False, Fraudulent, and Bad Faith DMCA Take Down Claims

Picture this.  You’re are a YouTube personality who happened to hit it big and before you know it you are relying on income from your YouTube channel as your sole source of income.  Your videos consist mainly of criticizing or commenting on issues that are important to you.  However, with this rise in fame also comes a rise in detractors – people who are not happy that you are criticizing them.  These detractors want nothing more than to hurt you and prevent others from hearing your criticisms.  So, what do these detractors do? They file a DMCA takedown notice claiming that your video (or videos) are infringing on their copyright.  You are now in the position of defending yourself or risking copyright strikes by YouTube.  Worse, even if you file a counter-notice, the video will still have been offline for some time, causing a serious interruption in your source of income.  Do you have any recourse against these bad-faith, fraudulent takedown notices?  The answer is yes, and this article discusses what those options are.

Congress passed the Digital Millennium Copyright Act (the “DMCA”) in 1998 to address the changing world of copyrights in lieu of the rise of the internet.  Over two decades later, the DMCA still provides an efficient mechanism to allow copyright holders to easily have infringing content removed from an internet service provider like YouTube without the need to file expensive lawsuits.

The DMCA, among other things, created a notice-takedown process that, if followed by service providers (like YouTube), insulates them from copyright liability for any infringing content posted on their site.  In general, the way that the takedown-notice procedure works is as follows:

  • A copyright holder files a takedown notice, under penalty of perjury, with a service provider claiming that the site is hosting infringing content owned by the copyright holder;
  • The service provider then removes the allegedly infringing content and notifies the person who posted the content;
  • The posting party then has the right to file a counter-notification, informing the service provider that the content is not infringing; and
  • If a counter-notice is filed, the service provider must re-host the content unless the original copyright holder files a lawsuit.

In most cases, this process works well and allows content creators, especially small content creators, the ability to police their works without needing to resort to expensive, federal copyright litigation.

However, people have been able to abuse this process to attack enemies and competitors, and to censor critics.  Critics often use small portions of video or text from the person they are criticizing to put the criticism in context.  This use, as discussed below, would clearly be fair use and allowable.  However, the person being criticized will then file a DMCA takedown notice claiming that, because snippets of his videos or text are used, the video infringes on his copyright.  These takedowns are not valid and are nothing more than attempts to censor perfectly acceptable speech and shield the person from criticism.

The DMCA provides a remedy for these bad-faith takedowns, specifically:

Any person who knowingly materially misrepresents under this section—

(1) that material or activity is infringing, or
(2) that material or activity was removed or disabled by mistake or misidentification, shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer, by any copyright owner or copyright owner’s authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.

17 U.S.C.A. § 512

Thus, if someone files a fraudulent DMCA takedown notice, they can be sued for the damages caused, along with the costs and attorneys’ fees that were incurred in pursuing those damages.  In many cases, the costs of attorneys’ fees can far outweigh the actual damages.

The big issue that arises in these types of cases is “fair use.”  Fair use is defined as follows:

[T]he fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.

17 U.S.C. § 107

One of the most important things to remember about fair us is that “fair use is not just excused by the law, it is wholly authorized by the law.” Lenz v. Universal Music Corp., 815 F.3d 1145, 1151 (9th Cir. 2016).  Thus, even if someone is using a copyrighted work, if it is being used as authorized by 17 U.S.C. § 107, the use is not infringing.

What many of these fraudulent takedown requests hang their hat on is that their copyrighted content was included in some way in the video in question.  However, they fail to undertake any sort of good-faith analysis as to whether fair use is applicable or not.  Most often, uses of a copyrighted work, especially snippets of that work, to criticize the work or the author are protected by fair use.  However, the sender of the notice doesn’t actually have a legitimate concern about copyright infringement, but instead is concerned with attempting to censor critics or punish people the sender does not like.

Unfortunately for these senders, the Court has addressed this issue and concluded that “a copyright holder must consider the existence of fair use before sending a takedown notification” and “form a subjective good faith belief that a use is not authorized[.]” Id at 1153.

Therefore, if the sender did not conduct a good faith, fair use evaluation before sending the takedown notice, they can be subject to liability, including damages, attorneys’ fees, and costs.

If you have been the subject of a bad-faith DMCA takedown notice, you should contact an attorney at Smith & Associates for a free consultation to discuss your situation and your potential remedies.

Maximize Your Reimbursement for Patients Involved in Accidents from PIP Insurance Carriers

Hospitals, Physicians and other providers are eligible for reimbursements from PIP insurance carriers (under an assignment of benefits) for emergency and follow-up medical services to patients involved in automobile accidents. In Florida, there are statutory protections in place to ensure hospitals and other medical service providers are paid for their services before any other liens are satisfied from the injured patient’s PIP policy of an injured patient.  The attorneys at Smith & Associates can help maximize the reimbursements permitted by law.

What is PIP?

Personal Injury Protection.  PIP is a type of insurance coverage required by all Florida motorists.  Benefits of PIP insurance are used to pay medical bills and lost wages in the event a driver is injured in an accident.

PIP insurance benefits to hospitals and other providers are “primary,” meaning that the medical providers are reimbursed first before other payments can be made under the policy. Section 627.736(4), Florida Statutes.

How does PIP work for Hospitals, Physicians and other Providers?

Florida requires insurance policies to reserve at least $10,000 in PIP benefits for medical and disability payments.  Hospitals and other qualified health care providers can become lienholders of those benefits if certain services were provided to the injured insured.  Pursuant to section 627.736(1)(a), Florida Statutes, “medical benefits” includes payment of 80-percent of all reasonable expenses for medically necessary surgical, medical, x-ray ambulance, hospital and nursing services if the injured patient received initial services within 14 days after the motor vehicle accident.

What Factors Determine Reimbursement of Medical Services?

One of the first factors a hospital or physician should consider in determining PIP coverage eligibility is when the injured patient was initially treated in relation to the automobile accident.  The injured motorist must receive the initial medical services within 14 days after the accident in order to be covered by PIP insurance. If initial medical services were not provided within 14 days of the accident, then there is no PIP coverage eligibility for any medical services.

Medical reimbursements may also cover “follow-up” services and care so long as they are consistent with the underlying medical diagnosis rendered pursuant to the initial services (within 14 days of the accident) upon referral by a qualified provider (licensed physician, dentist, or chiropractor).

A. Requesting PIP Reimbursements

Once the health care provider determines that PIP coverage applies to the medical services rendered to an injured patient, the provider should immediately submit written notice to the PIP insurance carrier indicating the patient’s coverage and the amount of the medical services provided.  An insurer must pay the provider’s PIP benefits within 30 days after written notice is furnished. Written notice is to be made as soon as practicable after an accident involving a motor vehicle.

B. Amount of Reimbursement

Subject to certain exclusions, reimbursement for medically necessary services can be up to $10,000 if the injured person had an “emergency medical condition” pursuant to section 627.736(1)(a)3., Florida Statutes.  In order to qualify as an emergency medical condition, the patient’s condition must be determined as such by a physician licensed under chapter 458 or chapter 459, a dentist licensed under chapter 466, a physician assistant licensed under chapter 458 or chapter 459, or an advanced practice registered nurse licensed under chapter 464.  If the medical services were provided to an injured person who did not have an emergency medical condition, then reimbursement is limited to $2,500.

What kinds of medical services are reimbursable?

