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What Happens When Someone Attempts to Avoid Being Served?

July 15, 2016/in Articles, Debt Collection, General/by Ted Hamilton

When filing a civil lawsuit in the state of Florida, initial service of process on the defendants named in the lawsuit is critical in order to confer jurisdiction on the courts. The Florida Rules of Civil Procedure and Florida Statutes govern who may serve process upon whom and how service of process may be perfected. See Rule 1.791, Fla. R. of Civ. P. and Chapters 48 and 49 of the Florida Statutes. Without perfecting service of process on the parties, the court lacks personal jurisdiction or authority over the parties and therefore lacks the authority to enter judgment. There are various forms of service, including personal or individual service, substitute service, and constructive service. Personal and substitute service give the Court personal jurisdiction over the parties who have been served, while constructive service gives the court in rem jurisdiction, over something such as property, rather than someone.

So what happens when a person attempts to avoid service of process? Can the court obtain jurisdiction over that person? As one might expect, the answer is, it depends. The statutes and rules regarding service of process must be strictly adhered to in order to perfect service on an individual. Florida Statute 48.031 (1) (a) states as follows:

Service of original process is made by delivering a copy of it to the person to be served with a copy of the complaint, petition, or other initial pleading or paper or by leaving the copies at his or her usual place of abode with any person residing therein who is 15 years of age or older and informing the person of their contents. Minors who are or have been married shall be served as provided in this section.

Interesting situations and questions of law can arise when individuals attempt to avoid being served. If a deputy or process server finds a defendant to be at home, but that person refuses to answer the door or attempts to hide, then at least one court has held that service of process was sufficient when the deputy “…read the summons in a loud voice and announced that he was leaving a copy of the summons and complaint on the doorstep for Mr. Haney and another copy with Mr. Haney as service on his wife.” Olin Corp. v Haney, 245 So.2d 669 (Fla. 4^th DCA 1971). In that case, the deputy attempting to serve the defendants had observed Mrs. Haney leave the house and Mr. Haney remained in the doorway. When the deputy identified himself, Mrs. Haney ran into the house in an apparent attempt to avoid service.

The point is that in order for the court to have the authority to proceed with a civil case in Florida, service of process must be perfected. The experienced collections attorneys at Wetherington Hamilton know how to handle this issue, even when a defendant is attempting to avoid service.

Joan W. Wadler, Esq.

Employee or Independent Contractor: A Disaster in the Making?

June 21, 2016/in Articles, General/by Ted Hamilton

At a recent business association dinner, I introduced myself to the gentleman sitting next to me. He was a retired business executive, now offering his substantial business expertise to new entrepreneurs as a SCORE[1] volunteer. When I told him I was a business lawyer, he asked me: “What is the most common legal issue for new business owners?” Without hesitation, I answered: “New business owners routinely misclassify workers as independent contractors, when those workers should be classified as employees.”

Why do business owners do this? In some cases it is inadvertent – the business owners do not understand the applicable tests or do not properly apply the applicable tests. In many cases, however, it is an intentional decision by the business owner to operate in a “gray area.” There are many reasons why a business owner would prefer to classify a worker as an independent contractor rather than an employee:

The business is not required to withhold income tax, pay social security and medicare taxes, pay unemployment compensation taxes or provide worker’s compensation insurance for independent contractors
Independent contractors are not subject to minimum wage or overtime pay requirements
Independent contractors aren’t eligible to participate in employer sponsored health plans and retirement plans

In my experience, misclassification seems to be more prevalent in certain industries. Other lawyers have observed the same trends. The law firm Pepper Hamilton studied reported cases from 2010 to 2015 and found that businesses in about 40 industries have been specifically targeted by federal or state agencies or have been the subject of class action lawsuits because of worker misclassification.[2] Those industries include amateur and professional athletics, aerospace and defense, automotive, charities, cleaning and janitorial services, computer programming and technical consulting, construction, health care, landscaping, publishing/editing, security, and trucking, among others.

The Unpleasant Consequences of Getting it Wrong

For many years, misclassification was not high on the list of priorities at the IRS or the US Department of Labor (“DOL”). That changed around the mid-2000s, when the IRS, the DOL and state agencies began stepping up their audits of both for-profit businesses and non-profit agencies. In 2004, the IRS audited a non-profit youth soccer league in Fairfield, Connecticut, assessing the league more than $300,000 in back taxes, penalties and interest based upon the league’s misclassification of its coaches as independent contractors instead of employees. The league ultimately settled with the IRS, agreeing to treat its coaches as employees going forward and paying $11,600 in back taxes, thankfully only a fraction of the initial assessment.

