In The News

Estate Tax Proposed Changes for 2015 and Beyond

By Richard J. Nickels President Obama will deliver his State of the Union address today at 8 p.m. CT.  Given the weighty foreign and domestic issues confronting the Union, proposed changes to the estate tax will most likely not make it into the address.  A couple of changes that may occur soon are discussed below. For the last couple of years, there has been a welcome certainty in the federal estate, gift and generation skipping transfer tax law (collectively the “estate tax”).  That may soon change.  The General Explanations of the Administration’s Fiscal Year 2015 Revenue Proposals (colloquially called the “Green Book”) contains a number of recommended estate tax changes.  Most are intended to increase revenue. Below is a summary of two key estate tax proposals contained in the Green Book:

  •  • Applicable Exclusion Amount Reduction and Rate Increase – President Obama’s Administration proposes a decrease in the applicable exclusion amount and an increase in the highest marginal estate tax. The applicable exclusion amount is the amount that a person can give to children and grandchildren without paying estate tax.  The American Taxpayer Relief Act of 2012 fixed the amount at $5,000,000, indexed for inflation.  This year, the applicable exclusion amount is $5,430,000.  The highest marginal estate tax rate equals 40 percent.


As set forth in the Green Book, the Administration proposes a reduction in the applicable exclusion amount to $3,500,000 and an increase in the top tax rate to 45 percent.  Also, the applicable exclusion amount for lifetime gifts would be limited to $1,000,000.  There would be no indexing for inflation.  Portability would remain intact.  The changes would take effect in 2018.

  • Annual Exclusion Amount Cap – The Green Book contains a proposal ostensibly intended to simplify the rules surrounding annual exclusion gifts. In general, a person can give away $14,000 per year per donee and not incur estate tax.  These types of gifts are known as annual exclusion gifts.  A husband and wife can each give $14,000 to a done, or one spouse can give $28,000 to each donee if the other spouse consents to have the gift made by his or her spouse deemed to be given halfby each spouse.  This is known as a split-gift election.  Annual exclusion gifts do not consume any part of an individual’s applicable exclusion amount.  In order to qualify for annual exclusion treatment, the gift must be a gift of a present interest.  This means that the donee must have the right to the immediate use and enjoyment of the gifted property.  Transfers in trusts qualify as present interest gifts if the beneficiary has what is known as a “Crummey” power, which is essentially a right to withdraw the gifted property from the trust for a short period of time, typically 30 days.


The Obama Administration proposes to eliminate the present interest requirement for annual exclusion gifts.  Its elimination should simplify how trusts are drafted and administered.  However, as part of the proposal, the Administration also proposes a $50,000 cap on annual exclusion gifts.  Annual exclusion gifts in excess of $50,000 per year would be taxable.  The proposed change would effectively limit to 3 the number of donees that could receive the full $14,000 annual exclusion amount ($50,000/$14,000=3.57).  The changes would take effect for gifts made after the year of enactment.

EPA Expands Definition of Solid Waste

By Sharon O.  Jacobs
On Tuesday, January 13, 2015, the U.S. Environmental Protection Agency’s (EPA) Administrator posted the final rule revising the definition of solid waste, also known as the DSW rule, expanding the definition of solid waste. In this new 2015 DSW rule, the EPA is imposing significant new regulatory requirements upon industry, pursuant to the Resource Conservation and Recovery Act, revising several recycling-related provisions and exclusions associated with the definition of solid waste.

The 122-page Federal Register notice includes changes of the current definition of solid waste, revised exclusions and lengthy explanations regarding the changes. The EPA estimates approximately 5,000 industrial facilities in 634 industries that handle roughly 1.5 million tons of hazardous secondary materials annually may be affected by the new rule. The facilities that will be affected most will be recyclers who handle metals and solvents. However, manufacturers of wood products, paper, printing, petroleum and coal products, chemicals, plastics, rubber products and nonmetallic mineral products will also be affected.

The rule affects certain types of hazardous secondary materials that are currently conditionally excluded from the definition of solid waste when reclaimed. There are six major regulatory areas that have been revised. The Federal Register summarizes those six areas, provides a brief overview and gives the EPA’s rationale for the changes.

More information about this rulemaking can be found here.

Jury Awards Nearly $500K for Sex Harassment and Retaliation

By Bryan E. Pieper

November 3, 2014

Last week, a federal jury awarded three former employees $499,000 against healthcare company EmCare, Inc. for sex harassment and retaliation. The plaintiffs alleged that the division CEO and other managers subjected Executive Assistant Gloria Stokes to “constant lewd sexual comments” that included comments about female body parts, derogatory references to women and sexual jokes. Ms. Stokes alleged that she complained about the harassment, but HR failed to take appropriate action.  The other two plaintiffs, Luke Trahan and Bonnie Shaw, complained to HR about the sexual comments and were fired six weeks later.  Title VII of the 1964 Civil Rights Act prohibits sex harassment and prohibits retaliation against employees who oppose sex harassment.

The jury awarded Ms. Stokes $250,000 in the sex harassment claim. While EmCare claimed Mr. Trahan and Ms. Shaw were fired for performance issues, the jury found that they were fired in retaliation for complaining about the sex harassment and awarded them $167,000 and $82,000, respectively, bringing the total award up to $499,000.

This jury verdict highlights several important rules for employers:

  1.  Employers must take employee complaints of harassment seriously by investigating thoroughly and taking appropriate action to prevent and correct any sexually harassing behavior.

