Marrs & Henry Law Blog
The Marrs & Henry Law Blog provides informative updates about timely and industry related subject matters.
Sports Betting: Coming to Virginia?
May 30, 2018
Earlier this month, the US Supreme Court struck down a 1992 law that allowed certain states to retain their pro-betting laws, but prohibited any states without such laws from passing them moving forward. (Click here for the opinion text: Murphy v. NCAA.) With this ruling, all states now – or rather, for now – are empowered to determine whether or not to permit sports betting.
The moral, ethical and policy implications of sports gambling will be debated and evaluated in legislatures throughout our country in the months and years to come. The elected bodies must determine whether the potential economic benefits of permitting sports gambling outweigh the possible negative impacts, which include but are not limited to concerns regarding the corruption of athletics. While these debates are similar to those common prior to 1992, the proliferation of casinos and other forms of legalized gambling throughout the United States since 1992 will add a new wrinkle. Only a few states had casinos in 1992, but 39 states now have either casinos or a similar forum for legalized gambling. With a gambling infrastructure already in place, sports gambling could explode in a matter of months, if not weeks.
But states weighing the issue should be wary. The Supreme Court did not say that Congress had no authority to regulate gambling. The Court merely took issue with the way Congress’s 1992 act had gone about it. The Court put it this way: “Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.” So while the 1992 law has been wiped off the books for the time being, Congress could respond by charging into the breach with new federal legislation that could supersede any and all state laws. Anyone considering investing in a sports gambling venture might want to proceed with caution, lest the rug gets pulled out from under them by Washington. Likewise, states may wait to see if this becomes a priority in Congress before they consider taking their own actions as well.
Virginia’s General Assembly won’t convene again for purposes of considering such changes in the law until next January. By that time, we may have a better indication of whether Congress will likely seize control of the issue, or whether it will allow each state to adopt its own rules.
Historically, Virginia has been opposed to legalized gambling, but since the adoption of the state’s lottery after the 1987 referendum, that opposition has steadily eroded. An effort to support the state’s horse racing industry led to the development of Colonial Downs, with satellite (off-track) betting parlors. And even though that venture has since gone dark, a Native American tribe is even now considering exercising its sovereign rights on its reservation to open its own casino. (See 3-17-18 article regarding Indian tribe’s casino plans in VA). Politically, Virginia has transitioned from a bellwether “red state” to one trending blue, or at least, turning into a “purple” or swing state. The historic social conservatism that fueled opposition to gambling has, for good or for ill, been waning. A total gambling ban is therefore far from assured. We should expect a hot debate next winter, with some expansion of permissive gambling very likely to be the end result.
HAPPY TRAILS, NANCY!!!
June 3, 2017
It’s probably impossible for anyone to have interacted with us here at Marrs & Henry without having the pleasure of dealing with Nancy Faulkner. She’s been with us since our founding in 2012, and has worked with Brad Marrs for the past 17 years! Throughout that time, she’s been not only a strong legal assistant, but a friendly face and voice for us in all of our dealings with clients, opposing law firms, and the public.
Our beloved Nancy transitioned into retirement at the end of May. After a pizza party and a private celebration at our offices, Nancy moved on to a life that will focus ever more on her adoring (and adored) grandchildren.
We plan on keeping Nancy as our friend in the years to come, and while we wish her well, we cannot help but miss her already! We know you all will as well.
Thanks from all of us at Marrs & Henry!
April 3, 2017
March 19 marked the fifth anniversary of our founding of what has become Marrs & Henry. How time flies!
But we wanted to take just a moment to thank all of you who have helped to make our venture a success, and for making it a joy for all of us to come to work each day!
Running Your Own Business Means Expect the Unexpected
January 11, 2017
If you haven’t heard our newest WRVA radio ad, take a listen to the audio file!
It’s too true that when many people first run into a serious legal problem, they truly don’t know where to turn. We hope you’ll help us to help them!
And of course, whenever you find yourself in one of those situations, we’ll always be here for you.
Medical Balance Billing: Different Tests For Different Contexts
December 14, 2016
Those clients who work with us on improving their rate of realization on worker’s compensation billings know that Virginia statute prohibits invoicing a patient with an awarded, work-related injury for any portion of his account for medical services provided. In worker’s compensation, medical providers must channel claims through the administrative process, seeking payment only from employers and their insurers.
The administrative process has historically been very favorable to providers – at least until the General Assembly began eroding provider rights with laws passed over the past three years. One key rule of evaluation adopted by the Virginia Worker’s Compensation Commission has been its emphasis on determining “prevailing community rates” – the statutory standard applicable in the absence of any contractual agreements governing billings – according to what providers charge, and without regard to what insurers want to pay or what compromises might be made. The Commission has affirmed this rule in numerous case decisions limiting prevailing community rate inquiries to studies of charges data, with payment and settlement data excluded from the decision process.
That standard will remain in place at least until January 1, 2018, when the new fee schedule under development is supposed to take effect.
But providers should understand that all of this discussion relates only to the limited context of worker’s compensation claims. When dealing with patients who have more typical billing arrangements (group health insurance, individual policies, self payment, etc.), none of the worker’s compensation rules apply at all.
For the greater number of patients, the standard rules of contract law apply without any special modification for medical billings. The key points to bear in mind are:
- Any time there is an explicit agreement for what charges will be, the courts will enforce that agreement.
- For medical providers, the use of explicit agreements is typically limited to contracts negotiated with health insurers; patients are seldom informed in advance of what rates of charge will be used.
- Health insurance network agreements nearly always limit what a provider may charge to the patient (whether in copays or coinsurance amounts). The patient in this situation is considered a third-party beneficiary of the contract between the provider and the insurer. Any provider who attempts to have a patient sign to confirm liability for balances over and above the permitted amounts is in breach of its contract with the insurance network, and the result of that will almost certainly be that the patient will be excused from any billings that exceed the permissible amounts. It is simply not kosher to attempt to collect amounts your agreement with the insurer requires you to write off from the patients. The only remedy for disgruntlement over insurance company reimbursement amounts is to terminate your agreements with them and seek to renegotiate, or to do without such relationships.
- For self-pay patients (including those who are uninsured or who rely upon health savings accounts), in the absence of any explicit agreements as to rates of charge, courts will undertake inquiries into what charges are reasonable for like services in the geographic area. The provider will not be allowed to recover more than its original invoice, but in an important distinction from worker’s compensation billings, there is no presumption that the billed amounts are reasonable. The court will hear evidence from both sides on that issue.
Currently, the Virginia Supreme Court is considering an appeal of a decision by a trial judge to consider the amounts providers accept as payment for their services when making these determinations. While the Supreme Court sometimes offers surprises, our expectation is that it will uphold the trial court, and make this sort of inquiry standard across the state.
Business to Business Connections: Tell A Friend!
December 9, 2016
We’re trying something new – or at least, new for us – at Marrs & Henry. If you haven’t heard our current WRVA radio ad, take a listen to the audio file!
