Business
Executive Playbook: The Challenges of Hiring and Recruiting
On this month’s episode of the Executive Playbook, Mike Cammarata and Russell Berger discuss the practical challenges of making strategic hires and recruiting. Mike and Russell focus on the different leading indicators that should prompt business owners to move forward with a hire and then, once that decision is made, where to recruit and how best to interview. Listen in to learn more.
October 27, 2022
Intellectual Property
USPTO Shortens Time for Response to Office Actions
On December 3, 2022, the US Patent and Trademark Office (USPTO) is making a big change to the requirements to respond to rejections or requirements for further information. Background: When a business files an application for trademark registration in the US, it is (eventually) examined, and the examining attorney will either approve the application or issue an Office Action. The Office Action is a letter that will either refuse to accept the application (because of a prior similar registration or other ground for refusal) or require amendments to a part of the application (such as the description of goods) before the application can be accepted. Throughout recorded history, the USPTO has given the applicant six months to respond to the Office Action. Big Change: For Office Actions issued on or after December 3, the USPTO will require a response within three months of the date of issue of the Office Action. It is possible to extend this time for an additional three months with payment of a fee. The fee will need to be paid before the 3-month deadline; it will not be automatic and cannot be paid after the fact. What this means for applicants: Your attorney handling the application will notify you when an Office Action issues and will let you know the deadline to respond or request the extension. It will be important to review the issues with your attorney and make a plan for responding without delay. Additional considerations: For now, this change only applies to Office Actions issued in pending applications. For Office Actions that might issue in response to a post-registration renewal or declaration of use, the same change will take effect on October 7, 2023. For more information about this rule change or any issues related to trademark protection or registration, please contact Laura Winston.
October 17, 2022
Healthcare
Healthcare Compliance Issues for Medical Drones
Advances in drone technology have begun to entice developers and medical care providers. There are numerous projects already in development that will use drones to help deliver medicine and medical supplies, help seniors, and a host of other possible medical uses. The legal issues involving how these devices will be regulated by the FDA (as a medical device or for other reasons) and other agencies are just beginning. This article explores many of the potential uses of drone technology. As with new innovations, developers and medical providers need to review the lines between the business aspect of this technology and the medical needs of the patients. Our experienced healthcare providers will review many different drone medicine issues including: Whether Stark Law, the Anti-Kickback Statute, or other anti-referral laws apply? When can and when can’t developers provide incentives to medical practices to use the developer’s drone technology? When can a physician have and when can’t he/she have an interest in a service that uses drone technology? Whether the corporate practice of medicine laws apply? Generally, only doctors can provide medical advice. To the extent the drones are considered medical, there will need to be a discussion about who can own the drone technology company. Who can prescribe and administer drone technology that has a medical component? Does HIPAA apply if the drone technology includes any electronic information about the patient? Many other legal questions depending on the scope and applications of the medical drone technology. DRUG AND MEDICAL DEVICE MANUFACTURERS NEED TO COMPLY WITH THE ACA’S SUNSHINE ACT – PART ONE The Sunshine Rule of the Affordable Care Act requires that drug and medical device manufacturers disclose to CMS any payments they made for the benefit of physicians regarding the drugs or devices. STARK LAW EXCEPTIONS THAT MIGHT APPLY TO YOU In today’s video, we discuss some exceptions to Stark Law, which deals with improper referrals by physicians and healthcare practitioners. CAN I OWN A MEDICAL PRACTICE IF I AM NOT A DOCTOR? AN OVERVIEW OF CORPORATE PRACTICE OF MEDICINE We spoke about a series of webinars talking about a trending topic in the legal aspects of corporate medicine, Management Services Organization. And with much anticipation, we bring you – Part II […] Drones and the delivery of medications or other health services Many publications such as Very Well Health have begun to review the benefits of drone technology for the practice of medicine. Very Well Health discussed the following pros and cons of using drones to deliver prescription medication to the homes to patients. For example, Zipline, a leading drone manufacturer is working with Magellan Health and Intermountain Healthcare to deliver prescription medications and medical supplies via drone to a patient’s home. The company is already planning to make deliveries in Charlotte, North Carolina and there are plans to service Salt Lake City, Utah – pending FAA (Federal Aviation Administration) approval. The drones, which are battery-operated can make medical deliveries in about 30 minutes – as compared to hours or days for more traditional services. According to Zipline, “autonomous aircraft are much more sustainable and fuel-efficient per delivery and also reduce congestion and wear and tear on the highways.” Zipline already is delivering medical products in Rwanda and Ghana. During the pandemic, Zipline was able to deliver personal protective equipment to North Caroline frontline healthcare workers. The company has also delivered, as of the date of the Very Well Health article, 650,000 COVID-19 vaccines. The benefits of drone medical delivery The advantages to drone delivery of medical products according to Very Well Health include getting necessary medical products to people who don’t have transportation or who cannot drive due to chronic health problems. The delivery services also mean deliveries can be made according to the patient’s schedule. Drone delivery is especially helpful in rural areas and any areas where the location may be hard to reach or difficult to traverse – such as islands, wetlands, or mountains. Drone delivery services help ensure the patient gets the medications promptly and with less personal contact which can reduce the possibility of spreading infectious diseases. Drone delivery could be especially useful when disasters happen. Drone delivery generally works by having a doctor, nurse, or health technician send a request to the drone company. The drone then delivers medications, vaccines, antivenoms, antibiotics, blood transfusions, and many other medical products. The product is dropped by parachute so that the product lands at a rate of speed that should prevent the medication or medical product from being damaged. The drone then flies back to the company launch site. Concerns about using medical drone services A few of the disadvantages of medical drone services include the following: Storage issues if the medications need to be kept at a certain temperature and a specific humidity level. “In 2021, Zipline partnered with Pfizer to complete the first long-range drone delivery of COVID-19 vaccines, which must be stored at extremely cold temperatures.” The expense of building and maintenance of the drone Equipment failure Training costs Possible damage or theft of the medications and other medical equipment Privacy concerns Weather-related challenges such as rain, snow, heat, cold, and wind Battery-related capabilities Fuel issues Drone propellor function There are regulations (or will likely soon be regulations) that monitor the path of the drone and the number of drones that can be in the sky. Drones generally land on a person’s front yard, backyard, or driveway. This strategy works well for homeowners. The strategy can require more work for apartment renters. “Another big disadvantage of drone delivery would be bypassing the ability for patients to speak directly with their pharmacist about any questions or concerns regarding their medications.” Many patients like to ask questions of their pharmacists when they pick up their prescriptions or medical supplies. Other concerns include insurance coverage, the cost of the delivery, and what happens if there’s a drone accident. Drone medical deliveries – the next stages Most Americans live within five miles of a pharmacy. While there would seem to be substantial benefits for people in rural or remote locations, the question begs how practical medical drones are for urban areas. Very Well Health adds that the delivery of medications and medical products “will require the involvement of multiple federal agencies including the FAA, Federal Trade Commission, Food and Drug Administration, Drug Enforcement Agency, and the Department of Health and Human Services.” Currently, the expectation is that medical drones will primarily be used to test their benefits and risks. Additional uses of medical drones According to Drones in HealthCare, medical drones are being developed for purposes other than delivering medications. Drones, like mobile apps, wearable technology, telemedicine, robots, and artificial intelligence are helping provide medical care throughout the country. In addition to helping people in their homes, drone delivery services could work with nursing homes that often, on average, how more patients in need of medical care than the general public. Drones could also help seniors stay in their homes instead of having to move into a nursing home. Drones could help deliver meals to people who can’t make their own meals Drones could help monitor patients with dementia. Drones could possibly help patients who are having cardiac problems and other medical orders that require a defibrillator. “Automated external defibrillators (AED) [could] fly to the patient in a public space to provide rapid defibrillation for ventricular fibrillation. No longer would a person have to obtain AEDs from a specific location that may be challenging to find in a rapid fashion. Simply summon the AED with the push of a button or smartphone app.” Drone deliveries can also be useful inside hospitals. Drones can make deliveries from floor to floor and building to building – faster the making the deliveries by walking or through pneumatic tube systems. Other factors that affect how well drone medical services work in hospitals are GPS signals and radio signals – which work outdoors but not as well indoors. As with most technology, there are concerns that drones can affect the jobs of various healthcare workers. Drones could be designed to deliver more than just medications. Drones could be programmed to sort laundry, grab a glass of water, or clean around the home. The psychology of having drones fly around a home needs to be considered. A drone is also referred to as an unmanned aircraft system (UAS). Forbes profiled a few other medical uses for drone technologies. One interesting possibility is to use drones equipped with cameras and a display screen so the patient can use telehealth services from their home or any other location to speak with a doctor. Drones can also be designed to enable patients to administer self-lab tests. In this way, the telehealth service could be combined with some diagnostic services. According to the US NIH: “Drones are used for surveillance of disaster sites, areas with biological and chemical hazards, and tracking disease spread. It has been shown that drones can gather information about the number of patients in need of care and triage in high-risk environments.” “Drone technology has been used to detect health hazards, such as heavy metals, aerosols, and radiation.” “The ability of drones to acquire real-time, high-resolution temporal and spatial information at low cost makes them viable for epidemiology research.” Drone technology is helping provide medical care in many ways. A primary way is the delivery of medications and medical supplies – especially to remote areas. Drone technology may also help when disasters strike, with medical research, and with the use of telemedicine. Drone manufacturers and medical practices need to understand when and how the FDA, the FTC, and other federal or state agencies may regulate drone technology. Companies need to review referral arrangements, medical supervision issues, and many other healthcare issues – with experienced healthcare attorneys. Developers, transit systems, hospitals, and health practices that are using drone technology for medical care should contact Cohen Healthcare Law Group, PC to review the federal and state legal compliance issues (in the health sector) that apply. Our experienced healthcare attorneys advise manufacturers, medical practices, and healthcare companies and providers about healthcare compliance laws and regulations. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
October 15, 2022
Estates and Trusts
Case Study on Estate Tax Reduction Strategies: Business and Investment
In the following case study for business owners, Offit Kurman attorneys Herbert Fineburg and Charles “Max” McCauley illustrate an estate and gift planning strategy for removing your business from your taxable federal estate. This tax planning also works for your stock portfolio. The presentation was delivered at the Philadelphia chapter of The Exit Planning Exchange’s monthly conference.
