The question of whether a Medicare Set Aside (MSA) is required in a Jones Act and/or personal injury case continues to be without a definitive answer. However, in Sippler v. Trans Am Trucking, Inc., 10-CV-03550, the United States District Court for the District of New Jersey ruled in an unpublished opinion that a MSA is not necessary in a personal injury matter.

To recap: the Medicare Secondary Payer Statute (MSP) assigns primary responsibility for medical bills of Medicare recipients to private health plans when a Medicare recipient is also covered by private insurance. These private plans are therefore considered primary under the MSP. Medicare acts as the secondary payer responsible only for paying amounts not covered by the primary plan. The MSP bars Medicare payments where a payment has already been made or can reasonably be expected to be made by a primary plan. (1)

Medicare payments are subject to reimbursement to the appropriate Medicare Trust Fund once the U.S. government receives notice that a third party payment has been or could be made with respect to the same item or service. If an MSP reimbursement is not made, the MSP authorizes the government to bring an action against any entity which is required or responsible to make payment under primary plan and against any other entity that has received payment from that entity. Note that “any entity” includes the parties to a lawsuit and their legal counsel.
Continue Reading Recent Developments in Medicare Set Aside

The overriding royalty interest (commonly known as “ORRI”) is prevalent in the oil and gas industry. A party who obtains an ORRI in a lease will receive a set percentage of the production that is obtained from the lease. The lease between the landowner and the lessee usually reserves an ORRI to the landowner as compensation for granting the lease, and the lease also specifically describes how that ORRI will be calculated.

Since the Outer Continental Shelf (“OCS”) off the coast of the United States is owned by the U.S. government, parties wishing to drill for oil and gas on the OCS are required to obtain those leasing rights from the U.S. government. Pursuant to federal regulation, the U.S. government, as lessor, receives a set royalty on all production that is obtained from an OCS lease.

Other parties besides the landowner can obtain ORRI’s. For instance, an investor may contribute funds towards the project in the hopes that the lease will be productive. Also, a geologist may perform surveys of a lease and receive an ORRI as compensation. Or, the lessee may wish to reduce its risk and capital outlay by sub-letting the drilling operation to another entity. In these instances, the ORRI is created by way of an agreement separate and apart from the lease between the landowner and the lessee. Oftentimes those ORRI agreements will state that the ORRI it grants “shall be calculated and paid in the same manner and subject to the same terms and conditions as the landowner’s royalty under the lease.” Ordinarily, that language makes calculating everyone’s (the landowner and any investors) ORRI a matter of simple mathematics.

Continue Reading Does the Deep Water Royalty Relief Act Affect the Calculation of Overriding Royalties? The U.S. Fifth Circuit May Decide This Issue Soon

Medicaid costs for Personal Care Services (“PCS”), designed to allow Medicaid beneficiaries to remain in their homes rather than being institutionalized, totaled approximately $12.7 billion in 2011, representing a 35% increase in spending since 2005. The cost for PCS is projected to grow by approximately 45% by the year 2018, certainly making PCS an area of interest to the federal government. PCS providers should expect to see increased federal oversight and control over these programs.

The Office of Inspector General (“OIG”) published a report in November, 2012 based on its examination of PCS and its findings of significant compliance, payment, and fraud vulnerabilities. The OIG also interviewed Medicaid beneficiaries receiving PCS services and found quality of care problems with PCS attendants, including physical abuse or threats of abuse, property theft, and beneficiary abandonment.

As of August, 2012, the OIG has produced 23 audit and evaluation reports focusing on PCS providers and programs in various states, including one in Louisiana. The Louisiana Department of Health and Hospitals, which oversees PCS programs, concurred with the findings and recommendations in the OIG audit. The OIG’s Office of Investigations and State Medicaid Fraud Control Units also reported an increasing volume of fraud involving PCS. The most commonly reported fraud schemes involved conspiracies between PCS attendants and Medicaid beneficiaries regarding claims for services that were never provided or that were not allowed under the States’ program rules.
Continue Reading OIG Report on Personal Care Services: Trends, Vulnerabilities, and Recommendations for Improvement

The U.S. Fifth Circuit recently issued its ruling in Beech v. Hercules Drilling Co., No. 11-30415, 2012 WL 3324283 (5th Cir. Aug. 14, 2012), clarifying its standard for finding an employer vicariously liable for the actions of its employees under the Jones Act. In doing so, the Fifth Circuit reversed a ruling by Judge Carl Barbier of the U.S. District Court for the Eastern District of Louisiana which found that the co-employee of a Jones Act plaintiff was acting in the course and scope of his employment when he accidentally shot and killed the plaintiff on the Jones Act employer’s jack-up rig.

