Consolidation and Conflict in the Health Care Industry

Viggo Boserup, Esq.

Viggo Boserup, Esq.

by Viggo Boserup, Esq.

The health care industry has experienced a significant increase in consolidations among providers of facilities and services alike.  From drugs to devices to service providers, 2014 saw the largest consolidation within the health care industry in the past 20 years.  These consolidations were spurred primarily by two distinct factors in the market.

The first is the reduction of reimbursements from both insurers and governmental agencies.  Both 2013 and 2014 saw some of the most dramatic reductions in Medicare and Medicare-related reimbursements to service providers.

The second factor is the effect of health care reform requiring a redesign of the clinical delivery system.  The Affordable Care Act (ACA) represents a transition from fee-for-service reimbursement to a results-based reimbursement.  It is no longer about how many services a provider can provide, but the quality of those services, often referred to as “population health.”

Mergers have been utilized to accommodate the foregoing two factors by realigning services to achieve greater scale of operations, an improvement in quality of care and/or enhanced access to care.  Variations on mergers with these goals in mind include strategic partnerships and shared-service agreements essentially consisting of purchasing networks.

These changes all bring greater opportunity for conflict.  They include contractual disputes over purchase price adjustments, valuations due to earn-out provisions, representations and warranties and countless other contractual provisions contained in the governing documents.  Likewise, non-contractual disputes will arise out of the natural friction occurring in any combination of two previously independent companies.

Contractual Disputes

Dispute resolution should be addressed in the acquisition agreement itself, and the arbitration clause in that agreement should be crafted with greater care than is typically the case.  Parties should attempt to incorporate the rules of arbitration providers specifically designed for arbitration in order to avoid the ambiguity inherent in references to statutes designed for civil litigation.  The number of arbitrators and the possibility of appellate review should also be considered.

To continue reading Viggo Boserup’s discussion, please read the full article, Consolidation and Conflict in the Health Care Industry, from Law.com.

“Getting to Yes” by Way of “I’m Sorry”: Settling Employment Discrimination Claims with Apologies

Maria Walsh

Maria Walsh

By Maria C. Walsh

Apologies are difficult.  By expressing regret and accepting responsibility for a harmful act, the person apologizing transfers “power” from him- or herself to the person receiving the apology.  Parties negotiating settlement want all the “power” they can muster, and many fear they’ll convey weakness by apologizing.  Experienced negotiators, however, use apologies to help settle cases.

Most people self-identify as decent, competent and moral.  When accused of illegal employment discrimination, defendants recoil.  They’re not “discriminators”!  Why should they apologize for something they believe they never did?  Moreover, won’t an apology be perceived as an admission of wrongdoing, further emboldening the plaintiff?

Social science research suggests the opposite.  A well-crafted apology can reduce the ultimate price of settlement by communicating empathy and respect to the “victim.”  Studies of adverse medical outcomes reveal that injured patients are less likely to sue, and more likely to settle quickly, when doctors apologize for unintended harm.  Recognizing the value of apologies, more than 34 states have “apology laws” that exclude certain expressions of regret or sympathy from evidence, primarily in the context of medical malpractice cases.

When an employee is involuntarily terminated (other than for an indisputably neutral reason), rarely does he or she agree the termination is justified.  Defense lawyers know, and advise their clients, that employers need not have just cause to terminate (in the absence of a contrary contract).  Most terminated employees, however, facing the loss of professional identity, economic security and workplace community, challenge the validity of any termination decision.

Many employers avoid litigation through effective communication.  They convey appreciation for the employee’s past contributions, express regret for the necessity of the termination and volunteer assistance with the employee’s transition to a new opportunity.  Their communications convey respect for the employee and acknowledge the employee’s value.  The employee, trusting the employer’s action was an unfortunate, but not vindictive, decision, feels little or no animus and can accept the need to move on.

In contrast, employees who are figuratively (or literally) marched out the back door, offered little or no explanation for the reason or timing of termination and/or accused of bad acts tend to think the worst of their employer.  Shame, confusion and disempowerment converge with anger and suspicion.  Trust is destroyed.  The employee disbelieves the employer’s stated reason, concluding that the employer must be hiding an illegal motive.

To continue reading Maria C. Walsh’s discussion, please read the full article, “Getting to Yesi” by Way of “I’m Sorry”: Settling Employment Discrimination Claims with Apologies, from Law.com.

