In a sharp setback for the National Labor Relations Board (the “Board”), a federal district court in Washington, D.C. (the “Court”), struck down the Board’s election rules, which took effect on April 30, 2012, on technical grounds, holding that the Board did not have a properly constituted quorum of three members when it voted to change its election rules and procedures. See Chamber of Commerce v. NLRB, No. 11-2262 (JEB), Slip Op., 2012 WL 1664028 (D.D.C. May 14, 2012). This decision comes less than a month after a federal appeals court struck down the Board’s notice-posting rule that would have required employers to advise employees of their rights under the National Labor Relations Act, and less than two years after the Supreme Court of the United States in New Process Steel LP v. NLRB, 130 S. Ct. 2635, 560 US __ (2010), held that the Board, which is traditionally comprised of five members, must have a quorum of three members to lawfully issue its decisions.

Read the full advisory online

Rock Center with Brian Williams recently featured a story about hospitals that were “overwhelmed by ‘permanent residents.’” The focus of the piece was individuals whose need for acute care in a hospital had long since been addressed, but who have no insurance or other way to pay for the long-term care they do need, in a nursing home or rehabilitation facility, or in their own home. Without a safe place to which discharge is available for these patients, hospitals must continue to provide for their care.

 One of the individuals profiled by the piece, and many of those who unnecessarily languish in hospital beds, are undocumented individuals without health insurance or access to government health care programs, including Medicaid. However, in various states around the country, including New York, there is a solution to the problem – a status called PRUCOL, short for permanently residing in the United States under color of law.  (PRUCOL is not an immigration status granted by the Department of Homeland Security, it is a public benefits eligibility category based upon a foreign national’s immigration status. Under what circumstances an individual will be considered to be PRUCOL, and eligible for Medicaid, is determined separately by each state program.)

PRWORA

Many people think that one must be a lawful permanent resident of the United States (i.e., have a “green card”) or be a refugee to be eligible for Medicaid. This belief is based upon the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (“PRWORA”)(commonly called “Welfare Reform”)(Pub. L. 104-193, codified in various sections of Titles 8 and 42 of the United States Code.)Generally speaking, aliens who are lawfully admitted for permanent residence, asylees, refugees, paroled into the United States for at least one year, having their deportation withheld, granted conditional entry, Cuban or Haitian entrants, or victims of battering or extreme cruelty by a family member are “qualified aliens” (see 8 U.S.C. §1641[b] – [c]) and are generally eligible for federal benefit programs, including Medicaid, if lawfully residing in the United States before August 22, 1996. Qualified aliens entering the U.S. on or after August 22, 1996 are eligible for federal Medicaid after five years. While other, “non-qualified” aliens are ineligible for federal Medicaid, states may pass laws subsequent to August 22, 1996 providing for their eligibility for state Medicaid. Notwithstanding the above, all aliens may receive state and federally funded emergency medical treatment. (see 8 U.S.C. §§ 1611 – 1613, 1621).  While New York, in response to PRWORA, actually passed legislation making aliens ineligible for Medicaid, that law was struck down as being violative of the New York State Constitution in Aliessa v. Novello, 96 N.Y.2d 418 (2001).

PRUCOL

New York State Department of Health Informational Letters 07 OHIP/INF 2, March 15, 2007 (PDF); 08 OHIP/INF 4, August 4, 2008 (PDF); and Administrative Directive 04 OMM/ADM-7, October 26, 2004 (PDF) spell out the criteria for Medicaid eligibility for PRUCOL aliens, defined as aliens who are living in the United States with the knowledge and permission, or acquiescence, of the federal government, and whose departure the agency does not contemplate enforcing. This condition is considered satisfied if: (1) it is the agency’s policy or practice not to enforce the departure of aliens in a particular category; or (2) it appears that the federal immigration agency is permitting the alien to reside in the United States indefinitely. In addition to the many statuses listed in these two documents that have been granted by the United States Citizenship and Immigration Services (USCIS), applications pending for a reasonable time (generally six months) with USCIS or the Executive Office for Immigration Review for various statuses will qualify an alien for PRUCOL status, and thus eligibility for Medicaid, if other eligibility criteria are met, including applicants for:

- Adjustment of status;

- Asylum;

- Suspension of deportation or cancellation of removal;

- Temporary protected status;

- Any other status that permits the applicant to work in the United States.