We are indeed at that time of year when many small business owners look over their books and realize that there are problematic accounts receivable that need tending to. But many people in that situation simply don’t know where to go to get the help they need. We hope you’ll help us to help them!
And of course, if you find yourself in that very situation, there’s no time like now to call us!
Can Your Lawyer Just Quit On You?
November 8, 2016
Dave Albo of Fairfax wears two hats. He is a state delegate from Fairfax, with enough tenure accumulated to have become Chairman of the House’s powerful Courts of Justice Committee. He is also a highly successful lawyer in the Northern Virginia region. And, in the interest of full disclosure, he is also my personal friend from when my brief tenure in the House overlapped his much longer (and still continuing) time there.
Members of our part-time “citizen legislature” are supposed to bring their life experiences with them when they come to the capitol in Richmond each winter. Even so, Dave raised eyebrows in the legal community when he proposed a bill for January’s General Assembly session to make it easier for lawyers to quit cases when clients don’t pay.
It may come as a surprise to clients, but your lawyers cannot just quit on you any time you fall behind in paying them. While that can happen for relationships involving advising or transactional work, for any case that goes to court, lawyers cannot withdraw from representation without asking and receiving permission from the presiding judge.
In criminal cases, judges often will not grant permission if the lawyer’s request to withdraw might result in a postponement of trial, thereby allowing the defendant to extend his time free on bond simply by withholding payment. For this reason, criminal defense lawyers commonly quote lump sum fees, and refuse to begin work until the entire fee has been paid in advance. But because some cases can become complex and therefore, expensive, lawyers will sometimes yield and allow the client to pay only as (and only if) a case progresses on to its latter stages. Lawyers who get burned learn to keep a watchful eye on such situations, so as to avoid ending up conscripted into completing the handling of a case without any hope of payment.
While judges tend to be more indulgent in civil cases, the same risks can be presented there, and what is more, the rulings can vary from judge to judge depending on the judge’s predisposition.
Against that background, Del. Albo is proposing that lawyers be given statutory privileges to stop work in cases of nonpayment, closer to (but not as favorable as) the rights other service providers enjoy.
While we sympathize with lawyers who offer clients the option of paying in stages, and see value in helping people find ways to finance their needs for lawyers, we would stop short of supporting our friend’s bill. There are many ways for a lawyer to protect himself from nonpayment, and the most effective way is to avoid procrastination. The more time that remains before trial when a request to withdraw is made, the more likely it is that the judge will grant the request.
It strikes us that imposing upon lawyers a duty to stay on top of their own cases and to act promptly when problems arise is not too much to ask. In this case, a bill borne of frustration might have the positive impact of drawing judges’ attention to the need not to take undue advantage of importuned lawyers, but action beyond sending that message is probably not warranted.
Virginia Still a Bastion of “At Will” Employment
August 23, 2016
Stories of lawsuits challenging firings lead many employers to be reluctant to discharge even the most problematic employees. But in Virginia, any reports of the demise of the doctrine of employment terminable “at will” are premature.
Traditionally, employment has been presumed to be terminable at will by either party upon reasonable notice, with or without a showing of cause. Most employees fully understand half of this rule – the half that holds that they can quit their jobs at any time, leave their employers in the lurch, and face no consequences beyond a possible bad reference. In reality, the rule is a two-way street, meaning that employers generally retain the right to fire in the same manner.
The rule has been eroded by the adoption of several anti-discrimination laws (with protections for race, sex, age, disability, religion, etc.), and also by the decisions of courts and legislatures in many states. But while civil rights laws passed by Congress govern us all, Virginia’s state courts and General Assembly have generally refrained from expanding the list of exceptions.
In recent years, employee lawyers have tried to emphasize the “upon reasonable notice” phrase, so as to argue for at least a few weeks’ severance pay as a matter of course. Often this leads to more involved severance agreements being negotiated.
But the Virginia Supreme Court recently rejected the interpretation of “reasonable notice” as requiring some period of time to cushion the blow to a fired employee. The court instead construed the phrase as requiring only that the firing be communicated in an effective manner, so that the employee would not continue working unaware of his own termination. Since that scenario is almost unheard of, the decision has the practical impact of treating the “reasonable notice” language as superfluous.
It should be noted that construing “reasonable notice” as a fired employee might wish could backfire on employees generally, since any rule adopted for firings would apply with equal force to resignations as well. And no one has ever suggested that employees want to be open to suits by employers who find themselves harmed by workers unexpectedly walking off the job.
The true impact of the court’s ruling may be in diminishing the motivation for even entering into negotiations for severance agreements. The fewer rights a fired employee has, the less protection the employer needs, and thus, the trend towards offering more and more in severance pay and benefits merely to purchase a signed release of claims may have run its course.
Lawyers Not Immune to Scam
August 9, 2016
Lawyers are often called upon to safeguard their clients in individual cases, and also to help them develop defensive procedures. But as is often the case in many fields, lawyers are often less guarded in managing their own affairs than they are when handling clients’ business.
Several years ago, a well-known Richmond law firm got stung by a common internet scam. Posing as a foreign business, the scammer asked the firm to handle a sizeable collection case for a percentage fee. Shortly after the law firm got involved on its supposed client’s behalf, the debtor ended its allegedly long holdout and made what appeared to be payment in full via cashier’s check. The scammer OK’ed the law firm’s depositing the cashier’s check to the firm’s trust account, then using the funds to pay its own fees, with the net funds then being remitted to the “client.”
But of course, the cashier’s check was a phony, so the lawyers’ bank reversed the deposit credit. This left the law firm’s trust account out of balance, due to the outstanding checks that paid the firm’s bill and the balance seemingly due to the “client.” The law firm had to restore its fee to the trust account, but by the time the problem surfaced, the “client” and that money were both long gone. The “client’s” check did not bounce, because the law firm’s trust account had a high balance comprised of other clients’ moneys. The law firm had to make good on restoring those funds to its real clients.
A variation on this scheme ensnared a venerated Lexington law firm recently. There, instead of asking the firm to handle a collection case, the scammer hired the firm to handle a business deal involving sale of a substantial asset to a local purchaser. The deal went through, the buyer paid, and the law firm put the buyer’s money into its trust account. The firm deducted its fee and then sent the net funds on to the “client.” When the buyer’s cashier’s check again turned out to be counterfeit, the law firm found itself out nearly $270,000.00.
In both cases, the firms may have been protected by insurance, and in addition, partial recoupment was achieved in suits against the law firms’ respective banks. In both cases, the lawyers involved claimed that they had disbursed funds only after bank personnel had assured them that the funds deposited were “good.”
But in such situations, any bank customer should fully appreciate the difference between the expiration of a common bank “hold” on newly deposited funds, on the one hand, and the expiration of the period in which a bank might revoke a prior deposit credit, on the other. A “hold” typically ends in less than 24 hours, so the bank will usually allow drafts on the funds that quickly. But the banks almost always have language in their account agreements giving them much longer to reverse deposit credits if the instruments deposited turn out to be no good.
