Federal statutes such as Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and the Pregnancy Discrimination Act extend protections to employees based on traits such as race, religion, national origin, sex, age, and pregnancy.   Louisiana has similar protections under state law; however, sexual orientation is not a protected trait under either federal or Louisiana employment law (although some states, and even some municipalities in Louisiana, have extended employment-based protections based on sexual orientation).

On May 20, a Louisiana Senate Committee considered a bill that would have made sweeping changes to a number of state statutes that would have extended certain protections based on sexual orientation.  The bill was voted down by a vote of 4-1 and was likely the last bill in the 2014 legislative session that would have extended rights based on sexual orientation.

On May 13, 2014, Louisiana’s legislators joined the ranks of several other states by passing legislation to prevent employers and schools from demanding access to social media, personal email, and other online accounts.  House Bill 340, also known as the Personal Online Account Privacy Protection Act, will prohibit employers from: (1) requesting or requiring an employee or applicant to disclose information that allows access to the employee or applicant’s personal online account; and (2) taking adverse employment against the employee or applicant for failure to disclose such information.

The bill also includes some significant protections for employers.  Here are some of the highlights.  For example, an employer is not prohibited from disciplining or discharging an employee for transferring the employer’s proprietary or confidential information or financial data to an employee’s personal online account without the employer’s authorization.   In addition, the bill specifically states that an employer is not prohibited from restricting or prohibiting an employee’s or applicant’s access to certain websites while using an electronic communications device paid for or supplied (in whole or in part) by the employer, or while using an employer’s network or resources, in accordance with state and federal law.  Further, an employer shall not be prohibited or restricted from viewing, accessing, or utilizing information about an employee or applicant that can be obtained by lawful means, i.e. without any required access information or that is available in the public domain.  Finally, the bill would not create a duty on behalf of the employer to monitor an individual’s personal online account.

The Bill is now before Governor Jindal.  Additional information about the bill can be found here.

The U.S. Department of Labor, in conjunction with the IRS and U.S. Department of Health and Human Services, has issued new model COBRA notices. The revised notices provide information to qualified beneficiaries regarding other coverage options, including marketplace exchanges, Medicaid and other group health plans.

The revisions also direct individuals with questions about marketplace exchange coverage to the government’s website for more information.

Employers are not required to use the model notices.

Copies of the new model notices can be found here and here.

The legal process typically begins with a claim, which, if not resolved, can result in a lawsuit.  There are steps a business should take to protect itself at the claim stage, or when a lawsuit is served.  Larger businesses may have a risk manager with the formal training and experience needed to respond to a claim or a suit.  However, the reality is that most businesses do not have a risk manager and are unfamiliar with the legal process.  For those businesses, the following actions may be appropriate:

  1. If a pre-suit demand letter is received, or a suit is served, read it.  Do not ignore the demand letter or the suit.  There must be a formal response to a suit within a certain time or there is a risk of a judgment against the business.  Likewise, demand letters typically request a response or action by a certain date or a lawsuit will be filed.
  2. Seek legal counsel to protect the business.  If you have a lawyer, contact your counsel immediately.  It’s time to pull out the insurance policies and immediately contact your insurance broker or agent.  A copy of the demand or the legal papers should be given to legal counsel and the broker or agent.  Insurance policies can have strict requirements related to the content and timing of notice, and any delay can adversely affect coverage.
  3. The insurance company will review the claim and the suit papers, and should give their opinion on coverage.  Most states require the insurance carriers to do so within a certain period of time, but it may not coincide with the period in which the business must respond to the suit.
  4. If the insurance company accepts coverage and it has a duty to defend, it will appoint an attorney to defend the business and will pay a judgment or settlement, but only up to policy limits.  The business needs legal advice if the potential exposure exceeds the dollar limits of coverage.
  5. The insurer can also deny coverage based on its conclusion that the insurance policy does not apply.  On some occasions, the insurance carrier may not respond, and follow-up is needed.
  6. The insurance company can also agree to defend the business under a reservation of rights.  This means that the cost of legal counsel will be paid by the insurer, but the insurance company believes that there are policy terms that may preclude or limit coverage.
  7. Many insureds wrongfully assume that there is coverage if the insurer agrees there is a duty to defend.  The insured should still consider keeping legal counsel involved throughout the litigation to monitor the likelihood of coverage.  With a reservation of rights, the insurance company can still conclude that there is no coverage when the litigation ends.
  8. Whether the insurance carrier issues a reservation of rights letter and agrees that it has a duty to defend, or if the insurance company denies coverage, the insured may need help to understand the insurers’ position.  The insurance carrier’s conclusion is not legally binding, but merely its opinion as to coverage.  Agents and brokers are a good starting point for dealing with insurance carriers that have not unconditionally accepted coverage.  The insured must decide if it will pursue litigation against the insurance company to obtain coverage if the insurance company does not pay a settlement or judgment.
  9. Interpreting an insurance policy is a legal issue.  An attorney can assist the broker and the business by reviewing the insurance policy, the claim or suit, and providing an opinion.  With some exceptions, that cost is borne by the insured.
  10. An insured cannot settle a case or otherwise prejudice the insurer’s rights without the insurer’s consent.  Thus, before you commit to, or actually, spend any money to stop or mitigate additional losses, repair any damages, or replace any damaged items, or even settle a claim, get the insurer’s consent.

