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Phillips Murrah Directors Discuss Oil and Gas Lease Cancellation Lawsuits at Petroleum Alliance Lunch and Learn

Phillips Murrah presentation to Petroleum Alliance

Directors John M. Bunting and Zac K. Bradt discuss legal actions related to a lease cancellation lawsuit.

Defending Against and Preventing Lease Cancellation Lawsuits

As leasing and drilling activities have increased over the last few years, so have lawsuits by mineral owners seeking to cancel existing oil and gas leases. More often than not, those suits allege that existing wells have ceased producing in paying quantities, and therefore the leases are no longer held by production or “HBP”.

On August 13, Phillips Murrah P.C. hosted a lunch and learn presentation at The Petroleum Alliance of Oklahoma headquarters. Phillips Murrah Directors Zac Bradt and John Bunting discussed the factors courts consider in determining whether a well is producing in quantities sufficient to hold the lease and provided some tips on how to minimize the risk of having the court rule that a lease has terminated for lack of production in paying quantities.

Phillips Murrah presentation to Petroleum Alliance“It is important for oil and gas producers to have an understanding of how courts are interpreting oil and gas lease terms,” said Phillips Murrah Director Liz Brown, who is also a member of the Petroleum Alliance of Oklahoma Board of Directors.

In her introduction statement to the well-attended program, Liz explained that a typical situation ripe for this type of litigation is when a producer has an old lease with a one-eighth royalty and marginal production that is holding acreage in hot areas for oil and gas development such as in the SCOOP or the STACK.

“There have been quite a few recent court decisions exploring what constitutes production in paying quantities,” Liz continued. “I’m glad Zac and John took the time to share their insights with us, so that our members can have a better understanding of what the courts are looking at in making these determinations.”

Some of the other information provided at the recent Lunch and Learn included an explanation of the habendum clause and other lease terms, suggestions as to how a producer can position itself to defend against a lease cancellation lawsuit, and a comparison of how the courts in Texas and Oklahoma interpret production in paying quantities for purposes of determining whether a lease is held by production.

About the presenters:

portrait of Elizabeth K BrownElizabeth K. Brown is a Director whose practice is focused on serving her privately-held business clients at a strategic level as outside general counsel where she assists in managing the many legal issues that arise in running a business, including structuring and negotiating business transactions, managing litigation, settling disputes, assisting with tax planning and designing the estate and succession plan for the family business owners.


Photo of Director Zac K. Bradt

Zac K. Bradt is a Director and an attorney in the Energy & Natural Resources Practice Group. He 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.


Photo of Director John M. Bunting

John M. Bunting is an attorney practicing all facets of commercial litigation and insurance coverage law. His experience includes representing clients in complex commercial disputes; representing energy producers, disposal well operators, and oilfield service companies; representing auto dealers in disputes with manufacturers and competitors; and helping business clients obtain insurance coverage.


Video courtesy of the Petroleum Alliance of Oklahoma

Q & A: Equifax data breach victims may file for restitution

Phillips Murrah attorney Cody J. Cooper was featured on Wednesday, Aug. 21, in a Q&A feature in the Oklahoman newspaper.

Photo of Oklahoma City Patent Attorney Cody Cooper

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

Equifax is a consumer credit reporting agency and, ironically, one of the products it publicly sells is individual credit monitoring. In 2017, Equifax disclosed one of the largest known data breaches in the United States affecting about 143 million people — close to half of the U.S. population. Equifax claimed that the breach was the result of their systems being hacked by thieves seeking to obtain information that is commonly referred to in the world of data privacy and cybersecurity as personally identifiable information (PII). The thieves were able to exploit a website application vulnerability to gain access to files that included customer names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. Lawsuits were initiated by a number of entities, including the Federal Trade Commission, and a $700 million dollar settlement was recently reached, which included a total of $425 million to compensate individuals, $100 million in civil money penalty, as well as other relief.

Who is entitled to recover, how do you submit a claim and is $125 the amount I can recover?

Anyone whose information was included within the documents that were stolen is eligible to receive benefits. In order to submit a claim, an affected individual needs to go to https://eligibility.equifaxbreachsettlement.com/en/eligibility and complete the requested information. While submitting your claim, there are two compensation options: (1) credit monitoring for 10 years or (2) a cash payment. The payment was estimated at $125, but that is likely to change because of the overwhelming number of people who have apparently opted in for the settlement payment. Apparently of the settlement amount, only a small portion — approximately $31 million — of the overall amount is earmarked for cash payments, which means that the more people who sign up for the cash payment could greatly decrease the amount paid to each person. In fact, the most recent stories suggest that the FTC is going to allow individuals who initially opted-in for cash payment to change their selection to credit monitoring because of the number of people who have already chosen the cash option and the small amount that would be paid to each.

What constitutes a data breach?

A data breach can be most easily described as the unauthorized access of information. The issues get nuanced from there. This is a particularly hot topic right now with the Equifax settlement and the most recent announcement that Capital One has suffered a data breach affecting about 106 million people or about a third of population.

How does the public find out about a data breach incident?

What we see in the news is for reportable breaches. Reportable breaches typically include PII. However, not all data breaches must be reported. In fact, most data breaches are likely never publicly disclosed. If PII is not involved, the organization that suffered the breach typically surveys the damage, addresses the breach, takes steps to mitigate the impact and moves along without ever telling anyone — except possibly industry regulators, if required, and their insurance company, if they are smart and have cybersecurity insurance.

What does the law say about organizations disclosing a data breach?

Importantly, there is no uniform “data breach” or “breach notification” federal law. Instead, these laws are formed by a hodgepodge of state laws (all 50 states have a breach notification law) and various other laws, including Gramm Leach Bliley Act, NAIC Insurance Data Security Model Law, New York Department of Financial Services Cybersecurity Requirements for Financial Services Companies, and the National Credit Union Administration’s Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice. Because of this, the standards applied from state to state and industry to industry can vary. For example, the definition of PII can be slightly different for each law. Some states include biometric data (fingerprint, facial scan, etc.) within PII, while others do not. Additionally, the deadlines for reporting a discovered breach can also vary widely. Significantly, some states and regulatory bodies have taken steps to increase the standards applied to protecting PII. As an example, New York has enacted laws that have very specific requirements a company must meet in order to be compliant.

How does data breach disclosure work in Oklahoma?

Generally, any person or entity that collects and stores PII is subject to Oklahoma’s data breach notification laws. If a breach of PII is discovered, that person or entity must comply with the various breach notifications in the applicable laws. In Oklahoma, notice is to be made as soon as practicable following discovery of the breach. Once notice is made to the affected individuals, there are requirements for what the breached entity must do, including reporting to specific law enforcement entities and providing credit monitoring for the affected individuals for a specific length of time. Again, these requirements can vary from state to state. Typically, the large data breaches ultimately result in litigation being filed by the affected individuals and/or specific related regulatory authorities, which is what led to the Equifax settlement.

Hendrick partners with North Texas LGBT Chamber of Commerce

Janet Hendrick

Janet Hendrick is an experienced employment litigator who tackles each of her client’s problems with a tailored, results-oriented approach.

Director Janet A. Hendrick joins the North Texas LGBT Chamber of Commerce, supporting the organization for 2019-2020 as a Bronze Partner and taking on a hands-on role.

