Patient Rights. In this Issue: Patient Rights

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1 In this Issue: Patient Rights FEATURES Keeping a Lid on Pandora s Box: Strategies for Protecting Genetic Privacy 6 by Jane Massey Licata Managing Conflicts of Interest in Human Subject Research 11 by Gary J. Lesneski Patient Rights Psychiatric Advance Directives: A Summary and Analysis of the New Jersey Advance Directives for Mental Healthcare Act 16 by Terri Roth Reicher Effective Discovery and Use of Mental Health Records: Statutory, Regulatory and Strategic Considerations 20 by Christopher R. Barbrack Strategies for Protecting Genetic Privacy Psychiatric Advance Directives Effective Discovery and Use of Mental Health Records New Jersey s Wrongful Death Law Nursing Home Admission Agreements Also in this issue Legal Commentary Legal Practice Lawyer s Bookshelf Practice Tips The Increasing Use of Arbitration and Mediation in Adjudicating Healthcare Cases 25 by Katherine Benesch The Impact of the Community Healthcare Assets Protection Act Upon Consumers Rights 30 by Mark I. Siman and Renée Steinhagen New Jersey s Wrongful Death Law: A Matter of Economics 35 by Michael J. Barrett Nursing Home Admission Agreements: A Review of Key Provisions to Protect Residents and Family Members 39 by Jerold E. Rothkoff DEPARTMENTS President s Perspective 2 Message From the Special Editors 4 Legal Commentary 43 Legal Practice 45 Winning Websites 48 Lawyer s Bookshelf 49 Practice Tips 51 E-Practice 53 Attorney Ethics 56 The Legal Arts 57

2 PRESIDENT S PERSPECTIVE WAYNE J. POSITAN It Was a Very Good Year During my travels around the state over the last year, I kept hearing two questions: 1) the larger firms want to know what the relevance is of having their lawyers be members of the bar association; 2) the solo and small firm practitioners want to know what we do for them. As I near the end of my term as NJSBA president, I can report to you with pride that the past year has been a success on many fronts for our association, thanks in large part to the dedicated efforts of our members. And I am pleased to have a lot of solid answers to those two recurring questions. Above all else, the NJSBA continues to be the voice of our profession. The good we do benefits all lawyers in New Jersey, the justice system, and the public in general. We have spoken out about the importance of the rule of law in our society; the separation of powers; the regulation of our profession and the judicial system by the Supreme Court rather than the Legislature; and the independence of the judiciary and our profession. When the judicial decision-making process came under fire, when law firms were attacked for providing pro bono counsel at Guantanamo, when the chief justices of the United States and New Jersey spoke out about the need for judicial pay raises, we were there. We speak with conviction, and we speak from the strength of our numbers and our positions. We have continued our proud tradition of participating as amicus curaie in cases of importance to the bar, including fighting against mandatory pro bono assignments, arguing successfully against blanket prohibitions on municipal representation of private clients by municipal attorneys, clarifying the application of verbal threshold standards in auto negligence matters, and obtaining a stay in advertising restrictions urged by the Supreme Court Committee on Attorney Advertising. We continue to lobby diligently on behalf of lawyers in the halls and committee rooms of the Statehouse, successfully thwarting a proposal for a professional services tax, improving lobbying regulations, and gaining passage of a new cause of action for divorce based on irreconcilable differences, which will ease the emotional pain of divorce on all those affected. Our relations with the Supreme Court remain strong and productive. In the past few months, we have submitted comments on the budget for the lawyer disciplinary system, made recommendations for changes in court rules and procedures, and discussed with the court a variety of issues of concern to lawyers, ranging from case management practices to the filling of judicial vacancies. Our Judicial and Prosecutorial Appointments Committee (JPAC) continues to provide an independent, nonpartisan evaluation of candidates for the bench and county prosecutor positions. Among my proudest accomplishments has been the appointment of three task forces that have undertaken important initiatives. The Disaster Planning Task Force last month sponsored a summit on disaster planning and response that attracted representatives from the Corzine administration, the judiciary, neighboring state bar associations, law firms, governmental agencies, and numerous bar association leaders. The task force has published a Disaster Planning Guide for law firms that can be downloaded from the NJSBA website ( The Pipeline Diversity Task Force is working to ensure that future generations of lawyers reflect the diversity of their communities by suggesting ways for minority students to continue their education and follow the pipeline into law school and a legal career. With terrific involvement by the New Jersey State Bar Foundation, which does so many great things to fund educational efforts in our state, in January we established a street law initiative with our three New Jersey law schools Taught by law school students, the program brings education on the law, democracy and human rights into inner-city high school classrooms. The task force is actively engaged in future expansion of these efforts. We also have looked inward, through the efforts of the Task Force on Sections, Committees and Infrastructure, which has 2 NEW JERSEY LAWYER April 2007

3 worked diligently on finding ways to improve the performance and responsiveness of sections and committees within the NJSBA, with an eye toward providing more communication and opportunities for members to participate in activities involving their substantive areas of practice. In addition, I am proud to have been involved in the efforts of the Steering Committee of the Law Center Capital Campagin, which will update our great Law Center physical plant and provide opportunities for greater technological capabilities to benefit the profession and the community we serve. Our communications have improved through our website, blasts to the membership, and features in New Jersey Lawyer newspaper and magazine. Many members have taken advantage of the Daily Briefing service provided free by New Jersey Lawyer Newspaper, ing news briefs important to the legal community, and summaries of court opinions, to members every morning. Our upgraded website also includes an online directory for section members; section websites to encourage online discussion and messaging capabilities among section members, and a website for law students to provide access for career assistance, meetings and useful articles and information. We also continue to strive to offer other benefits to assist our members, in the form of many new products that make their practices easier and more cost effective, including reduced telephone costs, teleconferencing and web conferencing services, and discounted data protection services. I have greatly appreciated the opportunity to carry the standard of our great bar association this past year. We live in a world of constant change, a world that has grown smaller, and will continue to do so through the advances of technology. Through all of this, we must not lose our sense of community. From John Adams defending the commander of the British garrison after the Boston Massacre, to the great lawyers who provided the impetus to the civil rights movement, we lawyers have stood with vigilance and duty as officers of the courts and the society we serve. We must stay involved in the organizational fabric of our society. If we are to maintain our fundamental freedoms, it will be through the rule of law. That means vigorously defending our Constitution and the Bill of Rights, the separation of powers, the independence of our profession, and a fully independent and properly compensated judiciary. We lawyers must be vigilant. Is our association relevant? Without us, who will speak up for these cherished rights and traditions; who will fight the good fight? I think you know the answer. Be there. NEW JERSEY LAWYER April

4 MESSAGE FROM THE SPECIAL EDITORS Harold L. Rubenstein Cheryl Baisden Janet Gallo Jeffrey P. Michals Margaret Goodzeit Lawrence R. Jones Kevin J. O Connor Marilyn K. Askin Mitchell H. Cobert James J. Ferrelli Pedro J. Jimenez Jr. Susan R. Kaplan Michele Labrada Brian R. Lehrer Robert Olejar Gianfranco A. Pietrafesa Michael F. Schaff Michael A. Shipp Susan Storch Susan Stryker Richard A. West Jr. STAFF Publisher Managing Editor Graphic Designer Advertising Rep. EDITORIAL BOARD Steven Richman Chair Vice Chair Vice Chair Book Review and Legal Creativity Editor NJSBA EXECUTIVE COMMITTEE Wayne J. Positan Lynn Fontaine Newsome Peggy Sheehan Knee Allen A. Etish Richard H. Steen Susan A. Feeney Stuart Hoberman President President-Elect First Vice President Second Vice President Treasurer Secretary Immediate Past President New Jersey Lawyer Magazine (ISSN ) is published six times per year. Permit number Subscription is included in dues to members of the New Jersey State Bar Association ($10.50); those ineligible for NJSBA membership may subscribe at $60 per year. There is a charge of $2.50 per copy for providing copies of individual articles Published by the New Jersey State Bar Association, New Jersey Law Center, One Constitution Square, New Brunswick, New Jersey Periodicals postage paid at New Brunswick, New Jersey and at additional mailing offices. POSTMASTER: Send address changes to New Jersey Lawyer Magazine, New Jersey State Bar Association, New Jersey Law Center, One Constitution Square, New Brunswick, New Jersey Copyright 2007 New Jersey State Bar Association. All rights reserved. Any copying of material herein, in whole or in part, and by any means without written permission is prohibited. Requests for such permission should be sent to New Jersey Lawyer Magazine, New Jersey State Bar Association, New Jersey Law Center, One Constitution Square, New Brunswick, New Jersey New Jersey Lawyer invites contributions of articles or other items. Views and opinions expressed herein are not to be taken as official expressions of the New Jersey State Bar Association unless so stated. Publication of any articles herein does not necessarily imply endorsement in any way of the views expressed. Printed in U.S.A. Official Headquarters: New Jersey Lawyer Magazine, New Jersey State Bar Association, New Jersey Law Center, One Constitution Square, New Brunswick, New Jersey Advertising Display MARILYN ASKIN MICHAEL F. SCHAFF The doctrine of informed consent sounded the death knell for a healthcare system based on the principle of doctor knows best. Informed consent accords people in a free society the right to receive all information necessary, pro and con, so the patient alone, if competent, can make the decision about the treatment preferred. If the patient lacks decisional capacity, written documentation or surrogate decision-makers can provide advice on what the patient would have wished if able to convey that decision. This issue of the New Jersey Lawyer Magazine will provide lawyers with insight into relatively new topics, aimed at leveling the playing field for patients and the lay public in the expanding practice of what is called health law. Discovery of the human genome has spawned a technology that may determine an individual s genetic makeup and probable medical future. How do we protect genetic privacy? Jane Massey Licata explores strategies to guarantee this fundamental right, which our courts acknowledge belongs to each of us from emanations of the penumbrae of the U.S. Constitution. Gary J. Lesneski raises the specter of personal financial gain in conflict with ethical principles of respect for person, beneficence, and justice when human subject research trials are financed by private industry. He discusses the growing number of lawsuits involving injury or death from participation in clinical trials. Mental health advocates have succeeded in raising mental health as a societal problem, not a problem to be borne by the individual family alone. Two articles in this edition discuss mental health legal issues: Terri Roth Reicher provides a summary and analysis of New Jersey s Advance Directives for Mental Health Care Act, while Christopher R. Barbrack details the use of mental health records and effective discovery, based on statutory, regulatory and strategic considerations. Katherine Benesch discusses the increasing use of alternative dispute resolution to resolve claims where the burgeoning cost of litigation and the time it takes would otherwise bar a claimant from a day in court. The conversion of nonprofit healthcare entities to for-profit status could put patients and the public at risk. Mark I. Siman and Renee Steinhagent analyze the effect of New Jersey s Community Healthcare Protections Act on consumer rights. Current wrongful death law in New Jersey is based on economics alone, and metes out unjust treatment for families of children and older adults, according to personal injury attorney Michael J. Barrett, who, in his article, recommends legislative action to correct inequitable treatment of victims. Finally, as our population continues to age, and as increasing numbers of our older population are faced with diseases that cripple but do not kill, lawyers should be aware of how to protect rights of clients entering long-term care 4 NEW JERSEY LAWYER April 2007

5 facilities. Elder law attorney Jerold E. Rothkoff draws the uninitiated into the realm of nursing home admission agreements in his article. We recognize that this issue and the February 2007 issue focusing on other aspects of health law have not covered all bases, but as this area of law continues to emerge, we hope to devote future issues to topics with which sole practitioners, not only health law attorneys, should become familiar. Marilyn Askin, currently chief legislative advocate for AARP-NJ, was among the first certified elder law attorneys in New Jersey. She was director of Senior Citizens Legal Services of Essex County for 15 years, founded what is now the NJSBA s Elder Law Section in 1985, and has taught elder law at Rutgers Law School-Newark for the past 23 years. Michael F. Schaff is the chair of the corporate and healthcare practice at Wilentz, Goldman & Spitzer, P.A., and past chair and currently a director of the NJSBA Health and Hospital Law Section. He also is on the board of directors of the American Health Lawyers Association and an adjunct associate professor at UMDNJ and St. John s University, as well as a member of the New Jersey Lawyer Magazine Editorial Board. NEW JERSEY LAWYER April

6 Keeping a Lid on Pandora s Box: Strategies for Protecting Genetic Privacy by Jane Massey Licata With the completion of the first map of the human genome, a basis for determining an individual s unique genetic makeup and probable medical future was created. Over a thousand genetic markers have been identified and correlated with human biology and disease. 1 Worldwide, university and pharmaceutical company researchers alike are mining databases of genetic information and developing gene tests. Genetic tests can confirm diagnoses and test pre-symptomatically to predict the possibility of future illness or detect carrier status in unaffected individuals. Genetic testing also is available for prenatal tests and pre-implantation screening of embryos. (Most newborns in industrialized countries are screened for disorders that can benefit from immediate treatment.) 2 Genetic tests identify gene abnormalities or the presence/absence of key proteins that are provided by specific genes. Therefore, genetic testing includes gene tests (DNA tests) and biochemical tests (protein testing). Genetic Testing Technology and Regulation Genetic markers can either be diagnostic or not. Most are not conclusively diagnostic, but rather may indicate a predisposition to a particular disease or condition, or may presently be believed to have a correlation with a particular disease or condition. Relying on these types of genetic markers in making employment or insurance decisions would be especially troublesome. To reduce the chances of inadvertent access to all genetic information or test results, 3 the definitions of genetic information and information relevant in determining the current health status of an individual becomes important. Except when the data is gathered as part of a development process for either a drug, device or biologic product to be used in human therapy, most genetic tests are categorized as a service; therefore, the United States currently provides no regulations in evaluating the accuracy of genetic testing. The FDA has recently provided the industry with a guidance document describing the desired approach for gathering genetic testing data and how the data can and cannot be used in the development of human therapeutics. 4 Even with this FDA oversight, certain types of genetic testing remain unregulated. A consumer alert was issued in Aug by the Federal Trade Commission to educate and warn consumers about the risks of at-home genetic tests, which have expanded in response to privacy concerns. There are limitations to genetic testing that many consumers may not appreciate. For example, genetic testing is not 100 percent predictive. Many genetic tests fail to detect all of the mutations that can cause a disease. A positive test does not mean an individual will necessarily develop a disease and a negative test doesn t mean they won t, due to non-inherited sporadic genetic changes. A positive genetic test also cannot predict severity of the disease. Genetic testing also is expensive, ranging from hundreds to thousands of dollars per test. Tests designed to determine the presence or version of genes that cause diseases or conditions carry with them the most intimate details of an individual s biological past and future, and also provide information about parents, siblings and children that impacts on family privacy. The potential for misunderstanding or misusing this information is so great, 6 NEW JERSEY LAWYER April 2007

7 that it has become essential to establish a national policy for the protection of an individual s privacy interest in their genetic information. Legal Concerns and Mechanisms for the Protection of Genetic Privacy Legal efforts to protect genetic privacy are incomplete. Most states have enacted legislation to prohibit insurers from collecting or using certain types of information to discriminate against insureds or those seeking coverage. 5 However, the scope of this legislation is highly variable, and enforcement mechanisms are inadequate. For example, 47 states prohibit the use of genetic information to determine rates or eligibility for health insurance. Some require actuarial evidence to use genetic information, while others prohibit its use entirely. A total of 27 states require informed consent for a third party to perform or require a genetic test or obtain genetic information. Several states treat genetic information as personal property, and mandate individual access to personal genetic information. A total of 18 states have specific penalties (civil and/or criminal) for violating genetic privacy laws. Some are disease-specific, and the definitions of genetic information vary widely. A notable exception is New Jersey s Genetic Privacy Act; 6 however, employer selfinsured health plans, which are exempt from state regulation under the Employee Retirement and Income Security Act (ERISA), are not covered. 7 New Jersey s Genetic Privacy Act, which was enacted in 1996, declared that genetic information is personal information that should not be collected, retained or disclosed without the individual s authorization. The act prohibits discrimination by employers against employees carrying genetic markers of diseases or behavioral traits. It is unlawful for an employer to refuse to hire or employ, or to discharge or require to retire, an employee because of the employee s genetic information, or atypical hereditary cellular or blood trait, or because the employee refused to submit to a genetic test or make available the results of a genetic test to the employer. It also prohibits the use of genetic information in the fixing of rates or withholding of life insurance, and bans the use of genetic information to establish the amount of insurance premiums, policy fees, or rates charged for a health insurance contract. The penalties for violation of the provisions of the act include fines and prison terms. Actual damages, including economic, bodily or emotional harm proximately caused, also may be recovered for wanton disclosure of genetic information. The author feels the New Jersey act is an important first step in controlling the flow of genetic information; however, federal legislation is still needed. Federal law also is inadequate. 8 There remains a need for federal legislation to assure that insurers cannot use genetic information to deny, limit or cancel coverage, and to prohibit employers from using genetic information against workers or in hiring decisions. Executive Order issued by President Bill Clinton on Feb. 9, 2000, prohibits the federal government from using genetic information in hiring or promotion actions. Under Executive Order federal employers cannot require or request genetic tests as a condition for hiring or receipt of benefits. Federal employers cannot request or require genetic tests to evaluate an employee s ability to perform a job, or use genetic information to classify employees or deny promotion or foreign posts because of genetic predisposition to a disease. The order also provides strong protection for any genetic information for treatment or research. Most employees, however, do not share these types of protections, and must rely on a patchwork of federal laws. For example, the Americans With Disabilities Act of 1990 (ADA) protects individuals with recognized disabilities. While the ADA protects individuals with symptomatic genetic disabilities, it does not protect against discrimination based on unexpressed genetic diseases or conditions. 9 The Health Insurance Portability and Accountability Act of (HIPAA) applies only to employer-based and commercially issued group insurance. While HIPAA prohibits group plans from using genetic information as a basis for denying or limiting eligibility for coverage or charging a higher rate, it does not apply to those seeking health insurance in the individual market. HIPAA covers all personal health information, limits nonconsensual use and release of any such information, and provides rights to patients to access their medical records and to know who has accessed them. HIPAA restricts disclosure of health information to the minimum needed for the intended purpose, and establishes new requirements for access to records by researchers and others. Criminal and civil sanctions also were created under HIPPA for improper use or disclosure of private health information. While there is no specific mention of genetic information, information contained in a medical or research record would be covered. It also has been suggested that Title VII of the Civil Rights Act of 1964 could be applicable to an employer engaged in discrimination based on racially or ethnically linked genetic disorders. 11 However, there are only a few diseases where a strong relationship between race or national origin has been established. The Equal Employment Opportunity Commission (EEOC) has considered a case alleging genetic discrimination. EEOC filed suit against an employer for secretly testing its employees for a genetic condition. The EEOC argued the NEW JERSEY LAWYER April

8 tests were unlawful under the ADA because they were not job related and any condition of employment based on the tests would be cause for illegal discrimination based on disability. The lawsuit settled. 12 The Effort to Establish Federal Legislation Concerning Genetic Privacy and Nondiscrimination There have been efforts to pass federal legislation over the past decade, including a Genetic Information Nondiscrimination Act, which was passed by the U.S. Senate. 13 The House of Representatives version has not passed. The House version could prohibit health insurance and employment discrimination against individuals and their family members on the basis of predictive genetic information or genetic services. Predictive genetic information is defined as: information about an individual s genetic tests (i.e., the analysis of human DNA, RNA, chromosomes, proteins, and certain metabolites in order to detect genotypes, mutations, or chromosomal changes); information about genetic tests of family members; or information about the occurrence of a disease or disorder in family members. Information about the sex or age of the individual, information about chemical, blood, or urine analysis of the individual unless these analyses are genetic tests, and information about physical exams and other information relevant to determining the current health status of the individual are specifically excluded from the definition of predictive genetic information. Genetic services are health services, including genetic tests, provided to obtain, assess, or interpret genetic information for diagnostic and therapeutic purposes, and for genetic education and counseling. Under the House proposal, an insurer would not be able to deny eligibility or adjust premium or contribution rates for a group on the basis of predictive genetic information or information about a request for or receipt of genetic services. An insurer also could not request or require genetic testing. Further, the insurer could not request, require, collect or purchase such predictive genetic information. The insurer also could not disclose predictive genetic information or a request for genetic services; disclosures to the Medical Information Bureau and the individual s employer or plan sponsor are specifically prohibited. However, with respect to payments for genetic services, the insurer could request evidence that services were performed (but not the results) and if the evidence is not provided, could deny payment. An insurer also could request that an individual provide predictive genetic information so long as the information would be used solely for the payment of a claim and limited to information directly related to and necessary for the payment of the claim (i.e. the claim would otherwise be denied). Disclosure would be limited to individuals within the plan who need access to the information for payment of the claim. Prior, knowing, voluntary, written authorization for the collection or disclosure of predictive genetic information would be required. Disclosures between healthcare providers for the purpose of providing treatment would be exempt. Civil actions for legal and equitable relief, including civil attorney fees and the costs of expert witnesses and civil penalties, payable to the United States Treasury, also are provided for. These provisions would not supersede any state law provision that more completely protects confidentiality or privacy, or protects against discrimination with respect to such information. Employers, employment agencies and labor organizations would be prohibited from failing or refusing to hire, discharging or otherwise discriminating on the basis of predictive genetic information. Employees could not be classified on the basis of predictive genetic information or a request for genetic services. Employers could not request, require, collect or purchase predictive genetic information about employees for genetic monitoring without prior, knowing, voluntary and written authorization by the employee, and without informing the employee of the monitoring results. Genetic monitoring is the periodic examination of employees to evaluate changes in their genetic material (e.g. chromosomal damage or evidence of increased occurrence of mutations) that may have developed during the course of employment due to exposure to toxic substances in the workplace in order to deal with adverse environmental exposures in the workplace. Any monitoring must conform to Occupational Safety and Health Administration (OSHA) or Federal Mine Safety and Health Act (FMSHA) requirements. The results of the monitoring may not disclose the identity of an employee. Any predictive information about an employee must be treated or maintained as part of the employee s confidential medical records. A federal or state court may award any appropriate legal or equitable remedy that may include payment of attorneys fees and costs, including the costs of experts. The EEOC also could enforce. Possible Approaches to Increasing Protection for Genetic Information in the Insurance and Employment Arena Healthcare providers are accustomed to dealing with sensitive, confidential information. However, given the unique nature of genetic information, heightened concern about the confidentiality and distri- 8 NEW JERSEY LAWYER April 2007