October 14, 2022
Business
Forwarding Email to Hotel Front Desk for Printing Waived Privilege!
Normally I write about recent and interesting tax cases in this blog, but every now and then, I come across a case so important I just have to share it here. Fourth Dimension Software v. Der Touristik Deutschland GMBh is such a case with an important cautionary tale. Fourth Dimension Software (“FDS”) is embroiled in a dispute with Der Touristik Deutschland GMBh (“DTD”) regarding DTD’s alleged overuse of a software license for software developed by FDS and licensed to DTD. Prior to the litigation, in preparation for a meeting with DTD in Berlin to discuss the licensing agreement, FDS’s former outside counsel emailed the president of DTD regarding certain issues for the meeting. As people sometimes do, FDS’s president wanted a hard copy of the email for his notes. Having no printer, FDS’s president forwarded the email to info.berlin@hilton.com with a note in the subject line “Please print one copy. I’m waiting at the front desk. Thanks.” How DTD got its hands on a copy of the email was not discussed. What was discussed was the waiver of the attorney-client privilege as a result of FDS’s president forwarding the email to the front desk of the Hilton in Berlin for printing. When the email came to light, FDS sought to exclude it as an attorney-client communication protected by the attorney-client privilege. As a reminder, the attorney-client privilege applies to any communication in which legal advice is sought or communicated, not just communications in the context of litigation. Because the parties were in federal court because they were from different states, and not because the case concerned a question of federal law, California law, not federal law, applied. Under California law, if a client discloses an attorney-client communication to unnecessary third parties, the client manifests an intent to waive the privilege. DTD successfully argued that was exactly what happened here. FDS pointed out that under California law, the privilege is not lost solely because the communication is by electronic means (e-mail) or because persons involved in the delivery, facilitation, or storage of electronic communications may have access to the content of the email. The Court dryly noted, “That statute does help FDS here.” The Court went on to point out the hotel desk clerk was an unnecessary third party to whom FDS’s president knowingly disclosed the communication. Though not mentioned in the court’s order, under the court’s analysis, merely forwarding the email to an unnecessary third party would have resulted in a waiver of the privilege as well. Other states’ laws may not be the same as California, but remember that forum selection clause in that contract you signed that said would only be brought in California? But why risk it? Think twice before forwarding that email to or from your lawyer. Like FDS, you may end up waiving the privilege.
October 14, 2022
Estates and Trusts
Empower Your Loved Ones with a ‘Power of Appointment’
Preparing an estate plan means having a say in what happens to your wealth after you are gone. Through a Last Will and Testament, you can name the important people in your life who will inherit your assets. You can also specify whether they should receive these assets immediately upon your death or over time through a trust. Looking even farther ahead, you can give your loved ones a “power of appointment,” enabling them to say where any remaining trust assets should go when they themselves are out of the picture. With a power of appointment at their disposal, your loved ones can direct their inheritance to subsequent generations wisely and effectively. Trusts — A Primer First, a little explanation. A trust is an arrangement under which money or other property is managed by one person, called the “trustee,” for the benefit of another person, called the “beneficiary.” Trusts can be especially useful if your loved ones include a young person, someone with special needs, or anyone who has trouble managing money. In placing their inheritance into a trust, you create a gatekeeper—the trustee. This person is a fiduciary who manages the trust assets and makes distributions only in your beneficiary’s best interests. With a power of appointment at their disposal, your loved ones can direct their inheritance to subsequent generations wisely and effectively. Some distributions could be discretionary. For example, the trustee could be authorized to cover expenses related to your loved one’s health, education, and support as the trustee deems advisable. This authority could be broadly defined to include things like paying for a wedding, buying a house, purchasing a business, or entering a trade or profession. Other distributions from the trust could be mandatory. A trust for a young person might say the beneficiary is entitled to withdraw half of the principal upon reaching the age of 25 and the balance when he or she turns 30. Some people like to include provisions that encourage the beneficiary to achieve certain life goals. The trust could state, for example, that the beneficiary is to receive a large distribution upon graduating from college. Trusts can also discourage harmful behavior by pausing distributions if the beneficiary falls prey to addiction or alcoholism—apart from payments for rehabilitative treatment. By including a “spendthrift clause” in the trust, you can prevent a creditor from placing on lien on the principal to satisfy your child’s unpaid debts. If your children are adopted, placing their inheritance into a trust can ward off possible intrusions from their birth family. Unscrupulous “friends” seeking a loan can also be kept at bay. Powers of Appointment In addition to protecting a loved one’s inheritance, a trust can say what happens upon the death of the beneficiary. Many trusts simply state that any remaining trust property goes to the beneficiary’s children in equal shares. With a power of appointment, however, you can give the beneficiary greater flexibility and control. A power of appointment is the legal right to designate the new owner of property. How can this be useful? Consider a beneficiary who has two children, one with special needs. The beneficiary could exercise the power by appointing half of the trust property in a special-needs trust for the disabled child and half to the other child, outright and free of any trust. In different circumstances, the beneficiary could effectively disinherit an estranged child. Or multiple children could be left different amounts of the trust property, based on their financial needs or how close they have been to the beneficiary. Under a “special power of appointment,” the potential appointees could be limited to a select group of people, such as the beneficiary’s spouse and children. Or the power could be “general,” meaning there are no restrictions on the beneficiary’s power to appoint (think unmarried partners, friends, or charities). Either way, the power could be exercised under the beneficiary’s own Will, which should specifically reference the power of appointment and name the new owners. A power of appointment has been called estate planning’s secret weapon. Consider including one in a trust for your loved ones. It will help them adjust your estate plan to their circumstances long after you are gone. To get started, call an Estates & Trusts lawyer for help.
October 11, 2022
Estates and Trusts
Historic Increase to Your Lifetime Exclusion from Federal Estate Taxes for 2023
Ironically, there is good news for some families due to rising inflation for gift and estate planning purposes. As a result of inflation adjustments built into federal estate tax laws, your lifetime exclusion from federal estate taxes is set to rise from $12.06 million per person in 2022 to almost $13 million in 2023. This is a total exclusion amount of almost $26 million per married couple [The inheritance tax rules, if any, for the state where you reside vary from state to state and are not discussed in this article]. Specifically, according to recent reports, in 2023 the estimated inflation adjustment will be $860,000, resulting in an aggregate exclusion amount of almost $13 million per person ($12,060,000 plus $860,000 = $12,920,000). This is a remarkable increase when compared to the 2022 inflation adjustment increase of $360,000, at that time the largest on record. By comparison, the inflation adjustment for 2016 was a mere $20,000. Additionally, the annual gift tax exclusion is set to rise from $16,000 per donee in 2022 to $17,000 per donee in 2023. This means you can gift up to $17,000 to an unlimited number of individual recipients without incurring gift tax consequences or reducing your estate tax lifetime exclusion. High-net-worth individuals will benefit from the inflation adjustments because they can move significant assets out of their taxable estates before the scheduled reduction of the exclusion amount on January 1, 2026, when the exclusion amount will drop by a staggering 50%. For example, in 2026, a married couple will go from being able to gift nearly $26 million free of federal estate tax to only being able to gift $12 million (adjusted for inflation) free of federal estate tax. Acting now to take advantage of the historically high exemption could save your family millions in federal estate taxes. Note: If you die before 2026, under the portability rules, your surviving spouse can carry over your unused exclusion to the surviving spouse’s federal estate tax return; otherwise, your exclusion is permanently lost. An individual who wants to take advantage of the current tax laws before they expire may loan their stock portfolio to an intentionally defective grantor trust for the benefit of the individual’s spouse or children in exchange for a promissory note that can be forgiven in 2025 — the eve of the tax law changes — using the exclusion amount before it disappears. Couples will typically consider a trust for a spouse to preserve access to the trust portfolio during the spouse’s lifetime as the trust beneficiary. In conclusion, if you expect that your taxable federal estate will be more than $6 million (adjusted for inflation) for a single individual or $12 million (adjusted for inflation) for a married couple, you should consider the federal estate tax benefits to your heirs by engaging in estate and gift tax planning. Please get in touch with Danielle Friedman or Herb Fineburg with any questions or additional estate planning techniques to reduce your taxable estate and preserve your lifetime exclusion.
