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Virtual meetings increase public access

By C. Eric Davis

This article appeared as a Guest Column in The Journal Record on April 21, 2021.

As schools and businesses increasingly met virtually over the past year, so too did Oklahoma’s governmental bodies, including boards of education, city councils, and state commissions. Today, largely as a result of the pandemic, online governmental meetings are commonplace, available to anyone with access to the internet. This increased accessibility has made it easier for Oklahomans to participate in government at all levels, an outcome that is in keeping with Oklahoma’s laws designed to ensure governmental transparency.

attorney Eric Davis

Eric Davis is an attorney in the Firm’s Clean Energy Practice Group and the Government Relations and Compliance Practice Group. He represents clients in a range of regulatory and energy matters.

In particular, Oklahoma’s Open Meeting Act requires public access to governmental meetings in order “to encourage and facilitate an informed citizenry’s understanding” of their government. The act requires that the meetings of all governmental boards and commissions be open to the public, and that advance notice of the time, place, and purpose of meetings be posted in advance. Prior to 2020, the Open Meeting Act mandated a majority of a public body’s members be physically present together to hold a meeting. However, amendments since March 2020 have given public bodies temporary flexibility to meet virtually, leading to an increased presence of meetings online, and thus increased public accessibility.

The recent amendments to the Open Meeting Act, however, have otherwise left the act’s preexisting requirements in place. For instance, meeting agendas must still be publicly posted in advance, votes of individual members must be recorded, and meeting minutes must be kept and made available. Moreover, meetings must continue to be accessible to all those who wish to attend. Thus, if a meeting is held via videoconference, those who wish to watch may not be excluded due to the online room’s capacity limits. Instead, accommodations must be made so that all those who wish to participate can.

Recognizing the benefits of online access to public meetings, Oklahoma lawmakers are now considering legislation that would mandate, to the extent practicable, that all public meetings include a livestream. Similar efforts to modernize open meeting laws are underway in states across the country.

Whether it be school redistricting or local zoning decisions, actions taken at public meetings affect all of us. If travel or time conflicts have deterred you from attending public meetings in the past, consider taking advantage of the increased access via the internet. As public engagement grows, so too will the diversity of viewpoints, providing public bodies with increased input and, perhaps, leading to more durable public policy.


For more information on how the information in this article may impact your business, please call 405.606.4757 or email C. Eric Davis.

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Jennifer Christian, Kayla Kuri join Phillips Murrah’s legal team in Oklahoma office

Attorney Jennifer Christian

Jennifer K. Christian – Click to view profile

OKLAHOMA CITY (March 1, 2021) – Phillips Murrah is proud to welcome Jennifer K. Christian and Kayla M. Kuri to the Firm’s legal team.

Jennifer Christian is an Of Counsel attorney who assists clients in a wide range of transactional matters and litigation involving business law, contractual disputes, real estate, banking, healthcare, business divorce, construction, trust administration, insurance coverage and bad faith, and employment-related matters.

Jennifer’s practice includes helping clients in understanding business challenges and finding solutions that coincide with and advance their objectives and interests, whether it relates to business formation or restructuring, risk management, or litigation. She serves as a volunteer for the Oklahoma County Bar Association’s Lawyers for Learning Committee, and she is a member the OBA Client Security Fund Committee and Leadership Oklahoma City’s LOYAL Class VIII.

A native Oklahoman, Jennifer attended the University of Oklahoma, where she received her Bachelor of Arts in Letters with honors in 2003. In 2007, she received her Juris Doctorate, summa cum laude, from the Oklahoma City University School of Law and was honored as the Outstanding Graduate for the class of 2007.

While in law school, Jennifer was the Editor-in-Chief for the Oklahoma City University Law Review, a pupil in the Ruth Bader Ginsberg Inn of Court, a Merit Scholar and a member of Phi Delta Phi. Her article, “Whistleblower Protection Under Sarbanes-Oxley: Key Provisions and Recent Case Developments,” was selected for publication in the 2006 edition of the Oklahoma City University Law Review. Jennifer was also a recipient of the Dean’s Circle Scholarship and academic achievement awards in the areas of civil procedure, corporations, legal research and writing, evidence, bankruptcy, agency and partnership, comparative law, and conflicts of law.

Attorney Kayla M Kuri

Kayla M. Kuri – Click to view profile

Kayla Kuri is an Associate attorney who represents individuals and both privately-held and public companies in a wide range of commercial and business matters, including mergers and acquisitions, real estate transactions, private securities offerings, and commercial financing transactions.

Kayla has represented clients across many industries in structuring, negotiating, and documenting business transactions, with an emphasis on merger, acquisition, and divestiture transactions. Kayla counsels public and private companies on matters related to corporate governance and routinely drafts and negotiates a wide range of commercial contracts. In addition, Kayla also has extensive experience representing oil and gas industry clients in drafting and negotiating various industry-related agreements, including master services agreements.

While in law school, Kayla was Assistant Managing Editor of the Oklahoma Law Review, as well as a member of the Dean’s Leadership Council and the Ruth Bader Ginsberg Inn of Court. She received the American Jurisprudence Award in business associations, real estate transactions, wills and trusts, conflicts of law, and criminal procedure. Kayla was also a recipient of the Comfort “Top Ten” Scholarship and graduated with highest honors.

Kayla grew up in Beebe, Arkansas, but she now lives in Oklahoma City and considers herself a true “Okie.” In her free time, she enjoys spending time with friends and family, cooking, and traveling.

 


CONTACT:

Phillips Murrah – Oklahoma City Office:
101 N. Robinson Ave., Thirteenth Floor
Oklahoma City, OK 73102

Main: (405) 235-4100
Fax: (405) 235-4133

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McMahan elected to OCBA Young Lawyers Division board

Attorney Natalie M. McMahan is a litigation attorney who represents individuals and both privately-held and public companies in a wide range of civil litigation matters.

The Oklahoma County Bar Association elected Attorney Natalie M. McMahan to the Board of Directors for the Young Lawyers Division (YLD) for 2021.

“I am looking forward to being connected to the larger community of young attorneys in Oklahoma County,” McMahan said. “The Board’s efforts to connect its members and contribute to the larger community through service and philanthropy are important to the profession and to me.

“I’ve already enjoyed getting to know the Board and look forward to becoming more involved as event planning resumes later this year.”

McMahan will serve as a member of the YLD Board of Directors through November.

The YLD was organized in 1966 to provide an avenue for Oklahoma’s young lawyers, who have been in practice for 10 years or less, to work on bar-related and public service-related projects.

In 2019, the Firm was honored by OCBA YLD with the “Friend of the YLD” award for the support Phillips Murrah and its attorneys have consistently displayed through volunteering and sponsorship.

Read more about McMahan and her legal experience here.

Carter accepted into Federation of Defense and Corporate Counsel

Michael Carter attorney portrait

Michael D. Carter is an experienced litigator and represents a wide variety of parties in environmental and toxic tort cases in state and federal courts.

Michael D. Carter, Phillips Murrah Of Counsel Attorney, has been accepted as a new member to the Federation of Defense and Corporate Counsel (FDCC).

“As an active member of Defense Research Institute (DRI), I was aware of the FDCC as an exclusive, invitation-only sister organization of DRI. I was honored and humbled to receive an invitation to apply and be vetted for membership in FDCC, and even more honored to be accepted as a member,” Carter said. “FDCC is famous for its collegiality and camaraderie, as well as substantive law programs.”

Carter is an experienced litigator and represents a wide variety of parties in environmental and toxic tort cases in state and federal courts. In addition, he is a long-time policy advisor on workers’ compensation issues in the state of Oklahoma.

“I am excited for the pandemic to wind down so I can network and participate with these illustrious members of the civil defense bar,” he said.

The FDCC was founded in 1936 and has maintained the mission of creating a network of established defense counsel, in which members are nominated and require approval before being accepted.

Read more about FDCC at its website here.

Director’s personal style featured on local fashion blog

Nikki Edwards for Maz Modern

Director Nikki Edwards is featured as the inaugural author of Maz Modern’s Tuesday Takeover column.

A standard is set for work attire in the legal field, but Director Nikki Edwards’ fashion sense caught the eye of local blog Maz Modern.

“A colleague of mine reached out and asked if I’d be interested in writing for her new website, and I accepted,” Nikki said. “I’m thankful I had a support team behind me.”

Nikki was tasked with writing Maz Modern’s inaugural Tuesday Takeover column, and Phillips Murrah’s Family Law team used their resources to band together and shoot portraits of her around the Firm’s office with just an iPhone.

Molly E. Tipton, Phillips Murrah Family Law Attorney, shared the article on social media telling readers to surround themselves with those that motivate and inspire them saying she’s “proud to call this intellectual powerhouse and stylish woman” her mentor.

“As a busy working mom/litigation director at Phillips Murrah, I have less time to shop than ever; hence my wardrobe reflects a cacophony of items, which create my style,” Nikki writes.

Visit Maz Modern to learn more about Nikki and find her tips for shopping local.

Richard, healthcare counsel to review Stark Law, Anti-Kickback Statute final rules

By Phillips Murrah Healthcare Attorney Mary Holloway Richard

Oklahoma Opioid Decision by Phillips Murrah healthcare attorney Mary Holloway

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families.

Final Rules have been issued for both the Stark Law (“Stark”) and the Anti-Kickback Statute (“AKS”).  Healthcare providers and their counsel have been awaiting these new rules for some time now.  In the days ahead, Phillips Murrah healthcare counsel will be studying the 627 pages of the Stark Final Rules and the 1,000 pages of the AKS Final Rules in order to advise our clients with regard to these changes.