The law provides for the reimbursement of emergency services and care to an injured person insured under PIP.  “Emergency services and care” means medical screening, examination, and evaluation by a physician, or, to the extent permitted by applicable law, by other appropriate personnel under the supervision of a physician, to determine if an emergency medical condition exists and, if it does, the care, treatment, or surgery by a physician necessary to relieve or eliminate the emergency medical condition, within the service capability of the facility. Section 395.002(9), Florida Statutes.

Additionally, the services must be “medically necessary” pursuant to section 627.732(2), Florida Statutes, which is defined as a medical service or supply that a prudent physician would provide for the purpose of preventing, diagnosing, or treating an illness, injury, disease, or symptom in a manner that is:

(a) In accordance with generally accepted standards of medical practice;

(b) Clinically appropriate in terms of type, frequency, extent, site, and duration; and

(c) Not primarily for the convenience of the patient, physician, or other health care provider.

Section 627.732(2), Florida Statutes.

A physician, hospital or clinic rendering treatment to an injured person for a bodily injury covered by PIP benefits may charge the insurer (and injured party) a “reasonable” amount for the services and supplies rendered.  The insurer providing such coverage may pay for the charges directly to the provider if the insured receiving such treatment (or his or her guardian) has countersigned a properly completed invoice, bill, or claim form approved by the Florida Office of Insurance Regulation upon which such charges are to be paid for as having actually been rendered to the best knowledge of the patient or his or her guardian.

What are “reasonable charges” for the medical treatment of injured persons?

Under the PIP statutes, a reasonable charge may not exceed the amount the provider customarily charges for like services or supplies. In determining whether a charge for a particular service, treatment, or otherwise is “reasonable,” section 627.736(5)(a), Florida Statutes, provides that consideration may be given to evidence of usual and customary charges and payments accepted by the provider involved in the dispute, reimbursement levels in the community and various federal and state medical fee schedules applicable to motor vehicle and other insurance coverages, and other information relevant to the reasonableness of the reimbursement for the service, treatment, or supply.

The insurer may limit reimbursement to 80 percent of the following schedule of maximum charges:

a. For emergency transport and treatment by providers licensed under chapter 401, 200-         percent of Medicare.

b. For emergency services and care provided by a hospital licensed under chapter 395,    75-percent of the hospital’s usual and customary charges.

c. For emergency services and care as defined by s. 395.002 provided in a facility             licensed under chapter 395 rendered by a physician or dentist, and related hospital           inpatient services rendered by a physician or dentist, the usual and customary charges in the community.

d. For hospital inpatient services, other than emergency services and care, 200-percent            of the Medicare Part A prospective payment applicable to the specific hospital providing       the inpatient services.

e. For hospital outpatient services, other than emergency services and care, 200-percent            of the Medicare, Part A, Ambulatory Payment Classification for the specific hospital          providing the outpatient services.

f. For all other medical services, supplies, and care, 200 percent of the allowable             amount under:

(I) The participating physicians fee schedule of Medicare Part B, except as provided in sub-sub-subparagraphs (II) and (III).

(II) Medicare Part B, in the case of services, supplies, and care provided by ambulatory surgical centers and clinical laboratories.

(III) The Durable Medical Equipment Prosthetics/Orthotics and Supplies fee schedule of Medicare Part B, in the case of durable medical equipment.

For purposes of submitting written notification of a PIP claim, it is recommended that the hospital or other medical provider submit the full amount of services provided to the insurer.  The provider need not calculate the reductions that are allowable under the statute.

Be advised that carriers may calculate (or miscalculate) the provider’s reimbursement for medical treatment in a way that is self-serving and improper.  For example, in a recent case before the Florida Supreme Court, an insurance carrier deducted the insured’s deductible of $1,000 from a hospital’s benefits after making the statutory reductions pursuant to section 627.736(5)(a), Florida Statutes, above. Progressive Select Ins. Co. v. Florida Hospital Medical Center, 260 So. 3d 219 (Fla. 2018).  By taking the reductions first, the carrier saved $200 that it would have, otherwise, paid to the hospital.  The Court said this was a miscalculation that was not consistent with another provision (section 627.739(2), Florida Statutes) requiring the insurance carrier to apply the deductible to “100-percent of the expenses and losses” of the insured.  Thus, when read together, the Court determined that the deductible must be applied to the total losses (including an insured’s medical bills) prior to applying reductions afforded to emergency medical services in section 627.736(5)(a)1., Florida Statutes. Id.

A. Collection of PIP Reimbursement

Once the medical provider provides written notice of the PIP claim to the insurer, the claim becomes overdue if not paid within 30 days.  An action to recover PIP benefits can be initiated pursuant to 627.736(4), Florida Statutes.  However, before any action to recover benefits can be initiated against an insurer, written notice of an “intent to initiate litigation” must be provided to the insurer. Such notice may not be sent until the claim is overdue (30 days after initial notice is provided), including any additional time the insurer has to pay the claim pursuant to law.

The notice of intent to litigate must state that it is a “demand letter under s. 627.736” and state, with specificity, the following:

1. The name of the insured upon which such benefits are being sought, including a copy of the assignment giving rights to the claimant if the claimant is not the insured.

2. The claim number or policy number upon which such claim was originally submitted to the insurer.

3. To the extent applicable, the name of any medical provider who rendered to an insured the treatment, services, accommodations, or supplies that form the basis of such claim; and an itemized statement specifying each exact amount, the date of treatment, service, or accommodation, and the type of benefit claimed to be due.

The demand notice must be delivered to the insurer (specifically addressed to the person designated by the insurer for the purposes of receiving notices) by certified or registered mail, return receipt requested.  Each licensed insurer is required to file with the Florida Office of Insurance Regulation the name and address of the designated person to whom notices must be sent which the office shall make available on its Internet website. The name and address on file with the office pursuant to section 624.422, Florida Statutes, is deemed the authorized representative to accept notice pursuant to this subsection if no other designation has been made.

No action may be brought if the insurer pays the overdue claim within 30 days after receipt of the demand notice, along with applicable interest and a penalty of 10-percent of the overdue amount paid by the insurer, subject to a maximum penalty of $250.  If the demand involves an insurer’s withdrawal of payment under paragraph (7)(a) for future treatment not yet rendered, no action may be brought against the insurer if, within 30 days after its receipt of the notice, the insurer mails to the person filing the notice a written statement of the insurer’s agreement to pay for such treatment in accordance with the notice and to pay a penalty of 10 percent, subject to a maximum penalty of $250, when it pays for such future treatment in accordance with the law.

B. Attorney’s Fees

In a dispute with an insurance carrier over PIP benefits, attorney’s fees may be awarded pursuant to the attorney’s fee provision in section 627.428, Florida Statutes (awarding a reasonable attorney’s fee to a prevailing named or omnibus insured), or section 768.79, Florida Statutes (offer of judgment and demand for judgement), provided the attorney’s fee:

(a) Complies with prevailing professional standards;

(b) Does not overstate or inflate the number of hours reasonably necessary for a case of comparable skill or complexity; and

(c) Represents legal services that are reasonable and necessary to achieve the result obtained.

Exceptions to the attorney’s fee recovery includes section 627.736(10), Florida Statutes (when the insurer pays 30 days after the demand letter or mails its agreement to pay for future treatment within the prescribed time), and section 627.736(15), Florida Statutes (requiring all claims be brought in a single action to recover PIP benefits).

