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Tuesday, April 23, 2019

Physicians, Hospitals, Clinics, And Other Health Care Providers Beware HHS Interpretation Of HIPAA Compliance Rules

 

As MD Anderson has learned the hard way over the past couple years HHS' interpretation of Mandatory versus Addressable HIPAA compliance rules and regulations can vary from the business practices of many Physicians, Hospitals, and other Health Care Organizations.

HIPAA provides many compliance rules that health care organizations must follow.  Those must follow rules are commonly referred to as "Mandatory".  Mandatory rules and requirements must be implemented to avoid HIPAA compliance problems.  There are however another set of rules and requirements that are not listed as Mandatory.  Instead these rules and requirements are listed as "Addressable".  Addressable rules have been treated by many Health Care Organizations as optional or merely suggestions by the government.

HHS however has made it clear in pursuing large fines against MD Anderson that the Addressable rules and requirements are more mandatory than optional.

HHS has ruled in the MD Anderson case that Addressable rules and requirements, specifically in the MD Anderson case the use of encryption techniques to secure electronic protected health care information, are MANDATORY unless the health care organization can demonstrate reasonable reasons why any particular Addressable rule and requirement does not need to be followed.

In the MD Anderson case a laptop and a few thumb drives were lost or stolen.  As a result the unencrypted electronic protected health information was disclosed to unauthorized persons.  MD Anderson contended that since encryption was an Addressable rule and requirement it was optional and therefore MD Anderson was not at fault for the unauthorized disclosures.

HHS says MD Anderson is wrong.  HHS says Addressable rules and requirements such as encrypting electronic protected health information is MANDATORY, and NOT optional, unless the health care organization can demonstrate a reasonable basis for why the Addressable rule and requirement in question does not need to be followed.

HHS ruled MD Anderson had not made any showing of a reasonable basis for not following the Addressable encryption of data rule, and therefore levied substantial penalties on MD Anderson.

MD Anderson is appealing to the courts, but their legal fight seems to be an uphill battle.

Best practice for any physician or health care organization is to treat Addressable rules and requirements, such as encryption of data, as Mandatory, unless they have some very strong and reasonable reasons why any specific Addressable rule and requirement does not need to be followed.


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All Persons And Businesses Must Report Large Cash Transactions To The IRS - NOT JUST BANKS !!

 
Federal law requires a person to report cash transactions of more than $10,000 by filing IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.

 

The information on the form helps law enforcement combat money laundering, tax evasion, drug dealing, terrorist financing and other criminal activities.
 

Who is covered

By law, a “person” is an individual, company, corporation, partnership, association, trust or estate. For example, dealers in jewelry, furniture, boats, aircraft or automobiles; pawnbrokers; attorneys; real estate brokers; insurance companies and travel agencies are among those who typically need to file Form 8300.

Tax-exempt organizations are also “persons” and may need to report certain transactions. A tax-exempt organization doesn’t have to file Form 8300 for a charitable cash contribution. Note, however, that under a separate requirement, a donor often must obtain a written acknowledgement of the contribution from the organization. See
Publication 526, Charitable Contributions, for details. But the organization must report noncharitable cash payments on Form 8300. For example, an exempt organization that receives more than $10,000 in cash for renting part of its building must report the transaction.

 

What’s cash

For Form 8300 reporting, cash includes coins and currency of the United States or any foreign country. It’s also a cashier’s check (sometimes called a treasurer’s check or bank check), bank draft, traveler’s check or money order with a face amount of $10,000 or less that a person receives for:
  • A designated reporting transaction or
  • Any transaction in which the person knows the payer is trying to avoid a report.

Note that under a separate reporting requirement, banks and other financial institutions report cash purchases of cashier’s checks, treasurer’s checks and/or bank checks, bank drafts, traveler’s checks and money orders with a face value of more than $10,000 by filing currency transaction reports.

A designated reporting transaction is the retail sale of tangible personal property that’s generally suited for personal use, expected to last at least one year and has a sales price of more than $10,000. Examples are sales of automobiles, jewelry, mobile homes and furniture.

A designated reporting transaction is also the sale of a collectible, such as a work of art, rug, antique, metal, stamp or coin. It is also the sale of travel and entertainment, if the total price of all items for the same trip or entertainment event is more than $10,000.

 

Reporting cash payments

A person must file Form 8300 if they receive cash of more than $10,000 from the same payer or agent:
  • In one lump sum.
  • In two or more related payments within 24 hours. For example, a 24-hour period is 11 a.m. Tuesday to 11 a.m. Wednesday.
  • As part of a single transaction or two or more related transactions within 12 months.

Examples of reporting situations

Automobile dealerships

  • If a husband and wife purchased two cars at one time from the same dealer, and the dealer received a total of $10,200 in cash, the dealer can view the transaction as a single transaction or two related transactions. Either way, it calls for only one Form 8300.
     
  • A dealership doesn’t file Form 8300 if a customer pays with a $7,000 wire transfer and a $4,000 cashier check. A wire transfer is not cash.
     
