Volume 6 | June 2020
Although the COVID-19 pandemic is far from over, we have decided to return to our normal format for this month's newsletter. Nevertheless, we will continue to bring you news and alerts related to COVID-19.

While we may be returning to our normal newsletter format, June 2020 is anything but "business as usual." It is a month that has brought both deep pain and hopeful signs of meaningful and lasting change. The attorneys and staff at Chilivis Grubman are deeply committed to the fight for equal justice and equality for all, and are committed, through not only words but action , to do everything we can to help with that fight. For more information on actions we are taking both immediately and on an ongoing basis, please read our full statement here .

Supreme Court Rules that Discrimination Based on Sexual Orientation and Gender Identity Is Unlawful

On June 15, 2020, the United States Supreme Court issued a landmark 6-3 decision in  Gerald Lynn Bostock v. Clayton County, Georgia . The Court held that an employer who fires an individual for being gay or transgender violates Title VII of the Civil Rights Act of 1964.

The Court interpreted Title VII, which makes it “unlawful . . . for an employer to fail or refuse to hire or to discharge any individual, or otherwise discriminate against any individual with respect to his compensation, terms, or privileges of employment, because of such individual's race, color, religion, sex, or national origin."

The Court first defined “sex” using its ordinary meaning. Although the employees argued that the definition of sex was broader than anatomy, the Court noted that the parties agreed – for argument’s sake – that sex referred to the biological distinctions between males and females. The Court then considered the ordinary meaning of “discriminate against” and found the meaning when Title VII was adopted to follow its present meaning – “treating an individual worse than others who are similarly situated.”

The Court’s analysis did not stop at the definition of sex or discrimination. The Court reconciled these terms with Title VII’s purpose, prohibitions, and judicial precedent. While the Court acknowledged that homosexuality and transgender status are distinct from sex, it observed that discrimination based on homosexuality and transgender status necessitates discrimination "based on" sex. The Court explained: 

“homosexuality and transgender status are inextricably bound up with sex. Not because homosexuality or transgender status are related to sex in some vague sense or because discrimination on these bases has some disparate impact on one sex or another, but because to discriminate on these grounds requires an employer to intentionally treat individual employees differently because of their sex.” 

Before the Court’s ruling, some jurisdictions interpreted sex to include gender and transgender status, while other jurisdictions levied a narrow interpretation. However, the United States Supreme Court’s ruling is clear: “An employer who fires an individual merely for being gay or transgender defies the law.”   

The full case opinion is available  here .
The End of Qualified Immunity?

On June 8, 2020, the United States House of Representatives introduced the Justice in Policing Act of 2020, which takes several steps toward comprehensive police reform and accountability. The legislation proposes several key policing measures, including prohibition of discriminatory profiling and mandatory training to prevent profiling; banning chokeholds and no-knock warrants; limiting the transfer of military style equipment to local police departments; and establishing a National Police Misconduct Registry to prevent the rehiring of officers fired for misconduct. While many of these reforms are aimed at preventing the types of police misconduct at the heart of the protests currently gripping the nation – others create avenues for redress for the victims of such misconduct.

Qualified immunity is a judicially created legal doctrine that shields police officers from liability for money damages from lawsuits alleging constitutional violations, so long as the officer did not violate clearly established law. The bar is quite low, as the United State Supreme Court has described qualified immunity as protecting “all but the plainly incompetent or those who knowingly violate the law.”  Malley v. Briggs , 475 U.S. 335, 341 (1986). 

The Justice in Policing Act tackles qualified immunity head on, amending 42 U.S.C. § 1983, the most common vehicle for filing federal civil rights lawsuits, to remove the qualified immunity defense:


Section 1979 of the Revised Statutes of the United States (42 U.S.C. 1983) is amended by adding at the end the following: ‘‘It shall not be a defense or immunity to any action brought under this section against a local law enforcement officer (as defined in section 2 of the Justice in Policing Act of 2020) or a State correctional officer (as defined in section 1121(b) of title 18, United States Code) that—

‘‘(1) the defendant was acting in good faith, or that the defendant believed, reasonably or otherwise, that his or her conduct was lawful at the time when the conduct was committed; or

‘‘(2) the rights, privileges, or immunities secured by the Constitution and laws were not clearly established at the time of their deprivation by the defendant, or that at this time, the state of the law was otherwise such that the defendant could not reasonably have been expected to know whether his or her conduct was lawful.’’

Although the other proposed reforms are far more concrete, removing the defense of qualified immunity as a barrier to lawsuits against police officers could drastically change the landscape of civil rights lawsuits moving forward. 

