Healthcare Reform Marches On

The White House has been working diligently on healthcare reform efforts, as promised during President Obama’s campaign. Around the country, healthcare providers and their attorneys (such as myself) are following and/or participating in the developments. Here is a summary of some activity in the past week:

  • Last week (on June 16, 2009), Peter R. Orszag, Director of the Office of Management and Budget,, posted an entry on the OMB Blog June 16th stating that in addition to the White House’s commitment to ensuring healthcare reform is “deficit neutral”, the healthcare system as a whole needs to adopt best practices that achieve higher quality and lower cost throughout the country. I heard Mr. Orszag give a speech last year in which he made the same pitch for higher quality and efficiency as a necessary part of the effort to lower healthcare costs. This has become a theme of the White House’s health care reform efforts.
  • On the same day (June 16), Douglas W. Elmendorf, Director of the Congressional Budget Office (“CBO”), issued letters to the Chairs of the Senate Budget Committee and the House Ways and Means Committee. The upshot of the letters, as I read them, is that fundamental changes in healthcare delivery and financing are believed to be needed for significant reductions in federal healthcare spending to occur. This is consistent with Mr. Orszag’s message (see above). (I wonder if they coordinated their efforts.) Mr. Elmendorf says: “In the absence of significant changes to policy, rising costs for health care will cause federal spending to grow much faster than the economy, putting the federal budget on an unsustainable path.” Citing an interest by some in policy changes combined with “a mechanism or framework to impose ongoing pressure for achieving efficiencies in the delivery of health care”, he concludes that, absent “meaningful reforms”, “the substantial costs of many current proposals to expand federal subsidies for health insurance would be much more likely to worsen the long-run budget outlook than to improve it.”
  • The CBO’s review of pending reform proposals as described above seems to have put reform effort on a path longer than what the White House had hoped for.
  • Yesterday (June 22), President Obama reported that, over the weekend, an “understanding” about upcoming reform was reached that would close Medicare Part D’s “doughnut hole.” The hole is a gap in prescription drug coverage that requires seniors to pay out-of-pocket for costs between $2,700 and $6,100. The President reports: “So as part of the health care reform I expect Congress to enact this year, Medicare beneficiaries whose spending falls within this gap will now receive a discount on prescription drugs of at least 50 percent from the negotiated price their plan pays.” AARP supports this reform effort. The change reportedly will cost drug manufacturers $80 billion over the next ten years.
  • Yesterday, President Obama also signed into law the Family Smoking Prevention and Tobacco Control Act of 2009  that gives the FDA, for the first time, the power to regulate the tobacco industry. 
  • Potential cuts in Medicaid payments to states, as part of healthcare reform, have been a hot topic over the past couple of days. Senator Dianne Feinstein, from California, stated on CNN’s State of the Union that changing the rate would have a huge impact on her state that would “take down her state.” Not surprisingly, then, she questioned her ability to support such a change. The White House responded by pointing out that California has received billions of dollars in Medicaid assistance as a result of this year’s stimulus bill.

Home Improvement Contractor Act is Coming to Pennsylvania

 

The Home Improvement Contractor Registration Act has become the law in Pennsylvania and is due to go into effect this Summer. At least part of the goal of this Act is to curb the impact of “fly-by-night” contractors by requiring all contractors that work in the residential home improvement area to register in a statewide database. The Act is designed to carry enforcement provisions and serve the purposes of protecting the public as well as legitimate contractors. It is expected that a form contract will be promulgated prior to the effective date of the Act. Highlighted points include:

 

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What Can A Doll's House Teach Us about E-Discovery?

On February 13, 2009, Judge Sylvia H. Rambo of the United States District Court for the Middle District of Pennsylvania issued an E-discovery spoliation sanction in the case of Kvitka v. The Puffin Co., LLCThe case involved a dispute between Plaintiff, a collector of French and German antique dolls, and the publisher of Antique Doll Collector Magazine. After fielding complaints of disparagement from other advertisers, American Doll Collector (“ADC”) refused to continue running Plaintiff’s ads.

 Plaintiff discovered the exclusion and wrote to ADC’s advertising director that, “Apparently, this entire thing has a lot to do with some emails.” When Plaintiff later threatened suit, an ADC attorney wrote Plaintiff instructing her to preserve her computer’s hard drive and all the disputed emails.

