiations–Pt 2

In our last post, we began speaking about letters of intent and their use in negotiating the terms of construction projects. As we noted, letters of intent are not contracts, but courts do sometimes enforce them as binding, depending on what the parties intended by the document. In cases where it is evident that both parties intended to be bound, they may be enforced by a court. In cases where parties did not intend to be bound, they may not be enforced. It depends on the circumstances, though.

In some cases, a court may enforce some parts of a letter of intent, but not others. This can happen in cases where parties did not intend to be bound by specific provisions of the letter, but agreed to deal exclusively with the other party, not to disclose the negotiations, or to deal with the other party in good faith. Certain types of agreements such as these can spur parties to take steps in reliance on the letter of intent, including investing money or passing on other opportunities, and courts may choose to enforce them.

Courts may choose to enforce such agreements even in cases where the letter of intent is clear about its non-enforceability, particularly where the party objecting to enforcement led the other party into taking actions in reliance on the letter. In yet other cases, letters of intent may be unenforceable, but may still be used by a court to help interpret ambiguous terms of a later contract. Any of these outcomes are possible, depending on the case.

As can be seen, it is difficult to point to general rules regarding the enforceability of a letter of intent. In the context of negotiating construction projects and other transactions, then, it is beneficial for parties to work with an experienced attorney to ensure they understand state law on the issue and what exactly they may be getting themselves into. Knowing this information can help a party to limit the possibility of a later dispute over a letter of intent. Working with our firm, clients can be sure that we will provide solid legal advice and practical guidance on business negotiations with their rights and interests in mind.

ARTICLE BY
Business and Corporate Law Practice Group.

OF
McBrayer, McGinnis, Leslie and Kirkland, PLLC

40 Essential Apps For Trial Lawyers, Part Two

As we noted in Part One of this post, iPads have become ubiquitous in courtrooms and depositions since lawyers use them for everything from keeping organized to presenting evidence. Since 2011, when BullsEye first surveyed some of the most popular apps for trial, the number of litigation-related apps has grown significantly.

When we recently decided to take another look at the best apps for trial lawyers, our list grew to 40. In Part One of this post, we covered apps for reviewing transcripts, conducting on-the-fly legal research, strategizing about settlement, and accessing dockets. In Part Two, we continue our look at 40 essential apps for trial lawyers.

Trial Presentation Apps

ExhibitView ($89.99). This app lets you organize and annotate exhibits and then present them wirelessly. Presentation tools include call-out features, highlight options, freehand pen tool, a laser pointer tool, and complete control of your output to a TV or projection device. Additional features include screenshot saving, creating alias names, and importing and exporting projects. For more functionality, there is a PC version of ExhibitView ($498, which includes the iPad app) in which you can prepare your exhibits and then transfer them to your iPad.

Keynote ($9.99). Although not designed specifically for trials, Apple’s Keynote is a popular presentation app among lawyers in the courtroom and elsewhere. You can use it to view, edit, and design presentations created in either Keynote ’09 or Microsoft PowerPoint. It allows video mirroring so that you can present on an HDTV while seeing a presenter view on your iPad that shows your slides and notes.

TrialDirector (free). This app enables you to create case folders on your iPad and then add exhibits, including video, through a Dropbox or iTunes account. Once you have added these exhibits, you can use the app to annotate and present them. If you have the TrialDirector 6 desktop application, which sells for an annual license of $695, you can prepare exhibits there and then export them to this app for presentation at trial.

TrialPad ($89.99). TrialPad is generally considered the leader among trial presentation apps. While it is also the priciest of these apps, it is comparable in its capabilities to far more expensive desktop applications. With TrialPad, you can highlight, annotate, redact, and zoom in on documents as you present them. You can also view and compare documents side-by-side, view and edit video, mark up an exhibit with annotations and call-outs and then save the mark-ups for your closing, and project wirelessly.

TrialTouch (free). TrialTouch provides on-the-go access to case materials including photographs, illustrations, 3D animations, medical imagery, video, and documents. It requires an account with the trial-graphics company DK Global.

Jury Selection and Monitoring Apps

iJuror ($29.99). This jury-selection app lets you record information about jurors, assign scores to jurors, assign color codes to jurors for visual reference, view juror demographics, and configure seating charts to match the courtroom. Information can be shared among multiple devices by exporting and importing via Dropbox. Information can also be shared via Bluetooth with someone else who is using iJuror.

iJury ($14.99). This app uses jurors’ responses to voir dire questions to assign them a score as negative or positive for your case. You start by creating a case profile and adding members of the jury pool. As they respond to the jury questionnaire, you tap a button to indicate whether each response is positive or negative to your case. The app records these responses and creates an overall grade.

