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Electing Portability – It’s Not Too Late to File

Posted in Estate Planning, Tax, and Probate Law


By Wendy B. Horton

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was signed into law on December 17, 2010, and included a key provision – providing for “portability” between spouses of the unified credit. On January 2, 2013, the American Tax Relief Act of 2012 (“ATRA”), was signed into law, including a provision making portability a permanent feature.

Generally, portability allows a surviving spouse to elect to take advantage of any unused portion of the unified credit of his or her predeceased spouse, provided that the deceased spouse died on or after January 1, 2011. Thus, a surviving spouse will be provided a larger exclusion amount to be used for his or her own gift or estate tax purposes. The portable amount that can be used by a surviving spouse is referred to as the “deceased spousal unused exclusion amount” (“DSUE amount”).

Historically, the applicable exclusion amount, or the maximum dollar amount the unified credit will allow to be transferred tax free at a decedent’s death are as follows: $5,000,000 in 2011; $5,120,000 in 2012; and $5,250,000 in 2013.

Assume for example that Jack and Jill are married. In 2011, Jack makes multiple taxable gifts in an amount equaling $3,000,000. In 2013, Jack dies having no taxable estate and is survived by Jill. Jack is considered to have used only $3,000,000 of the $5,250,000 exclusion available in 2013. Thus, Jack has $2,250,000 remaining. A timely filed estate tax return with a portability election will allow Jill to use not only her entire $5,250,000, but also the remaining $2,250,000 from Jack. Thus, Jill will be able to transfer up to $7,500,000 tax free.

One caveat of portability is that in order for a surviving spouse to use the predeceased spouse’s DSUE amount, the executor or representative of the predeceased spouse’s estate must file a federal estate tax return and affirmatively elect portability. Although estate tax returns are not required to be filed unless a decedent’s gross estate exceeds the basic exclusion amount, for decedents dying on or after January 1, 2011, an estate tax return must be timely filed, even if no estate tax is due, in order to affirmatively elect portability.

Estate tax returns generally are required to be filed within nine months after the date of a decedent’s death, unless an executor claims the available six-month extension. An estate tax return filed solely for the election of portability must meet the same filing deadline. However, there is good news for executors of the estate of decedents dying in 2011, 2012, or 2013, who were not required to file an estate tax return and who in fact did not file an estate tax return – portability may still be elected even if the deadline for filing the estate tax return has passed.

In order to file an estate tax return electing portability, an executor can file the otherwise late return with a notation at the top which provides: “FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).” The deadline for filing an otherwise late return filed in this manner is December 31, 2014.


Protection of Trademarks from Cybersquatters

Posted in Intellectual Property


By Bill Caughman

In 1999, the Internet Corporation for Assigned Names and Numbers (“ICANN”) adopted the Uniform Domain-Name Dispute-Resolution Policy (UDRP) which established a system for dispute resolution between owners of internet domain names and trademark owners. The UDRP allows a trademark owner to file a complaint with various administrative bodies, such as the National Arbitration Forum, by which the trademark owner asserts their rights and requests that offending domain names, including those held by cybersquatters, be either cancelled or transferred to the trademark owner as the rightful owner of a given trademark.

While the UDRP is certainly less expensive and less time consuming than formal litigation in court, the proceedings usually take many months and expenses can be substantial. In 2013, a new system for dispute resolution was implemented called the Uniform Rapid Suspension System (URS). This system has been expanding in use and coverage; only recently URS became applicable to .us top level domains. The URS is intended to provide certain trademark owners with an alternative to the UDRP. Under the URS, when a trademark owner files a complaint, the registrar of the domain name immediately locks the domain to prevent modification or transfer. The registrar will then provide notice to the domain owner of the complaint, and the domain owner has 14 days to file a response. If there is no response from the domain owner (which is frequent for cybersquatters), then the domain is immediately suspended. Once the domain is suspended, when a person enters the domain name into a search engine, they will be redirected to a URS placeholder page showing that the domain is suspended. This remedy is different from the UDRP where the domain can be terminated or transferred to the trademark owner, but it does shut down the offending site much faster, and the fees are typically less under the URS procedure.

