In The News

Stephen Zralek to Present "Legal Issues in Social Media"

Bone McAllester Norton attorney Stephen Zralek will present “Legal Issues in Social Media” at the Nashville Business Journal’s Crash Course on Social Media half-day seminar held Wednesday, March 30 at Lipscomb University Shamblin Theater.


Discussions will include how to create, implement and measure a successful social presence for your business and coaching for building a social media marketing plan.


Click here to register.


 

It Takes only one Expletive in a Tweet to Lose your Job

Chrysler did exactly what it should have done: immediately terminated its relationship with its social media agency New Media Strategies after the agency used the F-Bomb in a tweet on Chrysler's behalf.  Here's the tweet (with my redactions): "“I find it ironic that Detroit is known as the #motorcity and yet no one here knows how to f****** drive.”  Even more ironic is that Eminem (who cusses like a sailor) is Chrysler's new spokesman.  (Props to him for an awesome Superbowl ad!)  Still, this was not exactly the image Chrysler was going for. As reported in Automotive News, the social media agency immediately fired the employee.  And Chrysler is ending its relationship with the agency on account of the tweet.  No surprise here on either move. Michael Humphreys said it best in his Forbes blog: "Twitter is not a private room.  It's not a quiet corner in a public square.  It is THE public square."

It Takes only one Expletive in a Tweet to Lose your Job

Chrysler did exactly what it should have done: immediately terminated its relationship with its social media agency New Media Strategies after the agency used the F-Bomb in a tweet on Chrysler's behalf.  Here's the tweet (with my redactions): "“I find it ironic that Detroit is known as the #motorcity and yet no one here knows how to f****** drive.”  Even more ironic is that Eminem (who cusses like a sailor) is Chrysler's new spokesman.  (Props to him for an awesome Superbowl ad!)  Still, this was not exactly the image Chrysler was going for. As reported in Automotive News, the social media agency immediately fired the employee.  And Chrysler is ending its relationship with the agency on account of the tweet.  No surprise here on either move. Michael Humphreys said it best in his Forbes blog: "Twitter is not a private room.  It's not a quiet corner in a public square.  It is THE public square."

Opportunities Abound at PodCamp Nashville

PodCamp Nashville used to be a best-kept secret.  Not any more. If you're want to find your voice and find your audience, if you want to build your brand and link to potential customers throughout the world, if you want to speak your mind by creating online documentaries or podcasts, or if you want to meet other people interested in your world and your community, sign up.  PodCamp Nashville will be held downtown at Cadillac Ranch on Saturday, March 26.  And it's Free. People from all industries and skill-sets (and I mean All) will be there.  Over 400 have signed up to attend so far.There's no doubt that PodCamp is a chance to network.  I got introduced to PodCamp and its sister, BarCamp (held in the fall), through a friend at work. I've met some incredible Nashvillians in the music, entertainment, marketing, technology and digital fields; made some good friends; and developed some clients.

But more than that, it's a chance to learn from some of the best and brightest in our community.  Where else can you hear all these great luminaries under one roof?  Kate O'Neill will talk about how blogging made her a better leader; Courtenay Rogers will talk about "The Power of Digital Stalking," (she says we all do it); Jake Jorgovan will discuss "How to Effectively Utilize YouTube."  And I'm excited to hear Raj Menon talk about how to launch a podcast.

I can't wait to hear David Corrigan explain how to "Mak[e] your Mobile App idea a Reality."  I came up with about 20 ideas the other day on my drive into work (I'm sure 15 of them have already been invented), but I'm eager to hear what to do the next time creativity hits!

As one of the only lawyers speaking that day, I'll be leading a session with marketing guru Taylor Vick.  She and I are teaming up to talk about how businesses can accomplish their marketing goals through social media without running into trouble.  When clients come to me with a crisis involving online communications, it often takes a tag-team approach between legal solutions and SEO know-how.  Taylor and I will use some specific case-studies to frame our discussion, highlight the issues that can help businesses and bloggers avoid liability, and give some pointers along the way.  Quoting Shakespeare, we titled our session: "Kill All the Lawyers: The Legal & Marketing Aspects of Using Social Media."  We'd love to have you join us and add to the conversation.

Spread the word.  And sign up!

