On June 28, 2012, a sharply divided United States Supreme Court decided that The Patient Protection and Affordable Care Act (“PPACA”) is constitutional. National Federation of Independent Business, et. al. v. Sebelius, et al., 567 U.S. __ (2012) (cites here to Slip Opinion). Three separate Opinions – by Chief Justice Roberts (writing for the Court), Justice Ginsberg (a concurring opinion), and Justice Scalia (a dissent) – offer three contrasting, and occasionally acerbic, views of how the Constitution should be interpreted. This article will briefly summarize the reasoning behind all three Opinions. More important to healthcare providers, this article will briefly detail the strong Fraud Abuse and Waste provisions in the PPACA. Increased communication between, and use of, government databases, ever more sophisticated data mining, and stronger False Claims Act and Anti-Fraud Abuse and Waste provisions, will have direct impacts on all health care providers.
The Supreme Court Opinion
The Supreme Court’s Opinion reviewed two integral components of the PPACA: 1) the requirement that individual states expand the medical benefits to a larger group of people, including all adults with incomes up to 133% of the federal poverty level, or risk losing the entire federal government’s contribution to the state’s Medicaid budget; and 2) the “individual mandate,” that requires those who do not have health insurance to pay a “penalty.”
The Expansion of Medicaid
The first issue was handled with little rancor. The Court, by a 7 – 2 vote, held that Congress could not strip a state of all federal dollars provided to that state for its entire Medicaid program, solely because that state refused to expand its Medicaid program as required by the PPACA. The Court recognized that the concept of federalism does not permit Congress to compel the individual states to implement federal policy:
Permitting the federal government to force the states to implement a federal program would threaten the political accountability key to our federal system. Read More
Articles In This Issue:
1. Yours, Mine & Ours – Who Owns Social Media Information
2. When Does a University Own Rights to an Invention?
3. Mission “Impossible”: Recovering from Generic Prescription-Drug Manufacturers in the Wake of PLIVA, Inc. v. Mensing
Related Information:
Firm Newsletter, Summer 2012 Read More
WILLIAM PIETRAGALLO, II, managing partner of Pietragallo Gordon Alfano Bosick & Raspanti, LLP, was given the honor of being named a “Distinguished Alumni” by the University of Pittsburgh School of Law for the year 2012. This honor recognizes Alumni who have given exceptional service to the Law School and to the legal community at large, as well as recognizing their extraordinary commitment and outstanding accomplishments.
Mr. Pietragallo, recognized as an accomplished trial attorney, is a Fellow of the American College of Trial Lawyers and a Diplomat of the International Academy of Trial Lawyers. Mr. Pietragallo was named “Lawyer of the Year for 2012” for Bet-the-Company Litigation by Best Lawyers in America. He is also listed in The Best Lawyers in America for ‘Commercial Litigation’ and ‘Personal Injury Litigation – Defendants’ for 2012.
Mr. Pietragallo received his law degree from the University of Pittsburgh School of Law. He graduated from John Carroll University in Cleveland, Ohio, and also studied abroad, attending Loyola University of Rome in Italy. He is admitted to practice in Pennsylvania, and has been specially admitted to the Courts of over 20 other states, as well as the Third, Ninth and Eleventh Circuit Courts of Appeals. Read More
The Fair Labor Standards Act (“FLSA”) requires employers to provide overtime compensation to non-exempt employees who work more than 40 hours a week. Under the FLSA, a single individual can be considered to be the employee of more than one employer. When such a joint employment situation exists, both employers are required to comply with the FLSA’s overtime requirements. In In re Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, 2012 WL 2434747 (3d Cir. June 28, 2012), the Third Circuit set forth the factors to determine whether one is a joint employer for purposes of the FLSA.
