Many law students are surprised to learn about the parol evidence rule in their contracts class rather than in their criminal law class (it having nothing to do with “parole”).  The parol evidence rule states that the terms of a written contract may generally not be contradicted by oral agreements or prior written agreements.  This rule often comes up during a dispute in which one party claims to have relied on the oral representations of the other party before signing a written contract.  

With narrow exceptions, the parol evidence rule bars one from introducing evidence of oral representations to contradict the terms of the written contract.  In other words, the court holds the party to the terms of the written contract and ignores whatever oral promises may otherwise contradict them.  This rule enhances the critical importance of reading a contract before signing— because ignoring the written terms while listening to the sly representations of the other party can be perilous.  The Ohio Court of Appeals recently provided an example of this danger. 

In Licata Jewelers, Inc. v. Levis Commons, 195 Ohio App.3d, 2011-Ohio-4684, the landlord of a shopping center complex in development lured a jeweler into a lease with promises that several attractive anchor stores were committed to become tenants.  The jeweler relied on these statements believing that the anchor stores would generate the type of foot-traffic needed to make his business successful in that location.  The written lease, however, stated that the tenant shall not rely on any representations concerning the occupancy of any current or proposed tenants in the shopping center.  

Because the written lease made no promises concerning the “attractive anchor stores,” the Court of Appeals rejected the jeweler’s reliance on the landlord’s oral promises and excluded evidence related to the statements.  Thus, the parol evidence rule can operate in a manner that, at times, seems harsh and unfair to a party relying on the honesty of another.  Nevertheless, the prudent and careful businessperson can avoid this potential pitfall by reading the written contract and relying on its terms. 

Ryan McLane is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.

As a rule, there is no comp coverage for an employee who is on the road between home and work. That maxim is often called the “going and coming” rule – no workers’ comp while going to or coming home from the office or job site. Like many maxims, though, there are exceptions, and one is the use of a company vehicle.

Many states, like Ohio, grant comp coverage for almost any accident in which a worker drives a company vehicle, or where the company makes a substantial payment toward travel expenses. Kentucky is not one of them. In Kentucky, to obtain coverage, the worker must prove that use of the company vehicle “is of some benefit to the employer,” other than simply going to or coming from the workplace.

The rub lies in what, exactly, constitutes a use that is “of some benefit” to the employer. The court cases usually find in favor of coverage, but not always:

• Coverage – The employee died on the way home in the company truck, after his work day was over. He also used the truck during the workday to travel to job sites. The company paid for all fuel and paid the employer for time spent traveling. The company fought the claim by contending the truck was mainly a perk or bonus. However, the court found use of the truck allowed the worker to begin duties earlier, to remain productive longer, and avoid stops at the main office. Since this provided the company a benefit, there was coverage
• Coverage – The worker was on call at all times, would often work at night, and sometimes be called back to work before reaching home. He was on his way home from the office, and not from a job site, but was injured in an accident. The court ruled his overall use of the vehicle provided a service and benefit to the employer, and thus there was coverage.
• No coverage – The worker was on a purely personal errand in the company vehicle, driving outside his usual route home to pick up groceries. The judge found no coverage.
• Coverage – The worker was on a dual-purpose trip in the company vehicle. The worker was going to lunch, then on a personal errand to the bank, then to visit a client. She died in a wreck. Her bank deposit slip was found in the wreckage. A judge found there was coverage because the deposit slip provided evidence that her personal errands had ended.

These cases were decided after months and even years of hearings, motions and appeals. In the meantime, medical bills and lost wages most likely accrued. Whether one agrees or disagrees with Kentucky’s legal position, workers’ comp litigation involving the company car is often a demolition derby.

Stephen Burke is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.

It was the highest amount of false Medicare billings in a single takedown in the Medicare Fraud Strike Force’s five-year history, and it has led to the indictment of licensed medical professionals including doctors and nurses. The charges against the defendants include conspiracy to commit health care fraud and anti-kickback violations.