Opportunities Abound at PodCamp Nashville

PodCamp Nashville used to be a best-kept secret.  Not any more. If you're want to find your voice and find your audience, if you want to build your brand and link to potential customers throughout the world, if you want to speak your mind by creating online documentaries or podcasts, or if you want to meet other people interested in your world and your community, sign up.  PodCamp Nashville will be held downtown at Cadillac Ranch on Saturday, March 26.  And it's Free. People from all industries and skill-sets (and I mean All) will be there.  Over 400 have signed up to attend so far.There's no doubt that PodCamp is a chance to network.  I got introduced to PodCamp and its sister, BarCamp (held in the fall), through a friend at work. I've met some incredible Nashvillians in the music, entertainment, marketing, technology and digital fields; made some good friends; and developed some clients.

But more than that, it's a chance to learn from some of the best and brightest in our community.  Where else can you hear all these great luminaries under one roof?  Kate O'Neill will talk about how blogging made her a better leader; Courtenay Rogers will talk about "The Power of Digital Stalking," (she says we all do it); Jake Jorgovan will discuss "How to Effectively Utilize YouTube."  And I'm excited to hear Raj Menon talk about how to launch a podcast.

I can't wait to hear David Corrigan explain how to "Mak[e] your Mobile App idea a Reality."  I came up with about 20 ideas the other day on my drive into work (I'm sure 15 of them have already been invented), but I'm eager to hear what to do the next time creativity hits!

As one of the only lawyers speaking that day, I'll be leading a session with marketing guru Taylor Vick.  She and I are teaming up to talk about how businesses can accomplish their marketing goals through social media without running into trouble.  When clients come to me with a crisis involving online communications, it often takes a tag-team approach between legal solutions and SEO know-how.  Taylor and I will use some specific case-studies to frame our discussion, highlight the issues that can help businesses and bloggers avoid liability, and give some pointers along the way.  Quoting Shakespeare, we titled our session: "Kill All the Lawyers: The Legal & Marketing Aspects of Using Social Media."  We'd love to have you join us and add to the conversation.

Spread the word.  And sign up!

Third Circuit Addresses Hospital Contract with Hospital-Based Physician Group

Appeared in the July 2009 Physicians Organizations Practice Group Newsletter reprinted courtesy of the American Health Lawyers Association.

On January 21, 2009, in the case of United States ex rel. Kosenske v. Carlisle HMA, Inc.(1), the Third Circuit reversed the decision of the district court(2) which had dismissed an action under the False Claims Act(3) which alleged that an arrangement between an anesthesiology group and a for-profit hospital violated the Stark and Anti-Kickback Acts(4) (collectively, the Acts). The Third Circuit agreed with the district court that the arrangement implicated the Acts but disagreed with the lower court’s conclusion that a written agreement entered into in 1992 continued to meet all of the requirements of the personal service exception under the Stark Act. The Third Circuit applied the Stark Act broadly to the relationship between the hospital and physician group, but strictly construed the criteria necessary to qualify for an exception. The Third Circuit’s opinion provides useful guidance for hospitals and hospital-based physicians by clarifying that a hospital-based physician group’s relationship with the hospital must be documented by a written agreement that clearly sets forth the terms of an arrangement that currently meets the requirements of an exception under the Stark Act.


Background


In December 1992, Blue Mountain Anesthesia Associates PC, a group of four anesthesiologists (Group), entered into an agreement (1992 Agreement) with Carlisle Hospital and Health Systems, Inc. (CHHS) to provide anesthesia services to the hospital facility (Hospital). The 1992 Agreement provided that: (1) the Group would provide anesthesia coverage on a twenty-four-hours-a-day, seven-days-a-week basis; (2) the Hospital would provide the space, equipment and supplies reasonably needed by the Group to provide the services without charge; and (3) the arrangement would be an exclusive one for both the Hospital and the Group. The 1992 Agreement did not mention the services being provided outside the Hospital and, at the time they entered into the 1992 Agreement, no pain management services were provided by the Group.


A little more than a year after the 1992 Agreement was signed, Ted Kosenske, a member of the Group, began providing pain management services in space that the Hospital used for other purposes.  In 1998, CHHS built a new, stand-alone facility containing an ambulatory surgery center and a pain management clinic (Pain Clinic). The Group provided pain management services at the Pain Clinic and CHHS did not charge the Group for the space, equipment or personnel. The Group’s physicians providing pain management services at the Pain Clinic did not provide anesthesiology services at the Hospital. For both the anesthesia and pain management services, the Group submitted claims to Medicare for the professional services and CHHS submitted claims for the facility and technical components. In June 2001, Carlisle HMA Inc. (HMA) purchased the assets of the Hospital from CHHS. The 1992 Agreement was not assigned by any written document. However, both the Group and HMA continued the arrangement with each other as if the 1992 Agreement was assigned.