“I met the President of the Chamber, Tony Vedda, at the Dallas Business Equality Conference a few years ago, where I was asked to speak about evolving rights for LGBT employees in the U.S.,” she said. “We stayed in touch and he later asked me to be a member of the Chamber’s Governance Committee, the role of which is to assist in selection of the Chamber’s Board of Directors.

“I spoke again this year at the Business Equality Conference, which is sponsored by progressive Dallas-based companies like Toyota, Southwest Airlines and American Airlines.”

Janet is an experienced employment litigator who regularly appears in state and federal court to defend employers of all sizes against discrimination, harassment, retaliation, and related claims. She is a frequent speaker and author on topics including gender diversity in the legal profession, workplace accommodations and leave management, evolving workplace protections of LGBT employees, and the rapidly expanding gig economy.

The North Texas Lesbian Gay Bisexual Transgender Chamber of Commerce has been the premier business organization for the LGBT community in north Texas since 2005, working to improve the region’s economic vitality and support the positive attributes of a diverse workplace, supply chain and community.

To learn more about the North Texas LGBT Chamber of Commerce and its mission, click here.

Cooper named Court Appointed Special Advocates board member

Phillips Murrah Patent Attorney Cody J. Cooper

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

Attorney Cody J. Cooper has joined the Court Appointed Special Advocates of Oklahoma County as a member of the Board of Directors.

“As a director, I’ll being involved in helping CASA continue the success it is has experienced in serving Oklahoma County at-risk youth while helping to build off those prior successes to expand CASA’s operations and be able to help even more people,” he said. “This is an opportunity for me to be directly involved in a high community impact organization that provides an amazing services to those most vulnerable in our state.”

CASA provides a trained caring adult to advocate for the best interest of children who have been removed from their home due to abuse or neglect. Volunteers with CASA get to know these children and communicate with all parties in their case and people in the child’s life in order to provide complete information and sound recommendations to the court.

As “the eyes and ears” of the judge, the CASA volunteer offers a neutral, third-party opinion to the court, one that is unbiased and child-focused.

To learn more about CASA of Oklahoma County and volunteer opportunities, click here.

Firm selects Employee of the Month for July 2019

Bradley Burt

Bradley Burt, Legal Secretary, is Phillips Murrah’s Employee of the Month for July 2019.

“Phillips Murrah is a fantastic place to work, and it’s a privilege to be surrounded by such amazing people,” he said. “I try to learn and grow in my field each day, and Phillips Murrah fosters a really positive environment for that.

“To be selected as Employee of the Month in a workplace like this is an honor.”

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

“We are very lucky to have Bradley as a member of the team,” Director Joshua L. Edwards said. “He is extremely bright and motivated—willing to help out wherever needed and able to handle whatever is thrown his way.”

The Firm recently began making a donation to the winner’s charity of choice, and Bradley chose World Literacy Foundation.

“Reading is really special to me, and I believe it is important for every person to have the opportunity to learn to read,” Bradley said. “Especially in areas with broken education systems, the ability to read is a crucial tool for self-learning.”

To learn more about World Literacy Foundation, click here.


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

 

Attorney Lauren Voth leads SmartTalks presentation on medical marijuana in the workplace

SmartTalks Virtual User Group Meeting:
Medical Marijuana in the Workplace

Thursday, Aug. 15
12 PM to 1 PM (CST)

Free to participate with registration

 

Employers can still enforce drug-free workplace policies and implement drug-testing policies even after their state legalizes Medical Marijuana.  However, you must ensure your policies comply with state law.

Phillips Murrah Attorney Lauren Symcox Voth will review what your company can do to ensure the safety and security of your workforce and organization even after the legalization of medical marijuana.

To register, click here.

Presenter:

Lauren Voth

Lauren Symcox Voth

Lauren Symcox Voth is a member of Phillip’s Murrah P.C. Labor and Employment Practice Group. She represents individuals and both privately-held and public companies in litigation, administrative matters, mediations and negotiations. Specifically, Lauren has experience representing large and small corporations in employment-related matters.

Phillips Murrah Directors to present: Defending (and Preventing) Lease Cancellation Lawsuits

Petroleum Alliance logo

presented by

Phillips Murrah logTuesday, Aug. 13
11:30 a.m. to 1 p.m.
Petroleum Alliance of Oklahoma Headquarters
500 N.E. 4th Street, Oklahoma City

As leasing and drilling increase, so have lawsuits by mineral owners seeking to cancel existing leases. More often than not, those suits allege that existing wells have ceased producing in paying quantities, and therefore the leases are no longer HBP.

Photo of Director Zac K. Bradt

Zac K. Bradt

The presenters of this Lunch & Learn will be Phillips Murrah Directors Zachary K. Bradt and John M. Bunting. They will discuss how operators can defend against lease cancellation lawsuits, including factors that Oklahoma courts consider when determining whether a well is producing in quantities sufficient to hold a lease.

They will also discuss how operators can resolve such disputes outside of court; and how to prevent a lease cancellation suit by determining whether an existing lease is HBP prior to purchasing it.

To register, click HERE.

Presenters:

Photo of Director John M. Bunting

John M. Bunting

Zac K. Bradt is a Director and an attorney in the Energy & Natural Resources Practice Group. He 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.

John M. Bunting is an attorney practicing all facets of commercial litigation and insurance coverage law. His experience includes representing clients in complex commercial disputes; representing energy producers, disposal well operators, and oilfield service companies; representing auto dealers in disputes with manufacturers and competitors; and helping business clients obtain insurance coverage.

NewsOK Q&A: Child support payments based on several variables

Robert K. Campbell’s legal practice is focused in the area of family law, specifically concentrated in matters of divorce, legal separation and custody issues.

In this article, Oklahoma City Attorney Robert K. Campbell answers questions about the basics of arranging and handling child support.

Who pays child support in a divorce proceeding?

Oklahoma law requires both parents to provide financial support for their children during a divorce. That being said, typically it is one parent paying the other parent. There are, however, situations wherein neither parent may owe the other parent child support.

How is the amount of child support calculated?

The child support amount is calculated based upon the Oklahoma Child Support Guidelines. The Oklahoma Child Support Guidelines will calculate the child support obligation of each parent.

What does the Oklahoma child support calculation take into consideration when determining the amount of child support?

There are several variables that go into the Oklahoma Child Support Guideline calculation. The primary variables determine the base child support amount consist of the parties’ gross monthly income, the number of minor children of the parties, and the number of overnights each parent has with the children. There are other variables that can be taken into consideration. A common example of these are health insurance premiums and child care costs.

What is considered gross income for child support purposes?

Oklahoma’s definition of gross income is broad and intended to include earned income and passive income. Gross income consists of wages, salaries, tips, commissions, bonuses, etc. Passive income can include dividends, pensions, rent, interest income, trust income, gifts, gambling winnings, lottery winnings, etc.

If both parents agree, can the child support agreement differ from the Oklahoma Child Support Guidelines calculations?

Typically, an agreed amount other than the guidelines will likely be approved if it is in the best interest of the minor child and the amount of support indicated by the guidelines is unjust or inappropriate under the circumstances; both parties are represented by counsel and have agreed to a different amount; or one party is represented by counsel and the deviation benefits the unrepresented party.

How long does a parent have to pay child support?

