How to Respond to a Liability Insurer's Denial of Coverage
By Mark D. Mese
You purchased insurance thinking that if you are sued or subject to a demand for money or damages your insurance company will defend and indemnify you. Unfortunately, insurers deny many insureds requests for defense and indemnity. Consider the following actions if your insurer denies your request for defense and indemnity.
- If you have been served with a lawsuit, make sure that you retain a lawyer to defend the lawsuit. There is generally a very short time period between when you are served with a lawsuit and when a response is due. Failure to have a lawyer handle the lawsuit could lead to a quick judgment against you.
- Discuss the denial of coverage with your insurance broker or agent. The agent may be able to assist you in getting the insurer to reconsider its denial of coverage.
- If your agent is unsuccessful in rescinding the insurer’s denial of coverage, you should consider consulting with an attorney that specializes in insurance coverage and recovery for policy holders.
- The insurance coverage attorney will usually be able to review your insurance policy and the written demand or the lawsuit filed against you and provide an initial estimate of your chances of obtaining a defense and/or indemnity from your insurer. The amount of time and cost for an initial estimate will vary depending on the complexity of the claim and your policy(s).
- If you engage an insurance coverage attorney to assist in your demand for defense and indemnity, you have several strategic options to consider. a) The coverage attorney can stay behind the scenes and work with your agent to continue negotiations with your insurer.
- The decision on what to do and when, if your insurance company denies coverage can be complex. When and where to file a lawsuit for insurance coverage against your insurance company often requires consideration of a significant number of complex variables. To the extent the insurance coverage and lawsuit involves significant sums of money, hiring a policy holder insurance coverage attorney should be strongly considered. Insurance companies have insurance coverage specialists representing them who have specific knowledge. To the extent possible you want to be on an even playing field.
b) The coverage attorney can negotiate directly with your insurer.
c) File suit against the insurer in either the pending lawsuit against you or in a separate action.
Louisiana Fourth Circuit Offers Clarification on the Role of Pharmaceutical Labeling and Package Inserts in Medical Malpractice Litigation: Deviation from manufacturer dosage instructions is not ipso facto evidence of breach
The effect of a physician’s decision to deviate from the pharmaceutical company’s dosage instructions contained in a drug’s FDA approved package insert has been a recurring issue in medical malpractice litigation with many claimants contending that any deviation from the manufacturer’s instructions constitutes malpractice. In a recent case the Louisiana Fourth Circuit has now specifically rejected that theory.
In Deroche v. C.B. Fleet Company et al., the Fourth Circuit stated:
We specifically hold that a manufacturer’s labeling and package insert standing alone is insufficient to establish the prevailing standard of care required by La. R.S. 9:2794. Similarly we find that a physician’s medical decision to deviate from a manufacturer’s labeling also does not ipso facto establish a breach of the standard of care.
No. 2013-CA-0979, (La. App. 4th Cir. 12/18/2013), 2013 WL6923718.
Thus the Fourth Circuit has now confirmed that deviation from FDA approved labeling and dosage instructions does not necessarily equate with a breach of the standard of care and does not relieve plaintiff’s duty to provide expert medical testimony to establish the prevailing standard.
The Fourth Circuit opinion is well founded. By the FDA’s own admission, the FDA has never had authority to regulate the practice of medicine. While the labeling and package inserts for drugs and devices are heavily regulated by the Food and Drug Administration, the FDA has made it clear that, with respect to its role in medical practice, the package insert is informational only. 12 FDA Drug Bulletin 4-5 (1982) (cited in 59 Fed. Reg. 59,820 59,821) (Nov. 18, 1994).
The FDA has also informed the medical community that “once a [product] has been approved for marketing, a physician may prescribe it for uses or in treatment regimens or patient populations that are not included in approved labeling.” The FDA went on to state that: “unapproved” or more precisely “unlabeled” uses may be appropriate and rational in certain circumstances and may, in fact, reflect approaches ... that have been extensively reported in medical literature. 12 FDA Drug Bulletin 4-5 (1982) (cited in 59 Fed. Reg. 59,820 59,821) (Nov. 18, 1994)(emphasis added).
Thus the decision whether or not to use a drug or device for an off-label purpose or in a different manner than described in labeling is a matter of medical judgment which must be evaluated by the trier of fact with the benefit of expert medical testimony. Package inserts and manufacturer labeling will be evidentiary, but they should not be considered de facto evidence of standard of care.
