U.S. employers should reassess their existing policies on workplace drug use and testing and disability accommodation decision-making for Federal Drug Administration (“FDA”)-approved and state licensed medical use of marijuana in response to Drug Enforcement Agency (“DEA”) rescheduling orders under the Controlled Substances Act (“CSA”) implemented last April while closely monitoring for DEA action on a DEA proposal to reclassify marijuana from a Schedule I to a Schedule III substance under the CSA. The proposed marijuana rescheduling would significantly affect the consequences of marijuana use by individuals in the United States, including the testing and consequences of marijuana use under Department of Transportation (“DOT”) and other federal drug testing mandates.
Where the Rescheduling Stands Today
The recently completed ALJ hearing traces back to a Notice of Proposed Rulemaking published May 21, 2024, proposing to move marijuana from Schedule I to Schedule III of the CSA. After more than a year of procedural DEA delay holding hearings or taking other material action on the proposed rule, President Trump’s December 18, 2025 executive order directed the Attorney General to expedite completion of the rulemaking. In response, on April 23–24, 2026, Acting Attorney General Todd Blanche issued a final order that:
immediately moved FDA-approved marijuana drug products into Schedule III;
immediately moved marijuana subject to a qualifying state medical marijuana license into Schedule III; and
That broader hearing opened June 29, 2026 at DEA headquarters in Arlington, Virginia, before Chief ALJ Derek C. Julius, ran (with a recess for the July 4th holiday period) through mid-July, and formally concluded on July 15, 2026 following closing presentations from a group of participating states. See DEA press release; Notice of Hearing, 91 Fed. Reg. 22777 (Apr. 28, 2026). Because DEA and DOJ are the proponents of the rule, the hearing’s structure permitted testimony only from designated participants opposing rescheduling — including Smart Approaches to Marijuana (SAM), the National Drug & Alcohol Screening Association, and the States of Nebraska, Idaho, Indiana, Louisiana, and Tennessee (through its Bureau of Investigation), among others. Pro-reform organizations including NORML sought and were denied participant status. ALJ Julius also ordered that the hearing would not be televised, livestreamed, or otherwise broadcast, limiting observation to in-person attendance.
As if this ambiguity isn’t enough, the Acting Attorney General’s April 2026 final order reclassifying to Schedule III FDA-approved and state licensed marijuana now faces legal challenges such as the one brought by Smart Approaches to Marijuana and the National Drug & Alcohol Screening Association, seeSAM Inc., et al. v. U.S. Department of Justice, et al., No. 26-1106 (D.C. Cir., petition filed May 4, 2026), and another brought by the Attorneys General of Indiana and Nebraska, seeNebraska, et al. v. U.S. Department of Justice, et al., No. 26-1130 (D.C. Cir., petition filed May 22, 2026). While the fate of these consolidated challenges awaits resolution by the U.S. Court of Appeals for the D.C. Circuit, employers and health plans must deal with the currently effective policy change that, for now, has made a Schedule I drug FDAA-approved medical and state-licensed marijuana.
Pending the resolution of challenges to the currently effective change of FDA-approved medical and state licensed marijuana and DEA action on its broader rescheduling proposal, however, employers and plan sponsors should review their existing marijuana use and testing policies for the already effective FDA approval of FDA-approved marijuana drug products and marijuana subject to a qualifying state medical marijuana license that took effect under the final rescheduling orders issued by Acting Attorney General Todd Blanche on April 23–24, while continuing to monitor the Federal Register and other FDA and Congressional comments and actions signaling when and the likely direction the FDA intends to take on the broader proposal to reschedule marijuana generally from Schedule I to Schedule III.
What Already Changed — Independent of the Proposed DEA Rescheduling Rule Change
It is important for compliance purposes to separate what is already final from what remains pending:
Already in effect (April 2026 Final Order)
FDA-approved marijuana-containing drug products are in Schedule III.
Marijuana handled under a qualifying state medical marijuana license is in Schedule III, with a new expedited DEA registration pathway for state licensees.
State-licensed medical marijuana businesses are relieved of the Internal Revenue Code § 280E deduction disallowance, which applies only to Schedule I and II trafficking.
Recreational/adult-use marijuana, unlicensed marijuana, and synthetically derived THC remain in Schedule I and are unaffected by the April order.
Still pending (record closed; awaiting ALJ recommendation and DEA final decision)
Whether marijuana as a category — including adult-use/recreational marijuana not tied to an FDA-approved product or state medical license — moves to Schedule III.
The government has been explicit throughout that this proceeding is not about legalizing recreational use; it concerns whether marijuana has a “currently accepted medical use” sufficient to satisfy the CSA’s scheduling criteria.
Post-hearing briefs are due August 17, 2026; the ALJ’s recommendation and DEA’s final decision will follow on an unannounced timeline.
Why This Matters for Employers — and Why It Doesn’t Change as Much as Headlines Suggest
A move from Schedule I to Schedule III would be historically significant, but it would not legalize recreational marijuana use, and it would not, by itself, require employers to change drug-free workplace policies. Marijuana would remain a controlled substance requiring a valid prescription for lawful use under federal law; unauthorized possession or use would remain a federal offense. HR and employment counsel should calibrate client and internal expectations accordingly while continuing to monitor the following areas:
Drug testing and drug-free workplace policies
The scheduling change could impact your current workplace drug use and drug testing policies by expanding legally permitted use and requiring the collection of added documentation for those claiming permitted use. Employers, insurers and others concerned about impairment by workers consuming marijuana in accordance with its new scheduling will need to consider the need for and advisability of adopting policies tailored to their concerns and ensuring their testing and other administrative practices meet applicable legal requirements.
For purposes of this analysis, the changes adopted last April can make medicinal use in accordance with FDA-approved or state-licensed uses legal in the applicable workplace jurisdiction. However, the proposed schedule III classification would not convert a positive marijuana test into evidence of lawful drug use in the ordinary case, since off-label recreational use would remain unauthorized under federal law absent a valid prescription.
Employers should nonetheless review testing panels, medical review officer (MRO) protocols, and policy language for currency, and confirm policies still align with applicable state law, which increasingly diverges from federal scheduling on off-duty use protections.
DOT and other safety-sensitive/federally regulated testing
The recently adopted and additional proposed rescheduling of marijuana to a Schedule III classification are unlikely to change U.S. Department of Transportation drug testing requirements, as its 49 C.F.R. Part 40 rules operate independently of CSA scheduling. DOT has previously confirmed that rescheduling marijuana would not, by itself, change safety-sensitive testing requirements. Employers with DOT-covered or other federally regulated safety-sensitive positions should watch for any DOT or agency-specific guidance issued in response to a final rescheduling decision. Nevertheless, the rescheduling likely foreseeably could encourage even broader unauthorized use by employees or others reading the rescheduling as eliminating prohibitions, reflecting a further decline in enforcement, or both.
ADA and disability-related considerations
The recent DEA rescheduling of FDA-approved use of medicinal marijuana to a Schedule I drug classification will expand legally available options for medicinal marijuana use by employees in accordance with appropriately prescribed and used medicinal marijuana. Also, forty states now authorize medical marijuana under state law, many with employment protections for off-duty medical use that already operate independently of federal scheduling. Federal rescheduling will not harmonize this patchwork, and multistate employers should continue maintaining state-by-state policy matrices rather than assuming a federal fix is coming.
These changes can create new Americans with Disabilities Act (“ADA”) implijcations by, among other things:
Requiring employers to consider requests for accommodation of medically prescribed marijuana by broadening the availability and medicinal use of FDA-approved and state-licensed medicinal marijuana. Rescheduling does not change the ADA’s treatment of current illegal drug use as outside the definition of a protected disability while such use continues.
Requiring employers to consider the convergence between ADA’s mental/psychological impairment prong and MHPAEA parity classification issues when designing substance use disorder treatment benefits — a distinct analysis from current-use accommodation questions, and one worth continuing to track alongside this rulemaking.
Health and welfare plan sponsors and fiduciaries
The reclassification of FDA-approved medicinal marijuana also can create new design questions for health and disability benefit plan sponsors and claims and appeals health challenges for health and disability plan fiduciaries. For instance,
Health, AD&D, disability, life and other benefit plan sponsors and fiduciaries should recognize that the rescheduling adopted last April expands the legally allowed prescription and use of marijuana.
While Schedule III status does not itself create a coverage mandate, the approval could affect how FDA-approved uses are treated by removing exclusions or rules that previously denied coverage based on their more restricted DEA Schedule III status. While formulary and coverage decisions for any FDA-approved cannabinoid product remain a plan design and medical-necessity determination for the plan sponsor and its PBM or other fiduciaries, previously relied upon exclusions may no longer operate in the same way to restrict coverage.
Plan sponsors, their prescription benefit managers, insurers and other service providers should reevaluate current formularies and coverage provisions and exclusions for MHPAEA and other implications. They also should watch the FDA approval pipeline for cannabinoid drug products for potential formulary impact, should evaluate the need for changes in coverage or benefit exclusions and added fiduciary or other risks relating to benefit coverage and limitations potentially impacted by marijuana use. Health, disability, accident and dismemberment, and life insurance plan fiduciaries and insurers should use care to consider prudently the potential implications of rescheduling on any claims or appeals including special concerns and considerations likely to arise with respect to health benefits impacted byh MHPAEA. Fiduciaries should use care to coordinate any MHPAEA comparative analysis work touching substance use disorder benefits with counsel already tracking that parity exposure.
Cannabis-industry and cannabis-adjacent employers
State-licensed medical marijuana operators already qualify for § 280E relief under the April 2026 order; HR and finance functions at these employers should confirm payroll tax treatment reflects the change and monitor the expedited DEA registration pathway for state licensees.
Recommended Action Items
For HR and Employment Counsel
Review (but do not overhaul) drug-testing and drug-free workplace policies now; hold substantive revisions pending a final DEA decision, which — with post-hearing briefs not even due until August 17 — remains months away at minimum.
Confirm state-law policy variations are current, independent of the federal rescheduling timeline.
Flag DOT-covered positions for a separate compliance check once DOT issues any post-rulemaking guidance.
For Health, AD&D, Disability and & Other Welfare Plan Sponsors and Fiduciaries
Task PBM and plan counsel with monitoring FDA’s cannabinoid drug approval pipeline for formulary implications.
Coordinate substance use disorder benefit design review with pending MHPAEA comparative analysis obligations.
For General Counsel and Risk Management
Track the consolidated D.C. Circuit challenges to the April 2026 Final Order alongside the ALJ’s post-hearing process; a reversal on appeal could unwind the medical/state-licensed rescheduling already in effect.
Maintain rescheduling-tracking analysis as privileged work product where prepared to inform litigation or enforcement-risk posture.
For State-Licensed Medical Marijuana Employers
Confirm § 280E tax treatment has been updated and pursue the expedited DEA registration pathway using existing state licensure as supporting evidence.
Stay Tuned and Share Your Input
While the DEA’s proposed rescheduling is a self-initiated proposal, the ALJ’s post-hearing recommendation and what action, if any, the DEA ultimately will take on its proposal to reschedule marijuana more broadly remain uncertain. Although the DEA hearing on the proposed ruling is complete, communications to the DEA and Congress still offer opportunities to influence the direction and outcome of these decisions. Concerned employers and others should consider communicating any input or concerns to the DEA and Congress promptly to ensure their input receives consideration. Meanwhile, employers, health and disability plans and other interested parties should reevaluate their policies in response to the already adopted rescheduling as they monitor for future developments.
For Help or More Information
The author of this update, Cynthia Marcotte Stamer is an attorney Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization with decades of experience advising and assisting health industry and other employers to design, audit, and defend their employment and other risk management and compliance practices, including conducting audits and investigations, designing and updating compliance and risk management programs, responding to government investigations, conducting transaction, governance, and other due diligence, and assisting with other legal and operational compliance and risk management and legislative and regulatory affairs. She is available to assist your organization in assessing the impact of these developments and navigating the compliance and strategic steps that follow. For more information about these concerns or Ms. Stamer, contact Ms. Stamer via e-mail or via telephone at (214) 452 -8297.
About the Author
Cynthia Marcotte Stamer is an American College of Employee Benefits Counsel and a Martindale-Hubble “AV-Preeminent” (Top 1%) attorney and advisor board certified in labor and employment law by the Texas Board of Legal Specialization peer peer celebrated as “Top Rated Lawyer” and “LEGAL LEADER™ “Top Rated Lawyer” and “Best Lawyer” for her work in ERISA & Employee Benefits Law, Health Care Law, Labor and Employment Law, and Business and Commercial Law.
Nationally recognized for her decades of leading-edge workforce, health and other employee benefits and insurance, compensation, regulatory affairs and compliance, and other management work, public policy leadership and advocacy, coaching, teachings, and publications, she is the publisher of Solutions Law Press, Inc.® practitioner-focused compliance publications for employers, plan sponsors, HR professionals, health care, insurance, technology and data industry leaders, and legal counsel and risk management advisors.
Along with these activities, Ms. Stamer also has earned national recognition for her authorship of thousands of highly regarded works, presentations as a knowledgeable speaker, testimony and other input of regulators and legislators, and media interviews on health and other benefits, human resources and other workforce, health care, insurance, data privacy and security and other related concerns.
For more information about Ms. Stamer, engaging her services or to speak, her work, credentials, experience and involvements, or other matters, see the About the Author page, her website at www.cynthiastamer.com, or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
The $17 million False Claims Act settlement with technology giant IBM by announced April 10, 2026, using affirmative action or other disfavored diversity, equity and inclusion (“DEI”) practices creates added risks for federal government contractors and grant recipients beyond those U.S. businesses as a whole already face under the Trump Administration “merit based” interpretation and enforcement of federal Civil Rights laws as prohibiting DEI or other discriminatory decision making.
In the face of the IBM and other agency investigations and enforcements under the new merit based civil rights policy, all US businesses, generally, and government contractor specifically should seek the advice of qualified legal counsel on their potential exposure and options for mitigation of their exposure under the Trump merit based Civil Rights law interpretation and enforcement policy.
Affirmative Action & Other DEI Practices Under Attack
Government and private DEI practices have faced increasing challenges under a series of Supreme Court rulings that interpret the 14th Amendment as prohibiting affirmative action and other government required or applied race based hiring and other preferences except where adopted and tailored to redress a proven specific past discrimination harm. See e.g., Students for Fair Admissions v. President and Fellows of Harvard College, 600 U.S. ___ (2023); AdarandConstructors, Inc. v. Peña, 515 U.S. 200 (1995); Ricci v. DeStefano, 557 U.S. 557, 579–80 (2009). While the Court rulings since as early as 2009 indicated racial or other DEI preferences were allowed only to redress a past history of discrimination, federal regulators and many courts applied these holdings in a manner that presumed or required little evidence of specific discrimination to uphold DEI practices. Consequently, federal regulations and enforcement encouraged if not required broad adoption of these practices for decades.
The Supreme Court cast the dye for change with its ruling in Students for Fair Admissions, that race-conscious admissions programs at Harvard University and the University of North Carolina violated the Equal Protection Clause and, as applied to recipients of federal funds, Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d). Rejecting the universities’ diversity rationales as insufficiently measurable and not narrowly tailored, the Supreme Court in Students for Fair Admissions ruled that racial classifications are presumptively invalid and must meet strict scrutiny with clear endpoints and individualized consideration to overcome that presumption of invalidity. Its holding and reasoning as applied to the facts leave little room for legal defense of DEI practices in education, government contracting, employment and other practices historically using DEI strategies absent a specific remedial justification tied to proven discrimination. See also Ricci v. DeStefano, 557 U.S. 557 (2009).
President Trump reacted to the Students for Fair Admissions and other Supreme Court rulings banning DEI policies in a series of Executive Orders upon beginning his second Presidency. See, Exec. Order No. 14148, Ending Radical and Wasteful Government DEI Programs and Preferencing, 90 Fed. Reg. ___ (Jan. 20, 2025); Exec. Order No. 14149, Restoring Merit-Based Opportunity and Ending Illegal Discrimination, 90 Fed. Reg. ___ (Jan. 20, 2025); Office of Mgmt. & Budget, Memorandum M-25-13, Initial Guidance Regarding President Trump’s Executive Order on Ending DEI Programs (Jan. 21, 2025); U.S. Office of Personnel Mgmt., Guidance on Implementation of Executive Orders Eliminating DEI Programs in Federal Workforce (Jan. 2025); U.S. Dep’t of Justice, Memorandum on Civil Rights Enforcement and Prohibition of Race-Based Preferences (Jan. 2025); U.S. Dep’t of Defense, Directive on Removal of Diversity, Equity, and Inclusion Training and Programs (Feb. 2025); U.S. Dep’t of Educ., Dear Colleague Letter, Application of Federal Civil Rights Laws to Race-Conscious Policies Post-SFFA (Feb. 2025).
Upon taking office, President Trump in his January 21, 2025 Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (“EO 14173”) directed federal agencies to interpret and enforce the Civil Rights Act as requiring merit-based decisions without application of preferences for diversity, equity and inclusion,” (“DEI”), “affirmative action” or other favoritism to particular groups.
In Executive Order (“EO”) 14173, President Trump announced his interpretation of the equal protection and opportunity provision of the 14th Amendment of the U.S. Constitution, the Civil Rights Act of 1964 (“Civil Rights Act “), Section 1557 of the Patient Protection and Affordable Care Act of 1996 (“Section 1557”) and other federal civil rights laws as guaranteeing “merit-based” decision-making and prohibiting DEI, affirmative action and other non-merit-based race, sex, religious, national origin preferences. Consistent with this merit-based construction, President Trump ordered all federal agencies “to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements” and “to enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.”
In response to these directives, federal agencies abandoned decades of regulations and enforcement practices that encouraged if not required DEI practices to enforce a merit based decision making interpretation of federal civil rights laws that prohibits affirmative action and other DEI practices.
In response to President Trump’s Executive Orders, for instance, the Office of Federal Contract Compliance Programs (“OFCCP”) has abandoned regulations that for decades required federal contractors to demonstrate their affirmative action requirements effectiveness with a merit-only decision policy. See, Exec. Order No. 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, 90 Fed. Reg. 8633 (Jan. 21, 2025); U.S. Dep’t of Labor, Directive to OFCCP to Cease Enforcement of E.O. 11246 Affirmative Action Requirements (Jan. 24, 2025); Office of Federal Contract Compliance Programs, Director Catherine Eschbach, Letter to Federal Contractors Regarding Compliance with Executive Order 14173 and Wind-Down of Affirmative Action Programs (June 27, 2025); Office of Federal Contract Compliance Programs, Invitation to Voluntarily Report Compliance with Executive Order 14173 (2025).
Additionally, for employers generally, the Equal Employment Opportunity Commission (“EEOC”) revised its guidance to reflect that Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e-2) prohibits race-based employment decisions except in narrow circumstances, reinforcing a shift toward race-neutral strategies. See, e.g., Equal Employment Opportunity Commission, What You Should Know About DEI-Related Discrimination at Work (updated 2023–2024) (explaining that Title VII prohibits employment decisions motivated by race, even when framed as DEI initiatives). Meanwhile, the EEOC and the DOJ also sought to educate employees suffering job detriment from their employers’ DEI practices about their potential claims by jointly publishing a one-page technical assistance document, “What To Do If You Experience Discrimination Related to DEI at Work.”These actions are heightening Civil Rights discrimination risks for all employers for current or past DEI practices.
The DOJ’s weaponization of the FCA adds another significant DEI-derived risk for healthcare, education and government contractors. As reflected by a series of high profile agency actions initiated against educational and health care organizations using DEI practices announced in conjunction with or following President Trump’s DEI Executive Orders, federal health care and educational organizations participating in federal programs and federal government contractors face much greater risks from use of DEI practices beyond the general exposure of employers under the revised EEOC interpretation and enforcement policies. While initially these DEI enforcement policies targeted education and health care organizations participating in programs funded or managed by the Department of Education , the Department of Health and Human Services, or both, the IBM settlement makes clear these enforcement policies and risks now apply to federal government contractors and grant recipients as a whole.
Federal Government Contractor & Grant Recipient DEI False Claims Act Exposure
The first settlement announced by DOJ under the Civil Rights Enforcement Initiative announced in May, 2025, the IBM settlement with DOJ confirms DOJ is pursuing government contractors for using DEI practices under the False Claims Act (“FCA”).
On May 19, 2025, DOJ announced it would prosecute government contractors and other federal funds recipients under the Civil Rights Fraud Initiative for knowingly violating federal Civil Rights laws by using affirmative action, diversity, equity and inclusion, or other non-merit based (“DEI”) employment or other business preferences.
DOJ further clarified in subsequent guidance that DEI programs involving preferential treatment may violate statutes such as Title VI and Title VII, and that false certifications of compliance with those statutes may satisfy core FCA elements, including falsity and materiality. See, U.S. Dep’t of Justice, Guidance to Recipients of Federal Funding Regarding Unlawful Discrimination (July 2025).
DOJ takes the position that certain DEI programs expose federal contractors and grant recipients to liability under the FCA where those entities certify compliance with federal civil rights laws while maintaining practices the government views as involving unlawful race- or sex-based preferences.
In the Civil Rights Fraud Initiative announcement, DOJ stated that entities receiving federal funds that “knowingly violate[] federal civil rights laws” may be liable under the FCA because such violations can render certifications of compliance false and material to the government’s payment decisions. See U.S. Dep’t of Justice, Justice Department Establishes Civil Rights Fraud Initiative (May 19, 2025).
Government contractors targeted by DOJ for False Claims Act prosecution under its Civil Rights Enforcement Initiative face serious consequences as Civil Rights Act compliance is a condition of participation in federal programs. Since compliance with these requirements is a prerequisite to eligibility to bill or receive federal funds under federal programs, DOJ contends that billing the federal government or receiving funds under programs subject to these terms of participation for periods that the contractor are Grant recipient had DEI or other non-merit based practices constitutes making a false claim in violation of the False Claims Act.
Since announcing its FCA initiative, DOJ has encouraged whistleblower (qui tam) actions and signaled it was conducting active investigation and enforcement against federal funding recipients whose DEI policies allegedly conflict with federal nondiscrimination requirements of 31 U.S.C. §§ 3729–3733. See also U.S. Dep’t of Justice, Civil Division Memoranda on Civil Rights Enforcement and FCA Application (2025).
IBM Settlement Confirms DOJ FCA DEI Enforcement
The IBM settlement secured under DOJ’s Civil Rights Fraud Initiative confirms DOJ is pursuing government contractors for DEI practices.
On April 10, 2026 (publicly reported mid-April), DOJ announced that IBM agreed to pay approximately $17 million to resolve allegations that it violated the FCA by certifying compliance with federal anti-discrimination requirements in its government contracts while allegedly maintaining DEI practices that the government contended were discriminatory on the basis of race or sex. See U.S. Dep’t of Justice, IBM Pays $17 Million to Resolve Allegations of Discrimination Through Illegal DEI Practices (Apr. 10, 2026).
The DOJ IBM prosecution and resulting settlement reflect DOJ treats DEI programs as prohibited discrimination that can create FCA exposure where tied to contractual compliance obligations.
In its IBM prosecution, DOJ asserted that federal contractors must certify compliance with Title VII and related Federal Acquisition Regulation clauses as a condition of payment, and that knowingly maintaining noncompliant practices can render those certifications false and actionable under the FCA.
While IBM did not admit liability in the settlement, the DOJ sent a strong message to other government contractors to act to mediate their own exposure by repotting IBM received credit for cooperation, including early disclosures and remediation measures such as modifying or terminating the challenged programs.
As demonstrated by the announced IBM settlement, sanctions for False Claims Act violations are harsh. Along with potential criminal consequences for intentional or knowing violations, civil violations of the False Claims Act can result in treble damages and significant penalties, program exclusion or both.
Act Proactively To Mitigate Risks
The IBM settlement and other federal agency investigations and prosecutions sends a strong warning to Federal government contractors and federal grant recipients specifically and U.S. businesses generally to take proactive steps to mitigate their very real risk that their past and current DEI or other non-merit based employment and other policies.
With FCA enforcement now added to the employment discrimination enforcement risk government contractors face for challenged DEI practices, government contractors also must recognize their government contractor status puts them at a high risk of scrutiny due to the reporting and audit protocols used with government contracts and grants. When weighing the likelihood that their past or current practices will trigger scrutiny, government contractors are reminded that current and past certification and reporting facilitate the ability of DOJ and OFCCP to identify targets for enforcement under this new interpretation and enforcement of Civil Rights laws while sanctions secured through enforcement return significant revenue to federally constrained budgets.
Consequently, businesses generally and government contractors specifically should seek the assistance of qualified legal counsel to assess and mitigate their risk from past or current DEI initiatives in light of heightened litigation risk and federal agencies’s interpretation and enforcement of new Civil Rights merit based enforcement position. Organizations are encouraged to keep in mind that the sensitive nature of this investigation and analysis makes it critical that organizations conduct this analysis and their options for mitigation of liability within the scope of attorney. Client privileged to protect sensitive conversations and analysis from discovery.
If you have questions about or need assistance with these and other risk management or compliance concerns, contact the author.
For More Information
We hope this update is helpful. For more information about the or other health or other employee benefits, human resources, or health care developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
A Fellow in the American College of Employee Benefits Counsel and Board Certified in Labor and Employment Law by the Texas Board of Legal Certification, Cynthia Marcotte Stamer has more than 35 years experience, advising plan sponsors, fiduciaries, service providers and others about fiduciary responsibility and other employee benefit plan design, administration, risk management and compliance. i
Ms. Stamer is a Martindale-Hubble AV-Preeminent (highest/top 1%) practicing attorney recognized as a “Top Woman Lawyer,” “Top Rated Lawyer,” and “LEGAL LEADER™” in Health Care Law and Labor and Employment Law; among the “Best Lawyers In Dallas” in “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law recognized for her experience, scholarship, thought leadership and advocacy on health and other employee benefits, insurance, healthcare, workforce, HIPAA and other data and technology and other compliance in connection with her work with health care and life sciences, employee benefits, insurance, education, technology and other highly regulated and performance-dependent clients.
Ms. Stamer has more than 35 plus years of experience advising and representing, employers, employee benefit plans and their fiduciaries and administrators, their administrative services, technology and other business associates and other vendors, managed care and insurance, health care and other clients about these and other workforce, employee benefits, internal controls and other operations and compliance concerns.
Ms. Stamer is nationally sought out for her decades of leading-edge experience in the design, sponsorship, administration, and defense of health, severance, savings retirement and other employee benefit, workforce, insurance, healthcare, data and technology, and other operations to promote legal and operational compliance, reduce regulatory and other liability, and advance other operational goals. This experience includes decades of work on ERISA, Internal Revenue Code and other related labor and employment, insurance, corporate and securities, data privacy and security, licensing and other laws. She also sought out for her extensive speaking and publications on these and related concerns.
Along with her decades of legal and strategic consulting experience, Ms. Stamer also contributes her leadership and experience to many professional, civic and community organizations including current or previous service as Employee Benefits Group Chair and a Substantive Groups Committee Member for the ABA Real Property Trusts and Estates (“RPTE”) Section and Chair of its Welfare Plan, Fiduciary Responsibility and Plan Terminations Committees; Chair of the ABA International Section International Employment Law Committee; Chair and Vice Chair of the ABA Tort Trial and Insurance (“TIPS”) Section Medicine and Law Committee, Vice Chair of its Employee Benefits and Worker’s Compensation Committees; and Chair of the ABA Intellectual Property Section Law Practice Management and Special Technologies Committees; ABA Joint Committee on Employee Benefits (“JCEB”) Council Representative and Scribe for its annual agency meetings with the Department of Health and Human Services; International Section Life Sciences Committee Chair; Health Law Section Managed Care & Insurance Interest Group Chair; Vice Chair, Tax Section Fringe Benefit Committee Chair, and in various other ABA leadership capacities. Ms. Stamer also is a former Southwest Benefits Association Board Member and Continuing Education Chair, SHRM National Consultant Board Chair and Region IV Chair, Dallas Bar Association Employee Benefits Committee Chair, former Texas Association of Business State, Regional and Dallas Chapter Chair, a founding board member and Past President of the Alliance for Healthcare Excellence, as well as in the leadership of many other professional, civic and community organizations. She also is valued and celebrated for her decades of policy advocacy and charitable, pro bono, community and other service and leadership to promote understanding and strengthening health care, workforce, saving, disability, aging and retirement and other key policies and challenges through her PROJECT COPE Coalition For Patient Empowerment initiative and many other pro bono service involvements locally, nationally and internationally.
Ms. Stamer is the author of many highly regarded works published by leading professional and business publishers, the ABA, the American Health Lawyers Association, and others. Ms. Stamer also often speaks and serves on the faculty and steering committee for many ABA and other professional and industry conferences and conducts leadership and industry training for a wide range of organizations.
For more information about Ms. Stamer or her health industry, health and other benefits, workforce and other experience and involvements, see the Cynthia Marcotte Stamer P.C. website or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
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Human resources and other business leaders, using or allowing workforce members to CHAT-GPT or other artificial intelligence (“AI”) tools to research, make decisions or to support other activities should ensure that their organizations and their teams understand and manage the resulting evidentiary consequences and responsibilities these activities create.
In today’s AI age, Human Resources directors and other business leaders in increasingly are encouraged to turn to AI tools for a quick understanding of the law, drafting of documents, and a host of other human relations and business functions traditionally performed with the assistance of legal counsel. Although AI tools can be valuable under the right situations and properly used, the use of AI tools, along side of or as a substitute for legal advice obtained within the scope of attorney client privilege can carry a number of inherent risks and challenges. Human Resources and other leaders and their organization should carefully evaluate and manage these consequences before using AI.
AI Searches May Be And Create Evidence
AI prompts, outputs, and related metadata often qualify as discoverable electronically stored information (“ESI”) in litigation, regulatory audits, and enforcement proceedings.
Under the Federal Rules of Civil Procedure, discoverable information includes electronically stored information (ESI”) relevant to claims or defenses. See Fed. R. Civ. P. 26(b)(1); 34(a)(1)(A). Once litigation is reasonably anticipated, organizations must preserve relevant ESI under Federal Rules of Civil Procedure. See e.g.,Hoffer v. Tellone, 128 F.4th 433 (2d Cir. 2025).
AI searches and other interactions and the information and other outputs they produce generally qualify as ESI for purposes of the Federal Rules of Civil Procedure, Federal Rules of Evidence, (hereafter collectively the “Federal Rules”) and comparable federal and state litigation procedural rules.
Likewise, federal and state regulatory and enforcement agencies tend to consider AI and other ESI evidence covered by document retention and discovery rules.
Where applicable, these Federal Rules and agency rules generally include AI and other ESI evidence organizations must preserve, identify, and subject to discovery or other production like traditional evidence in litigation and agency audits and investigations.
ESI evidence generally includes any data stored in electronic form—such as emails, texts, spreadsheets, social media, and Internet of Things (“IoT”) data. As broadly construed by the courts, courts already long have admitted:
Internet search histories;
Internal chats and Slack messages;
Draft documents; and
Deleted files.
AI searches are simply the next evolution of this evidence category. AI records and information considered ESI can include;
AI prompt histories;
Generated outputs;
Embedded AI-assisted drafts;
Platform logs (if accessible); and
Other records.
Organizations that fail to fulfill requirements for AI or other ESI early identification, data authentication and other requirements of Federal Rule of Evidence 902, the requirements of Federal Rule of Civil Procedure 37(e) regarding lost evidence, or other applicable requirements to preserve and produce ESI may result in sanctions, adverse inferences, and penalties under the Federal Rules. Similarly, organizations may incur evidentiary sanctions, regulator penalties, and other adverse consequences for failing to identify, retain and produce ESI from AI or other sources in government audits and investigations. Common sanctions include:
Monetary sanctions;
Evidence preclusion;
Adverse inference jury instructions; and
Other authorized sanctions.
See, e.g., Jones v. Riot Hosp. Grp. LLC, 95 F.4th 730 (9th Cir. 2024) (affirming dismissal as sanction for intentional destruction of ESI); Maziar v. City of Atlanta, No. 1:21-cv-02172, 2024 WL 197561 (N.D. Ga. June 10, 2024) (denying summary judgment and awarding fees based on loss of text messages); McBride v. Moore, No. 2:23-cv-02904, 2024 WL 1136429 (C.D. Cal. Feb. 23, 2024) (denying sanctions where ESI not shown lost or duty not triggered). Gregory v. State of Montana, No. 22-____ (9th Cir. 2024) (reversing sanctions imposed outside Rule 37(e); emphasizing Rule 37(e) as exclusive remedy for ESI spoliation); DR Distribs., LLC v. 21 Century Smoking, Inc., 513 F. Supp. 3d 839 (N.D. Ill. 2021) (recognizing financial prejudice from spoliation and awarding fees); Bistrian v. Levi, 448 F. Supp. 3d 454 (E.D. Pa. 2020) (Rule 37(e) provides exclusive framework for ESI spoliation); Fast v. GoDaddy.com LLC, 340 F.R.D. 326 (D. Ariz. 2022) (failure to preserve mobile device data warranted sanctions).
These and other related cases alert organizations that AI and other modern data sources are squarely within ESI. Courts treat AI, texts, mobile data, and app-based communications as discoverable ESI.
The precedent reflects that the best opportunity to position your organization to show the reasonability of the actions taken is through the existence and enforcement of policies before and during the use of the AI tool.ESI preservation obligations depend on foreseeability, control, and access to data. When deciding the consequences of the unavailability or failure to produce ESI, the determination regarding failure to take “reasonable steps” is fact-intensive. Of course, the failure to retain the documentation will be particularly likely to be found unreasonable where the party was under a statutory, regulatory, ethical, contractual, or other pre-existing obligation to preserve the evidence.
Also, courts require proof of intent to deprive before imposing the most severe adverse inference or dismissal sanctions, a lack of proof of intent to deprive the request requesting party of evidence does not mean there will not be consequences for the non-producing party. Negligent failure to retain and produce ESI and other evidence still carries consequences. Even without bad faith, courts may impose curative measures, fees, or evidentiary limitations.
Among other things, organizations should be prepared to routine and produce documentation and data obtained, utilized, or otherwise interacting with AI tools and it’s associated meta-data and other components to respond to litigation and regulatory request for a broad range of data and information. Optimally the data captured and retained should include, but it’s not necessarily limited to:
AI usage policies;
Employee and other agent AI interaction records;
Evidence of AI and other relevant governance and training; and
Data protection controls.
Consequently, failure to govern, identify, preserve and produce AI-generated and AI-assisted records appropriately can expose organizations to spoliation sanctions, adverse inference instructions, regulatory penalties, loss of privilege protections, and expanded liability exposure.
In recognition of the possibility that AI tool interactions may give rise to obligations to retain and produce ESI evidence created as a consequence of that interaction, or organization should work with legal counsel to develop an administer appropriate practices to monitor, identify, retain, manage, and where necessary produce this ESI evidence.
AI Tools Create Evidence
Beyond considering and meeting documentation and other evidently protection, preservation, and production responsibilities, organizations and their human resources and other leaders need to recognize that the use of the tool itself and its outputs creates evidence that may give rise to legal opportunities, risks, and obligations for the organization.
Organizations should keep in mind that the use of AI tools creates legal evidently risks because AI tools typically generate synthesized responses (not just links) that often incorporate user inputs into outputs that may reflect user intent, knowledge, biases and opinions, and decision-making. This often makes AI interactions particularly valuable evidence for:
Intent (e.g., “how to terminate employee without legal risk”) Knowledge (awareness of compliance obligations) State of mind (deliberate vs. negligent conduct);
Knowledge (awareness of compliance obligations);
State of mind (intentional, willful, or deliberate vs. negligent conduct)
The potential risks of this and other evidence is heightened by the fact that the evidence created may arise not only from the actions taken by the user of the AI tool, but also may be inherently built into the design of the AI tool itself or the databases or other reference materials that it accesses, not all of which may be transparent to the user or the organization that employs the user. These risks are further heightened when the AI tool use is not conducted internally within the organization by its employee, but rather is a tool utilized by a consultant or other third-party provider conducting activities of a sensitive nature on behalf of the organization, such as a recruiting company, investigation, company, or other service provider.
These unique characteristics of AI make it advisable that organizations recognize and manage potentially heightened exposures that employee or other agent use AI tools can produce for the organization in a wide range of sensitive areas.
Examples of queries that can become “smoking gun” evidence include but are not limited to:
In employment or other workforce administration searches, AI queries such as “How to terminate employee with medical condition,” ‘How to avoid claims when, terminating older, disabled, complaining, injured or other employee with protected status, or the like can be evidence of discriminatory or other adverse intent;” or “How to beat a union organizing campaign;”
Compliance & Regulatory searches such as “How to structure payments to avoid reporting requirements,” “HIPAA penalties for disclosure; searches about compliance or looking for compliance loophole; searches where company researched sanctions for noncompliance in areas involved in litigation or enforcement; or searches on risk management that could be evidence the organization saw but chose not to follow rules or standards or otherwise looked for or acted to circumvent compliance or disregarded interpretations less favorable to chosen challenged course of action;
Litigation or Other Defense Strategy searches or tools such as “How to defeat a whistleblower claim,” “Ways to minimize damages in lawsuit” “Protecting your assets from IRS or in bankruptcy,” “How to conceal” or How to hide” orthe like can harm the organization’s interest by showing adverse intent, willfulness, or other motive or state of mind;
Litigation case law, enforcement, argument drafting, or other actions that could reveal or provide insight on sensitive litigation strategies or their strengths or weaknesses;
Financial & Tax searches such as “Aggressive tax strategies unlikely to be audited,” or “contract terms to reclassify employee to contractor,” “Structure transaction to avoid disclosure” or the like; and
Other searches or tool uses that could reflect improper, intent, or document improper activities, such as how to hide evidence, how to create a bomb, how to poison somebody or that creates a record of conduct such as edits to revise data or documentation in reports or records, where the changes are tracked and retained.
Given these other risks, organizations should carefully consider and manage these and other risks when deciding whether, when, how and what AI tools their organizations allow their people to use, who gets to use what tools, designate and train those authorized to use these tools appropriately, and design and implement appropriate tools to track, capture, retain and manage these records of AI use and their implications. Optimally, the planning should identify and work to manage the creation and preservation of evidence and related AI ESI required or otherwise helpful to meet, applicable, regulatory, contractual, statutory, or other requirements in a manner that minimizes the creation of evidence that could call into question the compliance or other appropriateness of the organizations actors.
Privilege and Confidentiality Risks
Asking AI tools to answer legal questions or provide guidance in legal advice obtained within the scope of attorney. Client privilege also can enhance the exposure for the organization and it’s actors because of the implications of that Youts on the availability of attorney-client privilege for the activities and information obtained. Using AI tools and output also can have implications on the ability of an organization to protect legal advice and work product developed and shared within the scope of attorney privileges from discovery in judicial or regulatory actions. Organizations need to recognize risk to the confidentiality of legal advice or work product that entering sensitive legal questions or information into public AI tools not specifically designed and used outside the scope of the attorney-client relationship to avoid creating problematic evidence, disclosing discussions or work product that otherwise might qualify for protect against discovery in litigation or agency proceedings under the attorney-client privilege or attorney work product rules, or both.
Searches conducted by organization employees, consultants, or other agents or representatives about the law, strategies, or legal risks and consequences without or outside the scope of an attorney-client relationship generally can be discovered and used as evidence. Consequently, organizations should regulate the use by officers, directors, compliance officers, human resources directors, consultants, non-legal investigators and auditors and others of AI tools, internet or other searches to investigate the law or legal strategies independent of or outside the scope of attorney-client privilege.
Particularly risky scenarios include:
In-house counsel, Human Resources, risk management or compliance staff using public AI tools;
Consultants, contractors, and other vendors use of AI in performing tasks or tools;
Embedded AI in software or other tools; or
Uploading contracts, PHI, or proprietary data into AI systems.
Additionally, organizations and others communicating or working with legal counsel on behalf of the organization within the scope of attorney-client privilege to design strategies or investigate or defend actions generally should not use AI tools to conduct their own legal research or analysis without authorization and direction of the legal counsel to avoid forfeiting attorney-client privilege and work product protections.
If the required confidentiality is preserved, the attorney-client privilege and work product privileges rules can protect confidential communications between a client and its attorney and work product prepared for risk management, defense or other purposes of the legal engagement against disclosure in litigation or other proceedings in many circumstances. However these protections are lost if the communication or work product is disclosed to or discussed with third parties outside the attorney-client relationship. Entering factual information, conducting legal searches, or using AI tools outside the attorney-client relationship, not specifically designed to preserve confidentiality, or both to draft or evaluate legal documents, research, drafts, or strategies generally is considered a third party disclosure that can waiver or undermine the privilege for the specific information input to the AI tool as well as potentially related communications or work product.
For these and other reasons, organizations and individuals generally should resist the temptation to use AI tools to evaluate legal strategies, advice or work product.
Trade Secret, HIPAA and Other Data Privacy and Use Exposures
Human Resources and other leaders also must keep in mind their organization’s responsibilities to respect other organizations, intellectual property, to safeguard the confidentiality and security of data, and their organization’s need to protect its own intellectual property.
AI tool enthusiasts promote AI tools as substitutes for legal advice and other paid services. While asking AI to write a “free” policy or contract may seem a great way to save legal or other consulting, licensing or other costs, human resources and other leaders and their organizations must keep in mind that not all data, information and resources obtained through a ChatGPT or other AI search is shareware. Most nongovernmental data bases, contractual firms, tools, templates and other materials accessed through AI searches are or incorporate materials owned or subject to copyrights or other intellectual property protections of third parties. Unlicensed use of these resources can expose their organizations to copyright and other intellectual property infringement liability.
Furthermore, human resources and other executives choosing to use materials drafted using AI tools or otherwise acquired off of the Internet or other sources without legal advice to recognize that acquired materials and resources may not be currently compliant, appropriately tailored to their use, or contain other deficiencies for utilization in their organizations. These deficiencies can arise from a number of sources. For one thing, the queries input by the user may not be sufficiently tailored to adequately represent all of the material considerations necessary to tailor he organizations, questions, and the AI response to the needs of the organization. Also, because AI databases often times include a broad range of historical data, AI responses may rely upon outdated, legal or operational presumptions incorporated into these historical policies when they no longer are appropriate for use in your organization. Additionally, the response of AI may draw from a wide range of sources, including many of which may be sample policies not drafted by qualified individuals with adequate expertise to fully understand the legal and operational implications of the policy and properly draft a policy appropriate for use in the organization, acquiring the form or materials off of the Internet.
Beyond suitability of the information where tool obtained through the AI search itself, unlicensed use of the response, may expose your organization to liability for violating other organizations or authors, intellectual property rights. AI searches can and often do access and incorporate data and other resources protected by third party copyright,trade secrets, HIPAA or other confidentiality, or other safeguards. Accordingly, accessing or using data bases, sample language or forms, or other materials without proper licensing or attribution may trigger liability to individuals and organizations for breaches of these intellectual property rights.
A separate concern arising from the use of AI tools in HR and other business operations to evaluate, formate or otherwise process sensitive data also creates potentially serious risks when theof these tools involves allowing the AI tool to access or uploading the confidential or other sensitive information into the tool. Human resources and other leaders must exercise care not to share inappropriately and to help their organizations use policies and processes to prevent their people’s use of AI tools to avoid violating statutory, regulatory or contractual confidentiality requirements, compromising confidential information, their own or business partner’s trade secrets, proprietary information and other intellectual property, or both.
Furthermore, uploading or sharing trade secrets, Health Insurance Portability and Accountability (“HIPAA”) protected health information, confidential employee, tax or other regulated information, trade secrets or other confidential or sensitive data into AI tools or searches without proper controls may itself breach of HIPAA, trade secret, federal or state privacy laws (e.g., biometric, consumer data laws) or other statutory, regulatory, ethical or contractual data privacy or confidentiality obligations. Additionally, allowing AI tools to access and interact with electronic data or systems frequently triggers data and systems security obligations under HIPAA, the Fair and Accurate Credit Transactions Act, Equal Employment Opportunity and other Human Resources and benefits data, electronic crimes, federal and state government contract, and a broad range of international, federal and state cybersecurity laws and regulations, and other government and private contractual and program participation, statutes, and regulations.
Given these concerns, organizations should avoid using AI tools that require uploading customer, financial, sales, or other data or information that the organization considers its own trade secrets or proprietary information into AI data bases or tools that do not adequately safeguard the ownership and confidentiality of that information.
AI Tool Hallucinations and Other Output Deficiency Risks
AI tools and the output they produce are not always reliable. Among other things, certain AI tools are known to:
Lack the ability to distinguish between more and less credible information sources;
Create plausible-sounding but entirely fabricated facts, news articles, legal authorities, or academic citations;
Create biased, false, incomplete, or inaccurate responses when models lack complete training data, are subjected to biased data, have limited context, ir under other circumstances;
Create false positives such as I dentifying a threat (e.g., in fraud detection) that is not actually present.
Fail to detect a real threat (e.g., in medical imagery) or report other false positives;
Fabricate non-existent, fake information or other incorrect or inaccurate information; and
Engage in hallucinations or other errors
The quality of the response, at best, often varies based on the quality and precision of the question asked. Lack of experience and careful structuring of the questions and inquiries made, lack of specialized knowledge necessary to structure the inquiry to be tailored to the specific needs at hand, and other limitations and concerns about the searches can undermine the accuracy, completeness and relevance of the AI tools output. Accordingly, response obtained by AI tools, often are unreliable and must be validated by a person experienced and skilled. The validation process should be conducted in such a matter that it preserves evidence that changes and responses are made based on thoughtful and reasonable determinations that the evidence obtained was not applicable or reliable, to minimize susceptibility to claims that decisions and actions were cherry picking based on improper intent rather than appropriate quality assurance processes. Organizations allowing the use of the tools and the individuals utilizing them need to understand and appropriately manage the very operational, legal in other risks of these deficiencies and error errors when utilizing AI tools.
Adopt And Enforce AI Policies To Manage AI Tool Use Responsibilities and Risks
Considering these and other responsibilities, human resources and other leaders and their organizations should use care to decide when, how, why, and by whom it allows AI tools to be used in or on behalf of its organization and provide appropriate steps to manage those uses in the resulting ESI to fill its legal obligations and manage its legal and operational risks. Because this process of itself could be evidence impacting, the organizations, legal exposures, organizations generally should work with qualified legal counsel within the scope of attorney-client privilege to work define and enforce policies and practices, to promote the organization’s legal and operational interests and manage the resulting legal obligations.
The author of this update, Cynthia Marcotte Stamer has decades of experience advising and representing governmental and private entities, AI and other technology, workforce and other legal and operational compliance, risk management and other operational and enforcement matters. If you have questions or need advice or help evaluating or addressing these or other compliance, risk management, or other concerns, contact her.
For More Information
We hope this update is helpful. For more information about these or other legal, contractual or operational compliance or risk management, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452-8297.
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for her more than 35 years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications including leading edge work on workforce and other risk management and compliance.
Ms. Stamer’s work throughout her career has focused heavily on working with businesses domestically and internationally on employment, benefits, technology, data confidentiality, privacy, and security, and other Federal Sentencing Guidelines and other workforce management, regulatory and public policy and other legal and operational concerns.
Author of many highly regarded compliance, training and other resources on these and other operations, risk management, compliance and government affairs concerns, Ms. Stamer is widely recognized for her thought leadership and advocacy on these matters.
In addition, Ms. Stamer currently or previously served as the American Bar Association (“ABA”) Joint Committee on Employee Benefits OCR annual agency scribe and a Council Representative, International Section International Employment Law Committee Chair and International Life Sciences and Health Committee Chair, ABA TIPS Medicine and Law Committee Chair, ABA Health Law Section Managed Care & Insurance Interest Group Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a host of other professional and civic leadership roles. She is a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations.
For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
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Recent fiduciary litigation clearly warns employer and other plan sponsors, plan committees and corporate officials, trustees and other service providers, and others involved in plan-related decision-making to ensure a well‑documented prudent fiduciary process for selecting and monitoring plan investments, selecting and overseeing service providers empowered to make or influence these decisions, and making other plan decisions.
The Employee, Retirement Income, Security Act (“ERISA”) requires “fiduciaries” to act prudently when making investment decisions, selecting and supervising parties to make investment decisions, or making any other fiduciary decision. See ERISA §404(a)(1)(B), 29 U.S.C. §1104(a)(1)(B).
Discount Tire Plan Litigation Illustrates Fiduciary Risks
The March 4, 2026 ruling in McGeathy v. Reinalt‑Thomas Corp., No. 2:25‑cv‑01439 (D. Ariz. Mar. 4, 2026), is the latest of a plethora of rulings highlighting the exposure of these and other parties with named or functional discretionary authority to make or select those responsible for making plan decisions risk from failing to recognize and appropriately manage their fiduciary status and responsibilities.
In McGeathy U.S. District Court for the District of Arizona refused to dismiss a fiduciary breach lawsuit alleging that the parent company of Discount Tire that sponsored the plan, various corporate officials and a trust company service provider were liable as plan fiduciaries for failing properly to monitor and replace underperforming target‑date funds in the company’s retirement plan.
The decision illustrates the willingness of courts to allow ERISA fiduciary claims to proceed against corporate plan sponsors and their officials or others who plaintiffs plausibly allege were fiduciaries and failed to follow a prudent process for reviewing investments or carrying out other discretionary decision-making. See ERISA §404(a)(1)(B), 29 U.S.C. §1104(a)(1)(B).
In McGeathy, a participant in the Discount Tire/America’s Tire Retirement Plan alleged that the defendants were plan fiduciaries and breached their duties under ERISA §404(a) by retaining a series of American Century target‑date funds that allegedly underperformed comparable funds for many years.
According to the complaint, the plan included approximately 16,000 participants and more than $1.2 billion in assets, with nearly 44% of plan assets invested in the challenged target‑date funds. The plaintiff alleges fiduciaries failed to prudently monitor and remove the investments despite long‑term underperformance relative to comparable funds.
The defendants argued that investment underperformance alone does not establish a fiduciary breach under ERISA. Some also disputed their fiduciary status relating to the challenged decisions.
The court rejected dismissal at the pleading stage, holding that the complaint plausibly alleged that the defendants were fiduciaries and as fiduciaries or co-fiduciaries may have failed to prudently monitor and replace the funds.
The court also allowed failure‑to‑monitor claims against company officials responsible for appointing and overseeing plan investment decision‑makers under the theory they acted as fiduciaries in selecting and retaining the trustee appointed to make those decisions for the plan. See ERISA §405(a), 29 U.S.C. §1105(a).
The courts ruling allows the case to proceed, requiring the plan sponsor, corporate officials, and trust company to continue to defend the case, pending a settlement or a determination on the facts. Regardless of how a case of merges, the litigation promises to be an expensive lesson, the outcome of which will depend on each defendant ability to demonstrate its prudence in the exercise of any discretion it possessed over the plan or it’s administration with regard to the disputed investments.
The Fiduciary Duty of Prudence
Under ERISA, the term “fiduciary” includes any person or entity that possesses named or functional discretionary authority over the administration or assets of a plan. ERISA §409. Since ERISA defines fiduciary status functionally, a party may not be a named fiduciary to bear fiduciary liability or responsibility. Consequently, many corporate officers and other parties often face fiduciary liability for their functional involvement and investment or other decisions regarding for the plan even though not official officially named as fiduciaries. A fiduciary generally is personally liable for breaches a fiduciary duties that it commits as well as liability as a co-fiduciary for fiduciary act or emissions of another fiduciary that the co-fiduciary through the exercise of prudence New, or should’ve known, was breaching its fiduciary duties and failed to appropriately act to protect the plan, including failure to monitor and manage a fiduciary that it appointed.
ERISA requires fiduciaries to act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use.” ERISA §404(a)(1)(B), 29 U.S.C. §1104(a)(1)(B).
Courts consistently emphasize that ERISA liability focuses on the fiduciary process used to select and monitor investments, not simply on whether investments perform well or poorly.
The U.S. Supreme Court reinforced this principle in Tibble v. Edison International, 575 U.S. 523 (2015), holding that ERISA fiduciaries have a continuing duty to monitor plan investments and remove imprudent ones within a reasonable time.
Other Recent Cases Reinforce Monitoring Duties
Recent ERISA litigation continues to demonstrate that plan fiduciaries they cannot produce the necessary evidence to show that they acted prudently risk significant personal liability.
In Collins v. Northeast Grocery, Inc., 87 F.4th 125 (2d Cir. 2025), the Second Circuit allowed fiduciary breach claims to proceed based on allegations that plan fiduciaries failed to prudently evaluate investment performance and fees relative to comparable alternatives.
Similarly, in Cunningham v. Cornell University, 604 U.S. ___ (2025), the U.S. Supreme Court revived claims challenging allegedly excessive administrative and recordkeeping fees and clarified pleading standards applicable to ERISA fiduciary breach claims.
These decisions reflect continuing judicial scrutiny of fiduciary monitoring processes, benchmarking practices, and oversight of investment decisions and the selection, monitoring and management of plan sponsors and their corporate officers and other officials involved in the selection and retention of the service providers and pension investments or provide other services.
This liability often arises or is enhanced by the failure of individuals or entities possessing or exercising discretion over the plan’s assets or administration to appreciate their own fiduciary status and a resulting failure to use the necessary processes to prudently carry out these discretionary duties in a manner that captures the necessary evidence to defend the prudence of their actions.
Compliance Lessons for Plan Fiduciaries
Plan sponsors, fiduciary committees and corporate officers and directors with responsibility or involvement in managing plan, investments, or selection and management of the service providers or company officials responsible for management of investments should consider several risk‑reduction steps.
Plan an investment for other committees, trust companies, investment, advisory organizations, or individuals involved in the discretionary decision-making about the investment and management of plan assets should conduct their activities to create and maintain the necessary, documented evidence of their prudence in their oversight and management of the plans, investments and other activities. As part of these actions, for instance, they should:
• Maintain a structured investment monitoring process with periodic performance reviews.
• Adopt and consistently follow a written Investment Policy Statement.
• Benchmark investment performance and fees against appropriate peer funds.
• Document fiduciary committee meetings and deliberations.
• Monitor market or other conditions that could create a need for reconsideration of investment policies to meet market specific or other emerging conditions and document their decision-making.
Corporate Officers Be Liable as “Functional Fiduciaries” Even When Not Named in the Plan
Another important lesson from this modern ERISA fiduciary litigation is that corporate officers and others involved in making or appointing individuals or service providers to make plan investment or other decisions can become liable as fiduciaries even if not formally named as fiduciaries in plan documents.
ERISA defines fiduciary status based on functions performed, not titles held.
Under ERISA §3(21)(A), 29 U.S.C. §1002(21)(A), a person becomes a fiduciary to the extent he or she exercises discretionary authority or control over plan management, exercises authority or control over plan assets, or provides investment advice for a fee.
Because of this functional fiduciary rule, courts frequently hold that corporate officers, executives, and investment committee members can be personally liable when they exercise discretionary authority over plan investments or the selection or retention of the parties to make those decisions.
In Fifth Third Bancorp v. Dudenhoeffer, for instance, plan participants sued corporate officers responsible for administering the company’s retirement plan.
Participants alleged that corporate insiders knew the company’s stock was artificially inflated but continued allowing the plan to invest heavily in it. The Supreme Court held that corporate officers serving as plan administrators are subject to the same ERISA fiduciary duties as any other fiduciary, rejecting a special “presumption of prudence” for employer-stock investments.
The decision reinforced that officers who exercise discretionary control over plan investments can face fiduciary liability even when acting in dual corporate roles.
Also, in Donovan v. Bierwirth, the court held corporate officers responsible for managing a company pension plan liable for breach of fiduciary duty when they made investment decisions involving employer stock during a takeover battle.
The Second Circuit held that fiduciaries must act solely in the interests of plan participants and must take steps such as seeking independent advice when corporate conflicts arise.
The case remains one of the leading precedents establishing that corporate insiders who control plan investments can be personally liable under ERISA.
Likewise, federal courts have also imposed fiduciary liability on corporate insiders involved in employee stock ownership plan (ESOP) transactions.
For example, litigation brought by the U.S. Department of Labor against parties involved in ESOP stock transactions resulted in liability where insiders participated in transactions that caused the plan to pay inflated prices for employer stock. Courts held that individuals involved in the transaction could be jointly and severally liable as fiduciaries or knowing participants in prohibited transactions.
These cases demonstrate that ERISA liability can extend beyond named fiduciaries to individuals who exercise real control over investment decisions.
This functional fiduciary doctrine significantly expands potential liability exposure.
Corporate executives may become ERISA fiduciaries when they select or retain service providers or named plan fiduciaries, approve or influence plan investment menus, participate in investment committees, select or retain target-date funds or other plan investments or appoint or monitor plan fiduciaries or investment advisors or engage in of influence other plan decisions affecting plan assets or administration.
Even if plan documents designate a committee or outside fiduciary, individuals involved in decision-making may still face liability under ERISA’s co-fiduciary provisions if they knowingly participate in or fail to correct fiduciary breaches.
Acdditional Practical Compliance Lessons for Corporate Leadership
Corporate officers involved in retirement or other benefit plan oversight should take steps to manage their potential liability exposure. Among other things, these steps should include:
Ensure plan documents and contracts provide a clear fiduciary governance structure that clearly identifies l who is responsible for plan investment and other decisions.
Establish and prudently appoint an investment committe responsible for prudent investment of the plan investments;
Require investment committee independence with prudent periodic monitoring and oversight;
Investment Committees should meet regularly and prudently decide and review investment performance pursuant to prudent written investment policy.
Ensure documented monitoring of plan investments.
Maintain benchmarking reports, advisor analyses, and prudent fiduciary deliberations documentation;
Periodically review of investment advisors Confirm that advisors are providing objective and appropriate recommendations;
Train executives and committee members Ensure individuals understand when their activities may create fiduciary status and their responsibilities.
All parties should understand that ERISA fiduciary liability is determined by what individuals actually do, not by whether they are formally labeled fiduciaries.
Courts consistently hold that corporate officers who exercise discretionary authority over retirement plan investments may be treated as ERISA fiduciaries and held personally liable for imprudent investment decisions or failures to monitor plan investments.
Businesses sponsoring employee benefit plans, and the officers and directors that serve on retirement committees, or in other capacities involved in the selection and retention of committees or service providers appointed to manage plan investments and other operations should recognize their selection authority generally will be considered fiduciary action for purposes of ERISA. Parties involved in these selection and oversight activities should conduct carefully documented processes to demonstrate their prudence in the selection and monitoring of the committee members or service providers that will be performing investment or other fiduciary functions for the plan. hiring processes should include carefully, documented, vetting processes that verify the credentials, performance, processes, fees and other compensation, and other relevant factors necessary to make these engagement of a particular entity or individual to carry out these investment functions prudent. Subsequently, procedure should be implemented and used to periodically monitor and review investment advisors and other service providers.
To meet express requirements of a risk of concerning the parties and trusted with fiduciary responsibilities, all involve parties should affirm that any individual or entity involved in the selection of plan, service providers, or investments, or otherwise performing fiduciary activities, or providing services to the plan are properly vetted for eligibility to serve under the ERISA rules, properly bonded, and otherwise have the credentials and performance history that justifies and trust of these responsibilities under the rules of prudence.
Documentation of fiduciary decision‑making is often critical in defending ERISA fiduciary breach claims. Courts frequently examine committee minutes, benchmarking reports, and advisor recommendations when evaluating whether fiduciaries followed a prudent process. processes of all involved parties should not only seek to exercise and verify prudent decision-making, but also captured the necessary evidence and documentation to defend their determination and actions in the event of a Department of Labor investigation or participant lawsuit.
Bottom Line
The Discount Tire and other similar decisions reaffirm a central principle of ERISA fiduciary law: liability often turns on the quality and documentation of the fiduciary process used to monitor plan investments or other decision-making regarding the plan, it’s service providers and investments, or other aspects of the establishment and administration of the plan.
Plan sponsors and fiduciaries should ensure they maintain a disciplined vendor credentialing, selection and contracting process; investment selection, performance and review process; and retain documentation demonstrating prudent oversight of plan investments and advisors.
Corporations should seek guidance and training from qualified employee benefits counsel as prudently required to understand and perform these responsibilities.
Also since lawsuits and other challenges can arise, despite the most diligent efforts to act prudently, all parties involved also gently should consider the advisability of securing fiduciary liability insurance coverage and appropriate contractional role designation and indemnification to help mitigate potential liability and cost arising from challenges that may arise out of the performance of investment or other related activities.
For More Information
We hope this update is helpful. For more information about these or other employee benefits, human resources, or health care developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
A Fellow in the American College of Employee Benefits Counsel and Board Certified in Labor and Employment Law by the Texas Board of Legal Certification, Cynthia Marcotte Stamer has more than 35 years experience, advising plan sponsors, fiduciaries, service providers and others about fiduciary responsibility and other employee benefit plan design, administration, risk management and compliance. i
Ms. Stamer is a Martindale-Hubble AV-Preeminent (highest/top 1%) practicing attorney recognized as a “Top Woman Lawyer,” “Top Rated Lawyer,” and “LEGAL LEADER™” in Health Care Law and Labor and Employment Law; among the “Best Lawyers In Dallas” in “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law recognized for her experience, scholarship, thought leadership and advocacy on health and other employee benefits, insurance, healthcare, workforce, HIPAA and other data and technology and other compliance in connection with her work with health care and life sciences, employee benefits, insurance, education, technology and other highly regulated and performance-dependent clients.
Ms. Stamer has more than 35 plus years of experience advising and representing, employers, employee benefit plans and their fiduciaries and administrators, their administrative services, technology and other business associates and other vendors, managed care and insurance, health care and other clients about these and other workforce, employee benefits, internal controls and other operations and compliance concerns.
Ms. Stamer is nationally sought out for her decades of leading-edge experience in the design, sponsorship, administration, and defense of health, severance, savings retirement and other employee benefit, workforce, insurance, healthcare, data and technology, and other operations to promote legal and operational compliance, reduce regulatory and other liability, and advance other operational goals. This experience includes decades of work on ERISA, Internal Revenue Code and other related labor and employment, insurance, corporate and securities, data privacy and security, licensing and other laws. She also sought out for her extensive speaking and publications on these and related concerns.
Along with her decades of legal and strategic consulting experience, Ms. Stamer also contributes her leadership and experience to many professional, civic and community organizations including current or previous service as Employee Benefits Group Chair and a Substantive Groups Committee Member for the ABA Real Property Trusts and Estates (“RPTE”) Section and Chair of its Welfare Plan, Fiduciary Responsibility and Plan Terminations Committees; Chair of the ABA International Section International Employment Law Committee; Chair and Vice Chair of the ABA Tort Trial and Insurance (“TIPS”) Section Medicine and Law Committee, Vice Chair of its Employee Benefits and Worker’s Compensation Committees; and Chair of the ABA Intellectual Property Section Law Practice Management and Special Technologies Committees; ABA Joint Committee on Employee Benefits (“JCEB”) Council Representative and Scribe for its annual agency meetings with the Department of Health and Human Services; International Section Life Sciences Committee Chair; Health Law Section Managed Care & Insurance Interest Group Chair; Vice Chair, Tax Section Fringe Benefit Committee Chair, and in various other ABA leadership capacities. Ms. Stamer also is a former Southwest Benefits Association Board Member and Continuing Education Chair, SHRM National Consultant Board Chair and Region IV Chair, Dallas Bar Association Employee Benefits Committee Chair, former Texas Association of Business State, Regional and Dallas Chapter Chair, a founding board member and Past President of the Alliance for Healthcare Excellence, as well as in the leadership of many other professional, civic and community organizations. She also is valued and celebrated for her decades of policy advocacy and charitable, pro bono, community and other service and leadership to promote understanding and strengthening health care, workforce, saving, disability, aging and retirement and other key policies and challenges through her PROJECT COPE Coalition For Patient Empowerment initiative and many other pro bono service involvements locally, nationally and internationally.
Ms. Stamer is the author of many highly regarded works published by leading professional and business publishers, the ABA, the American Health Lawyers Association, and others. Ms. Stamer also often speaks and serves on the faculty and steering committee for many ABA and other professional and industry conferences and conducts leadership and industry training for a wide range of organizations.
For more information about Ms. Stamer or her health industry, health and other benefits, workforce and other experience and involvements, see the Cynthia Marcotte Stamer P.C. website or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press™
Solutions Law Press™ provides health care, insurance, human resources and employee benefit, data and technology, regulatory and operational performance, and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education. These include extensive resources on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press™ resources or training.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general information and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation considering the specific facts and circumstances presented in their unique circumstances at the particular time. No comment or statement in this publication is to be construed as legal advice or admission. Solutions Law Press and its authors reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law constantly and often evolves, subsequent developments that could change the currency and completeness of this discussion are likely. Solutions Law Press and its authors disclaim and have no responsibility to provide any update or otherwise notify anyone of any fact or law-specific nuance, change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
The $2.7 million settlement government contractor Insight Global LLC, (“Insight”) is paying to settle a Justice Department (“DOJ”) False Claims Act civil suit for lax cybersecurity shows government contractors now must add possible False Claims Act prosecution to the already substantial and ever-widening potential consequences all organizations and leaders when their organizations experience a cyber incident.
Supplementing the strength and reach of existing cybersecurity laws by using the False Claims Act, federal securities, employee benefit fiduciary responsibility. and other laws as tools to pressure organizations and their leaders to strengthen their cybersecurity compliance and defenses is a key component of the National Cybersecurity Strategy the Administration announced in March, 2023 to battling the ongoing pandemic of cyber incidents. As National Cybersecurity Strategy states, “Continued disruptions of critical infrastructure and thefts of personal data make clear that market forces alone have not been enough to drive broad adoption of best practices in cybersecurity and resilience. … We must hold the stewards of our data accountable for the protection of personal data; drive the development of more secure connected devices; and reshape laws that govern liability for data losses and harm caused by cybersecurity errors, software vulnerabilities, and other risks created by software and digital technologies.
The National Cyber Security Strategy goes on to warn, “We will use Federal purchasing power and grant-making to incentivize security.”
With holding businesses and their leaders accountable a key component of the Federal government’s National Cybersecurity Strategy, government contractors specifically and all businesses and their leaders generally should heed the use of the DOJ’s use of the False Claims Act as another tool in its expanding arsenal for holding businesses experiencing cyber breaches accountable as proof of their own growing imperative to manage their own cyber security and liability in response to exploding strains of cyber threats and liabilities.
Government Contractor False Claims Act Cyber Risk
DOJ’s adoption of the False Claims Act as a tool for imposing liability against government contractors experiencing a cyber breach is part of a broader effort to persuade organizations and their leaders to tighten their cyber security defenses and responses by ratcheting up the liability and other consequences organizations and their leaders face when their organizations experience a cyber incident. The False Claims Act imposes treble damages and penalties on those who knowingly and falsely claim money from the United States or knowingly fail to pay money owed to the United States.
A Civil Cyber-Fraud Initiative announced by DOJ on October 6, 2021 adds potential False Claims Act civil lawsuits by DOJ or private whistleblowers to the already significant and expanding consequences government contractors and grant holders can face for failing to fulfill requirements to properly secure protected health information or other sensitive data as required in their government contracts.
According to DOJ’s May 1, 2024 announcement, Insight will pay $2.7 million to resolve DOJ False Claims Act charges for failing to have adequate cybersecurity measures to protect health information obtained during COVID-19 contact tracing under the new of the Settlement shows DOJ is following through on its promise.
$2.7 Million Insight FCA Cyber Settlement
The $2.7 million Settlement settles a whistleblower lawsuit, United States ex rel. Seilkop v. Insight Global LLC, No. 1:21-cv-1335 (M.D. Pa.). Filed under the whistleblower provisions of the False Claims Act that permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery, DOJ intervened in the suit. Whistleblower, Terralyn Williams Seilkop, a former Insight Global staff member who worked on the contact tracing at issue, will receive a $499,500 share of the $2.7 million settlement amount.
The lawsuit alleged the Pennsylvania Department of Health hired Insight to provide staffing for COVID-19 contact tracing and paid Insight using federal funds from the U.S. Centers for Disease Control and Prevention. Although keeping personal health information of contact tracing subjects confidential and secure was part on its contractual duties, Insight failed to secure the protected health information. Instead, DOJ claimed, for example, Insight transmitted certain personal health information and/or personally identifiable information of contact tracing subjects in the body of unencrypted emails, stored and transmitted the information using Google files not password protected, making them potentially accessible to the public via internet links and allowed staff to use shared passwords to access that information.
DOJ additionally alleged that from November 2020 through January 2021, Insight managers received complaints from Insight staff that protected health information was unsecure and potentially accessible to the public, but failed to start remediating the issue until April 2021 after deficiencies came to light.
When Insight eventually began remediating these cybersecurity breaches and deficiencies in 2021, the announcement states Insight cooperated with the DOJ investigation of the cause and scope of the incident. It also took steps to remedy cybersecurity deficiencies by strengthening internal controls and procedures, adding more data-security resources and issuing a public notice regarding the scope of the potential exposure and offering free credit monitoring and identity protection services to those affected. FOJ also reports Insight also cooperated with the United States’ investigation.
DOJ’s Insight settlement announcement warns other government contractors of DOJ’s “continuing commitment to ensure that government contractors fulfill their cybersecurity obligations.” Its announcement quotes Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division as stating, “The Justice Department will hold accountable those contractors who knowingly fail to satisfy cybersecurity requirements.”
Meanwhile, Special Agent in Charge Maureen R. Dixon of the Department of Health and Human Services Office of Inspector General (HHS-OIG) is quoted as stating “Contractors for the government who do not follow procedures to safeguard individuals’ personal health information will be held accountable.”
Cyber Risk Implications For Government Contractor & Other Organizations
Potential False Claims Act liability under the DOJ False Claims Act Civil Cyber-Fraud Initiative add additional liability risks for government contractors to already substantial and growing federal and state regulatory, contractual, and civil and criminal liabilities and other consequences that cyber breaches and other cybersecurity weaknesses create for business and other organizations, their health plans and their leaders. Examples of these other exposures that lax privacy, data security, data breach and other cybersecurity practice may create include:
Business operating losses from resulting operational disruptions and damages to customer, business partner, shareholder and public trust;
Federal Sentencing Guidelines organizational criminal liability arising from violations of electronic crime and other federal criminal data privacy and security laws;
Federal Trade Commission Act and state unfair business practices liability for deceiving customers about privacy practices;
Security and Exchange Commission (“SEC”) criminal and civil actions and shareholder lawsuits under the Security and Exchange Act;
Health Insurance Portability & Accountability Act civil monetary penalty and criminal exposures for health plans, health care providers, health care clearinghouses and their business associates;
Employee Benefit Security Act fiduciary liability for health fiduciaries;
Liability for violation of Fair and Accurate Transaction Act, Internal Revenue Code, or other federal privacy or confidentiality laws;
damages and other penalties and judgments arising under state identity theft, data security, privacy and other state statutory, contractual and tort laws; and
More.
These and other constantly emerging exposures show the imperative for government contractors and all other organizations and their leaders to ensure their organizations take adequate, well-documented efforts to protect their systems and data and fulfill all otherwise applicable cybersecurity rules.
With new cyber attacks and strains of cyber liability, emerging constantly, organizations, and their leaders increasingly must change the way they think about and address their own cyber security and other technology, budgets and management. The escalation of cyber incidents and risks necessitates that organizations and their leaders to treat cybersecurity as critical components of their operational and business plans and priorities.
Amid the pandemic of constantly evolving cyber threats, even the most diligent efforts to secure systems and data cannot guarantee the prevention of a breach or other cyber incident. Given this challenge, organizations and their leaders must focus both on taking meaningful steps to adequately secure their systems and data against a cyber breach or incident as well as position their organizations and leaders to defend their actions and mitigate exposures through appropriate strategic planning, documented oversight and risk assessment, monitoring and response of threats and safeguards; preparation and timely response to cyber events using attorney-client privilege and other evidentiary tools to promote the defensibility of pre-breach, breach investigation and post-breach investigation and decision-making.
As the availability of funding can radically impact the effectiveness of these and other risk mitigation efforts when a cyber incident occurs, these preparations also should incorporate insurance and other arrangements to provide for breach investigation funding and response.
If you need have questions or need assistance with this or other cybersecurity, health, benefit, payroll, investment or other data, systems or other privacy or security related risk management, compliance, enforcement or management concerns, to inquire about arranging for compliance audit or training, or need legal representation on other matters, contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
About the Author
Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 35 plus years of cybersecurity, workforce, technology and other compliance, risk management and mitigation, incident and other investigations,regulatory and government affairs, and other strategic, operational, regulatory and legal and consulting management work for government contractors and other public and private businesses; managed care and other health and life science, insurance, technology, and other performance and data dependent organizations,
A Fellow in the American College of Employee Benefit Counsel, Co-Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee and Vice-Chair Elect of its International Employment Law Committee, Chair-Elect of the ABA TIPS Section Medicine & Law Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, and Chair of the ABA Intellectual Property Section Law Practice Management Committee, Ms. Stamer is most widely recognized for her decades of pragmatic, leading-edge work, scholarship and thought leadership with healthcare and life sciences, employment and employee benefits, managed care and insurance, data and technology and other related industries and organizations. Known for her skill combined use of her extensive legal and operational knowledge to help these and other clients develop, operationalize and defend employment, employee benefits, compensation and other staffing and workforce; data, systems and other technology; heath benefit and other healthcare and life science, managed care and insurance; employee benefits, safety, contracting, quality assurance, compliance and risk management, and other legal, public policy and operational actions and practices. She speaks and publishes extensively on these and other related compliance issues.
Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, life sciences, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. Author of a multitude of highly regarded publications on HIPAA and other medical record and data privacy and scribe for the ABA JCEB Annual Meeting with the HHS Office of Civil Rights, her experience includes extensive involvement throughout her career in advising health care and life sciences and other clients about preventing, investigating and defending EEOC, DOJ, OFCCP and other Civil Rights Act, Section 1557 and other HHS, HUD, banking, and other federal and state discrimination investigations, audits, lawsuits and other enforcement actions as well as advocacy before Congress and regulators regarding federal and state equal opportunity, equity and other laws.
For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Laws Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested in reviewing some of our other Solutions Law Press, Inc.™ resources available here.
IMPORTANT NOTICE
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and educational purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstances at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author and Solutions Law Press, Inc.™ reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules make it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc.™ disclaim, and have no responsibility to provide any update or otherwise notify anyone of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication. Readers acknowledge and agree to the conditions of this Notice as a condition of their access to this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Pandemic’s End Doesn’t End COVID-19 Employer Headaches
Children’s Healthcare of Atlanta, Inc. (“CHOA”) is paying $45,000 to settle a religious discrimination lawsuit arising from its failure to grant a religious exemption from its COVID-19 vaccination requirements for a maintenance worker. The lawsuit highlights the continuing importance of all employers to use care when handling request for religious accommodation to vaccine or other workplace requirements.
The lawsuit filed by the U.S. Equal Employment Opportunity Commission (“EEOC”) arises from the 2019 denial of a request for a religious exemption to CHOA’s COVID-19 vaccine mandate made by a maintenance worker. CHOA previously had granted the same employee a religious exemption for vaccine mandates in 2017 and 2018. In 2019, however, CHOA denied the employee’s request for a religious accommodation and fired him, despite the employee working primarily outside and his position requiring limited interaction with the public or staff the EEOC said.
The EEOC alleged the denial of the vaccine exemption violated Title VII of the Civil Rights Act of 1964, which prohibits firing an employee because of their religion and requires that employers reasonably accommodate the sincerely held religious beliefs of their employees.
Under the consent degree entered in Ciil Action No. 1:22-CV-04953-MLB-RDC in U.S. District Court for the Northern District of Georgia, CHOA will pay $45,000 in monetary damages to the former employee. CHOA will also adjust its influenza vaccine religious exemption policy to presume the exemption eligibility of employees with remote workstations or who otherwise work away from the presence of other employees or patients, and to protect the ability of such employees to seek alternative positions within CHOA if their religious exemption request is denied. The decree further provides that CHOA will train relevant employees on religious accommodation rights under Title VII.
The EEOC announcement of the consent degree alerts employers of the continuing need to use care when handling religious accommodation requests to vaccine or other workplace policies. “ It is the responsibility of an employer to accommodate its employees’ sincerely held religious beliefs,” the announcement quotes Marcus G. Keegan, the regional attorney for the EEOC’s Atlanta District Office. “Unless doing so would require more than a minimal cost, an employer may not deny requested religious accommodations, let alone revoke those previously granted without issue. The EEOC is pleased that the employee has been compensated and that CHOA has agreed to take steps to ensure that it meets its obligation to evaluate religious accommodation requests in a manner consistent with federal law.”
Likewise, the announcement quotes Darrell Graham, district director of the Atlanta office, as saying , “The arbitrary denial of religious accommodations drives religious discrimination in the workplace. The EEOC remains committed to enforcing the laws that protect employees’ religious practices.”
While the federal COVID-19 vaccine mandate is gone, many healthcare and other employers continue to impose mandate requirements with appropriate disability and religious exemptions as part of their workplace safety and patient safety protocols. Additionally, beyond the Covid – 19 vaccination protocols, many workplace vaccination and other rules also can create conflicts with certain religious beliefs that prompt religious accommodation requests.
Employers administering these vaccination, and other policies must keep in mind that the duty to offer religious accommodation and the EEOC emphasis on enforcing accommodation rights for workers whose deeply held religious beliefs conflict with workplace rules lives on. The perils remain, even if the requirement is supported by well, established patient or workplace safety protocols. Employers need to evaluate and be prepared to defend their inability to accommodate the safety and other concerns underlying the workplace mandate against a potential religious discrimination challenge.
Employers must remain diligent in their management of responses to request for accommodations keeping in mind that EEOC COVID-19 – era guidance imposes a heavy burden on an employer to justify its refusal of a request. For this reason, employers that receive a request for religious of accommodation from an employee should seek the advice of experienced legal counsel as soon as possible if any question exists about whether the employer will grant the request. Employers also should ensure their policies clearly communicate the availability of religious and disability accommodation from these other requirements, establish clear protocols for requesting and processing those requests and prohibit and prevent retaliation.
To promote defensibility, employers also should consult with experienced legal counsel about the use of attorney, client, privilege, and other protocols to prevent or minimize the risk that discussions and actions in response to, or following a request for accommodation creates evidence of discrimination or retaliation.
For More Information
We hope this update is helpful. For more information about these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 35 plus years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
A Fellow in the American College of Employee Benefit Counsel, Co-Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee and Vice-Chair Elect of its International Employment Law Committee, Chair-Elect of the ABA TIPS Section Medicine & Law Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, and Chair of the ABA Intellectual Property Section Law Practice Management Committee, Ms. Stamer is most widely recognized for her decades of pragmatic, leading-edge work, scholarship and thought leadership on heath benefit and other healthcare and life science, managed care and insurance and other workforce and staffing, employee benefits, safety, contracting, quality assurance, compliance and risk management, and other legal, public policy and operational concerns in the healthcare and life sciences, employee benefits, managed care and insurance, technology and other related industries. At her career, she has worked extensively with healthcare and other employers to manage discrimination and other workplace and employee benefit compliance and risks. She speaks and publishes extensively on these and other related compliance issues.
Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, life sciences, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. Scribe for the ABA JCEB Annual Meeting with the HHS Office of Civil Rights, her experience includes extensive involvement throughout her career in advising health care and life sciences and other clients about preventing, investigating and defending EEOC, DOJ, OFCCP and other Civil Rights Act, Section 1557 and other HHS, HUD, banking, and other federal and state discrimination investigations, audits, lawsuits and other enforcement actions as well as advocacy before Congress and regulators regarding federal and state equal opportunity, equity and other laws.
For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested in reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and educational purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstances at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author and Solutions Law Press, Inc.™ reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules make it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc.™ disclaim, and have no responsibility to provide any update or otherwise notify anyone of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication. Readers acknowledge and agree to the conditions of this Notice as a condition of their access to this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Out-of-state employers, insurers, employee benefit plan vendors, and other businesses registered to do business in Pennsylvania, Georgia, Iowa, Kansas, Minnesota, or another state that requires that out-of-state businesses consent to jurisdiction as a condition of their registration to do business in the state face a heightened risk of getting hauled into court in the consent to jurisdiction state following last month’s Supreme Court decision in Mallory v. Norfolk Southern Railway Company, 600 U. S. ____ (2023) even if none of the events giving rise to the lawsuit took place in that state.
The Mallory ruling arose from a state lawsuit filed in Pennsylvania state court seeking damages by Robert Mallory (“Mallory”) to recover damages for cancer the argued was caused by the negligence of his former employer, Norfolk Southern Railroad (“Norfolk”) pursuant to the Federal Employers’ Liability Act workers’ compensation scheme that permits railroad employees to sue for injuries caused by employer negligence. Mallory filed the suit in Pennsylvania, a jurisdiction with no real connection to the claims but noted for its favorability to plaintiffs even though he never worked for Norfolk in Pennsylvania. Mallory only worked for Norfolk in Ohio and Virginia, was a Virginia resident at the time of the suit, and only briefly lived in Pennsylvania after leaving Norfolk’s employment before returning to live in Virginia. Given the lack of connection of Pennsylvania to the parties and events giving rise to the claim, Virginia-based Norfolk Southern moved for the dismissal of the Pennsylvania lawsuit for lack of the requisite “substantial minimum contacts” generally required to support personal jurisdiction.
While courts generally recognize and enforce contractual agreements by a party to consent to jurisdiction, mere registration of an out-of-state business to do business in a state historically has not been recognized as creating the necessary “substantial minimum contacts” that the Due Process clause of the United States Constitution generally requires exist to provide the general personal jurisdiction that must exist for a state court to possess jurisdiction to decide a lawsuit over the out-of-state business under the Supreme Court precedent first articulated in International Shoe Co. v. Washington, 326 U. S. 310 (1945)
Because Pennsylvania is one of five states that currently requires all out-of-state businesses registering to do business in the State to consent to be sued in the state as a condition of registration, however, Mallory argued and the Supreme Court agreed in Mallory that Norfolk waived its ability to object to personal jurisdiction when it registered to do business in the Commonwealth.
In Mallory, the Supreme Court Majority ruled that any corporation registered to do business in a state which requires out-of-state businesses to consent to general personal jurisdiction waives its right to assert a Due Process challenge to jurisdiction in that state. Accordingly, businesses registering to do business in a consent-to-jurisdiction registration state should anticipate that their mere registration with the state likely subjects the business to the jurisdiction of courts in that state even if the business has not entered into a contractual agreement to submit to that state’s jurisdiction or otherwise engage in other actions establishing the required substantial minimum contacts to satisfy the International Shoe Due Process standards even if none of the events underlying the lawsuit took place in that state.
Given the Supreme Court’s Mallory decision, businesses should take into account the potential risks of being subjected to out-of-state litigation and regulation anytime the business expands operations into, registers to do business as an out-of-state business or signs an agreement consenting to jurisdiction into a state other than their primary place of business. As evidenced by Mallory, businesses generally should consider and take steps to manage the risks of allowing the creation of jurisdiction against their business in states other than the primary location in which the business operates. Businesses subject to jurisdiction in a state generally become subject to laws, regulations, and lawsuits in that state. Aside from added obligations and costs associated with being subject to the laws of another state and conducting litigation in an unfamiliar state, businesses subject to the jurisdiction of laws in courts in multiple states open the door for opposing parties to strengthen their position by foreign shopping. Like Mallory, disgruntled current or former employees, plan members, or other opposing parties in disputes may choose to file their lawsuit in the state with the laws, rules, or precedent most favorable to their position even where the dispute does not arise out of events occurring in the chosen state. Along with assessing when their organization may be subject to liability in other states, businesses should review their insurance coverage and applications to ensure that their insurance and other risk management arrangements take into account the added risks and liabilities that could arise from the additional state law jurisdiction. Consequently, businesses choosing to operate, to register to do business in a consent-to-jurisdiction state, or contractually to agree to submit to jurisdiction in any states should be prepared for the possibility that their organization could subject themselves to regulations, lawsuits, investigations and enforcement actions in that state.
More Information
We hope this update is helpful. For more information about these or other health or other legal, management, or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Solutions Law Press, Inc. invites you to receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 35+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications. As a significant part of her work, Ms. Stamer has worked extensively domestically and internationally with business, government, and community leaders to prepare for and deal with pregnancy, disability, and other discrimination, leave, health and safety, and other workforce, employee benefit, health care and other operations planning, preparedness and response for more than 35 years. As a part of this work, she regularly advises businesses and government leaders on an on-demand and ongoing basis about the preparation of workforce, health care, and other business and government policies and practices to deal with management in a wide range of contexts ranging from day-to-day operations, through times of crisis or change, and in response to complaints, investigations and enforcement.
Author of a multitude of other highly regarded publications and presentations on MHPAEA and other health and other benefits, workforce, compliance, workers’ compensation and occupational disease, business disaster and distress, and many other topics, Ms. Stamer has worked with health plans, employers, insurers, government leaders and others on these and other health benefit, workforce and performance and other operational and tactical concerns throughout her adult life.
A former lead advisor to the Government of Bolivia on its pension privatization project, Ms. Stamer also has worked domestically and internationally as an advisor to business, community, and government leaders on health, severance, disability, pension, and other workforce, health care and other reform, as well as regularly advises and defends organizations about the design, administration, and defense of their organization’s workforce, employee benefit and compensation, safety, discipline, and other management practices and actions.
Board Certified in Labor and Employment Law By the Texas Board of Legal Specialization, Scribe for the ABA JCEB Annual Agency Meeting with OCR, Chair-Elect of the ABA TIPS Medicine and Law Committee, Chair of the ABA International Section Life Sciences Committee, and Past Group Chair and current Welfare Plan Committee Chair of the ABA RPTE Employee Benefits & Other Compensation Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training, and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls, and operational concerns. If you find this of interest, you also be interested in reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
The $167,000 paid by Jurassic Street Tacos for failing to pay overtime, and keep required records cautions other employers about the importance of ensuring their own compliance with the Fair Labor Standards Act (“FLSA”).
The payment resolves U.S. Department of Labor’s Wage and Hour Division charges that the street tacos restaurant operator violated the FLSA by paying straight time for all hours worked and, by doing so, failed to pay overtime for hours over 40 in a workweek. The division also discovered the employer did not maintain accurate time records as the law requires. The Labor Department required Jurassic Street Tacos to pay $ 83,539 in back wages and $83,539 in liquidated damages to 56 workers
Precautionary Lesson For Other Businesses
Employers caught making this mistake, can face back pay awards for the unpaid overtime, plus assessments of interest and penalties. To avoid these exposures, employers should consult with qualified legal counsel to confirm their proper treatment of all aspects of compensation paid to nonexempt employees for purposes of overtime, and other wage in our purposes.
More Information
We hope this update is helpful. For more information about the these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 35+ years of workforce and other management work, public policy leadership and advocacy, coaching, teachings, scholarship and thought leadership.
A Fellow in the American College of Employee Benefit Counsel, Vice Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, Ms. Stamer’s work throughout her 35 year career has focused heavily on working with employer and other staffing and workforce organizations, health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As an ongoing component of this work, she regularly advises, represents and defends employers, PEOs, staffing, employee leasing and other businesses about worker compensation, payroll and other tax, wage and hour and other compensation and employee benefit, occupational health and safety, contracting, compliance, risk management and other internal and external controls in a wide range of areas and has published and spoken extensively on these concerns. She also has decades of regulatory and other government affairs experience with these concerns including defending these and other businesses before the IRS, EBSA, WHD, EEOC, OCR, HHS, state labor, insurance, and other authorities, and evaluating and responding to federal, state and local statutory, regulatory and enforcement actions by federal and state legislators and regulators. A prolific author and popular speaker, Ms. Stamer also is widely recognized for her decades of pragmatic, leading edge work, scholarship and thought leadership on workforce, compensation, and other operations, risk management, compliance and regulatory and public affairs concerns.
For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here.
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If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author and Solutions Law Press, Inc.™ reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving, and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc.™ disclaim, and have no responsibility to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication. Readers acknowledge and agree to the conditions of this Notice as a condition of their access of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Dallas-based property management company, Alden Short and Hinson Jennings, LLC (“Alden Short”) will pay $85,000 and furnish other relief under a consent degree entered in the EEOC v. Alden Short & Hinson Jennings, LLC national origin harassment lawsuit. Part of the deluge of discrimination suits the EEOC is prosecuting under the Biden Administration’s civil rights agenda, the litigation highlights the advisability of all employers covered by federal discrimination laws to tighten their compliance and risk management efforts.
Alden Short Judgement
The U.S. Equal Employment Opportunity Commission (“EEOC”) originally filed the lawsuit in the Northern District of Texas in 2018 pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000eet seq. (“Title VII”), and Title I of the Civil Rights Act of 1991, 42. U.S.C. §1981a,
The EEOC alleges that that owner and president and the chief operating officer (COO) of Alden Alden Short subjected Claudia Guardiola, Linda Spears, and Leticia Stewart to a hostile work environment in violationn of federal law because of their Hispanic national origin by making disparaging comments relating to their national origin to the employees relating to their heritage, parents and children.
According to EEOC Trial Attorney Brooke López, the employees complained because these companies rent to tenants in predominantly Hispanic communities, yet management treated their Hispanic employees with disparagement or discrimination, Id.
The EEOC alleged this comment violated Title VII of the Civil Rights Act of 1964, which prohibits discrimination based on national origin.
Prior to agreeing to the consent decree, Alden Short in October, 2020 unsuccessfully sought summary judgment on the suit, arguing insufficient evidence to raise a genuine dispute of material fact regarding the third and forth elements of the EEOC’s hostile work environment claim as required to establish a prima facie case of harassment as well as that Alden Short was not an employer under Title VII
In his September 21, 2021 opinion denying summary judgment to Alden Short, U.S. District Judge Sam Lindsey noted that while the EEOC characterized the alleged improper discrimination as national origin discrimination, the allegations in the EEOC’s Complaint more clearly alleged a race claim, as the Complaint suggested but does not expressly state the womens’ country of birth or that of their ancestors. In ruling the failure to allege the country of origin in the complaint insufficient to merit summary judgement, Judge Lindsey noted:
National origin, though often confused with race, refers to “the country where a person was born, or, more broadly, the country from which his or her ancestors came.” Espinoza v. Farrah Mfg. Co., 414 U.S. 86, 88 (1973). In any event, in some contexts national origin and racial discrimination are “so closely related . . . as to be indistinguishable.” Bullard v. OMI Georgia, Inc., 640 F.2d 632, 634 (5th Cir. Unit B 1981). Discrimination against Hispanics is often referred to interchangeably under both of these categories. Cf., e.g., Gonzalez v. Trinity Marine Group, Inc., 117 F.3d 894, 895-96(5th Cir. 1997) (claim under 42 U.S.C. § 1981). Accordingly, the court will consider the EEOC’s Complaint as sufficiently alleging a claim for discrimination based on national origin.
In addition to paying the any uninsured legal defense costs of the protracted litigation, the three-year consent decree settling the suit entered April 4, 2023 orders Alden Short to pay $85,000 in damages to the Hispanic employees, prohibits its future discrimination and requires Alden Short to develop and implement a new employee handbook and to provide employees with annual training on discrimination.
Discrimination Exposures Heightened
The Alden Short lawsuit and order are illustrative of the rise in EEOC and private civil rights and other employment discrimination and retaliation investigations, charges, and lawsuits under the proactive civil rights agenda of the Biden Administration.
In pursuit of its mission to advance equal employment opportunity, the EEOC focused on several major areas during FY 2022, including aggressive educational outreach, addressing systemic discrimination, advancing racial justice in the workplace, enforcing pay equity, and addressing the use of artificial intelligence in employment decisions.
Among other things, the EEOC 2022 Annual Performance Report (APR) (“2022 Data”) shows EEOC has seen an uptick in complaints filed by workers. In Fiscal Year (“FY”) 2022, the agency received 73,485 new discrimination charges, which represents an increase of almost 20% when compared to the previous fiscal year. The agency also handled more than 475,000 calls —an 18% increase from FY 2021—and managed 32% more emails from the public than the previous year.
To help manage the increased demand and strengthen the agency’s ability to prevent and remedy employment discrimination, the EEOC specifically focused on growing its workforce to meet growing requests for its assistance by filling 352 new positions and 500 total staff vacancies in FY 2022, the majority of which were in frontline positions.
The effects of this proactivity is confirmed by the 2022 EEOC enforcement data. The agency marked several significant accomplishments in FY 2022.
Obtained more than $513 million in monetary benefits for victims of discrimination, an increase from the previous fiscal year;
Resolved over 65,000 charges of discrimination.
Meanwhile in the federal sector, the EEOC:
Conducted more than 3,000 free outreach events reaching almost 220,000 individuals.
Resolved 9,336 hearings;
Recovered more than $132 million for federal workers and applicants; and
Significantly reduced the federal hearing inventory by 25% from FY 2021 to FY 2022
EEOC appears to be continuing its aggressive enforcement into 2023. In March, 2023 alone, for instance, the EEOC announced the following discrimination and retaliation enforcement actions and results:
These and other developments, send a strong message to businesses and business leaders to audit and strengthen their employment, discrimination and retaliation compliance and risk management efforts. When assessing risk, businesses should keep in mind the possibility that COVID-19 related operational disturbances likely affected compliance oversight, investigations, training, recordkeeping and other risk management. COVID and post COVID job changes also offer new fodder for potential retaliation claims. Staffing changes also may affect the availability of critical witnesses and their testimony. Businesses should review their situation broadly within the scope of attorney-client privilege when assessing a particular charge or their broader organizational risk. Reassessment if the adequacy of liability insurance and other reserves also may make sense. Public companies also should weigh their prospectus and other disclosure obligations.
More Information
We hope this update is helpful. For more information about the these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 35+ years of workforce and other management work, public policy leadership and advocacy, coaching, teachings, scholarship and thought leadership.
A Fellow in the American College of Employee Benefit Counsel, Vice Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, Ms. Stamer’s work throughout her 35 year career has focused heavily on working with employer and other staffing and workforce organizations, health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As an ongoing component of this work, she regularly advises, represents and defends employers, PEOs, staffing, employee leasing and other businesses about worker compensation, payroll and other tax, wage and hour and other compensation and employee benefit, occupational health and safety, contracting, compliance, risk management and other internal and external controls in a wide range of areas and has published and spoken extensively on these concerns. She also has decades of regulatory and other government affairs experience with these concerns including defending these and other businesses before the IRS, EBSA, WHD, EEOC, OCR, HHS, state labor, insurance, and other authorities, and evaluating and responding to federal, state and local statutory, regulatory and enforcement actions by federal and state legislators and regulators. A prolific author and popular speaker, Ms. Stamer also is widely recognized for her decades of pragmatic, leading edge work, scholarship and thought leadership on workforce, compensation, and other operations, risk management, compliance and regulatory and public affairs concerns.
For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here.
IMPORTANT NOTICE ABOUT THIS COMMUNICATION
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author and Solutions Law Press, Inc.™ reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving, and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc.™ disclaim, and have no responsibility to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication. Readers acknowledge and agree to the conditions of this Notice as a condition of their access of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
A $259,474 backpay award the U.S. Department of Labor’s Wage and Hour Division (“WHD”) ordered plastics manufacturer Jadex Inc. and four subsidiaries (“Jadex”) to pay alerts other businesses against improperly failing to include incentives, bonuses and premium pay failed to include incentives, bonuses and premium when calculating and paying overtime under the Fair Labor Standards Act (“FLSA”).
Jadex Overtime Schooling
Jadex Inc., a South Carolina manufacturing holding company that employs approximately 1,800 employees at its headquarters and subsidiaries, Alltrista Plastics LLC, ArtaZn LLC, LifeMade Products LLC, and Shakespeare Co. LLC, is learning an expensive lesson about the FlSA’s requirements to include most shift, differentials, bonuses, or other supplemental compensation in an employee’s base rate of pay when calculating his overtime.
WHD found Jadex underpaid 939 employees by improperly omitting additional pay from the base rate of pay when calculating overtime,
A WHD audit of Jadex found the employers violated the FLSA by failing to include bonuses workers earned by reaching sales and safety goals per quarter, incentives awarded for working night shifts and for serving as trainers to other employees, additional hourly amounts for every hour worked during peak production seasons and bonuses for perfect attendance and personal safety performance during peak seasons.
As a result of the audit, WHD recovered a total $259,474 of overtime for the employees from Jadex.
Precautionary Lesson For Other Businesses
WHD warned other businesses against making similar mistakes when calculating overtime due their workers when announcing its recovery from Jafex. “Employers must understand all applicable rules when it comes to paying workers overtime. This includes adding bonuses and incentive pay when factoring overtime pay. Anything less robs workers of their hard-earned wages,” said Wage and Hour Division District Director Jamie Benefiel in Columbia, South Carolina.
Employers often unknowingly underpay overtime, because they failed to recognize that most bonuses, incentive pay, shift differentials, and other special compensation presumptively generally must be included in the base rate of pay for purposes of calculating overtime due to non exempt employees unless the employer can demonstrate that the extra compensation qualifies under one of the exemptions allowed by the FLSA.
Employers caught making this mistake, can face back pay awards for the unpaid overtime, plus assessments of interest and penalties. To avoid these exposures, employers should consult with qualified legal counsel to confirm their proper treatment of all aspects of compensation paid to nonexempt employees for purposes of overtime, and other wage in our purposes.
Getting nailed for failing to appropriately, taking account incentive, bonus, shift, differentials, and other supplemental compensation creates a particular hardship for the employer as the employer will unexpectedly before’s to pay 1 1/2 times the budgeted supplemental compensation amount plus interest and penalties for overtime hours worked if it turns out that the compensation is required to be taken in account for overtime purposes.
To avoid these unpleasant consequences, businesses and their leaders should consult with qualified legal counsel to fully understand how supplemental compensation is likely to be treated for purposes of the FLSA, before announcing or paying the supplemental compensation. Pre-armed with a proper understanding of what types of supplemental compensation, the FLSA requires an employer to include in the base rate of pay for overtime calculation purposes empowers the business to more reliably budget for and pay incentive compensation without the risk of an anticipated overtime liability.
More Information
We hope this update is helpful. For more information about the these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 35+ years of workforce and other management work, public policy leadership and advocacy, coaching, teachings, scholarship and thought leadership.
A Fellow in the American College of Employee Benefit Counsel, Vice Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, Ms. Stamer’s work throughout her 35 year career has focused heavily on working with employer and other staffing and workforce organizations, health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As an ongoing component of this work, she regularly advises, represents and defends employers, PEOs, staffing, employee leasing and other businesses about worker compensation, payroll and other tax, wage and hour and other compensation and employee benefit, occupational health and safety, contracting, compliance, risk management and other internal and external controls in a wide range of areas and has published and spoken extensively on these concerns. She also has decades of regulatory and other government affairs experience with these concerns including defending these and other businesses before the IRS, EBSA, WHD, EEOC, OCR, HHS, state labor, insurance, and other authorities, and evaluating and responding to federal, state and local statutory, regulatory and enforcement actions by federal and state legislators and regulators. A prolific author and popular speaker, Ms. Stamer also is widely recognized for her decades of pragmatic, leading edge work, scholarship and thought leadership on workforce, compensation, and other operations, risk management, compliance and regulatory and public affairs concerns.
For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here.
IMPORTANT NOTICE ABOUT THIS COMMUNICATION
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author and Solutions Law Press, Inc.™ reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving, and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc.™ disclaim, and have no responsibility to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication. Readers acknowledge and agree to the conditions of this Notice as a condition of their access of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Federal supply & service contractors should check the new Office of Federal Contract Compliance Programs (OFCCP) Corporate Scheduling Announcement List (CSAL) to see if their organization is among the 400 federal contractors and subcontractors selected for Compliance Review.
The CSAL released today is a courtesy notification to contractors selected for a Compliance Review (Establishment Review), Corporate Management Compliance Evaluation, or Functional Affirmative Action Program Review. The review will start once the contractor receives OFCCP’s Office of Management and Budget approved scheduling letter.
OFCCP has published the methodology for developing this list as well as frequently asked questions where answers to other matters related to this topic are included.
Contractors facing these reviews should begin preparing for the audit in anticipation of receipt of their scheduling letter by conducting their own compliance review within the scope of attorney=client privilege before the audit and working with qualified legal counsel to use OFCCP compliance assistance options and technical assistance to prepare for the evaluation.
These preparations should begin with an assessment whether any grounds exist for challenging the contractor’s selection for the audit under the applicable criteria. If a contractor believes it should not be selected for evaluation, OFCCP should be contacted promptly.
Whether or not a contractor is on the list of contractors selected for Compliance Review, every contractor should take documented steps to review and reconfirm their continuing compliance including new data security and other standards and requirements recently put in place, prioritized for review and enforcement or both.
More Information
We hope this update is helpful. For more information about these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, a Fellow in the American College of Employee Benefits Counsel repeatedly recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” by LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law and among the “Best Lawyers In Dallas” in “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely known for 30+ years of advising, representing and defending domestic and international public, closely held and government organizations on workforce, employee benefits, internal controls and governance, and other risk management, compliance and government relations concerns as well as her coaching, scholarship, training and legislative and public affairs advocacy on these and related areas.
Ms. Stamer helps health industry and other organizations and their management manage. Ms. Stamer’s legal and management consulting work throughout her nearly 30+ year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns. She also represents and defends clients in investigations, audits, enforcement actions and other dealings with the the Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and a multitude of federal, state, and locate agencies, state attorneys’ general and other federal and state agencies, public and private credentialing, licensing and accreditation bodies, as well as conducts and counsels clients on private litigation, employment and other services disputes, regulatory and public policy advocacy, training and discipline, enforcement and other strategic and operational concerns.
Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, expat and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.
Ms. Stamer also is deeply involved in helping to influence workforce, health care, pension, social security, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.
Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.
Ms. Stamer also shares her leadership through her extensive involvement in many professional, community and civic organizations. Currently, she serves as Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR and a representative for its Annual Agency Meeting with the EEOC, Chair of the ABA Intellectual Property Section Law Practice Management Committee, Vice Chair of the ABA International Section Life Sciences Committee, Chair-Elect of the ABA Tort & Insurance Section (TIPS) Medicine and Law Committee, RPTE Section Employee Benefits Committee Welfare Plan Chair, and in various other projects and capacities. She also previously has served as an ABA Joint Committee on Employee Benefits Council Representative, Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and the ABA RPTE Employee Benefits & Other Compensation Group, the Society for Human Resources Management Region IV Board Chair and National Consultant’s Board Member; am Editorial Advisory Board Member and author for HR.com, Insurance ThoughtLeaders, BNA CD-Rolm, and Employee Benefits News; the Alliance for Healthcare Excellence Board President, Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, on the North Texas United Way Long Range Planning Committee Member, as a Board Member and Compliance Chair of the National Kidney Foundation of North Texas and many others.
Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. These include hundreds of highly regarded articles and workshops on health and other benefits, workforce, health care and insurance concerns.
For more information about these requirements, Ms. Stamer or her experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here.
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The Biden- Harris Administration today announced it will require a multitude of US employees to adopt and enforce workplace COVID-19 vaccination mandates for their workers.
The mandate requirement generally will apply to all federal workers, government contractors and subcontractors, health care workers of facilities participating in Medicare or Medicaid And any employer with more than 100 employees.All Medicare and Medicaid certified health care facilities, and a broad range of other employers must prepare to meet impending new federal COVID-19 vaccine mandates announced by the Biden-Harris Administration today.
According to today’s announcements all healthcare facilities participating in Medicare or Medicaid, Federal government employees, federal government contractors or subcontractors and any business employing 100 or more employees will be required to ensure all staff are vaccinated against COVID-19.
The Biden-Harris Administration says the new health industry COVID-19 vaccine will be implemented through emergency regulations to be issued in October.
According to today’s announcement, the Centers for Medicare & Medicaid Service (“CMS”) in collaboration with the Centers for Disease Control (“CDC”) will issue an Interim Final Rule with Comment Period for health care providers in October that will apply vaccine mandates hospitals, dialysis facilities, ambulatory surgical settings, nursing homes and home health agencies, among others, as a condition for participating in the Medicare and Medicaid programs. This announcement expends the healthcare industry mandate beyond it’s originally planned applicability to nursing homes when announced last month.
In addition to the health industry mandate, the Biden-Harris Administration also announcementI it would impose new vaccine mandates for all federal government workers, government contractors and subcontractors, and all employers employing more than 100 employees.
In it’s announcement of the impending vaccination requirements, CDC urged health care facilities to prepare now to meet the new mandate in October. CMS expects certified Medicare and Medicaid facilities to act in the best interest of patients and staff by complying with new COVID-19 vaccination requirements.
The Administration is urging covered workers not currently vaccinated to begin the vaccination process immediately and facilities and employers to use all available resources to support employee vaccinations, including employee education and clinics, as they work to meet new federal requirements.
Beyond potential federal program participation losses, the new vaccine mandates likely adds vaccination to the list of safety safeguards that employers can expect to be required to enforce as part of the occupational safety rules of the Occupational Safety and Health Administration (“OSHA”).
While legal challenges to the mandate requirements are likely, most business andw that have not already adopted vaccine mandates are expected to adopt these mandates rather than face business losses and other sanctions.
Businesses that were supportive of mandates but fearful of the burdens of administering required accommodations under the Americans with Disabilities Act (”ADA”) or other civil rights laws are likely to welcome the Administration‘s new position. Unlike voluntary mandates, the ADA accommodation requirements do not apply to vaccination requirements required by law.
The new mandates also mean that businesses generally need to be concerned about potential OSHA exposure for failing to implement or enforce the mandates. OSHA already is sanctioning employers for violating COVID-19 related OSHA requirements. For instance, OSHA nailed Lakewood Resource and Referral Center Inc., dba Center for Education Medicine and Dentistry (CHEMED) with heavy fines for allegedly violating applicable COVID-19 safety guidelines in January, 2021.
In a July 23, 2021 citation letter, OSH proposes to fine CHEMED $273,064.00 for willfully violating OSHA by not providing a medical evaluation to determine each employee’s ability to use a N95 respirator, before the employee was fit tested or required to use the respirator in the workplace to protect against SARS-CoV-2 virus while testing suspected COVID-19 individuals.
In addition to the proposed fine, the citation also orders CHEMED to take a series of corrective actions and to post notices in the workplace informing workers of the violation.
Along with the CHEMED citation, OSH also cited a staffing agency contracted to provide nursing staffing to CHEMED, Homecare Therapies for also failing to conduct medical evaluations and fit tests. It received two violations and a proposed fine of $13,653.
In the face of these potential consequences, most covered health care facilities and other employers impacted by the mandate are likely to implement mandates unless and until these requirements are struct down by the courts or withdrawn.
Assuming the Administration follows appropriate procedures to adopt the rules, most legal commentators do not expect the legal challenges opposing the mandate orders to be successful in the courts particularly after the Supreme Court refused to overturn or hear arguments for overturning a unanimous decision of a three-judge panel of the United States Court of Appeals for the Seventh Circuit in Klassen v. Trustees of Indiana University that refused to enjoin a vaccine mandate imposed by Indiana University as a condition of student or staff in person participation in classes or other activities.
While most healthcare and other covered businesses are not expected to challenge the rules, compliance us likely to trigger backlash from some unvaccinated workers strongly opposed to becoming vaccinated. Employers may find that some employees will resign their employment or take other tactics to avoid becoming vaccinated. Even those who elect to become vaccinated to retain their employment are likely to express opposition and dissatisfaction that could create liability exposures for the employers if it becomes a basis for retaliation claim.
Employers in Texas and certain other states that have adopted rules restricting or prohibiting vaccine, mask or other mandates also may face challenges based on the state rules.
In light of these and other uncertainties and challenges, Healthcare and Other or Employers generally should seek legal advice and assistance from legal counsel experienced with the relevant health care, labor and employment, privacy and other concerns.
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This article is republished by permission of the author, Cynthia Marcotte Stamer. To review the original work, see here.
Solutions Law Press, Inc. invites you to receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns.
Most widely recognized for her work with health care, life sciences, insurance and data and technology organizations, she also has worked extensively with health plan and insurance, employee benefits, financial, transportation, manufacturing, energy, real estate, accounting and other services, public and private academic and other education, hospitality, charitable, civic and other business, government and community organizations. and their leaders.
Ms. Stamer has extensive experience advising, representing, defending, and training domestic and international public and private business, charitable, community and governmental organizations and their leaders, employers, employee benefit plans, their fiduciaries and service providers, insurers, and others has published and spoken extensively on these concerns. As part of these involvements, she has worked, published and spoken extensively on these and other human resources, employee benefits, compensation, worker classification and other workforce and other services; insurance; health care; workers’ compensation and occupational disease; business reengineering, disaster and distress; and many other performance, risk management, compliance, public policy and regulatory affairs, and other operational concerns.
A former lead advisor to the Government of Bolivia on its pension project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on these and other legislative, regulatory and other legislative and regulatory design, drafting, interpretation and enforcement, as well as regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.
Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member, past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.
For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com, on Facebook, on LinkedIn or Twitter or e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns.
A law firm is the latest employer nailed for Fair Labor Standards Act (“FLSA”) overtime violations by the US Department of Labor Wage and Hour Division (“DOL”).
Following an investigation and federal court order, the U.S. Department of Labor recovered $26,496 in back wages and liquidated damages from the Auburn, Alabama based Slocumb Law Firm LLC for failing to pay overtime to 42 workers.
Investigators also determined Slocumb failed to keep accurate records of hours worked for workers paid on a salary basis who the DOL found we’re not exempt under the FLSA.
In December 2020, the U.S. District Court for the Middle District of Alabama Eastern Division issued a default judgment, affirming the DOL’s findings that the personal injury law firm and owner Michael W. Slocumb failed to pay the workers overtime when they worked more than 40 hours in a workweek.
The court ordered the firm and its owner to pay $13,248 in back wages and an equal amount in liquidated damages.
Slocumb originally filed a motion to set aside the judgement but later withdrew it. The DOL then sent a demand letter requiring payment for the wages that the workers were legally owed.
The action illustrates both the widespread misunderstanding of many law firm and other employers of the rules regarding the treatment of employees as salaried, exempt from FLSA minimum wage, overtime and record keeping requirements and the DOL’s readiness to enforce those rules.
Misunderstandings about when workers are classified as employees versus contractors, exempt versus non-exempt, and regarding the appropriate tracking, counting, and reporting of hours work are recurrent grounds for frequent DOL and private litigant recoveries. Many employers fail to recognize The significance of special FLSA rules for characterization of workers as employees and the narrowness of the rules for treating employees as exempt and eligible for payment on a salary rather than hourly basis. These mistakes also create a heightened risk that the employer will failed to track necessary Information to defend against employee or DOL hours of work claims and and trigger additional liability for failing to comply with FLSA rules forreporting of hours work. These misperceptions also often lead misinformed employers to take actions that provide a basis for retaliation claims. DOL and private litigant leverage these mistakes to achieve their recoveries.
Enforcement by the DOL and private litigants is common.
DOL views FLSA enforcement as a key priority. “Employers must pay employees all the wages they’ve legally earned, including overtime when they work over 40 in a workweek,” said Wage and Hour Division District Director Kenneth Stripling in Birmingham, Alabama in announcing the recovery. “The Wage and Hour Division will use every avenue, including the courts, to protect workers’ rights and ensure they receive the wages they are lawfully owed. Employers should contact the agency and speak with a Wage and Hour professional to avoid these violations and ensure compliance with federal wage laws.”
Employers found in violation of these rules in DOL enforcement actions face actual damages, interest, civil monetary penalties, enforcement costs, and in the case of willful violations, even potential criminal sanctions.
Generous recoveries also makes private enforcement very attractive to employees and plaintiffs’ counsel. Private litigants can recover actual damages plus double damages, interest, attorneys fees and other costs of enforcement. The availability of these extraordinary damages and recoveries makes these highly popular cases to many plaintiffs attorneys.
Along with FLSA claims, these violations also can trigger state wage an hour, payday act and other liabilities.
DOL and private litigant leverage these mistakes to achieve their recoveries. Aside from avoiding potentially costly mistakes, critically reviewing and documenting the basis of characterization of workers as employees versus contractors and exempt versus non-exempt can minimize the risk that violations will be found willful.
Because these audits often uncover violations or lead to sensitive conversations about the classification and payment of workers under the FLSA and other laws, employers and their leaders generally should arrange for this analysis to be conducted within the scope of attorney client privilege under the direction of a lawyer experienced in FLSA and other employment law compliance.
Additionally, employers should keep in mind that improperly handled employee questions or statements of concern about potential FLSA and other related requirements could create retaliation or whistleblower risks. Accordingly, employers should use care to investigate and respond carefully to these concerns and in handling subsequent discipline or other employment decisions involving workers raising them.
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Solutions Law Press, Inc. invites you to receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns.
For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com, on Facebook, on LinkedIn or Twitter or e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns.
The Occupational Safety and Health Administration (“OSHA”) has issued two citations against AMA Health Holdings LLC, for violating an OSHA emergency COVID standard published in June at its Seaside Guest Services transitional housing facility. Like OSHA’s July 23rd $273,064.00 citation of Lakewood Resource and Referral Center Inc. (“CHEMED”), the AMA Holdings citations and proposed penalties illustrate the risks health industry and other employers face for failing to comply with COVID-19 safety protocols.
The AMA Holdings citationsstem from acomplaint-driven OSHA investigation at the Seaside Guest Services’ residential housing facility in Trenton, New Jersey where 11 employees and 28 residents tested positive for the coronavirus by late March found numerous violations.
The residential facility provides transitional housing for people attending area behavioral-health programs and those who have completed some level of addiction treatment.
In June OSHA issued an emergency temporary standard to protect healthcare workers from contracting coronavirus. In March, OSHA launched a national emphasis program focusing enforcement efforts on companies that put the largest number of workers at serious risk of contracting the coronavirus. The program also prioritizes employers who retaliate against workers for complaints about unsafe or unhealthy conditions, or for exercising other rights protected by federal law.
According to OSHA, its investigation of a complaint revealed that while Seaside Guest Services’ continuity of operations plan required that residents with coronavirus be isolated and workers notified, neither happened. Additionally, OSHA inspectors determined the facility provided protective masks to its employees, but did not enforce their use. Seaside also failed to enforce social distancing despite posting signs in its four housing units.
OSHA cited the facility’s operator, AMA Health Holdings LLC, with two citations for failing to develop and implement effective measures to mitigate the spread of the virus and not recording each work-related illness. The agency proposed $10,923 in penalties.
AMA Health Holdings LLC has 15 business days from receipt of its citations and penalties to comply, request an informal conference with OSHA’s area director, or contest the findings before the independent Occupational Safety and Health Review Commission.
The AMA Holdings OSHA actions demonstrate OSHA’s commitment to investigate complaints of violations is its COVID emergency standards and fine employers that violate them.
The citations against AMA Health Holdings follow OSHA’s earlier citation of CHEMED for retaliating against employees for questioning the adequacy of COVID safety at the dental practice where they worked.
In the face of these enforcement actions, all employers should take care to ensure their ability to demonstrate and defend their operation’s compliance with all applicable emergency COVID safety standards and other safety requirements here.
As illustrated by the recently issued Centers for Disease Control (“CDC”) nursing home vaccination mandate announced last week, OSHA requirements evolve are likely to evolve rapidly in response to changing CDC guidance. Consequently, employers should remain vigilant for changing requirements and respond accordingly.
Additionally, employers should keep in mind that improperly handled employee questions or statements of concern about the adequacy of workplace COVID -19 safeguards could create retaliation or whistleblower risks. Accordingly, employers should use care to investigate and respond carefully to these concerns.
More Information
Solutions Law Press, Inc. invites you to receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns.
For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com, on Facebook, on LinkedIn or Twitter or e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns.
Group health plans, their plan administrators and fiduciaries, employer or other sponsors, administrative services providers and insurers should act quickly to distribute required notices using the regulatory guidance just released today (April 7, 2021) and take other actions needed to comply with the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) coverage and premium subsidy notification, enrollment and coverage continuation requirements created by Section 9501 (the “COBRA Premium Assistance Rules”) of the American Rescue Plan Act of 2021 (“ARP ”) enacted last month.
The guidance package released today by the Employee Benefit Security Administration includes model notices and other preliminary guidance on the COBRA Premium Assistance Rules, which among other things require group health plans to notify “assistance eligible individuals” no later than May 31, 2021 of right under ARP Section 9501 to enroll in free COBRA Coverage during the ARP Premium Subsidy Period that began April 1, 2021.
As the deadline for providing notification to qualified beneficiaries is May 31, 2021 and the 60 day period for enrolling in COBRA coverage under the ARP COBRA Subsidy Rules does not begin until proper notification is provided, group health plan should move quickly to prepare and distribute the notifications and make other necessary plan arrangements.
This article provides an general overview of the ARP COBRA Premium Subsidy Rules and the Model Notices published by the Department of Labor Employee Benefit Security Administration (“EBSA”) on April 7, 2021 to assist group health plans and their administrators to comply with their notification obligations under these Rules. For a more comprehensive discussion of these requirements, see here.
New COVID COBRA Premium Subsidy Rules Overview
Section 9501 of the ARP seeks to help “assistance eligible individuals” continue their health benefits by providing assistance to maintain enrollment in covered group health plans by allowing them to enroll and maintain COBRA coverage under those plans without paying their COBRA continuation coverage premiums.
Covered group health plans generally include all group health plans sponsored by private-sector employers or employee organizations (unions) subject to the COBRA rules under the Employee Retirement Income Security Act of 1974 (ERISA); group health plans sponsored by State or local governments subject to the continuation provisions under the Public Health Service Act and group health insurance required to comply with state mini-COBRA laws.
In addition to mandating the provision of COBRA Coverage at no cost, no later than May 31, 2021, the ARP requires covered group health plans to notify certain former covered employees or dependents that qualify to enroll in COBRA coverage as “assistance eligible individuals” of their right within 60 days of notification to enroll in COBRA Coverage under the group health plan at no cost from April 1, 2021 through September 30, 2021 or, if earlier, the date their COBRA eligibility otherwise end (the “Premium Subsidy Period”).
From April 1 to September 31, 2021, group health plans cannot require an assistance eligible individual to pay any premiums for COBRA Coverage during his Premium Subsidy Period. ARP requires group health plans to provide COBRA Coverage without charge to assistance eligible individuals who qualify for and elect to enroll in COBRA Coverage with premium subsidy unless individual’s eligibility for COBRA or COBRA premium assistance ends before that date. Specific notifications to qualified beneficiaries also are required.
To implement these rules, ARP also requires that no later than May 31, 2021, covered group health plan administrators notify eligible qualified beneficiaries eligible to obtain COBRA coverage with premium assistance by applying for enrollment within the 60 day period following notification.
Assistance eligible individuals who timely enroll in COBRA Coverage with premium assistance generally must receive COBRA Coverage free of charge from the group health plan for any coverage period during the period that begins on or after April 1, 2021 until the earliest of the following dates (the “Premium Subsidy Period”):[1]
The date the qualified beneficiary is eligible[2] for coverage under any other group health plan (other than coverage consisting of only excepted benefits,[3] coverage under a health flexible spending arrangement under Code Section 106(c)(2), coverage under a qualified small employer health reimbursement arrangement under Code Section 9831(d)(2) or eligible for benefits under the Medicare program under title XVIII of the Social Security Act;
The date of the expiration of the otherwise applicable maximum period of COBRA continuation coverage under Code Section 4980B (other than due to a failure to elect or discontinuation of coverage for nonpayment of COBRA premium that occurred before April 1, 2021).
Assistance eligible individuals generally are qualified beneficiaries who lost coverage under the group health plan due to an involuntary reduction in hours or termination of employment enrolled in COBRA Coverage between April 1, 2021 and September 31, 2021 including those qualifying event was an involuntary employment loss occurring during the 18-month period (29-months for individuals qualifying for extended COBRA eligibility due to disability) prior to April 1, 2021 not enrolled in COBRA as of April 1, 2021. This generally includes COBRA qualified beneficiaries whose loss of group health coverage results from an involuntary employment reduction or loss for a reason other than gross misconduct after ARP’s enactment on March 11, 2021 as well as qualified beneficiaries whose involuntary employment loss happened before the effective date who but for their previous failure to elect COBRA or to maintain COBRA Coverage would still be entitled to COBRA Coverage because less than 18 months (29 months for qualified beneficiaries disabled on the date of coverage loss who qualify for extension of the disability coverage period) has elapsed since their employment loss and an event has not occurred following the coverage termination that would terminate their COBRA eligibility before the end of such otherwise applicable maximum COBRA eligibility period. Group health plans must offer a second opportunity to enroll in COBRA Coverage with COBRA premium assistance to qualified beneficiaries eligible for premium assistance not enrolled in COBRA Coverage as of April 1, 2021.
Sponsoring employers or other plan sponsors may qualify to claim an employment tax credit for COBRA premiums paid on behalf of assistance eligible individuals. Guidance on these tax rules is pending.
Required Group Health Plan Notifications To Assistance Eligible Individuals
ARP requires group health plans to provide certain written notifications to qualified beneficiaries entitled to qualify to enroll in COBRA coverage with premium assistance. This generally includes a requirement to provide an initial notification of the availability of premium assistance for COBRA coverage to assistance eligible individuals by the later of May 31, 2021 and subsequently to provide notice of the impending termination of eligibility for the COBRA Premium Subsidy during the 30 day period that begins 45 days before eligibility for COBRA Premium Subsidy ends. ARP dictates the minimum required content of such notices. Failure to provide the required notification is a failure to meet the notice requirements under the applicable COBRA continuation provision that subjects the group health plan administer and its sponsor to liability.
While ARP allows plan administrators the option of designing their own notices and forms to fulfill this requirement, it also directed the Department of Labor in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services to develop model notices for plans to use for this purpose. In response to this directive, the Department of Labor EBSA on April 7, 2021 published the following model notices and forms for group health plans to use to fulfill their ARP COBRA Premium Subsidy Rule notification requirements:
The ARP COBRA Premium Subsidy Rules are only one of a plethora of COVID health care emergency driven regulatory and enforcement changes impacting employers and their employee benefit plans. If you need assistance or would like additional information about these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Solutions Law Press, Inc. also invites you receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns.
Most widely recognized for her work with workforce, health care, life sciences, insurance and data and technology organizations, she also has worked extensively with health plan and insurance, employee benefits, financial, transportation, manufacturing, energy, real estate, accounting and other services, public and private academic and other education, hospitality, charitable, civic and other business, government and community organizations. and their leaders.
Ms. Stamer has extensive experience advising, representing, defending and training domestic and international public and private business, charitable, community and governmental organizations and their leaders, employee benefit plans, their fiduciaries and service providers, insurers, and others has published and spoken extensively on these concerns. As part of these involvements, she has worked, published and spoken extensively on these and other federal and state wage and hour and other compensation, discrimination, performance management, and other related human resources, employee benefits and other workforce and services; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress; and many other risk management, compliance, public policy and performance concerns.
A former lead advisor to the Government of Bolivia on its pension project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on these and other legislative, regulatory and other legislative and regulatory design, drafting, interpretation and enforcement, as well as regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.
Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member, past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.
For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns.
Group health plans, their plan administrators and fiduciaries, employer or other sponsors, administrative services providers and insurers should act quickly to distribute required notices using the regulatory guidance just released today (April 7, 2021) and take other actions needed to comply with the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) coverage and premium subsidy notification, enrollment and coverage continuation requirements created by Section 9501 (the “COBRA Premium Assistance Rules”) of the American Rescue Plan Act of 2021 (“ARP ”) enacted last month.
The guidance package released today by the Employee Benefit Security Administration includes model notices and other preliminary guidance on the COBRA Premium Assistance Rules, which among other things require group health plans to notify “assistance eligible individuals” no later than May 31, 2021 of right under ARP Section 9501 to enroll in free COBRA Coverage during the ARP Premium Subsidy Period that began April 1, 2021.
As the deadline for providing notification to qualified beneficiaries is May 31, 2021 and the 60 day period for enrolling in COBRA coverage under the ARP COBRA Subsidy Rules does not begin until proper notification is provided, group health plan should move quickly to prepare and distribute the notifications and make other necessary plan arrangements.
This article provides an general overview of the ARP COBRA Premium Subsidy Rules and the Model Notices published by the Department of Labor Employee Benefit Security Administration (“EBSA”) on April 7, 2021 to assist group health plans and their administrators to comply with their notification obligations under these Rules. For a more comprehensive discussion of these requirements, see here.
New COVID COBRA Premium Subsidy Rules Overview
Section 9501 of the ARP seeks to help “assistance eligible individuals” continue their health benefits by providing assistance to maintain enrollment in covered group health plans by allowing them to enroll and maintain COBRA coverage under those plans without paying their COBRA continuation coverage premiums.
Covered group health plans generally include all group health plans sponsored by private-sector employers or employee organizations (unions) subject to the COBRA rules under the Employee Retirement Income Security Act of 1974 (ERISA); group health plans sponsored by State or local governments subject to the continuation provisions under the Public Health Service Act and group health insurance required to comply with state mini-COBRA laws.
In addition to mandating the provision of COBRA Coverage at no cost, no later than May 31, 2021, the ARP requires covered group health plans to notify certain former covered employees or dependents that qualify to enroll in COBRA coverage as “assistance eligible individuals” of their right within 60 days of notification to enroll in COBRA Coverage under the group health plan at no cost from April 1, 2021 through September 30, 2021 or, if earlier, the date their COBRA eligibility otherwise end (the “Premium Subsidy Period”).
From April 1 to September 31, 2021, group health plans cannot require an assistance eligible individual to pay any premiums for COBRA Coverage during his Premium Subsidy Period. ARP requires group health plans to provide COBRA Coverage without charge to assistance eligible individuals who qualify for and elect to enroll in COBRA Coverage with premium subsidy unless individual’s eligibility for COBRA or COBRA premium assistance ends before that date. Specific notifications to qualified beneficiaries also are required.
To implement these rules, ARP also requires that no later than May 31, 2021, covered group health plan administrators notify eligible qualified beneficiaries eligible to obtain COBRA coverage with premium assistance by applying for enrollment within the 60 day period following notification.
Assistance eligible individuals who timely enroll in COBRA Coverage with premium assistance generally must receive COBRA Coverage free of charge from the group health plan for any coverage period during the period that begins on or after April 1, 2021 until the earliest of the following dates (the “Premium Subsidy Period”):[1]
The date the qualified beneficiary is eligible[2] for coverage under any other group health plan (other than coverage consisting of only excepted benefits,[3] coverage under a health flexible spending arrangement under Code Section 106(c)(2), coverage under a qualified small employer health reimbursement arrangement under Code Section 9831(d)(2) or eligible for benefits under the Medicare program under title XVIII of the Social Security Act;
The date of the expiration of the otherwise applicable maximum period of COBRA continuation coverage under Code Section 4980B (other than due to a failure to elect or discontinuation of coverage for nonpayment of COBRA premium that occurred before April 1, 2021).
Assistance eligible individuals generally are qualified beneficiaries who lost coverage under the group health plan due to an involuntary reduction in hours or termination of employment enrolled in COBRA Coverage between April 1, 2021 and September 31, 2021 including those qualifying event was an involuntary employment loss occurring during the 18-month period (29-months for individuals qualifying for extended COBRA eligibility due to disability) prior to April 1, 2021 not enrolled in COBRA as of April 1, 2021. This generally includes COBRA qualified beneficiaries whose loss of group health coverage results from an involuntary employment reduction or loss for a reason other than gross misconduct after ARP’s enactment on March 11, 2021 as well as qualified beneficiaries whose involuntary employment loss happened before the effective date who but for their previous failure to elect COBRA or to maintain COBRA Coverage would still be entitled to COBRA Coverage because less than 18 months (29 months for qualified beneficiaries disabled on the date of coverage loss who qualify for extension of the disability coverage period) has elapsed since their employment loss and an event has not occurred following the coverage termination that would terminate their COBRA eligibility before the end of such otherwise applicable maximum COBRA eligibility period. Group health plans must offer a second opportunity to enroll in COBRA Coverage with COBRA premium assistance to qualified beneficiaries eligible for premium assistance not enrolled in COBRA Coverage as of April 1, 2021.
Sponsoring employers or other plan sponsors may qualify to claim an employment tax credit for COBRA premiums paid on behalf of assistance eligible individuals. Guidance on these tax rules is pending.
Required Group Health Plan Notifications To Assistance Eligible Individuals
ARP requires group health plans to provide certain written notifications to qualified beneficiaries entitled to qualify to enroll in COBRA coverage with premium assistance. This generally includes a requirement to provide an initial notification of the availability of premium assistance for COBRA coverage to assistance eligible individuals by the later of May 31, 2021 and subsequently to provide notice of the impending termination of eligibility for the COBRA Premium Subsidy during the 30 day period that begins 45 days before eligibility for COBRA Premium Subsidy ends. ARP dictates the minimum required content of such notices. Failure to provide the required notification is a failure to meet the notice requirements under the applicable COBRA continuation provision that subjects the group health plan administer and its sponsor to liability.
While ARP allows plan administrators the option of designing their own notices and forms to fulfill this requirement, it also directed the Department of Labor in consultation with the Secretary of the Treasury and the Secretary of Health and Human Services to develop model notices for plans to use for this purpose. In response to this directive, the Department of Labor EBSA on April 7, 2021 published the following model notices and forms for group health plans to use to fulfill their ARP COBRA Premium Subsidy Rule notification requirements:
The ARP COBRA Premium Subsidy Rules are only one of a plethora of COVID health care emergency driven regulatory and enforcement changes impacting employers and their employee benefit plans. If you need assistance or would like additional information about these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Solutions Law Press, Inc. also invites you receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns.
Most widely recognized for her work with workforce, health care, life sciences, insurance and data and technology organizations, she also has worked extensively with health plan and insurance, employee benefits, financial, transportation, manufacturing, energy, real estate, accounting and other services, public and private academic and other education, hospitality, charitable, civic and other business, government and community organizations. and their leaders.
Ms. Stamer has extensive experience advising, representing, defending and training domestic and international public and private business, charitable, community and governmental organizations and their leaders, employee benefit plans, their fiduciaries and service providers, insurers, and others has published and spoken extensively on these concerns. As part of these involvements, she has worked, published and spoken extensively on these and other federal and state wage and hour and other compensation, discrimination, performance management, and other related human resources, employee benefits and other workforce and services; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress; and many other risk management, compliance, public policy and performance concerns.
A former lead advisor to the Government of Bolivia on its pension project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on these and other legislative, regulatory and other legislative and regulatory design, drafting, interpretation and enforcement, as well as regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.
Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member, past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.
For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns.
U.S businesses will face sharply increased wage costs if Senate Democrats succeed in their plan to pass as soon as this week the American Rescue Plan Act of 2021(the “Act”) passed by the House of Representatives on Friday, February 24, 2021.
One of many provisions impacting employers and their employee benefit plans in the Act that Congressional Democrats are pushing through as a COVID-19 relief package, Section 2101 of the Act amends the Fair Labor Standards Act of 1938 (“FLSA”) to increase immediately upon enactment the federal minimum wage employers covered by the FLSA must pay to most non-exempt employees (“regular rate”) by $2.25 per hour from the current rate of $7.25 to $9.50 per hour, then provides for additional annual increases the gradual increase of the federal minimum wage that will raise the regular rate to $15.00 per hour over the next four years. Beginning in 2026, the Act also provides for annual increases in the regular rate based on the median hourly wage of all employees as determined by the Bureau of Labor Statistics rounded up to the nearest multiple of $0.05. This means the regular minimum wage employers must pay most hourly employees would more than double by 2025 and continue to increase thereafter.
In addition, the Act also phases out current rules allowing employers to pay tipped employees, new employees under age 20 and handicapped employees less than the regular minimum wage over the next five years and raises the minimum wage the FLSA allows employers to pay those employees gradually over the intervening period, with the initial increases slated to take effect upon enactment.
As Senate Majority Leader Chuck Schumer has announced plans to bring the Act before the Senate for a vote as early as this week and President Biden committed to promptly sign the Act that is the centerpiece of the Democrats latest COVID-19 relief package, businesses are likely to feel the impact of the increased minimum wage and other mandates within days if not by month’s end.
These amendments will directly and immediately increase labor costs for non-exempt workers as well as employee benefit and fringe benefit costs and obligations tied to compensation or based on FLSA classifications. Other Biden-Harris Administration policies expanding the scope of the FLSA and other federal laws through revisions and enforcement of rules for characterizing workers as employees rather than independent contractors and enforcing expansive joint employer liability rules as well as other announced or expected Biden-Harris Administration proworker regulatory and enforcement changes almost certainly will expand the reach and implications of these changes. The Biden-Harris Administration’s January 20, 2021 Memorandum on Regulatory Freeze Pending Review suspended the implementation of the Trump Administration led Labor Department’s Final Rule: Independent Contractor Status under the Fair Labor Standards Act slated to take effect on March 8, 2021, which sought to restore and clarify historical more employer friendly policies for distinguishing employee versus independent contractor relationships for purposes of the FLSA, the WHD’s withdrawal of previously issued Trump Administration era opinions that applied that Administration’s more expansive view of independent contractor status, and WHD’s issuance of new opinions articulating and apply applying significantly narrower definitions of independent contractor and broader definitions of employees.
Based on the agenda announced by the Biden-Harris Administration, businesses also should expect the Biden-Harris Administration and private plaintiffs to use these more employee friendly interpretation and enforcement policies to attack employer characterizations of workers as contractors to justify nonpayment of minimum wage and overtime to those workers. Along with being forced to pay unpaid wages and overtime with interest, businesses unsuccessful in defending their worker classification characterizations can expect to face liquidated damage awards to private litigants equal to two times the amount of the back pay liability or in the case of WHD enforcement for repeated or willful violations, civil monetary penalties.
In assessing and managing these risks, businesses should evaluate their potential joint employer exposure to liability for unpaid minimum wage and overtime violations by other businesses providing labor or other services as the Biden-Harris Administration also is expected to seek to apply the much more expansive interpretation of joint employment applied during the Obama Administration abandoned during the Trump Administration.
These misclassification mistakes can be particularly costly. FLSA liabilities arising from misclassification of workers as independent contractors carry significant risk both because businesses often fail to pay required minimum wages or overtime as well as don’t keep required time records. The Biden-Harris Administration has made clear that it plans to move quickly to reimplement the regulatory and enforcement practices used during the Obama Administration to aggressively challenge employers’ characterization of workers as exempt from the FLSA’s minimum wage and overtime rules as independent contractors.
Considering these developments, all U.S. businesses and business leaders are well-advised both to begin preparing to comply with anticipated increases in federal minimum wage rates, as well as well as assess and take appropriate steps to mitigate their exposure to anticipated aggressive efforts to reclassify service providers considered to perform work as independent contractors, as contractors or employees of subcontractors or other businesses or both.
More Information
The FLSA reforms are only one of a number of provisions of the Act impacting employers and their employee benefit plans. For more a more comprehensive discussion of the FLSA amendments included in the Act, see here.
Solutions Law Press, Inc. also invites you receive future updates by registering here and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. For specific information about the these or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce compliance, performance management, internal controls and governance, compensation and benefits, regulatory compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns.
Most widely recognized for her work with workforce, health care, life sciences, insurance and data and technology organizations, she also has worked extensively with health plan and insurance, employee benefits, financial, transportation, manufacturing, energy, real estate, accounting and other services, public and private academic and other education, hospitality, charitable, civic and other business, government and community organizations. and their leaders.
Ms. Stamer has extensive experience advising, representing, defending and training domestic and international public and private business, charitable, community and governmental organizations and their leaders, employee benefit plans, their fiduciaries and service providers, insurers, and others has published and spoken extensively on these concerns. As part of these involvements, she has worked, published and spoken extensively on these and other federal and state wage and hour and other compensation, discrimination, performance management, and other related human resources, employee benefits and other workforce and services; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress; and many other risk management, compliance, public policy and performance concerns.
A former lead advisor to the Government of Bolivia on its pension project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on these and other legislative, regulatory and other legislative and regulatory design, drafting, interpretation and enforcement, as well as regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions.
Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member, past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.
For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns.
Solutions Law Press, Inc.™ invites employers, employee benefit plan fiduciaries and vendors and other impacted business leaders participate in a complimentary briefing on the employer and employee benefit requirements of the H.R. 6379, Take Responsibility for Workers and Families Act as approved by the Ways & Means Committee as of February 12, 2021. The live Zoom briefing now will begin at 9:00 a.m. Central Time on Thursday, February 18, 2021 to avoid potential weather-related power and other disruptions associated with winter storms at its originally scheduled presentation time on Monday, February 15.
Employers and employee benefit plan fiduciaries and vendors should get up to speed on a new mandate to subsidize health coverage continuation and other requirements of the Act that the House Ways & Means Committee voted on February 11, 2021 to include in the lasted COVID-19 relief package the Democrat Majority plans to fast track through Congress. By the end of February if not before, Congress is expected to pass a final COVID-19 relief package including these employer and employee benefit plan mandates in substantially the same form as approved by the Ways and Means Committee. As these provisions will require quick action by employers and plans, employers, employee benefit plans, their fiduciaries and plan vendors should begin preparing now to comply with the anticipated new requirements
Registration & Program Details
Solutions Law Press, Inc. will host the 30-minute Zoom briefing beginning at 9:00 a.m. Central Time on Thursday, February 18, 2021 on the current provisions of the Act. The briefing will be conducted attorney Cynthia Marcotte Stamer. Participation is complimentary, but space is limited. Accordingly, registration is required and registration and participation will be granted on a first come, first serve basis here.
About Presenter Cynthia Marcotte Stamer
A Fellow in the American College of Employee Benefits Counsel, Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization and recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney, 30+ years working as an on demand, special project, consulting, general counsel or other basis with domestic and international business, employee benefit plan, health care, insurance, financial service, charitable, community and government organizations of all types, sizes and industries and their leaders on labor and employment and other workforce, employee benefits and compensation, performance management, internal controls, governance, regulatory and operational compliance, investigations and audits, change management and restructuring, disaster preparedness and response and other operational, risk management and tactical concerns. Best known for her leading edge work and thought leadership on workforce management and reengineering and health and other employee benefits concerns, Ms. Stamer regularly advises and represents organizations on the design, administration and defense of workforce, employee benefit and compensation, safety, discipline, reengineering, regulatory and operational compliance and other management practices and actions. Along with advising and representing management organizations, Ms. Stamer also has worked continuously throughout her career internationally and domestically as an advisor to business, community and government leaders on health care, savings and retirement, workforce, and other legislative and regulatory design, drafting, interpretation, enforcement and other domestic and international public policy.
Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and provides insights and thought leadership through her extensive publications, public speaking and volunteer service with a diverse range of organizations including as Chair of the American Bar Association (“ABA”) Intellectual Property Section Law Practice Management Committee, Vice Chair of the International Section Life Sciences and Health Committee, Past ABA RPTE Employee Benefits & Other Compensation Group Chair and Council Representative and current Welfare Benefit Committee Co-Chair, Past Chair of the ABA Managed Care & Insurance Interest Group, past Region IV Chair and national Society of Human Resources Management Consultant Forum Board Member, past Texas Association of Business BACPAC Chair, Regional Chair and Dallas Chapter Chair, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation and many others.
For more information about these concerns or Ms. Stamer’s work, experience, involvements, other publications, or programs, see www.cynthiastamer.com or contact Ms. Stamer via e-mailhere.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns.
Earlier this week, the Internal Revenue Service (“IRS”) announced that employee benefit plan participants that already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity through August 31, 2020 to roll those funds back into a retirement account following the Coronavirus Aid, Relief, and Economic Security (CARES) Act RMD waiver for 2020. The announcement of this relief covers one of a long and growing list of special tax and other COVID-19 responsive special rules and requirements that may change requirements, provide special relief or both for businesses and individuals that every business leader and individual should carefully monitor and respond to appropriately.
Retirement Plan Rollover Relief
On July 23, 2020, the IRS announced its extension of the 60-day rollover period for any RMDs already taken this year to August 31, 2020 to give taxpayers time to take advantage of this opportunity in Notice 2020-51 (PDF). The Notice also answers questions regarding the waiver of RMDs for 2020 under the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act.
The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.
In addition to the rollover opportunity, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by August 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.
The notice provides two sample amendments that employers may adopt to give plan participants and beneficiaries whose RMDs are waived a choice as to whether or not to receive the waived RMD.
Other COVID-19 Tax Rules & Relief
The guidance and relief in Notice 2020-51 highlights only one of a long list of special COVID-19 associated tax rules and relief that could apply to a business, its employees or employee benefit plan participants or both including the following:
Along with these tax rules, businesses and their employees also may be impacted by a broad range of special federal and state labor and employment and other rules adopted in response to the continuing COVID-19 health care emergency and its fallout. Businesses and their leaders should carefully review and monitor these and other COVID-19 specific rules to ensure that their businesses don’t trigger unanticipated liability by failing to meet critical requirements or to ensure that they take full advantage of all available relief.
More Information
We hope this update is helpful. For more information about the these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years legal and operational management work, coaching, public policy and regulatory affairs leadership and advocacy, training and public speaking and publications. As a significant part of her work, Ms. Stamer has worked extensively domestically and internationally on an demand, special project and ongoing basis with health industry, health plan and insurance and other businesses of all types, government and community organizations and their leaders, spoken and published extensively on workforce and other services, compensation and benefits, and related tax; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress; and many other management concerns.
Board Certified in Labor and Employment Law By the Texas Board of Legal Specialization, Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, and the ABA RPTE Employee Benefits & Other Compensation Group and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer has extensive experience advising, representing, defending and training health care providers, health plans and insurers, employers, community organizations and others about HIPAA and other privacy concerns and has published and spoken extensively on these concerns.
Her involvement with HIPAA and other privacy and data concerns has taken place as part of her more than 30 years involvement working with with public and private health industry, health insurance and other employers and organizations of all sizes, employee benefit plans, insurance and financial services, health industry and a broad range of public and private domestic and international business, community and government organizations and leaders on pandemic and other health and safety, workforce and performance preparedness, risks and change management, disaster preparedness and response and other operational and tactical concerns throughout her adult life. A former lead advisor to the Government of Bolivia on its pension project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on crisis preparedness and response, privacy and data security, workforce, health care and other policy and enforcement, as well as regularly advises and defends organizations about the design, administration and defense of their organizations workforce, employee benefit and compensation, safety, discipline and other management practices and actions.
Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and shares insights and thought leadership through her extensive publications and public speaking. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:
While most COVID-19 test results won’t draw the widespread coverage and public interest that Elliott’s diagnosis did, businesses generally and health care providers, health plans, health care clearinghouses specifically need to recognize that coverage of the Elliott outrage will heighten awareness and therefore their need to properly handle and protect COVID-19 or other infectious disease and other testing, diagnosis, treatment and other medical and disability information collected or encountered in the course of their operation through the current COVID-19 health care emergency and otherwise in their own organizations.
ADA Responsibilities of Employers In Handling Medical Information
Protecting COVID-19 testing and other medical information isn’t just a concern for covered entities and their business associates, however. Businesses that are not covered entities also generally should use care in their collection, use, protection and disclosure of COVID-19 testing and other medical information to mitigate their potential liability under the disability discrimination requirements of the ADA, the Rehabilitation Act and other laws. For instance, along with prohibiting employers covered by the ADA from discriminating against qualified individuals with disabilities and requiring those employers to provide reasonable accommodations to such employees, the ADA also regulates the ability of covered employers to perform or require medical testing and imposes specific medical confidentiality requirements on all covered employers. See e.g., What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws.
The ADA’s medical confidentiality requirements dictate that covered employers maintain medical information and records about employees and applicants in separate, confidential files. Covered employers are responsible for maintaining the confidentiality of medical information and records and cannot disclose it without authorization from the subject employee except under the specific conditions allowed by the ADA.
EEOC guidance provided in its publication entitled Pandemic Preparedness in the Workplace and the Americans With Disabilities Act as updated as of March 19, 2020 emphasizes that covered employers remain accountable for complying with the requirements of the ADA and Rehabilitation Act during the current COVID-19 health care emergency and other pandemics.
While the EEOC Technical Assistance Questions and Answers in its publication What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws
Technical Assistance Questions and Answers as updated on June 11, 2020 recognizes temperature checks and certain other COVID-19 inquiries to screen for COVID-19 exposure or infection might be permitted under the safety exception to the ADA during the current COVID-19 health care emergency, that and other EEOC guidance makes clear that covered employers remain responsible for ensuring that the ADA medical confidentiality requirements are met with regarding to testing and related medical information. As a result, all ADA-covered employers generally and health care employers specifically are urged to use care both in the administration and collection of information regarding COVID-19 testing and diagnosis, and the protection of the confidentiality of COVID-19 and other medical information and records collected in the course of administering employment, safety, medical leave or other absence or other operations throughout the COVID-19 health care emergency.
Added HIPAA & Texas HIPAA Concerns For Health Plans & Other HIPAA Covered Entities
Assuming that the disclosure of Elliott’s information is traced to a testing provider, laboratory or other health care provider, health plan or insurer, health care clearing house subject to HIPAA (“covered entity”), a service provider acting as a business associate to a covered entity, or a member of their workforce, the unauthorized release of Elliott’s test results, that he underwent the testing, or other medical information, Elliott’s complaint about a possible HIPAA violation could be well-founded as both HIPAA and the somewhat broader provisions of the Texas Medical Privacy Act (“Tex-HIPAA”) (hereafter collectively the “HIPAA Laws”) both generally prohibit unauthorized disclosure of protected medical information such as his COVID-19 test or test results to the media.
The COVID-19 test results and of “individually identifiable personal health information” about Elliott and his encounter created, used, access or disclosed by the testing facility or other health care provider, a health plan, health care clearinghouse (“covered entity”) or a member of its workforce or a subcontractor acting as a business associated qualify as “protected health information subject to HIPAA’s privacy, security, breach and privacy rights protections of HIPAA and Tex-HIPAA.
The HIPAA and Tex-HIPAA prohibition against unauthorized disclosure of protected health information to the media stem from the HIPAA Laws’ broader requirement that covered entities and business associates affirmatively safeguard protected health information against unauthorized use, access or disclosure and sweeping prohibition against their disclosing or allowing the disclosure of protected health information without a HIPAA-compliant authorization except under the narrow and specifically delineated exceptions identified in the rule, none of which appear relevant to the media disclosure objected to by Elliott from the currently available public information.
Both HIPAA Laws expressly prohibit unauthorized disclosure of protected health information by covered entities or their business associates except under the specifically detailed conditions specified in one or more exceptions to this general rule. Assuming all relevant conditions to qualify for the exception are met, HIPAA does allow covered entities and business associates treatment, payment, operations, public health activities or another situation meeting all applicable requirements of an express exception to the HIPAA prohibition against disclosure.
The federal agency primarily responsible for the implementation and enforcement of HIPAA, the Department of Health & Human Services Office of Civil Rights (“OCR”) regulatory guidance and enforcement history clearly communicates OCR’s view that covered entities or business associates violate HIPAA by disclosing protected health information to the media or other third parties without first obtaining a HIPAA-compliant authorization from the subject of the information except under the specific circumstances described in an applicable Privacy Rule exception.
In its May 5, 2020 Guidance on Covered Health Care Providers and Restrictions on Media Access to Protected Health Information about Individuals in Their Facilities (“5/5 Guidance”), for instance, OCR specifically reminded HIPAA covered health care providers that the HIPAA Privacy Rule does not permit them to give media and film crews access to protected health information including access to facilities where patients’ protected health information will be accessible without the patients’ prior authorization. has made clear that testing facilities and other health care providers generally remain accountable for complying with the HIPAA Privacy Rule that prohibits unauthorized use, access or disclosure of test results and other protected health information except as specifically allowed in the applicable HIPAA Law.
The 5/5 Guidance specifically states, “The COVID-19 public health emergency does not alter the HIPAA Privacy Rule’s existing restrictions on disclosures of protected health information (PHI) to the media.’ Additionally, it states confirmed that even during the current COVID-19 public health emergency, covered health care providers remain required to obtain a valid HIPAA authorization from each patient whose PHI will be accessible to the media before the media is given access to that PHI. In this regard, the 5/5 Guidance states, As explained in prior guidance,1 HIPAA does not permit covered health care providers to give the media, including film crews, access to any areas of their facilities where patients’ PHI will be accessible in any form (e.g., written, electronic, oral, or other visual or audio form), without first obtaining a written HIPAA authorization from each patient whose PHI would be accessible to the media. 2 Additionally, covered health care providers may not require a patient to sign a HIPAA authorization as a condition of receiving treatment. The guidance clarifies that masking or obscuring patients’ faces or identifying information before broadcasting a recording of a patient is not sufficient, as a valid HIPAA authorization is still required before giving the media such access. Additionally, the guidance describes reasonable safeguards that should be used to protect the privacy of patients whenever the media is granted access to facilities.
OCR’s positions on disclosures to the media in the 5/5 Guidance reaffirm OCR’s longstanding interpretation and enforcement of HIPAA as prohibiting disclosures of PHI and media access to areas where patients or their protected health information might be visible or accessible is long standing.
In June, 2013, for instance, OCR sent a clear message to covered entities and business associates not to make unconsented disclosures of protected health information to or allow media access to areas where patients or their protected health information could be accessed or observed when it required Shasta Regional Medical Center (SRMC) to pay $275,000 to resolve OCR HIPAA charges stemming from SRMC’s unauthorized disclosure of protected health information to multiple media outlets as part of a public relations effort to mitigate damage from fraud and misconduct allegations made against it by the patient. See HIPAA Sanctions Triggered From Covered Entity Statements To Media, Workforce.
OCR subsequently reinforced its warning to covered entities and business associates about unauthorized disclosures of protected health information in a 2016 Frequently Asked Question (Media FAQ) that discussed covered entities HIPAA responsibilities when dealing with the media. The Media FAQ was issued in conjunction with OCR’s collection of its $2.2 million settlement with New York-Presbyterian Hospital and a series of other settlements totaling $999,000 from three other health care providers accused of violating HIPAA by allowing media personnel into treatment or other areas where patients or patient protected health information was accessible without first obtaining a HIPAA compliant written authorization from each patient or other subject present or whose protected health information otherwise would be accessible to the media. See $999K Price Hospitals Pay To Settle HIPAA Privacy Charges From Allowing ABC To Film Patients Without Authorization.
In the Media FAQ, OCR stated HIPAA required covered entities to obtain prior written authorization before disclosing protected health information to the media or allowing media to film or access exam rooms or other areas where patients or protected health information could be observed or accessed. The Media FAQ also stated that masking or blurring the identity of the patient or their specific information was not an adequate substitute for written authorization and that covered entities also were responsible for ensuring that reasonable safeguards were in place to protect against impermissible disclosures or to limit incidental disclosures of other PHI in areas where media is allowed access where prior authorization has not been obtained. While stressing the importance of compliance with these requirements, however, the Media FAQ clarified that the HIPAA Privacy Rule does not require health care providers to prevent members of the media from entering areas of their facilities that are otherwise generally accessible to the public like public waiting areas or areas where the public enters or exits the facility In addition, the Media FAQ states a health care provider or other Covered Entity also highlighted certain other limited circumstances where HIPAA might allow limited disclosure of protected health information to the media in accordance with specific provisions of the Privacy Rule about an incapacitated patient when in the patient’s best interest; or disclose a patient’s location in the facility and condition in general terms that do not communicate specific medical information about the individual to the media or any other person any person where the individual has not objected to his information being included in the facility directory and the media representative or other person asks for the individual by name.
In the intervening years, OCR periodically has issued additional reminders to covered entities about HIPAA’s general prohibition against unconsented disclosures to the media as well as sanctioned harshly various covered entities for violating these prohibitions. In 2017, OCR required the largest not-for-profit health system in Southeast Texas, Memorial Hermann Health System (MHHS), to pay OCR $2.4 million to settle charges it violated HIPAA by issuing a press release to the media that shared the name and other protected health information about a patient suspected of using a fraudulent insurance card to obtain care at a clinic without the patient’s prior HIPAA-compliant authorization. While OCR concluded a report made MHHS made to law enforcement about the patient was allowable under the Privacy Rule, OCR found MHHS violated the Privacy Rule by issuing the press release disclosing the patient’s name and other PHI without authorization from the patient and also by failing to timely document the sanctioning of its workforce members for impermissibly disclosing the patient’s information. See $2.4M HIPAA Settlement Warns Providers About Media Disclosures Of PHI.
Minimize Exposures By Preventing Unauthorized Media & Other Disclosures
Even without Mr. Elliott’s outrage heightening awareness about HIPAA’s prohibitions against unauthorized disclosures of protected health information to the media, the recent warning about HIPAA’s restrictions on media disclosure and access to protected health information and patient treatment areas in OCR’s 5/5 Guidance alone should serve as a strong incentive for covered entities and business associate promptly to reverify that the adequacy of their current policies, practices and training to prevent inappropriate media disclosures of protected health information and otherwise defend their compliance with OCR’s interpretation of HIPAA’s requirements for dealing with the media. Predictable heightened patient and public awareness and expectations about these and other HIPAA responsibilities fueled by the widespread media coverage of Mr. Elliott’s COVID-19 test results and his outrage about the unauthorized disclosure of his test results makes it more important than ever that health care providers and other covered entities and business associates take steps to prepare to respond to foreseeable complaints and questions by other patients, their families and others.
As part of these efforts, most covered entities and business associates may want to consider, at minimum, reconfirming the adequacy and understanding of their current media and other disclosure policies and practices, as well as sending strategic communications to their business associates and members of their workforce reminding them of the covered entity’s policies regarding media access and disclosures.
As part of these activities, covered entities should consider conducting a well-documented assessment of their current policies, practices and workforce training on disclosure of information to the media and other parties generally, as well as policies on allowing media or other parties to enter, film, photograph or record within their facilities or otherwise disclosing or allowing media access to their facilities. Along with these efforts, most covered entities also may want to consider also reminding workforce members that their patient privacy responsibilities also requires that they not share or discuss patient protected health information, film, photograph, or otherwise record, patients or areas where patients or patient protected health information is or might be present without prior written consent of the patient and the consent of their organization.
Since covered entities and members of their workforce also are likely to be subject to other statutory, ethical, contractual or other privacy or confidentiality requirements beyond those imposed by the HIPAA Laws such as medical confidentiality duties applicable to physicians and other health care providers under medical ethics, professional licensure or other similar rules, contractual responsibilities, as well as common law or statutory privacy, theft of likeness or other statutory or common law tort claims and exposures. Covered entities and business associates generally should consider whether other steps are advisable to manage these exposures along with managing their HIPAA Law compliance.
Given the high incidence of COVID-19 exposure and infection within their workplace, covered entities, business associates and other employers should use care fulfill their HIPAA Law relevant employment law confidentiality responsibilities when dealing with testing or other medical information about employees. In this respect, along with any HIPAA Law obligations that a covered entity or business associate has in handling medical information about a patient who also is an employee or family member of an employee, covered entities also should use care to ensure that medical confidentiality requirements of the Americans With Disabilities Act (“ADA”) and other applicable employment laws are met.
Since this analysis and review in most cases will result in the uncovering or discussion of potentially legally or politically sensitive information, Covered Entities should consider consulting with or engaging experienced legal counsel for assistance in structuring and executing these activities to maximize their ability to claim attorney-client privilege or other evidentiary protections against discovery or disclosure of certain aspects of these activities.
Finally, covered entities should keep in mind that HIPAA and other medical privacy compliance and risk management is an ongoing process requiring constant awareness and diligence. Consequently, covered entities and business associates also should use care both to monitor OCR and other regulatory and enforcement developments as well as exercise ongoing vigilance to monitor and maintain compliance within their organizations.
More Information
We hope this update is helpful. For more information about the these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years legal and operational management work, coaching, public policy and regulatory affairs leadership and advocacy, training and public speaking and publications. As a significant part of her work, Ms. Stamer has worked extensively domestically and internationally on an demand, special project and ongoing basis with health industry, health plan and insurance and other business, government and community organizations and their leaders, spoken and published extensively on HIPAA and other privacy and data security concerns, as well as other health care and health benefits; human resources, employee benefits and other workforce and services; insurance; workers’ compensation and occupational disease; business reengineering, disaster and distress; and many other management concerns.
Board Certified in Labor and Employment Law By the Texas Board of Legal Specialization, Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, and the ABA RPTE Employee Benefits & Other Compensation Group and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer has extensive experience advising, representing, defending and training health care providers, health plans and insurers, employers, community organizations and others about HIPAA and other privacy concerns and has published and spoken extensively on these concerns.
Her involvement with HIPAA and other privacy and data concerns has taken place as part of her more than 30 years involvement working with with public and private health industry, health insurance and other employers and organizations of all sizes, employee benefit plans, insurance and financial services, health industry and a broad range of public and private domestic and international business, community and government organizations and leaders on pandemic and other health and safety, workforce and performance preparedness, risks and change management, disaster preparedness and response and other operational and tactical concerns throughout her adult life. A former lead advisor to the Government of Bolivia on its pension project, Ms. Stamer also has worked internationally and domestically as an advisor to business, community and government leaders on crisis preparedness and response, privacy and data security, workforce, health care and other policy and enforcement, as well as regularly advises and defends organizations about the design, administration and defense of their organizations workforce, employee benefit and compensation, safety, discipline and other management practices and actions.
