Category: News Feeds

During the initial months of the Covid-19 pandemic, insurers saw profits rise, even double, as patients cancelled surgeries and postponed care. This has left insurers to explain their various pandemic response efforts in an election year where a public option could be on the table.

UnitedHealthcare saw its net profits jump from $3.4 billion in 2019 to $6.7 billion for the second quarter of 2020, with Anthem and Humana also seeing their bottom lines double. Aetna, which was acquired by CVS Health in 2018, also contributed to its parent company’s rising profits, with the segment’s operating income increasing from $1.06 billion last year to $3.07 billion in 2020.

As they set premiums for next year, insurers will have to walk a tight line between not setting rates too high, triggering premium rebates, while not underestimating future costs related to care that might have been deferred today.

“They’re going to be walking this fine line where they don’t want to make too much money or price too high. On the other hand, they’re still going to want to be competitive,” Fitch Ratings Senior Director Brad Ellis said in a recent panel discussion. 

The Affordable Care Act requires health insurers to spend at least 80% of their premium income of healthcare claims and quality improvement, limiting the amount that can go to administration and profit. When healthcare spending falls below that threshold, they’re expected to pay members back in premium rebates, calculated over a three-year period.

Based on what they spent in 2017, 2018 and 2019, insurers are expected to repay $2.66 billion to 7.9 million members in 2020, according to an analysis by the Kaiser Family Foundation (KFF).

“Insurers have already paid back record rebates in the past two years. It’s reasonable to expect that would continue,” said Daniel McDermott, a research associate with KFF.

If healthcare spending so far this year is any indication, more rebates are likely in the future. Insurers saw utilization rates drop between 30% and 40%, as elective procedures were cancelled and patients opted to stay at home. They also saw medical loss ratios — the amount that they spend on claims — fall to new lows, with UnitedHealthcare reporting a ratio of 70.2% and Aetna seeing its ratio fall to to 70.3% in the second quarter.

Some patients might also see funds this year in the form of premium credits. Earlier this month, the Centers for Medicare and Medicaid Services said it would allow insurers in the individual and small group markets to temporarily offer premium credits to help people who might struggle to pay premiums due to the current health crisis.

Setting premiums for next year

Given the sudden drop-off in care, one might expect premiums to decrease next year. But that’s not necessarily the case.

Based on individual market plan data from 10 states, so far, a modest increase is expected for next year, McDermott said. The median increase was 2.4%, but rates ranged from an 11% decrease by the Kaiser Foundation Health Plan in Maryland to a 31.8% increase by New Mexico Health Connections, which recently announced that it would cease operations at the end of 2020.

“Most insurers have held off from making assumptions about Covid-19 in their preliminary filings,” he said. “A lot of insurers are still in wait-and-see mode.”

Payers are still trying to factor in the costs of a vaccine, a potential second wave of Covid-19 in the fall, lasting effects of the disease itself, and costs related to deferred care.

Since the start of the summer, patients have started coming back quickly, though insurers still haven’t seen the “pent up demand” for care that they had expected.

“Although it’s started to tick up a bit, health spending is still 10% lower than it was last year,” McDermott said.

It’s difficult to forecast how that will change in the next year.

Industry lobbying group America’s Health Insurance Plans estimates treatment costs for Covid-19 could range from $30 billion to $547 billion over the next two years.

“The second half of the year could see a lot more care, and higher costs, than the first half of 2020,” AHIP wrote in a blog post. “However, if these costs never materialize and remain below certain levels, American consumers, businesses, and taxpayers are protected by provisions in federal and state laws that require health insurance providers to deliver premium rebates and put money back into their pockets.”

Membership changes

For insurers, the biggest threat is long-term changes to their membership if more patients lose their job-based insurance. So far, that effect has been less than expected at the beginning of the pandemic.

UnitedHealthcare, for example, saw its commercial enrollment decrease by 2%.