  2.  Anti-harassment rules must apply to everyone and must be enforced against even the highest ranking company officers or owners.

  3. While an employer cannot stop managing an employee simply because the employee has complained about harassment, the employer must acknowledge the additional risk associated with terminating or disciplining such an employee. Recognizing that the timing may appear suspicious to a jury and the decision closely scrutinized, the employer should take additional care to make sure that the performance or other legitimate reasons for termination or discipline are well-supported by the evidence and consistently applied.


For more information about the EmCare jury verdict, read the EEOC's press release here.

Music Without Borders by Stephanie Taylor

By Stephanie R. Taylor, Esq. with the assistance of Katie Garro McCain, Esq.
*This article first ran in the August 2014 Nashville Bar Journal

I grew up on a small, picturesque farm in rural South Dakota.  I loved all types of music, and as an aspiring fiddle player and violinist, I was always looking for musical inspiration.  Needless to say, large music tours didn’t typically route through my hometown.  As a result, radio was my only means of musical discovery.

In recent years, technology has opened doors to musical discovery in a variety of ways.  One significant change is that music fans are able to stream live audiovisual performances of concerts from their home computer or mobile device and view those concerts from nearly anywhere in the world.  Streaming technology has made it possible for artists and venues to access and connect with music fans throughout the world in an authentic way.  This technology is used locally by Music City Roots and has been embraced by brands as prominent as the Metropolitan Opera.  These venues are now able to connect with fans at an international level while building their brands. While this technology will never replace the live concert experience, it will undoubtedly connect music fans to artists and venues in a way that was previously not possible.  Of course, with the advent of technology comes the challenge of complying with copyright law.  This article analyzes the copyright law issues that impact the various individuals and companies whose rights are impacted by streaming technology.

Copyright Basics

In order to understand the rights impacted by live video streaming of concerts, it is important to begin with an overview of copyright law as it relates to the applicable rightsholders.

1. The Musical Work Copyright

In every recording of music, there are two separate and distinct copyrights involved.  The first is the “musical work” copyright.  While the U.S. Copyright Act (the “Act”) does not define “musical work,” a musical work is understood to be the musical composition or song, including the words and instrumental components of that song.[i]  The authors of musical works are the songwriters or composers.  In many instances, a musical work author transfers or assigns ownership of the musical work copyright to a third party music publisher.  In other instances, songwriters retain ownership of their musical work copyrights and become their own music publisher.

2. The Sound Recording Copyright

The second type of copyright is the “sound recording” copyright.  Sound recordings are defined in section 101 of The Act as the “work(s) that result from the fixation of a series of musical, spoken, or other sounds.”[2]  Put more simply, a sound recording is the audio recording of the underlying musical work. The authors of a sound recording are the performers whose performance is recorded.[3]  However, if the recording artist is signed to a recording agreement, the record label will own the sound recording copyright.  In some instances, recording artists may act as their own record label, retaining ownership of their sound recording copyright.

3. The Motion Picture Copyright

A third copyright exists when a concert is recorded in video format because the video producers are creating a “motion picture” which is defined in section 101 of The Act as an audiovisual work, “consisting of a series of related images…together with accompanying sounds, if any.”[4]  As a result, the video producers are the authors and owners of the motion picture copyright.[5]  If any person or entity other than the video producer wishes to own copyright in the audiovisual content (i.e. the venue, artist, or record label), then that person or entity should enter into a written work for hire agreement with the video producer prior to the live stream.[6]  The party who desires to own the motion picture copyright may also acquire those rights through a written assignment of copyright, but a work for hire agreement is typically the preferred method of ownership.

The existence of these three distinct copyrights means that there may be multiple rightsholders whenever a concert is streamed live online.  As a result, securing the necessary rights and clearances may be a challenge.

The Right to Stream a Musical Work

One of the exclusive rights held by a music publisher is the right to publicly perform the musical work. A live stream of a concert is an example of a public performance because it is a transmission of a performance to members of the public capable of receiving that communication.[7]

Most music publishers have granted the licensing rights for public performances of musical works to ASCAP, BMI, and SESAC, entities known as Performance Rights Organizations or PROs.  As a result, the online streaming service must obtain a “new media” license from each of the three PROs in order to secure rights to stream live performances of the musical works online.[8]  The new media license is in addition to any licenses the venue has already obtained from the PROs for public performances of music at the venue.

Typically, when a musical work is used in timed synchronization with video images, the user must obtain an additional license from music publishers; this license is referred to as a synchronization (“synch”) license.[9]  Synch licenses can be expensive and time consuming to obtain.  This is because synch license fees are not set by statute.  Rather, synch fees are negotiated based on a variety of factors making the fees very unpredictable.  Additionally, it is possible for a single song to have multiple songwriters and multiple music publishers, resulting in many hours of negotiations.  Fortunately, as long as the video of the concert performance is streamed live, no synch licenses will be required.  However, content creators and distributors need to be aware that synch licenses will be required if they desire to make videos of the musical performances available to the public after the live stream, whether in archived form, on their website, or for sale or distribution.[10]

The Right to the Artist’s Musical Performance

In addition to clearing the musical work, rights in the musical performance and resulting sound recording must also be cleared.  If a recording artist is signed to an exclusive recording agreement, the record label will typically own the exclusive rights to any recording of the artist’s musical performances during the term of such agreement.  As a result, any person or entity that wishes to capture the live performance of the artist and stream that performance online must secure permission from the record label.  The difficulty in clearing these rights depends on the promotional value the label sees in the live stream as well as the label’s comfort with the quality of such recorded performance.  Furthermore, even if a label grants permission for the live video stream, the label may nonetheless insist on ownership of the audiovisual content captured at the concert.  This clearance process may be significantly simplified when the artist is not signed to a label because the artist can grant all rights without label approval.

