All posts by Troy Moody

| Roy L. Kaufmann

D.C. Tax Rate Changes Effective October 1, 2018

The District of Columbia’s Office of Tax and Revenue has issued a notification of changes in various tax rates that will become effective on Monday, October 1, 2018.

The real property tax for Class 2 properties will increase to $1.65 per $100 of value for properties worth less than $5,000,000; $1.77 from $5 million to $10 million; and $1.89 for properties valued at more than $10 million.

The hotel rate has increased from 14.8 percent to 14.95 percent, and the tax on tobacco as almost doubled to $4.94 per pack from $2.94 per pack.

No D.C. estate tax return needs to be filed for a person whose death occurs after January 1, 2018 if the gross estate is less than $5,600,000.

| Arthur D. Burger

Arthur D. Burger to Participate on Panel at the 2018 Judicial Conference of the Occupational Safety & Health Review Commission

On September 13, 2018, Arthur D. Burger will participate on a two-person panel on professionalism and ethics at the 2018 Judicial Conference of the Occupational Safety & Health Review Commission at the Darcy Hotel in Washington, D.C. Assistant Virginia Bar Counsel Kathleen Uston, formerly president of the National Organization of Bar Counsel, is also on the Panel, which will be moderated by Chief Administrative Law Judge Corvette Rooney.

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Common HIPAA Pitfalls in Health Care Mergers and Acquisitions (and How to Identify Them)

Managing all the moving parts in a health care merger or acquisition is challenging in any transaction. For a small health care provider that does not have multiple attorneys at its beck and call, it can seem downright impossible. In the chaos of a massive exchange of due diligence materials, it is easy to overlook the additional agreements that must be executed and frameworks that must be established to ensure that the deal complies with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Imagine the following scenario: you are a physician running a solo practice with the help of two employees. You accepted an offer from a large group practice to buy out your practice, and it is time to move forward with the deal. In the course of due diligence, the buyer’s counsel asks you to transmit your patients’ records so you can integrate them into the buyer’s electronic medical records (EMR) system. Even though the buyer is also a covered entity, the issue of whether – and when – you can disclose the records is not black and white.

Prior to the closing, the parties should have in place a detailed framework that:

  • Specifies when and how the seller will transmit its medical records to the buyer;
  • Sets forth the steps each party must take to ensure that the transmission complies with HIPAA regulations and applicable state laws regarding medical records privacy;
  • Identifies the persons(s) responsible for integrating the two medical records systems; and
  • Includes a back-up plan in the event that the integration results in the loss or destruction of any of the seller’s data.

If possible, the framework should be a single document, or perhaps simply a chart, depending on the size and scope of the transaction. The framework is an essential item on the closing checklist in any health care merger or acquisition and should be exchanged in the course of due diligence, prior to closing.

In addition to complying with the requirements under HIPAA, the transaction may be subject to one or more state laws regarding medical records privacy. For example, Virginia law prohibits the transfer of medical records “in conjunction with the closure, sale or relocation of a professional practice until [the health care provider effectuating the transfer] has first attempted to notify the patient of the pending transfer, by mail, at the patient’s last known address, and by publishing prior notice in a newspaper of general circulation within the provider’s practice area, as specified in § 8.01-324.”[1] Other states may have similar notification requirements. Because failure to comply with state law requirements could subject the parties to liability, it is imperative that the parties review the applicable state laws when creating their framework to ensure that the transaction is compliant.

Once the framework has been established, the simplest way for the parties to hammer out these issues is by entering into a business associate agreement (BAA). The Department of Health and Human Services defines a business associate as a person or entity that performs certain functions involving the use or disclosure of protected health information (PHI) on behalf of, or provides services to, a covered entity.[2] Business associates can use and disclose PHI in accordance with the terms of their BAA.[3] Therefore, the BAA should expressly authorize the target practice to disclose its patients’ PHI to representatives of the acquiring practice for purposes of implementing the framework or as otherwise necessary in connection with the merger. Once both parties have executed the BAA, the process of transferring PHI can begin. The parties should consider incorporating the BAA into their ultimate purchase or merger agreement.

Depending on the size and scope of the transaction, the parties may be able to effectuate a HIPAA-compliant merger and successfully integrate their EMR systems with nothing more than a BAA. However, more complex transactions may necessitate additional, post-closing agreements. For example, if the buyer is purchasing only part of the target company, or if the buyer and seller do not intend to fully integrate their practices, the parties should consider executing an affiliated covered entity (ACE) agreement after the closing. To enter into an ACE Agreement, the parties must be under common ownership or control.[4] This means that the buyer either: owns at least five percent of the seller’s practice [5] or has the power to influence or control the seller’s actions and policies.[6] Thus, unlike a BAA, the ACE Agreement is not available prior to closing. The ACE Agreement is appropriate in situations where the buyer and seller can quickly streamline their operations and reach the point where they operate as a single entity. In larger transactions, that process takes more time and cannot realistically be done simultaneously with the closing.

Once the ACE Agreement is in place, the two health care practices can share PHI without violating the provisions of HIPAA.[7] The ACE Agreement allows the two practices to perform their various HIPAA obligations together under the auspices of the buyer. This means, among other things, that the practices can have one privacy officer instead of two. They can send out joint Notices of Privacy Practices. They can enter into future BAAs together, as a single unit, which may be important in the event of future mergers or acquisitions. They can adopt one set of health care privacy policies and procedures instead of two.