Stark: 

The Final Rules for Stark establish new and permanent exceptions for value-based arrangements which will apply broadly to care provided for all patients and not just Medicare patients.  Stark will continue to act to limit overutilization of services, fraud and other abuse in the healthcare industry but will offer increased flexibility for current strategies and activities to encourage value-based arrangements, coordination and improvement of care which are both reasonable and beneficial to patients.

AKS: 

The Final Rule includes seven new safe harbors and modifications of four existing safe harbors.  In addition, there is a new exception for Civil Monetary Penalties Act for Beneficiary Inducements.  Of interest to counsel for both physicians and hospitals is the Final Rule’s clarification of Fair Market (“FMV”) as related to physician compensation.  FMV has been a continued troublesome of scrutiny and debate by all participants in the healthcare industry.  Also significant for many healthcare clients are the modifications and clarification of provisions related to cyber security and digital technology.

Director Nikki Edwards honored with OBA Mona Salyer Lambird award

The Oklahoma Bar Association’s Women in Law Committee has named Phillips Murrah Director Nicholle Jones Edwards as a 2020 Mona Salyer Lambird Spotlight Award recipient.

Nicholle Jones Edwards attorneyt

Nicholle Jones Edwards’ practice focuses on family law, labor law and general civil litigation. Her family law practice includes litigation, complex custody issues and valuation issues.

“Mona Lambird was a trailblazer and paved the way for me and so many others, serving as the first woman OBA president,” Edwards said. “I was only a young lawyer when she died tragically in 1999 and recall the loss to our legal community.

“The Mona Lambird award is the highest honor as the award represents ultimate leadership and mentorship in our profession.”

The Spotlight Awards were created in 1996 to annually honor five women who have distinguished themselves in the legal profession and who have “lighted” the way for other women. The award was later renamed to honor 1996 OBA President Mona Salyer Lambird.

Edwards is director in the Firm’s Family Law practice and has been recognized by The Journal Record with the Leadership in Law Award and as one of the 50 Women Making A Difference (2017). She is also active in community service, serving in leadership roles with Positive Tomorrows, the Oklahoma City Ballet, the Oklahoma Single Parent Scholarship Program, and previously with the University of Oklahoma’s Women & Gender Studies advisory board.

Phillips Murrah is proud of our efforts toward equity among female partners and is a regular supporter of the National Association of Women Lawyers. The Firm was also deemed a “Ceiling Smasher” by Law360 for ranking among the top 10 law firms of its size with the highest representation of women equity partners.

Read more about the Mona Salyer Spotlight Awards recipients here.

Latham to present CLE on home lending issues, COVID-19’s impact

Gretchen M Latham Web

Gretchen M. Latham’s practice focuses on representing creditors in foreclosure, bankruptcy, collection and replevin cases.

Attorney Gretchen M. Latham will present “COVID-19 House Issues for Lenders: Foreclosures, Replevins, Evictions, and Bankruptcy” this Thursday afternoon as part of a series of Continuing Legal Education courses for Oklahoma Bar Association’s annual meeting.

The virtual presentation will give an overview of the topics important to home lenders with a special focus on how COVID-19 has changed ways to navigate each.

“It is important for landlords to be sure they know what can and can’t be done before starting an eviction or foreclosure,” she said.

Viewers will be advised on how the CARES Act and Center for Disease Control and Prevention’s guidelines will continue to impact home lenders through the end of 2020 when CDC regulations on foreclosures and evictions are set to expire.

Latham brings over 15 years’ experience in creditor representation to her practice, assisting local lenders as well as national creditors. Her practice focuses on representing creditors in foreclosure, bankruptcy, collection and replevin cases in which she offers on a statewide basis as well as in all three Bankruptcy and Federal Court Districts in Oklahoma.

To see the full meeting agenda covering a scope of COVID-19 issues, visit OBA’s website here.

Phillips Murrah named among 2021 Best Law Firms in 47 practice areas

Phillips MurrahPhillips Murrah is proud to announce that our law firm has been recognized by U.S. News & World Report’s 2021 “Best Law Firms” for professional excellence for the Oklahoma City Metropolitan Area and the Dallas/Fort Worth area in the following practice areas:

Oklahoma City

Tier 1

  • Administrative / Regulatory Law
  • Banking and Finance Law
  • Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law
  • Business Organizations (including LLCs and Partnerships)
  • Commercial Finance Law
  • Commercial Litigation
  • Commercial Transactions / UCC Law
  • Corporate Law
  • Energy Regulatory Law
  • Financial Services Regulation Law
  • Government Relations Practice
  • Information Technology Law
  • Insurance Law
  • Litigation – Bankruptcy
  • Litigation – Labor & Employment
  • Litigation – Land Use & Zoning
  • Litigation – Real Estate
  • Litigation – Tax
  • Natural Resources Law
  • Product Liability Litigation – Defendants
  • Real Estate Law
  • Trusts & Estates Law

Tier 2

  • Employment Law – Management
  • Energy Law
  • Land Use & Zoning Law
  • Litigation – Banking & Finance
  • Mergers & Acquisitions Law
  • Oil & Gas Law
  • Personal Injury Litigation – Defendants
  • Public Finance Law
  • Securities Regulation
  • Tax Law
  • Water Law
  • Workers’ Compensation Law – Employers

Tier 3

  • Bet-the-Company Litigation
  • Construction Law
  • Environmental Law
  • Family Law
  • Health Care Law
  • Labor Law – Management
  • Litigation – Antitrust
  • Litigation – ERISA
  • Litigation – Trusts & Estates
  • Mass Tort Litigation / Class Actions – Defendants
  • Medical Malpractice Law – Defendants
  • Technology Law

Dallas/Fort Worth

Tier 3

  • Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law

 

To be eligible for a ranking, a law firm must have a lawyer listed in The Best Lawyers in America, which recognizes the top four percent of practicing attorneys in the United States.

Earlier in the year, Phillips Murrah announced that 61 of our attorneys are recognized by Best Lawyers in America for 2021.

Firms included in the 2020 “Best Law Firms” list are recognized for professional excellence, quality law practice and breadth of legal expertise. The “Best Law Firms” rankings are based on a combination of client feedback, information provided on the Law Firm Survey and the Law Firm Leaders Survey and Best Lawyers peer-review.

NextGen Under 30 awards Kendra Norman in legal field

As the American labor force evolves to accommodate an influx of millennial-generation employees, standing out in a flooded career field grows more competitive and valuable.

Kendra Norman Web

Kendra M. Norman represents individuals and businesses in a broad range of transactional matters.

NextGen Under 30, which names top performing Oklahomans under 30 years of age across various industries, has named Attorney Kendra M. Norman to its 2020 honorary list in the Law category.

“I’m extremely honored to receive this award a few short weeks before I turn 30,” Norman said. “There are so many other amazing recipients, including several of my LOYAL XV classmates with which I am so excited to celebrate!

“I appreciate the opportunity to make a difference in the Oklahoma City as an attorney and as a volunteer in the community, and I am very grateful to be recognized for those efforts!”

NextGen recognizes strives to highlight the accomplishments of individuals who are making a difference within their respective industries and who demonstrate talent, drive and service to their communities.

“Kendra is not only outstanding in her role as an attorney with Phillips Murrah, but also impressive in the roles she’s taken upon herself in supporting her community and fostering connections with students who plan to enter the legal field,” said Joshua L. Edwards, Director and Transactional Practice Group Leader. “Phillips Murrah recognizes the potential our younger lawyers have to be successful leaders in the firm and in the community, and we seek to encourage and support them in their development.

“Kendra is a prime example of what can be accomplished when dedicated and compassionate individuals thrive in their practice and in their community involvement, and we are proud she is honored as NextGen Under 30 recipient.”

Honorees had the opportunity to meet and network at an Oct. 19 social event at the Oklahoma State Capitol.

“It was really awesome to meet so many other recipients from around the state and talk to young leaders in several different professions,” Norman said.

NextGen chose 379 Oklahomans as 2020 award winners in 20 career categories from 241 companies and organizations.

Read the full list of winners on NextGen’s website here.

Vicarious liability – Physicians can take steps to minimize risk

The following column was originally published in The Journal Record on October 5, 2020.


Martin J. Lopez portrait

Martin J. Lopez III is a litigation attorney who represents individuals and both privately-held and public companies in a wide range of civil litigation matters.

By Phillips Murrah Attorney Martin J. Lopez III

Between 2003 and 2020, the number of certified physician assistants practicing in the United States increased by over 220%. Set against this landscape of PA’s increasing role in health care, supervising physicians must be especially mindful of their responsibilities.

According to the Oklahoma’s Physician Assistant Act, a PA may practice medicine and prescribe drugs and medical supplies only under the supervision and direction of a state-licensed physician. The OPAA requires that the supervisory relationship be articulated and agreed upon by means of a practice agreement, which accounts for protocols and the scope of practice, as well as the PA’s education, training, skills and experience.

For physicians already juggling a busy patient caseload and bearing the responsibility of supervision and delegation of decision-making authority for up to four PAs at once, it is not uncommon for them to abrogate this responsibility by taking a hands-off or passive approach to this working relationship. However, they must be aware that the governing statute establishes that “at all times, a physician assistant shall be considered an agent of the delegating physician.”

This is known in the law as establishing vicarious liability. While no reported case in Oklahoma has actually held a physician vicariously liable for the acts or omissions of a PA, the statutory language creates the possibility of the extension of PA liability to the supervising physician.

