By: Elizabeth J. Wilson

The practice of medicine is changing almost daily, and a big contributor to the new landscape is technology. With the ever-growing list of apps and software platforms available, physicians and other health care providers are able to find and treat their patients in ways that were not possible in previous years.

Many of the same technologies that are being used in non-medical settings have proven useful in the healthcare world. One such area is call recording.  Certain software will allow physician groups, or other healthcare providers, to track whether a patient call originates from an online ad or website. Many times those same marketing companies that can track calls and analytics can also provide a platform to easily record and store calls coming into a healthcare provider’s office or call center.

The practice of recording phone calls is not uncommon. How often do you hear “your call may be recorded for quality assurance purposes” when you settle in for that long call with customer service? There are certainly benefits to having these patient calls recorded: customer service improvement, employee training, and tracking call sources, to name a few; but in the heavily regulated healthcare world, healthcare providers must consider other factors before making the decision to hit the record button.

From a HIPAA perspective, the provider must think about who or what is recording the calls, and where the audio recordings and any other information related to the audio recordings would be stored. Any entity a provider contracts with to record and store the patient telephone calls would need to sign a Business Associate Agreement, whereby the entity agrees to protect the patient information it receives in accordance with HIPAA. Failing to obtain a Business Associate Agreement in this instance would be a violation of HIPAA.

There is also the question of consent. Do you need to inform the patient the call is being recorded? One huge factor that goes to this consideration is, “Where is the patient located at the time of the call?” Louisiana is a one consent state, meaning at least one party to the conversation needs to know about the recording — and that one party can be the physicians’ practice making the recording. This means, as long as the medical provider is aware of the recording, a patient located in Louisiana does not have to be informed the call is being recorded. But what if the patient calls from a different state? Mississippi, Alabama, and Texas are also considered one consent states, but other states, including Florida, are “two-party consent” states, meaning you need the consent of both parties in order to make the recording. If a call is made from a patient located in Florida to a physician practice in Louisiana, the general legal consensus is that the physician practice must comply with the more stringent “two-party consent” requirements. Out of an abundance of caution, we would advise all of our healthcare provider clients to inform and request consent before recording any phone calls with patients. This way there is no question as to the legality of the recording, and you never run the risk of your patient being surprised when they learn of the existence of a stored call recording when they were never made aware they were being recorded.

Medical providers need to be cognizant that these audio records are likely considered health records. This means that recordings of patient telephone conversations with your nurse line or call center should be treated like any other medical record. Providers should retain the audio recordings for as long as all other records are retained, and ensure that those audio records are released along with the rest of the medical record when a valid authorization to release medical records is received.

Just as with traditional medical records, practices must consider security measures surrounding the creation and storage of these recordings. How are the recordings being stored? Will they be stored on cloud based servers? Will they be stored on your system? Will the audio files have to be sent or received at any point?  Will the files be encrypted? Who will be able to access the files? Do your privacy policies address call recording? All of these questions should be answered before determining 1) whether recording patient calls is appropriate for the provider, and 2) which recording system is the best choice.

The issue of malpractice liability should also be considered. A recorded conversation with a patient becomes discoverable evidence in the event of a claim, and this is a double edged sword. While a phone recording can be helpful in the event of a negative outcome (to prove what information was actually provided to the patient), it, just like any other documentation, can also be harmful (to prove what information was not provided to the patient). Thus, a provider should consider whether such recordings will be helpful or harmful if an issue were to arise. Also, it may be helpful for a provider to reach out to its malpractice carrier to see if there is any opinion on recording patient calls.

Finally, while not arising from health care regulations, one last consideration relates to whether a provider would be taking credit card payments over the phone during these recorded calls. Federal security standards set out compliance rules for practices relating to the processing of credit card payments over the phone and the storage of credit card information. When deciding to record patient phone calls, providers should be cognizant of these specific laws and standards for credit card processing, and insure that any call recording system selected will allow the health care provider to easily maintain compliance when it comes to patients’ credit card information.

Technology makes it very easy to hit record, but physicians and other providers should look hard at all of the relevant factors before implementing a policy to begin recording patient phone calls.