However, parties to an ACE Agreement are jointly and severally liable for each other’s HIPAA violations.[8] It is imperative that counsel keep that in mind when drafting the indemnification and limitation of liability provisions in an ACE Agreement. Further, before entering into an ACE Agreement, both parties need to assess their tolerance for risk. Each party to the transaction needs to perform appropriate due diligence that includes not only a thorough risk assessment of the other company, but also an evaluation of that company’s appetite for risk.

[1]See Va. Code Ann., § 54.1-2405A.

[2]See Dep’t of Health & Human Servs., Business Associates (Jul. 26, 2013), https://www.hhs.gov/hipaa/for-professionals/privacy/guidance/business-associates/index.html#.

[3] See 45 C.F.R. § 164.502(a)(3).

[4] See 45 C.F.R. § 160.105(b)(2)(i).

[5] See 45 C.F.R. § 160.103.

[6] See 45 C.F.R. § 160.103.

[7] See 45 C.F.R. § 164.105(b)(2)(ii).

[8] See 45 C.F.R. § 160.402(b)(2).

| Roy L. Kaufmann

New Maryland Statute: Corporate Articles of Transfer No Longer Needed to Transfer Real Property

Until August 2018, Maryland was one of the few states that required a state-based corporation that transfers all of its real property assets to execute and file articles of transfer with the State Department of Assessment and Taxation (SDAT). This regulation is outlined in the Corporations and Associations Article of the Annotated Code of Maryland Section 1-101(y) and 3-109. The real estate location does not matter, in that the new regulation applies to any property owned by the Maryland-based company. Additionally, this statute does not apply to non-corporate entities such as LLCs. While real estate professionals around the country might think that such a transfer is normally affected by the filing of a deed, Maryland has its own peculiarity.

Apart from the $100 filing fee, the strict requirements of what the Articles need to contain, and the appointment of a registered agent in Maryland, this process was often overlooked, especially when the property was located in another state where the attorneys or title professionals were not aware that the filing of a deed was not in compliance with the statute.

The legislature has recognized these difficulties and Governor Larry Hogan has signed off on a repeal of the existing laws that will go into effect on October 1, 2018. The law now permits the transfer of corporate-owned real estate to be completed by a deed filed with the land records, rather than articles of transfer recorded with the SDAT.

In a nod to the title industry, the law clarifies that transfers before the October 1, 2018 effective date that were made by deed, rather than by filing of articles of transfer, are valid.

The Bill and related documentation is available for the public to view at the General Assembly of Maryland website.

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Virginia: No Bona Fide Purchaser of an Easement; Terms of Revocable Trust May Permit Transfer by Non-Trustee

The recent case of Kruck v. Krisak, 2018 WL 2386671 (Fairfax Cir. Ct. 2018) addressed two issues of first impression in Virginia regarding bona fide purchasers and how the transfer of real property to a trust might affect a grant of an easement.

The case began with an easement for a septic field that was granted in 1974 by Austin Foster (the owner of the servient parcel) to his sister (the owner of the dominant parcel). On April 15, 2006, Mr. Foster conveyed his property to himself as trustee for a trust, which was recorded on June 21, 2006. On June 9, 2006, Mr. Foster executed an amendment to the easement in his individual capacity, which was recorded on June 13, 2006. Mr. Foster, as trustee, then sold the servient property, where it ultimately wound up in the hands of the Krisaks. Mr. Foster’s sister filed suit to enforce the second easement, arguing that she was a bona fide purchaser for value because the second easement was recorded before the deed conveying the servient property to Mr. Foster’s trust was recorded. The Krisaks, by plea in bar, argued that the second easement was unenforceable because Mr. Foster executed it in his individual capacity, and not as trustee.

The Fairfax Circuit Trial Court held that the sister was not a bona fide purchaser for value because she only received an interest in the servient property, and did not actually purchase the property in fee simple. The court noted that there was no clear-cut definition of “bona fide purchaser” under the Virginia Code, but determined that the language of Virginia Code sec. 55-96 and several Virginia Supreme Court opinions limited such a purchaser to one who purchases all rights to a parcel, as opposed to merely an easement. Additionally, the court held that the second easement was valid because the trust was revocable in nature and did not require the trustee to take any action beyond mere notice to himself of the transfer, which was a non-issue. The court also distinguished the case from that of Austin v. City of Alexandria, 265 Va. 89 (2003), in which the Virginia Supreme Court invalidated a similar transfer where the trust documents required the trustee to evidence in writing the revocation of the trust and reversion of title to the property held in trust in order to transfer any property from the trust.

| Roy L. Kaufmann

Housing Licensing and TOPA in the District of Columbia

Recent changes to the Tenant Opportunity to Purchase Act (TOPA) in the District of Columbia have had broad repercussions in the single-family rental market. Since TOPA’s inception, the competing purposes of maintaining a rental market and encouraging tenants to leave the rental market and become homeowners have resulted in a structure that is difficult to follow and has unpredictable results. The failure of TOPA to achieve either result was demonstrated in recent public hearings where it was determined that only a miniscule number of tenants actually purchased the properties presented to them.

The changes to TOPA became effective July 3, 2018. Single family dwellings are, with limited exceptions, no longer subject to almost all TOPA requirements. Single family dwellings include a house with a basement apartment or carriage house, but would exclude a building with two equal rental units. Exceptions are provided to elderly or disabled persons who occupied the property prior to April 15, 2018 and who are able to demonstrate their age or disability within certain time frames. The DC Department of Housing and Community Development (DHCD) continues to be charged with the administration of TOPA policies and recently issued new forms to address the changes. The D.C. Land Title Association has submitted recommendations for additional changes to the forms.