Posted In Health Law , Medical Malpractice
Companies as Persons: The High Court Hears Arguments in the Hobby Lobby Case
By Edward H. Warner
Yesterday (March 25, 2014), the Supreme Court heard oral arguments in Sebelius v. Hobby Lobby Stores, Inc. (“Hobby Lobby”) and Conestoga Wood Specialties Corp. v. Sebelius (“Conestoga”), two consolidated cases which challenge requirements under the Affordable Care Act (“ACA”). Specifically, each case involves private companies that challenge the federal health care law’s mandate that employee health plans provide no-cost coverage for birth control products. Why do they challenge the mandate? Because the owners’ faith-based beliefs are in opposition. While ordinarily corporations are separate entities from their owners, these owners will confront that theory by asserting that their personal religious principles shape their businesses. The Court will have the difficult task of determining whether profit-making companies are “persons” entitled to First Amendment Protections and the right to exercise religious freedom under the Religious Freedom Restoration Act (“RFRA”).
Why is business structure relevant?
One factor that the Court will likely consider is the business corporate structure. The corporate form offers several advantages to owners, not the least of which is limited liability. Fundamental to owner’s limited liability is that a corporation remains a separate entity, with distinct rights and obligations from the owner. This separateness has resulted in at least two U.S. Circuit Courts of Appeals decisions stating that the separate corporate entity is not a “person” capable of religious exercise in the sense that RFRA intended. These decisions will make it hard for the company’s lawyer to argue that the owner’s religious beliefs and religious exercise is the same as that of the company’s.
How is the Court likely to rule?
There are many moving parts in the case; however, the Court’s ruling ultimately depends on whether it is willing to grant an exemption and extend religious rights to for-profit corporate entities. The Supreme Court has already extended free speech rights to corporations in its 2010 decision in Citizens United. The two current cases before the Court represent the federal circuit split on the religious rights issue. If the Court agrees with the original Hobby Lobby decision from the Tenth Circuit Court of Appeals, then the Court will hold that even profit-making businesses can act according to faith-based beliefs, and these beliefs may control enforcement of the birth control coverage mandate. If, on the other hand, the Court agrees with the Conestoga decision from the Third Circuit, First Amendment religious rights of the owners will have no bearing on the company’s compliance with the mandate. The latter holding would confirm the narrow view that when owners choose the corporate form for their business entity, they create an entity that stands apart from their personal beliefs and interests.
What are the legal implications of this ruling?
One thing is for certain, if the Court rules that these companies are exempt from the ACA’s contraceptive mandate, it will be a profound constitutional shift. A corporation will no longer just be a separate entity; it will be a “person,” with its own religious beliefs. Such a ruling would further extend the Court’s holding in Citizens United.
If you wish to listen to the Supreme Court oral arguments online, you may do so once they are posted at the link here.
Facebook Post Costs Ex-Employee $80K Settlement
A Florida court threw out an $80,000 settlement because of the plaintiff’s daughter’s Facebook post.
The father had sued his former employer, Gulliver Preparatory School, for age discrimination. The parties ultimately reached an agreement to settle the matter. However, after the settlement, the plaintiff’s daughter bragged to her 1,200 Facebook friends: "Mama and Papa Snay won the case against Gulliver," she wrote. "Gulliver is now officially paying for my vacation to Europe this summer.”
As reported by the Miami Herald, when the school learned about the post, it refused to pay, and an appellate court found that the post violated the terms of a confidential settlement agreement.
This case provides an extreme example of the dangers of social media in the context of litigation.
New parents have to make a number of adjustments to their lives. From dealing with diaper rash to sleep deprivation, they have a lot to deal with. But parenting duties are not limited to physical care of a child. There are numerous financial parenting tips that every new parent must consider. This article is intended to hit the high points on the list of financial and estate planning tasks that every new parent should consider.
1) Adjust Income Tax Withholdings.
The easiest and quickest way to get extra cash into a new parent’s hands is to adjust their income tax withholdings as soon as possible. A new child should allow a new dependency withholding exemption, assuming the child qualifies as a dependent of the parent. A taxpayer qualifies for a dependency exemption in the year of the dependant’s birth and for so long as the dependent continues to satisfy the definition of a “dependant” under Internal Revenue Code (“IRC”) § 152. The additional dependency exemption should work to reduce a parent’s required tax withholdings from his or her paycheck.
The parent should adjust his or her withholding certificate as soon as possible to take advantage of the new withholding exemption. The IRC allows for almost immediate adjustment to an employee’s withholding certificate. The IRC even allows prospective adjustments to withholding calculations if furnished before December 1 of the prior year under IRC § 3402(f)(2)(C). The sooner a parent’s withholding certificate is adjusted, the sooner his or her take home pay gets a much needed bump.
2) Identify Applicable Tax Breaks.