Upon request by either party, a judge must make written findings, substantiated by evidence presented at trial or any hearings associated therewith, that any award of attorney fees complies with 627.736, Florida Statutes.

C. Other Remedies

An insurer that fails to pay a valid claim submitted by a hospital (or other qualified provider) is engaging in a prohibited unfair or deceptive practice and is subject to the penalties provided by in section 626.9521, Florida Statutes.  The Florida Office of Insurance Regulation has the power and duty to discipline the insurer if the insurer does the following with such frequency so as to indicate a “general business practice”:

1. Fails to pay valid claims for personal injury protection; or

2. Fails to pay valid claims until receipt of the demand notice required by section 627.736(10), Florida Statutes.

In addition, the Department of Legal Affairs may investigate and initiate actions for a violation of this subsection, including, but not limited to, the powers and duties specified in part II of chapter 501.

Case Law on Specific Issues Relating to Hospital Liens

Hospital liens take precedence in a judgement or settlement in favor of the patient.  The Third District Court of Appeals in Crowder v. Dade County, 415 So. 2d 732 (3rd DCA 1982), held that the lien of a hospital is intended to be effective for the “full amount” against the proceeds of a judgment or settlement in favor of the patient. Id., citing Dade County v. Perez, 237 So. 2d 781 (Fla. 3d DCA 1970) and Dade County v. Bodie, 237 So. 2d 553 (Fla. 3d DCA 1970).  Furthermore, the District Court in Crowder held that the amount of the lien could not be discounted or diminished by the amount of attorneys’ fees which may be due to the patient’s counsel. Crowder, supra, citing Public Health Trust of Dade County v. O’Neal, 348 So. 2d 377 (Fla. 3d DCA 1977).

Driving Your Computer without a License: Beware the Wrath of the BSA

Imagine this:  your company has grown from the original handful of employees to dozens or even hundreds of employees, all with their own workstations, home computers, and laptops with remote access to your company server.  You receive a letter one day from an organization called the “Business Software Alliance” (“BSA”) warning you that your company could be responsible for massive licensing fees and penalties because your employees are using unlicensed or mis-licensed software products.  When you begin to internally investigate this claim, you discover you have little or no documentation showing the licensing for the software installed on your company’s computers.  You just upgraded your computers and software and added what you needed as the company grew, never suspecting you would one day be called upon to “prove” that you properly purchased, installed and licensed the software at each workstation.   And now you are facing an ultimatum that failure to provide proof for each and every license will result in dire consequences.  What do you do?  This article discusses the steps you can take before ever being contacted by the BSA and what to do after the BSA has sent its demand letter.

The BSA describes itself as “the leading advocate for the global software industry before governments and in the international marketplace.” Businesses that have been on the receiving end of its compliance program, however, usually have less favorable words to describe the BSA. The BSA’s aggressive assertion of its members’ rights stretches the bounds of copyright law and the underlying software licenses at issue.  Once the BSA has a company in its sights that it believes has unlicensed or improperly licensed software, the BSA will seek to extract as much in fines from the company as possible and, if a settlement cannot be reached, it has a well-known reputation for taking companies to federal court to enforce its members’ rights.

To add insult to injury, if not handled properly, the BSA will publicly shame companies that have unlicensed software, naming them and the amounts paid.  For example, the BSA will publish articles like these naming the company and the amount of the settlement:

In the face of the aggressive tactics employed by the BSA, companies who are facing a demand from the BSA need someone just as aggressive to defend their rights.

What is the BSA?

The BSA is a trade organization representing software companies around the world.  Its members include such companies as Adobe, Apple, Autodesk, IBM, Oracle, Microsoft, and Siemens. The BSA lobbies governments around the world, seeking to advance their members’ interest.

Non-member companies, however, mainly know the BSA for its compliance and enforcement efforts.  The BSA aggressively seeks out companies who have unlicensed (or mis-licensed) copies of its members’ software.  This aggressive approach includes running television and radio commercials offering monetary rewards to workers if they report unlicensed copies of software on their employer’s computers.  In a recent case from Australia, the BSA paid its “informant” $10,000 for reporting unlicensed software on his company’s computers.  In short, the BSA is using cash rewards as incentives to get employees, especially disgruntled employees, to “rat” on their companies for unlicensed software use.

Once the BSA suspects a company of having unlicensed software, the BSA will send the potentially infringing company a letter demanding to audit the entire company’s software installations and accompanying licenses threatening fines up to $150,000 per violation.  The letter will advise that the company should contact them to resolve the issue otherwise litigation may occur. This threat is not an idle one.  BSA is well-known for aggressively enforcing its members’ rights and has a well-known reputation for following through with its threats to take an alleged violation to court.

Take Action Now to Avoid Any Encounter with the BSA

As described below, once the BSA is involved, the costs to remedy unlicensed or mis-licensed software increases dramatically.   Companies should take immediate action, prior to the BSA becoming involved, to ensure that the software they are using is properly licensed and installed.

This is not as simple a task as it may seem.  For example, most software licenses, especially on the server side, are conditioned upon the number of server cores, the number of users, a specific user, or some combination of those three.   However, as server virtualization becomes more popular and ubiquitous, determining the number of server cores and particular users on a virtualized server becomes more technical.  In addition to the technical issues, there is also the issue of well-meaning employees downloading software that is “free,” without realizing it is only free for personal or education uses and requires a paid license for commercial use.  As such, any internal audit needs to include not just legal professionals to review the licenses, but IT professionals to fully understand exactly where and how the software has been installed and is being accessed.

Moreover, a company may wish to enlist the help of legal counsel to conduct this audit through the help of a third-party IT service.  Should the company later become involved in copyright litigation resulting from unlicensed software, the use of legal counsel and third-party IT professionals can potentially keep the results of the audit confidential and prevent the right’s holder from using the results of the internal audit against the company.

Once the audit is conducted, the company should ensure that all of its software is properly licensed and, if not, purchase the appropriate licensing or uninstall the software from the company’s systems.

After the system is properly audited and licensed, the company should then create and implement policies and procedures regarding the installation and licensing of software to ensure that all future software installations are reviewed by legal counsel and only installed and accessed in accordance with the license.  IT professionals should also be involved in this process to ensure that rules are in place to enforce the terms of the license.

What If I’ve Already Been Contacted by the BSA?

Once the BSA has contacted a company and alleged copyright infringement, that company should seek immediate assistance from legal counsel.  The BSA, as stated before, is very aggressive in enforcing its members’ rights and failure to timely and properly act can end up costing the company significantly.

After retaining counsel, the first step in dealing with a BSA response letter is to discuss mitigating the issues and keeping the burden on the BSA to prove its case should the case end up in court.  For example, internal emails regarding potential infringement may be discoverable by the BSA in court.  While a manager’s first instinct may be to send an email to the IT department asking about unlicensed software, the IT department’s response may not be something that the company wants the BSA to read.  As such, the first communication after receiving the letter should be to an attorney.  Any communications with IT (or other) staff, should only be at the direction of that attorney.

Further, now that the company has been put on notice of potential copyright litigation, unless directed to by its attorney, no changes should be made to the underlying system.  If the case goes to court, uninstalling or deleting improperly licensed software could be seen as an attempt destroy or alter evidence if the case goes to trial.

