Discrimination – Accessing an applicant’s profile may yield facts that are not essential to the hiring process, such as an individual’s race, color, sex (including pregnancy status), religion, national origin, disability, genetic information, age, and military status. Federal and state anti-discrimination statutes prevent employers from using certain non-job related information in making hiring decisions. Thus, accessing certain information from a social media profile could potentially lead to a discrimination claim by an unsuccessful applicant alleging that improper information was considered in the hiring process.

For purposes of determining what information may or may not be considered in hiring decisions, employers should review all applicable anti-discrimination laws. Below are the federal anti-discrimination statutes applicable to private employers:

• Title VII of the Civil Rights Act of 1964 (“Title VII”) – Employers with 15 or more employees are subject to Title VII, which prohibits discrimination on the basis of race, color, religion, sex, or national origin. Title VII was amended by the Pregnant Discrimination Act of 1978 to prohibit sex discrimination on the basis of pregnancy.

• Title I of the Americans with Disabilities Act of 1990 (“ADA”) – Employers with 15 or more employees are subject to the ADA, which prohibits discrimination in employment on the basis of disability and prohibits employers from asking prospective employees disability-related questions during the hiring process.

• Genetic Information Non-Discrimination Act of 2008 (“GINA”) – Employers with 15 or more employees are subject to GINA, which prohibits discrimination against applicants on the basis of genetic information, which includes information regarding an applicant’s genetic tests and the genetic tests of an applicant’s family members, as well as information about the manifestation of a disease or disorder in an applicant’s family members, i.e., family medical history. Although GINA has generally been a non-issue for employers, the disclosure of family medical history through social media, such as a Facebook post by an applicant informing others that she is raising money to support breast cancer research in memory of her mother and aunt, makes GINA a real concern.

• Age Discrimination in Employment Act of 1967 (“ADEA”) – Employers with more than 20 employees are subject to the ADEA, which protects people who are 40 years of age or older from employment discrimination on the basis of age.

• Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”) – All employers, regardless of the number of employees, are subject to the USERRA, which prohibits employment discrimination on the basis of military service or obligation.

Employers should also consider any state anti-discrimination laws to which they are subject. Most states have enacted statutes that mirror the federal anti-discrimination protections. Moreover, many states (not including Idaho) have extended their anti-discrimination laws to protect certain other classes, such as sexual orientation, gender identity, and/or marital status. In 2011, Senate Bill 1033 was introduced to the Idaho Legislature, which seeks to add sexual orientation and gender identity to Idaho’s Civil Rights Act; however, no action has been taken since January 24, 2011. Further, employers should consider local ordinances in effect that provide similar and sometimes greater protections against employment discrimination. For example, on December 21, 2011, the City of Sandpoint, Idaho passed Ordinance No. 1261, which added sexual orientation and gender identity to its anti-discrimination law already in place.

To ensure compliance with anti-discrimination laws, employers are encouraged to implement safeguards designed to prevent the use of improper information in making hiring decisions. These may include hiring a neutral third-party to search social media sites and filter out any non-job related information, or designating a member of management not involved in hiring decisions to search social media sites and screen out information that should not be considered in evaluating candidates for employment. If employers choose to access social media sites in the hiring process, they should do so consistently for all applicants. To help ensure compliance, these safeguards should be documented in a comprehensive written policy for management regarding the use of social media in hiring.

Privacy – If an applicant’s social media profile is not accessible to the public, an employer should never use methods aimed at circumventing the applicant’s privacy settings. For example, an employer is prohibited from using a current employee’s Facebook account to view an applicant’s private profile on Facebook. Such conduct violates the federal Stored Communications Act, which makes it illegal to intentionally access without authorization a facility through which an electronic communication service is provided. Further, such conduct could be the basis for a state law invasion of privacy claim against the employer. Again, the prohibition against accessing any applicant’s private social media profile should be contained in the written policy provided to management.