The IRS grants taxpayers several child related tax breaks, in addition to the dependency exemption under IRC § 151. Every parent should examine these tax benefits in calculating their income tax liability.
First, parents are granted a child tax credit of $1,000 under IRC § 24. The child must be a qualifying child under IRC § 152(c), but this definition should cover almost all children living with the parent and less than seventeen years old. The credit is allowable against the alternative minimum tax, but begins to phase out for joint return filers making more than $110,000. For single parents, the phase out starts at $75,000. The phase out is complete at $130,000 for joint filers and $95,000 for individuals. In limited cases, the credit can be refundable under IRC § 24(d).
Parents with less than $15,000 in adjusted gross income are entitled to a tax credit for amounts paid to care for children, if such expenses allow the parent(s) to continue gainful employment. This credit is equal to thirty-five percent of the expenses incurred in caring for a child, up to a maximum amount of $3,000 for one child or $6,000 for two or more children.
Adoptive parents of special needs children also have a special tax break designed solely for them. Under IRC § 23, adoptive parents of children who are less than eighteen years old and physically or mentally incapable of caring for themselves are entitled to a tax credit for adoption expenses of up to $10,000. This credit is subject to a phase out for high earners.
3) Review or Create an Estate Plan.
Most new parents don’t have an estate plan because they’ve never thought they needed one. In a sense they are right. Louisiana law generally provides a spouse substantial rights in the community property of a decedent during the surviving spouse’s lifetime if the couple has no children. For single people, property usually stays within their family at death. But, when children arrive, a will is a must.>> Continue Reading Posted In Estate Planning, Tax, and Probate Law , Louisiana In General
EPA Clarifies Underground Injection Control Requirements Under Safe Drinking Water Act for Fracking Operations
Hydraulic fracturing involves injection of large volumes of fluids at high pressure into a well to create fractures in the source rock formation. This technique was designed to improve oil and gas production. Hydraulic fluids that are used in this technique are a mixture of water, chemical additives and proppants (small spheroids of solid material). The types of concentrations of chemical additives and proppants used in hydraulic fracturing fluids vary depending on site-specific conditions and are usually tailored to needs of the project. In some instances, operators will use diesel fuels as an additive. Diesel fuels may contain a number of chemicals of concern including benzene, toluene, ethylbenzene and xylene compounds that are highly mobile in groundwater.
Underground injection of fluids through a well is subject to the requirements of the Safe Drinking Water Act (SDWA). In the 2005 Energy Policy Act, Congress revised the SDWA definition of “underground injection” to specifically exclude hydraulic fracturing fluids from the Underground Injection Control (UIC) program, except in instances where diesel fuels are used as an additive. [SDWA section 1421(d)(1)(B)]. Thus, owners or operators who inject diesel fuels for hydraulic fracturing related to oil and gas operations must first obtain a UIC permit before the injection begins.
On February 12, 2014, the United States Environmental Protection Agency (“EPA”) released an interpretive memorandum to clarify the UIC program requirements under the SDWA, for underground injection of diesel fuels in hydraulic fracturing for oil and gas extraction. The agency has also released technical guidance containing recommendations for EPA permit writers to consider in implementing the UIC requirements.
According to the Louisiana Department of Natural Resources, there are no known operations in Louisiana that inject diesel fuels for hydraulic fracturing at this time. And although the technical guidance was developed specifically for hydraulic fracturing where diesel fuels are used, many of the guidance’s recommended practices are consistent with best practices for hydraulic fracturing in general, including those found in state regulations and model guidelines for hydraulic fracturing developed by industry and stakeholders.
The EPA’s stated objectives are:
- To explain that any owner or operator who injects diesel fuels in hydraulic fracturing for oil or gas extraction must obtain a UIC Class II permit before injection.
- To explain the agency’s interpretation of the SDWA statutory term “diesel fuels” for permitting purposes.
- To describe existing UIC Class II program requirements for permitting underground injection of diesel fuels in hydraulic fracturing and to provide recommendations for the EPA’s permit writers to consider in implementing these requirements to ensure protection of underground sources of drinking water.
The guideline provides an overview of existing program requirements and technical recommendations pertaining to the following aspects of Diesel Fuels hydraulic fracturing permitting:
- Permit application submission and review process
- Information submitted with the permit application
- Wells authorized under permits
- Permit duration and well closure
- Area of review
- Well construction and mechanical integrity testing
- Well operations, monitoring and reporting
- Financial responsibility
- Public notification and environmental justice.
The interpretive memorandum and technical guidance documents can be found on the EPA’s website here.
