Small Business Health Relief Act designed to repeal pieces of Health Care legislation

A recent bill introduced to Congress includes provisions that, if passed, result in repeal of certain PPACA (“Patient Protection and Affordable Care Act”)  provisions.  The bill repeals certain requirements dealing with shared responsibility for employers and requiring employer reporting of health insurance coverage.  The bill allows reimbursement for over the counter medication by repealing the PPACA provision prohibiting the same. The bill broadens grandfathered coverage and elminates annual caps on health FSA benefits imposed by PPACA.  Developments will be provided in follow up posts.



On April 7, 2009 CMS announced that, as a result of the incentive provisions for physicians to encourage the adoption of health information technology in the American Recovery and Reinvestment Act of 2009 (“ARRA”), CMS will change its plans for implementing the electronic health records (“HER”) Demonstration.  CMS will continue implementation of Phase I of the EHR Demonstration program on schedule.  CMS will continue working with Phase I community partners and practices, including local kick off meetings for more than 400 selected practices in May, 2009. The demonstration will begin as planned on June 1, 2009 and continue through May 21, 2014. However, CMS has decided to discontinue Phase II of the EHR demonstration, which originally was planned to begin operations in mid-2010.  



The EHR demonstration initiative aims to reward delivery of high-quality care supported by the adoption and use of electronic health records in physician practices. This initiative expands upon the foundation created by the Medicare Care Management Performance (“MCMP”) Demonstration. The goal of the demonstration is to foster the implementation and adoption of EHRs and health information technology (“HIT”) more broadly as effective vehicles to improve the quality of care provided and to transform the way medicine is practiced and delivered. 


As part of the EHR demonstration, all participating primary care physician practices will be required to have a Certification Commission for Healthcare Information Technology (“CCHIT”)-certified EHR by the end of the second year. (CCHIT is the recognized certification authority for EHRs and their networks.)  Physician practices must, as part of the demonstration, utilize the EHR to perform specific minimum core functionalities that can positively impact patient care processes, (e.g., clinical documentation, ordering of lab tests, recording lab tests, and recording of prescriptions).  The core incentive payment is based on performance on the quality measures, with an enhanced bonus based on the degree of HIT functionality used to manage care. 


On June 10, 2008 CMS announced its selection of 12 community partners in defined sites to help CMS implement the EHR demonstration. The approved community partners in each site represent diverse groups of organizations including varied HIT stakeholder collaborations, medical societies, primary care professional organizations and health departments. Phase I includes the following 4 sites: Louisiana, Southwest Pennsylvania, South Dakota (and some counties in bordering states), and Maryland and the District of Columbia. Recruitment of physician practices in the four Phase I sites was initiated on September 2, 2008, and the enrollment period closed on November 26, 2008. Over 800 eligible applications were received from interested practices in the four Phase I sites. 



© 2009 Parsonage Vandenack Williams LLC

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Many health care providers have been unaware of the Red Flag Rules or have been uncertain of the applicability of these requirements.  Under the Red Flag Rules, financial institutions and creditors must develop a written program that identifies and detects the relevant warning signs – or “red flags” – of identity theft.  Providers in general should be aware of the Red Flag Rules, should revisit their existing privacy and security compliance programs to ensure that the requirements of the Red Flag Rules have been addressed, and should take other actions to bring themselves into compliance with applicable requirements prior to the May 1, 2009 enforcement date.


Applicability to Health Care Providers


Under the Red Flag Rules, creditors that are subject to FTC enforcement under the Fair Credit Reporting Act (FCRA) with “covered accounts” must implement programs that identify, detect and respond to practices that could indicate identity theft.  Although opinions differ, it is likely that health care providers—whether they are for-profit or nonprofit—are subject to the Red Flag Rules because they (1) are creditors, (2) are subject to enforcement by the FTC under the FCRA, and (3) have “covered accounts.”