If the musicians performing with the artist are independent contractors as opposed to employees or members of the artist’s group, it will be necessary to obtain a “sideman/side musician” release.  Additionally, if the sideman is signed to an exclusive recording agreement, it will be necessary to obtain a release from sideman’s record label.

Additional Rights and Clearances

In addition to the rights and clearances discussed above, there are several other rights and clearances that one must obtain.

1. Location Release

Whenever filming at a venue, one must obtain a venue/location release from the owners and lessors of the applicable venue.  This release grants the right to record at that location and distribute the images captured at that location.  While filming at the venue, it is also important to be aware that if any copyrighted materials (i.e. posters) or trademarks (i.e. logos) appear in the background, a release from the owners of those copyrights or trademarks may also be required.

2. Name and Likeness Release

Recording artists are likely able to claim a right of publicity related to the use of his or her name, photograph, and likeness for commercial purposes.  As a result, it is important to include in any artist release the right to use the artist’s name, photograph, likeness, and biographical materials for marketing, promoting and other exploitations related to the concert/live stream.

3. Audience Release

Finally, if the audience members will be shown on camera, it is important to make the audience aware that they may be filmed.  In most instances it is not possible to obtain a written release from the audience members.  Nonetheless, best practices should include providing audience members notice at the time of ticket purchase, printing that notice on the ticket, and repeating that notice verbally to the audience prior to the taping.

Industry Response to Live Streaming

As mentioned above, live streaming will never replace the live concert experience.  Furthermore, it remains a fairly expensive technology requiring a skilled and experienced audio and audiovisual team to capture and distribute the content.  Additionally, some artists and labels remain apprehensive about a live stream of their performances because of concerns that these performances might not highlight the artist in the best possible light.  Nonetheless, live streaming of concerts creates an opportunity that might not otherwise be available, including: participation of overflow audiences to sold-out shows, interested fans exploring festivals and concerts in order to decide whether to attend in the future, and, as discussed above, a new and invaluable point of music discovery.

If I were still living in South Dakota today, my opportunities to engage in music would be vastly different.  I would have access to live video footage of concerts from around the world.  My point of musical discovery could be the weekly live stream of Music City Roots, or the price of admission to watch the Metropolitan Opera at a movie theatre.  This unprecedented access to live performances will enable artists and venues to connect with fans while building their brand in an authentic way while empowering fans to experience live music with fewer economic and geographic barriers.

 

[1] Marshall Leaffer, Understanding Copyright Law §3.18 (4th ed. 2005).

[2] 17 U.S.C.A. § 101 (West 2010).

[3] Authorship rights may also extend to the producer who is involved creatively in capturing those performances.

[4] 17 U.S.C.A § 101 (West 2010).

[5] A fourth copyright exists in that there will likely be software licenses and web server licenses that must grant the rights necessary for the live stream.  This article will not undertake that analysis, but those licenses will require careful analysis prior to streaming live concerts.  That analysis should consider the rights and obligations of those distributing the content as well as the rights of the rightsholders and the individual music fans consuming the content.

[6] Section 101 of the Act sets forth the formalities of creating a copyright that will be categorized as a work made for hire.

[7] 17 U.S.C.A. § 101 (West 2010).

[8] BMI issues a license through its Digital Licensing Department, and no longer refers to it as a new media license.

[9] Donald Passman, All You Need to Know About the Music Business 241 (7th ed. 2009).

[10] Increasingly, services like YouTube are negotiating blanket synchronization licenses with music publishers, which make the licensing process simpler and more cost effective.  However, those licenses are not within the scope of this article.

 

EEOC Attacks Common Severance Agreement Language

By Bryan E. Pieper The U.S. Equal Employment Opportunities Commission (“EEOC”) has filed a lawsuit against CVS Pharmacy, Inc., claiming that a severance agreement CVS has employees sign violates the employees' rights to communicate with the EEOC and to participate in EEOC investigations. Click here for the full lawsuit. Many of the provisions targeted by the EEOC are considered fairly typical in employee severance agreements. As is common in severance agreements, the employer, CVS, agrees to give the employee severance benefits, conditioned on the employee making certain promises in exchange. The EEOC takes issues with those required promises, specifically identifying the following provisions:

    • The employee releases any and all claims he or she may have against CVS;
    • The employee agrees not to file any claims again CVS in any court or agency;
    • The employee agrees not to make any statements that disparage CVS or its business;
    • The employee agrees not to disclose to any third party any of CVS's confidential information, which is defined to include personnel information;
    • The employee agrees to cooperate with CVS by notifying CVS promptly if the employee is contacted regarding any lawsuit or administrative proceeding against CVS; and
    • If the employee breaches the severance agreement, CVS will be entitled to an immediate injunction, and the employee will reimburse CVS for any attorneys’ fees incurred enforcing the agreement.