While supervising physicians need not be physically present nor consulted in each instance of PA patient care, they must be readily available through telecommunication and appropriately participate in services provided by the PA. The statute specifically notes the supervising physician must:

  • Be responsible for the formulation or approval of all orders and protocols that direct the delivery of services provided by a PA, and periodically review such orders and protocols.
  • Regularly review the services provided by the PA and any problems or complications encountered.
  • Review a sample of outpatient medical records at a site specified in the practice agreement.
  • While the OPAA sets forth the scope of physician supervision of a PA and participation in a PA’s practice, there are a number of steps that can be taken to minimize physician risks of vicarious liability:
  • Pay careful attention to credentials and qualifications during the PA hiring process.
  • Ensure that the practice agreement includes a listing of the PA’s scope-of-practice responsibilities, and the requirements and limitations of the physician’s delegation authority.
  • Specify aspects of care that require prior physician consultation or approval.
  • Include language setting out the manner in which the record review requirement will be met by the PA and physician.

Once the PA begins practice, the supervising physician is advised to actively monitor the PA to ensure compliance with the practice agreement and that the PA provides patient care in a manner that does not exceed the PA’s level of skill and competence. Likewise, the physician should foster an environment in which the PA’s consultation with the physician is not perfunctory, but is actively encouraged to a meaningful extent to further the care rendered to the patient.

As with so many issues in health care today, risk is based not only upon regulatory language but also upon an analysis of the facts. Potential vicarious liability risk is mitigated by beginning with a practice agreement that takes all of these requirements and concerns into account.

Martin J. Lopez is an attorney at the law form of Phillips Murrah.

Proactive tech considerations in the era of the virtual workplace

The following column was originally published in The Oklahoman on October 4, 2020.


Hilary Hudson Clifton Web

Hilary Hudson Clifton is a litigation attorney who represents individuals and both privately-held and public companies in a wide range of civil litigation matters. Click photo to visit her attorney profile.

By Phillips Murrah Attorney Hilary H. Clifton

As thousands of workers continue to clock in remotely each day, many businesses are still learning the ins-and-outs of the virtual collaboration platforms their employees are using.

Microsoft Teams, Slack, Google Docs, BlueJeans, Trello, and, of course, the ubiquitous Zoom, are only a few of the programs that have recently evolved from helpful but perhaps underutilized tech tools, to vital aspects of daily operations.

In the rush to adapt to these new realities, however, savvy businesses should be deliberate when selecting and utilizing virtual collaboration tools.

Though only time can play out the range of virtual workplace conduct that might cause headaches for businesses and employers, cautionary tales are emerging. For example, one doctoral student at Stockton University in New Jersey found himself facing potential disciplinary action after using an image of President Trump as his screen background during a class being held via Zoom.

Though his apparent political statement was likely intentional, it’s not difficult to imagine how one might make an inadvertent statement — political or otherwise — via a video conference background.

A controversial book on a bookshelf or a political poster hanging in a home office might become pertinent, for example, in an employee’s suit against a supervisor, or a family photograph of a luxury vacation might raise questions in a collection lawsuit.

In addition, long before the pandemic, businesses have been grappling with managing, storing, and retrieving vast quantities of electronic data.

In the age of telework, the built-in chat functionalities found in many applications allow users to forego traditional email and participate in fast-paced conversation threads that can promote informality and create huge quantities of data that might be mined by opposing parties in litigation.

Video conferencing platforms also often include a “chat” functionality, allowing participants to send private and/or public messages to one another during the course of a meeting, with those chats potentially, and potentially unbeknownst to the participants, becoming part of a memorialized “transcript” following the meeting.

Fortunately, many applications already have built-in features to deal with some of these concerns.

Zoom users can brush up on how to control private “chat” capabilities by visiting the support section of their website. For fans of Microsoft Teams, Microsoft has a page devoted to mining group chats for discoverable content.

To be truly proactive, however, businesses relying heavily on telework should consider implementing an express telework policy that covers the use of video conferencing and other collaboration platforms.

Employers could include policies stating whether video conferences will be recorded, or requiring that employees use a neutral background during business-related conferences (to make marketing lemonade out of pandemic lemons, many companies have created their own branded Zoom backgrounds).

Additionally, having a policy in place that specifies which programs employees are permitted to use for work-related communications can help streamline the retention and retrieval of important data. Though continuing to do business in the midst of Covid-19 can feel like an overwhelming minefield of uncertainties, proactive businesses can nevertheless adapt and thrive by taking control of their virtual workplaces.

Hilary H. Clifton is an attorney at the law firm of Phillips Murrah.

Phillips Murrah sponsors Positive Tomorrows at 2020 Cork & Canvas

Positive Tomorrows’ hosted its annual Cork & Canvas event, sponsored by Phillips Murrah and Director Nikki Jones Edwards, via virtual livestream on Sept. 17.

The event was originally scheduled for April 16 but was rescheduled and repurposed as an online auction event due to COVID-19. This change created an opportunity for Positive Tomorrow to air videos from supporting sponsors during the event.

Watch Phillips Murrah’s sponsor video below:

Nikki has supported Positive Tomorrows in various roles, serving as the Past President, volunteer, and four-term board member. She recently commemorated 20 years of service for the organization.

Positive Tomorrows is Oklahoma’s only elementary school specifically serving homeless children and their families and prides itself on educating at-risk children by dedicating attention to their unique educational and social service needs.

Learn more about Positive Tomorrows here.

Read more about Phillips Murrah’s support of Positive Tomorrows below:

Phillips Murrah welcomes two new attorneys to litigation team

Phillips Murrah is proud to welcome Natalie M. Jester and Laurie L. Schweinle to our Firm’s Litigation Practice Group as associate attorneys.

Attorney Laurie L. Schweinle and Natalie M. Jester

Laurie L. Schweinle and Natalie M. Jester

Natalie and Laurie represent individuals and both privately-held and public companies in a wide range of civil litigation matters.

Natalie attended the University of Oklahoma College of Law where she earned the American Jurisprudence Award for Professional Responsibility, Litigation Skills, and the Criminal Defense Clinic. She served as the Staff Editor on the Oklahoma Law Review and was on the Dean’s Honor Roll.

Prior to law school, Natalie was an Officer in the U.S. Navy. She now lives in Oklahoma City with her husband and two dogs.

Laurie attended the Oklahoma City University School of Law where she earned multiple CALI Awards for Excellence and was on the Dean’s List and Faculty Honor Roll. She served as a Staff Editor on the Law Review and received the Oklahoma Bar Association’s Outstanding Senior Law Student Award for OCU. She was also a member of the Phi Delta Phi Honor Society.

Laurie was raised in the Holdenville, Oklahoma area and received a Bachelor’s Degree from East Central University in Ada, Oklahoma. Prior to law school, Laurie worked for the Council on Law Enforcement Education and Training as the Executive Assistant, Public Information Officer, and Legislative Liaison.

Voth accepted into LOKC’s Signature Class 39

Attorney Lauren S. Voth has been accepted into Leadership Oklahoma City’s next Signature Class.

Attorney Lauren Symcox Voth

“Usually, the Signature LOKC program is a 10-month program with classes each month that focus on different community issues,” Voth said. “This year will be a little different and LOKC Class 39’s start date will be deferred to Fall 2021, however, we will have virtual meetings and get to attend alumni events throughout this year.”

The Signature Program is comprised of a two-day opening retreat and one-day-a-month programs for accepted individuals familiar with volunteer programs to network and increase their impact on their organizations and their community. Applicants are typically senior executives, business owners, and high-level directors and managers across industries and business types regionally.

“I am excited that we are in this unique position to spend a year getting to know one another and then another year learning and exploring Oklahoma City’s community issues, diversity, and resources,” Voth said.

To learn more about the Signature Program and other Leadership Oklahoma City programs, visit their website here.

Force majeure clauses and COVID-19

Gavel to Gavel appears in The Journal Record. This column was originally published in The Journal Record on September 17, 2020.


By Phillips Murrah Attorney Kendra M. Norman

Kendra Norman Web

Kendra M. Norman represents individuals and businesses in a broad range of transactional matters.

Force majeure clauses are common clauses in contracts that allocate risk between parties and release a party from liability or obligations during unforeseeable or unpredictable events that are out of the party’s reasonable control.

These events can generally be referred to as acts of God or can be specifically listed in the agreement, often including events like war, strikes, riots or government actions. However, it should be noted that there is not a specific set of events that come under the definition of “acts of God” – this often depends on the context of the contract and the jurisdiction.

Force majeure clauses are ever-evolving and the language used has been influenced by events around us. Before 9/11, most force majeure clauses didn’t include terrorism as a force majeure event. This spurred litigation between parties regarding whether terrorism was an act of God that should be covered by the force majeure clause to excuse performance. Now, terrorism and terrorist attacks are often specifically set forth in force majeure clauses.

The conversation about force majeure clauses now revolves around whether the COVID-19 pandemic qualifies as an act of God and how this will affect contracts. As always, this depends on the type of contract, the language set forth in the contract, the context of the contract, the intent of the parties, and the governing law of the contract. Therefore, this determination is highly fact-specific and depends on several factors.

It is possible that COVID-19 could be considered an act of God in some contracts, or it could fall under force majeure clauses that contain specific references to disasters, national emergencies, government regulations or generally acts beyond the control of the parties. With the extraordinary potential consequences from COVID-19 yet to be determined, businesses should begin ascertaining whether their material contracts contain force majeure provisions and how such provisions may affect their rights and responsibilities going forward. However, given the widespread impact of COVID-19, it is possible that parties may be more likely to negotiate amendments to agreements that have been impacted by COVID-19 rather than forcing parties to rely on and litigate force majeure clauses.