The full text of the Justice in Policing Act of 2020 is available here
Circuit Court Holds that Nursing Home's Insurer Required to Cover False Claims Act Lawsuit

Last month, in a 2-1 decision, a panel for the Fourth Circuit Court of Appeals held that, under North Carolina law, insurance coverage for “damages resulting from a claim arising out a medical incident” must be extended to cover a  qui tam  suit filed under False Claims Act (FCA). 

In 2016, a plaintiff filed  qui tam  action under the FCA against a North Carolina-based nursing home. The suit alleged that the nursing home failed to provide the services for which it had submitted claims for reimbursement to Medicaid. After the nursing home became aware of the FCA suit, it asked its insurer to cover the suit pursuant to its insurance policy. Coverage was denied, however, and the nursing home filed its own suit against its insurer wherein it asked a federal court to compel the extension of the requested coverage.  

Under the nursing home’s insurance policy, the insurer was required to cover claims for “damages resulting from a claim arising out of a medical incident.” The policy defined the term “medical incident” as an “act, error or omission in … rendering or failure to render medical professional services [i.e., ‘the health care services or the treatment of a patient’].” The insurer agreed that the nursing home’s alleged failure to render the services for which it submitted Medicaid claims qualified as a “medical incident” under the policy, but it disputed the contention that any damages incurred by the government “arose out of” that medical incident.  

In ruling against the nursing home, the federal district court acknowledged that North Carolina courts interpret the phrase “arising out of” broadly when the term is found in a provision extending insurance coverage. The district court nevertheless held that any damages resulting from the allegedly false Medicaid claims did not “arise out of” the failure to provide medical services (i.e. the “medical incident”) because the submission of the allegedly false Medicaid claims was “an ‘intervening cause’ that severs any connection between the medical incident” and the alleged damages. In other words, the government’s damages “arose out of” the nursing home’s submission of false Medicaid claims, not the nursing home’s failure to provide medical services. The district court held that, because the submission of false Medicaid is not a “medical incident” under the policy, coverage need not be extended to cover the FCA action. 

In its reversal of the district court’s ruling, the majority of the Fourth Circuit panel reiterated that North Carolina courts interpret “arising out of” broadly and added that the law requires only a “causal connection” when the term is used in a provision extending insurance coverage. The panel then noted that such a “causal connection exists” because, but for the nursing home’s alleged failure to provide medical services, there would be no claim for damages under the FCA. The majority of the panel further explained that, “while the [submission of false Medicaid claims] was not itself a medical professional service,” there is a “causal relationship” between the submission of false Medicaid claims and the alleged failure to render medical professional services (i.e. the “medical incident”). “Thus, under North Carolina’s caselaw, the False Claims Act action falls within the coverage provision in the [] insurance policy.”

A court applying Georgia law would likely come to the same conclusion because Georgia courts interpret the phrase “arising out of” to include “almost any causal connection or relationship” between a loss and a specified act. This interpretation is arguably even broader than the North Carolina court's interpretation
Chilivis Grubman News
Chilivis Grubman Secures Two Dismissals of Medical Board Actions

So far this month, the attorneys at Chilivis Grubman have secured two separate dismissals of Georgia Medical Board actions. Both cases resulted from a complaint filed with the Board by a patient, and both cases were completely dismissed by the Board without further investigation or any disciplinary action after Chilivis Grubman responded to the Board inquiries on our clients' behalf.

We are thrilled to continue our decades-long tradition of securing these types of results for our healthcare clients, and encourage you to reach out to us if you are facing any sort of Board or other type of licensure-related investigation.
CARES Act Webinar Recording Available for Download

Earlier this month, Chilivis Grubman attorneys Scott Grubman and Christian Dennis presented a free webinar on the CARES Act Provider Relief Fund, which continues to distribute $100 billion to healthcare providers affected by the COVID-19 pandemic. The webinar discussed the various "terms and conditions" with which fund recipients must comply, and provided tips on how to avoid liability in future audits and investigations.

If you missed the webinar, you can download it free of charge by clicking here .
Banks Scrutinized for Non-Payment of PPP Agency Fees
United Community Bank, headquartered in Blairesville, Georgia, recently disclosed that it has received a Civil Investigative Demand from the U.S. Department of Justice, seeking information related to the bank's alleged "nonpayment of fees to agents of borrowers" under the CARES Act Payroll Protection 'program ("PPP").

Banks are required to pay certain fees to agents of PPP recipients, and those fees are supposed to be taken out of the fees that the lender receives in connection with the PPP loan.