9 bution of such information is warranted. Results of genetic tests are usually maintained in medical records; therefore, when an individual applies for disability, health or life insurance, an insurer could access and examine this information. Accordingly, an individual s prior written consent to make the information available to insurers and between healthcare providers should be required. Presently there is no special consent required in many states, and the information is released as part of a general medical record release. 14 Segregating this information, or clearly identifying it as information that cannot be disclosed without explicit consent, while possibly viewed as burdensome by healthcare providers, is something that can be done (e.g. much as HIV testing information is protected), and the author believes, should be done given the significant potential of use of genetic information to stigmatize or discriminate. Those seeking individual health insurance protection who may be at the greatest risk for discrimination. While there are provisions that cover individual policies in some instances, individuals require the same protections as group participants. The author feels there should be significant penalties for any knowing violation by an insurer or employer. Under the current scheme, the employee or insured, who may not have reasonable access to legal representation, may not be able to effectively protect their privacy interests. The government shall, therefore, take a proactive role and provide substantial civil penalties provided for in the event there is a breach of confidentiality. This is provided for to some extent under state law and proposed federal legislation; however, strengthening the role for government enforcement could be helpful. Setting federal law for protecting genetic information in health and life insurance and employment decisions would allow states to pass, or maintain, more extensive laws if they wish. Making sure that both group and individual markets are covered is important. Providing consistency in coverage, protections afforded and enforcement strategies would protect individual privacy interests and reduce the likelihood of stigmatization or discriminate in insurance and the workplace. The author believes it is essential to establish a consistent, national policy to protect against genetic discrimination in employment and insurance, and to protect the privacy of this sensitive personal information. These issues cross state boundaries and affect all citizens. Until recently, access to genetic testing was limited to those who could afford to pay for it privately. By paying for it themselves, individuals also could have greater assurance of confidentiality concerning the testing and the results. While wider acceptance of the need and validity of genetic testing has made insurers more comfortable with reimbursement for this type of service, there is a huge risk to the insured or employee that sensitive information, which could easily be subject to misinterpretation, may be widely distributed as part of the insurance information system. Given the substantial gaps in federal and state law to protect against employment and insurance discrimination, federal legislation is needed to ensure that genetic technology and research are used to improve the health and lives of individuals and to prevent denial of employment opportunities and benefits. Federal legislation that establishes minimum protection could be supplemented by state laws, but would provide a needed threshold level of protection. Endnotes 1. As of Aug. 2006, the National Institutes of Health (NIH) report that there are genetic tests for 1,283 diseases (991 clinical and 292 research only); 2. For example, in the U.S. newborns are screened for Phenylketonuria (PKU), a genetic defect that causes an enzyme deficiency which results in mental retardation if untreated. 3. Genetic disorders can be caused by a variation or mutation of a gene. Genetic disorders may be caused by an alteration in a single gene (e.g. Sickle Cell disease, Cystic Fibrosis, Tay-Sachs disease). Chromosome disorders are the result of too many or too few genes (e.g., Down Syndrome). Most diseases are caused by a combination of small genetic variations and environment (e.g., heart disease, cancer, Alzheimer s disease) fnl.pdf 5. Forty-seven states have enacted laws related to genetic privacy. Most states restrict insurers or employers from carrying out particular actions without consent. For example, 17 states require informed consent for a third party to either perform or require a genetic test or to obtain genetic information; 27 states require consent to disclose genetic information; five states define genetic information as personal property and one state extends personal property rights to DNA samples; four states mandate individual access to personal genetic information; 18 states have specific penalties (civil and/or criminal) for violations. ( programs/health/genetics/prt.htm). 6. N.J.S.A. 10:5-43 to 10: U.S.C ; ERISA preempts state regulation of large, selfinsured plans. 8. To date, no federal legislation has been passed concerning genetic discrimination in individual insurance or in the workplace. 9. ADA cannot prevent requirements or requests to provide genetic information after a conditional offer of NEW JERSEY LAWYER April

10 employment has been made but before an individual begins work that is a concern because genetic samples can be stored and maintained for later study; ADA cannot prevent requirements to provide medical information that is job related and consistent with business necessity 42 U.S.C (2002). 10. C.F.R For example, Sickle Cell disease and Tay-Sachs disease. 12. EEOC v. Burlington Northern Santa Fe (BNSF) Railroad No. Col-4013-MWB (N.D. Iowa 2001). 13. The U.S. Senate passed S on February 18, 2005 by a vote of The act prohibits employers, employment agencies and labor organizations from using genetic information in hiring, firing and training decisions and from soliciting or purchasing genetic information. 14. Special consent provisions similar to those that exist for HIV testing could be considered. Like HIV status, genetic information can significantly impact on an individual s insurance and employment status. Therefore, confidential information that can be linked to an identifiable patient should be disclosed without the patient s authorization only when necessary to protect third parties from harm or when disclosure is compelled by law (e.g., reporting HIV tests results to public health authorities or sexual partners). Jane Massey Licata is a partner with Licata & Tyrrell P.C., and teaches patent and FDA law at Rutgers School of Law-Camden. 10 NEW JERSEY LAWYER April 2007

11 Managing Conflicts of Interest in Human Subject Research by Gary J. Lesneski It has been estimated that nearly $100 billion is spent annually on medical research in the United States, nearly 60 percent of which comes from private industry. 1 Research is big business, creating opportunities for investigators and the institutions that employ them to collaborate with drug and device manufacturers to share in the financial fruits of successful product development. Human subject research trials are conducted in compliance with three basic ethical principles: respect for persons, beneficence, and justice. 2 These principles risk compromise where the investigator s conduct may be affected by considerations of personal financial gain. Several well-publicized lawsuits have been filed involving injuries or death resulting from participation in clinical trials, most notably Gelsinger v. Trustees of the University of Pennsylvania, where the defendants settled both a private civil action and a Department of Justice False Claims Act 3 suit after 18- year-old Jesse Gelsinger died during a gene therapy trial. 4 There, the plaintiffs alleged, among other things, a failure of informed consent based on nondisclosure of university and investigator equity and other financial interests in the industry sponsor. Despite these well-publicized concerns over research conflicts of interest, new revelations continue to be reported. Recently, two major medical journals Neuropsychopharmacology and the Journal of the American Medical Association admitted that in published studies they failed to disclose the authors financial ties to drug and device makers. 5 A bipartisan group of congressional leaders has asked the National Institutes of Health (NIH) to provide details of a senior researcher s ties to several pharmaceutical companies, professing a need to evaluate whether NIH s conflicts of interest policies are adequate. 6 Both regulatory and industry initiatives have addressed research conflicts of interest, with the goal of eliminating or minimizing them. This article will address those initiatives. Federal Responses Overview Federal law provides the regulatory framework for identifying and managing conflicts of interest in the research setting. New Jersey has not adopted any statutes or regulations addressing these issues. Federal guidance and regulations come from various sources, lacking a unified approach, and thus creating the potential for different rules depending on the context in which the research is performed. Moreover, these pronouncements are limited to federally regulated research, that is, research sponsored by federal agencies or conducted to obtain Food and Drug Administration (FDA) approval of a drug, device, or biologic. Institutions do have the option, as part of their federal-wide assurance (FWA), which qualifies them for participation in federally sponsored research, to voluntarily agree to apply certain federal standards to all research performed, and many do so. Conflicts of Interest Involving Members of Institutional Review Boards Under the federal regulatory scheme, research is conducted under the auspices of either the so-called common rule, a series of regulations promulgated by the Department of Health and Human Services (HHS) that apply to research sponsored by a cohort of Executive Branch departments and agencies, or the regulations adopted by the FDA for approval of products falling under its jurisdiction. 7 Both the common rule and the FDA regulations require that human subject research be approved and reviewed on a contin- NEW JERSEY LAWYER April

12 uing basis by institutional review boards (IRBs). IRBs are either independent or institutionally connected bodies of five or more members who have appropriate scientific and non-scientific representation enabling them to evaluate whether the research is soundly designed and otherwise adequately protective of the interests of the research subjects. Recognizing that the IRB members themselves might have a conflict of interest, both sets of regulations preclude the participation of any IRB member in the initial or continuing review of a research protocol, except to provide information to the IRB. 8 However, the regulations do not determine what constitutes a conflicting interest, or outline the process an IRB should follow to identify, evaluate and manage potential conflicts. HHS Guidance Document In May 2004, HHS issued its final guidance document for IRBs, investigators, research institutions and other interested parties, which raises points to consider in determining whether specific financial interests in research could affect the rights and welfare of human subjects, and if so, what actions could be taken to protect those subjects. 9 The guidance document is not a regulation, and thus, as expressly noted by HHS in its preamble, does not confer any rights for or on any person, and does not bind HHS or any other federal agency. It does, however, state general principles that, as will be seen later in this article, complement initiatives in the private sector. The guidance document recommends that the IRBs remind members of conflict of interest policies at each meeting, document any actions taken by the IRB in response to a conflict of interest for a particular protocol, and periodically educate members on conflict of interest topics. Without specifying a definition of a conflict of interest, the guidance document counsels that IRBs, institutions and investigators determine what financial relationships should be deemed of concern, and at what level conflicts of interest should be managed or eliminated, and develop procedures to manage the actual or potential conflict. The guidance document additionally suggests that research institutions have true separation between research activities and the management of the institutions financial interests, and counsels that each institution establish a separate conflicts of interest committee that should function independently from the IRB, but with clear channels of communication between the two bodies. Other HHS recommendations include use of independent organizations to hold or administer institutional financial interests in research and/or to provide review and oversight of potential conflicts of interest. The guidance document presumes that there will be variability in institutional approaches to the various questions raised. To this extent, guidelines promulgated by industry groups (discussed below) may provide more practical solutions to some of the issues raised in the guidance document. Public Health Service The Public Health Service (PHS), which encompasses such HHS agencies as the National Institutes of Health, the Centers for Disease Control and Prevention, the Substance Abuse and Mental Health Services Administration and the Health Resources and Service Administration, has promulgated conflict of interest regulations that apply to grantee institutions and contractors. 10 These standards also are applied to grantees of the National Science Foundation. Institutions covered by these regulations must maintain and enforce conflict of interest policies, and designate an institutional official to solicit and review investigator financial disclosures for PHS-funded research. Investigators are required to disclose significant financial interests that would be reasonably affected by the research. The regulations define a significant financial interest as anything of value, included, but not limited to, salary or other payments for services, equity interests, and intellectual property rights. The regulations create thresholds for equity interests ($10,000 as determined through public prices or other reasonable measures of fair value and representing no more than a five percent stake in any single entity), as well as other income, such as consulting fees, honoraria, and royalties (expected to exceed $10,000 over the next 12 months). The regulations except certain income (such as honoraria from teaching at programs sponsored by public or nonprofit agencies and salary, royalties or other remuneration from the applicant institution). Financial interests of the investigator s spouse and dependent children are counted in determining whether these thresholds are met. Covered institutions are expected to take steps to manage, reduce or eliminate identified conflicts of interest, such as public disclosure of the conflict, modification of the research plan, disqualification of the investigator from all or part of the research, or mandating divestiture of the interest in question. The institution s policies also must include mechanisms for sanctioning non-compliance. FDA Regulations The FDA regulations require that sponsors of a regulated product must, as part of the marketing approval process, disclose financial interests of clinical investigators conducting the underlying research on the product. 11 The FDA particularly focuses on arrangements where the clinical investigator receives payments that rise or fall depending on the outcome of the study or has a proprietary interest in 12 NEW JERSEY LAWYER April 2007

13 the product being studied. FDA disclosure thresholds include any compensation (whether in cash or in kind) that exceeds $25,000 (exclusive of the costs of conducting the study), any proprietary interest in the study article (e.g., royalties), and any equity interest in the sponsor worth more than $50,000. Along with the disclosure, the sponsor must specify any steps taken to minimize potential bias resulting from the financial interest. Industry Initiatives The American Association of Medical Colleges The American Association of Medical Colleges (AAMC), which counts among its membership some 125 accredited U.S. medical schools and over 400 major teaching hospitals, has adopted policies and guidelines for oversight of individual and institutional financial interests in human subject research. 12 The guidelines present a unified approach for identifying conflicts of interest and managing them. They share similarities with the federal pronouncements, but approach the problem by positing that all significant financial relationships are potentially problematical and, where identified, create a rebuttable presumption that the research should not be conducted by the affected individual or institution, absent compelling circumstances. The guidelines counsel that a finding of compelling circumstances requires a case-by-case analysis that considers the science, the unique qualities of the affected investigator or institution, how closely the interest is related to the research, and the degree to which the interest may be affected by the research. The guidelines define individual investigator significant financial interests as including: compensation arrangements that exceed the $10,000 threshold contained in the PHS regulations, any equity interest in a non-publicly traded company, any equity interest in publicly traded companies over the PHS threshold, royalty rights where the research is directly related to the licensed technology or work, any payments in connection with the research that are not directly related to the reasonable costs of the research, and any service as an officer, director or other fiduciary for the sponsor, whether or not remuneration is received for the effort The guidelines recommend that conflicts be vetted by a separate conflict of interest committee. All investigators would have a duty to disclose their interests to this committee before the IRB considers the research. If the conflicts of interest committee concludes that the interest precludes the investigator s participation, that determination may not be overridden by the IRB considering the research. However, the IRB can take more stringent action than the conflicts committee. The guidelines further counsel that in those instances where the committees determine that despite the conflict there is a compelling need for the research to go forward, appropriate steps must to be taken to manage the conflict, such as requiring full disclosure of the interest to the research subjects, requiring that subject informed consent be obtained by a clinician with no financial ties to the research, or having the research overseen by an independent monitoring board. The guidelines also address conflicts at the institutional level. An institutional conflict is present whenever the financial interests of the institution or an institutional official might affect, or reasonably appear to affect, institutional processes for the conduct, review or oversight of human subject research. Examples of such institutional conflicts would include royalty arrangements with the sponsor, equity interests in a non-publicly traded sponsor, a significant equity position (exceeding $100,000 in value) in a publicly traded company, or receipt of a substantial gift or grant from the sponsor. As with individual investigator conflicts, the guidelines state that institutional conflicts should be vetted by a separate conflicts of interest committee, with the same rebuttable presumption against the research if the conflict is present, unless compelling circumstances dictate otherwise. Where compelling circumstances are found, the AAMC recommends a variety of approaches for managing the conflict, such as designating another institution as the primary research site, use of external monitoring, use of affiliated organizations to conduct the research, and recusal of institutional officials from the research process. Beyond process, the AAMC also asserts other core values that minimize potential conflicts and diminish undue influence by the sponsor on the objectivity of the research. These include prohibiting payment to investigators based on particular results, prohibiting payments that do not reflect the fair value of the services being performed, and precluding research agreement provisions that would enable a sponsor to interfere with an investigator s access to data or ability to analyze data independently. The American Medical Association The American Medical Association (AMA) has promulgated two ethical codes that deal with research conflicts of interest. AMA Code E counsels that all medical centers develop specific guidelines for their clinical staff on conflicts of interest, which should, at a minimum, include the following: NEW JERSEY LAWYER April

14 a ban on stock trading in the sponsor until the researcher s involvement ends and the results of the research are published or otherwise disseminated to the public; prohibition of any payment arrangement that involves compensation beyond what is commensurate with the efforts of the researcher; policies requiring researchers to disclose to the medical center, any other funding organizations, and any journals that will publish the research, the specifics of any material ties to the company whose product is being investigated. 13 AMA Code E establishes additional guidelines for physicians involved in research. 14 Physicians should only participate in clinical trials related to their scope of practice and area of medical expertise. Physicians should be familiar with principles of research ethics and should only participate in IRBapproved research. Someone other than the treating physician should, where possible, obtain the informed consent for the research protocol, if the subject s treating physician is the researcher. Payments to researchers should not exceed fair market value, and should not vary based on the volume of subjects the physician enrolls. (Thus, physicians should not accept any payment simply for referring patients to research studies.) Physicians should ensure that protocols include provisions for the funding of the subjects medical care in the event of complications associated with the research. The researcher should disclose the nature and source of funding and financial incentives to the research subjects. Physicians should ensure that their research contracts do not permit the sponsor to unduly delay or obstruct the publication of results. Other Sources There are a variety of other groups that have promulgated guidelines on financial conflicts of interest in research, including the American Association of Universities, 15 the American College of Emergency Physicians, 16 and the American Society of Gene Therapy. 17 Conclusion The cited regulations and industry guidelines evidence a national consensus that adequate protection of research subjects and promotion of objectivity in research requires an organized, welldocumented and specific process that assures disclosures of financial interests in the research are made and evaluated, and conflicts found are appropriately managed/minimized. However, the continued reports of undisclosed conflicts affecting significant research projects demonstrates that internal and external enforcement of these standards still leaves much to be desired. Any organization involved with human subject research is well advised to have conflicts policies in place that are commensurate with the recurring general principles evident in the cited materials and contain adequate monitoring and enforcement provisions. Failure to do so creates liability risks in the event of subject injury, and, where noncompliance with federal regulations is at issue, potential sanctions from the agencies involved. Endnotes 1. MSNBC report, at msnbc.com/id/ (last visited 8/23/2006). 2. The National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research, Ethical Principles and Guidelines for the Protection of Human Subjects of Research (April 18, 1979) (a/k/a The Belmont Report). 31 USC 3729 et seq. 4. Gelsinger v. Trustees of University of Pennsylvania, Phila. Cty. Ct. of Common Pleas, filed Sept. 18, 2000, at (last visited 7/26/2006). 5. MSNBC report, at msnbc.com/id/ (last visited 8/23/2006). 6. Los Angeles Times report, at (last visited 8/23/2006). 7. The common rule is codified at 45 C.F.R., Part 46, Subpart A, (2005), 46 C.F.R (2005), et seq. The FDA counterpart is codified at 21 C.F.R (2006), et seq and 21 C.F.R (2006), et seq C.F.R (e) (2005); 21 C.F.R (e) (2006). 9. Financial Relationships and Interests in Research Involving Human Subjects: Guidance for Human Subject Protection, 69 Fed. Reg (May 12, 2004) C.F.R (2005), et seq and 45 C.F.R (2005), et seq C.F.R (2006), et seq. 12. The two reports are Promoting Subjects, Preserving Trust and Promoting Progress Policy and Guidelines for the Oversight of Individual Financial Interests in Human Subjects Research (Dec. 2001), at firstreports.pdf (last visited 7/26/2006) and Promoting Subjects, Preserving Trust and Promoting Progress II: Principles and Recommendations for Oversight of an Institution s Financial Interests in Human Subjects Research (Oct. 2002), at coi/2002coireport.pdf (last visited 14 NEW JERSEY LAWYER April 2007

15 7/26/2006). 13. American Medical Association, E Conflicts of Interest: BioMedical Research, at ama-assn.org/ama/pub/category/8470.html (last visited 7/26/2006). 14. American Medical Association, E Managing Conflicts of Interest In the Conduct of Clinical Trials, at org/ama/pub/category/8471.html (last visited 7/26/2006). 15. American Association at Universities Report on Individual and Institutional Financial Conflict of Interest (Oct. 2001), at (last visited 7/26/2006). 16. American College of Emergency Physicians Policy # Financial Conflicts of Interest in Biomedical Research, at acep.org/webportal/practiceresources/policystatements/ethics/fin ancialconflictsinterestbiomedical- Research.htm (last visited 7/26/2006). 17. Policy of the American Society of Gene Therapy Financial Conflict of Interest in Clinical Research (April 5, 2000), at org/position_statements/conflict_of_interest.html (last visited 7/26/2006). Gary J. Lesneski is president of Archer & Greiner, P.C., in Haddonfield. He is currently vice chair and formerly chair of the Health and Hospital Law Section of the NJSBA. NEW JERSEY LAWYER April

16 Psychiatric Advance Directives: A Summary and Analysis of the New Jersey Advance Directives for Mental Healthcare Act by Terri Roth Reicher Effective March 21, 2006, New Jersey adopted a law that affords a patient the opportunity to specify treatment preferences for mental health services in the event that he or she is subsequently determined to lack decision-making capacity. The New Jersey Advance Directives for Mental Healthcare Act 1 allows a person of sound mind to help define their care, including limits on medication and preferences regarding physicians and institutions, should they become mentally ill. At first glance, the form of the new act is quite similar to the one used in 1991, when the Legislature passed the New Jersey Advance Directive for Healthcare Act (Living Will Act); 2 but its focus is different. The New Jersey Bill Passage, Amendments and Omissions A major goal of the bill that was enacted on Sept. 22, 2005, is to assure respect for the rights of patients with mental illness. 3 Supporters of the act included the Mental Health Association of New Jersey, the New Jersey Protection and Advocacy, Inc. (NJPA), the National Alliance for the Mentally Ill (NAMI) and the Community Health Law Project. This coalition of mental health organizations was instrumental in bringing the special needs of the behavioral health community to the attention of legislators. This vulnerable population often finds its due process protections compromised, and frequently lacks resources. It is further disadvantaged by the lack of awareness exhibited by physicians and attorneys regarding the specific issues a person with mental illness may face in time of crisis. From a public policy perspective, the Legislature identified the behavioral health community as a group in need of special statutory protections. Despite the act s unanimous passage, during the legislative process several items dealing with terminology required committee amendments. 4 Responsible mental healthcare professional was the preferred term used to describe the healthcare provider who had primary responsibility for the behavioral health treatment of the patient, and not attending mental healthcare professional. When describing a patient who no longer possessed decision-making capacity, the term of choice became incapacitated patient rather than incompetent patient. The definition of psychiatric facility was expanded to include a hospital or community-based mental healthcare center. The significance of the expansion is its impact on the patient s revocation rights. The Legislature streamlined certain procedures that other states required. New Jersey did not require a qualified mental health professional to certify that a patient is competent to complete a psychiatric advance directive (PAD), nor does it require a qualified mental health professional to pre-approve the content or the appropriateness of an advance directive for mental healthcare. A court need not determine that a patient 16 NEW JERSEY LAWYER April 2007

