In This Issue
Message from the General Counsel
Welcome to the first edition of The Foreseeable Future, OGC's new quarterly e-newsletter. Franklin P. Jones, an early 20th Century humorist and author, said, "Anybody who thinks talk is cheap should get some legal advice." Well, here is our effort to prove him wrong. Four times a year, we will distribute The Foreseeable Future to you, our clients, in an effort to keep you apprised of recent developments in the law that impact management and operations at our 15 institutions and UT System Administration.
Our goals are simple – to give you a few tidbits of practical legal advice, remind you of, and in some cases introduce you to, the OGC attorneys who are here to serve your legal needs and generally establish another avenue of communication between OGC and its clients. In each issue of The Foreseeable Future, we will feature at least one article authored by one of the attorneys in each of OGC's five sections: Business Law, Claims and Bankruptcy, General Law, Health Law, and Intellectual Property. For those of you that aren't as interested in the whys and wherefores, at the end of each article we have included The Bottom Line: A one sentence summary of the key point of the article.
We welcome your input on everything from layout and distribution to substantive topics covered. In particular, if there is anything you would like to see discussed in The Foreseeable Future, please let us know by contacting Bev Hurst at firstname.lastname@example.org. In future issues of The Foreseeable Future, we will include a section answering questions submitted to us by our clients. Past issues of The Foreseeable Future will be posted on the OGC website.
Most of all, we hope this newsletter lets you know the ways we can add value to your jobs. As an anonymous businessman once said, "Of course everyone has lawyers, but they're like nuclear weapons. Are you really going to be the one to use them first?" We hope you will use us first and we can prove that it was a good decision.
-- Barry D. Burgdorf
New Posting Requirements under USERRA for Employers
by Helen Bright (General Law Section)
The Uniform Services Employment and Reemployment Rights Act (USERRA), 38 U.S.C. § 4301-4333 (2000), was enacted by Congress to protect the rights of persons who voluntarily or involuntarily leave employment positions for military service. The Veteran's Benefits Improvement Act of 2004 (VBIA), Pub. L. No. 108-454 (Dec. 10, 2004), 118 Stat. 3598, signed into law December 10, 2004, amended USERRA by adding a provision that requires every employer to provide a notice of the rights, benefits and obligations of both the employer and employee under USERRA.
New posting requirements under USERRA took effect Thursday, March 10, 2005. All employers must post for their employees a notice of rights, benefits and obligations under USERRA. Employers may satisfy the notice requirements by posting the required notice wherever they customarily display notices for employees. However, employers are free to provide the notice in other ways that will minimize costs while ensuring that the full text of the notice is provided, such as hand delivery, mailing, email, or website posting. A copy of the required notice, released on March 10th by the Secretary of Labor, can be obtained on the U.S. Department of Labor website.
The Bottom Line: You must now post notice of an employee's rights under USERRA.
Revision of the Regents' Rules and Regulations
by Karen Lundquist (General Law Section)
The UT System Board of Regents approved revisions to the Regents' Rules and Regulations on December 10, 2004. A new format was adopted. The rules are now presented according to nine broad topics: board governance, administration, personnel, academic issues, student issues, development, investments, facilities, and intellectual property. Each broad topic contains rules on specific issues within that topic. In fact, there is a rule that provides a standard format for each rule as well as the guidelines used when drafting or amending the rules. Regents' Rules and Regulations, Rule 10100.
To assist you in determining the disposition of a prior rule, a Disposition Table is available on the Board of Regents' Rules and Regulations website. The table identifies the series number and title of the new rule that covers the subject matter of a particular section of a prior rule. A section of a prior rule that was not carried forward in the revised rules is noted as being "Deleted." A "Summary of the Significant Changes" may be helpful to you in determining substantive changes that were made in the revision.
Additionally, the Regental Policies no longer exist as a separate document. Most of the Regental Policies were incorporated into the revised Regents' Rules and Regulations. A Disposition Table is also available to assist you in determining the disposition of a prior Regental Policy.