- Suspension of deportation;

- Cancellation of removal; or

- Deferred action.

California also has broad PRUCOL eligibility for Medicaid.  Hawaii, Maine, Massachusetts, Pennsylvania, and Virginia has more limited eligibility, while New Jersey grandfathers eligibles in nursing homes as of June 30, 1996, and New Mexico grandfathers arrivals prior to August 22. 1996 (effective date of PRWORA).  Various states also have other specialized categories of Medicaid eligibility.

CONCLUSION

In sum, undocumented individuals who remain in a hospital for financial reasons after the need for acute care has been addressed generally have good arguments for eligibility for an immigration status, the pendency of which will provide the basis for a PRUCOL determination and Medicaid eligibility.  Often, discharge arrangements can be made with long term care providers  during consideration of the immigration application, while the situation ripens into PRUCOL status.   Like many other current initiatives, this leads to higher quality care, at less cost.

HITRUST provides resources, tools, education, and training to develop and maintain effective security programs for health care and life sciences companies that comply with security laws, regulations, and standards including HITECH, HIPAA, PCI, JCAHO, CMS, ISO, NIST, and various other federal, state, and business requirements.

Read the Full Announcement from Epstein Becker Green

The typical physician employment agreement will contain a laundry list of grounds for termination “with cause” by the employer.  Some grounds may be totally objective, such as loss of license, DEA number or board certification, termination of medical staff membership and clinical privileges, or inability to obtain malpractice coverage.  At the other end of the spectrum, some grounds may be quite subjective, perhaps best exemplified by the catchall grounds for termination:  ”Engaging in any other activity adverse to the best interests of the employer or its patients.”  In between, there are grounds which arise from the breach by the employee of a material term or provision of the employment agreement (such as failure to follow employer rules and regulations), usually paired with a requirement for notice from the employer and an opportunity to cure the breach within some designated period of time (e.g., 15 – 30 days).

Most employment agreements for physicians contain the traditional list of grounds for termination with cause, but don’t go overboard.  This, in turn, can lead to many situations where the actions of the employee might be grounds for termination with cause, but, because no one ground fits perfectly, legal counsel for the employer recommends use of the termination without cause provision, which simply requires prior written notice (e.g., 60 – 90 days) and no stated reason or grounds for termination.  This is oftentimes seen in cases dealing with an employed physician who had a “bad attitude” or didn’t get along well with his colleagues, or was abusive to staff; it also comes up in cases involving suspected drug or alcohol abuse, or suspected fraternization between the physician employee and a staff member, if clear employment policies are not in place which prohibit such activities or if the evidence is less than totally persuasive.  In these cases, the employed physician is clearly at fault, as his/her actions are the direct cause of the termination.  However, if the employment agreement equates “without cause” with “without fault,” the employer may not be very happy with how termination plays out.

The better practice, when negotiating a physician employment agreement, would be to NOT automatically assume, in laying out the effect of termination, that termination without cause means the employee is without fault.  Instead, the employer would be better served in taking a more hard-line approach.  For example:

• If there are restrictive covenants, including covenants not to compete, no-pirating covenants, non-solicitation covenants or confidentiality/non-disclosure covenants, the employer should consider having them apply whether the employment agreement is terminated with cause or without cause.
• If the employee is entitled to a bonus at the end of a contract year or term, the employee shouldn’t necessarily get that bonus (or a prorated portion thereof) if the agreement is terminated early without cause (but forfeit the bonus if the agreement is terminated early with cause).
• If the employee is required to obtain “tail coverage” upon termination of the agreement, the employer should consider having the employee pay for that coverage if the agreement is terminated without cause, just as the employee would be required to do if the agreement were terminated with cause. (For a more detailed description on this issue, see my February 28th blog post.)
• If the employee is also an owner and, as such, entitled to severance pay approximating the value of his/her share of the practice’s accounts receivable value, the employer shouldn’t necessarily agree to pay severance pay in full if termination is without cause, but not pay severance pay (or pay a lesser amount) if termination is with cause.
• If the employee has received a substantial moving allowance or an up-front signing bonus, the employer ought to consider requiring all or a portion of those benefits to be repaid to the employer if termination occurs within a specified period of time (e.g., 12-24 months),  whether the agreement is terminated with or without cause.