Kosenske, a former member of the Group(5), brought a qui tam action under the False Claims Act against HMA and its parent company, Health Management Associates Inc., alleging that they submitted outpatient hospital claims to the Medicare program and other federal healthcare programs falsely certifying that such claims were in compliance with the Acts.


Analysis


The district court considered the issues raised in the claim in connection with the parties’ cross-motions for summary judgment and held that the arrangement between HMA and the Group implicated the Stark and the Anti-Kickback Acts. The district court noted that both of the Acts prohibit a health care provider from paying physicians any form of compensation to induce them to refer patients to the provider, and from holding a financial interest in a healthcare entity to which they refer patients. The district court also held that the relationship between HMA and the Group involved both referrals and compensation.


Under the arrangement, HMA provided the Group office space, supplies, equipment and personnel without charge, as well as other benefits. Under the 1992 Agreement, the Group was granted the exclusive right to provide anesthesiology and pain management services. The district court agreed with the claimant, Kosenske, that these benefits constituted remuneration under the Acts. Kosenske also argued that the right to receive payment from a third-party payor for services to patients referred to the Group by the Hospital was a benefit that constituted remuneration for the purposes of the Acts. The district court rejected this argument, stating: “The court need not decide whether payment from third party payors or the expectation of payment constitutes remuneration for the purposes of the Stark Act. However, the court would be remiss if it did not express its doubts as to the merits of this attenuated argument.(6)


However, the benefits to the Group under the 1992 Agreement resulted in a compensation arrangement and financial relationship between the Group and the Hospital. The district court determined that the Group ordered numerous pain management services, and that these orders constituted referrals. Therefore, because the Hospital submitted claims to Medicare for these services, the arrangement would violate the Stark Act unless it qualified for an exception. The district court noted that the Anti-Kickback Act requires the “knowing and willful” payment of remuneration to a provider for the referral of services covered by a federal health care program, but it concluded without any additional factual consideration that the Anti-Kickback Act was also violated.


Although the relationship between the Hospital and the Group fell within the ambit of the Stark and the Anti-Kickback Acts, the district court determined that the Hospital demonstrated it met the requirements of the exception for personal services under the Acts. On Appeal, the Third Circuit agreed with the district court that there was clearly a financial relationship between the Hospital and the Group, but rejected the district court’s holding that the relationship qualified for the personal services exception.


The Third Circuit held that HMA had failed to show that the requirements of the Stark personal service exception had been met. The Third Circuit found the arrangement between the Group and HMA failed to meet the criteria of the exception by failing to have a written agreement that covered all of the services to be provided by the Group and by not adequately demonstrating that the compensation under the agreement was at fair market value.


The personal services exception applies if:


(i) the arrangement is set out in writing, signed by the parties, and specifies the services covered by the arrangement,
(ii) the arrangement covers all of the services to be provided by the physician…to the entity,
(iii) the aggregate services contracted for do not exceed those that are reasonable and necessary for the legitimate business purposes of the arrangement,
(iv) the compensation to be paid over the term of the arrangement is set in advance, does not exceed fair market value, and… is not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties, and
(v) the services to be performed under the arrangement do not involve the counseling or promotion or a business arrangement or other activity that violates any state or federal law(7).


The district court held that the 1992 Agreement continued to satisfy the requirement that the “arrangement be set forth in writing,” even though there was no written assignment of the 1992 Agreement when the assets of the Hospital were sold to HMA. The district court pointed out that the 1992 Agreement contained a provision stating that it would be binding on the parties’ successors and assigns. The district court applied Pennsylvania law and held that, because the actions of the parties after the sale of assets demonstrated their intent that HMA succeed to the position of CHHS under the 1992 Agreement, no specific assignment of the 1992 Agreement was necessary to satisfy the requirements of the exception(8).  The district court also determined that the 1992 Agreement satisfied the second requirement of the exception that the written agreement cover all services to be provided by the physician. When the 1992 Agreement was entered into, the Group was providing only anesthesia services to the Hospital, and it was not until 1998 that the Hospital opened the Pain Clinic. However, the 1992 Agreement included language granting the Group the right to provide physician services in the event the Hospital obtained, opened, or operated another facility or location at which anesthesiology or pain management services were required or offered. The district court held that this language in the 1992 Agreement adequately described the full range of services provided by the Group to the Hospital and met the Stark exception’s second requirement.