The Disposition Tables for both the Regents' Rules and Regulations and the Regental Policies indicate that several provisions now appear in the new Administrative Rules. The Administrative Rules apply System-wide but, unlike the Regents' Rules and Regulations, the Administrative Rules require only the Chancellor's approval for modifications.
The cite form for the revised rules is Regents' Rules and Regulations, Rule ________. If you need to refer to a particular section of a rule, the cite form is Regents' Rules and Regulations, Rule _____, Section _____. The UT System Style Guidelines state that "Rules and Regulations" should be italicized. Those guidelines provide other general information that may be useful in preparing all documents.
The Bottom Line: The Regents' Rules and Regulations have been reorganized and conversion charts are available for you to track an old rule or policy to its new home.
Spotlight on Contracting
by Jim Phillips (Business Law Section)
Recent headlines have highlighted concerns of the public and the Texas Legislature regarding whether state agencies are properly administering their contracts and whether the state is receiving full value for tax dollars spent on state contracts. These concerns emphasize the need for UT System institutions to continue to comply with applicable laws, rules, policies, and procedures related to procurement and contracting.
The State Auditor encouraged state agency executive directors and governing board members to attend a February 8, 2005, contracting forum where basic contract management risk areas were identified and discussed. The State Auditor advised agencies to (1) properly plan each procurement and contracting process, (2) consider risks inherent to a particular contract when deciding how to process and monitor that contract, (3) develop an appropriate scope of work or statement of deliverables for each contract, (4) make individuals within the agency accountable for each contract, (5) monitor each contract, and (6) review contract amendments using the same process that was followed for the initial contract.
OGC provides several online tools to assist UT System administrators with procurement and contracting. These tools are available through the OGC website, as well as the UT Purchasing Council website (password required) maintained by the Business Law Section.
The most recent addition to the OGC website is the Legal Manual for Purchasers and Contract Administrators. The Manual contains links to applicable statutes, Regents' Rules and Regulations, Business Procedure Memoranda, OGC training presentations, OGC procurement solicitation and contract templates, and other resources, on many topics including best value procurement; consulting services; contract checklists; electronic records, signatures, and transactions; equipment leases; professional services; public information; unrelated business income tax; vending machines; as well as website solicitation.
Finally, the Business Law Section, in consultation with System Business Affairs, is currently creating a course to teach users how to efficiently access all resources and personnel at UT System during the contracting process. We plan to bring that training to our clients by visiting each institution starting this fall.
The Business Law Section is committed to providing legal advice and helpful tools for UT System administrators engaged in the various stages of procurement and contracting. Please contact us if you have any questions. We welcome suggestions on how the Business Law Section may provide better service.
The Bottom Line: Good contracting process and procedure will enhance our chances of staying above the fray on contracting controversy and there are many resources available at UT System to assist in this effort.
New Rules on Tolling Requests under the Texas Public Information Act
by Carol Longoria (Open Records)
Public information officers (or their delegates) often receive requests for records that are so broad and all-encompassing that it is difficult to locate all of the requested information. Frequently, the public submits requests for documents that are unintelligible. Fortunately, the Texas Public Information Act (TPIA), Tex. Gov't Code §552.222(b), authorizes the public information officer to seek clarification from a requestor if the information requested is unclear or would result in gathering a large amount of information. According to Open Record Decision No. 664 (1999), a request for clarification will toll the 10-business day deadline for requesting an Attorney General decision.
Historically, state agencies have interpreted requests for clarifications under TPIA and Open Record Decision No. 664 to toll their deadline for requesting an Attorney General decision for the entire request, even if other portions of the request did not need clarification. Otherwise, multiple requests for Attorney General decisions could be generated from the same request requiring an institution to track and comply with multiple deadlines stemming from a single request.
Recently, the Attorney General's office has made clear that it does not interpret TPIA so expansively. In recent letter rulings, the Attorney General held that the 10-business day time limit can only be tolled for the specific portion of the request in question. As to portions of a request that do not need clarification the clock continues to run, resulting in governmental bodies not timely filing their requests and often waiving discretionary exceptions. See, OR2004-6224, OR2004-10815 and OR2005-00704.