Nevertheless, going forward, those entering into contracts should consider whether adding more specific terms such as epidemic, pandemic or infectious disease as force majeure events will be advantageous for them in the future.

Kendra Norman is an attorney with the law firm of Phillips Murrah.


Phillips Murrah’s attorneys continue to monitor developments to provide up-to-date advice to our clients during the current COVID-19 pandemic. Keep up with our ongoing COVID-19 resources, guidance and updates at our RESOURCE CENTER.

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Gardner to present ethics CLE for in-house corporate counsel

Director Melissa R. Gardner will give a Continuing Legal Education presentation virtually for Association of Corporate Counsel on Sept. 9.

Melissa Gardner is a Director who practices in the Energy & Natural Resources Practice Group. She represents both privately-owned and public companies in a wide variety of oil and gas matters, with a strong emphasis on oil and gas title examination.

ACC is a global association that aims to be an educational resource and networking platform for in-house counsel in corporations, associations and other organizations.

“Phillips Murrah is happy to sponsor the Oklahoma Chapter of the ACC and to partner with OK ACC in serving the business interests of our in-house counterparts,” Director Joshua L. Edwards said.

Gardner’s presentation is a refresher for a full spectrum of ethics issues in-house counsel manage on a daily basis.

“In my experience, continuing legal education for ethics is incredibly important because you are often on your own when making these decisions,” she said. “Plus, your relationships working with your clients on a day-to-day basis make some of the more difficult ethics calls more complicated than they would be if there was an arm’s length relationship.”

Gardner will cover Oklahoma’s Rules of Professional Conduct and address eight common ethics issues, exploring practical scenarios and ways to address each.

“Putting on programs like this allows us to support OK ACC’s mission of providing continuing education opportunities to its members,” Edwards said.

To learn more about ACC and this CLE, visit their website here.

Phillips Murrah voted 2020 Reader’s Choice Best Local Law Firm

The Oklahoman newspaper’s readers named Phillips Murrah law firm a winner of Readers’ Choice Awards in two categories for 2020.

Phillips Murrah P.C. was voted Best Local Law Firm, and Director Elizabeth K. Brown was chosen as Best Business Attorney.

Remaining nominees from the Firm were voted into the Top 3 of their respective categories:

Readers of The Oklahoman chose nominees in May and voted on winners in June.

The winners were recognized at the Readers’ Choice event on Aug. 27.

PM attorneys create “practical” guide to commercial real estate leasing

Phillips Murrah attorneys merged their expertise to curate a commercial real estate leasing legal guide for Thomson Reuters’ Practical Law resource.

Thomson Reuters Practical Law provides guidance across many practice areas with hundreds of editors monitoring each subject to make day-to-day updates as legal viewpoints shift. Directors Sally A. Hasenfratz and Joshua L. Edwards and Attorneys Jennifer Ivester Berry and Erica K. Halley contributed to organizing the August 5, 2020 update for Real Estate Leasing for Oklahoma.

“I enjoyed spending time taking an earnest look at the various layers of my real estate and leasing practice to create a user-friendly roadmap on the basics in the Oklahoma market,” Halley said. “Q&As like this and similar materials made available by Thompson Reuters are great resources for out-of-state attorneys and, particularly, local attorneys who may be handling a matter outside of their usual field.”

thomson reuters practical law

Read more on Phillips Murrah’s Real Estate Leasing guide for Oklahoma from Thomson Reuters here.

Cooper elected 2021 OCBA Vice President

Oklahoma County Bar Association members voted to elect Cody J. Cooper, Phillips Murrah Director, as Vice President for 2021.

Cody Cooper online photo

Cody Cooper is a Director in the Intellectual Property Practice Group and represents individuals and companies in a wide range of intellectual property matters, including patent, trademark and copyright matters. His practice also includes commercial litigation.

“I enjoy being involved in the Oklahoma County Bar because it provides me an opportunity to be directly involved with Oklahoma County’s legal community and provides me an excellent opportunity to meet and work with colleagues that I wouldn’t otherwise have an opportunity to work with,” he said. “I have the chance to work directly with our county judges, law schools and practitioners throughout the county to further the work of the bar and provide a positive community impact.”

Cooper is currently serving his term on OCBA’s Board of Directors, a role he assumed in 2019 and will serve in until his term as Vice President begins in August 2021.

OCBA members also elected Judge Don Andrews as President, Shanda McKenney as President-Elect, Benjamin Grubb as Law Library Trustee, and Ed Blau, Judge Heather Coyle, Katherine Mazaheri-Franze, Drew Mildren, Amy Pierce, and Judge Susan Stallings as members of the 2023 Board of Directors.

To learn more about OCBA, visit their website here.

Does COVID-19 constitute a material adverse effect?

Gavel to Gavel appears in The Journal Record. This column was originally published in The Journal Record on August 6, 2020.


In addition to a vast human toll, COVID-19 has wreaked havoc on businesses, markets and supply chains. With infections still spreading, businesses have suffered cash and liquidity constraints and anticipate such suffering to continue.

The pandemic also presents unique risks to parties in acquisition agreements, such as risks concerning the financial viability of the target company. Parties often address these risks by including material adverse effects, or MAE, clauses.

Generally speaking, an MAE is an event, circumstance, change or effect that presents a material threat to the business of the target company. MAE clauses account for this possibility and allocate risk among the parties.

Such clauses are frequently used as conditions to closing and qualifiers to the seller’s representations. If the target company suffers an MAE as defined in the agreement, the clause allows the buyer to unilaterally terminate the deal without being considered in breach of contract. The seller can qualify representations made about the condition of the target company, making it more difficult for a buyer to assert a breach. Also, exclusions to the definition of an MAE are identified, such as industrywide market conditions.

One increasingly common issue is whether COVID-19 constitutes an MAE. The following questions may help determine the answer and assist parties in the negotiation stages:

  • Are there MAE exclusions such as epidemics, pandemics and natural disasters?
  • Has COVID-19 resulted in unique issues for the target company that are disproportionate to other companies in the same industry?
  • Is the buyer obligated to use certain efforts to close the deal notwithstanding events that affect the financial condition of the target company?
  • What other limitations apply to an MAE? For example, can events only occurring after executing the agreement qualify as an MAE?
  • Have the parties contractually shifted the burden to the seller to prove that an MAE has not occurred?

While these questions may provide guidance on the issue, establishing whether an MAE has occurred is a highly fact-intensive issue that depends on the unique circumstances involved and the specific language used in the acquisition agreement. It should also be noted that buyers have faced a significant burden in court to show that any event meets the criteria of an MAE. As more parties litigate the issue, the courts will play an important role in establishing precedent that will shape how parties negotiate acquisition agreements.

 

GIP names Jim Roth as new board member

Global Innovation Platform has named Jim Roth, Phillips Murrah Director, as a board member.

Jim Roth is a Director and Chair of the firm’s Clean Energy Practice.

“Jim has extensive depth and insights regarding energy policy, trends and opportunities and will add tremendous value to the governance of GIP,” said David Swank, CEO of GIP. “I had the great pleasure of working with Jim while he served as Oklahoma Corporation Commissioner and found Jim to be very innovative, forward thinking and pragmatic about where we need to be going in the energy and built environment space.”

Roth is a member of the Phillips Murrah Law Firm’s Energy & Natural Resources Practice Group and chair of the Clean Energy Practice Group. He represents individuals, publicly-owned companies and privately-owned companies in a range of business, energy and environmental issues, as well as a variety of public policy and regulatory matters.

He served as an Oklahoma Corporation Commissioner, by appointment of Governor Brad Henry. Prior to that appointment, Roth was elected to consecutive four-year terms as Oklahoma County Commissioner. He is a member of the Oklahoma, Kansas, and American Bar Associations and is a past president of the National Association of Civil County Attorneys.

Additionally, in 2018, Jim began serving as the dean of the Oklahoma City University School of Law, his alma mater. He enjoys bringing leadership and innovation to preparing tomorrow’s lawyers for the legal profession. Roth is an alumnus of OCU Law, earning his Juris Doctor degree in 1994. He also holds graduate certificates from Harvard University’s Kennedy School of Government, the United States Air War College’s National Security Forum at Maxwell Air Force Base, and the Institute of Public Utilities at Michigan State University.

“Jim’s vast experience within the energy sector will be highly beneficial to our shareholders,” said Jordan Harper, GIP board chair. “Jim is an individual who brings out the best of others and organizations. I appreciate his ability to generate ideas and build solutions that are meaningful to clients and society in general.”

GIP is an IoT (Internet of Things) and digital data company located in Stillwater, Okla. The company provides technology solutions that make infrastructure and facilities smarter and intuitive. GIP’s primary clients include the utility, commercial, industrial, agriculture and residential sectors. Learn more about GIP at globalinnovationplatform.com.

405 Magazine selects Phillips Murrah for 2020 Oklahoma Top Attorneys

Phillips Murrah is honored to have 13 attorneys selected as Oklahoma Top Attorneys for 2020 by 405 Magazine. Attorneys are selected for the list by an online peer-voting and research process facilitated by DataJoe Research across various practice areas.

