Operating a purely informative website is not to be regarded as a business transaction, not even when it contains a link that points to the page of an online shop.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: In a current decision (File number: 6 U 220/12), the Superior Court (OLG) of Cologne had to rule how providing information about alternative treatment methods on a website had to be classified. The case involved an operator of a website which provided detailed information about an unconventional treatment method. In addition, the website included a link leading to an online shop that sells products for this treatment method. Another company saw this as anti-competitive promotion of the products and filed an action seeking a cease and desist order.
The Regional Court (LG) had found the action inadmissible due to misapplication of the law. The plaintiff filed an appeal with the OLG in Cologne. But that did not lead to success either. While the OLG found the action to be admissible, it did not agree on a cease and desist order. The court explained that such an order could only be justified in case of a business transaction as defined in the Unfair Competition Act (UWG). To assume a business transaction, there would have to be an objective connection between a person’s favouring conduct and sales promotion of products.
In this particular case, the OLG did not believe that those conditions were met. The court explained that it is not significant whether the conduct actually affects the decision of consumers, but whether that has also been the primary purpose of the action. There was no indication that the defendant profited financially from the sale of the products. The website statements exclusively served the purpose of informing about the treatment method. The mere placement of a link could not be taken as deliberate sales promotion. Furthermore, the website had also pointed to pharmacies in general as vendors of the products.
Purpose of the UWG is to protect free competition and to protect companies against detrimental activities by competitors. A violation of the UWG can justify a cease and desist order but can also lead to compensation and surrender claims. To ensure that companies do not violate the Unfair Competition Act, they should seek the advice of a lawyer with experience in competition law. By examining an individual case, he can evaluate the situation exactly and if necessary take the required legal action.
IRS, Treasury Department Issue Proposed Rules Governing Minimum Value, Affordability, and Wellness Programs | Martindale.com
IRS, Treasury Department Issue Proposed Rules Governing Minimum Value, Affordability, and Wellness Programs
A key policy goal of the Patient Protection and Affordable Care Act (the “Act”) is the expansion of health insurance coverage to all Americans. The concepts of “minimum value” and its correlate “actuarial value” speak to the generosity of that coverage. What constitutes minimum value is important both for employers that sponsor group health plans and for low-income individuals seeking government subsidies to help pay for coverage through newly established public insurance exchanges. Recently issued proposed regulations provide important clarifications on how employers determine minimum value, and how those determinations impact their compliance with the Act. The proposed rule also clarifies the relationships among minimum value and affordability, on the one hand, and wellness programs, Health Reimbursement Accounts and Health Savings Accounts, on the other. This advisory explains these and other features of the proposed regulations.
Beginning in 2014, the Act requires most U.S. citizens and green card holders to maintain health insurance coverage, which the Act refers to as “minimum essential coverage.” The phrase minimum essential coverage refers not to the content but to the source of coverage, which can include Medicare, Medicaid, or an “eligible employer-sponsored plan,” among others. Low income individuals may qualify for premium tax credits and cost sharing reductions (collectively, “premium assistance”) to assist with the purchase of coverage through public insurance exchanges. Where an individual is eligible for coverage under an eligible employer-sponsored group health plan that is both affordable and provides minimum value, however, that individual is ineligible for premium assistance.
Beginning in 2014, the Act also imposes certain obligations on “applicable large employers” — i.e., employers with 50 or more full-time and full-time equivalent employees — under which these employers must either offer group health plan coverage or face the prospect of a penalty. These “employer shared responsibility” (or “pay-or-play”) rules include two options:
The employer fails to offer to at least 95% of its full-time employees (and their dependents) the opportunity to enroll in a group health plan of the employer, and any full-time employee qualifies for premium assistance, or
The employer offers to at least 95% of its full-time employees (and their dependents) the opportunity to enroll in a group health plan of the employer that is either unaffordable or fails to provide minimum value, and one or more full-time employees qualifies for premium assistance.
These rules are set out in new Internal Revenue Code section 4980H. The no-coverage prong is referred to more formally in proposed regulations as the “4980H(a) penalty,” and the coverage prong, the “4908H(b) penalty.” Both penalties are determined monthly, but they are easiest to understand when expressed as an annual amount. The no-coverage penalty is determined by multiplying the number of the employer’s full-time employees (excluding the first 30) by $2,000. In contrast, the coverage penalty (i.e., the penalty for offering coverage that is either unaffordable or fails to provide minimum value) is determined by multiplying the number of the employer’s full-time employees who qualify for premium assistance by $3,000. This latter penalty can never exceed the 4980H(a) penalty. Where an employer makes an offer of coverage that is both affordable and provides minimum value, there is no penalty.