Nicholas Hickton was a former assistant branch manager for Enterprise Rent-a-Car Company of Pittsburgh. Mr. Hickton claimed that he was a joint employee of both Enterprise Rent-a-Car Company of Pittsburgh and Enterprise Rent-a-Car Company of Pittsburgh’s parent company, Enterprise Holdings, Inc., and that both companies had violated the FLSA by failing to provide him with overtime compensation. Suit was brought on behalf of Mr. Hickton and all current and former assistant branch managers at all Enterprise Rent-a-Car locations.
According to the underlying facts, Enterprise Holdings, Inc. is the sole shareholder of 38 domestic subsidiaries, including Enterprise Rent-a-Car Company of Pittsburgh. Enterprise Holdings, Inc. did not directly rent or sell any vehicles. Rather, this activity was performed solely by the subsidiaries. However, Enterprise Holdings, Inc. directly and indirectly supplied the subsidiaries with administrative services and support such as business guidelines, employee benefit plans, rental reservation tools, a central customer contact service, insurance, technology and legal services. The subsidiaries had the ability to choose whether they would participate in these services or not. Those who did participate were required to pay corporate dividends and management fees to Enterprise Holdings, Inc. Additionally, the board of directors of each of the subsidiaries consisted solely of the same three people who also served on the Board of Directors of Enterprise Holdings, Inc. Read More
Factual Background
In 2008, claimant was a member of a labor crew for a paving company. While waiting for the next truckload of asphalt to arrive, the crew found a bowling ball next to the parking lot where they were working. After a round of shot-put, a challenge arose among the crew members to see if anyone could break the bowling ball with a sledgehammer. Claimant struck the bowling ball with the sledgehammer and cracked it. Claimant’s second whack at the ball caused a piece of it to break off and strike him in the eye, resulting in an eye laceration which ultimately led to the loss of the eye. Claimant filed a workers’ compensation Claim Petition requesting benefits entitlement for specific loss of the eye, alleging the injury occurred during the course and scope of his employment. During the litigation of this case before a Workers’ Compensation Judge (WCJ), claimant’s foreman testified that in between the two times claimant struck the bowling ball with the sledgehammer, he told claimant to, “knock it off, or stop.”
The WCJ granted the Claim Petition holding that claimant, at the time of the accident, had not deliberately put himself at risk of injury, but was merely careless, and that such carelessness did not take him outside the scope of his employment to disqualify the claim. The WCJ disagreed with employer’s position during the litigation, that claimant had violated a positive work order, which violation had caused the injury, thus invalidating the claim. Instead, the WCJ concluded that although the foreman had issued a direct warning, it was not imparted sufficiently in advance of the injury in order to be considered a positive work order. The WCJ was more persuaded by claimant’s argument that an employee does not depart from being engaged in the furtherance of the employer’s business or affairs during intervals of leisure while at work. Read More
Pennsylvania Governor Tom Corbett is expected to sign legislation adopting “public-private partnerships,” commonly known as P3s, for transportation projects. On Saturday, June 30, 2012, state lawmakers approved a bill that allows public entities to enter into transportation development agreements with private firms to propose, design, finance and build road projects. When the law goes into effect, it will allow consideration of the “best value” approach to contract awarding – taking into account such factors as speed of delivery, cost, financial commitment, technical, scientific, technological or socioeconomic merit, financial strength and viability. A seven member state panel would approve projects. The legislature would then have twenty days to overrule the panel. Until now, Pennsylvania has awarded transportation contracts on the long standing requirement of competitive sealed bidding with a mandatory award to the lowest responsible bidder, pursuant to Pennsylvania Procurement Code, 62 Pa. C.S. §§ 511, 512(g).
The new law is expected to jump-start projects that have long been shelved due to budgetary constraints and to create new jobs in the construction and engineering industries. Examples of projects contemplated by advocates of the P3 legislation include creating express toll lanes for drivers to avoid traffic congested lanes and the creation of more high occupancy vehicle lanes.
