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Jones Day, P.C.

Jones Day Obtains Summary Judgment for Theken Spine on Successor Liability Claims
The case of Orthotec v. REO Spineline had been pending for two years when Orthotec chose to add Theken Spine, LLC, as a defendant. Orthotec did not plead that Theken had itself done anything wrong. Orthotec alleged only that Theken had acquired the assets of REO Spineline when REO went out of business, so Theken should be liable for REO's alleged misconduct. Orthotec's complaint sought over $10 million in damages.

Theken, which is based in Akron, Ohio, required lawyers in both Ohio and California to defend this lawsuit in federal court in Los Angeles. After just six months of intensive work, Jones Day succeeded in obtaining summary judgment on behalf of its client, Theken Spine. The Jones Day team consisted of Mark Herrmann in the Cleveland Office and Kevin Dorse, Richard Kovacik, Sophia Chang, and Jessica Repa in Los Angeles.

08-01-2006

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Fulbright & Jaworski L.L.P.

Johannes Gabel Joins Fulbright’s New York Office as Partner
Fulbright & Jaworski L.L.P. announces that Johannes Gäbel has joined its New York office as a partner in its expanding international corporate practice. Gabel joins Fulbright from Orrick, Herrington & Sutcliffe LLP.

New YorkWilliam Bush, head of Fulbright's New York office, said, ""For more than 23 years, Johannes has been providing legal counsel to clients from Germany and other German-speaking countries for their U.S. investments. He brings tremendous global corporate knowledge and strong relationships with businesses around the world. Johannes will be a strong asset to all of our offices-particularly New York and Munich.""

A native German, Gabel represents business entities, banks and individuals in M&A transactions, in corporate finance and acquisition finance transactions, and with regard to corporate compliance and structural issues. Gabel practiced law in Germany until he moved to the United States to attend Cornell University School of Law as a Fulbright scholar in 1980.

Gabel is admitted to the bar in Germany and New York. He earned his J.D., cum laude, from Cornell University and his Dr. Jur., magna cum laude, from the University of Munich.

08-01-2006

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Pillsbury Winthrop Shaw Pittman LLP

Eleventh Circuit Clarifies Notice Requirements Under Older Workers Benefit Protection Act
Many employers who implement reductions in force have struggled with the requirements of the Older Workers Benefit Protection Act ("OWBPA"). In order to obtain a valid release of federal age discrimination claims, OWBPA requires the employer to provide the employees with data concerning the ages of persons eligible for an exit incentive program, and the job titles and ages of those in the same "job classification" or "organizational unit" who were not selected or not eligible for the program. The Eleventh Circuit on July 11, 2006 addressed what it described as the "ambiguous" notice provision of OWBPA. The court upheld releases signed by a group of former McDonald's Corporation employees, thereby barring their effort to retain severance benefits and also sue McDonald's for age discrimination. In rejecting a claim that nationwide data should have been provided by McDonald's, the court found it was sufficient to provide the affected employees with data limited to the three regions affected by the reduction.

08-01-2006

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Parker Poe Adams & Bernstein LLP

Age Discrimination Release Only Requires Information about Employee's "Decisional Unit"
For group layoffs, the Older Workers Benefit Protection Act (“OWBPA”) requires that employers provide employees offered severance packages with certain information in order to obtain an effective release of age discrimination claims. This information includes the ages of employees being let go and those being retained by the employer. A new decision from the Eleventh Circuit Court of Appeals addresses how much information must be provided by large, nationwide employers. The case involved older McDonald’s employees who sued for age discrimination after signing a release of claims. They contended that the release did not comply with the OWBPA because it did not include information on layoffs outside of the employees’ operational region.

The Eleventh Circuit reversed the district court, granting summary judgment for McDonald’s. The court held that the OWBPA only requires employers to provide age and job title information about the departing employee’s decisional unit. The Eleventh Circuit deferred to EEOC rules that appear to limit the disclosures to the organizational unit. The court also noted that nationwide information will not assist the employee in determining patterns of age discrimination that could have affected the decision regarding her employment, given that she would not have information regarding the ages of the pre-termination workforce nationwide. While OWBPA-compliant release must be carefully written, this decision provides some assurance that employers can reasonably limit the scope of disclosures required to obtain effective releases of age discrimination claims.