 

By Pam R. Mascari

Pipeline companies may not exercise their powers of eminent domain granted under the federal Natural Gas Act (NGA) in federal courts when seeking to acquire state-owned lands.   On September 10, 2019, in In re: PennEast Pipeline Company, LLC, the United States Court of Appeals for the Third Circuit ruled in favor of New Jersey finding that its sovereign immunity under the 11th Amendment prohibited PennEast Pipeline from condemning property owned by the State of New Jersey.

PennEast Pipeline Company, LLC obtained federal approval to construct a pipeline through Pennsylvania and New Jersey.    After PennEast obtained approval for the project, it sued in federal court to condemn and gain access to properties along the approved route.    Of  the 113 tracts sued upon, 42  are owned, at least in part, by the State of New Jersey.    The United States District Court for the District of New Jersey found that PennEast had met all conditions required under the NGA to exercise the right of eminent domain, rejected New Jersey’s argument that it was immune from suit by a private entity under the 11th Amendment, and granted PennEast orders of condemnation and immediate access to the properties.  New Jersey appealed to the United States Court of Appeals for the Third Circuit.

The Third Circuit opinion does not consider whether PennEast had met the requirements for exercising eminent domain under the Natural Gas Act.  Rather, the Third Circuit opinion is based completely the sovereign immunity created by the Eleventh Amendment to the United States Constitution which provides that:

The Judicial Power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizen of another State, or Citizen or Subjects of any Foreign State.

However, the Eleventh Amendment does not prevent the United States from suing a sovereign state government in federal court.

The Third Circuit pointed to the two competing powers at issue:  the federal government’s eminent domain power and the federal government’s exemption from Eleventh Amendment immunity.  PennEast argued that the NGA impliedly represents a delegation of the federal government’s power to sue a state government when exercising the power of eminent domain.  The Third Circuit rejected this notion finding no authority for a “delegation theory” of the waiver of sovereign immunity.  Further, the Third Circuit noted that Congress may only abrogate sovereign immunity by unequivocal statutory language. The court found no such unequivocal waiver of sovereign immunity in the NGA.

The obvious concerns of PennEast and the natural gas industry were recognized near the end of the opinion:

PennEast warns that our holding today will give State unconstrained veto power over interstate pipelines, causing the industry and interstate gas pipelines to grind to a halt – the precise outcome Congress sought to avoid in enacting the NGA.  We are not insensitive to those concerns and recognize that our holding may disrupt how the natural gas industry, which has used the NGA to construct interstate pipelines over State-owned land for the past eighty years, operates.

But our holding should not be misunderstood.  Interstate gas pipelines can still proceed.  New Jersey is in effect asking for an accountable federal official [rather than a private pipeline company] to file the necessary condemnation actions and then transfer the property to the natural gas company.

This precedential opinion was filed in Docket No. 19-1191 in the United States Court of Appeals for the Third Circuit on September 10, 2019. Due to the vast acreage of state owned water bottoms in Louisiana, this decision portends potentially significant changes in pipeline development within the state.

By: Brian R. Carnie

The wait is over for better or worse – the Trump Administration has released the Department of Labor’s final rule concerning changes to the salary requirements to be exempt from the overtime pay requirement under the Fair Labor Standards Act (FLSA).

Under the final rule, the DOL has increased the minimum salary threshold that must be paid in order for most executive, administrative or professional employees to qualify for exemption from $455 per week ($23,660 annually) to $684 per week ($35,568 annually).  This new salary threshold does not apply to teachers, doctors, lawyers, or certain other exempt professionals who are not currently subject to the salary basis or salary level tests.  While the new salary threshold is $11,908 less per year than what was originally proposed in 2016, it still presents headaches for many employers who have exempt employees who are paid well below this new salary level.

The final rule also raises the amount paid to an employee to qualify for the highly-compensated employee exemption (from $100,000/yr to $107,432/yr), a much lower increase than what the DOL proposed earlier this year.  As expected, the final rule makes no changes to the duties requirements that these administrative, executive or professional employees must also meet in order to qualify for exemption.

Covered employers have until January 1, 2020 to make necessary changes (which is when the final rule is effective), after which employers could be held liable for overtime pay violations in subsequent workweeks for up to 3 years after each violation (plus liquidated damages and attorneys’ fees).  This final rule will likely be the subject of various court challenges over the course of the next few months but employers are cautioned not to solely rely on the court system in the event courts refuse to enjoin the final rule.