In Oklahoma, the law typically provides that a child is entitled to support by the parents until the child reaches the age of 18, or graduates high school, whichever occurs later; however, it shall not extend beyond the age of 20. There are certain situations where the law may provide support to an adult child with a disability beyond the age of majority. If you are paying support for more than one child, your payment amount does not drop automatically when one child no longer qualifies for support. You must take affirmative steps to recalculate future support for the remaining child or children and ask the court to enter a revised support order. When the last child no longer qualifies for child support, the support obligation ends if there is no past due support owed.

Can child support be modified?

Yes. In Oklahoma, either parent may request a modification of the amount of child support based upon a “material change in circumstances.” The increase or decrease in either parent’s income may constitute a material change in circumstances warranting a modification.

What happens if a parent who is ordered to pay child support fails to pay?

The parent who fails or refuses to pay their child support obligation can be cited for indirect contempt of court, which if found guilty can result in a $500 fine and/or up to six months in jail. Additionally, state licenses can be revoked, suspended or not renewed.

 

Robert K. Campbell is a family law attorney with Phillips Murrah.

Kelly selected to join Dallas Association of Young Lawyers Leadership Class

Kim Kelly Web

Kim Kelly is a civil litigator who represents individuals and corporations in both federal and state courts.

The Dallas Association of Young Lawyers has selected Phillips Murrah attorney Kim Beight Kelly to join the association’s exclusive Leadership Class for 2019.

Each year, the DAYL selects approximately 40 young lawyers of all practice areas, firm sizes and levels of experience to participate in the DAYL Leadership Class. The Leadership Program was created in 1997 as a way to reach out to young lawyers who wanted to make a difference in their community and the bar.

“I wanted to get involved with the Leadership Class because I want to learn how I can better serve my community,” she said. “My family and I benefit a great deal from the efforts of community leaders, and participation in this group will be an amazing opportunity to meet some of those leaders and learn how to follow their example.

“I look forward to getting to know other young lawyers who also want to get out there and take a more active role in making Dallas the amazing city that it is.”

The DAYL Leadership Class provides opportunities for young lawyers of all backgrounds to develop relationships with local city leaders and network with one another. With over 800 alumni, including judges, general counsels, law school professors, city leaders, and law firm-named partners, the Leadership Class has been emulated by bar associations across the state and the country and serves as a gateway for leadership among lawyers in the North Texas area.

Kim is a civil litigator who represents individuals and corporations in both federal and state courts who works in the Firm’s Dallas office.

To learn more about the Leadership Class, visit the Dallas Association of Young Lawyers website here.

Gavel to Gavel: Employers should examine paid parental leave policies

Gavel to Gavel appears in The Journal Record. This column was originally published in The Journal Record on July 18, 2019.


Phillips Murrah litigation attorney Hillary Clifton discusses holiday legal hazards.

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 Hudson Clifton

The notorious absence of any federally mandated paid family leave in the United States was a significant issue during the 2016 presidential election. Recent legislative proposals indicate that the issue will only gain steam through 2020 and beyond. Paid family leave is not a partisan issue, as demonstrated by legislators on both sides of the aisle introducing bills in 2019, including Marco Rubio and Kirsten Gillibrand.

With parental leave policies under particular scrutiny, it is a good idea for employers to examine their existing policies. As it looks ever more likely that paid leave will be federally mandated in the not-too-distant future, now might be the right time for employers without a paid leave policy to consider implementing one.

Though some states have passed laws requiring paid family leave benefits, Oklahoma is not among them, and employers in Oklahoma currently offering paid leave to new parents do so voluntarily. Still, employers could find themselves in legal trouble if their policies impermissibly distinguish between different classes of parents. For example, while it might be tempting to offer a certain period of paid maternity leave to a mother, and a different period of paternity leave to a father, employers must be careful to draft policies that do not discriminate on the basis of sex, sexual orientation, and other potentially protected categories.

Paid leave to care for a new child, sometimes referred to as bonding time, should apply equally to all new parents, including biological mothers and fathers, adoptive parents, and same-sex couples. However, with biological mothers requiring medical attention and recovery time related to pregnancy and childbirth, it is not discriminatory to offer biological mothers an additional period of paid leave, provided the policy specifies that such leave is for the mother’s medical/physical needs.

Increasingly, employers around the country are opting for generous leave policies to attract and retain qualified employees. In that regard, employers considering a policy that offers a birth mother significant paid leave for recovery but little time for bonding and childcare might consider whether such a policy could encourage fathers or adoptive parents to look elsewhere for job opportunities.

With no federal or state mandate in Oklahoma, there remains room for any employer to adopt a policy in line with its particular needs and preferences. That said, well-intentioned employers should take measures to avoid inadvertent discrimination in their policies.

Hilary H. Clifton is a litigation attorney with the law firm of Phillips Murrah.

Firm selects Employee of the Month for June 2019

David Carter web

David Carter

David Carter, Lead Office Clerk, is Phillips Murrah’s Employee of the Month for June 2019.

“It is a great honor to be chosen by my peers as Employee of the Month,” he said. “We are like family here, and it’s as a team we complete each task and assignment.

“I’m proud to be part of this team!”

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

“David is one of the most well-liked, friendly, hard-working employees at the Firm,” Executive Director Michelle Munda said. “David is never too busy to help anyone with anything and does it with that big smile he has.

“We are lucky he chooses to work here with us!”

The Firm recently began making a donation to the winner’s charity of choice, and David chose City Rescue Mission.

To learn more about City Rescue Mission, click here.


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

 

Phillips Murrah Director Liz Brown elected to Board of Oklahoma’s largest petroleum association

Phillips Murrah would like to congratulate Elizabeth K. Brown, Shareholder/Director and member of the Firm’s Energy and Natural Resources Practice Group, on being elected to the Board of Directors of the newly formed oil and gas industry advocacy organization, The Petroleum Alliance of Oklahoma. Liz formerly was a member of the OIPA Board of Directors until its recent merger into the Alliance.

Liz’s election to the Petroleum Alliance of Oklahoma Board of Directors will allow her to continue her involvement in oil and gas industry matters. She brings to the Board not only her experience in representing oil and gas businesses in legal matters, but also her practical knowledge of oil and gas operations that she has gained through managing The Gloria Corporation, a privately held oil and gas company founded by her father and based in Ada, Oklahoma. Having been raised in the oil business, Liz has been actively involved in every aspect of running a small, independent oil company.

Photo of Liz Brown at Gloria Corporation wellsite

Pictured here are Liz and her brother, Mike Kemp, in the field reworking one of the Gloria Corporation wells in Pontotoc County.

“Running a second-generation, family-owned oil and gas business is both rewarding and challenging” Liz said. “I feel very fortunate to have been able to continue the business my father started years ago.”

Also notably, Liz is one of four women who serve on the 41-member Board. She joins Valerie Mitchell (Corterra Energy Operating, LLC), Geree Wald Morton (Plaster & Wald Consulting Corp.), and Samantha Omey (ExxonMobil Corporation).

“I am honored to have been elected to serve on the Board of Directors of the newly formed Petroleum Alliance of Oklahoma to, among other things, bring attention to issues affecting smaller producers who make up a significant segment of the oil and gas industry,” Liz said.

Liz’s law practice with Phillips Murrah is focused on serving her privately held business clients as outside general counsel where she assists in managing the many legal issues that arise in running a business. Her role often involves structuring, negotiating and handling mergers and acquisitions, managing litigation, settling disputes, assisting with tax planning and designing estate and succession plans for family business owners.

