College of Imaging Administrators May 4, 2017 Annual Legal Update

1. College of Imaging AdministratorsMay 4, 2017 Annual Legal Update Tom H. Luetkemeyer Hinshaw & Culbertson LLP 222 North LaSalle Street, Suite 300 Chicago, IL 60601 312-704-3056 tluetkemeyer@hinshawlaw.com

2. The Affordable Care Act • HHS announced on February 15, 2017 a proposed rule which it says is designed to "help stabilize the Affordance Insurance Exchanges for the 2018 benefit year". • The rule proposes several revisions to the Affordable Care Act to improve the risk pool, and the action suggests that repair rather than repeal of the ACA may now be the objective of the Trump administration (?)

3. The Affordable Care Act • The proposed rule seeks to ensure a competitive market by making the following changes in the ACA markets: • Allows insurers to require a policy holder whose coverage terminated for non-payment of premiums to pay all past due premiums owed to that insurer in the prior 12 month period in order to resume coverage; • Shortens the annual open enrollment period; • Open enrollment for coverage year 2018 would begin on November 1, 2017 and end on December 15, 2017, which is 45 days sooner than the previously established open enrollment period;

4. The Affordable Care Act • HHS anticipates this revision will reduce opportunities to delay enrollment until after medical care is needed and will encourage healthier persons who may previously have enrolled in partial year coverage to enroll for the entire year; • Starting in June 2017, require pre-enrollment verification of eligibility before persons seeking to enroll during special enrollment periods obtain coverage; • The proposed change is intended to promote continuous coverage, but makes sure uninsured individuals who would not qualify for a special enrollment period obtain coverage during an open enrollment period instead of waiting until they get sick; • Amend the actuarial value to provide insurers with additional flexibility to try to help stabilize premiums and incentivize insurers to enter and remain in a market.

5. The Affordable Care Act • Generally, reception has been favorable in the insurance industry. • The comment period for the proposed rule closed on March 7, 2017, and we are awaiting the final rule.

6. Morriss v. BNSF Railway Co.817 F.3d 1104 (8th Cir. 2016) • Latest decision addressing whether obesity is a disability protected by the ADA. • Applicant for machinist position (safety sensitive) completed a medical questionnaire and submitted to two physical exams. Result of exams revealed BMI of over 40, "Class 3 obese". • BNSF policy was not to hire an applicant for safety sensitive position with BMI at or in excess of 40. • Suit asserted obesity was a disability under the ADA and employer regarded his obesity as disability.

7. Morriss v. BNSF Railway Co. • Summary judgment for employer affirmed, • Regarded as claim focus of appeal; • "In other words, even weight outside the normal range—no matter how far outside that range—must be the result of an underlying physiological disorder to qualify as a physical impairment under the ADA"; • Definition of physical impairment does not include characteristic predisposition to illness or disease. BNSF acted only on its assessment of applicants predisposition to develop an illness or disease in the future, not because it regarded him as having disability under the ADA; • Consistent with Second and Sixth Circuits; • Supreme Court denied cert. October 3, 2016.

8. Mandatory Arbitrations • On November 7, 2016, a federal court in the Northern District of Mississippi issued a TRO preventing CMS from implementing its final rule banning pre-dispute arbitration agreements between long-term care facilities and residents. • The arbitration ban will not go into effect until further order of the court. • The ban itself was based on CMS regulations governing the participation of long-term care facilities that receive funding from Medicare and Medicaid.

9. Mandatory Arbitrations • Had it gone into effect, the arbitration ban would have prevented facilities participating in Medicare or Medicaid from entering "into a pre-dispute agreement for binding arbitration with any resident or resident's representative, nor require that a resident sign an arbitration agreement as a condition of admission." • As a result, the arbitration agreement ban did not go into effect on November 28, 2016. • The TRO is still in effect, and a new rule may be imminent. • Are arbitration agreements a good idea?

10. EEOC v. Grisham Farm Products2016 WL 3221161 (W.D. Mo. June 8, 2016) • Did Employer's mandatory three page health history questionnaire in application process violate ADA and GINA? Yes… • Inquired whether the applicant suffered from 27 different types of health conditions—including everything from allergies to epilepsy, "breast disorder" to heart murmur, STDs to depression, Varicose veins and beyond; • Inquired whether applicants “[c]onsulted a doctor, chiropractor, therapist or other health care provider within the past 24 months” and to identify whether “future... diagnostic testing... [has] been recommended or discussed” with their medical provider.

