Author Archives: Finney Law Firm

• posted: Jan. 19, 2016
• Hemmer DeFrank Wessels PLLC
• Uncategorized

Written By: Todd V. McMurtry

Foreclosures, criminals and divorces combined with chronic understaffing have clogged the courts.  If you have not been involved in a lawsuit in the past ten years or so, you should count your blessings.  In my opinion, because many states are functionally insolvent, they have understaffed and underfunded their courts.  The brave few who have agreed to serve as judges face large dockets with diminished resources.  The unfortunate few who need the aid of the state courts have to compete with the many forces shaping the legal system to have their case heard. 

Once a person finds themselves in court, it is often very difficult to get out without expending more money than the dispute is worth.  Legal fees for even a simple case can quickly run into the tens of thousands of dollars.  Petitions to the court, called motions, can drag on for months as the courts struggle to keep up with the paperwork associated with such arguments.  It is common for the party that does not want to pay what is due to drag the process out as long as possible and then use the delay as a bargaining chip to pay far less or demand more than is equitable. 

I advise every client that a case can take 12 to 18 months to get through the courts.  On top of that, an appeal can easily drag a case out for another two years.  If the case then goes to the state supreme court, it might take another 6 to 18 months to get a final judgment.  In the worst case scenario, a case can then be remanded to the trial court for further proceedings and it starts all over.  It is not uncommon for a case to take four to six years to reach a conclusion.  During that time, you have to pay your attorneys tens of thousands of dollars to keep your case on the move. 

I share this sobering reality because I strongly recommend that you make every effort to avoid state court as a means to resolve a dispute.  Instead, I recommend these three alternatives:

• Limit involvement of legal counsel.
• Choose binding arbitration.
• Try pre-suit mediation.

Limit the involvement of legal counsel.  For a practicing trial attorney, this is tough advice to offer.  But, the truth is that disputes under $25,000 or so should be negotiated with limited involvement by attorneys.  Net of legal fees, a compromise in a one-on-one negotiation is often the best solution.  A good idea in this situation would be to consult with your attorney, but not have your attorney directly involved.  There may be something very important about your situation that you do not understand.  Buy an hour of your attorney’s time and make sure you understand what type of dispute you have.  As well, legal counsel can draft an agreement that will fully release whatever claims exist so both parties can put the matter permanently behind them. 

Choose binding arbitration.  Arbitration is faster.  Even more complex disputes can be resolved in months instead of years.  It is very hard to appeal an adverse arbitration award, so when it is over, it is usually over.  As well, you can use the courts to enforce any judgment you receive in arbitration.  Arbitration is more streamlined than state court proceedings.  You do have to pay an arbitrator to act as your private judge, but in most situations it will likely save money.  As well, since you can pick your own private judge, you can find someone with particular skill in a given area.  You hire a construction professional for a construction dispute, etc.  Ask your attorney to help you include a binding arbitration provision into contracts you sign. 

Try pre-suit mediation.  Let’s assume a circumstance where you have tried to negotiate a resolution with the opposing party, but failed.  Assume as well that your agreement does not require arbitration.  This means you are headed to state court.  At this point, it is almost always a good idea to hire a professional mediator to attempt a resolution before going into state court.  Your attorney can help you through this process and make it more effective.  The mediation process creates strong momentum for settlement and can overcome obstacles that may have blocked the success of direct negotiations.

A smart business should always try to avoid state court.  But, if your effort to be nice and resolve the problems through negotiation fails, then I recommend that you hire a real trial attorney and do battle!

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

You’ve built your business on the model that people doing work are independent contractors rather than employees.  Everything has been going fine until one day when you sit down at your desk to find a letter from a federal or state agency.  It might be the Internal Revenue Service, the Ohio Bureau of Worker’s Compensation, the Kentucky Division of Unemployment Insurance, or the Indiana Department of Workforce Development.   Regardless of the sender, the punch-line is the same: the agency in its infinite wisdom has determined that your independent contractors are in fact your employees.  At the stroke of a pen, the agency has created the foundation demand you make back payment for all the obligations you would have had if your contractors were on your company payroll going back however many years the statute of limitations allows.  Imagine if you suddenly had to pay several years worth of payroll taxes, workers’ compensation premiums, and unemployment insurance premiums, plus penalties and interest!  How would that affect your bottom line?  Would you even be able to stay in business?  Under-budgeted agencies are turning increasingly to these tactics in an effort to obtain revenue for operating expenses.  Will your company be next?