Other recent changes in TOPA clarify issues that have been problematic such as: how to deliver notices (overnight services, such as FedEx, are now permitted) and how to establish when time periods start and end relating to deadlines.  For example, it is now easier to measure the 20 days within which a tenant has to supply to DHCD information about disability

What has not changed are the District’s requirements for licensing and registration as a housing accommodation.

For single-family accommodations, no certificate of occupancy is required. All others must have a certificate of occupancy before a license will be issued.

All landlords of rental properties – including single family dwellings – are required to have a type of Basic Business License called a Residential Housing Rental License. The application will trigger inspections. Single and two-family accommodations will have a more cursory safety inspection by the D.C. Department of Consumer and Regulatory Affairs. Buildings with a higher number of units will require different, proactive inspections.

Rental properties need to be registered with the D.C. Accommodations Division, which is part of DHCD. In certain situations, the property may be exempt from rent control, but either way, there must be an application on file. There is no exemption unless you apply for it. Exemptions may apply if:

  1. The unit was constructed after December 31, 1975.
  2. There are four or fewer units in the building or that the owner is made up of less than four natural persons who own fewer than four units. As of now, that means that units owned by revocable trusts or LLCs are not exempt.
  3. Building has been vacant since January 1, 1985.
  4. Four or fewer rental units in the same housing accommodation, or an aggregate of four rental units in more than one structure in the District of Columbia, so long as the housing accommodation is owned by four or fewer natural persons. (D.C. OFFICIAL CODE § 42-3502.05(a)(3) (Supp. 2008)).

Landlords are also required to produce documentation to tenants which includes the registration of the property with DHCD. If the property was built before 1978, landlords should be basically familiar with lead laws in the District and the appropriate lead disclosure forms should be part of any lease.

There are other articles on Jackson & Campbell, P.C.’s blog dealing with the types of insurance available to landlords.

With all the requirements, many landlords rely upon the services of professional property managers who stay abreast of the requirements and changes and update the lease application and forms, as needed.

| Arthur D. Burger

Arthur D. Burger to Participate on Panel at the National Legal Malpractice Conference of the American Bar Association

Arthur D. Burger will be a speaker at the National Legal Malpractice Conference of the American Bar Association at Las Vegas on September 27, 2018. He will be joining a panel of legal malpractice experts from the firms of Williams & Connolly, Gibson Dunn, and Lewis Brisbois. The Panel will discuss strategies for defending suits involving allegations against lawyers whose clients allegedly engaged in fraud.

| John J. Matteo

Concrete Tips for Negotiating Commercial Real Estate Leases in the District

Join Firm President, John J. Matteo at the D.C. Bar on Tuesday, July 17 for a 2-hour CLE class.

 

All Communities Members Receive a $10 Discount on CLE Classes!
REGISTER NOW!

In-Person | Webinar

Tuesday, July 17, 2018
6:00 p.m. – 8:15 p.m.
(2.0 Credit Hours)
This new class will cover the fundamentals of representing landlords and tenants in negotiating and drafting commercial leases in the District of Columbia. Key leasing terms will be discussed, and topics will include:

  • Preleasing preparations
  • Hiring consultants and brokers
  • Test fits and who is responsible
  • Post lease issues
  • Letters of Intent/Memoranda of Understanding
  • Key provisions from both the landlord and tenant prospective
  • Post-lease issues.

Faculty:

  • John J. Matteo, Esq., Jackson & Campbell, P.C.

Price: $89-$129 (2.0 Credit Hours)
For more information and to register:

In-Person | Webinar| Call the CLE Office at 202-626-3488
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Justice Kennedy Announces His Retirement

After 30 years as an Associate Justice of the U.S. Supreme Court, Justice Anthony M. Kennedy announced his retirement effective July 31, 2018. In a letter to President Trump, Kennedy wrote: “For a member of the legal profession it is the highest of honor to serve on this court. Please permit me by this letter to express my profound gratitude for having had the privilege to seek in each case how best to know, interpret and defend the Constitution and the laws that must always conform to its mandates and promises.” In response, President Trump remarked that Kennedy has “been a great justice of the Supreme Court” and would begin work immediately to find his replacement.

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Court Rejects Overly Strict Standard Used By Special Master In State Dispute Over Water Rights

In an original proceeding brought by Florida against Georgia in a dispute over water apportionment from an interstate river basin, the Court referred the matter to a Special Master for evidentiary proceedings. Florida, as the downstream state, argued that Georgia was using more than its fair share of the water from the basin, thereby harming wildlife in Florida. Ultimately the Special Master recommended that the Court dismiss Florida’s suit on the basis that the Court would not be able to fashion an appropriate equitable decree. The Court, in a 5-4 decision by Justice Breyer, reversed, holding that the Special Master “applied too strict a standard” in coming to that conclusion. Instead of requiring Florida to prove with specificity the details of a workable decree by “clear and convincing evidence,” Florida only needed to show, under the principles of “flexibility” and “approximation,” that it is likely to prove possible to fashion such a decree. The Court declined to opine on how the case should ultimate be disposed, sending the case back to the Special Master for further findings. Justice Thomas, joined by Justices Alito, Kagan, and Gorsuch, dissented, arguing that the Special Master’s conclusion was well-supported by the evidence presented at trial, and thus should have been upheld. A link to the opinion in Florida v. Georgia is here.