11. EEOC v. Grisham Farm Products • Acceptable inquiry at pre-offer stage is limited to the ability of the applicant to perform job-related functions. • ADA violation, but also GINA violation. • Application requires applicants to reveal whether they have “[c]onsulted a doctor, chiropractor, therapist or other health care provider within the past 24 months” and to identify whether “future... diagnostic testing... [has] been recommended or discussed” with their medical provider. • Required an applicant without the manifestation of a condition, who has preventatively “consulted” with a physician or been told by a physician to get diagnostic testing, to reveal such information in violation of GINA.

12. EEOC Final Rule on Wellness Programs • Effective: January 1, 2017. • Application of ADA, GINA, and HIPAA to wellness programs that request health information from employees and their spouses. • Applies to programs that request health related information or undergo medical exams to earn a reward or avoid a penalty. • Does not apply to programs giving incentive to employeesor their spouses who participate in certain activities (e.g., weight loss or smoking cessation programs).

13. EEOC Final Rule on Wellness Programs: Program Design • Reasonably designed to promote health and prevent disease. • Not reasonably designed if program: • Is overly burdensome; • Is a subterfuge of discrimination; • Is designed to shift costs to employees; • Is used only to predict future health costs; • Imposes unreasonably intrusive procedures, overly burdensome time to participate, or significant costs related to medical exams; • Consists of screening or collection of information not used either to provide results, follow-up information, or advice to participants; • Is involuntary.

14. EEOC Final Rule on Wellness Programs: Program Design • Voluntary means the program may not: • Require participation; • Deny healthcare coverage to employees who do not participate; • Take adverse action against employees who choose not to participate. • Other requirements and prohibitions: • Grant disabled employees reasonable accommodations allowing participation; • e.g., signed class for deaf employees or alternative to walking program for employees in wheelchair; • Prohibits incentives for children and specified genetic information.

15. EEOC Final Rule on Wellness Programs: Caps on Incentives • Healthcare coverage offered by employer: • 30% of the total cost of self-only coverage (employees and spouse); • If the employer offers multiple plans, use lowest cost plan; • If employee selects a family plan, use the corresponding self-only plan; • Employee and spouse cap calculated separately. • Healthcare coverage not offered: • 30% of the cost a 40-year old non-smoker would pay for self-only coverage under the second lowest cost silver plan on the state or federal healthcare exchange in the employer's principal business location. • Capped at 50% for smoking cessation programs.

16. EEOC Final Rule on Wellness Programs: Confidentiality and Notices • Require employee and spouse to provide prior, knowing, written and voluntary authorization of the employer to provide genetic information. • Requires notice to employees about what information will be collected, with whom it will be shared, and for what purpose, the limits on disclosure and the way information will be kept confidential. • Sample form on EEOC site. • May collect and disclose information only in aggregate terms. • Prohibits employers from requiring employees to agree to the sale, transfer, exchanged, or other distribution of their health information to participate. • HIPAA Privacy Rules apply. • Certify employer will not use personally identifiable information for employment purposes.

17. EEOC v. Orion Energy Systems Case No. 14-CV-1019 (E.D. Wis. 2016) • The self-insured plan: • Non-smoking certification  $80 surcharge if not completed; • Exercise requirement  $50 surcharge if not met; • Health risk assessment  no premium paid by employee if completed; 100% of premium paid by employee if not completed. • Safe harbor doesn't apply (EEOC vs. Flambeau; and Seff vs. Broward County,11th Circuit): • Wellness program not used to underwrite, classify, or administer risk; • Eligibility not contingent on participation in wellness program; • Did not use data to determine premiums or determine coverage; • Writes provision allowing voluntary medical exams as part of a wellness program out of the ADA.

18. HIPAA • The Office of Civil Rights (OCR) of HHS already investigates every reported HIPAA breach affecting 500 or more individuals. • OCR has indicated they now will intensify efforts to scrutinize smaller breaches as well. • According to OCR, the root causes of small breaches may indicate entity-wide or industry-wide non-compliance with HIPAA and its underlying regulations. • According to the OCR, an evaluation of smaller breaches allows evaluation of an entity's compliance program and obtain correction of any deficiencies before major breaches occur.