The Virginia State Bar has emphasized this distinction to lawyers for years, always admonishing that trust funds may not be distributed until the longer time frame has passed. Unfortunately, it seems that even among experienced attorneys, this key distinction often goes unappreciated. Years of disbursing upon cashier’s checks without incident seem to leave even lawyers wrongly assuming that no risks remain.
Lawyers are often targeted by scammers because they often carry large balances in their trust accounts, so the checks they send to scammers go through even if the instruments initially deposited were fraudulent. But any business handling large sums, or whose bank accounts have substantial float, may see similar scams target them as well.
What made the Lexington case stand out was the extent to which the law firm there had actually investigated the scammers before taking on the tasks requested. The e-mail correspondence there was well written, devoid of the “pidgin English” that is often a dead giveaway. Web sites for the “client” and its purchaser were also reviewed — but in today’s world, unfortunately it is all too easy to construct phony web sites to support scams.
While law firms have been the favorite target of these types of scammers, all businesses would be well advised to keep their guards up at all times, especially when dealing for the first time with international customers. Indeed, international transactions carry risks not present with U.S.-based customers, even when the companies are legitimate. There truly is no time when anyone can afford to let their guard down.
Police Abuse Cases On the Rise
July 19, 2016
With police shootings seemingly gaining national publicity on a weekly basis, Virginia has not been on the sidelines for the civil lawsuits that sometimes spring from instances of police overreach.
Federal civil rights suits against police have historically been difficult cases to prosecute, for several reasons. First, neither the police department nor the local government entity may be sued; suit must name specific officers alleged to have used excessive force. Second, while officers are not absolutely immune from suit in the way governmental entities are, they do benefit from a qualified immunity that insulates them from liability unless they were grossly negligent in exceeding well-established standards of conduct.
Adding to those difficulties, juries have historically been very supportive of police and willing to give them the benefit of the doubt in close cases. And our area’s federal courts, in particular the federal appeals court here, have a well-earned reputation for supporting law enforcement except in the most egregious cases.
Even the most ardent advocates acknowledge that police work is difficult and dangerous, and officers deserve our support. But like any profession, policing has its bad apples, or the occasional crossing of the line by an otherwise good officer. Here in Virginia, these cases are increasingly succeeding in gaining compensation for parties whose civil rights have been violated, with or without physical injuries.
One definitive indication of the courts’ support for these cases has been a recent spate of instances where police claims of qualified immunity have been rejected. Those rejections typically mean that the claims will proceed on to trial before juries (often paving the way to out-of-court settlements). Among the recent cases allowed by federal judges have been:
- A man stopped and questioned after his wife had asked police to interrogate him due to a domestic dispute not involving violence was seized in a SWAT-like assault and taken into custody, supposedly due to his lawful possession of a hunting rifle;
- A driver unable to respond to police commands after a traffic stop due to his having suffered a stroke, but who did nothing to threaten the safety of the officers or others, was pepper sprayed and Tasered as part of an effort to force his compliance; and
Jail deputies, warned that a particular inmate had been threatened by other inmates, told the other inmates of the complaint, with the result that the complaining inmate was severely beaten.
- In addition to these recently publicized cases, Marrs & Henry has represented three additional citizens whose rights were violated in cases that, due to their confidential nature, cannot be detailed here.
One of the key factors fueling these cases is that in the past, law suits often devolved into “swearing contests” between uniformed officers and citizens who stood accused of crimes. Juries were typically unwilling to disbelieve the officers in those situations. In today’s world, however, video surveillance abounds, cell phone cameras are everywhere, and indeed, police officers themselves are often equipped with dashboard or even body cameras. As a result, exactly what happened is, in many situations, no longer subject to dispute.
At Marrs & Henry, we do not doubt that the overwhelming majority of police officers are well intentioned, well trained, and above reproach. Certainly, there can be no justification for the recent attacks on innocent police officers across the nation. But even our nation’s founding fathers knew that with police power comes the potential for abuse; that is why protections for citizens were given such high priority in the Bill of Rights. Given that there are well over 7 million residents in Virginia, it should come as no surprise that a handful of regrettable incidents may occur each year. Increasingly, it appears that those who are indeed genuinely abused will have recourse and compensation.
Virginia and the Nation’s Highest Court
June 16, 2016
Over the past year, Virginia has repeatedly found itself center stage before the United States Supreme Court. In notable cases including McDonnell v. US and Wittman v. Personhuballah, Virginia politics — and politicians — figure greatly, drawing national attention.
In McDonnell, our former governor is appealing his convictions from his highly publicized influence peddling trial, arguing that the government stretched the meaning of the criminal statutes beyond fair understanding. During oral argument before the Supreme Court in late April, several of the justices appeared sympathetic to McDonnell’s arguments. Because this case has substantial potential impact upon the conduct of government officials nationwide – and indeed, could mean prosecutions for any number of public officials over acts that have already occurred – the court’s ultimate ruling will be anxiously anticipated in many quarters.
In Wittman, the Court reviewed a trial court’s ruling that Virginia’s 2013 congressional redistricting plan was unconstitutional due to its packing of minorities, especially African-Americans, into a limited number of districts. Attorney General Mark Herring, a Democrat, elected not to defend the districts, which had been drawn by the Republican majorities in the General Assembly. In the absence of an appeal by the state itself, several Republican congressmen filed to intervene and then appealed in an effort to save the General Assembly plan, but the Supreme Court refused them. The court did not actually weigh in on whether the General Assembly’s plans met constitutional requirements; instead, it side-stepped the main issue by holding that the congressmen did not have the right to maintain the appeal themselves. The result is that the decision by the Attorney General ultimately determined the outcome, and Virginia will see districts newly crafted by the federal trial court in effect beginning this November.
On the horizon, Virginia may well return to the Supreme Court’s docket in a case working through the lower courts involving one of the bathroom-related suits brought by transgender advocates. A federal trial court judge denied a transgender student’s request for a preliminary injunction against the Gloucester County School Board, but a three-judge panel of the Fourth Circuit Court of Appeals overturned that ruling, holding that the trial judge had improperly excluded certain evidence from consideration. The school board sought review by the full Court of Appeals, but was turned away. As of May 31, the case has been returned to the trial judge with instructions to continue proceedings on the student’s claims. Since recent decades have seen virtually all of the nation’s controversial social issues ultimately laid at the doorstep of the Supreme Court for determination, it may well be only a matter of time before the Gloucester student’s case provides the vehicle for the inevitable presentation of this issue to the court.