Fortunately, you can take pro-active steps to avoid these dire consequences.  The IRS and courts use a list of 20 factors as an aid in determining whether a worker is an employee or an independent contractor.  The test is not a math problem; you need to do more than prevail on 11 of the 20 factors.  On the contrary, the test is rather subjective and that’s part of the problem.  You need to prepare in advance to make sure you land on the independent contractor side when the agency evaluates each individual factor.  The factors are discussed below.

(1)   Do you direct or control the manner or method by which instructions are given to the person performing services?

A worker who is required to comply with another person’s instructions about when, where, and how he is to work is ordinarily an employee. This control factor is present if the person or persons for whom the services are performed have the right to require compliance with instructions.  On the other hand, constraints imposed by your customer’s demands and government regulations do not determine the employment relationship.  Your efforts to monitor, evaluate, and improve the results of ends of the worker’s performance do not make the worker an employee.  Work by independent contractors is often performed to the exacting specifications of your customer.

 (2) Do you require the person performing services to undergo particular training?

The “training factor” refers to an experienced worker giving guidance to new workers to demonstrate how the instructions must be followed.  For example, people who are required by the company to attend more training than was mandated by the government have been deemed employees.  People who arrange for their own training tend to be deemed independent contractors.  Familiarizing a person with a customer’s needs does not constitute training.  Likewise, explaining the paperwork the independent contractor needed to complete in order to get paid does not constitute “training.”

(3)  Are the services performed by the individual integrated into the regular functioning of your business?

The “integration factor” refers to whether a business could continue without the contribution of the person’s services.  Integral services are more likely to be subject to the business’ control.

(4)  Do you require that services be provided by a particular individual?

If the services must be rendered personally, presumably the person for whom the services are performed is interested in the methods used to accomplish the work as well as in the results.  If your independent contractor has the power to hire a substitute to actually perform the services, that power strongly tends to show an independent contractor relationship.

(5)  Do you hire, supervise, or pay the wages of the individual performing services?

This factor tends to state the obvious.  Supervision tends to show an employee relationship.  Where the company does not confer benefits such as paid leave, health insurance, life insurance, or retirement benefits, this suggests an independent contractor relationship.

 

(6)  Is there a continuing relationship between you and the person performing services which contemplates continuing or recurring work, regardless of whether that work would be full- or part-time?

A continuing relationship between the worker and the person for whom the services are performed tends to indicate an employer-employee relationship exists. A continuing relationship may exist where work is performed at frequently recurring although irregular intervals.  Conversely, contracts of a set length often indicate independent contractor status.

 (7) Do you require the individual to perform services during established hours?

The establishment of set hours of work by the person or persons for whom the services are performed is a factor indicating control.  The absence of set hours or a minimum number of hours tends to indicate an independent contractor relationship.

(8)  Do you require the individual performing services to be devoted on a full-time basis to your business?

If the worker must devote substantially full time to your business, that requirement tends to show an employee relationship because you have control over the amount of time the worker spends working and impliedly restrict the worker from doing other gainful work.  An independent contractor, on the other hand, is free to work when and for whom he chooses.

(9)  Do you require the individual to perform services on your premises?

The performance of work on the premises of the company suggests control over the worker, especially if the work could be done elsewhere.  Where the person has no specific work location, a finding of an independent contractor relationship is more likely.

(10)    Do you require the individual performing services to follow the order of work that you have established?

If a worker must perform services in the order or sequence you set, that requirement suggests employer control.  An employee is typically not free to follow his own pattern of work but must follow the established routines and schedules of the company.

(11) Do you require the individual performing services to make oral or written progress reports?

A requirement that the worker submit regular or written reports to the person for whom the services are performed indicates a degree of control typically present in an employee relationship.

(12)    Do you make payments to the individual for services on an hourly, weekly, or monthly basis?

Payment by the hour, week, or month generally points to an employer-employee relationship, provided that this method of payment is not just a convenient way of paying a lump sum agreed upon as the cost of a job.  Payment made by the job or on a straight commission, on the other hand, generally indicates that the worker is an independent contractor.   The independent contractor status is also indicated when the company does not withhold taxes or benefits on behalf of the worker.