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First Amendment Forbids Mandatory Union Fees From Public Sector Unions

Illinois permits public employees to unionize, and Mark Janus was a state employee whose unit was represented by a public-sector union that engaged in collective bargaining on behalf of its members. The union required that Janus pay a union fee, but he objected since he opposed many of the collective bargaining positions the union took. In the previous case of Abood v. Detroit Bd. of Education, 431 U.S. 209 (1977), the Supreme Court had permitted such fees to be collected to support activities germane to the union’s purpose, so long as those fees did not support the union’s political speech. The district court accordingly ruled that Abood resolved Janus’ claim in favor of the union, and the Seventh Circuit affirmed. The Court, in a 5-4 decision by Justice Alito, reversed, overruling Abood as being inconsistent with First Amendment principles. The Court was troubled with the idea of forcing free and independent individuals to endorse ideas they find objectionable, and decided that the rationales supporting Abood no longer were sustainable. Thus, public-sector unions can no longer extract fees from nonconsenting employees, significantly weakening those unions. Justice Sotomayor filed a dissent noting her discomfort in how the Court has interpreted a prior opinion it now used to overrule Abood. Justice Kagan, joined by Justices Ginsburg, Breyer, and Sotomayor, dissented, arguing that there was no reason for the majority to overrule Abood, and the Court’s decision will have large-scale consequences for public employees across the country. A link to the opinion in Janus v. American Federal of State, County, and Municipal Employees, Council 31, is here.

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Court Upholds President Trump’s Travel Ban

In 2017, President Trump issued a proclamation restricting entry of people from eight countries, with exemptions for lawful permanent residents and case-by-case waivers under certain circumstances. The stated basis of the travel ban was that the named countries failed to provide the U.S. with sufficient information about the entrants, creating a security threat, although challengers to the ban (except as to North Korea and Venezuela) argued that it was primarily instituted because of anti-Muslim animus, and violated the Establishment Clause of the First Amendment. The district court entered a nationwide preliminary injunction on the travel ban as being beyond the President’s authority under the Immigration and Naturalization Act, and in violation of the Establishment Clause. The Ninth Circuit affirmed just under the Act. The Court, in a 5-4 opinion by Chief Justice Roberts, reversed. First, the Court held that the travel ban fit well within the President’s authority to suspend entry to the country under the Act, and must be afforded deference from the judicial branch. Second, the Court held that President’s Trump’s prior statements appearing to support animus against Muslims did not defeat the rational bases for the travel ban, including the legitimate security interests pursued thereunder. Justice Kennedy lodged a concurrence arguing that even where, as here, the judicial branch must grant deference to the statements of Government officials, those officials do not have carte blanche to disregard the Constitution. Justice Thomas also filed a concurrence arguing that district courts lack the ability to issue nationwide injunctions as this one did. Justice Breyer, joined by Justice Kagan, dissented, arguing that the travel ban may be legal as written, but the evidence in the record appeared to show religious animus due to the uneven application of the ban. Justice Sotomayor, joined by Justice Ginsburg, also dissented, arguing that the ban was clearly motivated by unconstitutional religious animus. A link to the opinion in Trump v. Hawaii is here.

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Court Strikes Down Abortion Notices Under First Amendment

A number of pro-life crisis pregnancy centers mounted a First Amendment challenge to a California law that required licensed medical providers to provide a notice to its patients of the availability of free or low-cost services, including abortions, and required each unlicensed pro-life medical provider to notify patients that it was not licensed. The centers requested a preliminary injunction, which was denied by the district court and affirmed by the Ninth Circuit on the basis that the centers could not show a likelihood of success on the merits because the notices were a regulation of “professional speech” that met a lower level of scrutiny than “strict scrutiny.” In National Institute of Family and Life Advocates v. Becerra, Justice Thomas wrote for a five-member majority that the notices likely violated the First Amendment, and so reversed and remanded the case. First, the Court held that the notices must be given at least intermediate scrutiny, and rejected the argument that “professional speech” was not protected by the First Amendment. The Court further held that the notices required by licensed medical providers were “wildly underinclusive” in who was required to provide the notices, and the notices required by unlicensed pro-life providers unduly burdened them compared to other unlicensed providers. Justice Kennedy, joined by Chief Justice Roberts and Justices Alito and Gorsuch, filed a concurrence noting that California’s law was “viewpoint discrimination” that raised serious constitutional concerns, but agreed with resolving the case under the narrower grounds of Justice Thomas’ opinion. Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, dissented, arguing that both provisions should be constitutional, and the majority’s new standard was too vague to be consistently applied.

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American Express’s “Antisteering” Provisions Survive Antitrust Scrutiny

Like other credit card companies, American Express (AMEX) permits cardholders to purchase things on credit. However, AMEX encourages cardholder spending by providing more benefits to its members, and that results in higher fees charged to merchants. Merchants, in response, sometimes encouraged customers to use other cards, called “steering.” AMEX in turn put antisteering provisions into its merchant contracts. The government challenged those provisions as being in violation of the antitrust laws in the Sherman Act. The district court agreed with the competitors that the credit card market is two separate markets, one with consumers and the other with merchants, and AMEX’s antisteering provision interfered with the latter market. The Second Circuit disagreed, finding there to be just one overall credit card market, and the provisions were permissible. The Court, in a 5-4 opinion by Justice Thomas, affirmed both aspects of the Second Circuit’s reasoning. The Court held that the relevant market in this case was the transaction between the consumer and the merchant facilitated by the credit card company, and thus there was no reason to consider the interaction with the merchants separately. The Court further analyzed that the antisteering provision in question did not reduce competition in the credit card market. Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, dissented, arguing that AMEX’s ability to increase its merchant fees numerous times, among other evidence, demonstrated the uncompetitive effects of the provision. A link to the opinion in Ohio v. American Express Co. is here.