October 10, 2022
Intellectual Property
Defamation: Five Key Questions for Any Potential Claim
Defamation has been in the news lately thanks to the Depp v Heard Trial. But what is defamation exactly? Has someone ever posted an untrue statement about you or your organization online? Untrue statements are published every day but not every untrue statement rises to the level of defamation. Consider the following elements of Defamation: What is defamation? A false, malicious communication of fact to a third-party causing injury to one’s reputation. In Virginia, defamation encompasses libel (written recorded statements) and slander (oral statements). Watch: Spider-Man: The Difference between slander and libel – YouTube What is required to prove defamation? Publication (the statement is seen or heard by a third party); A false statement tending to harm the reputation of another; & The requisite intent. (actual malice for public figures; negligence for nonpublic figures).Gaz, Inc. v. Harris, 325 S.E.2d 713, 725 (Va. 1985). What is a defamatory statement? The statement or communication must be more than an unpleasant statement. The subject of the statement must appear odious, infamous or ridiculous. A statement will not be actionable as defamation unless it has a “sting” injuring the subject’s reputation. However, defamation can be proven by inference, implication or insinuation. Can opinions constitute defamation? No – statements of pure opinion are not defamation. “The First Amendment and the Constitution of Virginia protect the right of every individual to express any opinion or idea, however ill-founded.” Tharpe v. Saunders, 737 S.E.2d 890, 893 (Va. 2013). Note – adding qualifiers such as “in my opinion” will not diffuse an otherwise defamatory statement. How can a statement be published? Any communication by any method to one or more persons who can understand its meaning. Newspaper articles, statements aloud to others, books, Twitter posts, Facebook statements, and other social media mediums. If you or your organization are the subject of a potentially defamatory statement or a defamation lawsuit is threatened against you or your organization, don’t make any decisions about how to proceed before talking with a trusted attorney in your area. Offit Kurman attorneys are available to advise on defamation and other issues. Reach out to Anders Sleight today to discuss your specific situation.
October 6, 2022
Labor and Employment
Monitoring Employee Email for Unionization Activity
We’re all noticing that increased unionization is the national trend. With new Democratic-appointed National Labor Relations Board members, the Board is no longer all Republican, and employers are closely watching the effects of this political shift in favor of unionization rights. On September 30, a panel of two Republican members and one Democratic member decided that T-Mobile US, Inc. broke the National Labor Relations Act by disciplining a customer service worker for sending a union-related email following a court battle appealing its initial decision. This reversed a 2020 decision by an all-Republican panel that T-Mobile had the right to discipline the worker for using its email for non-business-related purposes. The Board found that T-Mobile had broken labor law by “selectively and disparately” using company policies to silence the pro-union worker. However, this finding was specific to the facts of this case. Other employees had been permitted to use T-Mobile’s email for non-business purposes without being disciplined. Other employees sent mass emails about non-work issues such as hockey tickets, bowling parties, and “Nacho Day” in the cafeteria—but weren’t punished, said the decision. T-Mobile appeared to be targeting the worker who was promoting unionization. Employers may still restrict workers’ email use for non-work issues, including union organizing, as long as they don’t target union communications specifically. So, if employers want to prevent unionization emails on their servers, they need to monitor the servers for other uses and shut them down, too.
October 3, 2022
Healthcare
What Are the Legal Risks Involved with An IV Therapy Business? Part Two
In our first article about IV therapy, we discussed what IV therapy is, why it’s popular, and who can own an IV therapy practice. There are many more questions that practitioners of IV therapy need to review with an experienced healthcare attorney. We’ll discuss some of the following IV therapy legal compliance topics below: Who can prescribe, prepare, and administer IV therapy? What referral laws apply to IV therapy? What rules and regulations govern the marketing of IV therapy? We strongly suggest you make an appointment to discuss the topics listed above – and all healthcare regulations that govern IV therapy in your state – with healthcare lawyers with a record of service in the healthcare industry. What is the business structure of the IV therapy practice – and does the business structure comply with the corporate practice of medicine laws? Does the manner and delivery of the IV therapy make a difference – in a hospital, at a medical office, at home, or through a mobile app? What notices, consent issues, and contracts are involved – between physician and patient? Does the Federal Drug Administration (FDA) have to approve the IV therapy solution? What state agencies and medical boards have oversight over IV therapy? IV practices also need to review any medical malpractice issues, business issues, contractual issues, and other health, financial, and legal considerations. IV HYDRATION THERAPY – LEGAL STRATEGIES In today’s video, we discuss some of the legal perils involving IV hydration therapy and potential legal strategies and solutions. Who can prescribe, prepare, and administer IV therapy? Generally, a physician prescribes the IV therapy, a pharmacist prepares the IV solution, and a registered nurse administers the IV therapy to the patient. The states differ on which other healthcare professionals can participate in each phase of the IV therapy treatment. Some orders can be delegated from one healthcare professional to another; but others may not. For example, an emergency medical technician may also (you need to check with your lawyer) administer IV therapy to a patient. Many states do not authorize EMT administration of IV therapy. Other agencies that have oversight over IV therapy include the US FDA, state medical boards, state pharmacy boards, and state health and human services departments. There are also additional rules for prescribing IV therapy through a telemedicine interview as opposed to an in-person interview of a patient. For example, Cal. Code Regs. tit. 16 § 2542.1 provides that: The Board will consider a licensed vocational nurse as competent to start and superimpose intravenous fluids via primary or secondary infusion lines who has completed one of the following: An approved intravenous therapy course A submitted certification that meets specific medical board and California Business and Professions Code requirements. According to the American MedSpa Association, in addition to the corporate practice of medicine issues, the chain of care (including prescription and administration of the IV therapy) must be consistent with the diagnosis and treatment requirements of the procedure. An entity that has the legal authority to provide IV therapy must conduct an examination of the patient to determine the health status of the patient. As we recently discussed, California has modified its supervision and delegation requirements for registered nurses. The American MedSpa Association also states that a non-physician provider can be a physician’s assistant (PA), nurse practitioner (NP), or registered nurse (RN). In some states, a licensed practical nurse (LPN) or a licensed vocational nurse (LVN) may also have the authority to administer the IV therapy. Just a few states authorize an EMT or a paramedic to administer IV fluids. Supervision rules can include being on the site while the IV solution is administered – to being immediately available in case there is an emergency. For example, [as we discussed above] in California, an RN may administer the IV therapy under the supervision of either a physician, PA or NP. An LVN will be considered competent to start and superimpose IV fluids via a primary or secondary line if the LVN has completed either a nursing board-approved intravenous therapy course or submitted certification to prove that the LVN has the knowledge, skills, and abilities to safely administer IV services. In New York, an LPN must be under the “direct supervision of a physician, PA, RN, or NP. LPNs must be trained to administer IV therapy.” CALIFORNIA’S NEW SCOPE OF PRACTICE LAW FOR NURSE PRACTITIONERS – PART ONE California passed a new law, effective January 1, 2023, that permits nurse practitioners in specific settings to provide care (under certain conditions) that does not meet “standardized procedures.” What referral laws apply to IV therapy? The medical practices that provide IV hydration/vitamin therapy must also comply with laws designed to place patient safety before the profits of the medical practice. The laws (some civil, some criminal) generally provide that a doctor must refer patients to related services such as diagnostic labs and IV therapy services based on what is in the best interest of the patient. Some of the laws that we’ve also discussed that govern medical referrals include: Stark Law. This law prohibits doctors from referring patients to a designated health service (one in which the physician has a financial interest or a family member has a financial interest) unless certain Stark exceptions are met. The Anti-Kickback Statute (AKS). This law prohibits medical practices, such as IV therapy practices, from providing incentives (such as cash payments, directorships, or vacations) in return for the physician referring patients to the medical practice. The AKS does authorize certain safe harbors which may make the referral legal. The False Claims Act. This law prohibits medical providers from submitting false bills to Medicare, Medicaid, and other federal agencies. The law encompasses both Stark Law and the AKS. This means that a medical practice that is charged with a Stark Law or AKS violation may also be charged with violating the False Claims Act. California has its own False Claims Act that generally applies to false claim submissions to Medicaid. What rules and regulations govern the marketing of IV therapy? There are different laws and regulations that govern how medical practices including IV therapy practices can market their product and services. One federal agency that regulates false advertising is the Federal Trade Commission (FTC). We have a short video on FTC oversight of IV therapy online. IV therapy mixtures generally contain water, minerals, vitamins, and amino acids – that are administered through an IV drip. So, for starters, the marketing must be truthful as to what products are in the IV solution and how the solution is administered. The FTC does review company websites, social media, and print marketing materials. A website or marketing brochure that claims, as one company did according to an FTC enforcement action in 2018, that their IV mixture can cure specific diseases such as congestive heart failure, diabetes, or cancer – without any scientific evidence to support the claim – will likely result in a warning letter from the FTC and possible enforcement action. A settlement with the company was reached that prohibits the company from making false or unsubstantiated claims that its IV cocktails: “Are an effective treatment for any of the diseases included in the complaint. Produce fast, lasting results. Cure, mitigate, or treat any diseases, unless the claim is supported by competent and reliable scientific evidence.” The settlement order also prohibited the company “from making any express or implied health, safety, or efficacy claims unless they are not misleading and are supported by scientific evidence.” FTC enforcement also can require that companies prohibit misrepresentations about the healthcare professionals involved in designing, testing, and approving the IV products. Companies that fail to comply with FTC warning letters can be forced to suspend production of their products – along with other consequences. IV therapy is becoming a popular treatment for many patients. While there are opportunities for profit for the medical practices that prescribe and administer the solutions and the pharmacies that prepare the solutions – there are numerous legal compliance issues. Medical practices need to understand who can prescribe IV therapy, who can prepare the mixture, and who can administer the solution. The practices need to understand when referrals are legal and when referrals are not legal. All marketing claims must be honest and comply with legal requirements. IV therapy practices should contact Cohen Healthcare Law Group, PC to review the federal and state legal compliance issues. Our experienced healthcare attorneys advise physicians, nurses, pharmacies, and other healthcare providers about healthcare compliance laws and regulations. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
October 1, 2022
Healthcare
Can a Chiropractor Employ a Medical Doctor?