“The impact on commercial enrollment hasn’t been as great as we would have otherwise thought based on the unemployment data, just because of the stimulus as well as the furloughs,” CEO David Wichmann said in an earnings call.

Anthem also reported a less-than-expected decrease in commercial enrollment of 290,000 members, while its Medicaid enrollment increased by 15%. That said, its executives said they expect a decrease in commercial membership when federal assistance ends.

“I want to be clear, we do expect further declines, assuming the economy continues to operate at less than full capacity,” CEO Gail Boudreaux told investors.

Centene, which is a big provider of Medicaid and ACA marketplace plans, actually had raised its revenue guidance for 2020 by $6 billion, based on unemployment trends. But it recently adjusted its expectations down by $500 million, noting that membership at lower rates than it had initially expected.

That leaves one big variable: the upcoming election. That could spell out the future for the Affordable Care Act, the recent outcropping of Medicare Advantage plans, or potentially even a public option.

“The election is a huge issue for health insurers. Who gets into the White House is very important, whether it be from the standpoint of Medicare for All, or whether it be the extent to which the Medicare Advantage program itself is supported as it has been under the Trump administration,” Ellis said. “Assuming there’s no change in terms of a public option or the overall healthcare system, we expect insurers to return to baseline run rate margins.”

Photo credit: TAW4, Getty Images

As the days and weeks since the tragic deaths of George Floyd and Breonna Taylor march forward, it’s natural to start to wonder what, if anything, has changed. Biglaw made a big promises in the wake of protests supporting Black Lives Matter, but will that actually make a difference?

Of course, what the most powerful law firms should do to support racial justice is a question with a lot of different answers. Giving money is a big, and somewhat obvious, answer, as is doing some really vital pro bono work. But more is needed. Like rethinking what programs firms support, and even rethinking the traditional holiday calendar. Lots of firms got in on declaring Juneteenth a holiday, and now there’s another day earmarked for equal justice.

Fenwick recently announced a Voting Rights Initiative which includes declaring Election Day a paid public service holiday, designed to allow employees the time to vote and volunteer. In a statement about the new program, firm chair Richard Dickson said the move was linked to the firm’s commitment to equal justice:

“Our voting initiative ties directly to Fenwick’s Action for Change and our promise to work toward equal justice through civic engagement,” said Fenwick Chair Richard Dickson. “Voting is the most powerful lever in a democracy, and the most effective way to bring about change at the local, county, state and national levels. I hope that other law firms and more companies will join in making similar investments to promote the civic engagement needed for a properly functioning democracy.”

As with most Biglaw trends, we’ll be tracking exactly which firms are giving time off for employees to do their civic duty. If your firm is giving time off for Election Day or otherwise supporting voting rights, let us know. Our vast network of tipsters is part of what makes Above the Law thrive. You can email us or text us (646-820-8477).

---

Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

For the past decade, spoofing has been illegal. Unfortunately for prosecutors, it is also a real bitch to prove in a court of law.

Luckily—and possibly as a consequence—bankers are giving those prosecutors plenty of practice. And even more luckily, while spoofing securities and futures trades is illegal, spoofing a spoofing investigation—by asking foreign colleagues for help in a spoofing probe, even if the help isn’t needed other than to be able to hit the pause button on the statute of limitations—remains perfectly acceptable for now, insofar as those accused of spoofing in cases in which spoofing a spoofing investigation is alleged cannot actually investigate those spoofing allegations.

My reaction, like all applicants, is anger and disbelief. Anger that a better and more viable alternate solution is readily available, and in disbelief that a government body can be so utterly and inexcusably incompetent as the [Florida Board of Bar Examiners] is. Applicants are exhausted, and are taking several days’ well-deserved rest.

The Florida Board of Bar Examiners knew last week that there was no way the software would work. The fact that they never even went to a stress test means they knew well before last night that this wouldn’t work, and they still had no contingency plan. They had no alternative option besides delay, kick the can down the road, and hope they can figure it out later.