A Pregnant Pause: Using ADR to Resolve Pregnancy-Related Workplace Issues

Lorraine M. Brennan, Esq.

Lorraine M. Brennan, Esq.

By Lorraine M. Brennan, Esq.

A recent case heard before the U.S. Supreme Court, Young v. UPS (issued March 25, 2015), caught the attention of many women and employers as well.  In Young, the Court interpreted the Pregnancy Discrimination Act (PDA), in particular the second clause of that Act, which reads that employers must treat “women affected by pregnancy…the same for all employment-related purposes…as other persons not so affected but similar in their ability or inability to work.”

Young, a part-time driver for UPS, had suffered several miscarriages prior to the pregnancy at issue in this case.  She was told by her doctor that she could lift only 20 pounds during the first 20 weeks of her pregnancy, and then only 10 pounds until the pregnancy was over.  UPS advised Young that she was not to return to work at UPS until she could lift the required 70 pounds that her particular job required.  Young subsequently exhausted all of her Family and Medical Leave Act time, took an unpaid leave of absence and eventually exhausted all of her medical benefits.  After her child was born, she returned to work and filed a lawsuit against UPS.

Young sued UPS under the theory that the PDA was violated when UPS refused to allow Young to be given limited physical activities, as was the Americans with Disabilities Act (ADA).  Title VII of the Civil Rights Act was amended in 1978 to include the PDA.  She maintained that she was entitled to the same accommodation as other employees who had workplace restrictions due to injury or disability.

Young lost at both the District Court level and the Court of Appeals (4th Cir.), as the lower courts ruled that Young’s situation was not comparable to the situations of workers in those protected groups and granted summary judgment to UPS.  The Supreme Court granted cert. and vacated and remanded the case, remarking that Young had raised triable issues of fact that made the granting on summary judgment for UPS in this case inappropriate.

While the Young decision was limited to the issue of the UPS policy, it is not difficult to see how pregnant employees might use this holding in other workplace situations.  What the Young decision did is provide a vehicle for pregnant employees to challenge workplace accommodation policies under the PDA, which are afforded to other workers but not to pregnant ones.  Employers will need to take a careful look at their policies to make sure they are in compliance and that pregnant employees are not negatively impacted by discriminatory policies.

For more on Ms. Brennan’s discussion, please read the full article, “A Pregnant Pause: Using ADR to Resolve Pregnancy-Related Workplace Issues,” from Law.com.

There Are No Do-Overs in Mediation

Barbara A. Reeves Neal, Esq.

Barbara A. Reeves, Esq.

By Barbara A. Reeves, Esq.

Most mediations begin and end in a single day. As much as the parties would benefit from a leisurely pace to explore all the factual and legal issues, today’s practice is to schedule only one day, or even a half-day, to mediate a settlement. The result is often a settlement reached when counsel and parties are exhausted.

Did you get the best result for your client? Did you leave money on the table? Were there other remedies that you might have included in the settlement? If you have the luxury, the ideal procedure is to spend one day exploring the issues, likely outcomes, risks, possible remedies, then reconvene and turn to crafting a settlement.

Nine times out of 10, you don’t have that luxury. You have one day to get it done. Be better prepared for your next mediation by following this pre-mediation procedure with these four simple steps.

Evaluate what the lawsuit is worth by using a decision tree.

With every new offer or demand, the client is faced with comparing the value of that offer or demand with the expected value of continuing on with the litigation. On the one hand there is a concrete offer or demand; on the other hand there is the uncertainty of a litigation result.

Using a simple decision tree can make this difficult task easier. A decision tree is a roadmap of the litigation with a few intersections and forks in the road. List each of the significant uncertainties in the case: Will defendant prevail on summary judgment? Will the jury believe your key witness? Will the judge use your key jury instruction? If damages are awarded, will they be in the high, medium or low range? Assign a range of probabilities to each significant uncertainty, multiply the probabilities and then apply that probability to your estimated high, medium and low damage predictions, and viola, you have a guesstimate of the net value of your lawsuit.

Make a list of potential offers and demands.

Assume that you, as plaintiff’s counsel, value the case at $1 million. Discuss each potential offer that the defendant may make: zero (unlikely, or they wouldn’t have come to mediation) $100,000 (a potential starting offer); $200,000; $250,000, etc. Expose your client to each of these offers.

For more on Ms. Reeves’ discussion, please read the full article, “There Are No Do-Overs in Mediation,” from Law.com.