Ms. Stamer also serves in leadership of a broad range of professional and civic organizations and shares insights and thought leadership through her extensive publications and public speaking. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:
No business wants to get hit with a bill or judgement for unpaid overtime or other wages and penalties under the Fair Labor Standards Act (“FLSA”). It’s even worse when the order to pay is for back pay another business owed but didn’t pay. New FLSA joint employer regulations released today update the rules about when your business could get stuck paying another business’ backpay. That’s why all U.S. employers should re-evaluate their potential minimum wage, overtime, recordkeeping and other Fair Labor Standards Acts (“FLSA”) liability exposure from work performed by workers employed by subcontractors or contractors, staffing, leasing, manpower and workforce and other separate business entities in light of the new Final Rule: Joint Employer Status under the Fair Labor Standards Act (“Final Rule”) on determining joint employer status under the FLSA released by the Department of Labor Wage and Hour Division (“Labor Department”). The Labor Department released a copy of the Final Rule to the public today today (January 13, 2020) in anticipation of its scheduled official publication in the Federal Register on January 16, 2019.
Joint Employer Liability Long Standing FLSA Risk
Many businesses and their management are unaware that if their business meets the definition of a “joint employer” for purposes of the FLSA, their businesses could be required to pay unpaid wages and penalties another business owes for failing to pay minimum wage or overtime or other FLSA violations. even though their business never directly employed those workers. This is because the FLSA also makes business that are “joint employers” as defined for purposes of the FLSA jointly and severally liable with the direct employer for proper payment of wages and other compliance with the FLSA. The FLSA requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek. To be liable for paying minimum wage or overtime, an individual or entity must be an “employer,” which the FLSA defines in Section 3(d) to include “any person acting directly or indirectly in the interest of an employer in relation to an employee[.]” Under the FLSA, an employee may have—in addition to his or her employer—one or more joint employers. A joint employer is any additional “person” (i.e., an individual or entity) who is jointly and severally liable with the employer for the employee’s wages under the applicable Labor Department regulations.
While both the Labor Department and private litigants have used the joint employer rules and precedent to nail businesses for other employer’s wage and hour liability frequently for the past sixty plus years, Obama Administration changes in the Labor Department’s interpretation and enforcement of the joint employer rule have significantly broadened the scope of relationships found to constitute joint employment to include a broad range of subcontractor and other business relationships not historically recognized as triggering joint employer liability. Historically, joint employer determinations were reached by applying highly subjective, fact specific analysis heavily reliant upon decades of court decisions which required some evidence that the alleged joint employer possessed or exercised some control over the employees to support the finding of joint employment. Under these historical tests, mere benefit from work performed by individuals employed by another employer did not establish a presumption, much less proof of joint employment.
During the Obama Administration, however, the Department of Labor both stepped up its efforts to identify and enforce these joint employer provisions and concurrently without formally issuing new regulations adopted interpretive and enforcement guidelines for finding joint employer status that that significantly broadened the employment relationships that the Labor Department treated as joint employers in a manner that presumed the existence of a joint employment relationship whenever the alleged joint employer benefitted from the performance of work even when the facts showed little or any evidence that the alleged joint employer possessed or exercised any control over the employee or the details of his work. As a consequences, construction and other businesses uses contractors, health care organizations, and a host of other entities were surprised to be nailed with wage and hour liabilities arising from work performed by subcontractors, contractors, and other businesses including overtime liability attributable to work performed for the benefit of other customers of the employer.
Final Joint Employer Rule Changes Rules Effective March 16, 2020
Prompted by the Trump Administration’s broader effort to roll back these and other Obama Era pro-labor rulemaking and enforcement, the new Final Rule seeks to restore and reaffirm the requirement of evidence of the possession of authority or exercise of some traditional employer control by the alleged joint employer. Scheduled to take effect on March 16, 2020, the new Final Rule will continue to recognize two potential scenarios where an employee may have one or more joint employers based on a highly subjective analysis of the factual realities of an alleged joint employer with another business or businesses under two scenarios:
The employee has an employer who suffers, permits, or otherwise employs the employee to work, but another individual or entity simultaneously benefits from that work (“Scenario One”); versus
One employer employs an employee for one set of hours in a workweek, and another employer employs the same employee for a separate set of hours in the same workweek (“Scenario Two”).
The Final Rule modifies and clarifies the Labor Department’s historical joint employer rule as it relates to the determination of joint employment status in Scenario One situations but leaves substantially unchanged its existing rules on joint employer determinations in Scenario Two situations.
Finally, the Final Rule provides several examples of how the Department’s joint employer guidance should be applied in various factual circumstances
Final Rule Modifications To Existing Rules On Joint Employment in Scenario One Situations
Under the Final Rule in a Scenario One situation under which an employee performs work for the employer that simultaneously benefits another individual or entity, the Final Rule adopts a four-factor balancing test to determine whether the potential joint employer is directly or indirectly controlling the employee, assessing whether the potential joint employer:
hires or fires the employee;
supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
determines the employee’s rate and method of payment; and
maintains the employee’s employment records.
Businesses should keep in mind that proof of the exercise of exercise direct control over these details of employment of an employee is not required for a finding of joint employment. Indirect exercise of control is sufficient. Examples of indirect exercise of control recognized in the Final Regulations as supporting joint employer liability include control over an employee through mandatory directions to another employer that directly control the employee. However, indirect control does not include the direct employer’s voluntary decision to accommodate the potential joint employer’s request, recommendation, or suggestion. Similarly, acts that incidentally impact the employee do not indicate joint employer status. For example, a restaurant could request lower fees from its cleaning contractor, which, if agreed to, could impact the wages of the cleaning contractor’s employees. However, this request would not constitute an exercise of indirect control over the employee’s rate of payment.
Like under the prior rules and standards, whether a person is a joint employer under the new standards established in the Final Rule will continue to depend upon all the facts in a particular case, and the appropriate weight to give each factor will vary depending on the circumstances. Moreover, all of these factors need not be present for joint employment to exist. However, the Final Rule states the potential joint employer’s maintenance of the employee’s employment records alone will not lead to a finding of joint employer status. For purposes of its provisions, the Final Rule defines the “employment records” referred to in the fourth factor to mean only those records, such as payroll records, that reflect, relate to, or otherwise record information pertaining to the hiring or firing, supervision and control of the work schedules or conditions of employment, or determining the rate and method of payment of the employee.
Additionally, the Final Rule also notes that additional factors may also be relevant in determining whether another person is a joint employer in this situation, but only when they show whether the potential joint employer is exercising significant control over the terms and conditions of the employee’s work.
The Final Rule also identifies factors that are not relevant to the determination of FLSA joint employer status. For example, the Final Rule specifies that whether the employee is economically dependent on the potential joint employer, including factors traditionally used to establish whether a particular worker is a bona fide independent contractor (e.g., the worker’s opportunity for profit or loss, their investment in equipment and materials, etc.), are not relevant to determine joint employer liability. Economic dependence was an evidentiary factor promoted as evidence of joint employment in several Obama Administration era enforcement actions.
The Final Rule also identifies certain other factors that do not make joint employer status more or less likely under the Act which had been relied upon by the Labor Department under the Obama Administration era interpretation of the FLSA, including:
operating as a franchisor or entering into a brand and supply agreement, or using a similar business model;
the potential joint employer’s contractual agreements with the employer requiring the employer to comply with its legal obligations or to meet certain standards to protect the health or safety of its employees or the public;
the potential joint employer’s contractual agreements with the employer requiring quality control standards to ensure the consistent quality of the work product, brand, or business reputation; and
the potential joint employer’s practice of providing the employer with a sample employee handbook, or other forms, allowing the employer to operate a business on its premises (including “store within a store” arrangements), offering an association health plan or association retirement plan to the employer or participating in such a plan with the employer, jointly participating in an apprenticeship program with the employer, or any other similar business practice.
Additionally, the Final Rule makes clear that a finding of joint employer status in Scenario One situations must be based on an actual exercise of control by the alleged joint employer. In this respect, the Final Rule provides that although an individual or entity’s power, ability, or reserved contractual right to exercise control relating to one or more of the factors may be relevant in determining whether they are an FLSA joint employer, such power, ability, or reserved contractual rights are not in themselves sufficient to establish FLSA joint employer status without some actual exercise of control.
Final Rule Retains Existing Rules On Joint Employment In Scenario Two Situations
The Final Rule did not make any substantive changes to the standard for determining joint employer liability in Scenario Two situations. If the employers are acting independently of each other and are disassociated with respect to the employment of the employee, the Final Rule continues to provide that each employer may disregard all work performed by the employee for the other employer in determining its liability under the FLSA. However, if the factual realities show that the employers are sufficiently associated with respect to the employment of the employee, the Final Rule continues to state that the two businesses are joint employers and must aggregate the hours worked for each for purposes of determining if they are in compliance.
For purposes of the Scenario Two analysis, the Final Rule provides that employers generally will be sufficiently associated if there is an arrangement between them to share the employee’s services, the employer is acting directly or indirectly in the interest of the other employer in relation to the employee, or they share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer. Employers using manpower, staffing, employee leasing or other shared or part time workforces should keep in mind that a finding that their business is a joint employer with the supplier of the workers can result in liability for their business associated both for hours of work performed for the benefit of their business as well as any work the employee worked for another client of the supplier business. As these shared workforces often perform work for several competitors, ironically this often means that a joint employer often ends up payment overtime liability attributable to unpaid overtime or other wages performed for a competitor business or businesses that also are clients of the same partial workforce supplier.
Businesses Should Act To Assess & Mitigate Joint Employer & Other FLSA Liability
The Labor Departments that its adoption of the revisions to the joint employer rule made by the Final Rule will add greater certainty regarding what business practices may result in joint employer status: and promote greater uniformity among court decisions by providing a clearer interpretation of FLSA joint employer status. While the clarifications may help businesses to better predict certain relationships and arrangements that carry a higher risk of joint employer liability exposure, businesses must keep in mind that joint employer determinations under the Final Rule will continue to turn on highly subjective analysis of facts and circumstances that existing precedent suggests often finds the requisite evidence to find a joint employer relationship in many circumstances surprising to many business owners even taking into account the modifications made by the Final Rule, For this reason, virtually all businesses generally will want to critically evaluate their existing and prospective relationships for potential joint employer liability under the FLSA in light of the Final Regulations.
Businesses should look to the guidance in the new Final Rule initially to evaluate whether their existing or prospective relationships meet, or could be restructured to meet all of the requisites to avoid or reduce the risk of findings of joint employer status. When possible, businesses should seek to structure their contractual relationships and business dealings with other businesses to fit as closely as possible with those arrangements that the new Final Regulations identify as not constituting joint employer relationships in form and operation. When engaging in these efforts, businesses need to look beyond their contractual agreements to examine the factual realities of their relationships with other businesses realistically based upon a clear understanding of the historical precedent to avoid mischaracterizing their relationships and their associated risks. For added protection, businesses also should consider seeking contractual representations of compliance, coupled with requirements that other businesses whose employment practices could create joint employment risk provide records and other documentation needed to verify compliance and defend against potential joint employer liability claims.
Concurrently, businesses looking at FLSA joint employer liability risk management also should keep in mind that the new Final Rule only addresses joint employer determinations under the FLSA. This Final Rule does not address “joint employer” status or other characterizations of relationships under other federal employment laws, such as the National Labor Relations Act (NLRA), the Employee Retirement Income Security Act of 1974 (ERISA), the Migrant and Seasonal Agricultural Worker Protection Act, Title VII of the Civil Rights Act, state labor, tax, unemployment, workers’ compensation or other laws, which often apply different standards for finding joint employment or other imputed liability of businesses other than the direct or nominal employer. While different rules apply for those laws, government agencies and private litigants also increasingly successfully assert joint employer or other theories to impute liability to businesses that are not the nominal employer of workers protected by these laws. To effectively plan for a control their broader joint employer risk, most businesses benefit from looking at their exposure holistically taking into account the potential characterization and liabilities under all of these rules concurrently.
Before beginning these assessments, businesses and their leaders are encouraged to engage an attorney experienced in FLSA and other joint employer and other worker classification laws in light of the legally sensitive evidence and discussions inherently involved in this process. Conducting this analysis within the scope of attorney-client privilege helps protector limit the discoverability of sensitive discussions and work product in the event of a Labor Department investigation or litigation.
For More Information
We hope this update is helpful. For more information about this or other labor and employment developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Law and Labor and Employment Law and Health Care; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
Ms. Stamer’s work throughout her 30 plus year career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services, construction, manufacturing, staffing and workforce and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns. As a part of this work, she has continuously and extensively worked with domestic and international employer and other management, employee benefit and other clients to assess, manage and defend joint employer and other worker classifications and practices under the FLSA and other federal and state laws including both advising and and assisting employers to minimize joint employer and other FLSA liability and defending a multitude of employers against joint employer and other FLSA and other worker classification liability. She also has been heavily involved in advocating for the Trump Administration’s restoration of more historical principles for determining and enforcing joint employer liability over the past several years.
Author of hundreds of highly regarded books, articles and other publications, Ms. Stamer also is widely recognized for her scholarship, coaching, legislative and regulatory advocacy, leadership and mentorship on wage and hour, worker classification and a diverse range of other labor and employment, employee benefits, health and safety, education, performance management, privacy and data security, leadership and governance, and other management concerns within the American Bar Association (ABA), the International Information Security Association, the Southwest Benefits Association, and a variety of other international, national and local professional, business and civic organizations including highly regarded works on worker reclassification and joint employment liability under the FLSA and other laws published by the Bureau of National Affairs and others. Examples of these involvements include her service as the ABA Intellectual Property Law Section Law Practice Management Committee; the ABA International Section Life Sciences and Health Committee Vice Chair-Policy; a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former JCEB Council Representative and Marketing Chair; Past Chair of the ABA RPTE Employee Benefits and Other Compensation Group and Vice Chair of its Law Practice Management Committee; Past Chair of the ABA Managed Care & Insurance Interest Group; former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Southwest Benefits Association Board member; past Texas Association of Business State Board Member, BACPAC Committee Meeting, Regional and Dallas Chapter Chair; past Dallas Bar Association Employee Benefits Committee Executive Committee; former SHRM Region IV Chair and National Consultants Forum Board Member; for WEB Network of Benefit Professionals National Board Member and Dallas Chapter Chair; former Dallas World Affairs Council Board Member; founding Board Member, past President and Patient Empowerment and Health Care Heroes founder for the Alliance for Health Care Excellence; former Gulf States TEGE Council Exempt Organizations Coordinator and Board member; past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:
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NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc. disclaim, and have no responsibility to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
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Total U.S. national healthcare spending in 2018 grew 4.6 percent according to a study conducted by the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS). CMS reports this growth rate was slower than the 5.4 percent overall economic growth as measured by Gross Domestic Product (GDP). Consequently, the share of the economy devoted to health spending decreasedfrom 17.9percent in 2017 to 17.7 percent in 2018.
Growth in overall healthcare spending has averaged 4.5 percent for 2016-2018, slower than the 5.5 percent average growth for 2014-2015, that was affected by expanded Medicaid and private insurance coverage and increased spending for prescription drugs, particularly for drugs used to treat hepatitis C.
The growth in total national healthcare expenditures was approximately 0.4 percentage point higher than the rate in 2017 and reached $3.6 trillion in 2018, or $11,172 per person.
According to the report, private health insurance, Medicare, and Medicaid experienced faster growth in 2018. The faster growth for these payers was influenced by the reinstatement of the health insurance tax which was applied to private health insurance, Medicare Advantage, and Medicaid Managed care plans. The health insurance tax was a fee imposed on all health insurance providers beginning in 2014 as a part of the funding for the Affordable Care Act (ACA) and was subsequently amended to institute a one-year moratorium on the fee for 2017.
Private health insurance spending(34 percent of total health care spending) increased 5.8 percent to $1.2 trillion in 2018, which was faster than the 4.9 percent growth in 2017. The acceleration was driven in part by an increase in the net cost of private health insurance, which was a result of the reinstatement of the health insurance tax in 2018 following a one-year moratorium in 2017.
Medicare spending(21 percent of total health care spending) grew 6.4 percent to $750.2 billion in 2018, which was faster than the 4.2 percent growth in 2017. The faster growth in Medicare spending in 2018 was influenced by faster growth in the net cost of insurance of Medicare private health plans (mostly Medicare Advantage plans) due to the reinstatement of the health insurance tax in 2018, faster growth in Medicare spending for medical goods and services, and an increase in government administration spending after a reduction in 2017.
Medicaid spending(16 percent of total health care spending) increased 3.0 percent to $597.4 billion in 2018. This was faster than the rate of growth in 2017 of 2.6 percent. The faster rate of growth in 2018 was driven by faster growth in the net cost of insurance for Medicaid managed care plans, also due in part to the reinstatement of the health insurance tax.
Out-of-pocket spending(10 percent of total health care spending) includes direct consumer payments such as copayments, deductibles, and spending not covered by insurance. Out-of-pocket spending grew 2.8 percent to $375.6 billion in 2018, which was faster than the 2.2 percent growth in 2017. Faster out-of-pocket spending growth for retail prescription drugs, durable medical equipment, and dental services more than offset a slowdown in out-of-pocket spending for hospital care.
Health care spending growth was mixed in 2018 for the three largest goods and service categories – hospital care, physician and clinical services, and retail prescription drugs.
Hospital spending(33 percent of total healthcare spending) increased at about the same rate in 2018 as in 2017, growing 4.5 percent and 4.7 percent, respectively, to reach $1.2 trillion in 2018. The steady growth in 2018 was driven by an acceleration in hospital price growth that was offset by slower growth in the use and intensity of hospital services.
Physician and clinical services spending(20 percent of total healthcare spending) increased 4.1 percent to reach $725.6 billion in 2018. This was slower than the rate of growth in 2017 of 4.7 percent. The deceleration in 2018 was driven by slower growth in the use and intensity of physician and clinical services, as physician and clinical price growth accelerated in 2018.
Retail prescription drug spending(9 percent of total healthcare spending) grew 2.5 percent in 2018 to $335.0 billion following slower growth of 1.4 percent in 2017. This faster rate of growth was driven by non-price factors, such as the use and mix of drugs consumed, which more than offset a decline of 1.0 percent in prices for retail prescription drugs.
Additional highlights from the report include:
Sponsors of Healthcare.In 2018, the federal government’s spending on health care increased 5.6 percent, accelerating from growth of 2.8 percent in 2017, and was driven by faster growth in the federally-funded portions of Medicare and Medicaid expenditures. Private businesses’ health care spending increased 6.2 percent in 2018 due primarily to faster growth in employer-sponsored private health insurance premiums. The federal government and households accounted for the largest shares of spending (28 percent each), followed by private businesses (20 percent), state and local governments (17 percent), and other private revenues (7 percent).
The National Health Expenditure estimates have been revised to reflect the most recent and up-to-date source data that is available (and may not have been available for last year’s vintage of the National Health Expenditure Accounts).
The 2018 National Health Expenditures data and supporting information will appear here.
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We hope this update is helpful. For more information about this or other labor and employment developments, please contact the author Cynthia Marcotte Stamervia e-mailor via telephone at(214) 452 -8297.
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About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
As a primary focus of this work, Ms. Stamer has worked extensively with domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers, health industry advocacy and other service providers and groups and other health industry clients as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies.
Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, the ABA RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is noted for her decades-long leading edge work, scholarship and thought leadership on health and other privacy and data security and other health industry legal, public policy and operational concerns. This involvement encompasses helping health care systems and organizations, group and individual health care providers, health plans and insurers, health IT, life sciences and other health industry clients prevent, investigate, manage and resolve sexual assault, abuse, harassment and other organizational, provider and employee misconduct and other performance and behavior; manage Section 1557, Civil Rights Act and other discrimination and accommodation, and other regulatory, contractual and other compliance; vendors and suppliers; contracting and other terms of participation, medical billing, reimbursement, claims administration and coordination, Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other payers and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns. to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement; and other strategic and operational concerns.
Author of leading works on HIPAA and a multitude of other health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her experience and involvements, see here or contact Ms. Stamer via telephone at(214) 452-8297or via e-mailhere.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources availablehere.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profilehere
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc. disclaim, and have no responsibility for the suitability, completeness, accuracy or other content or to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Lanier Technical College, a unit of the Technical College System of Georgia, will pay $53,000 in back pay and compensatory damages and revise its policies and procedures to settle a Justice Department lawsuit alleging the College violated the Americans with Disabilities Act (ADA) by terminating along-time College employee based on her multiple sclerosis filed in the Northern District Of Georgia on November 4, 2019. In addition to this disability discrimination allegation, the Justice Department complaint also alleges the removed the employee from the teaching schedule for an entire school semester, thus reducing her hours and pay to zero, due to her multiple sclerosis after the employee took three days of sick leave one summer. The lawsuit and its settlement reminds academic health care and other public and private employers about the need to use appropriate care to avoid inappropriate discrimination against individuals with disabilities in employment and other operations.
The College had employed the terminated employee as a part-time emergency medical technician (EMT) lab assistant for over three years before the events prompting the lawsuit took place. The essential functions of her job involved assisting instructors in the classroom and in the lab, and perform “check offs” to authorize and certify that the students mastered particular technical competencies (e.g., properly taking blood pressure, starting a patient’s I.V., assessing a patient’s vital signs). In addition to her employment with the College, the former employee also worked as a paramedic for an unrelated employer. She continued to work as a full-time paramedic for nearly three years after the College terminated her employment as a part-time lab assistant.
Less than a year into her employment at the College, the former employee was diagnosed with multiple sclerosis (MS) in 2010. Shortly after her diagnosis the former employee notified among others, notified the Director of the Lanier Paramedicine Technology (PMT) Department, Sam Stone, of her condition and Mr. Stone subsequently discussed her MS and treatment with her over the course of her employment with the College. According to the Justice Department complaint, the former employee did not require any reasonable accommodations for her disability, remained qualified to perform the essential functions of the part-time lab assistant job, and did so successfully until College discharged her or otherwise altered her compensation, terms, conditions, or privileges of employment.
In 2012, the former employee assisted with classes and labs taught by Instructor Andy Booth. Instructor Booth managed the work schedule for all the part-time EMT lab assistants who assisted with his classes, including that of the former employee. This included the ability to remove lab assistants from any shifts they requested. Director Stone then completed a final review of the semester and approved the schedule and any changes to it.
During the summer of 2012, the former employee had to miss her assigned workdays on two or three occasions due to her MS and its treatment. She also was on disability leave from her paramedic job for a period during that summer, returning to work full-time in early August. Following these absences, Instructor Booth on August 30, 2012 sent an email to lab assistants, including the former employee requesting that lab assistants sign up for open shifts on the work schedule, as he was “still short on help.” The schedule with available shifts was posted for September through December 2012. The former employee signed up for seven or eight four-hour shifts over the course of the fall semester that same day and emailed Instructor Booth the evening of August 30 to inform him of this. In her email, she indicated that she was no longer on disability leave from her other job.
Two weeks later, on September 12, 2012, the College removed the former employee from the work schedule for the entire fall semester schedule on the written instructions of Instructor Booth with the approval of Director Stone. Instructor Booth’s September 12 email instructions to his assistant provided a link to the online work schedule for the lab assistants and stated: “Any day you see [the former employee], just take her off.” Director Stone was copied on this email. That same day, Director Stone replied to Instructor Booth’s email, stating that he had reviewed all of the dates up to December and approved the schedule. The College knew that, by removing the former employee from the schedule, it was terminating her employment with Lanier.
When the former employee realized that someone removed her from the schedule for the entire semester, she contacted Instructor Booth. He told the former employee, by text message, that it was Director Stone’s decision and that Director Stone wanted to give the former employee “some time to heal.” Instructor Booth also stated that Director Stone seemed upset about the former employee missing a few days in the summer due to her MS. Instructor Booth then directed the former employee to speak to Director Stone. He did not offer to reinstate her for any of the days she signed up for or for any future dates.
Thereafter, on September 26, 2012, the former employee contacted Director Stone by email. After telling Director Stone i her email that Instructor Booth said Director Stone was managing the schedule and had wanted to give her “some time to heal,” she reassured him that she appreciated his concern but that she felt she was “OK.” When Director Stone responded on September 23, he confirmed the correctness of Director Stone’s email and also confirmed that he was concerned with the former employee’s health. He offered to discuss these concerns further with her in private. He did not offer to reinstate her for any of the days she signed up for or for any future dates.
Later that day, the former employee called Director Stone. On the call, Director Stone expressed concern about legal and liability issues and whether the former employee was fit to work because of her MS. He said that he, as the Department Director, had to be concerned about her health and medical issues, because a student could challenge a grade on the basis that her MS made her unfit to evaluate students. Director Stone also referenced a couple days that the former employee missed work due to her MS during the summer, and stated that she was less reliable than other lab assistants were at that point. He did not offer to reinstate her for any of the days she signed up for or for any future dates.
Approximately six months later, College removed the former employee from the payroll and changed her payroll status to “terminated.”
On September 26, 2012, the former employee filed a timely charge of discrimination with the United States Equal Employment Opportunity Commission (EEOC), alleging that College terminated her because of her disability in violation of the ADA. The Justice Department filed the lawsuit after the EEOC referred the former employee’s complaint to it.
Title I of the ADA prohibits covered entities including the College from discriminating against a qualified individual on the basis of disability in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment. 42 U.S.C. § 12112(a); 29 C.F.R. § 1630.4.
The Justice Department complaint against the College charged that the College violated the ADA by discriminating against her on the basis of her disability by:
Removing her from the lab assistant work schedule for a semester and reducing her work hours and compensation to zero; and
Terminating her on the basis of her disability
As a consequence of these discriminatory actions, the complaint charged the former employee suffered lost earnings, benefits and job advancement opportunities, as well as substantial emotional distress, pain and suffering and other nonpecuniary losses. The complaint asked the District Court to redress these injuries by:
Declaring the College in violation of the Title I of the ADA and its accompanying regulation;
Enjoining the College and its agents, employees, successors, and all persons in active concert or participation with it, from engaging in discriminatory employment policies and practices that violate Title I of the ADA;
Requiring the College to modify its policies, practices, and procedures as necessary to bring its employment practices into compliance with Title I of the ADA and its implementing regulation;
Ordering the College to train its supervisors and human resource staff regarding the requirements of Title I of the ADA; and
Awarding the former employee back pay with interest; the value of any lost benefits with interest; and compensatory damages, including damages for emotional distress, for injuries suffered as a result of Defendant’s failure to comply with the requirements of the ADA;
Under the settlement agreement announced November 7, 2019 by the Justice Department, the College must pay the former employee $53,000 in back pay and compensatory damages, revise its policies and training staff on the ADA to ensure compliance with the ADA, train staff on the ADA, and report to the Justice Department on implementation of the settlement agreement.
Reaching this settlement allowed the College to eliminate its exposure to potentially much greater liability. In addition to actual lost compensation and benefit damages, a loss at trial could have resulted in a jury award that also ordered the College to pay attorneys’ fees and other costs, interest and exemplary damages of up to $300,000.
For More Information
We hope this update is helpful. For more information about employment discrimination or other labor and employment, compensation, benefits or other related management and compliance concerns or developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Solutions Law Press, Inc. invites you receive future updates and join discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Solutions Law Press HR & Benefits Update Compliance Update Group and registering for updates on our Solutions Law Press Website..
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, health care, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications including extensive work with businesses on compliance, risk management and defense.
Author of numerous highly regarding publications on disability and other discrimination and other employment, employee benefit, compensation, regulatory compliance and internal controls and other management concerns affecting health care, education, insurance, housing and other operations, Ms. Stamer’s clients include health care, insurance and financial services, educational and other employer and services organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors; domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations; and other private and government organizations and their management leaders. In addition to her legal and management operations work. Ms. Stamer’s experience includes 30 plus years’ of legislative and regulatory policy advocacy and drafting, design, compliance and enforcement including testifying to the EBSA Advisory Council on Employee Welfare and Pension Benefit Plans in on the effectiveness of employee benefit plan disclosures during 2017 hearings on on reducing the burdens and increasing the effectiveness of ERISA mandated disclosures as well as advice, representation, advocacy and testimony to and before and other work with various foreign governments, Congress, state legislatures, and a multitude of federal, state and local agencies.
Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; manage labor-management relations, comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline; handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.
A Fellow in the American College of Employee Benefit Counsel and Past Chair of both the ABA Managed Care & Insurance Interest Group and it’s RPTE Employee Benefits and Other Compensation Group, Ms. Stamer also has leading edge experience in health benefit, health care, health, financial and other plan, program and process design, administration, documentation, contracting, risk management, compliance and related process and systems development, policy and operations; training; legislative and regulatory affairs, and other legal and operational concerns.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.
Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
For more information about Ms. Stamer or her work, services, experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
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NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission and its content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion.otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
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Business owners and operators and the business’ tax, accounting and other service providers increasingly risk criminal prosecution when involved with a business caught shirking its obligations under the Internal Revenue Code (the “Code”) to report wages and withhold and pay federal income tax and employees’ share of social security and Medicare taxes (collectively known as “FICA taxes”) from employees’ wages and to pay the employer’s share of FICA taxes in addition to the substantial civil tax penalties that the business faces for these actions.
While various Internal Revenue Service (“IRS”) educational and enforcement initiatives across the past decade have expanded awareness among business leaders and their accounting and tax advisors more aware of the the potentially significant civil tax penalties risks aggressive employment tax practices can create for the business, many business owners and operators, and the tax, accounting and payroll service providers often overlook or fail to take seriously their potential personal exposure to civil and increasingly, even criminal liability that can arise from management, consulting or other involvement with businesses engaged in aggressive employment tax practices under the Code. With the Justice Department now increasingly using criminal prosecution of individuals as well as businesses involved in employment tax evasion a key weapon in its effort to combat the “substantial problem” of employment tax fraud, however, business owners, operators, tax counsel, accounting, payroll, staffing and others increasingly must exercise care to avoid subjecting themselves to criminal prosecution and other personal liability when dealing with businesses engaged in aggressive employment tax practices.
Employment Tax Compliance Now High Enforcement Priority
Business noncompliance with their employment tax obligations is a widespread and persistent problem in the United States for a multitude of reasons, not the least of which is budgetary. Employment taxes on employee wages represent nearly 70% of all revenue collected by the IRS and, as of June 30, 2016, more than $59.4 billion of tax reported on Employer’s Quarterly Federal Tax Returns (Forms 941) remained unpaid. When last measured prior to the Justice Department’s kickoff of its current enforcement initiative in 2018, uncollected employment tax violations represented more than $91 billion of the gross Tax Gap and, after collection efforts, $79 billion of the net Tax Gap in the U.S. See Employment Tax Enforcement.
Aside from the budgetary concerns created by the widespread business noncompliance with employment tax responsibilities, the Justice Department considers nonpayment of employment taxes a serious crime. According to its Employment Tax Enforcement page states, “When employers willfully fail to collect, account for and deposit with the IRS employment tax due, they are stealing from their employees and ultimately, the United States Treasury. In addition, employers who willfully fail to comply with their obligations and unlawfully line their own pockets with amounts withheld are gaining an unfair advantage over their honest competitors.”
To stem employment tax violations and encourage greater business compliance with these requirements, the IRS and Justice Department are using a variety of taxpayer outreach, voluntary compliance resolution, and civil and criminal enforcement tools. Along with ongoing educational outreach, for instance, the IRS tries to encourage businesses to voluntarily clean up outstanding employment tax compliance issues by making available various voluntary resolution programs. For instance, the IRS Voluntary Closing Agreement Process – Employment Tax (VCAP – ET) program offers an administrative process businesses not currently under audit may use to “permanently and conclusively” resolve outstanding IRS employment tax liabilities not involving worker classification while its Voluntary Classification Settlement Program (VCSP) for businesses not under audit and Classification Settlement Program for businesses under examination offer options for businesses may use to resolve worker classification associated employment tax liabilities.
Employment Tax Prosecution Rising
Coupled with efforts to obtain greater voluntary compliance through these voluntary resolution programs, however, the IRS and Justice Department Tax Division increasingly partner to investigate and prosecute aggressively businesses and their owners, operators and tax and other service providers for employment tax violations. As the agency responsible for conducting the civil and criminal prosecutions necessary to enforce these rules, the Justice Department brings both civil suits and criminal prosecutions against both businesses and the owners, operators and others that participate or assist businesses to willfully violate the Code’s employment tax rules. While in the past, IRS and Justice Department employment tax enforcement generally focused on high dollar employment tax fraud cases, since making employment tax fraud enforcement a priority in May 2018, the IRS and Justice Department no longer place a dollar threshold on the amount of unpaid employment taxes that could trigger more severe enforcement action. Since this change, Justice Department civil and criminal employment tax fraud prosecutions and convictions have risen significantly, resulting in the Justice Department achieving a long and growing list of civil money judgements to recover unpaid taxes, interest and penalties, permanent injunctions and criminal convictions against businesses and individuals involved in employment tax fraud over the past year.
On the civil front, the Justice Department brings litigation on behalf of the United States to enforce the IRS’ authority to collect unpaid taxes and penalties and pursues permanent injunctions against businesses, payroll and tax advisors and others for violating the Code’s employment tax requirements.
Criminal Employment Tax Fraud Prosecutions & Convictions Show Justice Department Ready To Nail Businesses & Individuals Cheating On Employment Taxes
While these and other civil enforcement successes are powerful tools in the arsenal of the Justice Department and IRS employment tax enforcement efforts, however, it is the Justice Department’s growing prosecution and success in securing criminal convictions resulting in prison sentences against business owners and operators, tax advisors and others for employment tax fraud that most clearly demonstrates the Justice Department’s announced commitment to employment tax fraud enforcement has real teeth. Over the past year, the Justice Department as racked up an impressive and growing number of federal grand jury criminal tax fraud indictments, convictions and sentences, many of which include prison sentences ordered against business owners, operators, advisors and other individuals convicted of employment tax fraud. See e.g., North Carolina Office Manager Sentenced to Prison for Employment Tax Fraud; see also Recent Criminal Employment Enforcement News.
The criminal employment tax prosecution actions reported by the Justice Department during the just ended month of October 2019 are typical of this prosecutorial trend over the past year. Among others, during October the Justice Department Tax Division announced its employment tax enforcement efforts resulting in it securing separate federal grand jury criminal indictments against staffing business operators in New York and North Carolina.
October Criminal Employment Tax Indictments
On October 24, for instance, the Justice Department announced that a New York grand jury had issued criminal tax indictments against the owner/operator of a Long Island City, New York temporary employment staffing businesses including PTP Staffing Associates Inc. (PTP), and PPS Associates Inc. (PPS). The indictments charge that as the alleged sole owner of PTP and PPS, Heppenheimer was required to collect, account for, and pay to the IRS federal employment taxes withheld from the wages of PTP and PPS employees, but from 2013 through 2017, failed to report more than $270,000 in employment taxes to the IRS. If convicted, Heppenheimer faces a statutory maximum sentence of five years imprisonment for each count charged, plus substantial monetary penalties, supervised release, and restitution. Owner of New York City Temporary Staffing Firms Indicted for Employment Tax Fraud
Mere days later, the Justice Department also announced that a North Carolina federal grand jury had indicted Rebecca Adams and her daughter Elizabeth Wood with conspiring to defraud the United States government by withholding taxes from employees’ paychecks and failing to pay those taxes over to the Internal Revenue Service (IRS). See e.g., Owners of Greensboro Temporary Staffing Firms Indicted for Employment Tax Fraud. The indictment alleges Adams and Wood created Forms W-2 for the staffing business employees but failed to file these forms with the government as required. Instead of paying the taxes withheld from employees, the indictment alleges that Adams and Wood used the funds to pay for personal expenses, such as a personal maid, personal landscaping services, and pet spa services. The staffing business allegedly changed names twice, even though it did not otherwise change its actual business operations. Adams was also charged with tax evasion based on her allegedly evading payment of more than $400,000 in previously assessed employment taxes and penalties to the IRS. If convicted, both defendants face significant punishment. If convicted on these charges both Adam and Woods can expect their punishment will include prison time. Adams and Wood each face a statutory maximum sentence of five years in prison for each charge of conspiracy, employment tax fraud, and tax evasion, plus probation and monetary penalties.
October Criminal Employment Tax Convictions
Along with securing these new criminal tax indictments, the Justice Department also was successful in obtaining new criminal tax convictions against business owners in West Virginia and Florida for employment tax violations.
On October 21, two West Virginian business owners plead guilty today to conspiring to defraud the United States regarding their employment taxes and individual income taxes in a Federal District Court in West Virginia. According to court documents, Russell and Karen Rucker, a married couple, operated Rucker, Billups and Fowler Inc. (RBF), an insurance agency located in Huntington, West Virginia. Russell Rucker was the president of RBF and since approximately late 2013, Karen Rucker served as a financial officer. Between September 2015 and September 2018, the Ruckers withheld approximately $143,226 in payroll taxes from the wages of RBF’s employees, which they did not pay over to the IRS. Instead, the Justice Department charged the Ruckers diverted portions of the withheld funds for their own personal benefit. For instance, from 2014 through 2016 the Ruckers continued to pay themselves over $500,000 in salary. The Justice Department also charges that in response to IRS collection efforts in an attempt to conceal funds from the IRS, the Ruckers deposited money into the bank account of another individual, attempted to evade IRS levies by using a series of bank accounts that they did not disclose to the IRS, and by paying their mortgage and many other bills in cash. The Justice Department also claims the Ruckers also attempted to evade payment of $114,911 of Russell Rucker’s 2001, 2002, and 2005 individual income taxes by disguising paychecks issued to Russell Rucker as non-taxable “note proceeds and failed to file their individual income tax returns and RBF’s corporate returns for 2014 through 2017. The Justice Department valued the intended tax loss caused to the IRS by their conduct is more than $250,000. Currently awaiting sentencing scheduled on January 27, 2020, the Ruckers each face a statutory maximum sentence of five years in prison as well as monetary penalties, a period of supervised release, and restitution. See West Virginian Business Owners Plead Guilty to Failing to Pay Employment Taxes and Individual Income Taxes.
Less than a week later, the Justice Department achieved another prosecutorial success when Miami, Florida business owner Ricardo Betancourt plead guilty on October 29 to causing the multiple parcel delivery businesses he owned and operated in South Florida to fail to pay over employment taxes. According to the Justice Department, Betancourt’s multiple South Florida parcel delivery businesses earned gross revenues of more than $100 million and employed hundreds of employees. Betancourt as the owner and operator of these businesses was responsible for ensuring the businesses collected and paid over to the IRS the employment taxes withheld from employees’ paychecks. The Justice Department charged that Betancourt withheld payroll taxes from his employees, but deliberately failed to pay over those withholdings and other associated taxes to the IRS. The Justice Department claimed that in 2013 and 2014, Betancourt did not pay over approximately 97 percent of the federal employment taxes he withheld from his employees. In 2015 and 2016, Betancourt did not pay over any of the federal employment taxes he withheld from his employees. For the quarter ending December 2016, Betancourt admitted that he failed to truthfully account for and pay over payroll taxes of approximately $727,478. In his sentencing currently scheduled for February 12, 2020, Betancourt faces a statutory maximum sentence of five years in prison as well as a period of supervised release, restitution, and monetary penalties. See Miami Business Owner Pleads Guilty to Employment Tax Fraud.
October Criminal Employment Tax Prison Sentencings
The prison sentences imposed during October against individuals convicted of employment tax fraud also show business owners, operators and others criminally convicted on employment tax related tax evasion and tax fraud charges should expect to serve time in prison. Take the sentencing of Gail Cooper, who was sentenced for the employment tax crimes she committed as owner of a commercial and residential glass installation company, Greenville Architectural Glass (GAG). According to the Justice Department, as the owner of GAG responsible for GAG’s finances, Cooper was legally responsible for ensuring that GAG properly withheld and paid over to the IRS federal income, Social Security and Medicare taxes on the wages GAG paid to its employees during the years 2013 through 2015. Cooper was also required to file quarterly employment tax returns with the IRS. Although Cooper caused GAG to withhold taxes from employees’ wages, the Justice Department shared she neither filed the required quarterly returns for the first quarter of 2013 through the second quarter of 2015, nor paid the withheld amounts over to the IRS. Cooper also failed to pay over to the IRS unemployment taxes. In all, Cooper caused more than $280,000 in payroll taxes not to be paid. Furthermore, the Justice Department also charged Cooper filed false individual income tax returns for 2008, 2009, and 2010, on which she understated GAG’s gross receipts and overstated its expenses. Cooper caused GAG’s bookkeeper to manipulate and delete entries in the company’s accounting records. Specifically, she directed the bookkeeper to delete invoices from the software after GAG received payment from a client to make it appear as if GAG had not received the payment. Cooper also paid personal expenses with business funds, including utility bills for her residence and rental properties, and caused these to be classified as business expenses. After filing fraudulent returns for 2008-2010, Cooper did not file any individual income tax returns for the next several years. In total, the Justice Department charged Cooper’s conduct caused a tax loss of $587,516 to the United States. As punishment for these criminal convictions, U.S. District Judge Thomas M. Rose on October 29th ordered Cooper to serve 14 months in prison, two years of supervised release and pay restitution to the IRS in the amount of $659,262.39. Ohio Glass Company Owner Sentenced to Prison For Not Paying Employment Taxes.
That same day, Justice Department Tax Division prosecutors also obtained a 24-month prison sentence against a Tulsa, Oklahoma computer software development company owner for his criminal conviction on failing to account for and pay over employment taxes withheld from his employees’ wages. According to documents and information provided to the Court, as the owner and operator of Tulsa-based Zealcon Corporation, Earnest J. Grayson Jr. was responsible for withholding, and paying over to the IRS payroll taxes on the wages paid to Zealcon employees. For the period January 2014 through June of 2016, Justice Department prosecutors showed Grayson caused a tax loss of approximately $1 million by intentionally not paying to the IRS income and social security taxes withheld from Zealcon employees’ wages and the employer portion of social security taxes due from Zealcon on those wages. As punishment for these crimes, Grayson was sentenced to serve a 24 month prison sentence, ordered to pay restitution to the IRS in the amount of $904,091, and to serve three years of supervised release. Owner of Tulsa Software Company Sentenced to Prison for Employment Tax Fraud.
With the Justice Department promising to continue to pursue ongoing enforcement effort, businesses, individuals with ownership or management authority over the collection and payment of employment taxes, and their tax, accounting, payroll, staffing and other service providers need to use care to avoid exposing themselves to liability when advising, assisting or dealing with a business engaged in aggressively classifying workers as contractors rather than employees, or otherwise failing to properly track, account for, report and pay over income tax and employment taxes properly.
When evaluate these potential risks, businesses and business leaders responsible for income and employment tax withholding, reporting and payment and those negotiating, reviewing or engaging in transactions with them should be particularly careful when participating in arrangements that the IRS might consider employment tax fraud schemes such as:
“Pyramiding” of employment taxes, which the IRS views as a fraudulent practice where a business withholds taxes from its employees but intentionally fails to remit them to the IRS. Businesses involved in pyramiding frequently file for bankruptcy to discharge the liabilities accrued and then start a new business under a different name and begin a new scheme.
Abusive employee leasing arrangements where the business contracts with outside businesses to handle all administrative, personnel, and payroll concerns for employees where the leasing entity fails to properly report wages and withhold and payover income or employment taxes to the IRS. The IRS and other agencies often pursue tax collection and other enforcement actions against businesses that have used leasing or other staffing businesses when the leasing or staffing company fails to properly report, withhold or pay over income and employment taxes to the IRS.
Paying workers in whole or partially, in cash without properly accounting for, withholding and paying income or employment taxes due on a worker’s wages where the facts and circumstances indicated the worker qualified as a common law employee of the business; or
Filing false payroll tax returns understating the amount of wages on which taxes are owed, or failing to file employment tax returns to evade employment or other taxes.
When evaluating the adequacy of employment tax compliance, proper worker classification is a critical starting point. Business owners, operators and others in the scope of employment tax liability risk should scrutinize the defensibility of how a business classifies those performing services or other work as employees versus independent contractors, employees or contractors of another business or in some other status and document the evidence supporting these characterization and other compliance efforts.
When performing these activities, business owners and operators are encouraged to resist the urge to assume that they can rely upon the contractual or labels of workers as contractors or employed by a staffing, leasing or other service provider to avoid characterization and resulting liability for employment and income tax obligations as the employer of workers. Under the Code the defensibility of these characterizations of workers generally is determined based on whether the facts and circumstances reflect that the business in operation possessed the requisite control to qualify as a common law employer with little or no deference to how the parties have labeled the arrangement or the historical duration of the practices within the organization or its respective industry. Rather, the analysis must focus on evaluating these and other potentially suspect arrangements to realistically assess the likelihood that the IRS or Justice Department could challenge the business’ employment tax practices as willful or other violations of the Code’s employment tax requirements. Wise individuals and businesses operating or dealing with businesses involved in arrangements or practices identified as potentially suspect by the IRS and Justice Department also should pursue contractual, audit and other operational safeguards to document their efforts to require, enforce and monitor compliance and to capture and retain records and other evidence that would be helpful to defend the business’ or their own action in the event the IRS or Justice Department audits or initiates enforcement action with respect to the arrangements in the future.
Tax preparers, tax and other attorneys, accountants and others that participating in operations, preparation of returns, transactions or other activities also should be sensitive to special ethical and legal requirements and standards that can attach to advice or involvement in operations, transactions or providing advice or representation potentially involving practices that might raise employment tax fraud or other employment tax withholding and payment, wage reporting, or related employment tax concerns might arise. See, e.g., IRS Circular 230. Along side of the Justice Department’s civil and criminal employment tax enforcement, tax practitioners, tax preparers, and other third parties expose themselves to discipline for failing to properly report, pay and file employment tax or other returns or other violations of professional standards of tax practice when giving advice or other engaging in other activities adhere to professional standards and follow the law.
Additionally, tax and other professionals are reminded that tax return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
Leaders, legal and other advisors, and service providers of businesses involved in these arrangements generally should use care to critically evaluate these should react to the growing enforcement risks and acting to mitigate their own and their organization’s potential exposure to criminal or civil tax or other enforcement. These efforts should start by assessing realistically the likely defensibility of their arrangements and risks of liabily from their own or other associated businesses employment tax or worker classification practices in the event of a challenge based on a realistic assessment of the real acts and circumstances within the scope of attorney-client priviledge as well as seek contractual, audit and other operational safeguards to require and document compliance and to capture and retain records and other evidence that the business might need to defend itself against a future audit or enforcement action associated with these suspect arrangements.
Businesses leaders, advisors and service providers also should keep in mind that aggressive worker classification and employment tax practices generally also extend to a business’ other relationships with workers and service providers such as minimum wage, over time, recordkeeping and other wage and hour; I-9 eligibility to work verification, occupational heath and safety, workers’ compensation, employment discrimination and other worker associated legal obligations also currently subject to heavy worker misclassification and other enforcement. As a consequence, businesses, legal counsel, accounting and other service providers should recognize the need for a holistic review and assessment of risk and planning to manage these risks, as well as the need to use care to safeguard attorney-client privilege and avoid unprotected discussion of sensitive facts and analysis outside the scope of attorney-client privilege with other parties without prior approval of their legal counsel.
For More Information
We hope this update is helpful. For more information about worker classification and employment tax compliance and enforcement or other labor and employment developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
Solutions Law Press, Inc. invites you receive future updates and join discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Solutions Law Press HR & Benefits Update Compliance Update Group and registering for updates on our Solutions Law Press Website.
About the Author
Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine.
Author of numerous highly regarding publications on worker classification and other employment, payroll, and employee benefit tax compliance publications, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors; domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations; and other private and government organizations and their management leaders. As part of this work, she has worked extensively on employee benefit communication and other employee benefit plan legislative and regulatory policy, design, compliance and enforcement including testifying to the EBSA Advisory Council on Employee Welfare and Pension Benefit Plans in on the effectiveness of employee benefit plan disclosures during 2017 hearings on on reducing the burdens and increasing the effectiveness of ERISA mandated disclosures.
Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; manage labor-management relations, comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline; handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.
A Fellow in the American College of Employee Benefit Counsel and Past Chair of both the ABA Managed Care & Insurance Interest Group and it’s RPTE Employee Benefits and Other Compensation Group, Ms. Stamer also has leading edge experience in health benefit, health care, health, financial and other plan, program and process design, administration, documentation, contracting, risk management, compliance and related process and systems development, policy and operations; training; legislative and regulatory affairs, and other legal and operational concerns.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.
Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
For more information about Ms. Stamer or herexperience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. We also invite you to join the discussion of these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions in our Health Plan Compliance Group or COPE: Coalition On Patient Empowerment Groupon LinkedIn or Project COPE: Coalition on Patient Empowerment Facebook Page.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission and its content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion.otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Health plans, their sponsoring employers and unions, insurers, fiduciaries, administrators, insurers and other service providers should learn from the $3 million lesson a Franklin, Tennessee-based diagnostic medical imaging services provider is learning about the heavy penalties a health plan, health care provider, health care clearinghouse or business associate (“Covered Entity”) risks if a post-data breach investigation by the U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”) shows the Covered Entity breached the privacy, data security, business associate agreement and breach notificataion rules of the Health Insurance Portability and Accountability Act (HIPAA) Security and Breach Notification Rules before or after the breach.
Under a new OCR Resolution Agreement and Corrective Action Plan announced May 6, 2019, Touchstone Medical Imaging (“Touchstone”) must pay $3,000,000 to OCR and adopt a corrective action plan to settle OCR charges it violated HIPAA arising from an OCR investigation of Touchstone’s handling of a 2014 breach. Around May 9, 2014, the Federal Bureau of Investigation (“FBI”) and OCR notified Touchstone that one of its FTP servers allowed uncontrolled access to PHI that allowed search engines to index the PHI of more than 300,000 of Touchstone’s patients, which remained visible on the Internet even after the server was taken offline. While Touchstone initially claimed that no patient PHI was exposed, in the course of OCR’s investigation, Touchstone subsequently admitted PHI of more than 300,000 patients was exposed including, names, birth dates, social security numbers, and addresses. As a result of its delayed acknowledgement of the occurrence of the breach on May 9, 2014, Touchstone did not provide notice of the breach until October, 2014, months after OCR and FBI notified it of the breach. See here.
OCR’s investigation found Touchstone breached HIPAA before and after the breach. OCR’s investigation found before the breach, Touchstone failed to conduct an accurate and thorough risk analysis of potential risks and vulnerabilities to the confidentiality, integrity, and availability of all of its electronic PHI (ePHI), and failed to have business associate agreements in place with its vendors, including their IT support vendor and a third-party data center provider as required by HIPAA. OCR also found Touchstone did not thoroughly investigate the security incident until several months after notice of the breach from both the FBI and OCR. Consequently, Touchstone’s notification to individuals affected by the breach also was untimely.
To resolve OCR charges arising from these events, Touchstone agreed to pay OCR $3,000,000. In addition to the monetary settlement, Touchstone will undertake a robust corrective action plan that includes the adoption of business associate agreements, completion of an enterprise-wide risk analysis, and comprehensive policies and procedures to comply with the HIPAA Rules.
The Resolution Agreement illustrates the expensive price Covered Entities risk from failing to conduct risk assessments, obtain business associate agreements and fulfill other HIPAA requirements before a breach, then failing to promptly investigate, provide notification and redress a breach when discovered. Covered Entities should learn from the painful lesson learned by Touchstone by reconfirming the adequacy of their current HIPAA compliance and using care to timely and adequately investigate and provide notification if and when a breach occurs.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry, health and other benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors; managed care organizations, insurers, self-insured health plans and other payers and their management; public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, health care accreditation, peer review and quality committees and organizations; managed care organizations, insurers, third party administrative services organizations and other payer organizations; billing, utilization management, management services organizations; group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; claims, billing and other health care and insurance technology and data service organizations; other health, employee benefit, insurance and financial services product and solutions consultants, developers and vendors; and other health, employee benefit, insurance, technology, government and other management clients.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompassess advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.
Beyond her public policy and regulatory affairs involvement, Ms. Stamer also has extensive experience helping these and other clients to design, implement, document, administer and defend workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government; accreditation and quality organizations; private litigation and other federal and state health care industry investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, and change management; workforce and operations management, and other opportunities and challenges arising in the course of their operations.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.
Ms. Stamer has extensive health care reimbursement and insurance experience advising and defending plan sponsors, administrators, insurance and managed care organizations, health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and employer and association group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions. Scribe for the ABA JCEB annual agency meeting with HHS OCR, she also has worked extensively on health and health benefit coding, billing and claims, meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical, workforce, consumer financial and other data confidentiality and privacy, federal and state data security, data breach and mitigation, and other information privacy and data security concerns.
Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.
A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Employers frustrated with the current Fair Labor Standards Act (“FLSA”) rules defining what forms of payment employers must count as part of an employee’s “regular rate” when calculating overtime should evaluate and consider expressing support for the Department of Labor’s proposal announced today (March 28, 2019) to update its more than 50-year old regulations implementing the regular rate requirements under section 7(e) of FLSA in 29 C.F.R. Parts 548 and 778. Officially scheduled for publication in the May 28, 2019 Federal Register, employers and other interested persons may review the unofficial text of the Notice of Proposed Rulemaking (“Proposed Rule”) released with the Labor Department’s announcement of its proposal today. The Proposed Rule also will make substantive changes to the Labor Department’s current FLSA regulations about the treatment of “call back pay” and its base pay rules.
Regular Rate For Overtime
The FLSA generally requires employers to pay non-exempt employees overtime pay of at least one and one-half times the “regular rate” of pay for all hours worked in excess of 40 hours per workweek. Regular rate requirements define what forms of payment employers include and exclude in the “time and one-half” calculation when determining workers’ overtime rates. The existing rules define the regular rate to include both the base hourly rate of pay and certain bonus and other compensation and perks. As the Trump Administration supports these proposed changes, employers should start evaluating their implications in anticipation of the Labor Department’s adoption of a Final Rule. At the same time, businesses supporting the rule or desiring refinements to its provisions also will want to submit comments to the Labor Department no later than the May 18 comment deadline.
Ambiguities in the current more than 50-year-old Labor Department regulations implementing the regular rate requirement rules discourage employers from offering more perks to their employees because of uncertainty about whether the perks are required to be included in the regular rate of pay for purposes of calculating overtime pay. In many other cases, employers that mistakenly fail to include bonuses, benefits and other perks often experience the unfortunate surprise of getting nailed with unexpected back pay and penalties obligations through Labor Department audits or private litigation.
The Proposed Rule primarily focuses on defining when employers must count bonuses, benefits, and other perks in an employee’s regular rate of pay when calculating overtime. As proposed, the Proposed Rule would confirm that employers may exclude the following from an employee’s regular rate of pay:
the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
payments for unused paid leave, including paid sick leave;
reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
reimbursed travel expenses that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System and that satisfy other regulatory requirements;
discretionary bonuses, by providing additional examples and clarifying that the label given a bonus does not determine whether it is discretionary;
benefit plans, including accident, unemployment, and legal services; and
tuition programs, such as reimbursement programs or repayment of educational debt.
that employers do not need a prior formal contract or agreement with the employee(s) to exclude certain overtime premiums described in sections 7(e)(5) and (6) of the FLSA; and
that employers may exclude pay for time that would not otherwise qualify as “hours worked,” including bona fide meal periods,from an employee’s regular rate unless an agreement or established practice indicates that the parties have treated the time as hours worked.
In addition, the Proposed Rule also would make two substantive changes to the existing regulations on “call-back pay” and to its “basic rate” regulations.
Call-Back Pay
The Proposed Regulation would eliminate the current restriction in Labor Regulation §§ 778.221 and 778.222 that “call-back” pay and other payments similar to call-back pay must be “infrequent and sporadic” to be excludable from an employee’s regular rate, while maintaining that such payments must not be so regular that they are essentially prearranged.
Basic Rate
The Proposed Rule also proposes an update the Labor Department’s “basic t rate” regulations.
Under the current regulations, employers using an authorized basic rate may exclude from the overtime computation any additional payment that would not increase total overtime compensation by more than $0.50 a week on average for overtime work weeks in the period for which the employer makes the payment.
The Proposed Regulation would change the current $0.50 limit to 40 percent of the federal minimum wage (currently $2.90.” The Labor Department is inviting comments on if 40 percent is an appropriate threshold in its request for comments on the Proposed Regulations.
Comment on the Proposed Rule & Other FLSA Rule Changes
Employers commenting on the Proposed Rule also should keep in mind that its publication comes on the heals of the Labor Department’s proposal of a new Proposed Salary Threshold Rule that if adopted will increase to $679 per week the minimum salary an employee must earn to qualify for coverage by the “white collar” overtime exemption. This would effectively raise the amount an employer must pay any worker it wants to treat as exempt under the white collar overtime exemption from $23,660 annually to $35,308 annually. The adoption of this proposed Salary Threshold Rule as proposed overnight will disqualify a million plus currently salaried workers to hourly employees entitled to overtime under the FLSA.
Businesses concerned about the Proposed Rule or the Proposed Salary Threshold Rule should submit their feedback as comments to the applicable proposal during the applicable comment period. May 28 is the deadline for employers and other interested persons to submit comments of support or other input on the Proposed Rule to change the regular rate determination rules.
Other Defensive Actions To Minimize FLSA Exposures
Whether or not the either of these proposed rule changes takes effect, U.S. businesses will want to strengthen their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws, tighten contracting and other compliance oversight in relation to outsourced services, weigh options to clean up exposure areas, review insurance coverages and consider other options to minimize their potential liability under applicable wages and hour laws. Conducting this analysis within the scope of attorney-client privilege is important because the analysis and discussions are highly sensitive both as potential evidence for wage and hour and other legal purposes. Consequently, businesses and their leaders generally will want to arrange for this work to be protected to the extent by attorney-client privilege, work product and other evidentiary protections against discovery by Department, employees or others for FLSA or other workforce enforcement actions.
As a part of this process, businesses and their leaders generally should plan to:
Review subcontractor, temporary, lease employee, independent contractor and other outsourced labor and services relationship for potential risk of worker reclassification and tighten contracting and other procedures;
Audit the position of each employee currently classified as exempt to assess its continued sustainability and to develop documentation justifying that characterization;
Audit characterization of workers obtained from staffing, employee leasing, independent contractor and other arrangements and implement contractual and other oversight arrangements to minimize risks that these relationships could create if workers are recharacterized as employed by the employer receiving these services;
Review the characterization of on-call and other time demands placed on employees to confirm that all compensable time is properly identified, tracked, documented, compensated and reported;
If the employer hires any individuals under age 18, audit and implement appropriate procedures to ensure its ability to demonstrate compliance with all applicable FLSA child labor rules;
If the employer is a government contractor or subcontractor or otherwise performs any services on projects funded with federal or state funds, evaluate the applicability and fulfillment of any special wage, fringe benefit, recordkeeping or other government contracting wage and hour requirements;
If the employer hires foreign agricultural or other workers subject to special conditions and requirements, to review compliance with those special requirements;
Review and tighten existing practices for tracking compensable hours and paying non-exempt employees for compliance with applicable regulations and to identify opportunities to minimize costs and liabilities arising out of the regulatory mandates;
If the employer uses leased, temporary, or other outsourced labor, evaluate contractual, process and other options to support the employer’s ability cost effectively to respond to an audit, investigation or enforcement action by the Labor Department or private litigants and if necessary, obtain indemnification or other recovery in the event the employer incurs liability due to the use or practices of the outsourced labor supplier;
If the audit raises questions about the appropriateness of the classification of an employee as exempt, self-initiation of proper corrective action after consultation with qualified legal counsel;
Review and document all workers classified as exempt;
Review of existing documentation and record keeping practices for hourly employees;
Evaluate potential exposures under other employment, labor, tax or related laws or contracts that might be impacted by the findings or actions taken in response to those findings;
Explore available options and alternatives for calculating required wage payments to non-exempt employees and assessing and resolving other concerns;
Identify and calculate other employee benefit, tax or other corrections and associated costs and procedures that may be required as a result of findings or corrective actions resulting from their redress;
Re-engineer work rules, policies, contracts and practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures;
Explore insurance, indemnification and other options for mitigating risks and associated investigation and defense costs; and
Consider self-correction within the new PAID Program or otherwise.
If you need more information or have questions, contact the author, Cynthia Marcotte Stamer. We also invite you to share your own best practices ideas and resources and join the discussions about these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions onLinkedIn.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused wage and hour and other employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors; domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations; and other private and government organizations and their management leaders.
Throughout her career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline; handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; transactional and other change management; regulatory affairs and public policy; process, product and service improvement, development and innovation; and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.
Author of leading works on wage and hour and a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
For more information about Ms. Stamer or her services, experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here. We also invite you to join the discussion of these and other human resources, health and other employee benefit and patient empowerment concerns by participating and contributing to the discussions Linkedin or Facebook
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
The NLRB has engaged outside contractors to assist the NLRB to process, classify and code the nearly 29,000 comments it received in response to the Proposed Rule during the comment period that ended in December, 2018. In their March 14, 2019 letter, Congressman Scott and Congresswoman Wilson expressed “concern” about reports that the NLRB planned to outsource “review of public comments” to a private contractor the and demanded the NRLB respond to their demand for information and documents.
The Proposed Rule
The Proposed Rule published by the NRLB last year would overrule a definition of joint employment implemented by NLRB order during the Obama Administration when Democratic appointees dominated NLRB during the Obama Administration. A finding of joint employment by the NLRB results in the NLRB treating a separate business that does not directly employ workers employed by a second business as a single employer, both of which are jointly and severally liable for complying with and breaches of NLRB rules on union organizing, collective bargaining and other NLRA protected activities even where the business is not under common ownership or control with the business that actually is the true employer of the workers.
The Proposed Rule seeks to overrule an interpretive position adopted by the NLRB during the Obama administration under which unions could use limited indirect involvement or control by a business Including limited involvement by general contractors subcontractors as the basis for having that business be treated as a joint player for purposes of union organizing in collective-bargaining obligations under the NLRB.
During the Obama Administration, the NLRB by Board order and without following regulatory rulemaking procedures or providing any opportunity for public comment expanded the circumstances where a business is treated as a joint employer to include situations where the business does not have direct control over the worker in such a way that it imperils businesses that contract to receive services under independent contractor or subcontractor agreements from businesses with unionized workers or involved in organizing campaigns. As modified during the Obama Administration, the NLRB could find a business liable as a joint employer based on very limited, indirect influence on terms of work such as setting the hours that a job site is available for the performance of work or requiring compliance with workplace safety or other contractual standards including those required to comply with federally imposed government contracting requirements. Congressman Scott and Congresswoman Wilson, both members of the current Democratic Majority in the House well known for their pro-labor positions, oppose the changes set forth in the Proposed Rule.
Outsourcing Inquiry & Response
In his March 22, 2019 Letter, Chairman made clear that the NRLB has not outsourced the substantive analysis of the comments to a private contractor. Rather, he explained that the NRLB merely has engaged an outside private contractor a General Services Administration (“GSA”)-approved temporary employment agency, contracted through the GSA bid process to provide temporary support on a limited, short-term basis to
perform the initial sorting and coding of the public comments. The Chairman stated that the use of these outside service providers to sort and code the response is a more cost effective alternative to completing this work than using NLRB legal staff and frees up the NLRB lawyers to perform their legal responsibilities for the NLRB.
The Proposed Rule enjoys significant support within the business community and among Republican leaders, but is widely opposed among Congressional Democrats. The Trump Administration is expected to approve some version of the Proposed Rule soon.
About The Author
Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation; Former Chair of the RPTE Employee Benefits and Compensation Committee, a current Co-Chair of the Committee, and the former Chair of its Welfare Benefit and its Defined Compensation Plan Committees and former RPTE Joint Committee on Employee Benefits Council (JCEB) Representative, Cynthia Marcotte Stamer is a Martindale-Hubble “AV-Preeminent” practicing attorney and management consultant, author, public policy advocate, author and lecturer repeatedly recognized for her 30 plus years’ of work and pragmatic thought leadership, publications and training on health, pension and other employee benefit, insurance, labor and employment, and health care fiduciary responsibility, payment, investment, contracting and other design, administration and compliance concerns as among the “Top Rated Labor & Employment Lawyers in Texas,” a “Legal Leader,” a “Top Woman Lawyer” and with other awards by LexisNexis® Martindale-Hubbell®; as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, in International Who’s Who of Professionals and with numerous other awards and distinctions.
Highly valued for her ability to meld her extensive legal and industry knowledge and experience with her talents as an insightful innovator and pragmatic problem solver, Ms. Stamer advises, represents and defends employer, union, multi-employer, association and other employee benefit plan sponsors, insurers and managed care organizations, fiduciaries, plan administrators, technology and other service providers, government and community leaders and others about health and other employee benefit and insurance program and policy design and innovation, funding, documentation, administration, communication, data security and use, contracting, plan, public and regulatory reforms and enforcement, and other risk management, compliance and operations matters. Her experience encompasses leading and supporting the development and defense of innovative new policies, programs, practices and solutions; advising and representing clients on routine plan establishment, plan documentation and contract drafting and review, administration, change and other compliance and operations; crisis prevention and response, compliance and risk management audits and investigations, enforcement actions and other dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, Justice, Securities and Exchange Commission, Education and other federal agencies, state legislatures, attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators, and various other foreign and domestic governmental bodies and agencies. She also provides strategic and other supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness. Alongside her extensive legal and operational experience, Ms. Stamer also is recognized for her work as a public and regulatory policy advocate and community leader with a gift for finding pragmatic solutions and helping to forge the common ground necessary to build consensus. Best known for her domestic public policy and community leadership on health care and insurance reform, Ms. Stamer’s lifelong public policy and community service involvement includes service as a lead consultant to the Government of Bolivia on its pension privatization project, as well as extensive legislative and regulatory reform, advocacy and input workforce, worker classification, employee benefit, public health and healthcare, social security and other disability and aging in place, education, migration reforms domestically and internationally throughout her adult life. In addition to her public and regulatory policy involvement, Ms. Stamer also contributes her service and leadership to a professional and civic organizations and efforts including her involvement as the Founder and Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Vice Chair, Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; current Fiduciary Responsibility Committee Co-Chair and Membership Committee member of the ABA RPTE Section; former RPTE Employee Benefits and Other Compensation Group Chair, former Chair and Co-Chair of its Welfare Plans Committee, and Defined Contribution Plans Committee; former RPTE Representative to ABA Joint Committee on Employee Benefits Council; former RPTE Representative to the ABA Health Law Coordinating Counsel; former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, former Board Member, Continuing Education Chair and Treasurer of the Southwest Benefits Association; Vice President of the North Texas Healthcare Compliance Professionals Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; past Dallas World Affairs Council Board Member, and in leadership of many other professional, civic and community organizations. Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, the Society of Professional Benefits Administrators, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other public policy advocacy and other professional and civic organizations and involvements. Through these and other involvements, she helps develop and build solutions, build consensus, garner funding and other resources, manage compliance and other operations, and take other actions to identify promote tangible improvements in health care and other policy and operational areas.
Before founding her current law firm, Cynthia Marcotte Stamer, P.C., Ms. Stamer practiced law as a partner with several prominent national and international law firms for more than 10 years before founding Cynthia Marcotte Stamer, P.C. to practice her unique brand of “Solutions law™” and to devote more time to the pragmatic policy and system reform, community education and innovation, and other health system improvement efforts of her PROJECT COPE: the Coalition on Patient Empowerment initiative.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Employers concerned about minimum wage, overtime and other liability from the Proposed Salary Threshold Rule (“Proposal”) that if adopted will increase the minimum salary for the Fair Labor Standards Act (“FLSA”) “white collar” overtime exemption from $23,660 annually to $35,308 annually. If adopted as proposed, the Proposal overnight will disqualify a million plus currently salaried workers to hourly employees that their employers will be required to pay minimum wage and overtime under the FLSA. Businesses concerned about the Proposal or other burdensome minimum wage or overtime requirements under the FLSA need to tell the Labor Department about these rules burdensome effects on business.
Proposal To Raise Minimum Salary For Overtime Exemption
The Labor Department Proposal if adopted will increase to $679 per week the minimum amount that an employer must pay an employee to treat that employee as exempt from the minimum wage or overtime rules of the FLSA regardless of the role or position of the employee. This means that an additional million plus employees overnight no longer would qualify to be paid as salaried rather than hourly employees. The Proposal
Under currently enforced FLSA rules, employers generally must treat any employee earning less than $455 per week ($23,660 annually) as a non-exempt employee. This generally means that the employer must pay the employee at least minimum wage for regular time and must pay overtime to the worker for any hours worked in excess of 40 hours per week.
The Labor Department set the minimum weekly earnings level of $455 per week in 2004. The Proposal if adopted will increase the minimum required earnings an employee must earn to qualify for exemption from minimum wage and overtime rules more than $124 per week to $679 per week (equivalent to $35,308 per year).
The Department also is asking for public comment on the Proposal’s language for periodic review to update the salary threshold. An update would continue to require notice-and-comment rule making rather than calling for automatic adjustments to the salary threshold for inflation.
Speak Up About Proposal & Other FLSA Burdens On Business
Businesses concerned about Proposal to increase the salary threshold or other burdensome FLSA rules or enforcement policies should seize the opportunity to provide feedback.
To start with, businesses should submit comments about the Proposed Rule electronically at www.regulations.gov as soon as possible before the 60-day comment period runs in mid-May.
Additionally, concerned businesses also should consider participating in events like the Small Business Roundtables that the Small Business Administration (“SBA”) Office of Advocacy plans to host to discuss the Proposal to hear directly from small businesses about the impact of the proposed rule. Currently SBA plans to host three roundtables:
Thursday April 4, 2019 – 2:00 pm – 4:00 pm (EDT) at the University of South Florida Port Tampa Bay, Building 1101 Channelside Dr., Suite 210, Tampa, FL 33602;
Thursday April 11, 2019 – 2:00 pm – 4:00 pm (EDT) at the SBA Headquarters, Eisenhower Room B 409 Third Street SW, Washington, DC 20416 (Call-in option available); and
Tuesday April 30, 2019 – 9:00 am – 11:00 am (CDT) at the Mobile Area Chamber of Commerce 451 Government St., Mobile, Alabama 36602
Interested parties must RSVP to Janis.Reyes@sba.gov to participate. Note that while SBA reports that SBA has invited Labor Department staff, the Labor Department has not confirmed its acceptance of these invitations yet. Also, because comments expressed during these roundtables do not take the place of submitting written comments to the regulatory docket, concerned businesses should also still comment on the Proposal. However adverse feedback from business expressed at this meeting could help to motivate SBA to express opposition or other negative feedback on the Proposal.
Other Defensive Actions To Minimize FLSA Exposures
Whether or not the Proposal takes effect, all U.S. businesses will want to strengthen their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws, tighten contracting and other compliance oversight in relation to outsourced services, weigh options to clean up exposure areas, review insurance coverages and consider other options to minimize their potential liability under applicable wages and hour laws. Conducting this analysis within the scope of attorney-client privilege is important because the analysis and discussions are highly sensitive both as potential evidence for wage and hour and other legal purposes. Consequently, businesses and their leaders generally will want to arrange for this work to be protected to the extent by attorney-client privilege, work product and other evidentiary protections against discovery by Department, employees or others for FLSA or other workforce enforcement actions.
As a part of this process, businesses and their leaders generally should plan to:
Review subcontractor, temporary, lease employee, independent contractor and other outsourced labor and services relationship for potential risk of worker reclassification and tighten contracting and other procedures;
Audit the position of each employee currently classified as exempt to assess its continued sustainability and to develop documentation justifying that characterization;
Audit characterization of workers obtained from staffing, employee leasing, independent contractor and other arrangements and implement contractual and other oversight arrangements to minimize risks that these relationships could create if workers are recharacterized as employed by the employer receiving these services;
Review the characterization of on-call and other time demands placed on employees to confirm that all compensable time is properly identified, tracked, documented, compensated and reported;
If the employer hires any individuals under age 18, audit and implement appropriate procedures to ensure its ability to demonstrate compliance with all applicable FLSA child labor rules;
If the employer is a government contractor or subcontractor or otherwise performs any services on projects funded with federal or state funds, evaluate the applicability and fulfillment of any special wage, fringe benefit, recordkeeping or other government contracting wage and hour requirements;
If the employer hires foreign agricultural or other workers subject to special conditions and requirements, to review compliance with those special requirements;
Review and tighten existing practices for tracking compensible hours and paying non-exempt employees for compliance with applicable regulations and to identify opportunities to minimize costs and liabilities arising out of the regulatory mandates;
If the employer uses leased, temporary, or other outsourced labor, evaluate contractual, process and other options to support the employer’s ability cost effectively to respond to an audit, investigation or enforcement action by the Labor Department or private litigants and if necessary, obtain indemnification or other recovery in the event the employer incurs liability due to the use or practices of the outsourced labor supplier;
If the audit raises questions about the appropriateness of the classification of an employee as exempt, self-initiation of proper corrective action after consultation with qualified legal counsel;
Review and document all workers classified as exempt;
Review of existing documentation and record keeping practices for hourly employees;
Evaluate potential exposures under other employment, labor, tax or related laws or contracts that might be impacted by the findings or actions taken in response to those findings;
Explore available options and alternatives for calculating required wage payments to non-exempt employees and assessing and resolving other concerns;
Identify and calculate other employee benefit, tax or other corrections and associated costs and procedures that may be required as a result of findings or corrective actions resulting from their redress;
Re-engineer work rules, policies, contracts and practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures;
Explore insurance, indemnification and other options for mitigating risks and associated investigation and defense costs; and
Consider self-correction within the new PAID Program or otherwise.
If you need more information or have questions, contact the author, Cynthia Marcotte Stamer.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
The author of the “Texas Payday Act,” and numerous other highly regarded publications on wage and hour and other human resources, employee benefits and compensation publications, Ms. Stamer is well-known for her 30 years of extensive wage and hour, compensation and other management advice and representation of restaurant and other hospitality, health, insurance, financial services, technology, energy, manufacturing, retail, governmental and other domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here including:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Employee benefit plan sponsors, fiduciaries, administrators and advisors should review and update their benefit and compensation plan designs and testing in response to the just released tables of covered compensation under § 401(l)(5)(E) of the Internal Revenue Code and related regulations for the 2019 plan year in new Revenue Ruling 2019-06.
The new tables are available in the advance release copy of Revenue Ruling 2019-06, scheduled for official publication in Internal Revenue Bulletin 2019-14on April 1, 2019.
The Revenue Ruling provides tables of covered compensation under § 401(l)(5)(E) of the Internal Revenue Code and related regulations for the 2019 plan year.
For this purpose, covered compensation is average of the contribution and benefit bases in effect under section 230 of the Social Security Act for each year in the 35 year period ending with the year in which an employee attains social security retirement age.
As the change will impact plan contribution limits, discrimination testing and other plan and contribution design and administration, employer and other plan sponsors, fiduciaries, administrators and service providers should evaluate the effects of the adjustments so as to maximize their ability to anticipate and respond to the adjustments.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors; domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations; and other private and government organizations and their management leaders.
Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline; handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.
Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as the following:
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NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Employers concerned about managing their overtime liability should review and provide prompt feedback to the U.S. Department of Labor (Department) on a Notice of Proposed Rulemaking (NPRM) that would make an additional million plus American workers eligible for overtime under the Fair Labor Standards Act (“FLSA”) by increasing the minimum amount an employee must earn to be eligible for treatment as FLSA exempt to $679 per week.
Under currently enforced FLSA rules, employers generally must treat any employee earning less than $455 per week ($23,660 annually) as a non-exempt employee. This generally means that the employer must pay the employee at least minimum wage for regular time and must pay overtime to the worker for any hours worked in excess of 40 hours per week.
The minimum weekly earnings level of $455 per week was set in 2004. The proposed regulation would increase the salary threshold using current wage data projected to January 1, 2020 from $455 to $679 per week (equivalent to $35,308 per year).
The Department also is asking for public comment on the NPRM’s language for periodic review to update the salary threshold. An update would continue to require notice-and-comment rulemaking.
The NPRM maintains overtime protections for police officers, fire fighters, paramedics, nurses, and laborers including: non-management production-line employees and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, and construction workers. The proposal does not call for automatic adjustments to the salary threshold.
The proposal to change the salary threshold in the NPRM follows a prior attempt by the Department of raise the threshold in 2016. The U.S. District Court for the Eastern District of Texas enjoined a 2016 final regulation that would have raised the threshold on November 22, 2016. Since November 6, 2017, the U.S. Court of Appeals for the Fifth Circuit has held in abeyance the Department’s appeal of the District Court’s ruling pending further rulemaking by the Department. In the 15 years since the District Court enjoined its 2016 final rule, the Department consistently has enforced the 2004 salary threshold level.
Employers concerned about the proposed increase in the salary threshold or other elements of the NPRM should submit comments about the proposed rule electronically at www.regulations.gov within the 60 day period following publication, in the rulemaking docket RIN 1235-AA20.
The NPRM proposing to increase the salary threshold for qualification as a FLSA-exempt employee is only one of a number of proposed rule changes that could significantly impact employer liabilities and costs.
Coupled with the Department’s continuing aggressive attacks against contract labor and other worker misclassification as well as other minimum wage, overtime and other FLSA rules, all employers should shore up the defensibility of their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws, tighten contracting and other compliance oversight in relation to outsourced services, weigh options to clean up exposure areas, review insurance coverages and consider other options to minimize their potential liability under applicable wages and hour laws. Conducting this analysis within the scope of attorney-client privilege is important because the analysis and discussions are highly sensitive both as potential evidence for wage and hour and other legal purposes. Consequently, businesses and their leaders generally will want to arrange for this work to be protected to the extent by attorney-client privilege, work product and other evidentiary protections against discovery by Department, employees or others for FLSA or other workforce enforcement actions.
As a part of this process, businesses and their leaders generally should plan to:
Review subcontractor, temporary, lease employee, independent contractor and other outsourced labor and services relationship for potential risk of worker reclassification and tighten contracting and other procedures;
Audit the position of each employee currently classified as exempt to assess its continued sustainability and to develop documentation justifying that characterization;
Audit characterization of workers obtained from staffing, employee leasing, independent contractor and other arrangements and implement contractual and other oversight arrangements to minimize risks that these relationships could create if workers are recharacterized as employed by the employer receiving these services;
Review the characterization of on-call and other time demands placed on employees to confirm that all compensable time is properly identified, tracked, documented, compensated and reported;
If the employer hires any individuals under age 18, audit and implement appropriate procedures to ensure its ability to demonstrate compliance with all applicable FLSA child labor rules;
If the employer is a government contractor or subcontractor or otherwise performs any services on projects funded with federal or state funds, evaluate the applicability and fulfillment of any special wage, fringe benefit, recordkeeping or other government contracting wage and hour requirements;
If the employer hires foreign agricultural or other workers subject to special conditions and requirements, to review compliance with those special requirements;
Review and tighten existing practices for tracking compensable hours and paying non-exempt employees for compliance with applicable regulations and to identify opportunities to minimize costs and liabilities arising out of the regulatory mandates;
If the employer uses leased, temporary, or other outsourced labor, evaluate contractual, process and other options to support the employer’s ability cost effectively to respond to an audit, investigation or enforcement action by WHD or private litigants and if necessary, obtain indemnification or other recovery in the event the employer incurs liability due to the use or practices of the outsourced labor supplier;
If the audit raises questions about the appropriateness of the classification of an employee as exempt, self-initiation of proper corrective action after consultation with qualified legal counsel;
Review and document all workers classified as exempt;
Review of existing documentation and record keeping practices for hourly employees;
Evaluate potential exposures under other employment, labor, tax or related laws or contracts that might be impacted by the findings or actions taken in response to those findings;
Explore available options and alternatives for calculating required wage payments to non-exempt employees and assessing and resolving other concerns;
Identify and calculate other employee benefit, tax or other corrections and associated costs and procedures that may be required as a result of findings or corrective actions resulting from their redress;
Re-engineer work rules, policies, contracts and practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures;
Explore insurance, indemnification and other options for mitigating risks and associated investigation and defense costs; and
Consider self-correction within the new PAID Program or otherwise.
