The BLT: The Blog of Legal Times

Amid Lawsuit, Senator Pushes Release of Billing Records

In a renewed focus on fraud, the top Republican on the Senate Judiciary Committee is urging the U.S. Department of Justice to support opening up the physician billing records for Medicare.

Sen. Chuck Grassley (R-Iowa) spoke today at his first hearing as the committee’s ranking Republican, a position he assumed this month. A longtime advocate for tougher anti-fraud laws, Grassley told two senior Justice Department officials that making billing records publicly available could help reduce the number of questionable payments to Medicare providers.

His interest follows a series in The Wall Street Journal that began in October, focusing on Medicare fraud. On Tuesday, the newspaper’s parent company filed a lawsuit in U.S. District Court for the Middle District of Florida asking a judge to overturn a 1979 order that barred access to billing records.

“At least I think it’s time to revisit this issue and bring some transparency to this whole thing,” Grassley said, in his first question at today’s hearing.

Grassley asked two assistant attorneys general, Lanny Breuer and Tony West, whether they would consider re-examining the privacy protections that physicians and other providers have. Both officials were noncommittal.

“We would absolutely want to work with you on these kinds of issues and have the dialogue,” said Breuer, head of the Justice Department’s criminal division. He added, “We do have right now, because of your work and others, the resources that we need, and are able to get the information we need for prosecutions.”

West, head of the department’s civil division, said DOJ officials always “welcome the opportunity to talk about tools,” but he went no further. “We look forward to continuing that dialogue,” West said.

FTC Requires Internet Marketer to Stop Selling Cosmetic Contact Lenses Without a Prescription

Want contact lenses that make your eyes dragon orange or banshee pink, or shape your pupils like a cockroach? Not without a prescription.

The Federal Trade Commission today announced a settlement with an Internet marketer and its manager for allegedly selling cosmetic contact lenses to consumers without prescriptions.

The settlement with Da Young Kim and Gothic Lens LLC requires them to pay a civil penalty of $50,000. Kim has to sell her 2008 BMW to help pay the fine (the rest will suspended because of the defendants’ inability to pay).

Under the Contact Lens Rule, which the FTC administers, sellers must verify that a consumer has a valid prescription for all contact lenses, including cosmetic lenses. Used improperly, contacts can cause corneal ulcers, corneal abrasions, vision impairment and blindness.

The settlement with the Gothic Lens defendants is the FTC’s sixth enforcement action since it issued the Contact Lens Rule in 2004.

The settlement order also prohibits the defendants from selling contact lenses without obtaining or verifying prescriptions directly from the prescribers, and requires them to maintain records of prescriptions and verifications.

Kim was represented by Robert Browne Jr., of counsel at Troutman Sanders in Chicago. The Department of Justice filed the complaint and settlement on the FTC’s behalf in the U.S. District Court for the Northern District of Georgia.

Penalty Exceeds $700 Million for Polluter

The U.S. Environmental Protection Agency continues its crackdown on air pollution by petroleum refineries, today announcing a settlement with Hovensa, owner of the second largest refinery in the United States, that requires the company to spend $700 million on new pollution controls and pay a $5.3 million fine.

The EPA and Justice Department alleged that the company made modifications to its refinery, located in St. Croix, U.S. Virgin Islands, that increased emissions without first obtaining pre-construction permits and installing required pollution control equipment. The Clean Air Act requires major sources of air pollution to obtain such permits before making changes that would result in a significant emissions increase of any pollutant.

The settlement will reduce emissions of nitrogen oxides, sulfur dioxide, volatile organic compounds, particulate matter, carbon monoxide and other pollutants that affect air quality.

It’s the 28th settlement under an EPA initiative to improve compliance among petroleum refiners and reduce air pollution since 2000.

Another Conservative Supporter for DOJ Pick

The National Law Journal reported Monday on a small Republican "fan club" at Sidley Austin for Virginia Seitz, a partner there who is President Barack Obama's choice for a top Justice Department post.

Add another like-minded conservative to the group in Jones Day partner Glen Nager.

Though Nager (pictured above) and Seitz don’t have the same political views, he said they’ve become friends since they were appointed as founding members of a congressional board in 1995. Nager said he supports her bid to head DOJ’s Office of Legal Counsel, which hasn’t had a Senate-confirmed leader since Jack Goldsmith, now a Harvard Law School professor, left in 2004. The office has been at the center of the national debate on interrogation methods for terrorism suspects.

“I think she’s an excellent choice as a nominee for that office,” Nager said in an interview. “She’s a very smart, very thoughtful, very virtuous individual.”

What reaction there’s been to Seitz’s nomination has been positive since Obama named her on Jan 5. Sidley Austin partners who are in her corner include Peter Keisler, a former acting attorney general nominated by President George W. Bush for the U.S. Court of Appeals for the D.C. Circuit, and Bradford Berenson, former associate counsel in the Bush White House.

Nager and Seitz were appointed in 1995 to the five-member board of the congressional Office of Compliance. That year’s new Republican congressional majorities created the office as part of an effort to apply workplace laws to Congress, which had previously been exempt. The board was charged with hiring staff and writing rules.