  • A customer purchases a car for $9,000 cash. Within 12 months, the customer pays the dealership cash of $1,500 for accessories for that car. The dealer doesn’t need to file Form 8300, unless they knew or had reason to know the transactions were connected.

Taxi company

Weekly lease payments in cash from a taxi driver to a taxi company within 12 months is considered the same transaction. The taxi company needs to file Form 8300 when the total amount exceeds $10,000. Then, if the company receives more than $10,000 cash in additional payments from the driver within 12 months, the company must file another Form 8300.

 

Landlords

Landlords need to file Form 8300 once they’ve received more than $10,000 in cash for a lease during the year. But a person not in the trade or business of managing or leasing real property, such as someone who leases their vacation home for part of the year, doesn’t need to report a cash receipt of more than $10,000.

 

Bail-bonding agent

A bail-bonding agent must file Form 8300 when they receive more than $10,000 in cash from a person. This applies to payments from persons who have been arrested or anticipate arrest. The agent needs to file the form even though they haven’t provided a service when they received the cash.

 

Colleges and universities

Colleges and universities must file Form 8300, if they receive more than $10,000 in cash in one or more transactions within 12 months.

 

Home builders

Home builders and contractors need to file Form 8300 if they receive cash of more than $10,000 for building, renovating or remodeling.

 

When to file Form 8300

A business must file Form 8300 within 15 days after the date the business received the cash. If a business receives later payments toward a single transaction or two or more related transactions, the business should file Form 8300 when the total amount paid exceeds $10,000.

Each time payments aggregate more than $10,000, the business must file another Form 8300.

How to file

A person can file Form 8300 electronically using the Financial Crimes Enforcement Network’s BSA E-Filing System. E-filing is free, quick and secure. Filers will receive an electronic acknowledgement of each submission.

Those who prefer to mail Form 8300 can send it to Internal Revenue Service, Federal Building, P.O. Box 32621, Detroit, MI  48232. Filers can confirm the IRS received the form by sending it via certified mail with return receipt requested or calling the Detroit Federal Building at
866-270-0733.

 

Taxpayer identification number

Form 8300 requires the taxpayer identification number (TIN) of the person paying with cash. If they refuse to provide it, the business should inform the person that the IRS may assess a penalty.

If the business is unable to obtain the customer’s TIN, the business should file Form 8300 anyway. The business needs to include a statement with Form 8300 that explains why the form doesn’t have a TIN. The business should keep records showing it requested the customer’s TIN and give the records to the IRS upon request.

Informing customers about Form 8300 filing

The business must give a customer written notice by Jan. 31 of the year following the transaction that it filed Form 8300 to report the customer’s cash transaction.
  • The government doesn’t offer a specific format for the customer statement, but it must:
  • Be a single statement aggregating the value of the prior year’s transactions,
  • Have the name, address and phone number of the person who needs to file the Form 8300 and
  • Inform the customer the business is reporting the payment to the IRS.

A business can give a customer who only had one transaction during the year a copy of the invoice or Form 8300 as notification if it has the required information. The government doesn’t recommend using a copy of Form 8300 because of sensitive information on the form, such as the employer identification number or Social Security number of the person filing the Form 8300.

A business may voluntarily file Form 8300 to report a suspicious transaction below $10,000. In this situation, the business doesn’t let the customer know about the report. The law prohibits a business from informing a customer that it marked the suspicious transaction box on the form.

 

More information:



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Texas Supreme Court Upholds Contractual Waiver Of Punitive Damages.

 
The Texas Supreme Court rendered a decision on the issue of a contractual waiver of punitive damages in a case alleging fraud.

This case was based on a transaction involving the purchase of a new airplane that actually contained repaired engines. The plaintiffs in the underlying case were successful in the trial court on a fraud claim and received an award of punitive damages. 

However, there were limitations of punitive damages contained in two applicable agreements. The purchase agreement provided that Bombardier will not be liable for punitive damages arising out of “services rendered or delivered under this Purchase Agreement.” The second agreement, a management agreement, stated “Neither party hereto may be held liable to the other party for any indirect, special or consequential damages and/or punitive damages for any reason.”

In upholding the validity of the waiver of punitive damages case, and reducing the judgment, the Texas Supreme Court explained:

"As the plaintiffs point out, we have held that 'fraud vitiates whatever it touches.' . . . We have never held, however, that fraud vitiates a limitation-of-liability clause. We must respect and enforce terms of a contract that parties have freely and voluntarily entered."
The Court continued, "And the plaintiffs 'cannot both have [the] contract and defeat it too.' . . . Rather than seeking rescission of the agreements based on Bombardier’s fraudulent conduct, the plaintiffs have tried to enforce the agreements, seeking an award of actual damages, while at the same time seeking to strike the limitation-of-liability clauses to receive an exemplary damages award."