New Law Sends Many Business Disputes to Federal Courts
June 1, 2016
The new, federal Defend Trade Secrets Act went into effect May 11. Until the DTSA, the law governing claims alleging misappropriation of protected trade secrets was drawn from statutes in each of the states, leading to preliminary considerations as to which states’ laws might apply to a particular case and how those differing laws were applied in their respective states. The DTSA aims to provide more uniform rules for these claims throughout the country, and extending even to international transactions.
While talk of trade secrets may conjure up images of industrial espionage, the most common fact pattern is the departing employee who seeks to use his former employer’s information to establish a competing venture. The information may include customer lists, profiles or histories, means and methods of production, internal cost structures, or even “secret sauce” items that the employer may not have patented. A current or departing employee can often easily transfer this information by e-mailing attached files out of the firm, or by downloading larger files onto a flash drive.
Many of these cases have already been finding their way into the federal courts, by way of what is known as diversity jurisdiction. An aggrieved party may file a suit in federal court even when the claims involved arose strictly under state law, if the parties are from different states and the dispute involves $75,000 or more.
But the DTSA does more than just provide a uniform national standard. By making trade secret cases a federal law issue, it confers federal court jurisdiction over all of these cases, irrespective of the residency of the parties or the amount in dispute.
In Virginia, the shifting of these cases from state to federal courts will likely be felt mostly in the legal costs incurred in litigating. Federal courts allow many pretrial motions, including motions to resolve the case without trial, to be pursued using only affidavits or deposition testimony; Virginia’s state courts do not allow the use of out-of-court testimony in this way. While the stated objective of the federal rule is to save expense by seeking to shorten litigation, in practice the federal rule encourages the filing of whole series of pretrial motions not seen in the state courts. Experienced practitioners know that litigating in federal court is typically much more expensive than in Virginia’s state courts. Larger companies often bank on this, strategizing that their lesser capitalized rivals will not be able to afford to fight back effectively.
The federal law also brings a new remedy to those claiming injury from misappropriation of trade secrets. The party suing may, even before notifying the defendants of the filing of the case, ask a court to have the U.S. Marshal Service seize any property necessary to prevent the defendants from using the information supposedly taken improperly. How often courts will actually grant this relief remains to be seen, however, as historically courts are very reluctant to intervene so severely after hearing only one side of a dispute. Moreover, anyone obtaining such a seizure will open themselves up to a counterclaim for any harm caused if it should later be determined that the seizure was improperly obtained. Thus, while some fear that this provision could be abused to launch an attack on a competitor, the magnitude of the counterclaim that an improper seizure could generate should lead any suing party to think twice before asking a court to authorize one.
With or without that additional aspect of litigation, the likely shift of many cases previously left to the state courts into the federal system will no doubt change the landscape of much business litigation. Even when the chief thrust of a suit is, e.g., over an employment agreement’s non-compete provisions, the DTSA can now be used to drag the entire dispute into the federal courts.
Worker’s Comp Medical Billing: Adjusting to the New Statute of Limitations
June 1, 2016
On March 15, we posted a report on how the statute of limitations adopted by the General Assembly in 2014 was substantially affecting clients’ ability to collect upon claims for underpayment in the worker’s comp system. To review that report, please reference the March 15 blog post.
As an update, we would add the following two key points for consideration.
First, because the statute’s one-year clock starts ticking when the insurance company makes its LAST payment for any date of service, many insurance companies are no longer willing to entertain provider requests for reconsideration of the initial, low ball payments. Any supplemental payment would extend the time the provider has to file a claim, so insurers are simply refraining for making later payments.
Before the statute of limitations went into effect, savvy providers often noticed that when the initial low ball payments arrived, at least some additional money was there for the asking if the billing staff pressed for reconsideration. As we move forward, providers’ business offices will notice that the efforts of their billing staff will bear less and less fruit.
Because of this, there is no reason for a provider to cling to a file after the insurer’s initial payment has arrived. The insurer is unlikely to issue any supplemental payments, so staff expenses spent pressing for supplemental payments will be money wasted.
In addition, the longer a provider hangs on to any particular file, the more likely it will become that part or all of that claim will be lost to the very short limitations period.
We are now urging clients to review their files with us at least once every six months. This will allow ample time for the insurer to conclude its initial payments, while still assuring that we have the ability to file your claims well before anyone could contend the claims were forfeit under the statute of limitations.
Our second key update point is that because the language in the 2014 law, intended to make the insurer’s ability to invoke the one-year rule contingent upon its having abided by prompt payment positions, was not as clearly written as it should have been, insurers are now looking to test the efficacy of that language by arguing that no such condition exists. That is, insurers want to be able to invoke a statute of limitations defense even if they did not deliver prompt payment. We are currently handling a test case brought by one insurer, and we expect to have to fight that case until all appeals are exhausted.
Bankruptcy “Clawback” Provisions: Top 2 ways to limit your preference exposure.
May 16, 2016
Your company provides excellent service to a customer and, after a long and anxious wait, is eventually compensated for your efforts. Your customer proceeds to file bankruptcy, and you breathe a sigh of relief that you got paid before that happened. But then you receive a claim from the bankruptcy trustee, seeking the return of payments you received within 90 days of the bankruptcy filing.
Under bankruptcy law governing “preferences,” the debtor’s bankruptcy estate can recoup delinquent payments made within that 90-day window. The rationale for this law is that when the debtor paid you, it should instead have spread the funds it had available among all of its creditors, as opposed to preferring you. In alleging a preference, the trustee does not claim that your company erred in anyway. Instead, he merely seeks to recover the funds and distribute them in the way the law would consider more appropriate.
This may be the only area of law where a creditor can be forced to pay money despite the fact that no one even contends that the creditor did anything improper. Because this runs counter to what we normally expect from the law, preference claims are among the most frustrating for anyone whose business involves the extension of credit to customers – which is to say, just about any business.
Fortunately, not all payments received during the 90-day period preceding a bankruptcy constitute preferences subject to the clawback provisions. There are several defenses available, and with a proactive approach your company can limit its preference exposure in situations where your customer files for bankruptcy.
Here are the top 2 tips for protecting your company:
1. Monitor Your Accounts Receivable & Maintain Ordinary Course of Business
Payments received in the ordinary course of business are not considered preferences. If you receive payments timely, consistent with the industry norms, the payments cannot be clawed back in the bankruptcy. A proactive approach with your accounts receivable can help ensure that payments are received in this manner. If you allow accounts to become delinquent, you can lose this protection.
2. Require Contemporaneous Payments, Especially When Customers Are Showing Signs of Financial Struggles
If your see that a customer is struggling, you should require contemporaneous payment with the delivery of whatever goods or services you provide. The contemporaneous payment/exchange will protect the payment from a preference attack. This is a valuable tool to deal with problem customers.
At Marrs & Henry, we have substantial experience in advising clients about protecting themselves from preference attacks when payments from struggling customers arrive late. We also have experience defending these trustee suits when possible, and negotiating discounted settlements when appropriate. Because preference liabilities can be substantial and quite surprising, legal representation is essential whenever a client receives a demand letter or trustee’s suit.