Most letters from the BSA will state that they have information that the company is infringing on one of its members’ rights.  However, the letter will then demand that the company do an audit of all its computers related to all of the member companies, not just the one the BSA suspects as unlicensed.  After making sure that internal mitigation is occurring, the next step is to then limit the scope of the audit.  The goal is to limit the audit to only the software owned by the member company for which the BSA believes is having its rights infringed.  Otherwise, the company may be providing the BSA with information about unlicensed software that the BSA was unaware of, increasing the scope of the issue and the monetary amount of any settlement or eventual damages award. Thus, if the BSA has reason to believe a company is infringing on Microsoft’s copyrights, the audit should be limited to only Microsoft, and should not include the other member companies.

Once the scope has been limited, an internal audit needs to occur.  It is highly recommended that this internal audit be conducted by a third-party IT company at the direction of legal counsel.  Should the case be taken to court, these steps will minimize the likelihood that the BSA will be able to discover them.  Further, in the case that they do eventually get discovered, the audit should be limited to only the software or company at issue.  For example, if the BSA agrees to limit the scope to Autodesk products, the audit should only include Autodesk products.

When a listing of all of the installed products of the member company are complied, then licenses need to be gathered for each of these installations.  Moreover, especially as it relates to server-side software, an understanding of where the software is installed and who is accessing it needs to be determined.  Once all of this is compiled, the attorney should be able to make an internal determination as to what, if any, software is not properly licensed.

The BSA typically is willing to settle infringement issues for what amounts to four-times the licensing costs.  The BSA will usually demand that the infringer pay the BSA three-times the licensing cost as a fine and, if the company wishes to keep the software installed, also purchase a license for the software. So, if it was determined that there were four copies of Microsoft Office, which retails for $250.00, that were installed but not licensed, the BSA would demand that the company purchase a license for these copies ($250 x 4) and then pay a fine equal to three times the licensing amount for each of these copies ($250 x 4 x 3).  Thus, the likely cost to settle an infringement issue involving only four copies of Microsoft Office would be around $4,000.00.

Keeping the BSA’s likely settlement position in mind, once the internal audit is concluded, a discussion needs to be held to determine what, if anything, should be turned over to the BSA.  The Copyright Act allows a rights holder, assuming other conditions are met, to seek actual damages or statutory damages ranging from $750 to $30,000 per infringement.  If it can be shown that the infringement was intentional, those damages can rise to $150,000 per infringement.  Further, the court has the authority to award the prevailing party its attorneys’ fees, which, depending on the case, can eclipse the actual damages award.

In addition to damages, the BSA has its own take as to what constitutes infringement and what constitutes proof of a license.  Not surprisingly, that take is incredibly favorable to the BSA members and pushes the limit of what a judge or jury may consider infringement.  For example, in prior dealings with the BSA, it has taken the position that a 15 year old installation of Microsoft Server 2000 was infringing because the physical license could not be found, despite assurances from the IT department that the license was purchased when it was installed and, due to the timeframes, would have necessarily been physically purchased from a store as opposed to being downloaded as much of the software today is.   In any dealings with the BSA, an experienced attorney who is able to push back against these overreaching claims by the BSA is essential.

All of these factors need to be considered when determining how to respond to the BSA.  Clearly understanding your rights and the potential risks involved is crucial to making the proper decision on how to respond to the BSA.

Finally, if the decision to settle with the BSA is made, it is important that it be negotiated properly.  The BSA is known for publishing settlements and publicly highlighting the infringement and settlement amounts it has recovered for its members to  publicly shaming the infringing company.  In addition to any other terms, the settlement needs to explicitly make clear that the settlement is confidential and that the BSA will not disclose it or the allegations of infringement to anyone.


The BSA is aggressive defending the rights of its member companies.  You deserve attorneys who will be just as aggressive in defending your rights. Whether it is ensuring that your company is in compliance with the applicable licenses or pushing back against the BSA’s overreaching interpretations of copyright law, Smith & Associates can help your company against software copyright infringement claims.

Should you need any assistance or have any questions about these issues, please feel free to give us a call for a free consultation.



Agencies Are No Longer Afforded Deference to the Interpretation of Rules and Statutes

On November 6, 2018, the voters of Florida approved a Constitutional Amendment (“Amendment 6”) which, among other things, eliminates the deference given to administrative agencies in interpreting statutes or rules.  Judicial officers are now required to interpret such statutes and rules de novo.

By way of background, the U.S. Supreme Court had previously ruled in Chevron v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), that courts must defer to an agency’s interpretation of a statute, if based on a permissible construction, when the statute is silent or ambiguous on the issue at bar.  Id.  As such, wide deference was given to administrative agencies in statutory and rule interpretation.  The passage of Amendment 6 to the Florida Constitution, however, requires the state court or administrative law judge to interpret the statute or rule.

Specifically, the amendment creates Section 21 of Article V, Florida Constitution, which provides:

Judicial interpretation of statutes and rules. In interpreting a state statute or rule, a state court or an officer hearing an administrative action pursuant to general law may not defer to an administrative agency’s interpretation of such statute or rule and, instead, must interpret such statute or rule de novo.

What does this mean for cases involving the interpretation of agency rules and statutes? Agencies will be subjected to the most reasonable interpretation of a rule or statute when such rule or statute is at issue in a dispute before a judicial officer or administrative law judge.  As such, parties engaged in litigation with agencies will have the benefit of an unbiased interpretation in cases where their interests are at stake.

Amendment 6 also address two other issues: 1) the retirement age for judges, and 2) victim’s rights in criminal proceedings.  The age of mandatory retirement for the state’s judges will be raised from age 70 to age 75.  However, this will not go into effect until July 1, 2019.  The second issue is the extension of a “bill of rights” for victims of crimes, modeled after a California law.

Overview of Federal Bid Protests


Under federal law, a bid protest is a written objection by an “interested party” to the conduct of a federal agency in acquiring supplies or services for its own direct use or benefits.  Congress authorizes bid protests in three separate forums, as discussed below.


To file a bid protest, the protestor must demonstrate standing as an interested party.  A protestor challenging the terms of a solicitation must be an actual or prospective offeror “whose direct economic interest would be affected by the award of the contract or by failure to award the contract.” See 31 U.S.C. §3551(2)(A).   A protestor challenging an agency’s decision generally must also demonstrate that it would be next in line for an award but for the agency error or that it would regain the opportunity to compete if its protest was sustained. [Note: Given their lack of “direct economic interests,” subcontracts on federal contracts generally lack standing to bring a GAO protest unless the contracting agency has requested that GAO hear such protests.]

Forum Selection

A contractor challenging a federal procurement may generally choose to file a bid protest before:

  • the agency administering the procurement,
  • the Government Accountability Office (GAO), or
  • the United States Court of Federal Claims (COFC).

Agency Administering the Procurement

Pre-award protests must be filed with the federal procuring Agency prior to the Agency’s receipt of the initial proposals, which would typically be before the “deadline” for bidders to submit their proposals.  Post-award protests must be filed within 10 days after discovery of the claim, meaning when the basis of the protest is known, or should have been known, by the contractor.

Pre-award Debriefing of Offerors: Offerors excluded from the competitive range or otherwise excluded from the competition before award may request a debriefing before award within 3 days after receipt of the notice of exclusion from the competition.  Debriefings may be done orally, in writing, or by any other method acceptable to the contracting officer. FAR 15.505.