19. HIPAA • For breaches involving less than 500 individuals, a covered entity is required to maintain a log and collectively report to OCR all such breaches occurring during a calendar year within 60 days of the end of the calendar year. • OCR regional offices still retain discretion to prioritize which smaller breaches it will investigate.

20. HIPAA • The factors OCR will utilize in making those determinations include: • The size of the breach; • Theft of or improper disposal of unencrypted PHI; • Breaches that involve unwanted intrusions to IT systems (hacking); • The amount, nature and sensitivity of the PHI involved; • Instances where numerous breach reports from a particular entity or business associate raise similar issues.

21. EEOC Guidance on Leave as Reasonable Accommodation • On May 9, 2016, EEOC issued a resource document reminding employers that unpaid leave must be considered as a reasonable accommodation. • Each request for leave should be evaluated on a case-by-case basis under the FMLA and ADA; • "Automatic termination" provisions should be avoided; • "Undue hardship" depends on the length and frequency of the leave sought and the impact on operations; • Critical medical information may be obtained to evaluate leave request; • EEOC wants to see an "interactive process".

22. Hively v. Ivy Tech Comm'y College830 F.3d 698 (7th Circuit 2017) • Part-time adjunct employee alleged college passed over for full-time faculty position and eventually chose not to renew her part-time contract because of her sexual orientation. • Is sexual orientation discrimination cognizable under Title VII? En Banc Panel of the 7th Cir. holds yes. • Court ultimately adopts EEOC viewpoint holding sex orientation discrimination is inherently a sex-based consideration and is prohibited by Title VII. • Highlighted difficulty courts have drawing the line between sexual orientation discrimination and gender stereotype, which also is sex discrimination under Title VII.

23. EEOC Retaliation Guidance • Retaliation claims account for 45% of discrimination charges. • Retaliation occurs when an employer takes a materially adverse action because an individual has engaged in or may engage in activity in furtherance of the EEO laws the EEOC enforces. • Sets forth EEOC's interpretation of retaliation laws and is not always consistent with case law. • Applies Title VII, ADA, ADEA, Rehabilitation Act, Equal Pay Act, and GINA. • Effective August 25, 2016.

24. Retaliation Guidelines Highlights • Adopted "but-for" causation standard: • The employee must show that "but for" a retaliatory motive, the employer would not have taken the adverse action; • The employee need not show retaliation was the "sole cause" of the adverse action; • Effectively eliminates a mixed-motive defense. • Broad definition of "opposition" includes: • Express and implicit complaints of discrimination; • "Standing pat" by refusing to take action (as opposed to instigating); • Accompanying a coworker for internal discrimination complaint; • Answering questions during an investigation.

25. Retaliation Guidelines Highlights • Expansive definition of "participation": • Now includes participation in employer's complaint procedures. • Adverse action: • Includes less severe work-related actions, such as reprimands, lowered evaluations, and verbal abuse, as well as non-work-related actions, such as disparaging an employee to the public. • Rejects "manager rule". • Adopts the “zone of interests” rule.

26. Retaliation Guidelines Highlights • Best Practices: • Establish written policies with user friendly examples of employer dos and don’ts; • Employ general and specialized training for managers, supervisors, and employees; • Provide advice and individualized support to employees involved in employer investigations; • Proactively follow up with affected employees during the pendency of an investigation; and • Review all consequential employment actions to ensure compliance with EEO anti-retaliation statutes.

27. National Origin Guidance Highlights • Discriminatory Customer Preference. • Job Segregation. • Social Security Number Policies. • Language Restrictive & English Fluency Policies. • Restrictions on Employees with Accents. • Citizenship Requirements.

28. National Origin Guidance Best Practices • Use a variety of recruitment methods (other than word-of-mouth). • Establish objective written criteria for evaluating position candidates. • Establish objective written criteria for identifying unsatisfactory performance; record business reasons for disciplinary issues and share with employees. • Take proactive measures to provide translated policies and training in languages spoken by employees. • Train all employees on anti-harassment policies.

29. False Claims Act • Last June, the United States Supreme Court decided Universal Health Services, Inc. v. Escobar. • In this case the Court expanded liability under the False Claims Act (FCA) to include situations where a provider makes a claim for payment and the provider's representations in submitting that claim were misleading and would materially affect the payment decision. • The Court approves of the limited application of an "implied false certification theory".