Coverage is affordable if the employee premium for self-only coverage does not exceed 9.5% of an employee’s household income. Recognizing the difficulty with obtaining household income data, proposed regulations under Code section 4980H provide three proxies or safe harbors for determining affordability: W-2 income, rate-of-pay, and (lowest) Federal Poverty Limit.
A plan fails to provide minimum value if the plan’s “share of the total allowed costs of benefits provided under the plan is less than 60 percent of the costs.” A plan with a minimum value of 100% would cover all benefit costs with no cost-sharing. Anything below 100% simply means that the covered employee or family member will pay a portion of the costs for covered services. The lower the value, the more the employee will need to pay by way of co-pays, deductibles, co-insurance and other cost sharing requirements.
The terms “minimum value” and “actuarial value” both describe the percentage of expected health care costs a health plan will cover for a “standard population.” In the case of minimum value, it’s a population that reflects typical self-insured group health plans. In the case of actuarial value, the standard population is a population that reflects the average health risk of the individual and/or small group health markets.
When determining actuarial value for individual and small group coverage, the services that must be covered include “essential health benefits.”1 For minimum value determinations involving large and self-funded groups, the standards are less clear. Should minimum value be based on the plan’s share of the cost of coverage for all essential health benefits? Or should it be based on the plan’s share of the costs of only those benefits that the plan actually covers? Both prior guidance (i.e., IRS Notice 2012-31) and the proposed regulations concede that there is no support under the Act for the former approach, and both reject the latter. In Notice 2012-31, the Treasury Department and the IRS charted a middle path, noting that the Act directs that the statutory phrase “percentage of the total allowed costs of benefits provided under a group health plan” is determined under rules contained in the regulations to be promulgated by HHS relating to actuarial value, and that the determination of whether an employer-sponsored plan provides minimum value “will be based on the actuarial value rules with appropriate modifications.” Notice 2012-31 proposed that, for an employer-sponsored plan to provide minimum value, it would be required to cover four core categories of benefits: physician and mid-level practitioner care, hospital and emergency room services, pharmacy benefits, and laboratory and imaging services.
HHS has since published a final rule defining the “percentage of the total allowed costs of benefits provided under a group health plan” as
The anticipated covered medical spending for essential health benefits (EHB) coverage ... paid by a health plan for a standard population,
Divided by the total anticipated allowed charges for EHB coverage provided to a standard population.
AV and MV calculators. Employer-sponsored plans may determine their actuarial or minimum value by entering information about the cost-sharing features of the plan for different categories of benefits into an online calculator made available by HHS.
Design-based safe harbor checklists. Employers will be able to use safe harbor checklists. If the employer-sponsored plan’s terms are consistent with or more generous than any one of the safe harbor checklists, the plan would be treated as providing minimum value.
Actuarial certification. For plans with nonstandard features that preclude the use of the AV calculator, or the MV calculator, actuarial value or minimum value is determined based on the AV or MV calculator with adjustments as certified to an actuary.
The proposed regulations include a fourth option: For small groups, plans that satisfy any of the metal tiers (platinum, gold, silver, and bronze) specified for coverage under a public insurance exchange are deemed to provide minimum value.
The minimum value proposed regulation coordinates with and builds on the HHS final regulation. The proposed regulations refer to the proportion of the total allowed costs of benefits provided to an employee that are paid by the plan as the plan’s “MV percentage.” According to the proposed regulation,
“The MV percentage is determined by dividing the cost of certain benefits the plan would pay for a standard population by the total cost of certain benefits for the standard population, including amounts the plan pays and amounts the employee pays through cost-sharing, and then converting the result to a percentage.” (Emphasis added).
A plan with an MV percentage of 60% or more is deemed to provide minimum value. Anything less, and a plan fails to provide minimum value.