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Narrow Majority Largely Upholds Texas Redistricting Plan Against Gerrymandering Challenge

Abbott v. Perez presented the third opportunity for the Court to address gerrymandering claims under the Voter Rights Act, this time examining plans approved by the Texas legislature in 2013 that were largely in accordance with interim plans created by a three-judge Texas court. The 2013 plans evolved from earlier 2011 plans that did not meet with any court’s approval. In 2017, the Texas court held that the state had failed to prove that the 2013 plan cured the “taint” of he legislature’s discriminatory intent in its 2011 plan, and that certain districts were racial gerrymanders in violation of the Act. While the Court declined to reach the merits in the two other gerrymandering cases, Justice Alito authored an opinion for a five-member majority that largely affirmed the 2013 plan, while finding that one particular district was an impermissible racial gerrymander. First, the Court held that it had jurisdiction to hear the case because although the Texas court did not describe its orders as “injunctions,” they had the practical effect of being injunctions, and thus provided the Court with appellate jurisdiction. Next, the majority held that the Texas court erred in placing the burden of proof on the state to prove lack of discriminatory intent—such burden always rests with the challenger. Finally, the Court held that of four districts challenged on alternative bases, only one, which was created through input from one of the challengers, was a racial gerrymander in violation of the Act. Justice Thomas, joined by Justice Gorsuch, filed a concurrence arguing that the Act did not apply to redistricting. Justice Sotomayor, joined by Justices Ginsburg, Breyer, and Kagan, filed a dissent, arguing that the Court lacked jurisdiction over the orders, the Texas court did not shift the burden of proof, and that the result of the decision was to preserve a discriminatory election map.

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Supreme Court Has Appellate Jurisdiction To Hear Appeals From The Court Of Appeals For The Armed Forces

There are a separate series of trial and appellate military courts that address criminal charges against service members, capped by the Court of Appeals for the Armed Forces (CAAF). After Keanu Ortiz was convicted of possession and distributing child pornography, he appealed to the Air Force Court of Criminal Appeals (CCA). Colonel Martin Mitchell was part of the panel of that court that affirmed the decision. Ortiz then appealed to the CAAF, arguing that Mitchell should have been disqualified because he had been appointed to the Court of Military Commission Review (CMCR), and the Appointments Clause of the Constitution barred him from serving on both. CAAF rejected Ortiz’s appeal, and he sought certiorari with the U.S. Supreme Court. In a 7-2 decision authored by Justice Kagan, the Court held that it had jurisdiction to hear an appeal from the CAAF as part of its appellate jurisdiction, reasoning that military courts were not sufficiently different from State and other lower courts to warrant a different result. The Court went on to rule that Mitchell’s simultaneous service on the CCA and CMCR did not violate the Appointments Clause or other federal law. Justice Thomas concurred, arguing that the Court’s appellate jurisdiction over the CAAF was consistent with the original understanding of judicial power under Article III. Justice Alito, joined by Justice Gorsuch, dissented, arguing that military courts fall under the executive branch of government, and thus do not wield judicial power that would permit the Court to exercise appellate jurisdiction. A link to the opinion in Ortiz v. United States is here.

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Defendant Who Consents To Separate Trials Not Subject To Double Jeopardy

After Michael Currier was indicted for burglary, grand larceny, and unlawful possession of a firearm by a convicted felon, he opted for separate trials, doing burglary and grand larceny first, unlawful possession second. He was concerned that his prior convictions for burglary and larceny, which would help prove the unlawful possession charge, would prejudice the jury’s consideration of his current burglary and larceny charges. Currier was acquitted in the first trial, and he moved to stop the second trial on the basis that it would amount to double jeopardy. The trial court and Virginia’s appellate courts denied relief, and he was convicted of the unlawful possession charge. On appeal, in a 5-4 decision resolving conflicts in other courts, Justice Gorsuch held that Currier’s decision to split his charges into two trials did not implicate the prohibition against double jeopardy. Important to the majority’s conclusion was Currier’s consent to the split—had the charges been heard together, there would have been no issue. Four members of the majority went on to also agree that issues resolved in the first trial were not preclusive on the second trial. Justice Kennedy split from the majority on that—his concurrence noted that the majority’s decision on the Double Jeopardy clause fully resolved the case without a need to go further. Justice Ginsburg, joined by Justices Breyer, Sotomayor, and Kagan, dissented, arguing that while the Double Jeopardy Clause did not preclude the second trial, Currier was entitled to issue preclusion for those issues resolved in the first trial. A link to the decision in Currier v. Virginia is here.