Post-Award Debriefing of Offerors: An offeror, upon its written request received by the agency within 3 days after the date on which that offeror has received notification of contract award, shall be debriefed and furnished the basis for the selection decision and contract award.  Debriefings may be done orally, in writing or by any other method acceptable to the contracting officer.  The debriefing should occur within 5 days after receipt of the written request. FAR 15.506.

The process for filing a protest with the procuring Agency varies among the agencies, but obtaining a decision on the claim is fairly quick and inexpensive compared to the other forums.

The basic framework for Agency protests is outlined in FAR 33.103, which simply requires that the Agency provide for a procedurally simple, informal and expeditious resolution to the protest.  In fact, parties are encouraged to use their best efforts to resolve concerns raised by an interested party at the contracting officer level “through open and frank discussions” prior to the submission of an agency protest.  FAR 33.103(b).   If filed, the protest must be concise and logically presented to facilitate review by the Agency.  Along with basic identifying information about the protester and the solicitation or contract number, protests must contain a detailed statement of the legal and factual grounds for the protest, copies of relevant documents, request for an Agency ruling and the type of relief requested, and information which establishes standing and timeliness to file the protest.

Upon receipt of a protest before award, a contract may not be awarded, pending agency resolution of the protest, unless contract award is justified, in writing, for urgent and compelling reasons or is determined, in writing, to be in the best interest of the Government. FAR 33.103(f)(1).

Upon receipt of a protest within 10 days after contract award (or within 5 days after a debriefing date offered to the protester under a timely debriefing request) the contracting officer shall immediately suspend performance, pending resolution of the protest within the agency, unless continued performance is justified, in writing, for urgent and compelling reasons or is determined, in writing, to be in the best interest of the Government. FAR 33.103(f)(3).

Agencies are required to make best efforts to resolve a protest within 35 days of filing, and the process is the most informal of all bid protest procedures.  An important benefit to an Agency filing is that it triggers an automatic stay of the award or performance of the contract.  However, please note that a stay can be overridden upon a written determination of compelling need by the Agency.

The downside to filing a protest directly with the Agency is that the complaint is generally heard by the same person (the Procuring Contract Officer or some other Agency head) who initially developed the flawed specification, instruction or made the award selection.  Notwithstanding this apparent lack of independent review, be advised that a few agencies require a protester to file its protest first with the procuring Agency before the protest can be heard in another forum (e.g., U.S. Postal Service).

Government Accountability Office (“GAO”)

Filing a protest with the GAO appears to have many of the benefits of filing with the procuring Agency, but offers a review of the matter by an independent government official who is not associated with the procuring Agency.   The GAO reviewer is likely to have more experience and insight into the specific issues of the protest than an Agency officer.

GAO review is not as quick or inexpensive as an Agency review.  Also, there are formal procedures that must be followed for filing a protest with the GAO, as outlined in 4 C.F.R. part 21.  Protests must be in writing and addressed as follows:

Attention: Procurement Law Control Group

General Counsel

Government Accountability Office

441 G Street, NW.

Washington, DC 20548.

A protest filed with GAO shall:

(1) Include the name, street address, electronic mail address, and telephone and facsimile numbers of the protester,

(2) Be signed by the protester or its representative,

(3) Identify the agency and the solicitation and/or contract number,

(4) Set forth a detailed statement of the legal and factual grounds of protest including copies of relevant documents,

(5) Set forth all information establishing that the protester is an interested party for the purpose of filing a protest,

(6) Set forth all information establishing the timeliness of the protest,

(7) Specifically request a ruling by the Comptroller General of the United States, and

(8) State the form of relief requested.

No formal briefs or motions are required. A complete copy of the protest must be provided to the procuring Agency within one day of filing the protest with the GAO.

Timing of Filing Protests

The timing requirements are similar to the Agency requirements.  Pre-award protests relating to the solicitation or instructions must be filed before the date of proposal submissions for all bidders.  All other protests must be filed within 10 calendar days after the basis of the protest is known, or should have been known (whichever is earlier), with the exception of protests under which a debriefing is requested and held.  In such cases, the initial protest shall be filed not later than 5 days after the date on which the debriefing is held.   Protests filed after these deadlines are untimely and the GAO generally dismisses them.

GAO Notice to Agency

Once a protest is filed with the GAO, the GAO is required by statute to notify the federal agency whose contracting activities are being protested within one working day of receiving the protest. See 31 U.S.C. §3553(b)(1).  This GAO notice to the Agency: 1) marks the beginning of an automatic stay of the award or performance of the contract that lasts for the duration of the protest (agencies may, however, override these stays upon determining that “urgent and compelling circumstances” will not permit waiting for the GAO’s decision or where “performance of the contract is in the best interests of the U.S.”), and 2) marks the beginning of the 30-calendar day period within witch the agency must generally respond to the GAO protest. See 31 U.S.C. §3553(b)(2)(A).

Agency’s Response and Protester’s Reply

Within 30 days of being notified of a GAO bid protest, the Agency must file a report including a statement of relevant facts, memorandum of law, and relevant documents.  The Agency can avoid filing this report only when it requests and is granted dismissal of the protest before the report is due.  After the agency’s report is due, the protester has 10 calendar days to submit written comments on the agency’s report to the GAO.  If protester fails to submit such documents, GAO is required to dismiss the protest.

GAO’s Decision

GAO allows protestors to avoid costs of traveling to DC, where GAO is located, by providing for the resolution of protests based upon documents filed by the protestor and the agency, as opposed to in-person hearings.  Hearings are relatively rare in GAO protests.

GAO generally is required to issue its final decision within 100 calendar days of the protest’s filing.  This timeframe can be shortened to 65 days if GAO determines, either upon request or its own initiative, that the protest be treated under the “express option.”

When deciding a protest, GAO does not substitute its judgment for the agency’s, or conduct de novo review; rather, it considers only whether the agency complied with procurement statutes or regulations, and had a reasonable bases and adequate documentation for its decision making. See, e.g., 31 U.S.C. §3552(a).

GAO may recommend to dismiss, deny, or sustain a protest.  GAO recommendation is provided to the procuring agency, which has 60 days to adopt the GAO recommendations.  The agency is not legally required to implement the recommendations in the GAO’s decision.  However, agencies typically fully adopt GAO recommendations, as failure to do so results in a report to Congress by the GAO.

If the GAO determines that a solicitation or contract award does not comply with a statute or regulation, it may issue a recommendation that the Agency pay the protester its costs, including reasonable attorney fees, consultant fees and expert witness fees, as well as bid and proposal preparation costs.

A GAO protest can provide a second chance for relief to a protester.  If a protester first files with the procuring Agency and was denied relief, the protester can then file a protest with the GAO within 10 days after the protester learns of any adverse ruling by the Agency. 4 C.F.R. section 21.2.   In addition, protestors disappointed with GAO’s decision can seek reconsideration from GAO or file a bid protest with the United States Court of Federal Claims.

For detailed information on GAO Bid Protests, see GAO Bid Protests: An Overview of Time Frames and Procedures, Congressional Research Service (Jan. 19, 2016). See also https://www.acquisition.gov/far/html/Subpart%2033_1.html.

United States Court of Federal Claims (“COFC”)

A protester also has the option to file its bid protest in the United States Court of Federal Claims (“COFC”).  Procedures for protests at the COFC are governed by the Rules of the United States Court of Federal Claims, which can be found at: http://www.uscfc.uscourts.gov/rules-and-forms.  The specific procedures governing bid protests may be found at Appendix C, Procedure in Procurement Protest Cases Pursuant to 28 U.S.C. 1491(b).  Additionally, the Federal Rules of Evidence apply to COFC proceedings.