The Petroleum Alliance of Oklahoma was formed in November 2018, when two of the state’s industry groups merged. Oklahoma Independent Petroleum Association and the Oklahoma Oil and Gas Association combined memberships to create a larger, stronger association with the aim to more effectively represent members in legislative and regulatory matters.

The new organization is now the largest trade association representing the oil and natural gas industry in the state, with more than 2,300 individuals from about 1,300 companies – companies that account for more than 90 percent of the state’s oil and natural gas production.

Potts: How to determine whether to hold or terminate an oil and gas lease

Morgen Potts Attorney

Morgen Potts is an attorney 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.

When a landowner leases property to an energy company, the lease agreement typically contains a held-by-production provision, also known as a habendum clause. In Oklahoma, habendum clauses in oil and gas leases establish that after the primary lease term has ended, the lease shall remain in force as long as the land is capable of producing a minimum amount of oil or gas. But how do courts decide whether to hold or end such a lease?

Habendum clauses typically describe the lease term as, “from the date hereof and as long thereafter as oil or gas … is produced from said land.” When the term “produced” is used in a “thereafter” provision of the habendum clause, it has been determined by courts to mean production in “paying quantities.”

However, “paying quantities” is not determined by a specific dollar amount. Rather, it is defined as an amount of production sufficient to yield a profit to the lessee beyond lifting expenses, which include costs of operating the pumps, gross production taxes and electricity.

To determine whether a lease is commercially producing and, therefore, may be held by production, there are four factors that courts take into account: the accounting period, revenue during that period, expenses during that period, and equitable considerations.

The accounting period chosen for any production analysis varies and is determined by examining facts and circumstances specific to the lease. Accounting periods can make or break a case when trying to ascertain whether there was production in paying quantities. Thus, to reflect the production status, it is crucial to determine a sufficient amount of time that would provide information that would allow a “reasonable and prudent operator” to decide whether to continue or cease operation.

For example, in Hoyt v. Continental Oil Co., the accounting period was 14 months. In Smith v. Marshall Oil Corp., the accounting period was 35 months.

Once an accounting period is established, all revenue generated by the lease during that period is considered. Next, lifting expenses are considered and compared against revenue to see which is greater. However, this consideration does not include overriding royalties, overhead, and depreciation.

Lastly, if the lease is unprofitable, the court will examine any equitable considerations to determine if any justify maintaining the lease. These considerations are very specific to the circumstances of the lease that may affect profitability, which could include market conditions, changes in public policy, pipeline access, and conflict resolution activity.

If, after examining all factors, it is determined that the lease is returning a profit over lifting expenses, the lease will not be vulnerable to termination and shall be allowed to continue beyond the primary lease term.

Morgen D. Potts is an attorney with Phillips Murrah in the Energy and Natural Resources Practice Group.

Phillips Murrah rowing team competes in 2019 Stars and Stripes River Festival

PM Rowing Team

Phillips Murrah law firm’s rowing team, Law & Oarder, competes at the 2019 Stars and Stripes River Festival.

Phillips Murrah’s rowing team Law & Oarder completed the Summer 2019 season with a neck-in-neck race.

The team competed on June 29 at the 2019 Stars and Stripes River Festival held at the OKC Boathouse District, finishing a 500-meter run in 2:10.3—less than a second from clinching Third Place.

“First of all, I want to thank the Firm for being supportive and giving us as a team the opportunity to represent Phillips Murrah,” said Deena Baker, Legal Assistant and Law & Oarder team captain. “This last season had many challenges with weather and all, but the team as a whole never gave up.

“We didn’t quite pull out that win we hoped for at the regatta, but it was a super close race and I couldn’t be more proud of the progress we made as a team.”

In all ten seasons the Firm’s rowing team has competed, team members consisted of both attorneys and staff members.

“This was my first year rowing with the team, and getting to practice regularly with everyone was a great way to break down the divide between attorneys and staff and a great team building experience,” said Kat Mach, Legal Assistant.

The team will resume practice in the Spring for the Stars & Stripes Festival in June 2020.


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

 

NewsOK Q&A: Deadline Monday for pharmacies’ annual inventory of controlled dangerous substances

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.

In this article, Oklahoma City Attorney Martin J. Lopez III discusses requirements pharmacies must abide by when submitting inventories and the consequences they may face if they neglect to do so.

There seems to be increasing regulation of pharmacies in recent years, and this has been heightened by the responses to the opioid crisis. What are the various inventory requirements of the Oklahoma State Board of Pharmacy (OSBP)?

According to state regulation, and because of the dangerous propensities of these controlled medications, OSBP requires pharmacies to perform inventories much like any retailer, although there are some distinctions based upon the nature of the pharmacy’s product. The regulation, Oklahoma Administrative Code 535:15-3-10, sets forth four distinct circumstances where inventories must be performed: The first is an annual inventory of controlled dangerous substances (“CDS”). Most relevant for all pharmacies at this particular time, the OSBP requires an inventory of all CDS be performed between May 1 and July 1 of each year; this annual inventory must be included with the pharmacy’s annual license renewal application. This annual license renewal application must be in writing, must contain the names of the pharmacy’s owners and shall provide any other information deemed relevant by the board — including the CDS inventory. Inventory is required for a Change of Ownership or a change of the Pharmacist-in-Charge (PIC) and must be sent to the board within 10 days. The OSBP requires the inventory include the new manager’s name and registration number and recommends that it include the outgoing manager’s name, registration number, and current place of employment. The OSBP further recommends that both the incoming and outgoing managers sign the inventory. Inventory also may be triggered by circumstances such as theft. In the case of suspected loss, theft, or other event, the OSBP may require an inventory be performed and sent to the board within ten days of the completion of the inventory. Inventory is also required when a pharmacy closes and must be sent to the board within 10 days of the pharmacy’s closing.

What is a controlled dangerous substance for the purposes of the annual inventory to be performed between May 1 and July 1?

Generally, a CDS is a drug, substance or immediate precursor (a substance that serves as a chemical intermediary to manufacture a controlled dangerous substance) in Schedules I through V of the Oklahoma Uniform Controlled Dangerous Substance Act, found at Title 63, Sections 2-203 through 2-212 of the Oklahoma Statutes; these Schedules range from those with high potential for abuse and no accepted medical use (includes many “street” drugs like heroin) to those with low potential for abuse and which are accepted for medical use (such as pseudoephedrine—such as brands commonly known as Sudafed PE and Allegra D.

What happens if a pharmacy misses or fails to complete an inventory or doesn’t perform or submit the inventory on time? For example, what happens if a pharmacy doesn’t perform inventories of its controlled dangerous substances between May 1 and July 1?

If a pharmacy fails to comply with the annual CDS inventory, both the PIC and the pharmacy itself are deemed to have violated the administrative code. A violation of the administrative code amounts to a violation of the Oklahoma Pharmacy Act, over which the OSBP may take a number of actions, including a reprimand, probation, suspension, permanent revocation of a pharmacy’s license, or other disciplinary action in its discretion; the OSPB also can levy fines up to $3,000.

Martin J. Lopez III is an attorney with Phillips Murrah law firm.

