Under the Patient Protection and Affordable Care Act, all states are required to contract with recovery audit contractors (RACs) by December 31, 2010. This program is being expanded to Medicaid, as well as to Medicare Parts C and D. Federal regulations to carry out the expanded RAC program will be created by the Secretary of Health and Human Services.

RACs have been used since 2006 (following a three year demonstration project) to conduct audits of Medicare providers to determine whether an overpayment was made in Medicare Parts A and B claims. RACs typically review a small sample of claims from a health care provider for a specific review period and calculate an error rate, based on the RAC’s determination as to whether claims were improperly paid.
 

Medicaid providers will now also be subject to these audits to see if an overpayment was made in their Medicaid billing. States must develop an appeals process for the provider to challenge the RAC audit findings and the overpayment amount. For Medicare providers, the appeal process consists of two levels of additional review before an administrative law hearing is held. The hearing is before an administrative law judge, and parties can present documentary evidence and witnesses. Additional appeal options are available, if necessary or desired, after the administrative hearing. Presumably, the states will set up a similar appeals process for Medicaid providers subjected to RAC audits.

During the 2010 Session, the Louisiana Legislature enacted Act 986 to amend La. R.S. 30:2022, the state law concerning the Louisiana Department of Environmental Quality’s (LDEQ) permit process. The legislation began as House Bill 1169 and was authored by Representative Karen St. Germain. Governor Bobby Jindal signed the legislation on July 7, 2010, as Act 986. The Act became effective that same day.

The Act enacted La. R.S. 30:2022(D), which requires greater transparency from LDEQ regarding changes made to permits, renewals, extensions, and modifications. First, Act 986 requires that, if requested by a permit applicant, LDEQ provide the applicant with a written summary of the specific changes to the existing permit whenever LDEQ prepares a draft database permit for the renewal, extension, or substantial permit modification of an existing hazardous waste permit, solid waste permit, Louisiana Pollutant Discharge Elimination System (LPDES) permit, or air quality permit. The database is LDEQ’s Tools for Environmental Management and Protection Organization (TEMPO) database system. Previously, LDEQ was under no obligation to inform a permit applicant of each and every change that had been made in the renewal, extension, or substantial modification of an existing permit.
 

Finally, for those minor permit modifications or revisions that do not require a draft permit and public notice, if requested by the permit applicant, Act 986 requires that LDEQ provide the applicant with a “reasonable opportunity” to review the proposed language of the modification or revision prior to the issuance of the final modification or revision. If the minor permit modifications or revisions were not requested by the permit applicant, then LDEQ either shall provide the applicant with a “reasonable opportunity” to review the proposed language of the permit modification or revision prior to issuance of the final modification or revision or shall reopen the permit, in accordance with applicable law.

While Act 986 became effective on July 7, 2010, it is unclear as to how the Act will impact the way in which LDEQ handles the permits, renewals, extensions, and modifications that were already underway at the time the Act was enacted. The LDEQ could follow the terms of this Act for those permit actions before it develops regulations to implement this legislation. Regardless, it is our understanding that the LDEQ is currently preparing a draft regulation to implement the Act.

For further information, contact Maureen N. Harbourt, M. Dwayne Johnson, Kyle B. Beall, or Tokesha M. Collins.
 

On July 13, 2010, the Centers for Medicare and Medicaid Services (“CMS”) published a proposed rule that would require physicians to disclose to their patient(s), at the time of ordering a CT, MRI or PET Scan service that may be performed in the physician’s office, the name, address, telephone number and distance from the physician’s office of ten (10) competing suppliers of the CT, MRI or PET Scan service where the patient may wish to have the test performed. This proposed rule implements a provision in the Patient Protection and Affordable Case Act (the “PPACA” or “Health Care Reform Legislation”) that mandates the disclosure at the time the test is ordered.

Although the proposed rule is an improvement over the Health Care Reform Legislation’s language, it should not be finalized as proposed. This is because it creates potentially unintended burdens, both operational and administrative, that physicians will incur in order to comply with it. For example, the rule, as proposed, would require that each time a physician recommends a CT, MRI, or PET Scan, the physician must, at the time of the recommendation, notify the patient of the identity of the competing suppliers and must have the patient sign the notice. The signed notice must be kept in the patient’s chart. There is no exception for orders communicated to a patient by telephone or for emergencies.