There are some additional limitations of the URS process. A trademark owner desiring to use the URS must be the owner of a mark consisting of a word only, as opposed to a trademark on a design, symbol or other feature that is ordinarily protectable under trademark law. Additionally, the burden of proof under the URS is “clear and convincing” which is a higher standard than the “preponderance of evidence” standard under the UDRP.

For the right situation, the URS is another tool to help trademark owners protect their rights in the ever expanding world of internet domain names.


ONC Report on Surge in Use of Electronic Health Records (“EHR”)

Posted in Health Law

by Linda G. Rodrigue


Two recent studies published by the office of the National Coordinator for Health Information Technology (the “ONC”) suggest that the use of electronic health records among physicians and hospitals has greatly increased. The study is based on information collected in calendar year 2013.

According to ONC, approximately 78% of office-based physicians have adopted some form of electronic health record. Almost 50% of these record systems have advanced functionalities. Similarly, ONC reported that almost 60% of hospitals had adopted EHR systems with advance functional capabilities by 2013, a 400% increase since calendar year 2010.

The United States Department of Health and Human Services (“HHS”) believes that these findings are the result of the “meaningful use” program. Meaningful use is a program that incentivizes Medicare payments for using electronic technology in the performance of certain functions (for example, electronic prescribing). Meaningful use has been introduced in stages. Stage 1 involved more “in-house” electronic functionality, while Stage 2 addresses sharing information with other entities. There is still, according to HHS, a great need for improvement in Stage 2 implementation.

Karen DeSalvo, M.D., MPH, who heads the ONC, stated recently that HHS continues to focus on the goal of “an interoperable health system that enables nationwide health information exchange.”


What is Process Safety Management (PSM) and What is a Risk Management Program (RMP) ?

Posted in Process Safety Management


By Lee Vail

Both OSHA’s Process Safety Management (“PSM”) and EPA’s Chemical Accident Prevention regulations are regulatory programs developed to address process safety in the “Process Industry.” A “Process” is defined broadly and includes any activity that uses, stores, manufactures, handles or moves hazardous chemicals. Since the definition is broad, it includes much more than refineries and chemical plants, and unless exempt, includes any facility with an inventory of hazardous chemicals above an established threshold.

PSM, which was promulgated in 1992 under authority of the Section 304 of the Clean Air Act (“CAA”), is administrated by the Occupational Safety and Health Administration. PSM regulations are codified at 29 CFR 1910.119. In addition to other requirements, the EPA’s Chemical Accident Prevention regulations (colloquially referred to as the Risk Management Program or “RMP”) require the development of a Risk Management Plan (confusingly also abbreviated as “RMP”). RMP (the program) was promulgated in 1996 under Section 114(r) of the CAA and the Emergency Planning and Community Right-to-Know Act of 1986 (“EPCRA”) by the Environmental Protection Agency (“EPA”). RMP regulations are codified at 40 CFR Part 68. Although different regulations developed by different agencies under separate authority, these programs contain a lot of overlap.





American Arbitration Association Requires Registration of Consumer Arbitration Clauses

Posted in Alternative Dispute Resolution, Business and Corporate, Business Litigation, General Litigation


By Linda Perez Clark

Beginning September 1, 2014, the American Arbitration Association (“AAA”) will require that any business using or intending to use the AAA rules in a consumer contract register the arbitration clause with the AAA. Upon submitting the clause, the AAA will review it for “material compliance” with the AAA’s due process standards contained in its Consumer Due Process Protocol and its newly-adopted Consumer Arbitration Rules (which will replace the AAA Consumer-Related Disputes Supplementary Procedures effective September 1, 2014).

If the AAA is satisfied that such compliance has been met, then the business will be included in the AAA’s publicly-accessible Consumer Clause Registry, which will contain a copy of the arbitration clause along with the business’s name and address. If the clause is determined non-compliant, then the AAA may decline to administer the case, and the parties may then submit their dispute to the appropriate court.