For more information on each listed attorney, visit their profile by clicking on their portrait or contact information below:

Oklahoma Top Attorney for Banking and Financial Law:

. Mark Lovelace Oklahoma Top Attorney Banking and Financial Law

J. Mark Lovelace, Director
405.552.2404
jmlovelace@phillipsmurrah.com

 

Donald A. Pape Oklahoma Top Attorney Banking and Financial Law

Donald A. Pape, Of Counsel
405.364.3346
dapape@phillipsmurrah.com


Oklahoma Top Attorney for Business Law:

Robert O. O'Bannon Oklahoma Top Attorney Business Law

Robert O. O’Bannon, Director
405.552.2483
roobannon@phillipsmurrah.com


Oklahoma Top Attorney for Commercial Litigation:

Thomas G. Wolfe Oklahoma Top Attorney Commercial Litigation

Thomas G. Wolfe, Director
405.552.2401
tgwolfe@phillipsmurrah.com


Oklahoma Top Attorney for Health Care Law:

Mary Holloway Richard Oklahoma Top Attorney Health Care Law

Mary Holloway Richard, Of Counsel
405.552.2403
mhrichard@phillipsmurrah.com


Oklahoma Top Attorney for Intellectual Property Rights:

Martin G. Ozinga Oklahoma Top Attorney Intellectual Property Rights

Martin G. Ozinga, Of Counsel
405.606.4721
mgozinga@phillipsmurrah.com


Oklahoma Top Attorney for Labor and Employment:

Byrona J. Maule Oklahoma Top Attorney Labor and Employment

Byrona J. Maule, Director
405.552.2453
bjmaule@phillipsmurrah.com


Oklahoma Top Attorney for Land Use – Environment:

Jim A. Roth Oklahoma Top Attorney Land Use Environment

Jim A. Roth, Director
405.552.2417
jaroth@phillipsmurrah.com


Oklahoma Top Attorney for Medical Malpractice Defense:

G. Calvin Sharpe Oklahoma Top Attorney Medical Malpractice Defense

G. Calvin Sharpe, Director
405.552.2413
gcsharpe@phillipsmurrah.com


Oklahoma Top Attorney for Oil and Gas:

Elizabeth K Brown Oklahoma Top Attorney Oil and Gas

Elizabeth K. Brown, Director
405.552.2423
ekbrown@phillipsmurrah.com


Oklahoma Top Attorney for Real Estate:

Sally A. Hasenfratz Oklahoma Top Attorney Real Estate

Sally A. Hasenfratz, Director
405.552.2431
sahasenfratz@phillipsmurrah.com


Oklahoma Top Attorney for Tax Law:

Robert O. O'Bannon Oklahoma Top Attorney Business Law

Robert O. O’Bannon, Director
405.552.2483
roobannon@phillipsmurrah.com

 

Dawn M. Rahme Oklahoma Top Attorney Tax Law

Dawn M. Rahme, Director
405.606.4770
dmrahme@phillipsmurrah.com

 

View the full list of attorneys here:

Phillips Murrah sponsors OU Law’s 2020 Best Brief Award

Eight first-year law students at the University of Oklahoma received awards for their prowess in writing legal briefs through Phillips Murrah’s ongoing sponsorship of the Best Brief Award.

OU law best brief 2020

Three recipients of OU Law’s 2020 Best Brief Award: Jordan Stroh, Jen Mook, and Trae Havens

“We appreciate Phillips Murrah for their unwavering support for the OU College of Law,” said Interim Dean Katheleen Guzman.  “The Phillips Murrah Best Brief Awards illustrate their commitment to helping us fulfill our mission:  educating the next great generation of lawyers and leaders to serve our community.

“That our students continue to excel in the classroom and the courtroom is directly attributable to extraordinary partners like Phillips Murrah, and we are truly grateful.”

$500 First Place and $250 Second Place prizes were awarded to students in each of the four sections of the 1L Class.

“I’m beyond grateful to this firm for the award money they gifted me and for recognizing me for my writing skills I have developed through my time thus far at OU Law,” said Jordan Stroh, First Place recipient.

Though awards are typically given during an awards luncheon, this year’s ceremony was hosted via a Zoom video conference on April 16.

“I am so appreciative of winning the Phillips Murrah Best Brief Writing Award during my first year of law school,” said Jen Mook, Second Place recipient. “Being a strong legal advocate requires many skills; however, none may be as useful as effective persuasive writing.

”I am grateful that Phillips Murrah recognizes this by awarding students for our writing efforts early in our law schools careers.”

Awards are given to top appellate briefs following judging from the 1L Moot Court Competition.

“I’m incredibly grateful for Phillips Murrah and their dedication to lifting up the next generation of legal professionals,” said Trae Havens, First Place recipient. “It’s a unique honor to receive the Phillips Murrah Best Brief Writing Award!

“I’m working hard to improve my legal research and writing skills, always taking inspiration from the amazing attorneys at Phillips Murrah.”

Read More: Phillips Murrah sponsors 2019 Best Brief Award

CARES Act and independent contractors – How businesses can mitigate risk related to CARES Act unemployment claims

By Phillips Murrah Attorney Martin J. Lopez III 

Below is an expanded version of a Gavel to Gavel column that appeared in The Journal Record on May 14, 2019.

attorney Martin J Lopez III

Martin J. Lopez III is a litigation attorney who represents individuals and both privately-held and public companies in a wide range of civil litigation matters.

Businesses should identify and mitigate risk related to CARES Act independent contractor unemployment claims

In response to the COVID-19 national emergency, Congress has taken the extraordinary measure to allow independent contractors, gig-workers, and self-employed individuals access to unemployment insurance benefits for which they are generally ineligible. This article is geared towards businesses that regularly use independent contractors who may file claims for unemployment insurance benefits—discussing the risks involved and how businesses can mitigate those risks.

Background Regarding Relevant CARES Act Provisions

On March 27, 2020 President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Among other provisions, the CARES Act significantly expands the availability of unemployment insurance benefits to include workers affected by the COVID-19 national public health emergency who would not otherwise qualify for such benefits—including independent contractors. This increased accessibility to unemployment insurance benefits theoretically provides an avenue for a state unemployment agency to find an independent contractor applicant to be an employee. Such a finding introduces the risk of the state unemployment agency assessing unpaid employment and payroll taxes for those a business previously treated as independent contractors. Tangentially, such a finding could serve to establish or bolster independent contractors’ claims in wage and hour litigation.

To qualify as a “covered individual” under the Pandemic Unemployment Assistance (“PUA”) provisions of the CARES Act, a self-employed individual must self-certify that she is self-employed, is seeking part-time employment, and does not have sufficient work history or otherwise would not qualify for unemployment benefits under another state unemployment program. Further, the self-employed individual must certify that she is otherwise able to work and is available for work within the meaning of applicable state law, but is “unemployed, partially unemployed or unable or unavailable to work” because of one of the following COVID-19 related reasons:

  • The individual has been diagnosed with COVID-19 and is seeking a medical diagnosis;
  • A member of the individual’s household has been diagnosed with COVID-19;
  • The individual is providing care for a family member or member of the individual’s household who has been diagnosed with COVID-19;
  • A child or other person in the household for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency and such school or facility care is required for the individual to work;
  • The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency;
  • The individual is unable to reach the place of employment because the individual has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  • The individual was scheduled to commence employment and does not have a job as a direct result of the COVID-19 public health emergency;
  • The individual has become the breadwinner or major support for a household has died as a direct result of COVID-19;
  • The individual has to quit his or her job as a direct result of the COVID-19 public health emergency;
  • The individual’s place of employment is closed as a direct result of the COVID-19 public health emergency.

If the individual meets the above criterion, she is a “covered individual” and is eligible for unemployment assistance authorized by the PUA provisions of the CARES Act. Such assistance was available beginning January 27, 2020 and provides for up to thirty-nine (39) weeks of unemployment benefits extending through December 31, 2020. Covered individuals’ unemployment benefits are calculated state-by-state, according to each state’s conventional unemployment compensation system. In addition, under the PUA provisions of the CARES Act, covered individuals may receive an additional $600 for each week of unemployment until July 31, 2020.

What Businesses Can Do to Protect Themselves

To counteract the risks discussed above, I recommend a business implement the following best practices when responding to a claim of unemployment by an independent contractor:

  • respond proactively to unemployment claim notices for independent contractors;
  • state clearly in the response that the relevant individual-claimants were independent contractors and not employees of the business;
  • affirmatively state that each independent contractor claimant was an independent contractor to whom the business occasionally (or routinely) provided work, but that it is unable to provide the same volume (or any) work to the individual at present because of the COVID-19 national emergency;
  • specify in the response that the individual’s eligibility for unemployment benefits must be entirely predicated on the PUA provisions of the CARES Act allowing for independent contractor participation in the program; and
  • provide the claimant’s independent contractor agreement to the state unemployment agency.

In providing this information and documentation to the state unemployment agency, the business will be able to demonstrate its independent contractor relationship with the individual. Together with the fact that these individuals’ eligibility to receive unemployment income rests exclusively on relevant CARES Act provisions, the business should be well-positioned to avoid the typical risks that can result from a successful unemployment claim by an independent contractor.

Martin J. Lopez III is an attorney at the law firm of Phillips Murrah.


Phillips Murrah’s attorneys continue to monitor developments to provide up-to-date advice to our clients during the current COVID-19 pandemic. Keep up with our ongoing COVID-19 resources, guidance and updates at our RESOURCE CENTER.

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Edwards named OCU Law’s Distinguished Practitioner for Fall semester

Nicholle Jones Edwards attorneyt

Nicholle Jones Edwards’ practice focuses on family law, labor law and general civil litigation. Her family law practice includes litigation, complex custody issues and valuation issues.

Oklahoma City University School of Law recently named Director Nikki Edwards the Distinguished Practitioner in Residence for the upcoming Fall semester.