(1) Creditors. First, the Red Flag Rules apply to creditors.  A “creditor” is defined as any person or entity that regularly extends, renews, or continues credit.  The term “credit” means the right granted by a creditor to a debtor to defer payment of debt or to purchase services and defer payment for such services.  For health care providers, credit would result when, for instance, a health care provider grants a patient the right to defer payment for medical services rendered. Thus, a health care provider could be deemed a creditor because it “regularly extends, renews, or continues credit,” in the form of deferred payment for medical services, to patients and to others who utilize the health care provider’s services.

(2) Subject to FCRA enforcement.  The second step is to determine whether a health care provider is a creditor that is subject to the administrative enforcement of the FCRA by the FTC. An FCRA violation is enforced as a violation of the FTC Act.  Those subject to FCRA enforcement include any person, including a corporation, that violates the FCRA “irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests” of the FTC Act.  Thus, most “for profit” and “non-profit” health care providers are subject to FTC enforcement under the FCRA and, likewise, may be subject to the Red Flag Rules.

(3) Covered accounts.  Finally, the Red Flag Rules apply only to “covered accounts.” A covered account is defined broadly as (a) an “account … primarily for personal, family, or household purposes, that involves or is designed to permit multiple payments or transactions”; or (b) “[a]ny other account … for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the … creditor from identity theft.”  Health care providers’ patient accounts appear to qualify as covered accounts under both prongs of the definition: (1) patient accounts serve “personal” and/or “family” purposes because such accounts relate to medical services for individuals and/or family members and often involve or permit multiple payments or transactions; and (2) health care provider accounts, including patient financial accounts, present possibilities for identity theft.


Requirements of a Red Flag Program


The Red Flag Rules mandate that a covered entity’s program should detect, prevent and mitigate identity theft in connection with covered accounts and should include reasonable policies and procedures to accomplish the following:

·         Identify red flags. To identify red flags, health care providers should consider the types of accounts offered and maintained, the methods used to open and provide access to such accounts, any previous experience with identity theft, and any suspicious activity related to patient accounts.  Health care providers should pay particular attention to actual or reasonably likely instances of medical identity theft, which is a growing problem.

·         Detect red flags. To detect red flags, a health care provider should have a process to authenticate patients, monitor transactions and verify the validity of change-of-address requests. Such a process might include requiring patients to produce identifying information to verify their identity at the inception of the account and when they present for service.

·         Respond to red flags. To respond to red flags, covered entities must make “appropriate responses” that prevent and mitigate identity theft.  For health care providers, appropriate responses might include responding to identity theft alerts from law enforcement or others, monitoring patients’ covered accounts, contacting patients when questions or concerns arise, changing passwords or security codes, refraining from collecting on an account or selling it to a debt collector, or notifying law enforcement as appropriate.

·         Ensure the program is updated. Covered entities should ensure the program is updated to reflect changing risks to patients or the safety of the provider from identity theft and medical identity theft. Health care providers should update their program to adequately respond to alerts from law enforcement and others, changes in the methods of identity theft, changes in the methods to detect and prevent identity theft, and changes to the health care provider’s business infrastructure.

·         Obtain board approval. The covered entity’s board of directors (or an appropriate board committee) must approve the identity theft prevention program and, thereafter, be involved directly, or through a designated senior management employee, in the oversight, development, implementation and administration of the program. Additionally, covered health care providers must assign specific responsibility for implementation, train staff, audit compliance, generate annual reports, and oversee anyone granted access to covered accounts.

 Much like the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the Red Flag Rules give covered health care providers some flexibility in implementing their identity theft programs, taking into account the size and complexity of a health care provider’s business. A program developed in compliance with the Red Flag Rules may be part of a provider’s HIPAA compliance efforts. There is certainly overlap between the requirements of HIPAA and the Red Flag Rules, and many of these actions may already have been included in an organization’s HIPAA compliance efforts.