What Employers Can Do

For affected exempt employees who are not paid enough to qualify under the increased salary basis test, consider the following:

  1. Compute what their current weekly salary would be under a 40 hour workweek and then figure how much overtime s/he would have to work before hitting the new minimum salary level (this will determine whether and how much of a change will be needed).

2. For employees whose hours significantly vary week to week and who meet the applicable requirements, consider adopting the fluctuating workweek method which permits employers to pay non-exempt employees a fixed weekly salary regardless of the number of hours worked.  If you implement this properly, employers only have to pay one-half (.5) the regular rate of pay for all hours that exceed 40 per workweek instead of the typical one and one-half (1.5) overtime rate.

You may also consider setting a maximum hour cap beyond which they cannot work without prior management approval.  However, should one or more non-exempt employees exceed this cap in a particular workweek, you must pay them the required overtime for that workweek but you may discipline them for violating the cap.

3. For employees whose hours are fairly consistent, consider translating their current weekly salary to an hourly rate where they would continue to receive approximately the same amount of compensation even if they are re-classified as non-exempt and are paid overtime.

4. Take steps to manage off the clock work by employees who were previously treated as exempt, especially if they use electronic devices such as smartphones or laptops outside of the workplace (or outside of normal work hours) for work purposes.

5. Implement a “safe harbor” policy that details your timekeeping requirements and prohibits off the clock work.  Such a policy may provide a good faith defense to liquidated damages stemming from FLSA OT violations, and may also preserve an employee’s exempt status in the event impermissible deductions are made.

By Jennifer Jones Thomas

On September 10, 2019, the Centers for Medicare and Medicaid Services (“CMS”) published a Final Rule in the Federal Register which will require Medicare, Medicaid, and Children’s Health Insurance Program (“CHIP”) providers and suppliers to disclose current and previous affiliations with other providers and suppliers who CMS identifies as posing an undue risk of fraud, waste, or abuse.  The effective date of the Final Rule is November 4, 2019.  The Final Rule will require providers and suppliers to disclose any current or previous direct or indirect affiliation with a provider or supplier that: 1) Has uncollected debt; 2) Has been or is subject to a payment suspension under a federal healthcare program; 3) Has been or is excluded by the Office of Inspector General (“OIG”) for Medicare, Medicaid, or CHIP or; 4) Has had its Medicare, Medicaid, or CHIP billing privileges denied or revoked.  “Affiliation” is defined as:

  • A five percent (5%) or greater direct or indirect ownership interest that an individual or entity has in another organization.
  • A general or limited partnership interest (regardless of the percentage) that an individual or entity has in another organization.
  • An interest in which an individual or entity exercises operation of managerial control over, or directly or indirectly conducts, the day-to-day operations of another organization either under contract or other arrangement, regardless of whether or not the managing individual or entity is a W-2 employee of the organization.
  • An interest in which an individual is acting as an officer or director of a corporation.
  • Any reassignment relationship.

The Secretary will have the authority to deny provider enrollment based on an affiliation the Secretary determines poses an undue risk of fraud waste or abuse.  CMS believes that this rule will help “make certain that entities and individuals who pose risks to the Medicare and Medicaid programs and CHIP are removed from and kept out of these programs.”  Specifically, the Final Rule will allow the Secretary:

  • To revoke or deny a provider’s or supplier’s Medicare if they are currently revoked under a different name, numerical identifier, or business identity.
  • To revoke a provider’s or supplier’s Medicare enrollment, including all practice locations, regardless of whether they are part of the same enrollment, if the provider or supplier billed for services performed at, or items furnished from, a location that it knew or should reasonably have known did not comply with the Medicare enrollment requirements.
  • To revoke a physician’s or other eligible professional’s Medicare enrollment if he or she has a pattern of practice of ordering, certifying, referring, or prescribing Medicare services, items or drugs that is abusive, represents a threat to the health and safety of Medicare beneficiaries, or otherwise fails to meet Medicare requirements.
  • To revoke a provider’s Medicare enrollment if he or she has an existing debt that CMS refers to the U.S. Department of Treasury.
  • To deny a provider’s Medicare enrollment application if the provider is currently terminated or suspended from participation in a state Medicaid program or any other federal healthcare program or the provider’s license is currently revoked or suspended in a state other than that in which the provider is enrolling.