According to the Justice Department, some defendants submitted claims to Medicare for treatments that weren’t medically necessary and sometimes never provided. Others were paid cash kickbacks for supplying information to providers that allowed them to submit fraudulent bills to Medicare. The services involved in the fraud schemes ranged from home health care to ambulance services. 

Seven individuals alone in Baton Rouge, La., are allegedly responsible for $225 million in false claims relating to community mental health center services. 

The HHS Medicare Fraud Strike Force is a multi-agency group of federal, state, and local investigators who use Medicare data analysis to investigate fraud.

James Dietz is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.

Practice Group Involved
Construction Law Section

Client Problem / Case Background
DBL’s client was a regional design-build firm that was one of many parties involved in an upcoming mediation of a complex dispute.  The mediation presented two key problems:  (1) there was some uncertainty as to whether one of the participants (not the DBL client) was insured, and (2) the competing and adverse interests of the participants lessened the likelihood of a successful outcome.

DBL Resolution
To attempt to circumvent these problems, Todd McMurtry, who practices in the firm’s Construction Law Section, started before the mediation to eliminate these obstacles.  In advance of the mediation, he coordinated efforts with similarly situated parties to unite these defendants in their approach to the mediation.  The parties allowed him to serve as the primary spokesman for the group.  Drawing upon his mediation training, McMurtry worked to build consensus on key issues among the group and solidify the groups position.  As well, he arrived prepared to discuss with the insurance coverage issues hampering one of the parties.  Ultimately, coverage was extended to the potentially uninsured party.  This additional funding allowed the matter to settle favorably.  Importantly, by focusing on pre-mediation planning, McMurtry was able to save time and avoid problems by addressing in advance some of the obstacles to a successful outcome.

Highlight of Firm’s Capabilities
Todd McMurtry is a Harvard trained mediator, and he brings this skill set to helping his clients successfully mediate disputes.    

Attorney and Contact Information
Todd V. McMurtry
207 Thomas More Parkway
Crestview Hills, KY 41017
Phone: (859) 426-2129 (Direct)
Fax: (859) 341-1881
Email: tmcmurtry@dbllaw.com
www.dbllaw.com (Website)
http://civilprocedure.dbllaw.com (Blog)

Bundled Payment Programs Are On The Horizon

Bundled Payment Programs are one of the centerpieces of healthcare reform. The goal of these programs is to reduce duplication of services and improve quality.   Bundled payments will be designed to incentivize providers to keep the cost of an episode of care below the lump sum payment. This model comes with the potential for both great risk and great reward. It is driving providers to change historic relationships and may change the overall framework through which care is provided.

Collaboration and Consolidation Come With Risks

We know we will see increased collaboration and consolidation across the provider spectrum. It is already here. Of course, changing relationships implicate a tangled web of legal issues, including antitrust, anti-kickback, and the Stark Law.

With Heightened Enforcement, Providers Must Stay Compliant

Enforcement of federal healthcare fraud and abuse laws has escalated in recent years, with recoveries reaching an all-time high in 2011. The laws on self-reporting and returning overpayments are changing, and compliance requires heightened vigilance. Organizations should strive to keep overpayment and self-disclosure policies in line with developing regulations.

Mathew Klein is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.

Under the Kentucky and Ohio statutes governing wage garnishments, an order of garnishment received by an employer creates a lien on all disposable and nonexempt earnings earned by the specific employee at the time the employer is served with the order of garnishment. Both Kentucky and Ohio follow the federal wage garnishment law which allows a maximum withholding of either 25% of the employee’s disposable earnings during a pay period or the amount by which the disposable earnings exceeds 30 times the federal minimum wage, whichever is less. In addition, both states’ garnishment forms include a section guiding the employer through this calculation of disposable earnings.

Because only up to 25% of an employee’s earnings are subject to a wage garnishment, there can only be one garnishment in effect at a time. Thus, if a second garnishment is received for the same employee, the second garnishment will become effective immediately after the first garnishment is paid in full.