Don’t Hesitate- Get What You Paid For
March 30, 2016
Nearly all businesses buy general liability insurance, to assure that they are protected from law suits that might arise from claims of negligence, defective products, or even employee problems.
And nearly all of the policy documents that insurance companies issue contain clauses that condition their responsibility for providing defense and indemnification from claims upon swift reporting when the insured business has reason to expect a claim to be forthcoming.
Often, businesses fail to appreciate how severe the outcomes can be if they delay in reporting the prospect of a claim. Management sometimes fears that if they report incidents that have not yet actually resulted in a law suit, the insurance companies will hike their premiums in the next cycle. We have even experienced situations where local agents actively discourage claim reporting, giving that fear as their reason.
Sometimes this is fueled by a failure to appreciate how the law in Virginia differs substantially from the law in other states. In most states, an insurance company cannot escape responsibility for defense or indemnification unless the insurer can prove that a delay in reporting prejudiced the insurer by making the case more difficult to defend. Insurance companies only rarely satisfy this tough standard.
But in Virginia, our state’s Supreme Court has repeatedly ruled that language in policy documents making the insurer’s obligations explicitly contingent upon timely reporting is enforceable exactly as written. The result is that a delay that probably would not have cost the customer its coverage in another state, will forfeit the benefit of the policy if Virginia law applies. And this is true even if the delay did not prejudice the insurance company at all.
Though every policy document has its own, unique wording, reporting is typically required when the insured first learns of the occurrence of an incident that could reasonably be expected to generate a claim. While suit papers sometimes do materialize out of the blue, in most cases, the insured has full knowledge of an incident months or even years before a suit gets filed. In Virginia, if an insured waits until suit papers are served to notify its liability carrier, it can expect to get a denial letter in response. Or, the insured may get a letter advising that the insurer will provide initial legal defense, but only until it can seek and obtain a court ruling that allows it to escape responsibility.
Once you know this rule, and the severe outcomes it can produce, you’ll understand why at Marrs & Henry, we typically advise clients not to delay in reporting incidents that might lead to future law suits to their insurance companies swiftly.
Delaying reporting out of concern for future premiums is too risky to be considered as an option. And after all, there is no point in paying those hefty liability insurance premiums if you are not going to claim the benefit of the coverages you bought when the need arises.
Marrs & Henry Among “Legal Elite”
March 15, 2016
For many years now, Virginia Business magazine has published a list of the state’s “Legal Elite,” lawyers considered by their peers to be the very best in their respective fields of specialty. The list is compiled using the results of surveys solicited from practicing lawyers.
Again this year, Marrs & Henry has had every one of its lawyers included in the “Legal Elite” listing, in the civil litigation practice area.
OK, so there are only two of us here. We still would be willing to bet that not many law firms have a 100% recognition rate!
And the plaques look very nice in our lobby.
Worker’s Comp Medical Billing: New Deadline Law Affecting Claims
March 15, 2016
This year has seen the General Assembly direct the Virginia Worker’s Compensation Commission to develop a fee schedule for medical billings, to take effect for dates of service on or after January 1, 2018.
That major hit to the bottom line of worker’s comp practitioners is still nearly two years off. But even before this year, when fee schedule legislation was staved off temporarily, some less-noticed concessions to the insurance industry found their way into the law. Some of them have already begun to effect medical billing claims filed with the Commission.
For treatment provided on or after July 1, 2014, billing claims are often – but not always –subject to a new one-year limitations period, with the year running from the date when payment is processed. Now, each passing day leaves more and more underpaid billings uncollectable due to this new defense available to the insurance industry.
Before 2014, there was no statute of limitations for billing claims. Case law from the Commission allowed insurers to fend off claims that had been allowed to grow so old that, e.g., files no longer existed to allow for fair review. But cases where that actually happened were extremely rare. As a practical matter, no claim younger than 5 years was ever denied as untimely, and even older claims were often permitted to proceed.
In the horse trading of the 2014 Assembly session, the Medical Society of Virginia was willing to yield on the insurance industry’s request for the adoption of a limitations period, as long as providers got something in return for the concession. Ultimately, the two sides crafted a compromise under which insurers committed to a specific time line for processing billings, providing written explanations for reviews, and remitting payments for the portions of billings that were uncontested. In return, the industry got a very short limitations period, but was allowed to invoke that defense only when the insurer could demonstrate that it had first met its own timeliness requirements.
As we first began hearing from insurers asserting the statute of limitations defense last fall, we often found that the insurers had not met their own timeliness burdens. In those situations, the law reverts to where it was prior to 2014 – with no effective limitations period at all. Thus, the defenses failed, and our clients collected.
But as insurers have realized the benefits they can reap from speeding up their review and payments processes, we are now starting to see instances where the limitations period can be, and is being, properly invoked to defeat underpayment claims.
Providers need to know that this new law can act to hurt their bottom lines. True, it applies only when the initial, partial payments are received more swiftly than was often the case in past years. But the ability to claim for amounts left unpaid has been compromised.
As a practical matter, providers need to adopt standard procedures for identifying underpaid claims before they reach the anniversaries of the dates of service. As noted above, the one-year limitations clock does not actually start ticking until payment is made, so getting a file into your lawyer’s hands before the anniversary of the date of service will assure that your lawyer has ample opportunity to review the case and still file a valid claim on time.
The reality is that if a billing has not been paid in full within 3-4 months, nothing is likely to change after that unless you have your lawyer pursue a claim with the Commission. There is no reason to wait longer than that to assure that files are reviewed, worker’s comp claims are identified, and cases are turned over to your lawyer for handling. Providers can therefore protect themselves by scheduling quarterly reviews of their accounts receivable, so that valid claims can be identified and pursued before it is too late.
In short, neglect and procrastination will now be punished like never before. But simply by instituting and following sound accounting and management procedures, providers can avoid the loss of any claims.
Where Toughness, Courtesy and Sanctions Meet
February 29, 2016
Famed lawyer and Noble Peace Prize winner Elihu Root once admonished, “About half the practice of a decent lawyer consists of telling clients that they are damned fools and should stop.”
While the comment drips with the sort of condescension for which lawyers are infamous, there is still a key point to be embraced. People who suffer wrongs often react emotionally, and understandably so. A key part of the lawyer’s job is to provide dispassionate analysis, so that months later, when tempers have cooled, the client does not find itself embroiled in litigation it has come to regret.
A recent Virginia Supreme Court opinion tells the story of a case in point.
A lawyer filed a suit to enforce a construction client’s mechanic’s lien. One of the defendants was a large bank, and its bureaucracy delayed the delivery of the suit papers to its lawyers. By the time the bank’s lawyers first saw the suit, the deadline for filing a response was already upon them. They immediately called the lienor’s lawyer, to ask for an extension of the filing deadline.