Who knows if it will be ready by [October]? Who knows what the realities for the applicants will be by then? People are starting work next week. They can’t wait until some undetermined time in October to get a paycheck and put food on the table. It’s utterly unethical, what the Board of Bar Examiners have done.

— Brian Heckmann, a recent graduate of Florida International University Law, commenting on the last-minute cancellation of the Florida bar exam with just two days’ notice. Considering the pandemic, Heckmann is a proponent of emergency diploma privilege for those who would like to practice law in Florida.

---

Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.

The tragedy of the killings of Breonna Taylor and George Floyd is that they weren’t particularly unique. Innocent, unarmed Black Americans are regularly killed by police across the United States and the justice system rarely ends up doing anything about it. As Judge Carlton Reeves poignantly noted, the doctrine of qualified immunity is responsible for a lot of the system’s lack of accountability, but it gets a tremendous boost from police unions whose contracts regularly set up roadblocks to gathering information about police abuse that renders future efforts to pierce immunity next to impossible.

Police reform organization Campaign Zero is working to spread awareness of common collective bargaining provisions that undermine public safety and accountability.

But what can legal tech do about a problem like this? It turns out it can do a lot.

Kira Systems, the machine learning-based contract analysis tool, provides exactly the sort of product that can sift through hundreds of lengthy police union agreements to identify key language and that’s why the company announced that it has partnered with Campaign Zero on the “Nix the 6” initiative focusing on six particularly troubling provisions that routinely appear in union deals. Earlier Campaign Zero efforts gleaned valuable insights from a number of contracts covering America’s largest cities, but as part of this new project, Campaign Zero has collected over 600 police union contracts and Law Enforcement Officers’ Bill of Rights across 20 states, which Kira will be hosting in a smart database to provide reporters with access to them in order to inform their reporting. API integrations will be built into the website for the purpose of sharing information with other interested parties. It’s the sort of supercharged contract analysis that Kira was built for.

Kira Systems founder and CEO Noah Waisberg explained, “We believe people make better decisions when they understand what’s in their contracts. That applies in the policy realm as well as the business world. This is an area where we, as a society, really need to make better decisions.”

While organized labor has taken a vicious beating at the hands of the Supreme Court, police unions emerged relatively unscathed from the turmoil. And even though it’s nice that the right of law enforcement workers to negotiate fair wages remains largely intact, fair pay ends up a small part of police union deals bogged down by procedural perks that tend to backdoor substantive criminal justice policy into the system under the guise of collective bargaining. One might not think of erasing misconduct records as a matter for negotiation but it’s a ubiquitous provision across the country.

Campaign Zero co-founder DeRay McKesson explains:

There is a hidden system of protections that almost guarantee that policing will not change and that officers will not be held accountable for their behavior. Nix the 6’ is about breaking down the legal structures that enable police violence. Thanks to Kira’s machine-learning software, we can systematically evaluate and dismantle these contracts that stifle reform, thus making it easier to pursue fundamental change.

The six planks identified by Nix the 6 are:

• Short expiration dates on complaints
• Limited oversight and discipline of officers
• Erased misconduct records
• Police misconduct cases and consequences paid for with public funds
• Preferential access to evidence for implicated officers
• Unfair interrogation procedures

Kira can run through the documents and extract the varied language that fits these concepts. For example drawing out and color-coding all language related to delaying interrogations for easy review.

That can then get fed into an interface like this one that displays when the contract is up, who to contact about it, and which of the six provisions are featured. All of which are easily clickable to provide the exact language identified for these provisions.

Sometimes our corner of the tech sector can feel a little niche, oriented toward parochial needs like billing and relationship management that only really matter to the professional model we’ve built for ourselves. But the law still forms the fabric of American life and even if our tools are just about helping lawyers do their jobs day to day, legal tech has a role to play in advancing justice. What Kira’s done is take a massive, multijurisdictional, multiparty contract issue and leverage their AI contract tools to untangle it for scrutiny. Just another reminder that legal technology is doing a public service at heart.