Required Authorization and Disclosures – The federal Fair Credit Reporting Act (“FCRA”) applies when an employer is seeking a “consumer report,” which is defined as any written, oral, or other communication by a “consumer reporting agency” (a third-party) that bears on the applicant’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living. The Federal Trade Commission recently stated that employers that rely on a social media background check service for information about job candidates must comply with the FCRA. If the FCRA is implicated, then the employer must obtain the applicant’s written authorization prior to the background check, and the employer must make certain disclosures to the applicant prior to taking adverse action based in whole or in part on the consumer report. Management should be aware of these requirements.

In conclusion, there are various legal issues employers should consider before searching applicants’ social media profiles. Employers should implement safeguards to minimize the legal risks associated with the use of social media in hiring and implement a written policy to help ensure manager compliance.

If your business does not currently have a written policy regarding the use of social media in hiring and you would like us to assist in drafting one, or you have any questions regarding this topic, please call 208.344.6000 or email corporate@hawleytroxell.com.

Ashby’s practice focuses on employment law and commercial litigation. He advises employers on labor and employment issues under state and federal law. He also represents employers in administrative proceedings and litigation involving claims of wrongful termination, discrimination, harassment, and claims under wage and hour laws. Ashby was a Law Clerk for the Honorable Stephen S. Trott, United States Ninth Circuit Court of Appeals. He earned his law degree from the University of Arizona College of Law.

Bjorkman’s practice focuses on real estate and commercial and real estate financing, including documenting loan originations and due diligence, while representing banks, financial institutions, and other institutional lenders. She was a Law Clerk for Judge James C. Morfitt, Third Judicial District, State of Idaho. Bjorkman earned her law degree from the University of Idaho. She is also active in the community, participating in Leadership Boise class 2011-2013, Boise Young Professionals, and CREW (Commercial Real Estate Women) Idaho.

Pantera is a member of Hawley Troxell’s Public Finance Group, and her practice includes bonds, banking, public finance, municipal law, and securities. She has worked with the public finance team in all areas, including representation of various entities as bond counsel, underwriter’s counsel, and disclosure counsel for public and private tax-exempt financings (such as financings for school districts, municipalities, and special purpose districts).

Pantera is a member of the National Association of Bond Lawyers, serves on the City Club of Boise Board of Directors and Executive Board, and also serves on the Board of Directors for Idaho Women Lawyers. In addition, she volunteers as a mentor to a refugee family through the Girls to Women program recently started by the International Rescue Committee.

Hawley Troxell is a longtime supporter of the WCA and is proud to be a Safety Level Sponsor of the 2012 TWIN awards.

Stark and Anti-Kickback Statutes.

1. Ethics in Patient Referrals Act (“Stark”). Under Stark, if a physician or a member of the physician’s family has a contract or other financial relationship with a hospital or other health care provider, the physician may not refer patients to the provider for certain designated health services payable by Medicare, and the provider may not bill Medicare for such services, unless the arrangement is structured to fit within a regulatory safe harbor. Stark is a strict liability statute: even technical violations require repayments. It is therefore imperative to structure and maintain contracts consistent with a regulatory safe harbor.

2. Anti-Kickback Statute. The Anti-Kickback Statute (“AKS”) prohibits anyone from knowingly and willfully soliciting, offering, receiving, or paying any form of remuneration to induce referrals for items or services payable by government health care programs unless the transaction is structure to fit within a regulatory exception. The statute is violated if one purpose of a contract or other transaction is to induce referrals unless the transaction satisfies a regulatory exception.

Penalties for Noncompliance. Violation of the AKS is a felony punishable by a $25,000 fine and up to five years in prison. Stark violations may result in a $15,000 penalty per improper referral. Providers who bill for services in violation of Stark or the AKS must repay payments received from government programs. In addition, Stark and AKS violations often result in False Claims Act violations, exposing providers to additional penalties of up to $11,000 per improper claim, treble damages, and potential qui tam lawsuits by disgruntled employees, competitors, or others who learn of the violations.

Top Issues for Physician Contracts. Given the massive exposure for even technical violations, it is critical to structure contracts appropriately at the outset and monitor continued compliance thereafter. Here are my top 10 regulatory issues to address when preparing or auditing physician contracts:

1. Have a signed, written contract. Stark and the AKS require signed, written agreements for independent contractor arrangements. Employment contracts need not be written, but it is generally a good idea to reduce them to writing to avoid disputes. Ensure both parties sign the contract before the services are performed or compensation paid.