Plaintiff originally sued in the Court of Common Pleas for Dauphin County, Pennsylvania. Plaintiff claimed that, while that case was pending, her laptop began acting “wonky” and she obtained a replacement from her company’s IT department. A week later, she threw her old laptop in the trash, but failed to take any efforts to preserve the emails. Plaintiff then discontinued the state court action and re-filed suit in Federal Court.

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Supreme Court Reverses Commonwealth Court in Billboard Case - Does size matter?

 

In an opinion issued by Chief Justice Castille, the Supreme Court reversed the decision of the Commonwealth Court and determined that the Zoning Hearing Board of Exeter Twp. was correct in determining that the Exeter Township Zoning Ordinance was exclusionary in limiting the size of a billboard to 25 square feet. The Supreme Court held that the owner of the billboard in question, Land Displays, was successful in presenting substantial evidence to enable the ZHB to conclude that a billboard is a legitimate means of displaying and communicating an advertising message to passing drivers on roads and highways, that a 25 sq. ft. sign is too small to convey this message and that a 300 sq. ft. sign is large enough for that purpose. The Court concluded that Land Displays proved a de facto exclusion.

Had the Supreme Court concluded otherwise it would have had a severe adverse impact upon the billboard industry in Pennsylvania. Ordinances in local municipalities would have been able to prevent industry standard size signs and thereby effectively preventing any new bill board signs to be erected. The industry had filed an amicus curiae brief in support of Land Displays.

The Court also remanded the case back to the Commonwealth Court because it had not rendered a decision on the issue raised by the Township that Route 422 presents a safety issue when signs are erected anywhere along that route and not just in the areas of Route 422 which the ZHB concluded there was no safety issue. We see no evidence on record which would enable the Court to overrule the well reasoned opinion of the ZHB on that issue. 

 

Environmental Hearing Board Denied Private Request from Toll Brothers, Inc.

In Toll Brothers, Inc. v. DEP and Bushkill Township, EHB Docket No. 2007-163-MG (Issued October 1, 2008) , the EHB denied Toll Brothers, Inc.s’ (“Toll Bros.”) appeal of DEP’s denial of Toll Bros. private request that the Township provide public sewer service to Toll Bros.’s proposed development. Toll Bros. filed a private request with DEP seeking to have the Department determine that Bushkill Township was not properly implementing the Township’s approved 537 Plan. The Township maintained that the area Toll Bros. proposed for development was in an area to have on-lot septic systems. Toll Bros. did not argue that the 537 Plan was inadequate to meet its proposed sewage needs.

The EHB found that the 537 Plan was not “concise” in relation to the areas to be publicly sewered. The 537 Plan made reference to areas that were developed at the time the plan was developed in 1973. Toll Bros. argued that portions of its proposed development were identified as being within the area to be publicly sewered and that the term “developed” was not defined in the Township’s 537 Plan.

The EHB found that DEP properly interpreted the 537 Plan in deciding that the area proposed by Toll Bros. was not within the area to be publicly sewered. There was no evidence that the area was “developed” in or prior to 1973, nor that the area was intended to be served by public sewers based on the description of the sewer service area.

Third Circuit - No Breach of Public Policy in Discharge

In a recent holding, the Third Circuit reiterated Pennsylvania’s “at-will” presumption in employment by declining to expand the recognized exceptions to that principle. In Pennsylvania, an at-will employee can generally be discharged at any time, with or without a reason. However, Pennsylvania courts have in the past recognized an exception where an employee’s termination violates a “clear mandate of public policy,” but such situations have been limited to circumstances in which an employer: (1) requires an employee to commit a crime; (2) prevents an employee from complying with a statutorily imposed duty; or (3) discharges an employee when specifically prohibited from doing so by statute.

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Environmental Hearing Board Issues Supersedeas On Blasting Authorization

In Brewster v. DEP and Highway Materials, EHB Docket No. 2008-196C (Issued September 18, 2008) , the Board granted the Brewester’s petition for supersedeas, effectively suspending blasting authorization issued by DEP to Highway Materials for quarry production blasting. 

Highway Materials had filed an action in the Montgomery County Court of Common Pleas relative to the blasting authorization at its quarry. The Court, relying on local zoning, issued an order authorizing Highway Materials to blast within 25’ of the Brewester’s property line and restricted the Brewsters’ from occupying certain portions of their property during blasting activity. 

Highway Materials submitted a revised blast plan to DEP, consistent with the Court of Common Pleas’ Order. DEP approved the revised blast plan authorizing blasting within 25’ of the property line and in effect within 300’ of the Brewsters’ residence.