The Court reasoned, "In balancing the competing interests between protecting parties from 'unintentionally waiving a claim for fraud' and 'the ability of parties to fully and finally resolve disputes between them,' we believe parties can bargain to limit exemplary damages. We note that the purchasing parties did not waive a claim for fraud; they only waived the ability to recover punitive damages for any fraud. As such, the valid limitation-of-liability clauses must stand."

The case is Bombardier Aerospace Corporation v. SPEP Aircraft Holdings, LLC,

 
The Texas Supreme Court's Opinion can be found here.
 
Full Article At:
 
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Adopting Pay-For-Performance Compensation Plans At Family Offices To Recruit And Retain Talent

 

Most public companies have developed long-term compensation programs that measure performance metrics over time (often over three years), and that typically reward senior executives for meeting clearly identified benchmarks.

 

These plans seek to align the interests of employees with those of owners (i.e., shareholders in the public markets).  Alignment, along with the retentive value of long-term incentives, has proven to be a successful way to ensure “pay-for-performance” and continuity within an organization.

 
But what about the compensation plans within private companies, including family offices? Whether led by a family member or another governance structure, a comprehensive compensation program that aligns stakeholder interests is critical to a successful organization. Following the public company model, rewarding key executives for value enhancement is the cornerstone of a pay-for-performance approach to compensation planning. Pay-for-performance clearly incents internal stakeholders and aligns the interests of the family office in providing the capital for those who are directing its investments (and upon whose performance the compensation depends). Further, pay-for-performance has become an integral tool for family offices to attract and retain top talent.
 
Most compensation programs have a three-pronged goal to incent, motivate and retain. Prudent investment, coupled with a properly structured compensation program, enables organizations to satisfy those three prongs because the ability to tie compensation directly to profitability incents and motivates and is often an expectation of top talent. The long-term nature of many family office investments fosters retention.
 
Here are some key considerations and best practices for the development of compensation plans that enable family offices to engage and retain top level talent.
 
Compensation factors
 
  • A well-thought-out compensation structure for executives comprises three elements: base salary, annual bonus, and long-term incentive plans (LTIPs):
  • Base salary. Seemingly obvious, but meaningful base compensation rewards a professional’s time and efforts since, without guaranteed success of every initiative/transaction, compensation cannot be solely tied to successful outcomes. Otherwise, most professionals will seek to limit risk.
  • Annual bonus. Although annual bonuses tend to be discretionary (see chart below), annual bonuses are useful if there are certain specific objectives that leadership would like to see achieved.  For example, specific HR or operational objectives are common.
  • Long-Term Incentive Plans (LTIPs). These plans intend to incent and retain talent by enabling them to create wealth alongside the family through metrics that align professionals with owners.  More recently, family offices have begun to allow (or even require) their senior-most executives to co-invest (with their own funds or funds lent by the family office), which cultivates a sense of ownership and further aligns the interests of all parties.
  • Vesting. Due to the long-term nature of successful initiatives/transactions, family offices often require several years of vesting even after value has been created.
 
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Director Access to Corporate Books and Records

 

The Court of Chancery recently affirmed the long-standing principle that directors of Delaware corporations are vested with “virtually unfettered rights to inspect books and records” of the company they serve. Schnatter v. Papa John’s Int’l., Inc. C.A. No. 2018-0542-AGB (Jan. 15, 2019). The Chancellor went on to reiterate that a director of a Delaware corporation that makes a demand to inspect the books and records of the corporation pursuant to Sec. 220 of the Delaware General Corporation Law should generally have “access at least equal to that of the remainder of the board.”

Directors of a company make a prima facie case for a statutory inspection of books and records where they show that: (a) they are a director, (b) they have demanded an inspection, and (c) the demanded inspection has been refused. Upon that showing, the company will then bear the burden of proving that the director making the demand for inspection was for an improper purpose–that is, the director’s “motives are improper, or that they are in derogation of the interest of the corporation. . . .”

 

Full story at link

 

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Startups And Founders NOTE: Now besides making a Section 83(b) election most also get a Section 83(i) election

 
For private corporations and their employees, IRS provides initial guidance on new tax benefit for stock options and restricted stock units

 


The Internal Revenue Service issued Notice 2018-97 offering guidance on a recent tax law change that allows qualified employees of privately-held corporations to defer paying income tax, for up to five years, on the value of qualified stock options and restricted stock units (RSUs) granted to them by their employers.
 

The tax law change was included in the 2017 Tax Cuts and Jobs Act (TCJA). In general, executives, highly-compensated officers and those owning one percent or more of the corporation’s stock cannot make the deferral election. Federal Insurance Contributions Act (FICA) tax and Federal Unemployment Tax Act (FUTA) tax payable on the value of qualified stock may not be deferred.

Notice 2018-97, posted today on IRS.gov, offers initial guidance taxpayers can rely on until proposed regulations are issued and requests public comment on additional issues that should be addressed in those regulations.
 

Updates on this and other TCJA provisions can be found on the Tax Reform page of IRS.gov.

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