In its Complaint, the EEOC asserts that the combination of the above provisions deprives an employee of his Title VII right to participate in and cooperate with an EEOC investigation and enables an employer to conceal a pattern of discrimination by thwarting the EEOC's ability to learn about and investigate employment discrimination. The EEOC alleges that in 2012, more than 650 individuals signed the CVS severance agreement. "Charges and communication with employees play a critical role in the EEOC's enforcement process because they inform the agency of employer practices that might violate the law," explained the EEOC’s lead attorney on the case. "For this reason, the right to communicate with the EEOC is a right that is protected by federal law. When an employer attempts to limit that communication, the employer effectively is attempting to buy employee silence about potential violations of the law. Put simply, that is a deal that employers cannot lawfully make." Click here to read the EEOC's full press release. The EEOC asked the court to do the following:

    • • Enjoin CVS from continuing to use the current version of the severance agreement;
    • • Reform the agreement to comply with Title VII, both for individuals who have already signed it and for those who sign it in the future;
    • • Require CVS to issue a corrective communication informing its workforce of its right to file an EEOC charge and to initiate and respond to communication with the EEOC;
    • • Require CVS to provide its management with additional training regarding an employee's Title VII right to file charges and participate in EEOC investigations; and
    • • Provide a window of 300 days for any former employee who has signed the severance agreement to file a charge of discrimination with the EEOC.

Because employers typically enter into severance agreements and pay severance pay in order to get the peace of mind that they have made a clean break with an employee, the agreement provisions discussed above are rather common. This clean break is often essential to an employer’s willingness to provide non-mandatory severance benefits in the first place. However, the EEOC contends this lawsuit is part of its new emphasis on attacking systemic patterns of discrimination and the methods employers use to protect and hide them. This is consistent with the EEOC's practice of using investigation of an individual charge of discrimination as an opportunity to look for class or group claims, which would be difficult if all former employees are bound to silence. Employers are encouraged to have their current severance agreements reviewed by counsel and to keep an eye on this case as it progresses through the courts.

EEOC Attacks Common Severance Agreement Language

By Bryan E. Pieper The U.S. Equal Employment Opportunities Commission (“EEOC”) has filed a lawsuit against CVS Pharmacy, Inc., claiming that a severance agreement CVS has employees sign violates the employees' rights to communicate with the EEOC and to participate in EEOC investigations. Click here for the full lawsuit. Many of the provisions targeted by the EEOC are considered fairly typical in employee severance agreements. As is common in severance agreements, the employer, CVS, agrees to give the employee severance benefits, conditioned on the employee making certain promises in exchange. The EEOC takes issues with those required promises, specifically identifying the following provisions:
  • The employee releases any and all claims he or she may have against CVS;
  • The employee agrees not to file any claims again CVS in any court or agency;
  • The employee agrees not to make any statements that disparage CVS or its business;
  • The employee agrees not to disclose to any third party any of CVS's confidential information, which is defined to include personnel information;
  • The employee agrees to cooperate with CVS by notifying CVS promptly if the employee is contacted regarding any lawsuit or administrative proceeding against CVS; and
  • If the employee breaches the severance agreement, CVS will be entitled to an immediate injunction, and the employee will reimburse CVS for any attorneys’ fees incurred enforcing the agreement.
In its Complaint, the EEOC asserts that the combination of the above provisions deprives an employee of his Title VII right to participate in and cooperate with an EEOC investigation and enables an employer to conceal a pattern of discrimination by thwarting the EEOC's ability to learn about and investigate employment discrimination. The EEOC alleges that in 2012, more than 650 individuals signed the CVS severance agreement. "Charges and communication with employees play a critical role in the EEOC's enforcement process because they inform the agency of employer practices that might violate the law," explained the EEOC’s lead attorney on the case. "For this reason, the right to communicate with the EEOC is a right that is protected by federal law. When an employer attempts to limit that communication, the employer effectively is attempting to buy employee silence about potential violations of the law. Put simply, that is a deal that employers cannot lawfully make." Click here to read the EEOC's full press release. The EEOC asked the court to do the following:
  • • Enjoin CVS from continuing to use the current version of the severance agreement;
  • • Reform the agreement to comply with Title VII, both for individuals who have already signed it and for those who sign it in the future;
  • • Require CVS to issue a corrective communication informing its workforce of its right to file an EEOC charge and to initiate and respond to communication with the EEOC;
  • • Require CVS to provide its management with additional training regarding an employee's Title VII right to file charges and participate in EEOC investigations; and
  • • Provide a window of 300 days for any former employee who has signed the severance agreement to file a charge of discrimination with the EEOC.
Because employers typically enter into severance agreements and pay severance pay in order to get the peace of mind that they have made a clean break with an employee, the agreement provisions discussed above are rather common. This clean break is often essential to an employer’s willingness to provide non-mandatory severance benefits in the first place. However, the EEOC contends this lawsuit is part of its new emphasis on attacking systemic patterns of discrimination and the methods employers use to protect and hide them. This is consistent with the EEOC's practice of using investigation of an individual charge of discrimination as an opportunity to look for class or group claims, which would be difficult if all former employees are bound to silence. Employers are encouraged to have their current severance agreements reviewed by counsel and to keep an eye on this case as it progresses through the courts.

B*law*ging

By Will Cheek

The original version of this article appeared in the February 2014 issue of the Nashville Bar Journal.

Why Should I Blog?