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Government Needs A Warrant To Obtain Cell-Site Records To Track Suspect’s Movements

When the FBI suspected that Timothy Carpenter was involved in several robberies, it identified his cell phone number and obtained cell-site information from his wireless carriers without a warrant, which could be used to track the movement of his phone, and thus Carpenter himself. Carpenter moved to suppress the information as violating the Fourth Amendment’s requirement for a warrant supported by probable cause. The district court denied the motion, and Carpenter was convicted at trial. The Sixth Circuit affirmed, holding that Carpenter lacked a reasonable expectation of privacy over the information held by the wireless carriers. The Court, in a 5-4 decision authored by Chief Justice Roberts, reversed, and held that the acquisition of cell-site records was a Fourth Amendment search that required a warrant. In the intersection of a person’s expectation of privacy in her physical movements, and not having such an expectation of privacy over information turned over to third parties, the majority found the unique nature of cell-site records, and the huge amount of information they provided about a person’s whereabouts, required that they be treated as a search under the Fourth Amendment. Justice Kennedy, joined by Justices Thomas and Alito, filed a dissent arguing that the majority was wrong to treat cell-site records differently from other forms of information held by third parties, which the Government has a right to access without a warrant. Justice Thomas filed a dissent arguing that the “reasonable expectation of privacy” test used by the majority has no basis in Fourth Amendment law and should be discarded. Justice Alito, joined by Justice Thomas, also filed a dissent arguing that the majority’s decision will destabilize Fourth Amendment law and cause more harm than good. Finally, Justice Gorsuch filed a dissent arguing that the Court should return to the more traditional principle of asking whether a given article belongs to someone, regardless of who holds it, to determine the extent of Fourth Amendment rights. A link to the opinion in Carpenter v. United States is here.

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Patent Act Permits Recovery Of Lost Profits From Foreign Patent Infringement

In WesternGeco LLC v. ION Geophysical Corp., WesternGeco sued ION for patent infringement under the Patent Act for creating an identical ocean floor surveying system that ION assembled overseas from parts made in America. A jury awarded WesternGeco damages and lost profits. ION moved to set aside the lost profits since it argued the Patent Act did not apply outside the U.S. The trial court denied the motion but the Federal Circuit reversed, holding that the Act did not permit the award of foreign lost profits. The Court, in a 7-2 decision by Justice Thomas, reversed, holding that the presumption against the application of a federal statute extraterritorially could be rebutted by considering the “focus” of the statute. In this case, the majority held that the nature of the infringement involved the exporting of component parts from the U.S., so the conduct subject to the focus of the Act occurred in the U.S., and permitted the recovery of lost profits. Justice Gorsuch, joined by Justice Breyer, dissented, agreeing that while WesternGeco’s claim did not offend the presumption against extraterritorial application of federal statutes, the Patent Act’s terms did not permit recovery of lost profits from sales outside the U.S.

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Removal Notice Must Specify Time And Place Of Proceeding To Stop Ten-Year Period To Cancel Removal Proceedings

Once a nonpermanent resident has been in the U.S. for a ten-year continuous period, they can cancel removal proceedings under the Illegal Immigration Reform and Immigrant Responsibility Act of 1996. That period is stayed if the resident receives a written notice to appear that specifies a time and place for the removal proceedings during the ten year period. A Brazilian citizen came to the U.S. in 2000 and overstayed his visa. In 2006, he received a “notice to appear” that did not specify a time or date for a hearing. Another notice was sent in 2007 with the missing information, but he never received it. When removal proceedings were instituted against him in 2013, he argued that he had fulfilled the ten-year period under the Act. The Government argued that the notice he received in 2006, without the hearing information, sufficed to stop the time. The Bureau of Immigration Affairs ruled that the notice did stop the accrual, and the First Circuit affirmed, granting the Bureau Chevron deference. The Court, in an 8-1 decision by Justice Sotomayor, reversed, holding that the requirements of the Act unambiguously mandated that the notice must have information about the time and place of the hearing to trigger the stoppage of time, and the Bureau’s order was not entitled to Chevron deference. Justice Alito wrote in dissent that the Court should not have ignored Chevron and affirmed the Bureau’s interpretation. A link to the opinion in Pereira v. Sessions is here.

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Securities And Exchange Commission Administrative Law Judges Are “Officers Of The United States” Under Appointments Clause

The Constitution’s Appointments Clause sets forth certain requirements for appointing “Officers of the United States,” who are more than mere employees of the federal government. The Securities and Exchange Commission (SEC) utilizes Administrative Law Judges (ALJ) to adjudicate administrative proceedings involving violations of securities laws. Those ALJs are not appointed in accordance with the Appointments Clause. When Raymond Lucia was charged with violating securities laws and an ALJ was assigned to adjudicate his case, he argued that the proceeding was invalid because the ALJ was an “Officer” that was not properly appointed. The D.C. Circuit rejected Lucia’s argument, but the Court, in a 6-3 decision by Justice Kagan, reversed, holding that SEC ALJs had equivalent powers and duties as the “special trial judges” the Court had previously held were “Officers” in Freytag v. Commissioner, 501 U.S. 868 (1991). Since the ALJ in this case was an Officer, but not appointed in accordance with the Appointments Clause, the case was remanded for a hearing before a properly appointed ALJ other than the one who already heard the case. Justice Thomas, joined by Justice Gorsuch, filed a concurrence, noting that while the SEC ALJs met the standards of Freytag, the Court’s precedents still have not established what standards are necessary to establish someone as an Officer of the United States. Justice Breyer concurred in part and dissented in part, agreeing that the ALJ was not properly appointed on statutory grounds, but was joined by Justices Ginsburg and Sotomayor in arguing that the case could be remanded to the same ALJ. Justice Sotomayor, joined by Justice Ginsburg, filed a dissent, arguing that an Officer should be someone who could make decisions binding the government, instead of issuing advisory opinions, and SEC ALJs lack that final decision making authority. A link to the opinion in Lucia v. Securities and Exchange Commission is here.