Government audits are not the only risk, however. Recently terminated workers and workers injured on the job are likely to retain attorneys and sue for unpaid overtime or for payment of medical expenses on the ground that they should have been classified as employees, not independent contractors. Large companies that use independent contractors to supplement their regular workforce or that operate on an independent contractor business model (such as Uber) are increasingly being targeted in class-action lawsuits brought on behalf of workers who are allegedly misclassified as independent contractors. In two widely reported cases, the federal 9^th Circuit Court of Appeals found in 2014 that FedEx Ground drivers in Oregon and California had been misclassified as independent contractors. FedEx lost those cases despite the fact that it had written contracts with all of its drivers in which the drivers agreed that they were independent contractors. That case cost FedEx over $225 million.

The consequences of misclassification can be grave. Besides owing back taxes to the feds, the business will also owe state unemployment taxes and unpaid worker’s compensation premiums, and may owe unpaid overtime or minimum wages, medical expenses and unpaid vacation and sick pay.

A Multiplicity of Tests Employee-vs.-Independent-Contractors

If a big company like FedEx can get it wrong, even with the resources to hire the best attorneys to write the best contracts, what’s a small business owner supposed to do? The reason that business owners who want to comply with the law find it so difficult is the multiplicity of tests. Years ago, the IRS used a “twenty-factor common law test.” Around 2010, the IRS issued guidance that it would use a three-part test, emphasizing the degree of control that an employer has over the worker. The DOL’s test, which it uses to enforce the Fair Labor Standards Act’s minimum wage and overtime provisions, is known as the “Economic Realities Test.” The focus of the DOL test is the degree to which the worker is economically dependent upon the employer. Finally, each state uses a test to determine eligibility for worker’s compensation and unemployment benefits. Some state tests mirror either the IRS test or the DOL test, but many do not.

The IRS Test (The 3-Category “Control Test”)

The IRS guidance[3] describes three broad categories of factors that need to be considered in applying the “Control Test”: behavioral control, financial control, and the relationship of the parties.

Behavioral Control covers facts that show if the business has a right to direct and control what work is accomplished and how the work is done, through instructions, training, or other means.

Financial Control covers facts that show if the business has a right to direct or control the financial and business aspects of the worker’s job. This includes:

The extent to which the worker has unreimbursed business expenses
The extent of the worker’s investment in the facilities or tools used in performing services
The extent to which the worker makes his or her services available to the relevant market
How the business pays the worker (by the hour? by the job?), and
The extent to which the worker can realize a profit or incur a loss

Relationship of the Parties covers facts that show the type of relationship the parties had. This includes:

Written contracts describing the relationship the parties intended to create
Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay
The permanency of the relationship, and
The extent to which services performed by the worker are a key aspect of the regular business of the company

The US DOL Test (6-Factor “Economic Realities” Test)

On July 15, 2015, the Department of Labor issued “Administrator’s Interpretation No. 2015-1,” a 15- page document describing the DOL’s “Economic Realities Test” under the Fair Labor Standards Act.[4] The document briefly describes the history and purposes of the Fair Labor Standards Act and the origins of the Economic Realities Test. The DOL describes the 6 factors that must be considered to determine whether a worker is an independent contractor or an employee under the Economic Realities Test:

the extent to which the work performed is an integral part of the employer’s business
the worker’s opportunity for profit or loss depending on his or her managerial skill
the extent of the relative investments of the employer and the worker
whether the work performed requires special skills and initiative
the permanency of the relationship
the degree of control exercised or retained by the employer

The Administrator’s Interpretation document includes numerous examples of how the test should be applied in different situations. The underlying theme the DOL’s Economic Realities Test is that true independent contractors are in business for themselves, deciding which jobs to take, how much to charge, and when and how to do the work. Whether they succeed or fail in their chosen business is fundamentally within their own control. By contrast, a worker who is economically dependent on the company for whom he or she is working is not really in business for him or herself, but is an employee.

State Tests

About a third of the 50 states use the “A-B-C Test” to determine whether a worker is an independent contractor: (A) the worker must be free from direction and control in connection with the performance of the service; (B) the worker’s service must be performed either outside the usual course of business of the employer and outside the employer’s places of business (some states only require one of these); and (C) the worker must be customarily engaged in an independently established trade, occupation, profession, or business of the same nature as the service performed.

Florida uses a “right of control” test, which is very similar to the IRS Control Test. Florida courts have adopted a number of criteria to determine whether the employer has a right of control, including

The extent of the right of control by the employer over the details of the work
Whether the person employed is engaged in a distinct occupation or business
The kind of occupation involved, and whether the work is done under the direction of the employer or by a specialist without supervision
The skill required in the particular occupation
Whether the employer supplies the instrumentalities, tools, and the place of work
The length of time the person is employed
Whether the work is a part of the regular business of the employer

Many states have entered into agreements with the IRS, the DOL or both, to share information and to cooperate in enforcement activities. An audit by the state worker’s compensation agency can thus spark an IRS or DOL audit and vice-versa.