A request for a filing extension will routinely be granted by a judge if the request is first made before the filing deadline has expired. Knowing this, lawyers routinely agree to brief extensions when requests are made before the deadlines pass, because failing to agree only causes a later court hearing that will almost certainly offer no help to the client. After agreeing to the extension, the lawyer may need to explain this to the client.
But in this case, the lienor’s lawyer did not simply agree to the extension. Instead, he asked his client for its opinion. The client, who lacked the experience needed to understand how failing to agree could backfire, decided to take the aggressive stance: no extension would be agreed to.
The bank’s lawyers responded by filing a motion and appearing in court to ask for the judge’s permission to file late. The lienor’s lawyer objected, but as expected, the judge granted the motion, so the bank got to file late.
The lienor’s refusal to extend the common courtesy earned it no advantage. Worse, the judge admonished the lienor’s lawyer for taking up the bank’s and the court’s time with the matter. The judge ordered the lienor’s lawyer to pay $1,200 to the bank to reimburse it for the lawyer fees it incurred in the unnecessary skirmish.
On appeal, the Virginia Supreme Court threw out the award, saying that while the agreement to extensions is a commonly observed courtesy, the refusal did not rise to the level of frivolous or meritless litigation, since no statute or rule had been violated.
Some might think the Supreme Court opinion affirmed the righteousness of the lienor client’s original position. But that would be wrong. The bank still got its extension. The case got delayed for a very long time, and the lienor’s lawyer had to suffer a tremendous imposition of time and expense, not to mention negative publicity, just to escape punishment.
Not getting paid for perfectly good work performed can leave a construction client understandably upset. Its lawyer should absolutely pursue the client’s rights vigorously and without apology.
But in this case, the client’s best interests would have been served by agreeing to the extension. Because the client had no way of knowing this, and because the very nature of the attorney-client relationship presupposes that the client needs the lawyer’s guidance on how to handle such matters, the lawyer’s abdication of responsibility for this decision was a mistake. And even though the monetary sanction ultimately got thrown out, the trial judge provided a reminder that courts expect lawyers to minimize needless additions to the burdens of litigation. Indeed, lawyers are required to exercise independent professional judgment, so deferring to a client is not necessarily a fail safe excuse.
By its very nature, litigation is not for the faint of heart. It is contentious, frustrating, and expensive. A key part of the lawyer’s role is to remain calm, to exercise sound judgment in deciding when something is worth fighting over and when it is not, and to lead the client down the path that serves it the best. Fighting over every niggling detail is not a show of toughness. It is an indulgence that hurts the client, with no offsetting benefits.
When choosing a lawyer for a litigation matter, a client should look at more than quoted hourly rates. Check lawyers’ reputations for sound judgment in handling cases. Lawyers with the same hourly rates can produce wildly different bills, depending on whether one is using sound judgment consistently while another may be tilting at every windmill. Make sure the lawyer you choose is not only capable, but judicious with your money.
Is Alternative Dispute Resolution Really in Your Best Interests?
February 15, 2016
Over the past few decades, use of alternative dispute resolution (ADR) has grown steadily. Meant as alternatives to the traditional court processes, mediation and arbitration provide parties with avenues to resolve their legal problems, at the very least, keep them out of the public eye.
But while ADR has many advantages, one size does not fit all. Before simply assuming ADR is your best alternative, you should weigh not only its advantages, but also its disadvantages.
A frequent selling point for ADR is cost savings. But depending on the types of cases anticipated, ADR can actually increase litigation expense. While the clerks, judges and juries at the courthouse are provided at taxpayer expense, the parties to an individual dispute will have to pay any mediators, arbitrators, or ADR service companies who may handle their cases. Unless you anticipate making up these costs through other savings, you may well want to avoid, for example, including mandatory ADR in your form contract documents.
Many contract forms actually require a multi-tiered ADR process. In the construction field, for example, many standard forms require participation in mediation before binding resolution can be sought, and if mediation is unsuccessful in producing an agreement, the binding resolution can be pursued only in an arbitration. In our experience, mediation is an outstanding vehicle when both sides come to the table with strong interest in finding common ground and determined to hammer out details. When parties are far apart and entrenched, a successful mediation may be at its most valuable — but those same cases see lower success rates. And regrettably, in many cases one side has no desire to resolve matters at all. In those situations, mediation adds not just to the expenses incurred, but also to the delay in getting to the finish line.
Before signing any contract, consider whether the likely circumstances of a possible future dispute would lead you to prefer mandatory mediation, or arbitration instead of court litigation. When in doubt, or when you want to craft language tailored to your individual situation, ask your lawyer for help. Probably the best kind of lawyer to help is a litigator – someone who has seen cases like yours fall into disputes and who can apply experiences to help you plan ahead effectively. After all, the best way to avoid future disputes, or to control the scope of problems that prove unavoidable, is to make sure your contracts speak with clarity.
As examples, consider these two approaches as alternatives to any standard forms you may have presented to you:
Remove Required Mediation and the Multi-tier Process
If a dispute arises and both sides want to be in mediation at that point, nothing stands in their way. But requiring mediation before you even know what the future dispute might be about can lead to one party begging to settle while the other drags its feet, stonewalls, or sits at a conference table refusing to budge. No one benefits from that. Consider striking mandatory mediation clauses from forms provided by the American Institute of Architects, the Associated General Contractors, the Virginia Association of Realtors, or others.
Provide your Business with discretion to choose to Mediation
If you control the drafting of a form document, consider providing yourself with the right to elect, after the dispute arises, whether you can force the other party to participate in mediation, or whether you wish to pass on that process. Mediation may well prove beneficial in resolving complicated disputes, and it is especially valuable when important customer relationships are salvaged in the process. But you may not want to be delayed by mediation if, for example, you are merely trying to collect an unpaid account and speed is needed to improve your prospects of recovery.
Managing litigation – its risks, its costs, its time commitments, and its potential for bad publicity – is critical for any business. ADR can be a valuable tool to help on all those fronts. But like any good tool, sometimes it is the right one for the job, and sometimes it isn’t. Working with your lawyer ahead of time can help you to know which tool will suit you best.
Federal Courts Move to Slow Litigation Expense Brad Marrs
January 25, 2016
For several decades, the pre-trial investigation process known as “discovery” has been governed by an open-ended standard, designed to assure that all parties had full and fair opportunity to sift through all the evidence and make their own determinations as to what mattered and what didn’t.
Discovery has historically not been limited by what might be considered relevant to the issues in the case. It has extended to embrace matter “reasonably calculated to lead to” relevant evidence, as well as the relevant evidence itself. The federal courts system pioneered this standard, and state courts across the country followed suit in their own rules.
But as litigation expense has metastasized in recent years, this very broad discovery standard has been identified as one of the biggest cost drivers. The explosion of “e-discovery” in particular has fueled the bills clients see as cases progress. What used to be a conversation around a water cooler, provable only through the testimony of the participants, is now often the subject of innumerable e-mails, texts, chats, social media posts, etc. And increasingly, lawyers and paralegals have been spending countless billable hours plowing through the mind-numbing documentation the modern world is creating and saving.