A Civil Investigative Demand is a tool available to the government under the False Claims Act, which generally prohibits submitting false or fraudulent claims for payment to the federal government.

The government's investigation, which is likely not limited to United Community Bank, demonstrates that the DOJ is focusing its investigative resources not only on PPP borrowers, but on lenders as well.

News of the DOJ investigation follows news of the filing of several class action lawsuits against major banks related to alleged non-payment of PPP agent fees. Specifically, no fewer than 11 class actions have been filed across eight federal judicial districts against major banks on this issue.

Litigants in various states are moving to consolidate those actions and move them to the Northern District of Georgia, where Judge Leigh May is already presiding over one of the filed cases. That action was brought by Alliant CPA Group on behalf of itself and similarly situated businesses and individuals against several major banks, including Bank of America, Bank OZK, Synovus, and Wells Fargo.

Don't Neglect Cybersecurity When Migrating to the Cloud

Even before the onset of the Covid-19 pandemic, many businesses – including small businesses – were in the process of migrating certain of their operations to cloud-based systems. This trend accelerated significantly f ollowing the onset of the Covid-19 pandemic.

         A number of recent reports remind business owners, however, that the use of a cloud-based system is not a substitute for a business’ own cybersecurity program. In fact, the trend towards cloud migration may require small businesses to implement even more robust security.

Cybersecurity firm McAfee recently reported that during the first four months of 2020, business use of cloud services increased by 50%. During this same period, however, cyberattacks on cloud services increased by a whopping 630%. The healthcare industry was the second most highly attacked, with almost 200 million attacks originating in Russia, China, or Iran.   

In addition, mobile security firm Lookout reports that phishing attacks directed at remote workers increased 66%. Therefore, not only are the bad guys increasingly targeting cloud users, they may be using new tactics to reach those targets.

Finally, the use of a cloud-based system involves its own unique challenges. In fact, a misconfigured cloud system can be compromised – literally – overnight. Cloud misconfigurations are the number one cause of cloud security issues. In a recent test, security researchers at Comparitech created a “dummy” cloud-based database with fake data, then waited to see what happened; the “dummy” database was located and attacked in eight and one-half hours. This, of course, means that a business could begin its new cloud-based operations at the end of a workday, and be compromised before the beginning of the next workday. 

Cloud-based systems can make the life of a business owner much easier in many ways. A cloud-based system does not, however, eliminate the business’ need for cybersecurity, as these systems present their own unique issues for the business to address.     


Lightening makes no sound until it strikes.

- Rev. Martin Luther King, Jr.

ADA Settlement with Hospital Demonstrates EEOC's Continued Interest in Healthcare Industry

In October 2019, we discussed increased enforcement efforts by the U.S. Equal Employment Opportunity Commission (EEOC) in the healthcare industry. Then in February 2020, we discussed the EEOC’s lawsuit against Yale New Haven Hospital for alleged violations of the Americans with Disabilities Act (ADA). The EEOC’s increased enforcement in the healthcare industry continues, as demonstrated by a recent settlement with St. Vincent Hospital, in Santa Fe New Mexico. The EEOC’s lawsuit against St. Vincent was based on alleged violations of the ADA, which generally prohibits discrimination against qualified disabled individuals (as defined by the ADA) in all aspects of employment. Under the ADA, employers must also provide reasonable accommodations to qualified individuals with a disability unless doing so would be an undue hardship.

In August 2019, the EEOC sued St. Vincent (which does business as Christus St. Vincent Regional Medical Center) for violations of the ADA. According to the EEOC, Asheley Coriz, who is deaf, was hired as a Histology Technician in St. Vincent’s laboratory in February 2018. St. Vincent’s Human Resources department granted Ms. Coriz’s request to use an American Sign Language (ASL) interpreter during her job orientation and onboarding process. Following onboarding, Ms. Coriz faced difficulties with her immediate supervisor related to her disability. According to the Complaint, Ms. Coriz had to repeatedly remind her supervisor – Mr. Luna – to face her when he provided instructions and training. Mr. Luna also refused to repeat the training procedures for Ms. Coriz. In response, Ms. Coriz requested written procedures, and this request was also refused according to the Complaint. 