Additionally, the rule, as proposed, may result in the unintended consequence of actually increasing the number of CT, MRI and/or PET Scans that physicians who have these services in-office may order.

This proposed rule, and the PPACA provision, itself, are apparently intended to reduce utilization of imaging services under the Stark law exception for in-office ancillary services. The Stark law is a civil law that prohibits the referral by a physician of a Medicare (and, in some instances, Medicaid) patient for the performance of a “designated health service”, including imaging services such as CT, MRI and PET Scans, if the physician has a “financial relationship” with the designated health service provider, unless a specific Stark exception applies. A financial relationship can be an ownership or investment interest or a compensation arrangement.

One Stark exception is the in-office ancillary service exception, which permits a physician, whether a solo practitioner or in a group practice, to “refer” a Medicare patient to the physician’s in-office radiology services, if certain requirements are met. Although such an arrangement is legally permissible, federal regulators have commented on what they believe may be a potential for overuse of the in-office ancillary service exception in the case of imaging services. Certain studies have reported an increase in physician ordering of imaging services when the ordering physician has a financial interest in the provision of the imaging service. This raises the question of whether tests that are ordered for Medicare patients are medically necessary, i.e., whether they are ordered only when they meet Medicare’s “reasonable and necessary” standard for reimbursement.

While one can understand the need to ensure that only medically necessary testing is ordered, this proposed disclosure requirement likely will not have what appears to be the intended effect – a reduction in the number of tests ordered, and, therefore, the number performed. In fact, it may increase the number of procedures ordered. Language in the proposed rule suggests that CMS believes physicians may try to neutralize the intended effect of the rule on their in-office utilization of diagnostic imaging. For example, the proposed rule mentions a concern that the 25-mile radius approach may not be the best one, as physicians in large metropolitan areas may identify suppliers located in the 25-mile “edge,” thus making it more likely that the patient will not choose a competing service. If CMS is concerned that some physicians will manipulate the rule to avoid the loss of referrals, then CMS should consider whether some physicians, as an alternative to losing some in-office referrals, might simply increase the number of orders for imaging services to offset any potential lost referrals resulting from the disclosure of competing services.

CMS also does not take into account the fact that sometimes the patient can have the imaging procedure performed at the ordering physician’s office on the same date the service is ordered. In such a circumstance, and in particular where the patient’s medical condition warrants an expeditious performance of the test, providing a patient a list of other suppliers may actually serve to delay needed care to the detriment of the patient. CMS fails to take into account the benefits of expeditious continuity of care.

Additionally, the proposed rule, as drafted, would create a significant burden on physician practices that is not necessary to achieve the goal of the Health Care Reform Legislation or the proposed rule. If the goal is to achieve a lesser utilization of imaging services, a disclosure requirement, at the time of referral will not help to achieve that goal. This is so because by the time the physician has made the decision to order the MRI, CT or PET Scan and has notified the patient of the order, the patient’s choice of where to have the service performed is not likely to impact whether to have the service performed. In other words, the goal of “controlling” utilization is inconsistent with the proposed means of achieving the goal.

Finally, the proposed rule offers no accommodation for telephone orders. In some cases, a physician has ordered other diagnostic testing, perhaps clinical laboratory procedures, and is awaiting those test results before deciding whether additional testing is needed. In such cases, receipt of the laboratory test results may lead to a telephone call to the patient to recommend imaging as a needed diagnostic tool. To meet the requirement of the proposed rule, the physician would have to either: (1) have the patient return to the physician’s office to receive the referral and sign the disclosure statement, resulting in patient inconvenience, delay in care and an unnecessary office visit; or (2) mail the patient the disclosure statement and follow-up the receipt of the sign statement, which, again, would delay the provision of care, or, at a minimum, significantly burden the physician with the need to conduct continual follow-up until the signed document is returned (if it is ever returned). Neither alternative is desirable.