  © 2009 Parsonage Vandenack Williams LLC 

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A Quick Overview of Covenants Not to Compete


In recent years, states have been split on the treatment of covenants not to compete in physician employment agreements. The vast majority of jurisdictions continue to apply a general “reasonableness’ standard often applied in other commercial contexts. Under a “reasonableness analysis, courts primarily look at two components of the restriction: (1) the time duration of the restriction; and (2) the geographic scope of the limitation. The greater the area covered and the time duration of the restriction on a physician’s ability to practice medicine, the greater the likelihood the entire covenant not to compete will be declared invalid. However, a growing minority of states have put further constraints on the enforceability of restrictive covenants in physician employment contracts. Three states, Colorado, Delaware and Massachusetts, have passed legislation that invalidates contractual provisions restricting a physician’s right to practice medicine after termination. 


Some states have also judicially tightened the restrictions on covenants not to compete in physician employment contracts. For example, the Supreme Court of Tennessee recently invalidated most restrictive covenants regarding physician employment contracts. The court noted that in Tennessee restrictive covenants are not allowed for attorneys because attorneys have an ethical duty to provide their services to the public, and to restrict to whom an attorney can provide services would be injurious to the public. The court then examined the doctor-patient relationship and noted that covenants not to compete were equally injurious in physician employment contracts. The court reasoned that covenants not to compete restrict a patient’s freedom of choice, restrict the patient’s right to maintain an ongoing relationship with a trusted physician, and result in the lost public benefit of having an increased number of available physicians practicing in the community. The court reasoned that an increased number of available physicians results in greater competition and a higher quality of care.


The harmful effects covenants not to compete can potentially create for patients have also been examined by the American Medical Association. The AMA has taken the view that “restrictive covenants are unethical if they are excessive in geographic scope or duration in the circumstances presented, or if they fail to make reasonable accommodation to a patient’s choice of physician.”


When drafting a covenant not to compete, or similar restrictions in an employment agreement for a physcian, the scope of the restrictions must be carefully considered as to prevent the terms of the agreement from being invalidated judicially. Attempt to provide too much protection to the remaining physicians and you may be left with no protection at all.



© 2009 Parsonage Vandenack Williams LLC 

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Ten Key Principles for Physicians Contracting with Third-Party Payors

  1.  Not signing an agreement can be okay.  Many practices and related endoscopy centers have gone bankrupt by signing contracts due to worrying that if they don’t sign, they will be left out of the network.  Physicians must understand the overall value of the contract.  When the reimbursement rates are below the cost, it is usually better not to sign and refrain from providing services to payors that are not profitable.© 2009 Parsonage Vandenack Williams LLC 

  2.  Do not sign agreements that are at a low rate just because it represents a small percentage of your business.  It is becoming more common for payors to rent their networks to other payors.  Practices may sign an unfavorable agreement without pause because it represents a small percentage of business, assuming it is not an important payor and trying to hastily get an agreement signed.  However, practices can later find out that they signed up for a contract that lowers their rate of reimbursement with other payors that are renting their network and, suddenly, the volume of business flowing through the rental network payor is much greater than expected at lower reimbursement rates.  Therefore, instead of just signing the agreement, it is better to not sign at all if it does not provide sufficient reimbursement.

 3.  Practices must understand which procedures drive 80% to 90% of their revenues.  In most practices, a small number of procedures and services generate the greatest percentage of revenues.  When negotiating agreements, efforts should be focused on these high-revenue-generating procedures and codes.  Do not get stuck on codes that represent low volume and may not be at desired rates of reimbursement if they can be used as leverage to negotiate high rates on the codes that represent the most volume.  Basically, you can give a lot on other codes if you focus mainly on these key codes that will increase the overall value of the agreement, resulting in increased levels of productivity.

 4.  Understand your revenues.  Each practice should understand what they are currently receiving in terms of revenues for each procedure.  Useful information systems and the ability to understand the current reimbursement per procedure is important for benchmarking expected reimbursement per procedure when entering into a new agreement.  If the overall net revenue per procedure turns out to be below the total cost per procedure, you may not want to sign the agreement.