It is now quite common to see each side in a court case incurring legal bills well into six, and sometimes even seven figures. One result is that a $50,000 dispute, though too large to ignore, is often a challenge to resolve on a proportional budget.
Effective last month, the federal courts have taken action to rein this in. Gone from the discovery rules is the “reasonably calculated” language that has long been ingrained in the minds of trial lawyers. That language has been replaced by a restrictive requirement that, before matter becomes discoverable, obtaining it must entail costs that are “proportional” to the needs of a case.
This rule change, of itself, will make only modest inroads into the litigation expense problem, because the federal courts handle only a fraction of all civil litigation. Federal courts can handle a claim only if it involves either a point of federal law, or a state law-based dispute between residents of different states with at least $75,000 at stake. The rule change is probably most needed for cases involving less than $75,000, and those cases are handled largely in our state courts.
But the federal courts will serve as the laboratory for seeing how the new rule works in practice. If it works as hoped, then we may well see state courts alter their rules as well in coming years.
This may add fuel to the economic pressures the recent “Great Recession” has placed on the nation’s very largest law firms. Keeping paralegals and junior attorneys busy with documents reviews and discovery battles has been their bread and butter. Reducing the volume of that work will likely continue the retrenchment the legal profession has been seeing over the past eight years.
But the person or company hoping to vindicate their rights through a process that considers the limitations of their means, the rule change has to be considered welcome and indeed, long overdue.
New Calendar, Same Old Questions
January 11, 2016
As the holiday season closes and we embark upon a new year, do you find yourself looking look back at your company’s 2015 performance and asking yourself, “What if …?”
What if everyone who should have paid you had actually paid you?
What if that problem customer had been dealt with before he ran his account even higher?
For your new year’s resolution, don’t just sit and wonder. Take charge of the situation. And where better to start than with a call to Marrs & Henry?
At Marrs & Henry, we can review your problematic commercial accounts receivable to see whether some of them can be salvaged, so that what you didn’t get in 2015 might yet materialize in 2016.
And we can work with your staff to train them in the basic forms and procedures needed to stay on top of your customer accounts, to assure that you get paid the next time around – this time maybe without even needing a lawyer’s help!
Whether or not you met your business and personal financial goals in 2015, there will always be the question, “Could we have done better?” With our help, you can still hope to make 2015 pay off better – and better still, you can look forward to future years with fewer uncollected receivables.
Getting Paid: Five Tips For Managing And Collecting Business Receivables
Brad Marrs & Patrick Henry
September 25, 2013
As our medical practice group clients know, we commonly recommend against joining or maintaining membership in the various preferred provider organization (PPO) networks that operate in the worker’s compensation field. While network membership gives payors the right to reduce reimbursements to absurdly low levels, the practice group sees nothing in return. In particular, the increase in referral volume common to group health insurance network membership is simply not seen in the worker’s comp field.
For those who see some reason to remain “in network,” however, close scrutiny of PPO contract documents is imperative. The form documents are terribly lopsided, and indeed, often include clauses that catch providers completely by surprise.
No one should ever sign a contract document without reading it carefully and understanding it. If a PPO network furnishes a document that is too long or complex to understand, then you should avoid signing unless and until they negotiate changes that simplify and clarify the relationship. And make no mistake, our experience demonstrates that networks will negotiate contract terms.
To give an idea of what goes on in these documents, consider these examples of problems we frequently find in PPO relationships:
- The primary offense of networks is with contracting with individual providers, instead of through the business or billing office or practice manager. The practice group will lose all control over management of receivables if it does not clamp down on personnel signing documents willy nilly. Bear in mind that these contracts can remain in effect until someone acts to terminate them, so we often see networks relying on documents that are decades old. Networks also take the position that the contracts follow a particular provider even as he may change practice group affiliations, so any group taking on a lateral hire should take care to assure that he is not bringing a PPO contagion with him.
- Some contract forms go on to specify that the network will process billings according to the provider’s taxpayer identification number (TIN), and that for their convenience, anyone billing using the same TIN will also be considered “in network”. If an individual provider signs intending only to bind himself, the network may well consider the entire practice group thereby bound, since all billings use the practice group’s TIN.
- Many contracts provide an onerous and overly lengthy process for terminating the relationship. If you find yourself in a bad deal, you may have a very long time before you can get yourself separated. When contract documents are aged or have perhaps become lost, it can be difficult to know if you are sending your termination notice in the manner required by the contract. We have seen networks actually receive termination letters and refuse to act on them because they contend they were not properly sent. Worse, we find that networks commonly ignore termination letters until forced to acknowledge them through the practice group’s pressing claims for underpayment.
- Beware of the fine print when negotiating reimbursement rates. Standard language buried in the document will allow them to pay you the lesser of any negotiated rates, or their internal fee schedules. If you do not find that language and strike it from your document, any better reimbursements you negotiated may not be worth the paper you wrote them on.
- Similarly, contracts often contain language that will subject you to industry practices that are otherwise not in accord with the precedents of the Virginia Worker’s Compensation Commission. For example, the Commission commonly disallows claimed multiple procedure discounts, but contract documents almost always find some way to give the network the right to take such discounts – and quite often, they do so in language that does not attract the provider’s attention.
- Another common clause allows the network the unlimited right to amend your deal simply by sending you a letter and then imposing on you the obligation to object by a stated deadline, or else your acceptance of the change is presumed. This leads to providers not really knowing what their contracts say, because often these letters are not recognized for what they are when the mail room opens them, and they therefore do not come to the attention of management personnel, nor find their way into the provider’s files. It can even lead to networks pulling you into their worker’s comp products after you had taken pains to exclude those plans from your relationship.
- Generally, our opinion is that any company that would do business in this way is unworthy of our clients’ trust. That reinforces our standard advice against even entertaining membership in these networks. But anyone still intent on joining a worker’s comp PPO network should, at the very least, (a) assure that the business office, and only the business office, handles all such contracts, and (b) consult with the group’s lawyers before signing, so as to assure that all offensive language is stricken and that the group actually gets what it thinks it has bargained for.
In addition, a sound record-keeping system is essential, so that you have a firm grasp of what deals you have, and have not made.
Worker’s Comp Networks and Their Offensive Contracting Practices
May 2, 2013
Nonpayment for the goods and services you deliver is an all too common problem. No business can prevent all instances of non-payment, but active management can both increase the likelihood that you will be paid, and help you recover even in those cases where legal action is needed.
The following five tips can help you improve your rate of realization on your invoicing:
- Build an Effective Contract Form
Many businesses find contract forms on LegalZoom or by “borrowing” from forms they see from others in their field. While these documents will indeed result in your making binding contracts, that does not mean that the contracts you make are serving you as well as they could be. A generic form from a national vendor may not provide you with the best protections available under Virginia law, or may even include provisions which are not enforceable under Virginia law. But more importantly, none of these forms were drafted just for you and the unique aspects of your business. “One size fits all”, we often find, really means that you are making do with something that does not actually fit you well at all.