Conclusion

Tests like the IRS’s Control Test and the DOL’s Economic Realities Test are called “balancing tests” by lawyers and judges, because all facts and circumstances need to be taken into account and no one factor predominates. All of the factors must be weighed and a conclusion drawn based on the preponderance of the factors breaking one way or the other. Ignoring certain facts can skew the tests one way or the other.

An close examination of all of these tests reveals certain common themes. The employer’s degree of control is a factor in all of the tests. The worker’s opportunity to realize a profit or suffer a loss is a factor in both the IRS test and the DOL test, and is implied in part C of the A-B-C Test. The extent to which the worker’s services are integral to the employer’s business is an important factor in both the IRS test and the DOL test and is arguably implied in part C of the A-B-C Test. A thoughtful consideration of the work to be performed and the nature of the relationship will usually lead to the correct result and that result will usually be that the worker is an employee, not an independent contractor.

It is important to emphasize that it doesn’t matter if a business has a written contract with a worker that declares him or her to be an independent contractor. If the applicable test results in that worker being classified as an employee, then that worker is an employee, notwithstanding what the contract says. That being said, in a true independent contractor relationship it is a very good idea to have a written contract delineating the services to be provided, the compensation to be paid, and how the relationship can be terminated, as well as providing for indemnification, insurance requirements of the contractor, etc. We recommend that businesses currently using independent contractors on a regular basis should review those relationships based upon the tests described in this article. If the workers at issue truly are independent contractors and the business does not have written agreements with those independent contractors, the lawyer for the business should draft appropriate contracts. If the business already has written independent contractor agreements, but they were not prepared by an attorney or an attorney has not reviewed them recently, we recommend that you have a qualified business lawyer or employment lawyer review them as soon as possible and modify them as necessary. If a company is not certain about the proper classification of its workers, we at Wetherington Hamilton stand ready to assist with that analysis. The IRS, DOL, and Florida Department of Revenue, as well as the plaintiff’s bar, are all paying attention even if you are not.

Matthew J. Lapointe, Esq.

Article References:

[1] SCORE is a nonprofit organization, supported by the U.S. Small Business Administration, that helps small businesses through education and mentoring. With headquarters in the Washington, D.C. area, SCORE has chapters throughout the U.S. Find out more at www.score.org.

[2] “The Crackdown and Costs of Independent Contractor Misclassification – And How to Minimize or Avoid Its Risks,” by Richard J. Reibstein, Lisa B. Petkun and Andrew J. Rudolph, Pepper Hamilton, LLP, 7/10/2015.

[3] See https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

[4] See https://www.dol.gov/whd/workers/misclassification/ai-2015_1.htm

The Importance of a Work Life Balance: An Attorney’s Perspective

May 13, 2016/in Articles, General/by Ted Hamilton

Attorney Work Life Balance Having been a member of the Florida Bar since 1991, and having practiced in various areas of law, I fully understand and take seriously the commitment of time and resources required in order to be an effective and successful attorney. Preparation is key if one expects to have a chance of “winning” and effectively representing one’s client at any hearing. I pride myself in my work ethic and preparation for each hearing that I attend, no matter how much time for preparation may be required. As attorneys, we do not create nor do we have control over the facts of any given case, but we do have control over our preparation and understanding the facts as they relate to the law for each and every case. As an attorney, a wife and mother, I know that this type of preparation requires sacrifice at times, but the rewards are well worth it! Having said all of that, it is important to me as an attorney, to be able to balance my work and home life.

May and June are extremely busy months for anyone who has school-aged children. Summer plans are being finalized; students have awards ceremonies, performances, sports banquets, and end-of-the-year events of all kinds. The list seems endless. In order to be able to accomplish everything, a great deal of planning and coordination is required. It is a given that effective time management plays an important role in obtaining and maintaining a balance between work and home life; however, there is more to this equation.

So how is it possible for anyone, whether they have children or not, to be an effective attorney while balancing life outside of work? First and foremost, no one can do everything alone. As an attorney, it is critical to have the support of competent legal assistants and paralegals. Without knowledgeable and effective legal assistants, it would be difficult at best to successfully balance home and work, while successfully representing one’s clients. At Wetherington, Hamilton, P.A. our support staff is second to none. This fact alone makes it possible to for our attorneys to maintain balance while effectively representing clients and obtaining the best results possible.