17 is legally incapacitated for a PAD to take effect during a crisis. In order to effectuate a PAD in New Jersey, the responsible mental healthcare professional makes the determination of a patient s incapacity and it must be confirmed by at least one other mental healthcare professional. Only in the event of disagreement do the parties need to consider dispute resolution via the courts. In such cases, the act calls for the use of an institutional ethics committee, or a person designated by the psychiatric facility to handle disputes to avoid court intervention. When constructing an ideal instruction directive for mental healthcare decision making, the Bazelon Center for Mental Health Law, the nation s leading legal advocate for people with disabilities, identifies additional recommended components that are not found in the New Jersey forms. 5 New Jersey does not provide preferences for: 1. notification of others immediately upon admission to a psychiatric facility, 2. care and temporary custody of minor children, 3. participation in experimental studies or drug trials, or 4. a list of visitors to be prohibited from visiting during admission to a psychiatric facility. Bazelon also advocates a record of psychiatric advance directive, which identifies the proxy s name, address, and phone number but also lists the name, address, and phone number of each person who was given a copy of the PAD. New Jersey does not provide for this additional checklist, which could be very helpful. Such a list also highlights that maintaining numerous, accessible copies of PADs is a desirable practice. Though New Jersey does provide for a registry, no provisions were made to have a standard wallet-sized card available. This card immediately advises any treating team of the existence of an advance directive for mental healthcare, where it is registered and the name and contact information of the designated agent. The issues raised above are often encountered by the psychiatric facility, and would be advantageous in determining the patient s wishes. The goal is to create a concise picture of the patient s requests during a time of lucid decision-making capacity, which will be relied upon at a future date when the person lacks capacity to make such decisions. If the patient s articulated desires are more inclusive, perhaps the instruction directive will be consistently honored, and there will be less need for the healthcare proxy to be called upon to surmise the best interests of the patient. National Use of Advance Directives for Mental Healthcare The act is consistent with a nationwide movement in which persons with mental illness and their psychiatric needs warrant enactment of a distinct statute. Currently, half the states have some form of a psychiatric advance directive statute. 6 In 1993, Oregon was one of the earliest states to enact such a statute. 7 North Carolina enacted Advance Instruction for Mental Health Treatment in 1997, which served as an early example of legislation giving legal authority for PADs, including the use of the registry. 8 Two significant developments have generated awareness in PADs: 1) the passage of the federal Patient Self-Determination Act (PSDA), and 2) the increased use of mandated psychiatric treatment. 9 The PSDA, euphemistically referred to as the federal Living Will Act, provides that all healthcare facilities that receive Medicaid or Medicare funding must implement advance directive policies. 10 It applies to both general hospitals and psychiatric hospitals. The federal act requires institutions to inform patients of their right to formulate an advance directive that allows them to accept or refuse medical treatment, document the existence of an advance directive in a patient s medical record, formulate policies that ensure compliance with an advance directive, and educate the staff and community about the rights and obligations associated with advance directives. The intent of the PSDA is to codify a patient s right to retain control over future medical treatment if they later become unable to communicate their wishes. Contemporaneously with the growth of the acceptance of advance directives, the nonconsensual treatment of the mentally ill also expanded. As outpatient commitment policies created an increasingly deleterious pattern of fragmented and often involuntary treatment for the behavioral health community, the need for PADs further evolved. In theory, the preparation of a PAD while competent could benefit the patient at a later date. It would facilitate the treatment process; improve adherence with beneficial therapies; advance communication between providers, caregivers, and patients; and ultimately avert psychiatric crises or improve management of such crises without resorting to involuntary commitment. PADs seemed to create an option that increased patient autonomy and produced an alternative to coercive treatment. The Role of the Division of Mental Health Services The Division of Mental Health Services in the New Jersey Department of Human Services (NJDMHS) is a leader in circulating information about the existence of an advance directive for mental healthcare. Under the new act, as with the Living Will Act, one can execute a proxy directive, an instruction directive or both. The NJDMHS website provides three basic forms for the public to use: NEW JERSEY LAWYER April

18 1) declaration of mental healthcare representative, 2) mental health instruction directive, and 3) registration. 11 NJDMHS emphasizes the voluntary aspects of completing an advance directive for mental healthcare, and the benefit it affords the declarant in planning for decisions in advance. The declarant is defined as a competent adult who executes an advance directive for mental healthcare. Persons seeking additional information beyond that provided by NJDMHS are encouraged to contact a trusted individual or a patient advocacy group such as NJPA. 12 NJPA has prepared a helpful worksheet to be used prior to completing the directive. It encourages at least the execution of a proxy directive to identify a trusted individual to be consulted in a crisis, especially if one is ambivalent about completing the exhaustive instruction directive. Key Highlights and Unique Features of the Act Mental Healthcare Representative A declarant has the right to appoint a mental healthcare representative, i.e. a proxy, an agent or a spokesperson, who will act consistently with his or her wishes, and, in the absence of clearly articulated preferences, will be consulted to determine the patient s desired treatment. NJDMHS encourages declarants to notify the proxy of the appointment and provide the proxy with a copy of the document, but are warned that the appointed representative has the right to withdraw at any time. Declarants are urged to provide several alternate representatives in the event that the person designated cannot or does not wish to serve. Acceptance of appointment as agent is optional. From a practical standpoint, however, the New Jersey form calls for the representative and the two alternates to sign the same form, which may be cumbersome. The act does not provide for the use of the advance directive to consent to a civil commitment. 13 However, the healthcare proxy can consent to a voluntary commitment under particular conditions. Health Insurance Portability and Accountability Act (HIPAA) considerations are exhibited by authorizing the agent to receive all of the patient s medical information, including any treatment for HIV/AIDS, as well as alcohol and substance abuse. Instruction Directive The NJDMHS directive is quite comprehensive in its treatment choices. The declarant may specify preferences regarding physicians, other providers, medications, voluntary hospitalization, acceptable facilities, emergency interventions and electroconvulsive therapy (ECT or shock therapy). The detailed checklists provided to declarants attempt to anticipate most common behavioral health events. Such extensive treatment specificity is, however, not generally recommended in a traditional living will. Instruction directives are triggered only if the declarant has lost the ability to provide an informed consent. The statute recognizes that some instructions are not feasible, and that clinicians cannot be bound to treatment instructions they deem clinically inappropriate, and in some situations may override some individual PAD instructions. Registration A state-run registry of advance directives for mental healthcare overseen by NJDMHS is a unique feature of the act. Oversight of the registry by NJDMHS requires consultation with the Department of Health and Senior Services (DHSS). The registration form provides access to the treating licensed healthcare providers as well as individuals who are given a password by the patient. The registration form provides that at their discretion NJDMHS also may accept other related forms, such as a healthcare advance directive (living will) or guardianship orders. The registry appears to be patterned after a national registry such as the U.S. Living Will Registry, which developed a streamlined method to store and transmit advance directives. 14 Though the registration form is currently accessible on NJDMHS s website, as of the writing of this article, no advance directives for mental healthcare have been filed in Trenton. Revocation A declarant has a general right to modify, reaffirm, revoke or suspend a PAD. Revocation was of considerable concern to the advocacy community. A declarant may not revoke or change the directive when incapacitated unless he or she has specifically reserved that right in the written document. If the declarant does exercise the right to revoke, he or she is warned that the document has no binding effect. The clinicians will ignore the PAD and treat the patient according to their best medical judgment. Furthermore, the healthcare professionals will no longer have the authority to contact the declarant s proxy, and the designated representative will no longer have the authority to make decisions on the patient s behalf. Duration Declarants may choose to specify an expiration date, although one is not necessary. Conversely, traditional living wills do not generally have a stated expiration date. A legislative safeguard provides that if the patient is incapacitated at the time the advance directive for mental healthcare expires, the document will remain in effect until capacity is regained. Witnesses The act creates a two-tiered system of 18 NEW JERSEY LAWYER April 2007

19 witnesses. Only one witness is required if he or she is a disinterested person. However, if the first witness is related to the declarant, entitled to any part of the declarant s estate, or the operator, administrator or employee of a rooming or boarding house or residential healthcare facility in which the declarant resides, than the second signatory must be an independent person. This provision differs from the Living Will Act, which provides for two witnesses, a notary or an attorney. The other witness provisions are consistent with the Living Will Act. The witness is asked to attest that the declarant appears to be of sound mind and not under duress, fraud or undue influence. Such a blanket assertion may prove to be a problematic requirement in the execution of a psychiatric advance directive. Lay witnesses may not have the ability to make an accurate assessment. No notarization of the document is necessary to be valid, which also is consistent with the Living Will Act. The Future In Sept. 2006, preliminary rules and regulations governing this act were promulgated by NJDMHS after consultation with the commissioner of health and senior services. 15 Initial written comments were due Nov. 4, The rules are intended to encourage the use of advance directives for mental healthcare, assure they are executed, recorded, and invoked appropriately, and establish a voluntary registry. The goal is to assure universal standards for implementation in New Jersey so the rules are useful to both consumers of mental health services and service providers who must abide by them. The psychiatric facilities will be required to inform current patients of the availability of a PAD and require that individual service plans (ISPs) include discussions of advance directives for mental healthcare. In addition, the psychiatric facilities will be obligated to train their staff about their responsibilities under the act, including the requirement that screeners consult the NJDMHS registry. The anticipated social benefit of these rules is to encourage patient participation in treatment, whereas the economic impact of the rules will enable more individualized, efficient treatment planning and implementation. This will reduce the number of more expensive and restrictive psychiatric hospitalizations. The new rules will impose some additional reporting, recordkeeping and compliance requirements on the facilities. This will likely include the creation of a dispute resolution process. The main purpose of these rules is to standardize the use of advance directives for mental healthcare, and to foster the self-directed recovery of persons who have mental illnesses. The goal of the New Jersey Advance Directives for Mental Healthcare Act is to empower the patient to improve communication regarding treatment options and influence decisions about care during a psychiatric predicament. By executing a valid advance directive for mental healthcare, the patient s objective is to increase the likelihood that his or her treatment preferences will be honored. The clinician s perceived legal and ethical dilemma may create potential conflicts. On the one hand, a provider is obligated to abide by the patient s stated wishes regarding acceptance of recommended treatment, but on the other hand, a provider is charged with the duty of providing specific treatment consistent with a best interest of the patient standard. Such a conflict may be exacerbated in the behavioral health arena. A person who suffers from psychiatric disorders may at times have significantly impaired judgment and limited ability to recognize the gravity of his or her condition and the need for intervention. Whether advance directives for mental healthcare prove to be a help or a hindrance in resolving such conflicts remains to be seen. Endnotes 1. N.J.S.A. 26:2H-102 et seq. 2. N.J.S.A. 26:2H-53 et seq. 3. Advance Directive for Mental Health Care Act P.L c Senate Committee Statement, 211th Legislature, NJ S. Comm. State, S.B. 2369, May 23, National Resource Center on Psychiatric Advance Directives, a collaboration between the Dept. of Psychiatry and Behavioral Sciences, Duke University Medical Center and the Bazelon Center for Mental Health Law 7. ORS et seq. 8. N.C. Gen Stat. 122C U.S.C (1990) dmhs/advance N.J.S.A. 30: et seq N.J.A.C. 10:32 et seq. Terri Roth Reicher is the bioethics attorney for Chilton Memorial Hospital, and maintains a commercial alternative dispute resolution practice in northern New Jersey dealing with civil matters including healthcare disputes. She taught healthcare law at Thomas Jefferson University School of Medicine and William Paterson University Graduate School of Nursing, and currently serves as a consultant to the William Paterson University IRB and teaches at its Cotsakos School of Business. NEW JERSEY LAWYER April

20 Effective Discovery and Use of Mental Health Records: Statutory, Regulatory and Strategic Considerations by Christopher R. Barbrack Sciences that are most familiar to attorneys tend to be constrained by specific principles and rules. Adherence to these principles and rules by practitioners for example, orthopedists, neurologists, architects, engineers and others does not preclude radically different interpretations of the same data. However, such interpretative differences usually fit within the framework of the applicable scientific rules and related scientific knowledge. Advocacy tends to amplify divergent opinions in forensic situations, usually in direct proportion to the science s immaturity and low level of empirical and conceptual development. frustrating and bewildering. Since MHPs are an entrenched part of the forensic scene in New Jersey and nationally, plaintiff and defense attorneys need to develop knowledge and skills to cope with them. This article discusses considerations and strategies for discovering and using confidential documents generated and maintained by MPHs in light of the Health Insurance Portability and Accountability Act (HIPAA) 2 and Crescenzo v. Crane. 3 Objective Data are Essential to an Effective Discovery Strategy Effective discovery involving adverse MHPs is greatly facilitated by forcing the inquiry onto an objective level. Objectivity offers the best opportunity to rein in the MPH who is inclined to testify to almost anything. In the mental health field, a modicum of objectivity can be established with records that are made and kept by MHPs: 1) clinical notes, and 2) standardized psychological test data. Obtaining Confidential Clinical Notes 4 Unlike most business records and similar documents, mental health records are confidential and privileged. 5 In litigation, this status creates tension between the belief that just legal outcomes require unlimited access to evidence and individual privacy rights. Personal injury attorneys and others are very familiar with N.J.S.A. 2A:84A-22.4, to wit: In the forensic mental heath environment there are few universal rules, a situation that permits extraordinary latitude in what mental health professionals (MHPs) do and say. In the mental health field there is no uniformity in the application of diagnostic procedures, no uniformity in the interpretation of clinical data, and very little reliance on the extant empirical knowledge base, sparse as it is. 1 Therefore, deposing a MPH can be There is no privilege under this act in an action in which the condition of the patient is an element or factor of the claim or defense of the patient or of any party claiming through or under the patient or claiming as a beneficiary of the patient through a contract to which the patient is or was a party or under which the patient is or was insured. If a privileged medical record is no longer privileged by 20 NEW JERSEY LAWYER April 2007

21 virtue of the filing of a complaint for psychological injuries, this statutory language would seem to open the door for an attorney to request or demand copies of all medical records from all professionals who have treated a plaintiff, without authorization from the patient. This is not the case. The privileged records, or parts of them, may be obtained eventually, but a demand letter or subpoena alone may not suffice. Obtaining mental health records requires meeting even more stringent requirements. The line of New Jersey cases bearing on the issue of access to health records begins in 1962 with Hague. 6 New Jersey case law contains many more recent cases bearing on the discovery of mental health records. 7 The lessons from all of these cases are virtually the same: 1) mental health records are treated very differently from all other generic health records, and are accorded considerable protection, 2) discovery of mental health records requires proper authorization from the patient, and 3) obtaining these records in the absence of such authorization requires intervention by the court. Attorneys occasionally step over the line by attempting to obtain mental health records without fulfilling the proper prerequisites. This practice is reinforced by MHPs who may improperly release confidential mental health records, often in response to a subpoena that seems to bear enough authority on its face to permit them to do so. Matrimonial attorneys may be the worst offenders, serving subpoenas without a signed authorization to obtain confidential mental health records. The common rationale for this conduct is twofold: 1) it is the attorney s job to protect the children in the case, and 2) the court would eventually require the release of the records; so, no harm no foul. Both of these positions are incorrect. 8 It has been established that confidential mental health records, or at least some parts of them, might be discovered and used when children are in jeopardy. 9 In Kinsella, the court noted with approval the standards set out by the American Psychiatric Association: courts should make the following findings before ordering disclosure: (i) the treatment was recent enough to be relevant; (ii) substantive independent evidence of serious impairment exists; (iii) sufficient evidence is unavailable elsewhere; (iv) courtordered evaluations are an inadequate substitute for disclosure; (v) given the severity of the alleged disorder, communications made in the course of treatment are likely to be relevant. Once the court has made the necessary findings, it must engage in the requisite balancing process before ordering the release of treatment records. 10 The essential phrase in all of the above is the court. Balancing the interests involved in providing access to all or some portion of confidential mental health records is within the province of the court s authority, and nowhere else. Upon application, the court will consider various factors; for example, the three-part test in In re Kozlov. 11 Following this kind of analysis, the court may order an in camera review, after which it may release the entire record, redact the record before releasing it, release the record subject to one or more protective orders, 12 or deny access to the entire record. None of these outcomes can be presumed a priori. It is worthwhile to try persuading adversaries to agree to have their clients voluntarily release mental health records. A useful gambit is to propose a consent protective order designed to assuage the party s and the MHP s anxieties over disclosure. 13 A possible approach involves respectfully acknowledging that the record is privileged, and that the entire record might not be relevant to the case. This would allow the adversary to redact the record according to some criteria such as dates or comments by others participating in the treatment as a prelude to recommending that the client authorize a redacted record. There also may be agreements about who would not have access to the record, and limits on how the record could be used and disposed of after the case is resolved. This takes time, and requires some patience. It may be too much for attorneys who are convinced they will get the records anyway. While this may or may not come about, the getting the records anyway approach can be expensive, time-consuming and unduly confrontational. If a conciliatory approach is ineffective, the option of filing a motion to compel discovery remains. Attempting to obtain confidential mental health records by subpoena without proper patient authorization or court order not only is a mistake, but also may expose the attorney to malpractice liability where a lawsuit may be filed by the offended adverse party. 14 This bears repeating: You may be sued on various grounds 15 by the adversary if you try to obtain confidential mental health records in an improper fashion. Discovery Restraints Imposed by State Regulations and Federal Law Prior to the enactment of HIPAA, discovery of clinical notes prepared by MHPs was governed almost exclusively by various state regulations and case law. Fundamentally, these regulations required: 1) the MPH to keep some kind of record of clinical contacts, and 2) the patient s written authorization prior to the release of information. HIPAA distinguishes between protected health information (PHI) and what are known as psychotherapy notes. These are: NEW JERSEY LAWYER April

22 notes recorded (in any medium) by a health care provider who is a MPH documenting or analyzing the contents of conversation during a private counseling session or a group, joint or family counseling session and that are separated from the rest of the individuals medical record. 16 This is a very broad and vague definition that could cover almost anything; however, HIPAA also specifies what psychotherapy notes are not, i.e. information pertaining to: medication prescription and monitoring, counseling session start and stop times, the modalities and frequencies of treatment furnished results of clinical tests, and any summary of the following items: diagnosis, functional status, the treatment plan, symptoms, prognosis and progress to date. 17 HIPAA requires that psychotherapy notes be kept physically separate from the rest of the record. Many MHPs do not adhere to this rule, and keep only one undifferentiated record. Therefore, it is prudent to assume that the requested record will contain psychotherapy notes and to prepare a proper authorization for the client to sign. At this time, it is not clear that failure to separate psychotherapy notes from the remainder of the record results in a loss of the added protection for psychotherapy notes. The Center for Medicare/Medicaid Services has provided 18 that the practitioner should be given an opportunity to extract information from a record in order to substantiate a claim for reimbursement from a record that also contains psychotherapy notes. However, if a MHP does not keep separate psychotherapy notes, untangling psychotherapy notes from regular progress notes may be virtually impossible. The authorization required by HIPAA is more detailed and specific than the consent form used by many attorneys to obtain medical records. A consent is a simple, highly general document, that is signed by an individual or personal representative of an individual, granting permission for PHI to be used or disclosed. 19 An authorization is defined in HIPAA 20 as having the following characteristics: 1. a description of the information to be disclosed that identifies the information in a specific and meaningful fashion, 2. to make requested use of disclosure, 3. the name or other specific identification of the person(s) or class of persons to whom the covered entity may make the requested use or disclosure, 4. a description of each and every purpose of the requested use or disclosure, although the statement at the request of the individual is a sufficient description of the purpose when the individual initiates the authorization and does not, or elects not to, provide a statement of the purpose, 5. an expiration date of the event that relates to the individual or purpose of the use or disclosure, and 6. the signature of the individual and the date. An authorization form should also include a statement that the individual has a right to revoke the authorization in writing. For the sake of full disclosure, this required statement could be supplemented by a statement to the effect that information provided to a MPH is confidential and will not be disclosed without the specific authorization of the patient, and that treatment, payment, enrollment or eligibility for benefits may not be conditioned on the authorization. 21 Standardized Psychological Test Data 22 Surprisingly, HIPAA classifies test data as PHI, but not as psychotherapy notes. This means that such test data is not as protected as psychotherapy notes, and as such can be obtained by a signed consent. An authorization is not necessary. The main hallmark of standardized psychological tests is that they are objectively scored. Most of these instruments are paper and pencil tests whose items are endorsed as true or false. Scoring involves adding the number of each response. No matter how many times one scores an objective test, or who scores it, the results always should be exactly the same. These are indicators of the test data s reliability or consistency. The reliability of test items establishes a ceiling on the validity of test items. The validity of a test means that it measures what it intends to measure. 23 Objective IQ tests are reliable and valid for measuring IQ. Other objective tests, such as the frequently used Minnesota Multiphasic Personality Inventory (MMPI-2) and Millon Clinical Multiaxial Inventory (MCMI III), are reliable but vary in their validity. No matter how statistically reliable and valid a test score might be, once the MHP incorporates a score into a clinical impression, there is an inestimable degree of subjectivity that also is injected. Some would term this infusion of subjectivity clinical judgment, and others would call it subjective error or bias. National organizations such as the American Psychological Association and the National Association of Neuropsychologists have long supported the idea that such psychological tests are protected by copyright or as trade secrets. In order to understand this issue, a distinction is needed between test items and test responses. Owners of tests such as the MMPI and MCMI are quite vigilant in guarding the secrecy of their test items. This position can be successfully attacked, but there is no need to do so in most instances. The attorney should obtain the actual test responses so common scoring errors 24 can be checked. Standardized psychological test data 22 NEW JERSEY LAWYER April 2007