08-01-2006

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Parker Poe Adams & Bernstein LLP

Plaintiff's Claims That He Was Perceived as a Homosexual Not Actionable Under Title VII
Federal courts have almost uniformly rejected attempts by plaintiffs to extend Title VII’s sex discrimination prohibitions to cover claims of discrimination based on sexual orientation. Several years ago, the Supreme Court slightly opened this door by recognizing that in limited circumstances, same-sex sexual harassment claims violate Title VII’s sex discrimination provisions. A recent Sixth Circuit Court of Appeals decision declines to extend this reasoning to claims based on same-sex stereotyping. The plaintiff was a hospital security officer who alleged that he was continually teased and harassed by male co-workers based on perceived homosexuality. He claimed that in addition to sexual harassment, his treatment was based on impermissible sexual stereotyping over what “normal” masculine behavior should involve.

The Sixth Circuit rejected these claims, affirming summary judgment for the hospital. The court noted that under Title VII, same-sex sexual harassment must be motivated by sexual desire or hostility toward a particular gender. In this case, the Sixth Circuit concluded that the claims were based on alleged hostility based on sexual orientation. These claims are outside the scope of Title VII. While sexual stereotyping can be actionable under Title VII, the alleged stereotyping must relate in some way to work performance or work issues. Here, the claims of bias only related to general standards of gender behavior. In states without laws prohibiting employment discrimination based on sexual orientation, federal courts have consistently refused to bootstrap sex discrimination laws to afford federal protection against such claims.

08-01-2006

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Jenner & Block LLP

United States v. Stein
"Exactly one month after holding a provision of the Department of Justice ""Thompson Memorandum"" unconstitutional in United States v. Stein, 05 CR 888 (S.D.N.Y.), on July 26, Judge Lewis Kaplan of the Southern District of New York dealt a second blow to the DOJ policy. The Thompson Memorandum -- named after then-United States Deputy Attorney General Larry D. Thompson under whose leadership it was promulgated -- requires federal prosecutors to consider a series of factors in deciding whether to indict a corporate entity. The Memorandum, formally known as Principles of Federal Prosecution of Business Organizations, can be found at www.usdoj.gov/dag/cftf/corporate_guidelines.htm.

The June 26th Kaplan Decision
Two of the Thompson Memorandum factors have come under assault in Stein, specifically whether a company elects to pay the legal fees of its employees and whether it continues to employ or support personnel who assert their Fifth Amendment privilege or otherwise refuse to cooperate in the government’s investigation. In its ruling last month, the Stein court held that the Thompson Memorandum's factor that weighed in favor of indictment if a company chose to pay legal fees for employees who were not cooperating with the government violated the Sixth Amendment right to counsel and the due process clause of the Fifth Amendment. To read the June 26 opinion, see http://www.concurringopinions.com/archives/KaplanOpinion_6-27-06.pdf.

The July 26th Kaplan Decision
In its latest blow to the Thompson Memorandum, on July 26 Judge Kaplan ordered the suppression of two defendants' statements because they were deemed to be coerced by the government. These defendants' employer, KPMG, had threatened to fire and/or cut off the legal fees of the employees if they did not submit to interviews with prosecutors investigating allegedly illegal tax shelters.

Under a 1967 Supreme Court decision, Garrity v. New Jersey, 385 U.S. 493 (1967), the constitution forbids State employers from coercing statements from their employees. Judge Kaplan found -- in a key part of his ruling -- that the combined effect of the Thompson Memorandum and the manner in which the prosecutors wielded it caused KPMG to act at the behest of the government in coercing KPMG employees to speak. By threatening KPMG with indictment -- ""the corporate equivalent of capital punishment"" -- the government left KPMG no real choice but to exert pressure on its employees to waive their constitutional rights. In fact, in a KPMG ""White Paper"" to the DOJ aimed at convincing the government not to indict the company, KPMG extolled the success of its efforts in inducing previously uncooperative employees to speak to the government. Under these circumstances, the court found that KPMG's conduct could be legally attributable to the government.

Although the court suppressed two defendants' statements, it refused to suppress those of other defendants. The court recognized that KPMG employees could have reasons to speak to the government -- such as obtaining a cooperation agreement or convincing the government of their innocence -- other than fear of losing their jobs or having their legal fees cut off. The operative question was thus not whether a defendant had opted to cooperate after being informed of the KPMG threat of loss of employment and legal fees. Rather, it was whether the employee elected to speak because of those threats. Unlike the two defendants as to whom the court suppressed statements -- whom Judge Kaplan found in fact spoke to the government because of KPMG's actions -- the other defendants were not found to have so acted. To read the July 26 opinion, please see http://jenner.com/files/tbl_s18News/RelatedDocuments147/2422/KaplanOpinion_7-26-06.pdf

Commentary
First, unlike the June 26 decision, Judge Kaplan's recent suppression decision is clearly immediately appealable by the government and in our opinion likely will be. There is a clear legal issue presented, and the government is likely to place great weight on legal precedent that even actions taken by corporations in heavily regulated industries are not deemed to be the actions of the government.