The Third Circuit disagreed with the district court’s analysis and stated:


In this case, the only written contract in existence between the parties is one that did not, and obviously was not intended to apply to services at a non-existent facility. It was negotiated in 1992, in a context wholly different from the one that existed six years later after the opening of the Pain Clinic. . . and the opening of the Pain Clinic represented a very substantial change(9).


The 1992 Agreement did not mention the provision of space, equipment and personnel without charge, and the Third Circuit appeared to find that broad language contemplating that the parties might provide each other additional services at a future date was not enough to support an argument that these services continued to be covered by a written agreement.


The Third Circuit also disagreed with the district court’s holding that the compensation under the 1992 Agreement satisfied the “fair market value” requirement under the Stark exception. The district court held that there was a “mutuality of rights and responsibilities imposed by the 1992 agreement” and that this was evidence that the compensation to the parties was a fair market value exchange. The district court went on to conclude the following, “By definition, the terms of the contract reflect the fair market value of the benefits conferred on each party(10).”  Not surprisingly, the Third Circuit rejected this argument. The Third Circuit concluded that it is impossible for a contract entered into six years earlier to reflect current fair market rates and further dismissed the lower court’s interpretation of the definition. Instead, the Third Circuit corrected the district court and stated that “as a legal matter, a negotiated agreement between interested parties does not ‘by definition’ reflect fair market value.” The Third Circuit concluded that the arrangement between the Group and the Hospital was exactly the type of situation which the Stark Act recognizes as potentially abusive. The Hospital and the Group were in a position to generate business for each other; therefore, their negotiations were not arms’ length(11).


The Third Circuit and the district court agreed that the exclusive arrangement between a hospital and a hospital-based physician group implicated the Acts. Both Courts concluded that the reciprocal responsibilities are enough to create a financial relationship and referrals governed by the Acts. The Third Circuit specifically rejected HMA’s argument that there is no fair market value issue because the Hospital and the Group were being compensated for their services by a third-party payor. The Third Circuit also rejected HMA’s argument, based on 42 C.F.R. § 413.65(d)(2)(vi), that the arrangement did not include referrals, and that the Stark Act did not apply because the facility was provider-based and the patients treated by the Group were Hospital patients:


HMA reads this sub-section [42 C.F.R. § 413.65(d)(2)(vi)] as depriving physicians at the facility of any discretion in making referrals of their patients, i.e., as mandating referrals to the main provider. We believe HMA reads too much into this provision. While Pain Clinic patients clearly must have access to all services provided by the Hospital in order for it to be considered a part thereof, we are unpersuaded that BMAA physicians at the Clinic have been deprived of the right to refer their patients in accordance with their best medical judgment(12).


Conclusion


Even if the Third Circuit had upheld all of the district court’s holdings, the result in this case would have supported the position that arrangements between hospitals and hospital-based physicians fall within the ambit of the Acts and should be structured to qualify for an exception under the Stark Act and a safe harbor under the Anti- Kickback Act.


In addition, Kosenske makes it clear that the parties’ intent to extend an arrangement that might have originally fallen within an exception to the Acts will not necessarily continue to protect the parties from prosecution if there has been a significant change in circumstance. Compliance with the Acts requires that hospitals and physicians review and revise their contracts when an arrangement has developed into something more than the original services, or when enough time has passed that the compensation’s value may have changed. Finally, the Third Circuit decision once again reminds providers and their lawyers that a complete and well drafted paper trail is important to compliance under Stark and the Anti-Kickback Act.


_____________________________________________________________________________________
1. 554 F.3d 88, 98 (3d Cir. 2009), rev’g No. 1:05-CV-2184, 2007 WL 3490537 (M.D.Pa., Nov. 14, 2007).
2. 2007 WL 3490537
3. 31 U.S.C. §§ 3729-3733 (“False Claims Act”).
4. 42 U.S.C. § 1395nn (“Stark Act”); 42 U.S.C. § 1320a-7b (“Anti-Kickback Act”).
5. Kosenske left the Group in 2005 to establish an independent pain management practice.
6. 2007 WL 3490537 at *7, n.9.
7. 42 U.S.C. § 1395nn(e)(3)(A); see also 42 C.F.R. § 411.357(a)(1).
8. 2007 WL 3490537 at *8 & n.14 (citing Bogart v. Phase II Pasta Machines, Inc., 817 F.Supp 547, 548 (E.D.Pa. 1993) for the proposition that, under Pennsylvania law, acquiring corporations become successors if they expressly or impliedly agree to assume the liabilities of the seller or if they continue to operate the seller’s business).
9. 554 F.3d. at 96-97.
10. 2007 WL 3490537 AT *10.
11. 554 F.3d. at 97.
12. Id. at 98.