23 offer a trove of useful objective data and many opportunities for deposition and cross-examination questions. Most modern MHPs submit standardized test data to a company that scores and interprets the results by computer. Many MHPs have no idea how these scoring/interpreting programs work. The output from the computer can be voluminous. Many MHPs do not read (or understand) the entire output, and all MHPs select only parts of the computergenerated output for inclusion in their reports or oral opinions. By having tests rescored, and by pouring over the computer-generated output, the attorney almost always can find statements that contradict the MHPs opinions or place strong qualification on their conclusions. By asking simple questions about the test s psychometric properties (reliability and validity), the attorney can demonstrate that the MHPs do not understand the limits of instruments they use. Using Objective Data in Examinations of MHPs MHPs tend to conceptualize in big pictures or themes rather than in small analytic parts. The links between these large generalizations and the clinical notes and standardized test results are loose or virtually non-existent. Attorneys can use clinical notes and standardized test results to challenge the generalizations. The conclusions expressed orally or written in reports usually attract the most attention. Imagine conclusions as a tapestry, and imagine every sentence in a report as a different color thread. In a deposition or on cross, the idea is to find where each tapestry thread originates. Working backwards, the questioner asks for: 1) the bases in the notes or test data for each generalization, 2) the strength of the connection between the notes/data and the generalizations, and 3) alternative explanations for the notes/data. The questioning would go something like this: Dr., please find in your notes (test data) where there is evidence of this or that. The MHP may be verbally adept and have a ready answer for this. The next type of question is Dr., where in the literature is the support for the connection you just made? This kind of questioning is very focused and specific. It is based on objective data, and always references back to empirical data as the touchstone. Uncovering the fact that conclusions are not based on, or conflict with, clinical notes or standardized test data exposes the MHP s subjective biases, identifies areas for challenging the MHP s credibility, and begins to lay the groundwork for limiting or excluding his or her reports or testimony as net opinions. 25 Conclusion Lack of familiarity with mental health data should not deter an attorney from engaging in assertive questioning. Focusing on objective data will help the attorney pierce through the rhetorical devices used by mental health practitioners and experts. Endnotes 1. Barbrack, C.R., Beyond the Guessed Interests of the Child. The Newsletter of the Carrier Foundation, Belle Mead, N.J., C.F.R et seq. 3. Crescenzo v. Crane, 350 N.J. Super. 531 (App. Div. 2002). 4. This article does not consider issues related to HMOs and other thirdparty payors trying to obtain confidential mental health records where restrictions may be more stringent, especially for notes prepared by New Jersey-licensed psychologists the insurer can never obtain even with the client s authorization. N.J.A.C. 13: et seq. 5. N.J.R.E. 505, 510, Hague v. Williams, 37 N.J. 328 (1962). 7. Kinsella v. Kinsella, 150 N.J. 276 (1997); Runyon v. Smith, 163 N.J. 438 (2000). 8. Schepard, A. Divorce Lawyers Professional Responsibility Obligations to the Children, N.J. Law Journal, Aug. 14, Jennings v. Lathrop, WL , App. Div., unreported, (2006). 10. See endnote In re Kozlov, 79 N.J. 232 (1979). 12. Common protective orders restrict parties access to the records, prevent children from having access to the records, or restrict the uses to which a record might be put. 13. Make no mistake, MHPs tend to perceive requests for confidential information as acts of hostility. The various professional groups educate their members regarding how to counteract this hostility. See Strategies for Private Practitioners Coping with Subpoenas or Compelled Testimony for Client Records or Test Data. Professional Psychology: Research and Practice, 37, (2006). This article was prepared by the Committee on Legal Issues of the American Psychological Association. 14. See endnote A successful legal malpractice lawsuit will require proving that the third-party plaintiff relied on the adversary attorney (Hawkins v. Harris, 141 N.J. 207 (1995). Lacking proof of reliance, the third-party plaintiff may proceed with other elements in the complaint, including invasion of privacy, defamation, and abuse of the legal process. 16. PHI is an overarching term. Progress notes such as the date of treatment and start-stop times of sessions are subsumed under PHI, as are psychotherapy notes. The psychotherapy notes subset receives greater protection than any other PHI. PHI is individually identifiable health information that is transmit- NEW JERSEY LAWYER April

24 ted by, or maintained in, electronic media or any other form or medium. This information must relate to: 1) the past, present, or future physical or mental health, or condition of an individual; 2) provision of healthcare to an individual; or 3) payment for the provision of healthcare to an individual. If the information identifies or provides a reasonable basis to believe it can be used to identify an individual, it is considered individually identifiable health information. 45 C.F.R C.F.R Center for Medicare/Medicaid Services (CMS) Advisory (Jan. 2005). This relatively minor advisory contains many strategic possibilities for attorneys who defend insurance fraud claims C.F.R C.F.R. 508 (c)(1) C.F.R. 508 (c)(2). 22. Not all standardized psychological tests are objective tests. Non-objective tests would include the Rorschach Ink Blot Test, the Rotter Incomplete Sentence Blank, the Human Figure Drawing Test, the Thematic Apperception Test and others. Interpretation of responses to these tests is about as freewheeling as anything in mental health practice. 23. These terms are frequently confused. Reliable test data may or may not be valid but unreliable test data can never be valid. This is a mathematical fact. 24. These include: 1) inaccurate data entry for computer scoring, 2) failure to take account of double endorsements (true and false) of items, 3) failure to take account of omitted responses, and 4) use of improper norms. 25. Creagna v. Jardal, 185 N.J. 345 (2005). Christopher R. Barbrack is a Ph.D. licensed psychologist. He has practiced personal injury litigation and consultation since graduating from the University of Pennsylvania School of Law in He is a solo practitioner in Princeton. 24 NEW JERSEY LAWYER April 2007

25 The Increasing Use of Arbitration and Mediation in Adjudicating Healthcare Cases by Katherine Benesch Between 1996 and 2002, total arbitration filings reported by the American Arbitration Association (AAA) more than doubled. In its 2003 survey of big-case litigators, the American Lawyer concluded that, arbitral bodies have become a routine forum for bet-the-company disputes. 1 Arbitration and mediation have become increasingly popular as a means to resolve disputes between healthcare providers, payors, managed care plans and other companies in the healthcare industry. In long-term care, consumer complaints are often filed in arbitration or mediation only. There are many reasons that alternative dispute resolution (ADR) has gained widespread acceptance as a means to resolve both simple and complex problems in the healthcare arena. These include the duration, cost and unpredictability of a trial, the complexity of the technical issues involved in many healthcare cases and the confidentiality afforded to mediation and binding arbitration. Recently, arbitrators in Illinois rejected a health plan s claims in a contentious antitrust dispute, in which the plan had argued that providers violated state and federal antitrust laws in their negotiation of contracts. 2 As this case reveals, major commercial healthcare disputes are being resolved outside of courts and administrative agencies. In many instances, the actions of the parties are governed by a contract that mandates binding arbitration. This is most frequent with managed care network and payor agreements. While some cases are filed in state or federal court and diverted to ADR, many providers and payors never see a courtroom. On the other hand, healthcare consumers are in court frequently over the validity of mandatory arbitration clauses in contracts for health services. This is occurring both in long-term care and in managed health plan agreements, where courts express concern with the fairness of the parties bargaining positions at the time the contract is signed. While courts themselves are using ADR mechanisms with increasing frequency, healthcare cases filed in state or federal court may be resolved by ADR neutrals (arbitrators and/or mediators) experienced in healthcare through private dispute resolution services. With the consent of the parties, courts refer healthcare cases to private mediators and services. Where an agreement to arbitrate is contained in a written contract signed by both parties, and one party seeks adjudication by the court, most federal courts return disputes to arbitration for resolution. 3 State and Federal Statutes, Regulations and Guidelines The rules that apply to a case in ADR depend on the forum and/or the ADR service through which the dispute is being resolved. Cases referred from federal or state court must be arbitrated or mediated under the rules of the particular court, statute and/or service in which the case is filed. For example, cases administered by the AAA are governed by the AAA Commercial Arbitration Rules and Mediation Procedures. If a contract specifies which state law will be applied, however, the state law governing the arbitration and/or mediation process may be used in the absence of specific rules set forth by the private ADR service. Strict rules of evidence do not apply in ADR. New Jersey has statutes and rules of court that govern arbitration and mediation. In New Jersey, the rules governing NEW JERSEY LAWYER April

26 arbitration and mediation through the federal courts can be found in the L. Civ. R for arbitration and L. Civ. R for mediation. State courts in New Jersey have adopted the Uniform Arbitration Act (UAA) 4 and the Uniform Mediation Act. 5 Of importance is the legislative statement that the purpose of the adoption of the UAA in New Jersey is to advance arbitration as a desirable alternative to litigation. 6 A number of other statutes between healthcare providers and payors mandate ADR in specific types of disputes. In New Jersey, the court-based ADR programs involving general contract and personal injury actions are governed by the New Jersey Alternate Procedure for Dispute Resolution Act. 7 At the trial court level, New Jersey courts have their own complementary dispute resolution (CDR) program governed by its own court rules. 8 The CDR program rules set forth definitions of various ADR procedures, the rules under which the court-based programs will function, as well as qualifications for arbitrators and mediators who may serve on the court-based roster. While the Federal District Court for the District of New Jersey has its own local rules, arbitration cases in the federal system, and/or where interstate commerce is involved, will likely be governed by the Federal Arbitration Act (FAA). 9 The FAA is broad in scope. It reflects a liberal federal policy favoring arbitration agreements, and...creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate. As a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. 10 The United States Supreme Court has held that the FAA applies to all arbitrations that involve interstate commerce. 11 Where this issue arises, most courts determine that activities in healthcare constitute interstate commerce. 12 The FAA has been held to apply equally in federal and state courts, and to pre-empt contrary state law. 13 In a dispute involving health maintenance organizations (HMOs), however, state insurance law, and not the FAA, may control. 14 Often the court order referring a case to mediation will set forth the amount of time the parties and the mediator have to resolve the case. If it is not settled within this time period, the case will revert to the regular litigation process. Under New Jersey law, the court may stay the action for as long as it takes to resolve the case in ADR (as provided by the terms of the parties contract) unless the party seeking a stay is already in default. 15 For cases filed in United States District Court, the time allowed for ADR will depend on the specific judge to whom the case is assigned. Federal judges will stay the court proceedings for a specified time period, to allow the ADR process to take place. This time limit, in fact, does encourage the parties to resolve the case. For resolution of specific types of healthcare issues, a number of New Jersey statutes and regulations contain provisions authorizing or requiring some type of ADR and/or hearing process. The Health Care Carrier Accountability Act, 16 for example, authorizes a court, with the plaintiff s consent, to employ ADR methods, including, but not limited to, mediation and arbitration in place of a hearing. 17 Adjudication under this act, whether by a court or in ADR, is to determine whether an organized delivery system or carrier was negligent in the denial or delay of the approval of medically necessary covered services. 18 Other examples include hearings for provider terminations from an HMO, 19 and a complaint and appeal system for members of HMOs. 20 On Jan. 12, 2006, Acting Governor Richard Codey signed into law the Health Claims Authorization, Processing and Payment Act, which became effective on July 11, Health insurers, consumers and providers in New Jersey are required to submit healthcare claims payment and utilization management disputes to binding arbitration under this new statute and amendments to related statutes and regulations. Under amendments to the Health Care Quality Act, a healthcare appeals program is established. 22 Types of Healthcare Cases Resolved Successfully Through ADR ADR is particularly well-suited to the resolution of healthcare disputes, and its procedures are being used frequently by large healthcare companies and institutions, as well as individual providers. As noted above, ADR processes may be mandated by statute, as well as by state and federal courts. Other organizations are known for their voluntary dispute resolution services for healthcare problems, and are often used when a contract requires mediation and/or binding arbitration. The AAA, Judicial Arbitration and Mediation Services and the American Health Lawyers Association Alternate Dispute Resolution Service are three of the most widely known services, which provide lists of qualified individuals who act as arbitrators and/or mediators to decide healthcare cases. Some of the types of healthcare matters decided successfully through ADR processes include: 1. Managed care contract disputes between providers, payors, consumers and management companies involving contract interpretation and/or reimbursement issues; 2. Employment contract disputes between physicians and their employers, including covenants not to compete; 26 NEW JERSEY LAWYER April 2007

27 3. Medical staff, credentialing and peer review disputes; 4. Shareholder disputes within physician practices; 5. Disputes involving healthcare joint ventures; 6. Contract disputes within medical practices and/or with vendors to healthcare facilities; 7. Disputes involving the dissolution of medical practices; 8. Contested guardianship disputes; 9. Medical necessity disputes; 10. Long-term care quality of care and billing issues; and 11. National and international contract disputes involving pharmaceutical companies, research and clinical trials of new drugs. In addition to the matters listed above, medical malpractice cases increasingly are being handled in ADR forums. 23 As noted above, major bet-thecompany commercial disputes in healthcare are frequently decided in arbitration. Use of Experts in Healthcare Arbitration Very often the subject of arbitration or mediation in a healthcare case involves convoluted contractual relationships between parties and third parties, and technical calculations of costs and charges. As in litigation, experts may be used by the parties in two ways: 1) as consultants to assist counsel behind the scenes to resolve technical issues; and/or 2) as experts to present testimony or information on administrative relationships and/or calculations of costs, charges or damages. In addition, neutral experts may be hired to advise the arbitrator in analysis of technical claims. This is particularly important in cases involving complex reimbursement formulas and/or Medicare/ Medicaid calculations. If this is done, all parties to the proceeding should review the qualifications of the expert proposed by the arbitrator and approve the individual who will be hired. The role of an expert to advise the arbitrator must be carefully circumscribed. While the expert may sit in on all of the arbitration hearing sessions, this person should not be allowed to participate in the arbitration itself. The reason for this is that an expert may find issues, which the parties have not raised on their own, and these should not enter into the proceeding. An accountant who is an expert in managed care financing and reimbursement methodologies can provide invaluable assistance to the arbitrator in analyzing whether or not appropriate reimbursement was made pursuant to a contract. This is particularly true where there are complex reimbursement formulas and/or questions about how costs and expenses were arrived at and accounted for. Also, there may be healthcare accounting regulations applicable to an analysis of contract issues. Applicability of HIPAA to Arbitration/Mediation The Health Insurance Portability and Accountability Act of 1996 (HIPAA) 24 has been raised as a defense and/or an excuse to prevent arbitration in a healthcare case from moving forward. This line of reasoning holds that to proceed with the arbitration process where patient records are part of the evidence in the case violates the confidentiality of the patient s individually identifiable health information protected by HIPAA. This argument, however, ignores the explicit exception to HIPAA nondisclosure for protected health information during the course of litigation or administrative proceedings. 25 A covered entity may disclose protected health information in the course of any judicial or administrative proceeding in response to an order of court or administrative tribunal, a subpoena, discovery request or other lawful process if satisfactory assurance or a qualified protective order is obtained by the party seeking the information. As of the date of this writing, this author has found no cases on the issue of whether this exception applies to arbitration or mediation proceedings. Nonetheless, at least one commentator has noted that,...it seems unlikely that the Department of Health and Human Services would take the position that the litigation exception does not apply to alternate dispute resolution procedures, In addition, a covered entity may use or disclose protected health information for payment purposes. 27 Thus, production of protected health information in any arbitration or mediation in which payment is the issue does not present a HIPAA problem. Even if it were held that the litigation exception to HIPAA does not apply to arbitration or mediation, this problem can be resolved. It may be possible to redact from any patient records the individual identifying information (i.e. to de-identify the patient in the material used as evidence). It also may be possible to aggregate the material from patient records, so that no individual identifying information is used in the case. Litigation Over Agreements to Arbitrate Agreements requiring a party to arbitrate and give up broader rights to litigate in court or secure damages may not be upheld if they are found to be contracts of adhesion or violative of rights secured by a party under state statute. Recently, a Florida appeals court ruled that the circumstances surrounding the manner in which the plaintiff was required to sign an arbitration provision before her father was admitted to a nursing home were procedurally and substantively unconscionable. The agreement denied the patient rights to NEW JERSEY LAWYER April

28 which he was entitled under Florida statutes namely non-economic damages, punitive damages and attorneys fees as well as access to discovery to prove statutory violations. 28 California has been the site of much litigation over the validity of mandatory binding arbitration in consumer healthcare cases. In 1997, the California Supreme Court found that a company s mandatory in-house arbitration system unduly delayed claims from patients, and was biased in the company s favor. 29 Similarly, a California appellate court held that an arbitration clause located three paragraphs before the final signature line on a health plan enrollment form, and written in the same font and size as every other paragraph in the agreement, was unenforceable under state law. 30 Nonetheless, a different California appeals court found that there was no authority in the federal or state constitutions to uphold the plaintiff s claim that an insured has a constitutional right to choose between arbitration and a jury trial in the context of a group health insurance plan, and the court authorized the plaintiff s waiver of a jury trial. 31 The Mississippi Supreme Court found that the agreement to arbitrate in the admissions agreement for a nursing home was a contract of adhesion. Nonetheless, it was not unconscionable, in that the patient who signed was competent, had knowingly executed the document with his daughter present, and was given a choice about whether or not to sign. 32 In an interesting malpractice case, the Texas appeals court found that the trial court had wrongfully denied a chiropractor s request for arbitration. In this case, the chiropractor had been sued by his patient for gross negligence. The chiropractor presented a valid arbitration clause in the contract with his patient, and the plaintiff s claims were within the scope of the agreement. The FAA governed the written arbitration clause, as the transaction between the chiropractor and patient was found to involve interstate commerce. Once a valid arbitration clause is presented, the court must compel arbitration, as long as the claims made are covered under the arbitration clause. 33 Advantages and Disadvantages of Arbitration and Mediation Arbitration In many types of healthcare cases, arbitration is successful because the parties want a decision quickly, and do not want to spend the time and money in court. Further, many healthcare contract disputes involve providers and/or insurers who want to continue to do business with one another after the case. Thus, they do not want to engage in the hostile and adversarial nature of the litigation process, which could result in a loss of their ability to conduct business together in the longer term. Publicity is another factor. Private arbitration and mediation are not subject to the public nature of a courtroom proceeding. Thus, many defendants prefer to have their cases resolved in an ADR forum, and settled through a confidential settlement document. Mediation Mediation offers the parties the advantage of preserving business relationships. While mediation has a number of advantages, it is not binding, and requires the willingness of the parties to reach a solution. If one party desires to draw out the process, and/or is unwilling to compromise, mediation will not be successful. The mediator cannot compel participation or impose a settlement. In mediation, however, the parties are able to control the process much more than in litigation and/or arbitration. The parties are able to manage how the case proceeds, how long it will last, and select the mediators. In complex healthcare disputes, mediation can be more productive than litigation if the mediators are knowledgeable in healthcare regulatory matters and experienced with the mediation process. If mediation fails, the parties may decide to proceed in binding arbitration. Conclusion Healthcare disputes of all types and for all amounts of money are being resolved increasingly through ADR. Most large healthcare disputes, however, are not arbitrated or mediated through the court process, even if the case has already been filed in state or federal court. Rather, the parties seek the ADR services of healthcare lawyers trained and experienced in arbitration and mediation. The reason for this is that the issues in a large reimbursement, managed care or healthcare contract dispute are often so convoluted they are not easily understood by lawyers or judges who are not knowledgeable about the types of factual issues and/or state and federal statutory and regulatory schemes involved. Further, arbitration and mediation often are successful in healthcare where the arbitrator/mediator assists the parties in reaching a creative solution to legal problems. This cannot be done without knowledge of the operations, functions and federal and state regulation of providers and other multi-faceted entities within the healthcare industry. Endnotes 1. Lawrence J. Mills and Thomas J. Brewer, A Courtroom Lawyer s Guide to Arbitration, 31 Litigation 42 (Spring 2005). 2. In re Arbitration between United Healthcare of Illinois, Inc. and Advocate Health Care Network, AAA, No Y , Nov. 18, See, Brandon, Jones, Sandall, Zeide v. Medpartners, 312 F.3d 1349 (11th Cir. 2002). 28 NEW JERSEY LAWYER April 2007

29 4. N.J.S.A. 2A:23B-1 to 2A:23B N.J.S.A. 2A:23C-1 to 2A:23C S , 2nd. Sess., at 1 (N.J. 2002). 7. N.J.S.A. 2A:23A-1 et seq. 8. R. 1:40-1 et seq U.S.C. 1 et seq. (2001). 10. Moses H. Cone Mem l Hosp. v Mercury Constr. Co., 460 U.S. 1 (1983), quoted in Mitsubishi Motors Corp. v. Soler Chrysler- Plymouth, Inc., 473 U.S. 614 (1985). 11. Id. 12. Morrison v. Colorado Permanent Medical Group, P.C., 983 F. Supp. 937, (D. Colo. 1997); Toledo v. Kaiser Permanente Medical Group, 987 F. Supp. 1174, 1980 (N.D. Cal. 1997). 13. Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265 (1995). 14. See, Smith v. Pacificare Behavioral Health of California, Inc., 93 Cal. App. 4th 139 (2001). 15. N.J.S.A. 2A:23A N.J.S.A. 2A:53A N.J.S.A. 2A:53A N.J.S.A. 2A:53A-33(a). 19. N.J.A.C. 8: N.J.A.C. 8: N.J.S.A. 17B:30-48 to 17B: N.J.S.A. 26:2S-11 and 26:2S-12. See also, N.J.S.A. 2A:53A See, Carl Oxholm III, A Whole New Ball Game, The Pennsylvania Lawyer 24 (May-June, 2005) U.S.C. 1320d C.F.R (e). 26. Scott D. Stein, What Litigators Need to Know About HIPAA, 36 J. Health Law 433 (Summer 2003) C.F.R (a)(1)(ii). 28. Prieto v. Healthcare and Retirement Corp. of America, Fl. Dist. Ct. App., No. 3D , Dec. 21, Engalla v. Permanente Medical Group, Inc., 15 Cal. 4th 951 (1997). 30. Robertson v. HealthNet of California, Inc., Cal. Ct. App., No. A106879, filed Aug. 31, 2005, certified for publication Sept. 28, Viola v. California Dept. of Managed Health Care, 133 Cal. App. 4th 299 (2d Dist. 2005). 32. Vicksburg Partners, L.P. v. Stephens, 911 So.2d 507 (Miss. 2005); Vicksburg Partners, L.P. v. Stephens, No CA SCT (Miss. Sept. 22, 2005). 33. Kroupa v. Casey, No CV, 2005 Tex. App. LEXIS (Ct. App. 1st Dist. Dec. 8, 2005). Katherine Benesch is with Duane Morris, LLP, in Princeton, and practices in the areas of healthcare law and litigation, with a particular emphasis on state and federal regulatory matters, fraud and abuse, managed care, faculty practice plans and employment and licensing matters. She is an arbitrator for the American Arbitration Association, is certified as a healthcare mediator for the American Health Lawyers Association and is a former chair of the NJSBA Health and Hospital Law Section. NEW JERSEY LAWYER April