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Stock Options Are Not Money Remuneration Under The Railroad Retirement Tax Act Of 1937

To support the nation’s ailing railroad systems, Congress passed the Railroad Retirement Tax Act in 1937 to bolster railroad employee pensions based on their “compensation,” which was defined as “any form of money remuneration.” Previously, the exception was used to exclude traditional perks like food, lodging, and tickets, but railroads recently began offering stock options. The lower courts split on whether stock options were “compensation” under the Act. The Court, in a 5-4 decision by Justice Gorsuch, held that stock options were not compensation, as such stock or options to buy stock are not exchangeable as “money remuneration” for other things, citing the IRS’s view at the time that the Act only taxes compensation that “may be used in lieu of money.” Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, dissented, arguing that “money remuneration” is an ambiguous term, and regardless provides a benefit with a definite value that should be considered remuneration like a paycheck. A link to the opinion in Wisconsin Central Ltd. v. United States is here.

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Court Permits States To Impose Sales Taxes On Online Retailers Under The Commerce Clause

In prior cases going back to 1992, the Court had ruled that the Commerce Clause precluded States from imposing sales taxes on sellers who did not maintain a physical presence in the State. But then the Internet exploded, and online retailers like Amazon regularly sell products in the various States while eluding sales taxes. In South Dakota v. Wayfair, Inc., South Dakota passed a law to force online retailers to pay sales taxes, and asked the Court to reconsider its earlier precedent. In a 5-4 decision by Justice Kennedy, the Court overruled the physical presence requirement, deeming it “flawed” and not well-suited to the modern economy. Now, a State may tax an online retailer if it generally meets the same kind of “substantial nexus” that would enable the seller to be sued in the State under Due Process concerns. Justice Thomas filed a concurrence noting his regret that he did not earlier join Justice White’s dissent opposing the physical presence requirement. Justice Gorsuch’s concurrence noted his disagreements with some aspects of the majority’s dormant Commerce Clause jurisprudence. Chief Justice Roberts, joined by Justices Breyer, Sotomayor, and Kagan, dissented, arguing that while the Court’s prior precedent was wrongly decided, the development of E-commerce required a congressional fix to the problem, not a judicial one.

| Crystal S. Deese

Nurses Qualify to Testify about Causation

In Frausto v. Yakima HMA, LLC, 393 P.3d 776 (Wash. 2017) the court held that an Advanced Registered Nurse Practitioner (ARNP) could qualify to provide causation testimony in a pressure ulcer case. The court based its holding, at least in part, on the Washington state statute empowering ARNPs to diagnose illnesses. The court noted that a majority of jurisdictions (Idaho, Kansas, Nevada, New York, North Carolina, Ohio, Oklahoma, and Pennsylvania) allow nurses to provide causation testimony in medical malpractice cases. While the District of Columbia and Maryland were not mentioned in the Frausto opinion, Virginia was described as a jurisdiction where the law “arguably” allows such testimony (citing Bush v. Thoratec Corp., 13 F.Supp.3d 554, 557 (E.D. La. 2014) (federal court interpreting Virginia law).

The District of Columbia Nurse Practitioner Act, D.C. Code § 3-1202.02, defines the ARNP scope of practice to include making diagnoses. Further, even a Registered Nurse is empowered to synthesize diagnoses and make nursing diagnoses. If the Frausto court’s rationale applies here, ARNPs and possibly even RNs in the District could qualify to give causation opinion testimony.

One of our more recent appellate cases also focuses on the importance of experience making diagnoses in determining whether to admit an expert’s proffered opinion. In Dickerson v. District of Columbia, 182 A.3d 721, 728, (D.C. 2018), the court noted that while a physician need not be a specialist in the field about which s/he is testifying, it is also not true that anyone familiar with basic anatomy can render admissible medical opinions. The Dickerson court held that an expert, who never diagnosed a pinched nerve, was properly prevented from testifying about it even though the expert was familiar with the treatments for the condition.

In sum, medical malpractice litigants might be able to have a nurse witness cover both the standard of care and causation bases. In D.C., the admissibility of causation testimony from a nurse has not, to this writer’s knowledge, been explicitly addressed one way or the other. Until such a case exists, this defense lawyer will continue to have a physician to address causation, just in case.

| Crystal S. Deese

Health Law Group Privileged to Serve Children’s National Medical Center

Recently Jackson & Campbell’s Health Law Practice Group successfully defended Children’s National Medical Center in a wrongful death lawsuit. Judge Anthony Epstein entered judgment for the hospital after Plaintiff rested his case at trial. Attorneys Crystal S. Deese and Diona Howard-Nicolas, along with the entire Health Law Practice Group, are honored to have served our client in this capacity.