The COFC is located in the District of Columbia, although the COFC has national jurisdiction and may hold court at other places as it may prescribe by rule of Court. See 28 U.S.C.A. §173.  For those unable to travel to Washington, DC, parties may file a motion to participate in proceedings by telephone or videoconferencing.   The COFC is comprised of sixteen active judges, nominated by the President, and several senior judges.  In COFC cases, the Department of Justice (DOJ) represents the Government.  Individuals may represent themselves pro se, but COFC requires that any corporation or partnership be represented by counsel admitted to the COFC’s bar to practice before the court.

In accordance with the Rules of United States Court of Federal Claims governing bid protests, plaintiff’s counsel must provide at least 24-hour advance notice of filing a bid protest to: (1) the Department of Justice, Commercial Litigation Branch, Civil Division; (2) the Clerk, United States Court of Federal Claims; (3) the procuring agency’s contracting office; and (4) the successful bidder/offeror.  See Rules of the United States Court of Federal Claims, Appendix C, Procedure in Procurement Protest Cases Pursuant to 28 U.S.C. 1491(b), at II.2(a).  This pre-filing notification requirement must include, but not be limited to, the following: the name of the procuring agency and number of the solicitation; the name and number of the contracting officer, the principal agency attorney, if any, who represented the agency in any prior protest of the same procurement; whether the plaintiff intends to seek injunctive relief; and whether the action was preceded by a protest before the GAO.

One of the biggest advantages to filing with the COFC is that it has full powers of authority to bind the procuring Agency to decisions.  Another advantage is that a protester can use the COFC as a “last resort” after receiving negative rulings from an Agency and/or GAO protest.  The converse is not true, as a protester who first files with the Court of Federal Claims and receives an adverse ruling cannot then file with the procuring Agency or GAO.

COFC judicial review of agency actions in bid protest cases is limited to the administrative record.  The COFC reviews agency decisions under the Administrative Procedure Act (“APA”) standard.  See Choice of Forum for Federal Government Contract Bid Protests, 18 Fed. Circuit B.J. 243 (2009), at 21-22.  The court determines whether the agency action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law based solely upon the administrative record. 28 U.S.C. § 1491(b)(1), (4); 5 U.S.C. § 702, 706(2)(A); see also Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332 (Fed.Cir.2001); CW Gov’t Travel, Inc. v. United States, 110 Fed. Cl. 462, 479 (2013).

Timeliness standards for filing protests at the COFC are more relaxed as well.  Unlike the Agency and GAO strict time requirements, post-award protests can be filed with the Court of Federal Claims any time after the award provided that any delay in bringing the protest is not unreasonable, inexcusable or otherwise prejudices the Government or other parties.  Software Testing Solutions, Inc. v. United States, 58 Fed. Cl. 533, 535 (2003).   In addition, in accordance with 28 U.S.C. §1491(b)(1), the COFC “shall have jurisdiction to entertain such an action without regard to whether suit is instituted before or after the contract is awarded.”  That said, the doctrine of laches may be invoked as an affirmative defense in the context of a bid protest before the COFC. See Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1314–14 (Fed.Cir.2007); see also Software Testing Solutions, Inc. v. U.S., 58 Fed.Cl. 533, 536 (2003).  See Nat’l Telecommuting Inst., Inc. v. United States, 123 Fed. Cl. 595, 602 (2015).  COFC cases have held that a “plaintiff cannot sit on his rights in bringing a bid protest while the Government moves forward with a contract.” See, e.g., Benchmade Knife Co. v. United States, 79 Fed.Cl. 731, 737 (2007) (citing Blue & Gold Fleet, 492 F.3d at 1314).  In a recent COFC case, the Court, in determining that plaintiff’s six-month delay in bringing its bid protest was untimely, stated:

“[T]his Court has found a “strong argument in favor of applying laches” when a plaintiff chose to wait two months to file suit because he was weighing the cost of litigation. Software Testing Solutions, Inc. v. United States, 58 Fed.Cl. 533, 536 (2003). In this case, NTI waited more than three times as long to bring this bid protest.” Nat’l Telecommuting Inst., Inc. v. United States, 123 Fed. Cl. 595, 602 (2015).

While the post-award timeliness standard is clearly less restrictive than that of the GAO and Agency requirement, the pre-award time requirement is comparable to the other forums: before the close of bidding.

The downside to the COFC forum is that protests can be more costly and time consuming than Agency or GAO protests.   However, in many cases, this forum offers the most due process protections to the protester because the Court adheres to the Federal Rules of Civil Procedure, can issue injunctive and equitable relief, and allows the parties to engage in discovery and file motions for summary judgment.

Another significant disadvantage to filing a protest in the Court of Federal Claims is the lack of an automatic stay of the award or performance on a contract award.  Even though a protester files a protest, the Agency can continue moving forward with the procurement and contracting process absent an injunction by the Court to stop until the protest is resolved.  For this reason, a protester should immediately request the Court to issue a stay on the Agency’s procurement process when the initial protest is filed.

Brief Overview of Some Comparisons Between the Different Forums

(See http://www.acc.com/legalresources/publications/topten/ttegcskabp.cfm)

Agency-level protests typically offer the least expensive and quickest resolution for a disappointed offeror, followed by GAO protests, and then COFC protests.

For agency-level protests, the Federal Acquisition Regulation (FAR) requires agencies to use best efforts to resolve a protest within 35 days after the protest is filed, although some agencies have implemented their own rules requiring shorter timeframes for resolution.  The GAO has 100 days after the initial filing of a protest to issue its decision.  By contrast, there are no time constraints on COFC’s authority to resolve bid protests.

Because none of these forums hold appellate jurisdiction over the others, a protestor who is unsatisfied with the result of a protest may re-file the protest in a different forum.  For example, a protestor disappointed with the outcome of a GAO protest may be able to file a COFC protest.  However, a protestor that files first at the COFC cannot later file a GAO protest based on the same issue. Thus, disappointed bidders may want to start with an agency-level or GAO protest before going to the COFC.

Although agency-level protests may be relatively quick and inexpensive, they also have significant disadvantages compared to GAO and COFC protests.  For example, agency-level protestors have no right to discovery.  By contrast, GAO and COFC protests require limited discovery, which means agencies must produce an agency report or administrative record containing all documents relevant to the protest. Further, in some cases, a COFC protest may allow for additional discovery (e.g., depositions).

Another important distinction between agencies, GAO, and the COFC, is the difference in remedies available to a disappointed bidder.  While agencies and GAO have limited authority and only can issue recommendations, the COFC has the power to enforce its judgments. Although this distinction has the potential to significantly impact forum selection, as a practical matter agencies generally follow GAO’s recommendations.

One significant advantage offered by GAO protests is the availability of an automatic stay of contract award or performance under the Competition in Contracting Act (“CICA”) (commonly referred to as a CICA stay).  To obtain a CICA stay, the protestor only needs to file its protest within 10 days of the contract award or within five days of its debriefing.  In contrast, CICA stays are not available in COFC protests.  COFC may stay contract award or performance through granting injunctive relief, although grants of injunctive relief require the protestor to satisfy a relatively high standard and post security.