30 The Impact of the Community Healthcare Assets Protection Act Upon Consumers Rights by Mark I. Siman and Renée Steinhagen The Nov signing into law of the Community Healthcare Assets Protection Act (CHAPA) 1 by Governor Christie Whitman concluded a more than four-year legislative effort to provide not only mandatory state statutory oversight of nonprofit hospital transactions, but also to ensure extensive public participation in those acquisitions. 2 In the five years preceding CHAPA s enactment, the attorney general s office reviewed more than two dozen nonprofit healthcare transactions in its well-established common law role as the protector of the public interest in a charitable trust or charitable corporation. 3 The process, however, was not transparent and accessible to healthcare consumers. In line with New Jersey s liberal standing requirements, the courts have recognized the role of private enforcement of charitable trusts. 4 Despite this recognition, however, there was little public influence upon the transactions under review. 5 These transactions represented the spread into New Jersey of the national phenomenon of conversions of nonprofit healthcare entities to for-profit status. The national trend was the single most intensive and voluminous conversion of charitable assets in the history of the United States, according to a resolution adopted in 1998 by the National Association of Attorneys General (NAAG). 6 In New Jersey, the 1990s saw an increasing trend in mergers, acquisitions, and consolidations in the healthcare industry in general, and in the nonprofit hospital sector in particular. Most importantly, it was the collapse of the Health Plan of New Jersey (HIP) within a year of its lease of membership lists, providers, and offices to Pinnacle Health Plan (an out-of-state for-profit) that gave renewed impetus to the eventual enactment of CHAPA. It was this transaction, which in effect was a conversion that led legislators to appreciate the importance of notice to the public, an opportunity to review the terms of the acquisition, 7 and most importantly, a court hearing on whether the charitable assets of the nonprofit entity are properly protected upon disposition to another entity. CHAPA Requirements There is little doubt that the enactment of CHAPA gives healthcare consumers and patients a much greater opportunity to ensure that their concerns are considered when nonprofit hospitals decide to change ownership. 8 This empowerment is accomplished procedurally through a mandatory review process in which the public is afforded an opportunity to participate, and substantively through a process that aims to ensure that the full value of the nonprofit s assets are used solely for community-based, charitable health purposes. As a preliminary matter, CHAPA requires all nonprofit hospitals to provide notice to both the attorney general and the commissioner of health and senior services before they enter into an acquisition. 9 The transaction is then subject to the review of these two cabinet officials, but only after the holding of at least one public hearing, as described below. In addition, the acquisition must be approved by the New Jersey 30 NEW JERSEY LAWYER April 2007

31 Superior Court, which has the independent authority to analyze the transaction on its merits, and not simply review a final administrative agency decision. 10 Though it can be argued that attorney general review and approval by the superior court in a cy pres proceeding was always required prior to the passage of CHAPA, these prerequisites were not always sought or followed. CHAPA also includes several procedural requirements that specifically enhance public participation in the review process. These include: notice to the public of the proposed transaction, 11 availability for public inspection of all documents submitted by the applicant, 12 public participation at the public hearing, 13 along with the opportunity to submit written comments, 14 and legislatively mandated standing to consumers and other interested parties in the superior court proceedings. 15 This last provision facilitates consumer communication directly to the court when an interested person believes state officials have not adequately considered community concerns. Accordingly, it is the public s right to raise questions, review documents, make comments and appear in court that is deliberately designed to ensure accountability. This accountability did not exist before CHAPA, and is likely to ensure that hospital boards will give due consideration to the impact an acquisition will have on health services in the affected community, as well as whether the hospital s charitable assets are being properly handled. It is thus CHAPA s premise that in every proposed transaction, public involvement in a structured review procedure is critical to preserving the full value of a nonprofit s assets for appropriate charitable healthcare purposes. Despite the many superior aspects of CHAPA compared to model acts adopted by many other states, there remain several areas that require improvement, especially in the realm of public participation. For example, regulations 16 promulgated under California s conversion statute 17 indicate that every applicant must maintain a copy of the materials submitted to the attorney general in an appropriate reading room in the community being affected by the acquisition. These must be available for review by the public during normal business hours, and their location must be publicized. This is not the case in New Jersey, where consumers must travel to Trenton to review relevant documents. In addition, upon written request, and as soon as practical, the California Attorney General makes available to the public, free-of-charge, the documents (with limited exceptions) he or she has received. There is little doubt that significant copying costs in New Jersey limit accessibility to only those consumers with adequate resources for this purpose. California also enhances the public s entitlement to be involved with the transfer of charitable assets by requiring applicants to provide to the attorney general a CD-ROM in PDF format containing the information submitted to the attorney general under the regulations. This regulation is missing in New Jersey. Other states require a posting of the required filings on the Internet. Notwithstanding these potential procedural improvements, CHAPA also protects consumers interests through the imposition of substantive review criteria designed to protect the quality, availability and accessibility of healthcare services in the applicant s market. CHAPA provides general and specific criteria for the respective reviews required to be undertaken by the attorney general and the commissioner of health and senior services. In general, the attorney general, in consultation with the commissioner, must support the proposed acquisition if he or she finds it is in the public interest. 18 More specifically: The proposed acquisition shall not be considered to be in the public interest unless the Attorney General determines that appropriate steps have been taken to safeguard the value of the charitable assets of the hospital and to ensure that any proceeds from the proposed acquisition are irrevocably dedicated for appropriate charitable health care purposes; and the Commissioner of Health and Senior Services determines that the proposed transaction is not likely to result in the deterioration of the quality, availability or accessibility of health care services in the affected communities. 19 The statute goes on to list seven specific criteria for the attorney general to consider in reviewing all proposed transactions, 20 and supplements these with eight additional factors where the purchaser is either a for-profit or out-ofstate nonprofit entity. 21 From the commissioner of health and senior services perspective, CHAPA is clear. The commissioner cannot approve the acquisition unless he or she determines that the proposed transaction is not likely to result in the deterioration of the quality, availability or accessibility of health care services in the affected communities. 22 Under this criteria, the prior track record of the purchaser must be considered, as well as future plans for capital improvements, proposed consolidation or elimination of services, and many other factors. This is a stringent test to meet, and one that is specifically designed to protect consumers. In California, under a similar test, the for-profit buyer refused to commit to a certain level of charity care, as requested by the attorney general, and consequently unilaterally terminated the NEW JERSEY LAWYER April

32 proposed agreement. 23 From the attorney general s perspective, the most important specific factor to be considered in all proposed transactions is whether the acquisition proceeds will be employed for appropriate charitable healthcare purposes consistent with the nonprofit hospital s original objective. 24 Where the purchaser is a for-profit or out-of-state acquirer, the criteria that best protect consumers and their communities include whether the nonprofit hospital receives full and fair market value for its assets, 25 to what degree the nonprofit hospital attempted to carry out its mission and purposes by establishing appropriate criteria in deciding to pursue a conversion, and whether the nonprofit hospital considered the proposed conversion as the only or the best alternative in carrying out its mission and purposes. 26 Another important stage of the process often is the creation of one or more conversion foundations. When the acquisition involves an out-of-state or a for-profit entity, the attorney general, after consultation with the principal parties to the transaction, makes a determination regarding the amount of assets the nonprofit hospital must set aside as a charitable obligation, based on the full and fair market value of the hospital at the time of the proposed acquisition. 27 In this way, CHAPA ensures that the full market value of the hospital s charitable assets remains in the community in which it accrued and to which it was dedicated. This is an important protection for patients of community-based hospitals facing acquisition by out-of-state systems that often have the authority to transfer assets throughout their systems, thus removing them from the community in which they were generated. Significantly, on behalf of patients, CHAPA further establishes criteria for any newly created nonprofit foundation or existing charitable trust or foundation resulting from the charitable asset settlement that must be made as part of the proposed transaction. 28 The charitable mission and grant-making functions of any charitable entity that receives such a charitable asset settlement must be dedicated to serving the healthcare needs of the community historically served by the predecessor nonprofit hospital. 29 If implemented properly, this provision adequately protects the healthcare interests of the residents served by the selling hospital. In order to ensure independence from the buyer and satisfaction of the selling hospital s mission, the attorney general also must review and approve the broadly based governance of the charitable trust or the newly established charitable organization that receives the asset settlement payment. CHAPA explicitly sets forth that the assets of any such charitable entity must be independent of any influence or control by the acquiring entity, its directors, officers, trustees, subsidiaries or affiliates. 30 As the commentary to the NAAG Model Act stated: the Attorney General has a major responsibility in connection with the crafting of the articles of agreement, the bylaws and the mission statements, as well as the selection of the initial governing board of the new foundation; and public comment on these issues should be invited at the public hearing and in written comments. The establishment of a new healthcare foundation can be a major event in the history of charitable foundations in a state, and issues of affordability, accessibility, charitable mission, and duplication of existing healthcare services are legitimate topics for public comment. 31 (emphasis added) So here again, this time through the attorney general s review and control of the resulting foundation, the public is given an opportunity to be heard and to protect their interests as healthcare consumers in the event of the acquisition of a nonprofit hospital by either a for-profit entity or an out-of-state hospital. It should be noted that in the years following the consummation of the acquisition, the conversion trust or foundation must provide the attorney general with an annual report, including an audited financial statement and a detailed description of its grant-making and other activities. This report must be made available to the public at both the attorney general s office and the office of the charitable trust or organization. 32 Conclusion CHAPA constituted a milestone in advancing consumers and patients rights in New Jersey. Armed with ample opportunity to participate in the state s review of nonprofit hospital acquisitions and substantive standards strongly solicitous of community health needs, individuals and organizations seeking to represent the public s interests are able to hold hospital boards accountable to their concerns in protecting the charitable assets involved. CHAPA s ability to protect healthcare consumers by ensuring that the full value of the nonprofit s assets is used solely for communitybased, charitable health purposes in the event of an acquisition, also should apply in the case of nonprofit hospital closings, the authors believe. The authors feel the codification of the attorney general s role as enforcer of charitable trust is urgently needed when a hospital is closing and its remaining assets, including the physical facility, should be dedicated to serving the healthcare needs of the community in which those assets were generated. 33 Endnotes 1. N.J.S.A. 26:2H-7.10 et seq. 2. See Siman, The Community Health Care Asset Protection Act An 32 NEW JERSEY LAWYER April 2007

33 Analysis, 47 The Garden State Focus, 6 (Feb. 2001). 3. Passaic Nat. Bank, etc., Co. v. East Ridgelawn Cemetery, 137 N.J. Eq. 603, 608 (E. & A. 1946). 4. See City of Paterson v. Paterson Gen. Hosp., 97 N.J. Super. 514, (Ch. Div.1 967). 104 N.J. Super. 472 (App. Div. 1969), aff d 53 N.J. 421 (1969). 5. But see Alison Manolovici Cody, Note, Success in New Jersey: Using the Charitable Trust Doctrine to Preserve Women s Reproductive Services When Hospitals Become Catholic, 57 N.Y.U. Ann. Surv. Am. L. 323, 323 (2000)(discussing the 1999 merger of New Jersey s fourth largest city s only two hospitals Elizabeth General Medical Center and St. Elizabeth Hospital). 6. Commentary to the Proposed Model Act for Nonprofit Healthcare Conversion Transactions, reprinted in National Association of Attorneys General, Resolution Adopting Legislation on Conversion of Nonprofit Health Care Entities to For- Profit Status (Summer 1998). 7. HIP of New Jersey v. New Jersey Dept. of Banking & Insurance, 309 N.J. Super. 538 (App. Div. 1998)(HMO denied injunctive relief to prohibit public disclosure of such documents as the asset purchase agreement with the for-profit corporation nor the health services agreement with limited liability corporation). As the appellate court stated: The changing landscape of the medical profession and medical industry requires that the public, more than ever, has available to it those facts and information which will bear directly on their well-being and ultimately on the delivery of medical services. Included within the public s right and need to know is the element of cost, a critical and complex element of this ever-growing complex industry. HIP, with almost 200,000 members has been an important player in meeting the medical needs of the New Jersey public. The dramatic shift of assets from a nonprofit medical provider to a profit making entity requires close scrutiny by not only the Department but by the public as well. [309 N.J. Super. at ] 8. After Governor Whitman s conditional veto of an earlier version of the legislation that eventually became CHAPA, the Legislature concurred with her recommended action, and extended CHAPA to cover nonprofit acquisitions of nonprofit hospitals, as well as forprofit purchases. Thus CHAPA explicitly states that a proposed acquisition which effects a fundamental corporate change that involves transfer of ownership or control of charitable assets or a change of the nonprofit hospital s mission or purpose (N.J.S.A. 26:2H-7.11) falls within the scope of the statute. 9. N.J.S.A. 26:2H Ibid. 11. N.J.S.A. 26:2H-7.11(a)(1). 12. N.J.S.A. 26:2H-7.11(f). 13. Several reasons have been cited for allowing the public to be heard, including: 1) that there are many differing public interests such as potential beneficiaries of a foundation, persons served by different activities of a converting nonprofit hospital, or provider or plan employees; 2) public hearings provide state officials an opportunity to discuss and receive feedback on the implications of the proposal; and 3) the public process may encourage other bids for the hospital which can only serve to increase the price. Patricia A. Butler, State Policy Issues in Nonprofit Conversions, Health Affairs (March-April 1997), at 69, Ibid. 15. N.J.S.A. 26:2H-7.11(l). 16. Cal. Code Reg., tit. 11, Despite the mandatory direction in the statute (N.J.S.A. 26:2H-7.11(n)), the attorney general, in consultation with the commissioner of health and senior services, has never adopted any CHAPA regulations. 18. N.J.S.A. 26:2H-7.11(b). 19. Ibid. 20. N.J.S.A. 26:2H-7.11(c). 21. N.J.S.A. 26:2H-7.11(d). 22. N.J.S.A. 26:2H-7.11(b). 23. See discussion in Connecticut Attorney General s Proposed Final Decision in re Purchase of Sharon Hospital (Oct. 29, 2001), at 44; available at lib/ag/press_releases/2001/health/s hbrief.pdf. 24. N.J.S.A. 26:2H-7.11(c)(6). 25. In every acquisition, the public interest in these charitable dollars is safeguarded by a meaningful and structured review procedure, with public involvement to preserve the full value of a nonprofit s assets for charitable health purposes. 26. N.J.S.A. 26:2H-7.11(d)(1), (4), and (5). 27. N.J.S.A. 26:2H-7.11(g). 28. N.J.S.A. 26:2H-7.11(h). 29. Ibid. 30. N.J.S.A. 26:2H-7.11(h)(1). 31. Commentary to the Proposed Model Act for Nonprofit Healthcare Conversion Transactions, reprinted in National Association of Attorneys General, Resolution Adopting Legislation on Conversion of Nonprofit Health Care Entities to For- Profit Status (Summer 1998). 32. N.J.S.A. 26:2H-7.11(h)(3). 33. See Senate Bill No (introduced May 6, 2004), sponsored by Senator Richard Codey, requiring attorney general oversight of nonprofit hospital closures. NEW JERSEY LAWYER April

34 Mark I. Siman is a former New Jersey deputy attorney general who reviewed not only the first two CHAPA acquisitions but also reviewed more than two dozen other nonprofit healthcare transactions. He is currently a member of the New Jersey Appleseed Public Interest Law Center Board of Directors, and is engaged in private practice as a solo practitioner in Mount Laurel. Renee Steinhagen is the executive director of New Jersey Appleseed Public Interest Law Center, where she oversees its healthcare reform program. She has participated, on behalf of several community-based organizations, in several administrative and cy pres hearings regarding the merger or acquisition of nonprofit hospitals in New Jersey, and was a leading advocate in support of CHAPA and the statute governing a potential conversion of Horizon BCBS. 34 NEW JERSEY LAWYER April 2007

35 COMMENTARY New Jersey s Wrongful Death Law: A Matter of Economics by Michael J. Barrett Family relationships, such as husband and wife and parent and child, are the most fundamental elements of our society. When an individual loses a spouse, child or parent as a result of the tortious conduct of another, the emotional consequences are usually devastating. The common perception is that our law provides a remedy in those circumstances. To the contrary, as discussed below, New Jersey s Wrongful Death Act 1 prohibits any recovery for the emotional consequences caused by the loss of a close family relationship, and instead treats the death of a loved one as strictly a matter of economics. With the act s focus upon economics, substantial recoveries are possible with deaths involving high wage earners. However, with deaths involving children or seniors the act often provides relatively minimal or no remedy at all. Current Law There is no common law right to recover damages for the wrongful death of a family member. The sole legal remedy under such circumstances is provided under the Wrongful Death Act, which became law in Under the act, the action is brought in the name of the decedent s executor. If there is no will, the action is brought in the name of an administrator ad prosequendum, appointed by the court. 2 The act specifically limits the scope of recovery to pecuniary losses resulting from the death, together with hospital, medical and funeral expenses. 3 Our courts have uniformly held that there can be no recovery for emotional loss under the act. 4 The pecuniary or financial loss recoverable under the act can be divided into two basic categories. The first category would be income loss, if the decedent was a wage earner. The second category is loss of services, which is typically broken down into several subcategories, including loss of household services, assistance, care, training, guidance and counsel. Family members of decedents who earned high incomes prior to their death stand to benefit the most under the act. Take the example of a married 30-year-old individual with a spouse and two children, earning $150,000 a year at the time of his death. An economist expert can provide an economic analysis that will project an income loss over the work life expectancy. The analysis will multiply the base income amount (adding in the value of fringe benefits) by the number of years remaining in the work life expectancy, incorporating assumed yearly income increases (typically in the range of four to five percent). Even after these numbers are reduced to reflect self-consumption and income taxes, and then discounted to present value, the net earnings loss will be substantial. However, the same economic analysis required under the act does not work as well for low-income families. Take the example of the same 30-year-old married individual with two children, but this time with an annual income of $25,000. Obviously, the financial loss will be substantially less under this example, notwithstanding the fact that in both examples a wife lost her husband and two children lost their father. Yet, in both cases it is reasonable to assume that survivors have each suffered an equivalent level of emotional harm. Given the likelihood of such inequities, the question becomes whether economics should be the sole basis for determining wrongful death recoveries. The act s reliance upon economics alone leads to even harsher results in cases involving deaths of senior citizens and children. Consider the following examples: First, a 75-yearold couple, married for 50 years and with two adult children, suffer the wife s death in a car accident. Second, a 21-year-old full-time college student dies in an auto accident and is survived by his two parents. In the first example, the real loss is obviously the loss of a 50-year loving marital relationship. However, this relation- NEW JERSEY LAWYER April

36 ship, in itself, does not have any financial value that would be compensable under the act. With the wife no longer employed, and no loss of income present, the wrongful death claim on behalf of her estate would be severely limited. One could imagine how difficult it would be for the surviving spouse to learn that a lifelong marital relationship has little value under the law. Under the second scenario, the 21- year-old college student earns no income and has no financial dependents. Moreover, no credible argument can be made that the son would have financially supported the parents as they grew older. Once again, the decedent s lack of income significantly limits the potential for recovery under the Wrongful Death Act, and the parents, who had devoted their lives to raising their child, find the act prohibits recovery for the crushing emotional consequences of the loss of a parent/child relationship. Lost Services Recovery For those family members who cannot assert any substantial income loss claims due to the wrongful death of a child, spouse or parent, the act also allows for the recovery of the financial value of so-called lost services caused by the death, but only those services that are recognized to have financial value, such as household services, companionship, care, advice, guidance and training. 5 However, claims for loss of services cannot be used as a guise to present claims for emotional loss. Juries are instructed that they must carefully separate the financial aspect of a services loss from any emotional component it may have. 6 For example, if the husband who loses his wife after 50 years of marriage makes a claim for loss of care and companionship, to be compensable those services must be substantially similar to those provided by companions or homemakers often hired today by the aged or the infirm, or substantially equivalent to services provided by nurses or practical nurses. The value of the services must be confined to what the marketplace would pay a stranger with similar qualifications for performing such services. No pecuniary value may be attached to the emotional satisfaction gained by the performance of such services by a close family member. Similarly, in claims involving loss of guidance, advice and counsel, juries are instructed that such claims must be confined to their pecuniary element. Consider the parents of the 21-year-old college student who assert such a claim. According to the jury instructions, these claims must involve more than simply the exchange of views, no matter how perceptive, when the parent and child are together, and they cannot include the loss of pleasure that accompanies such an exchange. Instead, it is the loss of guidance, advice or counsel that individuals need from time to time in particular situations for specific purposes, such as an aid in making a business decision or a decision affecting one s life generally, or even advice and counsel needed to assist with depression or personal dilemmas. It must be the kind of advice and guidance that can be purchased in the marketplace; for example, from a business advisor, a therapist or a trained counselor. Thus, in cases involving the death of children or persons of advanced age, the availability of loss of service claims can save most wrongful death claims from being entirely non-compensable under the act. Even then, there are circumstances where little or no compensation will be available; for example, the death of a parent of an adult child where there is no income loss or provable loss of services with financial value. Even in cases where loss of services may be argued, there are significant limitations on the potential value of such claims. In the case involving the death of a 21-year-old college student referred to above, the attorney for the estate will engage an economist to forecast the value of the service loss over the life expectancy of the parents. To support such a forecast, the parents must produce foundation evidence indicating that the parents and the son had a close relationship, and that the son had a history of providing the parents with compensable-type services prior to his death. Armed with this evidence, the economist will make an assumption that the decedent, if he had survived, would have devoted, for example, five to 10 hours per week to performing such services for his parents for the duration of their year life expectancy. The defense will then counter with its argument that the decedent, if he had survived, would have become employed and would have started his own family, and that his family and his employment obligations would have taken up so much of his time that much less time would have been available for him to provide compensable services to his parents over the years. In such a case, should the jury find that five hours per week of services would have been provided, with a value of $20 per hour, with the parents life expectancy of 25 years, the approximate economic value of that loss would be $5,000 per year, or $130,000 in total, before discounting to present value. In the example of the 75-year-old man who loses his wife, a jury might reasonably find 25 hours per week of lost services, at a value of $20 per hour, over the husband s six-year life expectancy. This would yield an approximate financial loss of $155,000. Compensation figures seem small in comparison to the magnitude of loss involved in each case. No reasonable person would dispute that the real loss for the parents of the 21-year-old student is the emotional loss resulting from the destruction of the parent/child relationship, and the 36 NEW JERSEY LAWYER April 2007