“We were picked for probably very different reasons, and we came from very different backgrounds,” said Nager, who was the board’s chairman. He was an employment lawyer with management-side experience, while Seitz was a labor-side lawyer at the time with Bredhoff & Kaiser. While they sometimes wrote competing opinions in cases before the board, Nager said, “They were always very respectful disagreements.”

Both lawyers specialize in appellate work, and Nager, who heads Jones Day’s appellate practice, said they sometimes cross paths professionally. He has referred work to her, while she has moot-courted Nager ahead of important oral arguments. (Like Keisler, Nager was considered during the Bush administration for nomination to the D.C. Circuit, but Nager was not selected.)

Because the Office of Legal Counsel advises the executive branch on interpreting laws and the Constitution, a key question for nominees is always whether they can resist political pressure. Nager said that’s not an issue for Seitz. “She will hold her own in any discussion,” he said. “She’s no one’s lackey.”

Photo by Roberto Westbrook.

The Morning Wrap

State of the Union: Many CEOs reacted with skepticism as to the President's ability to lower the corporate tax rate and foster U.S. job growth and innovation, but noted positively the President's changed tone in addressing the business community, according to The Wall Street Journal.

Agency Merger: President Obama said Tuesday night that he wants to dramatically overhaul the federal government by merging some agencies and departments together, the Washington Post reports. The question is, what to cut?

Here We Go Again: Toyota Motor Corp., the world’s biggest carmaker, recalled about 1.7 million vehicles globally for defects in fuel pipes and pumps, pressure sensors and spare tire carriers, Bloomberg reports.

Lehman's New Plan: Bankrupt financial company Lehman Brothers Holdings Inc proposed a new plan for divvying up billions of dollars among its creditors and offered a bigger payment to bondholders, provided they sign on, Reuters reports.

Milk Fight: A Food and Drug Administration plan to begin tests this month on milk from farms that had repeatedly sold cows tainted by drug residue has met with fierce protest from the dairy industry, The New York Times reports.

Immigrant Mom Victory: The Missouri Supreme Court on Tuesday overturned a lower court ruling that terminated the parental rights of a Guatemalan woman whose son, the woman says, was adopted without her consent while she was imprisoned following an immigration sting in 2007, CNN reports.

Obama Gently Knocks Lawyers, Lobbyists in State of the Union

President Barack Obama trained as a lawyer and taught law for a living, but lawyers were still among his targets in the annual State of the Union address Tuesday night.

On two issues — the tax code and medical costs — Obama pointed the finger at lawyers as part of the problem. He urged Congress to “simplify” the nation’s tax system by getting rid of “loopholes” and trying to “level the playing field.” He also reiterated his openness to changing the medical malpractice system.

Not to be left out, Washington’s lobbyists got a mention of their own, as Obama asked Congress to put online details of elected officials’ meetings with lobbyists. He noted the White House has done so for officials there, though The New York Times reported last year that one result has been to move hundreds of meetings to a coffee shop across the street.

Not included in the speech was any criticism of Supreme Court decisions, such as Citizens United v. FEC, a topic in last year’s speech, or any mention of his judicial nominees, many of whom are stalled in the Senate confirmation process. As expected, six justices were in attendance for the speech, despite the controversy a year ago.

Obama’s comments about taxes were targeted, in particular, at lawyers and others who help corporations find ways to reduce their tax bills.

“Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries,” he said. “Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change.”

The reference to liability for medical professionals was more brief. It came in a section of the speech addressing health-care costs, and it was the only specific idea he mentioned for reducing costs.

“Health insurance reform will slow these rising costs, which is part of why nonpartisan economists have said that repealing the health care law would add a quarter of a trillion dollars to our deficit,” Obama said. “Still, I’m willing to look at other ideas to bring down costs, including one that Republicans suggested last year: medical malpractice reform to rein in frivolous lawsuits.”

SEC Extracts $10 Million Settlement from Merrill Lynch

Merrill Lynch, Pierce, Fenner & Smith Inc. agreed to pay a $10 million fine to settle Securities and Exchange Commission charges that the company misused customer information and charged undisclosed trading fees.

According to the SEC, between 2003 and 2005 Merrill operated a proprietary trading desk known as the Equity Strategy Desk that traded securities for the firm’s benefit and had no role in executing customer orders.

The desk was located on Merrill's main equity trading floor in New York City, where traders obtained information about institutional customer orders from other traders. They used the information to place trades on Merrill's behalf after executing the customers' trades. “In doing so, Merrill misused this information and acted contrary to its representations to customers,” the SEC found.

The SEC also alleged that Merrill charged some customers undisclosed mark-ups and mark-downs by filling orders at prices less favorable to the customer than the prices at which Merrill purchased or sold the securities in the market.

"Charging these undisclosed mark-ups and mark-downs was improper and contrary to Merrill's agreements with its customers," said Robert Kaplan, co-chief of the SEC's Asset Management Unit, in a written statement. "Brokers must act honestly and transparently when charging fees to their customers. There is no place in our markets for charging investors undisclosed trading fees."

The company, which did not admit or deny the charges, was represented by Bruce Coolidge, a partner at Wilmer Cutler Pickering Hale and Dorr in Washington.