The Brewsters appealed DEP’s approval of the blast plan. The Board conducted a hearing on the petition for supersedeas. After initially denying the petition for supersedeas, the Board reconsidered its decision and held that 52 P.S. §3316, section 16 of the Non-coal Surface Mining Act of December 19, 1984, P.L. 1093, pre-empts local regulation of blasting activity and that the local zoning ordinance, which would allow blasting within 25’ of a property line, is potentially in conflict with the 300’ setback from an occupied dwelling under the Department’s regulations at 25 Pa. Code §77.504. The Board held that the Brewsters were likely to prevail on the merits of their appeal given the clear regulatory requirement for a waiver to blast within 300’ of an occupied dwelling. The Board also held that the Brewsters had made a credible case in terms of showing irreparable harm.

WARNING -- Do Your Layoff Plans Comply with the WARN Act?

Unfortunately, the current economic climate has employers looking at the reality of layoffs and downsizing to weather this financial storm. When companies consider trimming their workforce to a significant degree, or plant closings to deal with tough economic realities, they often-times must also forewarn employees of these decisions. Aptly named the WARN Act, the federal Worker Adjustment Retraining and Notification Act, in effect since 1989, requires certain employers to provide sixty-days’ advance notice of such a “mass layoff” or “plant closing.” The purpose of the WARN Act is to give affected employees sufficient advance notice to adjust to and hopefully emerge from the impending job loss.

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Another GARA Victory

Recently, the Pennsylvania Superior Court once again provided "more bite" for the 18 year statute of repose, more fully set forth in the General Aviation Revitalization Act (GARA) of 1994, Pub. L. No. 103-298, 108 Stat. 1552, codified at 49 USC 40101 et seq, by refusing to permit Plaintiffs to perform an end run around of the repose period by "resetting the clock." In the matter of Moyer v. Teledyne Continental Motors, Inc., et al., No. 1402 EDA 2007, 2008WL3854350 (Pa. Super. Aug. 20, 2008), (reargument filed 9/3/2008) children of decedents killed when their aircraft crashed brought an action that included claims against the manufacturer of an aircraft engine. More than 18 years had expired from the date of delivery of the aircraft to its first purchaser. As to the manufacturer, Plaintiffs argued, unsuccessfully, that the trial court erred in refusing to find the issuance of a subsequent Service Bulletin constituted a "replacement part" as the term is defined in GARA. Plaintiffs argued, inter alia, that flight manuals have been ruled to be a "part" of the aircraft as they contain the instructions necessary for the operation of an aircraft and therefore, are inseparable from it. They then argued by extension that like flight manuals, a Service Bulletin is also necessary for the operation of an aircraft and, as such, are tantamount to a flight manual.

The Superior Court held that Plaintiffs' logic was flawed given the continual issuance of Service Bulletins on a variety of topics, and if the issuance of a Service Bulletin were permitted to reset the clock with each subsequent issuance, the intent of GARA -- to "ameliorate the impact of long-tail liability…"-- would be eviscerated. The decision provides yet another well reasoned victory affirming the GARA repose period.

Patent Owners Beware! Enforcement is More Difficult

Since the United States Supreme Court’s ruling in KSR v. Teleflex, 550 U.S. ___, 127 S. Ct. 1727, 82 U.S.P.Q.2d 1385 (2007), enforcing existing patents against infringers has become much more difficult. When cornered into litigation, potential infringers will commonly attack an infringement assertion through patent invalidity. The defendant will attack the validity of the issued patent by claiming the invention is not novel nor non-obvious.

In order for an invention to be patentable it must be new. This novelty requirement is inflexible and is defined in the patent laws. However, the other requirement for patentability, non-obviousness, is not so clear. The history in defining non-obvious has taken many turns in scope and content.

For an invention to be patentable, the invention should not be an obvious improvement over prior art. In the least, the invention should be more than a mere improvement that a "person having ordinary skill in the art" would anticipate. Graham v. John Deere Co., 383 U.S. 1 (1966) provided the specific factors that the courts should use in determining if a claimed invention is non-obvious, requiring a determination of the scope and content of the prior art, the differences between the claimed invention and the prior art, and the level of ordinary skill in the prior art. Further, the court held that secondary considerations could serve as indicia of non-obviousness, but only on a case-by-case basis. These secondary considerations include: commercial success, long-felt but unsolved needs, and failure of others.

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