In addition, the firm philosophy places strong emphasis on taking time off when needed. In order to maximize productivity and effectiveness in the work place, appropriate time away from the job is necessary. This might mean something as simple as taking an extra thirty minutes at lunch time in order to run an errand or attend a personal appointment. This type of flexibility in scheduling can make the all the difference in one’s attitude about the workplace. That is not to say that taking extraordinary amount of time of is suggested or recommended. Rather, the goal is to obtain and maintain just the right balance between work life and home life…not an easy task…

Attorney Wadler and her family

Just as the scales of justice symbolize balance or the weighing of issues in order to achieve a just result, so too, maintaining balance between one’s work life and personal life allows for the best results in both worlds. The law firm of Wetherington Hamilton, P.A. allows for and encourages this type of balance, making this law firm not only a great place to work, but a successful law firm, achieving positive results for its clients!

Joan A Wadler, Esq.

Buying a Franchise? Read This First.

May 2, 2016/in Articles, General/by Ted Hamilton

To a middle manager in corporate America, owning one’s own business can appear very attractive. Often, buying a franchise business is a more attractive option than simply starting your own business from scratch. A franchise is a form of business that already has an established product or service in which the owner (the “franchisor”) enters into a contract with another, separately-owned business (the “franchisee”), which operates the business within a certain defined territory or from a specific location.

A good franchisor has invested a great deal of time and money developing a proven operating system for its particular type of business. Franchisors often provide detailed policy and procedure manuals that address many of the day-to-day problems associated with owning a business. Moreover, franchisors often (and should) provide training in these policies and procedures, enabling the franchise owner to quickly get up to speed on business operations and the actual processes by which the franchise and franchisee will conduct day-to-day operations.

In addition to a proven business operating system, many franchisors have developed strong trademarks and service marks, such as business names, catch phrases, and logos that are associated with their businesses and that are recognizable in the marketplace. These marks are the embodiment of the franchisor’s goodwill and name recognition in the given field of operations, and the franchisee is intended to acquire the benefits of the franchisor’s branding investment and efforts. In the franchise agreement, the franchisor licenses these trademarks and other intellectual property to its franchisees, allowing franchisees to use these recognizable names or phrases in their own businesses – imparting to them immediate name recognition and legitimacy.

Investigating the Franchise Opportunity

The franchisee is often making a very significant investment in his or her franchise. That investment should not be made without a thorough investigation of the franchisor and an understanding of the strength or weakness of the particular franchise opportunity. A weak franchise – one in which the trademarks are not particularly strong or well-known, or in which the franchisor does not have adequate financial resources to support its franchisees – can be a very poor investment.

Every franchisor must provide a prospective franchisee with a franchise disclosure document (the “FDD”). The contents of the FDD are to a high degree dictated by the federal franchise regulations and it is a rich source of information – and potential questions – about the franchisor and the strength (or weakness) of the franchise. The FDD and its associated tables, charts and appendices can tell the prospective franchisee a great deal about the background and financial strength of the franchisor. The prospective franchisee MUST read the FDD and should seek a lawyer’s assistance with anything in the FDD that he or she does not understand.

The FDD always contains the identity and contact information of other franchisees in the system. The prospective franchisee should contact several current and former franchisees, who are in the best position to provide inside knowledge about the pros and cons of the system. Questions should include the following:

Were the franchisor’s estimate of the working capital requirements to get up to speed accurate?
In addition to the franchise fee rendered as part of the franchise agreement, are there any other ongoing service fees or other fees payable to the franchisor?
Did the franchisor provide adequate training in the business system?
Were the operations manuals helpful and easy to follow?
Did the franchisor provide meaningful ongoing assistance in getting the franchisee’s business or site up and running?
Do the franchisees think that the system added value that would not be available to a similar business operating outside a franchise system?

Finally, because much of the value of a franchise is associated with the strength of the franchisor’s trademarks and other intellectual property, the prospective franchisee or his or her attorney should conduct a search on the US Patent and Trademark Office website to confirm that the franchisor’s trademarks are properly registered. If the franchise is not particularly well-known or well-established, an attorney can (and should) analyze the strength or weakness of a franchisor’s trademarks and discuss those strengths or weaknesses with the potential franchisee.

The Legal Relationship Between Franchisee & Franchisor: The Franchise Agreement.

Franchisors regularly tell prospective franchisees that the franchise agreement is non-negotiable. Even if that is true, it is still important for the prospective franchisee to understand what is contained in the agreement, and it is up to his or her lawyer to interpret and explain to the prospective franchisee in plain English the more complex provisions of the document.

Of course, in many cases, the franchise agreement is negotiable, or at least significant portions of it are negotiable. As with most any contract, the degree to which the franchise agreement is negotiable is related to the relative bargaining power of the parties involved. A general rule of thumb is that the more well-known and well-established the franchise, the less likely the franchisor will be willing to make any changes to the franchise agreement.

With the exception of the very strongest franchises (e.g., McDonald’s, Domino’s Pizza, 7-Eleven), there are certain provisions in the franchise agreement that an experienced attorney should be able to negotiate so that they are more franchisee-friendly.