“The role of Distinguished Practitioner in Residence is an exciting opportunity to interact with the students in a meaningful, interactive way, as opposed to a lecture format,” Edwards said. “I’m most looking forward to being able to play a small role in the exciting futures of our future lawyers.”

Edwards will be the third person and first female to hold the position, Jim Roth, OCU School of Law Dean and Phillips Murrah Director said.

“We at OCU School of Law are thrilled to host Nikki Edwards as our Distinguished Practitioner in Residence for the upcoming Academic Year ‘20-‘21 where she will lead our lucky students through a Litigation Practicum covering all issues from A to Z,” Roth said. “As our first female lawyer in this role, it’s an extra special way to highlight not only her wonderful skills, but to bring attention to the under-representation of women in litigation practices.

“We have tremendous faith that Nikki will educate and inspire men and women to become great practitioners for their clients and the profession.”

Highlighting the Firm’s focus on gender equity in law firm leadership, Edwards hopes her role can bring more visibility to women in the legal field.

“I am honored to be the first female to serve as Distinguished Practitioner In Residence,” Edwards said. “Today more than 50 percent of law students are women, yet a very small percentage of trial lawyers are female.

“I would love my students to realize that women can be strong, effective, trial lawyers, and the courtroom is not only a place for men. A big part of my life’s work is supporting other women as a mentor, friend and colleague. As a shareholder of Phillips Murrah P.C., our firm has a much larger percentage of female shareholders than the state and national average, which is something I am very proud of. I think the future should and will have more female litigators, and that is why being chosen by Dean Roth and OCU Law for this position is such a high honor.”

Enrollment for the course is now open. Learn more at OCU School of Law’s website.

“I hope students learn to love the practice of law and not just the substantive case law found in various subjects,” she said. “A significant takeaway will be that as lawyers in litigation we have the ability to really change lives and that the students realize how important our representation is to our clients, the public and the judiciary.

“Importantly, litigation and trial work can be extremely exhilarating and exciting, but also very frightening for new lawyers, so I hope each student feels a basic comfort level with the process at the conclusion of the class.”

Click here to learn more about Nikki’s practice.

Firm selects Employee of the Month for March 2020

donna anderson eotm

Donna Anderson

Donna Anderson, Legal Assistant, is Phillips Murrah’s Employee of the Month for March 2020.

“It is an honor to be nominated as Employee of the Month,” Donna said. “I am extremely grateful and blessed to be a part of this loving work family!”

The Employee of the Month is selected anonymously by Phillips Murrah staff on merits of teamwork and overall contributions to the Firm.

“Donna is more than just a legal assistant to me, she feels like family,” Attorney Molly E. Tipton said. “She is reliable, diligent, positive and very smart.”

The Firm makes a donation to the winner’s charity of choice, and Donna chose National Kidney Foundation.

To learn more about National Kidney Foundation, click here.

 

Read more: Firm selects Employee of the Month for February 2020


Phillips Murrah has been recognized as an Oklahoma Top Work Place by The Oklahoman/Energage five years in a row. Our Firm strives to recognize and reward our employees for excellence.

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Firm selects Employee of the Month for February 2020

eotm Abby Tompkins

Abby Tompkins

Abby Tompkins, Legal Assistant, is Phillips Murrah’s Employee of the Month for February 2020.

“It is a privilege to work with such a great group of people and for them to recognize me as Employee of the Month is an honor,” Abby said.

The Employee of the Month is selected anonymously by Phillips Murrah staff on merits of teamwork and overall contributions to the Firm.

“I am thrilled that Abby was recognized as Employee of the Month,” Director Sally A. Hasenfratz said. “Those who work with her closely know that she is a hard worker, she has her head in the game and helps spot issues, she has a keen willingness to learn new things and she is poised and great with clients. A well-deserved honor!”

The Firm recently began making a donation to the winner’s charity of choice, and Abby chose Focus on Home.

To learn more about Focus on Home, click here.


Phillips Murrah has been recognized as an Oklahoma Top Work Place by The Oklahoman/Energage five years in a row. Our Firm strives to recognize and reward our employees for excellence.

 
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Medicare Reimbursement Actions by the Government: Relief for Providers?

This article was originally published in the American Bar Association’s Health eSource newsletter in February 2020.


Oklahoma Opioid Decision by Phillips Murrah healthcare attorney Mary Holloway

Mary Richard is recognized as one of pioneers in health care law in Oklahoma. She has represented institutional and non-institutional providers of health services, as well as patients and their families.

By Mary Holloway Richard, Phillips Murrah, and
Anna Stewart Whites, Attorney at Law, Frankfort, KY

The tension between the government’s need to ensure appropriate use of Medicare funds and the need of providers to receive reasonable compensation for services to Medicare beneficiaries is an ongoing issue.  Providers are subject to demands for repayment or recoupment of compensation paid to providers based upon claims filed.  Providers are also pressed to keep up with the continually developing arsenal of vast data mining, increasingly restrictive federal reimbursement policies, and oversight tools, including a plethora of audit options available to the Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) programs that can lead to penalties and mandatory exclusion.  Locating the applicable guidance — statutes, regulations, guidelines, reimbursement policies — can be challenging, with the information upon which CMS actions are based sometimes emanating from data gathered across the country, which allows for identification of trends to be pursued by the regulators.

The focus of this article is to explore the tools available to counsel for providers seeking to place appropriate limits on CMS in connection with statutory and regulatory limits on HHS rulemaking authority as interpreted by recent case law.

Proper Rulemaking as a Limit to Regulatory Authority

Providers who have received payment under the CMS fee schedules may, even years later (1) be faced with demands by CMS for repayment of amounts received due to an after-the-fact reduction in the fees payable to the provider, or (2) experience a downward adjustment in payments.1  These changes by CMS, both prospective and retrospective, are frequently transmitted via electronic manuals or by local or national coverage determinations (LCDs or NCDs).

Providers argue that the retrospective changes by fiat can be likened to ex post facto laws penalizing the provider for actions occurring before the regulation, policy or change in interpretation of the law existed.  When a government entity or agency determines that such a change is necessary, and when those changes are substantive or can adversely impact providers or patients, an opportunity for all affected parties to comment is advisable to support wise decision-making within the government’s scope of authority, and to facilitate smooth transitions within the industry.2  The existing structured rulemaking process offers providers and other interested parties the opportunity to comment on the proposed change prior to its implementation, thereby facilitating the avoidance of bad rulemaking or rulemaking with unintended consequences.

The Rulemaking Process:  An Overview

The rulemaking process is formal and includes the notice-and-comment period so that public awareness and input are parts of the making of any enforceable regulatory change.3  Under the Social Security Act, a notice-and-comment period is required for a “rule, requirement or statement of policy” that establishes or changes a “substantive legal standard governing the scope of benefits, the payment for services, or the eligibility of individuals, entities, or organizations to furnish or receive services or benefits.”4 This requirement is stricter than the more common notice-and-comment requirements of the Administrative Procedures Act (APA). The APA employs different nomenclature and holds that no notice-and-comment period is required where the change is merely an “interpretive rule” or “general statement of policy.”  That exception had been relied upon by agencies to change rules via policy manual updates or internal regulatory interpretations.5

Informal rulemaking under the APA requires development of a proposed rule and a published notice of the proposed rule or changes to an existing rule.  Following that, there is a comment period of at least 30 days.  Members of the public, including but not limited to those impacted by the change, have the opportunity to comment on the proposal. Codification of the final rule may take place only after the comment period has passed and the agency has made any final revisions to the rule.6 Typically, rule and regulation changes have a future, rather than retroactive, effective date.  Where the change to a law or regulation is “substantive,” formal rulemaking under the APA requires an additional opportunity for an agency hearing on the proposal before it can be made effective.

Historically, providers faced with recoupment demands from a federal payor had little choice but to accede to the payor’s demands within a specified, limited timeframe.  Providers could argue against such recoupment or denial, but such arguments in reality were limited to proving that the recoupment demand was in error.. The provider was thus placed in a defensive posture and required to operate from the premise that the recoupment request was correct, but for an obvious calculation or medical necessity oversight by the payor during its review.8

From the agency perspective, however, rulemaking takes significant time and effort and can be administratively debilitating.  It requires publication of the proposed changes, a lengthy comment period (often as much as several months long), opportunity for live comments as well as written comments, and then an analysis of the comments by the agency and publication of the agency’s responses to the comments.  If the comments result in an amendment to the policy, the rulemaking process may have to begin again to allow comment on those amendments newly proposed or on the resolution of issues raised during the comment period.  Because of the complexity of that rulemaking, agencies may choose to draft minor changes instead, and implement those via an announcement to providers/patients, thereby eliminating any delay in implementation or any requirement that those affected be allowed to speak.  Implementing minor changes is a necessary way to keep policies and regulations current, and is an acceptable part of the agency’s process.  Over time, however, there may be a blurring of the applicable procedures, where an agency implements a substantive change informally for an item that required the complete rulemaking process, particularly under the Medicare Act.  Providers have begun to pay more attention to the correct application of the rulemaking process and to challenge agencies ignoring required rulemaking.

Judicial Interpretation of Rulemaking Requirements Related to Healthcare

In Clarian Health West, LLC v. Hargan,9 the Court required adherence to the rulemaking process before a recoupment of payments could be enforced.  Under Part A of the Medicare program, hospitals are compensated prospectively based on the estimated likely cost of patient care.10 The hospitals may also receive supplemental or “outlier” payments.11 The regulatory changes enacted by HHS in 2003, which included notice-and-comment rule making, altered the way such “outlier payments” are calculated.12  The Court found that an agency decision is arbitrary and unenforceable as such where the agency “has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.”13

Two recent cases, Azar v. Allina Health Services14 and Polansky v. Executive Health Resources, Inc.,15 have provided validation for that argument, finding that absent the required rulemaking process and an opportunity for providers to comment on and be aware of the effect of the changes to the law, recoupment of funds properly paid exceeds CMS authority.