If you need more information or have questions, contact the author, Cynthia Marcotte Stamer.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
The author of the “Texas Payday Act,” and numerous other highly regarded publications on wage and hour and other human resources, employee benefits and compensation publications, Ms. Stamer is well-known for her 30 years of extensive wage and hour, compensation and other management advice and representation of restaurant and other hospitality, health, insurance, financial services, technology, energy, manufacturing, retail, governmental and other domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here including:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Today’s diverse business environment creates a demand for businesses to think creatively about their employment relationships, including creative scheduling and pay arrangements. While many of these arrangements produce win/win solutions for both the business and its employees, businesses need to use care properly to evaluate and manage minimum wage, overtime, and other wage and hour law responsibilities under the Fair Labor Standards Act (“FLSA”) and applicable state law.
A new Department of Labor Wage and Hour Division (WHD) Fair Labor Standards Act (FLSA) opinion letter published December 21 illustrates this point. WHD Opinion Letter FLSA 2018-28 (Dec. 21, 2018) evaluates FLSA minimum wage and overtime compliance of one employer’s innovative strategy of paying certain hourly employees one hourly rate while the employee was working with clients and a second, lower hourly rate of pay for time that the employee spent traveling between client sites throughout the day.
In WHD Opinion Letter FLSA 2018-28 (Dec. 21, 2018), the WHD expresses reservations about whether the specific practices of the requesting employer for calculating overtime for workers paid different hourly rates for different categories of work during the same work week fulfill the FLSA overtime requirements under certain circumstances, but blessed the compliance of the practice of the employer with the FLSA minimum wage rules.
While only the employer that actually requested the ruling that resulted in the Opinion actually may rely upon the Opinion, the ruling highlights both the potential opportunity for businesses to structure innovative compensation and scheduling arrangements within the requirements of the FLSA and other laws, as well as the legal exposures that employers using innovative staffing and compensation arrangement risk by failing to appropriately manage these responsibilities.
FLSA Minimum Wage & Overtime Requirements Generally
The FLSA generally requires that employers pay covered, nonexempt employees receive at least the federal minimum wage (currently $7.25 per hour) for all hours worked. See 29 U.S.C. § 206(a)(1). According to previously published WHD guidance, WHD will consider an employer to have fulfilled this requirement “if the employee’s total wages for the workweek divided by compensable hours equal or exceed the applicable minimum wage.” See WHD Opinion Letter FLSA2004-8NA (Aug. 12, 2004)(different pay rates for trucking company workers); WHD Field Operations Handbook § 30b02.
In addition to the requirement to pay at least the minimum wage, the FLSA also requires that covered, nonexempt employees receive overtime compensation of at least one and one-half times their regular rate of pay for time worked in excess of 40 hours per workweek. See 29 U.S.C. § 207(a)(1). To determine the regular rate of pay for purposes of calculating the required overtime, an employer generally divides the employee’s “remuneration for employment” (subject to the exclusions in 29 U.S.C. § 207(e)) by the total hours worked for the workweek. See 29 C.F.R. § 778.109.
WHD Opinion Letter FLSA 2018-28
In WHD Opinion Letter FLSA 2018-28 (Dec. 21, 2018), WHD addressed its views regarding a home health provider’s practice for calculating the wages due to home health aide services that traveled to home health clients’ homes, who were required to travel to different client home locations during the workday. The employer establishes different rates of pay for time spent working with clients versus time spent traveling from location to location. To calculate weekly pay, that employer multiplied an employee’s time with clients by his hourly pay rate established by the employer for time spent working with clients. The employer then divides the product by the employee’s total hours worked, which includes both the client time and the travel time. The employer guarantees that the quotient meets both federal and state minimum wage rate requirements.
According to the facts published in the WHD Opinion Letter, the home health provider represented that a typical standard rate of pay is $10.00 per hour with a client including travel time,” and that “[i]f any employee works over 40 hours (total paid hours and [travel] time) in any given workweek, the employer pays the employee time and a half for all time over 40 hours at a rate of $10.00.”
Based upon the factual representations made by the home health agency, WHD ruled the employer’s compensation plan complies with the FLSA’s minimum wage requirements but expressed concern about whether the employer’s practices for calculating overtime complied with the FLSA.
Concerning the FLSA minimum wage compliance, the WHD found that the employers practice fulfilled the FLSA minimum wage requirements because even though the employee’s average hourly pay rate varied from workweek to workweek, the employer always ensured that the average hourly pay rate exceeded the FLSA’s minimum wage requirement for all hours worked.
In contrast, however, WHD expressed concern about the compliance of the employer’s compensation plan with the FLSA’s overtime requirements under certain circumstances. WHD states in the Opinion that the employer will not pay all overtime due to employees whose actual rate of pay exceeds $10 per hour if the employer always assumes a regular rate of pay of $10 per hour when calculating overtime due. See 29 C.F.R. § 778.107.
The Opinion notes that “neither an employer nor an employee may arbitrarily choose the regular rate of pay; it is an “actual fact” based on “mathematical computation.” Walling v. Youngerman-Reynolds Hardwood Co., Inc., 325 U.S. 419, 424–25 (1945); 29 C.F.R. § 778.108.
On the other hand, the Opinion also states that the employer’s compensation plan would comply with the FLSA’s overtime requirements for all employees whose actual regular rates of pay are less than $10 per hour, as an employer may choose to pay an overtime premium in excess of the required amount. See, e.g., Molina v. First Line Solutions LLC, 566 F. Supp. 2d 770, 779 (N.D. Ill. 2007).
The cautionary lessons from FLSA Opinion 2018-28 echo those WHD previously has issued alerting businesses to the need to use care to properly understand and meet FLSA requirements when structuring and administering two-tier hourly pay or other innovative pay and scheduling arrangements.
The need to attend to the details of FLSA compliance when adopting and administering customized pay arrangements is further illustrated by WHD’s review of the FLSA compliance of a school district employer’s customized pay arrangement for its drivers in FLSA2004-8NA in 2004. While the WHD found issues with the FLSA compliance of the special arrangement as administered by the school district, guidance provided by the Opinion also makes clear the type of adjustments to the arrangement the employer would need to adopt and apply to continue using the arrangement in its modified form.
Specifically, FLSA 2004-8NA considered a school district’s contractually negotiated arrangement to pay its drivers pursuant to a contractual arrangement under which the employer agreed to pay regular drivers a specified hourly rate with a minimum guarantee of two hours driving time pay per route/additional assignment. The contract also provided that for an assigned trip of less than two hours, a driver that wanted to receive pay for hte minimum guaranteed time had to perform regular maintenance in the bus garage or other work as assigned by the School District to complete the two hours. Furthermore, the contract also specified that “Any regular driver may complete a voucher for payment for additional time if their morning or afternoon route exceeds his/her assigned time by one half hour or more” and that the employers only would pay additional wages for the actual added time worked to employees that worked at least 30 minutes or more without rounding to the next hour for calculating wages. Thus, an employee that worked an additional twenty-five minutes beyond his/her normal shiftwould not be compensated for the extra time worked. Meanwhile, a bus driver that returned fifty minutes past the scheduled time received pay for an additional 50 minutes of work.
WHD’s issue with the arrangement was that the rounding practices applied under the arrangement meant that the school district did not ensure that workers were paid at least the minimum wage per hour for all hours worked and might under some circumstances not properly pay overtime due to workers.
While acknowledging that Labor Regulation Section 785.47 allows employers to disregard ‘insubstantial or insignificant periods of time outside the scheduled working hours that cannot practically be precisely recorded as de minimis, WHD noted that the de minimis rule applies only where a few seconds or minutes of work are involved and where the failure to count such time is due to considerations justified by industrial realities. It does not allow an employer by contract or otherwise to arbitrarily fail to count as hours worked any part, however small, of the employee’s fixed or regular working time. Where an employer fails to pay an employee for any part of the employee’s fixed or regular working time, however small, this would be considered a violation of the FLSA.
Concerning the FLSA’s requirement that the employer pay hourly employees at least the minimum wage, WHD noted that in non-overtime workweeks or in workweeks in which the overtime provisions do not apply, WHD would consider the employer to have met the minimum wage requirement if the employee’s total wages for the workweek divided by compensable hours equal or exceed the applicable minimum wage. WHD added that this principle would apply even if the employer technically did not compensate the emploeye for time which is compensable under the FLSA.
Concerning the overtime requirements of the FLSA, however, WHD had greater reservations. As WHD noted in the 2004 Opinion, when a covered and non-exempt employee works overtime, a different rule applies. The FLSA overtime rule requires that an employer pay the employee for all hours worked at the agreed rate plus the overtime premium (one-half the regular rate) for all overtime hours. Therefore, before an employee can be said to be paid statutory overtime compensation due, the employee must first be paid all straight time wages due for all hours worked under any express or implied contract or under any applicable statute (see 29 CFR Part 778.315). As a result, WHD found that the FLSA overtime requirements would require the employer both to ensure that the employee actually was paid for each hour of straight time at the regular rate of pay plus time and a half of the regular rate of pay for each overtime hour worked.
WHD additionally noted in the 2004 Opinion that the employer also risked violation of Labor Regulation 516.2(a)(7)’s requirement that the employer maintain accurate recordkeeping of hours worked each workday and total hours worked each workweek for covered, nonexempt employees if the payroll records do not accurately record the number of hours worked in one or more of the workdays.
Takeaways For Other Employers About Using Variable Pay Rates & Other Innovative Scheduling & Pay Practices
While other employers actually cannot rely upon either WHD Opinion Letter FLSA 2018-28, FLSA 2004-8NA, or most other WHD Opinion Letters, WHD Opinion Letters and other publishe guidance, as well as judicial precedent and the enforcement conduct by WHD provide a wealth of valuable insights for other employers about the potential FLSA opportunities and pitfalls of using variable rates of pay or other innovative compensation, scheduling and timekeeping practices for compensating hourly employees. Employers using or contemplating using innovative compensation, scheduling or recordkeeping practices should should seek assistance from experienced legal counsel with accessing and using this guidance to help reduce the risk that a proposed innovative compensation or other practice for scheduling or paying nonexempt hourly workers will trigger unanticipated FLSA or other liabilities..
Make Wage & Hour Compliance & Risk Management Priority To Reduce Exposures
Aside from using caution to properly calculate and pay overtime for workers paid different rates for different types of work, employers also need to use care to avoid other common FLSA and other wage and hour overtime violations.
With the Trump Administration U.S. Department of Labor Wage and Hour Division (WHD) continuing its aggressive investigation and enforcement of minimum wage, overtime and other Fair Labor Standards Act (FLSA) and other wage and hour laws it used to recover more than $1.2 billion in back pay for workers over the past five years, Agriculture, Amusement, Apparel Manufacturing, Auto Repair, Child Care Services, Construction, Food Services, Guard Services, Hair, Nail & Skin Care Services, Health Care, Hotels and Motels, Janitorial Services, Landscaping Services, Retail, and Temporary Help and other U.S. employers should evaluate their current and past potential liability exposures and consider using the new pilot WHD self-audit Payroll Audit Independent Determination (PAID) program announced by WHD on March 6 or other options to mitigate their liability for their own or temporary or other contract labor’s existing or past minimum wage and hour law violations.
U.S. employers and leaders with wage and hour management authority risk substantial liability from unresolved violations of the FLSA and other federal and state wage and hour laws.
One of the most frequently violated and litigated federal employment laws, the FLSA generally requires that U.S. employers pay nonexempt employees at least $7.25 per hour for all regular compensable hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. In general, FLSA “hours worked” includes all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday. Similar state or local laws often also impose higher minimum wage, compensable hour, break and other requirements than federal law requires.
The FLSA and most applicable state and local wage and hour laws also mandate that employers maintain records of the hours worked by employees by non-exempt employees, documentation of the employer’s proper payment of its non-exempt employees in accordance with the minimum wage and overtime mandates of the FLSA, and certain other records and prohibit retaliation by an employer or other person again an employee or other person for asserting rights under the law or cooperating in a WHD investigation about FLSA compliance.
Beyond these FLSA minimum wage and overtime requirements, WHD regulations and court decisions provide guidance on when an employer must treat “on-call” time, travel time, meal and break times, and certain other time periods as compensable hours worked by a non-exempt employee, when “comp time” in lieu of the payment of wages is permitted, various alternative methods for calculating overtime under certain special circumstances, and various other rules applicable to various special circumstances. Other special rules also can apply to businesses employing tipped employees, home workers, child labor, certain farm workers, workers working with special visas, and other special classes or workers. Furthermore, collective bargaining agreements or other contracts or other federal, state or local laws also sometimes impose additional requirements for employers to pay higher “prevailing wages,” apply special rules for counting compensable work hours, and provide specified fringe benefits or other special compensation or protections or other wages, when the employer is a government contractor or subcontractor covered by the Service Contract Act, the Davis Bacon Act or other similar federal or state statutes.
Over the past decade, WHD and private enforcement of the FLSA and other wage and hour laws generally has skyrocketed in part driven by the Obama Administration’s prioritization on raising the minimum wage, extending federal wage and hour protections, and expanding WHD and other enforcement. WHD’s success in recovering more than $1.2 billion in back pay for workers over the past five years and other achievements in expanding its own and private oversight and enforcement and the continuation of these efforts under the Trump Administration means all employers need to view wage and hour law as a major liability risk requiring conscientious management. However, the risk of enforcement is particularly acute for businesses in the following industries, designed for heightened enforcement and other attention as “Low Wage High Violation Industries” based on their particularly high record of noncompliance: Agriculture, Amusement, Apparel Manufacturing, Auto Repair, Child Care Services, Construction, Food Services, Guard Services, Hair, Nail & Skin Care Services, Health Care, Hotels and Motels, Janitorial Services, Landscaping Services, Retail, and Temporary Help.
Scrutiny & Challenges To Contract & Outsourced Labor Relationships Rising
Beyond assessing their FLSA and other wage and hour compliance and associated exposures from the worker on their own payroll, U.S. employers and their leaders also should take care to carefully evaluate potential exposures from nontraditional services relationships and act to manage those risks.
Misclassification of workers providing services as non-employees increasingly causes U.S. businesses to incur unanticipated FLSA and other wage and hour law liability for back pay, liquidated punitive damages, civil monetary penalties and other liability, in part because of WHD’s stepped up worker education, scrutiny, investigation, and enforcement challenging employers’ treatment of workers as non-employees.
The FLSA and state and local rules generally apply to any workers that the employer who receives its services cannot prove is not its common law employee or an exempt employee within the meaning of the FLSA. The FLSA and most other wage and hour laws generally rules presume that workers rendering services are common law employees of the business in most circumstances. Businesses should evaluate their FLSA exposures from both workers they recognize as common law employees and those performing services in capacities that the business typically does not view as common law or otherwise covered by the FLSA when managing FLSA compliance and evaluating exposures, employers should exercise care not to overlook potential responsibilities and exposures associated with outsourced services provided through relationships characterized by the employer as subcontractors, independent contractors, lease employees, or other common outsourced relationships.
Court decisions and regulations provide guidance for determining when leased, contract, jointly employed, independent contractor or other non-traditionally employed workers will be treated as employees of a business, As in many other enforcement areas, The WHD and many other agencies increasingly view the misclassification of workers as something other than employees, such as independent contractors, leased employees and other common “outsourced” relationship as a serious problem for affected employees, employers and to the entire economy.
According to the Labor Department, misclassified employees are often denied access to critical benefits and protections, such as family and medical leave, overtime, minimum wage and unemployment insurance and other rights. The Labor Department also says employee misclassification also generates substantial losses to state and federal treasuries, and to the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds. To address these and other concerns, the Labor Department has joined other agencies like the Internal Revenue Service increasingly is challenging employers’ treatment of workers as exempt from FLSA and other legal obligations as independent contractors or otherwise.
In response to these concerns, WHD published guidance warning employers about misclassification of workers about potential violation of the FLSA by improper misclassification of workers as independent contractors or non-employed. See Department of Labor Issues Guidance of Misclassification of Workers. DOL’s key points in the guidance are that:
Most workers are employees under the broad definitions of the FLSA;
No single factor is determinative;
Employers should be wary of classifying workers as independent contractors merely because the workers control some aspects of their work; and
The ultimate question is whether a worker “is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is an employee).
Other guidance makes clear that WHD and other agencies concerns about misclassification extend beyond workers labeled independent contractors to include scrutiny of subcontractor, day labor, temporary, leased employee and a broad range of other outsourced services relationships. See here,
Employers often face substantial challenges responding to, much less, containing their FLSA exposures when a WHD or a private litigant successfully challenges the employer’s classification of the worker as a non-employee for a variety of reasons. Beyond the likelihood of violations resulting from the employer’s failure to recognize it might owe minimum wage and overtime duties to the worker, an employer often lacks records and other data needed to fulfill recordkeeping and posting requirements and to accurately demonstrate hours worked and hourly rates to limit resulting back pay exposures because these workers are not treated as part of the employer’s workforce. Obtaining the necessary records to respond to a WHD or other investigation, lawsuit or other action often proves challenging because the independent contractor, leasing company, or other provider or of the services often becomes unavailable, is disincentivized by its own noncompliance or other interests, has failed to maintain necessary documentation or otherwise fails to cooperate in the delivery of these materials. Furthermore, as leased employee, staffing, independent contractor and other outsourced arrangements invoice services at higher rates of compensation payment than the employer might otherwise have paid a traditionally employed worker, the lack of records and elevated compensation rates tend to push up the compensation used to calculate back pay and other awards. Accordingly, employers utilizing these arrangements should use care in structuring and administering these arrangements properly to evaluate their likely FLSA and other treatment and to manage these risks.
FLSA Big Liability Risk
Under the FSLA and applicable state wage and hour laws, violations of the FLSA and other federal or state wage and hour laws expose employers to substantial back pay, interest and punitive damages, civil monetary penalties for willful or and in the case of willful or repeated violations and in the case of willful violations, criminal prosecution.
Because of the ability to recover liquidated damages and attorneys’ fees in addition to unpaid back pay, private enforcement of the FLSA is common. The FLSA generally allows employees wrongfully denied wages in violation of the FLSA to bring lawsuits to enforce their rights provided that the WHD has not or does not intervene to enforce those rights on the worker’s behalf. Workers successfully proving an employer violated their FLSA rights typically can recover back pay, plus liquidated damages, interest, attorneys’ fees and other costs of enforcement from the breaching employer. In some cases, Corporate officers such as CEOs, CFOs or COOs and other management leaders with control over the breaching employer’s financial affairs also be held personally liable for the unpaid wages See e.g., Lamonica v. Safe Hurricane Shutters, +2013 U.S. App. LEXIS 4599 (11th Cir. 2013)(ruling personal liability for FLSA violations can attach to any individual with control over an employer’s financial affairs who could potentially cause an employer to violate FLSA).
As an alternative to private litigation, the FLSA empowers the WHD to supervise or if necessary, enforce through litigation the rights of workers against a breaching employer to recover back pay plus liquidated damages in an amount equal to the wrongfully denied wages. WHD also can pursue injunctive relief against noncompliant employers.
When the employer is a repeat offender or willfully violated the FLSA, additional consequences attach. A violation is “willful” for purposes of FLSA criminal prosecution if it is deliberate, voluntary, and intentional. A fine of up to $10,000 on the first conviction
When an employer’s violation of the FLSA is repetitious or willful, the FLSA empowers WHD to impose civil money penalties (CMPs) against the noncompliant employer in addition to the recovery of back pay and liquidated damages. Intended to discourage future noncompliance by an employer guilty of violating the FLSA, CMPs for a “repeated” violation are assessable when the employer had previously violated the minimum wage or overtime requirements of the FLSA. CMPs for a “willful” violation may be assessed when it can be shown that the employer knew that its conduct was prohibited by the FLSA or showed reckless disregard for the requirements of the FLSA. CMPs ordinarily are imposed based on violations occurring within the normal two-year investigation period. Where violations are determined to be willful, the investigation will cover a three-year period.
The applicable 2018 CMP amounts, which are adjusted annually for inflation, are as follows:
Type of Violation
Statutory Citation
CFR Citation
Maximum Civil Monetary Penalty on or before 1/2/2018
Maximum Civil Monetary Penalty on or after 1/3/2018
Homeworker:
Violation of recordkeeping, monetary, certificate or other statutes, regulations or employer assurances.
29 USC 211(d)
29 CFR 530.302
$1,005
$1,026
Child labor:
(1) Violation of child labor standards (sec 212 or 213(c));
29 USC 216(e)(1)(A)(i)
29 CFR 570.140(b)(1) and 29 CFR 579.1(a)(1)(i)(A)
$12,278
$12,529
(2) Violation of child labor standards (sec 212 or 213(c)) that causes the serious injury or death of a minor;
29 USC 216(e)(1)(A)(ii)
29 CFR 570.140(b)(2) and 29 CFR 579.1(a)(1)(i)(B)
$55,808
$56,947
(3) Willful or repeated violation of child labor standards (sec 212 or 213(c)) that causes the serious injury or death of a minor
29 USC 216(e)(1)(A)(ii)
29 CFR 570.140(b)(2) and 29 CFR 579.1(a)(1)(i)(B)
$111,616
$113,894
(4) Repeated or willful violation of section 206 or 207.
29 USC 216(e)
29 CFR 579.1(a)(2)
$1,925
$1,964
Minimum Wage and Overtime:
Repeated or willful violation of section 206 or 207.
29 USC 216(e)(2)
29 CFR 578.3(a)
$1,925
$1,964
Although typically reserved for more egregious violations, “willful” violations of the FLSA can trigger criminal prosecution by the Department of Justice. A fine of up to $10,000, or a term of imprisonment of up to six months, or both, on all convictions after the first conviction
In addition to or instead of lawsuits by the Secretary of Labor for back wages or injunctive relief, willful violation of the FLSA also can trigger criminal prosecutions against an employer by the Department of Justice. Criminal penalties for willful FLSA violations include a fine of up to $10,000, or a term of imprisonment of up to six months, or both, on all convictions after the first conviction. Since enforcement actions by the DOJ can be brought instead of or in addition to lawsuits by WHD for back wages or injunctive relief, an employer that willfully violates the FLSA can be ordered to pay liquidated damages and back-pay, as well as any court imposed criminal fine or penalty.
Always popular, WHD and private enforcement of the FLSA initially spiked upward following the highly publicized George W. Bush Administration’s implementation of updated FLSA “white collar” regulations regarding the classification of workers as exempt. The Obama Administration’s highly publicized, but unsuccessful, campaign to increase the minimum wage and aggressive FLSA educational outreach and enforcement further fueled this trend. While President Trump has opposed proposals to increase the federal minimum wage, he has expressed his commitment to protect workers’ FLSA rights through continued vigorous enforcement of the FLSA minimum wage, overtime and other rules.
As a result of its aggressive enforcement commitments, WHD takes credit for having recovered more than $1.2 billion in back wages on behalf of more than 1.3 million workers over the past five years. See here. The following WHD enforcement statistics reflect that its commitment to FLSA enforcement has continued during President Trump’s tenure in office.
Cases with Violations
Back Wages
Employees Receiving Back Wages(duplicated 1)
FY 2011
Minimum Wage
12,450
$29,327,527
89,305
Overtime
11,990
$140,328,012
204,243
FY 2012
Minimum Wage
12,532
$35,270,524
107,005
Overtime
12,462
$148,560,700
218,137
FY 2013
Minimum Wage
12,403
$38,470,100
103,671
Overtime
12,108
$130,703,222
174,197
FY 2014
Minimum Wage
11,042
$36,732,407
106,184
Overtime
11,238
$136,239,001
174,365
FY 2015
Minimum Wage
10,642
$37,828,554
86,229
Overtime
10,496
$137,701,703
173,330
FY 2016
Minimum Wage
10,722
$34,964,350
81,870
Overtime
10,884
$171,917,225
209,819
FY 2017
Minimum Wage
10,687
$31,213,737
69,588
Overtime
10,823
$157,592,682
183,272
Pilot PAID Program May Offer New Option To Resolve WHD Exposures
When an audit uncovers potential violations, some employers may want to explore options to voluntarily resolve their exposures. To encourage voluntary compliance, the WHD on March 6, 2018 announced a new pilot self-audit Payroll Audit Independent Determination (PAID) program that offered employers accepted into the program after voluntarily disclosing violations to resolve their exposure WHD penalties and liquidated damages commonly assessed by WHD against employers for violating the FLSA minimum wage and overtime violations by:
Voluntarily disclosing the violations to WHD before becoming subject to investigation or enforcement and requesting admission to the program;
Paying affected workers 100 percent of the unpaid back pay due wrongfully denied by the end of the next full pay period after receiving the summary of unpaid wages from WHD confirming the back pay amount;
Working with WHD prospectively to correct noncompliant practices; and
Taking other actions to correct and prevent a recurrence of those violations.
Originally slated as a pilot program set to expire after six months, the PAID program remains an opportunity offered by WHD on its website, which also shares “testimonials” from various employers that report having participated in the PAID program.
While participation in the PAID program purpoerts to offer allows a participating employer to settle its exposure to prosecution for those violations by WHD without incurring some of themore extraordinary penalties that WHD is authorized to assess, many practitioners and employers report having achieved similar and in some cases even more favorable outcomes through negotiations conducted outside the PAID program. Furthermore, many employers may face challenges in using the program as a result of the inability to marshal the required capital to pay 100 percent of the back pay due within the required time period.
Beyond this challenge, employers evaluating whether to seek relief through the new PAID program also may need to weigh a variety of other concerns.
For instance, employers considering participation need to understand that the settlement only addresses potential liability from WHD enforcement. While WHD’s requirement that a participating employer pay affect 100 percent of any wrongfully denied back pay to the impacted employees generally would reduce the actual back pay damages recoverable by an employee in a private enforcement action, WHD says settlements reached with the WHD under the PAID program does not prevent employees wrongfully denied wages in violation of FSLA from bringing private lawsuits. Rather, WHD states that it will be purely the employee’s choice whether to accept the payment of back wages the employer agrees to pay under the PAID program settlement. If the employee chooses to not accept the payment, the employee will not release any private right of action. Additionally, if the employee chooses to accept the payment, the employee will not grant a broad release of all potential claims under the FLSA. Rather, the releases are tailored to only the identified violations and time period for which the employer is paying the back wages. The WHD also cautions that regardless of whether the employee accepts or rejects the back pay specified in the PAID program, the FLSA will prohibit employers from retaliating against the employee for his or her choice. Furthermore, while the payment of previously unpaid amounts could reduce the amount of unpaid wages for purposes of determining liability for state wage and hour law violations, the WHD settlement does not directly impact or release liability for any state wage and hour violations.
While any FLSA covered employer may use the program, interested employers should understand that acceptance into the program is not automatic and is not available for all FLSA violations. Rather, the PAID program only covers potential violations of the FLSA’s overtime and minimum wage requirements that an employer self-identifies and voluntarily discloses and resolves in accordance with its PAID program settlement with WHD. An employer cannot use the PAID program to resolve any issues for which WHD is already investigating the employer, or which the employer is already litigating in court, arbitration, or otherwise. An employer likewise may not initiate the process when an employee’s representative or counsel has already communicated an interest in litigating or settling the issue. Employers using the Paid program also must be prepared to correct the noncompliant practices that resulted in the violations settled under the PAID program. According to the WHD, WHD will not allow employers to use the program to repeatedly resolve the same violations, as this program is designed to identify and correct non-compliant practices. By allowing employers to participate in the PAID program, WHD also does not waive its right to conduct any future investigations of the employer.
Employers contemplating participation in the PAID program generally should conduct a self-audit after updating their understanding of WHD program and compliance assistance materials and other WHD guidance. Because the information, analysis and discussions conducted in this process may be legally sensitive, employers generally will want to engage qualified legal counsel before initiating these processes to advise and assist the employer about the adequacy and risks of its existing practices, recommendations for redressing known compliance issues and other risks as well as opportunities and procedures for qualifying certain of these actions and discussions for coverage under attorney-client privilege, attorney work product or other evidentiary protections.
Whether or not an employer decides based on the audit to pursue compliance resolution through the PAID program, employers generally should work with their legal counsel within the scope of attorney client privilege to organize and retain documentation of their audit, its findings of compliance and, for any potential compliance issues, corrective actions taken to redress those issues retrospectively and prospectively, and other documentation that the employer might need to pursue resolution under the PAID program or otherwise respond to and defend against a WHD or private charges brought by an employee in the future.
If the employer wishes to pursue resolution of potential violations under the PAID program based on review of the audit findings in conjunction with their legal counsel, the employer in coordination with the legal counsel within the scope of attorney client privilege should work together to prepare and assemble the records and information WHD will expect the employer to provide in the initial phases of the process including:
A list of the specific potential violations uncovered
The specific employees affected
The specific timeframes in which each employee was affected, and
The calculation of the amount of back wages the employer believes are owed to each employee.
Each of the calculations described above—accompanied by both evidence and explanation concerning how the calculations were made;
A concise explanation of the scope of the potential violations for possible inclusion in a release of liability;
A certification that the employer reviewed all of the information, terms, and compliance assistance materials;
A certification that the employer is not litigating the compensation practices at issue in court, arbitration, or otherwise, and likewise has not received any communications from an employee’s representative or counsel expressing interest in litigating or settling the same issues; and
A certification that the employer will adjust its practices to avoid the same potential violations in the future.
After preparing this information, the employer generally will want to arrange for legal counsel to make the preliminary contact to the WHD to request that the WHD admit the employer to the PAID program. During the preliminary contact, the WHD will require that a list of the specific potential violations, and the identity, specific time frame and back pay amount that employer believes it owes to each affected employee as a prerequisite to considering the request for admission to the program. If the WHD approves the employer’s request, WHD will require that the employer or its legal counsel on its behalf provide the remaining information listed above. After evaluating this information, WHD will provide notification of the next steps, including the collection of any other information necessary for WHD to assess and confirm the back wages due for the identified violations.
Current published guidance states that after WHD assesses the back wages due, it will issue a summary of unpaid wages. WHD will also issue forms describing the settlement terms for each employee, which employees may sign to receive payment. The release of claims provided in the form will match the previously agreed-upon language and, again, must be limited to only the potential violations for which the employer had paid back wages. The PAID program settlement will require the employers to pay the back pay amounts confirmed in the summary of unpaid wages promptly and in full by the end of the next payroll period after receiving the WHD summary of wages confirming the back pay amounts required.
Audit & Act To Mitigate FLSA & Other Wage & Hour Risks
Regardless of whether an employer elects to pursue using the new PAID program, all FLSA covered employers generally should consult with legal counsel within the scope of attorney-client privilege to assess the defensibility of their existing practices for classifying and compensating workers under existing Federal and state wage and hour laws, tighten contracting and other compliance oversight in relation to outsourced services, and about using the PAID program and other options to minimize their potential liability under applicable wages and hour laws. Conducting this analysis within the scope of attorney-client privilege is important because the analysis and discussions are highly sensitive both as potential evidence for wage and hour and other legal purposes. Consequently, businesses and their leaders generally will want to arrange for this work to be protected to the extent by attorney-client privilege, work product and other evidentiary protections against discovery by WHD, employees or others for FLSA or other workforce enforcement actions.
As a part of this process, businesses and their leaders generally should plan to:
Review subcontractor, temporary, lease employee, independent contractor and other outsourced labor and services relationship for potential risk of worker reclassification and tighten contracting and other procedures;
Audit the position of each employee currently classified as exempt to assess its continued sustainability and to develop documentation justifying that characterization;
Audit characterization of workers obtained from staffing, employee leasing, independent contractor and other arrangements and implement contractual and other oversight arrangements to minimize risks that these relationships could create if workers are recharacterized as employed by the employer receiving these services;
Review the characterization of on-call and other time demands placed on employees to confirm that all compensable time is properly identified, tracked, documented, compensated and reported;
If the employer hires any individuals under age 18, audit and implement appropriate procedures to ensure its ability to demonstrate compliance with all applicable FLSA child labor rules;
If the employer is a government contractor or subcontractor or otherwise performs any services on projects funded with federal or state funds, evaluate the applicability and fulfillment of any special wage, fringe benefit, recordkeeping or other government contracting wage and hour requirements;
If the employer hires foreign agricultural or other workers subject to special conditions and requirements, to review compliance with those special requirements;
Review and tighten existing practices for tracking compensable hours and paying non-exempt employees for compliance with applicable regulations and to identify opportunities to minimize costs and liabilities arising out of the regulatory mandates;
If the employer uses leased, temporary, or other outsourced labor, evaluate contractual, process and other options to support the employer’s ability cost effectively to respond to an audit, investigation or enforcement action by WHD or private litigants and if necessary, obtain indemnification or other recovery in the event the employer incurs liability due to the use or practices of the outsourced labor supplier;
If the audit raises questions about the appropriateness of the classification of an employee as exempt, self-initiation of proper corrective action after consultation with qualified legal counsel;
Review and document all workers classified as exempt;
Review of existing documentation and record keeping practices for hourly employees;
Evaluate potential exposures under other employment, labor, tax or related laws or contracts that might be impacted by the findings or actions taken in response to those findings;
Explore available options and alternatives for calculating required wage payments to non-exempt employees and assessing and resolving other concerns;
Identify and calculate other employee benefit, tax or other corrections and associated costs and procedures that may be required as a result of findings or corrective actions resulting from their redress;
Re-engineer work rules, policies, contracts and practices to minimize costs and liabilities as appropriate in light of the regulations and enforcement exposures;
Explore insurance, indemnification and other options for mitigating risks and associated investigation and defense costs .
Pursue self-correction within the new PAID Program or otherwise.
Many employers also will want to consider adopting or strengthening their use of arbitration agreements, strengthening contract compliance, audit, indemnification and other contractual safeguards in staffing and other outsourcing contracts and broadening employment practices and other liability insurance coverage to mitigate and manage these exposures.
For additional information, please contact the author or other qualified legal counsel with health industry wage and hour and other labor and employment experience.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer is nationally and internationally recognized for her work assisting businesses, governments, and other entities to develop, implement, administer and defend pragmatic strategies for dealing with employment and other workforce and related compensation, employee benefit, performance management and internal controls, insurance, health care and finance concerns to manage risk, operations and other business objectives.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
The author of the “Texas Payday Act,” and numerous other highly regarded publications on wage and hour and other human resources, employee benefits and compensation publications, Ms. Stamer is well-known for her 30 years of extensive wage and hour, compensation and other management advice and representation of restaurant and other hospitality, health, insurance, financial services, technology, energy, manufacturing, retail, governmental and other domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
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NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Employers should invite employees to update their Form W-4 withholding and finalize other 2019 payroll and income tax withholding arrangements based on guidance for 2019 published by the IRS and Treasury Department in Notice 2018-92 on November 26, 2018.
Many U.S. employers had delayed making changes to their income and payroll tax withholding pending the anticipated release by the IRS and Treasury Department of a revised Form W-4 and related income and payroll tax guidance updated to reflect changes to the Internal Revenue Code enacted as part of the Tax Cut and Jobs Act (P.L. 115-97)(“Trump Tax”) at the end of 2017.
Following the enactment of Trump Tax, most businesses have operated in reliance upon interim guidance published by the agencies at the beginning of the year to carryout their 2018 withholding obligations.
Until recently, the IRS and Treasury Department were expected to complete for use in 2019 the major overhaul of the Form W-4 and related guidance in response to the Trump Tax amendments to Sections 3402, 3405 and other Code rules. When the revision of the Form W-4 proved more complex than anticipated, however, the IRS and Treasury Department in September, 2018 announced that release of the newly designed and updated Form W-4 would be delayed from 2019 to 2020.
In Notice 2018-92, IRS and the Treasury Department provides interim guidance to employers and their workers on income tax withholding for 2019 pending agencies issuance of regulations implementing the changes, as well as requests comments on certain withholding procedures from concerned parties. For the most part, Notice 2018-92 continues the interim guidance that IRS and Treasury previously published for 2018. Specifically, Notice 2018-92:
Announces that the 2019 Form W-4 will be similar to the 2018 Form W-4,
Addresses new TCJA “withholding allowance” terminology,
Continues until April 30, 2019 Notice 2018-14’s temporary suspension of the requirement to furnish new Forms W-4 within 10 days for changes resulting solely from the TCJA,
Provides that, for 2019, the default rule when an employee fails to furnish a Form W-4 will continue to be single with zero withholding allowances,
Allows taxpayers to take into account the qualified business income deduction under section 199A to reduce withholding under section 3402(m),
Announces that the IRS and Treasury intend to update the regulations under section 3402 to explicitly allow taxpayers to use the online withholding calculator or Publication 505, Tax Withholding and Estimated Tax, in lieu of the worksheets to Form W-4,
Requests comments on alternative withholding methods under section 3402(h),
Announces that the IRS and the Treasury Department intend to eliminate the combined income tax withholding and employee FICA tax withholding tables under Treas. Reg. § 31.3402(h)(4)-1(b),
Modifies notification requirements for the withholding compliance program, and
Provides that for 2019, withholding on annuities or similar periodic payments where no withholding certificate is in effect is based on treating the payee as a married individual claiming 3 withholding allowances under § 3405(a)(4).
The Code generally requires employees that experience a change that reduces the number of withholding exemptions that the employee qualifies to claim to notify their employer and complete a new Form W-4 within 10 days of a specified event date. Interim relief published by the IRS and Treasury Department provides relief to workers whether the change in withholding eligibility results solely due to a Code change enacted as part of Trump Tax. Otherwise, however, employees generally still remain obligated to keep their withholding up-to-date. Since employees often are unaware of or overlook this responsibility, employers generally should encourage workers to review and update their Form W-4 withholding elections in connection with annual enrollment periods and in conjunction with other life or other changes likely to affect the withholding eligibility of the worker.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors; domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations; and other private and government organizations and their management leaders.
Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline; handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.
Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
State and local political subdivisions employing fewer than 20 employees should reconfirm the defensibility of their employment policies and practices under the Age Discrimination and Employment Act (ADEA) and the Fair Labor Standards Act (FLSA) and various other laws in light of the unanimous[1] ruling issued this morning by the United State Supreme Court holding that the ADEA applies to all state and local political subdivisions regardless of size.
In its ruling in Mount Lemmon Fire District v. Guido, – U.S. -, 2018 WL 5794639 (November 6, 2018) released this morning, the United States Supreme Court unanimously ruled that the ADEA applies to all state and local subdivisions regardless of the number of employees the political subdivision employs.
The Supreme Court’s ruling arose from an ADEA lawsuit brought by John Guido and Dennis Rankin against a small Arizona fire department, the Mount Lemmon Fire District (District) challenging their layoff by the District. Faced with a budget shortfall, the District laid off Guido and Rankin, who at the time were the District’s two oldest full-time firefighters. Guido and Rankin sued the Fire District, alleging that their termination violated the Age Discrimination in Employment Act of 1967 (ADEA), 81 Stat. 602, as amended, 29 U. S. C. §621 et seq. The Fire District sought dismissal of the suit on the ground that the District was too small to qualify as an “employer” within the ADEA’s compass.
In response to Guido and Rankin’s lawsuit, the District asserted that was not covered by the ADEA because its employment of fewer than 20 employees rendered it “too small” to qualify as an “employer” as defined by 29 U. S. C. §630(b). In its ruling against the Fire District this morning, the Supreme Court rejected this numerosity defense, holding instead that the ADEA applies to all political subdivisions regardless of the size of their workforce.
In the unanimous opinion authored by Justice Ginsburg, the Supreme Court pointed out that the ADEA definition of “employer” distinguishes between private sector employers and State and local political subdivisions. The Supreme Court noted that before 1974, State and local political subdivisions were exempt from the ADEA. In 1974, however, Congress added a special definition of “employer” for States and political subdivisions to the ADEA and FLSA when it amended the ADEA and FLSA to apply to all State and local government employers regardless of their size. Thus, since 1974, the ADEA and FLSA definitions of “employer” have read as follows:
“The term ‘employer’ means a person engaged in an industry affecting commerce who has twenty or more employees . . . . The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State . . . .” 29 U. S. C. §630(b); 29 U. S. C. §203(d), (x).
In construing this definition, the Supreme Court weighed whether the phrase “also means” added new categories to the definition of “employer” or merely clarified that States and their political subdivisions are a type of “person” included in §630(b)’s first sentence. While acknowledging that various Courts of Appeals previously have reached differing conclusions concerning the appropriate interpretation, the Supreme Court ruled that the phase “also means” added a new category to the definition of “employer” for purposes of the ADEA. Accordingly, the Supreme Court rejected the District’s claim that the ADEA definition of “employer” includes the requirement of employment of at least 20 employees applicable to the ADEA’s private sector definition of “employer. Accordingly, the Supreme Court unanimously ruled that the ADEA applies to all State and local political subdivisions.
In light of the Supreme Court’s ruling, any State or local subdivision that has operated in reliance upon the now discredited interpretations of the ADEA or FLSA definitions of “employer” as applicable only to State or local governmental entities employing at least 20 employees immediately should take all necessary corrective action to bring their policies into compliance with the ADEA and FLSA. These governmental entities also should seek the advice of qualified legal counsel about the advisability of taking any retrospective action to self-correct any potential past deficiencies in compliance, if any, for which the entity might bear potential liability to the extent that the applicable state of limitations has not run on those claims.
[1]Justice Kavanaugh did not join in the opinion as he took no part in the consideration or decision of the case.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors; domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations; and other private and government organizations and their management leaders.
Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline; handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.
Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Employers should submit comments supporting proposed changes in the National Labor Relations Board (NLRB) rules defining joint employment by the newly extended December 13, 2018 deadline announced today.
On September 14, 2018, the NLRB published in the Federal Register a Notice of Proposed Rulemaking (“NPRM”) setting forth a proposed standard for determining joint-employer status under the National Labor Relations Act, with an original comment deadline of November 13, 2018.
The employer friendly proposed rule change would overrule a definition of joint employment created by the then Obama Administration dominated NLRB during the Obama administration that has been highly unfavorable to business and beneficial to labor unions. The joint employment rule allows the labor unions to have the NLRB treat as a deemed employer a separate business that does not directly employ workers involved in union organizing campaigns or covered by collective bargaining agreements or other NLRA protected activities even where the business is not under common ownership or control with the business that actually is the true employer of the workers. During the Obama Administration, the NLRB expanded the circumstances where a business is treated as a joint employer to include situations where the business does not have direct control over the worker in such a way that it imperils businesses that contract to receive services under independent contractor or subcontractor agreements from businesses with unionized workers or involved in organizing campaigns.
The proposed rule change would require proof that an employer have more than intermittent direct control over the day-to-day details of the performance of work by an employee before that employer could be held to be a joint employer for purposes of the collective-bargaining organizing and labor practices rules of the NLRA. This proposed rule change would overrule an interpretive position adopted by the NLRB during the Obama administration under which unions could use limited in direct involvement or control by a business Including limited involvement by general contractors subcontractors as the basis for having that business be treated as a joint player for purposes of union organizing in collective-bargaining obligations under the NLRB.
Strong employer comment in favor of the rule is needed to help deter union opposition, particularly as the NLRB granted the extended deadline for comment in part in response to union calls for an extended comment period on the proposed rule. Thus, employers concerned about joint or other employer liability for collective-bargaining union organizing liabilities should comment on the proposed rule on or before December 13, 2018. Comments replying to comments submitted during the initial comment period must be received by the Board on or before December 20, 2018. See here.
Employers desiring more information about the proposed regulations or how to respond with comments I contact the author of this update.
About The Author
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation; Former Chair of the RPTE Employee Benefits and Compensation Committee, a current Co-Chair of the Committee, and the former Chair of its Welfare Benefit and its Defined Compensation Plan Committees and former RPTE Joint Committee on Employee Benefits Council (JCEB) Representative, Cynthia Marcotte Stamer is a Martindale-Hubble “AV-Preeminent” practicing attorney and management consultant, author, public policy advocate, author and lecturer repeatedly recognized for her 30 plus years’ of work and pragmatic thought leadership, publications and training on health, pension and other employee benefit, insurance, labor and employment, and health care fiduciary responsibility, payment, investment, contracting and other design, administration and compliance concerns as among the “Top Rated Labor & Employment Lawyers in Texas,” a “Legal Leader,” a “Top Woman Lawyer” and with other awards by LexisNexis® Martindale-Hubbell®; as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, in International Who’s Who of Professionals and with numerous other awards and distinctions.
Highly valued for her ability to meld her extensive legal and industry knowledge and experience with her talents as an insightful innovator and pragmatic problem solver, Ms. Stamer advises, represents and defends employer, union, multi-employer, association and other employee benefit plan sponsors, insurers and managed care organizations, fiduciaries, plan administrators, technology and other service providers, government and community leaders and others about health and other employee benefit and insurance program and policy design and innovation, funding, documentation, administration, communication, data security and use, contracting, plan, public and regulatory reforms and enforcement, and other risk management, compliance and operations matters. Her experience encompasses leading and supporting the development and defense of innovative new policies, programs, practices and solutions; advising and representing clients on routine plan establishment, plan documentation and contract drafting and review, administration, change and other compliance and operations; crisis prevention and response, compliance and risk management audits and investigations, enforcement actions and other dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, Justice, Securities and Exchange Commission, Education and other federal agencies, state legislatures, attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators, and various other foreign and domestic governmental bodies and agencies. She also provides strategic and other supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness. Alongside her extensive legal and operational experience, Ms. Stamer also is recognized for her work as a public and regulatory policy advocate and community leader with a gift for finding pragmatic solutions and helping to forge the common ground necessary to build consensus. Best known for her domestic public policy and community leadership on health care and insurance reform, Ms. Stamer’s lifelong public policy and community service involvement includes service as a lead consultant to the Government of Bolivia on its pension privatization project, as well as extensive legislative and regulatory reform, advocacy and input workforce, worker classification, employee benefit, public health and healthcare, social security and other disability and aging in place, education, migration reforms domestically and internationally throughout her adult life. In addition to her public and regulatory policy involvement, Ms. Stamer also contributes her service and leadership to a professional and civic organizations and efforts including her involvement as the Founder and Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Vice Chair, Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; current Fiduciary Responsibility Committee Co-Chair and Membership Committee member of the ABA RPTE Section; former RPTE Employee Benefits and Other Compensation Group Chair, former Chair and Co-Chair of its Welfare Plans Committee, and Defined Contribution Plans Committee; former RPTE Representative to ABA Joint Committee on Employee Benefits Council; former RPTE Representative to the ABA Health Law Coordinating Counsel; former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, former Board Member, Continuing Education Chair and Treasurer of the Southwest Benefits Association; Vice President of the North Texas Healthcare Compliance Professionals Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; past Dallas World Affairs Council Board Member, and in leadership of many other professional, civic and community organizations. Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, the Society of Professional Benefits Administrators, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other public policy advocacy and other professional and civic organizations and involvements. Through these and other involvements, she helps develop and build solutions, build consensus, garner funding and other resources, manage compliance and other operations, and take other actions to identify promote tangible improvements in health care and other policy and operational areas.
Before founding her current law firm, Cynthia Marcotte Stamer, P.C., Ms. Stamer practiced law as a partner with several prominent national and international law firms for more than 10 years before founding Cynthia Marcotte Stamer, P.C. to practice her unique brand of “Solutions law™” and to devote more time to the pragmatic policy and system reform, community education and innovation, and other health system improvement efforts of her PROJECT COPE: the Coalition on Patient Empowerment initiative.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Employees should heed the warning provided by a federal grand jury’s indictment today charging a Walled Lake, Michigan restaurant owner with 24 counts of failing to account for and pay over employment taxes and one count of willful failure to file an income tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
According to the indictment, Johni Semma owned Bayside Sports Bar & Grill (“Bayside”), a restaurant, and The Coliseum, an adult entertainment business. As the owner of Bayside, Semma was allegedly responsible for collecting and paying over Bayside’s employment taxes. The indictment charges that during 2008 to 2015, Bayside accrued employment tax liabilities of more than $1 million and that Semma withheld those taxes from the pay of the restaurant’s employees. Semma then allegedly failed to fully pay over the amounts he withheld to the Internal Revenue Service (IRS).
The indictment further alleges that in 2012, Semma sold The Coliseum for more than $6 million with approximately $3.5 million of the purchase price paid during 2012. Despite receiving considerable income from the sale of The Coliseum and other sources, Semma allegedly did not file a 2012 income tax return.
If convicted, Semma faces a statutory maximum of five years in prison for each count of failure to pay over the employment taxes. He faces a statutory maximum of one year in prison for the one count of willful failure to file his income tax return. In addition, he faces a period of supervised release, restitution, and monetary penalties. An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Employers should recognize the indictment as a reminder to ensure they timely collect and deposit all employment taxes withheld in accordance with applicable law.
About The Author
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation; Former Chair of the RPTE Employee Benefits and Compensation Committee, a current Co-Chair of the Committee, and the former Chair of its Welfare Benefit and its Defined Compensation Plan Committees and former RPTE Joint Committee on Employee Benefits Council (JCEB) Representative, Cynthia Marcotte Stamer is a Martindale-Hubble “AV-Preeminent” practicing attorney and management consultant, author, public policy advocate, author and lecturer repeatedly recognized for her 30 plus years’ of work and pragmatic thought leadership, publications and training on health, pension and other employee benefit, insurance, labor and employment, and health care fiduciary responsibility, payment, investment, contracting and other design, administration and compliance concerns as among the “Top Rated Labor & Employment Lawyers in Texas,” a “Legal Leader,” a “Top Woman Lawyer” and with other awards by LexisNexis® Martindale-Hubbell®; as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, in International Who’s Who of Professionals and with numerous other awards and distinctions.
Highly valued for her ability to meld her extensive legal and industry knowledge and experience with her talents as an insightful innovator and pragmatic problem solver, Ms. Stamer advises, represents and defends employer, union, multi-employer, association and other employee benefit plan sponsors, insurers and managed care organizations, fiduciaries, plan administrators, technology and other service providers, government and community leaders and others about health and other employee benefit and insurance program and policy design and innovation, funding, documentation, administration, communication, data security and use, contracting, plan, public and regulatory reforms and enforcement, and other risk management, compliance and operations matters. Her experience encompasses leading and supporting the development and defense of innovative new policies, programs, practices and solutions; advising and representing clients on routine plan establishment, plan documentation and contract drafting and review, administration, change and other compliance and operations; crisis prevention and response, compliance and risk management audits and investigations, enforcement actions and other dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, Justice, Securities and Exchange Commission, Education and other federal agencies, state legislatures, attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators, and various other foreign and domestic governmental bodies and agencies. She also provides strategic and other supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness. Alongside her extensive legal and operational experience, Ms. Stamer also is recognized for her work as a public and regulatory policy advocate and community leader with a gift for finding pragmatic solutions and helping to forge the common ground necessary to build consensus. Best known for her domestic public policy and community leadership on health care and insurance reform, Ms. Stamer’s lifelong public policy and community service involvement includes service as a lead consultant to the Government of Bolivia on its pension privatization project, as well as extensive legislative and regulatory reform, advocacy and input workforce, worker classification, employee benefit, public health and healthcare, social security and other disability and aging in place, education, migration reforms domestically and internationally throughout her adult life. In addition to her public and regulatory policy involvement, Ms. Stamer also contributes her service and leadership to a professional and civic organizations and efforts including her involvement as the Founder and Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Vice Chair, Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; current Fiduciary Responsibility Committee Co-Chair and Membership Committee member of the ABA RPTE Section; former RPTE Employee Benefits and Other Compensation Group Chair, former Chair and Co-Chair of its Welfare Plans Committee, and Defined Contribution Plans Committee; former RPTE Representative to ABA Joint Committee on Employee Benefits Council; former RPTE Representative to the ABA Health Law Coordinating Counsel; former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, former Board Member, Continuing Education Chair and Treasurer of the Southwest Benefits Association; Vice President of the North Texas Healthcare Compliance Professionals Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; past Dallas World Affairs Council Board Member, and in leadership of many other professional, civic and community organizations. Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, the Society of Professional Benefits Administrators, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other public policy advocacy and other professional and civic organizations and involvements. Through these and other involvements, she helps develop and build solutions, build consensus, garner funding and other resources, manage compliance and other operations, and take other actions to identify promote tangible improvements in health care and other policy and operational areas.
Before founding her current law firm, Cynthia Marcotte Stamer, P.C., Ms. Stamer practiced law as a partner with several prominent national and international law firms for more than 10 years before founding Cynthia Marcotte Stamer, P.C. to practice her unique brand of “Solutions law™” and to devote more time to the pragmatic policy and system reform, community education and innovation, and other health system improvement efforts of her PROJECT COPE: the Coalition on Patient Empowerment initiative.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
A flurry of activity in the House Ways & Means Committee and other Congressional committees over the past few weeks signals the advisability of keeping a close eye on health care and health benefit reform proposals this Summer in anticipation of both the Fall health benefit enrollment and renewal season and the mid-term November Congressional elections.
Coupled with the Trump Administration’s recent rollout of its long promised association health plan, short-term coverage and other regulatory reforms and promises of more changes to come, the ongoing attention paid by the Administration and Congress to health insurance and health care reform raises a strong possibility that employer, association, and other health plan sponsors, fiduciaries and their vendors that they and their plan members should be on watch for late-breaking developments that may require or warrant last minute changes to health benefit plan designs, communications, contracts or other key decisions.
With President Trump continuing to push for a wide range of health care reforms and health care and health benefit issues recognized as key voter concerns for the upcoming mid-term elections in November, the continued emphasis of the Republican-led Congress and federal regulators talking about their health care reform legislative agenda is not surprising. What may be more surprising to many is the intensity of the ongoing efforts in Congress to try to pass reform over the summer when many members of the House and Senate face tightly contested races in November.
Certainly continued Congressional commitment to pursue reform is evident from the House Ways & Means Committee’s health care heavy agenda of hearings and votes that this week alone resulted in its voting in favor of 11 health care reform bills promising new flexibility for employers about how to design their health plans and American families more health care choices and choice about how to pay for it and what coverage to buy popular with many providers, patients and employer and other health plan sponsors. While it remains to be seen if the House and Senate can agree on any or all of these proposal, the bi-partisan sponsorship of many of these proposals and the intensity of the focus of the Committee and others in Congress reflects a strong interest in health care reform by both parties leading up to November that could impact health benefit and other health care choices for providers, employers and American families in the Fall annual enrollment season.
The legislation passed by the Ways & Means Committee this weeks include bills that would:
Provide relief for employers relief from the Obamacare’s employer mandate and delay for an additional year the effective date of the widely disliked “Cadillac Tax;”
Overrule the “Use it Or Lose It” requirement in current Internal Revenue Regulations for healthcare flexible spending arrangement plans (HFSAs) that currently forces employers sponsoring HFSAs to draft their plans to require employees to forfeit unused salary reduction contributions in their HFSA accounts at the end of the year;
Offer individuals and families eligible for Obamacare created health premium subsidies more choice about where to obtain that coverage using their subsidies; and
Expand expand the availability and usability of HSAs in a multitude of ways.
Furthermore, a review of the Committee’s schedule makes clear that it isn’t finished with health care reform. After holding hearings on health savings account reforms and passing a flurry of health care reform bills intended to give employers relief from two key Obamacare mandates, to allow Obamacare subsidy-eligible Americans the choice to use the subsidies to purchase health care coverage not offered by the Obamacare exchanges, and a host of bills that would expand availability and usability of health savings account (HSA) and health care flexible spending account (HFSA) programs this week, the House Ways and Means Committee will turn its attention to health care fraud oversight and reform next week by holding hearings Tuesday on those health concerns. Health care providers, employer and other health plan sponsors, individual Americans and their families, and others interested in health benefit and health care reform will want to keep a close eye on these and other developments as Congress continues to debate health care reform in the runup to the upcoming 2018 health benefit plan renewal and annual enrollment season and November’s mid-term elections.
Committee Approved 11 Health Care Reform Bills This Week
As a part of its health reform efforts this week, the Committee voted to advance 11 health care reform bills offering new flexibility for employers about how to design their health plans and American families more health care choices and choice about how to pay for it and what coverage to buy popular with many providers, patients and employer and other health plan sponsors.
Among the approved legislation is a bill that would provide key relief for employers from certain key Obamacare mandates that have been widely unpopular with employers. H.R. 4616, the “Employer Relief Act of 2018,” sponsored by Rep. Devin Nunes (R-CA) and Rep. Mike Kelly (R-PA), which would give employers sponsoring health plans for their employees retroactive relief from Obamacare’s onerous employer mandate and delay for an additional year the effective date of another Obamacare requirement that when effective, will forces employers to pay the 40 percent tax on amounts paid for employer sponsored health care coverage that exceeds cost limits specified in the Obamacare legislation commonly known as the “Cadillac Tax.” Relief from the Cadillac Tax is widely perceived as benefiting bother employers and their employees, as its provisions penalize employers for spending more for employee health coverage than limits specified in the Obamacare law. These provisions also are particularly viewed by many as unfair because rising health plan costs since Obamacare’s passage make it likely that many employers will incur the tax penalty simply by sponsoring relatively basic health plans meeting the Obamacare mandates.
In addition to H.R. 4616, the Committee also voted to approve H.R. 6313, the “Responsible Additions and Increases to Sustain Employee Health Benefits Act of 2018,” sponsored by Rep. Steve Stivers (R-OH), which would overrule the “Use it Or Lose It” requirement in current Internal Revenue Regulations for HFSAs. Currently, this rule forces employers sponsoring HFSAs to draft their plans to require employees to forfeit unused salary reduction contributions in their HFSA accounts at the end of the year. The bill would allow employers to eliminate this forfeiture requirement so that employees could carry over any remaining unused balances in their HFSAs at the end of the year to use in a later year.
The Committee also voted to advance legislation to offer individuals and families eligible for Obamacare created health premium subsidies more choice about where to obtain that coverage. H.R. 6311, the “Increasing Access to Lower Premium Plans Act of 2018,” sponsored by Chairman Peter Roskam (R-IL) and Rep. Michael C. Burgess, M.D. (R-TX), would provide individuals receiving subsidies to help purchase health care coverage through the Obamacare-created health insurance exchange the option to use their premium tax credit to purchase health care coverage from qualified plans offered outside of the exchanges. Currently, subsidies may only be used to purchase coverage from health plans offered through the exchange, which often are much more costly and offer substantially fewer coverage options and less provider choice. In addition, the bill would expand access to the lowest-premium plans available for all individuals purchasing coverage in the individual market and allows the premium tax credit to be used to offset the cost of such plans.
Along with these reforms, the Committee also voted to pass a host of bills that would expand the availability and usability of HSAs including:
H.R. 6301, the “Promoting High-Value Health Care Through Flexibility for High Deductible Health Plans Act of 2018,” co-sponsored by Health Subcommittee Chairman Peter Roskam (R-IL) and Rep. Mike Thompson (D-CA), which seeks to expand access and enhance the utility of Health Savings Accounts (HSAs) by offering patients greater flexibility in designing their plan design while still being able to maintain their eligibility for HSA contributions.
H.R. 6305, the “Bipartisan HSA Improvement Act of 2018,” sponsored by Rep. Mike Kelly (R-PA) and Rep. Earl Blumenauer (D-OR), which also would expand HSA access and utility by allowing spouses to also make contributions to HSAs is their spouse has an FSA and lets employers offer certain services to employees through on-site or retail clinics.
H.R. 6317, the “Primary Care Enhancement Act of 2018,” co-sponsored by Rep. Erik Paulsen (R-MN) and Rep. Earl Blumenauer (D-OR), which seeks to protect HSA-eligible individuals who participate in a direct primary care (DPC) arrangement from losing their HSA-eligibility merely because of their participation in a DPC. In addition, it allows DPC provider fees to be covered with HSAs.
H.R. 6312, the “Personal Health Investment Today (PHIT) Act,” sponsored by Rep. Jason Smith (R-MO) and Rep. Ron Kind (D-WI), which seeks to fight obesity and promote wellness by allowing taxpayers to use tax-preferred accounts to pay costs of gym membership or exercise classes, children’s school sports programs and certain other wellness programs and activities.
H.R. 6309, the “Allowing Working Seniors to Keep Their Health Savings Accounts Act of 2018,” sponsored by Rep. Erik Paulsen (R-MN), which would expand HSA eligibility to include Medicare eligible seniors who are still in the workforce.
H.R.6199, the “Restoring Access to Medication Act of 2018,” sponsored by Rep. Lynn Jenkins (R-KS) and Rep. Grace Meng (D-NY), which would reverse Obamacare’s prohibition on using tax-favored health accounts to purchase over-the-counter medical products and would add feminine products to the list of qualified medical expenses for the purposes of these tax-favored health accounts.
H.R. 6306, the “Improve the Rules with Respect to Health Savings Accounts,” sponsored by Rep. Erik Paulsen (R-MN), which would increase the contribution limits for HSAs and further enhances flexibility in plans by allowing both spouses to contribute to make catch-up contributions to the same account and creating a new grace period for medical expenses incurred before the HSA was established.
H.R. 6314, the “Health Savings Act of 2018,” sponsored by Rep. Burgess (R-TX) and Rep. Roskam (R-IL), would expand eligibility and access to HSAs by allowing plans categorized as “catastrophic” and “bronze” in the exchanges to qualify for HSA contributions.
Committee Considers Health Care Fraud Next Week
The Committee next week will turn its attention to health care fraud by holding two hearings on Tuesday.
Both hearings are scheduled to take place in Room 1100 Longworth and their proceedings will be live streamed on YouTube.
The Committee’s health care reform focus this week and next are reflective of the continued emphasis of members of Congress in both parties on health care reform legislation as they prepare for the impending mid-term elections in November. As a part of these efforts, the House and Senate already over the past several months have held a wide range of hearings in various committees and key votes on a multitude of reform proposals. Numerous other hearings and votes are planned over the next several months as Congressional leaders from both parties work to advance their health care agendas in anticipation of the upcoming elections.
Key health care and health benefit reform proposals that the Republican Majority has designated for priority consideration include:
Prescription drug costs by checking perceived negative effects of health industry and health plan consolidations involving large health insurers, pharmacy benefit management companies (PBMs), pharmacy companies and other health industry and health insurance organizations on health care costs and patient, plan sponsor and plan sponsor choice and health care quality;
Oversight and reform of existing STARK, anti-kickback and other federal health care rules and exemptions relied upon by PBMs and other health industry organizations;
Efforts to understand and address health care treatment, health care and coverage costs and related social concerns associated with mental health and opioid and other substance abuse conditions and their treatment;
Efforts promote health benefit and health care choice, affordability and coverage; improve patient and employer choice; promote broader health care access and quality; reduce counterproductive regulation; and other health insurance and care improvements through expanded availability of health savings accounts, direct primary care and other consumer directed health care options, association health plan and other program options, streamlining quality reporting and regulation, billing and coding, physician and other health care provider electronic billing and recordkeeping, and other provider, payer, employer, individual and other health insurance mandates and other federal health care and health plan rules; and
While the recurrent stalling of past reform efforts over the past few years calls into question whether any or all of these proposals can make it through the highly politicized and divided Congress, bi-partisian sponsorship of most of the bills reported out this week at least raises the possibility that some of these proposals enjoy sufficient bi-partisan support to potentially pass before the elections. With both parties viewing health care reform as a key issue in the upcoming elections, voter feedback on these proposals could play a big role in determining the prospects for passage this Summer.
Along with the ongoing Congressional reform efforts, the Trump Administration also continues to move forward on a series of regulatory reforms that also could impact health care and health benefit decisions and responsibilities later this year. Beyond the Administration’s implementation of its long promised and recently finalized and released association health plan, short term coverage and other health benefit rules, the Administration’s continued consideration of changes to essential health benefits and other Obamacare regulations, ongoing mental health, substance abuse, and prescription drug reform projects, and other proposed regulatory and enforcement changes are likely to require health plans, their sponsors, insurers, administrators, members and even providers to adapt to changes in federal health plan rules between now and year end.
Amid this shifting legal landscape, employer and other health plan sponsors, their insurers, vendors, providers and participants will want to remain vigilant and work to preserve the flexibility to respond to new rules or guidance likely to rollout over the next several months.
Staying on top of proposed reforms as the Summer progresses is important:
To provide timely input to Congress on proposed reforms of particular benefit or concern;
To help plan for and deal with rules changes that could impact their options and choices during the upcoming health plan renewal and enrollment season this Fall and going forward; and
To be prepared to make informed choices when voting in the upcoming mid-term Congressional elections in November.
Keeping informed about potential changes is only part of the challenge, however. Employer and other health plan sponsors, fiduciaries and service providers also generally should seek to negotiate vendor contracts that allow them the greatest possible flexibility to respond to changing rules, opportunities and requirements with minimum penalties and disruption when designing, negotiating and implementing vendor contracts, plan designs and plan enrollment and other processes and communications.
About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry, health and other benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors; managed care organizations, insurers, self-insured health plans and other payers and their management; public and private, domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, health care accreditation, peer review and quality committees and organizations; managed care organizations, insurers, third party administrative services organizations and other payer organizations; billing, utilization management, management services organizations; group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; claims, billing and other health care and insurance technology and data service organizations; other health, employee benefit, insurance and financial services product and solutions consultants, developers and vendors; and other health, employee benefit, insurance, technology, government and other management clients.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompassess advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.
Beyond her public policy and regulatory affairs involvement, Ms. Stamer also has extensive experience helping these and other clients to design, implement, document, administer and defend workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government; accreditation and quality organizations; private litigation and other federal and state health care industry investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, and change management; workforce and operations management, and other opportunities and challenges arising in the course of their operations.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; HIPAA administrative simplification, meaningful use, EMR, HIPAA and other technology, data security and breach and other health IT and data; STARK, antikickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA, HEDIS and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care; internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; 1557 and other Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.
Ms. Stamer has extensive health care reimbursement and insurance experience advising and defending plan sponsors, administrators, insurance and managed care organizations, health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and employer and association group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions. Scribe for the ABA JCEB annual agency meeting with HHS OCR, she also has worked extensively on health and health benefit coding, billing and claims, meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical, workforce, consumer financial and other data confidentiality and privacy, federal and state data security, data breach and mitigation, and other information privacy and data security concerns.
Author of leading works on a multitude of health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative and CLE and Marketing Committee Chair, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer’s health industry clients include public health organizations; public and private hospitals, healthcare systems, clinics and other health care facilities; physicians, physician practices, medical staff, and other provider organizations; skilled nursing, long term care, assisted living, home health, ambulatory surgery, dialysis, telemedicine, DME, Pharma, clinics, and other health care providers; billing, management and other administrative services organizations; insured, self-insured, association and other health plans; PPOs, HMOs and other managed care organizations, insurance, claims administration, utilization management, and other health care payers; public and private peer review, quality assurance, accreditation and licensing; technology and other outsourcing; healthcare clearinghouse and other data; research; public and private social and community organizations; real estate, technology, clinical pathways, and other developers; investors, banks and financial institutions; audit, accounting, law firm; consulting; document management and recordkeeping, business associates, vendors, and service providers and other professional and other health industry organizations; academic medicine; trade associations; legislative and other law making bodies and others.
A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Construction industry and other employers of employees working in summer heat impacted environments need to take appropriate steps to prevent heat related injuries and illnesses
Every year, dozensof workers die and thousands more become ill while working in extreme heat or humid conditions. More than 40 percent of heat-related worker deaths occur in the construction industry, but workers in every field are susceptible.
Working in extreme heat without appropriate precautions creates heightened risk of a range of heat illnesses. These risks can affect anyone, regardless of age or physical condition.
Employer Responsibility to Protect Workers
Protecting workers from extreme heat generally is part of the responsibility of an employer to provide a safe workplace under the Occupational Health & Safety Act (OSHA) and state occupational health and safety statutes.
Aside from the worker’s compensation, medical and disability costs and workplace disruptions that heat related illness can create, heat related injuries or illnesses to workers also create risks of civil penalties and other liabilities under OSHA.
To minimize risks of heat related OSHA violations and other exposures, an employer of workers exposed to high temperatures should establish and document their training and administration of a complete heat illness prevention program that meets or exceeds applicable OSHA standards.
Resources
OSHA’s Occupational Exposure to Heat page explains what employers can do to keep workers safe and what workers need to know – including factors for heat illness, adapting to working in indoor and outdoor heat, protecting workers, recognizing symptoms, and first aid training. The page also includes resources for specific industries and OSHA workplace standards.
Employers can help promote compliance and reduce heat related injury risks by training and requiring workers and their management to use three common sense elements for preventing heat related injuries and deaths to workers – Water. Rest. Shade.
OSHA guidance urges employers to prevent heat-related injuries by taking the following steps:
Provide workers with water, rest and shade.
Allow new or returning workers to gradually increase workloads and take more frequent breaks as they acclimatize, or build a tolerance for working in the heat.
Plan for emergencies and train workers on prevention.
Monitor workers for signs of illness.
Take prompt action to provide appropriate intervention and medical care in response to signs of potential heat related health issues.
To ensure that they can prove these expectations are met, Most employers will want to adopt specific policies require in well-documented compliance with these requirements.
About The Author
If you need more information about or help with these or other workplace concerns, the author of this article may be able to help.
Board Certified in Labor and Employment Law, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation; Former Chair of the RPTE Employee Benefits and Compensation Committee, a current Co-Chair of the Committee, and the former Chair of its Welfare Benefit and its Defined Compensation Plan Committees and former RPTE Joint Committee on Employee Benefits Council (JCEB) Representative, Cynthia Marcotte Stamer is a Martindale-Hubble “AV-Preeminent” practicing management attorney, consultant, coach, author, public policy advocate, author and lecturer repeatedly recognized for her 30 plus years’ of work and pragmatic thought leadership, publications and training on labor and employment, compensation, health, pension and other employee benefit, insurance, and health care fiduciary responsibility, payment, investment, contracting and other design, administration and compliance concerns as among the “Top Rated Labor & Employment Lawyers in Texas,” a “Legal Leader,” a “Top Woman Lawyer” and with other awards by LexisNexis® Martindale-Hubbell®; as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, in International Who’s Who of Professionals and with numerous other awards and distinctions.
Highly valued for her ability to meld her extensive legal and industry knowledge and experience with her talents as an insightful innovator and pragmatic problem solver, Ms. Stamer advises, represents and defends employer, union, multi-employer, association and other employee benefit plan sponsors, insurers and managed care organizations, fiduciaries, plan administrators, technology and other service providers, government and community leaders and others about health and other employee benefit and insurance program and policy design and innovation, funding, documentation, administration, communication, data security and use, contracting, plan, public and regulatory reforms and enforcement, and other risk management, compliance and operations matters. Her experience encompasses leading and supporting the development and defense of innovative new policies, programs, practices and solutions; advising and representing clients on routine plan establishment, plan documentation and contract drafting and review, administration, change and other compliance and operations; crisis prevention and response, compliance and risk management audits and investigations, enforcement actions and other dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, Justice, Securities and Exchange Commission, Education and other federal agencies, state legislatures, attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators, and various other foreign and domestic governmental bodies and agencies. She also provides strategic and other supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness. Alongside her extensive legal and operational experience, Ms. Stamer also is recognized for her work as a public and regulatory policy advocate and community leader with a gift for finding pragmatic solutions and helping to forge the common ground necessary to build consensus. Best known for her domestic public policy and community leadership on health care and insurance reform, Ms. Stamer’s lifelong public policy and community service involvement includes service as a lead consultant to the Government of Bolivia on its pension privatization project, as well as extensive legislative and regulatory reform, advocacy and input workforce, worker classification, employee benefit, public health and healthcare, social security and other disability and aging in place, education, migration reforms domestically and internationally throughout her adult life. In addition to her public and regulatory policy involvement, Ms. Stamer also contributes her service and leadership to a professional and civic organizations and efforts including her involvement as the Founder and Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Vice Chair, Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; current Fiduciary Responsibility Committee Co-Chair and Membership Committee member of the ABA RPTE Section; former RPTE Employee Benefits and Other Compensation Group Chair, former Chair and Co-Chair of its Welfare Plans Committee, and Defined Contribution Plans Committee; former RPTE Representative to ABA Joint Committee on Employee Benefits Council; former RPTE Representative to the ABA Health Law Coordinating Counsel; former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, former Board Member, Continuing Education Chair and Treasurer of the Southwest Benefits Association; Vice President of the North Texas Healthcare Compliance Professionals Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; past Dallas World Affairs Council Board Member, and in leadership of many other professional, civic and community organizations. Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, the Society of Professional Benefits Administrators, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other public policy advocacy and other professional and civic organizations and involvements. Through these and other involvements, she helps develop and build solutions, build consensus, garner funding and other resources, manage compliance and other operations, and take other actions to identify promote tangible improvements in health care and other policy and operational areas.
Before founding her current law firm, Cynthia Marcotte Stamer, P.C., Ms. Stamer practiced law as a partner with several prominent national and international law firms for more than 10 years before founding Cynthia Marcotte Stamer, P.C. to practice her unique brand of “Solutions law™” and to devote more time to the pragmatic policy and system reform, community education and innovation, and other health system improvement efforts of her PROJECT COPE: the Coalition on Patient Empowerment initiative.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
With the Trump Administration U.S. Department of Labor Wage and Hour Division (WHD) continuing its aggressive investigation and enforcement of minimum wage, overtime and other Fair Labor Standards Act (FLSA) and other wage and hour laws it used to recover more than $1.2 billion in back pay for workers over the past five years, Agriculture, Amusement, Apparel Manufacturing, Auto Repair, Child Care Services, Construction, Food Services, Guard Services, Hair, Nail & Skin Care Services, Health Care, Hotels and Motels, Janitorial Services, Landscaping Services, Retail, and Temporary Help and other U.S. employers should evaluate their current and past potential liability exposures and consider using the new pilot WHD self-audit Payroll Audit Independent Determination (PAID) program announced by WHD on March 6 or other options to mitigate their liability for their own or temporary or other contract labor’s existing or past minimum wage and hour law violations.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
The author of the “Texas Payday Act,” and numerous other highly regarded publications on wage and hour and other human resources, employee benefits and compensation publications, Ms. Stamer is well-known for her 30 years of extensive wage and hour, compensation and other management advice and representation of restaurant and other hospitality, health, insurance, financial services, technology, energy, manufacturing, retail, governmental and other domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here including:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
March 30 is the deadline to comment on changes the U.S. Small Business Administration (SBA) and Department if Veteran Affrairs are proposing to make to regulations implementing The National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017).
The proposed changes will affect qualification for veterans preferences under a wide range of federal programs.
The NDAA 2017 placed the responsibility for issuing regulations relating to ownership and control for the Department of Veterans Affairs verification of Veteran-Owned (VO) and Service-Disabled Veteran-Owned (SDVO) Small Business Concern (SBC) with the SBA.
Under NDAA 2017, there will be one definition of ownership and control for that will apply for purposes of the Department of Veterans Affairs in its verification and Vets First Contracting Program procurements, and all other government acquisitions which require self-certification. The legislation also provides that in certain circumstances a firm can qualify as VO or SDVO when there is a surviving spouse or an employee stock ownership plan (ESOP).
Read the proposed rule hereand the companion rule issued by VA and additional information is here.
Health plans and insurers, their service providers that act as business associates within the meaning of the Health Insurance Portability & Accountability Act (HIPAA) and employer and other health plan sponsors, fiduciaries, and other management leaders should heed the warnings contained in the new Resolution Agreement (FileFax Resolution Agreement) with former HIPAA business associate FileFax, Inc. announced by the Department of Health & Human Services (HHS) Office of Civil Rights (OCR) about their own need to ensure that they and their business associates comply with HIPAA’s business associate and other Privacy, Security, Breach Notification rules as well as the advisability of tightening up their risk management and oversight of business associates that handle protected health information (PHI).
Significant for business associates as what appears to be the first announced resolution agreement with a business associate directly charged by OCR with violating HIPAA and the second resolution agreement pursued and reached with a HIPAA-regulated entity in bankruptcy, the FileFax, Inc. Resolution Agreement OCR announced February 13, 2018 also contains critical lessons for Covered Entities about their dealings with their own business associates when read in conjunction with the April, 2017 resolution agreement the Center for Children’s Digestive Health (CCDH) agreed to resolve OCR charges CCDC, as a Covered Entity, violated HIPAA by allowing FileFax, Inc. to act as its business associate without adequately complying with HIPAA’s business associate requirements.
With widespread media coverage over large scale breaches of health care and other sensitive information placing further pressure upon OCR and other governmental agencies to act to protect Americans’ privacy and data fueling even greater demands for OCR and other agencies to take meaningful action to enforce HIPAA and other privacy and data security requirements, health plans, health care providers, health care clearinghouses (Covered Entities) and their business associates can expect OCR and other agencies to continue to turn up the heat on investigation and enforcement of HIPAA compliance.
In the face of these developments, Covered Entities, their business associates and those responsible for their leadership and operations need to recognize and take the necessary steps both effectively to manage their own HIPAA compliance and risk management as well as to anticipate and make provision to deal with the likelihood that they may face HIPAA responsibilities, exposures and other fallout from their own or another business partner’s breach of PHI or other sensitive data or other HIPAA violations, bankruptcy or other business distress, or other compliance or business event.
The Privacy Rule requires that health plans, health care providers, health care clearinghouses (Covered Entities) and their vendors that qualify as “business associates” under HIPAA comply with detailed requirements concerning the protection, use, access, destruction and disclosure of protected health information. As part of these requirements, Covered Entities and their business associates must adopt, administer and enforce detailed policies and practices, assess, monitor and maintain the security of electronic protected health information (ePHI) and other protected health information, provide notices of privacy practices and breaches of “unsecured” ePHI, afford individuals that are the subject of protected health information certain rights and comply with other requirements as specified by the Privacy, Security and Breach Notification Rules. In addition, Covered Entities and business associates also must enter into a written and signed business associate agreement that contains the elements specified in Privacy Rule § 164.504(e) before the business associate creates, uses, accesses or discloses PHI of the Covered Entity. Furthermore, the Privacy Rule includes extensive documentation and keeping requirements require that Covered Entities and BAs maintain copies of these BAAs for a minimum of six years and to provide that documentation to OCR upon demand.
Violations of the Privacy Rule can carry stiff civil monetary penalties or even criminal penalties. Pursuant to amendments to HIPAA enacted as part of the HITECH Act, civil penalties typically do not apply to violations punished under the criminal penalty rules of HIPAA set forth in Social Security Act , 42 U.S.C § 1320d-6 (Section 1177).