The Final Rule also increases the maximum re-enrollment bar from the current three years to ten years.  If a provider submits false or misleading information on the enrollment application, the Secretary can bar enrollment for three years.

CMS reports that the new revocation authority will lead to approximately 2,600 new revocations per year with a projected savings over a ten year period at $4.16 billion.  The new reenrollment and reapplication bar provisions will apply to 400 of CMS’ revocations resulting in an additional savings of $1.79 billion over 10 years.

By Eric Lockridge and Wade Iverstine

Lenders who finance farm operations, including those who provide equipment, seed, fertilizer, and other farming-related products on credit, should be aware that the Family Farmer Relief Act of 2019 has been signed into law. This new law allows a “family farmer” with up to $10,000,000.00 in debt to restructure and to reduce debts under Chapter 12 of the Bankruptcy Code.  The provisions in Chapter 12 are more farmer friendly than the alternatives the law available under Chapter 7 (liquidation) or Chapter 11 (debt reorganization or asset sale).  When Congress first established Chapter 12 of the Bankruptcy Code in 1986, it was available only to family farmers whose debt was $1,500,000.00 or less.  In 2019, farming is a much more high-tech and capital-intensive endeavor than it was 30+ years ago.  Even part-time farmers are likely to have more than $1.5 million in debt today once one adds up the often-financed cost of acquiring land, necessary equipment, seed, fertilizer, and other necessities.

Under the new law, a family farmer, or the family farmer and spouse, can qualify to file for bankruptcy relief under Chapter 12 so long as their total debt is no more than $10,000,000.00 (non-contingent and liquidated), and at least fifty (50%) percent of the debt arises out of farming operations (e.g., not personal credit card spending), among a few other requirements.

Agricultural lenders and vendors should be aware of this change in the law. Many more farmers are eligible for a Chapter 12 bankruptcy today than were eligible a few weeks ago.

By Jennifer Jones Thomas

In December of 2018, the Louisiana State Board of Medical Examiners (“The Board”), approved adoption of an amendment to the rules governing the practice of telemedicine.  The Board published a Notice of Intent for the amendment in April of 2019 in the Louisiana register with the amended Rule becoming final on August 20, 2019.  Prior to the amendment, the Board’s Rule permitted physicians using telemedicine to be at any location at the time the services are provided; however the patient receiving the telemedicine services must be “in any location in this state at the time that the services are received.”   LAC 46:XLV.7505C.  The Board’s amendment to the rule deletes the words “in this state.”   The intent of the amendment is to “not inadvertently prevent physicians from prescribing medication or other health care services to their patients who may be vacationing or temporarily outside of Louisiana.”  This amendment answers a common question of what a physician can do to help an established patient who is temporarily out of state and becomes ill.  With this amendment, a Louisiana-licensed physician would not be prevented under Louisiana law from assisting the patient by prescribing medication.  However, the Board cautions that engaging in such activity may or may not be lawful or permitted by the medical licensing authority in the state in which the patient is located.  Therefore, before prescribing medication or providing other medical services to a patient on vacation in a state other than Louisiana, a physician would be wise to check the telemedicine rules established by the state where the patient is located.

By R. Lee Vail, P.E., Ph.D., J.D.

Up-to-date Process Safety Information

When originally adopted in 1996, the Environmental Protection Agency (EPA) adopted

“the requirements of the OSHA PSM Standard, 29 CFR 1910.119(c) through (m) and (o), with minor changes to address statutory differences. This makes clear that one accident prevention program to protect workers, the general public, and the environment will satisfy both OSHA and EPA.” [1]

But do they?

On January 13, 2017, the EPA amended the Risk Management Program (RMP) requirements including changes to the incident investigation report requirement (located in §1910.119(m) of PSM) and other provisions previously aligned with OSHA PSM. Whereas the contents of the incident investigation report may be a minor change, one change was flatly contradicted by an Occupational Safety and Health Review Commission (OSHRC) decision in September of last year: whether documentation of process safety information (PSI) was a continuous obligation.