OIG Allows Medigap Policy to Provide Premium Credits for Network Hospital Patients
In its second advisory opinion of the year, issued February 12, 2014, the U.S. Department of Health & Human Services, Office of Inspector General (OIG) determined that it would not impose sanctions pursuant to the anti-kickback statute or civil monetary penalty law on a proposed arrangement involving a licensed offeror of Medicare supplemental health insurance (Medigap) policies, preferred provider organizations (PPOs), and hospitals participating in the PPO networks. Under the proposed arrangement, network hospitals would waive the Medigap policyholders’ inpatient deductibles, which would otherwise have been paid by the Medicap insurer. Each time this discount was received, the Medigap insurer would pay the corresponding PPO an administrative fee and would provide the patient a $100 premium credit. The insurer would market the credit to its existing and potential policyholders and would identify the participating network hospitals.
The OIG began its analysis of the proposed arrangement under the anti-kickback statute. Although the arrangement failed to qualify for either the waivers of beneficiary coinsurance and deductible amounts safe harbor or the reduced health plan premium amounts safe harbor, the OIG found that the proposed arrangement presented no more than a minimal risk of fraud and abuse under the anti-kickback statute due to the following factors:
(a) The hospital waivers would not increase or affect the Medicare Part A payments for inpatient services, which are fixed and are unaffected by beneficiary cost-sharing;
(b) The arrangement was unlikely to increase utilization because the amount waived by the hospitals was owed by the insurer, not the patient;
(c) The arrangement would not adversely affect hospital competition because participating in the PPO networks would be open to any Medicare certified, accredited hospital that meets state law requirements;
(d) The arrangement would not affect medical judgment because policyholders would not incur any additional cost based on their hospital selection and physicians and surgeons would not receive any remuneration; and
(e) The policyholders would be informed that they can choose any hospital without incurring any penalty or increased cost.
Because the $100 premium credits served as an incentive for policyholders to select an in networkhospital, the OIG also analyzed the arrangement under the civil monetary penalty provision prohibiting beneficiary inducements. Finding that the premium credits were substantially similar in purpose and effect to differentials in coinsurance and deductible amounts, which are excepted from the definition of remuneration, the OIG concluded that the arrangement would pose a low risk of fraud and abuse. Additionally, the OIG noted that the arrangement had the potential to lower costs for all Medigap policyholders because it did not increase costs for policyholders choosing out of network hospitals and the savings would be reported to state-insurance setting regulators.
Posted In Health Law
President Obama Signs Executive Order Increasing the Federal Contractor Minimum Wage
On February 12, 2014, President Obama followed up on comments made during his State of the Union address and signed an Executive Order increasing the minimum wage for employees of federal contractors. The Order, which increases the minimum wage from $7.25 to $10.10 per hour, covers all employees who perform services or construction work under new contracts, subcontracts, and replacements for existing contracts. The effective date of the Order is January 1, 2015, and mandatory application will begin with solicitations for covered contracts issued on or after the effective date. However, the Order also “strongly encourages” all federal agencies “to take all steps that are reasonable and legally permissible” to comply with the Order prior to the effective date.
The minimum wage is set at $10.10 per hour for 2015 and will thereafter be adjusted by the U.S. Secretary of Labor to reflect inflation. Tipped employees of federal contractors and subcontractors must receive a minimum of $4.90 per hour and a guaranteed $10.10 per hour through the combination of tips and wages. The Order also requires covered employers to increase to $10.10 per hour the minimum wage of disabled individuals who, pursuant to a special certificate program under the Fair Labor Standards Act, receive less pay because of a disability that affects their productivity.
While the White House estimates that the Order will affect hundreds of thousands of people who work under contracts with the federal government, industry groups have noted that existing legislation already requires most federal contractors to pay a prevailing or negotiated wage that is often higher than $10.10 per hour. The Order is still seen as a major step towards an increase of the federal minimum wage and may very well put pressure on private employers. Legislation has already been introduced in both houses of the U.S. Congress to increase the federal minimum wage from $7.25 to $10.10 per hour over the next several years and to tie future increases to inflation.
The Order instructs the U.S. Secretary of Labor to issue more detailed regulations concerning the new minimum wage requirements by no later than October 1, 2014. In the meantime, employers who are parties to federal contracts or subcontracts should begin preparing for increased labor costs beginning in January of 2015.Posted In Business and Corporate , Construction Law , Labor and Employment Law
For most startups and emerging companies, fundraising continues to be challenging. With the passage of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), Congress tasked the Securities and Exchange Commission (the “SEC”) with revamping federal securities laws to make fundraising more accessible for small companies in attempt to help create jobs. Recently, the SEC has implemented and proposed new and revised securities laws to achieve this mandate. While not all of these rule changes make life easier for small companies seeking to raise capital, some of the rules do potentially provide new fundraising alternatives for small companies. Companies and investors should also be aware that certain new rules impact established practices and, predictably, there are new pitfalls to avoid. This post briefly introduces some of the recent developments in unregistered offerings and provides some key takeaways for companies and investors to consider.