Resolution Agreements the just announced FileFax Resolution Agreement allow Covered Entities and business associates to resolve potentially substantially larger civil monetary penalty liabilities that OCR can impose under the civil enforcement provisions of HIPAA for HIPAA violations through a negotiated settlement process. As amended by the HITECH Act, the civil enforcement provisions of HIPAA empower OCR to impose Civil Monetary Penalties on both Covered Entities and BAs for violations of any of the requirements of the Privacy or Security Rules. The penalty ranges for civil violations depends upon the circumstances associated with the violations and are subject to upward adjustment for inflation. As most recently adjusted here effective September 6, 2016, the following currently are the progressively increasing Civil Monetary Penalty tiers:
A minimum penalty of $100 and a maximum penalty of $50,000 per violation, for violations which the CE or BA “did not know, and by exercising reasonable diligence would not have known” about using “the business care and prudence expected from a person seeking to satisfy a legal requirement under similar circumstances;”
A minimum penalty of $1,000 and a maximum penalty of $50,000 per violation, for violations for “reasonable cause” which do not rise to the level of “willful neglect” where “reasonable cause” means the “circumstances that would make it unreasonable for the Covered Entity, despite the exercise of ordinary business care and prudence, to comply with the violated Privacy Rule requirement;”
A minimum penalty of $10,000 and a maximum penalty of $50,000 per violation, for violations attributed to “willful neglect,” defined as “the conscious, intentional failure or reckless indifference to the obligation to comply” with the requirement or prohibition; and
A minimum penalty of $50,000 and a maximum penalty of $1.5 million per violation, for violations attributed to “willful neglect” not remedied within 30 days of the date that the Covered Entity or BA knew or should have known of the violation.
For continuing violations such as failing to implement a required BAA, OCR can treat each day of noncompliance as a separate violation. However, sanctions under each of these tiers generally are subject to a maximum penalty of $1,500,000 for violations of identical requirements or prohibitions during a calendar year. For violations such as the failure to implement and maintain a required BAA where more than one Covered Entity bears responsibility for the violation, OCR an impose Civil Monetary Penalties against each culpable party. OCR considers a variety of mitigating and aggravating facts and circumstances when arriving at the amount of the penalty within each of these applicable tiers to impose.
In addition to these potential civil liability exposures, Covered Entities, their business associates and other individuals or organizations that wrongfully use, access or disclose electronic or other protected health information also can face civil liability under various circumstances. The criminal enforcement provisions of HIPAA authorize the Justice Department to prosecute a person who knowingly in violation of the Privacy Rule (1) uses or causes to be used a unique health identifier; (2) obtains individually identifiable health information relating to an individual; or (3) discloses individually identifiable health information to another person, punishable by the following criminal sanctions and penalties:
A fine of up to $50,000, imprisoned not more than 1 year, or both;
If the offense is committed under false pretenses, a fine of up to $100,000, imprisonment of not more than 5 years, or both; and
If the offense is committed with intent to sell, transfer, or use individually identifiable health information for commercial advantage, personal gain, or malicious harm, a fine of up to $250,000, imprisoned not more than 10 years, or both.
Because HIPAA Privacy Rule criminal violations are Class A Misdemeanors or felonies, Covered Entities and business associates should include HIPAA compliance in their Federal Sentencing Guideline Compliance Programs and practices and need to be concerned both about criminal exposure for their own direct violations, as well as imputed organizational liability for violations committed by their employees or agents under the Federal Sentencing Guidelines, particularly where their failure to implement or administer these required compliance policies and practices or failure to properly investigate or redress potential violations enables, perpetuates or covers up the criminal breach.
FileFax, Inc. Breach & Resolution Agreement
While Congress amended the Civil Monetary Penalty provisions of HIPAA enforced by OCR to make many of the requirements and Civil Monetary Penalty sanctions of HIPAA directly enforceable by OCR against business associates as part of the Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009, the FileFax Resolution Agreement appears to be the first HIPAA resolution agreement with a business associate announced by OCR.
Indeed, OCR’s enforcement action that resulted in the FileFax Resolution Agreement would never have occurred had FileFax, Inc. not become involved in handling medical records containing PHI in the capacity of a business associate for Covered Entities.
Before filing for bankruptcy in 2016, FileFax, Inc. advertised it provided HIPAA-compliant storage, maintenance, and delivery of medical records for HIPAA Covered Entities including Illinois based health care provider CCDC, which entered into a resolution agreement with OCR in April, 2017 to resolve OCR charges that it violated HIPAA by allowing FileFax, Inc. to handle PHI without fulfilling HIPAA’s business associate agreement requirements.
Like the CCDC Resolution Agreement, the FileFax, Inc. Resolution Agreement resulted from an investigation of FileFax, Inc. that OCR began in response to a February 10, 2015 anonymous complaint filed with OCR about FileFax, Inc. about deficiencies in its delivery of these HIPAA services in its capacity as a business associate to Covered Entities. The complaint to OCR alleged that FileFax, Inc. violated these requirements because an individual transported medical records obtained from FileFax, Inc. to a shredding and recycling facility to sell on February 6 and 9, 2015.
OCR’s investigation of the complaint against FileFax, Inc. confirmed that an individual had left medical records of approximately 2,150 patients at the shredding and recycling facility, and that these medical records contained patients’ PHI. OCR’s investigation additionally found that between January 28, 2015, and February 14, 2015, FileFax, Inc. impermissibly disclosed the PHI of 2,150 individuals by leaving the PHI in an unlocked truck in the FileFax, Inc. parking lot, or by granting permission to an unauthorized person to remove the PHI from FileFax, Inc. and leaving the PHI unsecured outside the FileFax, Inc. facility.
After OCR commenced its investigation of the complaint, FileFax, Inc. was placed into bankruptcy and a receiver was appointed to liquidate FileFax, Inc.’s assets for distribution to creditors and others in 2016. Despite the bankruptcy, OCR continued to pursue enforcement against FileFax, Inc. for the HIPAA violations it found through its investigation. On February 13, 2018, OCR announced that that the receiver on behalf of FileFax, Inc. had agreed in the FileFax Resolution Agreement to pay a $100,000 monetary settlement out of the bankruptcy estate and to arrange to properly store and dispose of remaining medical records found at FileFax, Inc.’s facility in compliance with HIPAA to resolve OCR’s HIPAA charges against FileFax, Inc.
OCR Previously Sanctioned Covered Entity For Involvement With FileFax, Inc.
Beyond affirming the exposure business associates to OCR civil monetary penalties or other enforcement for violating HIPAA, the FileFax Resolution Agreement in conjunction with OCR’s previously announced April 20, 2017 resolution agreement (CCDC Resolution Agreement) with CCDC also demonstrates the need for Covered Entities to recognize that their organizations are likely to face HIPAA investigations or enforcement from HIPAA violations by or OCR audits or investigations of the conduct of their business associates.
In fact, this is exactly what happened to CCDC. A small, Illinois based Covered Entity, CCDC used FileFax, Inc. to store and dispose of medical records. As a consequence of the FileFax, Inc. investigation, OCR conducted a compliance review of CCDC. OCR reports that its compliance review revealed that while CCDC had disclosed to and allowed FileFax, Inc. to store records containing PHI for CCDC since in 2003, neither party could produce a signed business associate agreement (BAA) prior to October 12, 2015. As a consequence, OCR charged CCDC with violating HIPAA by disclosing PHI to FileFax, Inc. in violation of HIPAA’s business associate requirements.
To resolve its exposure to potentially much greater civil monetary penalties associated with this charge, CCDC agreed under the CCDC Resolution Agreement to pay OCR a $31,000 resolution payment and take a variety of corrective actions. Beyond requiring CCDC to implement and maintain written business associate agreements before allowing business associates to possess or access PHI, the corrective action plan imposed as part of the CCDC Resolution Agreement also expressly requires CCDC to promptly investigate information of a possible violation of its HIPAA policies and procedures by a “workforce member,” which the Privacy Rule defines to include a business associate, and if the investigation reveals a violation, to report the violation and corrective action taken to OCR.
OCR Enforces HIPAA Against Covered Entities & Business Associates In Bankruptcy
OCR’s announcement of the FileFax Resolution Agreement also is significant in its reaffirmation of OCR to its commitment to HIPAA enforcement, even if the HIPAA-violating Covered Entity or business associate goes bankruptcy.
OCR’s enforcement action against FileFax, Inc. despite its bankruptcy and its successful negotiation of the FileFax Resolution Agreement within the bankruptcy should alert Covered Entities and business associates that OCR does not consider the bankruptcy of a Covered Entity or business associate as an obstacle to OCR enforcement against Covered Entities or business associates that violate HIPAA. The seriousness of OCR’s commitment to enforcement, even in the face of bankruptcy is driven home by its announcement of the FileFax Resolution Agreement on the heels of its December, 2017 announcement of its first OCR HIPAA resolution agreement secured with the formal approval of a bankruptcy court, a resolution agreement (21CO Resolution Agreement) against bankrupt health care provider, 21CO.
Secured with bankruptcy court approval, the 21CO Resolution Agreement resolved potentially much larger civil monetary penalties that the Fort Myers, Florida based provider of cancer care services and radiation oncology could have faced for alleged HIPAA breaches OCR charged it committed in connection with its failure to adequately act to prevent and respond to hacking and misappropriation of records containing sensitive electronic protected health information (ePHI) of up to 2,213597 individuals.
The OCR charges against 21CO arose from an OCR investigation commenced after the Federal Bureau of Investigation (FBI) notified 21CO on November 13, 2015 and a second time on December 13, 2015 than unauthorized third party illegally obtained 21CO sensitive patient information and produced 21CO patient files purchased by a FBI informant. As part of its internal investigation, 21CO hired a third party forensic auditing firm in November 2015. 21CO determined that the attacker may have accessed 21CO’s network SQL database as early as October 3, 2015, through Remote Desktop Protocol from an Exchange Server within 21CO’s network. 21CO determined that it is possible that 2,213,597 individuals may have been affected by the impermissible access to their names, social security numbers, physicians’ names, diagnoses, treatment and insurance information.
Although it knew of the breaches in November and December, 2015, 21CO waited more than three months after the FBI notified it of the breaches before it sent HIPAA or other breach notifications about the data breach to patients or notified investors in March, 2016. Its March 4, 2016 Securities and Exchange Commission 8-K on Data Security Incident (Breach 8-K) states 21CO delayed notification at the request of the FBI to avoid interfering in the criminal investigation of the breach.
When announcing the breach, 21CO provided all individuals affected by the breach with a free one-year subscription to the Experian ProtectMyID fraud protection service. At that time, 21CO said it had no evidence that any patient information actually had been misused. However some victims of the breach subsequently have claimed being victimized by a variety of scams since the breach in news reports and lawsuits about the breach.
At the time of the breach and its March 4, 2016 announcement of the breach, 21CO already was working to resolve other compliance issues. On December 16, 2015, 21CO announced that a 21CO subsidiary had agreed to pay $19.75 million to the United States and $528,000 in attorneys’ fees and costs and comply with a corporate integrity agreement related to a qui tam action in which it was accused of making false claims to Medicare and other federal health programs. See 21CO 8-K Re: Entry into a Material Definitive Agreement (December 22, 2015). Among other things, the corporate integrity agreement required by that settlement required 21CO to appoint a compliance officer and take other steps to maintain compliance with federal health care laws. In addition, five days after releasing the March 4, 2017 Breach 8-K, 21CO notified investors that its subsidiary, 21st Century Oncology, Inc. (“21C”), had agreed to pay $37.4 million to settle health care fraud law charges relating to billing and other protocols of certain staff in the utilization of state-of-the-art radiation dose calculation system used by radiation oncologists called GAMMA. See 21CO 8-K Re: GAMMA Settlement March 9, 2016 ; See also United States Settles False Claims Act Allegations Against 21st Century Oncology for $34.7 Million.
Based on OCR’s subsequent investigation into these breaches, OCR found:
21CO impermissibly disclosed certain PHI of 2,213,597 of its patients in violation of 45 C.F.R. § 164.502(a);
21CO failed to conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of the electronic protected health information (ePHI) held by 21CO in violation of 45 C.F.R. § 164.308(a)(1)(ii)(A);
21CO failed to implement certain security measures sufficient to reduce risks and vulnerabilities to a reasonable and appropriate level to comply with 45 C.F.R. § 164.306(A) in violation of 45 C.F.R. § 164.308(a)(1)(ii)(B);
21CO failed to implement procedures to regularly review records of information system activity, such as audit logs, access reports, and security incident tracking reports as required by 45 C.F.R. §164.308(a)(1)(ii)(D);
21CO disclosed protected health information to a third party vendors, acting as its business associates, without obtaining satisfactory assurances in the form of a written business associate agreement in violation of HIPAA’s business associate rule requirements under 45 C.F.R. §§ 164.502(e) and 164.308(b)(3).
In return for OCR’s agreement not to further pursue charges or penalties relating to the breach investigation, the Resolution Agreement entered into with the approval of the Bankruptcy Court requires that 21CO pay OCR a $2.3 million Resolution Amount and implement to OCR’s satisfaction a corrective action plan that among other things requires that 21CO complete a detailed series of corrective actions to the satisfaction of OCR.
These and other developments also had significant consequences on 21CO’s financial status and leadership. By March 31, 2015, 21CO notified the SEC and investors that it needed added time to complete its financial statements. Subsequent SEC filings document its restatement of financial statements, the departure of board members and other leaders, default on credit terms, and ultimately its filing for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York on May 25, 2017.
Because 21CO sought bankruptcy court protection from the fallout of its HIPAA breaches and other compliance and business issues, the 21CO Resolution Agreement required bankruptcy court approval. Funds for payment of the required $2.3 million resolution payment and other charges associated with the investigation apparently are being provided in part from breach liability insurance coverage provided under a policy issued by Beazley Insurance, as the Bankruptcy Court order directs Beazley Breach Response Policy No. W140E2150301 to make immediate payment to the OCR of the resolution amount and the payment of fees incurred by 21CO in connection with regulatory defense issues.
HIPAA & Data Breach Enforcement A Growing Health Plan Risk
Health plans and other Covered Entities, plan sponsors and plan fiduciaries, their business associates and other consultants and service providers and members of their workforce need to recognize that the FileFax, CCDC, 21CO and other resolution agreements are part of a growing trend, rather than isolated incidents of enforcement and that their exposure to investigation and enforcement is likely to continue to rise in the face of growing public and Congressional concern about privacy and data security.
While civil monetary penalty enforcement remains much more common than criminal prosecution, Covered Entities, their business associates and members of their workforce must understand that HIPAA enforcement and resulting liability is growing and that this trend is likely to continue if not increase.
While Department of Justice federal criminal prosecutions and convictions under HIPAA remain relatively rare, they occur and are growing. See e.g., Former Hospital Employee Sentenced for HIPAA Violations (Texas man sentenced to 18 months in federal prison for obtaining protected health information with the intent to use it for personal gain); Three Life Sentences Imposed On Man Following Convictions For Drug Trafficking, Kidnapping, Using Firearms and HIPAA Violations (drug king pin gets multiple 10 year consecutive prison terms for unauthorized access to private health information in violation of HIPAA; his health care worker friend sentenced for accessing electronic medical files and reporting information to him);Former Therapist Charged In HIPAA Case;Hefty Prison Sentence in ID Theft Case(former assisted living facility worker gets 37 months in prison after pleading guilty to wrongful disclosure of HIPAA protected information and other charges); Hefty Prison Sentence in ID Theft Case (former medical supply company owner sentenced to 12 years for HIPAA violations and fraud). While the harshest sentences tend to be associated with health care fraud or other criminal conduct, lighter criminal sentences are imposed against defendants in other cases as well. See e.g., Sentencing In S.C. Medicaid Breach Case (former South Carolina state employee sentenced to three years’ probation, plus community service, for sending personal information about more than 228,000 Medicaid recipients to his personal e-mail account.); HIPAA Violation Leads To Prison Term (former UCLA Healthcare System surgeon gets four months in prison after admitting he illegally read private electronic medical records of celebrities and others.)
The experiences of FileFax, Inc., CCDC, 21CO and these other OCR HIPAA Resolution Agreements provide strong evidence that that health plans and other Covered Entities and their business associates can anticipate that OCR will continue to zealously investigate HIPAA breaches and other HIPAA violations. Aside from OCR’s recurrent affirmations of its commitment to HIPAA enforcement, Covered Entities, their business associates and their leaders must recognize that public and Congressional privacy and data security concerns fueled by the ever growing stream of massive data breaches at Alteryx, eBay, Paypal owner TIO Networks, Uber, Equifax and a long list of other previously trusted prominent businesses are creating additional pressure upon OCR and other agencies to pursue even stronger and more aggressive HIPAA oversight and enforcement. Amid this growing concern, OCR, the FTC and other federal and state agencies with regulatory or enforcement authority over HIPAA or other data security and privacy concerns face increasing scrutiny and pressure to take meaningful action to regulate and enforce HIPAA and other laws intended to protect sensitive data even as private litigants enjoy increasing success in obtaining civil judgments from damages resulting from breaches of their PHI or other sensitive personal information using an expanding arsenal of legal theories of recovery. In the face of these growing concerns about privacy and data security, OCR can be expected to continue, if not increase its HIPAA compliance enforcement and oversight by OCR.
Furthermore, the experiences of FileFax, Inc., 21CO, CCDC and other Covered Entities and business associates that already have become the subject of OCR investigation or enforcement also reflect that HIPAA resolution payments or penalties paid to OCR and other costs and expenses associated with the defense and resolution of OCR’s investigations and enforcement actions typically only a portion of the financial and other business consequences that Covered Entities or business associates might expect to incur as a consequence of a breach of PHI or other substantial HIPAA violation or charge.
Beyond their potential HIPAA enforcement exposures following a HIPAA covered data breach or other violation, health care or other Covered Entities and members of their workforce experiencing breaches of ePHI or other PHI often also face FTC or other government investigations and enforcement relating their data breaches under the Fair and Accurate Credit Transactions Act (FACTA) and other federal or state identity theft, data privacy and security, electronic crimes and other laws. They or members of their workforce may face licensing board, credentialing, accreditation, contractual or other investigations or sanctions. Victims, business partners, investors and others often bring civil litigation to address losses or other injures associated with the breach or other misconduct. In addition, losses and disruptions in patients, plan member, vendor, investor, employee, management and other business relationships, and other business disruptions also are common.
Where the breach of other HIPAA violation involves a health plan, health plans, their fiduciaries and sponsors also need to give due consideration to the implications and exposures that might arise under the fiduciary responsibility rules of the Employee Retirement Income Security Act (ERISA). Beyond the direct exposure of their health plan to HIPAA and other compliance liabilities, health plan fiduciaries generally will want to consider whether their fiduciary responsibility under ERISA requires that prudent or other steps be taken to safeguard health plan information and maintain and administer their health plan in accordance with HIPAA and other laws. As a consequence, fiduciaries generally will want to ensure that they take and document prudent steps to evaluate, monitor and address HIPAA and other privacy and data security safeguards to minimize not only the liability exposures of their health plans, but also to help mitigate their own potential personal liability exposures that could arise or be asserted in response to a HIPAA breach or other HIPAA violation involving their health plans.
In the face of these growing risks and liabilities, Covered Entities and their business leaders face a strong imperative to clean up and maintain their HIPAA compliance and other data security to minimize their exposure to similar consequences. In addition to reaffirming the need for Covered Entities and their business associates to take the necessary steps to maintain and effectively demonstrate the adequacy of their own HIPAA compliance, the CCDC and FileFax Resolution Agreements alert Covered Entities and business associates of the advisability of greater oversight and risk management of their dealings and relationships with the other Covered Entities and business associates with access to or involvement with their PHI or other critical functions.
In light of these rises, leaders, investors, insurers, lenders and others involved with Covered Entities and their business associates should take steps to verify that the Covered Entities and their business associates not only maintain compliance with HIPAA and its business associate and other privacy, data security and breach notification and response requirements, but also maintain appropriate practices, insurance and other safeguards to prevent, respond to and mitigate exposures in the event of a breach of protected health information or other sensitive data. The bankruptcies and other financial and business fallout of HIPAA or other data breaches experienced by FileFax, Inc. 21CO and other HIPAA-covered and non-HIPAA regulated entities also makes clear that Covered Entities and business associates should anticipate that their own fallout from a breach or other HIPAA event and resulting responsibilities and consequences could be impacted by their own or a business associate’s financial distress or bankruptcy. Beyond the risk that their own or another entity’s breach, compliance issues, or other financial or business issues could trigger breach investigation, notice or other responsibilities for their own organizations, Covered Entities, business associates and their leaders also should evaluate and revise their HIPAA risk assessments and security plans to address foreseeable threats to the availability, access, retention and security of PHI and associated records and systems.
The Bankruptcy Court’s order to 21CO’s cyber liability insurer to pay the resolution payment required under the 21CO Resolution Agreement and other costs of investigation and defense also strongly suggests that the purchase of insurance and other arrangements for funding costs of defense or settlement should be included in these evaluations.
In light of these rises, leaders, investors, insurers, lenders and others involved with Covered Entities and their business associates should take steps to verify that the Covered Entities and their business associates not only maintain compliance with HIPAA, but also comply with data security, privacy and other information protection requirements arising under other laws, regulations, and contracts, as well as the practical business risks that typically follow the announcement of a breach. Considering these risks, Covered Entities and their business associates should recognize the advisability of taking meaningful, documented action to verify their existing compliance and ongoing oversight to ensure their organizations can demonstrate appropriate action to maintain appropriate practices, insurance and other safeguards to prevent, respond to and mitigate exposures in the event of a breach of protected health information or other sensitive data.
As part of these efforts, Covered Entities and their business associates should ensure that they have conducted, and maintain and are ready to produce appropriate policies and procedures backed up by a well-documented, up-to-date industry wide risk assessment of their organization’s susceptibility to breaches or other misuse of electronic or other protected health information. The starting point of these efforts should be to adopt and enforce updated written policies, procedures, technical and physical safeguards, processes and training to prevent the improper use, access, destruction or disclosure of patient PHI. Processes also should create, retain and be designed to cost effectively track, capture, and retain both all protected health information, its use, access, protection, destruction and disclosure, and the requisite supportive documentation supporting the appropriateness of those action to position the organization cost-effectively and quickly to fulfill required accounting, reporting and other needs in the event of a data breach, audit, participant inquiry or other event.
As part of this process, Covered Entities and business associates should maintain strong and ongoing processes for assessing and monitoring the adequacy of their policies and practices. In addition to ensuring that their organization has a comprehensive risk management and compliance assessment, Covered Entities and business associates need to conduct documented periodic audits and spot HIPAA audits and assessments. In doing so, they must use care to look outside the four corners of their Privacy Policies and core operating systems to ensure that their policies, practices, oversight and training address all protected health information within their operations on an entity wide basis. This entity-wide assessment should include communications and requests for information normally addressed to the Privacy Officer as well as requests and communications that could arise in the course of media or other public relations, practice transition, workforce communication and other operations not typically under the direct oversight and management of the Privacy Officer.
In connection with these efforts, the enforcement actions make clear that Covered Entities and business associates should adopt, implement and monitor PHI privacy, and security on an entity wide basis. These efforts should include general policies, practices and procedures as well as specifically tailored policies, processes and training to protect PHI and preserve HIPAA compliance throughout their organization. Testing and analysis should be conducted on a regular basis. Documented reassessments and testing should be performed in response to software, hardware or other changes or events that could impact security or other operations. Beyond security, attention also should cover business or system interruption including losses that might occur from the bankruptcy, termination of business or other disruptions of business associates or other parties. Attention should be paid both to protecting access and use of PHI and ePHI in the course of business as well as the transmission, transport, storage and destruction of records or systems containing such information.
Careful attention should be devoted to ensuring that business associate agreements as well and other processes provide for HIPAA compliance with respect to all PHI created, used, accessed or disclosed to business associates or others not part of their direct workforce or operating outside the core boundaries of their facilities.
Covered entities and their business associates also must recognize and design their compliance efforts and documentation recognizing that HIPAA compliance is a living process, which require both constant diligence about changes in systems or other events that may require reevaluation or adjustments, whether from changes in software, systems or processes or external threats.
Because the cost of responding to and investigating breaches or other compliance concern can be quite burdensome, Covered Entities and their business associates also generally will want to pursue options to plan for and minimize potential expenses in the design and administration of their programs as well as to minimize and cover the potentially extraordinary costs of breach or other compliance investigation and results that commonly arise following a breach or other compliance event. As a part of this planning, Covered Entities and their business associates also generally will want to add consideration of changes to federal tax rules on the deductibility of compliance penalty and other related compliance expenditures.
While the Internal Revenue Code traditionally has prohibited businesses and individuals from deducting penalties, fines and other expenditures arising from violations of federal or state laws under Section 162(f) of the Internal Revenue Code, Section 13306 of the Tax Cuts and Jobs Creation Act creates a new exception for amounts (other than amounts paid or incurred any amount paid or incurred as reimbursement to the government or entity for the costs of any investigation or litigation) that a taxpayer establishes meet the following requirements:
Constitute restitution (including remediation of property) for damage or harm which was or may be caused by the violation of any law or the potential violation of any law, or
Are paid to come into compliance with any law which was violated or otherwise involved in the investigation or inquiry into a violation or potential violation of any law;
Are identified as restitution or as an amount paid to come into compliance with such law, as the case may be, in the court order or settlement agreement, and
In the case of any amount of restitution for failure to pay any tax imposed under this title in the same manner as if such amount were such tax, would have been allowed as a deduction under this chapter if it had been timely paid.
Because the true effect of these modifications will be impacted by implementing regulations and a number of other special conditions and rules may impact the deductibility of these payments and the reporting obligations attached to their payment, Covered Entities will want to consult with legal counsel about these rules and monitor their implementation to understand their potential implications on compliance expenditures and penalties.
About The Author
Repeatedly recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, a Fellow in the American College of Employee Benefit Council, the American Bar Foundation and the Texas Bar Foundation and board certified in labor and employment law by the Texas Board of Legal Specialization, Cynthia Marcotte Stamer is a practicing attorney, management consultant, author, public policy advocate and lecturer widely known for health and managed care, employee benefits, insurance and financial services, data and technology and other management work, public policy leadership and advocacy, coaching, teachings, and publications. Nationally recognized for her work, experience, leadership and publications on HIPAA and other medical privacy and data use and security, FACTA, GLB, trade secrets and other privacy and data security concerns, Ms. Stamer has worked extensively with clients and the government on cybersecurity, technology and processes and other issues involved in the use and management of medical, insurance and other financial, workforce, trade secrets and other sensitive data and information throughout her career. Scribe or co-scribe of the ABA Joint Committee on Employee Benefits Agency meeting with OCR since 2011 and author of a multitude of highly regarded publications on HIPAA and other health care, insurance, financial and other privacy and data security, Ms. Stamer is widely known for her extensive and leading edge experience, advising, representing, training and coaching health care providers, health plans, healthcare clearinghouses, business associates, their information technology and other solutions providers and vendors, and others on HIPAA and other privacy, data security and cybersecurity design, documentation, administration, audit and oversight, business associate and other data and technology contracting, breach investigation and response, and other related concerns including extensive involvement representing clients in dealings with OCR and other Health & Human Services, Federal Trade Commission, Department of Labor, Department of Treasury, state health, insurance and attorneys’ general, Congress and state legislators and other federal officials.
Ms. Stamer also has an extensive contributes her leadership and insights with other professionals, industry leaders and lawmakers. Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others. You can get more information about her HIPAA and other experience here. For additional information about Ms. Stamer, see here, e-mail her hereor telephone Ms. Stamer at (214) 452-8297.
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Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
The $3.5 million payment that Fresenius Medical Care North America (FMCNA) is paying to the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) to settle potential liability for potentially much higher Civil Monetary Penalties (CMPs) to OCR for Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules violation charges under a voluntary resolution agreement illustrates the need for group health plans and their employer and other sponsors, fiduciaries, and vendors to make HIPAA compliance a key priority for 2018.
Widespread publicity and fallout from data breaches involving Equifax, Blue Cross, the Internal Revenue Service and many other giant organizations have ramped up public awareness and government concern about health care and other data security. The resulting pressure is adding additional fuel to the already substantial concern of OCR and other agencies about compliance with HIPAA and other data security and breach laws. Like the $2.3 million HIPAA resolution agreement OCR announced with now bankrupt radiation oncology and cancer care provider 21st Century Oncology, Inc. (21CO) earlier this year, see, e.g., $23M Penalty Small Part of 21st Century’s Data Breach Fallout; Offers Data Breach Lessons For Other Businesses, the growing list of OCR resolution agreements and other enforcement actions against FMCNA, 21CO and other covered entities and other legal and market fallout that covered entities and other organizations experience following the announcement of breaches or other security deficiencies make the case for why HIPAA-covered health care providers, health plans, health care clearinghouses and their business associates (covered entities) must prioritize HIPAA compliance and other medical and other data security protection, privacy and risk management a top priority in 2018.
When weighing the importance of HIPAA compliance and risk management for their health plans, health plans, their employer or other sponsors, fiduciaries, insurers, administrators and their business associates should resist the temptation to underestimate the exposure because providers, rather than health plans, have been the most common target of the majority of the announced OCR enforcement actions resulting in substantial civil monetary penalties or resolution payments.
Rather, they should take note of resolution agreements and other enforcement actions against health plans such as the $2.2 million settlement payment APFRE Life Insurance Company of Puerto Rico (MAPFRE) paid under a 2017 resolution agreement to resolve HIPAA violation charges OCR brought based on its investigation of a September 29, 2011 breach report MCPFRE made to OCR. The breach report indicated that a USB data storage device (described as a “pen drive”) containing ePHI was stolen from its IT department, where the device was left without safeguards overnight. According to the report, the USB data storage device included complete names, dates of birth and Social Security numbers. The report noted that the breach affected 2,209 individuals. MAPFRE informed OCR that it was able to identify the breached ePHI by reconstituting the data on the computer on which the USB data storage device was attached. OCR’s investigation revealed MAPFRE’s noncompliance with the HIPAA Rules, specifically a failure to conduct its risk analysis and implement risk management plans, contrary to its prior representations, and a failure to deploy encryption or an equivalent alternative measure on its laptops and removable storage media until September 1, 2014. MAPFRE also failed to implement or delayed implementing other corrective measures it informed OCR it would undertake.
The Privacy Rule requires that health plans, health care providers, health care clearinghouses (covered entities) and their vendors that qualify as “business associates” under HIPAA comply with detailed requirements concerning the protection, use, access, destruction and disclosure of protected health information. As part of these requirements, covered entities and their business associates must adopt, administer and enforce detailed policies and practices, assess, monitor and maintain the security of electronic protected health information (ePHI) and other protected health information, provide notices of privacy practices and breaches of “unsecured” ePHI, afford individuals that are the subject of protected health information certain rights and comply with other requirements as specified by the Privacy, Security and Breach Notification Rules. In addition, covered entities and business associates also must enter into a written and signed business associate agreement that contains the elements specified in Privacy Rule § 164.504(e) before the business associate creates, uses, accesses or discloses PHI of the covered entity. Furthermore, the Privacy Rule includes extensive documentation and keeping requirements require that covered entities and BAs maintain copies of these BAAs for a minimum of six years and to provide that documentation to OCR upon demand.
Violations of the Privacy Rule can carry stiff civil monetary penalties or even criminal penalties. Pursuant to amendments to HIPAA enacted as part of the HITECH Act, civil penalties typically do not apply to violations punished under the criminal penalty rules of HIPAA set forth in Social Security Act , 42 U.S.C § 1320d-6 (Section 1177).
Resolution Agreements like the $3.2 million FMCNA resolution agreement allow covered entities and business associates to resolve potentially substantially larger civil monetary penalty liabilities that OCR can impose under the civil enforcement provisions of HIPAA. As amended by the HITECH Act, the civil enforcement provisions of HIPAA empower OCR to impose Civil Monetary Penalties on both covered entities and BAs for violations of any of the requirements of the Privacy or Security Rules. The penalty ranges for civil violations depends upon the circumstances associated with the violations and are subject to upward adjustment for inflation. As most recently adjusted here effective September 6, 2016, the following currently are the progressively increasing Civil Monetary Penalty tiers:
A minimum penalty of $100 and a maximum penalty of $50,000 per violation, for violations which the CE or BA “did not know, and by exercising reasonable diligence would not have known” about using “the business care and prudence expected from a person seeking to satisfy a legal requirement under similar circumstances;”
A minimum penalty of $1,000 and a maximum penalty of $50,000 per violation, for violations for “reasonable cause” which do not rise to the level of “willful neglect” where “reasonable cause” means the “circumstances that would make it unreasonable for the covered entity, despite the exercise of ordinary business care and prudence, to comply with the violated Privacy Rule requirement;”
A minimum penalty of $10,000 and a maximum penalty of $50,000 per violation, for violations attributed to “willful neglect,” defined as “the conscious, intentional failure or reckless indifference to the obligation to comply” with the requirement or prohibition; and
A minimum penalty of $50,000 and a maximum penalty of $1.5 million per violation, for violations attributed to “willful neglect” not remedied within 30 days of the date that the covered entity or BA knew or should have known of the violation.
For continuing violations such as failing to implement a required BAA, OCR can treat each day of noncompliance as a separate violation. However, sanctions under each of these tiers generally are subject to a maximum penalty of $1,500,000 for violations of identical requirements or prohibitions during a calendar year. For violations such as the failure to implement and maintain a required BAA where more than one covered entity bears responsibility for the violation, OCR an impose Civil Monetary Penalties against each culpable party. OCR considers a variety of mitigating and aggravating facts and circumstances when arriving at the amount of the penalty within each of these applicable tiers to impose.
In addition to these potential civil liability exposures, covered entities, their business associates and other individuals or organizations that wrongfully use, access or disclose electronic or other protected health information also can face civil liability under various circumstances. The criminal enforcement provisions of HIPAA authorize the Justice Department to prosecute a person who knowingly in violation of the Privacy Rule (1) uses or causes to be used a unique health identifier; (2) obtains individually identifiable health information relating to an individual; or (3) discloses individually identifiable health information to another person, punishable by the following criminal sanctions and penalties:
A fine of up to $50,000, imprisoned not more than 1 year, or both;
If the offense is committed under false pretenses, a fine of up to $100,000, imprisonment of not more than 5 years, or both; and
If the offense is committed with intent to sell, transfer, or use individually identifiable health information for commercial advantage, personal gain, or malicious harm, a fine of up to $250,000, imprisoned not more than 10 years, or both.
Because HIPAA Privacy Rule criminal violations are Class A Misdemeanors or felonies, Covered Entities and business associates should include HIPAA compliance in their Federal Sentencing Guideline Compliance Programs and practices and need to be concerned both about criminal exposure for their own direct violations, as well as imputed organizational liability for violations committed by their employees or agents under the Federal Sentencing Guidelines, particularly where their failure to implement or administer these required compliance policies and practices or failure to properly investigate or redress potential violations enables, perpetuates or covers up the criminal breach.
The FMCNA resolution agreement is another example of a growing list of resolution agreements various HIPAA covered entities have entered into to resolve their exposure to potentially greater liability should OCR assess civil monetary penalties under HIPAA’s civil sanction scheme.
The breach reports filed on January 21, 2017 reported five separate breach incidents occurring between February 23, 2012 and July 18, 2012 implicating the electronic protected health information (ePHI) of five separate FMCNA owned covered entities (FMCNA covered entities): Bio-Medical Applications of Florida, Inc. d/b/a Fresenius Medical Care Duval Facility in Jacksonville, Florida (FMC Duval Facility); Bio-Medical Applications of Alabama, Inc. d/b/a Fresenius Medical Care Magnolia Grove in Semmes, Alabama (FMC Magnolia Grove Facility); Renal Dimensions, LLC d/b/a Fresenius Medical Care Ak-Chin in Maricopa, Arizona (FMC Ak-Chin Facility); Fresenius Vascular Care Augusta, LLC (FVC Augusta); and WSKC Dialysis Services, Inc. d/b/a Fresenius Medical Care Blue Island Dialysis (FMC Blue Island Facility).
OCR concluded its investigation showed the breaches resulted because FMCNA failed to conduct an accurate and thorough risk analysis of potential risks and vulnerabilities to the confidentiality, integrity, and availability of all of its ePHI. OCR also concluded:
The FMCNA covered entities impermissibly disclosed the ePHI of patients by providing unauthorized access for a purpose not permitted by the Privacy Rule.
FMC Ak-Chin failed to implement policies and procedures to address security incidents.
FMC Magnolia Grove failed to implement policies and procedures that govern the receipt and removal of hardware and electronic media that contain ePHI into and out of a facility; and the movement of these items within the facility.
FMC Duval and FMC Blue Island failed to implement policies and procedures to safeguard their facilities and equipment therein from unauthorized access, tampering, and theft, when it was reasonable and appropriate to do so under the circumstances.
FMC Magnolia Grove and FVC Augusta failed to implement a mechanism to encrypt and decrypt ePHI, when it was reasonable and appropriate to do so under the circumstances.
In addition to a $3.5 million monetary settlement, a corrective action plan requires the FMCNA covered entities to complete a risk analysis and risk management plan, revise policies and procedures on device and media controls as well as facility access controls, develop an encryption report, and educate its workforce on policies and procedures.
HIPAA & Data Breach Enforcement A Growing Health Plan Risk
Health plans and other covered entities, plan sponsors and plan fiduciaries, their business associates and other consultants and service providers and members of their workforce need to recognize that the FMCNA and other resolution agreements are part of a growing trend, rather than isolated incidents of enforcement.
While civil monetary penalty enforcement remains much more common than criminal prosecution, covered entities, their business associates and members of their workforce must understand that HIPAA enforcement and resulting liability is growing.
While Department of Justice federal criminal prosecutions and convictions under HIPAA remain relatively rare, they occur and are growing. See e.g., Former Hospital Employee Sentenced for HIPAA Violations (Texas man sentenced to 18 months in federal prison for obtaining protected health information with the intent to use it for personal gain); Three Life Sentences Imposed On Man Following Convictions For Drug Trafficking, Kidnapping, Using Firearms and HIPAA Violations (drug king pin gets multiple 10 year consecutive prison terms for unauthorized access to private health information in violation of HIPAA; his health care worker friend sentenced for accessing electronic medical files and reporting information to him);Former Therapist Charged In HIPAA Case;Hefty Prison Sentence in ID Theft Case(former assisted living facility worker gets 37 months in prison after pleading guilty to wrongful disclosure of HIPAA protected information and other charges); Hefty Prison Sentence in ID Theft Case (former medical supply company owner sentenced to 12 years for HIPAA violations and fraud). While the harshest sentences tend to be associated with health care fraud or other criminal conduct, lighter criminal sentences are imposed against defendants in other cases as well. See e.g., Sentencing In S.C. Medicaid Breach Case (former South Carolina state employee sentenced to three years’ probation, plus community service, for sending personal information about more than 228,000 Medicaid recipients to his personal e-mail account.); HIPAA Violation Leads To Prison Term (former UCLA Healthcare System surgeon gets four months in prison after admitting he illegally read private electronic medical records of celebrities and others.)
Beyond the direct exposure of their health plan to HIPAA and other compliance liabilities, health plan fiduciaries also should note that their fiduciary responsibility under the Employee Retirement Income Security Act (ERISA) likely includes taking prudent steps to safeguard health plan information and maintain and administer their health plan in accordance with HIPAA. As a consequence, fiduciaries generally will want to ensure that they take and document prudent steps to evaluate, monitor and address HIPAA and other privacy and data security safeguards to minimize not only the liability exposures of their health plans, but also to help mitigate their own potential personal liability exposures that could arise or be asserted in response to a HIPAA breach or other HIPAA violation involving their health plans.
Coming on the heels of an already lengthy and growing list of OCR high dollar HIPAA enforcement actions, the FMCNA and other resolution agreements and civil monetary penalties these and other announced enforcement actions clearly reflect that OCR takes HIPAA compliance seriously and stands ready to impose substantial penalties when it finds violations in connection with breach notice investigations. Viewed in the context of these and other enforcement actions, the FMCNA Resolution Agreement and others clearly reflect the time for complacency in HIPAA compliance and leniency in HIPAA HIPAA enforcement are passed. Rather, these and other enforcement actions make clear why health care providers, health plans, healthcare clearinghouses and their business associates must make HIPAA compliance a priority now.
Covered entities and business associates also should recognize their potential responsibilities and risks for breaches or other improper conduct concerning patient or other sensitive personal financial information, trade secrets or other data under a wide range of laws beyond HIPAA and its state law equivalents. As documented by the media coverage of the legal and business woes of Alteryx, eBay, Paypal owner TIO Networks, Uber, Equifax and a long list of other previously trusted prominent businesses have and continue to incur from data breaches within their organizations, health care or other covered entities experiencing breaches often also face FTC or other government investigations and enforcement under the Fair and Accurate Credit Transactions Act (FACTA) and other federal or state identity theft, data privacy and security, electronic crimes and other rules as well as business losses and disruptions; civil litigation from breach victims, shareholders and investors, and business partners as well as OCR, FTC, and state data security regulation enforcement. Amid this growing concern, OCR has indicated that it intends to continue to diligently both seek to support and encourage voluntary compliance by covered entities and their business associates and investigate and enforce HIPAA against HIPAA covered entities and their business associates that fail to adequately safeguard PHI and ePHI in accordance with HIPAA. In the face of these growing risks and liabilities, covered entities and their business leaders face a strong imperative to clean up and maintain their HIPAA compliance and other data security to minimize their exposure to similar consequences.
In light of these rises, leaders, investors, insurers, lenders and others involved with covered entities and their business associates should take steps to verify that the covered entities and their business associates not only maintain compliance with HIPAA, but also comply with data security, privacy and other information protection requirements arising under other laws, regulations, and contracts, as well as the practical business risks that typically follow the announcement of a breach. Considering these risks, covered entities and their business associates must recognize and take meaningful, documented action to verify their existing compliance and ongoing oversight to ensure their organizations can demonstrate appropriate action to maintain appropriate practices, insurance and other safeguards to prevent, respond to and mitigate exposures in the event of a breach of protected health information or other sensitive data.
In response to these growing risks and concerns, covered entities and their business associates should ensure that they have conducted, and maintain and are ready to produce appropriate policies and procedures backed up by a well documented, up-to-date industry wide risk assessment of their organization’s susceptibility to breaches or other misuse of electronic or other protected health information. The starting point of these efforts should be to adopt and enforce updated written policies, procedures, technical and physical safeguards, processes and training to prevent the improper use, access, destruction or disclosure of patient PHI. Processes also should create, retain and be designed to cost effectively track, capture, and retain both all protected health information, its use, access, protection, destruction and disclosure, and the requisite supportive documentation supporting the appropriateness of those action to position the organization cost-effectively and quickly to fulfill required accounting, reporting and other needs in the event of a data breach, audit, participant inquiry or other event.
As part of this process, covered entities and business associates should start by reviewing and updating their policies, HIPAA audits and assessments and other documentation and processes. In doing so, they must use care to look outside the four corners of their Privacy Policies and core operating systems to ensure that their policies, practices, oversight and training address all protected health information within their operations on an entity wide basis. This entity-wide assessment should include both communications and requests for information normally addressed to the Privacy Officer as well as requests and communications that could arise in the course of media or other public relations, practice transition, workforce communication and other operations not typically under the direct oversight and management of the Privacy Officer.
In connection with these efforts, the enforcement actions make clear that Covered Entities and business associates should adopt, implement and monitor PHI privacy, and security on an entity wide basis. These efforts should include both general policies, practices and procedures as well as specifically tailored policies, processes and training to protect PHI and preserve HIPAA compliance throughout their organization as well as the business associate agreements and other processes to provide for HIPAA compliance with respect to protected health information created, used, accessed or disclosed to business associates or others not part of their direct workforce or operating outside the core boundaries of their facilities.
Covered entities and their business associates also must recognize and design their compliance efforts and documentation recognizing that HIPAA compliance is a living process, which require both constant diligence about changes in systems or other events that may require reevaluation or adjustments, whether from changes in software, systems or processes or external threats.
Because the cost of responding to and investigating breaches or other compliance concern can be quite burdensome, covered entities and their business associates also generally will want to pursue options to plan for and minimize potential expenses in the design and administration of their programs as well as to minimize and cover the potentially extraordinary costs of breach or other compliance investigation and results that commonly arise following a breach or other compliance event. As a part of this planning, covered entities and their business associates also generally will want to add consideration of changes to federal tax rules on the deductibility of compliance penalty and other related compliance expenditures.
While the Internal Revenue Code traditionally has prohibited businesses and individuals from deducting penalties, fines and other expenditures arising from violations of federal or state laws under Section 162(f) of the Internal Revenue Code, Section 13306 of the Tax Cuts and Jobs Creation Act creates a new exception for amounts (other than amounts paid or incurred any amount paid or incurred as reimbursement to the government or entity for the costs of any investigation or litigation) that a taxpayer establishes meet the following requirements:
Constitute restitution (including remediation of property) for damage or harm which was or may be caused by the violation of any law or the potential violation of any law, or
Are paid to come into compliance with any law which was violated or otherwise involved in the investigation or inquiry into a violation or potential violation of any law;
Are identified as restitution or as an amount paid to come into compliance with such law, as the case may be, in the court order or settlement agreement, and
In the case of any amount of restitution for failure to pay any tax imposed under this title in the same manner as if such amount were such tax, would have been allowed as a deduction under this chapter if it had been timely paid.
Because the true effect of these modifications will be impacted by implementing regulations and a number of other special conditions and rules may impact the deductibility of these payments and the reporting obligations attached to their payment, covered entities will want to consult with legal counsel about these rules and monitor their implementation to understand their potential implications on compliance expenditures and penalties.
About The Author
Repeatedly recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, a Fellow in the American College of Employee Benefit Council, the American Bar Foundation and the Texas Bar Foundation and board certified in labor and employment law by the Texas Board of Legal Specialization, Cynthia Marcotte Stamer is a practicing attorney, management consultant, author, public policy advocate and lecturer widely known for health and managed care, employee benefits, insurance and financial services, data and technology and other management work, public policy leadership and advocacy, coaching, teachings, and publications. Nationally recognized for her work, experience, leadership and publications on HIPAA and other medical privacy and data use and security, FACTA, GLB, trade secrets and other privacy and data security concerns, Ms. Stamer has worked extensively with clients and the government on cybersecurity, technology and processes and other issues involved in the use and management of medical, insurance and other financial, workforce, trade secrets and other sensitive data and information throughout her career. Scribe or co-scribe of the ABA Joint Committee on Employee Benefits Agency meeting with OCR since 2011 and author of a multitude of highly regarded publications on HIPAA and other health care, insurance, financial and other privacy and data security, Ms. Stamer is widely known for her extensive and leading edge experience, advising, representing, training and coaching health care providers, health plans, healthcare clearinghouses, business associates, their information technology and other solutions providers and vendors, and others on HIPAA and other privacy, data security and cybersecurity design, documentation, administration, audit and oversight, business associate and other data and technology contracting, breach investigation and response, and other related concerns including extensive involvement representing clients in dealings with OCR and other Health & Human Services, Federal Trade Commission, Department of Labor, Department of Treasury, state health, insurance and attorneys’ general, Congress and state legislators and other federal officials.
Ms. Stamer also has an extensive contributes her leadership and insights with other professionals, industry leaders and lawmakers. Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, SHRM, HIMMS, the American Bar Association, the Health Care Compliance Association, a multitude of health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others. You can get more information about her HIPAA and other experience here. For additional information about Ms. Stamer, see here, e-mail her hereor telephone Ms. Stamer at (214) 452-8297.
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NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Businesses with employees that travel regularly or for the occasional training or other isolated business trip should review and update their travel related policies, practices, and procedures for evolving laws, risks and management needs.
To start with, 2017 tax reforms impact the tax treatment of various employee relocation and travel related expense. Businesses should review these changes and make appropriate updates now to avoid headaches for the business and its employees later.
While many employers mostly focus upon travel expense management, reporting and reimbursement, smart employers also understand there’s much more to consider.
First and foremost, since employees often forget that the purpose of business travel is carrying out the business of the company and not a boondoggle, business travel policies and communications should make clear to employees that their trip is about work. Policies should make clear to employees their tesponsibility for attending meetings and performing other business-related responsibilities as well as for conducting themselves at all times consistent with company policy and to promote a positive impression of the employer and the company.
Naturally all travel policies also should require compliance with all applicable laws and customs. For international travel, this includes compliance with the Foreign Corrupt Practices Act, the Patriot Act, U.S. and foreign immigration and customs, and other relevant laws, rules and customs. However, domestic travelers also should be reminded if their duty to comply with local laws as well.
Amid the current “Me Too” frenzy, however, companies also should consider addressing other potentially risky behavior that tends to arise when employees travel on business. Unfortunately history proves that many employees actually do need to be told and reminded to abstain from inappropriate alcohol, sexual harassment or other behavior that could create liability or embarrassment for the company when traveling for business or engaging in other activities. Because business travel tends to blur distinctions between business and personal time, most businesses will want to establish and communicate high expectations concerning on and off-duty conduct when traveling on business to head off potential problems. Updated direction about hosting or participating in entertainment and other social activities with co-workers, customers, vendors, prospects and others also often are warranted.
Beyond communicating expectations of employees while on business travel, businesses also should confirm their company’s compensation, expense reimbursement, timekeeping and reporting, hours of work, and other policies comply with current laws and capture and retain appropriate documentation.
Businesses must recognize, for instance, that training and other work related travel typically is considered hours of work for wage an hour, safety and various other purposes. Employers should confirm their policies and practices properly capture and count all required hours of compensable work and pay hourly workers for time on the road properly in accordance with Labor Department requirements. Many employers unfortunately get nailed for overtime violations because of assumptions or misunderstandings of rules. For instance, many employers improperly fail to count air travel and certain other travel time as compensable when required to do so under Labor Department Fair Labor Standards Act (FLSA) rules. Likewise, improperly structured expense reimbursement policies or practices can bump up overtime pay liability by requiring the employer to include otherwise excludable expense reimbursements payments in the hourly rate of pay when calculating regular and overtime pay. Employers must ensure they understand these rules and take appropriate steps to capture, track, report and pay for time and expenses upfront to defend an audit or other challenge effectively and efficiently.
Reviewing and tightening workforce travel related policies, practices and procedures to meet current laws, business and social expectations and management needs can boost the bang businesses realize for their business travel buck while mitigating a host of legal and business risks.
About The Author
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation; Former Chair of the RPTE Employee Benefits and Compensation Committee, a current Co-Chair of the Committee, and the former Chair of its Welfare Benefit and its Defined Compensation Plan Committees and former RPTE Joint Committee on Employee Benefits Council (JCEB) Representative, Cynthia Marcotte Stamer is a Martindale-Hubble “AV-Preeminent” practicing attorney and management consultant, author, public policy advocate, author and lecturer repeatedly recognized for her 30 plus years’ of work and pragmatic thought leadership, publications and training on health, pension and other employee benefit, insurance, labor and employment, and health care fiduciary responsibility, payment, investment, contracting and other design, administration and compliance concerns as among the “Top Rated Labor & Employment Lawyers in Texas,” a “Legal Leader,” a “Top Woman Lawyer” and with other awards by LexisNexis® Martindale-Hubbell®; as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, in International Who’s Who of Professionals and with numerous other awards and distinctions.
Highly valued for her ability to meld her extensive legal and industry knowledge and experience with her talents as an insightful innovator and pragmatic problem solver, Ms. Stamer advises, represents and defends employer, union, multi-employer, association and other employee benefit plan sponsors, insurers and managed care organizations, fiduciaries, plan administrators, technology and other service providers, government and community leaders and others about health and other employee benefit and insurance program and policy design and innovation, funding, documentation, administration, communication, data security and use, contracting, plan, public and regulatory reforms and enforcement, and other risk management, compliance and operations matters. Her experience encompasses leading and supporting the development and defense of innovative new policies, programs, practices and solutions; advising and representing clients on routine plan establishment, plan documentation and contract drafting and review, administration, change and other compliance and operations; crisis prevention and response, compliance and risk management audits and investigations, enforcement actions and other dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, Justice, Securities and Exchange Commission, Education and other federal agencies, state legislatures, attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators, and various other foreign and domestic governmental bodies and agencies. She also provides strategic and other supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness. Alongside her extensive legal and operational experience, Ms. Stamer also is recognized for her work as a public and regulatory policy advocate and community leader with a gift for finding pragmatic solutions and helping to forge the common ground necessary to build consensus. Best known for her domestic public policy and community leadership on health care and insurance reform, Ms. Stamer’s lifelong public policy and community service involvement includes service as a lead consultant to the Government of Bolivia on its pension privatization project, as well as extensive legislative and regulatory reform, advocacy and input workforce, worker classification, employee benefit, public health and healthcare, social security and other disability and aging in place, education, migration reforms domestically and internationally throughout her adult life. In addition to her public and regulatory policy involvement, Ms. Stamer also contributes her service and leadership to a professional and civic organizations and efforts including her involvement as the Founder and Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence; Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; Vice Chair, Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group; current Fiduciary Responsibility Committee Co-Chair and Membership Committee member of the ABA RPTE Section; former RPTE Employee Benefits and Other Compensation Group Chair, former Chair and Co-Chair of its Welfare Plans Committee, and Defined Contribution Plans Committee; former RPTE Representative to ABA Joint Committee on Employee Benefits Council; former RPTE Representative to the ABA Health Law Coordinating Counsel; former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, former Board Member, Continuing Education Chair and Treasurer of the Southwest Benefits Association; Vice President of the North Texas Healthcare Compliance Professionals Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; past Dallas World Affairs Council Board Member, and in leadership of many other professional, civic and community organizations. Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, the Society of Professional Benefits Administrators, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other public policy advocacy and other professional and civic organizations and involvements. Through these and other involvements, she helps develop and build solutions, build consensus, garner funding and other resources, manage compliance and other operations, and take other actions to identify promote tangible improvements in health care and other policy and operational areas.
Before founding her current law firm, Cynthia Marcotte Stamer, P.C., Ms. Stamer practiced law as a partner with several prominent national and international law firms for more than 10 years before founding Cynthia Marcotte Stamer, P.C. to practice her unique brand of “Solutions law™” and to devote more time to the pragmatic policy and system reform, community education and innovation, and other health system improvement efforts of her PROJECT COPE: the Coalition on Patient Empowerment initiative.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Health plans, their employer, union, insurer or other sponsors, fiduciaries, administrative or other service providers and their vendors and advisors should act immediately to investigate if any action is needed to protect electronic protected health information or other sensitive data and systems in response to the following cyber risk alert from the Department Of Health and Human Services Office of Civil Rights.
DISCLAIMER: This product is provided “as is” for informational purposes only. The Department of Health and Human Services (HHS) does not provide warranties of any kind regarding any information contained within. HHS does not endorse any commercial product or service referenced in this product or otherwise. Further dissemination of this product is governed by the Traffic Light Protocol (TLP) marking in the header.
TLP: WHITE information may be distributed without restriction (subject to standard copyright rules).
Healthcare and Public Health Sector partners-
The attached report is a technical update to the previously distributed HPH Cyber Notice covering chip vulnerabilities named Meltdown and Spectre. Both Meltdown and Spectre are vulnerabilities in how computer chips handle data that have the potential to expose sensitive information, such as protected health information (PHI), being processed on the chip. As this information is protected from disclosure under HIPAA, Healthcare and Public Health (HPH) entities should employ risk management processes to address these vulnerabilities and ensure the security of medical records and other PHI.
Major concerns for the HPH sector include but are not limited to:
• Challenges identifying vulnerable medical devices and accessory medical equipment and ensuring patches are validated to prevent impacts to the intended use.
• Cloud Computing: Potential PHI or Personally Identifiable Information (PII) data leakage in shared computing environments
• Web browsers: Possible PHI/PII data leakage
• Patches: Potential for service degradation and/or interruption from patches
Employer and other sponsors, fiduciaries, administrators and insurers of the Employee Retirement Income Security Act (ERISA)-covered employee benefit plans making disability-based benefit determinations should confirm that their plan documents, summary plan descriptions, procedures and claims and appeals notices are updated and ready to meet tightened new federal rules on disability-based benefit determinations applicable to all post December 31, 2017 claims under the restated Final Rule on Claims Procedure for Plans Providing Disability Benefits (“Disability Claims Rule”). Given the nature and scope of these new requirements, most covered plans will require specific action be taken before the new rules take effect to update plan documents, summary plan descriptions, notices, contracts, processes and procedures to meet the January 1, 2018 deadline.
The Disability Claims Rule published by the Department of Labor Employee Benefit Security Administration (“EBSA”) on December 19, 2016 generally require all ERISA-covered employee benefit plans making any disability benefit or other determination conditioned upon a finding of disability to comply with the new Disability Claims Rule for any claim received after December 31, 2017.
The new Final Disability Claims Rule will apply to all disability determinations made under any ERISA-covered plan after December 31, 2017, regardless of how the plan characterizes the benefit or whether the plan is a health or other welfare, pension, 401(k) plan or other savings plan.
Significant affirmative action is likely required to prepare covered plans to meet these requirements since most plans historically have not followed the detailed claims and appeals notification, independent and impartial decision-making, rescission, deemed exhaustion, “culturally and linguistically appropriate” and other procedural protections and safeguards based on EBSA’s previously adopted Patient Protection and Affordable Care Act (“ACA”) group health plan claims and appeals rules, which the Disability Claims Rules extend and make applicable to all ERISA-covered plans making benefit determinations based on disability. Covered plans making disability-based benefit or other covered determinations are likely to require updates to plan documents, insurance or administrative services contracts, summary plan descriptions and other plan communications, claims and appeals notices, and other related processes, procedures and documentation to meet these new requirements. Since certain requirements of the Disability Claims Rules like the summary plan description advance disclosure requirements are required to be provided before the claim is received, plans and their sponsors risk being accused of violating these requirements by waiting to update plans, their processes and materials until after claim involving a disability based determination arises.
Ensuring that impacted plans are updated before the January 1, 2018 deadline is important because the Disability Claims Rule, like the group health plan claims and appeals rules upon which it is based, also states that noncompliance with any of its requirements empowers a participant to immediately sue the plan for enforcement if his rights without further complying the the plan’s administrative procedures. Moreover, failing to comply with summary plan disclosure or claims or appeal adverse benefit determination notification requirements also may subject the plan administrator to administrative penalties under ERISA section 514(c). Consequently, employers and other plan sponsors, fiduciaries, administrators and insurers will want to act quickly to ensure that their plans, their summary plan descriptions and other communications, notices, processes, contracts and procedures are updated appropriately before January 1, 2018.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediatepast RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, BenefitsMagazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
The National Labor Relations Board is inviting employers to another interested person’s to provide input to the NLRB about it’s union representation election rules By responding by February 12, 2018 to a Request for Information the NLRB will publish in the Federal Register today (12:13/17).
The Request for Information in will ask for public input regarding three questions about the Board’s 2014 Election Rule, which modified the Board’s representation-election procedures published at at 29 CFR parts 101 and 102:
1. Should the 2014 Election Rule be retained without change?
2. Should the 2014 Election Rule be retained with modifications? If so, what should be modified?
3. Should the 2014 Election Rule be rescinded? If so, should the Board revert to the Representation Election Regulations that were in effect prior to the 2014 Election Rule’s adoption, or should the Board make changes to the prior Representation Election Regulations? If the Board should make changes to the prior Representation Election Regulations, what should be changed?
The Request for Information was approved by Board Chairman Philip A. Miscimarra and Board Members Marvin E. Kaplan and William J. Emanuel. Board Members Mark Gaston Pearce and Lauren McFerran dissented.
The election rules published during the Obama administration highly controversial to most employers. The Obama Administration’s publication of the prounion rules was part of a broader series of legislative and regulatory actions by that administration that sought to expand union organizing and other powers. While courts overruled many of these regulatory efforts, the fast track election rules adopted during the Obama Administration have not been struck down and therefore remain in force. Many employers view these rules as giving union organizers unfair advantage in union organizing elections.
Tomorrow’s invitation for public input on the Obama Administration election rule comes after President Trump filled vacancies on the NLRB after he took office. Many NLRB watchers expect these Trump appointees will cause the NLRB to modify or reverse the Obama Administration election and other rules .
The official Request for Information as approved by the Board, including the dissenting views, may be found here.
Responses to these questions will be accepted from Wednesday, December 13, 2017 to Monday, February 12, 2018 (within 60 days after publication in the Federal Register). Employers and others interested in seeking changes to the election rule should submit comments with this period.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
The Justice Department’s report Tuesday that the Justice Department spent $3.2 million on Special counsel Robert Mueller’s Russia probe its first four-and-a-half months highlights the importance for leaders accountable for their organizations’s Federal Sentencing Guideline, sexual harassment and other corporate compliance programs to appropriately plan and budget for potential investigation and defense costs as part of their compliance and risk management planning.
Conducting an internal investigation or defending a government or other allegation of wrongdoing often proves surprisingly expensive. While how much an internal investigation costs can vary widely depending on the issue, its potential civil and criminal liability and public relations implications on the organization and its management, it’s timing, the adequacy of the pre-event compliance management and record keeping relating to the issue, and a host of other concerns, investigation and defense costs often become largely irrelevant when an organization is required to investigate or defend against charges of legal or other business misconduct that expose the organization or its leadership to potentially devastating legal or business consequences. When these events happen, organizations and their leaders often see little option to spend whatever is necessary to defend their organization and its reputation.
Compared to the reported internal investigation and defense expenditures of private sector organizations that have faced these these make or break investigations, the Justice Department’s reported expenditures to date on the Russian probe look small.
For instance, Twenty-First Century Fox in March, 2017 Securities and Exchange Commission (SEC) filings disclosed spending $45 million tied to litigation related to harassment allegations in the 9 first three quarters of 2017 and $10 million “related to settlements of pending and potential litigations” during its fiscal third quarter as well as having received investigative inquiries and stockholder demands to inspect the books and records of the company which could lead to future litigation in the aftermath of sexual harassment allegations at Fox News.
In contrast, Avon Products spent nearly $500 million conducting its internal investigation before paying a $135m fine to the US government to settle charges it violated the Foreign Corrupt Practices Act by giving Chinese authorities $8 million in gifts and cash while it sought to obtain the first “direct sell” license in China.
These and other publicly disclosed expenditures make clear that corporate officers and directors need to reassess their investment in compliance both to strengthen the effectiveness of their efforts and to plan to deal with the financial, legal, operational and other costs of investigating and defending potential charges.
Aboaut The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
The National Labor Relations Board (NLRB) announced today the appointment of Jennifer A. Abruzzo to serve as NLRB’s Acting General Counsel.
Although Ms. Abruzzo original began her legal career as a civil litigation attorney in the medical malpractice division of a South Florida firm, she has spent almost twenty-three years working for the NLRB in various capacities, including as Field Attorney, Supervisory Field Attorney and Deputy Regional Attorney in the Miami, Florida office, as well as Deputy Assistant General Counsel in the Division of Operations-Management in Washington, DC, where she oversaw Regional operations in the Northeast and Midwest.
Prior to becoming Deputy General Counsel, Ms. Abruzzo served as the Executive Assistant to Acting General Counsel Lafe E. Solomon, and detailed in that role for General Counsel Ronald E. Meisburg. In 2011 her involvement at the NLRB drew public attention when an e-mail sent to her by then NLRB Deputy Assistant General Counsel Joseph Baniszewski forwarding a political cartoon mocking the state of South Carolina with regard to Boeing Corporation’s decision to locate its manufacturing facility to South Carolina was made public.
During her career with NLRB, she has participated in the litigation of numerous high profile cases.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
This month’s annual October Stop Bullying Month observances are a great time for employers to deter sexual, racial, religious, national Origin, disability discrimination and harassment, retaliation and other illegal or otherwise counterproductive bullying in their workplaces.
Aside from obvious legal exposures that often attend from many versions of workplaces bullying, unfair or heavy handed tactics of workplace bullies often pervasively disrupt workplace productivity and operations by undermining performance, feedback, initiative, employee retention and a host of other ways.
Seize the opportunity to boost your organization’s legal and operational exposures non discrimination, anti-harassment, and other workplace bullying policies by leveraging the visibility and resources of this month’s anti-bullying activities.
Checkout StopBullying.gov for more information and free resources.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Qualified profit-sharing and pension plan sponsors, fiduciaries, administrators and service providers should check of this recent guidance on various qualified pension and profit sharing plan qualification:
Final regulations – mortality tables for determining present value – Provide mortality tables that single-employer defined benefit plan sponsors must use to determine minimum required contribution and guidance about construction of substitute mortality tables (T.D. 9826).
Organizations and service providers involved in defined benefit plans should review their programs and make adjustments as warranted.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment;a member and policy technical adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, Insurance Thought Leaders, and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here including:
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and uhave no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
As businesses continue to struggle to comply with the growing plethora of federal and state laws mandating data security, the identity theft and cyber security epidemic keeps growing.
As human resources and other business leaders work to guard their own data and respond to employee demands for assistance in responding to breaches of their personal financial and other data, this weeks’ announcement that embattled credit monitoring giant Equifax has been awarded the exclusive contract to provide taxpayer identification and fraud prevention services to the Internal Revenue Service has many questioning whether these investments are futile.
The IRS’ announcement comes despite the September 7, 2017 announcement by Equifax of a data breach of its records impacting sensitive personal information of millions of consumers including:
The names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers of an estimated 143 million U.S. consumers;
Credit card numbers for approximately 209,000 U.S. consumers,
Certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers,and
Personal information for certain U.K. and Canadian consumers.
The huge breach already was creating many headaches for many businesses and their human resources departments before the IRS announced the award of the contract to Equifax. Due to the massive size of the breach, mist companies have been required to respond to concerns of workers impacted directly by the breach as well as requests of employees and identity theft protection companies that the business consider offering cybersecurity protection for employees or customers.
Beyond helping their workforce understand and cope with the news, many businesses and employee benefit plans also face the added headache of needing to investigate and respond to concerns about their own potential responsibilities to provide breach notification or take other actions. This added headache arises due to their or their plans’ use of Equifax or vendors utilizing Equifax to run employee or vendor background checks or carry out internal employee or employee benefit plan, customer or other business activities. These involvements often give rise to duties to conduct investigations and potentially provide notification or other responses to employees, applicants, benefit plan members, contractors or customers whose data may have been impacted under the Fair and Accurate Credit Transactions Act (FACTA), the Health Insurance Portability and Accountability Act (HIPAA), the Employee Retirement Income Security Act (ERISA) Fiduciary Responsibility rules or various other federal and state laws and regulations, vendor contracts or their own data privacy or security policies.
When notification is recommended or required, human resources and other business leaders also have to consider if modifications should be considered to standard protocols recommended to data breach victims. Notification and registration as an identity theft victim with Equifax long has been a standard part of the federal and state government recommended protocol for recommended to consumers impacted by identity theft or other data breaches. See,e.g., IRS Taxpayer Guide To Identity Theft. Although government agencies as of yet have not changed this recommendation to remove Equifax reporting, many consumers and others view reporting to Equifax as akin to the fox watching the hen house. Consequently, employers and other parties helping consumers respond to the breach often receive push back or questions from consumers about the appropriateness and security reporting to Equifax in light of its breach.
Beyond evaluating and handling their own legal responsibilities to investigate and deal with any breach impacting their data, employers and other business leaders also likely are or should consider what claims against Equifax, other vendors and business partners involved with Equifax and their own liability insurers are available and warranted to help cover the costs and potential liabilities for the business arising from the breach and it’s fall out.
As employers and other businesses work through these issues, They should keep in mind that the fallout is likely to continue for years and be further complicated by past and subsequent breaches impacting other governmental and private organizations. Human resources, employee benefits and other businesses and their leaders can expect to experience challenges dealing with fraudulent uses of misappropriated information as well as demands that they tighten up their background check, data security and usage and other practices and documentation to mitigate risks from the compromised data.
Human resources, employee benefits and other business leaders need to secure the assistance of counsel experienced in guiding their organizations through these and other challenges.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes. Author of numerous works on privacy and data security, Ms. Stamer‘s experience includes involvement in cyber security and other data privacy and security matters for more than 20 years.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:
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NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
Employers beware of potential National Labor Relations Act unfair labor practices risks that may arise from their adoption or enforcement of overly broad or restrictive workplace recording, acceptable use, workplace conduct, commitment-to-integrity or other policies that might be construed to prohibit or deter employees from exercising protected organization or other collective bargaining rights under the National Labor Relations Act (NLRA) in light of the Fifth Circuit’s July 25, 2017 T-Mobile United States, Inc. v. Nat’l Labor Relations Bd. decision.
In T-Mobile v. NLRB, the Fifth Circuit upheld and ordered the enforcement of a National Labor Relations Board (NLRB) ruling that telecommunications industry employers T-Mobile and MetroPCS (T-Mobile) engaged in unfair labor practices in violation of Section 8 of the NLRA by maintaining a policy that prohibited all photography and audio or video recording in its workplace without the employer’s prior permission (“Recording Policy”).
The Fifth Circuit’s ruling arose from an appeal filed by T-Mobile with the Fifth Circuit, challenging a NLRB ruling that the Recording Policy, a workplace conduct policy, a commitment-to-integrity policy and an Acceptable Use Policy included in the T-Mobile employee handbook violated the NLRA because “employees would reasonably construe the language to prohibit Section 7 activity and therefore constituted unfair labor practices prohibited under Section 8 of the NLRA. (Note: T-Mobile did not appeal the NLRB’s findings that 7 other policies also violated the NLRA).
While the Fifth Circuit’s decision only upheld the unfair labor practice determination based on the Recording policy, the decision makes clear that its findings concerning each of the four employment policies subject to the appeal as well as other employment policies could come out differently in other cases based on the contextual evidence reflected in the factual record concerning the particular employment policy and the context in which it is implemented and enforced. Employers maintaining or administering similar workplace rules will want to scrutinize carefully their own policies to assess their potential for exposing the employer to unfair labor practice charges and take appropriate action to minimize these risks.
Policies Chilling Organizational Rights Protected By NLRA § 7 Create Unfair Labor Practice Exposures
Section 7 of the NLRA protects workers’ right “to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157. NLRA § 8(a)(1) makes it an “unfair labor practice” for an employer to “interfere with, restrain, or coerce employees in the exercise of the rights” protected by NLRA § 7.
According to existing Fifth Circuit precedent, a workplace rule violates Section 8(a)(1) of the NLRA if the rule either:
“Explicitly restricts activities protected by Section 7″ or
Employees would reasonably construe the language to prohibit Section 7 activity even if the rule does not explicitly prohibit or has not been enforced to prohibit or restrict Section 7 protected activity.
A careful analysis of the Fifth Circuit’s decision makes clear that its decision about each of the four challenged policies covered by T-Mobile’s appeal turned upon the Court’s careful analysis of the surrounding context under which the applicable policy was implemented and administered reflected in the factual record. While the Fifth Circuit overruled as erroneous the NLRB’s findings that three other challenged policies violated the NLRA under this analysis, it agreed with and ordered enforced the NLRB’s ruling that T-Mobile’s Recording Policy violated the NLRA by impermissibly chilling worker’s exercise of their Section 7 rights. Construing the Acceptable Use Policy as prohibiting all recording in the workplace without the employer’s consent, the Fifth Circuit concluded that the policy would “discourage” a reasonable employee from engaging in protected activity” because a reasonable employee would construe the Policy as prohibiting employee unionizing or other concerted activity protected by the NLRA.
Context Protected Workplace Conduct, Commitment-To-Integrity, No Arguing or Fighting & Acceptable Use Policy
Based upon its review of the contextual facts shown in the record, the Fifth Circuit overruled the NLRB’s unfair labor practice orders with respect to T-Mobile’s workplace conduct, commitment-to- integrity, no argument or fighting and Acceptable Use policies. Employers should note, however, that the Fifth Circuit’s ruling does not give blanket enforcement to the defensibility of these policies in all circumstances. Rather, noting that “context matters” when determining whether a work rule violates the NLRA, the court found the policies read in the context of the workplace established common sense civility guidelines that a reasonable employee would not read as chilling or discouraging organization activities protected under Section 7. Accordingly, the Fifth Circuit declined to enforce the NLRB’s unfair labor practice orders against T-Mobile with respect to those policies in this instance. Employers considering the implications on this decision on their own policies should keep in mind, however, that the Fifth Circuit based its decision on the context reflected by the facts in the record. Accordingly, there remains a risk that these or other policies could be found to violate the NLRB if adopted or administered under circumstances that could chill reasonable workers from exercising their Section 7 organizational rights.
Context Invalidated Recording Policy
The critical significance of the factual context in determining the defensibility of each of these policies under Sections 7 and 8(a) of the NLRA is driven home by the Fifth Circuit’s explanation in the opinion of its decision to enforce the NLRB’s order with respect to the following Recording Policy as well as its explanation of its distinguishability from the Acceptable Use Policy that the Fifth Court found permitted.:
To prevent harassment, maintain individual privacy, encourage open communication, and protect confidential information employees are prohibited from recording people or confidential information using cameras, camera phones/devices, or recording devices (audio or video) in the workplace. Apart from customer calls that are recorded for quality purposes, employees may not tape or otherwise make sound recordings of work-related or workplace discussions. Exceptions may be granted when participating in an authorized [T-Mobile] activity or with permission from an employee’s Manager, HR Business Partner, or the Legal Department. If an exception is granted, employees may not take a picture, audiotape, or videotape others in the workplace without the prior notification of all participants.
In determining this Recording Policy impermissibly deterred employees from exercising their Section 7 rights in violation of the NLRA, the Fifth Circuit’s opinion makes clear that “the broad reach of the recording ban” strongly influenced this determination, stating:
The ban, by its plain language, encompasses any and all photography or recording on corporate premises at any time without permission from a supervisor. This ban is, by its own terms alone, stated so broadly that a reasonable employee, generally aware of employee rights, would interpret it to discourage protected concerted activity, such as even an off-duty employee photographing a wage schedule posted on a corporate bulletin board. …
Unlike the “workplace conduct” policy and the “commitment-to-integrity” policy, the recording policy forbids certain forms of clearly protected activity. We have earlier held that held those two policies would not be interpreted by a reasonable T-Mobile employee as forbidding protected activity. By contrast, a reasonable T-Mobile employee, aware of his legal rights, would read the language of the recording policy as plainly forbidding a means of engaging in protected activity.
In the face of this possibility, the Court similarly considered the factual record before rejecting T-Mobile’s argument that the Policy was defensible to promote its legitimate business interests “[t]o prevent harassment, maintain individual privacy, encourage open communication, and protect confidential information” on the grounds that “merely reciting such justifications does not alter the fact that the operative language of the rule on its face prohibits protected Section 7 activity, including Section 7 activity wholly unrelated to those stated interests.”
In reaching this determination, the Fifth Circuit distinguished these findings from its findings with regard to the Acceptable Use policy. In explaining its finding the Acceptable Use Policy valid, the Fifth Circuit’s opinion explains that the NLRB’s decision concerning the Acceptable Use Policy disregarded the context in which the acceptable use policy is to be read and understood, stating:
The “Scope” section of the acceptable use policy explicitly states that the policy “applies to all non-public T-Mobile information.” Thus the policy only prohibits employees from sharing non-public information.
Where a company policy prohibits the disclosure of non-public information, courts presume that a reasonable employee would not construe the policy to prohibit the disclosure of information that may be properly used in protected activity, such as wage and benefit information, so long as the policy does not explicitly state that it encompasses such information. … Here… the policy does not define “non-public T-Mobile information” in a way that would lead a reasonable worker to believe that it includes protected wage and benefit information. Instead, the policy only applies to the sort of proprietary business information that an employer may properly restrict its employees from sharing outside of the company. …
Thus the NLRB’s finding that a reasonable worker would construe the acceptable use policy to discourage protected activity is unreasonable, and we deny enforcement as to that part of its order.
Accordingly, the Fifth Circuit upheld enforcement of the NLRB’s order striking down the Recording Policy but denied enforcement and overruled the NLRB’s unfair labor practice finding with regard to the other three policies.
Contextual Basis of Decision Requires Employer Tread Carefully, Manage Risks
While the Fifth Circuit only enforced the NLRB’s unfair labor practice finding with respect to T-Mobile’s Recording Policy in T-Mobile, the opinion makes clear that similar or identical policies could be treated differently depending upon whether the contextual evidence reflects that the policy could be reasonably construed by employees as prohibiting or restricting conduct protected by Section 7 of the NLRA. Employers maintaining or administering similar workplace rules will want to scrutinize carefully their own policies to assess their potential for exposing the employer to unfair labor practice charges and take appropriate action to minimize these risks.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
“2017 Federal Group Health Plan Mental Health Rules Update”
Solutions Law Press, Inc™ Health Plan Update WebEx Briefing
Tuesday, June 27, 2017
10:30 A.M.-11:30 P.M. Eastern | 11:30 A.M.-12:30 P.M. Central
EXPANDING REGULATORY REQUIREMENTS & ENFORCEMENT SPELL TROUBLE FOR HEALTH PLANS AND THEIR SPONSORING EMPLOYERS.
Solutions Law Press, Inc.™ invites employer and other group health plan sponsors, fiduciaries, insurers, administrative service providers, plan brokers and consultants are invited learn critical information about their expanding risks and responsibilities arising from existing and proposed changes to rules and enforcement of federal group health plan mental health and substance abuse (MH/SUB) coverage and privacy rules under the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), as supplemented by the Patient Protection and Affordable Care Act (ACA) and the 21st Century Cures Act (Cures Act) and the Privacy Rules of the Health Insurance Portability & Accountability Act (HIPAA) conducted by attorney Cynthia Marcotte Stamer, a Fellow in the American College of Employee Benefits recognized as among the “Best Lawyers” in employee benefits for her health and other benefit knowledge, experience, policy advocacy and thought leadership. Register here now!
Tightening Health Plan Mental Health & Substance Abuse Rules & Enforcement Make Group Health Plan Compliance Critical
New and proposed guidance jointly published June 16, 2017 by the Departments of Labor (DOL), Health & Human Services (HHS) and Treasury is the latest in a series of regulatory and enforcement developments over the past year alerting group health plans and their employer and other group health plan sponsors, fiduciaries, insurers, administrative services providers, plan brokers and consultants involved in health plan design, funding, or administration to get serious about their group health plans’ compliance with the MHPAEA federal group health plan mental health and substance abuse coverage and benefit requirements, as supplemented by the ACA and the Cures Act without running afoul of the Privacy Rules of HIPAA.
Building upon federal group health plan mental health parity mandates originally implemented under the Mental Health Parity Act, the MHPAEA generally requires that any financial requirements or treatment limitations group health plans impose on mental health and substance use disorder (MH/SUD) benefits not be restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits. MHPAEA also imposes several disclosure requirements on group health plans and health insurance issuers. Not satisfied with the MHPAEA coverage and disclosure protections, however, Congress subsequently broadened federal MH/SUD benefit rights under group health plans through the enactment of the ACA and the Cures Act. Congress also has imposed special requirements and protections for mental health treatment records adds additional responsibilities for group health plans and their service providers when dealing with information and records in connection with the administration of MH/SUD benefits.