A lawsuit is on the horizon, or you have been sued, so you have given proper notice to your insurance company.  Your insurance company sends a letter acknowledging the claim or suit, acknowledges its duty to defend, and states variations of any of the following:

“Please be advised that our review of this matter is continuing subject to a full reservation of rights and defenses under the referenced Policy and applicable law”

*   *   *

“[Insurance Company] reserves the right to issue a partial or complete declination of coverage in the referenced matter should it determine that coverage does not apply to some or all of the asserted claims.”

*   *   *

“[Insurance Company] is continuing to investigate this matter under a full reservation of rights and invites you to provide us with any further facts or documents that you feel might support coverage.”
You scratch your head in confusion.  What does the insurer mean?  You paid for insurance coverage.  How should you react to the letter?

A reservation or rights letter is a notice which states that the insurance company is investigating the claim.  While a reservation of rights letter does not mean that your claim is not covered, it indicates that the insurer has doubts concerning your coverage and may not pay the claim or a judgment.

You have several options when you receive a reservation of rights letter.  You can ignore it, you can ask for clarification, or you can dispute the reservation.  Here are a few tips to remember when dealing with an insurer who has issued a reservation of rights letter:

  1. Do not ignore a reservation of rights letter.  Insurance policies typically contain provisions that require the insured to cooperate with any reasonable requests of the insurer.  Insurers issuing reservation of rights letters may request additional information, but you should exercise care in providing information to minimize the possibility that the insurer will build a coverage case against you.
  2. If a reservation of rights letter has been issued, get your broker, agent, or lawyer involved.  You should have “conflict counsel” review the insurer’s position and give advice related to actions you should take to pursue coverage under the policy.  Seek assistance from a lawyer with insurance contract experience if the amounts at issue justify the expenses.
  3. If you disagree with your insurer’s position, do so immediately in writing.  Your response letter does not require great detail.  The purpose is to put the insurer on notice that you do not agree with its conclusions.
  4. If you do not understand the insurer’s reservation, or if the letter does not specifically refer to policy provisions, you can ask for a further explanation.  Insurers owe a duty of good faith and fair dealing to their insureds.  Thus, it is likely that you will receive some type of response from your insurer.
  5. Liability policies generally provide that the insurer has the right and the duty to defend the insured.  The obligation to defend usually begins when the insured gives notice of the suit.
  6. If your policy provides for a defense, request that the insurer provide independent counsel to represent you before the insurer embarks on a significant investigation.  You may be entitled to hire a defense lawyer of your choice at the insurer’s expense.  While your insurer is entitled to conduct a reasonable investigation, an insurer cannot delay in deciding to defend you.  The longer you wait, the more opportunity for your insurer to obtain facts to deny coverage.
  7. If your insurer unreasonably delays, or misstates the facts or provisions of its policy, it could be liable for bad faith damages.  You or your lawyer have the right to have a court resolve insurance disputes.

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.

    1. 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.
    2. 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.
    3. 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.
    4. 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).
    5. 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.
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.

  1. 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.

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.

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.

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 Financial Planning for the Growing Family – Seven Important Tips for New Parents