Can a chiropractor employ a licensed medical doctor? The question reminds me a tee-shirt I once saw which said: “Can I pay my Mastercard with my VISA?” Hi, I’m Michael H Cohen, founding attorney of Cohen Healthcare Law Group. We provide legal strategy and regulatory advice to businesses like yours that accelerate health and wellness. The question about chiropractors employing licensed medical doctors brings up legal issues generally around multi-disciplinary healthcare practices, medical spas, wellness centers, IV hydration clinics, mental and behavioral health centers, addiction centers, and other types of healthcare group arrangements in which providers cross-pollinate. In California we’ve got the Moscone-Knox Professional Corporations Act, which allows a kind of mixing-and-matching among healthcare practitioners as owners, directors and employees within a professional corporation. Typically, it’s a professional medical corporation although it could also be a professional chiropractor corporation, nursing, psychological, acupuncture, or professional naturopathic corporation, and so on. One legal tip: simply because Moscone-Knox in California does allow a particular business structure does not mean that the business arrangement will pass scrutiny under corporate practice of medicine and anti-kickback prohibitions. For example, in California, a “strong” corporate practice of medicine State, non-physicians cannot hire and fire physicians, because this implies excessive control over the practice of medicine. The same restrictions over MSO practices would apply here to the chiropractor. Therefore, we would recommend structuring the venture so that the chiropractor is housed within a chiropractic corporation; the medical doctor within a medical corporation; then let’s say the chiropractor, our client, they could also own the MSO which provides MSO services to each professional corporation. Does this sound complicated? Not really. It’s the same MSO model we discuss over and over on the website, on the blog. The nuance is, we get a better structure than one that allows the chiropractor too much control over medical decision-making. Instead, the MSO is involved in management and marketing, basic business operations. It might include something as powerful as branding and marketing the entire center. Thanks for watching, if you have questions contact us, we look forward to working with you soon. Testimonials
October 1, 2022
Bankruptcy
When Bad Things Happen To Good People: Good Faith Is Not Enough When Investing in (What Later Turns Out To Be) a Ponzi Scheme
What happens when a good faith investor learns it invested in a Ponzi scheme and is presented with a claim to return money it withdrew from its account and fights the good fight to protect its investment? On September 20, 2022, the Court of Appeals for the Second Circuit affirmed the district court’s decision granting a motion for summary judgment in favor of Irving Picard, the S.I.P.C. appointed trustee liquidating Bernard L. Madoff Investment Securities L.L.C. (“B.L.M.I.S.”) and ruling that defendants J.A.B.A. Associates L.P. (“J.A.B.A.”) and the general partners of J.A.B.A.: Audrey Goodman, Bruce Goodman, Andrew Goodman, and the estate of James Goodman, were required to pay to the trustee the amount of $2,925,000 together with 4% pre-judgment interest. Considering that the litigation started in 2010 and went through three levels of the court system, the award of pre-judgment interest adds a material amount to the total due to the trustee. Who Are The Parties? J.A.B.A. is a former customer of Bernard L. Madoff who had no knowledge of his fraudulent conduct. Irving H. Picard, the trustee, sued it, alleging that it received voidable transfers from B.L.M.I.S. in the last two years of his operation, from December 11, 2006, to December 11, 2008. The initial claim filed on December 10, 2010, asserted against the defendants, was for $6,065,000 of withdrawals that J.A.B.A. allegedly received in the six-year period prior to the bankruptcy filing. However, in an earlier decision, the Court of Appeals for the Second Circuit ruled that the trustee is limited to recovery of the Two-Year Transfers. See Sec. Inv. Prot. Corp. v. Bernard L. Madoff Inv. Sec. L.L.C. (“Ida Fishman”), 773 F.3d 411, 423 (2d Cir. 2014). As set forth in the Second Circuit’s and the underlying district court’s decision, B.L.M.I.S. was a securities broker-dealer through which the infamous Bernard Madoff operated three business units: (1) a proprietary trading business; (2) a market-making business; and (3) an investment advisory business (the “I.A. Business”). B.L.M.I.S. collected funds from brokerage customers and purported to invest those funds on behalf of the customers, but it did not actually invest the money. Instead, it sent its customers fabricated statements using historical trading activity and returns that had never been generated and therefore were reflecting fictitious trades and gains. When customers sought to withdraw money from the accounts, B.L.M.I.S. satisfied those requests with the proceeds of other customers’ investments that were held in a commingled checking account. See, e.g., In re2 Bernard L. Madoff Inv. Sec. L.L.C., 773 F.3d at 415. The scheme collapsed in 2008. Analysis The finding that the trustee was allowed to claw back the amount transferred out of the B.L.M.I.S. money is not surprising. It is well settled that when a corpus of customer property is insufficient to pay customer claims, a S.I.P.A. trustee may recover certain transfers by the debtor pursuant to Section 548(a)(1)(A) of the Bankruptcy Code. 15 U.S.C. § 78fff-2(c)(3) and 11 U.S.C. § 548(a)(1)(A). A trustee may avoid and recover transfers of fictitious profits where (1) a transfer of an interest of the debtor in property, (2) was made within two years of the bankruptcy petition date, (3) and the transfer was made with “actual intent to hinder, delay, or defraud” a creditor. Adelphia Recovery Tr. v. Bank of Am., N.A., Nos. 05-cv-9050, 03-MD-1529, 2011 WL 1419617, at *2 (S.D.N.Y. Apr. 7, 2011), aff’d sub nom.Adelphia Recovery Tr. v. Goldman, Sachs & Co., 748 F.3d 110 (2d Cir. 2014). Defendants claimed that the S.I.P.C. trustee did not have the standing to pursue the claims and that the account out of which the money was transferred was held in the name of Madoff, not B.L.M.I.S. Both the District Court and the Court of Appeals found these arguments unpersuasive. The novelty here is the somewhat harsh determination concerning pre-judgment interest. The defendants sought to overturn the award of pre-judgment interest as an abuse of discretion because they were innocent victims of fraud and should not have been penalized for defending themselves in court. J.A.B.A. argued that (1) there was no statutory basis for an award of pre-judgment interest under 11 U.S.C. § 548; (2) pre-judgment interest was inappropriate where the defendants did nothing wrong; (3) the trustee was responsible for any delay; and (4) the district court’s award of 4 percent interest was excessive and punitive. The Court of Appeals found that the lack of explicit authorization in the Bankruptcy Code for an award of pre-judgment interest was not dispositive, and that pre-judgment interest had been awarded against other similarly situated six defendants in related S.I.P.A. litigation. See, e.g., Securities Investor Protection Corp. v. 7 Bernard L. Madoff Investment Securities L.L.C., No. 08–01789 (S.M.B.), 2018 W.L. 8 1442312, at *15 (S.D.N.Y. Bankr. March 22, 2018), report and recommendation adopted, 9 596 B.R. 451 (S.D.N.Y. 2019 aff’d, 976 F.3d 184 (2d Cir. 2020); Picard v. Nelson, 610 B.R. 197, 238 (Bankr. S.D.N.Y. 2019); Picard v. BAM, L.P. , 624 B.R. 55, 65-66 (Bankr. S.D.N.Y. 2020). The court further held that wrongdoing by the Defendants was not a pre-requisite to an award of interest. While defendants certainly had a right to litigate their case, they benefited from other customers’ stolen property and had not returned it for over a decade. The Court of Appeals was satisfied that the district court appropriately balanced the equities and surveyed other cases where pre-judgment interest was awarded, ranging from 9 percent to 4 percent. S.I.P.C., 528 F. Supp. 3d at 246. Takeaway The moral of the story here is that when presented with a settlement offer, litigants and their lawyers must carefully analyze how interest impacts the litigation strategy and decide whether it is worth spending money and time pursuing appeals, not just based on existing case law, but the trend in which the law is moving and the reasons behind it. For further information, please feel free to reach out to Albena Petrakov.
September 30, 2022
Marriage on the Rocks
Marriage on the Rocks: Prepping for Your First Meeting with Your Lawyer
Rachel Mech and Emily Shank discuss how to prepare for your first meeting with your lawyer. Emily Shank, who is featured in this video, is no longer affiliated with Offit Kurman.
September 30, 2022
Business
Executive Playbook: Maryland Saves Program
On this month’s episode of the Executive Playbook, Mike Cammarata and Russell Berger discuss the new Maryland Saves program. Under this program, almost all employers in Maryland are required to either offer a retirement plan of their own or to provide their employees with access to the Maryland Saves program. While this program should not cost employers any out-of-pocket funds, it is an opportunity for employers to ensure that they are taking strategic steps to not only comply with the law but to provide meaningful benefits to employees. Listen in to learn more about the financial and legal opportunities Maryland Saves presents for business owners.