It is very important for an employer to timely respond to a wage garnishment order. Even if the employee no longer works at the company or if the employee does not have sufficient disposable earnings to garnish, in Kentucky, a response should still be sent to the attorney that issued the garnishment indicating why the funds are not being withheld. In Ohio, an answer to the garnishment should also be filed with the Court that issued the garnishment. An employer has 20 days (or 23 days if the garnishment is served by mail) to respond to a garnishment issued by a Kentucky court and 5 business days to respond to a garnishment issued by an Ohio court.

There can be adverse action taken against an employer who fails to timely respond to a wage garnishment or fails to withhold the appropriate funds from an employee’s earnings. One possible adverse action could result in a judgment entered by the court against the employer for past due wages. The employer would then be required to pay the judgment creditor directly all amounts it failed to withhold from the employee’s pay. This is certainly an action any employer would prefer to avoid so it is a best practice to respond to any wage garnishment as soon as it is received and to consult the company’s attorney with any questions regarding complying with a wage garnishment order.

Megan Maxfield is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.

The typical construction contract allows the Contractor or Subcontractor only a very short time to give notice of a delay damage claim, often just seven days after the event causing the delay.  Such short deadlines have led to much litigation.  Courts are often called upon to decide if the notice must be in writing if the contract so states.  Or if late notice will bar the claim where the Owner or Contractor already knew of the delay even without notice from the claimant.  Or whether the Owner or Contractor was actually harmed by the late notice. 

The statute in Kentucky prohibits “no damage for delay” clauses in contracts for both private and public construction projects.  About a third of the states have enacted similar prohibitions on “no damage for delay” clauses, but mostly in public projects only.  The Kentucky statute specifically allows clauses which require timely notice of delay damage claims.  Unfortunately, there are no cases yet in Kentucky which have construed this Notice provision of the Kentucky statute.  And there are no pre-statute cases in Kentucky which address the notice issues mentioned above, where the Contractor or Subcontractor failed to comply with the timely notice clause in the contract for making delay damage claims.  However, although not a delay damage case, there is a helpful 1988 Kentucky Court of Appeals case, which held that verbal notice of an “additional compensation” claim is sufficient even though the construction contract required written notice.

Like the Kentucky statute, the Ohio statute also prohibits “no damage for delay” claims in both public and private project construction contracts.  But, in contrast to the Kentucky statute, the Ohio statute makes no reference to the inclusion of mandatory notice provisions.  There are, however, reported court decisions in Ohio addressing notice clause issues in both public and private construction project contracts.  Early Ohio cases stand for the proposition that constructive or verbal notice is sufficient even where the construction contract requires formal written notice.  For example, in 1986, an Ohio Court of Appeals held that constructive or actual notice is sufficient even if formal notice requirements are not met.  In 2003, an Ohio Court of Appeals re-affirmed this holding. 

However, the recent trend in Ohio is to require strict compliance where the contract contains specific notice requirements.  In 2007, the Supreme Court of Ohio held in Dugan & Meyers that written notice must be given if required by the contract unless the claimant can prove that the failure to make the request in writing was harmless to the Owner.  In 2009, an Ohio Court of Appeals further held that where a contract has specific notice requirements, those requirements will be strictly enforced despite actual or constructive notice.

For delay damage claimants in Ohio and Kentucky, strict compliance with notice requirements is the only sure way to preserve the claim.  For project Owners, it may be in their best interest to draft the contract with reasonable, but stringent, procedures for making timely delay damage claims. 

Richard Meyer is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.

 In Vowels v. St. Elizabeth Medical Center, http://www.comped.net/opinions_recentdisp.php?ID=5565 the Workers Comp Board ruled the ALJ had applied the wrong legal standard in deciding whether an award of benefits should be reduced because of a pre-existing condition.  St. Elizabeth argued that the ALJ should have decided whether a pre-existing active impairment existed at the time of injury.  Instead, the ALJ ruled that Vowels’ award should not be reduced because she had no pre-existing active occupational disability.  The Workers’ Comp board agreed with St. Elizabeth and sent the case back for further fact-finding.