 

Stephen Zralek Speaks on “How to Protect Against a Lawsuit When Using Social Media”

Bone McAllester Norton attorney Stephen Zralek speaks to Indie Connect Magazine on issues every social media user needs to know to help protect against a lawsuit ranging from copyrights and trademarks to fair use, privacy and terms of use.


Click here for “’CYA – How to Protect Against a Lawsuit When Using Social Media’ with Stephen Zralek Esq.”


 

Video of Recent Presentation on Legal Issues in Social Media

In late January, Indie Connect asked me to speak with professionals in the music industry about the pressing legal issues in social media.  It was an honor being with them.  They were kind enough to capture a video of the presentation, which you can watch here.If you'd like me to come speak about Social Media Law with your business or group, email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

Last week I spoke on social media legal issues to the Tennessee Bar Association.  Yesterday, the Nashville Business Journal selected me to be one of four panelists at an upcoming presentation on social media to the business community.  And in late March, I'll be co-presenting with Taylor Vick of Point3 Media on the collaboration needed in social media between legal and marketing; we'll be at PodCamp in Nashville.  Our title is "Kill All the Lawyers: Marketing through Social Media the Legal Way."  Sign up to attend -- it's free, and there will be incredible sessions on social media all day long.

Video of Recent Presentation on Legal Issues in Social Media

In late January, Indie Connect asked me to speak with professionals in the music industry about the pressing legal issues in social media.  It was an honor being with them.  They were kind enough to capture a video of the presentation, which you can watch here.If you'd like me to come speak about Social Media Law with your business or group, email me at This email address is being protected from spambots. You need JavaScript enabled to view it..

Last week I spoke on social media legal issues to the Tennessee Bar Association.  Yesterday, the Nashville Business Journal selected me to be one of four panelists at an upcoming presentation on social media to the business community.  And in late March, I'll be co-presenting with Taylor Vick of Point3 Media on the collaboration needed in social media between legal and marketing; we'll be at PodCamp in Nashville.  Our title is "Kill All the Lawyers: Marketing through Social Media the Legal Way."  Sign up to attend -- it's free, and there will be incredible sessions on social media all day long.

Best Practices for Businesses: Tip #1: Adopt a Social Media Policy

According to a February 14, 2011 article on Mashable.com "social media is predicted to see one of the biggest increases in online marketing spending this year."  With that in mind, businesses need to adopt and implement a social media policy.  In fact, they should implement two policies: one for all employees, and another for those employees responsible for official social media communications on behalf of the business. Some businesses may say that there's no need to have a social media policy because they aren't officially engaged in social media.  Even if a business doesn't officially participate in social media, you can bet its employees are on Facebook or Twitter.  They're definitely using social media after work, but probably using it during working hours, too.  Their unofficial use of social media makes it important for businesses to set some guidelines.Businesses should consider adopting two separate policies:1.  A social media policy for ALL employees.  Businesses should provide all employees general guidelines on certain matters, for example: keeping business matters confidential, affirming that employees should have no expectation of privacy for anything posted on a publicly-accessible site, and reminding employees that they should clarify that any opinion expressed is made in their individual capacity, not on behalf of their employer.  In light of a recent NLRB settlement with a Connecticut ambulance company who disciplined an employee for making negative comments about her employer on Facebook, businesses should be very reluctant to limit employees' right to discuss the terms of their employment (like wages and conditions).  Businesses should adopt this policy even if they do not officially engage in social media as a company.2.  A policy for employees responsible for official social media communications of the business.  Those employees responsible for communicating on behalf of the company through social media need guidelines.  They need to know what is acceptable language, how to respond to negative reviews of the business, and their responsibilities when inviting user generated content.  There are laws governing marketing to minors and regulations requiring disclosure of any material connection between a blogger and a business.  These are just a few of the items a business should consider when crafting its social media policy.