 5.  Long-term vs. short-term agreement.  When an agreement provides for sufficient reimbursement, the practice should be better positioned to negotiate for long term agreements with escalators, such as two years, three years, five years, or more.  On the other hand, where reimbursement is not sufficient, the practice should look into entering a shorter terms agreement or no agreement whatsoever.

 6.  Understand what percentage of reimbursement will be paid by the payor versus the patient.  More often, payors are able to shift significant amounts of the payment rates to the patients.  Thus, increases in reimbursement increase the amount due from the patient.  Although on paper the agreement may look great, it may also require a lot more effort to make certain you are collecting from patients to insure that you actually see the increase that has been promised.

 7.  Withholds and quality bonuses can be toxic.  There has been talk of increased bonus opportunities based on quality.  But over the last 10 to 15 years, the experience of physicians was most universally bad with withholds and bonuses from payors.  Basically, payors did not pay must on withhold amounts, and bonuses were rarely if ever seen.

 8.  Cost control and understanding your costs is important.  It is very important that practices manage their own businesses extremely efficiently as reimbursement becomes tighter from payors and employers try to reduce provider costs.  Finding ways to reduce your costs and manage your own costs allows you to retain a greater percentage of the revenues and reimbursement.

 9.  Merging practices can solve problems reaching agreement.  Oftentimes, practices view merger situations as a way to allow themselves and another practice to operate together and thus take advantage of better managed care rates in one practice or the other.  Before agreeing to merge, practices need to really have a strong idea of whether or not this is likely to be successful.  For instance, is the payor likely to extend the rates from one practice to the other?  Lots of times, payors are no longer willing to just allow the second practice to tie into the payment rates of the first practice of the merged or surviving practice.

 10.  Utilizing your attorney.  Attorneys can help you handle your managed care contracts.  Some attorneys have great experience in this area and a very strong understanding of where a payor can move towards in terms of reimbursement for a practice.  It often makes sense to use an attorney when negotiating your managed care contracts.  The impact economically can be very substantial.


 © 2009 Parsonage Vandenack Williams LLC

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American Recovery and Reinvestment Act Includes COBRA Changes

The American Recovery and Reinvestment Act of 2009 (“ARRA”) provides for premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage starting on or after February 17, 2009 and lasts for up to nine months.


COBRA gives employees who lose their jobs, including their health benefits, the right to purchase group health coverage provided by the plan under certain circumstances.

If the employer continues to offer a group health plan, the employee and his or her dependants can keep their group health coverage for up to 18 months by paying group rates. The COBRA premium may be higher than what the individual was paying while employed, but in general, the cost is lower than that for private, individual health insurance coverage.

The plan administrator must notify affected employees of their right to elect COBRA. The employee and his or her dependants each have 60 days to elect the COBRA coverage, otherwise they lose all rights to COBRA benefits.

It is important to note that COBRA generally does not apply to plans sponsored by employers with less than 20 employees. However, many States (including Nebraska) have similar requirements for small plans providing benefits through an insurance company. The premium reduction is available for plans covered by these State laws.

Changes Regarding COBRA Continuation Coverage Under ARRA

Premium Reduction:  The premium reduction for COBRA continuation coverage is available to “assistance eligible individuals.”

An “assistance eligible individual” is the employee or a member of his or her family who:

·         is eligible for COBRA continuation coverage at any time between September 1, 2008 and December 31, 2009;

·         elects COBRA coverage; and

·         is eligible for COBRA as a result of the employee’s involuntary termination between September 1, 2008 and December 31, 2009.

Those who are eligible for other group health coverage (such as a spouse’s plan) or Medicare are not eligible for the premium reduction. There is no premium reduction for premiums paid for periods of coverage prior to February 17, 2009.