September 29, 2022
M&A Nuggets
M&A Nuggets: Be Prepared for Due Diligence, Before You Go to Market Part 4 – Employee vs. Contractor Classification
This is Part 4 of a series on steps business sellers should take to make sure their house is in order before going to market. One of the hot button issues that buyers examine when conducting due diligence is whether the seller has properly classified a worker as an independent contractor versus an employee. The contractor versus employee issue has always been a target of the Internal Revenue Service and United States Department of Labor. If a worker improperly classified as a contractor is in fact an employee, the consequence can be a finding that the employer owes back payroll taxes, interest and penalties. Some employers stretch their classifications of workers as independent contractors to avoid having to pay payroll tax and provide coverage under the employer’s employee benefit plans, thereby saving costs that would be incurred if the person was classified as an employee. Regardless of an employer’s past practice, potential buyers are certain to examine the issue and, if a buyer believes that there is the potential for misclassification, a specific indemnification by the seller of the buyer will be required. Prior to going to market, sellers should review any classification of workers as independent contractors. The factors looked at to determine whether a worker is an independent contractor or an employee, although not crystal clear, depend in large part on whether the employer controls the worker’s schedule, provides all of the resources the worker needs to work and restricts the worker from engaging in competition. Independent contractor relationships should be properly documented with contractor agreements. The factors that determine worker status should be reviewed as they apply to each contractor and, if necessary, the relationship between the worker and the company should be adjusted to either make clear that the factors weighing in favor of a contractor determination will be satisfied, or to shift the worker to an employee. By examining the contractor versus employee issue proactively, a seller can not only provide comfort to interested buyers that this issue has been dealt with, but also avoid potential payroll tax and other regulatory issues later.
September 28, 2022
Contractor's Corner
Legal Considerations When Running a FedEx Business Webinar
Sarah Sawyer hosted a webinar to discuss the Legal Considerations When Running a FedEx Business. A few aspects that were covered during the webinar are: Legal issues related to pay structures and incentives Wage deductions, the do and don’ts Business formation and structure concerns Asset protection considerations The webinar can be found here. Passcode: G17$0WjE
September 26, 2022
M&A Nuggets
M&A Nuggets: Be Prepared for Due Diligence, Before You Go to Market Part 3 – Privacy Policies
This is Part 3 of a series on steps business sellers should take to make sure their house is in order before going to market. The Health Insurance Portability and Accountability Act, better known as HIPAA, was enacted in 1996 as one of the first laws to protect the privacy of personal identifiable information. The increase in attempts by cybercriminals to obtain or hold hostage private information, whether through ransomware, phishing attacks or other efforts, has been in part the reason for spurts in the enactment of additional privacy laws to protect personal information. As a result of the greater susceptibility of personal information to attack and the increase in the number of laws designed to protect the information, privacy laws and policies have become one of the due diligence areas most focused on by buyers. To be prepared, sellers must first understand which privacy laws apply to them. In the United States, HIPAA, which is designed to protect healthcare information, is the most significant federal law. At present, there is no overall federal law protecting privacy information in general. However, several States have enacted their own privacy laws, including California, Virginia, Utah, Colorado and Connecticut, and more are on the way. It is important to determine whether these laws apply to your business. A State’s law may apply to your business even though you do not do business in that State. Among the most important overseas laws is the General Data Protection Regulation, known as GDPR, which regulates the information of residents of the European Union. Again, just because your business does not operate in the European Union does not mean that your business is not subject to the GDPR, as that law applies to businesses that collect and process information of European residents. The privacy laws establish policies and standards that must be followed to protect personal information. Once it is understood what laws are applicable to your business, the next step is to determine whether your business has in place the policies and standards that are required, including whether its online privacy policies and terms of use are sufficient. Making sure that your business is in compliance with privacy laws will not only go a long way to protect the personal information of persons who do business with you (your employees, customers and members of the public who visits your website or app), but will provide comfort to potential buyers that you have adequately dealt with this area of high risk. If you have any questions about this or any other M&A issue, please contact Glenn Solomon at gsolomon@offitkurman.com or 443-738-1522.
September 22, 2022
Labor and Employment
Preparing for Potential Union or Organizing Activity
U.S. labor unions are becoming increasingly popular among Americans after years of relative indifference by rank-and-file employees. Approval ratings for unions and unionization efforts are at the highest point since 1965, according to a recent Gallup survey. Organizing activity is bubbling up in unexpected areas like gaming and the broader technology industry and in global organizations like Starbucks and Amazon. This workplace trend created an unsettling development for all employers as they contemplate their relationships with employees heading into 2023. Offit Kurman’s Labor & Employment group offers an informative 60–90-minute virtual presentation for business owners, HR professionals and managers, providing information crucial to mitigating risk and avoiding unionization in their organizations. The presentation covers applicable labor laws and regulations governing union activity, compliance requirements, proactive strategies to identify organizing warning signs, best practices for union-related communications and how to address organizing activity before it gains steam. There is also ample time allotted for Q&A. The presentation is directed only to management-level employees, not rank-and-file employees. If you would like to schedule a presentation or receive more information, please feel free to reach out.
September 22, 2022
Contractor's Corner
Potential Changes to Federal Overtime Pay Laws Loom
Currently, under the Fair Labor Standards Act (FLSA) Motor Carrier Exemption, FedEx contractors do not have to pay drivers overtime when driving trucks over 10,000 pounds. That could change. The Guaranteeing Overtime for Truckers Act, introduced in the U.S. House of Representatives on April 14, 2022, and in the Senate on September 12, 2022, would repeal the FLSA Motor Carrier Exemption. The legislation will significantly change how contractors schedule employees and manage their fleet if passed. The U.S. Department of Transportation recently recommended eliminating the exemption to improve the supply chain, and the bipartisan bill has a coalition of support from the Owner-Operator Independent Drivers Association, the International Brotherhood of Teamsters, the Institute for Safer Trucking, the Truck Safety Coalition, Citizens for Reliable and Safe Highways and Parents Against Tired Truckers. The introduction by Senator Markey and Padilla of the Senate version of the Guaranteeing Overtime for Truckers Act gives this bill new life and continues to move the efforts of these groups forward. While these developments in no way guarantee the elimination of the Motor Carrier Exemption, it is a significant development that contractors need to be aware of and prepared to address. We will continue to provide you with updates as we receive them.
September 20, 2022
Marriage on the Rocks
Marriage on the Rocks: Prenups- The Good, the Bad, the Funny
Rachel Mech and Emily Shank talk prenups – the good, the bad, and the funny. Emily Shank, who is featured in this video, is no longer affiliated with Offit Kurman.
September 9, 2022
Contractor's Corner
Wage Deductions: When Can You Make Them?
While wage deductions can effectively recoup costs and losses from an employee, deductions from wages are heavily regulated, and contractors should proceed with caution when making these deductions. Under the Fair Labor Standards Act, a federal law governing most contractors nationwide, wage deductions for items considered primarily for the benefit or convenience of the employer may not reduce an employee’s pay rate below minimum wage. For example, if an employer has an agreement with an employee to deduct from the employee’s wages costs to cover any damage to an employer’s property or lost equipment, the employer’s deductions cannot bring the employee’s pay below minimum wage. Alternatively, wage deductions for items considered for the employee’s benefit and do not benefit the employer, such as a personal loan to the employee, the wage deduction can reduce the employee’s effective rate of pay below minimum wage. The same general rule applies to wage deductions and overtime compensation, not bringing the employee’s wage below time and a half. In addition to federal laws regulating wage deductions, many states have stricter rules governing what, when, and how employers may make deductions from employees’ wages. For instance, in New Jersey, employers may not require an employee to pay for their uniforms or deduct the cost of uniforms from an employee’s paycheck, and in California, employers are generally prohibited from making deductions from an employee’s wages for vehicle damage caused by an employee’s negligence. As a general rule of thumb, contractors should always get express permission from employees to make any deductions from their wages and pay close attention to their state’s laws on deductions to ensure they are not running afoul of these regulations. To merely include a deduction policy in the employee handbook without seeking permission and vetting what deductions are allowable in your state and the laws governing those deductions is wholly insufficient. Out of all of the many areas of employment law that employers must comply with, wage and hour laws have some of the steepest consequences for noncompliance. Contractors who fail to comply with wage and hour laws, such as wage deduction regulations, may have to pay double to treble damages, the employee’s attorney’s fees, and individual penalties for noncompliance. Accordingly, contractors must pay special attention to these laws before implementing any policies or procedures related to payroll deductions.
September 8, 2022
Labor and Employment
The Turning Tide: How Americans Currently View the Supreme Court
Not too shocking: about half of Americans’ ratings of the Supreme Court are now as negative as – and more politically polarized than – at any point in three decades. According to the Pew Research Center’s report published September 1, the share of Democrats or Democrat-leaning participants who say they have a favorable opinion of the Court has dropped from 67% in 2020 to 28% in August 2022. Almost half of the respondents indicated their belief that the Court has too much power. In contrast, Republican and Republican-leaning approval ratings were very similar to 2020 at over 70%. The justices were once proud to say that they are apolitical, citing the fact that many of their decisions are unanimous, 8-1, or 7-2. But the percentage of those opinions dropped from 49% in 2016 to 28% in 2022, according to the authoritative empirical SCOTUS blog. I have been to the Supreme Court twice: once in 2015 and once in 2019. Our 2015 opinion was unanimously decided, and in 2019, the Court declined to review the lower court’s decision. This indicates – from my very small sample – cohesive views. Pew’s survey was much larger. It polled 7,647 adults, including 5,681 registered voters, from Aug. 1-14, 2022, using a national, random sampling of residential addresses. What do you think? Has the 6-3 “conservative” majority been that divisive? And isn’t it sad that we now commonly refer to the “factions” as “conservative” and “liberal”?