Notice Provisions. There are many places in a franchise agreement where the franchisor has the right to exercise certain remedies upon a default by the franchisee. The franchisee’s attorney can usually insert provisions requiring advance notice and an opportunity to cure such defaults before the franchisor may exercise its remedies.

Limiting the Franchisor’s Discretion. Franchise agreements often contain provisions requiring a franchisee to obtain the franchisor’s consent to do certain things. The attorney for the franchisee should try to ensure that the franchisor does not have absolute, unfettered discretion to deny its consent when giving such consent would be reasonable based upon verifiable facts.

Trademark Protections. As discussed above, much of the value in the franchise system is attributed to the trademarks that the franchisor licenses to the franchisee. The franchisor should be willing to stand behind its trademarks and defend them in the event they are challenged by third parties. Consequently, the franchisor should be willing to indemnify the franchisee in the event the franchisee is sued on the basis of trademark infringement.

Adjoining Territories. Sometimes the franchisor is willing to grant a strong (generally that means well-financed) franchisee a right of first refusal to purchase the territories that are contiguous with his or her own and which have not yet been assigned to other franchisees. The franchisee’s attorney might even be able to negotiate a reduced price for such additional territories.

Indemnification Provisions. Franchise agreements sometimes contain unreasonable indemnification provisions. It certainly makes sense for the franchisee to indemnify the franchisor for losses or damages that the franchisor suffers as a direct result of the wrongful acts of the franchisee or its employees. But often the indemnification provisions are written much more broadly to favor the franchisor and the franchisee’s attorney should make every effort to cut back such unreasonable indemnification rights.

Advertising Requirements. A franchisee may want to request that the franchisor loosen the requirements that the franchisee spend a certain dollar amount or percent of gross sales on advertising, particularly during the first several months of operation. Some franchisors will lower these requirements during the first six months to a year, in recognition that revenue is usually very tight during the start-up stage of the business.

Forum Selection and Governing Law Clauses. Although it will rarely come to pass, the franchisee should also request that the judicial or arbitration forum for future disputes concerning the operation of the franchise or the meaning and construction of the franchise agreement be in the franchisee’s location and governed by the franchisee’s local law. Owning a franchise in Florida, while having to manage a dispute with the franchisor in Washington state, places a potentially significant burden on the franchisee to inexpensively and expeditiously resolve disputes with the franchisor.

Sale of the Franchise. All franchise agreements set conditions on a franchisee’s ability to sell or transfer the franchise. These provisions are sometimes negotiable with respect to the assignment of the franchise to family members and with respect to the franchisor’s ability to exercise a right of first refusal. Since most franchise agreements have a term of 10 to 20 years (during which the franchisee develops its own goodwill, reputation and business), it is imperative that the franchisee understands the restrictions on his or her ability to sell the franchise.

Conclusion.

Buying a franchise can be a very rewarding decision. It can also be an unmitigated disaster if the prospective franchisee does not understand what he or she is getting into. An experienced attorney can guide his or her client in the investigation of the franchise and can usually negotiate more franchisee-friendly terms in the franchise agreement. Whether the franchisee fails or succeeds will depend upon a variety of factors, but with good legal representation going into the deal, the franchisee will at least be cognizant of the legal and business risks and of her own contractual rights and responsibilities. The attorneys at Wetherington Hamilton have experience representing franchisees in many different industries, from lawn care to sandwiches. We stand ready to help. Please contact the author for more information.

Matthew J. Lapointe, Esq.

Suing for Payment in Florida

March 25, 2016/in Articles, Debt Collection, General/by Ted Hamilton

In the state courts of Florida, suing for payment can be done in three different jurisdictions – Small Claims, County Court, and Circuit Court.

The jurisdiction for Small Claims is now for amounts not exceeding $5,000.00 for the principal balance claimed. (Note: This does not include interest, costs, and attorney’s fees.) It is also important to note that there are separate Rules of Summary Procedure for Small Claims Court. County Court is for matters involving $5,0001.00 or not exceeding $15,000.00. The County Court judges are the same as the Small Claims judges; however, the procedures are different, as one follows the Rules of Civil Procedure. The jurisdiction for Circuit Court is for amounts exceeding $15,000.00.

Although the Florida Rules of Civil Procedure have several forms which may be simply used for suits for accounts stated, suits for open accounts, and suits on promissory notes, it is very simple to plead a cause of action in Florida.

“A cause of action and shall contain (1) a short and plain statement of the grounds upon which the court’s jurisdiction depends …. (2) a short and plain statement of ultimate facts showing the pleader is entitled to relief, and (3) a demand for judgment for the relief to which the pleader deems him or herself entitled.”