(13)    Do you pay expenses for the person performing services?

If the company pays the worker’s business and/or traveling expenses, the worker is ordinarily deemed an employee.

(14)    Do you furnish the tools and materials for use by the person to perform services?

If the company furnishes significant tools, materials, and other equipment, that fact tends to show the existence of an employer-employee relationship.  Where a worker furnishes his own tools, that fact tends to support the existence of an independent contractor relationship.

(15)    Has the person performing services invested in the facilities used to perform services?

If the worker invests in facilities that are used by the worker in performing services and are not typically maintained by employees, that factor tends to indicate that the worker is an independent contractor.  On the other hand, lack of investment in facilities indicates dependence on the person or persons for whom the services are performed for such facilities and, accordingly, the existence of an employer-employee relationship.

(16)    Does the person performing services realize a profit or suffer a loss as a result of the performance of the services?

A worker who can realize a profit or suffer a loss as a result of the worker’s services is generally an independent contractor; the worker who cannot is an employee.  This factor reflects the shift in emphasis away from the subjective inquiry about “control” toward something that can be measured.   Courts focus on whether the worker has an entrepreneurial stake in his work.  This factor is powerful because independent contractors tend to be entrepreneurs; employees tend to have less ability to affect the income they generate.

(17)    Does the person perform services for two or more employers simultaneously?

If a worker performs services for two or more companies at the same time, that factor generally indicates that the worker is an independent contractor.  If the independent contractor agreement prohibits the worker from providing services to others, that fact will lean toward a finding of an employee relationship.

(18)    Does the person performing services make the services available to the general public?

The fact that a worker makes his services available to the general public on a regular and consistent basis indicates an independent contractor relationship.

Workers who are paid by the job, chose their own work hours, have the right to refuse assignments, and can work for others, are typically deemed independent contractors.  If the worker operates as a partnership, limited liability company, or a corporation, that fact will also weigh in favor of an independent contractor finding.

(19)    Do you have a right to discharge the individual performing services?

The right to discharge a worker is a factor indicating that the worker is an employee and the person possessing the right is an employer. An employer exercises control through the threat of dismissal, which causes the worker to obey the employer’s instructions. An independent contractor, on the other hand, cannot be fired so long as the independent contractor produces a result that meets the contract specifications.

(20)   Does the person performing services have the right to end the individual’s relationship with the employer without incurring liability pursuant to an employment contract or agreement?

This is the flip side of Factor #19.  If the worker has the right to end his relationship with the company any time he wishes without incurring liability, that factor indicates an employer-employee relationship.  A worker who breaches an independent contractor agreement, however, is subject to contractual liability for damages.

As you can see, these factors can be very subjective.  Whether one factor weighs in favor of a finding of an employee or independent contractor relationship can depend on which side of the bed the auditor woke up on.  Remember, the agency is motivated to find the existence of an employee relationship because that relationship will generate revenue.  Accordingly, it is imperative that the company develop a strategy to make it difficult to support a finding of an employee relationship and to implement that strategy immediately.  If you wait till one of your independent contractors files for unemployment benefits or an agency picks your name out of a hat for an audit, it may be too late to put the positive spin on your business model.  When that seemingly innocuous government questionnaire arrives in the mail, handle it with utmost care and at the highest level.  Because the test is subjective and no one factor is controlling, a careless answer or ambiguous word choice could make it easy for the government to brand your independent contractors as employees.

If you would like more information about these issues, please contact Scott Thomas.   Scott has secured victories for firm clients in Ohio, Kentucky, Indiana, New York and Pennsylvania against claims by state and federal agencies that the client’s independent contractors were employees.  He has assisted clients in developing proactive strategies to strengthen the company’s shield against such accusations.  He welcomes the opportunity to work with you on your case.  His direct line is 859.578.3862.  You can email him at [email protected].  If there is a particular topic you would like to see addressed in a blog, please send Scott an email with your ideas.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

You started your business on a shoe-string but you’ve worked hard and built it up.  Now you’re at the point where you’re ready to take on other people to help shoulder the work.  You’ve interviewed several candidates you think have the potential to become true partners as you take your company to the next level.  But then you think, “What if it doesn’t work out?”  Your mind starts racing.  “What if I invest in this new employee, provide expensive training, share my business model, provide access to my hard-won customers, and then he/she leaves to go to my competitor?  Or decides he/she can hang up his own shingle?”  So you decide to make the prospective employee sign a covenant against competition.  If you go that route, there are a number of pitfalls that you need to avoid.  American judges don’t like non-competes because they are a restraint on free trade.  Courts will enforce them but they have to be fair and reasonable or your non-compete agreement won’t be worth the proverbial paper it’s written on.  Here are the “Top Ten” things to keep in mind.