An alternative mechanism that CMS could adopt to satisfy the Legislation’s requirement would be to require physicians to utilize a blanket notice requirement, similar to the Notice of Privacy Practices that the Health Insurance Portability and Accountability Act of 1966 (“HIPAA”) and the HIPAA privacy regulations require a health care provider to give to a patient on the initial, new patient encounter. The HIPAA requirements also include posting the notice conspicuously in the health care provider’s practice. A patient is asked to sign a written acknowledgment of having received the Notice on the initial, new patient visit. This same type of initial encounter notice and conspicuous posting would serve the intended goal of the Health Care Reform Legislation and the proposed rule in a more effective way than the means identified in the proposed rule, which is to provide the patient notice over and over, on a visit-by-visit basis each time a referral is made. In fact, if the HIPAA-type approach were adopted, patients would receive notice of the right to choose his or her imaging provider well in advance of any testing being performed on any particular occasion, which is the government’s goal. The HIPAA-type advance notice would meet the Legislation’s and CMS’ goal of assisting patients in making informed choices about their health care.
 

Judges in East Baton Rouge and St. Tammany Parish have issued two of the earliest rulings on the impact of the Louisiana New Home Warranty Act on claims by homeowners against contractors for damages related to Chinese Drywall. Both state district court judges have found that the Louisiana New Home Warranty Act is the exclusive remedy as between a builder and a homeowner for damages caused by Chinese Drywall. Both judges have also ruled that the Chinese Drywall incorporated into homes in Louisiana is not a structural component of the home and is thus subject to a one year warranty period.

In both of the district court cases, the courts dismissed the plaintiff’s case because the suits against the contractors were brought more than one year after the homes were occupied by the original owners.

The rulings by the district court judges should have no impact on homeowner claims against suppliers and manufacturers of Chinese Drywall as the Louisiana New Home Warranty Act only applies to the relationship and rights between a home builder and a home owner in Louisiana.
 

In Bollinger Shipyards, Inc. v. Director, Office of Worker’s Compensation Programs, U.S. Dept. of Labor, (5th Cir. 2010) the United States Fifth Circuit upheld the award of workers compensation benefits to an undocumented immigrant worker who was injured on the job as a pipefitter.

The Bollinger plaintiff, Jorge Rodriguez, fell and allegedly injured himself while welding for his employer, Bollinger Shipyards, Inc.  At the time of his alleged injury, Rodriguez had been working for Bollinger for approximately eight months, having initially obtained employment by falsely holding himself out as a United States citizen.  Rodriguez presented Bollinger with a false Social Security Card.  Bollinger initially paid Rodriguez temporary disability benefits and reimbursed him for a portion of his medical bills.
 

The primary question on appeal was whether an undocumented immigrant could be eligible for benefits under the LHWCA.  Bollinger argued that Rodriguez’s injury caused him no loss of wage earning capacity because he had no legal wage earning capacity at the time he was injured.  As such, Bollinger argued that Rodriguez was per se ineligible under the Act.  Bollinger further argued that the Benefit Review Board’s ruling undermined the Congressional policies embedded in the Immigration Reform and Control Act of 1986.  Bollinger relied on a line of Supreme Court cases, including Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002), which made the distinction as to whether wages could be paid legally in declining to award some types of relief under the NLRA in order to avoid a conflict with the immigration laws, which prohibit the employment of aliens who enter or remain in the country illegally and which also criminalizes the use of false documentation to obtain work.

The Director, OWCP and several amici curiae filed briefs in support of Rodriguez’s eligibility for benefits under the LHWCA, arguing that failing to require workers’ compensation for immigrant workers encourages employers to hire undocumented workers.  The Fifth Circuit reviewed the statutory language of the LHWCA and concluded that the statute provides coverage to undocumented immigrants.  The Court found the precise language of §909(g) persuasive.  Section 909 (g) states that “[c]ompensation under the [the LHWCA] to aliens not residents (or about to become nonresidents) of the United States or Canada shall be the same in amount as provided for residents.”  The Fifth Circuit noted that other courts, have concluded that the unmodified term “alien” encompasses both documented and undocumented immigrants.  The court noted that compensation under the LHWCA is a non-discretionary statutory remedy.  Unlike the NLRA, the LHWCA is a substitute for tort law, abrogating fault of either the employer or the employee.  Further, the court held that awarding death or disability benefits post hoc to an undocumented immigrant under the LHWCA does not “unduly trench upon” the IRCA, because Congress chose to include a provision in the LHWCA expressly authorizing the award of benefits.