In accepting Merrill's offer, the SEC said it “considered certain remedial actions undertaken by Merrill after it was acquired by Bank of America.”

Buchanan Ingersoll Adds Health Lobbyist

Buchanan Ingersoll & Rooney has brought on the former director of federal government affairs for the American Physical Therapy Association as a lobbyist in its Washington office. Kelly Lavin joins the firm as assistant director of federal health policy.

At APTA, Lavin was the association’s head lobbyist and was responsible for overseeing its congressional and federal lobbying efforts. She led legislative initiatives to prevent Medicare payment reductions to providers of physical therapy and caps on therapy services for Medicare beneficiaries.

Lavin has also worked as a staffer on the Hill. Before joining APTA, Lavin was legislative assistant to U.S. Representative Phil English (R-Pa.), helping to draft health care legislation for the House Subcommittee on Health. She also advised English on campaign finance reform, education, financial services, environment, natural resources, energy, science and technology and labor issues.

Lavin was not immediately available for comment.

Six Justices Will Attend State Of The Union Address

After last year’s State of the Union “shout out” to the Supreme Court over its controversial campaign finance decision, speculation has been rife throughout the legal community and elsewhere over which justices would attend tonight’s speech.

Well, the Supreme Court has ended the speculation. Speaking through its information office, the Court reports that six justices will take their seats in the House chamber. There is no official word on which six of the nine will show, but some additional speculation helps to put faces on the number.

Chief Justice John Roberts Jr. and Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan are the likely sextuplet.

Justice Samuel Alito, now famous for mouthing the words, “Not true,” in response to President Barack Obama’s characterization of Citizens United v. FEC during last year's address, will be about as far away as possible and still be in the United States tonight. He is in Hawaii giving a speech to the Hawaii Bar Association.

Justices Antonin Scalia and Clarence Thomas rarely attend State of the Union addresses. Scalia last year in a speech to the Federalist Society called the annual gathering on Capitol Hill “a juvenile spectacle. And I resent being called upon to the indignity.” Thomas has said the event has become too “partisan” and he finds it uncomfortable as a judge to sit there. Scalia appeared yesterday before the House Tea Party Caucus to discuss how to write constitutional legislation. The talk was hosted by Rep. Michelle Bachmann (R-Minn.).

The real question of who would attend this year has focused on the chief justice. Roberts has attended every State of the Union address since his confirmation in 2005. But after President Barack Obama’s criticism of the Citizens United decision in last year’s speech, Roberts wondered publicly if the justices should attend an event that has become, in his words, “a pep rally.”

Roberts, however, has a strong sense of the Court as an institution, some court watchers noted, and of his own role as its leader, both of which may play a part in his decision to appear.

Scalia Tells Lawmakers to Use Their Powers

Members of Congress who attended a closed-door forum with Justice Antonin Scalia on Monday said they got some advice on how to keep the Supreme Court out of their hair.

Two of his suggestions: Be as specific as possible when writing legislation, and watch the boundaries set out by the Constitution.

Rep. Scott Garrett (R-N.J.) said Scalia emphasized that often, when the Supreme Court upends lawmakers’ work, “it’s because Congress is silent” regarding its intent. Rep. David Schweikert (R-Ariz.) said he took away that Congress should be its own “first line of defense” in ensuring that the laws it passes are constitutional.

The talk was hosted by Rep. Michele Bachmann (R-Minn.), the chair of the House’s Tea Party Caucus and an advocate for restraining congressional power via the commerce clause and other means. Any House member could attend the event, though, and more than 50 did so, she said. Reporters were not allowed inside, but several lawmakers described the discussion.

At least three House Democrats attended and two of them said the event was worthwhile. “There was nothing partisan here,” said Rep. Jerrold Nadler (D-N.Y.). “It was Justice Scalia expressing his views.” Nadler said he didn’t know that the House’s Tea Party Caucus was hosting the event until reporters told him afterward.

Nadler said the session was wide-ranging, and that several lawmakers asked questions. In response, Nadler said, Scalia restated his longstanding willingness to overturn Roe v. Wade and reiterated his view that a line-item veto could be constitutional.

Nadler said that Rep. Joe Barton (R-Texas) asked about the Court’s ruling in Massachusetts v. EPA, which found that the Environmental Protection Agency has the statutory authority to regulate greenhouse gas emissions. In response to Barton, Scalia noted that Congress can amend the relevant statute if it wishes, Nadler said.

Rep. Jan Schakowsky (D-Ill.), who attended and took notes, called the discussion “perfectly suited for a bipartisan audience.” She said Scalia advised lawmakers to get hard-copy versions of the Federalist Papers, but much of the discussion “was pretty dry.”

“This is a discussion going on at a very, very high level right now,” Schakowsky, who is not a lawyer, told reporters after leaving midway. “Lots of Latin phrases from lawyers. I’m not sure I understand them.”

Bachmann said Scalia’s talk would be the first in a series. She said she plans to invite other “people who are known for having an understanding of the Constitution,” continuing next with Hillsdale College President Larry Arnn. Any other Supreme Court justice is welcome, she said.