Where does this leave public information officers? If a request needs clarification, the public information officer must determine with precision what portion of the request is tolled and what portion remains active. As to the untolled portions of the request, the recipient must respond and present all discretionary exceptions or lose them forever. Once a request is partially tolled, a public information officer must then track at least two 10-business day deadlines. Additionally, depending on when the clarification is received from the requestor, submitting a follow-up to the Attorney General may result in trying to append additional information to a file when a ruling is imminent. Further, the recent Attorney General interpretation further complicates the public information officer's need and ability to provide a requestor with the statutorily required itemized statement of estimated charges for fulfillment of the request.
If you need assistance navigating this new TPIA minefield, please call Helen Bright at (512) 499-4471 or Carol Longoria at (512) 499-4521.
The Bottom Line: A request for clarification under the TPIA does not toll the entire TPIA request, but instead only tolls the specific portions of the request for which clarification is needed.
New Coverage Provided for Licensing and Disciplinary Proceedings
by Melodie Krane (Health Law Section)
The UT System Board of Regents authorized new coverage for faculty and resident physicians (and other Plan participants) under the Professional Medical Liability Benefit Plan (the "Plan"), effective September 1, 2004. The Plan is administered by the Health Law Section. This new coverage is provided in response to the increased activity of the Texas State Board of Medical Examiners (TSBME), particularly in the past year, regarding physician licensing and disciplinary actions, which are the result of stronger statutes and increased resources of staff, and funding in the last legislative session.
With the changes in coverage, the Plan covers all costs and expenses incurred in connection with the investigation and defense of a disciplinary or licensing action not exceeding $25,000 for a single proceeding and not exceeding $100,000 for all proceedings in an enrollment period. Coverage is limited to proceedings that arise from a covered activity, subject to a variety of exclusions including allegations against a Plan participant of illegal, dishonest, fraudulent, criminal, or malicious conduct. The Plan does not cover fines, penalties, or costs assessed as a result of the proceedings.
There are four primary stages in a TSBME complaint: (1) notice of complaint; (2) investigation; (3) informal hearing; and (4) formal disciplinary hearing. When the TSBME receives a complaint, the physician will receive a general letter from the TSBME requesting a narrative response to the complaint within 14 days. The complaint relates to an alleged violation of the Medical Practice Act, but neither the complainant nor the specific act is revealed by the TSBME. At this stage, narratives may be requested as well as medical records. Within 30 days of the complaint notice, a TSBME investigator determines whether a violation has occurred and an investigation is warranted. The TSBME has 180 days to further investigate the complaint, seek expert review, and determine if referral to an informal hearing is warranted. If referral is made, the case is assigned to a TSBME staff attorney and a hearing is scheduled. Held before a small panel, including physician members of the TSBME, an informal hearing (also known as a show cause or show compliance conference and commonly referred to as an ISC) is the physician's opportunity to show why the complaint should be dismissed. At this hearing, it is the physician's burden to show that there was no violation of the Medical Practice Act or TSBME rules. Although uncommon, a dismissal may be recommended by the panel to the TSBME. If a settlement or agreed order is not reached at this stage, the complaint proceeds to a formal disciplinary hearing, which is similar to litigation but takes place before an administrative law judge of the State Office of Administrative Hearings. The administrative law judge makes findings to the TSBME and recommends disciplinary action. The TSBME votes on final action followed by issuance of a final order. Appeal of the TSBME decision may be made to the state district court.
To request assistance under the Plan, physicians should refer all TSBME communications to the Health Law Section and to their local Plan liaison. Due to the extremely short time for response, requests for assistance should be made immediately upon receipt of the complaint. Health Law Section attorneys are available to speak to your institution if you would like more information about the new coverage or about the TSBME licensing and/or disciplinary process.
The Bottom Line: The UT System Professional Medical Liability Benefit Plan now provides limited coverage for costs and expenses incurred in connection with the investigation and defense of certain disciplinary and licensing actions.