AHCA Recommends New Medicaid Payment System to Legislature

UPDATE: The Agency for Health Care Administration (AHCA) held their final public meeting on November 20, 2015, to wrap-up their discussion and submit recommendations to the Legislature for the development of an Outpatient Prospective Payment System (OPPS) to replace the current “cost-based per visit” rate methodology for Florida’s Medicaid program. AHCA’s recommendation will be to adopt a modified Enhanced Ambulatory Patient Grouping system (EAPG), which involves bundling procedures and medical visits that share similar characteristics and pays one base rate to the provider to cover all of the bundled services. The new system is expected to be implemented on July 1, 2016.

Tom Wallace, Bureau Chief of AHCA’s Medicaid Program Finance, along with members of Navigant Healthcare, the private consulting company contracted to develop the new payment system were looking at two primary model options for the OPPS: 1) the EAPG, which requires proprietary software (most likely from Navigant) that will need to be purchased by providers; and 2) the Ambulatory Payment Classification (APC) model, which is linked to Medicare’s OPPS system. By the last meeting in October, it was clear that AHCA and Navigant preferred the EAPG system to the APC model. The recommendation presented at the final meeting confirmed the agency’s preference for the EAPG model.

Significantly, the consulting company provided a simulation of how the EAPG system would pay claims to hospitals based on data collected by AHCA in accordance with the current payment system. Navigant provided charts of the top 20 hospitals and ambulatory surgical centers (ASCs) that would see the biggest payment increases and decreases. (See pages 23-26 of attached workshop presentation.) According to the simulation compiled by Navigant using previous years data, the greatest increases in payments will be seen by Ocala Regional Medical Center, Bethesda Hospital East, St. Vincent’s Medical Center and Bayfront Health – St. Petersburg. The greatest decreases will be seen by Jackson Memorial Hospital, Florida Hospital, Homestead Hospital and Sacred Heart Hospital. (Full simulation results are attached here and here as Exel spreadsheets.) Approximately 18 hospitals were excluded from the simulation (including University Behavioral Hospital, Windmoor Healthcare, Emerald Coast Behavioral, UF Health Shands, UF Health Jacksonville, and others) because approximately 33-percent or more of their prior claims data were missing procedure codes. (See page 18 of attached workshop presentation for complete list.) It was suggested at the meeting that the committee reach out to the hospitals to get their procedure codes so that they can be included in the simulation.

Additional recommendations that will be provided to the Legislature include the following:

  1. No outlier payments from Medicare OPPS (payments above or beyond scope of EAPG system);
  2. No service line adjusters and only one provider-specific adjuster for hospitals with high Medicaid outpatient utilization (Nemours Children’s Hospital, Nicklaus Children’s Hospital and All Children’s Hospital);
  3. No “charge cap” with the EAPG payment methodology to allow payment of the lessor of submitted charges or Medicaid-allowed amount;
  4. Allow a 5-percent adjustment to the EAPG base rate to account for anticipated documentation and coding improvement (consistent with the value used in the first year of APR-DRG implementation); and
  5. Applicable claims paid between July 1, 2016, and the date of implementation will be adjusted to apply EAPG pricing (retroactive to July 1, 2016).

AHCA will submit its recommendations to the Florida Legislature by November 30, 2015. Legislation regarding a new payment system is expected to be passed during the 2016 Session, with the new program to be effective on or about July 1, 2016.

For more information about AHCA’s development of the OPPS, please contact an attorney at Smith & Associates.

A Year in Review: AHCA’s Managed Medical Assistance Program

AHCA presented a Post-Award Forum for Florida’s 115 Managed Medical Assistance (MMA) Waiver during the Medical Care Advisory Committee meeting on October 13, 2015. The forum provided a platform for AHCA to showcase data of the MMA program’s success and hear comments from the public regarding specific areas where the program fell short.

Medicaid is a federal/state entitlement program which is jointly financed by state and federal funds. Federal law requires the coverage of certain eligibility groups and services (mandatory), and states have the option of covering additional eligibility groups and services (optional). Florida implemented the MMA program as a way to incentivize higher quality care without causing inflation. In February 2015, AHCA signed contracts with MMA insurance providers to deliver a system of care to residents in each of the 11 AHCA districts in Florida.

In analyzing Florida’s average annual cost for Medicaid care, AHCA representative Beth Kidder presented a graph showing that the cost per person dropped from $6,564 per person in year 2010-11 to an anticipated $5,878 in 2015-16. AHCA also showcased an increased rate of participation by physicians and dental care providers. From November 2013 to June 2015, AHCA noted an increase of 7.43-percent increase in MDs and DOs providing services to Medicaid recipients. During the same time period, AHCA stated that total participating dentists increased by 23.09-percent.

Most of the public comments regarding the MMA program focused on the failure to ensure payment by providers to Emergency Transport Services (EMS) in Florida. Several groups representing EMS providers throughout Florida complained about improperly denied reimbursement for medical transports and the categorical denial of transports of more than 30 miles. The EMS providers pointed out that Medicare reimbursed such transports, and so should the MMA program providers. One EMS provider suggested a rule or statutory revision to require hospitals and nursing homes to obtain pre-authorization for a transfer request so that EMS is ensured reimbursement.

The Agency will be releasing a series of quarterly reports on the Statewide Medicaid Managed Care program. Reports for the first two quarters are available on the Agency’s website. The Agency also began publishing a consumer-focused health plan report card which includes annual ratings on how Florida’s health plans are faring with regards to providing preventative health care services to women and children (i.e., well-child visits, prenatal care for pregnant women). Plan effectiveness is measured through the Healthcare Effectiveness Data and Information Set (HEDIS), which is a standardized set of performance measures by the National Committee for Quality Assurance and used by more than 90-percent of the health plans in the U.S.

For more information about the MMA program in Florida or any other issue, please contact an attorney at Smith & Associates.

Outpatient Prospective Payment Systems

The Agency for Health Care Administration (AHCA) hosted a public meeting on September 17, 2015, to discuss the development of an Outpatient Prospective Payment System (OPPS) to replace the current “cost-based per visit” rate methodology. The stated goal of this payment method conversion is to help control healthcare spending increases while continuing to maintain access to services for Florida’s Medicaid populations.

To assist with this development, AHCA contracted with private consulting company Navigant Healthcare which has offered options between two popular OPPS models that have been adopted by other states. Once a preliminary decision is made on a model, Navigant and AHCA will send its recommendations to the Legislature before the next session.

Currently, Navigant and AHCA are leaning towards adopting an Enhanced Ambulatory Patient Grouping System (EAPG), which involves bundling procedures and medical visits that share similar characteristics and pays one base rate to the provider to cover all of the bundled services. The rates, which have yet to be formulated, will be based on a review of average historical data measured from diagnosis codes and claims paid to outpatient providers from fiscal year 2013-14.

The other OPPS model being considered is the Ambulatory Payment Classification (APC) model. According to Navigant, the APC model provides less bundling for procedures and ancillary services (and, subsequently, more “a la carte” payments) than the EAPG model. The APC model excludes many services – including laboratory, pathology, physical therapy and DMEs – which must be paid under other fee schedules. EAPGs require proprietary grouper software (from Navigant?) and will be less familiar to providers compared to the APC model, which is linked to Medicare’s payment system.

Two more public meetings will be scheduled before AHCA submits recommendations for an OPPS to the Florida Legislature on November 30, 2015. Legislation regarding a new payment system is expected to be passed during the 2016 Session, and then implemented on July 1, 2016.

For more information about AHCA’s development of the OPPS, please contact an attorney at Smith & Associates.