The AAA rules further require that the clause be submitted for registry at least 30 days before the planned effective date of the contract; but if a business does not submit its arbitration clause for review in advance of an arbitration being filed, the AAA will conduct a review at that time, for an expedited fee of $250, in addition to the standard initial registry fee of $650. The AAA also requires payment of a yearly, non-refundable fee of $500 to keep each clause registered. Any different arbitration clauses used by the same business or its subsidiaries must be separately registered and maintained, and any subsequent changes to a registered arbitration clause must be resubmitted. The AAA rules also provide that it will decline to administer an arbitration if the business has failed to pay the required fees.

An arbitration clause that satisfies the Federal Arbitration Act, along with a class action waiver, can effectively impede the use of class actions seeking recovery for individual de minimus claims. The U.S. Supreme Court has validated the enforceability of arbitration clauses for such purposes in a series of recent cases. It is therefore important to ensure that the clause is well drafted, and properly registered with the AAA so that it won’t be set aside when the business needs it most.

The AAA registry process can be found on their site at www.adr.org.


CMS Will Expand the Medicare Demonstration Requiring Prior Authorization for Power Mobility Devices to Twelve Additional States, Including Louisiana

Posted in Health Law


by Deborah J. Juneau

CMS published its notice of intent in the July 29, 2014 Federal Register to expand the demonstration regarding prior authorizations from DME suppliers seeking payment for Power Mobility Devices from the original seven states to an additional twelve states. Louisiana is one of those states.

The original states included in the demonstration were California, Florida, Illinois, Michigan, New York, North Carolina and Texas. The expanded demonstration will include Louisiana, Pennsylvania, Ohio, Missouri, Washington, New Jersey, Maryland, Indiana, Kentucky, Georgia, Tennessee, and Arizona. According to CMS, these states have high expenditures and improper payments for Power Mobility Devices, based on 2012 billing data. The effective date for the expanded demonstration begins on October 1, 2014.

CMS initially implemented the demonstration in the original seven states that had a perceived history of high levels of improper payments and incidents of fraud related to Power Mobility Devices. The objective of the demonstration was to develop improved methods for investigation and prosecution of fraud and recovery of improper payments. Per CMS, the data accumulated from the demonstration could be used to detect collaboration between ordering physicians and suppliers in submitting fraudulent claims for Power Mobility Devices. Investigators will use changes in billing practices to determine whether to investigate a supplier. Specifically, CMS intends to analyze data pertaining to suppliers who no longer bill for Power Mobility Devices or who have a significant decrease in billing, as well as physicians or treating practitioners who have a high volume of submissions for Power Mobility Devices. CMS will also analyze data regarding HCPCS codes that show a dramatic increase in use.

Pursuant to the demonstration, a request for prior authorization and all relevant documentation to support medical necessity, as well as a written order for the covered item, must be submitted when one of the following HCPCS codes for a Power Mobility Device is ordered: Group 1 Power Operated Vehicles (K0800-K0802 and K0812); all standard power wheelchairs (K0813-K0829); all Group 2 complex rehabilitative power wheelchairs (K0835-K0843); all Group 3 complex rehabilitative power wheelchairs without power options (K0848-K0855); pediatric power wheelchairs (K0890 and K0891); and Miscellaneous power wheelchairs (K0898).

In order to be affirmed, the request for prior authorization must meet all applicable rules, policies, and National Coverage Determinations/Local Coverage Determinations requirements. Upon receipt of the complete request for prior authorization, CMS will conduct a complex medical review and will attempt to postmark the notification of the decision with the prior authorization number within ten business days. If a subsequent prior authorization request is submitted following a non-affirmative decision on the prior request, CMS will attempt to provide notification of the decision on the request within 20 business days. A request for expedited review in an emergency situation may be submitted, if the healthcare practitioner clearly documents, with supporting rationale, that the standard time frame (10 days) would seriously jeopardize the beneficiary’s life or health. In that case, CMS will provide notice of the decision within 48 hours of the complete submission.