30. False Claims Act • Under that theory, every claim assumes that payment is legally justified and is in compliance with all conditions of payment. • The Court ruled that FCA liability can arise if a provider submits a claim making a specific representation about the services provided, but omits the violation of a material statutory, regulatory or contractual requirement.

31. False Claims Act • The facts of Universal Health Services, Inc. v. Escobar involved a teenaged beneficiary of a Massachusetts Medicaid program who received counseling services at a mental health facility. • The patient died after having an adverse reaction to medication that was prescribed at the facility after she was diagnosed with bipolar disorder. • It was later discovered that the patient's practitioner was not a medical doctor and lacked authority to order the prescription. • Her parents filed a FCA claim, because the facility failed to comply with applicable regulations, particularly with regard to credentialing providers of services.

32. False Claims Act • The Court in Universal Health Services, Inc. v. Escobar held that a claim can be deemed "impliedly false" or even fraudulent, even if there is no express statement that is false. • Claims which on their face are truthful but lack important information can be actionable misrepresentations under the FCA.

33. False Claims Act • Justice Thomas, writing on behalf of the unanimous Court, stated: By submitting claims for payment utilizing payment codes that correspond to specific counseling services, Universal Health represented that they provided individual therapy, family therapy, preventative medicine, counseling and other types of treatment . . . [T]hese representations were clearly misleading in context.

34. False Claims Act • Not all misrepresentations resulting from non-disclosure violate the FCA - - only those that are material to the government's payment decision. • The materiality of a misrepresentation depends upon the particular facts of each case. • So, what was misrepresented here?

35. False Claims Act • Review and update your compliance programs. • Violations of the FCA may include civil penalties of up to $10,000 per claim, as well as treble (triple) damages. • Keep in mind that the false certification theory is now a viable means of attack by the government or qui tam relators.

36. NLRB Developments

37. Lewis v. Epic Systems Corp.823 F.3d 1147 (7th Cir. 2016) • Are arbitration agreements which prohibit class and collective actions for wage and hour or other claims unenforceable as a violation of the NLRA? Seventh Circuit now says YES. • Healthcare software company sent employees email requiring electronic review and agreement to arbitration agreement. • Two key components: • Any wage and hour claims had to be pursued through arbitration; • Claims could only be pursued on an individual basis and class/collective actions prohibited. • Deemed accepted if continued employment (condition of employment).

38. Lewis v. Epic Systems cont. • The employee filed FLSA misclassification suit in federal court for unpaid OT. Epic moved to dismiss, and EE argued agreement in violation of the NLRA because it interfered with right to engage in concerted activities for mutual aid and protection (Section 7). • Section 7 of the NLRA provides that “[e]mployees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157. • Section 8: “ it shall be an unfair labor practice for an employer ... to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in [Section 7].” Id. § 158(a)(1).

39. Lewis v. Epic Systems cont. • Following NLRB precedent (DR Horton), 7th Circuit confirms that "other concerted activities" includes filing suit, and NLRB's interpretation entitled to deference. • NLRA does not define "concerted activities", but should be read broadly, collective and class remedies allow EEs to band together to equalize bargaining power. • Second focus of Epic's arbitration provision prohibiting class/collective actions impinged on Section 7 rights.

40. Lewis v. Epic Systems cont. • "A contract that limits Section 7 rights that is agreed to as a condition of continued employment qualifies as 'interfer[ing] with' or 'restrain[ing] ... employees in the exercise' of those rights in violation of Section 8(a)(1). 29 U.S.C. § 157(a)(1)." • No conflict with FAA because provision was illegal, NLRA provides substantive right, not procedural. • Leaves open question of "opt out" as potential save to agreement. • Circuit split: Seventh and Ninth Circuit v. Second, Fifth, and Eighth Circuits.

41. NLRB Actively Protecting Employee's Section 7 Rights • Section 7 of the National Labor Relations Act protects an employee's right to engage in "protected concerted activity." • Employer policy requiring employees to "maintain a positive work environment" violates Section 7. T-Mobile USA, Inc., 363 NLRB No. 171 (April 29, 2016). • Employee conversation over the company radio discussing unsafe working conditions and calling the boss "cheap" was protected activity. Lou's Transport, Inc., 361 NLRB No. 158 (December 16, 2014) upheld (6th Circuit, April 6, 2016). • Response to customer tweet was protected activity because it was intended to garner sympathy and support for Chipotle employees. Chipotle Services LLC, 364 NLRB No. 72 (August 18, 2016).

