Client Alerts & Publications Archive

This update includes:

• American Health Care Act Passes House, but May Be Stalled in the Senate
• Three HIPAA Corrective Actions Announced in April; First Settlement with Wireless Health Services Provider Costs $2.5 Million
• Blood Testing Laboratory to Pay $6 Million to Settle Allegations of Kickbacks and Unnecessary Testing 

The Financial Industry Regulatory Authority, Inc. recently released additional guidance on social media and digital communications. FINRA previously issued guidance on the use of social media communications in Regulatory Notice 10-06 and Regulatory Notice 11-39.

The Uniform Commercial Code affects financial institutions in countless ways. From duties of care for customers to the banks’ inspection of checks, familiarity with the UCC is critical when examining legal disputes. This alert discusses recent developments in UCC law that provide insight into how courts examine these rules and financial institutions’ responsibilities under the UCC.

On May 1, Tax Notes published a flurry of revocations of private letter rulings that had been issued to regulated investment companies. In each of the revocations, at least one of the rulings requested in the original private letter ruling was that the income from a commodity linked note was qualified income for the purposes of Internal Revenue Code § 851.

On April 19, the House Financial Services Committee posted a “discussion draft” of a revised version of the CHOICE Act. The discussion draft contains most of the provisions in last year’s bill with a number of important changes.

The Municipal Securities Rulemaking Board recently withdrew a proposed rule from consideration by the Securities and Exchange Commission. The rule would have prohibited a broker, dealer or municipal securities dealer from effecting a customer transaction in municipal securities in an amount lower than the minimum denomination of the issue stated in offering documents.

This white paper addresses pay for success legislation that has been adopted at the state level, pointing out the various functions of the pay for success financing structure and how individual states have treated these components within their legislation.

The Financial Industry Regulatory Authority, Inc. recently released three Regulatory Notices related to its ongoing review of its members’ involvement in the capital formation process. 

The Financial Industry Regulatory Authority, Inc. recently requested comments on proposed amendments to FINRA Rule 2241 (on equity research) and FINRA Rule 2242 (on debt research) that would create a safe harbor for trading desk commentary distributed to eligible institutional investors subject certain conditions.

2016 was a record year for filings under the Telephone Consumer Protection Act of 1991. In 2016, litigants filed 4,860 TCPA lawsuits, an increase of nearly 32% from 2015. But what does 2017 hold? What can companies who call customers to service or collect debts expect?

This update includes: 

• As Genetic Testing Booms and Fraud and Abuse Scrutiny Increases, Providers Need to Keep Medical Necessity in Mind
• House Republican Leaders Attempt to Revive the American Health Care Act with Risk-Sharing Fund Amendment
• Failure to Conduct a HIPAA Security Risk Assessment Results in Fine and Corrective Action Plan for Federally Qualified Health Center 

On March 27, the U.S. Supreme Court granted certiorari in the case of In re the Village at Lakeridge LLC, under which an appeals court held that a claim of an “insider,” which is not counted for the purpose of creating an accepting impaired class for the purpose of “cramming down” a plan of reorganization over the opposition of a rejecting class, does not retain its status as a claim of an insider for that purpose once transferred to a noninsider third party.

Yesterday the Department of Labor released the final rule delaying the applicability of the DOL fiduciary rule and the related prohibited transaction exemptions to June 9, 2017. The rule was originally set to become applicable on April 10, 2017.

This update includes:

• Amid Deep Program Cuts, President’s Budget Blueprint Increases Health Care Fraud and Abuse Enforcement Spending by 10 Percent
• CMS Rolls Out New Stark Law Self-Disclosure Form
• Kansas Governor Vetoes Medicaid Expansion; Legislature Fails to Override

Since the U.S. Supreme Court’s 2010 decision in Citizens United, which effectively invalidated restrictions on certain corporate political contributions, various shareholder activists and corporate governance advocates have increasingly sought corporate disclosure of such contributions.