If the prior authorization request is not affirmed, the claim will be denied upon submission by the supplier. The denial is subject to appeal by the beneficiary. Suppliers must issue an Advance Beneficiary Notice to the beneficiary prior to the delivery of the item in order for the beneficiary to be held financially liable when a Medicare payment denial is expected for the Power Mobility Device.

CMS also plans to assess a 25% payment reduction in the newly added demonstration states after the first three months of the expanded demonstration. CMS will assess a 25% payment reduction on those suppliers whose claims are determined to be payable but who did not first receive a prior authorization decision for the item. The supplier must submit the prior authorization number on the claim in order to not be subject to the 25% reduction in payment. For capped rental items, the payment reduction will be applied to all payments in the series. The 25% reduction in payment is not transferable to the Medicare beneficiary and is not subject to appeal. The payment reduction will not be applied to competitive bid contract suppliers.

DME suppliers and healthcare practitioners should be aware of this expanded prior authorization requirement that will go into effect on October 1, 1014, as well as the associated consequences for failure to obtain prior authorization for Power Mobility Devices. Suppliers and practitioners’ billing practices will be scrutinized by CMS to determine whether billing practices changed in relation to the demonstration and, if so, that could lead to an investigation by CMS.


Louisiana Supreme Court Holds Terms and Conditions Binding Due to Course of Conduct and Forum Selection Clauses are not per se Violative of Public Policy

Posted in Business and Corporate, Business Litigation, General Litigation, Louisiana In General


By Linda Perez Clark

The use of standard form terms and conditions, without a signed contract, often leads to disputes over whether the parties actually agreed to be bound by such terms and conditions, as was the case in Shelter Mutual Insurance Co. v. Rimkus Consulting Group, Inc. of Louisiana, et al., 2013-1977 (La. 7/1/14). In that case, an expert witness (“Rimkus”) was retained to assist a corporation (“Shelter”) in connection with certain litigation. In its letter to Shelter confirming the engagement, Rimkus indicated its services were subject to its Terms and Conditions attached to the letter. The Terms and Conditions included a forum selection clause requiring venue for any suits arising out of the contract to be in Harris County, Texas. When a dispute arose, Shelter filed suit against Rimkus in Louisiana, claiming the Terms and Conditions were not binding on it and, in any case, the forum selection clause was void as against public policy.

In response to Shelter’s argument that it never agreed to the unilateral Terms and Conditions, the Louisiana Supreme Court examined the course of conduct between the parties, noting that the Terms and Conditions were attached to Rimkus’ confirmation letter; Shelter had previously retained Rimkus numerous times and the same Terms and Conditions were routinely provided as part of its job acceptance; on three prior occasions, the same counsel for Shelter expressly accepted these Terms and Conditions; until this suit was filed, Shelter had never objected to the Terms and Conditions; and the parties acted in accordance with the Terms and Conditions relative to billing and payments during the job assignment. These facts led the court to conclude that the Terms and Conditions were indeed applicable and binding on the parties.

Another important aspect of the case is the Louisiana Supreme Court’s ruling that forum selection clauses are generally enforceable and are not per se violative of public policy in Louisiana. Historically, Louisiana courts have followed the lead of the U.S. Supreme Court in holding that such clauses are generally legal and binding, absent proof that enforcement would be unreasonable and unjust, or against public policy. The court noted, however, that a recent split in the Louisiana circuits was created when the Louisiana Third Circuit Court of Appeal in Thompson Tree & Spraying Serv., Inc. v. White–Spunner Const., Inc., 10–1187 (La.App. 3 Cir. 6/1/11); 68 So.3d 1142, writ denied, 11–1417 (La.9/30/11); 71 So.3d 290, held that such clauses are unenforceable because they violate the Louisiana Code of Civil Procedure and Louisiana public policy.

The Louisiana Supreme Court rejected Thompson Tree, explaining that the Louisiana legislature has restricted forum selection clauses only with respect to very specific types of contracts (such as certain construction contracts and non-compete agreements) and claims (unfair trade practices). Absent applicability of such specific statutes, the court held that forum selection clauses should be enforced in Louisiana unless the resisting party can “‘clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching …. [or that] enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.’” Id. at 10.