The proposed regulations do not require an employer to provide coverage for all EHB categories. Instead, minimum value is measured with reference to “benefits covered by the employer that also are covered in any one of the EHB benchmark plans.” Or, put another way, a plan’s anticipated spending for benefits provided under any particular EHB-benchmark plan for any state “counts towards” that plan’s MV. Thus, while large groups are not required to offer EHBs, their minimum value percentage is tested against an EHB benchmark plan. The categories of EHB provided in the IRS/HHS calculator include:
Primary Care Visit to Treat an Injury or Illness (except Preventive Well Baby, Preventive, and X-rays) Specialist Visit
The proposed regulations establish the following safe harbor plan designs for plans that cover all of the benefits included in the minimum value calculator:
A plan with a $3,500 integrated medical and drug deductible, 80% plan cost sharing, and a $6,000 maximum out-of-pocket limit for employee cost-sharing;
A plan with a $4,500 integrated medical and drug deductible, 70% plan cost sharing, a $6,400 maximum out-of-pocket limit, and a $500 employer contribution to an HSA; and
A plan with a $3,500 medical deductible, $0 drug deductible, 60% plan medical expense cost-sharing, 75% plan drug cost-sharing, a $6,400 maximum out-of-pocket limit, and drug co-pays of $10/$20/$50 for the first, second and third prescription drug tiers, with 75% coinsurance for specialty drugs.
The proposed regulations provide that current year employer contributions to a health savings account (HSA) and amounts newly made available under a health reimbursement arrangement (HRA) that is integrated with an eligible employer-sponsored plan and that are limited to the payment or reimbursement of medical expenses count toward the plan’s share of costs included in calculating minimum value. But if the HRA can be applied toward both the reimbursement of medical expenses and the payment of premiums, employer HRA credits may not be used in the minimum value determination. An integrated HRA is an HRA that coordinates with an employer’s group health plan.
The proposed regulations also provide that a plan’s share of costs for minimum value purposes is generally determined without regard to reduced cost-sharing available under a nondiscriminatory wellness program. But in the case of nondiscriminatory wellness programs designed to prevent or reduce tobacco use, minimum value may be calculated assuming that every eligible individual satisfies the terms of the program. These rules apply to wellness program incentives that affect deductibles, co-payments, or other cost-sharing.
Amounts newly made available under an integrated HRA for the current plan year are taken into account in determining affordability if the employee may use the amounts only for premiums or if he or she may choose to use the amounts for either premiums or cost-sharing. According to the preamble to the proposed regulation, treating amounts that may be used either for premiums or cost-sharing towards affordability prevents double counting the HRA amounts when assessing minimum value.
Tracking the rules for determining minimum value, after 2014, wellness incentives may not be included as either additions to, or deletions from, an individual’s plan premium for purposes of calculating affordability unless the incentive is related to a tobacco cessation program. Thus, the affordability of a plan that charges a higher initial premium for tobacco users will be determined based on the premium that is charged to non-tobacco users, or tobacco users who complete the related wellness program, such as attending smoking cessation classes.
For purposes of applying the employer shared responsibility rules, for plan years beginning before January 1, 2015, an employer will not incur a penalty under the coverage prong where an employee qualifies for premium assistance if the offer of coverage would have been affordable or would have satisfied minimum value based on the required employee premium and cost-sharing determined as if the employee satisfied the requirements of any such wellness program (including a wellness program relating to tobacco use). This rule applies only to wellness plan terms and incentives in effect as of May 3, 2013, and only to employees who are in a category of employees eligible for the program as of that date.
Health Savings Accounts, Health Reimbursement Accounts, and Non-discriminatory Wellness Programs: Summary of Impact on Affordability and Minimum Value
Amounts contributed by an employer for the current plan year to an HSA are taken into account in determining the plan’s share of costs for MV purposes.
Current-year contributions to integrated Heath Reimbursement Accounts—premiums and payment/reimbursement of medical expenses
Amounts newly made available under an integrated HRA for the current plan year are not taken into account for MV purposes.
Current-year contributions to integrated Heath Reimbursement Accounts—Limited to payment/reimbursement of medical expenses
Amounts newly made available under an integrated HRA for the current plan year are taken into account for MV purposes.
For purposes of applying the employer shared responsibility rules (i.e., Code § 4980H), affordability is determined by assuming that each employee satisfies the requirements of a wellness program (including a wellness program relating to tobacco use).
For purposes of applying the employer shared responsibility rules (i.e., Code § 4980H), MV is determined by assuming that each employee satisfies the requirements of a wellness program (including a wellness program relating to tobacco use).
Affordability is determined by assuming that each employee fails to satisfy the requirements of a wellness program.
A plan’s share of costs is determined without regard to reduced cost-sharing available under a nondiscriminatory wellness program.
Affordability is based on the premium charged to non-tobacco users (or tobacco users who complete the alternative standard).
A plan’s share of costs is determined assuming every eligible individual satisfies the terms of a nondiscriminatory wellness program.
