Keep your finger on the legal world's pulse

A recent settlement between the New York State AG and Refuah Health Center, Inc. highlights the risks of concurrent jurisdiction under the Health Insurance Portability and Accountability Act (HIPAA). The settlement resulted in an Assurance of Discontinuance (AoD), showing the increasing use of AoDs in New York to address data breaches. The Stop Hacks and Improve Electronic Data Security (SHIELD) Act expanded reporting obligations for entities subject to HIPAA, requiring them to report breaches to both federal authorities and the New York State Attorney General. This new reporting duty is based on the concurrent enforcement jurisdiction granted to state attorneys general under the HITECH Act. The Refuah AoD, along with other recent AoDs, demonstrates the risks faced by organizations operating in New York under the concurrent jurisdiction of both OCR and the Attorney General. The settlement highlights the importance of timely breach reporting and compliance with HIPAA's Security Rule. Organizations must conduct regular risk assessments and keep them up to date to avoid penalties and ensure information security. The Refuah AoD imposes monetary penalties and requires the development and maintenance of an information security program. This case, along with another recent AoD involving New York and Presbyterian Hospital, underscores the challenges of regulatory myopia in data protection. Organizations may face multiple regulators and overlapping regulatory risks, making data protection compliance complex. The lesson from these settlements is that organizations should consider all potential regulators and not rely solely on their primary regulator. Data breach notifications are just the beginning, and regulatory investigations can have lasting effects.

 

Law

Physician groups and advocates for Medicare payment overhaul are set to lose three key supporters in Congress due to retirement. Republican Reps. Larry Bucshon, Michael C. Burgess, and Brad Wenstrup, all members of the GOP Doctors Caucus, have been vocal in pushing for changes to the Medicare payment system. The current system has faced criticism for not keeping up with inflation and for budget-neutral requirements that result in cuts to doctor pay. The retirements of these lawmakers may leave long-term changes to the Medicare payment program unfinished, as Congress focuses on other priorities and an election year. Efforts to stabilize physician payments and reward quality instead of volume, such as the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), have not achieved the desired results. Short-term fixes are being pursued, but prospects for long-term change remain uncertain. The retirement of these key supporters is seen as a loss of institutional knowledge and expertise in Congress.

 

The Columbian

Georgia's ruling Republicans are pushing a bill that would make it more difficult for workers at companies receiving economic incentives to join labor unions. The bill, backed by Gov. Brian Kemp, would require a formal secret-ballot election for companies to recognize unions, blocking unions from gaining recognition through a majority sign-up process. Union leaders and Democrats argue that the bill violates federal law and the right to voluntary recognition. The bill, modeled after a law in Tennessee, is part of a larger trend of Southern states opposing unions. Republicans claim the bill protects workers from being coerced into joining unions, while Democrats argue it hinders union organizing. The bill now moves to the House for further debate.

 

U.S. News

The Federal Trade Commission (FTC) has sued Amazon over allegations of anti-competitive and monopolistic behavior. Amazon has asked a federal judge to dismiss the case, arguing that the practices in question have lowered prices for consumers and are common across the retail industry. The FTC argues that Amazon's conduct creates a self-reinforcing monopoly that harms customers. The case against Amazon is described as "a straightforward story of illegal conduct" by the FTC. The two parties are also deadlocked over how many company insiders Amazon must make available for deposition. The FTC has accused Amazon of using anticompetitive practices to keep its competitors from gaining a foothold in the digital retail space. Amazon accounted for nearly 38% of the U.S. e-commerce market as of June 2022. The FTC accuses Amazon of replacing organic search results with paid advertisements, charging steep fees to sellers, and penalizing vendors for offering lower prices elsewhere. The FTC alleges that Amazon's monopolistic strategy works to keep its rivals from growing and gaining momentum. Attorneys general from 17 states have signed on to the lawsuit. Amazon has asked the judge to dismiss the case entirely, arguing that its business practices are pro-competitive. The FTC alleges that Amazon punished sellers who offered lower prices elsewhere by excluding them from the "Buy Box." The FTC also accuses Amazon of raising prices for shoppers using an algorithm called Project Nessie. The FTC has asked Amazon to provide an organized list of how and where the company stores its information. The FTC has also asked for additional protections for sellers who fear retaliation from Amazon. Amazon has designated four attorneys to participate in the case and argues against the FTC's proposed protections for sellers. The FTC has sought documents from 130 current and former Amazon employees over a four-year period. Amazon and the FTC will meet to set a schedule for the discovery process.