After a long period of lax oversight and enforcement of these federal group health plan mental health rules, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments) since October, 2016 have begun both tightening the rules and acting to increase oversight and enforcement. The Departments have issued a series of joint guidance clarifying and broadening their interpretations of these MH/SUD benefit and disclosure mandates while simultaneously taking steps to increase awareness and enforcement of these rights. As part of these ongoing efforts, Departments’ on June 16, 2017 expanded this guidance with their publication of new Mental Health Parity Implementation FAQs Part 38 discussing their joint interpretation of the broadening effect of the enactment of the ACA and the Cure Act on these plan requirements. Concurrently, the Departments signaled their intention to add additional responsibilities for group health plans and insurers by publishing along with FAQ Part 38 a Draft MHPAEA Disclosure Template and request for comments. This latest guidance package reaffirms that the Departments are continuing efforts to increase oversight of and enforcement of MH/SUD compliance against group health plans, their sponsors, fiduciaries, insurers, and their administrative and other service providers. In the face of these developments and the reported initiation of enforcement actions by the Departments, the group health plans, their employer and other sponsors, fiduciaries, insurers, and their administrative and other service providers should move quickly to understand and update their plans and practices to comply with these recent developments while bracing for the likely need to deal with further expanded disclosure and other additional responsibilities under the MHPAEA jointly proposed by the Departments on June 16, 2017.
Beyond fulfilling these expanding MHPAEA responsibilities, health plan fiduciaries, administrators, insurers and sponsors also must ensure their health plan and its business associates comply with special rules concerning the protection, use and disclosure of mental health treatment records and information that may impact certain mental health treatment and other records received, used, retained or disclosed in the course of administering mental health, substance abuse or other provisions of their group health plans under the HIPAA Privacy Rules. Keeping in mind that HHS audit and enforcement of compliance by health plans and other HIPAA covered entities with HIPAA’s medical privacy and data security rules, health plan sponsors, fiduciaries, insurers and administrative and other service providers also should take the opportunity to verify that their plans and practices comply with special HIPAA rules impacting authorizations and other dealings with certain mental health and substance abuse health information and records and other HIPAA medical privacy and security requirements.
Given these developments, group health plans, their sponsors, fiduciaries, insurers and administrator must take steps to verify and maintain compliance with these federal MH/SUD requirements. Ensuring proper compliance with these federal rules is particularly important to avoid triggering the substantial liability that health plans, their employer and other sponsors, insurers, and administrators can incur if their health plan violates these mandates. Obviously, plans and their sponsors, insurers and fiduciaries can expect to pay additional plan expenses necessary to pay wrongfully denied benefits and other expenditures these plan or its fiduciaries expend to investigate, defend and resolve claims or compliance audits, investigations, litigation or actions brought by the Departments, state insurance regulators with respect to state governments or insurers, or private litigation by participants or beneficiaries. Many employer or other plan sponsors may be unaware that these violations also generally expose employers and other health plan sponsors to liability to self identify, self-report on Internal Revenue Service Form 8928 and self-pay and excise tax of up to $100 per participant per day per uncorrected violation by the due date for filing of their annual corporate tax return.
With oversight and enforcement already rising and the Departments proposing to expand further both disclosure duties and enforcement, group health plans, their employer and other sponsors, insurers, fiduciaries and administrators clearly need to take prompt action to verify their existing health plan provisions and administrative practices are up-to-date and administered to withstand challenge from the Departments, participants, beneficiaries, health care providers and others. Consequently, employer and other group health plan sponsors, fiduciaries, insurers, administrative services providers, plan brokers and consultants involved in health plan design, funding, or administration should act quickly to verify their plan terms and practices are updated to comply with existing rules and share their input in response to the Departments June 16, 2017 requests for comments.
ABOUT CYNTHIA MARCOTTE STAMER
Recognized as “Legal Leader™ Texas Top Rated Lawyer” in both Health Care Law and Labor and Employment Law, a “Texas Top Lawyer,” and an “AV-Preeminent” and “Top Rated Lawyer” by Martindale-Hubble, singled out as among the “Best Lawyers In Dallas” in employee benefits by D Magazine; Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely recognized for her nearly 30 years’ of work and pragmatic thought leadership, publications and training on health coverage and health care, health plan and employee benefits, workforce and related regulatory and other compliance, performance management, risk management, product and process development, public policy, operations and other concerns.
Throughout her legal and consulting career, Ms. Stamer has drawn recognition for combining extensive knowledge and experience with her talents as an insightful innovator and problem solver when advising, representing and defending employer and other plan sponsors, insurers, fiduciaries, insurers, electronic and other technology, plan administrators and other service providers, governments and others about health coverage, benefit program design, funding, documentation, administration, data security and use, contracting, plan, public and regulatory reforms and enforcement, and other risk management and operations matters as well as for her work and thought leadership on a broad range of other health, employee benefits, human resources and other workforce, insurance, tax, compliance and other matters. Her experience encompasses leading and supporting the development and defense of innovative new programs, practices and solutions; advising and representing clients on routine plan establishment, plan documentation and contract drafting and review, administration, change and other compliance and operations crisis prevention and response, compliance and risk management audits and investigations, enforcement actions and other dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, Justice, state legislatures, attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators, She also provides strategic and other supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares shared her thought leadership, experience and advocacy on these and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, Past Group Chair, current Defined Contribution Plan Committee Co-Chair, former Welfare Committee Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Counsel, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, the Society of Professional Benefits Administrators, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email to here or via telephone to (469) 767-8872.
About Solutions Law Press
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at www.SolutionsLawPress.com.
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Solutions Law Press, Inc. editor and attorney Cynthia Marcotte Stamer will speak and moderate two key panel programs on health care privacy and data security scheduled at the Healthcare Privacy & Security Form hosted on May 19, 2017 by the Information Security Systems Association of Los Angeles County (ISSA-LA) as a component of its 9th Annual ISSA-LA Information Security Summit. The presentations of Ms. Stamer and others at the conference are particularly timely coming on the heels of the May 12 Cyber alerts to U.S. health industry and other businesses about the urgent need to defend against the spread of an epidemic international malware threat targeting U.S. healthcare and other businesses. See Urgent WannaCry Ransomware Cyber Warning Issued; Alert: Guard Health E-Mail, Other IT Against WannaCry Malware Attack.
The Medical Privacy & Security Summit is part of the 9th Annual ISSA-LA Information Security Summit scheduled for May 18-19, 2017 at the Universal City Hilton in Los Angeles. Recognized as a premier information security education and networking event, the Summit is expected to bring together 1000 or more health industry and other IT and InfoSec executives, leaders, analysts, and practitioners to learn from the experts, exchange ideas with their peers, and enjoy conversations with the community.
The Healthcare Privacy & Security Forum offered for the 5th year as a component of the annual Summit on May 19 specifically focuses on leading challenges, issues and opportunities confronted by health industry privacy and security professionals and their organizations. Ms. Stamer has served on the steering committee, moderator and popular faculty member for the 2017 Forum for the 5th consecutive year. During the 2017 Forum, she will moderate and speak on two panels:
“Finding & Negotiating The Mine Fields: CISO, CIO & Privacy Officer’s Playbook for Promoting Compliance & Security Without Getting Fired,” a luncheon interactive panel discussion with the audience exploring the challenging mission CISOs, CIOs and Privacy Officers face to ensure their healthcare, financial and other critical information, data and systems continue to support the patient care and operating functions of their organizations, while at the same time defending these systems, operations and their sensitive, but mission critical data against malicious or innocent misappropriation, use, access or destruction; and
The closing panel on “What Initiatives Are on the Horizon in Healthcare, and How Can We Secure Them?”, which will explore likely future emerging privacy and security threats and technologies, regulatory challenges and enforcement, and other trends that Privacy and Security professionals are likely to face and tips and strategies for preparing to leverage these likely new opportunities and manage new challenges.
Register or get the full schedule of programs and other events scheduled at the Healthcare Privacy & Security Forum specifically along with the overall Information Security Summit here.
About Ms. Stamer
Cynthia Marcotte Stamer is a Martindale-Hubble “AV-Preeminent (Top 1%) rated practicing attorney and management consultant, health industry public policy advocate, widely published author and lecturer, recognized for her nearly 30 years’ of work on health industry and other privacy and data security and other health care, health benefit, health policy and regulatory affairs and other health industry legal and operational as a LexisNexis® Martindale-Hubbell® “LEGAL LEADER™ and “Top Rated Lawyer,” in Health Care Law and Labor and Employment Law; a D Magazine “Best Lawyers In Dallas” in the fields of “Health Care,” “Labor & Employment,” “Tax: Erisa & Employee Benefits” and “Business and Commercial Law,” a Fellow in the American Bar Foundation, the Texas Bar Foundation and the American College of Employee Benefit Counsel.
Scribe for ABA JCEB annual agency meeting with OCR for many years, Ms. Stamer is well-known for her extensive work and leadership throughout her career on HIPAA, FACTA, PCI, IRC and other tax, Social Security, GLB, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and concerns. Ms. Stamer has worked extensively throughout her career with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks, insurers and other financial institutions, and others on trade secret confidentiality, privacy, data security and other risk management and compliance including design, establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, drafting and negotiation of business associate, chain of custody, confidentiality, and other contracting; risk assessments, audits and other risk prevention and mitigation; investigation, reporting, mitigation and resolution of known or suspected breaches, violations or other incidents; and defending investigations or other actions by plaintiffs, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others; reporting known or suspected violations; commenting or obtaining other clarification of guidance and other regulatory affairs, training and enforcement, and a host of other related concerns.
Her clients include public and private health care providers, health insurers, health plans, employers, payroll, staffing, recruitment, insurance and financial services, health and other technology and other vendors, and others.
Author of a multitude of highly-regarded works and training programs on HIPAA and other data security, privacy and use published by BNA, the ABA and other premier legal industry publishers In addition to representing and advising these organizations, she also speaks extensively and conducts training on health care and other privacy and data security and many other matters Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.
Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. Through these and other involvements, she helps develop and build solutions, build consensus, garner funding and other resources, manage compliance and other operations, and take other actions to identify promote tangible improvements in health care and other policy and operational areas.
Healthcare providers, health plans, healthcare clearinghouses and their business associates (Covered Entities) can’t disclose the name or other protected health care information about a patient in press releases or other announcements without prior authorization from the patient. That’s the clear lesson Covered Entities should learn from the $2.4 million payment to the U.S. Department of Health and Human Services (HHS) that the largest not-for-profit health system in Southeast Texas, Memorial Hermann Health System (MHHS) is paying to settle charges it violated the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule by issuing a press release with the name and other protected health information (PHI) about a patient without the patient’s prior HIPAA-compliant authorization under a Resolution Agreement and Corrective Action Plan (Resolution Agreement) announced May 10, 2017 by HHS Office of Civil Rights (OCR).
The Resolution Agreement resolves OCR charges the operator of 13 hospitals, eight Cancer Centers, three Heart & Vascular Institutes, and 27 sports medicine and rehabilitation centers violated the Privacy Rule that resulted from an OCR compliance review of MHHS triggered by multiple media reports suggesting that MHHS improperly disclosed the name and other details about a patient arrested and charged with presenting an allegedly fraudulent identification card to office staff at an MHHS’s clinic after MHHS clinic staff alerted law enforcement of suspicions the patient was presenting false identification to the clinic. According to OCR, after law enforcement investigated and arrested the patient, MHHS published a press release concerning the incident in which MHHS senior management approved the impermissible disclosure of the patient’s PHI by adding the patient’s name in the title of the press release without securing prior authorization of the patient.
While OCR concluded the report to law enforcement allowable under the Privacy Rule, OCR found MHHS violated the Privacy Rule by issuing the press release disclosing the patient’s name and other PHI without authorization from the patient and also by failing to timely document the sanctioning of its workforce members for impermissibly disclosing the patient’s information.
To resolve and avoid the potential Civil Monetary Penalties that HIPAA could authorize OCR to impose for the alleged Privacy Rule violation, MHHS agrees in the Resolution Agreement to pay OCR a $2.4 million monetary settlement and implement a corrective action plan that obligates MHHS to update and train its workforce on its policies and procedures on safeguarding PHI from impermissible uses and disclosures including specific instructions and procedures to:
Address (a) Uses and disclosures for which an authorization is required, including to the media, to public officials, and on the internet; (b) Disclosures for law enforcement purposes; and (c) Uses and disclosures for health oversight activities;
Identify MHHS personnel or representatives whom workforce members, agents, or business associates may contact in the event of any inquiry or concern regarding compliance with HIPAA in relation to these activities;
Internal reporting procedures requiring all workforce members to report to the designated person or office at the earliest possible time any potential violations of the Privacy, Security or Breach Notification Rules or of MHHS’ privacy and security policies and procedures and MHHS promptly to investigate and address all received reports in a timely manner; and
Application and documentation of appropriate sanctions (which may include retraining or other instructive corrective action, depending on the circumstances) against members of MHHS’ workforce, including senior level management, who fail to comply with the Privacy, Security or Breach Notification Rules or MHHS’ privacy and security policies and procedures, including a description of the sanctions; a timeframe in which MHHS will apply and document sanctions for violations of the HIPAA Rules or of MHHS’ privacy, security or breach policies or procedures; the manner in which MHHS will document the sanctions; and where MHHS will store or retain such documentation (e.g., personnel file).
The corrective action plan in the Resolution Agreement also requires all MHHS facilities to attest to their understanding of permissible uses and disclosures of PHI, including disclosures to the media and others.
Covered entities should keep in mind the MHHS Resolution Agreement is the latest in a series of OCR enforcement actions and resolution agreements highlighting the need for Covered Entities to adopt and use appropriate policies and procedures to prevent wrongful disclosures of PHI to the media or public. For instance, in June, 2013, OCR required Shasta Regional Medical Center (SRMC) to pay a $275,000 settlement payment and implement a comprehensive corrective action plan to resolve OCR charges stemming from SRMC’s disclosure of PHI about a patient to members of the media and its workforce in an effort to respond to accusations the patient made that SRMC engaged in fraud and other misconduct. See HIPAA Sanctions Triggered From Covered Entity Statements To Media, Workforce. In contrast, the $2.2 million resolution agreement that OCR required New York Presbyterian Hospital for improperly allowing a film crew to film hospital patients in violation of HIPAA was almost 10 times greater than the SRMC penalty and was accompanied by OCR’s publication OCR of specific additional guidance warning Covered Entities against improper disclosures to the media. See $2 Million+ HIPAA Settlement, FAQ Warn Providers Protect PHI From Media, Other Recording Or Use.
Following on the heels of this previous guidance and prior enforcement actions warning Covered Entities against wrongful disclosure to the media, the MHHS Resolution Agreement sends a strong message to Covered Entities that they should expect little sympathy if their organizations improperly share PHI with the media. OCR’s announcement of the MHHS Resolution Agreement, for instance quotes OCR Director Roger Severino with stating that “Senior management should have known that disclosing a patient’s name on the title of a press release was a clear HIPAA Privacy violation that would induce a swift OCR response.” The announcement goes on to quote Director Severino further as stating, “This case reminds us that organizations can readily cooperate with law enforcement without violating HIPAA, but that they must nevertheless continue to protect patient privacy when making statements to the public and elsewhere.”
Conduct Entity-Wide Risk Assessment & Review & Tighten Media Relations Policies, Processes & Training ASAP
Covered entities should heed the warning by conducting a risk assessment of their organization’s susceptibility to potential improper disclosures to media or others and reviewing and implementing necessary written policies, procedures and training to prevent the improper disclosure of patient PHI to media or others unless the Covered Entity either secures prior HIPAA-compliant authorization from the patient or can prove the disclosure falls squarely under an exception to the Privacy Rule’s prohibition against disclosure of PHI without authorization except as allowed by the Privacy Rule.
Based on experiences reported in the MHHS and other similar resolution agreements, Covered Entities also generally will want to ensure that their policies, procedures and training extend to all potential sources of communications that could involve patient information and make clear that the Privacy Rule restrictions must be followed even if the circumstances involve allegations of misconduct, special performance by healthcare providers or others that it would benefit the organization or certain individuals to have known to the public, or other circumstances likely to be of interest to the media or other parties.
As part of this process, covered entities should ensure they look outside the four corners of their Privacy Policies to ensure that appropriate training and clarification is provided to address media, practice transition, workforce communication and other policies and practices that may be covered by pre-existing or other policies of other departments or operational elements not typically under the direct oversight and management of the Privacy Officer such as media relations. Media relations, physician and patients affairs, outside legal counsel, media relations, marketing and other internal and external departments and consultants dealing with the media, the public or other inquiries or disputes should carefully include and coordinate with the privacy officer both to ensure appropriate policies and procedures are followed and proper documentation created and retained to show authorization, account, or meet other requirements.
In conducting this analysis and risk assessment, it will be important that Covered Entities include, but also look beyond the four corners of their Privacy Policies to ensure that their review and risk assessment identifies and assesses and addresses compliance risks on an entity wide basis. This entity-wide assessment should include both communications and requests for information normally addressed to the Privacy Officer as well as requests and communications that could arise in the course of media or other public relations, practice transition, workforce communication and other operations not typically under the direct oversight and management of the Privacy Officer. For this reason, Covered Entities also generally will not only to adopt and implement specific policies, processes and training in these other departments to prohibit and prevent inappropriate disclosures of PHI in the course of those departments operations. It also may be advisable to pre-established processes for reviewing media or other communications for potential PHI content and require prior review of any proposed public relations and other internal or external communications containing patient PHI or other information by the privacy officer, legal counsel or another suitably qualified party.
Because of the high risk that the preparation or review of media or other public communications reports will involve the use and disclosure of PHI, Covered Entities also generally should verify that all outside media or public relations, legal, or other outside service providers participating in the investigation, response or preparation or review of communications to the media or others both are covered by signed business associate agreements that fulfill the Privacy Rule and other requirements of HIPAA as well as possess detailed knowledge and understanding of the Privacy and Security Rules suitable to participate in and help safeguard the Covered Entity against violations of these and other Privacy Rules. See e.g., Latest HIPAA Resolution Agreement Drives Home Importance Of Maintaining Current, Signed Business Associate Agreements.
About The Author
Recognized by LexisNexis® Martindale-Hubbell® as a “AV-Preeminent” (Top 1%/ the highest) and “Top Rated Lawyer,” with special recognition as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Health Care,” “Labor & Employment,” “Tax: Erisa & Employee Benefits” and “Business and Commercial Law” by D Magazine, the author of this update is widely known for her 29 plus years’ of work in health care, health benefit, health policy and regulatory affairs and other health industry concerns as a practicing attorney and management consultant, thought leader, author, public policy advocate and lecturer.
Throughout her adult life and nearly 30-year legal career, Ms. Stamer’s legal, management and governmental affairs work has focused on helping health industry, health benefit and other organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.
As a core component of her work, Ms. Stamer has worked extensively throughout her career with health care providers, health plans and insurers, managed care organizations, health care clearinghouses, their business associates, employers, banks and other financial institutions, management services organizations, professional associations, medical staffs, accreditation agencies, auditors, technology and other vendors and service providers, and others on legal and operational compliance, risk management and compliance, public policies and regulatory affairs, contracting, payer-provider, provider-provider, vendor, patient, governmental and community relations and matters including extensive involvement advising, representing and defending public and private hospitals and health care systems; physicians, physician organizations and medical staffs; specialty clinics and pharmacies; skilled nursing, home health, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing and management services organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers; and other health industry clients to manage and defend compliance, public policy, regulatory, staffing and other operations and risk management concerns. A core focus of this work includes work to establish and administer compliance and risk management policies; comply with requirements, investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; dealings with JCHO and other accreditation and quality organizations; investigation and defense of private litigation and other federal and state health care industry investigations and enforcement; insurance or other liability management and allocation; process and product development; managed care, physician and other staffing, business associate and other contracting; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others.
Author of leading works on HIPAA and other privacy and data security works and the scribe leading the American Bar Association Joint Committee on Employee Benefits Annual Agency Meeting with OCR, her experience includes extensive compliance, risk management and data breach and other crisis event investigation, response and remediation under HIPAA and other data security, privacy and breach laws. Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly regarded works and training programs on trade secret, HIPAA and other medical, consumer, insurance, tax, and other privacy and data security, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns.
In connection with this work, Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA, FACTA, trade secret and other information privacy and data security rules, including the establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns. Her clients include public and private health care providers, health insurers, health plans, technology and other vendors, and others.
Her work includes both regulatory and public policy advocacy and thought leadership, as well as advising and representing a broad range of health industry and other clients about policy design, drafting, administration, business associate and other contracting, risk assessments, audits and other risk prevention and mitigation, investigation, reporting, mitigation and resolution of known or suspected violations or other incidents and responding to and defending investigations or other actions by plaintiffs, DOJ, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others.
In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, MGMA, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in Pensions, healthcare, workforce, immigration, tax, education and other areas.
The American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has worked closely with a diverse range of physicians, hospitals and healthcare systems, DME, Pharma, clinics, health care providers, managed care, insurance and other health care payers, quality assurance, credentialing, technical, research, public and private social and community organizations, and other health industry organizations and their management deal with governance; credentialing, patient relations and care; staffing, peer review, human resources and workforce performance management; outsourcing; internal controls and regulatory compliance; billing and reimbursement; physician, employment, vendor, managed care, government and other contracting; business transactions; grants; tax-exemption and not-for-profit; licensure and accreditation; vendor selection and management; privacy and data security; training; risk and change management; regulatory affairs and public policy and other concerns.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending health plans, health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other “nonpar,” insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions.
A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposium and chair, faculty member and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management. Examples of her many highly regarded publications on these matters include “Protecting & Using Patient Data In Disease Management: Opportunities, Liabilities And Prescriptions,” “Privacy Invasions of Medical Care-An Emerging Perspective,” “Cybercrime and Identity Theft: Health Information Security: Beyond HIPAA,” as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, Insurance Thought Leadership and many other prominent publications and speaks and conducts training for a broad range of professional organizations.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.
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While Congress continues to debate the future of the Obamacare health reforms and its exchanges, the Department of Health & Human Services is reminding employers with less than 50 employees that wish to offer group health coverage for their employees to check out their coverage options offered the Small Business Health Options Program (SHOP) Marketplace established as part of the Patient Protection and Affordable Care Act (ACA). Before or when offering health coverage for employees or their dependents, employers and their management should confirm they fully understand and appropriately arrange for fulfillment of all applicable federal, contractual and other requirements to avoid unfortunate and often expensive liabilities.
The SHOP Marketplace is intended to offer an opportunity for for small employers who want to provide health and dental insurance to their employees. Use of the SHOP Marketplace to obtain coverage may be an option for an employer if it is a business or non-profit organization with 50 or fewer full-time equivalent employees (FTEs). An employer that qualifies to get group health coverage through the SHOP doesn’t have to wait for an annual enrollment period; it can start offering SHOP insurance to your employees any time of year by completing the enrollment process by the applicable deadline prior to the first day of the month that the employer wants to start offering coverage through the SHOP.
In addition to the option to buy coverage through the SHOP, employers with 25 or fewer employees also may be eligible to use the Small Employer Health Care Credit created by the ACA to help defray the costs of providing this coverage to their qualifying employees. For instance, Monday, May 15 is the sign up deadline for small employers and nonprofit employees interested in obtaining small group health plan coverage for their employees through the the SHOP Marketplace beginning on June 1. SeeHealthCare.gov/Small-Business to enroll your small business or non-profit employees or get more details.
While many excellent reasons may exist for a business to offer group health coverage for qualifying employees, all employers regardless of size considering offering group health coverage obtained through the SHOP or other sources should keep in mind that employers that establish and maintain group health coverage, the group health plans they establish and the company or persons with discretionary authority or responsibility for the maintenance, management or administration of these programs or their plans are required to comply with a variety of federal tax, labor and other rules.
Businesses and their owners or management leaders making these decisions should confirm that they fully understand these responsibilities and take appropriate steps to ensure their fulfillment before establishing or maintaining a group health plan to avoid exposing their business, its management or owners or others to unexpected and often substantial liabilities that can result from violation of these requirements. While small employers plans sometimes qualify for some relief from a few of these requirements, depending on their size, the majority of these federal rules apply to most if not all group health plans. Furthermore, businesses sponsoring these programs and their leaders involved in deciding whether and what health coverage to offer for employees and their dependents should not presume that their organization, the resulting plan or its fiduciaries will fulfill these requirements simply by purchasing coverage through the SHOP Marketplace, directly from an insurer, or with the assistance of a broker or consultant. Fulfillment of applicable requirements generally requires that sponsoring employers and individuals within the management responsible for or appointed to oversee the program to take other steps. The scope of responsibility and resulting liability to a sponsoring employer and members of its ownership or management also typically are impacted by the plan design and contracts used to establish and maintain the program, its funding, and various other factors. These factors generally include contractual language in insurance, consulting or brokerage, administrative services and other contracts presented by vendors for use in purchasing and maintaining the program that often shift responsibility for many duties an employer otherwise might assume would be born by the vendor. For these and other reasons, most businesses and their leadership will want to consider arranging for their proposed program and its associated contracts and arrangements to be reviewed by legal counsel experienced in group health plan and associated labor, tax and other laws and arrangements.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for work, teachings and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality and governmental employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and advisor to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group; immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other regulatory and operational risk management. Examples of her many highly regarded publications on these matters include the “Texas Payday Law” Chapter of Texas Employment Law, as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
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Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com
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While Congress and the Trump Administration continue to ponder and debate what if anything to do with the health care reforms of the Patient Protection and Affordable Care Act (ACA), employer and other health plan sponsors, health plan insurers, plan fiduciaries and others responsible for health plan design, administration or funding must take steps to verify their past and continuing compliance with the ACA and other federal mandates while laying the groundwork to respond quickly to any eventual reforms.
Regardless of what, if anything, the existing Congress or the Trump Administration does to repeal or reform the ACA or other federal health plan rules, all health plan sponsors, insurers, fiduciaries and administrators should act to mitigate their substantial and ever-growing health plan exposures by arranging for an independent compliance audit of their health plan terms, materials and operations for potential uncorrected past or current violations of the 40 federal mandates covered by the Form 8928 reporting and associated Internal Revenue Code excise tax liability exposure, as well as other applicable plan liabilities under the Employee Retirement Income Security Act (ERISA), the Social Security Act, the Internal Revenue Code and other federal laws within open statute of limitation periods.
The cost, complexity and riskiness of health plan sponsorship and administration has grown exponentially over the past two decades. Thanks to the ACA and the continuous stream of other federal laws and regulations implemented over the past 20 years, sponsoring employers, as well as their health plans and those responsible as fiduciaries for administering, funding and insuring these programs now face huge costs, responsibilities and liabilities. While the ACA substantially expanded the federal health plan mandates and liabilities, the ACA is not the lone cause and its amendment or repeal alone won’t fully resolve these risks prospectively or retrospectively insulate sponsoring employers, their plans or their fiduciaries and insurers from the liabilities and costs of compliance issues occurring before Congress repeals or amends the ACA.
Of particular note for employer and other sponsors of group health plans are the self-reporting and excise tax self-assessment and payment requirements for employers coupled with the companion responsibilities and liabilities fiduciaries, plan administrators and others face under these federal mandates make it important that employers and others sponsoring group health plans and their management or other leaders overseeing or participating in plan design or vendor selection, plan administration or other plan related activities get advice and help from qualified legal counsel experienced in health plan matters:
To conduct an independent compliance review and risk assessment of their health plans,
To recommend and assist in the performance of recommended steps to correct or mitigate risks from any potential past or existing violations or other exposures that have arisen or are likely to arise from existing contractual, plan design or other health plan actions;
To explore the potential advisability of taking additional steps to prevent or mitigate health plan associated compliance or other risks going forward whether or not health reform happens; and
To begin preparing to take advantage of any impending health care reforms by evaluating the requirements and procedures that existing plan terms, contracts, vendors and arrangements are likely to require to implement changes necessary to respond to any reforms as quickly and efficiently as possible.
Spring Clean Your Health Plan House
Since any reforms eventually enacted are unlikely to retroactively eliminate liability of employers, their health plans or fiduciaries for violations of federal health plan mandates, health plan terms, or associated contracts occurring before the effective date of reform, employer and other health plan sponsors, fiduciaries, insurers and administrators should begin by identifying, cleaning up any existing, unresolved, and preventing any new health plan compliance problems.
While overall compliance with applicable federal mandates and health terms generally should be the goal, employers or others sponsoring group health plans need to be particularly concerned with their responsibilities and potential liability under the Internal Revenue Code to self-identify, report and pay stiff excise tax penalties of $100 per day per violation of any of 40 federal health plan mandates imposed by the ACA and various other federal laws when the sponsor files its annual tax return.
Sponsors and plan fiduciaries also need to be concerned about other risks beyond sponsoring employers’ excise tax liability exposures for sponsoring a non-compliant group health plan. Among other things, group health plans and their fiduciaries can face audits, litigation and enforcement actions by the Centers for Medicare & Medicaid Services and other health plans for improperly coordinating plan claims with other coverage as well as lawsuits from covered persons, their health care providers or other beneficiaries, the Department of Labor and CMS, or others seeking to enforce rights to benefits, penalties in the case of CMS or the Department of Labor, and attorneys’ fees and other costs of enforcement. Beyond benefit litigation, the employer or representatives of the sponsoring employer, if any, named or acting as fiduciaries, insurer or third-party service providers named or acting as fiduciaries, also could face fiduciary lawsuits seeking damages, equitable relief, and attorneys’ fees and costs of court, for failing to prudently administer the plan in accordance with its terms and the law brought by covered persons or their beneficiaries or the DOL as well as fiduciary breach penalties if the fiduciary breach action is brought by the DOL. If the plan fails to comply with claims and appeals procedures or other ERISA notification requirements, parties named or functioning as the plan administrator for this purpose also could face penalties of up to $125 per violation per day in the case of enforcement actions brought by participants and beneficiaries or $1025 per violation per day in the case of actions brought by the DOL, plus attorneys’ fees and other costs of enforcement. Unless the employer previously took steps to draft its health plan documents and negotiate its vendor contracts to provide otherwise, most vendor provided plans typically assign these liabilities to the sponsoring employer or a member of its management by naming that employer or the management person the “plan administrator” and/or “named fiduciary” responsible for those activities and liabilities, requiring the plan sponsor to indemnify the vendor for costs and liabilities arising from the performance of actions under the plan even when those actions don’t comply with ERISA fiduciary or other legal standards applicable to the performance of those duties under the plan, or both, and other contractual or plan provisions that shift liabilities and costs to the plan sponsor.
To mitigate their exposure to these liabilities and costs, employer or other health plan sponsors should consider arranging for an independent legal compliance and risk assessment of their health plan, its terms, materials and operations to help mitigate the sponsoring employer’s exposure to self-identify, self-report on IRS Form 2848 and pay the $100 per day per violation excise tax liability now generally required under the Internal Revenue Code for any such violation.
Beyond mitigating a plan sponsor’s Form 8928 reporting and associated excise tax exposures, an independent compliance audit also can mitigate other risks and exposures for the sponsoring employer, the plan and its fiduciaries, the cost of which the sponsoring employer often bears financial responsibility for funding pursuant to the contractual indemnification and funding obligations entered into in connection with the establishment and maintenance of the plan, the fiduciary role, if any, of the employer with respect to the plan, or both. Accordingly, a timely and appropriate review is likely to help mitigate other risks and liabilities such as:
Fiduciary liability that can arising from failing to administer the plan in accordance with these and other federal health plan mandates under ERISA;
Unanticipated benefit costs and liabilities, which for self-insured plans are likely to be particularly burdensome if compliance issues are not identified and corrected before applicable deadlines to pay and submit claims to the stop-loss or other insurer expire (usually at or shortly after the close of a plan year or if earlier, contract termination);
Benefit costs and penalties for wrongful coordination of benefits with Medicare, Medicaid, DOD and certain other plans or coverage in violation of Secondary Payer and other mandates; and
Costs of defending and settling audits, litigation and other government or participant enforcement actions.
Since prompt self-audit and correction can help mitigate all of these liabilities, business leaders of employers sponsoring health plans should act promptly to engage experienced legal counsel experienced with health plan laws and operations to advise the plan sponsor about how to audit their group health plan’s plan documents, materials and operations for compliance with these and other federal health plan rules within the scope of attorney-client privilege while managing tax, financial, benefit and fiduciary liability exposures to deal with potential compliance concerns that the review might discover as well as mitigate risks that could result if the audit is improperly structured or conducted.
Prepare To Respond To Potential Health Reform & Other Health Plan Improvement
Beyond identifying and addressing existing compliance concerns and other risks associated with prior or existing plan design or administration, most employer and other sponsors also will want to review the health plan document and materials and associated insurance, third-party administration and other health plan vendor contracts pursuant to which the health plan is established, maintained and administered to identify requirements and opportunities to respond quickly to make changes when and if health care reform happens as well as for other opportunities to mitigate existing risks and costs.
As most commentators expect some type of regulatory or statutory health plan relief to result from the current health care reform debates in Congress, employer and other health plan sponsors desiring to accelerate their ability to take advantage of any forthcoming relief should familiarize themselves with the procedures required under existing plan terms, contracts and rules to modify their programs in response to these changes. Almost certainly, plan sponsors should anticipate needing to adopt some amendments to plan documents, summary plan descriptions and other materials to take advantage of any legislative or statutory relief. Plan sponsors also need to keep in mind that their vendor contracts with administrators, group, stop-loss or captive insurers, and other vendors likely also will require the plan sponsor to notify and negotiate with its vendors to secure their agreement before adopting these changes to avoid violating those vendor agreements and prudently to arrange for appropriate implementation and administration of the modified plan design and terms. Identification of the contractual and plan requirements and commencement of discussions with the relevant vendors can help expedite the planning and implementation of any desired plan modifications the plan sponsor elects to make in response to any statutory or regulatory reforms.
While preparing for anticipated health care reforms, most plan sponsors also will want to review their plans and vendor contracts for other potential opportunities to mitigate risks or expenses. With respect to existing and future liability mitigation, each plan sponsor generally should carefully assess the allocation of fiduciary responsibility and liability between the sponsoring employer, members of its management or other workforce team, and vendors to identify potential areas where the contract may assign named or other plan administrator or other fiduciary status and liability to the plan sponsor or a member of its workforce for duties outsourced to a vendor. Sponsoring employers or their management may want to initiate negotiations with the vendor to reallocate the fiduciary role and responsibility to the party responsible for performance of the specific duties, enhancement of performance guarantees, indemnifications and insurance coverage for proper performance of the outsourced duties by the vendor in accordance with the plan terms, including any mandates imposed by the ACA and other federal laws in form and operation, and other safeguards or, if the vendor is unwilling to consider these changes, begin searching for a replacement vendor willing to provide better accountability for its actions with respect to the services it is hired to perform.
Except in rare circumstances where the sponsoring employer has carefully contracted to transfer fiduciary liability to its insurer or administrator and otherwise does not exercise or have a fiduciary obligation to exercise discretion or control over these responsibilities, employers sponsoring group health plans that violate federal mandates like the out-of-pocket limit often ultimately bear some or all of these liabilities even if the violation actually was committed by a plan vendor hired to administer the program either because the plan documents name the employer as the “named fiduciary” or “plan administrator” under ERISA, the employer or a member of its management named in the plan generally bears fiduciary responsibility functionally for selection or oversight of the culpable party, the employer signed a contract, resolution or plan document obligating the employer to indemnify the service provider for the liability, or a combination of these reasons.
Since prompt self-audit and correction can help mitigate all of these liabilities as well as help to preserve access to stop-loss or other reinsurance coverage, if any, applicable to help pay for some or all of any additional benefit liabilities resulting from these benefit mandates, business leaders of companies offering group health plan coverage should act quickly to engage experienced legal counsel for their companies for advice about how to audit their group health plan’s compliance with these and other federal health plan rules within the scope of attorney-client privilege while managing tax, financial, benefit and fiduciary liability exposures to deal with potential compliance concerns that the review might discover as well as mitigate risks that could result if the audit is improperly structured or conducted.
While businesses inevitably will need to involve or coordinate with their accounting, broker, and other vendors involved with the plans, businesses generally will want to get legal advice in a manner that preserves their potential to claim attorney-client privilege to protect against discovery in the event of future enforcement or litigation actions sensitive discussions and analysis about compliance audits, plan design choices, and other risk management and liability planning as well as to get help identifying potential plan design, contracting, procedural or other changes that may be needed to fix compliance deficiencies and mitigate other risks, particularly in light of complexity of the exposures and risks.
About The Author
Recognized by LexisNexis® Martindale-Hubbell® as a “AV-Preeminent” (Top 1%/ the highest) and “Top Rated Lawyer,” with special recognition as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Health Care,” “Labor & Employment,” “Tax: Erisa & Employee Benefits” and “Business and Commercial Law” by D Magazine, the author of this update is widely known for her 29 plus years’ of work in health care, health benefit, health policy and regulatory affairs and other health industry concerns as a practicing attorney and management consultant, thought leader, author, public policy advocate and lecturer.
Throughout her adult life and nearly 30-year legal career, Ms. Stamer’s legal, management and governmental affairs work has focused on helping health and othre employee benefit, financial services, health care and other organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk.
Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.
Throughout her career, she has helped a diverse array of clients manage, administer and defend employee and other workforce, vendors and suppliers, their recruitment, selection, performance management, contracting, investigation, discipline and termination; health and other employee benefits; compensation; safety; governance; compliance and internal controls; strategic planning, process and quality improvement; change management; trade secret and other privacy, data security and data breach;; crisis preparedness and response; internal, government and third-party reporting relations, audits, investigations and enforcement; government affairs and public policy; and other compliance and risk management, government and regulatory affairs and operations concerns.
The American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has worked extensively throughout her career with employers, health and other employee benefit plans, insurers, managed care organizations, health care clearinghouses, health care providers, their business associates, employers, banks and other financial institutions, management services organizations, professional and trade associations, accreditation agencies, auditors, technology and other vendors and service providers, and others on benefit and insurance program legal and operational compliance, risk management, public policies and regulatory affairs, contracting, payer-provider, provider-provider, vendor, patient, governmental and community relations and matters including extensive involvement advising, representing and defending plan sponsors, fiduciaries, service providers, managed care organizations, insurers, self-insured health plans and other payers. Her experience includes both leading edge work designing and administering programs, as well as defending clients in connection with audits and enforcement actions by OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC, OSHA, Department of Insurance, Department of Justice and state attorneys’ general and other federal and state agencies; accreditation and quality organizations; private litigation and other federal and state health care industry investigation, enforcement including insurance or other liability management and allocation; process and product development, contracting, deployment and defense; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others.and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions.
Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns. Her work includes both regulatory and public policy advocacy and thought leadership, as well as advising and representing a broad range of health industry and other clients about policy design, drafting, administration, business associate and other contracting, risk assessments, audits and other risk prevention and mitigation, investigation, reporting, mitigation and resolution of known or suspected violations or other incidents and responding to and defending investigations or other actions by plaintiffs, DOJ, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others.
A lead policy advisor to the Government of Bolivia on its pension privitization project and involved in U.S. federal and state as well as cross border workforce, pension, health care, Social Security, immigration, and tax regulatory and statutory reform throughout her adult life, Ms. Stamer also is widely sought out for her thoughtleadership and assistance with domestic and international public policy concerns in Pensions, healthcare, workforce, immigration, tax, education and other areas.
A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposium and chair, faculty member and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, Insurance Thought Leadership and many other prominent publications and speaks and conducts training for a broad range of professional organizations.
For more information about Ms. Stamer or her experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at www.solutionslawpress.com.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here.
Health plans, their fiduciaries and sponsors, health insurers, health care providers, health care clearinghouses (“covered entities”) and their business associates must get and keep your business associate (BA) agreements (BAAs) in place, up-to-date, and readily available for inspection in accordance with the Health Insurance Portability & Accountability Act (HIPAA) Privacy Rule, 45 C.F.R. Part 160 and Subparts A and E of Part 164 (Privacy Rule). That’s the clear message to covered entities and their business associates in the April 17, 2017 HIPAA Resolution Agreement just announced by the Department of Health & Human Services (HHS) Office of Civil Rights (OCR) with the Center for Children’s Digestive Health (CCDH).
While the Resolution Agreement relates to breaches of the BAA requirements of a small pediatric practice, all health plans, health care providers and other covered entities and business associates should focus on the adequacy of their BAAs and their BAA record keeping. HIPAA compliance surveys reflect deficiencies with the BAA rules are common throughout the industry. These findings and the involvement of BAs in data breaches or other OCR enforcement activities suggest a high probability that many other covered entities and business associates may be sitting ducks for similar sanctions. See e.g., HIPAA Compliance Survey Churns Up Many Business Associate Problems (January 3, 2017). Consequently, all covered entities and business associates generally should treat the CCDH Resolution Agreement as a message to review and correct as necessary their organizations’ compliance and recordkeeping to minimize their exposure to potential sanctions from violations of the HIPAA business associate rules.
The HIPAA Business Associate Agreement Requirements
OCR’s announcement of the CCDH Resolution Agreement is the latest in a growing series of HIPAA enforcement actions showing the growing risk covered entities and their business associates face for failing to take appropriate steps to comply with the BAA and other Privacy Rule requirements of HIPAA.
As compliance audits and surveys of covered entities and business associates suggest a high level of noncompliance with the business associate agreement requirements among covered entities and business associates, While the ever-growing list of Resolution Agreements and Civil Monetary Penalties announced by OCR cover a variety of categories of HIPAA violations, the CCDH Resolution Agreement highlights the importance of covered entities and their business associates ensuring that before the BA creates, accesses, receives, discloses, retains or destroys any PHI for the covered entity, a BAA meeting the Privacy Rule requirements is signed and retained for at least the six-year period the Privacy Rule requires in a manner easily producible when and if OCR or another agency asks for a copy as part of an investigation or other compliance audit. See Privacy Rule §§ 164.502(e), 164.504(e), 164.532(d) and (e).
The Privacy Rule requires that covered entities and business associates enter into a written and signed business associate agreement that contains the elements specified in Privacy Rule § 164.504(e) before the business associate creates, uses, accesses or discloses PHI of the covered entity. Meanwhile, the Privacy Rule recordkeeping requirements require that covered entities and BAs maintain copies of these BAAs for a minimum of six years.
Violations of the Privacy Rule can carry stiff civil or even criminal penalties Pursuant to amendments to HIPAA enacted as part of the HITECH Act, civil penalties typically do not apply to violations punished under the criminal penalty rules of HIPAA set forth in Social Security Act , 42 U.S.C § 1320d-6 (Section 1177).
Under Section 1177, the criminal enforcement provisions of HIPAA authorize the Justice Department to prosecute a person who knowingly in violation of the Privacy Rule (1) uses or causes to be used a unique health identifier; (2) obtains individually identifiable health information relating to an individual; or (3) discloses individually identifiable health information to another person, punishable by the following criminal sanctions and penalties:
A fine of up to $50,000, imprisoned not more than 1 year, or both;
If the offense is committed under false pretenses, a fine of up to $100,000, imprisonment of not more than 5 years, or both; and
If the offense is committed with intent to sell, transfer, or use individually identifiable health information for commercial advantage, personal gain, or malicious harm, a fine of up to $250,000, imprisoned not more than 10 years, or both.
In contrast, as amended by the HITECH Act, the civil enforcement provisions of HIPAA empower OCR to impose Civil Monetary Penalties on both covered entities and BAs for violations of any of the requirements of the Privacy or Security Rules. The penalty ranges for civil violations depends upon the circumstances associated with the violations and are subject to upward adjustment for inflation. As most recently adjusted here effective September 6, 2016, the following currently are the progressively increasing Civil Monetary Penalty tiers:
A minimum penalty of $100 and a maximum penalty of $50,000 per violation, for violations which the CE or BA “did not know, and by exercising reasonable diligence would not have known” about using “the business care and prudence expected from a person seeking to satisfy a legal requirement under similar circumstances;”
A minimum penalty of $1,000 and a maximum penalty of $50,000 per violation, for violations for “reasonable cause” which do not rise to the level of “willful neglect” where “reasonable cause” means the “circumstances that would make it unreasonable for the covered entity, despite the exercise of ordinary business care and prudence, to comply with the violated Privacy Rule requirement;”
A minimum penalty of $10,000 and a maximum penalty of $50,000 per violation, for violations attributed to “willful neglect,” defined as “the conscious, intentional failure or reckless indifference to the obligation to comply” with the requirement or prohibition; and
A minimum penalty of $50,000 and a maximum penalty of $1.5 million per violation, for violations attributed to “willful neglect” not remedied within 30 days of the date that the covered entity or BA knew or should have known of the violation.
For continuing violations such as failing to implement a required BAA, OCR can treat each day of noncompliance as a separate violation. However, sanctions under each of these tiers generally are subject to a maximum penalty of $1,500,000 for violations of identical requirements or prohibitions during a calendar year. For violations such as the failure to implement and maintain a required BAA where more than one covered entity bears responsibility for the violation, OCR an impose Civil Monetary Penalties against each culpable party. OCR considers a variety of mitigating and aggravating facts and circumstances when arriving at the amount of the penalty within each of these applicable tiers to impose.
CCDH Sanctions For Violation Of HIPAA Business Associate Agreement Rules
The CCDH Resolution Agreement arises from violations of this requirement that OCR says it discovered as a result of a compliance review conducted in response to an OCR investigation of a CCDH business associate, FileFax, Inc. According to OCR, OCR found from the compliance review of CCDH triggered by OCR’s investigation of FileFax that while CCDH began disclosing PHI to Filefax in 2003 and that Filefax stored records containing protected health information (PHI) for CCDH, neither CCDH nor Filefax could produce a signed Business Associate Agreement (BAA) covering their relationship for any period before October 12, 2015.
Based on the resulting investigation, OCR concluded:
CCDH failed to obtain a BAA providing written assurances from Filefax that it would appropriately safeguard the PHI in Filefax’s possession or control satisfactory assurances as required by Privacy Rule §164.502(e); and
Because CCDH failed to secure the required BAA, it violated the Privacy Rule by impermissibly disclosing the PHI of at least 10,728 individuals to Filefax when CCDH transferred the PHI to Filefax without obtaining the requisite BAA from Filefax (Covered Conduct).
In the Resolution Agreement, CCDH agrees to pay HHS $31,000.00 (Resolution Amount) and enter into and comply with a Corrective Action Plan (CAP) in return for OCR’s release of CCDH from liability for “any actions it may have against CCDH under the HIPAA Rules” for the Covered Conduct. The Resolution Agreement only settles the civil monetary penalty and other OCR enforcement liabilities of CCDH with respect to the Covered Conduct. Its provisions expressly state the Resolution Agreement does not affect any exposures of CCDH to CCDH to OCR civil monetary penalties or other enforcement for any HIPAA violations other than the Covered Conduct.
Perhaps even more noteworthy given the HITECH Act’s provisions coordinating the civil and criminal sanctions of HIPAA, while the Resolution Agreement provides no clear indication that the Justice Department might be considering criminally prosecuting CCDH or any other party in relation to the Covered Conduct, the Resolution Agreement also expressly states that its provisions do not affect CCDH’s potential exposure, if any, to criminal prosecution by the Justice Department for a criminal violation of the Privacy Rules under Section 1177 of the Social Security Act.
Implications For Covered Entities & Business Associates
Covered entities and their business associates should heed the CCDH Resolution Agreement as a strong message from OCR to ensure their organizations are complying with HIPAA’s BAA and other requirements. The Resolution Agreement makes clear that the starting point of this compliance effort must be obtaining and maintaining the requisite BAAs for each BA relationship.
To position their organizations to withstand potential investigation by OCR, covered entities and BAs should start by conducting a well-documented audit within the scope of attorney-client privilege both to verify that an appropriate, signed BAA is in place for each BA relationship as well as adequacy of processes for identifying business associate relationships, ensuring that signed BAAs are in effect before BAs access any PHI, and for investigating, reporting and resolving any breaches of the HIPAA Privacy or Security Rules that may arise in the course of operations.
Conducting this audit as soon as possible is particularly important in light of reported findings of widespread compliance concerns. See HIPAA Compliance Survey Churns Up Many Business Associate Problems (January 3, 2017). As the audit process could identify potential violations or other legally sensitive concerns, covered entities and business associates generally will want to arrange for this audit and evaluation to be conducted under the supervision of legal counsel experienced with HIPAA within or pursuant to processes structured with the assistance of legal counsel within the scope of attorney-client privilege.
Beyond confirming all necessary BAAs are in place, covered entities and business associates also generally will want to evaluate the adequacy of BAs’ processes and procedures for maintaining compliance with the Privacy and Security Rules as well as processes and procedures for responding to audits, investigations and complaints, reporting and addressing breaches of electronic and other PHI and other possible compliance concerns under HIPAA and other related laws. In many instances, parties may n wish to revise and strengthen existing BAAs to more specifically define these policies and procedures more specifically as well as indemnification, cyber or other liability coverage requirements and other contractual provisions for allocating potential costs and liabilities arising from breaches, audits, investigations and other expenses associated with the administration of these provisions.
About The Author
Recognized by LexisNexis® Martindale-Hubbell® as a “AV-Preeminent” (Top 1%/ the highest) and “Top Rated Lawyer,” with special recognition as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Health Care,” “Labor & Employment,” “Tax: Erisa & Employee Benefits” and “Business and Commercial Law” by D Magazine, the author of this update is widely known for her 29 plus years’ of work in health care, health benefit, health policy and regulatory affairs and other health industry concerns as a practicing attorney and management consultant, thought leader, author, public policy advocate and lecturer.
Throughout her adult life and nearly 30-year legal career, Ms. Stamer’s legal, management and governmental affairs work has focused on helping health industry, health benefit and other organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.
As a core component of her work, Ms. Stamer has worked extensively throughout her career with health care providers, health plans and insurers, managed care organizations, health care clearinghouses, their business associates, employers, banks and other financial institutions, management services organizations, professional associations, medical staffs, accreditation agencies, auditors, technology and other vendors and service providers, and others on legal and operational compliance, risk management and compliance, public policies and regulatory affairs, contracting, payer-provider, provider-provider, vendor, patient, governmental and community relations and matters including extensive involvement advising, representing and defending public and private hospitals and health care systems; physicians, physician organizations and medical staffs; specialty clinics and pharmacies; skilled nursing, home health, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing and management services organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers; and other health industry clients to manage and defend compliance, public policy, regulatory, staffing and other operations and risk management concerns. A core focus of this work includes work to establish and administer compliance and risk management policies; comply with requirements, investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; dealings with JCHO and other accreditation and quality organizations; investigation and defense of private litigation and other federal and state health care industry investigations and enforcement; insurance or other liability management and allocation; process and product development; managed care, physician and other staffing, business associate and other contracting; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others.
In the course of this work, Ms. Stamer has accumulated extensive experience helping health industry clients manage workforce, medical staff, vendors and suppliers, medical billing, reimbursement, claims and other provider-payer relations, business partners, and their recruitment, performance, discipline, compliance, safety, compensation, benefits, and training, board, medical staff and other governance; compliance and internal controls; strategic planning, process and quality improvement; change management; assess, deter, investigate and address staffing, quality, compliance and other performance; meaningful use, EMR, HIPAA and other data security and breach and other health IT and data; crisis preparedness and response; internal, government and third-party reporting, audits, investigations and enforcement; government affairs and public policy; and other compliance and risk management, government and regulatory affairs and operations concerns.
Author of leading works on HIPAA and other privacy and data security works and the scribe leading the American Bar Association Joint Committee on Employee Benefits Annual Agency Meeting with OCR, her experience includes extensive compliance, risk management and data breach and other crisis event investigation, response and remediation under HIPAA and other laws.
The American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has worked closely with a diverse range of physicians, hospitals and healthcare systems, DME, Pharma, clinics, health care providers, managed care, insurance and other health care payers, quality assurance, credentialing, technical, research, public and private social and community organizations, and other health industry organizations and their management deal with governance; credentialing, patient relations and care; staffing, peer review, human resources and workforce performance management; outsourcing; internal controls and regulatory compliance; billing and reimbursement; physician, employment, vendor, managed care, government and other contracting; business transactions; grants; tax-exemption and not-for-profit; licensure and accreditation; vendor selection and management; privacy and data security; training; risk and change management; regulatory affairs and public policy and other concerns.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar, insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions.
Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns.
In connection with this work, Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA, FACTA, trade secret and other information privacy and data security rules, including the establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and and enforcement, and a host of other related concerns. Her clients include public and private health care providers, health insurers, health plans, technology and other vendors, and others.
Her work includes both regulatory and public policy advocacy and thought leadership, as well as advising and representing a broad range of health industry and other clients about policy design, drafting, administration, business associate and other contracting, risk assessments, audits and other risk prevention and mitigation, investigation, reporting, mitigation and resolution of known or suspected violations or other incidents and responding to and defending investigations or other actions by plaintiffs, DOJ, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others.
In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, MGMA, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in Pensions, healthcare, workforce, immigration, tax, education and other areas.
A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposium and chair, faculty member and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management. Examples of her many highly regarded publications on these matters include “Protecting & Using Patient Data In Disease Management: Opportunities, Liabilities And Prescriptions,” “Privacy Invasions of Medical Care-An Emerging Perspective,” “Cybercrime and Identity Theft: Health Information Security: Beyond HIPAA,” as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, Insurance Thought Leadership and many other prominent publications and speaks and conducts training for a broad range of professional organizations.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.
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The US House of Representatives is scheduled to vote again tonight on the revised Majority-leadership lead first step healthcare reform legislation seeking to provide Americans and American business with some initial relief from the soaring premium and health care costs, care access barriers and regulatory and other burdens that have resulted under the ObamaCare law and regulations. Every American should call, e-mail or fax the leaders and their Congressperson as soon as possible today and tell them to pass this legislation and get busy passing the next set of reforms with no further delay, the get and stay II formed and involved until it gets it done starting with the House hearing and vote slated tonight starting at 8:30 Eastern. Get details here.
Health care and its reform is a complex challenge. Americans and American businesses, health payers, and States and their healthcare needs are highly diverse. The ambitious but far from successful Obamacare law shows the dangers of well-meaning but unrealistic To try to fix these challenges with a sweeping, one shot fix.
While passage of this legislative package won’t magically fix these challenges, it will provide quick relief for some of the ObamaCare expense and restrictions and expand the choices that Americans, American business, payers, providers and States while Congress works with American to identify and pursue legislative, regulatory, marketplace and other improvements.
A new Department of Health and Human Services Office of Civil Rights (OCR) CardioNet Resolution Agreement and Corrective Action Plan (Resolution Agreement) settling OCR charges of violations of the Privacy and Security Rules of the Health Insurance Portability & Accountability Act against remote cardiac monitoring provider CardioNet provides important lessons for all health plans, health insurers, telemedicine and other healthcare providers, healthcare clearinghouses (Covered Entities) and their business associates about steps to take to reduce their risk of getting hit with big OCR penalty like the $2.5 million settlement payment CardioNet must pay under the Resolution Agreement.
OCR announced the first OCR HIPAA settlement involving a wireless health services provider Monday, April 24. Under the Resolution Agreement, CardioNet agrees to pay OCR $2.5 million and to implement a corrective action plan to settle potential OCR charges it violated the HIPAA Privacy and Security Rules based on the impermissible disclosure of unsecured electronic protected health information (ePHI).
CardioNet Charges & Settlement
As has become increasingly common in recent years, the CardioNet settlement arose from concerns initially brought to OCR’s attention in connection with a HIPAA breach notification report. On January 10, 2012, OCR received notification from the provider of remote mobile monitoring of and rapid response to patients at risk for cardiac arrhythmias that a workforce member’s laptop with the ePHI of 1,391 individuals was stolen from a parked vehicle outside of the employee’s home. CardioNet subsequently notified OCR of a second breach of ePHI 2,219 individuals, respectively.
Likewise, the HIPAA breaches uncovered by OCR in the course of investigating these CardioNet breaches occur in the operations of many other covered entities. According to the OCR’s investigation in response to these breach reports revealed a series of continuing compliance concerns, including:
CardioNet failed to conduct an accurate and thorough risk analysis to assess the potential risks and vulnerabilities to the confidentiality, integrity, and availability of ePHI and failed to plan for and implement security measures sufficient to reduce those risks and vulnerabilities;
CardioNet’s policies and procedures implementing the standards of the HIPAA Security Rule were in draft form and had not been implemented;
CardioNet was unable to produce any final policies or procedures regarding the implementation of safeguards for ePHI, including those for mobile devices;
CardioNet failed to implement policies and procedures that govern the receipt and removal of hardware and electronic media that contain electronic protected health information into and out of its facilities, the encryption of such media, and the movement of these items within its facilities until March 2015; and
CardioNet failed to safeguard against the impermissible disclosure of protected health information by its employees, thereby permitting access to that information by an unauthorized individual, and failed to take sufficient steps to immediately correct the disclosure.
To resolve these OCR charges, CardioNet agrees in the Resolution Agreement to pay $2.5 million to OCR and implement a corrective action plan. Among other things, the corrective action plan requires CardioNet to complete the following actions to the satisfaction of OCR:
Prepare a current, comprehensive and thorough Risk Analysis of security risks and vulnerabilities that incorporates its current facility or facilities and the electronic equipment, data systems, and applications controlled, currently administered or owned by CardioNet, that contain, store, transmit, or receive electronic protected health information (“ePHI”) and update that Risk Analysis annually or more frequently, if appropriate in response to environmental or operational changes affecting the security of ePHI.
Assess whether its existing security measures are sufficient to protect its ePHI and revise its Risk Management Plan, Policies and Procedures, and training materials and implement additional security measures, as needed.
Develop and implement an organization-wide Risk Management Plan to address and mitigate any security risks and vulnerabilities found in the Risk Analysis as required by the Risk Management Plan.
Review and, to the extent necessary, revise, its current Security Rule Policies and Procedures (“Policies and Procedures”) based on the findings of the Risk Analysis and the implementation of the Risk Management Plan to comply with the HIPAA Security Rule.
Provide certification to OCR that all laptops, flashdrives, SD cards, and other portable media devices are encrypted, together with a description of the encryption methods used (“Certification”).
Review, revise its HIPAA Security training to include a focus on security, encryption, and handling of mobile devices and out-of-office transmissions and other policies and practices require to address the issues identified in the Risk Assessment and otherwise comply with the Risk Management Plan and HIPAA train its workforce on these policies and practices.
Investigate all potential violations of its HIPAA policies and procedures and notify OCR in writing within 30 days of any violation.
Submit annual reports to OCR, which must be signed by an owner or officer of CardioNet attesting that he or she has reviewed the annual report, has made a reasonable inquiry regarding its content and believes that, upon such inquiry, the information is accurate and truthful.
Maintain for inspection and copying, and provide to OCR, upon request, all documents and records relating to compliance with the corrective action plan for six years.
Implications For Covered Entities & Business Associates
The latest in a rapidly-growing list of high dollar HIPAA enforcement actions by OCR, the CardioNet Resolution Agreement contains numerous lessons for other Covered entities and their business associates about the importance of appropriate HIPAA privacy and security compliance, including but not limited to the following:
Like many previous resolution agreements announced by OCR, the Resolution Agreement reiterates the responsibility of covered entities and business associates to properly secure their ePHI and that as part of this process, OCR expects all laptop computers and other mobile devices containing or with access to ePHI be properly encrypted and secured.
It also reminds covered entities and their business associates to be prepared for, and expect an audit from OCR when OCR receives a report that their organization experienced a large breach of unsecured ePHI.
The Resolution Agreement’s highlighting of the draft status of CardioNet’s privacy and security policies also reflects OCR expects covered entities to actually final policies, procedures and training in place for maintaining compliance with HIPAA.
The discussion and requirements in the Corrective Action Plan relating to requirements to conduct comprehensive risk assessments at least annually and in response to other events, and to update policies and procedures in response to findings of these risk assessments also drives home the importance of conducting timely, documented risk analyses of the security of their ePHI, taking prompt action to address known risks and periodically updating the risk assessment and the associated privacy and security policies and procedures in response to the findings of the risk assessment and other changing events.
The requirement in the Resolution Agreement of leadership attestation and certification on the required annual report reflects OCR’s expectation that leadership within covered entities and business associates will make HIPAA compliance a priority and will take appropriate action to oversee compliance.
Finally, the $2.5 million settlement payment required by the Resolution Agreement and its implementation against CardioNet makes clear that OCR remains serious about HIPAA enforcement.
Of course, covered entities and business associates need to keep in mind that acts, omissions and events that create HIPAA liability risks also carry many other potential legal and business risks. For instance, since PHI records and data involved in such breaches usually incorporates Social Security Numbers, credit card or other debt or payment records or other personal consumer information, and other legally sensitive data, covered entities and business associates generally also may face investigation, notification and other responsibilities and liabilities under confidentiality, privacy or data security rules of the Fair and Accurate Credit Transaction Act (FACTA), the Internal Revenue Code, the Social Security Act, state identity theft, data security, medical confidentiality, privacy and ethics, insurance, consumer privacy, common law or other state privacy claims and a host of other federal or state laws. Depending on the nature of the covered entity or its business associates, the breach or other privacy event also may trigger fiduciary liability exposures for health plan fiduciaries in the case of a health plan, professional ethics or licensing investigations or actions against health care providers, insurance companies, administrative service providers or brokers, shareholder or other investor actions, employment or vendor termination or disputes and a host of other indirect legal consequences.
Beyond, and regardless of if, a covered entity or business ultimately succeeds in defending its actions against a charge of violating any of these or other standards, however, covered entities, business associates and their leaders should keep in mind that the most material and often most intractable consequences of a HIPAA or other data or other privacy breach report or public accusation, investigation, admission also typically are the most inevitable:
The intangible, but critical loss of trust and reputation covered entities and business associates inevitably incur among their patients, participants, business partners, investors and the community; and
The substantial financial expenses and administrative and operational disruptions of investigating, defending the actions of the organization and implementation of post-event corrective actions following a data or other privacy breach, audit, investigation, or charge.
In light of these risks, covered entities business associates and their management should use the experiences of CardioNet and other covered entities or business associates caught violating HIPAA or other privacy and security standards to reduce their HIPAA and other privacy and data security exposures. Management of covered entities and their business associates should take steps to ensure that their organizations policies, practices and procedures currently are up-to-date, appropriately administered and monitored, and properly documented. Management should ensure that their organizations carefully evaluate and strengthen as necessary their current HIPAA risk assessments, policies, practices, record keeping and retention and training in light of these and other reports as they are announced in a well-documented manner. The focus of these activities should be both to maintain compliance and position their organizations efficiently and effectively to respond to and defend their actions against a data breach, investigation, audit or accusation of a HIPAA or other privacy or security rule violation with a minimum of liability, cost and reputational and operational damages.
As the conduct of these activities generally will involve the collection and analysis of legally sensitive matters, most covered entities and business associates will want to involve legal counsel experienced with these matters and utilize appropriate procedures to be able to use and assert attorney-client privilege and other evidentiary privileges to mitigate risks associated with these processes. To help plan for and mitigate foreseeable expenses of investigating, responding to or mitigating a known, suspected or asserted breech or other privacy event, most covered entities and business associates also will want to consider the advisability of tightening privacy and data security standards, notification, cooperation and indemnification protections in contracts between covered entities and business associates, acquiring or expanding data breach or other liability coverage, or other options for mitigating the financial costs of responding to a breach notification, investigation or enforcement action.
About The Author
Recognized by LexisNexis® Martindale-Hubbell® as a “AV-Preeminent” (Top 1%/ the highest) and “Top Rated Lawyer,” with special recognition as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Health Care,” “Labor & Employment,” “Tax: Erisa & Employee Benefits” and “Business and Commercial Law” by D Magazine, the author of this update is widely known for her 29 plus years’ of work in health care, health benefit, health policy and regulatory affairs and other health industry concerns as a practicing attorney and management consultant, thought leader, author, public policy advocate and lecturer.
Throughout her adult life and nearly 30-year legal career, Ms. Stamer’s legal, management and governmental affairs work has focused on helping health industry, health benefit and other organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.
As a core component of her work, Ms. Stamer has worked extensively throughout her career with health care providers, health plans and insurers, managed care organizations, health care clearinghouses, their business associates, employers, banks and other financial institutions, management services organizations, professional associations, medical staffs, accreditation agencies, auditors, technology and other vendors and service providers, and others on legal and operational compliance, risk management and compliance, public policies and regulatory affairs, contracting, payer-provider, provider-provider, vendor, patient, governmental and community relations and matters including extensive involvement advising, representing and defending public and private hospitals and health care systems; physicians, physician organizations and medical staffs; specialty clinics and pharmacies; skilled nursing, home health, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing and management services organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers; and other health industry clients to manage and defend compliance, public policy, regulatory, staffing and other operations and risk management concerns. A core focus of this work includes work to establish and administer compliance and risk management policies; comply with requirements, investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; dealings with JCHO and other accreditation and quality organizations; investigation and defense of private litigation and other federal and state health care industry investigations and enforcement; insurance or other liability management and allocation; process and product development; managed care, physician and other staffing, business associate and other contracting; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others.
In the course of this work, Ms. Stamer has accumulated extensive experience helping health industry clients manage workforce, medical staff, vendors and suppliers, medical billing, reimbursement, claims and other provider-payer relations, business partners, and their recruitment, performance, discipline, compliance, safety, compensation, benefits, and training, board, medical staff and other governance; compliance and internal controls; strategic planning, process and quality improvement; change management; assess, deter, investigate and address staffing, quality, compliance and other performance; meaningful use, EMR, HIPAA and other data security and breach and other health IT and data; crisis preparedness and response; internal, government and third-party reporting, audits, investigations and enforcement; government affairs and public policy; and other compliance and risk management, government and regulatory affairs and operations concerns.
Author of leading works on HIPAA and other privacy and data security works and the scribe leading the American Bar Association Joint Committee on Employee Benefits Annual Agency Meeting with OCR, her experience includes extensive compliance, risk management and data breach and other crisis event investigation, response and remediation under HIPAA and other data security, privacy and breach laws. Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly regarded works and training programs on HIPAA and other data security, privacy and use, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns.
In connection with this work, Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA, FACTA, trade secret and other information privacy and data security rules, including the establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns. Her clients include public and private health care providers, health insurers, health plans, technology and other vendors, and others.
Her work includes both regulatory and public policy advocacy and thought leadership, as well as advising and representing a broad range of health industry and other clients about policy design, drafting, administration, business associate and other contracting, risk assessments, audits and other risk prevention and mitigation, investigation, reporting, mitigation and resolution of known or suspected violations or other incidents and responding to and defending investigations or other actions by plaintiffs, DOJ, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others.
In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, MGMA, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in Pensions, healthcare, workforce, immigration, tax, education and other areas.
The American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has worked closely with a diverse range of physicians, hospitals and healthcare systems, DME, Pharma, clinics, health care providers, managed care, insurance and other health care payers, quality assurance, credentialing, technical, research, public and private social and community organizations, and other health industry organizations and their management deal with governance; credentialing, patient relations and care; staffing, peer review, human resources and workforce performance management; outsourcing; internal controls and regulatory compliance; billing and reimbursement; physician, employment, vendor, managed care, government and other contracting; business transactions; grants; tax-exemption and not-for-profit; licensure and accreditation; vendor selection and management; privacy and data security; training; risk and change management; regulatory affairs and public policy and other concerns.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other “nonpar,” insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions.
A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposium and chair, faculty member and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management. Examples of her many highly regarded publications on these matters include “Protecting & Using Patient Data In Disease Management: Opportunities, Liabilities And Prescriptions,” “Privacy Invasions of Medical Care-An Emerging Perspective,” “Cybercrime and Identity Theft: Health Information Security: Beyond HIPAA,” as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, Insurance Thought Leadership and many other prominent publications and speaks and conducts training for a broad range of professional organizations.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
While Congress and the Trump Administration continue to ponder and debate what if anything to do with the health care reforms of the Patient Protection and Affordable Care Act (ACA), employer and other health plan sponsors, health plan insurers, plan fiduciaries and others responsible for health plan design, administration or funding must take steps to verify their past and continuing compliance with the ACA and other federal mandates while laying the groundwork to respond quickly to any eventual reforms.
Regardless of what, if anything, the existing Congress or the Trump Administration does to repeal or reform the ACA or other federal health plan rules, all health plan sponsors, insurers, fiduciaries and administrators should act to mitigate their substantial and ever-growing health plan exposures by arranging for an independent compliance audit of their health plan terms, materials and operations for potential uncorrected past or current violations of the 40 federal mandates covered by the Form 8928 reporting and associated Internal Revenue Code excise tax liability exposure, as well as other applicable plan liabilities under the Employee Retirement Income Security Act (ERISA), the Social Security Act, the Internal Revenue Code and other federal laws within open statute of limitation periods.
The cost, complexity and riskiness of health plan sponsorship and administration has grown exponentially over the past two decades. Thanks to the ACA and the continuous stream of other federal laws and regulations implemented over the past 20 years, sponsoring employers, as well as their health plans and those responsible as fiduciaries for administering, funding and insuring these programs now face huge costs, responsibilities and liabilities. While the ACA substantially expanded the federal health plan mandates and liabilities, the ACA is not the lone cause and its amendment or repeal alone won’t fully resolve these risks prospectively or retrospectively insulate sponsoring employers, their plans or their fiduciaries and insurers from the liabilities and costs of compliance issues occurring before Congress repeals or amends the ACA.
Of particular note for employer and other sponsors of group health plans are the self-reporting and excise tax self-assessment and payment requirements for employers coupled with the companion responsibilities and liabilities fiduciaries, plan administrators and others face under these federal mandates make it important that employers and others sponsoring group health plans and their management or other leaders overseeing or participating in plan design or vendor selection, plan administration or other plan related activities get advice and help from qualified legal counsel experienced in health plan matters:
To conduct an independent compliance review and risk assessment of their health plans,
To recommend and assist in the performance of recommended steps to correct or mitigate risks from any potential past or existing violations or other exposures that have arisen or are likely to arise from existing contractual, plan design or other health plan actions;
To explore the potential advisability of taking additional steps to prevent or mitigate health plan associated compliance or other risks going forward whether or not health reform happens; and
To begin preparing to take advantage of any impending health care reforms by evaluating the requirements and procedures that existing plan terms, contracts, vendors and arrangements are likely to require to implement changes necessary to respond to any reforms as quickly and efficiently as possible.
Spring Clean Your Health Plan House
Since any reforms eventually enacted are unlikely to retroactively eliminate liability of employers, their health plans or fiduciaries for violations of federal health plan mandates, health plan terms, or associated contracts occurring before the effective date of reform, employer and other health plan sponsors, fiduciaries, insurers and administrators should begin by identifying, cleaning up any existing, unresolved, and preventing any new health plan compliance problems.
While overall compliance with applicable federal mandates and health terms generally should be the goal, employers or others sponsoring group health plans need to be particularly concerned with their responsibilities and potential liability under the Internal Revenue Code to self-identify, report and pay stiff excise tax penalties of $100 per day per violation of any of 40 federal health plan mandates imposed by the ACA and various other federal laws when the sponsor files its annual tax return.
Sponsors and plan fiduciaries also need to be concerned about other risks beyond sponsoring employers’ excise tax liability exposures for sponsoring a non-compliant group health plan. Among other things, group health plans and their fiduciaries can face audits, litigation and enforcement actions by the Centers for Medicare & Medicaid Services and other health plans for improperly coordinating plan claims with other coverage as well as lawsuits from covered persons, their health care providers or other beneficiaries, the Department of Labor and CMS, or others seeking to enforce rights to benefits, penalties in the case of CMS or the Department of Labor, and attorneys’ fees and other costs of enforcement. Beyond benefit litigation, the employer or representatives of the sponsoring employer, if any, named or acting as fiduciaries, insurer or third-party service providers named or acting as fiduciaries, also could face fiduciary lawsuits seeking damages, equitable relief, and attorneys’ fees and costs of court, for failing to prudently administer the plan in accordance with its terms and the law brought by covered persons or their beneficiaries or the DOL as well as fiduciary breach penalties if the fiduciary breach action is brought by the DOL. If the plan fails to comply with claims and appeals procedures or other ERISA notification requirements, parties named or functioning as the plan administrator for this purpose also could face penalties of up to $125 per violation per day in the case of enforcement actions brought by participants and beneficiaries or $1025 per violation per day in the case of actions brought by the DOL, plus attorneys’ fees and other costs of enforcement. Unless the employer previously took steps to draft its health plan documents and negotiate its vendor contracts to provide otherwise, most vendor provided plans typically assign these liabilities to the sponsoring employer or a member of its management by naming that employer or the management person the “plan administrator” and/or “named fiduciary” responsible for those activities and liabilities, requiring the plan sponsor to indemnify the vendor for costs and liabilities arising from the performance of actions under the plan even when those actions don’t comply with ERISA fiduciary or other legal standards applicable to the performance of those duties under the plan, or both, and other contractual or plan provisions that shift liabilities and costs to the plan sponsor.
To mitigate their exposure to these liabilities and costs, employer or other health plan sponsors should consider arranging for an independent legal compliance and risk assessment of their health plan, its terms, materials and operations to help mitigate the sponsoring employer’s exposure to self-identify, self-report on IRS Form 2848 and pay the $100 per day per violation excise tax liability now generally required under the Internal Revenue Code for any such violation.
Beyond mitigating a plan sponsor’s Form 8928 reporting and associated excise tax exposures, an independent compliance audit also can mitigate other risks and exposures for the sponsoring employer, the plan and its fiduciaries, the cost of which the sponsoring employer often bears financial responsibility for funding pursuant to the contractual indemnification and funding obligations entered into in connection with the establishment and maintenance of the plan, the fiduciary role, if any, of the employer with respect to the plan, or both. Accordingly, a timely and appropriate review is likely to help mitigate other risks and liabilities such as:
Fiduciary liability that can arising from failing to administer the plan in accordance with these and other federal health plan mandates under ERISA;
Unanticipated benefit costs and liabilities, which for self-insured plans are likely to be particularly burdensome if compliance issues are not identified and corrected before applicable deadlines to pay and submit claims to the stop-loss or other insurer expire (usually at or shortly after the close of a plan year or if earlier, contract termination);
Benefit costs and penalties for wrongful coordination of benefits with Medicare, Medicaid, DOD and certain other plans or coverage in violation of Secondary Payer and other mandates; and
Costs of defending and settling audits, litigation and other government or participant enforcement actions.
Since prompt self-audit and correction can help mitigate all of these liabilities, business leaders of employers sponsoring health plans should act promptly to engage experienced legal counsel experienced with health plan laws and operations to advise the plan sponsor about how to audit their group health plan’s plan documents, materials and operations for compliance with these and other federal health plan rules within the scope of attorney-client privilege while managing tax, financial, benefit and fiduciary liability exposures to deal with potential compliance concerns that the review might discover as well as mitigate risks that could result if the audit is improperly structured or conducted.
Prepare To Respond To Potential Health Reform & Other Health Plan Improvement
Beyond identifying and addressing existing compliance concerns and other risks associated with prior or existing plan design or administration, most employer and other sponsors also will want to review the health plan document and materials and associated insurance, third-party administration and other health plan vendor contracts pursuant to which the health plan is established, maintained and administered to identify requirements and opportunities to respond quickly to make changes when and if health care reform happens as well as for other opportunities to mitigate existing risks and costs.
As most commentators expect some type of regulatory or statutory health plan relief to result from the current health care reform debates in Congress, employer and other health plan sponsors desiring to accelerate their ability to take advantage of any forthcoming relief should familiarize themselves with the procedures required under existing plan terms, contracts and rules to modify their programs in response to these changes. Almost certainly, plan sponsors should anticipate needing to adopt some amendments to plan documents, summary plan descriptions and other materials to take advantage of any legislative or statutory relief. Plan sponsors also need to keep in mind that their vendor contracts with administrators, group, stop-loss or captive insurers, and other vendors likely also will require the plan sponsor to notify and negotiate with its vendors to secure their agreement before adopting these changes to avoid violating those vendor agreements and prudently to arrange for appropriate implementation and administration of the modified plan design and terms. Identification of the contractual and plan requirements and commencement of discussions with the relevant vendors can help expedite the planning and implementation of any desired plan modifications the plan sponsor elects to make in response to any statutory or regulatory reforms.
While preparing for anticipated health care reforms, most plan sponsors also will want to review their plans and vendor contracts for other potential opportunities to mitigate risks or expenses. With respect to existing and future liability mitigation, each plan sponsor generally should carefully assess the allocation of fiduciary responsibility and liability between the sponsoring employer, members of its management or other workforce team, and vendors to identify potential areas where the contract may assign named or other plan administrator or other fiduciary status and liability to the plan sponsor or a member of its workforce for duties outsourced to a vendor. Sponsoring employers or their management may want to initiate negotiations with the vendor to reallocate the fiduciary role and responsibility to the party responsible for performance of the specific duties, enhancement of performance guarantees, indemnifications and insurance coverage for proper performance of the outsourced duties by the vendor in accordance with the plan terms, including any mandates imposed by the ACA and other federal laws in form and operation, and other safeguards or, if the vendor is unwilling to consider these changes, begin searching for a replacement vendor willing to provide better accountability for its actions with respect to the services it is hired to perform.
Except in rare circumstances where the sponsoring employer has carefully contracted to transfer fiduciary liability to its insurer or administrator and otherwise does not exercise or have a fiduciary obligation to exercise discretion or control over these responsibilities, employers sponsoring group health plans that violate federal mandates like the out-of-pocket limit often ultimately bear some or all of these liabilities even if the violation actually was committed by a plan vendor hired to administer the program either because the plan documents name the employer as the “named fiduciary” or “plan administrator” under ERISA, the employer or a member of its management named in the plan generally bears fiduciary responsibility functionally for selection or oversight of the culpable party, the employer signed a contract, resolution or plan document obligating the employer to indemnify the service provider for the liability, or a combination of these reasons.
Since prompt self-audit and correction can help mitigate all of these liabilities as well as help to preserve access to stop-loss or other reinsurance coverage, if any, applicable to help pay for some or all of any additional benefit liabilities resulting from these benefit mandates, business leaders of companies offering group health plan coverage should act quickly to engage experienced legal counsel for their companies for advice about how to audit their group health plan’s compliance with these and other federal health plan rules within the scope of attorney-client privilege while managing tax, financial, benefit and fiduciary liability exposures to deal with potential compliance concerns that the review might discover as well as mitigate risks that could result if the audit is improperly structured or conducted.
While businesses inevitably will need to involve or coordinate with their accounting, broker, and other vendors involved with the plans, businesses generally will want to get legal advice in a manner that preserves their potential to claim attorney-client privilege to protect against discovery in the event of future enforcement or litigation actions sensitive discussions and analysis about compliance audits, plan design choices, and other risk management and liability planning as well as to get help identifying potential plan design, contracting, procedural or other changes that may be needed to fix compliance deficiencies and mitigate other risks, particularly in light of complexity of the exposures and risks.