- The truth is, it costs relatively little to work with your personal attorney to tailor a contract form to your particular needs and preferences. The form should protect you from nonpayment situations, but otherwise be kept as simple and unintimidating as possible; “over-lawyering” a document can scare off even your good customers.
- Require Signatures
Once you have settled on your form, train your sales and credit management personnel to ensure that it is used in all future transactions. This will allow for a uniform collections process, making it easier for you or your accounts manager to know exactly what to do and when, in those instances where your customer does not pay on time.A surprising number of nonpayment situations involve customers who receive the contract form, but never sign or return it. Many times, sales personnel feel reluctant to follow up, for fear of irritating the customer and losing the sale. In truth, these customers are throwing up a big “red flag” about how they intend to handle their debt to you. Customers who like to take their time to pay, or who may even doubt their own ability to pay, tend to find ways to “forget” about your document. These are the very customers your contract was designed to protect you from.The time to get your form signed is before you provide any goods and services. The typical customer is satisfied at the time they commit to a purchase, so this is the opportune time to collect signatures. On the other hand, the high risk customer may well do you the favor of identifying himself before you actually perform your end of a deal, if you politely but firmly make it clear that no work or deliveries will start until you have the signed document in hand. Sales to customers like those, you can do without.
- Keep Control of the Documents
In business-to-business sales, your customer’s purchase order may often contain contractual terms that could override your contract form if you do not read them carefully and communicate your objections to them. Where sales of goods alone (without services) are involved, the law may bind you to your customer’s terms even if you never signed anything explicitly agreeing to them. The key is to insist that your document be the last word in all negotiations, so that any other terms not to your liking are essentially paved over.Some businesses find that industry custom does not permit them to control the choice of contract form. Construction subcontractors, for example, almost always have to deal with general contractor form documents in addition to project plans and specifications. A surprising number of businesses allow their focus on the goods and services being sold and the price being negotiated to divert their attention away from what are often lengthy and onerous contract forms. But because the other party has devoted its efforts to developing a form that serves its needs, reviewing the documents they present carefully will often uncover offensive terms that can and should be stricken from the document before you sign.Discipline here is key. Never allow hunger for a sale to lead you to gamble that the other party will not do what its contract says it can do. Start by deleting offensive terms or otherwise adding or rewriting terms. But be prepared to drop the deal entirely if the other side makes it clear that it will deal with you only if you entrust the fate of your business to their hands.
- Collection Charges
Most sales involve extensions of credit. That is, you deliver your goods and services first, then you invoice, and then you await payment. All such transactions require you to consider in advance whether your customer will be good for the money, and whether you are protected if your customer fails to pay.If your contract does not explicitly provide for accrual of interest, Virginia law allows you to ask for interest, but (a) you may not get it in court, and (b) the most you could hope for is 6% per annum. You can improve your position by specifying a higher rate of interest. First, it provides a powerful incentive to the customer who is short of cash to pay you ahead of other creditors. Second, if the customer persists in nonpayment for an extended period, you can at least hope for some compensation for having to do without your money.If you end up having to hire a lawyer to pursue collection, you will be glad to have included a clause in your form allowing you to tack on the lawyer’s bill to the amount your customer owes. Without such a clause, you will not have any hope of getting reimbursed for those expenses. While having an attorney’s fees clause does not guarantee that you will get all your money back, it is the only way to give yourself hope of getting back to even on the deal you thought you had made.
- Watch the Age of Your Accounts
The longer you wait to act on unpaid accounts, the lower the odds get that you will ultimately receive your money. An unpaid bill indicates your customer is having trouble. Those kinds of troubles tend to grow worse over time. Early action can help you to get your money and get clear of the problem customer before he may reach the point of bankruptcy or other business failure. And in those situations where you may have collateral rights (such as mechanic’s liens in construction dealings), the “waiting and hoping” approach can result in key deadlines passing so that you lose your last hope for damage control.While these general rules should be considered by every business, the needs of each business are always going to be unique in some way. Getting your lawyer’s help up front, both for developing your contract form and for educating your key employees on how to use it, is truly an instance where an ounce of prevention is worth a pound of cure. While your lawyer will always help you to collect problem accounts when they inevitably do arise, doing what you can to limit the frequency of problems not only improves your initial financial performance, but ultimately saves on litigation costs.At The Marrs Law Firm, we welcome the opportunity to help you to grow your business and prosper over the long term.
Low Worker’s Comp Payments Merit Action
March 28, 2013
Physicians who serve patients with employment-related injuries are acutely aware of the absurdly low reimbursement rates that insurance companies typically offer. But often, they do not realize that they are not powerless to act.
While“write-offs” are commonly agreed to when participating in group health insurance networks, Medicare or Medicaid, the write-offs typical in the worker’s comp field do not have to be taken lying down. You can deposit the initial checks that come, then take your claim for the remainder of your bill to the Virginia Worker’s Compensation Commission for relief.
The Commission process is very friendly to physicians and their groups. First, it is an administrative process, not a court process. This means that the vast majority of claims are resolved based on paper submissions, with only modest discovery obligations and usually without any need for the physicians or their staff to appear in court. There are no case filing fees to pay, either. With just a little help from your staff, your lawyer can get to work on improving your bottom line.
Second, the Commission offers physicians a presumption that their standard rates of charge are acceptable. Unless and until the insurance company produces evidence that the amounts charted are excessive, the health care provider is customarily awarded the full balance due from the amount originally billed. No more write-offs!
While every case has its own unique aspects, given a volume of underpaid accounts, your lawyer should be able to improve your net realization rate out of your worker’s compensation billings. At The Marrs Law Firm, we represent many physician groups across Virginia, and we have handled literally thousands of worker’s comp account claims for them. Occasionally an individual file will see challenges. But overall, every one of our clients has seen new revenues from discovering and accessing the Commission’s procedures.
Physicians and their administrative staff should also understand that membership in worker’s compensation insurance networks is usually a terrible deal for the physicians. As in group health insurance networks, the physician or group commits to accepting heavily discounted payments. But unlike the group health situation, there is almost never any increase in patient volume in return. We typically recommend that worker’s comp networks be avoided (or exited if need be).
If a physician still prefers network membership, at the very least he or she should know that network reimbursement rates and other contract terms are negotiable. In addition, the network’s standard form contracts contain many overbearing provisions that should definitely be stricken from the documents before signing is considered. Never let anyone tell you it’s a “take it or leave it” situation; our clients regularly prove that it is not.
Whether in or out of the networks, you can do better. All physicians should ensure that their chief administrators know this, so that their groups’ financial performance in worker’s comp cases can be all that the law means for it to be.