• New employee. If you think you need the protection of a non-compete, make it part of the hiring process.  Once an employee has begun work, the employer must provide some additional value in exchange for the employee’s promise not to compete when the employment ends.  When the agreement is hammered out at the beginning, no consideration beyond the job itself is necessary to support the agreement.
• Geography. You may want to make the new employee agree not to compete with you in the same galaxy but non-compete agreements must be reasonable.  Consider how far your most distant customer is.  Pushing the envelope beyond that distance is dangerous.  Try to match the non-compete zone to your company’s footprint.  Pick a radius to be drawn from each place where you do business.  The reasonableness of the length of the radius will vary with each business.  If it’s more appropriate, you may specify a city, or a county or other defined region but be prepared to show that you have customers to protect in the territory you’ve identified.
• Duration. As with geography, you need to pick a time period that is reasonable.  You may wish to prevent the employee from competing till the rocks melt with the sun but judges will take a red pen to your agreement.  Again, the time period varies with the nature of the employer’s investment.  In some businesses, a year is appropriate; in others, two years might be reasonable.  Pushing it past two years is difficult.
• Activities. The activities that are prohibited must be spelled out clearly and in detail.  If any ambiguity exists, the law requires the Court to interpret the agreement in favor of the employee.  Accordingly, you must state exactly what your new employee cannot do in the event the employment ends.  In this regard, it’s a good idea to define what your competitors look like—without naming them.  You don’t want your employee to have any wiggle room.
• Injunctive relief. An injunction is an order from the Court that, in this case, would require your employee to refrain from violating the contract.  If the employee continues to violate the agreement, the Court can punish the employee via its contempt powers.  Your agreement should require the employee to agree to the things you would otherwise have to prove to the Court.  For example, the agreement should specify that the employee understands and agrees that if he were allowed to compete with the employer during the time and in the locale specified, you would suffer “irreparable harm,” i.e., harm that could not be remedied by mere dollars and cents.  By having the employee agree to the elements you would have to prove, you avoid much of the risk of litigation and make it much less expensive.
• Damages too. Your agreement should also specify that you are entitled to damages.  I know what you’re thinking, that I just said the employer has to prove “irreparable harm” to get an injunction.  True enough, but your employee will have violated the agreement for some period of time before you get a chance to persuade a judge to give you the injunction.  In many cases, you won’t know that your employee has been unfairly competed for some weeks or months.  Your agreement should state that while you are entitled to injunctive relief going forward, you are also entitled to compensatory damages for the unfair competition that occurred before you obtained the injunction.
• No Bond, thank you. Before an injunction takes effect, the Court has to specify a bond.  The bond is a surety that can be used to compensate the employee if it later turns out that the Court should not have issued the injunction. You don’t want to have to pay a bond to get the benefit of the bargain you made with the employee.  So put that in the agreement: the employee agrees that no bond is necessary to make the injunction effective.
• No cherry-picking, if you please. While we’re making the employee promise not to compete, you ought to make him promise not to hire away your employees.  You don’t want to come in to work and find out that your ex-employee has made your secretary a better offer to come work for him five miles away.
• Re-start the clock. Five hundred years ago, Hamlet complained about “the law’s delay.”  Courts try to work quickly when it comes to temporary restraining orders but things still take time, more time than you probably like.  By the time you get your injunction, your former employee may have been improperly competing for six months.  It’s only fair that that six months not be counted against the non-compete period in your agreement.  Unfortunately, that’s exactly what will happen unless you put language in the agreement that will re-start the non-compete period.
• Attorney fees. In the absence of an agreement or statute, American litigants have to pay their own attorney fees.  You can change that by putting it in your agreement.  You can provide that the “prevailing party” gets an award of attorney fees from the other side.  You can even specify that the employee has to pay your attorney fees but not vice versa.  That sounds harsh but the employee is the one violating the agreement.  But you won’t get fees unless it’s in the agreement.

