Source: https://mccumberdaniels.wordpress.com/2012/02/
Timestamp: 2019-04-22 01:15:29+00:00

Document:
“Last year the cost of global cyber crime was estimated to be 388 Billion USD – with an individual falling victim to a form of online crime every 19 seconds.” Lockton UK recently released a report, “Cyber Risk Decoded,” where they provide an in-depth analysis on cyber risks, a problem that is on the rise with the ever-increasing need to go digital.
The report indicated what are the main cyber risks today, showing that the majority of the data breaches were from Human Error or from a glitch in the system, most commonly stolen laptops, flash drives, emails with sensitive customer data, databases not being protected or loss of unencrypted data in transit from one organization to another. Theft, spear phishing, Hacktivism, Denial of Services (DOS), cyber-extortion, cloud computing and emerging themes were also trends in how businesses and individuals are being susceptible to cyber threats.
Court invalidates West Virginia law prohibiting pre-dispute arbitration agreements in nursing home admissions contracts. This will likely impact other states who have similar prohibitions like Oklahoma.
The Supreme Court of the United States has recognized “an emphatic federal policy in favor of arbitral dispute resolution.” See KPMG LLP v. Cocchi, 132 S.Ct. 23, 25 (2011). This policy is codified in Section 2 of the Federal Arbitration Act (FAA) which makes arbitration clauses “valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
In contrast to the federal policy, West Virginia has recognized that the public policy of that state requires its Courts not to enforce in personal injury or wrongful death suits “[a]rbitration clauses in nursing home admission agreements—which were signed prior to the alleged occurrence of negligence that resulted in the person injury or wrongful death of a nursing home resident . . .” See Brown v. Genesis Healthcare Corp., 2011 WL 2611327 (W.Va. 2011). The tension between West Virginia’s policy and the FAA was apparent when three families brought suit against West Virginia nursing homes. In each instance, a family member signed an agreement with the nursing home on behalf of the resident. Each agreement included a clause to arbitrate disputes with the nursing home. The Supreme Court of West Virginia held that the public policy of West Virginia was not preempted by the FAA. According to the State Court, “Congress did not intend for the FAA to be, in any way, applicable to personal injury or wrongful death suits that only collaterally derive from a written agreement that evidence a transaction affecting interstate commerce, particularly where the agreement involves a service that is a practical necessity for members of the public. See Brown.
In two opinions released on February 17, 2012, the Second District Court of Appeal reversed a trial court order denying a nursing home and its Director of Nursing’s motions to compel arbitration. See SA-PG Sun City Center, LLC v. Kennedy, Case No. 2D11-93 (Fla. 2d DCA, Feb. 17, 2012), and Cornwell v. Kennedy, Case No. 2D11-105 (Fla. 2d DCA, Feb. 17, 2012).
The trial court had determined that the arbitration agreement was unconscionable, finding both procedural and substantive unconscionability present in the agreement. Specifically, the trial court found that the representative signing the agreement was unable to read it, did not understand the terms, and had no opportunity for the agreement to be explained to her. These findings, if supported by the evidence, amounted to procedural unconscionability. The Second District Court of Appeal, however, disagreed with the findings. The appellate court found that the trial court’s finding of procedural unconscionability was not supported by the evidence and, therefore, was error as a matter of law.
Contrary to the trial court’s factual findings, the Second District determined that the record showed the representative did not inform anyone that she could not read the agreement and, when given the opportunity, did not ask any questions about arbitration. Because the director of admissions testified that she discussed the arbitration agreement and spent twenty to thirty minutes reviewing the entire admissions agreement with the representative, the evidence could not support the trial court’s findings. The appellate court emphasized that the burden is on the party seeking to avoid arbitration to present evidence to show why it should be avoided. The representative’s argument that she was unable to read the documents was insufficient when she was not prevented from knowing their contents.