Second, Judge Kaplan's first decision has already spurred action to revisit the propriety of the provisions of the Thompson Memorandum, and his new opinion will likely prompt further reconsideration. This September, the Senate Judiciary Committee intends to hold hearings on the Thompson Memorandum in light of the Stein case. Jenner & Block partner Andrew Weissmann will testify about revisions that should be made to the Thompson Memorandum. Further, DOJ surely will consider how to mitigate some of the more severe aspects of the Memorandum so as to avoid the challenges successfully made in the Stein case.

Finally, although the Stein decision focused on the DOJ Thompson Memorandum, it is worth watching legal developments within the SEC with respect to challenges to the SEC’s 2001 ""Seaboard Order"" -- which embodies many of the same provisions in the Thompson Memorandum -- and could find itself under similar attack. (See Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement Decisions, http://www.sec.gov/litigation/investreport/34-44969.htm)."

08-01-2006

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Jackson Walker L.L.P.

House Passes Legislation Promoting the Use of Health Information Technology
On July 27, 2006, the U.S. House of Representatives passed HB 4157, which promotes the use of Health Information Technology (HIT). It did so in hopes of improving patient safety and overall quality of care.

Of course, HB 4157 still has to be approved by the Senate and signed by the President before becoming effective. However, the passage of this bill is an important step towards making the implementation of HIT a reality. It also marks a more cohesive approach towards HIT by the House, where the House Energy and Commerce Committee and the House Ways and Means Committees had passed relatively dissimilar versions of the “Health Information Promotion Act of 2006” just this past June. Highlights from the HB 4157 are outlined below.

Clarification on the Role of the National Coordinator for HIT

HB 4157 establishes an Office of the National Coordinator for HIT within the Department of Health and Human Services (DHHS). The bill requires that the National Coordinator set forth and clarify the agency’s role with regard to HIT. Specifically, the bill outlines items for which the agency will be responsible, including maintaining and updating a strategic plan to guide the nationwide implementation of standards for HIT, serving as a principal advisor to the DHHS on the use of HIT, and coordinating HIT policies and programs across federal agencies.

New Stark Exception and Anti-Kickback Safe Harbor

HB 4157 also enables hospitals to provide physicians with HIT by creating a new exception to the Stark law and new safe harbors to the Anti-Kickback Statute. This may include supplying software and hardware or related services that are used for the electronic creation, maintenance, and exchange of clinical health information.

Specifically, the bill adds the following exception to 42 USC 1395nn(b), which delineates the general exceptions to both ownership and compensation arrangement prohibitions under Stark: “Any nonmonetary remuneration (in the form of health information technology or related installation, maintenance, support or training services) made by a specified entity to a physician” if it meets certain conditions.

Further, HB 4157 amends the Anti-Kickback Statute to state that inducements to reduce or limit services which are prohibited by the statute “shall not include the practical or other advantages resulting from health information technology or related installation, maintenance, support, or training services.”

HB 4157 states that for purposes of both the Stark law and the Anti-Kickback Statute, HIT shall be defined as “hardware, software, license, right, intellectual property, equipment, or other information technology (including new versions, upgrades, and connectivity) designed or provided primarily for the electronic creation, maintenance, or exchange of health information to better coordinate care or improve health care quality, efficiency, or research.”

Adoption of ICD-10 by 2010

HB 4157 also requires the replacement of the International Classification Diseases (ICD)-9 system, used for diagnosis coding since the 1970s, with the ICD-10 codes sets by October 1, 2010. The adoption of ICD-10 accounts for recent innovations in healthcare diagnostics as well as statistical analysis.

State and Federal Confidentiality and Security Laws

The bill also requires DHHS to look into the effect of the differences in the State and Federal confidentiality and security laws on HIT. Specifically, it requires DHHS to submit a report to Congress in eighteen (18) months regarding whether or not “there is a need for greater commonality of the requirements of State security and confidentiality laws and current Federal security and confidentiality standards to better protect, strengthen, or otherwise improve the secure, confidential, and timely exchange of health information among States, the Federal government, and public and private entities.”

Providers and hospitals should follow the progress of HB 4157 as it makes its way to the Senate, as this bill will have a significant impact on their ability to utilize HIT. To read more about HB 4157 click here: http://thomas.loc.gov/

08-01-2006

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