Lastly, the employer has to keep his nose clean too.  An injunction is what Courts call “equitable relief.”  The goal is fairness.  If the employer has violated the employment agreement is some way—e.g., not paying a promised bonus—the Court may deny a request for an injunction.  The Court is going to look at the conduct of both parties.

If you would like more information about these issues, please contact Scott Thomas.   Scott has secured victories for firm clients both seeking and defending claims for injunctive relief in Ohio and Kentucky courts.  He welcomes the opportunity to work with you on your case.  His direct line is 859.578.3862.  You can email him at [email protected].  If there is a particular topic you would like to see addressed in a blog, please send Scott an email with your ideas.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

• posted: Dec. 01, 2015
• Hemmer DeFrank Wessels PLLC
• Uncategorized

Written By: Justin Whittaker

What happens when your previously reliable commercial tenant stiffs you on the rent?  If you are a commercial landlord in Kentucky, you’ve likely had to grapple with this question.  If you are a commercial landlord who has not yet faced this issue, give it time; you’re up next.  All landlords have a fundamental interest in securing a responsible tenant to occupy their property, the security of their property, and collecting rent for the use of their property.  In the event of a breach of a commercial lease, the last thing the commercial landlord wants to do is misstep in securing its rights.  Any misstep may result in landlord being left out in the cold on months of rent, and damage to its property.  These risks will rear their ugly heads if the commercial eviction is not handled properly.

In Kentucky, the commercial eviction procedure is known as a “forcible detainer” proceeding.  The purpose of a forcible detainer proceeding is to simply determine who has the right to possession of the commercial property at issue.  Forcible detainer proceedings arise if the commercial tenant hasn’t paid rent, or if it has otherwise failed to comply with other terms of the commercial lease.  In order to recover the money owed by the tenant for back rent, late fees, damages, etc., a landlord is required to file a separate civil action against the tenant.  In either case, the commercial landlord must act swiftly – and act correctly – to secure its rights.

Commercial landlords are required to provide proper written notice and an opportunity for the tenant to cure its breach of the commercial lease.  If the commercial tenant fails to cure its breach within seven days of proper notice, the landlord must proceed formally by filing a forcible detainer complaint to evict the tenant.  After the complaint is filed, the court will schedule a hearing.  In Kentucky, a representative of the landlord must appear at the hearing to offer testimony as to the landlord’s right to possession of the property.  If the judge grants a forcible detainer judgment, the tenant has seven days to either vacate the property or appeal.  At this point, the commercial tenant can either make plans to vacate the property, appeal, or try to make a deal with you.

Resolution at this point may sound great.  It is important, however, that in your eagerness to put the matter behind you, you do not give up your rights to continue collecting rent and enforcing the commercial lease.  If the tenant appeals the forcible detainer judgment ordering it to vacate, the court will require it to post a bond in the form of ongoing rent payments.  The court clerk will hold these funds until the appeal is resolved.

If the tenant does not file an appeal but also does not willingly vacate the property by the end of the seventh day, the landlord must obtain a writ of possession from the district court judge and ask the County Sheriff to enforce the judgment.  The Sheriff will require a fee for this service, and precise instructions as to the removal of the tenant, either by “put out” or “set out.”  The Sheriff is then authorized to physically remove the tenant and reclaim the property for the landlord.  You may be tempted to avoid the hassle and expense of enlisting the Sheriff’s services and resort to “self help” in evicting the deadbeat tenant.  It is important to understand the risks to the self-help approach.  Regardless, once you have successfully removed the commercial tenant, you will need to secure as much of the back rent as possible through the enforcement of a “landlord’s lien” on the personal property of the tenant.  It is critical that you differentiate between the value of your lien and the overall value of the tenant’s property.  While you are entitled to receive value for rent of your property, you are not entitled to convert the tenant’s property in excess of the value of your lien, lest you face a lawsuit for damages and attorneys’ fees from the tenant.

If you need assistance with these issues, please do not hesitate to contact Justin Whittaker at 859.344.1188.  Justin is also happy to help you prepare a commercial lease agreement.  You can email Justin at [email protected].