Lawyering involves a delicate balance of too much to do and too little time to do it in. Work on your desk competes for limited personal time.  Precious hours for downtime are quickly consumed. Sleep and relaxation suffer.

New wavers Devo covered a classic song that captures things well:

Workin in a coal mine

Goin down, down

Workin in a coal mine

Whew! About to slip down

Lord I am so tired

How long can this go on?

Why blog? Here are four basic reasons:

    • • New frontier
    • • Education for client and referral base
    • • Source of business
    • • Appearances and expert

New Frontier

Although blogging has been around for more than a decade, attorneys in general have done a poor job exploiting blogging as a new communication tool. Many attorney blogs regurgitate the newsletter format, featuring detailed legal articles that are posted months apart.  These posts often read like condensed law review articles.

In the internet age, the newsletter format does not work. Internet consumers are looking for quick, easy, entertaining and useful information.  Posting lengthy lawyerly articles is not blogging.

There is plenty of room in cyberspace for real attorney blogs.

Education for Client and Referral Base

Folks frequently turn to the internet for information. People are in search of answers to all kinds of queries from the internet, including legal questions. Sadly, much of the information on the internet concerning legal advice is wrong. In addition, legal information on the internet is usually not tailored to a particular legal field or location, such as Tennessee or Nashville.

The fact that blogging is a new frontier for lawyers creates an opportunity for innovative attorneys to fill the void. If you follow some simple recommendations for blogging, your blog can easily become a destination for clients and referral sources – who want to regularly read informative posts about useful information.

This is your primary objective. Your blog should become a go-to source for education concerning your blog topic.  Do not expect your readers to pick up every post; instead, you want readers to visit regularly enough for your blog to become a destination.

Source of Business

As a young associate, I did not understand the importance of being a rainmaker. I get it now. If you have a book of business, you get more respect from your law firm.

Although it takes time and patience, a good blog is an excellent source of business. My Last Call blog easily generates $50,000 to $100,000 in new business each year.

Perhaps more importantly, I often hear from repeat clients that have read a blog post. Blogging is a great way to remind existing clients that you are an expert and that you are around to help.  My blog leads to new business from existing clients; for example, when I break news about a new legal issues that impact clients.

Becoming a trusted adviser to a client is one of the best ways to cement a long-term relationship with a client. Providing helpful information for free in a blog can pave the way for new relationships and strengthen bonds with existing clients.

Appearances and Expert

People tend to seek out professionals that have a reputation for being the best. Traditional methods of becoming known as the best lawyer are largely passé in the internet era. I am not a fan of this, but in my experience, your appearance in internet searches is critical to becoming a rain maker.  An AV Martindale Hubbell rating is not as important as being on the first page of a Google search.

Blogging is an easy way to increase your visibility on the internet. If your name pops up in multiple searches on a legal topic, you can appear to be an expert on the topic.

Internet search engines like Google are basically a popularity contest. A good blog can help you place your name near the top of the list in Google searches.

There is only one word for being at the top of a Google search: Priceless.

Understanding Certificates of Need

By James Mackler

As their practice grows, many physicians find themselves in a position where they would like to grow and expand their practice but are intimidated by the red tape involved in obtaining approval from the Tennessee Health Services and Development Agency (THSD) for their dream facility. It is important, therefore, for you to have some understanding of the “certificate of need” (CON) program.

What is a “certificate of need?”

A CON is a permit that must be granted by the THSD before a person can establish or modify a healthcare facility.

How does this apply to physicians?

Physicians who simply intend to establish or modify their private professional practice office do not need a CON.

Who will receive the CON?  

The CON is typically issued to the property owner.

What “healthcare facilities” require a CON?  

Senator Mark Green recently introduced House Bill 854, which would remove medical imaging equipment from the requirement to have a Certificate of Need.  As the law currently stands, you will usually need a CON for:

    • • nursing homes
    • • recuperation centers
    • • hospitals
    • • ambulatory surgical treatment centers
    • • birthing centers
    • • mental health hospitals
    • • intellectual disability institutional habilitation facilities
    • • home care organizations
    • • outpatient diagnostic centers
    • • rehabilitation facilities
    • • residential hospices
    • • nonresidential substitution-based treatment centers for opiate addiction

How do you get a CON? 

Obtaining a CON requires strict compliance with THSD regulations. It requires careful completion of an application with THSD. You will also need to pay an application fee, file a detailed letter of intent with THSD and publish that letter for public comment. In many cases, it is helpful to file supporting documentation as well.

What does THSD consider when deciding whether to issue a CON?

THSD is required to consider many factors in determining whether the proposed facility meets a healthcare need in the area, including:

    • • the need for the facility in the particular area
    • • the economic feasibility of the project
    • • the contribution which the project will make to the development of the healthcare system

Do I need an attorney in order to obtain a CON?

There is no legal requirement that you be represented by counsel. Bear in mind, however, that the process is time-consuming and complicated and that THDS requires strict compliance with its rules. An experienced attorney can help you navigate this process and, if your application is denied, can assist with an appeal.

What To Do When the Feds Come Calling

By James Mackler

It is a harrowing yet increasingly common experience for healthcare providers to find themselves face-to-face with federal investigators. The U.S. Attorney’s office has announced that the investigation of healthcare fraud will continue to be one of its highest priorities. This means that you or your staff could literally have your relaxing evening at home interrupted by a knock on the door from a law enforcement agent. There are two key points to remember should you become the focus of an investigation: First, don’t talk to law enforcement agents without an attorney; second, preserve your documents but don’t alter them.