42. FLSA Final Overtime Rule • Effective December, 1, 2016. • Also the subject of a nation-wide TRO. • Increases the so-called “white collar” exemption salary threshold to $47,476. • Bill pending in Congress that would delay the rule's effective date to June 1, 2017.

43. OIG Review Activities • The Fiscal Year 2016 Work Plan issued by the OIG is still in effect. • It is good to keep in mind the initiatives that the OIG plans to undertake throughout the fiscal year: • Review of provider-based status for facilities owned and operated by hospitals to bill as a hospital outpatient department (this may result in higher Medicare payments for services furnished at a provider-based facility);

44. OIG Review Activities • The OIG intends to review and compare Medicare payments for physician office visits and provider-based clinics and free-standing clinics to determine the difference in payments made to the clinics for similar procedures; • The OIG continues to look at the potential Medicare savings of hospital outpatient stays if providers are ineligible for outlier payment; • The OIG will review Medicare outpatient payments for Intensity-Modulated Radiation Therapy (IMRT) to determine whether payments were made in accordance with federal requirements. Prior OIG reviews identified hospitals that have incorrectly billed IMRT. • CMS will continue to review data from Medicare cost reports of hospitals to identify salary amounts included in the operating costs reported to Medicare;

45. OIG Review Activities • OIG will continue to compare claims for hospital stays in the year prior to and the year following the effective date of the Two-Midnight Rule to review how hospitals' use of outpatient and inpatient stays may change; • The OIG will review Medicare claims to identify the costs resulting from additional use of medical devices associated with defective medical devices. Federal regulations require reductions in Medicare payments for replacement of implanted devices; • The OIG will determine the extent to which hospitals comply with contingency planning requirements of HIPAA. Specifically, they will compare hospital contingency plans with government-recommended practices. The HIPAA Security Rule requires covered entities to have a contingency plan for responding to an emergency or other occurrence that damages systems containing PHI.

46. Illinois Child Bereavement Leave Act • Effective July 29, 2016 to provide leave to those suffering loss of a child. • Employer (defined by FMLA, 50 employees) must provide 2 weeks of unpaid leave to attend funeral, make arrangements necessitated by death or to grieve. • Leave must be completed within 60 days of learning of death. • 48 hour notice to employer where reasonable or practical, employer may require reasonable documentation. • Leave rights not to exceed time available under FMLA.

47. Illinois Child Bereavement Leave Act • Employees may substitute paid leave, but employer cannot require. • IL DOL will administer/enforce: • Conduct investigations, bring legal action to recover amount of unpaid wages, damages, penalties and costs; • Civil penalties: first offense $500, second or more $1000. • Employee has private right of action, can file DOL complaint or sue in state court. • Anti-retaliation provision.

48. Illinois Family Caregiver Leave Law • Effective January 1, 2017. • Employers will have to allow employees to use their accrued personal sick leave benefits (gathered for up to 6 month period) to care for a family member. • Family member = child, spouse, sibling, parent, grandparent, step-parent or parent-in-law. • Anti-retaliation provision. • California, Connecticut, Massachusetts, Oregon and DC have similar laws guaranteeing right to earn and use sick time for family care in addition to personal illness.

49. Chicago Paid Sick Leave Ordinance • Passed June 22, 2016, effective July 1, 2017. • All employers, regardless of size, that maintain a business facility within Chicago or that are subject to licensing requirements. • All employees who work at least 2 hours for a covered employer while physically in Chicago in a two week period and work 80 hours in any 120 day period. • Begin to accrue on the first day after the start of employment or July 1, 2017, whichever is later. • 1 hour earned for every 40 worked, capped at 40 in a 12 month period.

50. Chicago Paid Sick Leave Ordinance • Carry over rights for up to 20 hours to the next 12 month period, but 40 hours (in addition to the standard carry over) if employer is subject to FMLA. • Can begin using no later than 180th day following start of employment. • If need is foreseeable, can require 7 days' advance notice. If unforeseeable, employees must provide as much notice as practical and notice by phone, text, email or message ok. • Does not mandate payout at termination. • Notice obligations.