This ruling by the Louisiana Supreme Court puts to bed generic “public policy” arguments against forum selection clauses. And it provides good insight into how “course of conduct” can render un-signed terms and conditions binding on the parties. A better practice is to have terms and conditions signed or formally acknowledged in some manner, if the parties intend to be bound by them.


Is it Time for Your Business to Have a Check Up?

Posted in Business and Corporate, Insurance, Insurance Coverage and Recovery, Intellectual Property, Labor and Employment Law, Louisiana In General, Real Estate, State and Local Taxation


By Sonny Chastain

We have become accustomed to having regular check-ups with our doctors. The doctor will analyze our current physical condition, including heart rate, blood pressure, cholesterol level, lung condition or otherwise. The doctor may order a treadmill test or a screening for a particular function. The doctor will also compare current test results to any prior tests to determine any changes to the body and mind resulting from the stress of our daily lives. The doctor considers any symptoms to determine whether risks associated with developing any particular disease can be reduced through diet, exercise, medication or other intervention. The goal is to stay healthy and fit. While the probing, pricking, injecting, and waiting are all uncomfortable, these activities are certainly better than a stay in the hospital or worse.

Our businesses should undergo a similar checkup or audit – to analyze risks that are connected to the business. Vital signs of the business should be examined to determine the current state of affairs. Similar to the condition of a body, after the business is formed, business owners are often just too busy competing in the marketplace to “take a physical.” The important and urgent items such as payroll, inventory, and sales are the immediate focus. Matters which are important, but non-urgent, including the “vital signs of the business,” get placed on the back burner. Business owners just do not take the time to pay attention to signs or symptoms. No different than a frog that dies because it does not realize the water is heating up, business owners do not pay attention to growth, market changes, etc., which have caused their own “water to heat up.”

Too many times the legal issues in a business are not noticed until after the business has had a “heart attack.” Steps should be taken to proactively consider areas in which the business may be vulnerable. Remedying problems which may be identified in any check-up are much easier to address before a legal issue arises. A legal check-up should be customized for the particular business, but should typically include: (1) review of the By-Laws or Operating Agreement to determine if they are current and appropriately govern the operation of the business; (2) review of insurance coverage to determine whether operational risks of the business are covered or not; (3) identification of any trade secrets and consideration of whether reasonable steps are really being taken to keep them confidential; (4) review of logos, slogans, or other indicia utilized as a trademark to identify the business and whether they are protected; (5) analyze whether the business owns a copyright in or has a license for any works that are integral to operations, like software, publications, drawings, etc.; (6) review of employee handbook and consideration of whether the business is operating consistent with it; and (7) analysis of whether certain employees should have to execute a valid non-compete or non-solicitation agreement. Similar to action items for the body like exercise, diet, or medication, intervention or remedies can be considered for any identified shortcomings of the business.

So, maybe it is time for a check up — to pick up your head and work “on” the business and not just “in” the business. Maybe it is time to consider the applicable vital signs of the business so as to get the “house in order.” After all, there are three outcomes for a business: (1) it fails/dissolves, (2) it is inherited by the owner’s heirs, or (3) it is sold or transferred to a third party. Failing to check vital signs may contribute to the first possible outcome. Otherwise, appropriate business checkups and action items to keep the business healthy, wealthy and wise make the other two outcomes much easier to accomplish.

How healthy is your business? Is it fit, fat, or on the verge of a heart-attack or stroke? Maybe it is time to conduct a business audit to determine the current condition of the business. Much like a routine physical exam, a legal check-up by your attorney will help you address and troubling finding, and provide you with a full report on the health of your company.



What Process Safety Information (PSI) is Required?