37 real loss for the 75-year-old man who loses his wife of 50 years is the emotional loss resulting from the loss of the husband/wife relationship. When the parents of the 21-year-old student lose their son, would they really be concerned about the future times when their son would not be able to cut their grass, or run errands for them? When the 75-year-old widower loses his wife, will he be thinking about how he will replace the household services that had been provided by her? The answer to both questions, of course, is no. Both the parents and the 75-year-old widower will expect the law to provide them with a fair and just remedy for their real loss the loss of their relationship with their child and spouse, respectively. The Wrongful Death Act, as it now stands, provides neither with such a remedy. Proposed Changes There are currently bills pending before the New Jersey Senate and Assembly, which, if passed, will permit family members to seek compensation for the loss of such close family relationships. Assembly Bill A-1511 and Senate Bill S-176 are identical, and provide the following: Damages [for wrongful death] shall consist of pecuniary loss. In addition, damages may be recovered hereunder for loss of society, companionship, comfort, protection, marital care, parental care, filial care, attention, advice, counsel, training, guidance or education, where applicable. Loss of the special relationship between and among spouses, parents, children and siblings shall form a basis for an award of damages recoverable hereunder. Loss of such relationship may include consideration of mental anguish and emotional pain and suffering only in the case of a surviving spouse, child, father or mother, or persons standing in loco parentis to the deceased person or to whom the deceased stood in loco parentis at the time of the injury which caused the death of the deceased, or in the alternative, surviving brothers and sisters. Where the deceased was an unemancipated minor child at the time of the injury which resulted in death, damages to the parents may be based on the loss of the pecuniary investment of the parents, including the costs of birth and rearing the child. The above-proposed amendments to the Wrongful Death Act, if passed, will permit close family members to pursue claims for their real losses, the emotional loss caused by the wrongful death of a spouse, parent or child, regardless of the decedent s economic status or income-generating capacity. A child in a low-income family would have the same right as a child in a high-income family to seek compensation for the loss of the relationship with his or her father or mother. The 75-year-old widower would have an opportunity to explain to a jury what it was like to lose a 50- year-old marital relationship with his wife. The parents of the 21-year-old college student would not be forced to engage in disputes over how many hours per week of services their son would have provided to them, but would instead be allowed to explain to the jury the importance of their relationship with their son, and seek compensation for its loss. Wrongful death cases would no longer be a simple matter of economics. The proposed amendments to the act do not provide juries with any monetary guidelines to evaluate the loss of close family relationships. Such evaluations would have to be made on a caseby-case basis, as with all other personal injury claims. Presently, juries are called upon to make such evaluations in other contexts; for example, in cases where claims are asserted for severe emotional distress resulting from actually witnessing an accident that results in death or grievous injury to a loved one. 7 Some will argue, however, that juries are not equipped to perform such evaluations, and that the potential will exist for excessively high jury verdicts in cases involving loss of close family relationships. However, such a position underestimates the ability of juries to recognize the loss of family relationships which are deserving of compensation as opposed to those which are not. Juries would be required to evaluate the claimed loss of relationship in terms of the closeness of the relationship, the time the decedent spent with his or her family members, and the ways in which the decedent contributed to the lives of the family members who were close to him. Presumably, juries would know the difference between a close, caring relationship between a parent and child, as opposed to a strained or non-existent relationship between a parent and an adult child who rarely, if ever, had any contact with each other. There is no reason to believe that juries are not up to this task, especially when they are under the skillful watch of trial judges, and, if necessary, appellate judges. The proposed amendments to the act also redefine the class of family members who are eligible to assert claims. Under the present law, the class of persons entitled to recover under the act are those who would be eligible to inherit the decedent s property under the intestacy laws. 8 The proposed amendments to the act provide that members of the decedent s family are eligible to assert claims, and family is defined to include spouse, parent, natural or adopted child, grandparent or grandchild or sibling of the decedent. Enactment of the proposed amendments would, therefore, expand the class of persons eligible to recover under the act as compared to the present limitation to persons entitled to inherit the decedent s property under NEW JERSEY LAWYER April

38 the intestacy laws. In the end, the issue is a question of fairness. We presently have a wrongful death law that works very well for some families, very marginally for other families, and does not work at all for others. The present system of valuing a lost life strictly upon consideration of economics is arbitrary and inevitably leads to inconsistency and unfairness. The focus of the present law upon economics alone must be changed to account for the real loss confronted by those who lose close family members as a result of the tortious conduct of another. The law must acknowledge the importance and value of close family relationships, and permit the recovery of reasonable compensation by those who suffer such a loss. The present Wrongful Death Act is a product of the 19th century and often fails to meet the needs and expectations of those who are forced to rely upon it. New Jersey is in the minority of states that limit recoveries in wrongful death cases to economic loss alone. The majority of states permit recovery in such cases for mental anguish or loss of society. The Wrongful Death Act requires updating and reworking to meet the goals of fairness and equality which society recognizes in the 21st century. Endnotes 1. N.J.S.A. 2A:31-1 et seq. 2. N.J.S.A. 2A: N.J.S.A. 2A: Green v. Bittner, 85 N.J. 1 (1980). 5. Id., supra. 6. Model Civil Jury Charge See Portee v. Jaffee, 84 N.J. 8 (1980). 8. N.J.S.A. 2A:31-4. Michael J. Barrett is a certified civil trial attorney and a partner with Wilentz, Goldman and Spitzer in Woodbridge. He specializes in medical malpractice, product liability and general negligence litigation. 38 NEW JERSEY LAWYER April 2007

39 NURSING HOME ADMISSION AGREEMENTS A Review of Key Provisions to Protect Residents and Family Members by Jerold E. Rothkoff As the population continues to age, practitioners will more likely be asked to review a nursing home admission agreement on behalf of a client or a client s family member. Once a family has chosen the facility for their loved one, not surprisingly the family will be confronted with a large packet of admission papers, including a form admission contract. Like most form contracts, there are few opportunities to truly negotiate the terms. Compounding the problem are the circumstances during which the admission agreement is usually executed. Most individuals enter a nursing home during a moment of crisis. For example, upon discharge from a hospital when a spouse or caregiver child is keenly aware they cannot bring their loved one home. Thus, the agreements are typically signed when the individual or family member will agree to almost any terms, no matter how unreasonable, in order to obtain proper care of their loved one. In large part, nursing home residents are protected from unreasonable contract terms, as both state and federal law govern nursing home agreements. All Medicare- and Medicaid-participating skilled nursing facilities must provide residents with certain basic rights pursuant to the Nursing Home Reform Act of Within this framework, however, there are many variations of the business arrangements made between a resident and a nursing home. This article examines the most common issues and problems arising in nursing home admission agreements and highlights the importance of sound legal advice for residents and their families prior to admission. Responsible Party Provisions One of the first issues to consider is who the party to the admissions contract will be. It is always preferable to have the resident him or herself sign the admission agreement, if he or she has the capacity to contract. Otherwise, a guardian or agent under the individual s financial power of attorney can sign on the resident s behalf. Many nursing homes attempt to have a family member, regardless of the resident s mental capacity, sign as guarantor of payment to the facility. Such provisions are typically referred to as a responsible party clause. Responsible party provisions may be nothing more than a family member signing as a surrogate healthcare decision maker on the nursing home contact. However, such provisions, if they attempt to guarantee payment to the facility, are unlawful under federal law. 2 The key federal statutory language specifies: With respect to admission practices, a skilled nursing facility must not require a third party guarantee of payment to the facility as a condition of admission (or expedited admission) to, or continued stay in the facility. 3 However, the Nursing Home Reform Act does allow facilities to require an individual, who has legal access to a resident s income or resources available to pay for care in the facility, to sign a contract (without incurring personal financial responsibility) to provide payment from the resident s income or resources for such care. 4 Thus, the nursing home NEW JERSEY LAWYER April

40 may not require mandatory, third-party guarantees, but may require legal representatives to sign admission contracts pledging the use of the resident s funds for payment. Furthermore, on Feb. 8, 2006, President George W. Bush signed the Deficit Reduction Act of 2005 (DRA) into law. 5 The DRA, which includes sweeping changes to federal Medicaid law regarding asset transfers, will encourage nursing homes to hold family members responsible for any outstanding balances due the nursing home. The DRA increases the Medicaid lookback period for all transfers, whether to individuals or to trusts, to a five-year period. More importantly, the new law postpones the Medicaid penalty period start date for any transfers for less than fair market value. Previously, under the old law, a Medicaid penalty period calculated in months would begin during the month in which the transfer was made. Under the DRA, the Medicaid penalty period does not begin until the individual enters the nursing home, submits a Medicaid application, and is financially eligible for Medicaid (meaning a single individual has under $2,000 remaining in countable assets). In other words, the penalty period does not begin until the nursing home resident is out of funds, meaning he or she cannot afford to pay the nursing home. 6 This, of course, raises the question of how the nursing home will be paid if the resident has no funds. Ultimately, in many cases, in order to attempt to avoid such an outcome, it is conceivable that nursing homes will increase their efforts to hold family members liable for any outstanding payments due the nursing home. In light of the DRA, practitioners, if time allows, should closely scrutinize admission agreements so that family members do not subject themselves to unnecessary personal responsibility. Practitioners may consider the following practice points when advising family members regarding responsible party provisions in nursing home admission agreements: When possible and appropriate, only the resident should sign the admission agreement; The third-party signer should seek to strike out any contract provisions that purport to impose a financial obligation as a responsible party if such language refers to a guarantor of payment; When third-party signatures are provided, the signing party should clearly specify in writing, on the nursing home agreement, that he or she is signing in the limited role of agent for or guardian for the named resident; and The third-party signer should be cautioned that despite language in the agreement that seemingly limits liability to the resident s assets and income, and despite signing as mere agent, the signer faces potential liability if the resident s assets and income are not paid to the nursing home and any portion of the resident s bill remains unpaid. 7 Private Payment Agreements and Prohibition Against Transfer of Assets It is common practice for nursing homes to require applicants to show the ability to pay privately for several months, or even two or three years, before the nursing home would consider accepting the individual as a resident at their facility. This would allow the nursing home to receive the higher private pay rate. Such nursing home policies frustrate families, and inhibit the ability of Medicaid-eligible individuals to obtain access to a quality nursing home. The Nursing Home Reform Act states that nursing homes may not charge, solicit, accept or receive any gift, money, donation or other consideration as a precondition of admitting a patient, or as a requirement for the resident s continued stay, when the resident would otherwise be eligible to have services paid for by Medicaid. 8 Therefore, a Medicare- or Medicaidparticipating facility may not ask prospective residents or their family members to agree to any duration of stay payment agreements. Additionally, the admission agreement may contain a provision purportedly prohibiting the transfer of the resident s assets to a third party while a resident of that particular facility. Such prohibition against transfers is in essence a duration of stay payment provision, which is unenforceable under federal law. A nursing home cannot prevent an individual from applying for and receiving Medicaid if the facility is a Medicaid-participating facility. Many nursing homes, aware that federal law bars duration of stay payment agreements, may nonetheless attempt to circumvent federal law. Nursing homes orally advise families that a Medicaid bed will not be available for a certain period of time. However, the Nursing Home Reform Act prohibits discrimination based on a resident s Medicaid eligibility. A nursing home must establish and maintain identical policies and practices regarding transfer, discharge, and the provision of services required under the State (Medicaid) plan for all individuals regardless of source of payment. 9 Moreover, all New Jersey-licensed nursing homes must accept Medicaid pursuant to the indigent bed requirement. The facility must make available to indigent individuals at least five percent of its beds or, if the facility is licensed for 100 or more beds, at least ten percent of its beds. 10 Indigent is defined as a Medicaid-eligible individual. 11 New Jersey law attempts to bar discrimination based upon ability to pay prior to admission. New Jersey nursing homes are required to maintain only one waiting list of prospective residents, 40 NEW JERSEY LAWYER April 2007

41 regardless of payment source. 12 However, New Jersey law does permit facilities to maintain a separate Medicaid waiting list if the facility s Medicaid occupancy level equals the statewide occupancy level, or the Medicaid occupancy level set forth in the provider s Certificate of Need, whichever is higher. 13 Nursing home law, at least on its face, provides potential residents and their family members protection against discrimination at the time of admission. Unfortunately, since nursing home placement usually occurs in a crisis situation, financial discrimination does occur, and family members may agree to private payment arrangements that are clearly contrary to nursing home law. The practitioner can assist clients and their family members by advocating for the prospective resident prior to admission to require nursing homes to abide by the protections afforded a very vulnerable nursing home population. Transfer Procedures The admission agreement should adequately state the facility s discharge policies. A resident can only be transferred or discharged under certain circumstances. 14 Changes in payment status from Medicare to Medicaid or private payment to Medicaid are not valid reasons for a resident transfer or discharge. Typically, a resident enters the nursing home as a Medicare patient after several days in the hospital. At the time of admission, the resident is occupying a Medicare-certified bed. The Medicare certification does not mean that the bed is reserved exclusively for residents whose care is being paid for by Medicare. A Medicare-certified bed can be occupied by a resident who is paying privately, through private insurance, or through the Medicaid program. Due to the fact that the Medicare program generally pays more per day than any other source of payment, nursing homes prefer to use Medicare-certified beds exclusively for Medicare residents. Once a resident is not longer eligible for Medicare reimbursement of his or her nursing home expenses, the nursing home has an incentive to transfer that resident out of the Medicare-certified bed, so the nursing home can use that bed for another Medicare-eligible resident. This is a common practice in the majority of nursing homes. Once the Medicare eligibility has expired, the facility may advise the resident or family member that the resident will need to be discharged to another nursing home because the facility has no long-term care beds available. This is especially true when a Medicaid-eligible resident is no longer Medicare eligible. To protect residents in this situation, the Nursing Home Reform Act gives a resident the right to veto a transfer within the nursing home if the purpose of the transfer is to move the resident out of a Medicare-certified bed. 15 Although there are a limited number of Medicare-certified nursing home beds, all New Jersey nursing home beds are potential Medicaid beds. Thus, a Medicaid-eligible resident can remain in a Medicare-certified bed without the need to move to another bed in the facility or be transferred to another nursing home. If the resident agrees, the nursing home, if it has a non-medicare-certified bed available, may move the resident to another bed, but must accept Medicaid as payment in full. The facility is prohibited from transferring the resident to another facility if a bed in the same facility is available. Usually, the intra-facility transfer or a transfer to another nursing home can be avoided if the resident has a proper advocate. By knowing the proper grounds for discharge or transfer, which should be specified in the admission agreement, practitioners can allow a resident to remain in the same facility, giving peace to both the resident and family members. Mandatory Arbitration Provisions Across the country, nursing homes have sought to insulate themselves from potential liability by including mandatory arbitration provisions in nursing home admission agreements. Such provisions are generally not a good option for residents. Arbitrators often are less sympathetic to residents concerns than are judges or juries, and nursing homes commonly write arbitration agreements in a way that favors the nursing home over the resident. New Jersey has addressed mandatory arbitration provisions by prohibiting their use in all nursing home and assisted living admission agreements. Under New Jersey law, any provision or clause waiving or limiting the right to sue for negligence or malpractice in any admission agreement or contract between a patient and a nursing home or assisted living facility is void against public policy and wholly unenforceable, and shall not constitute a defense in any action, suit or proceeding. 16 Thus, the practitioner should seek to remove all mandatory arbitration clauses as contrary to New Jersey law. Nursing Home Admission Agreement Checklist When reviewing a nursing home admission contract, in addition to analyzing the above issues, the practitioner should ensure that the following are included: The daily rate, plus services that have an extra charge. Source of payment, such as Medicaid or Medicare. Cost to the resident. Bed holding policy and associated charges when hospital care is needed. Nursing services and therapies provided. Charges for durable medical equipment, pharmacy items, physician services, laundry, and beautician or barber services. NEW JERSEY LAWYER April

42 Transfer and discharge policies. Patients rights and responsibilities. Notice and explanation of Medicaid eligibility. Terms of the security deposit, if any, and provision for refund, if applicable. A receipt for money deposited in the resident s trust fund, if any. The written facility policy concerning protection of resident trust funds and the right of residents to manage their own funds. The facility s written policy on advance directives. The facility s rules governing resident conduct. The facility s written theft and loss policies and procedures. Conclusion It is important to have a basic understanding of the key components of a nursing home admission agreement. The admission agreement is typically executed during a time of great stress and anxiety; therefore, residents and family members should seek counsel prior to executing the document. Knowing what terms should and should not be included will help the resident receive the best care possible, while minimizing potential future problems and family liability. Endnotes 1. See N.J.S.A. 30: and 42 C.F.R This article will only address nursing home admission agreements. Although related, assisted living admission agreements are governed under different state law, and therefore beyond the scope of this article U.S.C. 1395i-3(c)(5)(A)(iii) and 1396r(c)(5)(A)(ii). 3. Id U.S.C. 1395i-3(c)5)(B)(ii) and 1396r(c)(5)(B)(ii). See also 42 C.F.R (d)(2). A separate potential ground for a family member s personal responsibility is under fraudulent transfer law. 5. Deficit Reduction Act of 2005, Pub. L. No The Medicaid changes are under 42 U.S.C. 1396p, 1396r-5, and 1396r. As of Dec. 31, 2006, New Jersey had yet to publish regulations implementing the Deficit Reduction Act of For a more thorough analysis of the DRA, See the NAELA Journal, White Paper Analysis of Changes to Federal Medicaid Laws under the Deficit Reduction Act of 2005, Volume2, 2006, Special Edition. 7. Traps for the Unwary in Nursing Home Admission Agreements Guarantor, Agent or Separate Promisor?, Pennsylvania Bar Association Quarterly, Oct C.F.R (c)(1). An exception to this rule applies to a nursing home located within a continuing care retirement community (CCRC). The Deficit Reduction Act of 2005 allows a CCRC to require residents to use the entire entrance fee to pay the facility before the resident is eligible for Medicaid. 9. Id. 10. N.J.C.A. 8:39-5.1(c). 11. Id. 12. N.J.C.A. 8:39-5.2(a). 13. N.J.C.A. 8:39-5.2(a)(1)(iii). 14. N.J.C.A. 8:39-4.1(31) C.F.R (o). See generally Eric M. Carlson, 20 Common Nursing Home Problems and How to Resolve Them, National Senior Citizens Law Center, Dec N.J.S.A. 30: Jerold E. Rothkoff is the principal of the Law Offices of Jerold E. Rothkoff in Cherry Hill and Philadelphia, where he concentrates his practice in elder and disability law and advocacy for seniors and the disabled. He is vice chair of the NJSBA Elder and Disability Law Section, and has lectured for both ICLE and PBI on litigation issues related to nursing homes. 42 NEW JERSEY LAWYER April 2007

43 LEGAL COMMENTARY Mediation Isn t a Band-Aid for Poor Lawyering by Jay A. Gilbertz The problem is not novel or new. None love the messenger who brings bad news. 1 Little has changed in the 2,500 odd years since Sophocles identified the simple fact that we dislike the person who bears ill tidings. While it may not be an analytical or logical reaction, it is a predictable part of human nature. Instinctively we know this to be true, and it creates a counter response in humans. This reaction, however, is logical if the news is bad, no one really wants to be the messenger. We are like teenagers who get a bad report card on Friday. We look for any excuse or justification to avoid telling our parents until Monday. Then again, Mondays are always bad; maybe Wednesday (night) would be good. Attorneys are no different; we want our clients to like us. We want our clients to think that we are fine attorneys doing our best to negotiate or litigate for a good outcome, and maybe even cut that proverbial fat hog for them, if the opportunity is presented. At the same time, one of the obligations we accept as lawyers is to renounce our human tendency to avoid the distasteful task of conveying unwanted information. Our professional obligations and our human tendencies are in conflict. The need to overcome our natural inclinations is so important that we have an ethical rule on the issue. In our role as advisors, we are ethically bound to tackle this problem. The comment to Rule of Professional Conduct 2.1 states that: Legal advice often involves unpleasant facts and alternatives that a client may be disinclined to confront a lawyer should not be deterred from giving candid advice by the prospect that the advice will be unpalatable to the client. 2 While the obligation seems uncomplicated, it will always be unpleasant to some degree to convey bad news, and there is a strong temptation to delay the task. I have found that it is much easier to impart this type of message early in the attorney-client relationship. When a new client first comes in my office, it may not be a fun job to tell him or her that his great case has some significant legal or practical flaw. Yet providing accurate and straightforward advice is easier when we don t really know the person. Few lawyers have trouble dispensing bad news under these circumstances. However, as the representation or case proceeds, we develop a more personal relationship with our clients. We begin to think of them as people, and we begin to believe more and more in our client s case. By nature, lawyers are competitive, and during the process we can get personally (and financially) invested in the client s cause, or simply driven by the idea of winning. At times, we may even begin to dislike the other party or even the lawyer representing them. To complicate matters, our client s opinion of us develops as we represent them. Clients start telling us what exceptional, ethical and committed attorneys we are. These are always gratifying compliments, but they also can create feelings of comradery and commitment to the cause. Even if such accolades do not cloud our judgment, they accentuate our natural reticence to deliver unwanted information. From my perspective, this problem is greatest when a case that seemed to be going well takes a sudden and unexpected turn for the worst. If the reversal of fortune is the result of some previously unknown or unaccounted-for issue, we anticipate the client may well blame us for the new development. Under these circumstances, the temptation to shirk being the messenger is the greatest. Mediation serves a good purpose in many circumstances. It can provide a plaintiff with a cathartic experience as he or she explains the impact an event has had on his or her life, and have those complaints acknowledged by a judge-like mediator. Likewise, a defendant has the opportunity to respond to accusations that can be personally offensive or demeaning and have his or her position acknowledged. In this way, mediation can facilitate a resolution by being a surrogate for the trial process without the associated expense, delay and risk. However, the potential for mediation is not justification for an attorney to abdicate his or her duty to advise the client of unpalatable facts, law or developments. NEW JERSEY LAWYER April