About The Author
Recognized by LexisNexis® Martindale-Hubbell® as a “AV-Preeminent” (Top 1%/ the highest) and “Top Rated Lawyer,” with special recognition as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Health Care,” “Labor & Employment,” “Tax: Erisa & Employee Benefits” and “Business and Commercial Law” by D Magazine, the author of this update is widely known for her 29 plus years’ of work in health care, health benefit, health policy and regulatory affairs and other health industry concerns as a practicing attorney and management consultant, thought leader, author, public policy advocate and lecturer.
Throughout her adult life and nearly 30-year legal career, Ms. Stamer’s legal, management and governmental affairs work has focused on helping health and othre employee benefit, financial services, health care and other organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk.
Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.
Throughout her career, she has helped a diverse array of clients manage, administer and defend employee and other workforce, vendors and suppliers, their recruitment, selection, performance management, contracting, investigation, discipline and termination; health and other employee benefits; compensation; safety; governance; compliance and internal controls; strategic planning, process and quality improvement; change management; trade secret and other privacy, data security and data breach;; crisis preparedness and response; internal, government and third-party reporting relations, audits, investigations and enforcement; government affairs and public policy; and other compliance and risk management, government and regulatory affairs and operations concerns.
The American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has worked extensively throughout her career with employers, health and other employee benefit plans, insurers, managed care organizations, health care clearinghouses, health care providers, their business associates, employers, banks and other financial institutions, management services organizations, professional and trade associations, accreditation agencies, auditors, technology and other vendors and service providers, and others on benefit and insurance program legal and operational compliance, risk management, public policies and regulatory affairs, contracting, payer-provider, provider-provider, vendor, patient, governmental and community relations and matters including extensive involvement advising, representing and defending plan sponsors, fiduciaries, service providers, managed care organizations, insurers, self-insured health plans and other payers. Her experience includes both leading edge work designing and administering programs, as well as defending clients in connection with audits and enforcement actions by OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC, OSHA, Department of Insurance, Department of Justice and state attorneys’ general and other federal and state agencies; accreditation and quality organizations; private litigation and other federal and state health care industry investigation, enforcement including insurance or other liability management and allocation; process and product development, contracting, deployment and defense; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others.and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions.
Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns. Her work includes both regulatory and public policy advocacy and thought leadership, as well as advising and representing a broad range of health industry and other clients about policy design, drafting, administration, business associate and other contracting, risk assessments, audits and other risk prevention and mitigation, investigation, reporting, mitigation and resolution of known or suspected violations or other incidents and responding to and defending investigations or other actions by plaintiffs, DOJ, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others.
A lead policy advisor to the Government of Bolivia on its pension privitization project and involved in U.S. federal and state as well as cross border workforce, pension, health care, Social Security, immigration, and tax regulatory and statutory reform throughout her adult life, Ms. Stamer also is widely sought out for her thoughtleadership and assistance with domestic and international public policy concerns in Pensions, healthcare, workforce, immigration, tax, education and other areas.
A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposium and chair, faculty member and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, Insurance Thought Leadership and many other prominent publications and speaks and conducts training for a broad range of professional organizations.
For more information about Ms. Stamer or her experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at www.solutionslawpress.com.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here.
Metro Community Provider Network (MCPN), a federally-qualified health center (FQHC), must pay $400,000 and implement a corrective action plan to resolve U.S. Department of Health and Human Services, Office for Civil Rights (OCR) charges it violated the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule by failing to implement a security management process to safeguard electronic protected health information (ePHI). The latest in a growing series of high-dollar HIPAA settlements and penalty assessments, it reminds health plans and other HIPAA-covered entities of the importance of conducting risk assessments and other actions to prevent and prepare to respond to hacking and other data breach and security events.
The Resolution Agreement and Corrective Action Plan, like most others before it, resulted from an investigation opened in response to a breach report. On January 27, 2012, MCPN filed a breach report with OCR indicating that a hacker accessed employees’ email accounts and obtained 3,200 individuals’ ePHI through a phishing incident. OCR’s investigation revealed that MCPN took necessary corrective action related to the phishing incident. However, the investigation also revealed that MCPN failed to conduct a risk analysis until mid-February 2012 – well after the hacking incident reported in the breach report.Prior to the breach incident, MCPN had not conducted a risk analysis to assess the risks and vulnerabilities in its ePHI environment, and, consequently, had not implemented any corresponding risk management plans to address the risks and vulnerabilities identified in a risk analysis.
When MCPN finally conducted a risk analysis, OCR found that risk analysis, as well as all subsequent risk analyses, were insufficient to meet the requirements of the Security Rule.
OCR made a point in announcing the Resolution Agreement of noting it considered MCPN’s status as a FQHC when balancing the significance of the violation with MCPN’s ability to maintain sufficient financial standing to ensure the provision of ongoing patient care. MCPN provides primary medical care, dental care, pharmacies, social work, and behavioral health care services throughout the greater Denver, Colorado metropolitan area to approximately 43,000 patients per year, a large majority of whom have incomes at or below the poverty level. It is likely that OCR would have imposed a much greater settlement amount had the covered entity not been a FQHC serving the poor.
About The Author
Recognized by LexisNexis® Martindale-Hubbell® as a “AV-Preeminent” (Top 1%/ the highest) and “Top Rated Lawyer,” with special recognition as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Health Care,” “Labor & Employment,” “Tax: Erisa & Employee Benefits” and “Business and Commercial Law” by D Magazine, the author of this update is widely known for her 29 plus years’ of work in health care, health benefit, health policy and regulatory affairs and other health industry concerns as a practicing attorney and management consultant, thought leader, author, public policy advocate and lecturer.
Throughout her adult life and nearly 30-year legal career, Ms. Stamer’s legal, management and governmental affairs work has focused on helping health industry, health benefit and other organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer supports these organizations and their leaders on both a real-time, “on demand” basis as well as outsourced operations or special counsel on an interim, special project, or ongoing basis with strategic planning and product and services development and innovation; workforce and operations management, crisis preparedness and response as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.
Throughout her career, she has helped health industry clients manage workforce, medical staff, vendors and suppliers, medical billing, reimbursement, claims and other provider-payer relations, business partners, and their recruitment, performance, discipline, compliance, safety, compensation, benefits, and training ;board, medical staff and other governance; compliance and internal controls; strategic planning, process and quality improvement; change management; assess, deter, investigate and address staffing, quality, compliance and other performance; meaningful use, EMR, HIPAA and other data security and breach and other health IT and data; crisis preparedness and response; internal, government and third-party reporting, audits, investigations and enforcement; government affairs and public policy; and other compliance and risk management, government and regulatory affairs and operations concerns.
Author of leading works on HIPAA and other privacy and data security works and the scribe leading the American Bar Association Joint Committee on Employee Benefits Annual Agency Meeting with OCR, her experience includes extensive compliance, risk management and data breach and other crisis event investigation, response and remediation under HIPAA and other laws.
The American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has worked closely with a diverse range of physicians, hospitals and healthcare systems, DME, Pharma, clinics, health care providers, managed care, insurance and other health care payers, quality assurance, credentialing, technical, research, public and private social and community organizations, and other health industry organizations and their management deal with governance; credentialing, patient relations and care; staffing, peer review, human resources and workforce performance management; outsourcing; internal controls and regulatory compliance; billing and reimbursement; physician, employment, vendor, managed care, government and other contracting; business transactions; grants; tax-exemption and not-for-profit; licensure and accreditation; vendor selection and management; privacy and data security; training; risk and change management; regulatory affairs and public policy and other concerns.
As a core component of her work, Ms. Stamer has worked extensively throughout her career with health care providers, health plans and insurers, managed care organizations, health care clearinghouses, their business associates, employers, banks and other financial institutions, management services organizations, professional associations, medical staffs, accreditation agencies, auditors, technology and other vendors and service providers, and others on legal and operational compliance, risk management and compliance, public policies and regulatory affairs, contracting, payer-provider, provider-provider, vendor, patient, governmental and community relations and matters including extensive involvement advising, representing and defending public and private hospitals and health care systems; physicians, physician organizations and medical staffs; specialty clinics and pharmacies; skilled nursing, home health, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing and management services organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers; and other health industry clients to establish and administer compliance and risk management policies; comply with requirements, investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry investigation, enforcement including insurance or other liability management and allocation; process and product development, contracting, deployment and defense; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others.and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.
Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also has extensive health care reimbursement and insurance experience advising and defending health care providers, payers, and others about Medicare, Medicaid, Medicare and Medicaid Advantage, Tri-Care, self-insured group, association, individual and group and other health benefit programs and coverages including but not limited to advising public and private payers about coverage and program design and documentation, advising and defending providers, payers and systems and billing services entities about systems and process design, audits, and other processes; provider credentialing, and contracting; providers and payer billing, reimbursement, claims audits, denials and appeals, coverage coordination, reporting, direct contracting, False Claims Act, Medicare & Medicaid, ERISA, state Prompt Pay, out-of-network and other nonpar insured, and other health care claims, prepayment, post-payment and other coverage, claims denials, appeals, billing and fraud investigations and actions and other reimbursement and payment related investigation, enforcement, litigation and actions.
Heavily involved in health care and health information technology, data and related process and systems development, policy and operations innovation and a Scribe for ABA JCEB annual agency meeting with OCR for many years who has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues including meaningful use and EMR, billing and reimbursement, quality measurement and reimbursement, HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and many other concerns. Her work includes both regulatory and public policy advocacy and thought leadership, as well as advising and representing a broad range of health industry and other clients about policy design, drafting, administration, business associate and other contracting, risk assessments, audits and other risk prevention and mitigation, investigation, reporting, mitigation and resolution of known or suspected violations or other incidents and responding to and defending investigations or other actions by plaintiffs, DOJ, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others.
Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA, FACTA, trade secret and other information privacy and data security rules, including the establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and and enforcement, and a host of other related concerns. Her clients include public and private health care providers, health insurers, health plans, technology and other vendors, and others. In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, MGMA, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in Pensions, healthcare, workforce, immigration, tax, education and other areas.
A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; a ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposium and chair, faculty member and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management. Examples of her many highly regarded publications on these matters include “Protecting & Using Patient Data In Disease Management: Opportunities, Liabilities And Prescriptions,” “Privacy Invasions of Medical Care-An Emerging Perspective,” “Cybercrime and Identity Theft: Health Information Security: Beyond HIPAA,” as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, Insurance Thought Leadership and many other prominent publications and speaks and conducts training for a broad range of professional organizations.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.
Actual or perceived disloyalty or other reaches of Trece is one of the quickest ways to destroy a working relationship between an a business and its management or other employees or other service providers.
Heading off problems begins with both the management of a business and those providing services to it understanding the call mama and other conflict of interest, loyalty and other responsibilities of the service provider to the businesses
Historically, the common law has recognized that common law management and other employees – but not necessarily independent contractors or other non common law employee service providers – owe a duty of loyalty to their employer that among other things. Inventions, knowledge and other value created by an employee and value derived from the employee generally are presumed the property of the employee under the doctrine of “works for hire.” An employee’s common law duty of loyalty generally also prihibits the employee from engaging in competition with the employer, self dealing, or conflicts of interest unless the the employee proves the employee consented after full disclosure of relevant facts by the employee.
In the age of federal sentencing guidelines and other federal and state internal controls mandates, carefully crafted loyalty, conflict of interest, confidentiality and trade secret, nonsolicitation, noncompete and other provisions in employee contracts, handbooks and policies can promote important regulatory risk management and compliance goals as well as deter employee breaches of loyalty by educating the employee of their duty, limit or overrun statutorial restrictions on some of these common law duties, and otherwise strengthen the ability of an employer to enforce these duties in the event of a violation.
As the common law does not necessarily apply these same duties of loyalty automatically businesses of contractor and other no traditional worker or other service provider relationships, however, ensuring that independent contractors and other nontraditional service providers are engaged pursuant to written agreements that include carefully crafted provisions that clearly reserve the business’ exclusive or other ownership of created products, internal controls mandates, and loyalty, conflict of interest, confidentiality and trade secret, nonsolicitation, noncompete and other safeguards can be critical to protect the interests of the business.
Whether dealing with employees or other service providers, today’s privacy and other limits on business investigatory powers also create a strong demand for businesses to back up their ability to investigate and redress these and other breaches by adopting and requiring all service providers to consent or otherwise be subject to appropriate disclaimers of privacy, computer and other use and monitoring, pre, concurrent and post terminationinvestigation, disclosure, cooperation, and other policies.
Heads up tax-exempt and governmental entities, employer and other qualified employee benefit plan sponsor, fiduciaries, administrators, and recordkeepers and their management, accountants, attorneys, and other service providers and advisors. Changes to the procedures that Internal Revenue Service (IRS) Tax Exempt and Government Entities TE/GE examiners use to make and enforce Information Document Request (IDR) in connection with an audit or other examination make it more important than ever that taxpayers use special care to collect, organize and maintain all of the data and documentation that examiners are likely to request in IDR and take other steps to prepare in advance to respond to an IDR.
New procedures announced in the February 27, 2017 Memorandum For All TE/GE Examiners On New Process For All Information Document Requests and scheduled to take effect April 1 seek to expedite the examination process and reduce backlogs. To accomplish this, the new procedures impose specific, tightened timelines for responding to IDRs and IRS follow and enforcement of data and document productions demanded by an IDR. As part of these changes, the new procedures shorten the time that the examiners will issue early subpoena warnings and subpoenas to compel taxpayers to produce requested data.
Taxpayers unable to respond in a timely fashion risk of both triggering these perilous enforcement procedures and an enhanced risk that IRS examiners will view the delay as an indication that the taxpayer may not be using the internal controls and processes expected by the IRS rules. Accordingly, taxpayers should seek advise from experienced legal counsel about the policies, practices, data and information they might be expected to need to respond to a IDR or other government investigation, recommendations for conducting their operations to promote their ability to efficiently assemble and produce the necessary data, records and other information to respond to a IDR or other investigation, audit or enforcement action, and other appropriate steps to position their organizations timely to recognize and produce the often substantial data generally demanded by an IRD and minimize risks of liability likely to arise from an IRS examination or other governmental or private investigation or action.
About The Author
Recognized by LexisNexis® Martindale-Hubbell® as a “AV-Preeminent” (Top 1%/ the highest) and “Top Rated Lawyer,” with special recognition as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, the author of this update is widely known for her 28 plus years’ of work in health care, health benefit, health policy and regulatory affairs and other health industry concerns as a practicing attorney and management consultant, thought leader, author, public policy advocate and lecturer.
Throughout her adult life and nearly 30-year legal career, Ms. Stamer’s legal, management and governmental affairs work has focused on helping health industry, health benefit and other employee benefit, insurance, technology and other highly regulated organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps these and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, current American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Compliance Chair of the National Kidney Foundation of North Texas, and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer’s includes nearly 30 years’ of work with a diverse range of health industry clients on an extensive range of matters.
Ms. Stamer has worked closely with health industry, managed care and insurance, employee benefit, financial services, technology, restructuring, retail, hospitality, manufacturing, consulting, sales, energy, import-export, staffing and other businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of staffing, human resources and workforce performance management, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
As a core component of her work, Ms. Stamer has worked extensively throughout her career with health care providers, health plans and insurers, managed care organizations, health care clearinghouses, their business associates, employers, banks and other financial institutions, management services organizations, professional associations, medical staffs, accreditation agencies, auditors, technology and other vendors and service providers, and others on legal and operational compliance, risk management and compliance, public policies and regulatory affairs, contracting, payer-provider, provider-provider, vendor, patient, governmental and community relations and matters including extensive involvement advising, representing and defending public and private hospitals and health care systems; physicians, physician organizations and medical staffs; specialty clinics and pharmacies; skilled nursing, home health, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing and management services organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers; and other health industry clients to establish and administer compliance and risk management policies; comply with requirements, investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry investigation, enforcement including insurance or other liability management and allocation; process and product development, contracting, deployment and defense; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others, and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.
Best known for her thoughleadership and experience on health benefit and other health and insurance industy matters, Ms. Stamer has worked throughout her career health care, health benefit and insurance and health information technology, data and related process and systems development, policy and operations design, management, product development, innovation, administration, public policy, regulatory compliance, enforcement, contracting, privacy and data security and related matter. Ms. Stamer continuously advises health and insurance industry clients about licensing, regulatory compliance and internal controls, workforce, agent and broker and medical staff performance, claims and reimbursement, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Scribe for ABA JCEB annual agency meeting with OCR for many years, Ms. Stamer also is widely recognized for her extensive work and leadership on HIPAA, FACTA, PCI, IRC and other tax, Social Security, GLB, rade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and concerns including policy design, drafting, administration and training; business associate and other contracting; risk assessments, audits and other risk prevention and mitigation; investigation, reporting, mitigation and resolution of known or suspected breaches, violations or other incidents; and defending investigations or other actions by plaintiffs, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others. Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks, insurers and other financial institutions, and others on trade secret confidentiality, privacy, data security and other risk management and compliance including the design, establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR, FTC and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns.
Her clients include public and private health care providers, health insurers, health plans, employers, payroll, staffing, recruitment, insurance and financial services, technology and other vendors, and others. In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others. Ms. Stamer also has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use published by BNA, the ABA and other premier legal industy publishers.
Ms. Stamer also has extensive experience with a diverse array of other human resources and other staffing, services, outsourcing and other workforce, qualified and nonqualified employee benefit, compensation, and related matters, their design, documentation, administration, modification, enforcement and defense and other related operational, compliance and risk management. Her experience includes advising andassisting employer and other plan sponsors, fiduciaries, administrators, vendors and others with and program design, documentation and ongoing administration administration for compliance and defensibility under IRS and other federal and state tax, OFCCP, CAS, SCA, Davis Bacon, SEC and other corporate, ERISA and other federal and state labor and employment, SEC and other corporate, Department of Insurance and other laws and regulations; advising and assisting buyers, sellers, investors, debtors, creditors, trustees, plan fiduciaries and service providers and others in relation to business transactions, restructurings, bankruptcies and other substantial corporate and business events and transactions including significant work involving amendment, termination, windup and restructuring of employee benefit plans and workforce concerns in highly publicized fiduciary, securities or other misconduct investigation and enforcement, bankruptcy, restructuring or other distress situations.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy and governmental and regulatory affairs experience, Ms. Stamer also is widely recognized for regulatory and policy work, advocacy and outreach on healthcare, education, aging, disability, savings and retirement, workforce, ethics, and other policies. Throughout her adult life and career, Ms. Stamer has provided thought leadership; policy and program design, statutory and regulatory development design and analysis; drafted legislation, proposed regulations and other guidance, position statements and briefs, comments and other critical policy documents; advised, assisted and represented health care providers, health plans and insurers, employers, professional. and trade associations, community and government leaders and others on health care, health, pension and retirement, workers’ compensation, Social Security and other benefit, insurance and financial services, tax, workforce, aging and disability, immigration, privacy and data security and a host of other international and domestic federal, state and local public policy and regulatory reforms through her involvement and participation in numerous client engagements, founder and Executive Director of the Coalition for Responsible Health Policy and its PROJECT COPE: the Coalition on Patient Empowerment, adviser to the National Physicians Congress for Healthcare Policy, leadership involvement with the US-Mexico Chamber of Commerce, the Texas Association of Business, the ABA JCEB, Health Law, RPTE, Tax, Labor, TIPS, International Life Sciences, and other Sections and Committees, SHRM Governmental Affairs Committee and a host of other involvements and activities.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications. In addition to her many years of service as a scrivener for the ABA JCEB’s meeting with OCR, for instance, she also serves as Chair the Southern California ISSA Health Care Privacy & Security Summit, and an editorial advisory board member, author, program chair or steering committee member, and faculties for a multitude of other programs and publications regarding privacy, data security, technology and other compliance, risk management and operational concerns in the health care, health and other insurance, employee benefits and human resources, retail, financial services and other arenas.Ms. Stamer also shares her thought leadership, experience and advocacy on HIPAA and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association, Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Board Compliance Chair and Board member of the National Kidney Foundation of North Texas, current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposium and chair, faculty member and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management. Examples of her many highly regarded publications on these matters include “Protecting & Using Patient Data In Disease Management: Opportunities, Liabilities And Prescriptions,” “Privacy Invasions of Medical Care-An Emerging Perspective,” “Cybercrime and Identity Theft: Health Information Security: Beyond HIPAA,” as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, Insurance Thought Leadership and many other prominent publications and speaks and conducts training for a broad range of professional organizations.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as:
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A $5.5 million settlement payment that Memorial Healthcare Systems (MHS) just paid the U.S. Department of Health and Human Services (HHS) to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy and Security Rules sends a clear warning message to all health plans, healthcare providers and health care clearinghouses (Covered Entities) and their business associates that simply adopting HIPAA policies alone is insufficient to avoid getting nailed by OCR under HIPAA; Covered Entities and their business associates also must implement, audit and enforce those policies.
MHS, a nonprofit corporation which operates six hospitals, an urgent care center, a nursing home, and a variety of ancillary health care facilities throughout the South Florida area with affiliated physician offices through an Organized Health Care Arrangement (OHCA) also agreed to implement a robust corrective action plan as part of the Resolution Agreement.
The MHS Resolution Agreement resulted from an investigation initiated by the HHS Office for Civil Rights (OCR) after MHS reported to OCR that protected health information (PHI) of 115,143 individuals had been impermissibly accessed by its employees and impermissibly disclosed to affiliated physician office staff. This information consisted of the affected individuals’ names, dates of birth, and social security numbers. The login credentials of a former employee of an affiliated physician’s office had been used to access the ePHI maintained by MHS on a daily basis without detection from April 2011 to April 2012, affecting 80,000 individuals.
The investigation revealed that although MHS had workforce access policies and procedures in place, MHS failed to implement procedures with respect to reviewing, modifying and/or terminating users’ right of access, as required by the HIPAA Rules. Further, MHS failed to regularly review records of information system activity on applications that maintain electronic protected health information by workforce users and users at affiliated physician practices, despite having identified this risk on several risk analyses conducted by MHS from 2007 to 2012.
MHS’ failure to follow through to implement the controls required by its policies and audit and enforce compliance with HIPAA and its HIPAA policies was a costly mistake. Other Covered Entities should heed MHS’ painful lesson and take documented steps to ensure its HIPAA policies not only are adopted, but also implemented and monitored and audited for compliance.
In response to the MHS settlement, health plans, their sponsors, fiduciaries and business associates should take documented action to audit and correct as needed both their written policies, procedures and notices as well as their operational compliance with HIPAA to mitigate their exposure to similar enforcement action for HIPAA violations.
About The Author
Recognized by LexisNexis® Martindale-Hubbell® as a “AV-Preeminent” (Top 1%/ the highest) and “Top Rated Lawyer,” with special recognition as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, the author of this update is widely known for her 28 plus years’ of work in health care, health benefit, health policy and regulatory affairs and other health industry concerns as a practicing attorney and management consultant, thought leader, author, public policy advocate and lecturer.
Throughout her adult life and nearly 30-year legal career, Ms. Stamer’s legal, management and governmental affairs work has focused on helping health industry, health benefit and other employee benefit, insurance, technology and other highly regulated organizations and their management use the law, performance and risk management tools and process to manage people, performance, quality, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps these and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup legal and operational crises large and small that arise in the course of operations.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, current American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting, former Vice President of the North Texas Health Care Compliance Professionals Association, past Chair of the ABA Health Law Section Managed Care & Insurance Section, past ABA JCEB Council Representative, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Compliance Chair of the National Kidney Foundation of North Texas, and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer’s includes nearly 30 years’ of work with a diverse range of health industry clients on an extensive range of matters.
Ms. Stamer has worked closely with health industry, managed care and insurance, employee benefit, financial services, technology, restructuring, retail, hospitality, manufacturing, consulting, sales, energy, import-export, staffing and other businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of staffing, human resources and workforce performance management, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
As a core component of her work, Ms. Stamer has worked extensively throughout her career with health care providers, health plans and insurers, managed care organizations, health care clearinghouses, their business associates, employers, banks and other financial institutions, management services organizations, professional associations, medical staffs, accreditation agencies, auditors, technology and other vendors and service providers, and others on legal and operational compliance, risk management and compliance, public policies and regulatory affairs, contracting, payer-provider, provider-provider, vendor, patient, governmental and community relations and matters including extensive involvement advising, representing and defending public and private hospitals and health care systems; physicians, physician organizations and medical staffs; specialty clinics and pharmacies; skilled nursing, home health, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing and management services organizations; consultants; investors; technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, insurers, self-insured health plans and other payers; and other health industry clients to establish and administer compliance and risk management policies; comply with requirements, investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry investigation, enforcement including insurance or other liability management and allocation; process and product development, contracting, deployment and defense; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others, and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.
Best known for her thoughleadership and experience on health benefit and other health and insurance industy matters, Ms. Stamer has worked throughout her career health care, health benefit and insurance and health information technology, data and related process and systems development, policy and operations design, management, product development, innovation, administration, public policy, regulatory compliance, enforcement, contracting, privacy and data security and related matter. Ms. Stamer continuously advises health and insurance industry clients about licensing, regulatory compliance and internal controls, workforce, agent and broker and medical staff performance, claims and reimbursement, quality, governance, reimbursement, privacy and data security, and other risk management and operational matters. Scribe for ABA JCEB annual agency meeting with OCR for many years, Ms. Stamer also is widely recognized for her extensive work and leadership on HIPAA, FACTA, PCI, IRC and other tax, Social Security, GLB, rade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and concerns including policy design, drafting, administration and training; business associate and other contracting; risk assessments, audits and other risk prevention and mitigation; investigation, reporting, mitigation and resolution of known or suspected breaches, violations or other incidents; and defending investigations or other actions by plaintiffs, OCR, FTC, state attorneys’ general and other federal or state agencies, other business partners, patients and others. Ms. Stamer has worked extensively with health care providers, health plans, health care clearinghouses, their business associates, employers and other plan sponsors, banks, insurers and other financial institutions, and others on trade secret confidentiality, privacy, data security and other risk management and compliance including the design, establishment, documentation, implementation, audit and enforcement of policies, procedures, systems and safeguards, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR, FTC and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns. Her clients include public and private health care providers, health insurers, health plans, employers, payroll, staffing, recruitment, insurance and financial services, technology and other vendors, and others. In addition to representing and advising these organizations, she also has conducted training on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others. Ms. Stamer also has authored numerous highly-regarded works and training programs on HIPAA and other data security, privacy and use published by BNA, the ABA and other premier legal industy publishers.
Ms. Stamer also has extensive experience with a diverse array of other human resources and other staffing, services, outsourcing and other workforce, qualified and nonqualified employee benefit, compensation, and related matters, their design, documentation, administration, modification, enforcement and defense and other related operational, compliance and risk management. Her experience includes advising andassisting employer and other plan sponsors, fiduciaries, administrators, vendors and others with and program design, documentation and ongoing administration administration for compliance and defensibility under IRS and other federal and state tax, OFCCP, CAS, SCA, Davis Bacon, SEC and other corporate, ERISA and other federal and state labor and employment, SEC and other corporate, Department of Insurance and other laws and regulations; advising and assisting buyers, sellers, investors, debtors, creditors, trustees, plan fiduciaries and service providers and others in relation to business transactions, restructurings, bankruptcies and other substantial corporate and business events and transactions including significant work involving amendment, termination, windup and restructuring of employee benefit plans and workforce concerns in highly publicized fiduciary, securities or other misconduct investigation and enforcement, bankruptcy, restructuring or other distress situations.
A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy and governmental and regulatory affairs experience, Ms. Stamer also is widely recognized for regulatory and policy work, advocacy and outreach on healthcare, education, aging, disability, savings and retirement, workforce, ethics, and other policies. Throughout her adult life and career, Ms. Stamer has provided thought leadership; policy and program design, statutory and regulatory development design and analysis; drafted legislation, proposed regulations and other guidance, position statements and briefs, comments and other critical policy documents; advised, assisted and represented health care providers, health plans and insurers, employers, professional. and trade associations, community and government leaders and others on health care, health, pension and retirement, workers’ compensation, Social Security and other benefit, insurance and financial services, tax, workforce, aging and disability, immigration, privacy and data security and a host of other international and domestic federal, state and local public policy and regulatory reforms through her involvement and participation in numerous client engagements, founder and Executive Director of the Coalition for Responsible Health Policy and its PROJECT COPE: the Coalition on Patient Empowerment, adviser to the National Physicians Congress for Healthcare Policy, leadership involvement with the US-Mexico Chamber of Commerce, the Texas Association of Business, the ABA JCEB, Health Law, RPTE, Tax, Labor, TIPS, International Life Sciences, and other Sections and Committees, SHRM Governmental Affairs Committee and a host of other involvements and activities.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications. In addition to her many years of service as a scrivener for the ABA JCEB’s meeting with OCR, for instance, she also serves as Chair the Southern California ISSA Health Care Privacy & Security Summit, and an editorial advisory board member, author, program chair or steering committee member, and faculties for a multitude of other programs and publications regarding privacy, data security, technology and other compliance, risk management and operational concerns in the health care, health and other insurance, employee benefits and human resources, retail, financial services and other arenas.Ms. Stamer also shares her thought leadership, experience and advocacy on HIPAA and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association, Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Board Compliance Chair and Board member of the National Kidney Foundation of North Texas, current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposium and chair, faculty member and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management. Examples of her many highly regarded publications on these matters include “Protecting & Using Patient Data In Disease Management: Opportunities, Liabilities And Prescriptions,” “Privacy Invasions of Medical Care-An Emerging Perspective,” “Cybercrime and Identity Theft: Health Information Security: Beyond HIPAA,” as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, Insurance Thought Leadership and many other prominent publications and speaks and conducts training for a broad range of professional organizations.
For more information about Ms. Stamer or her health industry and other experience and involvements, see here or contact Ms. Stamer via telephone at (469) 767-8872 or via e-mail here.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here such as:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or your profile here.
Employer and other health plan sponsors, fiduciaries and insurers generally should be prepared to prove that they are maintaining and administering their health plans to comply with many Patient Protection and Affordable Care Act (ACA) mandates pending Congressional repeal or reform of the ACA, despite President Trump’s January 20, 2017 Executive Order on “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal” (Executive Order) because the Federal agencies responsible for the implementation and interpretation of the ACA generally don’t have authority to bar health plan participants and beneficiaries from bringing benefit denial or breach of fiduciary duty lawsuits against health plans or fiduciaries for violating ACA mandates incorporated into the Employee Retirement Income Security Act (ERISA).
In addition to affirming President Trump’s commitment to seek the prompt repeal of the ACA, the Executive Order seeks to mitigate the burden of the ACA pending Congressional repeal by ordering the Departments Health and Human Services (HHS), Labor (DOL), Treasury (Treasury) and other agencies with ACA authority (Agencies) to exercise all available authority and discretion to the “maximum extent permitted by law:”
To waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the ACA that would impose a “cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”
To provide greater flexibility to States and cooperate with them in implementing healthcare programs and to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State;
For departments and agencies with responsibilities relating to healthcare or health insurance to encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.
While applicable Agencies are expected to act as quickly as possible to comply with President Trump’s orders, various statutory and procedural requirements almost certainly will limit both the relief granted and the speed with which the Agencies can grant the relief. One obvious place where statutory limitations on Agencies authority almost certainly will impact the availability of relief arises from the ACA’s incorporation of many of its patient protection act group mandates into ERISA. While the Agencies may possess the authority to lessen the burden of compliance with the regulatory mandates of the ACA by revising regulations, issuing enforcement relief or other certain other actions, these powers do not extend to blocking the authority of participants and beneficiaries to bring suit to enforce the provision of the ACA that the ACA added to ERISA through private benefit denial or breach of fiduciary duty lawsuits brought under ERISA.
In the case of insured health plans, sponsors, insurers and administrators also will need to consider whether their ability to take advantage of the federal relieve available is blocked or restricted by state insurance statutes, regulations or other administrative requirements. The likelihood of state statutory or regulatory restrictions on insured arrangements is particularly likely because of the heavy regulation of these products by states including the widespread incorporation of ACA mandates into state insurance laws and regulations in response to the Market Reform provisions of the ACA.
Even if these federal requirements are met to qualify for, adopt and implement any federally issued regulatory relief, employer and other plan sponsors, insurers, fiduciaries and administrators also should plan for and be prepared to run the necessary traps to properly amend their plan document, summary plan description and other plan notifications, administrative services agreements, stop loss or other insurance contracts and other vendor agreements to implement their desired changes. Beyond knowing what has to be done to adopt and communicate the desired changes, employer and other sponsors and fiduciaries, their consultants, brokers and advisors need to consider the requirements and consequences that the planned changes might have under applicable plan documents and vendor agreements to avoid unanticipated costs or liabilities as well as what actions are needed to ensure that ERISA’s prudence and other fiduciary requirements are met.
Until these and other required actions are completed by the Agencies and the applicable plan sponsors, fiduciaries and other parties, employers and other plan sponsors, their management, their health plans, health plan fiduciaries, administrators and insurers remain legally obligated to continue to comply with the ACA as presently implemented under the existing regulations and judicial and administrative rulings.
Responsible parties should begin preparing to take advantage of the anticipated legislative and regulatory relief both by both carefully monitoring statutory and regulatory health plan developments and positioning themselves to act quickly when relief comes by evaluating their existing heath plan documents, contracts, communications and systems to verify existing compliance and determine requirements for implementing any planned changes, opening up discussion vendors about these possibilities and taking other steps to position themselves to act knowledgeably and efficiently to take advantage of new opportunities if and when they emerge and are warranted.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely known for work, teachings and publications.
Ms. Stamer works with health industry and other businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and advisor to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group; immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment, employee benefits, compensation, and other regulatory and operational risk management. Examples of her many highly regarded publications on these matters include the “Texas Payday Law” Chapter of Texas Employment Law, as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
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Trump Executive Order Promises But Gives No ACA Health Plan Relief Until Agencies Act
Employer and other health plan sponsors, insurers, plan members and their family, health care providers and others struggling to cope with the costs and burdens of complying with the Patient Protection and Affordable Care Act (ACA) health care reforms are celebrating the promise of impending relief from ACA mandates held out by newly inagurated President Donald Trump January 20, 2017 Executive Order on “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal” (Executive Order).
In addition to affirming President Trump’s commitment to seek the prompt repeal of the ACA, the Executive Order seeks to mitigate the burden of the ACA pending Congressional repeal by ordering the Departments Health and Human Services (HHS), Labor (DOL), Treasury (Treasury) and other agencies with ACA authority (Agencies) to exercise all available authority and discretion to the “maximum extent permitted by law”:
To waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the ACA that would impose a “cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”
To provide greater flexibility to States and cooperate with them in implementing healthcare programs and to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State;
For departments and agencies with responsibilities relating to healthcare or health insurance to encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.
While employer and other health plan sponsors and others struggling to cope with the costs and mandates of ACA unquestionably welcome the promise of relief offered by the Executive Order, it is critical that those looking forward to enjoying this promised relief not jump the gun or overestimate the scope of the relief. Because the Executive Order is not self-executing, the Executive Order provides no legally enforceable relief from applicable ACA compliance obligations unless and until the applicable Agency or Congress adopts that relief consistent with law. While applicable Agencies are expected to act as quickly as possible to comply with President Trump’s orders, various statutory and procedural requirements almost certainly will limit both the relief granted and the speed with which the Agencies can grant the relief.
First, because the Executive Order is not self-executing, it doesn’t actually provide any relief for anyone; rather it just creates the expectation that the Agencies will grant some relief in the future. Those anticipating relief should expect that even regulatory relief will take time since the Agencies by law as well as the terms of the Executive Order will be required to comply with the often time consuming and cumbersome requirements of the Administrative Procedure Act and other applicable statutes in considering and issuing regulatory revisions and relief, including any applicable requirements for submission and approval by the Office of Management and Budget. The often added need for interagency collaboration and negotiation created by the ACA’s grant of multijurisdictional authority over many of its provisions historically has made negotiating these requirements more complicated and time consuming.
Second, relief will not be available for certain exposures because statutory limits on the jurisdiction and authority of the Agencies under the ACA will limit the scope of the relief that an Agency can grant. The Agencies generally do not have the authority to waive certain provisions of the ACA which are not within the discretion of the Agencies, such as the right of participants and beneficiaries in employer or union-sponsored health plan to sue to enforce ACA health plan mandates through a benefits or breach of fiduciary action brought under the Employee Retirement Income Security Act. Likewise, Agencies also will be restricted in their ability to waive penalties or requirements where the statutory mandate is drafted in a manner that denies the Agency discretionary authority to offer that relief.
Third, health plans, their sponsors, insurers, fiduciaries and administrators should anticipate that they may need to take certain action in response to any issued relief before they can take advantage of the relief allowed such as adopting health plan amendments, issuing notices to participants or beneficiaries, making elections or a combination of these actions.
In the case of insured health plans, sponsors, insurers and administrators also will need to consider whether their ability to take advantage of the federal relieve available is blocked or restricted by state insurance statutes, regulations or other administrative requirements. The likelihood of state statutory or regulatory restrictions on insured arrangements is particularly likely because of the heavy regulation of these products by states including the widespread incorporation of ACA mandates into state insurance laws and regulations in response to the Market Reform provisions of the ACA.
Even if these federal requirements are met to qualify for, adopt and implement any federally issued regulatory relief, employer and other plan sponsors, insurers, fiduciaries and administrators also should plan for and be prepared to run the necessary traps to properly amend their plan document, summary plan description and other plan notifications, administrative services agreements, stop loss or other insurance contracts and other vendor agreements to implement their desired changes. Beyond knowing what has to be done to adopt and communicate the desired changes, employer and other sponsors and fiduciaries, their consultants, brokers and advisors need to consider the requirements and consequences that the planned changes might have under applicable plan documents and vendor agreements to avoid unanticipated costs or liabilities as well as what actions are needed to ensure that ERISA’s prudence and other fiduciary requirements are met.
Until these and other required actions are completed by the Agencies and the applicable plan sponsors, fiduciaries and other parties, employers and other plan sponsors, their management, their health plans, health plan fiduciaries, administrators and insurers remain legally obligated to continue to comply with the ACA as presently implemented under the existing regulations and judicial and administrative rulings. While preparing for future changes, health plans, their sponsors, fiduciaries, administrators and insurers also should act to manage their prior and existing liabilities arising out of acts or omissions occurring before Congress or the regulators revise and ease the rules.
While health plans, their sponsors, fiduciaries, administrators and insurers remain legally responsible to comply with existing rules until changed by the regulators or Congress, they still have much to do to get ready for the changes that are coming while acting to manage their health plan costs and liabilities in the meantime. Whether or not the Trump Administration in the future provides relief from Form 8928 self-reporting and excise tax self- assessment penalties for violation of 40 federal group health plans, group health plans and their fiduciaries almost certainly will remain exposed to ERISA lawsuits for violation of ACA or other federal group health plan mandates. In addition, until revoked or revised, employers and health plans remain subject to and risk liability for failing to provide ACA-required tax forms, notices, benefits, coverage, rights or other compliance.
Responsible parties should begin preparing to take advantage of the anticipated legislative and regulatory relief both by both carefully monitoring statutory and regulatory health plan developments and positioning themselves to act quickly when relief comes by evaluating their existing heath plan documents, contracts, communications and systems to verify existing compliance and determine requirements for implementing any planned changes, opening up discussion vendors about these possibilities and taking other steps to position themselves to act knowledgeably and efficiently to take advantage of new opportunities if and when they emerge and are warranted.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely known for work, teachings and publications.
Ms. Stamer works with health industry and other businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and advisor to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group; immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment, employee benefits, compensation, and other regulatory and operational risk management. Examples of her many highly regarded publications on these matters include the “Texas Payday Law” Chapter of Texas Employment Law, as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein
The US Department of Labor (DOL) is appealing the November 22 Nevada v US Department of Labor ruling preliminarily enjoining DOL from implementing or enforcing a modification to the DOL Fair Labor Standards Act (FLSA) White Collar Exemption Regulations that would have nearly doubled the minimum salary that an employer must pay an employee on a salaried basis in reliance on the White Collar Exemption.
The Department of Justice on behalf of the Department of Labor filed a notice to appeal the preliminary injunction to the U.S. Circuit Court of Appeals for the Fifth Circuit yesterday.
The November 22 Nevada preliminary injunction order barred DOL nationwide from implementing a change to its White Collar Regulations on December 1, 2016 that would automatically excluded any employee earning a salary of less than $913 per week ($47,476 per year) from coverage by the most commonly relied upon FLSA exemption, White Collar Exemption, pending a future ruling on the merits lifting the injunction.
The Obama Administration’s final rule change published in the Federal Register on May 23, 2016, increases the threshold salary for the exemption from $455 per week to $913 per week ($47,476 per year) effective December 1, 2016 and provides for automatic adjustments to this amount every three years beginning January 1, 2020
DOL’s full statement regarding the litigation is here.
The appeal likely surprises many who assumed that the impending change in Administration would put an end to the Obama Administration’s change. It remains to be seen how quickly the Fifth Circuit will hear the appeal as well as the fate of the rule change and the litigation after President-Elect Trump takes office. Either way, however, zealous and often successful private plaintiff and DOL enforcement of other elements of the While Collar Exemption and other FLSA requirements makes it imperative that employers be prepared to produce the necessary proof to defend their payment of any worker on a salaried basis as well as.compliance with all minimum wage, overtime, record keeping and other FLSA requirements.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,”“Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely known for work, teachings and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares shared her thought leadership, experience and advocacy on these and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association, Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Board Compliance Chair and Board member of the National Kidney Foundation of North Texas, current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment, employee benefits, compensation, and other regulatory and operational risk management. Examples of her many highly regarded publications on these matters include the “Texas Payday Law” Chapter of Texas Employment Law, as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as:
DOL Aggressively Targeting Restaurants For Wage & Hour & Child Labor Law Violations
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New ACA Student Health Insurance Guidance Allows College Payment Of Working Students’ Student Health Insurance Premiums Post 2016
ERISA Violations Cost More Now
IRS Qualified Plan Correction Procedures Changing 1/1/17
DOL Invites FLSA Section 14(c) Certificateholders Test Prototype Application
Private Exchanges: Employer Health Program Panacea or Problem? Consider Carefully!
New DOL, IRS & HHS FAQ Confirms Employers Can’t Pay, Use HRAs to Reimburse Employees For Individual Policy Premiums
Review Health Plans With Reference-Based Reimbursement Designs Under New Agency FAQ Guidance
IRS Guidance Raises Concerns For Many Employers Offering “Skinny” & Other Limited Coverage Health Plans
Plan’s Purchase of Company Stock Triggers $6.48 Million Award Against ESOP Sponsor, Shareholder, Board Members & Trustees
Encourage Workers To Review Withholding As Part Of Annual Enrollment
Making Wellness Work On A Shoestring Budget
Brace For OCR HIPAA Audits
Check Health Plan Privacy For New Guidance Compliance
Health Benefit Still Top Employer Benefit Cost
Congress Passess Joint Resolution Overturning NLRB “Quickie Election Rule”
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Improve HR Value To Company By Making HR A Performance Rather Than People Department
Sponsoring Employers Face Excise Taxes, Other Liabilities Unless Health Plans Comply With ACA Out-Of-Pocket & Other Federal Rules
Legal Review Of Health Plan Documents, Processes Needed To Mitigate Employer’s Excise Tax & Other Health Plan Risks
EEOC ADA Suit Against Magnolia Health Highlights US Employer’s Growing Disability Discrimination Risks
10 Practical Pointers To Use Law To Better Strengthen The Legal Defensibility Of Your Business & Its Leaders
Health Insurer/Vendor’s Claims & Appeals Deficiencies Could Trigger Significant Employer Excise Tax Liability
EEOC Charges Employer Violated ADA By Terminating Employment At FMLA Leave End
Businesses Should Verify Proper Tracking, Withholding & Reporting On Tips & Gratuities
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
Employee benefit plans and tax-exempt organizations facing Internal Revenue Service (IRS) audits or investigations after April, 2016, their leaders and advisors should prepare for some changes in the practices IRS agents will use to issue and enforce document requests (IDRs) after March 31.
The IRS Tax Exempt and Government Entities Division (TEGE) just issued updated internal guidance (Guidance) governing the procedures its agents will use to gather information for employee benefit plan and exempt organization examinations including information requests made in connection with:
Employee Benefit Form 5500 Examination Procedures
Exempt Organizations Pre-Audit Procedures
On-Site Examinations
Tax Exempt Bonds Examinations
Indian Tribal Government Examinations and
Federal, State and Local Governments (FSLG) Examinations
The new Guidance follows other recent announcements of changes of IRS employee plan or exempt organization procedures such as recently announced changes in IRS employee plan correction procedures. See, e.g., IRS Qualified Plan Correction Procedures Changing 1/1/17.
The new procedures defined in the Guidance apply more broadly and take effect April 1, 2017. The Guidance also requires that TEGE update the following IRMs to specifically reflect the new procedures within the next two years:
IRM 4.71.1, Overview of Form 5500 Examination Procedures;
IRM 4.81.5, Tax Exempt Bonds Examination Program Procedures – Conducting the Examination;
IRM 4.86.5, Conducting Indian Tribal Government Examinations; and
IRM 4.90.9, Federal, State and Local Governments (FSLG) – Procedures, Workpapers and Report Writing.
Among other things, the new Guidance will require “active involvement” by managers of IRS examiners’ early in the process. The Guidance also calls for:
Taxpayers to be involved in the IDR process.
Examiners to discuss the issue being examined and the information needed with the taxpayer prior to issuing an IDR.
Examiners to ensure that the IDR clearly states the issue and the relevant information they are requesting.
If the taxpayer does not timely provide the information requested in the IDR by the agreed upon date, including extensions, examiners to issue a delinquency notice.
If the taxpayer fails to respond to the delinquency notice or provides an incomplete response, for the examiner to issue a pre-summons notice to advise the taxpayer that the IRS will issue a summons unless the missing items are fully provided.
For a summons to be issued if the taxpayer fails to provide a complete response to the pre-summons letter by its response due date.
According to TEGE the new procedures set forth in the Guidance are designed to “ensure” that IRS Counsel is prepared to enforce IDRs through the issuance of a summons when necessary while also reinforcing the IRS’ commitment to the respect of taxpayer rights under the Taxpayer Bill of Rights. TEGE says the updated procedures established in the Guidance will promote these goals by:
Providing for open and meaningful communication between the IRS and taxpayers;
Reducing taxpayer burdens
Providing for consistent treatment of taxpayers;
Allowing the IRS to secure more complete and timely responses to IDRs;
Providing consistent timelines for IRS agents to review IDR responses; and
Promoting timely issue resolution.
While it remains to be seen exactly how well the new procedures will promote these goals in operation, leaders, sponsors, administrators and tax advisors to employee benefit plans and exempt organizations tagged for audits after the Guidelines take effect will want to ensure that they review and fully understand the new procedures as soon as possible after receiving notice of the audit.
A clear understanding of the procedures can help the entities and their representatives to take advantage of all available options for mitigating exposures and liability from the audit as well as to avoid unfortunate missteps that could result in forfeiture of otherwise available tax-related rights and options or otherwise increase the tax and other associated risks and liabilities of the entities or others associated with them arising from the audit.
Along with responding to these tax-related risks, leaders and advisors of employee benefit plan and exempt organizations also need to keep in mind the often substantial non-tax related risks that may arise concurrently or evolve from a TEGE or other tax-related audit or investigation. The often substantial tax and non-tax exposures typically makes it desirable if not necessary to involve experienced legal counsel in the process as soon as possible.
To help respond to the audit and manage its tax and non-tax related risks and, leaders responsible for these entities generally not only will want to seek legal advice within the scope of attorney-client privilege from legal counsel immediately after receiving an IDR or other notice of an audit or investigation, as well as consider periodically consulting experienced legal counsel for assistance in conducting pre-audit assessment of compliance and other compliance and risk management planning.
Early involvement of legal counsel generally is necessary both to understand and manage both the tax and non-tax exposures associated with the audit, as well as to preserve and utilize the potential benefits of attorney-client privilege and other evidentiary privileges that could help to mitigate both the tax and non-tax related risks. While federal tax rules afford some evidentiary privileges to certain accounting professionals when providing tax representation or advice, the protective scope of such privileges generally are more limited than attorney-client privilege and work product evidentiary privileges and typically do not apply to non-tax matters. As a result, most entities and their leaders will want to consider involvement of legal counsel to maximize privilege protections and non-tax related exposures even if the parties plan for a qualified tax professional or other consultant to play a significant role in assisting them to prepare for and respond to the audit.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely known for work, teachings and publications.
Ms. Stamer works with health industry and other businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and advisor to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group; immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment, employee benefits, compensation, and other regulatory and operational risk management. Examples of her many highly regarded publications on these matters include the “Texas Payday Law” Chapter of Texas Employment Law, as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at SolutionsLawPress.com such as:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein
Restaurant employers beware! Restaurants are the target of a highly successful, U.S. Department of Labor Wage and Hour Division (WHD) restaurant enforcement and compliance initiative that WHD already has used to nail a multitude of restaurants across the country for “widespread violations” of Fair Labor Standards Act (FLSA) minimum wage, overtime, child labor and other wage and hour laws (WH Law).
Having reportedly found WH Law violations in “nearly every one” of the WH Law investigations conducted against restaurant employers during 2016 and recovered millions of dollars of back pay and penalties from restaurants caught through investigations conducted under its WHD Restaurant Enforcement Initiative, WHD Administrator Dr. David Weil recently confirmed WHD plans to expand the restaurant employers targeted for investigation and other efforts to punish and correct WH Law violations under the Restaurant Enforcement Initiative through 2017 in an October 5, 2016 WHD News Release: Significant Violations In The Austin Restaurant Industry Raise Concerns For Us Labor Department Officials (News Release).
The News Release quotes Administrator Weil as stating:
The current level of noncompliance found in these investigations is not acceptable …WHD will continue to use every tool we have available to combat this issue. This includes vigorous enforcement as well as outreach to employer associations and worker advocates to ensure that Austin restaurant workers receive a fair day’s pay for a fair day’s work.
Given the substantial back pay, interest, civil or in the case of willful violations, criminal penalties, costs of defense and prosecution and other sanctions that restaurant employers, their owners and management can face if their restaurant is caught violating FLSA or other WH Laws, restaurants and their leaders should arrange for a comprehensive review within the scope of attorney-client privilege of the adequacy and defensibility of their existing policies, practices and documentation for classifying, assigning duties, tracking regular and overtime hours, paying workers and other WH Law compliance responsibilities and opportunities to mitigate risks and liabilities from WH Law claims and investigations.
Many Restaurants Already Nailed Through Restaurant Enforcement Initiative
Even before the planned 2017 expansion of its Restaurant Enforcement Initiative, WHD’s enforcement record shows WHD’s efforts to find and punish restaurants that violate WH Laws are highly successful. Restaurant employers overwhelmingly are the employers targeted by WHD in the vast majority of the WH Law settlements and prosecutions announced in WHD News Releases published over the past two years, including aggregate back pay and penalty awards of more than $11.4 million recovered through the following 31 actions announced by WHD between January 1, 2016 and October 31, 2016:
Enforcement Actions Highlight Common Restaurant WH Law Compliance Concerns
Restaurant employers, like employers in most other industries, are subject to a host of minimum wage, overtime and other requirements including the FLSA requirement that covered, nonexempt employees earn at least the federal minimum wage of $7.25 per hour for all regular hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also are required to maintain accurate time and payroll records and must comply with child labor, anti-retaliation and other WH Law requirements.
The News Release identified some of the common violations WHD uncovered in these investigations included employers:
Requiring employees to work exclusively for tips, with no regard to minimum-wage standards;
Making illegal deductions from workers’ wages for walkouts, breakages, credit card transaction fees and cash register shortages, which reduce wages below the required minimum wage;
Paying straight-time wages for overtime hours worked.
Calculating overtime incorrectly for servers based on their $2.13 per hour base rates before tips, instead of the federal minimum wage of $7.25 per hour.
Failing to pay proper overtime for salaried non-exempt cooks or other workers;
Creating illegal tip pools involving kitchen staff;
Failing to maintain accurate and thorough records of employees’ wages and work hours.
Committing significant child labor violations, such as allowing minors to operate and clean hazardous equipment, including dough mixers and meat slicers.
Use Care To Verify Tipped Employees Paid Properly
Based on the reported violations, restaurants employing tipped employees generally will want to carefully review their policies, practices and records regarding their payment of tipped employees. Among other things, these common violations reflect a widespread misunderstanding or misapplication of special rules for calculating the minimum hourly wage that a restaurant must pay an employee that qualifies as a tipped employee. While special FLSA rules for tipped employees may permit a restaurant to claim tips (not in excess of $5.12 per hour) actually received and retained by a “tipped employee,” not all workers that receive tips are necessarily covered by this special rule. For purposes of this rule, the definition of “tipped employee” only applies to an employee who customarily and regularly receives more than $30 per month in tips.
Also, contrary to popular perception, the FLSA as construed by the WHD does not set the minimum wage for tipped employees at $2.13 per hour. On the contrary, the FLSA requirement that non-exempt workers be paid at least the minimum wage of $7.25 per hour for each regular hour worked also applies to tipped employees. When applicable, the special rule for tipped employees merely only allows an employer to claim the amount of the tips that the restaurant can prove the tipped employee actually received and retained (not in excess of $5.13 per hour) as a credit against the minimum wage of $7.25 per hour the FLSA otherwise would require the employer to pay the tipped employee. Only tips actually received by the employee may be counted in determining whether the employee is a tipped employee and in applying the tip credit. If a tipped employee earns less than $5.13 per hour in tips, the restaurant must be able to demonstrate that the combined total of the tips retained by the employee and the hourly wage otherwise paid to the tipped employee by the restaurant equaled at least the minimum wage of $7.25 per hour.
Furthermore, restaurant or other employers claiming a tip credit must keep in mind that the FLSA generally provides that tips are the property of the employee. The FLSA generally prohibits an employer from using an employee’s tips for any reason other than as a credit against its minimum wage obligation to the employee (“tip credit”) or in furtherance of a valid tip pool.
Also, whether for purposes of applying the tip credit rules or other applicable requirements of the FLSA and other wage and hour laws, restaurant employers must create and retain appropriate records and other documentation regarding worker age, classification, hours worked, tips and other compensation paid and other evidence necessary to defend their actions with respect to tipped or other employees under the FLSA and other WH Law rules. Beyond accurately and reliably capturing all of the documentation required to show proper payment in accordance with the FLSA, restaurants also should use care to appropriately document leave, discipline and other related activities as necessary to show compliance with anti-retaliation, equal pay, family and medical leave, and other mandates, as applicable. Since state law also may impose additional minimum leave, break time or other requirements, restaurants also generally will want to review their policies, practices and records to verify their ability to defend their actions under those rules as well.
Child Labor Rules Require Special Care When Employing Minors
While hiring workers under the age of 18 (minors) can help a restaurant fulfill its staffing needs while providing young workers valuable first time or other work experience, restaurants that hire minors must understand and properly comply with any restrictions on the duties, work hours or other requirements for employment of the minor imposed by federal or state child labor laws.
As a starting point, the legal requirements for employing minors generally greater, not less, than those applicable to the employment of an adult in the same position. Employers employing workers who are less than 18 years of age (minors) should not assume that the employer can pay the minor less than minimum wage or skip complying with other legal requirements that normally apply to the employment of an adult in that position by employing the minor in an “internship” or other special capacity. The same federal and state minimum wage, overtime, safety and health and nondiscrimination rules that generally apply to the employment of an adult generally will apply to its employment of a worker who is a minor.
Beyond complying with the rules for employment of adults, restaurants employing minors also must ensure that they fully comply with all applicable requirements for the employment of minors imposed under the FLSA child labor rules and applicable state law enacted to ensure that when young people work, the work is safe and does not jeopardize their health, well-being or educational opportunities. Depending on the age of the minor, the FLSA or state child labor rules may necessitate that a restaurant tailor the duties and hours of work of an employee who is a minor to avoid the substantial liability that can result when an employer violates one of these child labor rules.
The FLSA child labor rules, for instance, impose various special requirements for the employment of youth 14 to 17 years old. Seehere. As a starting point, the FLSA child labor rules prohibit the any worker less than 18 years of age from operating or cleaning dough mixers, meat slicers or other hazardous equipment. Depending on the age of the minor worker, the FLSA child labor rules or state child labor laws also may impose other restrictions on the duties that the restaurant can assign or allow the minor to perform. Restaurants hiring any worker that is a minor must evaluate the duties identified as hazardous “occupations” that the FLSA child labor rules prohibit a minor of that age to perform hereas an “occupation” and take the necessary steps to ensure the minor is not assigned and does not perform any of those prohibited activities in the course of his employment.
In addition to ensuring that minors don’t perform prohibited duties, restaurants employing minors also comply with all applicable restrictions on the hours that the minor is permitted to work based on the age of the minor worker. For instance, the FLSA and state child labor rules typically prohibit scheduling a minor less than 16 years of age to work during school hours and restrict the hours outside school hours the minor can work based on his age. Additional restrictions on the types of jobs and hours 14- and 15-year-olds may work also may apply.
Compliance with the FLSA child labor rules is critically important for any restaurant or other employer that employs a minor, particularly since the penalties for violation of these requirements were substantially increased in 2010, as Streets Seafood Restaurant learned earlier this year.
According to a WHD News Release, Street’s Seafood Restaurant paid $14,288 in minimum wage and overtime back wages and an equal amount in liquidated damages totaling $28,577 to eight employees, and also was assessed a civil money penalty of $14,125 for FLSA child labor violations committed in the course of its employment of four minors ages 15 to 17. Specifically, investigators found Street’s Seafood Restaurant:
Required a 15-year-old to work more hours than allowed by law.
Paid some workers only $6 per hour, below the required federal minimum wage of $7.25 per hour.
Paid employees straight time for overtime when they worked more than 40 hours in a week, instead of paying them time-and-one-half, as the law requires.
WHD’s announcement of the settlement resolving these child labor laws quotes Kenneth Stripling, director of the division’s Birmingham District Office as stating:
Employing young people provides valuable experience, but that experience must never come at the expense of their safety …Additionally, employers have an obligation to pay employees what they have legally earned. All workers deserve a fair day’s pay for a fair day’s work. Unfortunately, Street’s Seafood violated not only child labor laws, but has also shorted workers’ pay. The resolution of this case sends a strong message that we will not tolerate either of those behaviors.
Restaurants Must Act To Minimize Risks
Beyond WHD’s direct enforcement actions, WHD also is seeking to encourage private enforcement of WH Law violations by conducting an aggressive outreach to employees, their union and private plaintiff representatives, states and others. Successful plaintiffs in private actions typically recover actual back pay, double damage penalties plus attorneys’ fees and costs. The availability of these often lucrative private damages makes FLSA and other WH Law claims highly popular to disgruntled or terminated workers and their lawyers. When contemplating options to settle claims WH Law claims made by a worker, employers need to keep in mind that WHD takes the position that settlements with workers do not bar the WHD from taking action unless the WHD joins in the settlement and in fact, past settlements may provide evidence of knowingness or willfulness by the employer in the event of a WHD prosecution. The substantial private recoveries coupled with these and other WHD enforcement and other compliance actions mean bad news for restaurant employers that fail to manage their FLSA and other WH Law compliance. Restaurant employers should act within the scope of attorney-client privilege to review and verify their compliance and consult with legal counsel about other options to minimize their risk and streamline and strengthen their ability to respond to and defend against audits, investigations and litigation.
Beyond verifying the appropriateness of their timekeeping and compensation activities and documentation, restaurants and staffing or management organizations working with them also should use care to mitigate exposures that often arise from missteps or overly aggressive conduct by others providing or receiving management services or staffing services. All parties to these arrangements and their management should keep in mind that both parties participating in such arrangements bear significant risk if responsibilities are not properly performed. Both service and staffing providers and restaurants using their services should insist on carefully crafted commitments from the other party to properly classify, track hours, calculate and pay workers, keep records, and otherwise comply with WH Laws and other legal requirements. Parties to these arrangements both generally also will want to insist that these contractual reassurances are backed up with meaningful audit and indemnification rights and carefully monitor the actions of service providers rendering these services.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,”“Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely known for work, teachings and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares shared her thought leadership, experience and advocacy on these and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association, Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Board Compliance Chair and Board member of the National Kidney Foundation of North Texas, current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment, employee benefits, compensation, and other regulatory and operational risk management. Examples of her many highly regarded publications on these matters include the “Texas Payday Law” Chapter of Texas Employment Law, as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at http://www.solutionslawpress.com such as:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here.
Cyber and other bullying usually is discussed as a child protection concern. However bullying of adults in the workplace also can be a big employment issue.
Applying the term “harassment” to adult bullying in the workplace allows most businesses to rapidly recognize need to prevent bullying and harassment in the workplace.
The connection between bullying and harassment is rapidly apparent from the definition of bullying. The government website stopbullying.gov defines “bullying” as unwanted, aggressive behavior among school aged children that involves a real or perceived power imbalance. The behavior is repeated, or has the potential to be repeated, over time. Bullying includes actions such as making threats, spreading rumors, attacking someone physically or verbally, and excluding someone from a group on purpose.”
In employment or other adult environments, the word “harassment” typically is used instead of bullying to refer to aggressive unwarranted behavior against an adult. Regardless of which term is used, bullying and harassment in workplaces and other communities is disruptive for the victims, co-workers, the employment or other community and those who interact with them.
Of course by now, all businesses and their leaders are legally accountable to know that the law generally requires businesses to prevent and protect their employees against harassment by management or other employees, customers, vendors and others with whom they do business on account of sex, sexual preference, race, age, disability, National origin, religion, whistleblower status, worker’s compensation or certain other benefit claims and the exercise of a host of other protected types of conduct.
Beyond the substantial legal exposures that businesses risk from harassment in the workplace, harassment or other pulling in the work place also inevitably creates other substantial operation costs for businesses by undermining job performance of bullying victims and others, undermining morale, increasing employee turnover, creating distractions, increasing management demands, eroding trust and team work, and more.
To reduce their exposure to these legal and operational risks, most US businesses have policies, conduct training and investigations, and engage in a host of other anti-harassment activities. Even with these efforts, however, effective prevention, detection and management of bullying and other harassment behaviors in most workplaces remains a challenge. For this reason businesses and their management should constantly be on the watch for tips and tools ate them in this endeavor.
The United States government’s annual Stop Bullying Month observances each October provide an excellent opportunity for US businesses and employers to strengthen their anti-harassment risks and compliance by joining in the celebration in October and using the resources available in their anti-harassment efforts throughout the year.
Businesses also may want to take advantage of resources like stopbullying.gov that provide tips and training for identifying and addressing bullying of children and others requiring special protection.
Stopbullying.gov, for instance includes a multitude of resources for Parents, Educators, Communities, and others that can be reworked and applied and workplace and other business contexts. Beyond these generally applicable tips, The website also includes videos and other materials addressing special topics like Cyberbullying and what to do about it, Sexual Preference Harassment and many others.
Human resources and other business leaders should check out these resources and leverage them to expand their tools and strengthen their anti-harassment efforts and risk management.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely known for work, teachings and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares shared her thought leadership, experience and advocacy on these and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association, Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Board Compliance Chair and Board member of the National Kidney Foundation of North Texas, current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see www.CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at http://www.solutionslawpress.com such as:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here.
Compliance with the Privacy and Security Rules of the Health Insurance Portability & Accountability Act (HIPAA) is a living process that requires employer and other health plans, health insurers, health care providers and healthcare clearinghouses to recurrently reevaluate their HIPAA enterprise risk and timely act to mitigate security threats to electronic (ePHI) and other protected health information and other HIPAA compliance concerns on an ongoing basis. That’s the clear take away applicable to all HIPAA-Covered Entities and business associates from the St. Joseph Health Resolution Agreement and Corrective Action Plan (SJH Settlement) and the Oregon Health & Science University Resolution Agreement and Corrective Action Plan (OHSU Settlement) announced by the Department of Health & Human Services Office of Civil Rights (OCR) in the past 30 days. Health plans, their sponsors, fiduciaries and vendors, health care providers and health care clearinghouses should carefully heed this message and in response take documented steps to ensure
Their existing policies, practices and procedures properly are updated in response to changing guidance and events;
They in place the current, comprehensive enterprise risk assessment along with a mitigation plan documenting actions taken to address these risks;
Ensure that the organization has and is administering appropriate, documented processes and procedures to ensure that the organization reassesses its enterprise risk assessment and compliance on a timely basis as warranted by changes or other events that could impact ePHI, regulatory developments or other events that might impact its compliance; and
Have an appropriate, documented process for oversight by C-level management.
OHSU Charges & Settlement
The OHSU Settlement Agreement announced by OCR on September 23, 2016 requires OHSU to pay a $2.7 million settlement payment and adopt and implement a comprehensive three-year corrective action plan to address “widespread and diverse” HIPAA compliance problems OCR reports uncovering while investigating multiple HIPAA breach reports the large public academic health center and research university centered in Portland, Oregon.
OCR began investigating OHSU after the large public academic health center and research university centered in Portland, Oregon, submitted three HIPAA breach reports affecting thousands of individuals, including two reports involving unencrypted laptops and another large breach involving a stolen unencrypted thumb drive:
On March 23, 2013, HHS received notification from OHSU regarding a breach of its unsecured electronic protected health information (“ePHI”) resulting from a stolen laptop computer;
On July 28, 2013, HHS received notification from OHSU regarding a breach of its ePHI resulting from storing ePHI at an internet-based service provider without a business associate agreement; and.
These incidents each garnered significant local and national press coverage. OCR’s investigation uncovered evidence of widespread vulnerabilities within OHSU’s HIPAA compliance program, including the storage of the ePHI of more than 3,000 individuals on a cloud-based server without a business associate agreement. OCR found significant risk of harm to 1,361 of these individuals due to the sensitive nature of their diagnoses.
OCR’s investigation showed the reported breaches resulted from widespread, long-term, systematic and unresolved HIPAA violations by OHSU that OCR attributed to an inadequate commitment to and oversight of HIPAA compliance by OHSU C-level management which resulted in the failure by OHSU to appropriately monitor the adequacy of its ongoing compliance and to assess and address changes in its enterprise-wide risk and compliance obligations on an ongoing basis. OHSU performed risk analyses in 2003, 2005, 2006, 2008, 2010, and 2013, but OCR’s investigation found that these analyses did not cover all ePHI in OHSU’s enterprise, as required by the Security Rule. While the analyses identified vulnerabilities and risks to ePHI located in many areas of the organization, OHSU did not act in a timely manner to implement measures to address these documented risks and vulnerabilities to a reasonable and appropriate level. OHSU also lacked policies and procedures to prevent, detect, contain, and correct security violations and failed to implement a mechanism to encrypt and decrypt ePHI or an equivalent alternative measure for ePHI maintained on its workstations, despite having identified this lack of encryption as a risk.
OCR concluded that the reported breaches were the result of long-standing, systematic deficiences in OHSU’s processes and procedures for HIPAA compliance, including the following:
While OHSU reportedly performed risk analyses in 2003, 2005, 2006, 2008, 2010, and 2013, OCR says its investigation found that these analyses did not cover all ePHI in OHSU’s enterprise, as required by the Security Rule;
While the analyses identified vulnerabilities and risks to ePHI located in many areas of the organization, OHSU did not act in a timely manner to implement measures to address these documented risks and vulnerabilities to a reasonable and appropriate level;
OHSU also lacked policies and procedures to prevent, detect, contain, and correct security violations and failed to implement a mechanism to encrypt and decrypt ePHI or an equivalent alternative measure for ePHI maintained on its workstations, despite having identified this lack of encryption as a risk;
OHSU failed to comply with its duty under HIPAA to enter into a business associate agreement with a vendor before allowing a vendor business associate to store ePHI; and
The absence of meaningful C-suite leadership oversight and commitment to HIPAA compliance.
Based on these investigations, OCR concluded that while OHSU initially adopted HIPAA Policies, the reported breaches were the result of a series of widespread and ongoing breaches of HIPAA resulted including the following:
From January 5, 2011, until July 3, 2013, OHSU disclosed the ePHI of 3,044 individuals in violation of Privacy Rules §§160.103 and 164.502(a) when workforce members disclosed the ePHI to a third party internet-based service provider without obtaining a business associate agreement or other satisfactory assurance that the internet-based service provider would safeguard the ePHI;
From January 5, 2011 until July 3, 2013 OHSU failed to obtain a business associate agreement from an internet-based service provider that was storing ePHI on its behalf as a business associate as required by 45 C.F.R. § 164.308(b);
From January 5, 2011 until July 3, 2013 OHSU failed to implement policies and procedures to prevent, detect, contain, and correct security violations as required under Privacy Rule § 164.308(a)(1)(i);
From July 12, 2010 to present, OHSU failed to implement a mechanism to encrypt and decrypt ePHI or an equivalent alternative measure for all ePHI maintained in OHSU’s enterprise as required by Privacy Rules §§ 164.312(a)(2)(iv) and 164.306(d)(3)); and
From May 29, 2013 until July 3, 2013, OHSU failed to implement policies and procedures to address security incidents in violation of Privacy Rule § 164.308(a)(6)(i).
According to statements made by OCR Director Jocelyn Samuels in OCR’s announcement of the OHSU Settlement, the breaches should not have happened. “From well-publicized large scale breaches and findings in their own risk analyses, OHSU had every opportunity to address security management processes that were insufficient,” said OCR Director Jocelyn Samuels. OCR’s announcement also signals that OCR views inadequate commitment and oversight by OHSU’s senior management to have played a key role in the creation and perpetuation of the OHSU violations. It quotes OCR Director Jocelyn Samuels as stating, “This settlement underscores the importance of leadership engagement and why it is so critical for the C-suite to take HIPAA compliance seriously.”
OCR’s announcement of the OHSU Settlement emphasizes its determination that a lack of commitment and oversight by C-level management resulted in the failure by OHSU to periodically perform a comprehensive enterprise risk analysis and to reevaluate and update that analysis and its policies, practices, procedures and training as warranted by changing events and guidance.
To resolve the HIPAA charges, the OHSU Settlement requires OHSU to pay OCR $2,700,000 as well as take a long series of corrective actions detailed in the Corrective Action Plan incorporated into the Settlement Agreement. The requirements of the Corrective Action Plan both seek to address the specific weaknesses that lead to the breaches of unsecured ePHI reported by OHSU in its breach notifications as well as the broader deficiencies in OHSU’s overall HIPAA compliance practice by requiring among other things that OHSU:
Conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of ePHI at all OHSU facilities and on all systems, networks, and devices that create, receive, maintain, or transmit ePHI;.
Develop and present to OCR for approval a comprehensive written risk management plan that explains OHSU’s strategy for implementing security measures sufficient to reduce the risks and vulnerabilities identified in the risk analysis to a reasonable and appropriate level based on OHSU’s circumstances as well as a comprehensive, enterprise-wide plan to implement effective oversight of OHSU workforce members to ensure their adherence to HIPAA Rules and OHSU’s internal privacy and security policies and procedures with specific timelines for their expected completion and compensating controls identified in the interim to safeguard OHSU’s ePHI;
Implement and administer the written risk management plan and other safeguards as approved by OCR;
Provide updates to OCR about OHSU’s implementation of required encryption including a Mobile Device Management (MDM) solution that ensures all OHSU- owned and personally-owned mobile devices (tablets, smart phones, and other mobile devices) that access ePHI on OHSU’s secure network are encrypted other than mobile devices for which OHSU has granted exceptions based on documented evidence of the implementation of alternative reasonable compensating controls to protect the ePHI on such devices;
Report to OCR on OHSU’s efforts to a solution to enforce encryption of ePHI on OHSU-owned and personally- owned devices (laptops, desktops, and medical equipment) connecting to OHSU’s secure wired and wireless networks except for any devices for which OHSU has granted exceptions to the encryption requirement;
Report to OCR about its implementation of policies that prohibit the transfer of data containing ePHI from OHSU-owned and personally-owned devices to unencrypted removable storage devices (USB drives and portable hard drives) and implementation of a technical solution that enforces the policies prohibiting transfers of this type when attached to the OHSU secure network, except for any removable storage devices for which OHSU has granted exceptions based on documented evidence of reasonable compensating controls that have been implemented to protect the ePHI on such devices;
Send a communication to all members of the OHSU community describing its commitment to enterprise encryption;
Prepare to the satisfaction of OCR security awareness training materials needed to implement its security management processing including specific privacy and security awareness related to a) use of internet-based information storage services; b) disclosures to third party entities that require a business associate agreement or other reasonable assurance in place to ensure that the business associate will safeguard the protected health information (PHI) and/or ePHI; c) regarding managers, effective oversight of workforce members’ uses and disclosures of PHI, including ePHI, to ensure the workforce members’ compliance with the Privacy and Security Rules and OHSU’s internal policies and procedures; d) security incident reporting; and e) password management;
Initially train all workforce members with access to PHI and/or ePHI with 120 days of OCR’s approval of the training and thereafter ensure that new workforce members are trained with 15 days of hire and that all workforce members subsequently continue to receive training on an on-going basis;
Review the security awareness training materials annually, and, where appropriate, update the training to reflect changes in Federal law or HHS guidance, any issues discovered during audits or reviews, and any other relevant developments;
Management oversight and supervision of the implementation and administration of the corrective actions required by the Corrective Action Plan and HIPAA compliance; and
Management reporting to OCR on its actions and compliance with the Corrective Action Plan.
SJH Settlement
Similarly, the SJH Settlement OCR announced on October 18, 2016 with St. Joseph Health (SJH) requires SJH to pay a $2.4 million plus settlement payment, conduct an enterprise-wide risk analysis and implement and administer a comprehensive correction plan to settle OCR charges that SJH violated HIPAA by allowing files containing ePHI of 31,800 individuals that SJH created for its participation in the Medicare meaningful use program to be publicly accessible on the internet from February 1, 2011, until February 13, 2012.
A nonprofit integrated Catholic health care delivery system sponsored by the St. Joseph Health Ministry, who through its 24,000 employees and 6,000 physicians provides a range of health care services to more than 137,000 inpatients and 3.6 million outpatients each year at SHS’ 4 acute care hospitals, home health agencies, hospice care, outpatient services, skilled nursing facilities, community clinics and physician organizations located throughout California and in parts of Texas and New Mexico.
OCR’s charges against SJH arose out of OCR’s investigation into a 2012 breach notification report SJS filed with OCR. On February 14, 2012, SJH reported to OCR that files containing electronic protected health information (ePHI) of 31,800 individuals from five of the SJH hospitals-St. Jude Medical Center, Mission Hospital, Queen of the Valley Medical Center, Santa Rosa Memorial Hospital, and Petaluma Valley Hospital that SJH created for its participation in the meaningful use program were publicly accessible on the internet from February 1, 2011, until February 13, 2012, via Google and possibly other internet search engines.
SJH’s report to OCR indicated that this public access resulted from a configuration within its network server in which PDF files containing following patient information were uploaded: patient names; BMI; blood pressure; lab results; smoking status; diagnoses lists; medication allergies; advance directive status and demographic information (language, ethnicity, race, sex, and birth date). The server SJH purchased to store the files included a file sharing application whose default settings allowed anyone with an internet connection to access them. Upon implementation of this server and the file sharing application, SJH did not examine or modify it. As a result, the public had unrestricted access to PDF files containing the ePHI of 31,800 individuals, including patient names, health statuses, diagnoses, and demographic information from February 14, 2012 until SJH blocked external access to the ePHI when it shut down the application February 13, 2012.
OCR’s investigation indicated the following potential violations of the HIPAA Rules:
From February 1, 2011 to February 13, 2012, SJH potentially disclosed the PHI of 31,800 individuals;
Evidence indicated that SJH failed to conduct an evaluation in response to the environmental and operational changes presented by implementation of a new server for its meaningful use project, thereby compromising the security of ePHI;
Although SJH hired a number of contractors to assess the risks and vulnerabilities to the confidentiality, integrity and availability of ePHI held by SJH, evidence indicated that this was conducted in a patchwork fashion and did not result in an enterprise-wide risk analysis, as required by the HIPAA Security Rule.
To resolve charges resulting from these findings, the SJH Resolution Agreement requires SJH to pay OCR a $2,140,500 settlement payment and adopt a comprehensive corrective action plan which among other things, requires SJH to conduct an enterprise-wide risk analysis, develop and implement a risk management plan, revise its policies and procedures, and train its staff on these policies and procedures. SJH’s Chief Executive Officer, Annette M. Walker, is named in the Corrective Action Plan as the SJH authorized representative and contact person responsible for overseeing the CAP implementation.
Among other things, the Corrective Action Plan specifically requires that SJH:
Within 240 days, conduct an enterprise-wide analysis and provide a report to OCR which includes a complete inventory of all electronic equipment, data systems, and applications that contain or store ePHI, and prepare and deliver to OCR for review an enterprise-wide risk analysis that identifies all security risks and vulnerabilities that incorporates all electronic equipment, data systems, and applications controlled, administered, or owned by SJH, its workforce members, and affiliated staff that contains, stores, transmits, or receives electronic protected health information (ePHJ);
Revise this risk analysis plan as directed by OCR based on its review of the presented risk analysis;
Develop and implement to the satisfaction of OCR an organization-wide risk management plan to address and mitigate any security risks and vulnerabilities identified in the risk analysis;
Distribute the risk management plan as finally approved by OCR to to workforce members involved with implementation of the plan within 30 days of OCR approval;
Revise to OCR’s satisfaction, adopt and implement within 30 days of OCR’s approval compliant HIPAA policies and procedures;
Prepare for review of OCR training materials and once approved by OCR, provide initial training to required workforce members, and obtain certification of completion of that training from each required workforce member within 60 days of OCR’s approval of the training and thereafter at least annually as long as the Corrective Action Plan remains in force;
Promptly conduct a documented investigation of any information indicating a potential workforce member violation of the new HIPAA policies in the manner required by OCR and if the investigation confirms a violation (Reportable Event), notify OCR of the relevant facts, findings, corrective actions and sanctions imposed against the violating workforce member in the manner required by the Corrective Action Plan;
Submit annual report to OCR signed and attested to by an SJH officer, which contains the information and attestations of compliance with the requirements of the Corrective Action Plan in accordance with the Corrective Action Plan;
Retain for inspection and copying and provide to OCR upon request all documents and records relating to compliance with this Corrective Action Plan for six (6) years from the Effective Date of the SJH Settlement Agreement.
Take Away For Other Covered Entities & Business Associates
The OHSU and SJH Settlement Agreements send a clear message to all Covered Entities and business associates that they must be prepared to demonstrate not only that their initial adoption and implementation of required HIPAA Privacy and Security policies and safeguards, but also that their organization’s leadership needs to be prepared to demonstrate their commitment to HIPAA compliance by making adequate provision for HIPAA compliance, and appropriately monitoring developments that could impact the adequacy of their existing measures and timely update their systems and security, policies, procedures, training and other relevant safeguards.