Ms. Coriz alleged that Mr. Luna became hostile and frequently yelled at her. Ms. Coriz sought help from Mr. Luna’s supervisor, Director Randall Schulz. In response to Ms. Coriz’s concerns, Director Schulz transferred Ms. Coriz to a different department as a Histology Assistant. Ms. Coriz’s new position required her to use the telephone, however, and Ms. Coriz could not use a regular telephone due to her disability. Ms. Coriz requested an accommodation requiring St. Vincent to install a Video Relay Service (VRS) telephone system that would allow Ms. Coriz to make and receive telephone calls. The EEOC noted that “no additional purchase of equipment was necessary,” as Ms. Coriz owned a VRS system. But St. Vincent provided Ms. Coriz no accommodations aside from the ASL interpreter during orientation, according to the Complaint.

According to the EEOC, in April 2018, Mr. Luna, Director Schulz, and Director Mary Jo Metzger (Director Schulz’s manager) scheduled a meeting with Ms. Coriz to review her performance and to set a timeline for her to meet performance goals. When Ms. Coriz requested an ASL interpreter for the meeting, Director Schulz canceled the meeting so he could meet with HR about the accommodation request. The next day, Director Schulz informed Ms. Coriz she was placed on paid administrative leave, according to the Complaint. On April 20, 2018, St. Vincent terminated Ms. Coriz’s employment citing poor performance. The EEOC noted that St. Vincent never provided written performance goals to Ms. Coriz, despite citing poor performance for the termination.

St. Vincent settled the EEOC’s lawsuit and agreed to pay $98,000 in back pay and compensatory damages. St. Vincent also agreed to revise its policies, provide training, and report to the EEOC any complaints of disability discrimination during the consent decree’s three-year term.  The decree also makes the supervisor who allegedly discriminated against Ms. Coriz ineligible for rehire.

All employers should try to reduce discriminatory acts. Policies should be reviewed, updated, and used. Training should be performed on employment laws. Managers, especially first-line supervisors, should be familiar with employment laws, handling complaints, and handling accommodation requests. Notably, many of the EEOC’s allegations against St. Vincent stemmed from actions (or inactions) by the first-line supervisor, Mr. Luna. 

Repeated violations in the healthcare industry have caused the EEOC to take notice, as evidence by Regional Attorney Mary Jo O’Neill’s statements to the Albuquerque Journal: “We see a pattern of health care providers engaging in discriminatory violations, and that they are some of worst violators of ADA.” Healthcare employers should expect more enforcement actions and greater scrutiny by the EEOC. 
DOJ Faces Criticism Over Dismissal Authority under the False Claims Act

I n a March 4, 2020 brief t o the Supreme Court, the Department of Justice (DOJ) appears to take a broad view of its dismissal authority under the False Claims Act (FCA). DOJ’s position has provoked vocal criticism from Senator Grassley, a long-time advocate for whistleblowers, and raises questions about the proper scope, if any, of the DOJ’s ability to dismiss an FCA case brought by a whistleblower when the DOJ declines to intervene.

The FCA was enacted in 1863 as a tool to deter fraud against the government. Congress strengthened the FCA in 1986 when it amended the qui tam provisions of the law to provide financial incentives and the procedural structure to whistleblowers – or “relators” – so that individuals could bring FCA cases on behalf of the government. If a relator sues under the FCA, the DOJ has 60 days (with extensions for good cause) to investigate the allegations raised in the complaint and decide whether to “intervene” and pursue the case or decline intervention. 

While the relator is typically permitted to pursue the case on the government’s behalf if the government decides to decline intervention, the FCA gives the government the right to dismiss the suit over the relator’s objections. Specifically, the FCA provides that “[t]he Government may dismiss the action notwithstanding the objections of the person initiating the action if the person has been notified by the Government of the filing of the motion and the court has provided the person with an opportunity for a hearing on the motion.” 31 U.S.C. § 3730(c)(2)(A).

On January 10, 2018, the DOJ issued guidance, known as the Granston Memo , encouraging U.S. attorneys to consider seeking dismissal of qui tam actions under this provision in certain circumstances where the government declines intervention. Prior to the Granston Memo, the government sought dismissal of qui tam claims only in very rare circumstances. But, according to the DOJ, a record number of qui tam actions have been filed in recent years, but the rate of intervention in those actions has remained relatively stable; begging the question whether newly filed qui tam actions were meritorious or worth the expenditure of limited government resources.

In response to the Granston Memo, Senator Grassley, among others, opposed the DOJ’s dismissal authority and raised concerns that the exercise thereof “could undermine the purpose of the False Claims Act by discouraging whistleblowers and dismissing serious fraud on the taxpayers.” That opposition was recently renewed in response to the DOJ’s articulation of its dismissal authority in briefing submitted to the Supreme Court.