You do not have to anticipate the defendant’s defenses in pleading a Complaint; however, you should act to avoid their defenses by giving sufficient notice of facts and attach all pertinent exhibits and reference the exhibits within the Complaint.

In the Small Claims Court, a Pretrial Summons is necessary to apprise the defendants of a date certain in which they shall appear for pretrial to answer the allegations of the Complaint. There is not the opportunity to file a response unless leave of court is given, and the defendant must simply appear to answer the claims made by the plaintiff. If the defendant is served and fails to appear, a default and judgment may be submitted against them without further notice.

In Florida, the County and Circuit Court summonses are the same among the counties. When a civil action begins, the summons is issued by the Clerk and delivered then to a process server or sheriff, of Plaintiff’s choosing. Service of process may be effectuated by an officer authorized by law to serve process, or as court-appointed “competent person” not interested in the action. Service of process must be made on a defendant within 120 days after an initial pleading is filed, unless good cause for failure to serve is established.

A Complaint has several important sections which put the defendant on “notice” of the claims made against him or her.

As an initial matter, the Complaint must disclose the correct name of the plaintiff. With respect to the naming of the defendant, the defendant should be properly named as either a corporation, partnership, sole proprietorship, or individual.

It is important to note that there are only certain places where you can file a lawsuit. The Florida Statutes outline that a defendant may be sued where the contract was signed, payment was made, or the defendant resides (or does business).

After suit is filed an service is obtained the case can be concluded in several ways. If the defendant fails to respond a default and default judgment can be obtained. If defendant responds but does not plead any defenses, a summary judgment may be obtained. If there a real defenses raised which present issues of fact or law, the case would proceed to trial and the court would rule in favor of one side or the other.

Thomas K. Sciarrino, Jr., Esq.

HIPAA Privacy: Is There an App for That?

March 11, 2016/in Articles, General/by Ted Hamilton

Health apps are very popular in our tech savvy and health conscious society. Just Google “health apps” and you will be greeted with “The 10 Best Apps to Improve Your Health” and “The 25 Best Fitness Apps for 2016” among many other hits. Far down on the Google list, however, you might find this gem from Healthcare IT News: “8 Out of 10 Mobile Health Apps Open to HIPAA Violations, Hacking, Data Theft.”

The Healthcare IT News article claims that 84% of U.S. FDA-approved health apps that were tested by IT security vendor Arxan Technologies did not adequately address security issues. How is this possible? Don’t these apps need to comply with HIPAA, the federal privacy law?

Rules issued by the federal government under the Health Insurance Portability and Accountability Act (“HIPAA”) regulate the use and disclosure of individually identifiable health information. But HIPAA does not apply to all users of health information, only those who are specifically covered by the law. The HIPAA regulations apply to health care providers such as doctors, dentists, hospitals and nursing homes, as well as health insurance companies and organizations known as “healthcare clearinghouses.” Healthcare clearinghouses are entities that serve as weigh stations, processing non-standard data into standardized data elements that are recognizable by insurance companies, the federal government and others who pay for health care services. These entities that are subject to the HIPAA regulations are known as “covered entities.”

Covered entities often outsource functions that require access to health information. For example, many physician groups contract with medical billing companies, which review medical information provided by the doctor and prepare bills that are transmitted electronically to health insurance companies for payment. Medical billing companies and other contractors that collect, create, receive, maintain or transmit health information on behalf of covered entities are known as “business associates.” These business associates are also subject to the HIPAA regulations, as are any subcontractors of the business associates.

App developers have long sought better guidance from the federal government about how HIPAA applies to their industry. In response, on February 11, 2016, the Department of Health and Human Services’ Office for Civil Rights (“OCR”) released “Health App Use Scenarios & HIPAA” (the “Health App Guidance”). The Guidance sets out various factual scenarios involving health apps and OCR’s conclusion whether or not the HIPAA regulations would apply to the app developer in each scenario. The Health App Guidance builds upon OCR’s previous guidance concerning business associates and frames the scenarios in terms of whether or not the app developer is a business associate, and thus subject to the HIPAA regulations.

Unless the app is being developed by a health care provider, health insurer or healthcare clearinghouse, the app developer is almost assuredly not a covered entity. But under certain circumstances it is entirely possible that the app developer is a business associate of a covered entity and is therefore subject to the HIPAA regulations. The scenarios provided in the Guidance illustrate the basic analysis that must be performed to determine whether or not the app developer is a business associate.

The Health App Guidance makes clear that health apps that are downloaded and used solely by individual consumers are generally not subject to HIPAA because the developer is not collecting, creating, receiving, maintaining or transmitting health information on behalf of a covered entity. However, health apps that are offered directly by or on behalf of healthcare providers or their business associates and that collect, store or transmit health data very likely are subject to HIPAA. In those cases where the app developer is providing a service on behalf of the covered entity itself, or on behalf of a business associate of the covered entity, that app developer is, itself, a business associate subject to HIPAA.