Continue Reading Fifth Circuit Clarifies and Reiterates its Standard for “Course and Scope of Employment” Under Jones Act

The Centers for Medicare and Medicaid Services (“CMS”) has added a new face-to-face encounter requirement related to the ordering of certain Durable Medical Equipment (“DME”) items in the Medicare Program Revisions to Payment Policies under the Physician Fee Schedule Final Rule that was published in November, 2012 (the “Final Rule”). For covered DME items requiring a written order, physicians must document that a face-to-face encounter with the beneficiary occurred within six (6) months before the written order. The new rule is effective for all covered DME items ordered on or after July 1, 2013. The rule does not apply retrospectively to DME orders prior to July 1, 2013. CMS is not implementing a requirement for a face-to-face encounter for prosthetic devices, orthotics, and prosthetics that require a written order, at this time, and deferred to future rule-making to address this area.

Continue Reading CMS Imposes New Requirements on Health Care Providers for Face-to-Face Encounters for DME Orders

We’ve all been there. You sit on the Board of a local non-profit organization as the token lawyer. Or, you volunteered to assist with your house of worship’s finance committee because you have some practice experience with banks. Inevitably the scenario comes up: “You’re a lawyer. Will you help us buy that little piece of property next to the parking lot? The parcel is so small. It won’t take up too much of your time…”

Before you volunteer your time (and the benefits of your professional license) consider the following:

  1. If you decide to take on a real estate project for a non-profit organization, require the entity to hire an abstractor to run a complete abstract of title. Many times even seasoned lawyers believe they can adequately search the public records to “see what’s out there,” and most times they come up short. Strongly urge your non-profit group to pay for a professional abstractor. This professional is well acquainted with the nuances of searching the public records, and the cost of an abstract should be considered a necessary expense. Not only will an abstractor provide information on the ownership of property, but an abstractor should also provide information about servitudes, rights or way or other encumbrances that might make property substantially less valuable than it appears!
  2. Don’t forget to check the organization’s documents or applicable laws to determine who has authority to act. Non-profits and houses of worship typically have organizational documents that set forth the precise procedure for buying, selling or encumbering property in the name of the organization. In the event that the organization’s documents are silent, each type of organization has procedures set forth in the applicable Revised Statutes. These proper steps are critical to successfully completing a transaction. In certain instances, authority for a specific entity requires unanimous approval by all members of the organization. It is never safe to assume that the Organization’s President or the Church’s Pastor has authority to sign documents in the name of the organization.
  3. If your organization is buying property, consider having the entity purchase Title Insurance. Title insurance is a form of indemnity insurance which insures against financial loss from defects in the title to immovable property. It defends against a potential claim attacking the title or reimbursing the insured for monetary loss incurred, up to the dollar amount of the insurance provided by a policy. There is a one-time premium for title insurance and it will provide coverage so long as the purchaser has an insurable interest in the property.
  4. There are no short cuts. Remind all parties involved (repeatedly, if necessary) that real estate work can take a long time. The conveyance of property will include, at the very least, obtaining the property authority, researching title issues, negotiating a transfer (including a purchase price and additional accessory obligations) and moving through a successful closing. If there are title defects or problems associated with a piece of property, it can take an extended period of time to resolve the issues. Even the easiest and fastest of real estate closings require substantial cooperation by all involved.
  5. When in doubt, call a professional! Fast/easy/simple/quick/etc. projects often snowball into enormous traps for your time and patience. If you feel a project spinning out of control or you encounter issues that you do not feel qualified to investigate and resolve, call a real estate attorney. Encourage your non-profit organization or house of worship to hire an attorney to represent their best interest. A professional versed in business or real estate law can likely efficiently resolve negotiation and title issues.