44 As an advocate, I have attended more mediations than I care to remember, and I have acted as a mediator in a handful of cases. Unfortunately, in a number of instances it has appeared to me that attorneys have abandoned their obligation as advisor when a case or the facts have taken a wrong turn. Rather than addressing troublesome facts, developments or risks directly with the client, they rely on the mediator to perform this task and spare the attorney the unpleasantness. At worst, this tactic will doom the mediation. At best the mediation will succeed, but the client will usually leave angry with the mediator, the process and his or her own lawyer. Even though the lawyer dodged being the messenger, he or she still took a bullet in the end. While mediation is an excellent option in many cases, it does not supplant our obligation to properly advise our clients. When these more difficult situations arise, attorneys must take the time to be consciously aware of and think about all the forces that act to dissuade him or her from fulfilling the duty of bearing bad news. Once the forces that affect the lawyer are tamed, good planning and preparation can make the delivery process less painful. Prepare for your meeting as if it were an appearance in court. Start by reminding your client that your job is not to blindly fight for them, but to give them a good, detached assessment of the legal battlefield as it develops. Like any battle, the field conditions and circumstances change, and this requires assessment and reassessment. Plan a good, easy to understand explanation of the things that have changed or the unexpected circumstance that has arisen. Take the time to explain why the change makes a difference, and how it impacts a detached assessment of their case. If the situation is an unexpected development, explain why it was not or could not have been anticipated. Planning also must account for the fact that the client will tend to blame the messenger you. Take the time to think about and anticipate the questions the client will ask, and be ready with good concise answers. Know in advance that the client is going to offer objections, arguments and excuses to combat the bad news or deflect its implications. If there are strategies or avenues to limit the impact of new developments, be ready to discuss these with your client, but try to keep expectations realistic. When we were kids, the Band-Aid had really strong glue so it wouldn t fall off. It did its job well so well that removing the bandage could be a painful experience. Anyone who has removed a bandage from a hairy arm can tell you that you are better off grasping the bandage firmly and ripping it off. If you approach the process timidly and without resolve, slowly pulling the bandage back inch by inch, you will just make the process more painful. The same is true for bearing bad news. Let your client know this is going to hurt a little, and then tackle the task directly. (Editor s Note: This article was previously published in the December 2006 issue of Wyoming Lawyer, and is reprinted here with permission. Copyright 2006, Wyoming State Bar.) Endnotes 1. Sophocles ( BC), from the play Antigone lines , trans. Sir George Young, p.16 (1888). 2. Wyoming Rules of Professional Conduct, Rule 2.1 Cmt.[1]. Jay Gilbertz practices law with his partners at Yonkee & Toner, LLP, in Sheridan, Wyoming. 44 NEW JERSEY LAWYER April 2007

45 LEGAL PRACTICE A Modification to the Standard Governing Motions to Dismiss Under Rule 4:6-2(e) by Gianfranco A. Pietrafesa It appears that the New Jersey Supreme Court has modified the standard governing motions to dismiss for failure to state a claim upon which relief can be granted under Rule 4:6-2(e). In a relatively recent decision, the Court incorporated language from the standard used by the federal courts on motions to dismiss under Federal Rule of Civil Procedure 12(b)(6) into the standard used by the state courts on motions to dismiss under Rule 4:6-2(e). As a result, a state court is no longer limited to considering only the allegations in a complaint. A state court may now consider documents attached as exhibits to the complaint, matters of public record, and documents that form the basis of the claims in the complaint. The standard governing a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 4:6-2(e) is well known. In Printing Mart, the Supreme Court stated the standard as follows: [T]he test for determining the adequacy of a pleading [is] whether a cause of action is suggested by the facts. [The court s] inquiry is limited to examining the legal sufficiency of the facts alleged on the face of the complaint. However, a court searches the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary. At this preliminary stage of the litigation the Court is not concerned with the ability of plaintiffs to prove the allegation contained in the complaint. For purposes of analysis plaintiffs are entitled to every reasonable inference of fact. The examination of a complaint s allegations of fact required by the aforestated principles should be one that is at once painstaking and undertaken with a generous and hospitable approach. 1 As stated in Printing Mart, on a motion to dismiss under Rule 4:6-2(e), a court may consider only the allegations on the face of the complaint. If it considers other matters, it may convert the motion into one for summary judgment. In this regard, the last sentence of Rule 4:6-2, which is almost identical to Federal Rule 12, provides: If, on a motion to dismiss based on the defense numbered (e), matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided by R. 4:46, and all parties shall be given reasonable opportunity to present all material pertinent to such a motion. 2 What is a matter outside the pleading? That is, what matters may a court consider on a motion to dismiss under Rule 4:6-2(e), other than the allegations in the pleading, without converting the motion into one for summary judgment? The question was recently answered in the Supreme Court s 2005 decision in Banco Popular: In evaluating motions to dismiss, courts consider allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim. 3 Therefore, the Supreme Court has stated that on a motion to dismiss under Rule 4:6-2(e), a court is not limited to simply reviewing the allegations in the complaint (i.e., matters on the face of the complaint), but may consider other matters that are part of (i.e., not outside) the complaint. As noted in Banco Popular, these other matters are exhibits attached to the complaint, documents that are not attached to the complaint but that form the basis of the claims in the complaint, and matters of public record. This article suggests and demonstrates that the Supreme NEW JERSEY LAWYER April

46 Court s modified standard for reviewing motions to dismiss is well-established law in the federal courts, well-founded under what may be described as obscure New Jersey law, and logical. Documents Attached as Exhibits to the Complaint May a court consider a document attached as an exhibit to the complaint on a motion to dismiss under Rule 4:6-2(e)? Or, by doing so, does a court turn the motion into one for summary judgment? Rule 1:4-3 provides in pertinent part that: A copy of a document which is an exhibit to a pleading is a part thereof. Therefore, the court rules explicitly state that a document attached to the complaint is considered a part of the complaint. As such, a court may logically consider an exhibit attached to the complaint on a motion to dismiss. However, only one court has cited Rule 1:4-3. The rule was cited by a trial court in an unpublished decision; fortunately, it was in the context of a motion to dismiss under Rule 4:6-2(e). 4 There is, however, ample support under the federal case law for a court to consider a document attached as an exhibit to the complaint on a motion to dismiss under Federal Rule 12(b)(6). For example, the Third Circuit has held that: When reviewing a complaint, a court should consider not only the allegations contained in the complaint itself but also the exhibits attached to it which the complaint incorporates pursuant to Federal Rule of Civil Procedure 10(c). 5 Federal Rule 10(c) is virtually identical to Rule 1:4-3, and provides that: A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes. 6 The federal rule is identical to R.R. 4:10-3, the former New Jersey court rule. 7 The omission of the phrase for all purposes in the current rule does not substantively change the effect of the rule. Accordingly, a court may consider a document attached as an exhibit to the complaint. As a result of Rule 1:4-3, it is considered a part of the complaint, and not a matter outside the complaint. Therefore, a state court s consideration of such a document does not turn a motion to dismiss into one for summary judgment. Documents That Form the Basis of the Complaint May a court consider a document not attached as an exhibit to the complaint, but that forms the basis of the claims in the complaint? Or, does a court s consideration of such a document turn the motion to dismiss into a motion for summary judgment? The court should be able to consider such a document even though it is not attached as an exhibit to the complaint. Such a document should not be considered outside the pleading; it should not, therefore, turn the motion to dismiss into one for summary judgment. As shown below, this is a logical conclusion. In a complaint for breach of contract, the plaintiff may allege the existence of a contract in the complaint (even quote relevant terms of the contract in the complaint) or attach the contract as an exhibit. Why should a court be able to consider the contract if it is attached as an exhibit, but not consider it if it is merely referred to or quoted in the complaint? Such a result would be illogical when a plaintiff s claim is based on the contract. Such a result also would invite mischief, because a plaintiff may simply refer to the contract instead of attaching it to the complaint in order to avoid a motion to dismiss, and thus needlessly prolong the litigation. The Third Circuit has noted that, as a general rule, a court may not consider matters extraneous to the pleadings on a motion to dismiss. However, it has recognized an exception to the general rule; namely, a court may consider an undisputedly authentic document that a defendant attached as an exhibit to a motion to dismiss if the plaintiff s claims are based on the document. 8 Therefore, a document integral to or explicitly relied upon in the complaint may be considered without converting the motion [to dismiss] into one for summary judgment. 9 The Third Circuit s reasoning was that to hold otherwise would allow a plaintiff with a legally deficient claim [to] survive a motion to dismiss simply by failing to attach a dispositive document on which it relied. 10 It also is noted that a defendant may quickly obtain a copy of a document referred to but not attached as an exhibit to the complaint pursuant to Rule 4:18-2, which provides that: When any document or paper is referred to in a pleading but is neither annexed thereto nor recited verbatim therein, a copy thereof shall be served on the adverse party within five days after service of his written demand therefor. Such a document should become part of the complaint as if it were initially attached to the complaint. 11 Accordingly, a state court may consider a document that is not attached as an exhibit to the complaint, but is presented to the court on a defendant s motion to dismiss, when the document is integral to or explicitly relied upon in the complaint; that is, when the document forms the basis of the claims in the complaint. A court may do so without converting the motion to dismiss into one for summary judgment. Matters of Public Record Finally, may a court consider a matter of public record on a motion to dismiss under Rule 4:6-2(e)? Or, to repeat the refrain, does a court s consideration of such a public record turn the motion to 46 NEW JERSEY LAWYER April 2007

47 dismiss into a motion for summary judgment? The court should be able to consider a matter of public record (i.e., a court may take judicial notice of a matter of public record) on a motion to dismiss under Rule 4:6-2(e) just like a federal court does under Federal Rule 12(b)(6). 12 A matter of public record should not be considered a matter outside the pleading, especially when it may quickly and simply dispose of a complaint on a motion to dismiss. For example, why should the court in a second action be precluded from considering and taking judicial notice of the pleadings, the order or judgment, and other documents filed in a prior action by the same parties, on a motion to dismiss the second action on the grounds of res judicata? There are a variety of public records that a court may take judicial notice of and consider on a motion to dismiss. For example, the federal courts have considered pleadings in prior actions, 13 pleadings and other materials filed in other actions, 14 decisions in prior actions, 15 documents pertaining to regulatory proceedings, 16 corporate documents filed with the state, 17 filings with the Securities and Exchange Commission, 18 and deeds filed with a county clerk or register of deeds. 19 Accordingly, a state court may consider a matter of public record on a motion to dismiss under Rule 4:6-2(e), and may do so without converting the motion to dismiss into one for summary judgment. Conclusion Based on the foregoing, it appears that a court deciding a motion to dismiss under Rule 4:6-2(e) may properly consider not only the allegations in the complaint, but also documents attached as exhibits to the complaint, documents integral to or relied upon in forming the basis of the claims in the complaint, and matters of public record. These documents and public records should not be considered matters outside the pleading, and should not convert a motion to dismiss into one for summary judgment. It remains to be seen whether the Supreme Court intentionally or inadvertently modified the standard governing motions to dismiss. However, as shown above, the modified standard has logical support under the court rules and other New Jersey authorities, and ample support under the federal case law governing similar motions under Federal Rule 12(b)(6). Therefore, litigants may use the broader, more liberal standard to seek the dismissal of complaints for failure to state a claim upon which relief can be granted under Rule 4:6-2(e). Endnotes 1. Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 746 (1989) (citations omitted; emphasis added). 2. R. 4:6-2. See Fed. R. Civ. P. 12 ( If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56. ). 3. Banco Popular No. Am. v. Gandi, 184 N.J. 161, 183 (2005), quoting Lum v. Bank of Am., 361 F.3d 217, 222 n.3 (3d Cir.), cert. denied, 543 U.S. 918, 125 S. Ct. 271 (2004). 4. See Sammarone v. Bovino, 2006 WL *6 (N.J. Super. Law Div. July 10, 2006) (trial court considered a letter attached as an exhibit to the complaint on a motion to dismiss under Rule 4:6-2(e)). See also Morris Schnitzer and Julius Wildstein, New Jersey Rules Service (Gann), comment D(2) to R.R. 4:12-2 (predecessor to R. 4:6-2(e)) ( in testing the sufficiency of a claim, such exhibits annexed thereto must be resorted to and taken into consideration for the purpose of limiting or enlarging the pleading. ). 5. Ala, Inc. v. CCAIR Inc., 29 F.3d 855, 859 (3d Cir. 1994). See also Pension Benefit Guaranty Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). 6. Fed. R. Civ. P. 10(c). 7. See R.R. 4:10-3 ( A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes. ). 8. Pension Benefit Guaranty Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) (citations omitted). 9. In re Burlington Coat Factory Sec. Lit., 114 F.3d 1410, 1426 (3d Cir. 1997) (citation and internal quotations omitted). See also Donald J. Trump Casino Sec. Lit., 7 F.3d 357, 368 n.9 (3d Cir. 1993) (court considered prospectus that was not attached to the complaint but that formed the basis of plaintiff s claims); In re Westinghouse Sec. Lit., 832 F. Supp. 948, 964 (W.D. Pa. 1993), rev d on other grounds, 90 F.3d 696 (3d Cir. 1996), cited with approval in Lucent Technologies, Inc. Sec. Lit., 217 F. Supp. 2d 529, (D.N.J. 2002), and In re Bayside Prison Lit., 190 F. Supp. 2d 755, 760 (D.N.J. 2002). 10. Pension Benefit Guaranty, 998 F.2d at 1196, citing Goodwin v. Elkins & Co., 730 F.2d 99, (3d Cir.) (Judge Becker, concurring), cert. denied, 469 U.S. 831, 105 S. Ct. 118 (1984). See also Lum v. Bank of America, 361 F.3d 217, 222 n.3 (3d Cir. NEW JERSEY LAWYER April

48 2004) (citations omitted). 11. See, e.g., Morris Schnitzer and Julius Wildstein, New Jersey Rules Service (Gann), comment 3.B to R.R. 4:24-2 (predecessor to Rule 4:18-2). See also id. comment D(2) to R.R. 4:12-2 (predecessor to R. 4:6-2(e)) ( in testing the sufficiency of a claim, such exhibits obtained on written demand pursuant to R.R. 4:24-2 [now R. 4:18-2], must be resorted to and taken into consideration for the purpose of limiting or enlarging the pleading. ). 12. See, e.g., Lum, 361 F.3d at 222 n.3; Pension Benefit Guaranty, 998 F.2d at Churchill v. Star Enterprises, 183 F.3d 184, 190 n.5 (3d Cir. 1999). 14. Caldwell Trucking PRP Group v. Spaulding Composites Co., 890 F. Supp. 1247, 1255 (D.N.J. 1995). 15. Southern Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Group Ltd., 181 F.3d 410, (3d Cir. 1999). 16. City of Pittsburgh v. West Penn Power Co., 147 F.3d 256, 259 (3d Cir. 1998). 17. In re Earned Capital Corp., 331 B.R. 208, 223 (W.D. Pa. 2005). 18. Sheehan v. Little Switzerland Inc., 136 F. Supp. 2d 301, 306 (D. Del. 2001). 19. Assn. of Irritated Residents v. C & R Vanderham Dairy, 2006 WL *3 n.2 (E.D. Cal. Sept. 14, 2006); Schrager v. Grossman, 1995 WL *3 n.2 (N.D. Ill. Dec. 18, 1995). Gianfranco A. Pietrafesa practices with Lindabury, McCormick, Estabrook & Cooper, P.C., and is a member of the New Jersey Lawyer Magazine editorial board. WINNING WEBSITES The user-friendly site covering all aspects of Medicare and related programs, including prescription drug stand-alone plans and Medicare Advantage plans (HMOs), and Medigap plans in New Jersey, as well as monitoring reports for the state s nursing homes. CMSForms/list.asp A website providing downloadable forms for Medicare appeals and grievances. The Center for Medicare and Medicaid Services website, offering extensive information on health programs. The website for the Pharmaceutical Assistance Program for the Aged and Disabled (PAAD). The website for New Jersey s Senior Gold Program, available to individuals with incomes above PAAD limits. The AARP website, offering useful tools for research on healthcare policy and programs, and links to related websites. An online referral site where clients can be referred to trained volunteers working for the State Health Insurance Program (SHIP), who can help them navigate the healthcare maze. An interactive site that explains benefits available to clients and permits them to work with their own personal records. This regular New Jersey Lawyer Magazine feature highlights websites that lawyers in the state have found particularly useful. These may be comprehensive sites or, in some cases, more general sites that nonetheless offer introductions to an area of the law with which the practitioner may be unfamiliar. We invite you to submit your own discoveries. Please forward your suggested sites to Cheryl Baisden, managing editor, at [email protected]. 48 NEW JERSEY LAWYER April 2007

49 LAWYER S BOOKSHELF The Little Book of Plagiarism Richard A. Posner Pantheon Books, 2007 Richard A. Posner is a judge of the United States Court of Appeals for the Seventh Circuit, and a professor at the University of Chicago Law School. He is known for being a leading disciple of the law and economics school of thought, where economics is applied to solve legal issues. Posner also is a prolific author of books on a variety of topics. This is a review of his latest, The Little Book of Plagiarism. While the volume really is a little book measuring approximately four inches by six inches, and contains 116 pages Posner manages to quite thoroughly explore plagiarism, both as it is understood today and as it was understood in the past. According to the author, plagiarism is difficult to define, but involves more than simply copying or paraphrasing without referring to one s sources. Simply put, Posner contends that the heart of plagiarism is a writer s unauthorized copying or paraphrasing that he or she claims as his or her own, which causes someone to do something differently than if he or she knew the truth. So, a judge issuing an opinion without acknowledging that it was written by a law clerk is not guilty of plagiarism because the practice is widely understood, and no one is really harmed by it; that is, no one has been caused to act differently. However, an individual who writes a book by copying or paraphrasing from other works is guilty of plagiarism if he or she claims it as an original work, because he or she wants someone to buy the book believing it is an original work. A clear example of plagiarism is the recent chick-lit book by a New Jersey teenager attending Harvard University. The book was largely copied or paraphrased from one or more books by a well-known author of the genre, Megan McCafferty. McCafferty wrote: Bridget is my age and lives across the street. For the first twelve years of my life, these qualifications were all I needed in a best friend. The New Jersey teenager wrote: Priscilla was my age and lived two blocks away. For the first fifteen years of my life, those were the only qualifications I needed in a best friend. Pretty clear evidence of plagiarism. Posner notes, however, that the concept of plagiarism has changed over time. For example, Shakespeare paraphrased Sir Thomas North s translation of Plutarch s life of Marc Antony, without giving credit to North. North wrote: She disdained to set forward otherwise, but to take her barge in the river of Cydnus; the poope whereof was of gold, the sailes of purple, and the owers of silver, which kept stroke in rowing after sounde of musick of flutes Shakespeare wrote: The barge she sat in, like a burnished throne, burnt on the water. The poop was beaten gold; purple the sails, and so perfumed that the winds were lovesick with them. The oars were silver, which to the tune of flutes kept stroke This was not considered plagiarism, because at that time it was considered more creative to improve an existing work than to create an original work. Likewise, T.S. Eliot borrowed from Shakespeare s work: The Chair she sat in, like a burnished throne, glowed on the marble This type of imitation or allusion by poets is not, however, considered plagiarism. Shakespeare improved on the work of North, and Eliot borrowed from Shakespeare. The New Jersey teenager, however, simply copied or paraphrased another s work, without reference. She did not create or improve anything; she plagiarized. Posner s little book analyzes many scenarios and considers whether they constitute plagiarism. He also discusses books ghostwritten by others and passed off as the works of celebrities, such as Hillary Clinton s It Takes a Village. It is a fascinating subject, and an easy read. As a matter of fact, I have already read Posner s book three times. I recommend every attorney peruse its pages at least once. Reviewed by Gianfranco A. Pietrafesa Lindabury, McCormick, Estabrook & Cooper, P.C. The Lease Manual: A Practical Guide to Negotiating Office, Retail, and Industrial Leases Rodney J. Dillman ABA Books, 2007 For each lease provision in The Lease Manual A Practical Guide to Negotiating Office, Retail, and Industrial Leases, author Rodney J. Dillman provides a brief description of the provision and analyzes it from the perspectives of the landlord, tenant, and lender. He then suggests how the parties can compromise when negotiating the provision, and offers alternatives to be considered in negotiations. Additionally, he comments on the provision; provides a sample provision typically used in a lease; and (from the landlord s point of view) NEW JERSEY LAWYER April

50 assigns a risk rating of one through five to the provision, with one being a giveaway and five being nonnegotiable. The book covers 67 provisions typically found in an office lease, as well as 18 additional or alternate provisions found in a retail lease and six alternate provisions found in a warehouse lease. It also contains several forms often used in commercial lease situations, including a letter of intent, a subordination, non-disturbance and attornment agreement, and a tenant estoppel letter. The book is a handy size, measuring six inches by nine inches, and contains 359 pages. It is accompanied by a CD- ROM containing the text of the book, as well as all of the forms mentioned in it. Although the objective of the book is to approach the lease from the perspective of negotiations, it also can be used when drafting a lease. The book will prove to be a valuable resource for both attorneys and sophisticated landlords preparing their own leases. Needless to say, I definitely will be using it the next time I negotiate and prepare a commercial lease. Reviewed by Gianfranco A. Pietrafesa, Esq. Lindabury, McCormick, Estabrook & Cooper, P.C. way through the issues surrounding presenting or objecting to expert witnesses, obtaining discovery on experts, and conducting a direct and cross-examination of experts at trial. The book is a narrative of one litigator s views on expert witnesses. It provides a very general overview of the issues surrounding expert witnesses. There are precious few legal authorities cited in the 164 pages of text (there are an additional 60 pages in the appendix, which includes two Supreme Court cases, court and evidence rules). The book may be useful to the general practitioner who does not often deal with experts, or as an occasional refresher for the litigator; however, the serious litigator can find better and more authoritative books on the subject. Reviewed by Gianfranco A. Pietrafesa, Esq. Lindabury, McCormick, Estabrook & Cooper, P.C. A Litigator s Guide to Expert Witnesses Cecil C. Kuhne III ABA Books, 2006 There is nothing new in A Litigator s Guide to Expert Witnesses by Cecil C. Kuhne III. It summarizes the United States Supreme Court s trilogy of cases (Daubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993); Kuhmo Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999); General Electric Co. v. Joiner, 522 U.S. 136 (1997)) on the admission of expert opinion testimony at trial, the court rules on the discovery of experts, and the evidence rules on the admission of expert testimony. It then works its 50 NEW JERSEY LAWYER April 2007