2. Ensure the contract is current. Contract performance may morph over time. Ensure the contract is current and accurately documents the parties’ performance. In Kosenske v. Carlisle HCA (3d Cir. 2009), a hospital faced millions of dollars in penalties because the parties expanded the physicians’ services without amending or executing a new agreement. Do not continue performing after the contract has expired unless you fit within a different exception. Avoid unnoticed or unintended lapses in the contract by including automatic renewals subject to appropriate termination clauses.

3. Specify the services and compensation in the contract. The services performed and compensation paid must be stated in the contract. Do not pay or provide additional compensation, benefits or perks not specified in the contract (e.g., insurance, bonuses, side payments, free items or services, etc.) unless expressly permitted by a separate Stark or AKS exception.

4. Set compensation in advance. Stark and the AKS require that an independent contractor’s compensation, or an objectively verifiable compensation formula, be set in advance. Doing so may also avoid problems in an employment contract. Do not change an independent contractor’s compensation retroactively.

5. Beware changes to compensation within the first year. Stark and the AKS generally prohibit changes to terms that impact an independent contractor’s compensation during the first year. If you terminate an independent contractor arrangement within the first year, you generally cannot enter a new contract with the same physician or provider for similar services during the original one year period. These limits do not apply to employment contracts.

6. Pay fair market value. This is the single most important factor in evaluating a physician contract. The compensation must be appropriate to the services rendered. In Drakeford v. Tuomey Healthcare (D. S.C. 2010), a hospital was ordered to repay $45 million due to Stark violations, and faces an additional $200 million in False Claims Act penalties because the court found that its contracts with 18 physicians exceeded fair market value. When calculating fair market value, include all compensation paid to the physician, including insurance, benefits, and other perks. Providers are usually safe if the compensation is in the 50% to 75% range of relevant MGMA compensation surveys; however, differences in geographic location, specialty, services provided, productivity, hours worked, and similar factors affect fair market value. Parties often overestimate fair market value at the outset of a contract: actual productivity may not justify the compensation promised. Incorporating an appropriate productivity-based compensation formula can reduce the regulatory risk and ensure the long-term viability of the arrangement.

7. Do not pay based on referrals. Physicians may be paid a set salary or a fee per hour or service. They may be paid based on services they personally perform (e.g., per RVU, billings, receipts, encounter, etc.). They cannot be paid for referrals for items or services performed by others, including ancillary services referred by the physician. Outside of a qualifying group practice, contracted physicians generally cannot be paid according to the overall profitability of a facility, department, or cost center. Stark contains a limited exception that allows providers to condition compensation on a physician’s referrals for services directly related to the physician’s services if certain safeguards are met, but such a condition may not satisfy the AKS.

8. Ensure the agreement is commercially reasonable absent referrals. Only contract and pay for legitimate, needed services. Do not contract for unnecessary services or services that exceed those that are reasonable and necessary for legitimate business reasons apart from referrals. This was an additional basis for the $45 million verdict in Drakeford v. Tuomey Healthcare.

9. Comply with the contract. Perform the services required by the contract and pay according to services actually performed. Document performance through reports, time cards, or similar methods. Parties may become lax, modify their performance, or change the compensation without properly amending the contract, all of which can affect fair market value and result in Stark and AKS violations. In U.S. v. Campbell (D. N.J. 2011), a hospital violated Stark because the physician failed to perform the services for which he was paid. In U.S. v. Anderson (D. Kan. 1998), facility administrators and physicians were convicted of AKS violations and served prison time for the same reasons.

10. Remember contracts with family members. Stark also applies to financial relationships between a provider and family members of referring physicians, including spouses, children, and parents. Agreements with family members must also satisfy the foregoing requirements. Stark generally prohibits referrals between spouses for designated health services unless certain conditions are satisfied.