While it is in every health app developer’s interest to make sure its app maintains the confidentiality and security of its customers’ health data, not all health app developers are subject to the HIPAA regulations. The Health App Guidance provides 6 scenarios that illustrate OCR’s analysis of the regulations. There are countless other scenarios not covered by the Guidance, however. Health app developers should seek advice from qualified attorneys with experience in health law in general and the HIPAA regulations in particular. The lawyers at Wetherington Hamilton are available to advise health app developers on these, and other regulatory matters.

Matthew J. Lapointe, Esq.

Attorney Billing Methods – More Than Just the Hourly Rate

March 2, 2016/in Articles, General/by Ted Hamilton

So you have a lawsuit of some kind and it is not a personal injury claim. You can’t afford an attorney or you may be able to afford an attorney, but you really don’t want to spend the money to pursue your claim. If your claim involves an action for money of any kind, for example a breach of contract, foreclosure, for possession of some type of real estate, breach of fiduciary duty or other type of claim for money, an alternative fee arrangement may be the way to go.

The age of hourly billing for attorneys is rapidly changing. Our firm handles matters using all types of alternative fee arrangements. When you chose your attorney to handle a breach of contract claim, you need to consider using these types of attorney billing methods to limit your exposure to excessive attorney’s fees. The hourly billing method involves the attorney billing by the hour for all work performed on the case. You receive a monthly bill with the time entries charged to your file for the month. This method works well in cases not involving a claim for money, or in cases where you are defending a claim brought against you by someone else.

Alternatives to the hourly attorney billing method include a contingency fee, a suit fee plus contingency fee, a straight flat fee, a success fee plus reduced hourly, a reduced hourly rate plus contingency and a flat fee.

The most common type of alternative fee used by attorneys is the contingent fee. A contingent fee involves the attorney getting paid a percentage of the recovery. This type of billing may be used to handle all types of commercial collections claims. A suit fee may be included in this type of claim. A suit fee is a fee earned by the attorney upon filing suit. For example, if the attorney sees your case as more complicated than a normal collections case, the suit fee will help get the case started. This suit fee can range from a few hundred dollars to thousands of dollars depending on the amount involved and the complexity of the case. In addition, a contingency fee may also be used in combination with a reduced hourly rate. For example if the attorneys rate is normally $350 per hour. This rate might be lowered to $250 per hour with a contingency of say 15% or 20% upon collection.

A straight flat fee is often used for matters involving contract preparation and drafting. You need to have your attorney commit to the fee at the outset as much as possible to ensure you will not be charge more than you anticipate for a particular project.

A success fee, is an additional fee received by the attorney upon a successful outcome. Often, this fee is included along with a slightly reduced hourly rate or a lower contingency rate. In the end this fee may be substantial, but of course, it is only paid if you win.

Ultimately, it is up to you to ask your attorney about these billing alternatives. Feel free to call our firm any time to discuss billing alternatives to help you get your claim filed.

Theodore Hamilton, Esq.

Why Mediate in Florida State Court Proceedings?

February 19, 2016/in Articles, General/by Ted Hamilton

Mediation is a voluntary, confidential process whereby the parties to a lawsuit or dispute gather with their respective counsel, if any, and a mediator with the goal of resolving their issues. The process is voluntary, although it is often court-ordered. A mediator is not a judge or decision maker; rather, a mediator is a neutral third party who facilitates communication between the parties.

So let’s break this down a bit. How can a court-ordered meditation be voluntary? In state court, if mediation is court-ordered, the parties to the action are required to appear. The process is voluntary – that is the parties are not required to reach an agreement. Generally, in Florida state courts, there is no good faith requirement for mediation. (Local rules and Federal Court rules may have different requirements regarding mediating in good faith). The parties must have full settlement authority and must comply with all court orders and rules regarding the proceedings. The process itself is voluntary and whether or not the parties reach an agreement depends upon the facts and circumstances of each case.

Usually, communications held during mediations are confidential, except as provided by law. The parties should be able to freely discuss the case during mediation without concern for having their words used against them at a later time. The rationale is to encourage open dialog throughout the process. If the parties reach agreement at mediation, a signed, written agreement is not confidential, unless it states otherwise.

The mediator’s role is not that of decision maker. Unlike a judge or arbitrator, the mediator acts as an impartial third party to facilitate or guide the mediation process. So, what is the point of mediation if the mediator isn’t making a ruling on the case? Mediation allows the opportunity for all parties to communicate freely and to have input into any potential resolution. Typically, if a judge or jury decides the case, at least one party will not be pleased with the outcome. If successful, mediation can save the time and expense of trial, with the parties having input into the resolution of their case.