James Mackler is a member of Bone McAllester Norton’s Criminal Defense and Government Investigations group. He is an experienced criminal defense attorney and former prosecutor at the firm. James has this very simple advice for the moment you are first confronted by an investigator: “Do not talk to anyone until you speak with your own attorney.” Although this advice is very easy to give, it can be difficult to follow. Most law-abiding citizens want to cooperate with the authorities. Moreover, people tend to assume that if they refuse to answer questions, it will look like they have something to hide. This could not be further from the truth. The fact is that investigators and prosecutors respect and, to some extent, admire people who can think clearly enough to assert their right to counsel.

This is not to suggest that you should forever refuse to assist in a law enforcement investigation. The point is you need to make sure that your rights are protected. Even if you are being interviewed as a witness, there is always a chance that, as the investigation develops, a prosecutor might begin to see you as an accomplice. If you have retained counsel, your lawyer may be able to protect you ahead of time from this possibility. Although you have every right to refuse to answer questions, it is a crime to impede an investigation or lie to authorities. An attorney can also help you navigate these treacherous waters.

You may be tempted to start reviewing billing or treatment records to make sure your files are in good order in case they are ever subpoenaed. While it is fine to review your records, be careful to neither create nor destroy documents in response to an inquiry from law enforcement agents. In today’s digital age, nothing ever goes away completely. The best approach is to preserve what you have without making any changes. It is much easier for a good attorney to deal with records that might portray you in a bad light than it is to deal with allegations of evidence tampering or obstruction.

You are also likely to begin trying to figure out what is really behind the questioning. The chances are that you will be given little or no information by the investigating agent. Furthermore, the agent does not have to be truthful or forthcoming with you. You might be a potential witness or, worse, a potential target. The investigation might be civil in nature, or it might be leading toward criminal prosecution. The reality is that these distinctions don’t really matter in terms of your response.

Now if a law enforcement official shows up at your door, you have the perfect reply to the question, “Do you mind answering a few questions?”

With all sincerity, you can say, “I have no problem speaking with you, but my attorney has told me never to answer questions without talking to him first. I will get back in touch with you.”

How to Get a Liquor License in Tennessee

By Will Cheek

The most common question we hear is how do you get a liquor license to sell alcoholic beverages in Tennessee? Here is a short summary of how to navigate alcoholic beverage laws and obtain liquor permits for a restaurant or bar.

Tennessee requires two liquor permits to serve alcohol: One is from the state – for wine and spirits. The other is from the city – for beer.  You have to file separate applications for liquor and beer permits, and the process is different for each.

The good news is that there is no limit on the number of restaurant and bar licenses, and you do not need to purchase a license in Tennessee.

The bad news is that both liquor and beer permits generally are not issued until local building codes officials have issued a certificate of occupancy. This puts considerable pressure near the end of the construction process, at a time when the restaurant or bar owner is trying to train staff, finalize menus and manage the completion of construction.

Tennessee Liquor License

The state ABC application process requires basic disclosure from individual or corporate owners and officers, as well as managers. The application requires a lease or other proof or legal right to sell alcohol at the premises, copies of corporate charter, a sales tax certificate and a copy of the TTB registration.

The fee to apply for the state alcoholic beverage permit is $300, and annual liquor license fees range from a few hundred dollars for a wine-only permit to $4,000 for a bar that sells very little food. Cities impose an annual tax that is slightly less than the license fee.

Food service is required for most liquor licenses in Tennessee. The basic bar license requires 15% food sales, as compared to liquor sales. The ABC will inspect before issuing a license and requires at least a minimal kitchen and a food menu.

The ABC staff approves LBD licenses and applications do not come before the full Alcoholic Beverage Commission.

Applicants must obtain a $10,000 bond for full bar service, and the state is very particular about the form of the bond. Do not be surprised if your bond is rejected by Revenue. Revenue also accepts CDs in lieu of the bond.

All servers must be trained and hold ABC-issued server permit cards. The ABC regularly fines restaurants and bars for servers that do not have current server permit cards.

The ABC recently implemented a requirement that all corporate officers and owners, as well as servers, must file a declaration of citizenship. The declaration must be by proof of citizenship or rights to work in the U.S.

The application process takes several weeks, and with the recent move of the Tennessee ABC in Nashville, approvals may take longer.

Tennessee Beer Permit

The beer board process varies depending on the city. Nashville, Johnson City and Memphis have more complicated rules for beer, and obtaining a permit requires attention to detail.

Many cities have a fairly simple process for obtaining a beer permit.

The application fee for a beer permit is $250, and the annual beer permit tax is $100.

Most beer boards have distance requirements from churches, schools, residences and other places. Site selection should definitely examine distance requirements.

Oddly, there is no distance requirement for a Tennessee liquor license. There are restaurants that have a license to sell wine and spirits but cannot sell beer because they are too close to a house, church or school.

Almost every Tennessee Beer Board hears applications at a public meeting, and many require a representative to be present at the meeting. Beer boards generally do not grill applicants at the meeting but may ask questions about sales to minors and intoxicated persons.

The application process for beer takes three weeks for many beer boards and as long as three months for cities like Johnson City. The timing of beer board approval should be carefully considered for new applicants.