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Court Upholds District Court Judge’s Explanation For A Sentencing Modification

A criminal drug offender was originally sentenced to 135 months’ imprisonment after the Sentencing Guidelines provided a range of 135 to 168 months. The U.S. Sentencing Commission thereafter revised the range for the same crime to 108 to 135 months. The defendant moved the district court to modify his sentence accordingly. The judge lowered the sentence to 114 months, not 108, after checking a couple boxes on a form indicating the judge had “considered” the request and “tak[en] into account] relevant factors and the Guidelines. The defendant appealed on the basis that the sentence was modifying without sufficient explanation as required by statute. The Tenth Circuit denied relief, and the Court, in a 5-3 opinion by Justice Breyer (Justice Gorsuch recused), affirmed, holding that the information provided by the form was adequate, and there was “not much else for the judge to say.” Justice Kennedy, joined by Justices Sotomayor and Kagan, dissented, arguing that the form did not provide sufficient information to permit meaningful appellate review, and that if the form merely included “a few more categories covering the factors most often bearing on a trial court’s sentencing determination, the objections petitioner raises likely would be met.” A link to the opinion in Chavez-Meza v. United States is here.

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Courts Of Appeals Are Obligated To Correct Plain Sentencing Guideline Errors Under Federal Rule Of Criminal Procedure 52(b)

Under Federal Rule of Criminal Procedure 52(b), a court of appeals “should exercise its discretion to correct”  an error in the district court’s application of the Sentencing Guidelines if the error “seriously affects the fairness, integrity, or public reputation of judicial proceedings.” In Rosales-Mireles v. United States, after the defendant was sentenced under a miscalculation under the Sentencing Guidelines and raised a Rule 52(b) request on appeal, the Fifth Circuit declined to afford relief because the result (which was within the correct Guidelines range) did not affect the mentioned factors, nor did it “shock the conscience.” The Court, in a 7-2 decision authored by Justice Sotomayor, reversed, holding that a correction under Rule 52(b) is required almost every time a plain error affecting the defendant’s established rights occurs, unless some “countervailing factors” compel a different result. Justice Thomas, joined by Justice Alito, dissented, arguing that plain error review should only permit relief in exceptional circumstances, and not establish a “rebuttable presumption” as the majority has ruled.

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Court Denies Injunctive Relief In Maryland Gerrymandering Case

In Benisek v. Lamone, several Republican voters filed suit in 2017 challenging Maryland’s 2011 redrawing of its Sixth District as being gerrymandered against their constitutional rights. Those voters moved for a preliminary injunction in the district court, to allow the creation of a new districting map. The district court denied that relief and stayed the proceedings pending the decision in Gill v. Whitford. On appeal, a per curiam Court affirmed, holding that the voters were not entitled to a preliminary injunction (which would have prevented use of the existing district map) because they failed to show reasonable diligence by waiting six years to file suit, and the relief would not serve the public interest by having a “chaotic and disruptive effect upon the electoral process.”

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Plaintiffs Lacked Standing To Bring Gerrymandering Claims

In Gill v. Whitford, twelve Democratic voters brought claims arguing that the redrawing of Wisconsin’s districts after the 2010 census was an unconstitutional gerrymandering that made it harder for Democratic candidates to get elected. Specifically, the redrawing allegedly “cracked” Democratic voters into other districts where they could not reap a majority, and “packed” Democratic voters into a few districts where Democratic candidates already won by large margins. The state election commission moved to dismiss on the basis that the voters had not demonstrated standing to challenge the redistricting as a whole—they could only challenge based on their individual interests in each district. The district court denied the motion, and after a trial enjoined the new districting plan. On direct appeal, the Court, in a unanimous decision by Chief Justice Roberts, reversed, holding that the individual defendants had not satisfactorily proved their respective particularized burdens that would grant standing. Arguing a statewide injury to Wisconsin Democrats and their candidates was not sufficient. The Court then remanded the case back to the district court to allow the plaintiffs to prove their concrete and particularized injuries. Justice Kagan, joined by Justices Ginsburg, Breyer, and Sotomayor, filed a concurrence outlining what kinds of proof might grant standing in such a case, and what theories the voters might advance at the second trial. Justice Thomas, joined by Justice Gorsuch, also filed a concurrence agreeing with the result but disagreeing that the cause should be remanded—he would have dismissed the case entirely for lack of standing.

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Court Permits First Amendment Retaliation Claim Against Municipality Despite Probable Cause To Arrest

Fane Lozman was something of a political gadfly to the City of Riviera Beach’s city council, and had filed a lawsuit against it. During a closed meeting, one of the council members suggested that the council “intimidate” Mr. Lozman, which the council supported. At a subsequent public meeting, when Lozman sought to discuss the recent arrest of a former county official, a councilmember directed that the police arrest and remove him. Lozman was charged with disorderly conduct and resisting arrest without violence, but the prosecutor dismissed the charges. Lozman then sued the council alleging, among other things, that his arrest was retaliatory in violation of his First Amendment rights. At trial, the jury entered judgment for the council, and the Eleventh Circuit affirmed, on the basis that the existence of probable cause to arrest (which Lozman conceded existed in this case) precluded any such claim. The Court, in an 8-1 decision by Justice Kennedy, reversed, holding that in these precise circumstances, probable cause did not bar Lozman’s claim. The Court specified that for Lozman to prevail, he would have to prove “the existence and enforcement of an official policy motivated by retaliation,” and left it to the Eleventh Circuit to determine whether a new trial was appropriate under the facts established at trial. Justice Thomas filed a dissent, arguing that the Court should not have narrowed its opinion to the unique circumstances of this case, which are unlikely to recur, and that he would have held that for Lozman’s retaliation claim to succeed, he would have had to prove a lack of probable cause. A link to the opinion in Lozman v. City of Riviera Beach is here.