Provider Litigation to Enforce Rulemaking

In Azar v. Allina Health Services, the United States Supreme Court held that the decision to retroactively reduce Medicare disproportionate share hospital (DSH) payments according to a newly revised formula and practice must be vacated due to HHS’s failure to provide an opportunity for notice and comment in the context of revised payment rules.16 The DSH payment is calculated based upon a Medicare Fraction which establishes a proportion of low income patients provided services at the hospital for a certain time period and is the basis for the hospital’s final reimbursement adjustments.

By way of explanation, a DSH payment is a sum awarded a hospital pursuant to 42 C.F.R. 412.106.  Under Section 1886(d) (5) (F) of the Medicare Act, hospital DSH payments are calculated by the formula:

  • DSH Patient Percent = (Medicare SSI Days / Total Medicare Days) + (Medicaid, Non-Medicare Days / Total Patient Days)17

A new CMS rate calculation affected the way the applicable payments were made, and was therefore considered by the Court to be a ‟substantive legal standard” under the Medicare Act requiring notice-and-comment rulemaking prior to enforcement.18  The Court found that HHS had promulgated a retroactive Medicare rate calculation methodology and that this was not a change that could be enacted without opportunity for comment and discussion.As explained by the Court of Appeals for the D.C. Circuit, in 2004 HHS decreed that Medicare Part C patients would now be included in DSH calculations along with patients entitled to Medicare Part A benefits, and this change would have been applied prospectively for all Medicare Fraction calculations from 2005 onward. However, this change was successfully challenged and vacated by the D.C. Circuit.19 In response, in 2013 HHS promulgated the same rule to be applied prospectively from 2014. This left fiscal year 2012 at issue, and in 2014 HHS posted the Medicare Fraction on the CMS website, including Part C patients and Part A patients.20

CMS clarified that the 2012 determination that Medicare Part C days would be included in the calculations, thereby lowering the DSH calculation by including Medicare Advantage subscribers who generally represented higher income, resulting in a reduction of the DSH payments to hospitals.21

The proposed change underwent notice and comment in 2013 and eventually was adopted as a valid way to calculate those payments prospectively, beginning in 2014.  Rather than simply implementing the changed standard from 2014 onward, CMS looked back at earlier years and claimed that the change should apply retroactively.  There was no notice and comment period in 2012 on that change.  Following the changes, CMS used this ability to look back and demanded recoupment from provider hospitals, applying the changed law or interpretation of the law retroactively to 2012.

A group of  hospitals  challenged the changes made without notice and the opportunity to comment and sought to stop the recoupment, which represented billions of dollars.22  They argued that absent such timely rulemaking procedures, the change should not apply to years prior to 2014. HHS’s response was that it was not required to hold a notice-and-comment period for the new rule, since it was only advising the public on an existing interpretation of the law.  HHS relied on the less stringent standards of the APA23 to permit the recoupment.

The DC Circuit Court ruled in favor of HHS, and the hospitals appealed to the United States Court of Appeals for the District of Columbia, which reversed the lower court ruling and held that the new payment schedule amounted to a “statement of policy” that required the notice-and-comment period specified by the Social Security Act.24

The Supreme Court, quoting the Social Security Act, held that “[n]o rule, requirement, or other statement of policy (other than an NCD) that establishes or changes a substantive legal standard governing the scope of benefits, the payment for services, or the eligibility of individuals, entities, or organizations to furnish or receive services or benefits under this title shall take effect unless it is promulgated by the Secretary by regulation.…”25 “Substantive rules” refer to the Supreme Court phrase “substantive legal standard” as encompassing more than just the “substantive rules” that already require notice and comment under the APA.26 The Supreme Court noted in particular that the many manuals that provide guidance to participants in the Medicare program might contain substantive legal standards that require notice and comment, and that its decision applied broadly across those fields.27

The Allina ruling established that substantive changes to the law should not be applied retroactively to time periods in which there has been no rulemaking process.  Providers faced with any retroactive application of a change in the law that occurred after a payment to the provider which was valid at the time of payment could now claim that absent rulemaking at that time, the change should only be prospectively applied.

That doctrine was expanded in Polansky v. Executive Health Resources, Inc.,28 where the provider faced a False Claims Act (FCA) action based upon allegations that the provider’s billing was fraudulent for failure to comply with Medicare reimbursement guidelines. The provider argued that the Medicare criteria being applied had not gone through appropriate rulemaking prior to implementation.  The Court agreed, holding that Medicare reimbursement criteria must be established through notice-and-comment rulemaking to provide the basis for enforcement actions under the FCA. Because the reimbursement policy at issue had been established solely in the 1989 edition of the Medicare Hospital Manual and not via the rulemaking process including questions and comments, the court found that it “cannot withstand scrutiny under Allina’s interpretation of the Medicare Act.”29

The Court based its findings in part on Bowen v. Michigan Academy of Physicians,30 which held that a provider demanding administrative or judicial review of a recoupment of a Medicare Part B claim or payment must show that the matter is reviewable by challenging the method by which the claim was determined under 42 U.S.C.A. § 1395ff(b)(1)(C) (Supp.1990).  While courts may not “improperly impose on agencies an obligation beyond the `maximum procedural requirements’ specified by [statute or regulation],” the rulemaking standards must have applied to the creation of the statute or regulation.31  The District Court in Polansky relied upon the Allina decision to grant summary judgment in favor of the defendant, holding that the method by which a change is implemented may be challenged by an affected party where the agency failed to comply with the process required.32  The provider must show first that this is a matter to which the rulemaking standard applies, and secondly, that the method used by the agency was flawed in that it did not use the correct standard, before being allowed to attack the change or any related financial impact created by the change.33

The Allina and Polansky decisions establish an additional strategy for providers to defend enforcement actions that are part of a recoupment or recalculation, rather than attempting to prove that the government’s audit determinations or interpretations are in error. This, in effect, places the burden of defense back on CMS (or another governmental agency or payor) by requiring it to prove that the law or regulation was properly created in compliance with required rulemaking procedures.  Importantly, these decisions offer that, where providers did not have opportunity to comment on or object to implementation of a rule or regulation, they should not be found to have either had notice of it or be bound by its terms.

In response to Allina, the Department of Justice (DOJ) provided notice of DOJ policy in a memorandum to U.S. Attorneys from former Associate Attorney General Rachel Brand dated January 25, 2018. Known as the Brand Memo, it announced that “Department litigators may not use noncompliance with guidance documents as a basis for proving violations of applicable law in affirmative civil enforcement (ACE) cases.”34 The effect of the Brand Memo is to place agencies on notice that they may not rely upon sub-regulatory guidance to re-frame, expand, or enforce requirements established by statute or regulation.35  Specifically, the Brand Memo prohibits coercing regulated parties from taking or refraining from taking actions beyond the requirements of applicable statute or “lawful regulation.”36 The Brand Memo further pointedly provides that “the Department may not use its enforcement authority to effectively convert agency guidance documents into binding rules.”37

A new internal memorandum from HHS dated October 31, 2019 is instructive. That Memo says that it’s important for CMS to conform its guidance documents to the rulemaking obligations set forth in Allina.  For instance, HHS personnel are discouraged from basing enforcement actions on guidance documents, specifically the Internet-only manuals, that are not “closely tied to statutory or regulatory standards.”38  This Memo suggests to counsel for providers a few new tools when dealing with Medicare payment issues, including the limits of the impact of formerly formidable sub-regulatory or “non-regulatory” guidance, the amelioration of LCDs as the single basis for enforcement actions and judicial support for these limitations.

Conclusion

Recoupment and reimbursement demands, audits, exclusions, prosecutions and targeting by CMS, its contractors or other federal and state agencies are substantive, significant matters.  Adherence to the regulatory protections, including the notice and opportunity to provide input, allows all affected parties to have an understanding of the law or regulation and to be prepared for its impact.  The Allina case and its progeny are likely to benefit providers and patients alike as the country continues to grapple with healthcare reform.