OCBA Young Lawyers Division deems Phillips Murrah “Friend of the YLD”

Ben Grubb, YLD Chair, Hilary Clifton & David Cheek, Awards Committee Chair

YLD Chair Ben Grubb, Phillips Murrah Attorney Hilary Clifton and Awards Committee Chair David Cheek

The Oklahoma County Bar Association Young Lawyers Division honored Phillips Murrah as a “Friend of the YLD” at the annual OCBA Awards Luncheon on June 21.

“Phillips Murrah was chosen for this award because of their consistent support of the Harvest Food Drive and the Regional Food Bank,” said Debbie Gorden, OCBA Executive Director. “They have also continued to sponsor the events of the Chili Cook-Off and Striking Out Hunger Bowling Tournament by monetary donations as well as team participation.”

Many Phillips Murrah attorneys have dedicated their time to supporting OCBA’s mission. Multiple attorneys have even served on the OCBA Board of Directors.

“The Firm is honored to be acknowledged by OCBA Young Lawyers’ Division as a Friend of the YLD,” said Cody J. Cooper, Phillips Murrah Attorney and Past Chair of YLD. “Our attorneys are motivated to give back to Oklahoma’s community and privileged to support the YLD with their ongoing service efforts.”

Read more about the Firm’s past support of OCBA at the links below:

Journal Record awards Phillips Murrah law firm top Reader Rankings honors

PM Reader Rankings attendees 2019

Phillips Murrah attorneys and executive leaders attend The Journal Record’s Reader Rankings Gala where the Firm won in five categories.

Phillips Murrah is proud to announce our Firm received top honors in five of The Journal Record’s Reader Rankings categories.

“It’s an honor to be recognized in our community for the challenging work our attorneys do every day,” Marketing Director Dave Rhea said.

Phillips Murrah received awards for Best Civil Litigation Firm, Best Family Law Firm, Best Intellectual Property Firm, Best Malpractice Firm and Best Overall Leadership at Reader Rankings Gala on June 20.

“We take pride in providing exceptional legal services while striving to provide a positive, balanced atmosphere for our attorneys and staff,” said Thomas G. Wolfe, Phillips Murrah President and Managing Partner.

The Reader Rankings program recognizes and celebrates the achievements of Oklahoma businesses and entrepreneurs.

Journal Record readers nominate and vote for the best businesses and organizations across a wide variety of categories encompassing the areas of construction and design, entertainment, finance/accounting, general business, health care, higher education, hospitality, legal services, real estate and information technology.

To learn more about the workplace culture and opportunities at Phillips Murrah, visit our Careers pagehttps://phillipsmurrah.com/careers.

Hasenfratz inducted into American College of Real Estate Lawyers

Sally Hasenfrats

Sally Hasenfratz is a Director in the firm. She is a veteran real estate and transactional attorney with over 25 years of experience.

Phillips Murrah is proud to announce Director and Shareholder Sally A. Hasenfratz has been elected as a Fellow of the American College of Real Estate Lawyers.

Admission to ACREL is by invitation only, following a rigorous screening process and significant peer review. Members are elected based on recognition locally and nationally as a distinguished real estate practitioner, high standards of professional and ethical conduct, and contributions within both the legal and non-legal communities to the improvement of the practice of commercial real estate law.

Sally is the leader of the Firm’s Real Estate Practice Group, where she focuses her practice on the acquisition, development, leasing and financing of all types of commercial real estate. She is a co-founder and past president of CREW-OKC, Inc., which is the local chapter CREW Network, a global organization formed to transform the commercial real estate by advancing women in the industry.

Sally has receive a number of other honors such as being named in Chambers USA Guide to America’s Leading Lawyers in Real Estate, The Best Lawyers in America (real estate, construction, land use and commercial transactions), and Super Lawyers (real estate, top 25 women lawyers in Oklahoma, top 50 lawyers in Oklahoma).

She brings to her transactional practice an LL.M. degree in taxation, which allows her to strategize with her clients from a broad view of their projects, helping them to plan, structure and execute each piece of the deal to maximize business objectives.

For more information about ACREL, visit their website here.

Director Melissa Gardner featured in article about forced pooling in Oklahoma

Phillips Murrah Director Melissa Gardner is featured in an article published on June 3 at Oklahoma oil and gas industry online resource, Oklahoma Minerals, by founder, Gib Knight. The article, titled “Oklahoma Forced Pooling,” references a Q&A Gardner published in the Oklahoman in August 2017, titled “Forced pooling in mineral land leasing has upsides, downsides.”

From the Oklahoma Minerals article:

Melissa Gardner portrait

Melissa Gardner

Back in August of 2017, Paula Burkes with NewsOK interviewed Melissa R. Gardner who is a Director and attorney at Phillips Murrah P.C., and practices in the Energy & Natural Resources Practice Group. That interview provided some insight into the drawbacks and benefits of Forced Pooling. Here is an excerpt from that interview:

Q: What are the pros and cons of leasing versus being made subject to a forced pooling order?

A: If you choose to sign a lease, you will have the ability to negotiate more of the specifics of the usage of your minerals. You are in a position to get the oil and gas companies to agree to some conditions and special provisions. If you are subject to a forced pooling (as managed by the Oklahoma Corporation Commission), you’re not in a position to negotiate these details.

Second, you can negotiate bonus and royalty costs. If you are subject to a forced pooling order, you’re given three options, being a combination of the prevailing prices in the surrounding areas, with no option to negotiate those prices. In the alternative, if you allow yourself to be subject to the OCC forced pooling order, the applicant is given a shorter time within which it has to commence operations. The average lease is valid for three to five years, whereas the average pooling order is valid for six months to a year, both of which extend after production has been initiated. This keeps your minerals under contract for a shorter period of time.

Additionally, the minerals only are forced pooled as to certain, limited geological formations. If a well is drilled and producing from those zones, your minerals are still open and unleased as to other, non-pooled zones. In the alternative, most leases cover all depths or, at a minimum, from the surface to a certain depth below the surface. Finally, forced pooling orders expire at the end of production. If a producing well is drilled during the first year of a five-year lease and only produces for two years, the lease remains valid, and your minerals remain unmarketable for re-lease, for an additional three years.

To find out more about how forced pooling affects you or your business, you may contact Melissa Gardner by visiting her Attorney Profile here.

Maule to present at nonprofit business seminar

Byrona Maule

Byrona J. Maule is a Director and litigation attorney as well as a member of the Firm’s Labor & Employment and Healthcare practice groups.

Byrona J. Maule, Director and member in the Firm’s Labor and Employment Practice Group, will give a presentation on the current state of human resources on June 4 at a Nonprofit Accounting and Finance Seminar hosted by Arledge & Associates, P.C.

Accounting and finance professionals are invited to attend the seminar which is tailored to address tax and accounting issues specific to the nonprofit sector.

The seminar will cover a wide range of topics including audits, tax law changes and Financial Accounting Standards Board updates. Sessions will also cover employment law issues for nonprofits, donor relations matters and online marketing.

Byrona represents executives and companies in a wide range of business and litigation matters with a strong emphasis on employment matters, ensuring their compliance before various state and federal regulatory boards.

For more information about the seminar, click here.

NewsOK Q&A: Federal income tax challenges for medical marijuana businesses in Oklahoma

Jessica Cory web

Jessica N. Cory represents businesses and individuals in a wide range of transactional matters, with an emphasis on tax planning.

In this article, Oklahoma City Attorney Jessica N. Cory explores the conflict between federal and state law as it pertains to medical marijuana businesses.