The Bottom Line:  These are tough issues to negotiate, especially in a “buyer’s market” where employers are competing aggressively for new physicians.  The employer should expect to get significant pushback from a prospective employee, who views some or all of these provisions as being “unfair.”  Still, it pays to deal with these issues up front and recognize that, as an employer, it may be necessary to terminate an “at fault” physician employee without cause, to avoid or minimize the risk of costly litigation.  That decision is much easier if the consequences of termination match up with the true level of respective fault between the employer and employee.

 OSHA Enforcement of Workplace Violence

Employers can face significant liability as a result of workplace violence incidents.  For example, while the Occupational Safety and Health Administration (“OSHA”) has no specific standard addressing workplace violence hazards, OSHA has released voluntary guidelines to address these issues.  OSHA also offers all employers guidance on preparing for and handling emergencies and on developing a workplace violence program, including the adoption of a zero-tolerance policy. For example, in its “Guidelines for Preventing Workplace Violence for Health Care & Social Service Workers,” OSHA sets forth uniform procedures for responding to incidents and complaints, and conducting inspections in the health care industry, and provides recommendations for workplace violence prevention. 

In the absence of a specific standard, OSHA bases its enforcement efforts on the General Duty Clause of the Act.  This provision requires employers to furnish employees with a working environment free from hazards (a) that are recognized by the employer or industry as hazardous; (b) that have the potential for causing death or serious physical harm; and (c) that may be abated by feasible means. 

Some recent OSHA enforcement actions include a hospital in Connecticut, which was cited for failing to provide adequate safeguards against workplace violence when employees in the psychiatric ward, emergency ward, and general medical floors were injured by violent patients.  Similarly, another OSHA inspection identified over 115 instances in which employees of a psychiatric hospital and clinic were assaulted by patients.

OHSA’s Guidelines set forth a number of recommendations that all organizations should implement to prevent workplace violence, including: 

Create a Written Zero-Tolerance Workplace Violence Prevention Program

• Conduct Employee Training
• Screen Patients for Potential Violence
• Ensure Security Personnel are Available and Trained
• Implement Systems to Flag Patient’s History of Violence

Criminal Background Checks as a Preventative Measure

One critical aspect of a prevention plan is the implementation of effective background checks of applicants, employees, and contractors in order to ensure that individuals with a violent history are carefully screened from employment.  However, employers should be mindful that several federal and state laws restrict the kind of information an employer may be able to obtain concerning an applicant’s qualifications, job abilities, trustworthiness, and propensity towards violence.

For example, a number of states and EEOC policy guidance prohibit most employers from considering an applicant’s arrest record if the arrest did not lead to conviction.  Further, private employers may not bar individuals from applying for or holding jobs based upon criminal convictions unless the convictions are job-related or the individual poses a direct threat to public safety or property. 

Importantly, with respect to potential discrimination issues, the Equal Employment Opportunity Commission (the “EEOC”) takes the position that because the reliance on arrest and conviction records may have a disparate impact on some protected groups, such records alone cannot be used to routinely exclude persons from employment.  However, the EEOC does permit employers to rely on conduct which indicates unsuitability for a particular position as a basis for exclusion, and employers will need to show that that the exclusion is job-related and consistent with business necessity.  The EEOC is expected to issue updated guidelines with respect to criminal background checks.  As one EEOC Commissioner recently commented at a law conference, the EEOC is closely scrutinizing criminal background checks and will likely require employers to provide some type of notice or conduct an “individualized assessment” with applicants who report criminal convictions on their applications before the employer can bar them from employment.  The EEOC hopes that through this “assessment” the employer can then effectively evaluate whether an exclusion based on the conviction is job related and consistent with business necessity.  The EEOC’s revised guidelines are expected to be released by the end of April 2012.   