Finally, the court held that Fifth Circuit precedent has been that undocumented immigrants are eligible under the LHWCA, citing Hernandez v. M/V Rajaan, 841 F.2d 582, amended after rehearing, 848 F.2d 498 (5th Cir. 1988), the court held that Rodriguez was entitled to benefits because Bollinger failed to provide any evidence that Rodriguez was “about to be deported or would surely be deported.”  The court also found persuasive the D.C. Circuit’s opinion in Rivera v. United Masonry, Inc., 948 F.2d 774, 775 (D.C. Cir. 1991), in which the court declined to take into consideration an immigrants undocumented status when determining his eligibility for benefits.

Bollinger filed a petition for review which was denied in all respects. (5th Cir. April 22, 2010).  Although the Fifth Circuit seems to have made it clear that undocumented immigrant will remain eligible for benefits under the LHWCA, the court left open the possibility that an alien who was about to be deported or was sure to be deported might not be eligible for future lost wage benefits calculated as they would be earned in the U.S.
 

In Solana v. GSF Development Driller I, et al., 587 F.3d 266 (5th Cir. 2009), the United States Fifth Circuit reiterated the longstanding rule that generally, a seaman belonging to a vessel in peril cannot claim a salvage compensation for saving his vessel.

The facts in Solana are quite interesting.  As Hurricane Katrina approached the Gulf Coast, Global Santa Fe (GSF) evacuated its jack-up and anchored rigs in the Gulf of Mexico, which included the Development Driller I (DDI), a $350 million dollar semi-submersible drilling rig. The DDI’s power was shut off and its crew was evacuated.  Solana, a 20 year GSF employee and Offshore Installation Manager (OIM) of the DDI, and Lally, a ballast control operator and senior dynamic positioning operator, were among those employees who were evacuated from the rig.
 

Solana and Lally later filed suit seeking an award of pure salvage because they were part of the team that ultimately salvaged the vessel.  Solana and Lally likely envisioned an enormous “payday” as the DDI was worth more than 350 million dollars.  GSF moved for Summary Judgment asserting the longstanding rule that crew members are not entitled to a salvage award for assistance rendered to their own vessel.  Solana and Lally countered with the argument that in certain circumstances, crew members can be salvors.  Specifically, Plaintiffs cited existing jurisprudence holding that extraordinary events may occur in which a seaman’s connection may be dissolved de facto, or by operation of law, or they may exceed their proper duty, in which case they may be permitted to assert a claim as salvors.  The Fifth Circuit disagreed holding that the rule barring a crew member from a salvage award is longstanding and rooted in a crew member’s duty to save both ship and cargo.  Obviously, it is unwise to tempt a crew member to let their ship and cargo slip into a position of danger in order to claim a salvage award.

Ultimately, the Fifth Circuit held that Solana and Lally did not volunteer service to the DDI when it was in distress as volunteers within the parameters of the law of salvage.  Instead, Solana and Lally had been asked by GSF to board the DDI following Katrina, and they expressly agreed to do so.  Moreover, they expected to be compensated by GSF for their efforts to stabilize the DDI after it was damaged by Katrina regardless of whether those efforts were successful.  A binding agreement to pay for salvage services irrespective of the success of the enterprise will defeat a claim for pure salvage.  As such, Solana and Lally’s claims for pure salvage were dismissed.
 

It is a fairly common practice for individuals purchasing pleasure yachts to take calculated steps to minimize sales taxes on their purchases. In fact, a simple “Google” search on the subject reveals many websites offering free advice on this issue. One of the tactics suggested by several websites seems fairly simple: instead of the individual purchasing the yacht, the individual forms a corporation, and the corporation purchases the yacht.

In Kelly v. Porter, Inc., 687 F. Supp. 2d 632 (E.D. La. 2010), the Eastern District of Louisiana made it clear that individuals who purchase recreational vessels through corporate entities cannot recover for any emotional distress or loss of enjoyment that the individual LLC member sustains when the vessel is damaged. The Kelly plaintiff wished to purchase a yacht for his own personal use. In an attempt to minimize the sales tax on that purchase, the Kelly plaintiff formed a new limited liability company (LLC) and named himself the sole member. Although the yacht was titled in the name of the LLC, the Kelly plaintiff considered himself to be the “true” owner of the yacht.