ARRA treats assistance eligible individuals who pay 35 percent of their COBRA premium as having paid the full amount. The premium reduction (65 percent of the full premium) is reimbursable to the employer, insurer or health plan as a credit against certain employment taxes. If the credit amount is greater than the taxes due, the Secretary of the Treasury will directly reimburse the employer, insurer or plan for the excess.

The premium reduction applies to periods of coverage starting on or after February 17, 2009. A period of coverage is a month or shorter period for which the plan charges a COBRA premium. The premium reduction starts on March 1, 2009 for plans that charge for COBRA coverage on a calendar month basis. The premium reduction for an individual ends upon eligibility for other group coverage (or Medicare), after 9 months of the reduction, or when the maximum period of COBRA coverage ends, whichever occurs first. Individuals paying reduced COBRA premiums must inform their plans if they become eligible for coverage under another group health plan or Medicare.

Special COBRA Election Opportunity:  Individuals involuntarily terminated from September 1, 2008 through February 16, 2009 who did not elect COBRA when it was first offered OR who did elect COBRA, but are no longer enrolled (for example because they were unable to continue paying the premium) have a new election opportunity. This election period starts on February 17, 2009 and ends 60 days after the plan provides the required notice. This special election period does not extend the period of COBRA continuation coverage beyond the original maximum period. COBRA coverage elected in this special election period begins with the first period of coverage beginning on or after February 17, 2009. Additionally, this special election period opportunity does not apply to coverage sponsored by employers with less than 20 employees that is subject to State law.

Notice: Plan administrators must provide notice about the premium reduction to individuals who have a COBRA qualifying event during the period from September 1, 2008 through December 31, 2009. Plan administrators may provide notices separately or along with notices they provide following a COBRA qualifying event. This notice must go to all individuals, whether they have COBRA coverage or not, who had a qualifying event from September 1, 2008 through December 31, 2009.

Individuals eligible for the special COBRA election period described above also must receive a notice informing them of this opportunity, which must be provided within 60 days following February 17, 2009.

Expedited Review of Denials of Premium Reduction: Individuals who are denied treatment as assistance eligible individuals and thus are denied eligibility for the premium reduction (whether by their plan, employer or insurer) may request an expedited review of the denial by the U.S. Department of Labor. The Department must make a determination within 15 business days of receipt of a completed request for review. The Department is currently developing a process and an official application form that will be required to be completed for appeals.

Switching Benefit Options: If an employer offers additional coverage options to active employees, the employer may (but is not required to) allow assistance eligible individuals to switch the coverage options they had when they became eligible for COBRA. To retain eligibility for the ARRA premium reduction, the different coverage must have the same or lower premiums as the individual’s original coverage. The different coverage cannot be coverage that provides only dental, vision, a health flexible spending account, or coverage for treatment that is furnished in an on-site facility maintained by the employer.

Income limits: If an individual’s modified adjusted gross income for the tax year in which the premium assistance is received exceeds $145,000 (or $290,000 for joint filers), then the amount of the premium reduction during the tax year must be repaid. For taxpayers with adjusted gross income between $125,000 and $145,000 (or $250,000 and $290,000 for joint filers), the amount of the premium reduction that must be repaid is reduced proportionately. Individuals may permanently waive the right to premium reduction but may not later obtain the premium reduction if their adjusted gross incomes end up below the limits.

Fact Sheet: COBRA Premium Reduction

U.S. Department of Labor

February 26, 2009

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On January 16, 2009, the Family and Medical Leave Act (“FMLA”) regulations issued U.S. Department of Labor went into effect.  This is the first major update since the FMLA was enacted over 15 years ago.  Although the basic rights have not changed, Congress amended the FMLA to provide new leave rights relating to military family leave and also updated and modified certain other FMLA regulations.  A summary of the key items in the new regulations is provided below.