---

Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

Sure, the Florida bar exam dallied for weeks when it should have known that the exam couldn’t run as scheduled. And sure, the exam software still seems to have numerous security and other stability issues that may not even be solved by the expected new October date.

But there is one thing that the software platform gets right that even all the geniuses in Cupertino can’t seem to solve:

What a ducking disaster.

---

Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

I always thought that whether a question was leading was a binary proposition: Either a question was leading or it was not.

Blah, blah, blah; is that right? Leading.

Can you explain why … ? Not leading.

On cross-examination, you use only leading questions. Simple enough.

But no.

There are variations. There are very leading questions, slightly leading questions, slightly nonleading questions, and completely open-ended questions. With the hardest witnesses, you must use excruciatingly leading questions.

Here’s an example:

You have a sales chart. The company sold 15 in December 2019, 14 in January, 13 in February, 12 in March, 11 in April, 10 in May, 9 in June, 25 in July, 24 in August, 23 in September, 22 in October, 21 in November, and 20 in December 2020. Thus: The company started with 15 sales per month and ended with 20 per month in the next year, but this was not a consistent increase.

With the toughest expert witness on cross-examination, use the most leading questions:

Q: The company sold 15 in December 2019. Did I read that correctly?

That’s extraordinarily leading. Witnesses quibble with a lot, but it’s hard to quibble with, “Did I read that correctly?”

Next:

Q: The company sold 20 in December 2020. Did I read that correctly?

Same deal. The witness can’t quibble. For very tough witnesses, stop there.  You’ve now made the point you need for closing: “As the expert witness conceded, the company sold 15 in December 2019 and 20 in December 2020.  Year-over-year, the sales were increasing.”

But you can be more aggressive with your questions, at the cost of more risk about the answers.

Suppose you try a third question:

Q:  So you agree that, year-over year, there was an increase in sales, right?

Maybe the witness is cooperative, and you get a “yes.” Eureka!

But maybe the witness is stubborn:

A:  Absolutely not. Sales peaked with 25 in July, and sales then decreased every month for half a year until finally bottoming out at 20 in December 2020. That’s not year-over-year sales growth. That’s a declining company. It’s a disaster.

You’re feeling a little stupid for having asked the question, but you show no emotion and battle on:

Q:  I’m asking about year-over-year. You’d agree that, on a year-over-year basis, from December to December, sales were increasing, right?”

This sound leading, but it’s an invitation for a counter-punch.

A: It depends of course on where you start the year. I think the last six months are most important, because they’re the most recent. If you focus on the recent months, sales have fallen off the edge of a cliff.

You struggle on, because you’re a fool and don’t know when to stop:

Q: But I’m talking about the end of one year to the end of the next.

A: Yes, you are, but that’s because you’re mistaken about what matters. If you were focused on the correct numbers, blah, blah, blah.

The questions looked so leading when you drafted them last week, but they weren’t leading enough.

Then, of course, there’s the other end of the spectrum — questions that only fools ask:

Q: Can you tell me any reason why the year-over-year numbers don’t matter?

A: Any reason? Now that you mention it, there are 14 reasons. Judge, please don’t interrupt me while I give a soliloquy for the next half hour, because this clown asked for it. Who hired this lawyer, anyway? In any event, reason number one is … .

Leading and nonleading questions. That is not a binary choice. Did I read that correctly?

---

Mark Herrmann spent 17 years as a partner at a leading international law firm and is now deputy general counsel at a large international company. He is the author of The Curmudgeon’s Guide to Practicing Law and Drug and Device Product Liability Litigation Strategy (affiliate links). You can reach him by email at inhouse@abovethelaw.com.

Last week, the Wall Street Journal asked if we trusted robots to do our lawyering for us. It was framed to evoke the standard fear of artificial intelligence that resonates with audiences. In reality, the answer is that it depends on what the robots are being asked to do, but the public needs to be educated not to embrace the blanket fear of AI because many legal tasks are actually better served by algorithms that can open up limited legal advice to underserved populations.