Shortly after it was purchased, the yacht was extensively damaged when it took on water while docked in its slip. The Kelly plaintiff and the LLC filed suit against the defendants alleging that they sustained “emotional damages” and “loss of enjoyment” due to the yacht being damaged. In response, the defendants filed a motion for summary judgment seeking to have all of the claims of the individual plaintiff dismissed for lack of standing. The defendants cited La. R.S. 12:1329, which states that the members of a LLC do not have an ownership interest in property owned by the LLC. Although the Kelly plaintiff attempted to claim that he was the “equitable” owner of the yacht, the Court disagreed and dismissed all of his claims.

Additionally, the defendants sought to have the LLC’s claims for “emotional damages” and “loss of enjoyment” (i.e., “non-pecuniary damages”) dismissed as well. The Court dismissed those claims, citing a litany of cases holding that corporations “cannot recover non-pecuniary damages such as loss of enjoyment or emotional damages.”

This decision makes it clear the Courts will not allow would-be yacht purchasers to “have it both ways.” Therefore, the author suggests that individuals considering purchasing a yacht should carefully consider all of the consequences of purchasing a yacht through an LLC and make a well-informed decision.
 

The July 20, 2010 Louisiana Register contained a notice from the Office of Conservation, Louisiana Department of Natural Resources that purported to promulgate rules amending Statewide Order 29-B to add a new Chapter 8 on procedures for evaluation and remediation of groundwater at E&P sites. Conservation’s Web site on July 20, 2010 contained a “final” version of the SERP Manual that was part of the proposed rules.  In a memorandum dated July 20, 2010 sent to interested parties, the Commissioner of Conservation said the July 20 notice on these proposed rules had been “unintentionally and incorrectly published” in the Louisiana Register as a final rule.  The memorandum states that Conservation does not consider the proposed rules “to be final or in effect at this time.”  Look for future information on these proposed rules.

A law passed by the Legislature and signed by Governor Bobby Jindal (Act 945) requires all bidders for public works contracts to certify that they have not entered a plea of either guilty or nolo contendre to certain crimes. Each bidder for public works contracts must certify in writing that they have not pleaded guilty or nolo contendre to: (1) public bribery (La. Rev. Stat. 14:118); (2) corrupt influencing (La. Rev. Stat. 14:120); (3) extortion (La. Rev. Stat. 14:66); or (4) money laundering (La. Rev. Stat. 14:230).

If evidence substantiates that a false attestation has been made and the project must be readvertised or the contract cancelled, the awarded entity making the false attestation shall be responsible to the public entity for the costs of rebidding, additional costs due to increased costs of bids, and any and all delay costs due to the rebid or cancellation of the contract.
 

A new law (Act 868) passed by the Legislature and signed by Governor Bobby Jindal on July 2, 2010 requires contractors who are awarded no-bid contracts with state and local entities, or $10,000-plus bid contracts with local entities, to disclose all commissions and fees in writing.

If the fee sharing changes, a new affidavit reflecting the changes is required and must be recorded by the contractor in the public record. If the recorded affidavit is determined to be incorrect, then the contract becomes null, and all payment of the commission, fee, or other consideration shall be rebated to the state or local entity that entered into the contract.
 

A new Louisiana law requires non-resident/out-of-state contractors to provide additional information before a building permit can be issued. The new law, amending La. Rev. Stat. 37:2171.2 (Act No. 67), has been signed by the governor.

It requires a non-resident commercial, residential, or home improvement contractor to provide (1) its federal tax payer identification number to the local building permit official and (2) proof of registration to do business in Louisiana before a building permit can be issued.
 