Joan W. Wadler, Esq.

HIPAA Enforcement – Small Physician Groups Are Not Immune

January 25, 2016/in Articles, General/by Ted Hamilton

Small medical practices who think they don’t need to worry about HIPAA privacy and security compliance had better think again.

In December 2013, Adult & Pediatric Dermatology, a 12-physician group in Massachusetts, agreed to pay $150,000 to US Health & Human Services for alleged violations of the HIPAA Privacy, Security, and Breach Notification Rules arising out of a lost, unencrypted flash drive containing patient information. In addition to the cash settlement, HHS required the group to implement a corrective action plan, including developing a risk analysis and risk management plan to address and mitigate any security risks and vulnerabilities.

Prior to the Massachusetts case, HHS reached a $100,000 settlement with a 5-physician group in Phoenix, Arizona. HHS accused Phoenix Cardiac Surgery, P.C. of a “multi-year, continuing failure … to comply with the requirements of the Privacy and Security Rules.” The practice was posting clinical and surgical appointments for its patients on an Internet-based calendar that was publicly accessible. In addition, the practice had failed to implement even the most basic requirements of the Privacy and Security Rules – such as appointing a security official or adopting basic policies and procedures to appropriately safeguard patient information.

A review of the HHS website on which OCR posts examples of its enforcement actions reveals that most of the examples involve large hospitals, national drugstore chains, and large health insurance companies. The list of private practices facing enforcement actions appears to be growing, however. Surprisingly, many of the enforcement actions cited on the website deal with a private practice’s misunderstanding of the patient’s right to access his or her own medical records. For example:

A practice refused to honor an individual’s request for a complete copy of her minor son’s medical record.
A practice improperly billed a patient a $100.00 “records review fee” in connection with the patient’s request for a copy of his medical record.
A practice denied an individual access to his records on the basis that a portion of the individual’s record was created by a physician not associated with the practice.
A physician requested that patients sign an agreement entitled “Consent and Mutual Agreement to Maintain Privacy.” The agreement prohibited the patient from directly or indirectly publishing or airing commentary about the physician, his expertise, and/or treatment in exchange for the physician’s compliance with the Privacy Rule.
A private practice physician denied a patient access to her medical records because the patient had an outstanding balance for services the physician had provided.

Each of these cases arose out of a complaint filed with the OCR by an individual patient. And each of these cases involves one of the most basic provisions of the HIPAA Privacy Rule.

The experiences of Adult & Pediatric Dermatology and Phoenix Cardiac Surgery should serve as clear warnings that HHS is not only investigating those complaints brought against large health insurers and drug store chains, but that complaints against small, private practices are going to be investigated and prosecuted as well. Physicians, dentists and other private providers would be well advised to make sure they have the necessary policies and procedures in place to comply with HIPAA and that staff members are being properly trained. If you have an “off the shelf” generic HIPAA manual, Wetherington Hamilton, P.A. has the resources to help you tailor the policies to your practice and to provide you with the necessary staff training. If you don’t have a HIPAA manual or you aren’t providing training to your staff you are risking big fines.

Matthew J. Lapointe, Esq.

Do You Really Want to Hire an Aggressive Lawyer?

October 16, 2015/in Articles, General, Litigation/by Ted Hamilton

If you live in Tampa, you no doubt have seen the billboards for the personal injury law firm touting themselves as the “Aggressive Law Firm”. I have wondered what this means for a lawyer to be aggressive. Does it mean that the lawyer throws coffee on opposing counsel? (See this article) Or worse, does the lawyer break laws or rule to get the win.

When you are shopping for a lawyer, what should you look for? Aggressive sounds good but what does it mean. Our firm is focused on solving your disputes, helping you in a time of need, and keeping you out of trouble so you can run your business or go about your life. I have seen “Aggressive” lawyers in court represent themselves above their client’s best interests. Our focus is on ensuring that your interests come first. If this means presenting your case to a judge or jury, we will focus on the facts and present them passionately and logically on your behalf. At the same time, however, we are respectful to the judge and to opposing counsel. An aggressive attorney creates a controversy between the lawyers that doesn’t need to exist. Creating unnecessary conflict hampers your goal of resolving your conflict.

Finally, our lawyers strive to keep you out of trouble. This occurs through advice and counsel at the contract stage or prior to filing a lawsuit. Our attorney’s want you to understand the costs of litigation before you get into the case. In addition, we work with our clients to handle collections suits and other types of suits on a percentage of the amount recovered or with other alternative fee arrangements if at all possible.

So when you chose a lawyer, ask the legal community what they think of the attorney. If they give you a resounding yes, then that is the firm and attorney to hire.