The Circuit Courts are split as to the level of judicial review to apply to the DOJ’s decision to dismiss a qui tam action. The Ninth and Tenth Circuits, for example, hold that the DOJ is able to dismiss a qui tam action only when the dismissal bears a “rational relationship” to a legitimate government purpose. The D.C. Circuit, on the other hand, has held that the DOJ has an unfettered right to dismiss a qui tam action without any judicial constraint.
In U.S. ex rel. Schneider v. JP Morgan Chase, the Supreme Court is tasked with resolving that circuit split and deciding whether and to what extent the DOJ’s decision to dismiss a qui tam action is subject to judicial review. The DOJ’s position in that case is a resounding no. The DOJ argued that it has “unfettered discretion” to dismiss a qui tam action and its judgment on the issue amounts to “an unreviewable exercise of prosecutorial decision.”

In a May 4, 2020 letter addressed to Attorney General William Barr, Senator Grassley renewed his opposition to the DOJ’s dismissal authority, noting he “vehemently disagree[d]” with the DOJ’s position in Schneider . Senator Grassley notes that, since the Granston Memo was issued, the DOJ has sought to dismiss 45 FCA qui tam cases pursuant to § 3730 – an amendment which Grassley himself authored. As one of the lead authors of the 1986 amendment, Senator Grassley is in a unique position to describe how Congress intended § 3730 to be interpreted, and his letter explains why the DOJ’s interpretation of that provision is incorrect.

The Supreme Court has yet to render a decision in Schneider , however Senator Grassley does not appear to be waiting on the judiciary to prove his point. His most recent letter to the Attorney General concluded by requesting DOJ submit a written brief to address his concerns. His vehement disagreement with the DOJ’s position is some evidence that even a Supreme Court decision in the DOJ’s favor may be short lived.
As Georgia General Assembly Reconvenes, Charter Schools Plan for Next School Year and Face Funding Challenges

Though it seems like the school year just ended, some school districts in the metro Atlanta area will resume in only seven weeks. Needless to say, many aspects of schools and the school year will look different when students return for the 2020-2021 academic year.

First, public schools are trying to decide the best manner to instruct students and ensure students are thriving. School administrators and boards of education for the 180 school districts in Georgia are considering various proposals for the coming school year: returning to traditional learning (either with or without a “block system” for students to attend different days or segments of the day), continued distance or remote learning like districts utilized to finish the school year this spring, or a hybrid system of in-school instruction and remote learning. Indeed, many districts might utilize a hybrid model for the coming semester due to space constraints of the schools and the need to respect social distancing requirements. As schools think through those decisions, other factors need to be considered: ensuring that students have computers, tablets, or other means to utilize virtual learning, including internet access; whether parents or caregivers will be able to stay home with their students (particularly for younger students); cleaning required to ensure buildings and classrooms are properly disinfected; and whether students receive one or more of their meals through the school each day. Whatever each school or district decides, schools and learning will be different for the foreseeable future and might not return to “normal” for many months to come.

Second, making the planning for the school year more difficult, school funding from the State of Georgia will be reduced substantially for the 2020-2021 academic year. Depending on the school district, the State of Georgia provides about half of funding for schools, with local jurisdictions (cities or counties) providing a substantial portion of the funding through property taxes and the federal government providing a small share of funding. The Georgia General Assembly reconvenes this week and one of the largest tasks before legislators is passing a budget for the 2021 fiscal year, which begins on July 1, 2020. Initially Governor Kemp asked state agencies to propose budget cuts of 14%, which affects every state agency and will have significant impacts on the operation of state government. State tax collections for May 2020 were down 10.1% compared to May 2019 so budget writers are adjusting their economic forecasts accordingly. Proposals before legislators include cutting state education funding by more than $1.3 billion, cutting funding for student transportation, and nutrition for students. Teachers and other professionals likely face furloughs and a shortened school year (less school days).  

There are several good sources of information for school administrators that summarize the available resources, funding updates, school resources, webinars, and other helpful data. One such resource that we have relied on our for our charter schools practice is information compiled by the State Charter Schools Commission of Georgia, the agency that authorizes charter schools at the state level. You can find updated information here .

A s the Georgia General Assembly reconvenes, you can find more information about the various budget proposals and processes at the St ate Senate Budget & Evaluation Office   and the House of Representatives Budget & Research Office .

Chilivis Grubman partner   Jeremy Berry   focuses his practice on government and regulatory matters, government contracts and bid protests, charter schools, investigations, and public policy litigation. He is also a registered lobbyist. Please contact Jeremy if you need assistance in any of these areas.
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