In Hogg v. Chevron U.S.A. Inc., Docket No. 09-CC-2635 (see opinion here), a case handled by Kean Miller attorneys, Leonard L. Kilgore, III and Richard D. McConnell, Jr., the Louisiana Supreme Court reversed the trial court’s denial of a motion for summary judgment based on a prescription (statute of limitations) defense.  In a 5-2 decision, the Louisiana Supreme Court clarified several issues pertinent to prescription in tort cases, in particular to cases involving allegations of environmental contamination of immovable (real) property. The Court addressed the following issues:

1.               What constitutes “actual” and/or “constructive” knowledge of plaintiffs sufficient to commence the running of the applicable prescriptive period for torts under La. Civil Code articles 3492 and 3493;

2.               What constitutes a continuing tort; and

3.               Does the alleged failure to remediate environmental damage constitutes a distinct, continuing tort?

The Court held that letters from the Louisiana Department of Environmental Quality (LDEQ) received by the landowners several years prior to filing suit, advising the landowners of the potential for underground migration of gasoline constituents from a former, leaking underground storage tank (UST) located on nearby property, were sufficient to provide the landowners with knowledge of the potential claim within the meaning of La. Civil Code Article 3493. Article 3493 provides:

“When damage is caused to immoveable property, the one year prescription commences to run from the day the owner of the immoveable acquired, or should have acquired, knowledge of the damages.”

Relying on its previous decision in Crump v. Sabine River Authority, 98-2326 (La. 6/29/99), 737 So.2d 720, the Court also held that the duty to remediate property contamination does not constitute a continuing wrong that suspends prescription.  The Court noted that the initial wrong that caused the plaintiffs’ damages was the leaking underground storage tank system, not the failure to remediate the contamination.

It is worth noting that the plaintiffs were not seeking damages for remediation. Instead, the plaintiffs were seeking damages for diminution in the value of the property. The property is being remediated under LDEQ’s UST program.

What Is The Connection?

Kean Miller Connection is a two-day law school preparatory program for college juniors and seniors from groups that are traditionally underrepresented in area law schools.  The goal is to “connect” students with information helpful to making the decision to attend law school and become a lawyer.  Lawyers from Kean Miller, the Greater Baton Rouge Region’s largest law firm, along with other faculty, provide an intense overview of the law school experience.  The program provides information and guidance on law school admission standards, insight into opportunities in the legal field, speakers from all facets of the legal profession, financial aid information and general information designed to encourage minorities to enter the profession.

When Is It?

Now in its fourth year, the annual Kean Miller Connection will be held on Thursday, July 22 through Friday, July 23, 2010 in Baton Rouge in the Kean Miller Conference Center (301 Main Street, 18th Floor).

How Does One Apply?

Applications can be found on the Kean Miller Web site here. 

Are There Eligibility Requirements?

Yes. Applicants must be members of a group traditionally underrepresented in law school and the law practice and maintain a minimum GPA of 3.0.  Applicants must have completed at least 45 college credits and must be a Louisiana resident.   Applications must be received no later than July 9, 2010.

Who Can I Contact?

Linda Perez Clark, Partner, Kean Miller, 225.387.0999 or linda.clark@keanmiller.com
 

On April 15, 2010, President Barack Obama issued a memorandum to the U.S. Department of Health and Human Services ("HHS") calling for the initiation of rulemaking designed to ensure that Medicare and Medicaid participating hospitals respect the rights of patients to designate visitors, regardless of whether the visitors are legally related to the patient. In accordance with the Presidential memorandum, the Centers for Medicare and Medicaid Services ("CMS") issued a proposed rule on Tuesday, June 22 to revise the Medicare conditions of participation for hospitals and critical access hospitals to ensure the visitation rights of all patients. Under the proposed rule, hospitals must inform patients of their visitation rights, any clinical restrictions on those rights, and their right to receive any visitors they designate. Hospitals are prohibited from restricting or denying visitation privileges on the basis of race, color, national origin, religion, sex, sexual orientation, gender identity or disability. Pursuant to the proposed rule, hospitals must ensure that designated visitors have the same visitation privileges afforded immediate family members.

Employers covered by the Fair Labor Standards Act should take note of references on the Web site of the U.S. Department of Labor (“DOL”) about the “We Can Help” nationwide campaign.

A “News Release,” dated April 1, 2010, on the DOL Web site refers to the “`We Can Help’ nationwide campaign” and states that “[t]he effort, which is being spearheaded by the department’s Wage and Hour Division, will help connect America’s most vulnerable and low-wage workers with the broad array of services offered by the Department of Labor.”  It goes on to state in part that “[i]t also will address such topics as rights in the workplace and how to file a complaint with the Wage and Hour Division to recover wages owed.”

The “News Release” also quotes the Secretary of Labor as stating that “I have added more than 250 new field investigators nationwide – an increase of a third – to help in this effort.”