When revising the requirement for PSI (located in §1910.119(d) of PSM) the EPA said:

EPA is revising § 68.65(a) in order to remove irrelevant text regarding the timeframe for initial development of PSI and to more clearly demonstrate that PSI must be kept up-to-date. EPA is revising § 68.65(a) to remove the phrase “In accordance with the schedule set forth in § 68.67” and is adding the phrase: “and shall keep PSI up-to-date.” EPA expects that revising § 68.65(a) in this manner will help Program 3 facilities to better comply with PSI requirements and further clarifies the requirement that PSI must be completed prior to conducting a PHA.[2]

Apparent from this discussion, EPA intended merely to “clarify” that the obligation to update PSI was continuous. It is important that EPA did not discuss this change as a change in substance. It was EPA’s interpretation of an OSHA rule.

However, the OSHRC came to a different decision when it said

the obligation to document RAGAGEP compliance is not continual.” Paragraph (d)(3)(ii), using the verb form of “document,” directs the employer to take an action that naturally takes place at a particular point in time. That point in time is specified in paragraph (d), which contains the cited requirement as a subsidiary provision, specifically stating that written process safety information is to be completed “[i]n accordance with the schedule set forth in paragraph (e)(1)”— that is, every five years.17 29 C.F.R. § 1910.119(d), (e)(1), (e)(6). Therefore, on its face, the requirement to document compliance with RAGAGEP applies only every five years.[3]

Further, the OSHRC decision (which came after the EPA rule change), potentially has further implications. The OSHRC further opined, “because the duty imposed by the standard to discover non-RAGAGEP conditions is not continual, the duty to ensure RAGAGEP compliance must also not be continual.” Id. The OSHRC concluded that OSHA’s interpretation was unreasonable based on the regulatory history and would make another provision (§1910.119(j)(4)(iii)) superfluous.

This conclusion influenced another ORHRC opinion, that the “interim measures” provision of §1910.119(j)(5) effectively suspends the “comply with RAGAGEP” provisions of §1910.119(d)(3)(ii):

In sum, the only reasonable interpretation of (d)(3)(ii) is that (j)(5)’s interim measures option dictates the timing for when non-RAGAGEP equipment must be documented as RAGAGEP-compliant. In other words, if interim measures have been implemented and the deficiency is corrected “in a safe and timely manner,” an employer need not document that such equipment conforms to RAGAGEP until the deficiency has been corrected. Id.

It is highly possible, based on the statements made during the rulemaking process, that the OSHRC would have concluded anyway that “interim measures” would suspend the need to “document RAGAGEP.” But one thing is certain; OSHA’s opinion and EPA’s 2017 “clarification” of the OSHA rule (that PSI must be kept current) were rejected by the OSHRC in the BP Products/BP Husky case.

Now what?

________________________________

[1] 61 Fed. Reg. 31668, 31672 (June 20, 1996) [Emphasis Added].

[2] 82 Fed. Reg. 4594, 4675 (January 13, 2017) [Emphasis Added].

[3] Bp Prod. N. Am., Inc., 2018 O.S.H. Dec. (CCH) ¶ 33688 (04 National/Federal Sept. 27, 2018). [Emphasis Added.]

By the Kean Miller Tax Team

The 2019 Regular Session of the Louisiana Legislature ended on June 6, 2019. Important new tax provisions include several legislative acts signed into law by the Governor along with several proposed constitutional amendments that will appear on the ballot this October. In addition to substantive law changes, important remedial legislation was also passed that addressed the ability to appeal a state tax refund denial but left a possible trap for the unwary with respect to local refund claims.  The following are some notable legislative enactments that made it out of the 2019 Session.

Income and Franchise Tax Legislation

Act 442 (SB 223), enacted June 22, 2019.

New Pass-Through Rules Impacting the Federal SALT Deduction Cap

Act 442 allows an S corporation or any entity taxed as a partnership for federal income tax purposes to elect to be taxed as a C corporation for Louisiana income tax. The modification allows pass-through owners to pay state and local taxes at the entity level, bypassing the $10,000 SALT cap introduced in the Tax Cut and Jobs Act which only applies to individuals.