In order to defray escalating malpractice premiums, Pennsylvania established the Medical Care Availability and Reduction of Error (MCARE) Fund. 40 P.S. 1303.712. The MCARE Fund provides secondary coverage for professional liability claims. Participating health care providers are required to have $500,000 in primary liability coverage. The second $500,000 of liability comes from the MCARE Fund. The MCARE Fund is supported by annual assessments paid by participating health care providers. Providers pay their assessment to their primary insurer who is required to remit the payment to the MCARE Fund. There is no mechanism for a health care provider to pay their assessment directly to the MCARE Fund. 31 Pa.Code § 242.6(a)(3). Any provider who fails to pay their assessment within sixty days will not be covered by the MCARE Fund. 31 Pa.Code § 242.17(b). So this leads to the question: Will the MCARE Fund cover a provider for their loss when the provider timely paid the assessment but the primary insurance company, unbeknownst to the provider, failed to timely remit the assessment to the MCARE Fund?
This very scenario played out for the facility sued in Scampone v. Grane Health Care, et al, 11 A.3d 967 (Pa. Super. 2010), allocatur granted, 15 A.3d 427 (2011). As noted in an earlier blog entry, the Scampone matter concerns allegedly deficient care provided at a nursing facility. The facility, Highland Park Care Center, timely paid its assessment to its primary insurer but the carrier did not remit the assessment within the required sixty days. After the facility was sued, the primary insurer submitted a request to the MCARE Fund for excess coverage for the facility. The MCARE Fund denied the request because the assessment was not paid on time.
A Hearing Examiner found that the MCARE Fund was required to provide coverage to the facility. The Hearing Examiner noted that the facility did everything right and that the late Assessment was the “result of the MCARE Fund’s ‘collection and remittance’ system whereby medical care providers are directed to pay the carrier but they are not warned or otherwise notified of a carrier’s failure to remit the assessment on time.” See Highland Park Care Center v. Medical Care Availability and Reduction of Error (MCARE) Fund, — A.3d —, 2012 WL 280576, *1 (Pa.Cmwlth., 2012) (publishing prior unpublished opinion).
The MCARE fund appealed to the Commonwealth Court asserting that the Hearing Examiner’s ruling was contrary to applicable statutes, regulations and state law. In Highland Park Care Center, the Commonwealth Court agreed with the Hearing Examiner. The Court ruled that the statute requires only payment of the assessment with sixty days. Id. at *2. The act of remittance from the primary insurer to the MCARE Fund is a separate act that does not bear on coverage. Id.
This case is a common-sense result. With all the i’s that providers must dot and t’s they must cross, it is refreshing to see that providers will not now be required to track their payment and assure that their carrier was compliant.
• a duty to formulate, adopt and enforce adequate rules and policies to ensure quality care for the patients.
Id. at 707. The basis for adopting these new standards was the “corporate hospital’s role in the total health care of its patients.” Id. at 708.
The dissent in Thompson felt that the majority was instituting a “deep pocket theory of liability, placing financial burdens upon hospitals for the actions of their own employees.” Id. at 709. The dissent also predicted that corporate negligence liability would not be constrained to hospitals alone. So far that prediction has held true.
When a court is asked to permit liability for corporate negligence against a new type of entity, the court conducts an analysis of whether the entity provides comprehensive care to its patients. A series of precedents has eroded the meaning of comprehensive care and has permitted corporate negligence to apply to entities that provide something less than total care. For example, the Superior Court extended corporate negligence to Health Maintenance Organizations (HMO) despite the fact that HMO’s do not practice medicine. See Shannon v. McNulty, 718 A.2d 828 (Pa.Super, 1998). In Scampone v. Grane Healthcare, Co., 11 A.3d 967 (Pa. Super., 2010), allocatur granted, 15 A.3d 427 (Pa., 2011), the Superior Court applied corporate negligence to nursing facilities and their management companies despite the fact that those entities did not have staff physicians. See id. at 976.

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