If Your Contract Violates Stark or the AKS…. If you discover that your physician contract fails to comply with Stark and AKS requirements, simply correcting the contract going forward is not enough. If a physician has been overpaid, the period of non-compliance under Stark is deemed to continue until the physician returns the amount overpaid. If you have received government payments for services referred by the physician, you likely have an affirmative obligation to report and repay those payments by the later of 60 days after discovery or the date your corresponding cost report is due. The knowing failure to timely report and repay overpayments is a violation of the False Claims Act and the Civil Monetary Penalties Law, subjecting the parties to additional fines and qui tam lawsuits in addition to repayments. Significantly, many of the recent enforcement actions have resulted from complaints filed by physicians who were excluded from beneficial transactions. If you think you have a problem, it may be wise to contact a qualified health care attorney to help you resolve the issues.

Conclusion. Given the huge exposure for non-compliance, it is far better to practice preventative medicine by ensuring that your physician contracts comply with Stark and the AKS at the outset and throughout the relationship.

If you have questions about these or other legal issue, please contact Kim Stanger at 208.388.4843 or email kstanger@hawleytroxell.com.

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1. 42 U.S.C. § 1395nn; 42 CFR § 411.350 et seq.

2. Designated health services covered by Stark include inpatient and outpatient hospital services; outpatient prescription drugs; clinical laboratory services; physical therapy, occupational therapy, or speech-language pathology services; radiology and certain other imaging services; radiation therapy and supplies; durable medical equipment and supplies; parenteral and enteral nutrients, equipment and supplies; and prosthetics, orthotics and prosthetic devices and supplies.

3. 42 U.S.C. § 1320a-7b(b); 42 C.F.R. § 1001.952.

4. 42 U.S.C. § 411.354(d)(4).

During Howell’s past tenure on the Board, he was heavily involved in the transition of College of Idaho presidents, a $50 million gift from the J.A. and Kathryn Albertson Foundation, and was involved in many other initiatives. At the conclusion of his previous board service, Howell was awarded an honorary doctorate from the College in recognition of his years of service to his Alma Mater. Howell is thoroughly looking forward to serving another term on the Board and being involved with the college again.

“We are pleased to have one of our partners serve the community through his work on the College of Idaho Board of Trustees. Two of our founding partners were alumni of the College of Idaho, and Hawley Troxell is pleased to continue to honor their memories by this service. I also know for a fact that the Board is thrilled to have Ken back,” said Managing Partner Steve Berenter.

A trademark is anything (a word, graphic, slogan, jingle, color, sound, or even a smell) that identifies, to the world, a business as the source of a particular brand of goods, and distinguishes it from all others. Our Intellectual Property practice group would chastise me if I failed to take this opportunity to emphasize that registering a trademark with the United States Patent and Trademark Office (USPTO) is an important step to ensuring the broadest possible protection for a trademark. What good is a brand if you do not take the necessary steps to protect it? You can pour your blood, sweat, and tears into establishing a brand, but if you do not register the trademark, you will have fewer remedies against another person that attempts to use your trademark or a confusingly similar one.

In comparison, an assumed business name (or doing business as or dba) is a rather meager concept. Specifically, it is a creature of a statute that codifies the basic policy that the public, and especially creditors, should be able to identify a business by searching some public database and finding an official contact person and mailing address for the business. That way, if Bob’s Anti-Ant Shack messes up a fumigation job, the customer can look up Bob’s Anti-Ant Shack online and determine that it is actually an assumed business name for ACME Chemical, Inc. and get the name and address where the customer may contact ACME Chemical, Inc.

But an assumed business name is not a trademark, and filing a Certificate of Assumed or Fictitious Business Name (the formal name for a dba filing) with the state does not afford you the same protection as a trademark. The assumed business name filing is merely a public notice filing, and the state can and will accept multiple assumed business name filings for the same name. Contrast this with the trademark registration procedure, where the application may be rejected by an examiner in the trademark office if it is confusingly similar to a previously registered trademark.