Serious Injury or Illness of Covered Service Member


The changes to the FMLA authorize up to 26 weeks of leave for certain family members to care for seriously ill or injured military personnel.  The provision is not limited to just immediate family members.  Rather, an employee eligible for this type of leave includes next of kin as well as immediate family members.  The serious injury or illness provision is different from the FMLA’s serous health condition provision.  A serious injury or illness is one that “may render the service member medically unfit to perform the duties of his or her office, grade, rank or rating.”  The regulations clearly state that an employee cannot combine the standard 12 weeks of FMLA leave with the 26 weeks of service member leave.


Qualifying Exigency for Military Personnel


The changes to this provision include up to 12 weeks of leave in a 12-month period due to a “qualifying exigency” relating to an employee’s immediate family member being on active duty, or who has been notified of an impending call to active duty, in support of a contingency operation.  This type of leave does apply if the service member is a member of the regular armed forces – it applies only to members of the reserves or the retired forces.


According to the statute, a “qualifying exigency” includes: (1) any issue that arises from receiving short notice of deployment (seven or less calendar days of deployment), where leave can be used during the seven calendar days; (2) attendance at official ceremonies, programs, family support programs, or informational briefings; (3) arrangements of childcare or attendance at certain school activities; (4) to make or update legal or financial arrangements; (5) to attend counseling; (6) to spend time with a military service member on short-term rest and recuperation (limit of five days); and (7) post-deployment official programs, or issues relating to death.  The need to take leave for one or more of the above reasons must be related to the service member’s active duty or call to active duty.


Serious Health Condition and Continuing Treatment


Under the current regulations, a serious health condition may be established by a three-day period of incapacity that is followed by subsequent treatment.  However, under the new regulations, the subsequent treatment needs to occur within specific timeframes.  If the subsequent treatment consists of two or more treatments, the treatment must occur within 30 days of the first day of incapacity.  If the subsequent treatment consists of one visit followed by treatment, the visit (which must be in person) must occur within seven days of the first day of incapacity.


Certification/Fitness for Duty


There are several changes in regard to an employer’s right to request certification under the FMLA.  This includes the ability of the employer to request additional certifications at specific intervals.  The new rules have rules regarding essential functions and serious health conditions.  Specifically, they permit the employer to include information in the certification form directed to the employee’s essential functions and the ability of the employee to perform those essential functions.  This is very significant because a “serious health condition” is defined to include a three-day period of incapacity, which may include an inability to work.  Under the existing regulations, there is no way to evaluate a health care provider’s general assertion of incapacity.  But with the new regulations, there will be an ability for the employer to request specific information relating to the alleged incapacity, through an evaluation of the employee’s ability to perform the essential functions of his or her job.  The fitness for duty form can now also request information about the employee’s ability to perform the essential functions of his or her job.


Doctor Consent


One problem employers have had with collecting needed information was the prohibition on anyone other than the employer’s medical professional contacting the employee’s health care provider.  This has changed.  Under the new regulations, other individuals are also authorized to contact the employee’s health care provider for authentication and clarification, including a human resources professional.  Although a management representative may contact the employee’s health care provider, this may not be the employee’s direct supervisor.


New Forms


The Department of Labor has issued several new forms that fully comply with the new FMLA regulations.  The new forms are not required to be used but will likely prove to be very helpful to employers.  The forms are available at


  © 2009 Parsonage Vandenack Williams LLC
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Employees Have No Absolute Right To Return To Work Following FMLA Leave

The Family and Medical Leave Act (“FMLA”) is federal legislation that gives certain covered employees the right to take unpaid leaves of absence in certain circumstances, including leave for an employee’s own serious health condition. Employees who qualify for FMLA leave may take up to twelve (12) weeks of unpaid leave during any designated 12-month period. Additionally, the FMLA is intended to provide certain return to work protection for an employee who needs to take FMLA leave. However, there are limits to this protection and it is now clear that the protection is not guaranteed.

On April 27, 2006, the federal Fourth Circuit Court of Appeals ruled in the case of Yashenko v. Harrah’s NC Casino Company LLC (“Yashenko”), that an employee desiring to return to work after completing FMLA leave has no absolute right to do so. The Court went on to determine that the decision of the employer to deny reinstatement to the complaining employee was proper under the specific circumstances presented.