The proposed regulations provide that a pre-Medicare retiree who declines to enroll in available retiree coverage may qualify for premium assistance. This is similar to the rule adopted in final regulations under Code section 36B, under which an individual who may enroll in continuation coverage required under federal law or a state law is eligible for minimum essential coverage only for months that the individual is enrolled in the coverage. Under this proposed rule, a low-income retiree who declines to enroll in an employer’s retiree health plan may still qualify for premium assistance despite that employer’s coverage is both affordable and provides minimum value.
1 The categories of essential health benefits include ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
The following is the first in a series of postings which will provide a brief look into UN procurement intended to help potential contractors assess the viability of doing business with the UN.
In an era of shrinking procurement budgets, federal contractors are increasingly seeking new opportunities abroad. But many companies understandably view navigation of the numerous rules, regulations and laws associated with international procurement as daunting at best and unfeasible at worst. Luckily, there exists a middle ground allowing companies the opportunity to expand globally without ever dialing a country code or resorting to Skype - the United Nations.
The United Nations is a 65-year old organization of 192 member countries aiming to foster and facilitate international security and global economic development. The UN is funded primarily through voluntary contributions of its member states and is made up of five principal active “organs,” the General Assembly, the Security Council, the Secretariat, the Economic and Social Council, and the International Court of Justice. Under each organ lies a bevy of agencies, organizations, commissions, and programs created to tackle specialized tasks or problems. Known as the “United Nations System of Organizations,” these specialized units include agencies such as the United Nations Children Fund (“UNICEF”), United Nations High Commissioner for Refugees (“UNHCR”), the United Nations Educational, Scientific and Cultural Organization (“UNESCO”) and the Department of Peacekeeping Operations.
Each of the five principal organs and the numerous specialized units have procurement needs that, due to the variety and breath of UN missions, require the UN to procure an extraordinary variety of goods and services. Generally addressed and managed by the UN’s Department of Management, goods procured by the UN can range from food and pharmaceutical supplies to household/domestic items, computers and telecommunication equipment and vehicles suiting numerous purposes. The services the UN procures are similarly diverse and include security, engineering, leasing, property management, freight services and, like most large organizations, construction.
In 2009, the UN’s annual operating budget was $2 billion - yet the value of its procurement of goods and services was roughly $14 billion. This disparity is made possible by UN receipt of funds from the development budgets of countries participating in UN national development programs combined with loans from international lending institutions. This blend of funding has enabled the UN to triple procurement outlays over the last ten years, from $5 billion in 2003, consisting of $1.5 billion for goods and $3.5 billion for services, to nearly $14 billion in 2009, consisting of $6.5 billion for goods and $7.5 billion for services.
The UN reports that in 2009, 12.6% of the goods and services procured, or $1.7 billion, came from the United States. However, as a key goal of UN procurement is to advance the economies of developing nations, the UN may exclude US businesses from a procurement if a developing nation is able to provide an equivalent good or service. US contractors will recognize this approach as analogous to our own small business preference program under which large businesses may be excluded from certain procurements.
The first step towards participation in UN procurement is registration, which is an on-line vetting process that permits the potential vendor to be entered into the United Nations Global Marketplace (“UNGM”) database, thereby rendering it visible to approximately 2,200 procurement personnel in 37 UN agencies and enabling access to on-line tender and solicitation announcements. Registration also permits companies to receive solicitation announcements through a subscription service should they choose to do so.
The initial phase of the registration process entails assessment of the applicant’s responsibility and divides potential vendors into two distinct camps. If the vendor has at least three years of documented export experience, that vendor will be permitted to register with the UN as a “Global potential supplier” and eligible to interact with 19 UN agencies, such as the International Atomic Energy Agency and/or the International Fund for Agricultural Development. Vendors with less than three years of export experience will be limited to registering as a “Local potential supplier,” and only able to provide goods and services to UN agencies in that potential supplier’s country of residence (i.e., for U.S. companies the UN Headquarters in New York). This differentiation could be an important factor in the selection of evaluation agencies with which a company chooses to register, as discussed below.
On completion of the initial registration phase, the potential vendor commences the process of formal registration on the UNGM, which includes submission of company information and, importantly, the selection of at least one UN agency with which to register as a potential vendor (i.e., UNICEF, UNHCR, etc.). Potential vendors may seek to register with more than one evaluation agency but should take care to assure that the goods and services they offer will be needed by the agencies identified because the application will be rejected if no agency identifies a need for the goods and services offered. That said, the approval of only one agency is required for successful completion of registration and consequent eligibility to sell to any UN agency.