Accordingly, by being mindful of workplace violence issues and the potential for liability from OSHA or other federal agencies, employers must be prepared to implement thorough and comprehensive policies and procedures designed to prevent workplace violence.  Part and parcel of any preventative plan is a legally enforceable background check policy and a well-trained Human Resources staff to avoid running afoul of any federal or state discrimination law.

The Update is a quarterly publication which provides two primary components:

1. a Featured Article addressing a trend or topic currently being discussed in the benefits community which (i) explains why the topic is important, (ii) explains the impact of the topic on the reader, and (iii) proposes some action that should be considered in response; and
2. select Case Summaries involving noteworthy benefits litigation issues across the country.

FEATURED ARTICLE

Benefit Claim Denial Litigation
After Glenn and Conkright
By: Paul Friedman and John Houston Pope

No single issue accounts for more ERISA litigation than the denials of claims for benefits. ERISA Section 502(a)(1)(B) provides a vehicle for a dissatisfied participant to obtain judicial review of a denial of benefits. Although ERISA permits either a state court of competent jurisdiction or a federal court to hear a lawsuit seeking review of a claim denial, most suits end up in federal court, either by claimant’s choice or the exercise of a plan’s right to remove to a federal forum. . .

Read the full Update here.

Social media has become an increasingly important tool for businesses to market their products and services.  As the use of social media in business continues to grow, companies will face new challenges with respect to the protection of their confidential information and business goodwill, as several recent federal district court decisions demonstrate.   

Christou v. Beatport, LLC (D. Colo. 2012),  Ardis Health, LLC v. Nankivell (S.D. N.Y. 2011), and PhoneDog v. Kravitz (N.D. Cal. 2011) each involved former employees who took the login credentials for their employers’ business social media accounts when they left their employment.  In each case, the companies alleged that the removal of the login credentials for their social media accounts by their former employees had significant negative consequences on their ability to effectively compete and market their products and services.

Earlier this year, the U.S. District Court for the District of Colorado addressed whether a nightclub owner’s MySpace page and its connections could constitute a protectable trade secret.  In Christou v. Beatport, LLC, Bradley Roulier, a former partner in a business that ran two Denver nightclubs kept the login credentials for the clubs’ MySpace pages when he left the partnership to start his own competing nightclub.  According to the complaint, the nightclubs’ MySpace pages each had over 10,000 “friends.”  After leaving to start his own competing club, Mr. Roulier used the login credentials that he had taken to post updates to his former partner’s MySpace pages promoting his new night club.  His former partner then sued him for misappropriation of its trade secrets – namely the login credentials for its MySpace pages and the “friend” connections for those pages.  On Mr. Roulier’s motion to dismiss, the court found that the MySpace login credentials and the “friend” connections could constitute protectable trade secrets.  The court concluded that the MySpace pages were password protected, that the “friend” connections for the clubs’ MySpace pages were more than just lists of potential customers, they also provided personal information about the “friends” and their preferences, and the clubs’ lists of “friends” could not be duplicated without a substantial amount of effort and expense.

In a similar case, Ardis Health a former employee effectively froze her former employer out of its business social media websites by taking the login credentials for the accounts and refusing to return them to the former employer.  The employee had formerly been responsible for creating and updating the company’s social media websites and was in sole possession of the login credentials for those websites at the time her employment was terminated.  Accordingly, when she refused to return the login credentials after her termination, the employer could no longer access or update its websites.  The employer was ultimately able to obtain a preliminary injunction requiring the former employee to return the login credentials for its social media websites based on the theory that the former employee’s unauthorized retention of that information constituted conversion.  In finding that the company owned the rights to the login credentials for its social media sites, the court noted that the former employee had entered an agreement in which she had agreed that any work she created or developed during her employment would be the property of the company.