In Yashenko, the Defendant managed the gaming enterprise for the Eastern Band of the Cherokee Indians. Mr. Yashenko was employed by Defendant as Manager of Employee Relations. During each of the years 2000, 2001 and 2002, Mr. Yashenko took medical leaves of absence, most of which were taken as FMLA leave. In May 2003, he requested medical leave again due to a serious health condition resulting from problems related to heart surgery. Defendant approved his request for FMLA leave.

While Mr. Yashenko was on his FMLA leave in 2003, Defendant underwent a reorganization, which had the effect of eliminating Mr. Yashenko’s position. Defendant informed Mr. Yashenko of the job elimination and encouraged him to apply for other available positions. Mr. Yashenko declined, saying that he did not feel up to it due to the medication he was taking and his doctors’ recommendations against it.

On July 21, 2003, Mr. Yashenko completed his FMLA leave and sought to return to work. But upon his return, Defendant fired him. Mr. Yashenko then filed suit against his employer in federal court claiming a violation of his right to reinstatement under the FMLA. He also claimed that he was retaliated against for engaging in the protected activity of taking FMLA leave.

First, the court discussed Mr. Yashenko’s claim that the FMLA establishes an automatic right to job reinstatement following leave. The language in one part of the FMLA says that on return from FMLA leave, an employee is “(A) to be restored by the employer to the position of employment held by the employee when the leave commenced; or (B) to be restored to an equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment.” Mr. Yashenko argued that the words “to be restored” from this section of the FMLA is plain language sending a clear message that mandates job restoration.

Addressing Mr. Yashenko’s argument, the court examined another provision of the FMLA and the regulations established by the Secretary of Labor interpreting the Act. For instance, the court noted that 29 USC § 2614(a)(3)(B) provides that “nothing in this section shall be construed to entitle any restored employee to. . .any right, benefit, or position of employment other than any right, benefit, or position to which the employee would have been entitled had the employee not taken leave.” The court found that the regulation interpreting this provision makes clear that an employee has “no greater right to reinstatement” than if the employee had been continuously employed during the FMLA leave period.

Furthermore, the court determined that “an employer must be able to show that an employee would not otherwise have been employed at the time reinstatement is requested in order to deny restoration of employment.” As such, the court concluded that notwithstanding Mr. Yashenko’s assertions otherwise, the right of reinstatement is not automatic following FMLA leave. The court’s decision is in line with the decisions of four other federal Circuit Courts of Appeal (i.e., the 3rd, 6th, 8th and 11th Circuits).

Mr. Yashenko also challenged Defendant’s decision to reorganize and deny him re-employment. He claimed that the alleged reasons for Defendant’s action was not legitimate and interfered with his FMLA rights, and that Defendant retaliated against him for exercising his protected right to take such leave. In regard to this claim, the court noted three main facts: (1) It was undisputed by the parties that before Mr. Yashenko’s most recent FMLA leave, the finance department had suggested a reorganization that would eliminate Mr. Yashenko’s position; (2) There had already been three restructurings involving the elimination of at least 12 other positions; and (3) Defendant continued to provide Mr. Yashenko with continued benefits until his FMLA leave was completed and offered him the chance to interview for other positions. Based on the foregoing facts, the court held that Defendant did not interfere with Mr. Yashenko’s FMLA rights and that, with respect to the retaliation claim, Mr. Yashenko did not carry his burden of proof to overcome the legitimate non-discriminatory reasons offered by defendant for its action.

The Yashenko decision provides some cover to employers in cases where the employer legitimately would have fired the employee had the employee not taken FMLA leave. One example the court gave is where an employer is planning to fire a poor performing employee but before it can do so, the employee takes FMLA leave. Another example is when the employer eliminates an entire branch of a business, which includes the position of the employee on FMLA leave.