Reports emerged on July 23, 2019 that Treasury and the IRS have stepped up meetings with tax practitioners concerning this and similar SALT cap workarounds passed by state legislatures. The IRS included guidance on applying the SALT deduction cap to pass-through entities on its April 2019 Priority Guidance Plan update, and it is likely that new regulations are on the horizon that may limit the usefulness of this type of “workaround.”

Act 442 became effective on June 22, 2019.

Act 304 (HB 263), enacted June 11, 2019.

Net Operating Loss (“NOL”) Carryfowards Revert Back to First-In, First-Out

Act 304 amends R.S. 47:287.86(C)(2) to provide that the net operating loss carryforwards are applied starting with the earliest taxable year of NOLs when calculating taxable income for taxable periods beginning in 2020. This legislation reinstates the pre-2016 NOL carryforward rules (before the unpopular and problematic legislative changes creating the “last-in, first-out” ordering rules introduced during the 2016 budget crisis).  Louisiana NOL tracking has now become even more complicated (although this is a welcome change to the law).

Act 304 became effective on June 11, 2019.

Economic Development and Incentive Legislation

Act 203 (SB 237), enacted June 11, 2019.

Authorizes New Tax Increment Financing Projects in Economically Deprived Areas

 Act 203 authorizes the creation of new tax increment financing districts in areas with high unemployment. New public entities covering the districts will have the authority to borrow against future increases in sales and property tax collections in order to fund new economic development projects.

Act 203 became effective on June 11, 2019.

Act 251 (HB 585), enacted June 11, 2019.

 Property Located Within New Federal Opportunity Zones to Qualify for Restoration Tax Abatement Program

 Act 251 amends R.S. 47:4312(3) to add structures located in new federally designated Opportunity Zones to the property eligible to participate in the Restoration Tax Abatement Program. Qualifying property owners renovating or restoring buildings within Opportunity Zones are now eligible to contract with local governing authorities to temporarily freeze property tax assessments for 5 years at the pre-improvement level.

Act 251 became effective on June 11, 2019.

Sales and Use Tax Developments

Act 360 (HB 547), enacted June 17, 2019.

Reenactment of Remote Seller Law

Act 360 amends and reenacts Louisiana’s remote vendor law to more effectively implement a post-Wayfair “remote seller” sales tax registration system through the creation and establishment of the Louisiana Sales and Use Tax Commission for Remote Sellers. A loophole in the drafting of last year’s legislation made its application (including the Commission’s service as the central collector for sales/use taxes on remote sales) contingent on a ruling of the Supreme Court of the United States that the South Dakota sales tax law at issue in Wayfair was constitutional. However, the Supreme Court never technically ruled on the constitutionality of the South Dakota sales tax law, holding only that physical presence was no longer a requirement for “substantial nexus” (under Complete Auto Transit) and remanding to the South Dakota Supreme Court to determine whether the rest of the law was constitutional.

The new legislation sets a hard deadline of July 1, 2020 for the new Commission to start collecting tax. Out-of state sellers with more than $100,000 in sales or 200 transactions in Louisiana are required to file Direct Marketer Returns under R.S. 47:302(K) until the new system is ready.

The Act contains several drafting issues Louisiana courts will undoubtedly be called upon to address, and as a result, its practical scope may be much more limited than anticipated. For example, the definition of “remote seller” under Act 360 is limited to sellers that both lack physical presence in Louisiana and which are not considered “dealers” under R.S. 47:301(4)(a)-(l), greatly restricting the impact of the law. In addition, the Act does not address whether online marketplace facilitators qualify as dealers, an issue currently pending before the Louisiana Supreme Court under Normand v. Wal-Mart.com USA, LLC, 2019-0263 (La. 5/6/19).

Act 360 becomes effective on August 1, 2019.

Act 359 (HB 494), enacted June 17, 2019.

Specifies Sales and Use Taxes for Asphalt

Act 359 provides sourcing rules for sales and use tax on raw materials to be converted into road asphalt.

Act 359 became effective on June 11, 2019.

Property Tax Relief

Act 432 (HB 301), enacted June 22, 2019.  

Proposed Constitutional Amendment to Exempt Goods Destined for Outer Continental Shelf From Property Tax

Act 432 would amend R.S. 47:1951.2 and 1951.3 to exempts raw materials, goods, commodities and other property stored in Louisiana and destined for the Outer Continental Shelf from ad valorem tax.