Finally, in PhoneDog, a former employee who had been responsible for establishing and operating a Twitter account for his employer that was designed to increase traffic to his employer’s website kept the login credentials for the account after he terminated his employment with the company, renamed the account, and kept its Twitter following.  PhoneDog alleged its Twitter following was the equivalent of a proprietary customer list.  PhoneDog also alleged that, by taking the account, the employee effectively decreased the number of visitors to the company’s website and thereby reduced the number of advertisers who were willing to purchase space on its website.  On the former employee’s motion to dismiss, the U.S. District Court for the Northern District of California held that the Twitter account, its login credentials, and its followers could potentially constitute protectable trade secrets and that the unauthorized taking of the account and its login credentials constituted misappropriation. 

It should be noted that the courts in both PhoneDog and Christou did not find that the plaintiffs had established that their social media accounts were trade secrets.  Rather, the courts simply held that they had alleged sufficient facts to state a claim that those accounts were trade secrets.  The question of whether the employers will be able to prove the facts necessary to prevail on their claims was left open and both plaintiffs may very well encounter difficulties in proving the facts necessary to prevail on their trade secrets claims later in their respective cases.

These cases demonstrate the importance of careful planning to protect a company’s social media presence and its business connections.  Employers should ensure that they maintain a log of their social media account login credentials and that the log is appropriately updated.  Further, companies are well advised to require employees who establish and maintain such accounts on behalf of the company to enter agreements that provide that the accounts and their login credentials are the sole property of the company.  Departing employees should also be interviewed in connection with their exit to ensure that all company social media login credentials to which they had access have been returned.  Finally, in the event that an employee takes the login credentials for the employer’s social media accounts when he or she leaves the company, it is essential for the employer to take prompt action to recover the information.  Delay can result in the loss of legal protections for the accounts and any connections that they hold.

As we have previously reported on this blog, the National Labor Relations Board (the “Board”) issued a highly controversial rule requiring private employers to post a notice informing employees of their right to join or form a union.  Implementation of the rule has been postponed several times, but was finally set to go into effect on April 30, 2012.

Thankfully, the courts have once again intervened to provide a respite to employers.  Today, the D.C. Circuit Court enjoined implementation of the rule pending an appeal in the underlying case brought against the Board by several trade associations.  In the underlying case, the D.C. District Court held that the Board had the authority to promulgate the rule, but struck down two of the rule’s enforcement measures.  That decision is currently being appealed.  In today’s order, the D.C. Circuit enjoined implementation of the rule until the appeal is decided.  Oral argument for the appeal will be held in September 2012, so the earliest the rule will go into effect is the fall of 2012, if at all.

The D.C. Circuit’s order comes on the heels of a decision issued yesterday, in which he held that the Board did not have authority to promulgate the rule at all.   Judge Norton’s decision puts the validity of the rule – not just its enforcement – in question.  Interestingly, the D.C. Circuit cited Judge Norton’s decision in their order granting the injunction, leaving us to wonder whether that is a harbinger of how the D.C. Circuit views the Board’s authority to promulgate the rule.

While these developments are good news, employers must remain vigilant to protect against union organizing, especially in light of the Board’s new election rules that are going into effect next month.  Management training and other defensive measures should be implemented as expeditiously as possible.

Last week, the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”) launched a new National Emphasis Program targeting Nursing Homes and Residential Care facilities (“Nursing Home NEP”).  In an accompanying Press Release, OSHA announced that the Nursing Home NEP aims to protect workers from safety and health hazards “common in medical industries.”  Effective upon its announcement and for a three-year period thereafter, the NEP focuses on ergonomic hazards (e.g., strains and sprains from patient  handling), exposure to bloodborne pathogens (e.g., needlestick injuries), workplace violence (e.g., assaults by patients or others), and other hazards commonly found within nursing homes and residential care facilities (e.g., exposure to hazardous chemicals or infectious diseases).