JuryDuty ($39.99). Similar to other jury-selection apps, JuryDuty lets you add information and notes about each juror, prepare topics and questions for voir dire, create seating charts, and share information among members of your trial team via Bluetooth.

Jury Notepad ($4.99). From the same company that developed iJuror, Jury Notepad is designed specifically for creating, keeping, and organizing notes about jurors. It has a simpler interface that makes it easier to use on iPhones, but it can also be used on an iPad.

JuryPad ($24.99). This app is designed to make it easy for you to record, arrange, evaluate, and use juror information as well as create, edit, and reuse voir dire questions. A unique feature of JuryPad is its ability to take you on a “virtual tour” of jurors’ neighborhoods.

JuryStar ($39.99). Developed by a trial lawyer for use in selecting juries, JuryStar lets you enter and record voir dire questions and juror responses and demographic information. It uses color codes to help you rate jurors and make decisions about which jurors to strike.

Date Calculator Apps

Court Days Pro ($2.99). This is a legal calendaring app for the iPad and iPhone. It gives you the ability to calculate dates and deadlines based on a customizable database of court rules and statutes. Once you set a trigger event, the app displays a list of corresponding dates and deadlines. Dates appear within the app and can also be added to your device’s native calendar app.

DocketLaw (free). This app lets you calculate event dates and deadlines for free based on the Federal Rules of Civil Procedure. For additional monthly fees, you can add subscriptions to rules-based calendars for specific state and federal courts. The cost varies by state and court. By way of example, you can add all New York courts for a monthly fee of $49.95.

Smart Dockets (free). Calculate dates and deadlines directly on your mobile device using court rules. Choose your court rule set, determine the trigger event, and enter the trigger date to calculate deadlines automatically.

Trial Preparation Apps

Courtroom Objections ($2.99). This app is a quick, simple guide to common courtroom objections and responses.

eDepoze (free). This app allows you to present deposition exhibits using an iPad. Users are able to introduce, mark, and share exhibits in real time, and the app allows participants to review and annotate their personal copies. The app is free, but use of the system must be purchased through a network of resellers, most of which are court reporting companies.

iTestimony ($9.99). Use this app to keep track of witness information and notes before and during trial and depositions. Assign avatars to each witness for easier identification. Information about witnesses can be shared with others by email.

TabLit: Trial Notebook ($89.99). This app is designed to enable a lawyer to walk into court with nothing but an iPad. It includes case documents, examination outlines, examination checklists, evidentiary checklists, case contacts, and other features.

E-Discovery Apps

eDiscovery Assistant ($29.99). This app is intended to provide access to key e-discovery information. As purchased, it includes access to the FRCP for e-discovery, pilot projects, key case digests identified by the editors, sample checklists and templates, a resources database, and a glossary of terms. For an additional monthly subscription of $15.99, you can also get access to all state and U.S. district court e-discovery rules, more than 3,000 digests of e-discovery decisions, and more than 50 checklists and templates.

E-Discovery Project Calculator (free). This free app lets you calculate and estimate the size of your e-discovery project. This tool will estimate document and page count based on the size of the job. It will also calculate the time and cost required to complete the project.

ARTICLE BY

Robert J. Ambrogi, Esq.

IMS ExpertServices

The National Law Forum

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From Federal Prosecutor to Law Firm Life: A Conversation with Grant Fondo on Business Development Strategies when transitioning from Public Service to Private Practice

1. What were the considerations you took into account when choosing a law firm to join?

2. What role, if any, has your firm’s business development and marketing staff had in helping you grow a book of business?

3. What role, if any, has speaking engagements and / or thought leadership, played in helping you stay front of mind with existing or potential clients?

4. How did you form and maintain relationships with potential and current clients?

5. Did you take any affirmative action to meet attorneys from other practice groups within the firm? Has this been an effective in generating referrals or helping you transition to private law practice?

6. Is there anything different you wish you had done earlier in your legal career to help you with practice today?

7. What are the advantages / disadvantages of working in a prosecutor role vs. in a private practice defense attorney role?

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January 2015 State Tax Credit and Incentive Update–SALT

Recent Announcements of Credit/Incentives Packages