  1. 42 U.S.C. § 1886(d)(5)(F); 42 C.F.R. § 412.106.
  2. See discussion below comparing the rulemaking requirements of the Medicare Act, 42 U.S.C. § 1395(h), which was passed as an amendment to the Social Security Act, 5 U.S.C. Chapter 5, §§ 551-559.
  3. See generally, https://www.federalregister.gov/uploads/2011/01/the_rulemaking_process.pdf, “A Guide to the Rulemaking Process” (last accessed Jan. 24, 2020).
  4. 5 U.S.C. § 1395hh(a)(2)  (emphasis added).
  5. See, e.g., acus.gov/research-projects/agency-guidance-through-interpretive-rules, “Agency Guidance Through Interpretive Rules” (Administrative Conference of the United States) Adopted June 13, 2019 (last accessed Jan. 19, 2020).
  6. 5 U.S.C. §§ 551-559.
  7. 5 U.S.C. § 553.
  8. See, e.g., “Tricare Recoupment Steps Outline”(Guidance provided to Tricare Beneficiaries), https://tricare.mil/Resources/Recoupment?p=1 (last accessed Jan. 15, 2020).
  9. 878 F3d. 346 (D.C. Cir. 2017).
  10. 49 Fed. Reg. 234 (Jan. 3, 1984); 42 U.S.C. § 1395ww(d)(2), “Prospective Payment for Medicare Inpatient Hospital Services.”
  11. 42 U.S.C. § 1395ww(d)(5)(A)(ii); See also Dist. Hosp. Partners, L.P. v. Burwell, 786 F.3d 46,  49 (D.C. Cir. 2015).
  12. See Change in Methodology for Determining Payment for Extraordinarily High-Cost Cases (Cost Outliers) Under the Acute Care Hospital Inpatient and Long-Term Care Hospital Prospective Payment Systems Final Rule.  Fed. Reg. June 9, 2003 at 34493-515; https://www.ncbi.nlm.nih.gov/pubmed/12795306 (last accessed Dec. 27, 2019).
  13. See Hawaii Helicopter Operators Ass’n v. F.A.A, 51 F.3d 212, 214-15 (9th Cir.1995). See also n. 1 supra and accompanying text.
  14. 863 F.3d 937 (D.C. Cir. 2017), aff’d, 139 S.Ct. 1804 (2019).
  15. 2019 WL 5790061 (E.D. Pa. Nov. 5, 2019).
  16. 587 U.S. ___, 139 S.Ct. 1804 (2019), 42 U.S.C. §§ 1395 ww(d)(5)(k)(I); 42 C.F.R. § 412.106; cms.gov/Medicare/Medicare.Fee.For.Service.Payment /Acute InpatientPPS/dsh (last accessed Jan. 15, 2020).  See S.Ct. at 1309 quoting Petition for Cert; “So counting makes the fraction smaller and reduces hospitals’ payments considerably–by between $3 and $4 billion over a 9-year period, according to the government.”
  17. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInPatientPPS/dsh. Hospitals rely on DSH payments, as calculated annually, for a significant part of the yearly budget and income. The change in the method in which HHS was calculating those payments, applied retroactively, reduced the sum HHS found should have been paid each hospital in 2012 and 2013, resulting in a CMS demand for recoupment (paying back) of those funds to Medicare. There is an alternate special exception method for large urban hospitals that can demonstrate that more than 30 percent of their total net inpatient care revenues come from state and local governments for indigent care (other than Medicare or Medicaid). Because Medicaid monies are funds designated to serve a specific group in accordance with CMS payment guidelines, CMS is permitted up to 10 years to recoup funds which it believes were paid in error.
  18. Allina at 1810-1815.
  19. Allina Health Services v. Sebelius, 746 F.3d 1102, 1107-9 (D.C. Cir. 2014), as quoted in Allina Health Services v. Sebelius, 863 F.3d 937 (D.C. Ct.App. 2017).
  20. Allina at 1810.
  21. Part A Benefits refers to inpatient benefits (42 U.S.C. § 1395ww(9)(5)(F)(vi)(I). Part C Benefits refer to Medicare Advantage beneficiaries, who generally have more financial resources. Including Part C patients in the DSH calculation lowers hospital payments markedly. See Northeast Hospital Corp. v. Sebelius, 657 F.3d 1, 5 (D.C. Cir. 2011).
  22. See n. 17 and accompanying material.
  23. 42 U.S.C. Chapter 5, §§ 551 – 559. See Allina at 1813.  See also Perez v. Mortgage Bankers Ass’n, 575 U.S. 92, 95 (discussion of “interpretive rules” to which the APA notice and comment rulemaking requirements do not apply.)
  24. See Allina Health Servs. v. Price, 863 F.3d 937, 949 (D.C. 2017).
  25. 42 U.S.C. § 1395hh(a)(2) (emphasis added).
  26. See Allina Health, 139 S. Ct. at 1814.
  27. Id. At 1816.
  28. No. 12-4239, 2019 WL 5790061 (E.D. Pa. Nov. 5, 2019).
  29. Polansky at 7. See generally Allina at 1816. (discussion of CMS Provider Manual).
  30. 476 U.S. 667, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986).
  31. See Perez v. Mortg. Bankers Ass’n, 135 S.Ct. 1206, 191 L.Ed.2d 186 (2015).
  32. ___ F.Supp.3d___, 13 (2019); 2019 WL 579006 (at 12-13).
  33. Id. at 16.
  34. https://www.justice.gov/opa/press-release/file/1028756/download . See also Executive Order, https://www.whitehouse.gov/presidential-actions/executive-orders-promoting-rule-law-improved-agency-documents/.
  35. See Attorney General Memo on the Prohibition on Improper Guidance Documents, https://www.justice.gov/opa/press-release/file/1012271/download (last accessed Dec. 27, 2019).
  36. Brand Memo at Page 1.
  37. Id. at Page 2. The Brand Memo has been incorporated into the Justice Manual, the guidebook for DOJ attorneys. See https://www.justice.gov/jm/1-20000-limitation-use-guidance-documents-litigation (last accessed Dec. 27, 2019).
  38.  https://fcablog.sidley.com/wp-content/uploads/2019/11/1222000-1222453-allina-memo-cms.pdf.

About the Authors

Mary Holloway Richard represents both institutional and non-institutional providers of health services. Her career has included work at hospitals, outpatient clinics, behavioral health facilities and rehabilitation facilities and clinics. She has significant experience in health services contracting, reimbursement audits and appeals, OIG investigations, and regulatory and corporate matters. She lectures and has written on numerous healthcare topics including nonprofit operations, telehealth and behavioral health law, confidentiality and criminal justice reform. She was the driving force behind the first Oklahoma Women’s Law Manual as well as a contributor and editor.  She is currently a member of the faculty of the Oklahoma City University School of Law teaching an introduction to Healthcare Law and Behavioral Health Law. She has been in the leadership of the Behavioral Health Task Force of the American Hospital Association since its inception and is currently Vice Chair. She is Chair of the Oklahoma Bar Association’s Health Law Section. She may be reached at mhrichard@phillipsmurrah.com.

Anna Whites is the owner of Anna Whites Law Office and a graduate of Centre College and the University of Kentucky College of Law.  Her practice concentrates on health law, with a focus on laboratories, rural hospitals and behavioral health.  She advises providers on reimbursement, compliance and transactional issues.  Ms. Whites works with the Kentucky State Legislature and advocates in Kentucky and nationally to advance policies on prompt payment, uniform provider credentialing, telehealth advances and laws providing broad coverage to vulnerable populations. She is the Co-Chair of the Rural Health Subcommittee of AHLA’s Behavioral Health Task Force and speaks and writes for HCCA, ABA and AHLA on behavioral and compliance health law topics. She may be reached at annawhites@aol.com.

Banks may be liable for negligent transfer of hacked accounts

This column was originally published in The Journal Record on March 9, 2020.


Justin G. Bates is a litigation attorney who represents individuals and both privately-held and public companies in a wide range of civil litigation matters.

By Justin G. Bates, Phillips Murrah Attorney

When asked by a reporter why he robs banks, notorious criminal “Slick Willie” Sutton replied, “Because that’s where the money is.” While banks still have the money, the nature of the crime has evolved with technology. Today’s modern bank robber is often armed with nothing more than a mouse and keyboard, and the preferred tools and techniques of their trade are phishing and malware.

Hackers infiltrate businesses and individuals alike, typically using “social engineering” tactics to gain trust and access to an employee’s email account, to cite a common example, and re-route money from the rightful owner’s bank account to their own. While there are stiff penalties for a criminal caught in the act, it may come as a surprise that a bank that authorizes a wire transfer to a hacker’s account could be liable to the rightful owner.

Article 4A of the Uniform Commercial Code was enacted in response to the growth of electronic funds transfers and the crime that evolved in its wake. Under Article 4A, a bank is liable to a customer for the full amount of a negligently processed wire received by a hacker, including interest.

In the most basic terms, a bank is liable to its customer for a negligent wire transfer when (1) the customer did not authorize the transfer and (2) the transfer cannot be enforced against the customer because either (a) the transfer was not authorized by an employee of the customer or (b) a third party (outside hacker) initiated the transfer. At first glance, this may seem to be a slam-dunk trigger for liability to an aggrieved customer. But banks can take proper steps to insulate themselves from any liability under Article 4A.

To avoid liability, the bank must first prove three things: First, that it and the customer had an “agreed security procedure,” which are steps put in place, to which both the bank and customer agree by contract, to verify that a payment order or communication is between the bank and the customer. This is most commonly accomplished in the customer and bank’s initial account agreement.

Second, the bank must prove that it complied with the agreed security procedure and that such procedure is “commercially reasonable.” In other words, the procedures are to be in line with that which someone familiar with the industry would regard as sufficient and realistic. Examples of what constitutes “commercially reasonable” are explored below.

Finally, the bank must prove that it not only followed the security procedure, but that it initiated the wire transfer in “good faith.” In other words, the bank must prove that it acted with honesty in fact and observance of reasonable commercial standards of fair dealing.

So how does a bank best avoid liability?

In practice, cases under Article 4A often hinge on whether the bank’s security procedure is commercially reasonable. In order to meet this threshold, a bank is expected to have better than single-factor identification. The wire transfer should require the customer to input at least two of the following: (1) something the customer knows, such as a password; (2) something the customer has, such as an IP address; or (3) something the customer is, such as a fingerprint or voice scan.

With cybercrime on the rise, it is crucial for any bank to both protect its customers and insulate itself from potential liability. Requiring multi-factor identification is no guarantee for a bank to avoid liability under Section 4A, but it is one relatively easy way for a bank to better protect itself and its customers.

Justin G. Bates is a civil litigation attorney at the law firm of Phillips Murrah in Oklahoma City.