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

• posted: Nov. 23, 2015
• Hemmer DeFrank Wessels PLLC
• Uncategorized

Written By: Matthew T. Cheeks

Has your practice done a HIPAA Risk Analysis lately?  Indiana provider pays $750,000 settlement for HIPAA violations.

Hacking and data breach incidences are increasingly common and have become a fact of life in modern business.  Regardless of the sector or industry, individuals rarely have to wait long before the next hack or breach grabs national headlines (e.g., government, banking, retail or healthcare).  The constant media attention and an increased awareness of the risks of identity theft have driven healthcare consumers’ concerns about the use and security of their electronic protected health information (ePHI).  This growing concern and the ease of electronically filing a Health Insurance Portability and Accountability Act (HIPAA) complaint via the U.S. Department of Health and Human Services Office for Civil Rights’ (OCR) online Complaint Portal have led to tremendous increases in the number of HIPAA complaints OCR receives.  For instance, there was a 16 percent increase in the number of complaints received between 2011 (9,018) and 2012 (10,457).  The number of complaints increased 24 percent in 2013 (12,974) and jumped 37 percent in 2014 when OCR received 17,779 complaints.  As healthcare consumers’ interest in ePHI has grown, so too has OCR’s enforcement efforts, and OCR publicly maintains that enforcement is a high priority.

The natural result of these factors is the increased risk to healthcare providers of potentially significant liability, particularly growing out of the failure to be proactive in guarding ePHI.  For example, OCR recently announced the $750,000 settlement of potential violations of HIPAA’s Security Rule and Privacy Rule against Cancer Care Group, P.C. (CCG), an Indiana-based group that includes 18 physicians.

CCG self-reported the theft of “computer server backup media” (e.g., back-up tapes) containing the unencrypted ePHI of 55,000 patients from a CCG employee’s vehicle in August 2012.  OCR’s investigation revealed that “CCG failed to conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of ePHI help by CCG.”  OCR further found that CCG had “failed to implement policies and procedures that govern the receipt and removal of hardware and electronic media that contain [ePHI] into and out of a facility, and the movement of these items within the facility.”

While the impermissible disclosure of ePHI of 55,000 patients certainly played a role in the outcome of OCR’s investigation, it is clear that CCG’s failure proactively address the security of ePHI was a—if not the—significant factor.  OCR reinforced its emphasis on the Risk Analysis and Risk Management requirements (45 C.F.R. §164.308(a)(1)(ii)(A) and (B)) in the Resolution Agreement and required CCG adopt a “robust corrective action plan” subject to OCR’s review and approval.

Despite OCR’s efforts in recent years, the U.S. Department of Health & Human Services Office of the Inspector General (OIG), Office of Evaluation and Inspections, released two reports in September 2015 (found here and here) calling on OCR to strengthen its enforcement efforts regarding general privacy standards and security breach reporting requirements.  OCR agreed with the OIG’s reports, and indicated that it intends to do just that (the implementation of Phase 2 audits in 2016 will be part of these efforts).

Thus, all signs point to increasing risks for providers with respect to ePHI and the need to be proactive about the security of ePHI.  The unfortunate fact, however, is that policies and procedures—or lack thereof—similar to CCG’s are probably not uncommon.  Providers are too often reactionary, addressing these issues only after a breach for a variety of reasons (e.g., costs of risk analyses, costs of implementing recommended safeguards, or even a general unawareness of the need for the analyses).  Old adages often hit the mark and, when dealing with ePHI, an ounce of prevention is truly worth a pound of cure.

Matthew Cheeks is a trial attorney with Hemmer DeFrank Wessels PLLC.  His practice focuses on helping individuals and businesses solve complex problems through negotiation, mediation, arbitration and trial.  You can reach him at [email protected].

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

• posted: Nov. 12, 2015
• Hemmer DeFrank Wessels PLLC
• Uncategorized

Written By: Kyle M. Winslow

Limited liability companies (“LLCs”) have become a popular business entity for individuals in Kentucky. One of the main reasons that Kentucky small business owners choose the LLC is because of the protection offered by Kentucky Revised Statute 275.150 – “no member…of a limited liability company…shall be personally liable by reason of being a member…for a debt, obligation, or liability” of the LLC. Generally, LLC members can take business risks and creditors cannot seek their personal assets should their business ventures fail.