Background: The JOBS Act
As a reference point, the JOBS Act consists of the following five parts or Titles: Title I is the so-called “on-ramp” to the initial public offering (“IPO”) process for emerging growth companies that introduced certain relaxed disclosure and audit requirements (this topic is not covered in this post); Title II tasked the SEC to promulgate rules to lift the ban on general solicitation in effect under existing private placement exemptions; Title III created an exemption for crowdfunding offerings; Title IV tasked the SEC with improving the Regulation A offering exemption; and Title V increased the limit on the number of shareholders a company may have before it triggers public reporting requirements.
Traditional Regulation D Private Placements
Companies seeking to raise capital through the offer and sale of securities must either register the securities offered with the SEC under the Securities Act of 1933 (the “Securities Act”) or rely on an exemption from registration. Historically, when small companies raised funds from private investors in unregistered offerings, such offerings were generally conducted as private placements exempt from registration under Rule 506 of Regulation D under the Securities Act, which allows an unlimited amount of capital to be raised from an unlimited number of accredited investors (and up to 35 sophisticated non-accredited investors).(1) One of the requirements of former Rule 506, now revised Rule 506(b), is that a company cannot engage in general solicitation or advertising in connection with the offering.>> Continue Reading Posted In Business and Corporate
IRS Gives Some (But Not All) Employers More Time To Comply With ACA...With Conditions
On February 10, 2014, the Treasury Department released final regulations on the employer mandate provisions under the Affordable Care Act (a.k.a. Obamacare). While the final rules retain much of what was outlined in the proposed regulations issued in December 2012, the most significant news is the additional one-year delay for certain covered employers with respect to the potential penalties (the “no offer penalty” and/or the “unaffordability / lack of minimum value penalty”).
Here are some of the major takeaways:
- Applicable large employers that have fewer than 100 full-time employees (including full-time equivalents) in 2014 will not be subject to either employer penalty in 2015 if they meet certain conditions. One such condition is that the employer is prohibited from reducing the size of its workforce, or the overall hours of service of its employees, in 2014 to qualify for this transition relief. There are also limitations on changes the company can make to its previously offered group health coverage for the rest of 2014.
- All covered employers can avoid the “no offer” penalty in 2015 if they offer employer-sponsored coverage to at least 70% of their full-time employees in each calendar month in 2015 (and any calendar month during the 2015 plan year that extends into 2016 for non-calendar year plans). Beginning in 2016, the employer must offer such coverage to at least 95% of its full-time employees to avoid the “no offer” penalty. Notwithstanding the limited transition relief under this paragraph, the company still would be subject to the individual unaffordability / lack of minimum value penalty in 2015 if it has one or more full-time employees receive premium assistance on the exchange because either they were one of the ones not eligible for coverage, or such coverage was not affordable to them due to their household income, or the coverage did not provide minimum value.
- The final rules contain additional transitional relief for non-calendar year plans. Most employers with non-calendar year plans now have until the start of their 2015 plan year, rather than January 1, 2015, to bring their plans into compliance to avoid assessment of the employer penalties, and the conditions for this relief are expanded to include more employers.
- For employers who have not previously offered dependent coverage, there is also a delay in the requirement to offer coverage for dependent children to 2016 as long as the employer is taking steps to arrange for such coverage to begin in 2016.
Applicable large employers with 100 or more full-time employees or FTEs who are assessed a “no offer” penalty in 2015 will get the benefit of a reduction in the monthly penalty for 2015 and any applicable transition relief period into 2016, in that the payment is calculated by reducing the total number full-time employees by 80 (instead of just 30) multiplied by 1/12 of $2,000. If the employer is a member of a controlled group, the company will not get the entire additional 50 full-time employee deductible but rather the member’s allocable share of 80.
The final rules also contain exceptions for various categories of employees such as volunteers, adjunct faculty and seasonal employees, provide further details and guidance on the affordability safe harbors and the safe harbor for determining full-time employee status, and significantly shorten the length of the break-in-service required before a returning employee may be treated as a new hire for purposes of group health coverage.
In the coming months the IRS is expected to issue additional guidance about the employer reporting requirements, among other issues.
To read the full version of the IRS’ final rules, click here.