September 7, 2022
Bankruptcy
Splintering Door Frames (Almost) as U.S. Marshals Enforce Order of the Bankruptcy Court
Last month, Jim Hoffman of Offit Kurman, P.A., Counsel to Cheryl E. Rose, a Chapter 11 Bankruptcy Trustee, accompanied the U.S. Marshals and the Prince George’s County Police to the home of an uncooperative debtor to enforce a Bankruptcy Court order to seize his computers, computer equipment, books, records and other items that may assist Ms. Rose, as Trustee, to administer the Bankruptcy Estate (“Seizure Order”). Prior to that time, the Bankruptcy Court had the patience of Job – – month after month, the debtor broke promises to the Court and to the Trustee to cooperate when producing books and records for more than ten businesses that each own real estate. The debtor also liquidated and retained more than $150,000 of assets during the bankruptcy without Court approval. The Court issued orders to enforce contempt sanctions, but the debtor continued his obstructive behavior. Even a court-imposed detention with the Marshals for two days did not alter the debtor’s behavior. The Seizure Order drafted by Counsel was in the form of a Writ of Assistance. This relief is unusual and requires coordination among the Office of the U.S. Marshals, the Trustee, Counsel and others. The Marshals from the Greenbelt, MD, location were extraordinarily helpful. Ms. Rose coordinated the presence of a locksmith (to avoid splintering door frames), and the Marshals provided manpower and protection, although the debtor’s schedules stated that he had no firearms. The Marshals took no chances. Prior to the date of the seizure, the Marshals communicated with local police to determine whether outstanding warrants existed for the debtor. In fact, there was. So the Marshals, local police, a locksmith and Counsel appeared unannounced at the debtor’s residence worth more than $700,000. Counsel was told to stay far away as law enforcement approached the property. The Marshals called the debtor on two (2) different telephone lines and pounded on the door. No one answered. So the locksmith began drilling a lock behind a tactical shield, drilling – – later admitting it was not his best work under the eyes of so many spectators and the threat of gunfire. After the door was opened, law enforcement announced themselves. The debtor then appeared, claiming to be asleep (despite being fully dressed, television on). The local police arrested the debtor on a prior charge, and Counsel proceeded through the residence, gathering computers, thumb drives and 20 boxes of records. Counsel diligently searched looking for an external hard drive the debtor referenced at a hearing and for more thumb drives. Within the debtor’s nightstand, Mr. Hoffman found 20 rounds of ammunition – – right next to a thumb drive. After further searching, he located a handgun and two pellet guns. The Marshals called the local police again (they were processing the debtor on the prior charge). A policeman returned, took possession of the handgun and ammunition and then returned to the station to arrest, for a second time, the debtor on new charges. The debtor was a convicted felon and was not permitted to possess a weapon or ammunition. The Trustee and Counsel thank the Marshals, Prince George’s County police and others who bravely assisted in the enforcement of the Bankruptcy Court’s Seizure Order. Who said the practice of law was dull?
September 2, 2022
Real Estate
How do Shared Equity Agreements Work?
As discussed in the last edition of This Week in Real Estate, many homeowners are interested in shared equity agreements. Let’s discuss how those agreements work. Here are a few examples of shared equity agreements in action. Scenario 1: Securing a down payment Harry Homeowner wants to buy a home that costs $250,000. To avoid Private Mortgage Insurance (PMI), he needs to put down $50,000. He saved up $25,000 but is not sure how to get the rest. He hears about a shared equity investment company and finds out they will lend him the other $25,000. In exchange, they get an interest in his property and its future appreciation or depreciation. Harry’s agreement sets the term at 30 years. That means he won’t have to make a single repayment on the amount until he sells the home or thirty years have passed, whichever comes first. At the end of the agreement, Harry will repay the initial investment along with 35% of the property’s gain or loss over the span of the agreement. Note that the amount of the company’s interest in the gain is considerably more than the percentage of the initial investment. Repayment Fifteen years later, Harry is ready to sell his home. Depending on how the value of his home has changed, here’s what could happen. If Harry’s home has increased in value to $350,000, he will owe the investor the initial investment of $25,000 plus 35% of the $100,000 gain ($35,000). The total payment would be $60,000. If the value of Harry’s home stayed the same, he would owe the investor the initial investment of $25,000 and nothing more. What if Harry’s home value drops to $200,000?He’ll need to repay the difference between the initial investment ($25,000) and the investor’s percentage of the loss (35% of -$50,000=-$17,500). The total repayment amount would be $7,500. Scenario #2: Cashing out some home equity Ophelia Owner has a home worth $500,000. She still owes $300,000 on her mortgage and has $200,000 in home equity. She wants to cash out $50,000 and reaches out to an equity-sharing company to make it happen. Equity sharing agreement Ophelia agrees to sell $50,000 of her equity in exchange for a 25% stake in her home’s appreciation over the next ten years. Repayment When the 10-year term is up, it’s time for Ophelia to pay, here are three possible outcomes: If Ophelia’s home increases in value to $550,000, she will have to repay the initial $50,000 plus 25% of the $50,000 appreciation, for a total of $62,500. If she is not ready to sell her house, so she will have to pay out-of-pocket or refinance the debt. However, refinancing the debt will result in additional financing fees. And even if she sells her home, the $37,500 she gains from the appreciation won’t cover the full $50,000 repayment. This outcome could be problematic for some homeowners. Before making a shared equity agreement, check market trends and predictions to make sure you’ve got a good chance of gaining money instead of losing it. Next week, we will examine who would truly benefit from a share equity agreement.
September 1, 2022
Healthcare
California’s New Scope of Practice Law for Nurse Practitioners – Part Two
This article is a continuation of our discussion about how California law AB 890 makes treating patients easier for nurse practitioners – without physician supervision or the need to comply with “standardized procedures.” In part one, we ended by discussing how NPs could meet the provisions of the new law by working in specific types of settings and organizations. This article continues that discussion by explaining the role of NPs in nursing corporations. NPs in Nursing Corporations California law already provided, before AB 890, that nurse practitioners could create nursing corporations: “2775. A nursing corporation is a corporation which is authorized to render professional services, as defined in Section 13401 of the Corporations Code, so long as that corporation and its shareholders, officers, directors, and employees rendering professional services who are registered nurses are in compliance with the Moscone-Knox Professional Corporation Act, the provisions of this article and all other statutes and regulations now or hereafter enacted or adopted pertaining to such corporation and the conduct of its affairs.” “With respect to a nursing corporation, the governmental agency referred to in the Moscone-Knox Professional Corporation Act is the Board of Registered Nursing.” 2776. This section states that violations of the act (indirect or direct attempts to violate the act, and other acts such as aiding in the violation of the nursing corporations statute, the Moscone-Knox Professional Corporation Act, or any regulations duly adopted under those laws – will be considered unprofessional conduct and a violation of this chapter. 2777. This provision provides that a nursing corporation is bound by the same statutes and regulations as a person holding a license under this chapter. 2778. This provision states that: “the name of a nursing corporation and any name or names under which it may render professional services shall contain the words “nursing” or “registered nursing,” and wording or abbreviations denoting corporate existence.” 2779. Except as provided elsewhere in the Corporations Code; “each shareholder, director and officer of a nursing corporation, except an assistant secretary and an assistant treasurer, shall be a licensed person as defined in Section 13401 of the Corporations Code.” Other provisions pertain to the income of a nursing corporation attributable to professional services rendered while a shareholder is a disqualified person – and what regulates can be adopted and enforced to carry out the objectives of the nursing corporation law. When AB 890 becomes effective in 2023, a nurse practitioner that meets the new scope of practice requirements (that permit an NP to practice in a setting/organization-specific practice – without standardized procedures) will: “Be able to practice independently with an additional three years of practicing in good standing (i.e., no discipline against the NP’s BRN RN license or NP certificate) in a setting-specific practice, for a total of six years (i.e., three years in TTP + 3 years practicing in good standing), to practice as an independent NP outside the setting-specific practices.” AB 890 also provides the following benefits and rights for nurse practitioners: Medical Staff Membership and Voting Rights. A nurse practitioner will be able to serve on “organized medical staff and hospital committees and adhere to all applicable medical staff bylaws in healthcare facilities.” In certain setting/organization practices, an NP will be eligible to attend department meetings. The NP will not be able to vote at a department, division, or other meetings unless their vote relates to the determination of NP privileges, peer review of NP clinical practice, certain licensee employment considerations, or the vote is “otherwise allowed by the applicable Medical Staff bylaws.” If an NP in a nursing corporation is eligible to join an organized medical staff (after January 1, 2023), the nurse practitioner will have the right to vote at all department, divisions, or other meetings. Referrals and evaluation of care. NPs should refer a patient to a doctor, surgeon, or another licensed health care provider – if the care that a patient need is beyond the skill and experience level of the nurse practitioner. According to the California Association of Long Term Care Medicine, NPs already are required to refer patients if the patient needs help above the skill level of an NP. NPs and other health care providers regularly make authorized referrals – such as “to a specialist Cardiology clinic for uncontrolled hypertension or Physical Therapy and Occupational Therapy in the Skilled Nursing Facility (SNF) setting for evaluation of a safe discharge.” For NPs in Nursing Corporations, NPs in SNFs Generally, most nurse practitioners who work in a skilled nursing facility (SNF) will be practicing within a setting-specific group – and will not require standardized procedures and physician supervision – once the California BRN creates new regulations. If a nurse practitioner in an SNF wants to create a nursing corporation, “they will then practice as an independent individual NP or NP group in 2023, under certain conditions.” Until the new law and new BRN regulations go into effect, nurse practitioners must enter into a written practice agreement with an individual doctor or a physician group: “Because the regulations governing SNFs require that a physician may not delegate a task when the regulations specify that the physician must perform it personally, which includes the initial comprehensive visit in an SNF during which the physician completes a thorough assessment, develops a plan of care, and writes or verifies admitting orders for the resident.” Medicare requires that the doctor cannot delegate the initial comprehensive visit in an SNF. Generally, non-physician practitioners may perform other medically necessary visits before and after the physician’s initial comprehensive visit. AB 890 should enable a better SNF workflow as NPs can practice without physician supervision and standardized procedures – and doctors will have a lighter workload and less paperwork. According to the California Association of Long-Term Care Medicine, “NPs in California have been working for over 20 years to get full practice authority. While there are still regulatory rules that need to be created, NP practices now have the statute for full practice authority.” How to Use a Management Services Organization for Profit if you’re a Doctor, Nurse, or Entrepreneur This video is excerpted from a Webinar held by Clara Salvai, Matthew Stokke, and Molly Fashola on April 14th, 2022. We are sharing some legal industry insights to the ever changing landscape of […] What Physicians and Investors Must Know About California Medical Corporations Doctors must comply with California’s Professional Corporation Act. A professional medical corporation provides many advantages over a partnership or sole proprietorship. Affordable Care Act creates scope of practice legislative scramble for healthcare practitioners Healthcare reform is creating incentives for even more legislative scrambles by different practitioner lobbying groups for favorable legislation that will protect, preserve, and expand their own […] What regulations may be needed to implement AB 890? According to the California BRN: The term “transition to practice,” will need to be defined. Currently, the term means: “Additional clinical experience and mentorship provided to prepare a nurse practitioner to practice independently.” “Transition to practice” includes, but is not limited to, managing a panel of patients, working in a complex health care setting, interpersonal communication, interpersonal collaboration and team-based care, professionalism, and business management of a practice. The board shall, by regulation, define minimum standards for transition to practice. Clinical experience may include experience obtained before January 1, 2021, if the experience meets the requirements established by the board. The BRN will need to determine process for Nurse Practitioner Advisory Committee to advise the Board on disciplinary matters* This regulation may or may not be necessary depending on the process used “Lower experience requirement to practice under 2837.104 for NPs holding a DNP (if desired*) (*This is not a prerequisite to full implementation of AB 890, as it is within the Board’s discretion to determine whether to lower this requirement).” “Establish certificate to practice under section 2837.104, and corresponding fee for certificate.” “Establish supplemental examination, if deemed necessary.” “The Board may consider whether other portions of AB 890 require a regulation in order to implement, interpret, or make specific any of the statutes in the bill.” What has the BRN done so far? Currently, the California Board of Registered Nurses is engaged in developing proposals and regulations to implement AB 890. Additional considerations by a local medical association According to the Alameda-Contra Costa Medical Association, there are some additional considerations: The California Medical Association (CMA) will be closely involved in the implementation of AB 890, monitoring and advocating during the regulatory process at the Board of Registered Nursing and at the Medical Board of California, as necessary. AB 890 allows Section 103 and 104 NPs to do the following: “Conduct an advanced assessment Order, perform; and interpret diagnostic procedures, as specified with regard to radiologic and clinical laboratory procedures Establish primary and differential diagnoses Prescribe, order, administer, dispense, procure, and furnish therapeutic measures including referrals, pharmacological agents, and nonpharmacological interventions, as specified Certify disability for state disability benefits Delegate tasks to a medical assistant.” AB 890 requires Section 103 and 104 NPs to do the following: “Verbally inform all new patients in a language understandable to the patient that the nurse practitioner is not a physician; Post a notice in a conspicuous location accessible to public view that the nurse practitioner is regulated by the BRN, including information about how complaints can be made; Practice only within the scope of their education and training; Refer patients to a physician in specified circumstances; and Carry professional liability insurance.” AB 890 Does Not End Physician Supervision. The bill does not prohibit the supervision of NPs – including the two new categories created under AB 890 – or otherwise seek to regulate or modify the operative law regarding the governance of nurse practitioners who do not receive additional training. Current arrangements regarding the practice and supervision of NPs are not regulated or changed by AB 890. AB 890 Requires Consultation and/or Referral. AB 890 requires “Section 10”’ NPs to refer cases beyond their training and education to a physician. AB 890 also requires “Section 104” NPs, who are practicing in facilities that may not have a physician on site, to consult with and refer patients to a physician in specified circumstances. AB 890 Explicitly Protects the “Corporate Bar.” AB 890 specifies that the corporate bar applies to Section 103 and Section 104 NPs. That means entities including hospitals may not hire, employ or otherwise control the Section 103 and Section 104 NPs unless one of the existing exceptions to the corporate bar applies. California AB 890 expands the ability of nurse practitioners in California to provide patient services without following “standardized procedures” in certain settings and through nurse corporations. The California Board of Registered Nurses is developing regulations to implement the new law. Nurse practitioners and medical practices should contact Cohen Healthcare Law Group, PC to how to comply with AB 890. Our experienced healthcare attorneys advise doctors, nurses, and other health care providers about healthcare compliance laws and regulations. Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.
September 1, 2022
Bankruptcy
Corporate Subchapter V Debtors Beware: Creditors May Object to Dischargeability of Fraud and Other Claims, at Least in Some Jurisdictions
On June 7, 2022, the U.S. Court of Appeals for the Fourth Circuit (“4th Circuit”) held that the discharge exceptions in Subchapter V of Chapter 11 (enacted as part of the Small Business Reorganization Act (“SBRA”)) apply to both individual debtors and corporate debtors. Cantwell-Cleary Co., Inc. v. Cleary Packaging, LLC (In re Cleary Packaging, LLC), 36 F.4th 509 (4th Cir. 2022). The 4th Circuit’s decision reversed the bankruptcy court’s “nicely crafted opinion,” which held that the exceptions to dischargeability incorporated into the Subchapter V provisions of Chapter 11 applied only to individual debtors. The 4th Circuit’s decision is a big deal in the bankruptcy world because it is the first decision to hold that corporate Chapter 11 debtors are subject to all discharge exceptions under Section 523(a) of the Bankruptcy Code. In this case, the debt at issue was a $4.7 million judgment against the debtor for intentional interference with contracts and tortious interference with business relations. Section 523(a) of the Bankruptcy Code is the section relied upon by creditors objecting to certain types of debts, including for fraud, breach of fiduciary duty and willful and malicious injury. That section refers to dischargeability exceptions of an “individual debtor.” Section 1192, which applies only in Subchapter V cases, excepts from discharge debts “of the kind specified in section 523(a).” In holding that the Section 1192 dischargeability exception applies equally to corporate debtors, the 4th Circuit found that Section 1192 referred to “kinds” of debts as opposed to “kinds” of debtors. This decision is controlling precedent only in Maryland, Virginia, West Virginia, North Carolina and South Carolina. Bankruptcy courts in Idaho and Michigan have held that the discharge exceptions in Subchapter V apply only to individual debtors. It will take time before there are any potentially conflicting circuit decisions on this issue that could result in review by the U.S. Supreme Court. In the meantime, this author understands that certain groups may lobby Congress for a legislative fix to the 4th Circuit’s decision, which some believe will lead to unintended consequences at odds with the legislative history of Subchapter V. What are the potential unintended consequences? In Cantwell-Cleary, the National Association of Bankruptcy Trustees (“NABT”) filed a brief in support of appellee’s petition for rehearing en banc, which the 4th Circuit denied. In that brief, the NABT argued that the purpose of the SBRA was to “streamline the bankruptcy process by which small business debtors reorganize and rehabilitate their financial affairs.” The NABT argued, among other things, that by allowing claims under § 523(a) to proceed against corporate, small business debtors, Subchapter V cases will no longer proceed in a timely, cost-effective manner, nor will it help these companies remain in business. This may be true. For example, in a hypothetical case in which a creditor has a $4.7 million claim (that is not subject to a discharge exception), the debtor could confirm a plan (over the objection of creditors) that pays unsecured creditors only $100,000 if the debtor’s assets are not worth more than $100,000 and if the debtor does not generate more than $100,000 in projected disposable income over the plan term. That debtor could obtain a fresh financial start. By contrast, if that $4.7 million claim is nondischargeable, the debtor will be burdened with collection efforts and may not actually be able to survive. Indeed, the creditor with a nondischargeable claim ends up with significant leverage against the Subchapter V debtor trying to negotiate a consensual plan. Only time will tell whether other courts will follow the 4th Circuit and/or whether someone can convince Congress to clarify whether the discharge exceptions in Section 523(a) of the Bankruptcy Code apply to corporate Subchapter V debtors. For information on this topic, contact Stephen Metz.
August 31, 2022
Labor and Employment
CDC Speaks Again: How Does it Affect Employees?