Supreme Court Hears Grokster Case: Sony Precedent at Stake
by Georgia Harper (Intellectual Property Section)
On March 29, 2005, the Supreme Court heard oral argument in the case of MGM Studios v. Grokster, Ltd., 380 F. 3rd (9th Cir. 2004) and a decision is expected by the end of June. At stake are a venerable Supreme Court precedent (Sony Corporation of America v. Universal City Studios, Inc., 464 U.S. 417 (1984)), the current business models for distribution of music and other media, and perhaps no less than the future of technological innovation in the U.S. So it is, when incentives to promote innovation in the arts collide with innovation in technology, as they have for most of the history of copyright law. Grokster is very new and yet nothing new – just the latest example of the tight wire balancing act copyright law performs.
Defendants Grokster and Streamcast produce peer-to-peer (p2p) software for locating and retrieving files that reside on the computers of other users of the software simultaneously connected to each other through the Internet. Using p2p software, ordinary people with only a personal computer are able to make their digital music collections available world-wide. Therein lies the problem, of course. Ordinary people have made millions and millions of copies of copyrighted music and movies available for others to download and further distribute. The music and movie industries sued Grokster and Streamcast under theories of contributory and vicarious liability, to stop their distribution of this software. While such suits against Napster and Aimster, creators of predecessor types of p2p software, were successful, the 9th Circuit confirmed last summer that Grokster and Streamcast were different. Their software programs lacked a central index feature leaving Grokster and Streamcast uninvolved in the actual search and retrieval function performed by their users. As a result, they lacked the control needed for vicarious liability, and they didn't materially contribute to the infringements as required for contributory liability. Further, because their software had substantial noninfringing uses, based on the Sony precedent from 1984 (the case that gives us the right to time-shift television programming at home), their generalized knowledge that users infringe did not satisfy the other element required for contributory liability (the "staple article of commerce" exception to contributory liability).
Thus, by appealing the 9th Circuit's decision, MGM is challenging the Sony precedent. MGM believes that we need a new rule for the digital age, a rule that won't reward product development choices that seem deliberately designed to avoid responsibility for the actions of third parties. Under MGM's proposals, one who intends to induce an infringement in a third party could not avail himself of the Sony "staple article of commerce" exception. This prospect has the technology sector worried. They point to products like Apple's iPod and ask whether it could have been developed and distributed under such an "inducement" rule. Remember the "Rip. Mix. Burn." ad campaign for the iPod? Might that kind of promotion indicate intent to induce infringement? Even if MGM loses its appeal and Grokster and Streamcast remain legal, the studios are likely to seek relief from Congress. In fact, many say that Congress is the proper forum for the studios' grievances. One way or the other, the law of vicarious liability in copyright is about to change, perhaps dramatically. We will update you further as this issue develops in the courts and Congress.
The Bottom Line: Look for meaningful guidance soon from the U.S. Supreme Court on the extent of vicarious liability for p2p software and other file swapping and copying technologies.
Legislative Changes Allow UT System Health Institutions to Recover Additional Funds
by Kent Kostka (Claims & Bankruptcy Section)
Thanks to recent legislative changes, UT System health institutions now have an extra resource to use in collecting certain kinds of emergency health debts. Under new provisions of the Tex. Prop. Code, Section 55, health institution physicians and their group practice plans may now file liens for the charges for medical services provided to a patient injured in an accident. In fact, in many cases UT System health institutions are required to file liens and refer the accounts to the OGC for collection.
This provision is particularly useful in cases involving a patient whose injuries can be attributed to the fault of another person, such as automobile accidents, product liability incidents, medical malpractice cases involving another provider, and many other types of injuries. The lien now enables the physician, like the hospital, to recover their charges out of any award, judgment, or settlement the patient obtains as compensation for their injuries. Often these charges would have never been recovered.
Once a lien is filed, cases are referred to the OGC, which then uses its resources and significant experience to obtain the maximum recovery out of the patient's settlement or award. OGC has a comprehensive training and resource module available for health institutions to use in setting up and implementing this mandatory program. For additional information, please contact the Claims and Bankruptcy Section at (512) 499-4467.
The Bottom Line: UT health institution physicians and their group practice plans may now file (and in many cases must) liens for the charges for medical services provided to a patient injured in an accident.
Resources from this e-Newsletter
Office of General Counsel
201 W. 7th Street
Austin, TX 78701