However, the LLC protection is not absolute. “Veil piercing” is an equitable remedy that allows a court to impose personal liability on shareholders for a corporation’s wrongful acts. In Turner v. Andrew, the Kentucky Supreme Court stated that the doctrine can also apply to LLCs.

In 2012, the Supreme Court of Kentucky clarified the test for veil piercing in Inter Tel Techs v. Linn Station, LLC. While Inter Tel Techs discusses veil piercing in the context of a corporation, Kentucky law does not distinguish between corporations and LLCs when analyzing the equitable remedy. In Inter Tel Techs, The Supreme Court stated that in its determination of whether to pierce the corporate veil, trial courts should essentially resolve two dispositive elements: (1) domination of the corporation resulting in a loss of corporate separateness and (2) circumstances under which continued recognition of the corporation would sanction fraud or promote injustice.

So how does the veil piercing doctrine affect small businesses? In Inter Tel Techs, the Court noted that in assessing the first element above, courts give the most emphasis to several factors, one of which is the egregious failure to observe legal formalities.

In my practice, piercing the corporate veil has come up most often where small businesses fail to follow the legal formalities associated with the business entity. This can include failure to hold meetings, failure to keep records of important decisions, and failure to monitor the activities of its members. To avoid personal liability, LLC members should make sure that they know the ins and outs of their LLC’s operating agreement and strictly comply with the agreement’s provisions.

Our team at Hemmer DeFrank Wessels is ready to answer any questions that you may have about your operating agreement or corporate bylaws, or how the legal doctrine of piercing the corporate veil may affect your business.

Kyle Winslow is an attorney with Hemmer DeFrank Wessels PLLC. He helps business professionals solve problems in Kentucky, Ohio, and Indiana.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

• posted: Oct. 30, 2015
• Hemmer DeFrank Wessels PLLC
• Uncategorized

Written By: Kyle M. Winslow

The construction industry is on the rebound in Kentucky and throughout the rest of the country. In northern Kentucky, our river cities are booming with various development projects. Nevertheless, in a good or bad economy, contractors and subcontractors encounter payment problems.

Kentucky’s mechanic’s lien statutes, found in Kentucky Revised Statutes (“KRS”) 376, provide protection to construction companies who furnish materials and labor on public or private projects.

While some of the statutes’ terms are interpreted liberally, Kentucky courts have consistently held that lien claimants must strictly comply with the notice requirements of KRS 376. Due to the demands of the construction industry, contractors and subcontractors routinely miss these deadlines and forfeit the leverage and security that accompany a mechanic’s lien.  The general notice requirements for private projects can be simplified into four steps:

(1) Preliminary Statement of Lien. The lien claimant should file a Preliminary Statement of Lien with the county clerk to secure priority over subsequently recorded liens. While the Preliminary Statement of Lien is not required to establish a valid mechanic’s lien, it protects the lien’s precedence. Since it’s not required, there is no deadline to file the Preliminary Statement of Lien.

(2) Notice of Intent to File Lien. Prior to filing the Lien Statement, subcontractors must notify in writing the owner of the property to be held liable or his authorized agent, of their intent to file a lien. This notification must be completed within 120 days on claims in excess of $1,000 (75 days on claims amounting to less than $1,000) after the last item of material or labor is furnished.

(3) Lien Statement. Lien claimants must file their Lien Statement with the county clerk within 6 months of the last day on which the lien claimant last furnished labor or materials. KRS 376.080(1) imposes strict requirements on the form of the Lien Statement.

(4) Notice to Property Owner. The lien claimant must send by regular mail a copy of the Lien Statement to the property owner at his last known address within seven days of filing the Lien Statement. Failure to follow this last requirement dissolves the lien.

In my practice, when a client anticipates payment problems, I immediately calendar all four steps on my personal calendar and on my firm’s litigation practice group calendar. I have forms for all four steps so when a deadline arrives, I’m prepared to take action. Should your company encounter payment problems, I’d encourage you to contact a construction lawyer familiar with the ins and outs of KRS 376. While many of the deadlines seem simple, they often involve complex factual issues.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.