Registration also requires the vendor to use the United Nations Common Coding System (“UNCCS”) to identify up to seven types of goods or services the vendor intends to offer. Proper correlation of vendor goods and services with UNCCS code(s) is critical to assure accurate agency evaluation of the vendor during registration and, as well, to enhance the probability of sales of goods and services to UN agencies since all agencies use the identified UNCCS product coding to identify vendors from whom they will make purchases.
While the UN vendor registration process itself is relatively straightforward, agency evaluation of vendors is a highly bureaucratized undertaking that takes varying amounts of time depending on the evaluation agency or agencies chosen. For example, a vendor who has identified UNICEF as an evaluating agency should expect to wait four to eight weeks before receiving notice of acceptance or rejection. In contrast, the International Atomic Energy Agency may well give the vendor a completed evaluation in two to three weeks. While it would probably not be wise to choose an evaluating agency based on anticipated time for approval, potential vendors should be aware that some registrations will likely be afflicted by agency-caused delays.
In sum, the UN is potentially a good customer for a vendor seeking to enter the global marketplace or to expand its global reach and presence. Fortunately, the first step towards becoming a UN vendor can be completed with the exercise of due diligence, access to an internet connection and a capacity for patience. Actually getting work from the UN is, however, a bit more complicated and potentially frustrating process and is the subject of our next posting.
After the Senate and House passed identical versions of S. 2450, adding new Evidence Rule 502 to the Federal Rules of Evidence, the bill went to President Bush for signature.
James J. Holman practices in the areas of commercial finance law, business reorganization, and business and municipal insolvency. He represents institutional lenders, trust companies, insurance companies and businesses in a broad spectrum of transactions, including corporate finance, business restructuring and bankruptcy.
Admitted to practice in Pennsylvania, Delaware and New York, he is a member of the American Bar Association, the Delaware State Bar Association, the Commercial Finance Association Education Foundation, the American Bankruptcy Institute and the Society of Trust and Estate Practitioners.
He is listed annually by Chambers USA: America’s Leading Lawyers for Business, by Best Lawyers in America, and by the London organization Citywealth as a leading lawyer in the United States.
Mr. Holman is a 1989 graduate of Villanova University School of Law, where he served as managing editor of the Villanova Law Review, and a summa cum laude graduate of DeSales University.
The listing of areas of practice in the foregoing profile does not represent official certification as a specialist in those areas.
•Author, Commercial realities: to what extent can US commercial trust mitigate investor risks?, Trust Quarterly Review, June 2015
•Author, Strategies for Avoiding the Headache of Preference Liability, The Legal Intelligencer, April 17, 2013
•Speaker and Panel Leader at annual Risk and Recovery: Developments in Business Bankruptcy and Commercial Finance Law, Philadelphia.
•Speaker, Recent Trends in Business Bankruptcy Law Affecting Commercial Real Estate: Key Issues and Strategies for Weathering Extended Economic Uncertainty, presented to Principal Financial Group, August 17, 2011
•Speaker, U.S. Trusts and Companies in International Planning, Geneva, Switzerland, November 23-24, 2009
•Speaker, Annual Review of Developments Related to Recovery of Preferential Transfers Under Section 547 of the United States Bankruptcy Code, American Bar Association Business Law Section Spring Meetings
•Speaker, The United Nations Convention on Contracts for the International Sale of Goods: An Overview for Attorneys Representing U.S. Clients, CLE program sponsored by the American Corporate Counsel Association
1989, Pennsylvania and New Jersey; Supreme Court of Pennsylvania; U.S. District Court for the Eastern District of Pennsylvania; Delaware; New York; U.S. District Court for the District of New Jersey; Supreme Court of New Jersey
Representative Matters: Represented a national bank lender as Administrative Agent, Collateral Agent, Lead Arranger, and Sole Bookrunner in an $85 million syndicated lending facility to one of the mid-Atlantic's largest contracting and construction companies and its affiliates.; Represent Principal Life Insurance Company, as secured lender in restructuring of shopping mall loan facilities in chapter 11 proceedings of General Growth Properties (SDNY).; Represent UBS Ag Stamford as Agent for Bank Group in valuation, sale, and chapter 11 reorganization proceedings of Nellson Nutraceuticals, Inc. (D. Del.).; Represent major secured creditor as Administrative Agent and DIP Lender in bankruptcy proceedings of Revel, Inc.; Represent major secured creditor in negotiation, documentation, and implementation of asset based lending facilities extended to nationwide retail chain.; Represent major secured creditor in negotiation and documentation of credit facilities for national trucking and transportation group and its affiliates.; Represent major secured creditor in workout and restructuring matters associated with gaming and casino borrower.