In Park Terrace Health Care v. Thompson, http://www.comped.net/opinions_recentdisp.php?ID=5576 the ALJ had recited copious evidence in deciding that a work-related injury (falling ceiling tiles) had never occurred, nor caused any injury.  However, the ALJ also cited to some hearsay testimony of a co-worker.  Both the Workers’ Comp Board and the Court of Appeals decided the case should be sent back to the ALJ for another decision with the hearsay testimony excluded.

Such scrutiny by the courts usually results in months of delays in the payment of benefits.  While scrutiny of workers’ comp decisions is needed, the costs of such litigation and delays to claimants are areas that should bear examination.

Stephen Burke is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.

The NLRB has been extremely active on the topic of an employer’s ability to restrict the off-site use of social media by employees. Earlier this year, an administrative law judge found that even using Facebook’s “Like” button might confer protection under the National Labor Relations Act (the Act). The judge found that an employer had unlawfully terminated employees for participation in a Facebook conversation regarding their employer’s withholding of taxes. The judge found that one of the discharged employees had participated in a protected discussion by simply clicking the “Like” button on another employee’s Facebook wall post about the employer’s tax withholding error.

More recently, the NLRB’s General Counsel issued the agency’s second report on social media cases within the past year. The report summarizes 14 recent NLRB cases which “present emerging issues in the context of social media.”

The report, available at www.nlrb.com, confirms that the NLRB is continuing to find many facially neutral, but broadly worded, employer policies to be unlawful restraints of employees’ rights to engage in protected concerted activity under the Act.

Eleven of the cases discussed in the report address some form of discipline based on employee social media use. Of those 11, the NLRB found in six cases that there was no violation of the employee’s right to engage in protected concerted activity. Seven of the cases discussed in the report address specific language contained in an employer’s social media policy. Of those seven, six policies were found to be overbroad and unlawful.

Employers can expect that the NLRB will continue to focus on this developing area of the law, especially in light of the fact that the Act applies to most employers in this context, not just those that are unionized. As the use of social media continues to grow, employers must remain aware of the Board’s aggressive policing of this area of the law and should carefully consider the Board’s position before disciplining any employees for using social media to complain about any aspect of their employment.

Nicholas Birkenhauer is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.

While IPD contracts typically are multi-party contracts, design-build contracts govern a transaction between the owner and a single entity that both designs and constructs the project. Typically, the owner develops its programmatic and performance requirements before acquiring a design-builder. Once the owner selects the design-builder, the design-build team designs the project to meet the programmatic and performance requirements. Unlike IPD, the owner generally has a hands-off approach once it selects a design-builder. However, similar to IPD, the design and construction of the project result from collaboration among the design and construction professionals. This collaboration allows design-build contracts to establish an atmosphere conducive to IPD-like construction delivery.

With a few tweaks to the design-build contract, the parties can implement lean IPD:

• Core Group: A core group consisting of representatives of the owner, lead contractor, and lead designer could manage the project.
• IPD Team: The design-build contract could specify the obligations and formation of the IPD Team. Furthermore, members of the IPD Team could bind themselves to the design-build contract through joining agreements.
• Target Value Design: The lead contractor and major trade contractors would be involved in designing the project from the beginning. Together the designers and contractors would develop a design that fits the owner’s parameters, while also keeping cost and constructability in mind.
• Lean Processes: Lean processes seek to maximize value while minimizing waste of time, efforts, and materials. Many of these processes can be incorporated into any construction project – despite the delivery method. Lean processes include BIM, pull planning, continuous improvement, Last Planner System, and more. The design-build contract could provide for the parties to use these processes during design and construction of the project.
• Risk/Reward Sharing: The design-build contract could provide for the owner, the design-build team, and any IPD team members to share the risks of project overruns and the rewards of project savings. However, this may be difficult in some jurisdictions with restrictions on owner’s sharing in project risk.