New COVID guidance from the CDC throws some of what we’ve learned about safe returns to work and prevention out the window. The CDC’s recommendation is now that anyone exposed to COVID is safe to be around others by wearing a well-fitted and high-quality mask for ten days. I’d suggest that the “well-fitting and high-quality mask” is a big factor. Employers should still require that employees inform them of exposure and intent to test and, at that time, let them know the new standard and that they may report in person. Keep a stock of KN95 or other tight-fitting masks on hand. Delaware still requires employers to provide masks, and these are readily available. All persons should still seek testing for active infection when they are symptomatic or if they have a known or suspected exposure to someone with COVID. Symptomatic or infected persons should isolate promptly, and infected persons should remain in isolation for at least five days (day 0 is the day of exposure) and wear a well-fitting and high-quality mask if they must be around others. Infected persons may end isolation after five days, only when they are without a fever for at least 24 hours without the use of medication and all other symptoms have improved. They should continue to wear a mask or respirator around others at home and in public through day 10. Don’t forget: employees at high risk for severe illness and those in contact with them (such as caregiving recipients and household members) may want to minimize risk if they learn they’ve been exposed. They may still ask to quarantine while they await test results. This may either be handled by telework, isolating onsite, or taking available paid or unpaid time off. Be cognizant of reasonable accommodations for workers with disabilities; this may fall into that basket. On another note, I am really happy to announce that I was voted into Best Lawyers in America for employment law. I joined 59 of my colleagues at Offit Kurman, who were included in the listing of the top 5% of American lawyers. Sincerely, thank you for your trust in me.
August 31, 2022
Executive Playbook: Buy/Sell Agreements
On this month’s episode of the Executive Playbook, Mike Cammarata and Russell Berger apply their knowledge as professional advisors and managers to advocate for the use of Buy/Sell Agreements between owners of a business. Mike and Russell discuss the need for a transition plan to ensure the ongoing viability of the business as well as a funding source for a buyout. They also discuss planning for potential disabilities of an owner. Listen in to learn more.
August 25, 2022
Tax
Virtual Currency and Virtual Transactions – Real Tax Issues in Real Dollars
Recently the IRS released a draft form of Form 1040 for the upcoming tax year. The biggest change is a more detailed question about virtual currency transactions. The new draft form asks, “At any time during 2022, did you: (a) receive (as a reward, award, or compensation); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset),” followed by a “Yes” or “No” box. You can see a copy of the draft form here. Although not as bad as some expected (Line A-How much did you make last year? Line B-How much do you have left? Line C-Send Line B.), this change shows the Service is increasing its scrutiny of virtual currency transactions and, not coincidentally, subjecting taxpayers to false statement penalties if they are not truthful in their answer. Although the question asking about virtual currency did not appear on the 1040 until 2020, as seen here, the Service began issuing guidance on virtual currency and transactions as early as 2014, as seen in Notice 2014-21. Five years later, in Rev. Rul. 2019-24, the Service issued further guidance to address “hard forks” and “airdrops.” So, what are the rules? First, despite the moniker, virtual currency or cryptocurrency, the Service considers virtual currency (Bitcoin, Dogecoin, Ethereum, as well as all other cryptocurrencies) to be personal property, not currency. Setting aside currency arbitrage transactions, the basis of currency is the face value of the currency. If I receive a $100.00 bill, my basis in that Benjamin is always $100.00 (I can’t depreciate it), and when I dispose of it (use it to buy, say $100.00 of Dogecoin), I have no gain or loss on the disposition of that bill. Now, because Dogecoin is treated as property and not currency if my $100.00 of Dogecoin grows to $300.00 and I use it to buy something else for $300.00, I have taxable gain, in this case, $200.00. Because my Dogecoin is considered property, not currency, the gain will be taxed either as ordinary income or as a capital gain. Whether the gain is taxed as a capital gain depends on whether the Dogecoin is a capital asset in my hands. See Q &A No. 7, Notice 2014-21. If I do not hold the Dogecoin in inventory for sale to others but hold it as an investment, much like stocks, bonds, and other investments, it should be treated as a capital asset and taxed at capital gains rates. If I satisfy the long-term capital holding period (more than one year, i.e., a year and a day), then I get the favorable long-term capital gain rates, which generally are lower than short-term capital gain rates. Let’s take the flip side. What if someone pays me in virtual currency? What is my basis in the virtual currency with which I was paid? My basis is the fair market value of the virtual currency on the date of receipt. See Q & A No. 4, Notice 2014-21. Transactions using virtual currency must be reported in U.S. dollars for U.S. tax purposes. If the virtual currency is traded on an exchange, the value can be determined simply by looking at the exchange rate on the date of receipt or payment. Where the virtual currency is not traded on an exchange, the taxpayer still must determine the fair market value based on all the facts and circumstances. What if I receive virtual currency in payment for services? If I am an independent contractor (I receive a 1099), the receipt of virtual currency is considered self-employment income, which means it is subject to self-employment tax. This also means that payment to an independent contractor using a virtual currency is subject to information reporting, i.e., reporting to the IRS payments of $600 or more in the same tax year to the same person, and the attendant penalties for not filing information returns. If I am an employee (I receive a W-2 from my employer), the payment of wages in virtual currency is subject to federal income tax withholding and, if I am the employer, to the employer’s share of employment taxes. If I am an employer, I must pay the taxes withheld and the employer’s share of employment taxes in U.S. currency, not Dogecoin or any other virtual currency. What if I “mine” virtual currency? If I mine virtual currency, the fair market value of the virtual currency as of the date of my receipt of it is included in gross income. What if I “mine” virtual currency as a trade or business? If I mine virtual currency for my own trade or business or as an independent contractor, the net earnings from that activity constitute self-employment income, but I am entitled to deduct my ordinary and necessary business expenses in determining my net income. You said something about hard forks and airdrops; tell me more. (For those unfamiliar with soft forks and hard forks, click here to read an Investopedia article containing a brief explanation). Typically, and grossly general terms, a hard fork results in the creation of a new cryptocurrency. After a hard fork, transactions involving the new cryptocurrency are recorded on a new distributed ledger, while transactions involving the old or legacy virtual currency continue to be recorded on the old legacy ledger. An airdrop is a way of distributing units of virtual currency to the distributed ledger addresses of multiple taxpayers. Hard forks are often, but not always, followed by airdrops. Generally, a virtual currency is received from an airdrop on and at the date and time it is recorded on the distributed ledger. For U.S. tax purposes, whether the taxpayer received the virtual currency on and at that date and time is determined by the dominion and control test. If the taxpayer has dominion and control over the virtual currency on the date and at the time it was airdropped, then the taxpayer, if on the cash basis of accounting, has gross income under IRC § 61(a)(3) on and at the date and time of receipt. On the other hand, if the hard-forked virtual currency is airdropped into a wallet managed by an exchange that does not support the newly created (hard forked) virtual currency, which means the taxpayer cannot transfer, sell, exchange, or otherwise dispose of it, then the taxpayer does not have dominion and control over the new hard fork airdropped virtual currency, and it would not be included in the taxpayer’s gross income unless and until the taxpayer later acquired dominion and control over it. The use of virtual currencies and transactions using virtual currencies can create real tax issues. If these tax issues result in federal tax liability, those liabilities must be paid with the U.S., not virtual, currency. If in doubt regarding the tax consequences of buying, selling, using, or mining virtual currency, taxpayers should consult their tax advisor regarding the implications of buying, selling, and using virtual currencies. Offit/Kurman PA counsels clients on intellectual property matters such as virtual currency and NFTs, including the tax aspects and effects of those matters. The views expressed herein are solely those of the author, are not intended as, and do not constitute, legal or tax advice.
August 24, 2022
Family Law
Separation? Where Do I Start?
If you are contemplating a separation, or if you believe that your spouse is, where do you begin? Collect and preserve financial information. This will include tax returns and information regarding income and expenses, such as check registers, checking account statements and credit card statements. You will also want information regarding assets and liabilities. If you have done a loan application for a mortgage or refinance, that will be a very helpful summary. You also want to secure information regarding 401K’s, retirement and investment accounts and the like. If there is a business involved, any documentation regarding the business would be an integral part of the information you will need. Information regarding real estate. HUD-1 forms from the purchase and sale of real estate are essential for tracing. If any assets were acquired using non-marital funds by either party, that information should be provided to your attorney. Non-marital asset tracing would include funds or assets owned by either party prior to the marriage, gifts from a third party, inheritances or anything traced to those funds. Consider available funds. You will need funds to retain counsel and experts and enough funds to pay ongoing bills for at least a short period of time. Familiarize yourself with bank accounts and investment accounts that would be accessible to acquire a new place to live and other expenses for at least a few months’ time. Consider options for living arrangements. Although you do not want to move before consulting with an attorney and considering all of your options, it will be beneficial for you to know whether you can afford to remain in your current home if that’s an option. And, if you must move, what kind of residence would be appropriate for you (and for your children)? Consult with a divorce attorney. Seek referrals from trusted friends who have had divorce experiences, estate and trust lawyers, accountants, therapists, and others who can give you names of competent attorneys. You may want to consult with more than one before making the decision as to who should represent you. Always consider peer evaluations, such as Super Lawyers, Best Lawyers, and, of course, the American Academy of Matrimonial Lawyers (AAML). Membership in the AAML is an organization of the top divorce lawyers in the country. Both Cheryl Hepfer and Sandy Brooks are Fellows of the AAML. Make your children your primary concern. For any parent contemplating separation and divorce, the best interest of their children is of great concern. An experienced divorce attorney can give you advice regarding the process options for you to consider and can provide information that will make this less frightening.
August 24, 2022
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