But in discussing this topic on last week’s Legaltech Week, it struck me that what we’re really talking about here aren’t LawyerBots, but KarenBots.

Apps designed to challenge parking tickets or secure airline refunds are “legal” to the extent that they’re asserting the user’s legal rights, but what these products really boil down to are AI marvels that harass customer service until you get that coupon you deserve.

And while Karenism in reality is a mostly reported as a negative phenomenon, in bots it’s pretty awesome. Not only are these products not using their algorithms to make racist complaints, but they actually extend a sort of Karen representation to citizens who might lack the markers of privilege required to have their complaints heard. Because for all the Karen bashing out there, the public woefully underappreciates that Karens exist because the system routinely rewards that behavior — as the ancient wisdom goes, “don’t hate the player, hate the game.”

Statistics have long shown that minority consumers get worse deals on balance from mortgages to fast food. The algorithm can shield the user from these biases and essentially be the short-cropped, indignant blonde suburbanite advocate that everyone needs from time to time.

So to revisit the WSJ headline, do I trust robots to speak to the manager? Yes, I do.

Earlier: Do You Trust Lawyer Bots? Well, It Depends.

After two years supporting law firms with accounting solutions, the PwC InsightsOfficer team has been excited to see the challenges that law firm accounting teams actually face day-to-day.
When we embarked on this journey we, and the law firms we worked with, believed
their biggest need was deeper insights and KPIs.

However, we were intrigued to find out that law firms actually face accounting challenges that are far more foundational, rooted in process and deliverables.

Panel:

• T.C. Whittaker, PwC InsightsOfficer Leader
• Steven Chung, Tax Attorney, Above the Law Columnist

Join our webinar on August 19th at 1 p.m. ET /10 a.m. PT to learn how law firms can overcome common accounting challenges.  Sign up below:

* By filling out the form you agree to receive messages from Above the Law and its Partners.

Copyright law and social media enjoy an interesting dance together. Social media platforms permit the posting of user “content” for other users — subscribers if not the entire online world — to see. Some platforms are even wholly focused on the sharing of images (Pinterest) or audiovisual works (YouTube). Sometimes the content reflects the user’s own authorship; other times it may involve the sharing of another creator’s works (and not always legally). Social media platforms enjoy a certain “safe harbors” from copyright infringement liability for the works posted by their users, whether via the “fair use” doctrine or Section 512 of the Digital Millennium Copyright Act (which limits the liability of service providers for the transmission of copyrighted works through their platforms) to name a few. But my focus here is not on the social media sites themselves, but on an interesting turn of events involving the artist Richard Prince and his use of social media posts in his artwork — more specifically, as his artwork. Like everything else with intellectual property, there is far more here than meets the eye.

For those not “in the know,” Prince is an American painter and photographer who is somewhat controversial; however, the controversy is a bit different than what you may think. Beginning in 1977, Prince began rephotographing the works of others.  An example of this would be his work Untitled (Cowboy), which apparently is a rephotographing of a photograph photographer Sam Abell used in a Marlboro cigarette ad, which according to Wikipedia “was the first rephotograph to be sold for more than $1 million at auction at Christie’s New York in 2005.” Regardless of the historical context, Prince’s work has become the subject of two copyright lawsuits filed by artists claiming infringement by Prince of their underlying works. The first case involves a photograph, by professional photographer Donald Graham, which he titled Rastafarian Smoking a Joint. The other case involves a photograph by fine art photographer Eric McNatt of musician/artist Kim Gordon. The artworks at issue? Prince basically enlarged the photographs from Instagram posts containing the works, and added new comments to the enlarged posts along with emojis. This begs the question: Does the reuse of others photographs in this manner constitute “fair use” for copyright purposes?