 

The Columbian

Authorities have taken action against two Texas companies believed to be connected to robocalls that used artificial intelligence to mimic President Joe Biden's voice and discourage voting in New Hampshire's primary. The New Hampshire Attorney General's office is investigating the robocalls, which were described as an attempt to disrupt and suppress voting. Cease-and-desist orders and subpoenas have been issued to Life Corporation and Lingo Telecom, with the Federal Communications Commission also issuing a cease-and-desist letter. The recorded message falsely suggested that voting in the primary would prevent voters from casting a ballot in the general election. This incident highlights the potential for AI interference in elections and the need for strong law enforcement action. The investigation is ongoing, but authorities are sending a clear message that attempts to undermine elections will not be tolerated.

 

U.S. News

Google has agreed to pay $350m to settle a lawsuit related to a security bug at its now-defunct Google+ social media website. The settlement resolves claims that Google concealed the three-year software glitch that exposed users' personal data. Shareholders alleged that Google feared disclosure would subject it to regulatory and public scrutiny similar to what Facebook faced after the Cambridge Analytica scandal. The lawsuit, led by Rhode Island Treasurer James Diossa, covers Alphabet shareholders from April 2018 to April 2019. Google denied wrongdoing and found no evidence of data misuse. The company previously settled a related lawsuit with Google+ users for $7.5m. Lawyers for the shareholders may seek up to $66.5m in fees from the settlement.

 

Reuters

SpaceX is being investigated by a California civil rights agency over allegations of discrimination and sexual harassment against female employees. The investigation comes after a group of engineers filed complaints claiming they were fired for criticizing SpaceX and Elon Musk. The U.S. National Labor Relations Board has also filed a case against SpaceX, accusing the company of violating federal labor law. The engineers allege that SpaceX routinely discriminates against women, pays them less than men, tolerates harassment, and retaliates against those who complain. SpaceX has until later this month to respond to the allegations. This is not the first time companies run by Musk have faced accusations of labor and employment law violations. The California agency previously sued Tesla, where Musk is CEO, for alleged harassment and discrimination against Black factory workers. The U.S. Equal Employment Opportunity Commission also made similar claims against Tesla.

 

Reuters

A U.S. scientific publisher, Sage Publications, has retracted two studies that were cited in a lawsuit challenging the approval of the abortion pill mifepristone. The retraction comes ahead of an expected appeal by President Joe Biden's administration in the same case. The lead author of the studies, James Studnicki, a vice president at the anti-abortion Charlotte Lozier Institute, called the retractions "completely unjustified." One study found a high rate of emergency room visits following mifepristone abortions, while the other found that complications are frequently misclassified as miscarriages. Sage Publications retracted the studies due to fundamental problems and conflicts of interest. The retraction is expected to impact the plaintiffs' legal standing in the appeal. Medication abortion accounts for a majority of abortions in the United States.

 

Reuters

First Citizens BancShares has accused HSBC executives, including CEO Noel Quinn, of condoning a plan to steal employees and confidential information from Silicon Valley Bank (SVB). The lawsuit alleges that David Sabow, who previously worked at SVB, met with Quinn and other top executives to share plans of poaching workers in order to launch a competing venture capital business. First Citizens claims that Sabow and five other former SVB officials took client information and trade secrets and convinced over 40 employees to join HSBC. HSBC denies wrongdoing and states that Sabow's recruitment efforts predated First Citizens' takeover of SVB. The case is ongoing.

 

Reuters

Manatt Phelps & Phillips is facing a lawsuit for allegedly mishandling a client's case against his brothers, resulting in the client losing a $30.9m court victory. Leonard Schrage, the client, claims that the firm used the wrong legal theory when he initially sued his brothers over their management of their late father's car dealership empire. Schrage alleges that the firm wrongly asserted individual claims instead of derivative claims against his brothers. The lawsuit also accuses Manatt of abandoning Schrage after a court ruling reversed the verdict. Schrage is seeking damages for the financial loss and damage to his reputation. The case is Leonard Schrage v. Manatt Phelps & Phillips LLP in Los Angeles County Superior Court.

 

Reuters

Boards should understand that even if climate change and environmental stewardship ranks low on their list of priorities for 2024, that may not be the case for their shareholders. According to a new report by the EY Center for Board Matters, investors representing $50tn in assets want companies to prioritize climate change and environmental stewardship. The report highlights a disconnect between investors and boards of directors, with investors prioritizing talent and the environment, while boards focus on economic conditions and capital allocation. Investors are calling for companies to reduce emissions, innovate for a clean-energy transition, and establish specific targets for emissions. They want evidence of credible commitments and may raise concerns if companies fail to meet targets. The EY report emphasizes the importance of companies aligning with shareholder priorities on climate change and environmental stewardship.

 

Law