AHCA Preliminary Decisions on Skilled Nursing Facilities

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AHCA has issued its State Agency Action Reports announcing the preliminary results on CON Applications submitted for Skilled Nursing Facilities. Below is a summary of the winners and losers listed by Sub-district. For a summary of the process for challenging AHCA’s preliminary decisions, please see our prior Newsletter Article attached.

Sub-district 1-1

Approved Application:

NF Bay, LLC/NF Bay, LLC Establish a new 90-bed community nursing home

Denied Application:

PruittHealth – Escambia County, LLC/PruittHealth – Escambia County, LLC Establish a new 90-bed community nursing home

Sub-district 3-1

Approved Application:

SF Brevard, LLC/SF Brevard, LLC Establish a new 113- bed community nursing home

Withdrawn Application:

Terrace Enterprises, LLC/Terrace Enterprises, LLC Establish a new community nursing home of up to 120 beds

Sub-district 3-2

Approved Applications:

Oak Hammock at the University of Florida, Inc./Oak Hammock at the University of Florida Add 17 community nursing home beds through the conversion of 17 sheltered nursing home beds
Palm Garden of Gainesville, LLC/Palm Garden of Gainesville, LLC Add 30 community nursing home beds

Withdrawn Application:

Innovative Medical Management Solutions, LLC/Innovative Medical Management Solutions, LLC Establish a new 47-bed community nursing home

Sub-district 3-3

Approved Application:

Crestwood Nursing Center, Inc./Crestwood Nursing Center Add 29 community nursing home beds

Sub-district 4-1

No Approved Applications

Denied Application:

Innovative Medical Management Solutions, LLC/Innovative Medical Management Solutions, LLC Establish a new 14-bed community nursing home

Sub-district 7-2

Approved Applications:

Presbyterian Retirement Communities, Inc./Westminster Towers Add 30 community nursing home beds through the conversion of 30 sheltered nursing home beds
Presbyterian Retirement Communities, Inc./Westminster Winter Park Add 17 community nursing home beds through the conversion of 17 sheltered nursing home beds

Denied Applications:

MF Orange, LLC/MF Orange, LLC Establish a new 90-bed community nursing home
Orange SNF, LLC/Orange SNF, LLC Establish a new 118-bed community nursing home

Sub-district 7-4

Approved Application:

Lifespace Communities, Inc./Village on the Green Add 30 community nursing home beds through the conversion of 30 sheltered nursing home beds

Withdrawn Application:

Innovative Medical Management Solutions, LLC/Innovative Medical Management Solutions, LLC Establish a new 33-bed community nursing home

Sub-district 8-2

Denied Application:

Pelican Bay Retirement Services/Premier Place at the Glenview Add 14 community nursing home beds through the conversion of 14 sheltered nursing home beds

Sub-district 9-1

Approved Application:

Palm Garden of Vero Beach, LLC/Palm Garden of Vero Beach, LLC Add nine community nursing home beds

Sub-district 11-1

Approved Application:

Florida Medical Systems, LLC/Florida Medical Systems, LLC Add 45 community nursing home beds

Denied Application:

Palm Garden of Aventura, LLC/Palm Garden of Aventura, LLC Add 45 community nursing home beds

Geoffrey D. Smith is a shareholder in the law firm of Smith & Associates, and has practiced in the area of health care law for over 20 years.

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New ALF Rules May Be Coming Soon

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The Department of Elder Affairs is holding a public workshop to consider new regulations that may have a significant impact on Florida assisted living facilities (“ALFs”). Significant changes being discussed at the workshop include changes to record keeping requirements, staff competency and training requirements, medication practices, and patient safety and quality of care processes. The first workshop on the proposed rules is scheduled for July 13, 2015 from 9:30 a.m. to 11:30 a.m., at the Department of Elder Affairs, 4040 Esplanade Way, Tallahassee, FL 32399. There is currently no draft proposed rule.

The Rulemaking Process

Rulemaking is required and governed by the Florida Administrative Procedure Act, which provides: “rulemaking is not a matter of agency discretion.” A grant of rulemaking authority is necessary, but not sufficient to allow an agency to adopt a rule. Rulemaking also requires a specific law to be implemented. An agency may only adopt rules that implement or interpret the specific powers and duties granted by the enabling statute. An invalid exercise of delegated legislative authority is an action that goes beyond the powers, functions, and duties delegated by the Legislature.

Agencies’ rulemaking authority is also invalid if it fails to adhere to strict procedural requirements. For example, not less than 28 days prior to the intended adoption, amendment, or repeal of any rule (other than an emergency rule) an agency must give notice of its intended action, including an explanation of the purpose and effect of the proposed action, the full text of the proposed rule or amendment, and a summary of the proposed rule or amendment. The notice must include an estimate of the regulatory cost of implementation.

Where there is a likely impact on small businesses, the agency must consider each of the following methods for reducing the impact: (1) establishing less stringent compliance or reporting requirements in the rule; (2) establishing less stringent schedules or deadlines in the rule for compliance or reporting requirements; (3) consolidating or simplifying the rule’s compliance or reporting requirements; (4) establishing performance standards or best management practices to replace design or operational standards in the rule; and (5) exempting small businesses, small counties, or small cities from any or all requirements of the rule.

Within 21 days of the publication of the notice, any affected person may request a public hearing. When an agency receives such a request it must hold at least one public hearing. In many instances the agency will hold multiple public hearings and may allow written comments to be submitted at or after the public hearing. Substantially affected persons also have the right to challenge a proposed rule under Florida Statute §120.56 as an invalid exercise of delegated legislative authority and have the right to a formal hearing before the Division of Administrative Hearings (“DOAH”). The timing of filing a challenge to a proposed rule varies based upon several criteria, the most common being dependent upon whether a hearing was requested or whether there are amendments to the proposed rule that require it to be republished. In most instances, challenges to proposed rules should either be filed within the same 21 day period or within 10 days after the public hearing is held.

To initiate a formal challenge, a substantially affected person must file a petition at DOAH. Within 10 days after receiving the petition, the matter must be assigned to an administrative law judge who shall conduct a hearing within 30 days and render a final decision within 30 days from the end of the hearing, unless these time frames are extended by agreement of the parties or for good cause, which is routine.

These hearings are de novo, meaning the agency has no presumption of correctness in its proposed rule. The standard of proof is a preponderance of the evidence. Hearings are conducted in the same manner as other 120.569 and 120.57, hearings, with one important exception, the administrative law judge’s order shall be a final agency action instead of a recommendation to be considered by the agency in a final order. The petitioner and the agency whose rule is challenged shall be adverse parties and other substantially affected persons may join the proceedings as intervenors in support of or against the proposed rule. There are opportunities to challenge a proposed rule after it becomes final, but the burden of proof becomes more difficult to challenge an existing rule than a proposed rule.

Be a Part of the Process

Rulemaking is the opportunity for facilities that will be affected by the regulatory changes to protect their interests and have input into the rules that will be implemented. Providers know better than the agencies that regulate them the true impacts of the proposed regulation. FALA and other associations are an important part of the process, but they may not know and understand the unique issues your facility faces with regard to proposed regulatory changes. The best regulations are fully vetted through multiple workshops, where stakeholders from diverse backgrounds and facility sizes participate.

Geoffrey D. Smith is a shareholder in the law firm of Smith & Associates, and has practiced in the area of health care law for over 20 years.

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