51 PRACTICE TIPS Reconnecting With Your Existing Network by Susan R. Sneider Before you begin reconnecting with your existing network, take some time to consider with whom you wish to reconnect and why. As a small step in this direction, select three people in your circles with whom you have been out of touch, but with whom it would be fun to reconnect. Why would you enjoy reestablishing a connection? How would you go about establishing a connection , phone call, letter, holiday card, surprise visit? When are you going to do this today, tomorrow, next week? Ironically, many people find it easier to just write-off people in their existing networks and start fresh with new people they meet. This is, in part, because none of us are able to stay in close contact with all of the people that waltz in and out of our lives. Rather than trying to do the impossible stay closely connected or reconnect meaningfully with everyone in our existing network try to compromise: superficial connection to some, non-connection with a selected group. Here are a few examples of what to do with your law school classmates: 1. The annual holiday or New Year s card, whether a personal card, a business card or a family letter. DO: Send these to everyone in your network you truly want to connect or reconnect with at this time. DO: Write a small personal note. Sign it even if your name is embossed on the card. Your comments can run the gamut from generic happy holidays to an invitation for a specific event. Here are some examples of what you can write to even long-lost law school classmates. I was thinking of you last week when I read that [former classmate] is making a run for judge. Hope all s well with you. Give me a call if you have time for lunch one of these days. I miss late-night chats about [professor s or classmate s] antics. Are you free for coffee next week? I d love to reconnect. I ll be flying into New York for a deposition on February 2nd. Any chance I can take you to dinner? I hope you and your family are well. Wishing you a joyous holiday season and a New Year filled with peace, happiness, health and prosperity. I just moved to [firm name]. Would you believe [former classmate] came to the firm at the same time? We were just talking about you how about drinks next week after the holidays? I was thinking about you the other day and can t believe we ve lost touch give me a call if you find a free moment and tell me what you ve been up to. Our firm is hosting a seminar February 12th on Selecting the Situs of a Trust. I ll be moderating and would love to have you as my guest. I ll give you a call/send you an next week to see if you re available. (Note: This example works particularly well if you re with a firm and your connection is an in-house counsel.) DON T: Mail a card that you haven t personalized. That is a waste of paper and postage. DON T: Send to someone who will not think of you as either a friend or active acquaintance. Do NOT blanket your entire law school class with these cards. Your recipients should be able to have a quick image of you in their mind the minute they see your name and not need to scratch their heads trying to remember who you are! DON T: Pretend an intimacy that never existed, as that would seem artificial. DON T: Forget to send them a card again next year, even if you failed to connect by phone or in person after sending the first card. Sometimes it takes years of superficially staying in touch before people find the need or desire to actually reconnect. An annual hello is still far better than a hello after a 10-year silence, especially if you will be requesting assistance from someone. 2. An , phone call, letter any time of the year. DO: Compose carefully even your opening lines for a phone call. This is especially true for someone with whom NEW JERSEY LAWYER April

52 you have been out of touch with for a long time, and with whom you had a good, but not intimate, relationship. DO: Think of a hook for reconnecting the more genuine the reason, the better the chance of truly re-establishing a relationship. In addition to the examples in the holiday letter list above, consider the following: You have read an article that is relevant to their firm, business or charity. Attach the article with some type of notation (e.g., good news, great victory, or congratulations). You have information about an opportunity that may be of value to them, such as a job lead for which they are particularly well-qualified. You want to introduce them to someone you think they can help (e.g., a college student who is writing a research paper on their area of expertise). Caution: It is more than permissible to ask people to help others, but be considerate to limit their time commitment and obligation. Say something like: My wife s nephew is writing his college thesis on environmental issues and he wanted to ask you some questions that will take no more than 10 minutes of your time. 3. An upcoming reunion. Most classes host them every five years. DO: Attend. DO: Send out a note asking if your friends plan on attending. Ask who else they know is going. Remember, the more people you know ahead of time who will be attending the event, the more comfortable you will be upon arrival. DO: Suggest that you get together for drinks the night before. If that sounds like a good idea to your closest friend, offer to send the inviting all the rest. DO: Ask if they re staying at a hotel. If so, you may want to coordinate hotels or even offer to share a room. DO: Find out whether seats will be assigned. If so, work with the event coordinator to ensure that you are seated with friends. DON T: Carry law school emotional baggage with you. DON T: Drink too much or share intimacy that you will regret when the reunion is long over. DON T: Bad-mouth classmates. Not only is this bad form, it s dangerous; you never know who will appear in your life as your next partner or boss or colleague. Nor do you know who will repeat your comment to someone who would think less of you for insulting people. DON T: Pretend to know something or someone that you do not. You will lose credibility when the truth is revealed. Lawyers commingle and communicate regularly, and it s a far smaller community than you might imagine. DON T: Forget to follow-up on any promises you made during the reunion. Failure to follow up will show your lack of follow-through, and will often prove fatal to re-establishing a meaningful relationship. Remember, networking is about providing benefit to others. Following up with a promise is the cornerstone of providing that benefit. (Editor s Note: This article is an excerpt from A Lawyer s Guide to Networking, written by Susan R. Sneider and published by the American Bar Association, and is reprinted here with permission American Bar Association. All Rights Reserved.) Susan R. Sneider, a former general counsel, is a management consultant who works with law firms, legal departments, law schools and legal vendors. 52 NEW JERSEY LAWYER April 2007

53 E-PRACTICE Practical Responses to the New Federal Rules on E-discovery by Steven C. Bennett Now that amendments to the Federal Rules of Civil Procedure, aimed directly at regulating e-discovery, are in effect, the question arises: What, in practical terms, should prospective litigants and their counsel do to comply with (and take advantage of) the new rules? This article is a brief attempt to summarize some of the most important practical points. It is important to recognize, however, that there is room for interpretation in the implementation of the new rules. Thus, it will be useful for counsel and their clients to monitor developments as courts around the country apply the new rules. Areas of Little Change To a large extent, the new rules merely codify practices and understandings that have grown up over the past 30 years or so, as the impact of e-discovery on litigation has increasingly become apparent. For example: It has been apparent since at least 1970 that the term document in Rule 34 includes data compilations, i.e., electronic documents. Revisions to the language of Rule 34 (making clear that documents include electronically stored information or ESI ) simply reinforce this point. Similarly, since documents may include electronic documents, it has been apparent that one potential response to interrogatories is to point to (and produce) electronic documents. Revisions to Rule 33, again, make this technical point crystal clear. Early Attention to E-discovery Increasingly, local rules and best practice recommendations have emphasized the importance of early attention to e- discovery issues. The revised rules make this requirement uniform, across all cases. Revised Rule 26 requires that parties address e-discovery issues in advance of the first conference in a case, and that they come to the first conference prepared to discuss e-discovery issues Several important practical points derive from this requirement: Trial lawyers must become familiar with the basic language and issues of e-discovery, or be prepared to cede this area of pre-trial preparation to more tech-savvy colleagues. Lawyers and their clients must begin to discuss e-discovery issues almost from the moment they first learn of the dispute. Even if the client has no e-documents (a rare case), the discussion must at least concern how the party will receive e-documents from the other side, and which e-documents may be essential to the party s case. Where a party has substantial quantities of discoverable e-documents of its own, moreover, a more concerted discussion of the e- discovery process must be undertaken, as soon as possible. Lawyers and their clients must bring to the discussion with their adversaries (and ultimately with the court) a good understanding of the client s information and records storage systems. The new rules, for example, suggest that the parties should at least discuss the format for discovery (native files, images or paper). Without some understanding of what documents and information systems the client currently maintains, plus an understanding of any legacy data, off-site storage and data in the hands of vendors, the discussion of what is reasonable and possible in the way of e-discovery will suffer, and unnecessary disagreements and misunderstandings (with the court and opposing counsel) may be created. Preservation and Production The new rules make it clear that e-documents are subject to mandatory initial disclosures, and further suggest that questions of data preservation may be an important part of the initial conferences with counsel and the court. Among the practical points that flow from the new rules are the following: Parties and their counsel should be prepared to explain NEW JERSEY LAWYER April

54 what data preservation policies are in place, from the outset of the litigation. Ideally, such policies will have been established well in advance of the onset of the dispute. A party should have a system to issue litigation hold notices, and to suspend routine destruction of data (such as deletion of s on some fixed, periodic basis). The discussion at the outset of litigation should then focus (if necessary) on whether any additional, special preservation efforts (beyond those already embodied in the parties pre-existing policies) are appropriate. The new rules recognize a distinction between accessible materials and materials that are not reasonably accessible. For a party to obtain discovery of inaccessible materials (such as fragmented data), some showing of marginal value for the data (cost to retrieve versus benefit to retrieval) must be made. The new rules also suggest that some form of cost shifting may be appropriate in such cases. What the new rules do not directly address is the question of preservation of arguably inaccessible data. It is unclear whether data that may never be produced (because it is inaccessible) must nevertheless be preserved (against the possibility that another party may call for the production of such information, and perhaps may agree to pay for its retrieval). Because the rule is unclear, some attention to this issue may be part of the agenda for initial discussions between the parties, at the outset of a case. The new rules also offer a safe harbor, to avoid sanctions in circumstances where routine, good faith operations of an electronic information system may result in loss of data. Parties and counsel should consider the limits of this exception. The advisory committee notes fully embrace the concept of a litigation hold. A party certainly could not claim the benefits of the good faith safe harbor if it took no steps to impose a litigation hold. And the agreement of the parties (and/or direction from the court) regarding preservation may do much to clarify the range of good faith preservation obligations in an individual case. The point, in short, is that parties and their counsel should not count on blanket after-the-fact claims of good faith as a way of avoiding preservation obligations under the new rules. Privilege Protection The new rules suggest that one of the subjects for discussion between the parties at the outset of a case is entry into an agreement (typically so ordered by the court) that recognizes (at the very least) that inadvertent production of privileged material will not constitute a waiver of privilege (including work product protection). This discussion must recognize the potential range, and limits, of such agreements. One form of privilege-protection agreement is a simple understanding that inadvertent production of privileged material will not constitute a waiver of privilege (as to the particular documents produced, or the broader subject matter encompassed by the privileged document). This form is often referred to as a clawback agreement (the point being that, in the event of inadvertent production of privileged documents, the producing party may claw it back, by request to the other side, without waiver of privilege protection). Such agreements may be essential in the highvolume, rapidly changing world of e-discovery, where 100 percent of privilege may be impossible, despite the best technology and the strictest human review. A more extreme form of clawback agreement (sometimes called the quick peek approach) takes as an organizing principle the notion that conventional privilege review takes too long and costs too much to be practical in an e-discovery world. Under the quick peek approach, the producing party makes all of its responsive documents available for review by the requesting party, without any initial effort to identify and withhold privileged documents. Instead, only when the requesting party designates specific documents for copying does a privilege review take place. At that point, the responding party, focusing only on the specific requested documents, may seek to withhold some of the documents on the grounds of privilege. The quick peek agreement between the parties endorses this procedure, and confirms that no waiver of privilege will occur as a result of voluntary disclosure of privileged material (in the initial review process). The new rules suggest that the foregoing forms of non-waiver agreement may be appropriate for discussion between the parties at or prior to the first court conference in a case. The rules further suggest that the court itself may embody such an agreement in a matter of course. What the new rules do not address, however, is the reach of such an order. Such an order technically only applies in the case in which it is entered. Consider, therefore, the party involved in multiple (perhaps serial) litigation. If it produces privileged information in one case, might a litigant in a subsequent case claim waiver of privilege (even though a non-waiver agreement and order may be entered in the first case)? The answer is almost certainly affirmative, and the subsequent question (whether the second court will respect the initial court s non-waiver 54 NEW JERSEY LAWYER April 2007

55 order) cannot be answered strictly on the terms of the new rules. As a result, an amendment to the federal Rules of Evidence (proposed FRE 502) has been developed. At the present time, the advisory committee has issued its report on the proposed amendment and is accepting comments. For now, the new rules address some, but not all, of the problems. Finally, the new rules provide a procedural answer to the question of how to deal with allegedly privileged materials once they are in the hands of an adversary. The new rules make clear that, on request by a producing party, a receiving party must segregate (and not use) allegedly privileged materials, and must return such materials to the producing party, or seek direction from the court on the propriety of the privilege invocation. The new rules, however, do not address the substance of privilege and waiver claims. Rather, they establish a mechanism (arguable best practice, even before the new rules) to maintain the status quo, pending resolution of the privilege dispute. the New York Law Journal ALM Properties Inc. All rights reserved. Further duplication without permission is prohibited.) Steven C. Bennett is a partner at Jones Day and chair of the firm s e-discovery committee. Heightened Awareness Perhaps the largest change engendered by the development of the new rules (a process that has unfolded over the course of the past five years) is the heightened awareness of e-discovery issues the rules have provoked, for bench and bar. The number of continuing legal education and judicial training programs on the subject has steadily grown, and sophisticated parties and their counsel are preparing to exploit the procedures suggested by the new rules. It is fair to say that those who have not studied and embraced the new rules may find themselves at an distinct disadvantage. (Editor s Note: Reprinted with permission from the Dec. 13, 2006 edition of NEW JERSEY LAWYER April

56 ATTORNEY ETHICS Office of Attorney Ethics Disciplinary Summaries The following regular feature includes summaries of actual ethics cases provided by the Office of Attorney Ethics. RPC 1.15(b): Non-Payment of Physician and Other Third-party Liens In the Matter of Craig Altman, Unpublished DRB Decision (June 17, 1999)(Admonition). The respondent issued a letter of protection to a medical provider, indicating that his client s medical bills would be paid from any anticipated settlement proceeds. Thereafter, the respondent settled the matter in his client s behalf and received a settlement check in the matter. However, the provider s bill was not paid, despite several subsequent reminders from the medical provider that the bill remained unsatisfied and follow-up assurances from the respondent that he would guarantee payment. In Re Zeitler, 158 N.J. 181 (1999)(Reprimand). The respondent represented his client in a workers compensation action against his employer, as well as in a third-party action against the premises owner where his client fell and sustained injuries. The attorney received notice of a compensation lien from the workers compensation insurance carrier (in a specific dollar amount). Thereafter, he settled the third-party action against the premises owner in his client s behalf. As a condition of settlement, the insurance carrier for the third-party required assurances from the respondent regarding payment of medical bills and liens. The respondent thereafter sent the carrier a letter representing that he would pay all outstanding bill and liens with respect to the workers compensation claim from the settlement proceeds, and indemnify and hold the third-party carrier harmless for liens or money owed as a result of the workers compensation claim. On receipt of the settlement proceeds of the third-party action, the respondent disbursed the entire amount to his client and to himself. In doing so, he maintained that the compensation carrier s lien was not fixed or ripe for payment (because that matter was still in progress). Furthermore, he believed that ultimately the compensation carrier would be required to pay the client additional monies on the workers compensation claim. Finally, the respondent maintained that he owed no duty to the compensation carrier because it did not have an interest in the third-party settlement proceeds since it had failed to perfect its lien; and that he was not a fiduciary for the compensation carrier, but rather owed a duty to the thirdparty carrier and premises owner. The Disciplinary Review Board (DRB) found that based on his affirmative representation to the third-party carrier that he would pay any bills and liens from the settlement, the respondent had a fiduciary obligation to the third-party carrier to address the compensation carrier s lien, and should not have disbursed the settlement funds until he had either paid the lien or reached an agreement with the compensation carrier regarding the lien. Because of the respondent s past ethics history, the DRB recommended that a reprimand be imposed for his violation of RPC 1.15(b), instead of an admonition, and the Supreme Court agreed. In Re Sonstein, 174 N.J. 293 (2002) (Three-month suspension). The respondent represented his client in both a workers compensation claim against her employer and a third-party action against the maintenance contractor allegedly responsible for his client s injuries. The workers compensation carrier notified the respondent of its specific lien amount for medical and temporary disability payments made to the client (as well as an undetermined amount for permanent disability). The respondent acknowledged the lien, and assured the compensation carrier that its interests would be protected. Thereafter, the respondent settled the third-party action with the carrier for the maintenance contractor, agreeing in the release to satisfy any liens from the proceeds of settlement. The carrier for the third-party/maintenance contractor then sent the respondent a draft payable to the client, to the respondent, and to the compensation carrier. The respondent did not notify anyone of his receipt of the draft, endorsed all signatures without consent, and deposited it into his trust account. Thereafter, he disbursed the proceeds to his client and to himself, holding only slightly more than half the amount of the lien reflected in the original lien letter. The DRB found the respondent acted with deceit when he improperly endorsed the settlement draft and failed to satisfy the lien after having assured the lienholder that he would do so, and recommended a three-month suspension for his violation of RPC 1.15(b) (among others), instead of a reprimand, and the Supreme Court agreed. 56 NEW JERSEY LAWYER April 2007

57 THE LEGAL ARTS Reflections by Sheldon F. Margolis Irecently filed a motion in the superior court. I appeared on time at 9 a.m. as scheduled by the judge s clerk. The courtroom was packed with dark pinstriped suits, brown leather attaché cases, the New York Times and a hubbub of conversations. Attorneys were bragging to one another about one case or another. It seemed every attorney had their own war story to top another. At 10:15 sharp the judge took the bench and heard contested motions. I cautiously tiptoed to the judge s clerk (tiptoeing is still the required legal approach to the bench) and whispered that my motion was uncontested and would take just a few minutes. At a break in the action (the judge left the bench), the clerk informed me that she had brought my matter to the judge s attention. The judge, back on the bench 20 minutes later, commenced to conduct settlement conferences in his chambers. In order to ease my pain, I called my office for any messages (two new clients and a message from my wife that we had a dead tree in our backyard). I picked up a New York Times left on the seat by another attorney, completed the crossword and jumble, perused the obituaries (no one I knew), studied the financial pages with interest regarding the plummeting pineapple prices in Mexico and read a review of a new chamber music recital at the Lincoln Center. As the time passed, I thought about my first day in private practice just over 31 years ago. That day was more of an education than all of my law school courses. I hope the following is found interesting and perhaps somewhat amusing by the general bar. By the way, my motion took 15 minutes and I was on my way at 1:35 p.m. The click from my clock radio, which occurs a fraction of a second before the music starts, awoke me. It was 6 a.m. I had to arrive early on my first day of work to prove to the hiring partner I was an industrious and hard-working new attorney. I took a quick shower, shaved with a new blade against the grain and carefully groomed my mustache. I had laid my clothes out the night before, and carefully put on new underwear (fresh from the package); starched white shirt; threepiece, pinstriped, dark blue suit, conservative red tie, and black, spit-shined, wing-tipped shoes that would have made the Marines proud. I grasped my new briefcase, with my initials embossed in the leather, a gift from my parents, which was empty expect for a new Cross pen and pencil set (a bar mitzvah gift I had seven of them), and ran off. After a quick cup of industrial-strength coffee and a buttered roll at the local 7-Eleven, I was finally mentally and physically prepared to protect the world against injustice. I arrived at 8 a.m., an hour early, but had to sit in my car until the receptionist made an appearance at 8:59 to open the office. We cordially introduced ourselves, and I thought she murmured to herself something about he ll learn. I followed her through a maze of hallways, corridors and doors. At the very back of the office, in the corner between the copy machine and the file room, she pointed to a door with my name on it. The door would not fully open due to the placement of the water cooler. I accepted her apology that my printed nameplate was still on order, but I commented that whoever wrote my name on a piece of yellow lined paper and taped it on the door had beautiful handwriting. She shook her head and left. I squeezed myself through the door, barely missing the water cooler, and with great anticipation, I swear (under oath), I saw an aura of light form in my office and heard the Mormon Tabernacle Choir in 50-part harmony sing amen. The office even smelled of justice, though I quickly determined it was from a water leak behind the wall. It was furnished with the basics: worn desk, three chairs and a gray, old, dented, discolored metal file cabinet. I carefully hung my diplomas on the wall with great pride. I gathered a few loose paper clips and rubber bands and neatly placed them into the little compartments in one of my desk drawers. I sharpened about a dozen pencils to a fine point. I took out a legal pad I found in another drawer and placed it exactly in the middle of my desk, ready for action. NEW JERSEY LAWYER April

58 My mind suddenly drifted, and I envisioned myself standing in a packed courtroom holding the judge and jury spellbound with my eloquent orations on behalf of my client. Their eyes were affixed to me, nodding with approval, even a clap here and there, as I spoke of truth, justice and the American way. The obvious favorable jury verdict was proceeded by a hug from my client, cheers from the standing-room-only courtroom, fellow attorneys patting me on the back, a nod of approval from the judge, overwhelming smiles from the jury, and my humble statement to a young Mike Wallace from 60 Minutes, who was covering the trial and, yes, of course, he questioned my credentials. My interview with Ted Koppel on Nightline was prematurely interrupted by the buzz on my intercom. I was connected with the senior partner. I listened for a few seconds, placed the phone back on the receiver, and I am confident that one could not differentiate the look on my face from a deer in headlights. A bead of perspiration formed on my brow, and my stomach initiated a discussion with me. The senior partner was trying a case at the courthouse and, due to a conflict with another case scheduled for the same time, I was the only attorney available to handle the matter. I wasn t yet ready to balance the scales of justice. I still had more pencils to sharpen. The perspiration oozed through my shirt. I grabbed my legal pad and briefcase, and with only one wrong turn found myself at the front door. After reaffirming that old adage, I obtained directions from the receptionist and proceeded to the courthouse. The senior partner handed me a file, introduced me to the client, reassured him that I was totally familiar with the case and that I was the firm s lead attorney on these types of matters. He directed me to the judge hearing small claims matters. The perspiration had now oozed through my vest. I argued my case with confidence, though I had to keep my arms by my side due to the moon-shaped perspiration stains that penetrated my suit jacket. I had hoped that no one suspected I had been practicing law for less than an hour (45 minutes of which consisted of sharpening pencils and my trip to the courthouse). After presenting my client s testimony, the pro se defendant, a very nice older gentleman, presented his side of the story, which was compelling and, may I say, honest. However, I cross-examined him as if he had been accused of murder rather than failing to pay $200 to my client for waxing his basement floor. I was intimidating and unrelenting in my cross-examination, to my own surprise. I was able to prove to the judge that the defendant had signed a contract for two men to wax the floors. The fact that one performed the actual labor and the other supervised was a mere technicality, and therefore, the defendant was liable to pay $50 an hour for each man. The entire case was over in 20 minutes. The judge ruled in favor of my client for $200 plus interest and costs of suit. There were no cheers from the gallery, nor fellow attorneys patting me on the back (the courtroom was practically empty). Mike Wallace was nowhere to be found, not to mention that Nightline was not on that evening due to a football game that ran over its time limit. The judge s ruling would never be cited in any legal text. My client shook my hand and sneered at the defendant. The defendant was shaking his head with a look of utter frustration. As I turned to leave the courtroom, I noticed the senior partner sitting in the back of the courtroom (unbeknownst to me he was there the entire time) with a huge Cheshire cat grin on his face. I exited the courtroom with a sense of satisfaction and accomplishment; however, I experienced mixed emotions. Law school had not prepared me for the human side of the law. The click from my clock radio, which occurs a fraction of a second before the music starts, awoke me. It was 6 a.m. I pushed the snooze button. 58 NEW JERSEY LAWYER April 2007