It is very important to note that each case will be judged on its facts. If an employer is simply refusing reinstatement to an employee returning from FMLA leave for a fabricated reason, or worse yet, because the employer is upset that the employee has taken FMLA leave, the Yashenko decision will be no help to the employer. Therefore, employers must be certain that their decision to terminate an employee is the same decision they would have made had the employee not taken FMLA leave. They must also examine any documents or other records that could support (or undermine) that assertion, with specific emphasis on the timing of such records/action vs. when the employee first requested or went out on FMLA leave. Finally, employers must consider all surrounding circumstances to be sure that the decision is not misperceived and thereby ruled to be a violation of the employee’s FMLA rights.

© 2009 Parsonage Vandenack Williams LLC 

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HHS Releases Guidance on Sharing Patient Information With Family and Friends

On September 16, 2008, the HHS Office for Civil Rights (“OCR”) released new guidance on how to interact with a patient’s family or friends without violating the HIPAA privacy regulations.  OCR released two separate guides on this issue: one for patients and one for providers.

The guides are in a question-and-answer format and address common and sometimes confusing situations about when a physician or other medical staff member can share information on a patient’s condition with his or her family members.  For instance, the provider’s guide asks, “If the patient is present and has the capacity to make health care decisions, when does HIPAA allow a health care provider to discuss the patient’s health information with the patient’s family, friends, or others involved in the patient’s care or payment for care?”  The guide states that the provider may have such discussions if the patient agrees.  “A health care provider also may share information with these persons if, using professional judgment, he or she decides that the patient does not object. In either case, the health care provider may share or discuss only the information that the person involved needs to know about the patient’s care or payment for care,” OCR says.

Another question addresses sharing information when the patient is not present or is incapacitated. “[A] health care provider may share the patient’s information with family, friends, or others as long as the health care provider determines, based on professional judgment, that it is in the best interest of the patient. When someone other than a friend or family member is involved, the health care provider must be reasonably sure that the patient asked the person to be involved in his or her care or payment for care,” it says.  “The health care provider may discuss only the information that the person involved needs to know about the patient’s care or payment.”  Still, providers should not reveal past medical problems that are unrelated to the patient’s current condition.

The provider and patient guides are available at


 © 2009 Parsonage Vandenack Williams LLC

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Provider Information: Steps to Take to Prevent Incidents of Medical Identity Theft

          Health care providers need to implement approaches to detect, prevent and respond to medical identity theft incidents.  No single solution applies to all providers because of each provider’s unique size, overhead and available resources.  Therefore, providers should implement a variety of techniques, including patient authentication, training and awareness, and risk assessment.

          Providers should especially be awate of medical identity theft concerns because they could increase as the industry moves toward electronic health records and a national health information network.  If networks do not have adequate privacy and security protections, huge volumes of health information could be improperly accessed and used for medical identity theft, as well as other purposes.

          In many cases, providers have not yet considered the unique characteristics of medical identity theft as a part of their overall risk assessment.  It is important for providers to evaulate whether there are any gaps in their policies and procedures that might lead to medical identity theft.  The best time for this evaluation is during routine risk assessments.

         Although entities covered under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) are required to implement a security awareness and training program for their workforce, medical identity theft is raraly addressed as a separate, individual risk.  Requiring patient authentication – in the form of picture identification as well as a health insurance card – is one way to combat medical identity theft.

        In addition to using education and training to prevent incidents of medical identity theft, providers should consider conducting training following an incident to ensure that employees and contractors have responded appropriately.  This allows staff to debrief , identiry and apply lessons learned, and to continuously improve the quality of privacy and security process and procedures.  It will also help providers respond and mitigate any threats as well as learn steps that can be implemented in the future to prevent similar incidents from occurring.

 Guide to Medical Privacy and HIPAA.  Health Care Series.  December 2008, vol. 7, no. 11.


© 2008 Parsonage Vandenack Williams LLC

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