Those lawmakers who voted against Pennsylvania’s adoption of P3s felt that awarding contracts to non-Pennsylvania private companies without local ties would shortchange Pennsylvania residents and workers. A proposed amendment, which would have required companies to give preference to Pennsylvania workers and Pennsylvania manufactured steel, failed in the state House of Representatives. When Governor Corbett signs the law, Pennsylvania will become the 33rd state to allow public-private partnerships. Read More
On June 18, 2012, the United States Supreme Court issued its long-awaited decision in Christopher v. Smithkline Beecham Corp., –S.Ct.–, 2012 WL 2196779 (June 18, 2012), and held that the pharmaceutical sales representatives, also known as “detailers,” qualify as “outside salesmen” under the Fair Labor Standards Act (“FLSA”), and thus, they are not entitled to overtime wages.
The plaintiffs in Christopher were pharmaceutical sales representatives. As such, they visited doctors’ offices, encouraging them to prescribe their companies’ drugs to their patients. Pharmaceutical sales representatives, however, do not actually sell anything to the doctors. The plaintiffs often worked more than 40 hours per week, but they did not receive time-and-a-half for the overtime work. The plaintiffs, therefore, sued their employer for overtime pay. In turn, the defendant argued that pharmaceutical sales representatives are not entitled to overtime pay because they qualify as “outside salesmen,” and thus, are exempt from the FLSA’s overtime requirement.
In enacting the FLSA, Congress delegated authority to the Department of Labor (“DOL”) to issue interpretative regulations. The DOL’s regulations provide that to qualify as an “outside salesman,” the employee’s primary duty is to make sales within the meaning of the statute. The statute defines a sale to include “any sale, exchange, contract to sell, consignment for sale, shipment for sale or other disposition.” The DOL’s regulations further provide that a sale includes the transfer of title to tangible property. The DOL filed an amicus brief in this matter stating that to qualify as an outside salesman, there must be an actual transfer of title to the property at issue. As a result, the DOL stated that the regulations do not exempt pharmaceutical companies from paying its sales representatives overtime wages.
In reaching its decision, the Court disregarded the DOL’s interpretation of an “outside salesman” under the FLSA. Although courts generally defer to agencies’ interpretations of statutes and of their own regulations, the Court withheld deference because the DOL’s interpretation would result in “unfair surprise” on the pharmaceutical industry, which has been engaging in this practice for over 70 years. Read More
In Brown v. Genesis II, the West Virginia Supreme Court, on remand from the United States Supreme Court, again considered the enforceability of an arbitration agreement in a nursing home negligence case. In Brown I, the West Virginia Supreme Court found that Congress did not intend for nursing home arbitration agreements to be governed by the Federal Arbitration Act. The West Virginia Supreme Court, in accordance with the United States Supreme Court’s mandate, overruled its prior finding.
The Court went on to consider the doctrine of unconscionability as it related to the arbitration agreements at issue. In considering whether a contract is unconscionable a court must focus on the relative positions of the parties, the adequacy of the bargaining position, the meaningful alternatives available to the plaintiff, and the existence of unfair terms in the contract. In considering procedural unconscionability, the court noted that issues that would be considered to determine whether there was a meeting of the minds between the parties were: age, literacy, lack of sophistication of a party, hidden or unduly complex contract terms, the adhesive nature of the contract, and the manner and setting in which the contract was formed, including whether each party had a reasonable opportunity to understand the terms of the contract. The Court then warned that while not entirely dispositive of the issue, procedural unconscionability often begins with a contract of adhesion.
The salient consideration for substantive unconscionability is whether the contract itself or a particular term is a one-sided agreement, “requiring arbitration only for the claims of the weaker party but a choice of forums for the claims of the stronger party.” Thus, an enforceable arbitration agreement must have a “modicum of bilaterality.” The Court also noted that the analysis should include whether the arbitration agreement imposes or may impose high costs which would act as a deterrent to a claimant in vindicating his or her rights in the arbitral forum. Read More