We all recognize that non-profit organizations would like to keep an eye on expenses associated with legal work. Despite the best intentions, organizations can quickly fall into a situation where they’ve inadvertently created more problems by trying to save money relying upon “volunteer” legal advice. Accept these sorts of projects with the above advice in mind, and remember to ask for help if a project exceeds expectations.

Employers find themselves in uncharted territory when it comes to responding to social media activity by their employees, particularly in the wake of a series of reports issued by the National Labor Relations Board’s acting general counsel. But on September 28, 2012, in the Board’s first decision involving a discharge for Facebook postings, the NLRB found that an Illinois BMW dealership did not violate the National Labor Relations Act when it fired a salesman for photos and comments posted to his personal Facebook page. The employee’s posts concerned two incidents that occurred on the same day.

As an initial matter, the Administrative Law Judge had to decide which of the two postings triggered the termination. The ALJ found that one posting – which included photos and sarcastic comments about the dealership serving hot dogs, chips, and bottled water at a sales event announcing a new BMW model – might have been protected activity under the NLRA. But, the ALJ found (and the NLRB agreed) that the salesman was fired solely for his other posting – which included photos of a Land Rover accidently driven over a wall and into a pond at an adjacent dealership owned by the same employer, along with sarcastic commentary. The NLRB found that the Land Rover photos and comments were not concerted or protected activity under the NLRA because they were posted solely by the employee and had no connection to any of the employees’ terms and conditions of employment.

However, employers should also note that the Board’s decision also included a finding that the dealership’s “courtesy” rule was unlawful. In particular, the NLRB reasoned that employees would reasonably believe that the policy prohibited any statements of protest or criticism, even those protected by the Act. This component of the decision is consistent with the NLRB’s recent trend of invalidating social media policies and finding components of such policies to be overly broad.

On August 29, 2012, the Securities and Exchange Commission (the “SEC”) proposed rules to eliminate the prohibition against general solicitation and advertising in certain unregistered securities offerings. These rules are mandated by the Jumpstart Our Business Startups Act (the “JOBS Act”), which was signed into law on April 5, 2012, and is intended to, among other things, give issuers the ability to communicate more freely to attract capital. The SEC is seeking public comment on the proposed rules for 30 days, and thereafter the SEC will determine whether, and with what revisions, if any, to adopt the proposed rules.

Issuers seeking to raise capital through the sale of securities must either register the securities offering with the SEC or rely on an exemption from registration. Most of the SEC’s exemptions from registration prohibit issuers from engaging in general solicitation or advertising, such as advertising on the internet or in print media, in connection with securities offerings. The JOBS Act directs the SEC to revise Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933 to permit general solicitation or general advertising in unregistered offerings, provided that the issuer reasonably believes that all purchasers (but not all offerees) are accredited investors, or qualified institutional buyers (“QIBs”), in the case of Rule 144A.

Rule 506

Under the proposed rules, new Rule 506(c) would permit the use of general solicitation and advertising to offer securities if the following conditions are satisfied:

  • The issuer takes reasonable steps to verify that the purchasers are accredited investors.
  • All purchasers are accredited investors, either because they qualify as such under the existing rules (1) or the issuer reasonably believes that they do at the time of the sale of the securities.
  • All other applicable conditions of Regulation D are satisfied.

The proposed rules do not specify what is necessary to satisfy the requirement that the issuer has taken reasonable steps to verify that purchasers are accredited investors, which is the key to permitting general solicitation and advertising. Rather, the SEC said that issuers are to consider the facts and circumstances of each transaction. The SEC provided a non-exclusive list of factors to be considered, including, the type of purchaser and the type of accredited investor that the purchaser claims to be, the amount and type of information that the issuer has about the purchaser, the manner in which the purchaser was solicited to participate in the offering and the nature and terms of the offering, such as a minimum investment amount.

The proposed rules would also amend Form D, which issuers must file with the SEC when they sell securities pursuant to Regulation D. The revised Form D would add a new check box for issuers to indicate whether they are relying on the new Rule 506(c) exemption that would permit general solicitation and advertising.