The Tax Exempt and Government Entities Division of the Internal Revenue Service announced changes to the information document request process in tax-exempt bond and tax-advantaged bond examinations.

This update includes: 

• Favorable OIG Advisory Opinion Provides Helpful Roadmap in Structuring a Patient Lodging/Meals Assistance Program that Complies With Federal Law
• Kansas Votes to Expand Medicaid, Embracing a Key Measure of the Affordable Care Act; Veto Possible 
• With AHCA Withdrawn, What’s Next for Health Care Reform?  

Since the U.S. Supreme Court’s 2010 decision in Citizens United, which effectively invalidated restrictions on certain corporate political contributions, various shareholder activists and corporate governance advocates have increasingly sought corporate disclosure of such contributions.

On March 1, the Securities and Exchange Commission issued a release seeking comments on proposed amendments to Rule 15c2-12 under the Securities Exchange Act of 1934, as amended.

This update includes:

• American Health Care Act Moves Through House Committees; Floor Vote Scheduled for Thursday
• Large FCA Judgment Against Nursing Home Operators Could Trigger Cross-Default Provisions of Loan Providing Operating Capital to 183 Non-Defendant Co-Obligors
• HIPAA Settlement Underscores Importance of Audit Controls and Timely Mitigation of Issues Identified in Security Risk Assessments
• OIG Reports that State Medicaid Fraud Control Units Recovered $1.9 Billion in FY 2016

On March 13, the Congressional Budget Office released its highly anticipated score of the American Health Care Act, the Republican-proposed replacement bill for the Affordable Care Act.

Before purchasing any debt, distressed investors need to be mindful of what unrestricted subsidiaries are and how they may impact the overall credit of a company or debt recoveries.

This update includes:

• Five Things to Know as the American Health Care Act Moves Through the House
• Hospital Associations and American Medical Association Oppose ACA Replacement Bill 

In a stark reminder to the bankruptcy community of the old adage that “you can run but you can’t hide,” the U.S. Bankruptcy Court for the Southern District of New York recently denied an Austrian bank’s motion to dismiss for lack of personal jurisdiction.

The Department of Labor announced a proposed 60-day delay of the applicability date of the DOL fiduciary rule and related exemptions. The DOL has allowed a 15-day comment period providing all interested parties an opportunity to comment on the proposed delay.

On February 27, the U.S. District Court for the Southern District of New York issued its long-awaited remand decision in Madden v. Midland Funding, LLC. 

The staff of the Securities and Exchange Commission’s Division of Investment Management recently issued new guidance providing additional clarity on Rule 206(4)-2 under the Investment Advisers Act of 1940.

The staff of the Securities and Exchange Commission’s Division of Investment Management recently released guidance on disclosure, suitability and compliance obligations for automated advisers—often referred to as “robo-advisers.”

This update includes:

• Oncology Practice, Practice Manager and Physician Pay $1.7 Million to Resolve Allegations of Billing Medicare for Unapproved Chemotherapy Drugs
• Federal Regulators Issue Proposed Rule Aimed at Stabilizing Insurance Marketplaces as ACA is Debated; Trump’s “One In, Two Out” Executive Order Determined Inapplicable 
• House Republicans and Trump Administration File Joint Motion to Indefinitely Delay Resolution of Lawsuit with Potential to Dismantle ACA Insurance Exchanges 

The U.S. Court of Appeals for the D.C. Circuit made headlines following its decision in the PHH Corporation et al. v. Consumer Financial Protection Bureau case. The Court found that the CFPB’s single-director, removable-only-for-cause structure was unconstitutional. However, the Court has now vacated that order in its entirety and set the case to be heard again en banc.

On February 14, two federal lawsuits were filed in Illinois challenging the legality of the Zero Emissions Credits program provided for under Illinois’ recently passed Future Energy Jobs Act (Public Act 99-0906). 

The Financial Industry Regulatory Authority, Inc. announced the effective date of amendments to FINRA Rule 2232 requiring firms to disclose additional transaction-related information for certain fixed income securities principal transactions with retail customers.