What is the primary federal tax issue for Oklahoma medical marijuana businesses?

Jessica Cory, attorney with Phillips Murrah law firm answers: The primary tax issue for Oklahoma medical marijuana businesses stems from the conflicting treatment of the marijuana industry under federal and state law. Although the approval of State Question 788 last summer legalized the use, growth and sale of medical marijuana for state purposes, marijuana remains an illegal drug under the federal Controlled Substances Act. Special tax provisions apply to penalize anything deemed illegal drug trafficking under federal law, including licensed medical marijuana businesses.

What are the specific federal tax burdens a medical marijuana business will face?

Internal Revenue Code Section 280E represents the biggest tax challenge for medical marijuana businesses. Generally, the Internal Revenue Code allows a taxpayer to take a deduction for all “ordinary and necessary” business expenses paid or incurred during the taxable year. Congress has created an exception to this rule in certain instances, however.

One such exception is Code Section 280E, which prohibits a taxpayer engaged in the business of “trafficking in controlled substances” from taking a deduction for ordinary business expenses. Because the federal Controlled Substances Act defines marijuana as a Schedule I drug, Code Section 280E severely limits the types of deductions available to a medical marijuana business.

Although Code Section 280E prevents a marijuana business from taking normal business deductions, it does not bar a business from offsetting its gross receipts with its cost of goods sold (“COGS”). This means a business can at least reduce its potential taxable income by its direct costs of production. However, the Internal Revenue Code has issued guidance strictly limiting the types of costs a taxpayer engaging in a marijuana business can allocate to COGS, to prevent an end-run around Code Section 280E.

Case law supports this narrower interpretation of COGS for the marijuana industry, including prohibiting resellers of marijuana from including any indirect costs — costs other than the price paid for inventory plus any transportation or other necessary acquisition costs — in COGS.

Is there anything marijuana business owners can do to minimize their federal tax burden?

Yes, a tax professional can help marijuana businesses develop strategies for minimizing the impact of Code Section 280E. For example, a tax adviser can help a business differentiate between COGS and business deductions to take full advantage of the COGS offset allowed under federal law. In addition, a tax professional may be able to help a company structure its business to separate out its different activities to avoid having Code Section 280E apply too broadly. It is also essential for marijuana businesses to keep careful records, particularly if the business also engages in additional activities unrelated to growing, processing or selling marijuana.

Has there been any effort in Congress to fix the disparity in treatment under federal and state law?

Members of Congress have repeatedly introduced legislation to exempt marijuana businesses lawfully operating under state law from the parameters of Section 280E. For example, the Strengthening the Tenth Amendment through Entrusting States (“STATES”) Act, which would amend the Controlled Substances Act to protect people operating within the bounds of state cannabis laws, was recently reintroduced. Unfortunately, despite bipartisan support and the backing of several 2020 presidential candidates, the odds are not in favor of passage at this time.

Jessica Cory is an attorney with Phillips Murrah law firm.

Firm supports Big Brothers Big Sisters 2019 Bowl for Kid’s Sake campaign

Bowling Night attendees

Director Jennifer Miller, Director Melissa Gardner, Amy Bradt, and Director Zac Bradt wait for their turns at Bowling Night.

Months of fundraising events culminated into a night of bowling for Phillips Murrah employees, families and friends.

The Firm celebrated its annual fundraising efforts for Big Brothers Big Sisters’ Bowl for Kids’ Sake campaign on May 16 with a Bowling Night event at Dust Bowl Lanes.

Director Byrona Maule spearheaded the campaign, raising $4,700.

“Thank you for your generous support of Bowl for Kids’ Sake. It is the biggest fundraiser for Big Brothers Big Sisters of Oklahoma. The Phillips Murrah family is just that, a family. But not everyone is blessed with a family like ours – and that is where Big Brothers Big Sisters of Oklahoma assists.”

The Firm hosts a series of firm-wide events to garner support for the campaign and raise money to help the organization’s cause.

“The money raised from Bowl For Kids’ Sake is used to support one-to-one mentoring. Big Brothers Big Sisters evidence-based mentoring programs are designed to create positive, measurable outcomes for youth, including educational success, avoidance of risky behaviors, higher aspirations, greater confidence and better relationships. They match children, ages 6-18, (“Littles”) with caring adult role models (“Bigs”). The Bigs share experiences with the Littles that expand the Littles world in new ways.”

To learn more about Big Brothers Big Sisters of Oklahoma or to make a donation, visit their website here.


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

 

Kim Beight Kelly joins Phillips Murrah Dallas office

Kim Kelly Web

Kim B. Kelly

OKLAHOMA CITY (May 13, 2019) – Phillips Murrah P.C. is pleased to announce that Kim Beight Kelly has joined the Firm in its Dallas-based office as an Associate attorney. Kim is a civil litigator who represents individuals and corporations in both federal and state courts. She brings the number of Phillips Murrah attorneys serving the Texas market to fourteen.

Kim is a goal-oriented litigator who advocates for clients through every stage of litigation, from pre-suit negotiations through final resolution. Kim works closely with clients to identify strategic objectives and manage risk at each critical juncture over the life of a lawsuit. She is experienced in defending clients of all sizes in both state and federal courts.

Kim has experience defending major corporations, insurance companies, and small businesses in a wide variety of cases, including product liability, insurance coverage and bad faith litigation, dealership liability, personal injury and wrongful death, and business contract disputes.

Kim is a member of the Texas Bar Association, the Dallas Bar Association, and the Dallas Association of Young Lawyers.

Prior to joining Phillips Murrah, Kim practiced at a law firm in Dallas.


CONTACT:

Phillips Murrah – Dallas Office:
3710 Rawlins Street, Suite 1420
Dallas, Texas 75219

Main: (214) 238-2525
Fax: (214) 434-1370

 

Phillips Murrah law firm names new Director and Shareholder

Cindy Murray Web

Cindy Hastie Murray

OKLAHOMA CITY (May 8, 2019) – Phillips Murrah proudly announces the promotion of Cindy Hastie Murray to a Director and Shareholder for the Firm. Murray’s selection brings the Firm’s total number of Directors to 40.

Cindy is a member of the Firm’s Real Estate Practice Group. She represents individuals as well as privately-held and public companies in a wide range of commercial real estate matters, including purchasing and selling commercial real estate and assisting both landlords and tenants in leasing matters.

“After having been Of Counsel with Phillips Murrah, practicing with my dad in the Norman office for many years, I am absolutely thrilled to have the opportunity to join the many fine attorneys in the Oklahoma City office and look forward to collaborating with them on a daily basis,” Cindy said.

While still in law school, Cindy co-authored The ABC’s of the UCC: Related and Supplementary Consumer Law, ABA 1999 with Professor Frederick H. Miller. She also clerked for the late Justice Marian P. Opala at the Oklahoma Supreme Court in 1999.

Born in Arlington Heights, Illinois, and raised in Oklahoma City and Edmond, Cindy lives in Norman with her family.

Director to present employment law lecture for SMU School of Law

Janet Hendrick

Janet Hendrick is an experienced employment litigator who tackles each of her client’s problems with a tailored, results-oriented approach.

Janet A. Hendrick, an employment attorney and Director in Phillips Murrah’s Dallas office, will share her insight and expertise with students of Southern Methodist University’s Dedman School of Law later this month.