The filing of an assumed business name is still an important and necessary step if you are ACME Chemical, Inc. and you want to do business as Bob’s Anti-Ant Shack. In fact, it is required by Idaho statute, but please do not confuse it with a trademark because they are very different and function differently. If you would like assistance with examining your use of assumed business names or trademarks, please feel free to contact us at 208.344.6000 or email us at corporate@hawleytroxell.com.

Davis is a partner in the firm’s litigation practice group with an emphasis in employment, construction, and commercial litigation. Her practice focuses on construction-related litigation, arbitration, and mediation. She represents project owners, contractors, subcontractors, and design professionals in large, complex construction projects. Additionally, Davis serves on the Advisory Board for the Discovery Center of Idaho, Inc. and is a volunteer for Make-A-Wish of Idaho.

Points is a partner in the firm’s litigation practice group with an emphasis in professional negligence defense, commercial transactions, and natural resources litigation. She also provides numerous hours of pro bono work in the areas of child protection and domestic violence. Additionally, Points volunteers with the Idaho Volunteer Lawyer Program and the Idaho Junior Golf Foundation.

Managing Partner Steven Berenter commented, “Lynnette and Michelle are more than deserving of this special recognition. Their professional contributions to our firm and volunteer efforts within the community are commendable.”

Davis and Points will be honored at an awards dinner, along with the other Women of the Year recipients, on February 21, 2012.

1. Gifts to Patients. Federal laws generally prohibit offering gifts to government program beneficiaries to induce utilization of items or services payable by government programs (e.g., Medicare or Medicaid). The OIG does permit inexpensive gifts to program beneficiaries so long as (1) they are not cash or cash equivalents; and (2) they have a retail value of no more than $10 individually and $50 in the annual aggregate per patient. In addition, the OIG does allow discounts or write-offs to the financially needy if certain conditions are met. As for patients who are not government program beneficiaries, there is probably not much risk in offering reasonable appreciation gifts, especially if (1) practitioners follow the $10 per gift / $50 per year standard described above; (2) the patient’s services are not paid by insurance; or (3) the practitioner can otherwise prove that the gift is not offered to induce referrals.

2. Gifts to Other Practitioners. If the other practitioner is not a potential referral source, there is little risk in giving gifts. On the other hand, if the other practitioner is a potential referral source, then the fraud and abuse statutes generally prohibit offering, giving, or soliciting gifts with the intent to induce referrals. The OIG’s compliance guidance for physicians suggests that “nominal” gifts or gratuities may be permissible, but, unlike patients, offers no specific guidance as to what a “nominal” gift might be. In addition, a gift to or from a physician (or a physician’s family member) establishes a financial relationship that will trigger Stark. If the gift is to or from a physician (or a physician’s family member), Stark generally prohibits the physician from referring patients for designated health services , and prohibits the entity receiving the improper referral from billing for such services, regardless of the parties’ intent in giving the gift. The safest course is not to give or accept gifts to or from other practitioners if you may refer patients to or receive referrals from the other practitioner, especially if the referrals are for items or services payable by government programs.

3. Gifts or Appreciation Events for Medical Staff Members. The fraud and abuse statutes also apply to gifts offered by hospitals or other facilities to medical staff members if the gifts are offered to induce referrals. The Stark regulations contain an exception that allows hospitals and other entities with medical staffs to give medical staff members gifts or other non-monitory benefits if the following conditions are met: (1) the gifts do not exceed an aggregate value of approximately $300 per physician per year (subject to annual CPI adjustment); (2) the gift is not based on the volume or value of referrals; (3) the gift is not solicited by the medical staff; and (4) the gift is not intended to induce referrals. In addition, Stark allows hospitals or other facilities to provide one medical staff appreciation event for all medical staff members each year without impacting the $300 limit; however, any gifts or gratuities given at the event count toward the $300 annual limit.

4. Gifts from Vendors. The fraud and abuse laws also apply to gifts received from vendors if they are intended to induce referrals, especially orders for items or services payable by government programs. Again, the OIG compliance guidance for physicians suggests that “nominal” gifts may be permissible, but does not define what a “nominal” gift might be.