The proposed rules preserve the existing exemption to offer unregistered securities without any general solicitation or advertising, in which case an issuer can sell securities to up to 35 sophisticated non-accredited investors, and can sell to accredited investors relying on their self-certification and the issuer will not be subject to the new verification requirement.

Rule 144A

Under the proposed rules, securities sold pursuant to Rule 144A could be offered to persons other than QIBs, including by means of general solicitation, provided that the securities are sold only to persons whom the seller and any person acting on behalf of the seller reasonably believe is a QIB.

(1) Under existing rules, a natural person qualifies as an accredited investor if he or she has individual net worth (or joint net worth with a spouse) that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person. Or, if he or she has income exceeding $200,000 in each of the two most recent years (or joint income with a spouse exceeding $300,000 for those years) and a reasonable expectation of the same income level in the current year.

After the 2003 Corbello decision, the Louisiana legislature attempted to enact a workable procedure for recovering environmental damages arising from oil and gas operations known as Act 312. The main goal of Act 312 was to ensure that property contaminated by oilfield operations would be cleaned up to applicable regulatory standards. Since the enactment of Act 312, very few cases have made it through the Act 312 process. Thus, in an attempt to expedite the identification and remediation of contaminated property, the Louisiana legislature recently passed two new measures revising the Act 312 procedure.

Summary of the New Legislation

The first measure (a House bill enacted as Act 754) amends the Louisiana Code of Civil Procedure to provide for:

  • The issuance of an environmental management order (EMO) to expedite site inspections and sampling, and
  • A limited admission of environmental liability that allows defendants to begin to remediate property before trial (limited to the most feasible plan to remediate the property).

The second measure (a Senate bill enacted as Act 779) provides for a number of amendments to Act 312:

  • Allows a plaintiff to provide a notice of intent to investigate potential environmental damage that suspends prescription of the claim for one year upon the notice being provided to LDNR,
  • Requires the plaintiff to identify the alleged environmental damage and the results of any environmental testing if a lawsuit is filed after a notice of intent to investigate is filed,
  • Permits a defendant to request an early preliminary hearing to determine whether there is good cause for it to remain a defendant in the case,
  • Grants subpoena power over agency personnel involved in developing the feasible plan and allows for discovery regarding the development of the plan after a final plan has been submitted,
  • Prohibits ex parte communications with agencies, officials, and contractors who are involved in formulating the feasible plan,
  • Requires the Departments of Agriculture, Forestry, and Natural Resources, along with the Department of Environmental Quality (DEQ), to comment if LDNR approves or structures a preliminary plan that applies regulations other than those of LDNR, and
  • Provides for a waiver of indemnity rights against punitive damages caused by a party who admits limited liability.

Continue Reading Act 312 – Louisiana Legislature Passes New Measures to Speed Remediation Process

Lawyers often find themselves explaining the concept and process of mediation to clients and other people that have a need for a framework for dispute resolution other than the traditional adversary process. A traditional definition might be something like this:

Mediation is simply the name for a process that brings the parties to a dispute together with a neutral third party to identify and narrow disputed issues, develop options and consider settlement alternatives, in an effort to reach a consensual agreement that will accommodate the needs and interests of all. The Mediator is not empowered to impose terms on the parties, but rather facilitates communication, the exploration of alternatives, and encourages conciliation.

But if a picture is worth 1000 words, a great YouTube video is worth how many?

We can thank the Tennessee Association of Professional Mediators for Pigs, Pistols, and a Hanging: Mediation Meets the Hatfields and McCoys. This 3 minute video hits the high-points of what a mediation can offer, and features some fancy banjo-pickin’:

https://youtube.com/watch?v=R9rUHweAwI8

If you find yourself preparing for a mediation in a civil dispute, the American Bar Association Section of Dispute Resolution has published a helpful Complex Civil Mediation pamphlet that answers a clients’ basic questions about Mediation and raises other questions that should be considered and discussed. Some of the more important questions include:

  • identifying your actual interests (as opposed to positions);
  • identifying your best alternative to a negotiated agreement;
  • identifying and considering the opposing party’s actual interests; and
  • considering whether the parties would or could have a continuing relationship after resolution of the dispute.

The Guide is available here.