Hendrick will present on key labor and employment matters for businesses as part of the law school’s Business Law Boot Camp on May 30, 2019.

“I will be teaching the Boot Camp students, who have finished their first or second year at SMU Law School, about labor and employment laws from a business perspective, with the goal of teaching them the different sources and implications of our country’s workplace laws,” she said. “As a SMU Dedman School of Law alum, I am delighted to have this opportunity to share my experience and insight from my years of practicing in this area.”

The Boot Camp is intended to introduce vocabulary, concepts and skills needed to effectively understand how business works so students are able to communicate with and advise business clients, including as regulatory and litigation counsel, according to the law school’s website.

NewsOK Q&A: #MeToo movement reaches merger transactions

Erica K. Halley

Erica K. Halley represents individuals and businesses in a broad range of transactional matters.

In this article, Oklahoma City Attorney Erica K. Halley discusses the “#MeToo” movement and the Weinstein Clause as they relate to requirements in buying and selling companies.

What is the #MeToo movement and how did it start?

In October 2017, The New York Times published an article detailing decades of sexual misconduct by film producer Harvey Weinstein. The scandal ultimately left Weinstein disgraced, his film studio bankrupt and victims of sexual harassment and assault emboldened. The #MeToo movement ensued, wherein victims tweeted (or otherwise went public with) their experiences, which highlighted the prevalence of such misconduct in the workplace. As a result, the chickens have come home to roost for many predators in power. This means, among many other things, companies must adapt and prepare for the potential PR and legal nightmare that necessarily follows misconduct allegations against employees, particularly those having influence over compensation, promotions/demotions and workplace culture. One way we see the #MeToo movement in the doldrums of corporate paperwork is through what is becoming known as the “Weinstein Clause” in merger and acquisition agreements.

What is a Weinstein Clause?

When a company is sold or merged, the selling company is typically required to make a litany of representations to the buyer concerning the status of the selling company. A Weinstein Clause is a representation made by the selling company where the seller promises that none of the selling company’s employees is the subject of allegations of sexual misconduct. In its broadest form, a seller represents that no allegations of sexual harassment or misconduct have been made to the company against any individual in his or her capacity as an employee of the company or any of its affiliates. Usually, if a seller makes a false representation, the buyer can sue the seller for all damages resulting from the breach.

How do sellers negotiate Weinstein Clauses in M&A transactions?

Just like any representation in an M&A (merger and acquisition) transaction, sellers will try to limit the scope of the representation by adding knowledge qualifiers (ex: to the seller’s knowledge, there are no sexual harassment or misconduct allegations), defining or reducing the look-back period (ex: the seller represents that there have been no allegations in the past five years) and minimizing the number or type of employees subject to such allegations (ex: the seller represents that there have been no allegations against executive level employees). In addition, the lawyers on both sides will probably spend time negotiating the definitions of “sexual harassment” and/or “sexual misconduct,” as such terms are open to interpretation and, therefore, ambiguity. After the representation itself is determined, if the seller is aware of any such allegations, the seller will try to negotiate an exception to the representation and describe the allegations on a schedule attached to the agreement. In this case, the seller is essentially saying, “except for that one time, which buyer is going to overlook, there have been no allegations of sexual harassment/misconduct.”

Why should people care?

The Weinstein Clause itself will probably not have a noticeable impact on the viability or essential terms of M&A transactions. And most people will probably never lose sleep over how broadly or narrowly any Weinstein Clause is negotiated. However, everyone is affected by companies (some more directly than others), and most companies are led by individuals who have power and influence over other employees. The emergence of the Weinstein Clause is indicative of a broader social change. The Weinstein Clause provides evidence that sexual harassment and misconduct by such individuals is not tolerated, safe and respectful company cultures matter, and victims of sexual harassment and misconduct ought to be protected.

 

Published: 5/7/19; by Paula Burkes
Original article: https://newsok.com/article/5630647/metoo-movement-reaches-merger-transactions

Schovanec: Oklahoma Supreme Court ruling on noneconomic damages could have profound impact

Attorney Ashley Schovanec Web

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

On Tuesday, the Oklahoma Supreme Court ruled Oklahoma’s statutory cap on noneconomic damages violates the Oklahoma Constitution because it singles out for different treatment less than the entire class of similarly situated persons who may sue to recover for bodily injury.

In plain terms, the court found the statute is a “special law” that limits a living plaintiff’s right to recover noneconomic damages to no more than $350,000 and cannot be reconciled with the provision of the Oklahoma Constitution that expressly forbids any statutory damages limitation for injuries resulting in death.

Oklahoma’s statutory cap provides that in any civil action arising from claimed bodily injury, the trier of fact may award a plaintiff for noneconomic loss no more than $350,000, regardless of the number of parties against whom the action is brought or the number of actions brought—unless the claimed bodily injury is the result of more than mere negligence (i.e. reckless disregard for the rights of others, gross negligence, fraud, intentional injury, or malice).

The statute defines noneconomic damages as “nonpecuniary harm that arises from a bodily injury that is the subject of a civil action” and includes damages for, among other things, pain and suffering, loss of consortium, companionship, mental anguish, etc.

In Beason v. I.E. Miller Services, Incorporated, an employee was injured while operating a crane in his employment with I.E. Miller Services. As a result of his injuries, the employee underwent two amputations on parts of his arm. The employee and his wife sued I.E. Miller in a personal injury action. The matter went to trial in Oklahoma County and the jury awarded the employee and his wife a combined total of $15 million – $6 million of which was allocated as noneconomic damages. Applying the statutory cap, the district court reduced the jury verdict to $9.7 million, as the noneconomic damages to plaintiffs was lowered to $700,000, or $350,000 per person. On appeal to the Oklahoma Supreme Court, plaintiffs challenged the damages cap.

The Oklahoma Supreme Court held the statutory damages cap is unconstitutional for one reason: the statue purports to limit recovery for pain and suffering in cases where the plaintiff survives the injury-causing event, while persons who die from the injury-causing event face no such limitation under Oklahoma Constitution Article 23, section 7 (“The right of action to recover damages for injuries resulting in death shall never be abrogated, and the amount recoverable shall not be subject to any statutory limitation . . . . ”).

The court explained that “[b]y forbidding limits on recovery for injuries resulting in death, the people have left it to juries to determine the amount of compensation for pain and suffering in such cases, and no good reason exists for the Legislature to provide a different rule for the same detriment simply because the victim survives the harm-causing event.”

Moving forward, the court noted that if the people of Oklahoma believe the jury system and judicial review are no longer effective in deciding compensation in private personal injury cases, then constitutional amendment is the proper way to make such a change, “not a special law.”

The impact of the Oklahoma Supreme Court’s decision in Beason is profound.

Now, after Beason, with the statutory damages cap removed, an unemployed, catastrophically injured plaintiff, and a defendant, may be looking at a substantially different recovery and exposure.  Consequently, and somewhat counter-intuitively, because the risk of large verdicts just went up, cases may settle earlier because of the uncertainty associated with leaving a damages calculation up to a jury.

Ashley M. Schovanec is a litigation attorney with the law firm of Phillips Murrah.

Phillips Murrah sponsors OU Law’s 2019 Best Brief Award

Best Brief Award Winners

Attorneys Ashley M. Schovanec and Erika K. Halley presented the Best Brief award to winners in the 1L Class.