Posted in Process Safety Management

RMP was promulgated a few years after PSM and kept the same list of PSI developed by OSHA. See 29 CFR 1910.119(d) and 40 CFR 68.65. Although basically the same list, EPA’s list dropped reference to the health and safety of employees (as they lack authority to regulate the workplace). See 61 Fed. Reg. 31668, 31711 (June 20, 1996). Information concerning the hazards of the regulated materials is required; sufficient information is typically found in a material safety data sheet (MSDS). Also included in the PSI requirement is information about the technology of the process. These include:

  • A block flow diagram or simplified process flow diagram;
  • Process chemistry;
  • Maximum intended inventory;
  • Safe upper and lower limits for such items as temperatures, pressures, flows or compositions; and,
  • An evaluation of the consequences of deviations.

Other PSI required involves the equipment in the process. These include:

  • Materials of construction;
  • Piping and instrument diagrams (P&ID’s);
  • Electrical classification;
  • Relief system design and design basis;
  • Ventilation system design;
  • Design codes and standards employed;
  • Material and energy balances for processes built after June 21, 1999; and
  • Safety systems (e.g. interlocks, detection or suppression systems).

Finally, PSI includes two less defined requirements; documentation that equipment complies with recognized and generally acceptable good engineering practices (also referred to a “RAGAGEP”) or alternatively, where equipment was constructed to older versions of a code or standard, the employer must document that “equipment is designed, maintained, inspected, tested, and operated in a safe manner.” 29 CFR 1910.119(d)(3)(iii) and 40 CFR 68.65(d)(3).

OSHA originally proposed that PSI must be communicated to employees. This explicit requirement was removed when the rule became final. However the requirement implicitly remains based on requirements for employee participation, contractors and training. 57 Fed. Reg. 6356 ,6374 (Feb 24, 1992).

For more information, contact Lee Vail.

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The Hobby Lobby Aftermath: What Does This Mean For For-Profit Companies?

Posted in Business and Corporate, Labor and Employment Law

By Edward Warner

On Monday June 30, 2014, the Supreme Court ruled that requiring family owned corporations to pay for insurance coverage for contraception under the Affordable Care Act (“ACA”) violated a federal law protecting religious freedom. As noted in my previous entry, the contraception coverage requirement was challenged by corporations whose owners claimed that they run their businesses according to their faith-based beliefs. The parties to the case engaged in heated oral arguments before the Court in late March of this year. The Court’s ruling in favor of Hobby Lobby signifies an important shift in corporate rights. As Justice Ruth Bader Ginsburg asserted in the dissent, this ruling could apply to numerous commercial enterprises and countless laws. Questions abound as companies try to make sense of this sensationalized decision.

What does this ruling mean in plain English?

The court held that the requirement that the companies provide contraception coverage imposed a substantial burden on the companies’ religious liberties. Put simply, the ACA mandate hindered the companies’ religious freedom. This ruling extends the religious rights of corporations, classifying them as “persons” under the Religious Freedom Restoration Act (“RFRA”).

Does the ruling really apply to all corporations?

According to the majority decision, the ruling does not apply to all corporations. The opinion states that the decision only applies to closely held, for profit corporations run on religious principles. Justice Samuel Alito also emphasized that these types of corporations are not necessarily likely to prevail if they object to complying with other laws on religious grounds.

Why is this ruling relevant to corporations other than Hobby Lobby?

This decision of “startling breadth” may have opened the door to challenges from other corporations. Essentially, despite the limited scope of the ruling, nothing would stop similar corporations from arguing that other laws that burden their religious liberty are unconstitutional. These companies may then seek exemptions from the requirements of these laws. Prior to the decision, Hobby Lobby faced annual fines of hundreds of millions of dollars if it failed to comply with the ACA mandate.

What are the legal implications moving forward?

The Court will one day have to decide clearly whether publicly traded companies and other corporate forms are also protected under RFRA. The ACA mandate has been challenged in at least 50 other cases. Hobby Lobby Stores Inc. is a family owned chain of 500 craft stores with 13,000 employees. This large company made substantial, formal commitments to run the stores according to religious principles years prior to signing on to the lawsuit and winning before the high court. The question remains: will other large corporations try to jump on the proverbial Hobby Lobby bandwagon?

If you wish to view the full Supreme Court opinion, you may do so at the link here.