 

It’s a nice fall day and you sit down with a cup of coffee to go through your mail.  You see you’ve got a letter from the County Auditor and you hold your breath.  You open the letter and breathe a sigh of relief when you see the bold words “This is not a tax bill.”  You read on and learn that the county thinks your property has increased in value.  For about 30 seconds, you feel good, as you reflect on the wisdom of your investment.  Then it sinks in that your Ohio property taxes are going up.  Not just one year but every year after that.  The notice typically provides scant information about the process and what rights you have as a property owner.  Many property owners are unaware of their ability to fight the county’s determination.  The good news is that you have the tools to contest an unfair valuation.

Years ago, the value of your property would stay unchanged until a sale occurred.  An “arm’s length” sale between strangers is always the best evidence of a property’s value.  Ohio counties have gotten more aggressive in recent years to increase their tax base.  County auditors will now increase a property’s value on their records if they feel they have any justification for doing so, whether it be a comparable sale down the street or a “drive-by” appraisal by a county employee or independent contractor.

The first step is to seek a review by the County’s Board of Revision.  You begin this process by filing a Complaint with the Board.  That sounds difficult but it’s really just a form that requires you to identify the property and explain why you think the valuation is unfair.  That is, you need to tell the County what you think the valuation should be and why.  At this stage, only broad brush strokes are required.  The Complaint form is usually available online.  The Complaint must be filed by March of the following year.  For example, if you got a notice this week, your Complaint would need to be filed in March 2016.

The Board will set your Complaint for a hearing.  That hearing will usually be conducted in May or June.  The hearing will typically be conducted at a conference room at the county offices.  The usual players who appear are the County Auditor, the County Attorney, the County’s appraiser, and staff members.  An attorney for the pertinent school district will often appear as well.  School districts jealously protect the auditor’s valuations because they get the lion’s share of these revenues.

Convincing the Board to overturn the Auditor’s value is a tall order.  To prevail, you have to convince the Board that if they affirm the Auditor’s opinion, their decision will be reversed on appeal.  To get that kind of traction, you must present evidence at this hearing to support your opinion of the property’s value.  You are not required to have an attorney at this hearing but you have little chance of success unless you hire an appraiser.  The appraiser you select must not only prepare a report but also be willing to testify at the hearing.  Without testimony—and the opportunity to cross-examine your appraisal, the Board may reject the appraisal report itself.  Consequently, you want to be careful to select an appraiser who not only knows how to value your property accurately, but who can also communicate that valuation to the Board effectively.  You need to work closely with your appraiser to determine the best strategy for calculating the value of your property.  While there may be different ways to get to your number, choosing the Cost Approach, the Sales Comparison Approach, or the Income Capitalization approach may have strategic consequences you need to consider in advance.

You will also have an opportunity to examine the Auditor’s evidence.  An attorney accustomed to these proceedings can be helpful in this regard.  The time a county takes to render a decision varies but you can typically expect a decision within 30 days.  If that decision is not in your favor, you can ask the Board of Tax Appeals (BTA) to review the case.  You only have a short time to make this choice.  Hiring an attorney at this stage is usually critical, if only because of the intricate procedural requirements imposed by the BTA.  A misstep on any of these procedural issues may result in the loss of your appeal on a mere technicality.  The BTA may conduct a hearing in Columbus but it will usually decline to hear evidence that was not presented to the Board of Revision.  This underscores why it is so important to present your entire case to the lower Board.  A property owner who saves the best witness for the BTA may find that witness never gets heard.  Because the BTA operates state-wide and has no connection to the County, some property owners feel they get their first objective consideration at this stage.

The BTA usually takes much longer to render a decision than the Board of Revision.  The tax bill based on the increased valuation will usually come due while your BTA case is still pending.  In this situation, your attorney can often negotiate an arrangement with the County to ensure your account is not deemed delinquent.

If the BTA decides the case against you, the decision may be appealed to the Ohio Supreme Court.  As before, the Supreme Court’s review will be limited to the issues before the BTA.  The Supreme Court will refrain from disturbing a BTA decision if there are reasonable grounds to support it.  That is, they will not intervene to say the BTA should have given more weight to your appraiser’s testimony than the County’s.  Still, the Supreme Court will carefully review the BTA’s decision to ensure it conforms to Ohio law and judicial precedent.

About Finney Law Firm, LLC

Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation.  FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.

FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.

For more information about Finney Law Firm, visit finneylawfirm.com.

Media Contact: Mickey McClanahan; [email protected]; 513.797.2850.