The Municipal Securities Rulemaking Board is requesting comments on proposed amendments to its advertising rule for brokers, dealers, and municipal securities dealers and a new advertising rule for municipal advisors.

The Financial Industry Regulatory Authority, Inc. recently proposed amendments that would create a new exception to FINRA’s prohibition on projecting performance. The proposed exception to FINRA Rule 2210 would permit a firm to distribute a customized hypothetical investment planning illustration.

Investments in “unrestricted subsidiaries” are an exception to investment covenants, which have been used in an attempt to provide flexibility in restructuring a company’s capital structure.

The Supplemental Examination Procedures for Risk Management of Third-Party Relationships issued by the Office of the Comptroller of the Currency on January 24 establish detailed compliance obligations for relationships with third-party service providers.

This update includes:

• Weekly Health Care Criminal and Civil Fraud Enforcement Round-Up  
• Office of Budget Management Withdraws Proposed Omnibus Guidance for 340B Drug Pricing Program
• Failure to Respond Timely to HIPAA Notice of Proposed Determination Results in $3.2 Million Penalty
• Anthem-Cigna Merger Blocked by Federal Judge
• Joint Commission Clarifies That It Prohibits Secure Texting for Patient Orders

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently published a Risk Alert listing five compliance topics most frequently identified in deficiency letters to investment advisers following exams.

The Securities and Exchange Commission is seeking comments on proposed new Municipal Securities Rulemaking Board Rule G-49 prohibiting a broker, dealer or municipal securities dealer from effecting a customer transaction in municipal securities in an amount lower than the minimum denomination of the issue stated in offering documents.

Lenders and investors in companies often have assumed that claims related to the purchase and sale of securities are subordinated to the level of the underlying security in question. However, a recent decision has raised a serious question as to when claims for damages should be deemed “arising from” the purchase or sale of a security.

“Board refreshment” is currently a hot corporate governance topic. A board of directors’ ability to “refresh” itself on a regular basis can help ensure that the board is comprised of the proper mix of directors to meet both current and long‑term needs of the board, the company and shareholders, and provide the necessary oversight of the company’s evolving corporate strategy and risks.

In this edition: 

• Mortgage Servicing Foreclosure Practices
• OCC Semiannual Risk Perspective 

With Republicans retaining control of both chambers of Congress and Donald Trump elected President, the prospects for financial regulatory reform have changed. Many observers point to the Financial CHOICE Act as the best indication of Republican Congressional aspirations for such reform. 

Lenders and investors in companies often have assumed that claims related to the purchase and sale of securities are subordinated to the level of the underlying security in question. However, a recent decision has raised a serious question as to when claims for damages should be deemed “arising from” the purchase or sale of a security.

President Trump issued a memorandum directing the Department of Labor to conduct an analysis of the fiduciary rule’s potential impact. Depending on the results of its examination, the memorandum instructs the DOL to publish for notice and comment a proposed rule to rescind or revise the rule. 

This update provides general information regarding say-on-pay frequency, summarizes the current say-on-pay frequency policies and positions of several large asset managers and pension funds, leading proxy advisory firms and certain corporate governance advocates, and presents practical considerations for boards to help facilitate discussion.

The Department of Labor released on January 13 two sets of frequently asked questions to provide additional guidance on its new fiduciary rule. One set of FAQs is directed at consumers to better help them understand the Rule. The other set of FAQs is directed at financial service providers to address the regulation defining “investment advice.” 

This updated includes:

• Weekly Health Care Criminal and Civil Fraud Enforcement Round-Up
• $2.2 Million HIPAA Settlement Demonstrates Importance of Conducting Required HIPAA Security Risk Assessments and Implementing ePHI Safeguards
• CBO Releases Report on How Repealing Portions of the ACA Would Affect Health Insurance Coverage and Premiums

In a decision that deals a potential blow to holdout noteholders in out-of-court restructurings, the United States Court of Appeals for the Second Circuit adopted a narrow interpretation of Section 316(b) of the Trust Indenture Act.