 

Bone McAllester Norton PLLC is a full-service law firm with 33 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 16 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters.   Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

Anne Sumpter Arney Discusses the High Cost of Failing to Comply with HIPAA with Nashville Medical News

Bone McAllester Norton attorney Anne Sumpter Arney wrote an article for Nashville Medical News about new regulations for HIPAA compliance, set to take effect in September. The piece, “The High Cost of Failing to Comply with HIPAA,” outlines common violations and advice for making sure providers mitigate risks.

 

 

Bone McAllester Norton PLLC is a full-service law firm with 33 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 16 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters.  Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

 

Chris Raybeck Speaks to the Nashville Business Journal on Managing Growth

Bone McAllester Norton attorney Chris Raybeck was interviewed by the Nashville Business Journal last week on managing growth and was asked when he knows it is time to add staff. “If the value of opportunities that your instinct tells you are missed, or if the cost of unfilled demand is greater than the cost of hiring, it is time to add staff members.”

Chris will serve as a panelist at this Thursday’s Entrepreneur Exchange and will discuss ways to ramp up your business.

Read more from the Nashville Business Journal on adding staff here.

 

Bone McAllester Norton PLLC is a full-service law firm with 33 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 16 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters.  Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

James Crumlin Discusses How to Keep Employees’ Smartphone Use Out of Legal Jeopardy

Bone McAllester Norton attorney James A. Crumlin recently spoke with Visage Mobile on the relationship employers have with their employees’ smartphones. Because of the rise in court cases involving companies being sued when employees misbehave on mobile devices, attention on the topic is hot. As James explains, “. . .it might be your [the employee’s] device, but there is company information that is going to it and, because of that, the company is entitled to look at the device.”

 

 

Bone McAllester Norton PLLC is a full-service law firm with 33 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 16 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters. Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

Special Fraud Alert on Physician-Owned Distributorships

On March 24, 2013, the Office of the Inspector General (“OIG”) issued a Special Fraud Alert addressing its concern about the proliferation of physician-owned distributorships (PODS). PODs are physician-owned entities that derive revenue from selling, or arranging for the sale of, implantable medical devices ordered by their physician-owners for use in procedures the physician-owners perform on their own patients at hospitals or ambulatory surgical centers (ASCs). During the last several years, there has been a lot of discussion in the healthcare community about whether or not PODs violate the Anti-Kickback Statue, but until now, there has been little guidance from either CMS or the OIG.

In the Special Fraud Alert, the OIG reiterates its longstanding position that “the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the anti-kickback statute.” In addition, the OIG concludes that PODs are “inherently suspect under the anti-kickback statute.” The Special Fraud Alert provides a list of characteristics making any POD suspect which leaves open the possibility that a POD without any of the listed characteristics would not violate Anti-Kickback Statute.

The listed characteristics are all familiar red flags which have been cited many times by the OIG as indicative of a potentially abusive physician investment or arrangement. Although the OIG does not go so far as to make PODs a per se violation of the Anti-Kickback statute, the language of the Special Fraud Alert is strong. The OIG restates its longstanding guidance “that the opportunity for a referring physician to earn a profit, including through an investment in an entity for which he or she generates business, could constitute illegal remuneration under the Anti-Kickback Statute. The Anti-Kickback Statute is violated if even one purpose of the remuneration is to induce such referrals.”

Bone McAllester Norton PLLC is a full-service law firm with 33 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 16 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters. Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

District Court Rejects Physician’s Whistleblower Suit Against Hospital

By Anne Sumpter Arney

It will be no surprise to the healthcare community that the relationship between doctors and hospitals is not always a friendly one. Nonetheless, physicians and hospitals seldom seek to resolve their disputes in the court room. This reluctance of physicians to resort to litigation to resolve their disputes is one of the things that makes a recent Tennessee case brought by a physician against University Medical Center (UMC) in Lebanon, Tennessee particularly interesting. In United States ex rel. Dennis v. Health Management Assocs., Inc., a physician on the hospital’s medical staff brought a qui tam, or whistle blower, suit against UMC, claiming that the hospital had violated the False Claims Act.   A qui tam lawsuit is not simply a claim by an individual who believes a contract has been breached or that rights have been damaged but is, rather, a claim that a federal law has been violated.  The individual who brings a qui tam lawsuit seeks to have the Office of Inspector General (or another governmental agency) join in the whistle blower’s suit and pursue damages on behalf of the government. If the government intervenes, the individual who brought the qui tam, in this case the physician, is entitled to receive a portion of the damages recovered by the enforcement action.  The recovery in qui tam actions can be substantial, and these cases are often brought by former employees of a healthcare provider but not usually physicians.

In this case, the physician claimed UMC had submitted claims to government insurers, such as Medicare, for services that had been provided in violation of the Anti-Kickback Statute and the Stark Law. The Anti-Kickback Statute and the Stark Law generally prohibit the payment for referrals of patients if the services are paid for by a government insurance program such as Medicare. Most hospitals carefully structure their recruitment arrangements to fall within an exception and not violate these laws. UMC appears to have had a typical recruiting agreement in which a hospital recruits a physician to an underserved area by underwriting a portion of their salary and expenses during the first years of practice. As is standard in most recruiting agreements, UMC required, among other things, that the recruited physician become a member of its medical staff.