The exemption will take effect subject to approval by the voters of a constitutional amendment on the ballot this October.

Act 385 (HB 493), enacted June 20, 2019.

Authorization for a Homestead Exemption Audit Program in New Orleans

Act 385 allows the city of New Orleans to establish a homestead exemption audit program for Orleans Parish property. The city is authorized to impose a fee up to ten percent on the total amount of taxes, penalties, and interest owed by a taxpayer.

Act 385 becomes effective on August 1, 2019.

Board of Tax Appeals

Act 365 (HB 583), enacted June 19, 2019.

Proposed Constitutional Amendment to Expand Board Jurisdiction 

Act 365 would expand the jurisdiction of the Board of Tax Appeals to include challenges to taxes under Federal law or the Constitution of Louisiana.   

The change will take effect subject to approval of a constitutional amendment to be set before voters on the ballot this October.

Act 367 (SB 198), enacted June 18, 2019.

Allows State (but not Local) Refund Claims for Illegal Tax Overpayments Without Payment Under Protest

Act 367 legislatively overrules last year’s Louisiana First Circuit Court of Appeal decision in Bannister Properties which held that R.S. 47:1621(F) prohibits refunds arising from the Department of Revenue’s misinterpretation of a law or regulation without a payment under protest. Bannister Properties concerned several taxpayers who had voluntarily paid franchise tax under a Department regulation later ruled invalid. The new legislation repeals R.S. 47:1621(F) in its entirety and allows refund claims for all overpayments due to any unconstitutional law, illegal regulation, or misinterpretation of a law or regulation by the Department of Revenue.  The new legislation does not appear, however, to address the appeal of a denial of a local refund tax claim.  This means there may be no effective remedy for taxpayers to recover local taxes not paid under protest even if the tax is later determined to be illegal.       

Act 385 became effective on June 18, 2019.

Local Taxes

Act 169 (HB 43), enacted June 7, 2019.

Authorizes Occupancy Tax on Short-Term Rentals in New Orleans

Act 169 authorizes the City of New Orleans to levy and collect a tax upon the paid occupancy of short-term rentals located within the city. The tax may not exceed six and three-quarters (6.75%) percent of the rent or fee charged for occupancy. The City Council may impose the occupancy tax by ordinance after voter approval.

Act 169 became effective on July 1, 2019.

If you have questions, please contact Kean Miller tax attorneys, Jaye Calhoun (504.293.5936), Jason Brown (225.389.3733), Angela Adolph (225.382.3437), Phyllis Sims (225.389.3717), Willie Kolarik (225.382.3441) or Sanders Colbert (504.585.3021).

By Jessica C. Engler & Michael deBarros[1]

Policyholders are often disappointed in the amount of time their insurers take to investigate and pay claims.  In 2003, the Texas Legislature enacted the Texas Prompt Payment of Claims Act (“TPPCA”) to facilitate the prompt investigation and payment of Texas insurance claims.[2] Codified at Section 542 of the Texas Insurance Code, the TPPCA imposes an affirmative duty on insurers to promptly pay claims as soon as it becomes “reasonably clear” that they are obligated to do so under the policy.

The TPPCA outlines requirements and deadlines that insurance carriers must meet to avoid paying penalties to an insured.[3] In short, the TPPCA generally requires insurers to accept or reject claims within 15 business days of receiving of the insured’s written notice of claim, or within 30 days for surplus line insurers. If the insurer rejects the claim, it must state its reasons for rejection. If an insurer accepts a claim, it must pay the claim within 5 business days. If the insurer fails to pay the claim within 60 days, the insured is entitled to payment of the claim, statutory damages of 18 percent interest per year, and attorney’s fees.

Texas courts have continuously held that to prevail under a claim for TPPCA damages under section 542.060, the insured must establish: (1) the insurer’s liability under the insurance policy, and (2) that the insurer failed to comply with one or more sections of the TPPCA in processing or paying the claim.[4] Although this test is easily applied to insureds who do not receive acceptance or rejection of their claim within the 15 day time period, or payment within 5 business days after acceptance of their claim, the procedure is less clear when the insured submits to the appraisal process after the insurer has rejected the claim.