The Settlements make clear that Covered Entities and their business associates should ensure that their organization possesses a well-documented current enterprise-wide risk assessment, as well as has in place and is administering as necessary to maintain the currency and adequacy of its risk assessment strong practices for conducting documented evaluations of their own HIPAA security, policies, practices, audits and investigations and other procedures necessary to comply with HIPAA, taking into account recent OCR guidance, its initiation of its Phase II audit program, the insights offered by OCR’s ever growing list of enforcement actions and compliance tools, as well as changes in systems, documentation, software, equipment or other occurrences within the operations of the Covered Entity or business associate’s operations that could impact the currency and adequacy of its risk assessment or otherwise raise compliance risks.
In this respect, Covered Entities and business associates are encouraged to take special note of the advisability of specifically reviewing and updating their HIPAA policies, practices, business associate agreements, training, oversight and documentation to in response to the guidance and insight that OCR provides, including:
Guidance On HIPAA & Cloud Computing released October 6, 2016, which provides guidance for Covered Entities and business associates about contracting and other procedures that HIPAA-regulated Covered Entities and their business associates should implement when contracting for and using Cloud Computing Services;
Joint Guidance published October 21, 2016 by the Federal Trade Commission and OCR reminding Covered Entities and their business associates of the need to ensure that in addition to fulfilling the technical content requirements of HIPAA, their HIPAA authorizations, privacy practices notices and other HIPAA notices and communications are written and presented in plan language, include required specific terms and descriptions and in a manner that does not mislead individuals about their rights or about what is happening with their PHI. Furthermore, where Covered Entities and their business associates contemplate that businesses associates may request that individuals sign HIPAA authorizations, Covered Entities and their business associates should the Covered Entity and business associate have in place a current, signed HIPAA-compliant business associate agreement that that expressly authorizes the business associate to request the HIPAA authorization in light of statements in the Joint Guidance indicating that OCR views the Privacy Rules as prohibiting a business associate from asking a consumer to sign a HIPAA authorization unless its business associate contract expressly permits the business associate to do so; and
Employer and other health plan sponsors, health plan fiduciaries and business associates, and their service providers also generally will want to consider their responsibilities to provide and enforce employer certifications, as well as the fiduciary obligations health plan fiduciaries under the fiduciary responsibility rules of the Employee Retirement Income Security Act (ERISA). Among other things, wrongful disclosure of PHI to a sponsoring employer or others could violate HIPAA or other plan terms. Furthermore, Department of Labor officials have indicated stated that a fiduciary’s general fiduciary responsibilities can apply to the protection and administration of PHI and other health plan information as well as create a duty by a responsible fiduciary to prudently investigate and take steps to address breaches or other potential concerns that place PHI at risk. See, HIPAA Settlement Warns Health Plans, Sponsoring Employers & Business Associates To Manage HIPAA Risks.
Furthermore, as breaches of PHI and other violations of HIPAA also frequently give rise to responsibilities or risks under a broad range of other federal and state laws medical and financial privacy and data security, Medicare and other terms of federal program participation, medical credentialing, licensure and ethics, insurance and Employee Retirement Income Security Act fiduciary responsibilities in the case of health plans, contractual, tort and other exposures, Covered Entities and their business associates also generally are best served to take into account these other responsibilities and exposures in conjunction with the design and administration of their HIPAA compliance and risk management policies and practices.
Covered Entities and their business associates also should seek advice from legal counsel regarding the adequacy of their compliance, investigatory, training, management oversight, training, reporting, documentation, document retention and other processes and procedures that could reduce risks of HIPAA violations and position the organization to effectively and more efficiently respond to a potential breach, audit, investigation or enforcement action and mitigate the costs and potential liability exposures that increasingly attends these events. In addition, given the typically high financial, operational and legal costs typically incurred to conduct investigations, report and redress breaches, and respond to OCR audits or investigations, much less make any payments and implement any corrective actions required to settle OCR changes, most Covered Entities and their business associations will want to consider the advisability and adequacy of insurance and other sources of funding or indemnification for the often substantial costs that often attend a HIPAA breach, audit or enforcement event. Since HIPAA violations under certain circumstances also can give rise to felony criminal liability, boards of directors and other leaders of Covered Entities and business associates also will want to ensure that their HIPAA compliance policies and practices also are incorporated and monitored by management as part of their organization’s overall Federal Sentencing Guideline Compliance programs and practices.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,”“Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely known for work, teachings and publications on HIPAA and other privacy and data security concerns earned in connection with her more than 28 years’ of involvement advising and representing business and government clients domestically and internationally about workforce and human resources, employee benefits; health care; insurance and financial; privacy and data security and other performance management, regulatory, internal controls and other compliance, risk management, public policy and operational other key concerns.
Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a Fellow in the American College of Employee Benefit Counsel, past Group Chair and current Defined Contribution Plans Committee Co-Chair, Groups and Substantive Committee and Membership Committee Members, past Welfare Plans Committee Chair and Co-Chair, and former Fiduciary Responsibility Vice Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current ABA International Section Life Sciences Committee Vice Chair, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, former ABA Joint Committee on Employee Benefits Council Representative and Marketing Committee Chair and a prolific author and highly popular speaker and consultant, Ms. Stamer helps management manage.
Ms. Stamer’s legal and management consulting work throughout her nearly 30-year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
As a core component of her work, Ms. Stamer has worked extensively throughout her career with health care providers, health plans, health care clearinghouses, their business associates, employers, banks and other financial institutions, their technology and other vendors and service providers, and others on legal and operational risk management and compliance with HIPAA, FACTA, PCI, trade secret, physician and other medical confidentiality and privacy, federal and state data security and data breach and other information privacy and data security rules and concerns; prevention, investigation, response, mitigation and resolution of known or suspected data or privacy breaches or other incidents; defending investigations or other actions by plaintiffs, OCR, FTC, state attorneys’ general and other federal or state agencies; reporting and redressing known or suspected breaches or other violations; business associate and other contracting; insurance or other liability management and allocation; process and product development, contracting, deployment and defense; evaluation, commenting or seeking modification of regulatory guidance, and other regulatory and public policy advocacy; training and discipline; enforcement, and a host of other related concerns for public and private health care providers, health insurers, health plans, technology and other vendors, employers, and others.
Beyond her extensive involvement advising and representing clients on privacy and data security concerns and other health industry matters, Ms. Stamer also has served for several years as a scrivener for the ABA JCEB’s meeting with OCR, the Chair of the Southern California ISSA Health Care Privacy & Security Summit, and an editorial advisory board member, author, program chair or steering committee member, and faculties for a multitude of other programs and publications regarding privacy, data security, technology and other compliance, risk management and operational concerns in the health care, health and other insurance, employee benefits and human resources, retail, financial services and other arenas.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares shared her thought leadership, experience and advocacy on HIPAA and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as the Vice Chair of the North Texas Healthcare Compliance Association, Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Board Compliance Chair and Board member of the National Kidney Foundation of North Texas, current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Council, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management. Examples of her many highly regarded publications on these matters include “Protecting & Using Patient Data In Disease Management: Opportunities, Liabilities And Prescriptions,” “Privacy Invasions of Medical Care-An Emerging Perspective,” “Cybercrime and Identity Theft: Health Information Security: Beyond HIPAA,” as well as thousands of other publications, programs and workshops these and other concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clientson the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.
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The U.S. Department of Labor’s just announced successful whistleblower prosecution in Perez v. Scott Brain, et al of an employee benefit plan trustee, and an individual lawyer and her law firm that served as the employee benefit plan’s outside legal counsel of violating the fiduciary responsibility and whistleblower rules of the Employee Retirement Income Security Act of 1974 (ERISA) illustrates why employee benefit plan sponsors, trustees or other fiduciaries, their management, legal counsel, auditors and other service providers must both prudently investigate whistleblower allegations or other evidence of potential wrongdoing involving their employee benefit plans and resist the temptation to retaliate against employees or others for reporting or cooperating in the investigation of alleged improprieties involving an employee benefit plan.
The Brain decision highlights the care that employee benefit plan sponsors, fiduciaries, advisors and service providers and their management must use when responding to allegations or other evidence of wrongdoing relating to an employee benefit plan or its administration, investigating and addressing alleged misconduct or other performance or disciplinary concerns involving parties whose report or involvement in investigations of ERISA or other misconduct could form the basis of a potential ERISA 510 or other retaliation complaint.
The decision also makes clear that outside legal counsel advising an employee benefit plan or its fiduciaries in relation to the investigation or response to charges of ERISA misconduct involving an employee benefit plan must use care to avoid actions that could render them liable for participation in acts of illegal retaliation, violating their duty of loyalty to the plan by allowing themselves to become involved in a conflict of interest when investigating or defending potential wrongdoing involving an employee benefit plan, or engaging in other discretionary actions that could constitute a breach of fiduciary duty in violation of ERISA.
In Perez v. Scott Brain, et al., the U.S. District Court for the Central District of California ruled that Cement Masons Southern California Trust Fund’s trustee and Cement Masons Local 600 business manager, Scott Brain (Brain) and outside trust fund legal counsel, Melissa Cook, violated sections 510 and 404 of ERISA by causing the firing a trust fund employee Cheryle Robbins (Robbins) and an employee of the plan’s third party administrator, Cory Rice (Rice), in retaliation for their involvement in filing an internal complaint about and cooperating with the Labor Department’s Employee Benefit Security Administration’s federal criminal investigation of reports of Brain’s wrongful interference as a trustee with collections and contributions from unionized employers.
In 2011, Robbins, director of the trust funds’ audit and collections department, responded to a federal criminal investigation into Brain’s activities with contractors. The same year, she and Rice, who worked for the third-party administrator to the trust fund, American Benefit Plan Administrators, now, Zenith American Solutions (Zenith), participated in an effort to complain about Brain’s interference with efforts to collect delinquent contributions from contractors. Within weeks of this conduct, Robbins was suspended from her employment with the trust fund. Less than six months later, both Robbins and Rice were fired.
The court’s 71-page decision chronicles the coordinated retaliatory campaign orchestrated by Brain and Cook that led to Robbins’ suspension and firing by the employee benefit plan as well as the termination of Cook by his employer, Zenith..
With respect to Robbins’ suspension, the court found that the evidence showed Brain and Cook “were very upset with Robbins due to her contact with the [Department of Labor],” and that Brain and Cook “used their positions and influence to cause the other trustees to vote in favor of” suspending Robbins. To do so, the court explained, Brain and Cook “took the lead at the . . . [b]oard meeting with respect to the discussion of Robbins’ contact with the [Department of Labor]” and “created an environment that was hostile to her,” which “caused the trustees to vote to place her on leave.” The court noted that the two “‘set in motion’ the decision by the Joint Board to put Robbins on leave [.]”
As for Rice’s firing, the court explained how Brain and Cook retaliated against Rice by pressuring his employer, Zenith, into firing Rice and manipulating the Zenith relationship to deter Zenith from rehiring Rice in retaliation for his involvement in efforts to make an internal complaint about Brain.
Based upon evidence introduced during a five-day trial, the District Court ruled that Brain, Cook and Cook’s law firm violated ERISA section 510 by suspending and then discharging Robbins, and causing Zenith to refuse to hire Robbins and to discharge Rice in retaliation for their participation in reporting Brian’s misconduct to the General President of the Operative Plasterers’ and Cement Masons’ International Association and because Robbins participated in a federal criminal investigation of Brain. Specifically, the District Court ruled:
Brain, Cook and Cook’s law firm wrongfully retaliated against Robbins in violation of ERISA 510 for her communications with the DOL by placing her on administrative leave; causing the work performed by the department that Robbins previously managed to be outsourced to Zenith and by causing Zenith not to hire Robbins to participate in its work;
Brain, Cook and Cook’s law firm wrongfully retaliated against Rice in violation of ERISA 510 by causing Zenith to terminate Cook;
Brain breached his fiduciary duty under ERISA 404 by retaliating against Robbins and causing her to be placed on administrative leave and that Cook knowingly participated in that breach.
The court held that Brain and Cook’s retaliatory conduct violated section 510 of ERISA, which prohibits retaliation against whistleblowers for complaining of ERISA violations or cooperating with a governmental investigation of such violations. The court also held that the couple’s retaliation against Robbins breached Brain’s fiduciary duties under ERISA section 404 to the trust funds and that Cook participated knowingly in that breach.
In reaching its decision, the court rejected attorney Cook’s argument that she was somehow immunized from her unlawful conduct because she was an attorney to the trust funds. Among other things, the court noted the “apparent conflict of interest” Cook had in representing the trust funds while being in an undisclosed “romantic relationship” with Brain, which existed as defendants carried out their retaliatory scheme. Reminding lawyers of their ethical duties in California, the court cited California Rule of Professional Conduct 3-310(B), which the court explained “requires that an attorney disclose to a client any personal relationship or interest that he or she knows, or with the exercise of reasonable diligence should know, could substantially affect her his or her professional judgment in advising the client.”
As punishing for these criminal violations of ERISA, the District Court ordered the permanent removal of Brain as a trustee. It also ordered the permanent barring of Brain, Cook and her law firm from serving the Cement Masons Southern California Trust Funds. In addition, the court ordered Cook and her law firm to repay all attorneys’ fees she billed the trust funds for the actions she took in retaliating against whistleblowers Robbins and Rice. These criminal sanctions were in addition to the $630,000 civil damage award that the Labor Department previously secured in lost wages and damages for Robbins, Rice and another worker victimized by Brain and Cook in August 2015.
In addition to its successful prosecution of Brain, Cook and Cook’s law firm on these charges, the DOL also had sought, but failed to convince the District Court based on the evidence presented at trial to find Brain, Cook, Cook’s law firm and Brain’s fellow trust fund trustee Local 600 business agent and Joint Board of Trustees member Jaime Briceno guilty of wrongful retaliation against another alleged whistleblower or Briceno of breaching his fiduciary duties under ERISA by failing to prudently investigate Robbins’ allegations against Brain; or by voting to use assets of the Trust Funds to pay the cost of the settlement of the civil action brought by Robbins. The District Court also refused to consider a newly raised charge that Brain breached his fiduciary duty by failing to collect all monies owed to the Trust Funds on the grounds that the Labor Department had failed to timely raise the charge. While the court refused to convict Briceno, Brain, Cook or Cook’s law firm on the additional charges, the Labor Department’s prosecution of these claims illustrates that along with abstaining from retaliating against ERISA whistleblowers, employee benefit plan fiduciaries also should position themselves to defend against potential breach of fiduciary duty claims based on alleged inadequacies in their investigation or response to reports or other evidence of misconduct involving the plan by prudently investigating and acting to redress allegations or other evidence of potential wrongdoing in the administration of employee benefit plans or their assets.
About The Author
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, the author of this update, attorney Cynthia Marcotte Stamer, is AV-Preeminent (the highest) rated attorney repeatedly recognized as a Martindale-Hubble as a “LEGAL LEADER™” and “Texas Top Rated Lawyer” in Health Care Law, Labor and Employment Law, and Business & Commercial Law and among the “Best Lawyers In Dallas” in ERISA, Labor and Employment and Healthcare Law by D Magazine for her nearly 30 years of experience and knowledge representing and advising employers, employee benefit plans, their sponsors, fiduciaries, service providers and vendors and others on these and other planning, business transaction and contracting, administration, compliance, risk management, audits, investigations, government and private litigation and other enforcement and other related matters.
past Chair and current committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, a former ABA Joint Committee on Employee Benefits Council Representative ,
Ms. Stamer’s legal and management consulting work throughout her nearly 30-year career has focused on helping management manage. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, she de[;pus jer her extensive legal and operational knowledge and experience to help organizations and their management use the law and process to manage people, process, compliance, operations and risk.
As a key part of this work, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.
Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, expat and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.
A former lead consultant to the Government of Bolivia on its Social Security reform law Ms. Stamer also is well-known for her leadership on U.S. health and pension, wage and hour, tax, workforce, tax, education, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer for many years acted as the scribe responsible for leading the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights annual agency meeting and regularly participates in the OCR and other JCEB annual agency meetings, and participates in the development and submission of comments and other input to the agencies on regulatory, enforcement and other concerns. She also works as a policy advisor and advocate to many business, professional and civic organizations.
Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.
Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer serves on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and as an editorial advisor and contributing author of many other publications. Her leadership involvements with the American Bar Association (ABA) include year’s serving many years as a Joint Committee on Employee Benefits Council representative; ABA RPTE Section current Practice Management Vice Chair and Substantive Groups & Committees Committee Member, RPTE Employee Benefits & Other Compensation Committee Past Group Chair and Diversity Award Recipient, current Defined Contribution Plans Committee Co-Chair, and past Welfare Benefit Plans Committee Chair Co-Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; International Section Life Sciences Committee Policy Vice Chair; and a speaker, contributing author, comment chair and contributor to numerous Labor, Tax, RPTE, Health Law, TIPS, International and other Section publications, programs and task forces. Other selected service involvements of note include Vice President of the North Texas Healthcare Compliance Professionals Association; past EO Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former Southwest Benefits Association Board of Directors member, Continuing Education Chair and Treasurer; former Texas Association of Business BACPAC Committee Member, Executive Committee member, Regional Chair and Dallas Chapter Chair; former Society of Human Resources Region 4 Chair and Consultants Forum Board Member and Dallas HR Public Policy Committee Chair; former National Board Member and Dallas Chapter President of Web Network of Benefit Professionals; former Dallas Business League President and others. For additional information about Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.
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Employer and other group health plan sponsors, fiduciaries and administrators and individual and group health insurers should confirm their plan documents and practices comply with new additional guidance on when the Patient Protection and Affordable Care Act (ACA) preventive care mandates set forth in Public Health Services (PHS) Act section 2713, the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (the Code) require non-grandfathered group health plans to cover colonoscopies and Food and Drug Administration (FDA)-approved contraceptives as preventive services without co-pays or deductibles in light of yet more guidance on the preventive care rule jointly published April 20, 2016 by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the “Agencies”) inFAQs about Affordable Care Act Implementation (Part 31) (FAQ 31).
Employer and other plan sponsors, group health plan fiduciaries and insurers alike should make compliance with the ACA preventive care mandates a priority because violations of the preventive coverage rule not only exposes group health plans and insurers to potential liability for wrongful denial of benefits, breach of fiduciary duty for ERISA covered arrangements and other similar insurance claims for insurers under state law, noncompliance with these mandates generally triggers liability for an employer to self-assess, self-report on Internal Revenue Service Form 8928 an excise penalty of $100 per participant per day for each day of uncorrected violation. With most employers sponsoring plans facing a deadline to file Form 8928’s for any uncorrected disclosures soon, now is the time to review and correct any violations of the preventive care guidelines over the past year and preventing future deadlines.
ACA Preventive Care Mandate Overview
The preventive care mandates of ACA generally require that health insurance or plan coverage offered in the individual or group market cover the following items or services without imposing any cost-sharing requirements:
Evidence-based items or services that have in effect a rating of “A” or “B” in the current recommendations of the United States Preventive Services Task Force (USPSTF) with respect to the individual involved, except for the recommendations of the USPSTF regarding breast cancer screening, mammography, and prevention issued in or around November 2009, which are not considered in effect for this purpose;
Immunizations for routine use in children, adolescents, and adults that have in effect a recommendation from the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC) with respect to the individual involved;
With respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration (HRSA); and
For women, evidence-informed preventive care and screening provided for in comprehensive guidelines supported by HRSA, to the extent not included in certain recommendations of the USPSTF subject to special rules with respect to coverage of contraceptive services for group health plans and group health insurance coverage provided in connection with group health plans established or maintained by religious employers.
See 1.26 CFR 54.9815-2713, 29 CFR 2590.715-2713, 45 CFR 147.130.
If a recommendation or guideline does not specify the frequency, method, treatment, or setting for the provision of a recommended preventive service, then the plan or issuer may use reasonable medical management techniques to determine any such coverage limitations. See 26 CFR 54.9815-2713(a)(4), 29 CFR 2590.715-2713(a)(4), 45 CFR 147.130(a)(4).
FAQ 31 On Coverage of Colonoscopies Pursuant to USPSTF Recommendations
Concerning colonoscopies, FAQ 31 states that because the Agencies view preparation for a preventive screening colonoscopy an integral part of the procedure, bowel preparation medications, when medically appropriate and prescribed by a health care provider, are an integral part of the preventive screening colonoscopy that group health plans and health insurers must cover without cost sharing, subject to reasonable medical management).
Coverage of Food and Drug Administration (FDA)-approved Contraceptives
FAQ 31 also supplements an already extensive list of Agency guidance concerning when group health plans and health insurers must cover contraceptives as preventive care without cost sharing under ACA stemming from the HRSA Guidelines’ inclusion of a recommendation of all FDA-approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity, as prescribed by a health care provider.
FAQs about Affordable Care Act Implementation (Part XII), Q14 (FAQ 12) previously released in 2013 states the HRSA Guidelines ensure women’s access to the full range of FDA-approved contraceptive methods including, but not limited to, barrier methods, hormonal methods, and implanted devices, as well as patient education and counseling, as prescribed by a health care provider. FAQ 12 also states group health plans and insurers may use reasonable medical management techniques to control costs and promote efficient delivery of care, such as covering a generic drug without cost sharing and imposing cost sharing for equivalent branded drugs provided that the plan or insurer accommodates any individual for whom a particular drug (generic or brand name) would be medically inappropriate, as determined by the individual’s health care provider, by having a mechanism for waiving the otherwise applicable cost sharing for the brand or non-preferred brand version.
Must cover without cost sharing at least one form of contraception in each of the methods (currently 18) identified for women by the FDA;
To the extent plans and issuers use reasonable medical management techniques within a specified method of contraception, must have an easily accessible, transparent, and sufficiently expedient exceptions process that provides for making a determination on the claim according to a timeframe and in a manner that takes into account the nature of the claim (e.g., pre-service or post-service) and ensures the medical exigencies involved for a claim involving urgent care is not unduly burdensome on the individual or provider (or other individual acting as a patient’s authorized representative, including a provider) to ensure coverage without cost sharing of any service or FDA-approved item within the specified method of contraception;
Must defer to the determination of the attending provider and cover a service or item without cost sharing a particular service or FDA-approved item that the individual’s attending provider recommends based on a determination of medical necessity with respect to that individual, where medical necessity could include considerations such as severity of side effects, differences in permanence and reversibility of contraceptives, and ability to adhere to the appropriate use of the item or service, as determined by the attending provider; and
In the case of health insurers required to provide essential health benefits (EHB) under the ACA, must have an exceptions process that meets the standards in 45 CFR 156.122(c).
FAQ 31 supplements this previous Agency guidance by confirming that group health plans and health insurers may develop a standard exception form with instructions that an attending provider may use to prescribe a particular service or FDA-approved item based on a determination of medical necessity with respect to the individual involved and suggests the Medicare Part D Coverage Determination Request Formas an appropriate model for the development of such forms.
Act To Verify Compliance, Leverage Opportunities
FAQ 31 and the other guidance presents a two-edged sword for health insurers and group health plans and their sponsors. On one hand, failing to design and administer their health benefit programs to comply with these and other rules and interpretations about the preventive care and other federal health plan mandates imposed by the ACA or other laws can trigger significant liability for insurers as well as group health plans and theirsponsoring employers. On the other hand, group health plans and insurers that carefully design and administer their arrangements to comply with the guidance also can take advantage of opportunities to manage utilization and costs using the narrow windows of opportunity offered within the guidance.
In either case, careful, well-documented efforts to verify compliance in response to the evolving guidance is important to prevent unanticipated violations and position group health plans, their sponsoring employers and fiduciaries and insurers to mitigate potential exposures in the event of a violation of existing or subsequently published guidance.
About The Author
A practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., Ms. Stamer’s more than 28 years’ of leading edge work as an practicing attorney, author, lecturer and industry and policy thought leader have resulted in her recognition as a “Top” attorney in employee benefits, labor and employment and health care law.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Cynthia Marcotte Stamer is a noted Texas-based management lawyer and consultant, author, lecturer and policy advocate, recognized as among the “Top Rated Labor & Employment Lawyers in Texas” by LexisNexis® Martindale-Hubbell® and as among the “Best Lawyers In Dallas” for her work in the field of “Tax: Erisa & Employee Benefits” and “Health Care” by D Magazine.
Ms. Stamer’s legal and management consulting work throughout her career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.
Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer helps management manage. Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well-known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.
A Fellow in the American College of Employee Benefit Counsel, Ms. Stamer uses her deep and highly specialized knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions. In the course of this work, Ms. Stamer has accumulated an impressive resume of experience advising and representing clients on HIPAA and other privacy and data security concerns. The scribe for the American Bar Association (ABA) Joint Committee on Employee Benefits annual agency meeting with the Department of Health & Human Services Office of Civil Rights for several years, Ms. Stamer has worked extensively with health plans, health care providers, health care clearinghouses, their business associates, employer and other sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA and other information privacy and data security rules, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns. Her clients include public and private health plans, health insurers, health care providers, banking, technology and other vendors, and others. Beyond advising these and other clients on privacy and data security compliance, risk management, investigations and data breach response and remediation, Ms. Stamer also advises and represents clients on OCR and other HHS, Department of Labor, IRS, FTC, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She also is the author of numerous highly acclaimed publications, workshops and tools for HIPAA or other compliance including training programs on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.
Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.
Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.
Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see here or contact Ms. Stamer directly by email here or by telephone at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also may be interested reviewing other Solutions Law Press, Inc.™ resources at www.solutionslawpress.com such as:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile at here.
Health Plans, Sponsors & Business Associates Should Verify Plan’s HIPAA Compliance
Employers and other health plan sponsors and the health plan fiduciaries and business associates providing services involving dealings on behalf of the plan with protected health information just received another reminder to confirm and be prepared to prove all required business associate agreements are in place and that the health plans otherwise properly are administering all policies, practices, safeguards and procedures for handling, using and disclosing electronic and other protected health information from the April 20, 2016 Department of Health & Human Services Office of Civil Rights (OCR) announcement of its latest resolution agreement settling Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rule charges OCR made against a HIPAA-covered entity for violating HIPAA’s business associate agreement rules.
OCR Charges Brought For Business Associate Agreement Violations
HIPAA’s Privacy Rules generally apply to “covered entities,” which under HIPAA are health plans and insurers, health care providers, health care clearinghouses (Covered Entities) and “business associates,” which are individuals or entities that perform services that aid the Covered Entity to perform its duties as a Covered Entity.
The Resolution Agreement and Corrective Action Plan (Resolution Agreement) with Raleigh Orthopaedic Clinic, P.A. of North Carolina (Raleigh Orthopaedic) announced by OCR on April 20th requires Raleigh Orthopaedic to pay $750,000 to settle charges OCR it violated the Privacy Rule by handing over protected health information of approximately 17,300 patients to a potential business partner without first executing a business associate agreement.
Raleigh Orthopaedic is a provider group practice that operates clinics and a surgery center in the Raleigh, North Carolina area. OCR initiated its investigation of Raleigh Orthopaedic after receiving a breach report on April 30, 2013. OCR’s investigation indicated that Raleigh Orthopaedic violated the Privacy Rules by releasing the x-ray films and related protected health information of 17,300 patients to an entity that promised to transfer the images to electronic media in exchange for harvesting the silver from the x-ray films. Raleigh Orthopaedic failed to execute a business associate agreement with this entity before turning over the x-rays and PHI.
OCR says this sharing of the x-ray files and other protected health information by Raleigh Orthopaedic violated the Privacy Rules.
Specifically, the Privacy Rules prohibit Covered Entities and their business associates from using, accessing and disclosing protected health information except as specifically permitted in the Privacy Rules. As part of these rules, the “Business Associate” requirements of the Privacy Rule prohibit Covered Entities from disclosing or allowing business associates to use, and business associates from receiving or using protected health information unless the parties first enter into a written business associate agreement that complies with the requirements of the Privacy Rules.
The Resolution Agreement settles OCR charges that Raleigh Orthopaedic violated this Business Associate Agreement requirement by sharing the x-rays and other protected health information with the service provider without first entering a business associate agreement. Under the Settlement Agreement, Raleigh Orthopaedic must pay a $750,000 payment, as well as revise its policies and procedures to: establish a process for assessing whether entities are business associates; designate a responsible individual to ensure business associate agreements are in place prior to disclosing PHI to a business associate; create a standard template business associate agreement; establish a standard process for maintaining documentation of a business associate agreements for at least six (6) years beyond the date of termination of a business associate relationship; and limit disclosures of PHI to any business associate to the minimum necessary to accomplish the purpose for which the Covered Entity hires the business associate.
Although the Resolution Agreement only addresses charges OCR brought against the Covered Entity, Raleigh Orthopaedic, business associates need to keep in mind that both Covered Entities and business associates now are responsible for ensuring compliance with the business associate agreement requirements of the Privacy Rules since the Stimulus Bill amended HIPAA to make most provisions of the Privacy Rule directly applicable to business associates as well as Covered Entities.
Take Aways For Covered Entities & Their Business Associates
OCR’s announcement of the Resolution Agreement includes a strong message for other Covered Entities and business associates of the importance of taking seriously their responsibility under the Privacy Rule to ensure that the business associate agreement requirements of the Privacy Rule are met before business associates are allowed to receive, access or use protected health information. The announcement quotes Jocelyn Samuels, Director of the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) as stating. “It is critical for entities to know to whom they are handing PHI and to obtain assurances that the information will be protected.” and “HIPAA’s obligation on covered entities to obtain business associate agreements is more than a mere check-the-box paperwork exercise.”
In light of the Business Associate Rule and Director Samuels’ comments, Covered Entities and business associates alike should review the adequacy of their documentation, policies and practices regarding dealings with service providers who are or could collect, receive or use electronic or other protected health information to propose or perform services in the capacity as a business associate. Certainly both Covered Entities and business associates to ensure that they possess and are able to produce if needed signed business associate agreements for each current business associate agreement as well as that appropriate policies, practices and procedures are in place to ensure that all required business associate agreements are implemented before any disclosure or use of protected health information to the business associate in the future. As part of these activities, both Covered Entities and business associates also should ensure their policies and practices appropriately provide for the retention of signed copies of all business associate agreements and other records, and the implementation of all other processes and procedures required to position the entity to be able to demonstrate it not only had policies requiring compliance, but appropriately implemented and administered those policies in accordance with the Privacy Rule.
When conducting this review, Covered Entities and business associates also generally should consider the advisability of also reviewing their business associate agreements and the adequacy of these arrangements in light of any other contractual confidentiality and or contractual rights and commitments, regulatory requirements and other operational and risk management concerns that impact or interrelate with the relationship between the business associate and the Covered Entity. It is important to ensure that appropriate steps are taken to evaluate and properly integrate the confidentiality and other commitments that the Privacy Rules mandate a business associate agreement include with audit, performance assessment, and other data access or disclosure, trade secrets, confidentiality, performance standards and guarantees, indemnity and other contractual obligations of other agreements that could impact or be impacted by the business associate agreements. Steps also should be taken to incorporate appropriate processes and procedures for ensuring that the Covered Entity and members of its workforce understand and consistently administer and document their use of appropriate processes to ensure that the business associate agreement and other requirements of the Privacy Rules are fulfilled. In the case of employer sponsored plans subject to the Employee Retirement Income Security Act of 1974, for instance, the selection and proper oversight of business associates and the management of plan data both are subject to the fiduciary responsibility rules of ERISA. Meanwhile, insurers, business associates and other plan vendors also generally should anticipate that beyond HIPAA, they also may be subject to data security, privacy and other mandates and exposures under state HIPAA-like rules for protected health information, as well as other obligations under insurance, data security, identity theft, breach, privacy and other state laws.
The process of evaluating the adequacy of current arrangement and considering the advisability of changes to tighten existing practices in many cases will result in the discovery and discussion of potentially sensitive information about the adequacy of current or past compliance with the Privacy Rules or other matters. For example, it is possible that in the course of review, parties may be unable to locate a signed business associate agreement governing a relationship that the Privacy Rules require be subject to a business associate agreement or in the course of review, information indicating breaches of protected health information or other Privacy Rule violations may have occurred. For this reason, most Covered Entities and their business associates will want to consider arranging for this review and analysis to be conducted within the scope of attorney-client privilege by or under the direction of qualified legal counsel with HIPAA experience that has entered into a business associate agreement with the Covered Entity or business associate.
About The Author
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Cynthia Marcotte Stamer is a noted Texas-based management lawyer and consultant, author, lecturer and policy advocate, recognized as among the “Top Rated Labor & Employment Lawyers in Texas” by LexisNexis® Martindale-Hubbell® and as among the “Best Lawyers In Dallas” for her work in the field of “Tax: Erisa & Employee Benefits” and “Health Care” by D Magazine who works, writes and speaks extensively about HIPAA and other data privacy and security concerns.
Ms. Stamer’s legal and management consulting work throughout her career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.
Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer helps management manage. Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well-known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.
A Fellow in the American College of Employee Benefit Counsel, Ms. Stamer uses her deep and highly specialized knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.
Throughout her career, Ms. Stamer has advised these and other clients about health care, health plan, financial information, trade secret, privacy and other related compliance, data breach response and remediation and related compliance, risk management and related concerns. In the course of this work, Ms. Stamer has accumulated an impressive resume of experience advising and representing clients on HIPAA and other privacy and data security concerns. The scribe for the American Bar Association (ABA) Joint Committee on Employee Benefits annual agency meeting with the Department of Health & Human Services Office of Civil Rights for several years, Ms. Stamer has worked extensively with health plans, health care providers, health care clearinghouses, their business associates, employer and other sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA and other information privacy and data security rules, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns. Her clients include public and private health plans, health insurers, health care providers, banking, technology and other vendors, and others.
Beyond advising these and other clients on privacy and data security compliance, risk management, investigations and data breach response and remediation and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She also is the author of numerous highly acclaimed publications, workshops and tools for HIPAA or other compliance including training programs on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.
Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.
Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns. She will share updates on HIPAA and other health care and data security concerns when returns to speak and chair at the 4th Annual Healthcare Privacy and Security Forum scheduled on May 20, 2016 in Los Angeles.
Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see here or contact Ms. Stamer directly by email here or by telephone at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also may be interested reviewing other Solutions Law Press, Inc.™ resources at www.solutionslawpress.com such as:
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Employer and other employee benefit plan sponsors, benefit plan committees and fiduciaries, and the broker-dealers, financial advisors, insurance agents and other plan service providers that provide investment-related platforms, advice, recommendations or other services for employee benefit plans need to reevaluate the fiduciary status of their service providers and begin restructuring as necessary their associated relationships, service provider commission or other compensation, service agreements and arrangements or other services in response to a new Regulatory Guidance Package (Rule) that explicitly classifies parties providing “covered investment advice” as fiduciaries subject to the conflict of interest and other fiduciary responsibility rules of the Employee Retirement Income Security Act (ERISA).
Supplementing existing precedent and EBSA’s already existing broad, functional definition of “fiduciary,” the Rule clarifies when individuals and entities that provide “covered investment advice” to plans, plan sponsors, fiduciaries, plan participants, beneficiaries and Individual Retirement Accounts (IRAs) and IRA owners are:
Fiduciaries of the Plan or IRA for purposes of Title I of ERISA;
Required to acknowledge their status and the status of their individual advisers as “fiduciaries” of the plan for purposes of ERISA;
Accountable as fiduciaries for making prudent investment recommendations without regard to their own interests, or the interests of those other than the plan or plan participant or beneficiary that is the customer;
Restricted to charging only “reasonable compensation” for their advice or service;
Prohibited from making misrepresentations to their customers regarding recommended investments; and
Prohibited from providing advice or making payments that involve any conflicts of interest prohibited by ERISA unless the arrangements fully complies with a prohibited transaction exemption issued by EBSA under ERISA Section 408 that otherwise complies with ERISA Section 404.
Concurrent with its adoption of final regulations implementing these new rules concerning investment advisors and their fiduciary responsibilities, the Rule also adopts certain new Prohibited Transaction Exemptions that define requirements that providers of covered investment advice and the plan fiduciaries that engage them generally will be required after April 7, 2017 to ensure are met for investment advisors to receive commission-based compensation for their services, to sell or purchase certain recommended debt securities and other investments out of their own inventories to or from plans and IRAs, or to receive compensation for recommending fixed rate annuity contracts to plans and IRAs.
Investment Advice Covered By The Rule
The final rule applies to “covered investment advice.” For purposes of the rule, “covered investment advice” generally includes:
A recommendation to a plan, plan fiduciary, plan participant and beneficiary and IRA owner for a fee or other compensation, direct or indirect, as to the advisability of buying, holding, selling or exchanging securities or other investment property, including recommendations as to the investment of securities or other property after the securities or other property are rolled over or distributed from a plan or IRA;
A recommendation as to the management of securities or other investment property, including, among other things, recommendations on investment policies or strategies, portfolio composition, selection of other persons to provide investment advice or investment management services, selection of investment account arrangements (e.g., brokerage versus advisory); or recommendations with respect to rollovers, transfers, or distributions from a plan or IRA, including whether, in what amount, in what form, and to what destination such a rollover, transfer, or distribution should be made.
Under the Rule, the fundamental threshold element in establishing the existence of fiduciary investment advice is whether a “recommendation” occurred. The Department has taken an approach to defining “recommendation” that is consistent with and based upon the approach taken by the Financial Industry Regulatory Authority (FINRA), the independent regulatory authority of the broker-dealer industry, subject to the oversight of the Securities and Exchange Commission (SEC).
The Rule specifies that a “recommendation” is a communication that, based on its content, context, and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action. Under the Rule, the more individually tailored the communication is to a specific advice recipient or recipients, the more likely the communication will be viewed as a recommendation.
The types of relationships that must exist for such recommendations to give rise to fiduciary investment advice responsibilities include recommendations made either directly or indirectly (e.g. through or together with any affiliate) by a person who:
Represents or acknowledges that they are acting as a fiduciary within the meaning of ERISA or the Internal Revenue Code (Code);
Renders advice pursuant to a written or verbal agreement, arrangement or understanding that the advice is based on the particular investment needs of the advice recipient; or
Directs the advice to a specific recipient or recipients regarding the advisability of a particular investment or management decision with respect to securities or other investment property of the plan or IRA.
Also, the Rule only applies where a recommendation is provided directly or indirectly in exchange for a “fee or other compensation.” “Fee or other compensation, direct or indirect” means any explicit fee or compensation for the advice received by the person (or by an affiliate) from any source, and any other fee or compensation received from any source in connection with or as a result of the recommended purchase or sale of a security or the provision of investment advice services including, though not limited to, such things as commissions, loads, finder’s fees, and revenue sharing payments. A fee or compensation is paid “in connection with or as a result of” such transaction or service if the fee or compensation would not have been paid but for the transaction or service or if eligibility for or the amount of the fee or compensation is based in whole or in part on the transaction or service.
Investment Advice Not Covered By Rule
While the Rule reaches broadly, not all communications with financial advisers are covered fiduciary investment advice under the Rule. As a threshold issue, if the communications do not meet the definition of “recommendations” as described above, the communications will be considered non-fiduciary. In response to requests from commenters, and for clarification, the final rule includes some specific examples of communications that would not rise to the level of a recommendation and therefore would not constitute a fiduciary investment advice communication under the Rule.
When evaluating the applicability and effect of these exemptions, however, it is important to keep in mind that by adding the new Rule, EBSA seeks to make clear that individuals or organizations that engage in activities described in the Rule as covered investment advice are fiduciaries subject to these requirements. Since the Rule does not revoke existing EBSA fiduciary guidance or judicial precedent, service providers and other parties with discretionary authority or responsibility over employee benefit plans not covered by the Rule still could qualify as fiduciaries if their authority, responsibility or actions functionally causes them to fall within the definition of a fiduciary under these other pre-existing definitions of fiduciary status. Subject to this cautionary proviso, the following are some of the activities that the Rule identifies as activities that might fall outside the Rule’s covered investment activities in the manner required by the Rule:
“Education” as defined and provided in accordance with the Rule;
“General communications that a reasonable person would not view as an investment recommendation;”
Simply making available a platform of investment alternatives without regard to the individualized needs of the plan, its participants, or beneficiaries if a plan fiduciary independent of the platform service provider actually decides what investment options are offered and the platform service provider also represents in writing to the plan fiduciary that they are not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity; and
Transactions with independent plan fiduciaries where the adviser knows or reasonably believes that the independent fiduciary is a licensed and regulated provider of financial services (banks, insurance companies, registered investment advisers, broker-dealers) or those that have responsibility for the management of $50 million in assets, and other conditions set forth in the Rule are met;
Communications and activities made by advisers to ERISA-covered employee benefit plans in swap or security-based swap transactions when the swap transaction meets certain conditions set forth in the Rule, which EBSA designed in coordination with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to avoid conflicts between the Rule and the swap and security-based swap rules promulgated by those agencies under the Dodd–Frank Wall Street Reform and Consumer Protection Act; and
Activities and communications of employees working in the payroll, accounting, human resources, and financial departments of the plan sponsor or its affiliated business who routinely develop reports and recommendations for the company and other named fiduciaries of the sponsors’ plans if the employees receive no fee or other compensation in connection with any such recommendations beyond their normal compensation for work performed for their employer.
New Prohibited Transaction Exemptions Published With Rule
Concurrent with its publication of the Rule, EBSA also is adopting the following new “Prohibited Transaction Exemptions to the otherwise applicable statutory list of prohibited conflict of interest transactions in ERISA Section 406 and the companion rules of the Internal Revenue Code (Code) applicable to qualified retirement plans.
Noncompliance with the Rule, including where necessary to avoid violating ERISA Section 406’s prohibited transaction prohibitions, by parties providing covered investment advice or the engagement or retention of such a service provider by an employer or other party exercising or with responsibility or authority to make that engagement carriers big legal risk. Advisers and financial institutions that don’t meet the BICE standards and other requirements of the Rule expose themselves to liability from breach of fiduciary duty claims under ERISA brought by ERISA plans, participants, and beneficiaries or in the case of IRAs or other non-ERISA plans, state law breach of contract or other state law claims brought by IRAs and other non-ERISA plans or accountholders. Likewise an employer, member of its management or other party responsible for or having authority to choose the service provider risks breaching its own fiduciary duties under ERISA by engaging a party that renders covered investment advice without complying with the Rule. In addition, to the extent that the engagement or activities of the service provider involves commission compensation payments, swaps or other activities that would constitute a prohibited conflict of interest under ERISA Section 406 not structured and conducted with an applicable prohibited transaction exemption, both the service provider and the fiduciary could bear personal liability for involving the plan or its assets in a prohibited transaction in violation of ERISA Section 406. For this reason, to help positions themselves to mitigate or defend against liability for such potential claims, advisors generally should take steps to ensure that the advisor can prove the advisor acted in their clients’ best interest by documenting their use of a reasonable process and adherence to professional standards in deciding to make the recommendation and determining it was in the customer’s best interest, and by documenting their compliance with the financial institution’s policies and procedures required by the Best Interest Contract Exemption.
“Best Interest Contract Exemption” (BICE)
ERISA and the Internal Revenue Code rules for qualified retirement plans generally prohibit individuals or entities providing fiduciary investment advice to plan sponsors, plan participants, and IRA owners to receive payments creating any of the listed statutory conflicts of interest listed in ERISA or the Code without a prohibited transaction exemption (PTE), employee benefit plan sponsors, benefit plan committees and other fiduciaries, and the broker-dealers, financial advisors, insurance agents and other plan service providers providing covered investment services to employee benefit plans also need to ensure that their compensation is structured to ensure that the compensation and other arrangements do not violate these prohibited transaction and conflict of interest prohibitions of the Code and ERISA, ERISA’s reasonable compensation rules, or the other requirements of ERISA.
Concerning ERISA Section 406’s party-in-interest and other conflict of interest requirements, EBSA issued in conjunction with its publication of the Rule a new “Best Interest Contract Exemption” (BICE), which provides a prohibited transaction exception that permits the payment of commission-based compensation to fiduciary investment advisors as long as the conditions specified in the BICE are met. Among other things, the BICE requires as a condition of the applicability of this exception that:
The financial institution to acknowledge in writing fiduciary status for itself and its advisers;
The financial institution and advisers to adhere to ERISA’s basic standards of impartial conduct, including giving prudent advice that is in the customer’s best interest, avoiding making misleading statements, and receiving no more than reasonable compensation;
The financial institution to have policies and procedures designed to mitigate harmful impacts of conflicts of interest; and
The financial institution to disclose specified information about their conflicts of interest and the cost of their advice.
The specified disclosures required to meet the conditions of the BICE include:
Descriptions of material conflicts of interest;
Descriptions of fees or charges paid by the retirement investor
A statement of the types of compensation the firm expects to receive from third parties in connection with recommended investments;
Notification that investors have the right to obtain specific disclosure of costs, fees, and other compensation upon request; and
A requirement that a website must be maintained and updated regularly that includes information about the financial institution’s business model and associated material conflicts of interest, a written description of the financial institution’s policies and procedures that mitigate conflicts of interest, and disclosure of compensation and incentive arrangements with advisers, among other information. However, the BICE currently does not require that the website include individualized information about a particular adviser’s compensation.
Noncompliance with the Rule by parties providing covered investment advice or the engagement or retention of such a service provider by an employer or other party exercising or with responsibility or authority to make that engagement carriers big legal risk. Advisers and financial institutions that don’t meet the BICE standards and other requirements of the Rule expose themselves to liability from breach of fiduciary duty claims under ERISA brought by ERISA plans, participants, and beneficiaries or in the case of IRAs or other non-ERISA plans, state law breach of contract or other state law claims brought by IRAs and other non-ERISA plans or accountholders. Likewise an employer, member of its management or other party responsible for or having authority to choose the service provider risks breaching its own fiduciary duties under ERISA by engaging a party that renders covered investment advice without complying with the Rule. In addition, to the extent that the engagement or activities of the service provider involves commission compensation payments, swaps or other activities that would constitute a prohibited conflict of interest under ERISA Section 406 not structured and conducted with an applicable prohibited transaction exemption, both the service provider and the fiduciary could bear personal liability for involving the plan or its assets in a prohibited transaction in violation of ERISA Section 406. For this reason, to help positions themselves to mitigate or defend against liability for such potential claims, advisors generally should take steps to ensure that the advisor can prove the advisor acted in their clients’ best interest by documenting their use of a reasonable process and adherence to professional standards in deciding to make the recommendation and determining it was in the customer’s best interest, and by documenting their compliance with the financial institution’s policies and procedures required by the Best Interest Contract Exemption.
Principle Transactions Exemption
The “Principal Transactions Exemption” published in connection with the Rule provides an exemption from the prohibitions of ERISA Section 406 to allow investment advice fiduciaries to sell or purchase certain recommended debt securities and other investments out of their own inventories to or from plans and IRAs where the requirements of the Exemption are met. As with the Best Interest Contract Exemption, the Principle Transaction Exemption requires, among other things, that investment advice fiduciaries adhere to certain impartial conduct standards, including obligations to act in the customer’s best interest, avoid misleading statements, and seek to obtain the best execution reasonably available under the circumstances for the transaction.
Existing PTE For Fixed Rate Annuity Contracts
In connection with its adoption of the Rule, EBSA also is amending existing exemption, PTE 84-24, which provides relief for insurance agents and brokers, and insurance companies, to receive compensation for recommending fixed rate annuity contracts to plans and IRAs. As amended in connection with the Rule, the requirements of PTE 84-24 are modified to provide increased safeguards for retirement investors while still providing “more streamlined conditions” than those required to meet the Best Interest Contract Exemption. Consistent with its enthusiasm for encouraging the offering and adoption of life time income products to retirees over the past several years, EBSA says these more streamlined conditions of PTE 84-24 are appropriate to “facilitate access by plans and IRAs to these relatively simple lifetime income products.” More complex products, such as variable annuities and indexed annuities, will be able to be recommended by advisers and financial institutions under the terms of the Best Interest Contract Exemption.
Other PTE Exemptions Modified To Raise Requirements
The Department is amending other existing exemptions, as well, to ensure that plan and IRA investors receiving investment advice are consistently protected by impartial conduct standards, regardless of the particular exemption upon which the adviser and the fiduciary engaging that advisor intend to rely upon to avoid violating of ERISA 406.
While the compliance deadline for the new Rule is not until April 8, 2017, the relief from ERISA Section 406 offered by the new Exemptions announced in connection with the Rule’s publication generally became available when EBSA published them in connection with the Rule on April 8, 2016. As this relief could provide helpful protection against fiduciary challenges or exposures that some service providers might already face under already existing fiduciary precedent or guidance, many service providers involved in dealings with plan or IRA investments may wish to take steps to position themselves to claim protection under one of these new PTE Exemptions even before the Rule takes effect. When evaluating this option, some service providers should be aware of the availability of transitional relief that may make it easier for some service providers to claim relief under the new BICE or Principal Transactions Exemption between April 8, 2017 and January 1, 2018 (Transition Period). In addition, parties that contemplate wishing to take advantage of the relief offered by the new BICE or Principal Transactions Exemption may benefit from taking advantage of reduced requirements for meeting these conditions during the phase in Transition Period. During this Transition Period, EBSA still will require firms and advisers to adhere to the Exemptions’ impartial conduct standards, provide a notice to retirement investors that, among other things, acknowledges their fiduciary status and describes their material conflicts of interest, and to designate a person responsible for addressing material conflicts of interest and monitoring advisers’ adherence to the impartial conduct standards; however compliance with certain other requirements is waived until January 1, 2018. Of course, full compliance with all requirements of the applicable Exemptions will be required as of January 1, 2018.
Rule Requires Action By Plan Sponsors, Fiduciaries & Service Providers
The new Rule creates lots of new work both for advisors and other service providers in, as well as plan sponsors, plan administrative committees or other fiduciaries responsible for selection, retention and oversight of those providing these services. All such parties have much to do to fulfill their ERISA responsibilities by the April 8, 2017 deadline for compliance with the new Rule and to deal with other likely fallout from the new Rule.
Fallout for Covered Investment Advisors & Other Service Providers
Clearly, advisors, financial institutions and other service providers providing covered investment advice and others with involvement with investments or investment platforms have much work to do to prepare for the new rule. However, compliance with the Rule is not merely a service provider problem. Employer or other plan sponsors, plan fiduciaries or other responsible for the credentialing, selection, retention, and oversight of service providers dealing with investments also need to ensure that the party or parties responsible for these vendor dealings fulfills its own fiduciary responsibilities in dealing with vendors and service providers that may be impacted by these requirements.
Advisers and financial institutions that don’t meet the requirements of the new Rule expose themselves to liability from breach of fiduciary duty claims under ERISA brought by ERISA plans, participants, and beneficiaries or in the case of IRAs or other non-ERISA plans, state law breach of contract or other state law claims brought by IRAs and other non-ERISA plans or accountholders. Obviously, advisors, financial institutions and other service providers providing advice or having dealings or involvement with IRA or employee benefit plan investments, their selection or administration will want to review and update their relationships and their associated compensation, contracts, disclosures and other arrangements and processes in light of the new Rule. Clearly, those that could be considered to offer or provide covered investment advice need to start revising contracts, compensation, policies, practices and other arrangements in anticipation of the Rule. At the same time, the Rule also is likely to create work for certain service providers with involvement or dealings with investments that the service provider considers to fall outside of the Rule:
To respond to changes in client requests for proposals, contracts or other due diligence in response to the Rule;
To respond to changes in response to the Rule by covered investment advisors to reconfigure services, relationships and contracts in response to the Rule;
To clarify and institutionalize and document communications by the uncovered service provider to clients and others of limits on the service provider’s services and capacity that are necessary or helpful to avoid or limit exposure of the service provider to coverage by or claims of liability arising out of the Rule; and/or
Otherwise.
Fallout For Plan Sponsors & Plan Fiduciaries Selecting & Overseeing Service Providers
Employer or other plan sponsors, plan fiduciaries or other responsible for the credentialing, selection, retention, and oversight of service providers dealing with investments also need to anticipate and be prepared to deal the effects of adoption of the Rule on their responsibilities and risks as they relate to the selection, retention, contracting, compensation and other dealings with service providers impacted by the Rule.
The Rule’s explicit designation as fiduciaries of certain service providers that previously may have been characterized as providing services as non-fiduciaries, much less its tightening of requirements for the investment advisors that are covered fiduciaries, creates a host of new responsibilities and considerations for employers sponsoring plans and its members of management that select, retain, contract with and oversee these service providers.
Under ERISA, parties designated in writing or function exercising discretionary authority or responsibility for the selection, retention, compensation and oversight of fiduciary or other service providers generally are considered fiduciaries for purposes of carrying out these responsibilities and bear personal liability for prudently selecting, retaining and monitoring the service provider in accordance with ERISA.
To fulfill this fiduciary obligation, those involved in selecting and retaining investment advisors covered by the rules should expect to bear responsibility for ensuring that the covered investment advisor is engaged in compliance with the Rule and the otherwise applicable requirements of ERISA, including that the engagement and compensation of the selected investment advisor will not involve the plan or its assets in a prohibited conflict of interest listed in ERISA Section 406. Furthermore, failing to ensure that the engagement of an investment advisor does not violate these conflict of interest rules also exposes a sponsoring employer of a qualified plan to excise tax liability under the Code’s companion party-in-interest rules applicable to such plans.
Accordingly, whether the employer itself retains and directly exercises the discretionary authority to select and retain a service provider or appoints a committee or member of its staff to perform these responsibilities as a designated fiduciary, an accurate understanding of which service providers, taking into account the rule, now will be considered fiduciaries and the requirements of the Rule flowing from this status is essential to understand and make appropriate provisions to ensure that proper steps are taken to ensure that the Rule and ERISA’s other requirements for prudent credentialing, bonding, contracting, compensation, and other dealings with the service provider and to budget for the proper conduct of the activities needed to fulfill these obligations.
In light of these and other exposures and obligations, employer and other plan sponsors, plan fiduciaries and plan service providers alike all should start preparing to respond to the new Rule.
To help positions themselves to mitigate or defend against liability for such potential claims, each party generally will want to take prudent and well-documented steps to evaluate the fiduciary status of each applicable service provider, as well as its own fiduciary status, capacity, responsibility and other exposures in light of the new Rule. Since ERISA fiduciary status attaches functionally based on the functional facts and circumstances, sponsoring employers, as well as service providers generally will want to consider taking appropriate steps to document this analysis and other compliance and risk management efforts to avoid violations of the Rule, as well as to position themselves to defend against other claims and liabilities.
In all cases, each impacted party should make an effort to apply and retain evidence documenting its efforts including, in the case of all service providers, whether or not covered investment advisors under the Rule, their efforts to act in their clients’ best interest by documenting their use of a reasonable process and adherence to professional standards in deciding to make the recommendation and determining it was in the customer’s best interest, and by documenting their compliance with the financial institution’s policies and procedures and applicable requirements of the law.
About The Author
Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, a Fellow in the American College of Employee Benefit Counsel, past Group Chair, past Welfare Benefit Committee Chair, and Current Defined Contribution Plan Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, a past ABA Joint Committee on Employee Benefits Council Representative Cynthia Marcotte Stamer is a practicing attorney, regulatory and public policy advocate, author, lecturer and industry and public policy thought leader recognized as a “Top” attorney in employee benefits, labor and employment and health care law for her more than 28 years’ of leading edge experience nationally and internationally providing practical and effective advice and representation to management.
Ms. Stamer’s legal and management consulting work throughout her career has focused on helping organizations and their management understand and use the law and process to manage people, performance, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative and pragmatic problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes.
As a key part of this work, Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements.
She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. In these and other engagements, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.
Ms. Stamer also advises and represents clients on OCR and other HHS, Department of Labor, IRS, FTC, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. In the course of this work, Ms. Stamer has accumulated an impressive resume of more than 28 years’ of experience advising and representing clients on Title I and other ERISA fiduciary responsibility concerns including assisting and advising plan sponsors, plan fiduciary and plan service providers to design and administer fiduciary and other compliance and risk management policies and practices, conducting investigations of potential fiduciary or other breaches, and serving as special counsel, advising and representing these and other clients in connection with EBSA, IRS, SEC and other governmental audits, investigations and enforcement actions; in private disputes and litigation regarding plan investments or other fiduciary concerns between plan participant and beneficiaries, plans, plan fiduciaries, plan sponsors and plan service providers; or both.
Ms. Stamer also is deeply involved in helping to influence health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. Deeply involved in both U.S. statutory and regulatory pension and health care reform throughout her career, Ms. Stamer both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas. She also works as a policy advisor and advocate to health plans, their sponsors, administrators, insurers and many other business, professional and civic organizations.
Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.
Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see www.cynthiastamer.com, or http://www.stamerchadwicksoefje.com the member of contact Ms. Stamer via email here or via telephone to (469) 767-8872.
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Employers sponsoring health plans and members of their management named as plan fiduciaries or otherwise having input or oversight over health plan concerns should verify their company’s group health plan meets the out-of-pocket maximum rules of the Patient Protection and Affordable Care Act (ACA) § 1302(c)(1) as well as a long list of other federal health benefit rules to minimize the risk that violations will compel the sponsoring employer to self-assess, self-report on IRS Form 8928, and pay a $100 per day per violation excise tax penalty and while expose the plan and its fiduciaries to fiduciary or other liability under the Employee Retirement Income Security Act (ACA). Consequently, sponsoring employers and their management generally will want to ensure that their plan documents are properly updated to comply with the out-of-pocket maximum and other federal requirements, to require contractual commitments to administer the health plan in compliance with and to report, correct, and indemnify for violations of these requirements in vendor contracts with their health plan insurers, administrators and other vendors, and conduct documented audits to verify the health plan’s operational compliance with these requirements as interpreted by the Department of Health & Human Services (HHS), Department of Labor (DOL) and Internal Revenue Service (IRS) in form and operation. The new self-reporting and excise tax self-assessment and payment requirements for employers coupled with already long-standing fiduciary and other liabilities for fiduciaries, plan administrators and others makes it important that employers sponsoring group health plans and their management or other leaders overseeing or participating in plan design or vendor selection, plan administration or other plan related activities seek the advice and help of qualified, experienced legal counsel for assistance with conducting an appropriate compliance review and risk assessment of their health plans, correcting or taking other steps to mitigate risks from any past or existing violations, and steps to take to tighten documents, vendor contracts, and processes to mitigate compliance or other risks going forward.
Employers, Insurers & Plan Fiduciaries Face Big Risks From Federal Health Plan Rule Violations
As amended by ACA, health plan violations of ACA and various other federal health plan mandates carry big risks for health plans, their sponsoring employers, and representatives of sponsoring employers, insurers and third party administrators responsible as fiduciaries for administering a group health plan in accordance with these federal rules. As amended by ACA, federal law imposes significant penalties against plans, their fiduciaries and even the sponsoring employer if the group health plan violates the ACA out-of-pocket limit or a long list of other ACA and other federal group health rules. Group health plans can face lawsuits from covered persons, their health care providers as assignees or the DOL, to enforce rights to benefits, plus attorneys’ fees and other costs of enforcement. Beyond benefit litigation, the employer or representatives of the sponsoring employer, if any, named or acting as fiduciaries, insurer or third party service providers named or acting as fiduciaries, also could face fiduciary lawsuits seeking damages, equitable relief, and attorneys’ fees and costs of court, for failing to prudently administer the plan in accordance with its terms and the law brought by covered persons or their beneficiaries or the DOL as well as fiduciary breach penalties if the fiduciary breach action is brought by the DOL. If the plan fails to comply with claims and appeals procedures or other ERISA notification requirements, parties named or functioning as the plan administrator for this purpose also could face penalties of up to $125 per violation per day in the case of enforcement actions brought by participants and beneficiaries or $1025 per violation per day in the case of actions brought by the DOL, plus attorneys’ fees and other costs of enforcement.
Except in rare circumstances where the sponsoring employer has carefully contracted to transfer fiduciary liability to its insurer or administrator and otherwise does not exercise or have a fiduciary obligation to exercise discretion or control over these responsibilities, employers sponsoring group health plans that violate federal mandates like the out-of-pocket limit often ultimately bear some or all of these liabilities even if the violation actually was committed by a plan vendor hired to administer the program either because the plan documents name the employer as the “named fiduciary” or “plan administrator” under ERISA, the employer bears fiduciary responsibility functionally for selection or oversight of the culpable party, the employer signed a contract, resolution or plan document obligating the employer to indemnify the service provider for the liability, or a combination of these reasons. Even where the employer avoids these direct or indirect ERISA exposures, however, employers now also need to be concerned that out-of-pocket limitation or other federal health plan rule violations will trigger expensive excise tax liability for the sponsoring employer.
As part of ACA, the Internal Revenue Code now generally requires employers sponsoring a group health plan that violates the ACA out-of-pocket limit or a long list of other federal health plan rules after 2013 to self-assess, report and pay stiff new excise tax penalties of $100 per day per violation when filing their annual tax return. See,Businesses Must Confirm & Clean Up Health Plan ACA & Other Compliance Following Supreme Court’s King v. Burwell Decision;More Work For Employers, Benefit Plans Following SCOTUS Same-Sex Marriage Ruling; 2016 & 2017 Health Plan Budgets, Workplans Should Anticipate Expected Changes To SBCs.Since prompt self-audit and correction can help mitigate these liabilities, business leaders should act quickly to engage experienced legal counsel for their companies for advice about how to audit their group health plan’s 2014 and 2015 compliance with the out-of-pocket limit and other federal health plan rules within the scope of attorney client privilege while managing fiduciary exposures that could result if the audit is improperly structured or conducted, as well as options for addressing potential 2014, 2015 and future years excise tax and other exposures that compliance deficiencies with these rules could trigger.
While businesses inevitably will need to involve or coordinate with their accounting, broker, and other vendors involved with the plans, businesses generally will want to get legal advice in a manner that preserves their potential to claim attorney-client privilege to protect against discovery in the event of future enforcement or litigation actions sensitive discussions and analysis about compliance audits, plan design choices, and other risk management and liability planning as well as to get help identifying potential plan design, contracting, procedural or other changes that may be needed to fix compliance deficiencies and mitigate other risks, particularly in light of complexity of the exposures and risks.
The Supreme Court’s recent King v. Burwell decision makes it particularly important that employers and other group health plan sponsors, and those named or serving functionally as the plan administrator or other fiduciary responsible for properly administering the group health plan in accordance with these rules move quickly to manage these risks. With the continued limited Republican majority in the Senate, Republicans lack sufficient votes to override a promised Presidential veto of any legislation that would repeal or substantially modify ACA. Meanwhile, President Obama is moving to help ensure that his Presidential Legacy includes implementation of ACA and to mitigate ACA’s budgetary impacts by collecting excise tax and other penalties from insurers, plan administrators and employers by instructing the Tri-Agencies to move forward on full implementation and enforcement of ACA and other federal health plan rules. As a consequence, employers that sponsored group health coverage in 2014 need to confirm that their plan complied with the out-of-pocket maximum and other specified federal health plan rules or take timely action to self-assess, report on the Internal Revenue Service (IRS) Form 8928, and pay the $100 per day per violation penalty required by the Internal Revenue Code for 2014 when filing their 2014 business tax return.
Adjusted Out-Of-Pocket Limit Amounts
The ACA out-of-pocket maximum limitation is one of many broad health care reforms enacted by ACA. Under its provisions, federal law now limits the amount of the maximum deductible, co-payments or other cost sharing that most employer or union sponsored group health plans can impose on essential health benefits to the out-of-pocket limitation allowed by ACA § 1302(c)(1). See Public Health Service (PHS) Act §2707(b).
The out-of-pocket limitations of $6,350 for individual only coverage and $12,700 for other than self-only coverage that first took effect with the 2014 plan year, are subject to annual adjustment for inflation under ACA §1302(c)(4) by the premium adjustment percentage beginning this plan year. The IRS recently announced the adjusted limitations that will apply to the 2015 and 2016 plan years. The applicable limits for 2014-2016 are as follows based on this guidance:
Plan Year
Individual Coverage Only
Other Than Self-Only
2014
$6,350
$12,700
2015
6,600
13,200
2016
6,850
13,700
Since noncompliance with this limitation is one of a long list of federal health plan mandates that triggers a duty for the sponsoring employer to self-assess, report and pay an excise tax of $100 per day per violation for post-2013 plan years, employers that sponsored health plans in 2014 generally will want to verify that their plan complied with this out-of-pocket rule in 2014 and ensure that its 2015 plan has been updated to reflect the adjusted limit and otherwise comply with its requirements.
In this respect, the final HHS Notice of Benefit and Payment Parameters for 2016 (2016 Payment Notice) clarifies that the self-only maximum annual limitation on cost sharing applies to each individual, regardless of whether the individual is enrolled in self-only coverage or in coverage other than self-only.
While employers can design their group health plans to apply higher out-of-pocket limitations on coverages for non-essential benefits and out-of-network care, plans designed to take advantage of this permitted distinction must be carefully administered to ensure that the limits allowed for non-essential benefits are not improperly applied to essential benefit coverages under the plan. Employers are cautioned to use care to avoid this from occurring by drafting the plan terms and requiring fiduciaries to administer the plan to ensure that:
The plan properly essential and non-essential health benefits, both in terms and in operation;
The limit is properly applied and calculated with respect to all benefits considered essential health benefits; and
The application of higher out-of-pocket limitations for non-essential benefits does not violate other federal health plan rules such as special federal health plan rules regarding out-of-network emergency care, mental health coverage parity, coverage for newborns and mothers, or the like.
Ensure Plan Language & Operations Comply With Tri-Agency Out-Of-Pocket Guidance & Other Federal Health Plan Rules
Updating the out-of-pocket maximum rules of a group health plan to comply with the ACA out-of-pocket maximum rule can be more complicated than many employers or plan fiduciaries might realize since the plan terms, and its administration must comply in form and operation with the regulations and other interpretations of the three agencies jointly responsible for administration and enforcement of this and various other federal health plan rules: the Departments of Health & Human Services (HHS), Internal Revenue Service (IRS), and Labor (DOL) (collectively, the “Tri-Agencies”).
In the case of ACA’s out-of-pocket maximum rules, the Tri-Agencies already have supplemented the guidance in their implementing regulations by publishing a FAQ that gives additional clarification and examples that the Tri-Agencies intend to help explain the proper administration of the rule. Group health plans, their insurers or other fiduciaries, as well as sponsoring employers should take into account all of this existing guidance when reviewing and assessing the compliance of their group health plans, as well as stay vigilant for the publication of additional guidance.
Existing guidance on the out-of-pocket maximum rule states that group health plans and insurance policies generally must count toward the out-of-pocket maximum limit all deductibles, coinsurance, copayments, or similar charges and any other expenditure the group health plan requires a covered person to pay for a qualified medical expense that is an “essential health benefit” within the meaning of ACA other than premiums, balance billing amounts for non-network providers and other out-of-network cost-sharing, or spending for non-essential health benefits.
One of the first considerations should be to ensure that the plan document and parties responsible for administer it properly understand and apply the rule to all charges falling within coverage for “essential health benefits.” Technically, the out-of-pocket limitation only applies to coverage of “essential health benefits” within the meaning of ACA, in any group health plan, whether insured or self-insured. What benefits are considered “essential health benefits” is defined by Tri-Agency regulations. The definition of “essential health benefits” in these Tri-Agency regulations is complicated and generally varies by state, even when the group health plan is self-insured. Sponsors of self-insured group health plans and employers sponsoring plans covering individuals in different states generally will want to seek legal advice about the adequacy of their group health plan’s essential health benefit definition to make sure that these rules and their limitations are met.
When applying these limits, employers, insurers, and administrators of group health plans attempting to distinguish non-essential health coverages such as prescription drug, behavior health, or dental coverages provided separately from otherwise applicable major medical coverage should consult with legal counsel to confirm that those arrangements comply with existing guidance on ACA’s out-of-pocket maximum and other federal mandates in form and operation. This analysis generally should both verify that the plan documents and administrative processes incorporate these requirements generally into the plan document as well as include provisions to ensure that these requirements are properly integrated with other federal mandates requiring cost-sharing for emergency care in the case of behavioral health coverage, the applicable federal mental health parity mandates, and other federal health plan rules. Special care and scrutiny should be applied if the group health plan uses multiple service providers to help administer benefits (such as one third-party administrator for major medical coverage, a separate pharmacy benefit manager, and a separate managed behavioral health organization).
Special care also is needed if a group health plan uses separate plan service providers to administer the plan or certain of its provisions. Separate plan service providers may impose different levels of out-of-pocket limitations and may utilize different methods for crediting participants’ expenses against any out-of-pocket maximums. Administrators, insurers or other fiduciaries responsible for administration of these coverages must properly coordinate, and sponsoring employers should consult with legal counsel about auditing their plans for proper coordination of these processes across these different service providers.
Along with making specific plan document and process changes to provide for proper implementation and administration of the out-of-pocket and other federal coverage and benefit mandates, all parties also should review the claims and appeals procedures used in connection with the processing and notification of covered persons about claims and appeals determinations made about denials to ensure that they fully comply with both the DOL’s reasonable claims and appeals regulations and, in the case of non-grandfathered health plans, ACA’s special independent review and other heightened requirements for administering and notifying covered persons or their beneficiaries about claim denials or appeals as any of these violations could trigger the obligation for the sponsoring employer to self-report on IRS Form 8928 and pay the $100 per day per violation ERISA liability for the plan and its fiduciaries, as well as other penalties under ERISA §502(c).
Sponsoring Employers, Plan Fiduciaries and Vendors Should Act To Manage Exposures
Since violations trigger substantial excise tax liability for the sponsoring employer, as well as expose the group health plan and its sponsor, members of management or others acting as fiduciaries to judgments, regulatory penalties, and associated investigation, defense settlement and other costs and disruptions, most sponsoring employers and their leaders generally will want to consult with qualified legal counsel knowledgeable about these health plan rules and their management about steps that they should take to prevent or mitigate legal and financial exposures that violations of the out-of-pocket maximum and other federal health plan mandates can trigger. Timely action generally both can help prevent future violations and their expensive redress and mitigate penalties and other exposures incurred for violations, if any, that may have or in the future inadvertently occur.
As a part of these efforts, steps that plan sponsors and fiduciaries generally should take include.
Having plan documents and other plan materials and communications carefully review and drafted to meet mandates and mitigate risks;
Using care in when selecting and contracting with plan insurers or other vendors, by conducting appropriate documented review and credentialing of each vendor and its practices, as well as reviewing and negotiating administrative, insurance or other vendor agreements to appropriately name and allocate fiduciary status as well as include provisions requiring insurers, administrators and other group health plan vendors appropriately designate to provide contractual commitments that the policies and other plan documentation, systems and practices provided by the vendor are and will be administered in accordance with the out-of-pocket and other legal mandates, to provide certification of compliance and notice of violations, correction and indemnification of compliance deficiencies, and other related assurances and taking other documented prudent safeguards to require compliant practices;
Auditing as part of the vendor selection and renewal process and at other times throughout the year the operational compliance of the administration of the group health plan and taking corrective action as needed;
Ensuring that stop-loss, group or other insurance coverages are drafted to include catchall language to help ensure that the employer does not get left unexpectedly self-insuring the cost of funding benefits mandated by law that the carrier asserts fall outside the policy coverage because of gaps between drafting and the law;
Arranging for fiduciary liability, directors and officers or other coverage, indemnification from financially secure vendors, or other backup funding to help protect or mitigate the potential costs or liabilities that the sponsoring employer or its plan fiduciaries can expect to incur in the event of a challenge to the compliance of their group health plan or its practices; and
Learning and using appropriate processes to document prudent efforts to appropriately administer the plan in a compliant, legally defensible manner throughout the year.
For Legal or Consulting Advice, Legal Representation, Training Or More Information
If you need help reviewing your group health plan or responding to these new or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, help updating or defending your workforce or employee benefit policies or practices, or other related assistance, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.
Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick│Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 27 years’ experience practicing at the forefront of employee benefits and human resources law.
A Fellow in the American College of Employee Benefit Counsel, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, an ABA Joint Committee on Employee Benefits Council Representative and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy.
Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her 27 plus year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.
Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.
Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.
Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.
Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see http://www.cynthiastamer.com or the Stamer│Chadwick │Soefje PLLC website or contact Ms. Stamer via email to here or via telephone to (469) 767-8872.
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With the Obama Administration construing the United States Supreme Court’s King v. Burwell decision as a green light for its full implementation and enforcement of the Patient Protection & Affordable Care Act (ACA), U.S. businesses should brace for both increases in health benefit costs and liabilities over the next year as well as take prompt action to identify and mitigate potential excise tax and other exposures from any unaddressed compliance deficiencies in their 2014 or 2015 health plans as soon as possible and no later than the due date for filing their 2014 business tax return.
As health benefit costs continue their upward trend, many businesses and their leaders plan to look for new options to manage costs and liabilities following the King decision. In most cases, businesses assume they can delay these actions until the beginning of their upcoming health plan year, not realizing their company’s potential liability exposures from existing and past defects. Businesses and their leaders who have held off updating their health plan compliance and expect to delay completion of these activities until the beginning of their upcoming health plan year are likely to be in for a rude awakening, however, particularly since a much underappreciated Sarbanes-Oxley style provision of the Internal Revenue Code will require employer or other group health plan sponsors to self-report, self-assess and pay stiff excise tax penalties when filing their company’s 2014 business tax return unless their group health plan complied with a long list of ACA and other federal health plan rules in 2014.
Employer Health Benefit & Other Compensation Up, Costs Exposures Projected To Continue To Rise
While many businesses delayed making tough choices about their health plan design and compliance over the past several years in hopes of some judicial or Congressional relief from the mandates and costs of ACA, businesses generally have continued to struggle with ever-rising compensation and benefit costs, with health benefit costs the biggest challenge. Recent U.S. Bureau of Labor Statistics (BLS) data confirms what business leaders already know. Compensation and benefit costs rose over the past year, with health benefit costs remaining a big factor in these increased costs. According to BLS, employer compensation costs rose slightly and health benefit costs remained the largest individual benefit cost for employers during the 12-month period ending March 31, 2015, according to the U.S. Bureau of Labor Statistics (BLS). See BLS Employment Cost Index News Release (April 30, 2015).
The BLS Employer Costs For Employee Compensation Report, March 2015 released June 10, 2015 Report) shows private employers spent an average of $31.65 per hour worked for compensation in March 2015 with health benefits accounting averaging 7.7 percent of this average employer total compensation cost per employee. This compares to BLS showing that in March 2014, In March 2014, total employer compensation costs for private industry workers averaged $29.99 per hour worked, with wages and salaries averaging $20.96 per hour (69.9 percent) and benefits averaging $9.03 per hour (30.1 percent). See BLS Employer Costs For Employee Compensation, March 2014 (June 12, 2014)(2014 Report).
BLS data on health benefit and other compensation and benefit costs and trends provides many interesting insights for business as well as government leaders and the role health benefit cost increases play in these increased expenditures. For instance, BLS statistics show for private employers on average during the 12-month period ending March 31, 2015:
Compensation costs for private industry workers increased 2.8 percent over the year, higher than the March 2014 increase of 1.7 percent;
Wages and salaries increased 2.8 percent, also higher than the March 2014 increase of 1.7 percent;
Benefits costs rose 2.6 percent, which was higher than March 2014, when the increase was 1.8 percent; and
Health benefits on average increased 2.5 percent over during the 12-month period that ended on March 31, 2015, rising from the March 2014 increase in compensation costs of 1.8 percent.
Businesses Must Prepare For Impending ACA Enforcement While Dealing With Upsurge In Health Benefit Costs
While the continued rise in the average hourly cost of health benefits for employers is significant in its own right, the reported health benefit cost and employer health cost data in the Report does not include additional reporting and other compliance and risk management costs, which in light of the explosion in employer group health plan mandates since the passage of the Patient Protection and Affordable Care Act (ACA). Research indicates that the employer plan design changes slowed the upward trend in employer health benefit expenditures that otherwise would have occurred in 2015. This upward trend is projected to continue if not accelerate in 2016, however.
The 2015 Report shows these upward increases in employer costs for health benefits and other compensation continued in the first quarter of 2015. Concerning health benefits, for instance, the 2015 Report shows health benefit costs paid by employers averaged $2.43 per hour worked (7.7 percent of total compensation)in private industry in March 2015, compared to the average health benefit costs BLS reported. In comparison, the 2014 Report indicated in March, 2014, the average cost for health insurance benefits in private industry was $2.36 per hour worked in March 2014 (7.9 percent of total compensation).
Overall health benefit costs and associated compliance expenses of employers that elect to continue to offer health benefits for employees are projected to rise throughout 2015 and 2016 as ACA driven mandates and market changes drive up employer’s direct health benefit costs. See, e.g. Employers’ Health Costs Projected to Rise 6.5% for 2016.
The trend data and judicial and political developments indicate that business leaders can look for these trends not only to continue, but accelerate. With an impending responsibility to self-report violations of ACA and various of federal health plan mandates imminent, business leaders should brace to deal with any deficiencies in compliance in their 2014 and 2015 health plans much sooner than they might have expected following the Supreme Court’s King v. Burwell decision last week. President Obama made clear last week he views the King ruling as giving the Internal Revenue Service, Department of Labor and Department of Health & Human Services the all clear for full implementation and enforcement of ACA and other federal health plan rules. While these overall enforcement exposures will play out over the next several years, many employers are poised to experience the first bite of these new enforcement exposures over the next few months, when the Internal Revenue Code will require that employers that offered health coverage for employees in 2014 self-assess, report and pay stiff new excise tax penalties of $100 per day per violation when filing their 2014 tax return unless their program complied with all of a long list of ACA or other federal law mandates in addition to otherwise applicable exposures under the Employee Retirement Income Security Act (ERISA) and other laws. See, Businesses Must Confirm & Clean Up Health Plan ACA & Other Compliance Following Supreme Court’s King v. Burwell Decision. Since prompt self-audit and correction can help mitigate these liabilities, business leaders should act quickly to engage experienced legal counsel for their companies for help in evaluating, within the scope of attorney client privilege, the adequacy of their 2014 and 2015 health plan compliance, options for addressing potential exposures from any compliance deficiencies, and for advice and assistance to decide whether to offer health benefits going forward and if so, aid in designing and implementing their future health benefit program to enhance its defensibility. While businesses inevitably will need to involve or coordinate with their accounting, broker, and other vendors involved with the plans, businesses generally will want to get legal advice in a manner that preserves their potential to claim attorney-client privilege to protect against discovery in the event of future enforcement or litigation actions sensitive discussions and analysis about compliance audits, plan design choices, and other risk management and liability planning as well as to get help evaluating potential future plan design changes or proposed solutions to known or suspected liability exposures, particularly in light of complexity of the exposures and risks.
For Legal or Consulting Advice, Legal Representation, Training Or More Information
If you need help responding to these new or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, help updating or defending your workforce or employee benefit policies or practices, or other related assistance, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.
Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick │Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 27 years’ experience practicing at the forefront of employee benefits and human resources law.
A Fellow in the American College of Employee Benefit Counsel, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, an ABA Joint Committee on Employee Benefits Council Representative and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms.Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy.
Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her 27 plus year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy. Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes. Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.
Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.
Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings. She also works as a policy advisor and advocate to many business, professional and civic organizations.
Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.
Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see www.cynthiastamer.com, or www.stamerchadwicksoefje.com the member of contact Ms. Stamer via email here or via telephone to (469) 767-8872.
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