By way of background, the Nursing Home NEP is not the first of its kind.  Nearly a decade ago, in September 2002, OSHA issued a virtually identical Nursing Home NEP, which targeted the same types of employers and all of the same hazards except for workplace violence.  Today’s OSHA evaluated the need for a new health industry NEP, and reviewed 2010 data from the Bureau of Labor Statistics.  That review revealed that nursing and residential care facilities still had one of the highest DART rates of all industries.  Specifically, the DART rate for nursing and residential care was nearly three times the national average.

Reacting to this data, the Assistant Secretary of Labor for OSHA, David Michaels, declared: “These are people who have dedicated their lives to caring for our loved ones when they are not well. It is not acceptable that they continue to get hurt at such high rates. . . .  Our new emphasis program for inspecting these facilities will strengthen protections for society’s caretakers.”

As was the case with the 2002 NEP, the new Nursing Home NEP focuses primarily on ergonomic stressors relating to resident handling, exposure to blood and other potentially infectious materials, exposure to tuberculosis, and slips, trips and falls.  This NEP also addresses workplace violence, which was not part of the 2002 NEP.

What’s most interesting about the Nursing Home NEP, especially as compared to OSHA’s other Special Emphasis Programs, is its intended heavy reliance on the General Duty Clause; i.e. the catch-all duty in the OSH Act requiring all employers to provide a workplace free from “recognized hazards that are likely to cause death or serious physical harm.”  There are no specific OSHA standards for two of the primary hazards targeted by this NEP — (1) Ergonomics; and (2) Workplace Violence — so citations related to those two hazards will have to fall under the General Duty Clause.

In determining which facilities to inspect under the Nursing Home NEP, OSHA has prepared a list of Skilled Nursing Care, Immediate Care, and Nursing and Residential Care facilities with DART rates at or above 10.0 as reported in the CY 2010 OSHA Data Initiative (some 700 sites).  Each OSHA Area Office must conduct at least three Nursing Home NEP inspections per year.  The Nursing Home NEP also continued a recent trend by mandating that all approved State Plan OSHA Programs also adopt the NEP, and also conduct at least three Nursing Home NEP inspections per year.

 Although the scope of this NEP covers only nursing homes and residential care facilities, practically speaking, it will have a major impact on the healthcare industry as a whole.  The reason is, a major component of the NEPs launched under the current OSHA leadership has been extensive training of OSHA’s compliance safety and health officers (CSHOs), who conduct the NEP inspections.  The training related to the Nursing Home NEP will arm CSHOs all over the country with a better understanding of the OSHA standards and General Duty Clause application to the supposed hazards common in nursing homes.  Those hazards happen also to be the same hazards that impact hospitals, doctors’ offices, rehab centers, and other healthcare workplaces.  The same broad impact was seen in the chemical industry after OSHA developed its Petroleum Refinery PSM NEP.  OSHA suddenly had a much larger group of CSHOs who understood the complex PSM Standard, and knew what to look for in PSM covered processes.  Even before the Chemical Facilities PSM NEP launched, chemical manufacturers were already seeing a surge in PSM enforcement because of the new army of PSM-knowledgeable CSHOs borne out of the Refinery NEP.  The healthcare industry will see the same surge.

To prepare for increased scrutiny under the Nursing Home NEP, industry stakeholders should evaluate and enhance their internal programs and policies as they relate to the hazards we know OSHA will be targeting.  A good starting point would be cross-check the programs against the NEP Directive and the referenced Guidance Documents within, such as OSHA’s:

(1)  Guidelines for Nursing Homes: Ergonomics for the Prevention of Musculoskeletal Disorders;

(2)  Directive on Enforcement Procedures for Investigating or Inspecting Workplace Violence Incidents;

(3)  Enforcement Procedures for the Occupational Exposure to Bloodborne Pathogens Standard; and

(4)  Nursing Home eTool.

Likewise, employers should be sure they are prepared to properly manage an OSHA inspection.  Epstein Becker Green’s national OSHA Group prepared an OSHA Inspection Checklist to help guide employers through the steps necessary to prepare in advance for a visit from OSHA, and to effectively manage an inspection once it begins.