From a historical perspective, “appropriation art” is not something new. From Pablo Picasso’s “synthetic cubism” in the use of newspaper clippings to create forms, to pop artist Andy Warhol’s re-imagining of Campbell’s Soup can labels to Roy Lichtenstein’s appropriation of comic book pictures in his paintings (such as Masterpiece), such art has been both criticized and lauded. It seems that Prince feels that enlarging the works as presented in a social media post, along with added commentary and emoji elements, transform the works into something more, representing a new portraiture. At least his attorneys have valiantly argued this point, asserting that that their client’s work is transformative and constitutes “fair use” of the underlying images as a commentary on the “pop culture and narcissism” of social media.

This is not Prince’s first run-in with alleged copyright infringement. A little over a decade ago, photographer Patrick Cariou sued Prince, the Gagosian Art Gallery, Lawrence Gagosian, and Rizzoli International Publications over Prince’s “Canal Zone” exhibit (which used 35 photographs from Cariou’s out-of-print “Yes, Rasta” book that depicted Cariou’s experiences in Jamaica’s mountains and villages). In fact, some of Prince’s pieces barely changed the underlying works, while others superimposed gas masks, blotches of paint, or other elements over the subjects. Although the federal district court found fair use, the US Court of Appeals for the Second Circuit later reversed, finding 25 of the 30 works at issue in the case “transformative” in nature and therefore fair use. That case eventually settled in 2014, but it has left a lingering question as to what constitutes “transformative” use in such circumstances.

Fair use in copyright law permits the use of another’s copyrighted work for certain enumerated purposes (such as commentary, criticism, news reporting, teaching scholarship, and research). In determining whether fair use exists, however, Section 107 of  the Copyright Act lists four factors to be included when determining fair use in a particular case:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

This seems straightforward, but application of these factors requires rigorous application to the facts in a specific case. Moreover, the federal courts are not limited to only these factors — they operate as guidelines in determining fair use.

Notwithstanding the foregoing  — and unfortunately for Prince — he is likely fighting an uphill battle here. His motion to dismiss the case brought by photographer Graham was denied by the federal district court, holding that Prince’s work based upon ratajay92’s Instagram post is not transformative as a matter of law. He is now seeking summary judgment in both cases (having engaged in discovery), premised upon the same arguments that the use is transformative and therefore fair use. I will not delve into the fair use factors analysis or other elements here in detail (and leave that to the court) — my point here is that Prince faces a more difficult proposition than other appropriation artists before him. Unlike Warhol’s Campbells Soup Cans (which were paintings by him of the cans but with slight variations in the lettering and in the hand-stamped fleur-de-lis symbols on the bottom of each can) or Lichtenstein’s Whaam! (depicting a fighter plane shooting a missile, conceived from several DC Comics comic book panels and “presenting it as a diptych while altering the relationship of the graphical and narrative elements”), Prince is attempting to convey an artistic point of view on cultural use of social media with these works by simply (1) enlarging the original posts and (ii) adding in a fake comment or other emoji(s). Unlike transposing various works into one, or even reimagining  various photos into a visual mosaic, Prince is relying entirely upon size and original commentary as sufficient from a fair use standpoint. Whether this is enough to consider his artwork transformative is anyone’s guess.

Artists can be complicated; understanding their artwork sometimes more so. One can argue whether Prince is trying to convey artistic expression, but his motives appear genuine. Granted, the four factors may yet weigh in Prince’s favor, but it may be difficult to draw the line here (pun intended). Whether such changes will be held to rise to the level of sufficient transformation to constitute fair use is anyone’s guess, but is sure seems like a thin line here any way you draw it.

---

Tom Kulik is an Intellectual Property & Information Technology Partner at the Dallas-based law firm of Scheef & Stone, LLP. In private practice for over 20 years, Tom is a sought-after technology lawyer who uses his industry experience as a former computer systems engineer to creatively counsel and help his clients navigate the complexities of law and technology in their business. News outlets reach out to Tom for his insight, and he has been quoted by national media organizations. Get in touch with Tom on Twitter (@LegalIntangibls) or Facebook (www.facebook.com/technologylawyer), or contact him directly at tom.kulik@solidcounsel.com.