In the lawsuit, the physician claimed, in part, that UMC’s recruiting agreements were a way for the hospital to pay the physician for referral because they required a recruited physician to maintain active staff membership at the hospital.  Further, as is also usual at most hospitals, in order to maintain his position on the medical staff, the physician was required to admit a certain number of patients to the hospital.

The physician’s claim against UMC was not successful, and on January 14, 2013, the District Court dismissed the suit with prejudice, finding that the claim did not give specific facts to find a False Claims Act violation. In rejecting the physician’s complaint, the District Court said “the only arena in which the relator (the physician) offers allegations of any specificity whatsoever, concern his own recruitment agreement with UMC.”   The Court recognized that the requirements of the recruitment arrangement at issue were not only standard practice but also specifically allowed under the law. The Center for Medicare and Medicaid Services has determined that in the context of recruitment a hospital may require, as a condition for receiving benefits, that the practitioner maintain staff privileges at the recruiting hospital. It is also a common practice for hospitals to classify their medical staff based in part on the number of admissions to the hospital per year.

The District Court’s conclusion is not as surprising. It is surprising that the qui tam lawsuit was brought by the physician and that the physician himself was party to the same recruiting agreement with UMC that was the basis for his lawsuit.  If the UMC recruitment agreement had been found to be a violation of the law, as a party to the recruitment agreement, the physician would himself have been guilty of violating the Anti-Kickback Statute and Stark Law.

 

Bone McAllester Norton PLLC is a full-service law firm with 33 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 16 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters.   Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

New HIPPA Rule Requires Changes to Privacy Practices

By Anne Sumpter Arney

Since 2002, HIPAA has required physician’s offices as well as other healthcare providers to provide their patients with a Notice of Privacy Practices.  These notices are now familiar to everyone who is part of the healthcare industry, including patients.  Although they may differ slightly, they are substantially the same because the form and content is primarily dictated by the Privacy Rule under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

On January 17 of this year, the U.S. Department of Health and Human Services issued the new final rules under HIPAA, which strengthen its privacy and security protections. This new final rule changed several aspects of the privacy and security rules in ways that will directly affect physicians, including modifying what must be included in your Notice of Privacy Practices. In addition to the information already required, a provider’s Notice of Privacy Practices must now include the following additional statements and information:

  • If a provider plans to use or disclose protected health information for fundraising, a statement that the provider may contact them to raise funds and that the individual has the right to opt out of receiving these fundraising communications.

  • If the provider maintains “psychotherapy notes,” a statement that the psychotherapy notes will only be used and disclosed with the individual’s authorization.

  • A statement that the patient has the right to restrict the disclosure of information to their insurer if they are paying out of pocket, in full for the care.

  • A statement that the sale of protected health information without the express written authorization of the individual is prohibited, as well as the other uses and disclosures for which the rule expressly requires the individual's authorization (i.e., marketing and disclosure of psychotherapy notes, as appropriate).

  • A statement that the covered entity has a duty to notify affected individuals of a breach of unsecured protected health information.


The other changes required by the new final rule will be addressed in future issues of the Physicians’ Legal Update.  A covered entity has until September 23, 2013 to update their Notice of Privacy Practices and to comply with the other requirements of the new rule.

 

Bone McAllester Norton PLLC is a full-service law firm with 33 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 16 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters.   Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.

 

James Crumlin Discusses Employee Termination

Bone McAllester Norton labor and employment attorney James Crumlin spoke with staffing and consulting firm Borrowman Baker, LLC about handling employee termination. His interview appeared in their quarterly newsletter this week. To see what James had to say about avoiding pitfalls in the termination process, click here.

Stephen Zralek Quoted in The City Paper on Copyright Infringement Lawsuits

Bone McAllester Norton attorney Stephen Zralek was quoted in a January 29 article in Nashville’s The City Paper regarding copyright infringement lawsuits.

“It was only a matter of time before copyright trolls filed a bit-torrent lawsuit in Tennessee,” he said. “By law, the [Internet Service Providers] are required to reach out to the John Does and tell them they have 30 days to file a ‘motion to quash’ the subpoena or otherwise settle the lawsuit. If the individuals take no action, the ISPs will release their identities to the Plaintiff, after which the Plaintiff will amend the complaint to name the individual in the copyright infringement action — for all the world to see.”

 

Stephen Zralek Quoted in The City Paper on Copyright Infringement Lawsuits

Bone McAllester Norton attorney Stephen Zralek was quoted in a January 29 article in Nashville’s The City Paper regarding copyright infringement lawsuits.

“It was only a matter of time before copyright trolls filed a bit-torrent lawsuit in Tennessee,” he said. “By law, the [Internet Service Providers] are required to reach out to the John Does and tell them they have 30 days to file a ‘motion to quash’ the subpoena or otherwise settle the lawsuit. If the individuals take no action, the ISPs will release their identities to the Plaintiff, after which the Plaintiff will amend the complaint to name the individual in the copyright infringement action — for all the world to see.”

 

James Mackler Quoted in The Tennessean Regarding 1860s Trial of Mary Surratt

Bone McAllester Norton attorney James Mackler served on a panel discussion that re-examined the 1860s trial of Mary Surratt, the first woman executed by the federal government. The Tennessean covered that discussion and quoted James.

“We were in war,” he said. “Although this was a civilian, this was a civilian being tried for war crimes. She was a civilian acting on behalf of the enemy accused by the United States of war crimes. I’m not saying that Mary Surratt was tried fairly; she was certainly not.”