The University of Oklahoma’s Competitions and Clinic Awards Luncheon offered first-year law students the chance to compete and show how their studies have paid off on April 18.

“We celebrated the hard work our students have put into our competitions and clinic programs,” said Camal Pennington, Director of Annual Giving at OU College of Law.

Attorneys Erica K. Halley and Ashley M. Schovanec presented the $5,000 Best Brief Award sponsored by Phillips Murrah law firm. The Firm also sponsored the award in 2018. 

“The First Place award is granted to one student from each of the four sections in the 1L Class for best written brief,” Pennington said. “$500 is awarded to each of the First Place winners.

“Phillips Murrah also grants a $250 award to the second place brief for each section.”

OU Law competition teams traveled all over the U.S., from New York City and Albuquerque to Dallas and Washington, D.C. to Denver, San Diego, and Chicago, he said.

“Faculty members, alumni and outside attorneys helped coach these teams,” Pennington said. “For two consecutive years, OU Law has been ranked in the Top 5 in the country for our competitions program.

“OU Law competition teams have won four national championships in the last two years including the 2019 Federal Bar Association Moot Court National Championship.”

Halley and Schovanec are OU College of Law alumni. Halley represents individuals and businesses in a broad range of transactional matters, and Schovanec is a litigation attorney who represents individuals and both privately-held and public companies in a wide range of civil litigation matters.

Click here to learn more about the OU College of Law.

NewsOK Q&A: Medical practice support can be costly to suppliers, others

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.

In this article, Oklahoma City Healthcare Attorney Mary Holloway Richard discusses the “Anti-Kickback Statute” and potential, federal violations of the statute as it relates to providers in the healthcare industry.

What is the authority for the federal government to oversee providers’ relationships with durable medical equipment (DME) and device suppliers and drug companies, such as educational programs that would seem to benefit the patient? How active is that oversight?

The Anti-Kickback Statute (AKS) prohibits remuneration to induce referrals or use of products reimbursement by Medicare, Medicaid or other federal healthcare programs. The federal government, through its investigators and prosecutors, pursue civil remedies including fines for remuneration considered as kickbacks. Remuneration may be cash of in-kind contributions. Under the AKS both civil and criminal charges may result from an investigation by the federal government. Federal policy is designed to prevent relationships that purportedly “lead to excessive or unnecessary treatment,” drive up health care costs and inhibit free market competition. The kickback prohibition applies to all sources of referrals, even patients. For example, where the Medicare and Medicaid programs require patients to pay copays for services, you generally are required to collect that money from your patients. Routinely waiving these copays could implicate the AKS and you may not advertise that you will forgive copayments. However, providers are free to waive a copayment if the provider makes an individual determination that the patient cannot afford to pay or if reasonable collection efforts fail. In addition, providing free or discounted services to uninsured people is not prohibited. The beneficiary inducement statute (42 U.S.C. § 1320a-7a (a) (5)) also imposes civil monetary penalties on physicians who offer remuneration to Medicare and Medicaid beneficiaries to influence them to use their services.

Is the federal government even active in investigating and prosecuting under the AKS?

Yes. The Office of the Inspector General, counsel for the Department of Health and Human Services (HHS), estimated in 2018 that for every $1 spent on investigating health care fraud, $4 is recouped. The government has investigated, prosecuted and settled claims with many types of providers and continues to do so. The government does not need to prove patient harm or financial loss to the programs to show that a physician violated the AKS. A physician can be guilty of violating the AKS even if the physician actually rendered a medically necessary service. Taking money or gifts from drug or device companies or DME suppliers is not justified by arguing that providers would have prescribed that drug or ordered that wheelchair even without a kickback. An example of unlawful activities comes from the Covidien case. A supplier of vein ablation products in California and Florida, Covidien recently settled its claims with the federal government that it offered or provided free to medical practices, or at discounted rates, practice development assistance, lunch-and-learns, dinners with physicians, and market development support, such as vein screening activities designed to recruit new patients to the practices — all provided free of charge or at discounted rates. This virtually uncompensated support, according to the Department of Justice, was designed to induce the use of certain items or services, leading to excessive and unnecessary treatments and driving up health care costs for everyone.

Are there any clear guidelines for physicians and other providers?

HHS has published guidelines for providers, such as “A Roadmap for New Physicians-Avoiding Medicare and Medicaid Fraud and Abuse,” which I routinely provide to new physicians, advanced-practice nurses and other providers. Failure to follow the guidelines can be costly. For example, the outcome of the Covidien investigation was a civil settlement agreement for violation of the AKS in the amount of $17,477,947, with additional payments in excess of $2 million by the company to the states of California and Florida for claims paid by their Medicaid programs.

How are violations of the AKS usually discovered?

Violations of the AKS are often discovered through “qui tam” actions brought by employees of the practice group or those with knowledge of its practices known as “whistleblowers” or “relators.” To avoid vulnerability to qui tam actions providers are advised to adopt and implement robust compliance policies, including training providers and other personnel regarding behavior that may constitute risk under a federal regulatory analysis. It is also advisable to have operating agreements of the practice’s legal entity and written agreements reviewed by counsel in order to shift legal liability where possible.

 

Published: 4/19/19; by Paula Burkes
Original article: https://newsok.com/article/5629122/medical-practice-support-can-be-costly-to-suppliers-others

Gavel to Gavel: Gender parity and the rise of women in the boardroom

Gavel to Gavel appears in The Journal Record. This column was originally published in The Journal Record on April 18, 2019.


Kendra Norman Web

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

By Phillips Murrah Attorney Kendra M. Norman

It should come as no shock that, although women make up just over half of the U.S. population, they are underrepresented in corporate executive management, as well as in the boardrooms of public companies in the U.S. This is often due to stereotypes that characterize female leaders as abrasive, aggressive and emotional. This disparate societal perception rewards certain characteristics in men while condemning them in women, which damages women striving for leadership roles.

A 2016 Catalyst report found that in the U.S., women made up only 21.2% of the S&P 500 board seats.

A recent push for diversity on corporate boards of directors may change the gender lines of corporate culture. For example, California is the first state to statutorily require female representation on boards of directors.

In 2018, roughly 25% of California-based companies had no female directors on their board. In October, Gov. Jerry Brown signed a law requiring all public companies having principal executive offices in the state to have at least one woman on the board by the end of 2019. By the end of 2021, any California public company with five directors must have a minimum of two female directors, and those with six or more directors must include at least three women. The law imposes a $100,000 fine for a first-time violation and a $300,000 fine for subsequent violations.

California follows several European countries, including Germany, France, Norway, and Sweden, which have implemented quotas and fines to increase female representation in the boardroom. Additionally, shareholder advisory firms such as Institutional Shareholder Services and Glass, Lewis & Co. are now using gender diversity as a factor for shareholder vote recommendations.

While a government-mandated requirement may not be the ultimate solution, it could accelerate the achievement of gender parity.

Such a change in gender representation is likely to benefit companies, as gender and culture diversity results in diverse perspectives, which is likely to improve a company’s performance. It will also create less gender discrimination in recruitment, promotion, and retention.

While Oklahoma continuously ranks in the bottom of states for women when it comes to the income gap, workplace environment, education, and health, Oklahoma ranks 20th with respect to the executive positions gap, according to a recent 2018 WalletHub study. While there is much room for improvement, there may be hope for Oklahoma in achieving executive gender parity.