Many property insurance policies have appraisal clauses. A typical appraisal clause provides that if the insured or the insurer disagrees on the valuation of property or the amount of loss, either party may make a written demand for appraisal of the loss. After the demand is made, the insured and insurer each select an appraiser and the two appraisers value the property and set the amount of the loss as to each item. If the appraisers fail to agree on a valuation or the amount of loss, the dispute is submitted to an “umpire” who determines a valuation and amount of loss that is binding on the parties.

In Barbara Technologies v. State Farm Lloyds[5]  and Ortiz v. State Farm Lloyds,[6] the Texas Supreme Court recently decided whether an insurer may be liable for damages and fees under the TPPCA after it pays an insured, in full, within five business days of an appraisal award. The cases are factually similar. In both cases, the insureds filed claims for wind and hail damage and State Farm denied the claims, alleging that the damages sustained were less than the policy deductibles. The insureds filed suit to recover damages for the underpayment, and State Farm invoked the appraisal clauses. The appraisers found State Farm had undervalued the loss, and State Farm issued payments to the policyholders within the five business days of the appraisal award. The trial court in both cases concluded that State Farm’s prompt payment of the appraised amount at the conclusion of the appraisals foreclosed all TPPCA claims against the insurers.

On appeal, the Texas Supreme Court held that the TPPCA’s requirements and deadlines—including the 60 day payment deadline—continue to apply, even during appraisal. Consequently, an insurer’s payment of an appraisal award within five business days of the award does not immunize it from TPPCA claims. The Court did note, however, that an appraisal award does not establish liability under an insurance policy as a matter of law.  Therefore, an insured must still prove that the loss is covered under the policy to succeed in its TPPCA claim.

These cases are important because insurers can no longer avoid TPPCA liability by rejecting a claim, invoking appraisal, and delaying payment until the appraisal concludes. In his dissent, Justice Nathan Hecht cautioned that the holding could have a chilling effect on the appraisal process:

The result of today’s decision is this: If an appraisal is requested, either by the insurer or the insured, after a claim has been rejected in whole or in part, and the insurer immediately pays the award, it is nevertheless liable for 18 percent interest and attorney fees if the claim is later adjudicated to be covered by the policy. Unless the insured gives up, litigation is unavoidable, either over the rejection or over the penalty. If that does not make appraisal requests unlikely, it certainly makes them less likely. The Court renders the appraisal process it praises of little use.

Time will tell whether these opinions materially affect the way insurers handle claims in Texas.  For now, insurers are on notice that the appraisal process will not, by itself, suspend or eliminate TPPCA delay damages.

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[1] Special thanks to Gabriella Leonovicz, Tulane University Law School Class of 2021, for her assistance with this article.

[2] See Mike Geeslin, Texas Dep’t of Insurance, Technical Advisory Committee on Claims Processing Report on Activities, Sept. 2010, at 2-4 (2010).

[3] See Tex. Ins. Code §§ 542.055(a)(1)-(3), .056(a), .057(a) .058(a), .060.

[4] Barbara Technologies Corp. v. State Farm Lloyds, No. 17-0640, p. 10, June 28, 2019 (https://www.txcourts.gov/media/1444300/170640.pdf)

[5] Id.

[6] Ortiz v. State Farm Lloyds, No. 17-1048, June 28, 2019 (https://www.txcourts.gov/media/1444305/171048.pdf)

 

By Ed Hardin

As reported by national and local media outlets, two Gretna, Louisiana, police officers were fired for social media activity that targeted Congresswoman Alexandria Ocasio-Cortez.  In the case of one of the officers, he posted a message on his personal Facebook page regarding the Congresswoman that allegedly included threatening remarks directed toward her.  The second officer then gave a “like” to the post.  Media outlets quickly picked up the story. The Gretna Police Department then fired both officers for violating the Department’s social media policy.  The situation is a vivid illustration of how social media activity can intersect with employment issues with serious consequences.  For employees, it shows that employees can be held responsible for their social media activities.  For employers, it shows the value of social media policies and how those policies can serve as reminders to employees to be mindful of their social media activities.  For more about the story see the recent articles from NOLA.com and CBS news.