5. Charitable Donations. Purely charitable donations should not present a problem so long as they are not made with the intent to induce referrals. Stark contains an exception that allows physicians to make charitable donations to a hospital or other non-profit entity so long as they are not solicited or made in a manner based on the volume or value of any referrals, and are not otherwise made with the intent to generate improper referrals.

Conclusion. Giving gifts to potential referral sources may create unintended consequences for practitioners and health care facilities. Practitioners should not offer gifts as a way to reward past or induce future referrals unless the practitioner is certain that either (1) the gift is outside the realm of the fraud and abuse statutes; or (2) the gift fits within one of the regulatory exceptions, including those cited above. As a practical matter, gifts of nominal value should not create problems, but the state and federal governments offer little guidance as to what they would consider to be nominal.

For more information or to ask Kim Stanger a question about this topic, please email kstanger@hawleytroxell.com or call 208.388.4843. For regular Health Law updates visit www.healthlawattorney.blogspot.com.

1. 42 U.S.C. § 1395nn; 42 C.F.R. § 411.351 et seq.
2. 42 U.S.C. § 1370a-7b; 42 C.F.R. § 1001.952.
3. Idaho Code § 41-348.
4. 42 U.S.C. § 1320a-7a; 42 C.F.R. § 1003.101.
5. Idaho Code § 54-1814(8).
6. OIG Special Advisory Bulletin, Offering Gifts and Other Inducements to Beneficiaries (8/02).
7.  Id.
8. OIG Compliance Program Guidance for Individual and Small Group Physician Practices, 65 F.R. 59441.
9. “Designated health services” include clinical laboratory services; physical, occupational or speech therapy; radiology and certain imaging services; durable medical equipment and supplies; parenteral and enteral nutrients, equipment and supplies; prosthetics and orthotics; home health services; outpatient prescription drugs; and inpatient and outpatient hospital services. 42 C.F.R. § 411.351.
10. 42 C.F.R. § 411.353.
11. 42 C.F.R. § 411.357(k).
12. Id.
13. See OIG Compliance Program Guidance for Pharmaceutical Manufacturers, 68 F.R. 23738; see also J. Washlick & S. Welch, “Physician-Vendor Marketing and Financial Relationships Under Attack”, Journal of Health and Life Sciences Law, American Health Lawyers Ass’n (Oct. 2008); AMA Opinion E-8.061, Gifts to Physicians from Industry.
14. 65 F.R. 59441.
15. 42 C.F.R. 411.357(j).

In our role as legal counsel to non-profits we often advise as to “best practices” for their boards. The following is a list of some best practices that directors should consider implementing for their non-profit:

• Actively encourage all directors to attend board meetings and meetings of the committees on which they serve.
• Provide the board and its committees with information that is relevant, accurate, succinct, easy to understand, and free of technical jargon.
• Allow adequate time at board and committee meetings for members to ask questions and discuss issues.
• Allow time for executive sessions of the board on a regular basis.
• Create an atmosphere at board meetings that welcomes questions and does not shrink from challenges, without encouraging irrelevant digression.
• Enforce a board-adopted conflict of interest policy, which includes requiring board members to leave the room during discussions of matters in which they have a conflict.
• Ensure that accurate minutes of all meetings are maintained and take the time to read each set of minutes before they are sent out to board members.
• Distribute minutes promptly to board and committee members, including those not present at the meeting.
• Ensure that minutes are filed and accessible for future reference and in the event of litigation or a regulatory investigation.
• Create a document describing general expectations for board members (such as regular attendance at board meetings, adequate preparation for meetings, constructive participation in board discussions, disclosure of conflicts of interest, etc.) which is approved by the board, and periodically redistributed to each board member and discussed at board meetings.
• Include discussion of board member duties and rights and the potential for liability in board member orientation meetings and materials, and review such matters periodically at board and committee meetings or retreats or special educational sessions.
• Encourage board member attendance at director training programs offered by outside groups.

Brian is an associate in the Corporate and Real Estate Practice Groups. For more information or questions about this article or corporate governance in general, please contact Brian Aune at 208.388.4876 or email baune@hawleytroxell.com.